July 14/Poor CPI numbers coupled with poor retail sales sends gold and silver northbound with the dollar sinking/Turkey turns its back on the West: purchases defense missiles from Russia/Turkey will not let Germany visit its forces at Incirlik/

GOLD: $1230.30  UP $12.00

Silver: $15.96  UP 21  cent(s)

Closing access prices:

Gold $1228.50

silver: $15.96

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: $1226.61 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME:  $1216.15

PREMIUM FIRST FIX:  $10.46

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SECOND SHANGHAI GOLD FIX: $1226.95

NY GOLD PRICE AT THE EXACT SAME TIME: $1218.10

Premium of Shanghai 2nd fix/NY:$8.85

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LONDON FIRST GOLD FIX:  5:30 am est  $1218.95

NY PRICING AT THE EXACT SAME TIME: $1218.95 

LONDON SECOND GOLD FIX  10 AM: $1230.30

NY PRICING AT THE EXACT SAME TIME. $1231.60

For comex gold:

JULY/

NOTICES FILINGS TODAY FOR APRIL CONTRACT MONTH:  2 NOTICE(S) FOR 200  OZ.

TOTAL NOTICES SO FAR: 117 FOR 11700 OZ    (.3639 TONNES)

For silver:

JULY

 8 NOTICES FILED TODAY FOR

40,000  OZ/

Total number of notices filed so far this month: 2815 for 14,075,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

end

I HAVE BEEN TOLD LAST NIGHT AT THE CANADIAN ROYAL MINT HAS RUN OUT OF 10 OZ AND 100 OZ BARS OF SILVER AND WILL NOT BE BACK IN PRODUCTION UNTIL LATE AUGUST.  SILVER IS ALSO DEEPLY BACKWARD IN PRICE JULY/SEPT IN LONDON FORWARDS.

Let us have a look at the data for today

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In silver, the total open interest FELL BY 2121 contract(s) DOWN to 206,358 WITH THE  FALL IN PRICE THAT SILVER TOOK WITH YESTERDAY’S TRADING (DOWN 18 CENT(S). WITH THE DATA TODAY, THE ONLY EXPLANATION IS THE COMMERCIALS CONTINUED AS THE SUPPLIER OF THE SHORT PAPER AND COVERED SOME OF THEIR SHORTS.  THE SPECULATORS PITCHED SOME OF THEIR  LONG SIDE PAPER

 In ounces, the OI is still represented by just OVER 1 BILLION oz i.e.  1.033 BILLION TO BE EXACT or 148% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MAY MONTH/ THEY FILED: 8 NOTICE(S) FOR 40,000  OZ OF SILVER

In gold, the total comex gold  FELL BY A RATHER TAME 3,841 CONTRACTS WITH THE FALL IN THE PRICE OF GOLD  ($1.50 with YESTERDAY’S TRADING). The total gold OI stands at 487,597 contracts. AGAIN, THE COMMERCIALS SUPPLIED THE SHORT PAPER TO WHICH THE SPECULATORS DECIDED TO LIGHTEN UP A BIT ON THEIR LONGS TO WHICH SOME OF THE COMMERCIALS COVERED THEIR SHORT POSITION. 

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

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

GLD:

Today a huge  change in tonnes of gold at the GLD/strange!! a withdrawal of 3.55 tonnes with gold up $12.00

Inventory rests tonight: 828.84 tonnes

.

SLV

Today: : , WE HAD NO CHANGES AT THE SLV/

INVENTORY RESTS AT 349.012 MILLION OZ

end

.

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

1. Today, we had the open interest in silver  FELL BY  2121 contracts  DOWN TO 206,358 (AND now A LITTLE FURTHER FROM THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787), WITH THE FALL IN PRICE FOR SILVER WITH YESTERDAY’S TRADING  (DOWN 18 CENTS ).We  SEEM TO HAVE LOST A FEW OF OUR LONGS. HOWEVER THE OI REMAINS RELATIVELY HIGH COMPARED TO THE LOW PRICE OF SILVER. SILVER IS THE ONLY COMMODITY WHERE WE WITNESS A HIGH OI AND A CORRESPONDING LOW PRICE. IT SHOWS THE POWER OF MANIPULATION. 

(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 THURSDAY night/FRIDAY morning: Shanghai closed UP 4.25 POINTS OR 0.13%   / /Hang Sang CLOSED UP 43.06 POINTS OR 0.16% The Nikkei closed UP 19.05 POINTS OR 0.09%/Australia’s all ordinaires CLOSED UP 0.51%/Chinese yuan (ONSHORE) closed UP at 6.7825/Oil UP to 46.47 dollars per barrel for WTI and 48.85 for Brent. Stocks in Europe OPENED ALL IN THE GREEN EXCEPT LONDON,, Offshore yuan trades  6.7825 yuan to the dollar vs 6.7825 for onshore yuan. NOW THE OFFSHORE IS EQUAL  TO THE ONSHORE YUAN/ ONSHORE YUAN  STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE WEAKER DOLLAR. CHINA IS HAPPY TODAY 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)NORTH KOREA

China states that supposedly trade with North Korea grew by only 10.5% in the first 6 months of 2017….the USA wants China to cut off all trade with North Korea.

( zero hedge)

b) REPORT ON JAPAN

c) REPORT ON CHINA

NHA is one of China’s biggest dealmaker and even though it is private, it holds huge quantities of public companies.  It has used its shares and the shares of its acquisitions as to fund the purchases.  Everything is fine until the price of those acquisitions drop and the face margin calls from Hell..this could present a systemic risk along side Anbang which I brought to your attention last month

(courtesy zerohedge)

4. EUROPEAN AFFAIRS

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)TURKEY/RUSSIA/NATO

Not good:  Turkey turns its back on the West (NATO) towards Russia as it buys from its new found friend an advanced missile system for $2.5 billion.

( zero hedge)

ii) To add salt to injury, Turkey bars German lawmakers from visiting its soldiers at NATO’s Incirlik airbase in Turkey

( zero hedge)

6 .GLOBAL ISSUES

7. OIL ISSUES

i)Saudi Arabia may have a huge problem with corrosion in one of its major oil fields.  If Saudi Arabia has to stop production to remedy the situation, this would remove a major part of the glut

( Cyril Widdershoven/OilPrice.com)

ii) Bearish again for oil as rig count rises to April 2015 level

( zerohedge)

8. EMERGING MARKET

9.   PHYSICAL MARKETS

i)the mechanics behind the Shanghai Gold Exchange: objectives, productions members, vaulting and settlements
( Bullion Star)

ii)This is big news:  Russia’s Sberbank begins physical gold trading on the Shanghai Gold Exchange:

( Winning/Reuters/GATA)
iii)A very important commentary tonight from Alasdair Macleod.  He comments that it is now in the interest of the Shanghai Cooperation Organization to break completely from the USA dollar and form a sound money system.  He comments on the difficulty they will have to get this going but it is necessary..
( Alasdair Macleod)

iii)Cryptos collapse today:

( zero hedge)

10. USA Stories

i)A plethora of data today

First:  Comfort Index plunged! (soft data)

( zero hedge)

ii)The following is a huge disappoint to the uSA and the Fed:  Hard data  Consumer prices disappoint for the 4th month in a row: weakest since 2015:

( zero hedge)

iii)Retail sales down as they are showing the weakest growth in 3 years.  This should put the Fed’s hike intentions on permanent hold for now.  This is June’s reading which is in the 2nd quarter.  This should lower 2nd quarter GDP considerably!!!
(courtesy zerohedge)

iv)reaction to the above data points this morning:

( zero hedge)

v)More bad news; industrial production growth slows for the first time since January
( zero hedge)

vi)Soft data University of Michigan Consumer Confidence tumbles to levels before the election as hope disappears:

(courtesy zero hedge)

vii)The mouthpiece for the Fed has just revealed how Yellen is trapped especially with the data today.  Obviously if she raises rates with lousy data, then the Fed is not data dependent as the raise seeks to adjust risks. Then the Fed loses all of its credibility as they have always stated that they are data dependent
( zero hedge)

Prior to last night, it was well understood that the USA will run out of money by the first week of October.  When the official debt ceiling was reached in March the government had about 630 billion USA of pension and other pension funds to borrow against to continue spending until everything is exhausted.  However last night, there was an unexpected $427 billion outlay in June much greater than the $330 billion incoming and that deficit caught everyone by surprise. June is generally a surplus month.  Since the Republicans and Democrats cannot agree on anything expect us to reach the “latest” debt ceiling at around the first week of Sept and remember that all members will be enjoying their summer recess

( zero hedge)

viii)The Illinois budget deal was announced last week but the real tragedy is that fact that in order to balance the books, the boys stated that the rate of return on assets will be 7% which is pie in the sky.  Obviously they kicked the can down the road and this will put futures liabilities even greater as thy cannot possibly fund the new retirees.

( zero hedge)

Let us head over to the comex:

The total gold comex open interest FELL BY A RATHER TAME 3,841 CONTRACTS DOWN to an OI level of 487,597 WITH THE FALL IN THE PRICE OF GOLD ($1.50 with YESTERDAY’S trading). THE COMMERCIALS SUPPLIED THE SHORT PAPER TO WHICH THE SPECULATORS LIGHTENED UP ON THE LONG SIDE. THERE WAS SOME COMMERCIAL SHORT COVERING.

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 LOST 53 contract(s) to stand at 32 contracts. We had only 52 notices filed YESTERDAY morning, so we LOST 1 contracts or an additional 100 oz will NOT stand in this non active month of July.  Thus 1 EFP notice(s) was 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 LOST 16,656 contracts DOWN to 246,805, as this month winds down prior to first day notice.  The next non active contract month is September and here they lost another 5 contracts to stand at 476. The next active delivery month is October and here we gained 430 contracts up to 22,062.  October is the poorest of the active gold delivery months as most players move right to December.

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

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

On July 11.2016:  open interest for the front month: 349,573 contracts compared to July 14.2017:   264,461.

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  FELL BY 2121 contracts FROM 208,479 DOWN TO 206,358 WITH YESTERDAY’S 18 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.THE COMMERCIALS TODAY WERE ONLY ON THE SHORT SIDE AND COVERED SOME SHORTS. THE SPECULATORS WERE ONLY ON THE LONG SIDE TODAY AND PITCHED SOME OF THEIR LONGS.
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 41 contracts DOWN to 110. We had 50 notices served  yesterday so we gained 9 notices or an additional  45,000 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 LOST 126 contracts to stand at 608.  The next big active delivery month for silver will be September and here the OI already LOST ANOTHER 1815 contracts UP to 155,253.

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 8 notice(s) filed for 40,000 oz for the June 2017 contract

VOLUMES: for the gold comex

Today the estimated volume was 159,488 contracts which is fair/

Yesterday’s confirmed volume was 287,789 contracts  which is excellent

volumes on gold are STILL HIGHER THAN NORMAL!

Initial standings for JULY
 July 14/2017.
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  
nil oz
Deposits to the Dealer Inventory in oz NIL  oz
Deposits to the Customer Inventory, in oz 
32.15 oz
1 kilobar Brinks
No of oz served (contracts) today
 
2 notice(s)
200 OZ
No of oz to be served (notices)
30 contracts
3000 oz
Total monthly oz gold served (contracts) so far this month
117 notices
11700 oz
.3639 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   28,599.8 oz
Today we HAD  1 kilobar transaction(s)/ 
We had 0 deposit into the dealer:
total dealer deposits: NIL oz
We had NIL dealer withdrawals:
total dealer withdrawals:  NIL oz
we had no dealer deposits:
total dealer deposits:  nil oz
we had 1  customer deposit(s):
 i) Into Brinks: 32.15 oz
(1 kilobar)
total customer deposits; 32.15  oz
We had 0 customer withdrawal(s)
total customer withdrawals; 0 oz
 we had 1 adjustment(s): strange!!
exactly 100.000 oz was removed from the dealer Delaware and this landed into the customer account of Delaware…how could this be??
 
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 2  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 (117) x 100 oz or 11,700 oz, to which we add the difference between the open interest for the front month of JUNE (32 contracts) minus the number of notices served upon today (2) x 100 oz per contract equals 14,700  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 (117) x 100 oz  or ounces + {(32)OI for the front month  minus the number of  notices served upon today (2) x 100 oz which equals 14,700 oz standing in this  active delivery month of JULY  (0.4572 tonnes)
We LOST 2 contracts or AN ADDITIONAL 100 oz will NOT stand and 1 EFP contract(s) was issued as described as above.
.
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Total dealer inventory 696,226.154 or 21.655 tonnes  (dealer gold continues to disappear)
Total gold inventory (dealer and customer) = 8,522,223.757 or 265.07 tonnes 
 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 265.07 tonnes for a  loss of 38  tonnes over that period.  Since August 8/2016 we have lost 89 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 14 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
296,869.830 oz
Brinks
CNT
Scotia
Deposits to the Dealer Inventory
nil  oz
Deposits to the Customer Inventory 
615,145.220 oz
CNT
Delaware
No of oz served today (contracts)
8 CONTRACT(S)
(40,000 OZ)
No of oz to be served (notices)
102 contracts
( 510,000 oz)
Total monthly oz silver served (contracts) 2815 contracts (14,075,000 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 874,711.7 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 3 customer withdrawal(s):
 i) Out of Brinks:  14,297.500 oz
ii) Out of CNT: 213,724.900 oz
iii) Out of Scotia: 48,847.430 oz
TOTAL CUSTOMER WITHDRAWALS:   294,869.83 oz
We had 2 Customer deposit(s):
i) Into CNT: 600,145.220 oz
ii) Into Delaware: 15,313.100 oz
***deposits into JPMorgan have now stopped 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: 615,458.320 oz
 
 we had 0 adjustment(s)
The total number of notices filed today for the JULY. contract month is represented by 8 contract(s) for 40,000 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 2815 x 5,000 oz  = 14,075,000 oz to which we add the difference between the open interest for the front month of JULY (110) and the number of notices served upon today (8) x 5000 oz equals the number of ounces standing
 

 

.
 
Thus the INITIAL standings for silver for the JULY contract month:  2815 (notices served so far)x 5000 oz  + OI for front month of JULY.(110 ) -number of notices served upon today (8)x 5000 oz  equals  14,540,000 oz  of silver standing for the JULY contract month.
We  gained 9 contracts for an additional 45,000 oz  that will stand at the comex and 0 EFP’s were issued. THE DELIVERY CYCLE IN JULY IS BEHAVING EXACTLY LIKE THE PREVIOUS MONTHS OF MAY, AND JUNE AS THE AMOUNT STANDING INCREASES EVERY SINGLE DAY AND ALSO SURPASSED WHAT WAS STANDING FOR METAL ON FIRST DAY NOTICE.
 
 
 
 
Volumes: for silver comex
Today the estimated volume was 56,580 which is good
YESTERDAY’s  confirmed volume was 81,656 contracts which is  HUGE
YESTERDAY’S CONFIRMED VOLUME OF 81,656 CONTRACTS EQUATES TO 423 MILLION OZ OF SILVER OR 60% 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:  38.502 million (close to record low inventory  
Total number of dealer and customer silver:   213.282 million oz
The record level of silver open interest is 234,787 contracts set on April 21./2017  with the price at that day at  $18.42
The previous record was 224,540 contracts with the price at that time of $20.44
end

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 6.1 percent to NAV usa funds and Negative 6.3% to NAV for Cdn funds!!!! 
Percentage of fund in gold 63.3%
Percentage of fund in silver:36.6%
cash .+0.1%( July 14/2017) 
2. Sprott silver fund (PSLV): STOCK   NAV  FALLS TO +0.24% (July 14/2017) 
3. Sprott gold fund (PHYS): premium to NAV FALLS TO -0.55% to NAV  (July 14/2017 )
Note: Sprott silver trust back  into POSITIVE territory at +0.24/Sprott physical gold trust is back into NEGATIVE/ territory at -0.55%/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 14/strange@!!with gold up $12.00 today, we had a huge withdrawal of 3.55 tonnes/inventory rests at 828.84 tonnes

July 13/no change in gold inventory at the GLD/inventory rests at 832.39 tonnes

JULY 12/no change in gold inventory at the GLD/inventory rests at 832.39 tonnes

July 11/strange!@! we had a big withdrawal of 2.96 tonnes despite gold’s advance today/inventory rests tonight at 832.39 tonnes

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 14 /2017/ Inventory rests tonight at 832.39 tonnes
*IN LAST 190 TRADING DAYS: 118.29 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 131 TRADING DAYS: A NET  9.14 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.
*FROM FEB 1/2017: A NET  22.26 TONNES HAVE BEEN ADDED.

end

Now the SLV Inventory

July 14/no change in silver inventory/inventory rests at 349.012 million oz/

July 13/no change in silver inventory/inventory at the SLV rests at 349.012 million oz/

JULY 12/another massive 1.986 million oz of silver added into the SLV/inventory rests at 349.012 million oz/the last 3 days saw 7.281 million oz added into the SV

July 11/ANOTHER MASSIVE INCREASE OF 2.364 MILLION OZ into the SLV inventory/inventory rests at 347.026 million oz

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 14.2017:
 Inventory 349.012  million oz
end
  • 6 Month MM GOFO

    Indicative gold forward offer rate for a 6 month duration

    + 1.08%
  • 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 $1228.00                                                                                                    OI for gold today: 487,597//Oi for silver  206,358
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 $16.00
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 487,597 OI for gold) accompanying  199,826 and 206,358 for silver)
It seems the data suggests power manipulation to control the price through paper!
end
At 3:30 pm we await the COT report.  It is important to see what the commercials were doing.  You will recall that they went net long while the specs went net short
Let’s see
the gold COT
Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
217,637 157,377 64,759 147,818 221,734 430,214 443,870
Change from Prior Reporting Period
-4,044 29,495 7,791 16,628 -16,682 20,375 20,604
Traders
160 105 90 56 52 254 215
 
Small Speculators  
Long Short Open Interest  
45,455 31,799 475,669  
-1,907 -2,136 18,468  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of Tuesday, July 11, 2017

WOW!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Our large speculators

those large speculators that have been long in gold pitched 4,044 contracts from their short side

those large speculators that have been short in gold added a whopping 29,495 contracts to their short side and thus by today if the data is half accurate would be annihilated.

thus the large specs go net short by 33,000

Our commercials

those commercials that have been long in gold went long a huge 16,628 contracts to their long side

those commercials that have been short in gold covered 16,652 contracts from their short side.

thus the commercials go net long by a tiny 33,000 contracts.

Our small speculators

those small specs that have been long in gold pitched 1907 contracts from their long side

those small specs that have been short in gold covered 2136 contracts from their short side.

Conclusions:

the commercials continue buying up gold contracts and the specs continue on the short side and yet the annihilation was so far tiny!

James McShirley: I need help on this one!!

Let us now head over to the silver COT

let us see if we witness the same modus operandi by the crooked banks

Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
91,174 77,169 23,907 65,517 90,084
-822 11,448 3,307 3,956 -10,705
Traders
111 66 48 40 33
Small Speculators Open Interest Total
Long Short 207,592 Long Short
26,994 16,432 180,598 191,160
-2,390 1 4,051 6,441 4,050
non reportable positions Positions as of: 173 127
Tuesday, July 11, 2017   © SilverS

Our large speculators

those large specs that have been long in silver pitched 822 contracts from their long side

those large specs that have been short in silver continued to add to their shorts by a whopping 10,705 contracts.

the large specs went net short by 12,300 contracts.

the specs seemed to stop adding to their shortfall on Thursday but that will be in the next COT report

Our commercials

those commercials that have been long in silver added 3956 contracts to their long side

those commercials that have been short in silver covered 10,705 contracts

the commercials go net long by 14,600 contracts.

Our small speculators

those small specs that have been long in silver pitched 2390 contracts from their long side.

those small specs that have been short in silver added one contract to their short side.

Conclusions:

the specs went net short again by 12,300 with the commercials going net long by 14,600 contracts..and yet the price did not move until today

the specs should have been annihilated by now!!

END

Major gold/silver trading/commentaries for FRIDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

“Financial Crisis” Coming By End Of 2018 – Prepare Urgently

“Financial Crisis Of Historic Proportions” Is “Bearing Down On Us”

John Mauldin of Mauldin Economics latest research note, Prepare for Turbulence, is excellent and a must read warning about the coming financial crisis. Mind refreshed from what sounds like a wonderful honeymoon and having had the time to read some books outside his “comfort zone” he has come to the conclusion that we are on the verge of  a “major financial crisis, if not later this year, then by the end of 2018 at the latest.”

Source: Financial Times

Mauldin is a New York Times bestselling author and respected investment expert and his excellent analysis concludes with advice to prepare urgently for the financial “crisis of historic proportions” which is “once again bearing down on us”:

“You and I can’t control whether banks are ready, but we can control whether we are ready. I am working on a number of fronts to help you. My brief time away convinced me beyond any doubt that a crisis of historic proportions is once again bearing down on us. We may have little time to prepare. We definitely have no time to waste.

His financial crisis warning is important as Mauldin is no perma-bear. Indeed up until now his central thesis was that we were in the “muddle through economy” and that the U.S. economy and global economy would “muddle” along and we would avoid a financial crisis. So not only has he changed his central thesis but he has gone from being neutral and mildly positive to being very bearish and concerned about a severe financial crisis.

Mauldin is a long time advocate of owning physical gold including gold coins  as financial insurance – taking delivery and secure storage.

“I do not think of gold as an investment. It is insurance for me. I buy a fixed amount of gold nearly every month, no matter the price. I hope the price of gold goes down, because that means I get more coins in the mail to go into the vault. Yes, I take delivery of my gold, and it is near me if I need it.”


Contents

Afraid of the Truth
We Couldn’t Take the Chance
Policy Brick Wall
Least-Bad at Best
Getting Out of Dodge
Global Contagion
Barefoot on the Beach

Introduction

“The job of the central bank is to worry.”

– Alice Rivlin

“The central bank needs to be able to make policy without short-term political concerns.”

– Ben Bernanke

“… from the standpoint of the overall economy, my bottom line is we’re watching it closely but it appears to be contained.

– Ben Bernanke, repeatedly, in 2007

“Would I say there will never, ever be another financial crisis? You know, probably that would be going too far, but I do think we’re much safer, and I hope that it will not be in our lifetimes, and I don’t believe it will be.”

– Janet Yellen, June 27, 2017

“My good friends, for the second time in our history, a British Prime Minister has returned from Germany bringing peace with honor. I believe it is ‘peace for our time.’ Go home and get a nice quiet sleep.”

– Neville Chamberlain, September 30, 1938

Photo: Monica Muller via Flickr

The way we assess problems depends on our perspective. People can look at the same set of facts and reach quite different conclusions based simply on their circumstances. This is why it’s good at times to get away from your normal environment. Listen to a wide variety of opinions. Read books outside of your comfort zone. You’ll see things differently when you return.

I had that feeling on returning to the US from Shane’s and my honeymoon in St. Thomas. We’re now officially married, and we thank everyone for the congratulations and kind wishes. I saw a little bit of news while we were there but spent more time just relaxing with my bride and reading books.

Re-entering the news flow was a jolt, and not in a good way. Looking with fresh eyes at the economic numbers and central bankers’ statements convinced me that we will soon be in deep trouble. I now feel that it’s highly likely we will face a major financial crisis, if not later this year, then by the end of 2018 at the latest. Just a few months ago, I thought we could avoid a crisis and muddle through. Now I think we’re past that point. The key decision-makers have (1) done nothing, (2) done the wrong thing, or (3) done the right thing too late.

Having realized this, I’m adjusting my research efforts. I believe a major crisis is coming. The questions now are, how severe will it be, and how will we get through it? With the election of President Trump and a Republican Congress, your naïve analyst was hopeful that we would get significant tax reform, in addition to reform of a healthcare system that is simply devastating to so many people and small businesses. I thought maybe we’d see this administration cutting through some bureaucratic red tape quickly. With such reforms in mind I was hopeful we could avoid a recession even if a crisis developed in China or Europe.

Six months in, the Republican Congress that promised to repeal and replace Obamacare, cannot even agree on the process. For six years they discussed what to do, and you would think they might at least have a clue …

Prepare for Turbulence should be read in full at Mauldin Economics

News and Commentary

Gold on track for first weekly gain in three (Nasdaq)

Cautious Fed lifts stocks to record high, investors eye earnings boost (Reuters)

U.S. budget deficit reaches $90 billion for June (Reuters)

London house price slump continues (Ciyt AM)

JPMorgan Hires New Head of Global Government Relations (Reuters)

How silver could bounce back after a ‘bearish 2017’ (Marketwatch)

Gold – building a base for higher? Forecasts (Forex Live)

The Tripwire on the Next “Black Monday” (Daily Reckoning)

Are IPOs a good investment? (Stansberry)

Bitcoin’s acceptance among retailers is low and getting lower (Bloomberg)


German police search for stolen huge gold coin worth $3.9 million (Washington Post)

Gold Prices (LBMA AM)

14 Jul: USD 1,218.95, GBP 940.54 & EUR 1,067.92 per ounce
13 Jul: USD 1,221.40, GBP 944.51 & EUR 1,071.05 per ounce
12 Jul: USD 1,219.40, GBP 947.60 & EUR 1,064.29 per ounce
11 Jul: USD 1,211.90, GBP 938.98 & EUR 1,063.68 per ounce
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

Silver Prices (LBMA)

14 Jul: USD 15.71, GBP 12.11 & EUR 13.76 per ounce
13 Jul: USD 15.95, GBP 12.34 & EUR 14.00 per ounce
12 Jul: USD 15.83, GBP 12.31 & EUR 13.82 per ounce
11 Jul: USD 15.51, GBP 12.02 & EUR 13.61 per ounce
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


Recent Market Updates

– Video – “Gold Should Probably Be $5000” – CME Chairman Duffy
– India Gold Imports Surge To 5 Year High – 220 Tons In May Alone
– “Silver’s Plunge Is Nearing Completion”
– China, Russia Alliance Deepens Against American Overstretch
– 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

 end
Cryptos collapse today:
(courtesy zero hedge)

Cryptocurrency Carnage – Bitcoin Trades Below $2200, Ether Tumbles Below $200

The ten largest cryptocurrencies (by market cap) are all getting hammered once again today as the August 1st deadline for Bitcoin’s ‘civil war’ looms ever closer.

As Bloomberg reports, it’s time for bitcoin traders to batten down the hatches.

The notoriously volatile cryptocurrency, whose 160 percent surge this year has captivated everyone from Wall Street bankers to Chinese grandmothers, could be headed for one of its most turbulent stretches yet.

Blame the bitcoin civil war. After two years of largely behind-the-scenes bickering, rival factions of computer whizzes who play key roles in bitcoin’s upkeep are poised to adopt two competing software updates at the end of the month. That has raised the possibility that bitcoin will split in two, an unprecedented event that would send shockwaves through the $41 billion market.

While both sides have big incentives to reach a consensus, bitcoin’s lack of a central authority has made compromise difficult. Even professional traders who’ve followed the dispute’s twists and turns aren’t sure how it will all pan out. Their advice: brace for volatility and be ready to act fast once a clear outcome emerges.

“It’s a high-stakes game of chicken,” said Arthur Hayes, a former market maker at Citigroup Inc. who now runs BitMEX, a bitcoin derivatives venue in Hong Kong. “If you’re a trader, there’s a lot of uncertainty as to what happens. Once there’s a definitive signal about what will be done, the price could move very quickly.”

All the largest market cap coins are getting slammed…

Source: Cryptocompare.com

Once again it is the so-called ‘civil war’ that is weighing on the entire virtual currency space as we noted previously,behind the conflict is an ideological split about bitcoin’s rightful identity…

Some have suggested this drop may also be exaggerated by India’s decision to tax Bitcoin like gold.

it is being reported that taxes are the probable outcome from this enquiry which will render the cryptocurrency legal, but also affect its growth as a decentralized alternative currency.

It seems likely that the regulatory regime that comes in to monitor Bitcoin and its affiliated digital currencies will fall under the Securities and Exchange Board of India (SEBI).

This board will then hope to treat digital currencies much like gold; trading it on registered exchanges and thus promoting a formal tax.

This will also allow the regulators to keep tabs on the transactions in order to stop nefarious uses such as money laundering, terror funding, and drug trafficking.

Bitcoin is back below $2000 – its lowest since mid June..

And Ethereum is dumping back below $200…

Source: Cryptocompare.com

Below is an outline of the main events that could unify or divide bitcoin:

By July 21: SegWit2x software is released and supporters begin using it.

July 21 to July 31: The community monitors how many miners deploy SegWit2x:

If more than 80 percent deploy it consistently, that should signal community-wide adoption of SegWit and the avoidance of a split, at least for now.

But if a majority do not deploy, expect anxiety within the community to grow as the focus shifts to the Aug. 1 deadline.

Aug. 1: UASF is deployed by its supporters, who begin checking if bitcoin transactions are compliant with SegWit.

If a majority of miners still do not deploy SegWit2x or otherwise accept SegWit, and if UASF supporters do not back down, then two versions of bitcoin’s blockchain could come into existence: a UASF-backed one where only SegWit transactions are recognized, and another where all trades — SegWit and non-SegWit — are recognized.

If a split occurs, bitcoin will likely begin existing on both blockchains in parallel, resulting in two versions of the cryptocurrency. Expect traders to quickly re-price the value of both, likely leading to massive volatility.

“It’s moderates versus extremists,” said Atlanta-based Stephen Pair, chief executive officer of BitPay, one of the world’s largest bitcoin wallets. “It depends on how much a person values the majority of people staying on one chain at least for a little while longer, versus splitting and allowing each pursuing their own vision for scaling.”

As a reminder, investing legend Michgael Novogratz recently noted, that he’s looking to add more ether if it falls between $200 and $150… and more bitcoin if it falls to $2,000.

the mechanics behind the Shanghai Gold Exchange: objectives, productions members, vaulting and settlements
(courtesy Bullion Star)

Bullion Star’s primer on the Shanghai Gold Exchange

 Section: 

9:06a ET Thursday, July 13, 2017

Dear Friend of GATA and Gold:

Bullion Star today presents a primer on the Shanghai Gold Exchange, covering its objectives, products, connection to the Chinese currency, members, vaulting, settlement accounts, and advisers. The primer is headlined “Mechanics of the Shanghai International Gold Exchange” and it’s posted at Bullion Star here:

https://www.bullionstar.com/gold-university/the-mechanics-of-the-shangha…

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

 end
This is big news:  Russia’s Sberbank begins physical gold trading on the Shanghai Gold Exchange:
(courtesy Winning/Reuters/GATA)

Russia’s Sberbank begins physical gold trading on Shanghai exchange

 Section: 

By Alexander Winning
Reuters
Thursday, July 13, 2017

MOSCOW — Russia’s biggest bank, Sberbank, said today that its Swiss subsidiary had begun trading physical gold on the Shanghai Gold Exchange.

Sberbank was granted international membership of the Shanghai exchange in September last year and in July completed a pilot transaction with 200 kilograms of gold kilobars sold to local financial institutions, the bank said.

Sberbank plans to expand its presence on the Chinese precious metals market and anticipates total delivery of 5 to 6 tonnes of gold to China in the remaining months of 2017. …

… For the remainder of the report:

http://www.reuters.com/article/sberbank-gold-china-idUSL8N1K41VS

end
A very important commentary tonight from Alasdair Macleod.  He comments that it is now in the interest of the Shanghai Cooperation Organization to break completely from the USA dollar and form a sound money system.  He comments on the difficulty they will have to get this going but it is necessary..
(courtesy Alasdair Macleod)

Alasdair Macleod: The logic of modern gold standard

 Section: 

By Alasdair Macleod
GoldMoney.com, St. Helier, Jersey, Channel Islands
Thursday, July 13, 2017

In last week’s essay I analysed the current geopolitical situation and concluded that it was now in the interest of the Shanghai Cooperation Organisation to break from the US dollar completely, by establishing a new monetary and banking system. By linking the yuan and rouble to gold, the SCO’s principal currencies would be insulated from manipulation by means of dollar currency rates, and their use as a weapon to undermine the Sino-Russian partnership. This article addresses some of the practical difficulties of establishing such a sound monetary system.

A return to sound money will require a radical reform of financial markets, as well as the laws and regulations under which banks and investment houses work. The weaknesses of the current fiat-money system must be identified and understood by reforming governments. It also amounts to no less than discarding the entire evolution of mainstream economic thinking that has evolved in the welfare-states since the 1930s. …

… For the remainder of the analysis:

https://www.goldmoney.com/research/goldmoney-insights/the-logic-of-a-mod…

 end

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

 
 

1 Chinese yuan vs USA dollar/yuan  STRONGER 6.7825(REVALUATION NORTHBOUND   /OFFSHORE YUAN MOVES EQUAL TO ONSHORE AT   6.7825/ Shanghai bourse CLOSED UP 4.25 POINTS OR 0.13%  / HANG SANG CLOSED UP 43.06 POINTS OR 0.16% 

2. Nikkei closed UP 19.05 POINTS OR 0.09%   /USA: YEN FALLS TO 113.18

3. Europe stocks OPENED GREEN EXCEPT LONDON      ( /USA dollar index FALLS TO  95.67/Euro UP to 1.1411

3b Japan 10 year bond yield: FALLS  TO  +.083%/ GOVERNMENT INTERVENTION    !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 114.34/ 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::  46.47 and Brent: 48.85

3f Gold UP/Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO  +.580%/Italian 10 yr bond yield UP  to 2.265%    

3j Greek 10 year bond yield FALLS to  : 5.33???  

3k Gold at $1222.50  silver at:15.79 (8:15 am est)   SILVER BELOW  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 21/100 in  roubles/dollar) 59.58-

3m oil into the 46 dollar handle for WTI and 48 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 REVALUATION NORTHBOUND 

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 113.18 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  0.9692 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1059 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

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

3r the 10 Year German bund now POSITIVE territory with the 10 year RISING to  +0.580%

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 2.355% early this morning. Thirty year rate  at 2.909% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

Global Shares Hit Another Record High In Lethargic Session Ahead Of US Data Deluge

It was another painfully low-volume overnight session, which however did not prevent global stocks from hitting another record highs, capping their best week in over two months as the dollar stayed close to nine-month lows following Yellen’s dovish retreat in which she noted caution on persistently low inflation (hence today’s CPI print will be especially important) as odds of future rate hikes in 2017 and 2018 dropped.

“(The Fed comments) add to our conviction that no further Fed hike should be expected for the rest of the year, which should prove reassuring for markets concerned about excessive tightening risk globally,” Mizuho’s head of euro rates strategy Peter Chatwell said in London.

European equity markets trade broadly flat, FTSE 100 underperforms with healthcare sector lagging as uncertainty on AstraZeneca (-1.6%) CEO grows. The pan-European STOXX 600 index inched up 0.1%, adding to earlier gains on stock markets in Asia that took MSCI’s world stock index to an all-time high. European shares were poised for their best week since late April as investors piled back into the Stoxx 600, though moves on indexes on Friday were largely muted for now.

Earlier, Japan’s Nikkei added 0.2%, poised for a weekly rise of just over 1 percent. MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 0.3 percent to its highest level in two years.

S&P 500 index futures were little changed after financial shares led gains yesterday with three large banks slated to deliver earnings Friday, although all eyes will be on today’s CPI print for validation of Yellen’s recent dovishness.

Leading into today’s US CPI print yesterday’s PPI report in the US was a bit of a mixed bag. Headline PPI rose +0.1% mom in June which was a tenth ahead of expectations however base effects have seen the annual rate slip to +2.0% yoy from +2.4%. The more significant core (ex food and energy) reading rose +0.1% mom which was a slight miss (+0.2% expected). That puts the annual rate now at +1.9% yoy and down from +2.1% in May (which was the highest since May 2014). Of note in the report was healthcare costs which rose a fairly modest +0.1% mom. This should point to a similar rise in the component for the PCE  deflator.

DB economists expect headline and core CPI to have risen +0.1% mom and +0.2% mom respectively which is also in line with the market consensus. Should their forecast be close to the mark then the year over year growth rate of core CPI would rise a tenth to +1.8% which would be mildly positive for dovish-leaning policymakers fretting about recent soft inflation. That would also be one-tenth ahead of the consensus. However it is worth noting that core CPI has missed expectations for the last three months and the 3m average surprise has dropped to the lowest (-0.17%) since June 2005 (when it was the same level). So it’ll be interesting to see if today bucks the trend.

Bonds posted a modest rebound while US stock futures were marginally in the red ahead of a US data deluge which includes the start of earnings season when JPM, Wells and PNC post Q2 results, coupled with data deluge from the US including inflation data, retail sales, industrial production and UMich consumer confidence.

Stocks weren’t the only thing to benefit from Yellen’s dovishness: treasuries headed for their first weekly gain in three while Bunds rose for the first day in four. Likewise in Europe, bonds rebounded after yields bounced in the past few weeks in the euro zone on rising expectations that the European Central Bank is set to wind down its asset purchase program.  The German 10-year yield fell some 3 basis points when European trading started on Friday to 0.50%, moving away from an 18-month high hit earlier this week of 0.583 percent.

The Bloomberg Dollar Spot Index fell for the fifth day, its longest streak of losses in two months and set for another weekly decline, near the lowest level since September 2016. The dovish signals from the Fed also pressured the broader DXY index on Thursday and it stayed close to that trough, inching down 0.1 percent on the day.  The yen was on the back foot against high-yielding currencies such as the Australian dollar as the VIX index drifted lower and provided a boost to carry trades. There was some excitement in FX land where the AUD/USD pushed to a new YTD high with similar price action observed in EUR/CHF which also hits YTD high as CHF weakened across the board. The euro was up 0.1 percent at $1.1415 and was set to end the week flat.

“The latest comments from Yellen and others suggest that interest rates will rise very gently, and that is supportive for high-yielding currencies for now,” said Viraj Patel, an FX strategist at ING Bank in London.

A quick recap of overnight trading sessions courtesy of Bloomberg:

  • ASIA: BOJ may be allowing more room for shorter-maturity bond yields to rise as long as 10-year stays in preferred range. Australian dollar bulls find support from widening yield gap between nation’s bonds and USTs. AUD/USD extends weekly gain to over 2%, biggest in four months
  • EUROPE: Implied probability of EUR/USD hitting fresh high at 1.15 by July 20 has almost halved since Fed chair Janet Yellen’s Congress testimony. Strong open for core euro-area bonds, with wave of short-covering demand pushing bunds higher. German 10y outperforms USTs, though volumes in futures are poor.

In commodities, Brent, WTI edged higher for the fifth day as Shell declared force majeure on Nigeria’s Bonny Light crude exports, as the market looks ahead to rig count data later on Friday. “We have the rig count later today, so it will be interesting to see if that drop two weeks ago was a one-off, or if we are seeing signs of stabilization,” says Jens Pedersen, senior analyst at Danske Bank, adding that the market is stabilizing after “a bumpy week” in which prices fluctuated on OPEC, EIA and IEA reports. “We have some interesting U.S. key figures due this afternoon which could move the dollar,” including inflation data, Pedersen said. Gold was steady at $1,217.32 an ounce, heading for a half-percent gain for the week.

Bulletin Headline Summary from RanSquawk

  • Asian equities traded with little in the way of firm direction as markets await a slew of tier 1 US data releases later in the session
  • FX markets also traded in a tentative manner with outflows from safe-haven JPY & CHF, as AUD/USD breaks 2017 highs
  • Looking ahead, highlights include US CPI, retail sales, industrial output, Uni. Of Michigan and Fed’s Kaplan

Market Snapshot

  • S&P 500 futures down 0.1% to 2,443.00
  • STOXX Europe 600 up 0.09% to 386.47
  • MXAP up 0.4% to 156.80
  • MXAPJ up 0.3% to 516.95
  • Nikkei up 0.09% to 20,118.86
  • Topix up 0.4% to 1,625.48
  • Hang Seng Index up 0.2% to 26,389.23
  • Shanghai Composite up 0.1% to 3,222.42
  • Sensex down 0.2% to 31,988.18
  • Australia S&P/ASX 200 up 0.5% to 5,765.12
  • Kospi up 0.2% to 2,414.63
  • German 10Y yield fell 2.4 bps to 0.579%
  • Euro up 0.1% to 1.1411 per US$
  • Brent Futures down 0.1% to $48.35/bbl
  • Italian 10Y yield rose 7.1 bps to 2.035%
  • Spanish 10Y yield fell 5.0 bps to 1.655%
  • Brent Futures down 0.1% to $48.35/bbl
  • Gold spot up 0.05% to $1,218.21
  • U.S. Dollar Index unchanged at 95.72

Top Overnight News

  • ECB is wary of putting an end date on its QE program; any changes remain data dependent with a special focus on wages according to people familiar: Reuters
  • Trump vows to curb steel dumping; considers import tariffs and quotas
  • U.K. accepts for first time the necessity of a financial settlement for leaving the EU
  • Telegraph: conservative MPs are in talks with Labour about signing-up the U.K. to free movement of people after Brexit
  • Republican Health Bill Draft May Be Destined for Another Rewrite
  • Asia’s Biggest Buyout Sees GIC-Backed Firm Get $11.6 Billion
  • Macron Woos Trump With Parisian Splendor in European Lesson
  • Trump May Have to Use Obama’s Secret Debt Plan, Worrying Markets
  • Europe Car-Sales Growth Slows on Brexit Effect Amid Market Peak
  • PPG Sticks With European Brand Overhaul After Dulux Dog Bolts
  • As ‘Game of Thrones’ Comes Roaring Back, HBO Retrenches Online
  • BP Spill-Loss Investors Can Seek Damages on Shares Not Sold
  • Big Oil Just Woke Up to the Threat of Rising Electric Car Demand
  • China Small Caps Tumble in Worst Week in a Year on Earnings Woes
  • EdgePoint Undecided on How to Vote on Huntsman-Clariant Deal
  • Cogeco Communications Third Quarter EPS Beats Highest Estimate
  • Blavatnik’s Netflix of Sports Is Said to Target Canada Expansion
  • Biocon Says FDA Oncologic DAC Favors Nod for Proposed Biosimilar
  • Richemont Head of Watchmaking Leaves Four Months Into Job
  • Senate Bill Would Expand Program to Cover Self- Driving Cars

Asia equity markets traded mixed amid a lack of drivers and relatively quiet news flow, although the region’s major bourses mostly kept afloat and adhered to the momentum from US where financials outperformed ahead of earnings releases from major banks. ASX 200 (+0.49%) and Nikkei 225 (+0.09%) were both in the green as gains in energy led the advances in Australia, while upside in Nikkei 225 was capped by weakness in index heavyweight Fast Retailing after the Co. missed on Q3 results. Hang Seng (+0.16%) and Shanghai Comp. (+0.13%) were mixed despite the PBoC conducting open market operations via a CNY 100bIn injection, as this still amounted to a weekly net drain. Japanese yields were higher across the curve following a similar unwinding of the dovish rally in USTs, while a somewhat positive risk tone in Japan also contributed to the lack of demand for JGBs. Fitch affirmed China sovereign rating at A+; outlook stable. PBoC injected CNY 100bIn through 7-day reverse repos, for a net weekly drain of CNY 70bIn vs. CNY 250b1n drain last week. PBoC set the CNY midpoint at 6.7774 vs. Prey. 6.7802.

  • Top Asia News
  • Anbang’s Fall Ends Wild Chapter in China Insurance Industry
  • Singapore’s Economy Rebounds in Second Quarter to Expand 0.4%
  • India Wholesale Prices Rise 0.9% in June; Est. 1.39%
  • Hangzhou Hikvision Cut by UBS as Positive News Seen Priced In
  • Vanke May Become Major Shareholder of GLP, Co. Says
  • Hong Kong Court Ousts Four Lawmakers, in Victory for China
  • Global Logistic Properties Soars After Chinese Consortium Deal
  • Carmakers, Banks, Machinery Exporters Lift Topix as Yen Retreats
  • The Hottest Commodity in China May Start to Cool Before Long

European bourses trade mixed, as position taking has slowed following the risk appetite seen through yesterday’s trade. Sectors trade mixed, with no real out or under performance. The healthcare sector did open on the back foot with pre-market reports stating that AstraZeneca may be close to issuing a profit warning, however, recovery was seen in the sector, as buying was seen in Shire, now up 1.40%. Yields rose throughout yesterday’s US session amid the risk tone, filtering into European futures as the lOy bund trades once again firmly above the 0.50bps level. European paper did see a bid into the open, as Gilts gapped up. Bunds also extended on the opening bid, with OATs continuing to out-perform in the week.

Top European News

  • A $95 Billion Danish Fund Bets Robots Can Defy Market Correction
  • Shell Is Said to Put 17% Stake in Comgas Up for Sale: Estado
  • SEB Beats Estimates as Commission and Lending Income Pick Up
  • Santander Offers Loyalty Bond Plan to Banco Popular Clients
  • Skanska Says Project Writedowns in U.S., U.K. to Weigh on Profit

In currencies, dollar traders awaited the slew of US tier 1 data expected at 8:30 ET, with risk could very much be to the USD upside, as the greenback has been hit following a slightly unexpected pessimistic tone toward the US economy from Chair Yellen. AUD/USD did see some bullish pressure as Europeans got to their desks, we reside around the top of 2016/2017 highs, with a break through 0.7835 could indicate a firm change in long-term AUD/USD direction. The franc has also struggled amid the move from risk assets, losing ground against EUR and USD this EU morning, with a USD/CHF reversal possible, as markets attempt to break the week highs around 0.9700. EUR/CHF has been a big talking point of late, with the EUR strength clear in the pair, the pair did break through 1.10 this week, with next key resistance at 1.12 (Post floor highs).

In commodities, commodity markets have been subdued throughout Asian and European trade with oil holding onto the gains seen yesterday amid nothing fundamental, with USD 45.00/bbl; a clear support level in WTI. The precious metals sector did give back some of its week gains throughout Asian trade, yet Gold did see a bounce with bids clear as we approached USD 1215.00. The yellow gold remains up around 0.40% for the week, gaining on Fed Chair Yellen’s less than hawkish testimony tone, as silver underperforms.

Looking at the day ahead, all eyes turn to the bumper session scheduled for the US. The June CPI report will likely be front and centre, while at the same time we’ll also receive the important June retail sales report where the consensus is for a small +0.1% mom rise in headline sales but +0.4% mom rise in the core ex auto and gas print. Following that we’ll get the June industrial (+0.3% mom expected) and manufacturing (+0.2% mom expected) production prints before we end the day with the preliminary July University of Michigan consumer sentiment print (expected to hold steady) and May business inventories. Away from the data we are due to hear from the Fed’s Kaplan again (8.30am ET) while the Chicago Fed’s Evans’ speech – which was due to be held yesterday but got cancelled – will be posted later today. As noted earlier also, keep an eye on earnings from JP Morgan, Wells Fargo and Citi, as well as any headlines which may emerge from Trump’s meeting with Macron.

US Event Calendar

  • 8:30am: US CPI MoM, est. 0.1%, prior -0.1%; CPI Ex Food and Energy MoM, est. 0.2%, prior 0.1%
    • CPI YoY, est. 1.7%, prior 1.9%; CPI Ex Food and Energy YoY, est. 1.7%, prior 1.7%
  • 8:30am: Real Avg Weekly Earnings YoY, prior 0.58%; Real Avg Hourly Earning YoY, prior 0.6%
  • 8:30am: Retail Sales Advance MoM, est. 0.1%, prior -0.3%; Ex Auto MoM, est. 0.2%, prior -0.3%; Ex Auto and Gas, est. 0.4%, prior 0.0%
  • 9:15am: Industrial Production MoM, est. 0.3%, prior 0.0%; Capacity Utilization, est. 76.8%, prior 76.6%l; Manufacturing (SIC) Production, est. 0.2%, prior -0.4%
  • 9:30am: Fed’s Kaplan Speaks in Mexico City
    10am: U. of Mich. Sentiment, est. 95, prior 95.1; Mich. Current Conditions, est. 112, prior 112.5; Mich. Expectations, est. 84.4, prior 83.9
  • 10am: Business Inventories, est. 0.3%, prior -0.2%
  • 1pm: Chicago Fed to Post Evan’s Speech on Website

DB’s Jim Reid concludes the overnight wrap

Maybe in a few months we’ll also fondly remember when central bankers weren’t talking much. That’s all changed of late and it’s certainly been a see-sawing three weeks if you’re a central bank watcher with lots of unpredictable headlines and comments.Yesterday had even more ups and downs as the morning session saw the ECB’s Rimsevics suggest QE will continue for a ‘few years’, followed by news that Draghi will speak at the Jackson Hole Symposium on August 24-26th in what will be his first visit for 3 years. So cancel your holidays or in my case ask my wife to hold the twins in for a few more days given that’s pretty much when she’ll be full term. To be fair Rimsevic’s comments were vague but fitted the morning mood of a bond rally but the Draghi news then stole the attention with discussion that the last time he spoke at the event he prepared the ground for QE. So the expectation yesterday was that his appearance will be preparing the ground for a further taper announcement (for January 2018) just two weeks later at their September 7th meeting.

As we approach the summer holidays that speech is likely to be a big event for markets. As noted above the prospect of it contributed to a choppy day for rates yesterday and while yields generally closed 2bps (in  the case of Bunds and OATs) to 8bps (in the case of peripherals) higher, the intraday ranges were much more impressive. 10y Bunds saw a range 6.1bps, OATs 7.4bps, BTPs 10.6bps, Spanish govies 10.4bps and Portuguese govies 11.3bps. Gilts (7.4bps) and Treasuries (6.1bps) also joined in while the Euro – which eventually ended a shade weaker – traded in a 0.74% range. It’s worth noting that yields were also sharply higher across the Swedish curve (2y and 10y +4.7bps) following an unexpected jump in underlying CPI in June (+0.1% mom vs. -0.1% expected) which briefly put the spotlight back on the Riksbank. It’s worth adding that there were no final surprises in the last revisions to June CPI for either Germany (+0.2% mom and +1.5% yoy) or France (0.0% mom and +0.8% yoy).

Moves weren’t quite so emphatic for equities but nonetheless it was another positive day for risk. Yellen’s testimony in front of the Senate was largely a repeat of her Wednesday speech although at the margin she was perhaps slightly less dovish on inflation, calling risks to prices being “two-sided”. The S&P 500 ended last night up +0.19% while the Dow finished +0.10% and in the process notched up a new record high. It’s worth noting that the Fed’s Brainard became the latest Fed official to say that asset valuations “look a bit stretched” in comments yesterday however it mostly appeared to be shrugged off. Meanwhile closer to home the Stoxx 600 finished +0.32% and it’s worth noting that the twoday gain for the index of +1.84% is the best since the 24th and 25th of April.

This morning in Asia bourses are mostly finishing the week on the front foot without there being too much movement or volumes. Chinese stocks are slightly lower but the rest of the region is slightly higher as we go to print. Despite not much going on, Asian stocks look set to complete their best week since March.

Moving on. After a quiet start to the week which only really got going post Yellen on Wednesday, we’re ending today in the US with some very significant data in the form of the June CPI report. Our US economists expected headline and core CPI to have risen +0.1% mom and +0.2% mom respectively which is also in  line with the market consensus. Should their forecast be close to the mark then the year over year growth rate of core CPI would rise a tenth to +1.8% which would be mildly positive for dovish-leaning policymakers fretting about recent soft inflation. That would also be one-tenth ahead of the consensus. However it is worth noting that core CPI has missed expectations for the last three months and the 3m average surprise has dropped to the lowest (-0.17%) since June 2005 (when it was the same level). So it’ll be interesting to see if today bucks the trend.

While that data is likely to be the number one focus for markets, it’s also pointing out that today will also see US earnings start to ramp up with JP Morgan, Citi and Wells Fargo all scheduled to report either at or prior to the open. So that will be worth a watch. President Trump is also due to meet his French counterpart Emmanuel Macron today while attending Bastille Day celebrations. The meeting is expected to be more than just ceremonial duties so worth also keeping an eye on that to see if interesting headlines emerge. All eyes also on the handshake!!

Leading into today’s US CPI print then, yesterday’s PPI report in the US was a bit of a mixed bag. Headline PPI rose +0.1% mom in June which was a tenth ahead of expectations however base effects have seen the annual rate slip to +2.0% yoy from +2.4%. The more significant core (ex food and energy) reading rose +0.1% mom which was a slight miss (+0.2% expected). That puts the annual rate now at +1.9% yoy and down from +2.1% in May (which was the highest since May 2014). Of note in the report was healthcare costs which rose a fairly modest +0.1% mom. This should point to a similar rise in the component for the PCE  deflator. The rest of the data in the US yesterday was a relative sideshow. Initial jobless claims fell to 247k from 250k while the monthly budget statement for June revealed a wider than expected deficit of $90.2bn.

Before we wrap up, a quick mention that Bloomberg is reporting that 2 Republican senators have rejected the Republican’s latest version of the health care bill released yesterday. A few also remain undecided still and are waiting to see the CBO’s analysis next week. As a reminder the Republicans can only afford to lose 2 votes and no more based on their narrow majority.

Looking at the day ahead, this morning in Europe it is fairly quiet with only the Euro area trade balance reading for May due. All eyes then turn to the bumper session scheduled for the US this afternoon. The aforementioned June CPI report will likely be front and centre, while at the same time we’ll also receive the important June retail sales report where the consensus is for a small +0.1% mom rise in headline sales but +0.4% mom rise in the core ex auto and gas print. Following that we’ll get the June industrial (+0.3% mom expected) and manufacturing (+0.2% mom expected) production prints before we end the day with the preliminary July University of Michigan consumer sentiment print (expected to hold steady) and May business inventories. Away from the data we are due to hear from the Fed’s Kaplan again (2.30pm BST) while the Chicago Fed’s Evans’ speech – which was due to be held yesterday but got cancelled – will be posted later this evening. As noted earlier also, keep an eye on earnings from JP Morgan, Wells Fargo and Citi, as well as any headlines which may emerge from Trump’s meeting with Macron.

Finally, a quick mention that first thing Monday morning we get the latest data dump in China including Q2 GDP (6.8% expected), industrial production and retail sales. So we’ll have a full recap of that in Monday’s EMR. Also as Monday’s EMR goes to print the world will have just seen the premier to the new series of Game of Thrones. How very exciting!!!

 END

3. ASIAN AFFAIRS

i)Late THURSDAY night/FRIDAY morning: Shanghai closed UP 4.25 POINTS OR 0.13%   / /Hang Sang CLOSED UP 43.06 POINTS OR 0.16% The Nikkei closed UP 19.05 POINTS OR 0.09%/Australia’s all ordinaires CLOSED UP 0.51%/Chinese yuan (ONSHORE) closed UP at 6.7825/Oil UP to 46.47 dollars per barrel for WTI and 48.85 for Brent. Stocks in Europe OPENED ALL IN THE GREEN EXCEPT LONDON,, Offshore yuan trades  6.7825 yuan to the dollar vs 6.7825 for onshore yuan. NOW THE OFFSHORE IS EQUAL  TO THE ONSHORE YUAN/ ONSHORE YUAN  STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE WEAKER DOLLAR. CHINA IS HAPPY TODAY 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

NORTH KOREA

China states that supposedly trade with North Korea grew by only 10.5% in the first 6 months of 2017….the USA wants China to cut off all trade with North Korea.

(courtesy zero hedge)

b) REPORT ON JAPAN

end

c) REPORT ON CHINA

NHA is one of China’s biggest dealmaker and even though it is private, it holds huge quantities of public companies.  It has used its shares and the shares of its acquisitions as to fund the purchases.  Everything is fine until the price of those acquisitions drop and the face margin calls from Hell..this could present a systemic risk along side Anbang which I brought to your attention last month

(courtesy zerohedge)

4. EUROPEAN AFFAIRS

end

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

TURKEY/RUSSIA/NATO

Not good:  Turkey turns its back on the West (NATO) towards Russia as it buys from its new found friend an advanced missile system for $2.5 billion.

(courtesy zero hedge)

Turkey “Turns Away” From NATO, Buys Russian Advanced Missile System For $2.5 Billion

In a move that Bloomberg has defined as “signalling a turn away from the NATO military alliance that has anchored Turkey to the West for more than six decades” Turkey agreed to pay $2.5 billion to acquire Russia’s most advanced missile defense system, a senior Turkish official told Bloomberg on Thursday. The proposed deal which was first reported here back in November 2016, has been finalized and the preliminary agreement sees Turkey receiving two S-400 missile batteries from Russia within the next year, then producing another two inside Turkey.

For Ankara, which has had a dramatic falling out with its NATO partners over the past year, the missile deal with Russia “is a clear sign that Turkey is disappointed in the U.S. and Europe,” said Konstantin Makienko, an analyst at the Center for Analysis of Strategies and Technologies, a Moscow think-tank. “But until the advance is paid and the assembly begins, we can’t be sure of anything.” Furthermore, the Russian system would not be compatible with other NATO defense systems, but just as importantly wouldn’t be subject to constraints imposed by the alliance, which prevent Turkey from deploying such systems on the Armenian border, Aegean coast or Greek border. The Russian deal would allow Turkey to deploy the missile defense systems anywhere in the country, a move which will prompt a cry of outrage from Turkey’s neighbors, especially Greece.

So what does Turkey get in exchange for $2.5 billion? First and foremost, Russia’s most advanced technology or know-how, a Turkish official quoted by Bloomberg said. Turkey wants to be able to produce its own advanced defense systems, and the Russian agreement to allow two of the S-400 batteries to be produced in Turkey would serve that aim. For Russia there is little to lose from the deal as the US most likely already has the full details of the system, however they are obviously kept secret from US NATO allies, especially someone as volatile as Turkey.

“There are a lot of different levels of technology transfer,” and any offer to Turkey would probably be limited in terms of sophistication, said Makienko, the Moscow-based analyst. For Russia, the potential risk from the transaction contained: “For Turkey to be able to copy the S-400 system, it would have to spend billions to create a whole new industry.”

According to Bloomberg, the S-400 is designed to detect, track and then destroy aircraft, drones or missiles. It’s Russia’s most advanced integrated air defense system, and can hit targets as far as 250 miles away. Russia has also agreed to sell them to China and India, both nations who are masters at reverse engineering.

As further reported, Turkey and Russia are currently sorting out technical details and it could take about one year to finalize the project, although one battery may be available earlier if Russia decides to divert it from another country. The missiles are not ready to sell off-the-shelf and Russia will have to produce the batteries before delivering them.

Most concerning for NATO, however is that the systems delivered to Turkey would not have a friend-or-foe identification system, which means they could be deployed against any threat without restriction.

Meanwhile, news of the deal are likely to strain relations between Turkey and NATO to the point of breaking, if not beyond. Disagreements between Turkey, which has the second-largest army by personnel numbers in NATO, and the U.S., the bloc’s biggest military, have also impacted business. No U.S. companies bid for a Turkish attack helicopter contract in 2006 after Turkey insisted on full access to specific software codes, which the U.S. refused to share, considering it a security risk. Turkey partnered with Italy instead in a $3 billion project to co-produce 50 attack helicopters for its army.

And now, very symbolically, it has picked the sworn enemy of NATO: Russia.

There is still a chance, however slim, that the deal will fall apart:

Turkey has reached the point of an agreement on a missile defense system before, only to scupper the deal later amid protests and condemnation from NATO. Under pressure from the U.S., Turkey gave up an earlier plan to buy a similar missile-defense system from a state-run Chinese company, which had been sanctioned by the U.S. for alleged missile sales to Iran.

That said, such an outcome is unlikely as it will be seen as caving to Erdogan’s hard-knuckled negotiating style, something a “resurgent” Europe under the new ownership of Merkel and Macron will not allow.

To add salt to injury, Turkey bars German lawmakers from visiting its soldiers at NATO’s Incirlik airbase in Turkey
(courtesy zero hedge)

6 .GLOBAL ISSUES

7. OIL ISSUES

Saudi Arabia may have a huge problem with corrosion in one of its major oil fields.  If Saudi Arabia has to stop production to remedy the situation, this would remove a major part of the glut

(courtesy Cyril Widdershoven/OilPrice.com)

The Technical Failure That Could Clear The Oil Glut In A Matter Of Weeks

Authored by Cyril Widdershoven via OilPrice.com,

OPEC exports have come under pressure this week from technical threats to oil fields, with Saudi Arabia’s Manifa problems grabbing the headlines.

Saudi Aramco CEO Amin Nasser, while addressing the World Petroleum Congress in Istanbul, stated that the outlook for oil supplies is “increasingly worrying”, due to a loss of $1 trillion ($1000 billion) in investments last year. The skepticism shown by a majority of financial analysts and oil commentators about the real threat to global oil (and gas) production volumes was countered by the news that the production at Saudi Aramco’s main offshore oil field, Manifa, has been hit by technical problems. News sources reported that the output from Saudi Aramco’s massive Manifa oilfield has been hit by a technical problem.

The impact of this possible technical mishap is not to be underestimated. Aramco’s Manifa is one of its biggest oilfields, with a targeted production capacity of around 900,000 bpd, to be brought onstream in two phases. At present, the main issue being reported on is that there has been corrosion of the water injection system, which is used to keep pressure in the reservoir. No facts have emerged about the total impact on the Manifa production capacity, but unnamed sources are already quoting ‘millions of dollars’ of losses. The current reports are not really worrying, as corrosion control in a water injection system is only a technical challenge. Maintenance of the field is expected, resulting in a shut-down of production – something that has been confirmed by Sadad Al Husseini, former VP Aramco. If the all production needs to be shut-down, Saudi Aramco’s overall production capacity will be cut by 900,000bpd.

The current corrosion problem at Manifa is not new when looking at the overall situation of some giant fields in the Kingdom. Aramco has been fighting an uphill battle for years to counter existing corrosion threats to the Ghawar, Manifa and other fields. The problem is immense, as main production wells could be completely blocked if no solutions are found for corrosion and scaling issues. Until now, no real solutions have been found, except the traditional mitigation in place.

At the same time, Saudi Arabia’s export volumes have been hit by high local summer demand for crude oil and products. The Kingdom already stated that it will cut overall crude oil shipments by around 600,000 bpd in August to balance the rise in domestic consumption during the summer. Increased local demand is not only a growing problem for Saudi Arabia, but for most Persian Gulf producers. Saudi August crude exports could fall to around 6.6 million bpd. A majority of cuts will be made to export volumes to the U.S. and Asia. Saudi sources expect that Saudi crude volumes to the U.S. will be below 800,000 bpd, while exports to Asia will be around 3.5 million bpd (decrease of 200,000 bpd). Europe’s imports will be only down by 70,000 bpd, reaching a level of 520,000 bpd.

When looking at the Saudi situation, the need for new investments and increased technology development is clear. Saudi Aramco’s investment of $300 billion in the next 10 years will, in large part, be focusing on the new technology needed to keep existing projects running while opening up new volumes in the future. Its drive to increase overall gas production will also be based on a two-fold approach. One is to counter growing domestic demand for natural gas as a power generator. At the same time, with most focus on crude oil production, gas will need to be reinjected into the field to keep production at necessary levels. Both targets will only be possible to reach if the growing technical challenges in gas production in the Kingdom, due to sour gas issues, can be countered effectively.

The Saudi situation is not different from its neighbors. The Kingdom has the same challenges as its current main political adversary, Qatar. The latter’s national oil company, Qatar Petroleum, has only been able to maintain crude oil production on its main offshore oilfield Al Shaheen through heavy investments from its former joint-venture partner Maersk Oil. After the Danish concession, the operations are set to be led by French oil major Total. The Al Shaheen oil field is located in Qatari waters, 80 kilometers north of Ras Laffan, with facilities consisting of 33 platforms and close to 400 wells. Currently producing about 300,000 barrels of oil per day, Al Shaheen is Qatar’s largest offshore oil field and one of the largest offshore oil fields in the world. The production has been one of the main revenue generators for the Qatari government. To keep production up, QP and Total have already announced the need for a $3.5 billion investment plan for the exploration of the Al Shaheen field. This was reported during the launch of the North Oil Company (NOC), which was established a year ago as a partnership between a wholly owned affiliate of QP (70 percent) and a wholly owned affiliate of Total (30 percent).

The challenges for this field are still immense. Already in 2013 QP asked all foreign operators to come up with redevelopment plans to increase recovery rates and, if possible, production at its mature fields. Between 2012 and 2016, Maersk had been working on field development, slated to have cost $1.5 billion, to sustain output at current levels. Sources indicated at that time that excessive associated gas at Al-Shaheen could prevent it from increasing crude output. Other geological challenges at the field include thin and stretched reservoirs. More knowledge of these thin reservoirs and extended wells is still needed. The fact that the French oil major Total has now taken over is not a surprise, with its technical capabilities and financial strength needed to counter the current problems. Qatar’s remaining fields are experiencing similar threats.

Amin Nasser’s aim is to go beyond global oil markets. His assessments are based on regional (OPEC) developments, as production of oil and gas in the so-called cheap oil regions is also under threat. These technical challenges will need an increased amount of investments, which will be hard to come by in today’s market. If Saudi Aramco or QP are already experiencing production threats, the situation in other production regions, such as Nigeria, Libya or Mexico, could be even more dire. With increased demand for crude oil and petroleum products still shown in all international assessments, the market will need to react. A production shutdown due to technical issues is not as easy to counter as a weather or geopolitical issue. More money is needed, otherwise production fields will be closed down and international clients, including utilities or chemical companies, will bear the brunt of it. A shutdown of one or two giant fields will take the market from an oil glut to an oil shortage within weeks.

Assessments that a shutdown in the Middle East or a major OPEC producer can be covered by new production elsewhere is not entirely unrealistic. But the current production increases in Nigeria, Iraq and Libya, will most probably be temporary. Growing political instability in Libya, as the LNA is targeting control of the country, or the re-emergence of the Niger Delta insurgency, will put a cap on increases.

end

Bearish again for oil as rig count rises to April 2015 level

(courtesy zerohedge)

Rig Count Rises To April 2015 Highs As Analysts Warn “Oil Market Rebalancing Hasn’t Even Started Yet”

After falling for the first time this year two weeks ago, Baker Hughes reports US oil rig count rose once again (up 2 to 765) for the 24th week in the last 25, to the highest since April 2015.

“The so-called re-balancing is likely to happen later than earlier,”Michael Poulsen, an analyst at Global Risk Management Ltd, said on Friday.

It does appear we have reached an inflection point in the rig count numbers (if the historical relationship with crude holds)…

While EIA cut its 2018 production outlook, this week saw the effect of field maintenance in Alaska and Tropical Storm Cindy in the Gulf of Mexico fall away and production surged once again this week – to new cycle highs…

And the lagged rig count trend suggests crude production has further to rise yet…

Crude prices have been active today with macro headlines hurting and machines helping ramp any dip… the rig count create iunstant selling which was instantly bid back upo,,,

And while US crude production just jumped to cycle highs (and shale production we believe reached a record high), OilPrice.com’s Nick Cunningham notes the oil market rebalancing hasn’t even started yet

Global oil production surged in June “as producers opened the taps,” according to a new report from the International Energy Agency (IEA). OPEC was a major culprit, with Libya and Nigeria doing their best to scuttle the production cuts made by other members.

But it wasn’t just those two countries, who are exempted from the agreed upon reductions. OPEC’s de facto leader, Saudi Arabia, also boosted output by an estimated 120,000 bpd in June, from a month earlier. That put Saudi production above 10 million barrels per day (mb/d) for the first time in 2017. Those gains, combined with the 80,000 bpd increase from Libya and a 60,000 bpd jump from Nigeria, plus some smaller contributions from Equatorial Guinea, put OPEC’s June production 340,000 bpd higher than in May. It also took the cartel’s compliance rate down to just 78 percent from 95 percent in May, the worst monthly figure for the group since its deal came into force at the start of the year.

Even worse, the production figures from Libya and Nigeria are much higher at this point than their June average. Over the past few months, the two countries have added 700,000 bpd in new supply, offsetting nearly half of the 1.8 mb/d in the combined OPEC/non-OPEC cuts. And more barrels could be on the way. Libya’s output is now above 1 mb/d, a four-year high, and Nigeria could see production “soar towards full capacity of roughly 1.8 mb/d during August,” the IEA says, up from 1.59 mb/d in June.

The IEA noted that the production cut deal is averaged over the entire compliance period through March 2018, so one month’s worth of data might not mean much. But it does not bode well. If the higher level of production continues, or if the compliance rate slips further, it would throw most projections about rebalancing out the window. “It will be a very difficult six months for the oil industry,” Fatih Birol, the IEA’s executive director, said at a conference in Istanbul. “It will be riding on the storm.”

Still, OPEC woes also mean that U.S. shale is suffering too. Prices collapsed in June, and there are many more causes for concern about the health of the shale industry than previously. The IEA said that “[f]inancial data suggests that while output might be gushing, profits are not,” with even executives from the industry saying that oil needs to be north of $50 per barrel for shale growth to be sustainable. U.S. shale might still grow in the near-term, but “the recent exuberance is being reined in,” the Paris-based energy agency concluded.

For now, though, non-OPEC supply is depressing the oil market.Global oil production is up 1.2 mb/d from a year ago, and “non-OPEC [is] firmly back in growth mode,” the IEA said in its report. Next year, things don’t get much better. Non-OPEC countries – led by the U.S., Canada and Brazil – will add 1.4 mb/d of new supply, enough to meet the entire growth in global demand. As such, any gains in output from OPEC would merely return the market to a surplus. That raises a very big question about what OPEC plans on doing after March 2018 when its deal expires. For now, it has no “exit strategy.”

The silver-lining for oil prices is that demand was much more robust in the second quarter compared to the first, leaping from 1 mb/d to 1.5 mb/d. The IEA revised up its overall 2017 demand growth figure to 1.4 mb/d, an increase of 0.1 mb/d compared to last month.

Putting supply and demand together, the IEA predicts that global inventories should have drained at a rate of 0.7 mb/d in the second quarter, although incoming data suggests the drawdowns might not have actually occurred at such a pace.

Ultimately, the message from the IEA was much more pessimistic than in previous months. In May, the agency said that the “rebalancing is essentially here and, in the short term at least, is accelerating.” But that bullish sentiment has all but vanished. “[W]e need to wait a little longer to confirm if the process of re-balancing has actually started in 2Q17 and if the waning confidence shown by investors is justified or not,” the IEA wrote this week.

8. EMERGING MARKET

end

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

Euro/USA   1.1411 UP .0009/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 GREEN EXCEPT LONDON

USA/JAPAN YEN 113.18 DOWN 0.236(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 1.2976 UP .0030 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED

THERESA MAY FORMS A NEW GOVERNMENT/STARTS BREXIT TALKS

USA/CAN 1.2731 DOWN .0000 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/TRUMP INITIATES LUMBER TARIFFS ON CANADA)

Early THIS FRIDAY morning in Europe, the Euro ROSE by 7 basis points, trading now ABOVE the important 1.08 level  RISING to 1.1411; Europe is still reacting to Gr Britain HARD BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and now the Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ TRUMP HEALTH CARE BILL DEFEAT AND MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED  UP 4.25 POINTS OR 0.13%     / Hang Sang  CLOSED UP 43.06 POINTS OR 0.16% /AUSTRALIA  CLOSED UP 0.51% / EUROPEAN BOURSES OPENED ALL IN THE GREEN EXCEPT LONDON 

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 FRIDAY morning CLOSED UP 19.05 POINTS OR 0.09%

Trading from Europe and Asia:
1. Europe stocks  OPENED ALL IN THE GREEN EXCEPT LONDON 

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 43.06 POINTS OR 0.16%  / SHANGHAI CLOSED UP 4.25 POINTS OR 0.13%   /Australia BOURSE CLOSED UP 0.51% /Nikkei (Japan)CLOSED UP 19.05 POINTS OR 0.09%    / INDIA’S SENSEX IN THE RED

Gold very early morning trading: 1221.15

silver:$15.73

Early FRIDAY morning USA 10 year bond yield: 2.355% !!! UP 1 IN POINTS from THURSDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%.

 The 30 yr bond yield  2.909, DOWN 1  IN BASIS POINTS  from THURSDAY night.

USA dollar index early FRIDAY morning: 95.67 DOWN 6  CENT(S) from THURSDAY’s close.

This ends early morning numbers FRIDAY MORNING

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And now your closing FRIDAY NUMBERS

Portuguese 10 year bond yield: 3.161%  DOWN 4 in basis point(s) yield from THURSDAY 

JAPANESE BOND YIELD: +.083%  DOWN 3/5  in   basis point yield from THURSDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.7651% DOWN 6   IN basis point yield from THURSDAY 

ITALIAN 10 YR BOND YIELD: 2.290 DOWN 3 POINTS  in basis point yield from THURSDAY 

the Italian 10 yr bond yield is trading 62 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.596% DOWN 1 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR FRIDAY

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

Euro/USA 1.1454 UP .0050 (Euro UP 50 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 112.64 DOWN  0.782(Yen UP 79 basis points/ 

Great Britain/USA 1.3079 UP  0.0133( POUND UP 133 basis points) 

USA/Canada 1.2661 DOWN .0067 (Canadian dollar UP 67 basis points AS OIL ROSE TO $46.08

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This afternoon, the Euro was UP  by 50 basis points to trade at 1.1454

The Yen ROSE to 112.64 for a GAIN of 79  Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND ROSE BY 133  basis points, trading at 1.3079/ 

The Canadian dollar ROSE by 67 basis points to 1.2661,  WITH WTI OIL RISING TO :  $46.08

The USA/Yuan closed at 6.7753/
the 10 yr Japanese bond yield closed at +.083%  DOWN 1/10  IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 4 IN basis points from THURSDAY at 2.3160% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.909  DOWN 2 in basis points on the day /

Your closing USA dollar index, 95.26  DOWN  47 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 FRIDAY: 1:00 PM EST

London:  CLOSED DOWN 35.05 POINTS OR 0.47%
German Dax :CLOSED DOWN 9.61 POINTS OR 0.08%
Paris Cac  CLOSED UP 0.09 POINTS OR 0.00% 
Spain IBEX CLOSED DOWN 3.20 POINTS OR 0.03%

Italian MIB: CLOSED  DOWN 29.36 POINTS/OR 0.14%

The Dow closed UP 84.65 OR 0.39%

NASDAQ WAS closed UP 38.03  POINTS OR 0.61%  4.00 PM EST
WTI Oil price;  46.08 at 1:00 pm; 

Brent Oil: 48.86 1:00 EST

USA /RUSSIAN ROUBLE CROSS:  59.16 DOWN 63/100 ROUBLES/DOLLAR (ROUBLE HIGHER BY 63 BASIS PTS)

TODAY THE GERMAN YIELD FALLS TO  +0.591%  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:$46.62

BRENT: $48.98

USA 10 YR BOND YIELD: 2.330%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.916%

EURO/USA DOLLAR CROSS:  1.1470 UP .0066

USA/JAPANESE YEN:112.49  DOWN  0.931

USA DOLLAR INDEX: 95.12  DOWN 61  cent(s) 

The British pound at 5 pm: Great Britain Pound/USA: 1.3111 : UP 166 POINTS FROM LAST NIGHT  

Canadian dollar: 1.2649 UP 79 BASIS pts 

German 10 yr bond yield at 5 pm: +0.591%

END

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

TRADING IN GRAPH FORM FOR THE DAY

Dismal Data Sends Stocks To Record Highs As Short Interest Collapses To 2007 Lows

Overheard everywhere today…

Stocks (Dow and S&P) hit record intraday highs… (must mean everything is awesome, right?)

With Nasdaq’s best week of 2017…So clearly, unlike The Leftists, Trump Jr’s email means absolutely nothing…

BUT…

This morning’s terrible retail sales and inflation data sent ‘hard’ data to new post-Trump lows – lowest since May 2015 – as ‘soft’ data clings to hope once again, sending ‘animal spirits’ back near record highs

GDP expectations have plunged…

And then there is this… Short Interest in the S&P 500 has not been this low since May 2007, right as the market peaked…

And as JPM Prime Broker Services shows, this week saw the largest amount of short-covering year-to-date…

*  *  *

Here’s today’s completely uniform, not at all odd, straight line, 100% correlated price action in stocks…

VIX chopped around into the close but it was a one-way street all day to get the S&P to intraday record highs (above 2453.82 on 6/19)…

FANG Stocks had their best week in 3 months… (up 5 of the last 6 days)

Despite all the exuberance over Bank earnings, financials lagged on the day (but as the green line shows, the dip-buyers were desperate) as Tech led…

JPMorgan was the biggest loser at the open, but you ‘buy the dip’ because it’s a no-brainer…

The “Most-Shorted” stocks are up 5 of the last 6 days – this week was the biggest ‘short squeeze’ since Dec 6th…

VIX was smashed lower again to its lowest weekly close since 1993… (9.48 close 12/24/93)

The stock market is near peak euphoria here (tracked by the ratio of Fwd P/E to VIX)…

Oh and Shiller’s P/E crossed above 30 (30.15).

While stocks gained on the week, so did Bonds (though the long-end underperformed)… (while 2s30s steepened for the 3rd week in a row, 2s10s flattened modestly on the week, after two big weeks of steepening)

10Y Treasury Futures briefly spiked above their 50DMA at 125’27 on the weak data, but fell back as the equity ramp began…

The Dollar Index was hammered this week on Trump Jr and Yellen dovishness (worst week for USD in 4 months)…

The Dollar is now at its weakest in 10 months…

Cable has spiked above 1.31 – its highest in 10 months…

WTI Crude rose for the 5th day in a row… (note how this week’s API/DOE moves were a pefect mirror of last week’s)

Gold and Silver up for the 4th day in the last 5 breaks a 5-week losing streak…best day for gold and silver in 5 weeks…

Finally, Bitcoin tumbled again today ending the worst week in 4 months…

So to summarize – After months of hawkishness, Yellen drops a slight hint at ‘dovishness’ on the rate-hike trajectory and stocks soar to record highs, VIX closes at a record weekly low, bonds rally, crude oil rips, and gold has best week in months…oh, and macro data dumps!

A plethora of data today

First:  Comfort Index plunged! (soft data)

(courtesy zero hedge)

Americans’ “Comfort” In The US Economy Just Plunged Most In Over 6 Years

Americans’ comfort in the US economy plunged the last two weeks to its lowest since February (tumbling most since 2011), despite the recovery in stock prices. Democrats, in particular, have lost any faith with the weakest confidence since Dec 2015.

Confidence in Personal Finances also declined, as did Americans’ perception of the buying climate.

Democrats and Republicans both saw confidence decline, the former to post-Trump lows.

Interestingly, only those 65 years and over were more comfortable this week over last, and Black comfort rose while White declined.

end

The following is a huge disappoint to the uSA and the Fed:  Hard data  Consumer prices disappoint for the 4th month in a row: weakest since 2015:

(courtesy zero hedge)

Consumer Prices Disappoint For 4th Month In A Row – Weakest Since Jan 2015

For the 4th month in a row, CPI missed expectations (unchanged MoM vs expectations of a modest 0.1% rise).

Across the board consumer price rises disappointed economists’ guesses with Core CPI tumbling to just 1.7% YoY – the lowest since Jan 2015

Energy prices fell 1.6% MoM and were the biggest drag on CPI; Apparel and Transportation (airfares) also fell MoM.

The last time CPI followed this trajectory, Bernanke unleashed QE-infinity…

But this time The Fed is hiking rates.

Just remember, according to Janet Yellen this is all ‘transitory’ and due to unlimited phone plans.

Then again, there were some silver linings for those who still believe core inflation weakness is transitory, to wit:

  • Shelter, owners’ equivalent rent, improved to 0.28% from 0.20%
  • Medical services 0.28% from -0.12%

To some at the Fed, this might support their ongoing view that transitory factors have dampened inflation this year. Then again, coupled with yet another poor retail sales report, one needs a really strong microscope to find the silver lining in today’s data.

end
Retail sales down as they are showing the weakest growth in 3 years.  This should put the Fed’s hike intentions on permanent hold for now.  This is June’s reading which is in the 2nd quarter.  This should lower 2nd quarter GDP considerably!!!
(courtesy zerohedge)

US Consumers Reeling: Core Retail Sales Post Weakest Growth In Over Three Years

This is not the data the Fed was looking for: after the 4th consecutive miss in CPI data, moments ago the Census Bureau also reported June retail sales which was unexpectedly poor, missing across the board once again, and judging by the surge in bonds, suggests that the Fed’s rate hike intentions and narrative is now on indefinite hold.

The details, as shown below, missed in every category:

  • Retail sales down -0.2%, Exp. +0.2% after falling 0.1% in May
  • Retail ex-autos -0.2%, Exp. +0.2%
  • Retail sales ex-autos and gas -0.1%, Exp. 0.4%
  • Retail sales control group -0.1%, Exp. +0.3%

Furthermore, the steep disappoinment in the control group, suggests that Q2 GDP estimates are about to be revised sharply lower.

Putting the weak consumer spending data in context, core retail sales ex auto/gas posted by the lowest annual increase going back to February 2014.

The breakdown: despite a modest rebound in Motor Vehicle Sales (0.1%), Building Material and Garden equipment (0.5%) and Health and Personal care stores (0.3%), and of course the relentless increase in non-store retailers, i.e., internet vendors such as Amazon, which rose 0.4%, the rest declined led by a sharp decline in Miscellaneous store retailers which tumbled -3.1%.

Coupled with the miss in CPI, the USD has taken a plunge and the risk is, as Citi notes, it has more to go. More importantly, the Fed is now in a hole how to explain not only the 4th consecutive CPI miss but also the unexpectedly poor retail sales confirming that US consumers fail to see the so-called economic recovery.

end

reaction to the above data points this morning:

(courtesy zero hedge)

Stocks, Bonds, & Bullion Spike, Dollar Dumps After Dismal Sales/Inflation Data

While JPMorgan’s share price is tumbling pre-market, Nasdaq is soaring as bad-news-is-good-news againFollowing dismal retail sales and CPI data, bond yields have plunged (along with the dollar) and gold is spiking...

Expectations for The Fed’s tightening trajectory have collapsed…

JPM is unhappy…’no brainer’

But Nasdaq traders love terrible data… (Pay up for growth again, no matter what)…

Bonds are bid…

With 10Y back below 2.30%…

This puts the big bond strangle-buyer in the money already…

Gold is up…

And the dollar is dumping…

More bad news; industrial production growth slows for the first time since January
(courtesy zero hedge)

Industrial Production Growth Slows For First Time Since January

Following May’s disappointing MoM collapse in industrial production growth, economists had hoped for a modest 0.3% rebound and were pleasantly surprised with 0.4% gain in June (and upward revision for May).

  • Factory production rose 0.2% in June after falling 0.4% in May
  • Utilities unchanged in June after rising 0.8% in May
  • Mining rose 1.6% in June after rising 1.9% in May

However, year-over-year growth in industrial production slowed from +2.1% to +2.0% YoY – its first slowdown since January.

Industrial Production remains 1.4% below its Nov 2014 peak, but the Dow Jones “Industrial” Average is up 21% since then

“New Economy”

end

Soft data University of Michigan Consumer Confidence tumbles to levels before the election as hope disappears:

(courtesy zero hedge)

UMich Consumer Confidence Tumbles To Lowest Since Before Election As ‘Hope’ Disappears

Following the biggest 2-week plunge in Bloomberg’s index of economic comfort in 6 years,UMich reports a big disappointment in the preliminary print for June. At 93.1 (below the 95.0 expectation), this is the weakest print since Oct 2016 – before the election.

UMich point sout that overall, the recent data follow the same pattern repeatedly recorded around past cyclical peaks:expectations start to post significant declines while assessments of current economic conditions continue to reach new peaks. To be sure, the data do not suggest an impending recession. Rather, the data indicate that hopes for a prolonged period of 3% GDP growth sparked by Trump’s victory have largely vanished, aside from a temporary snap back expected in the 2nd quarter. The declines recorded are now consistent with just above 2% GDP growth in 2017.

The drop was driven by a plunge in ‘hope’ as expectations dropped the most since Oct 2013.

UMich notes that the weakness in the Expectations Index in early July was concentrated among Republicans (falling to 108.9 from June’s 116.0 and February’s 120.1); Democrats continue to hold much less favorable expectations, although the Expectations Index among Democrats has markedly improved (to 63.2 from June’s 62.0 in June and 55.5 in February).

While UMich doesn’t release their demographic data, Bloomberg’s comfort index gives an idea of the partsan divide in confidence…

END
The mouthpiece for the Fed has just revealed how Yellen is trapped especially with the data today.  Obviously if she raises rates with lousy data, then the Fed is not data dependent as the raise seeks to adjust risks. Then the Fed loses all of its credibility as they have always stated that they are data dependent
(courtesy zero hedge)

Prior to last night, it was well understood that the USA will run out of money by the first week of October.  When the official debt ceiling was reached in March the government had about 630 billion USA of pension and other pension funds to borrow against to continue spending until everything is exhausted.  However last night, there was an unexpected $427 billion outlay in June much greater than the $330 billion incoming and that deficit caught everyone by surprise. June is generally a surplus month.  Since the Republicans and Democrats cannot agree on anything expect us to reach the “latest” debt ceiling at around the first week of Sept and remember that all members will be enjoying their summer recess

(courtesy zero hedge)

Will Trump Use Obama’s “Secret Debt Ceiling Plan” To Avoid A U.S. Treasury Default?

After voting to repeal and replace Obamacare 60 times under the Obama administration, Senate Republicans, now that it counts, are locked in a heated civil war over how or if they should even modify the controversial legislation.  As proven time and again, despite sharing a common party, conservative and moderate republicans have very little else in common.

So, while many may think that a repeat of the 16-day government shutdown in 2013 is unlikely while a single a party controls all three branches of government in Washington D.C., we suspect it may not be quite as simple as that.  Without a budget in place that truly balances, conservative republicans will most likely be unwilling to approve debt ceiling increases no matter who is sitting in the White House.

While republicans have attempted to get ahead of the game by passing a debt ceiling increase well in advance of a breach, efforts so far have failed.  And while it may seem far away, the U.S. government will reach its statutory limit on borrowing some time in October.  So how will Mnuchin handle the Treasury Department if Republicans fail to act and Democrats refuse to play ball?  Turns out Obama had a plan for that. Per Bloomberg:

When the nation almost breached its debt ceiling six years ago, the Federal Reserve and Treasury drew up contingency plans that were kept secret until January, when transcripts of an Aug. 1, 2011 conference call at the central bank were released after a customary five-year lag.

Under the contingency plan, holders of U.S. debt and recipients of social security, veterans benefits and other entitlements would be paid first. Everyone else, such as government contractors and federal employees, would be at risk of payment delays or partial payments.

Though the scenario nominally protects holders of U.S. debt by prioritizing the payments they are due, it raises fears that the value of their underlying assets could suddenly decline if the U.S. government’s reputation for creditworthiness is damaged.

“I’m assuming that prioritization is the fallback,” said Lou Crandall, chief economist at Wrightson ICAP LLC. The acknowledgment in the Fed transcripts of the existence of a backup plan to pay interest first makes it more plausible, he said, calling it a “truly terrible idea.”

Under the prioritization plan described in the 2011 transcripts, Treasury would make all semi-annual coupon payments on debts in part by using monies built up by deferring other obligations. The government would auction new debt at regularly scheduled times only to fund old debts that matured.

Meanwhile, even though the plan would still make all interest payments on U.S. debt when due, it’s unclear whether Obama’s prioritization plan would merit further downgrades from the ratings agencies.

Prioritizing U.S. debt is a contentious issue, with no consensus over whether it constitutes a default. Former Treasury Secretary Jacob Lew called it “default by another name” while in office. Fitch Ratings disagrees, but says it would trigger a review of whether the U.S. still warrants a AAA rating.

Moody’s Investor Service, which considers it likely that the government would use the plan if the Treasury exhausts extraordinary measures to stay under the ceiling and Congress doesn’t act, seems comfortable with it. The agency says that the economic disruption that could erupt would expedite a political compromise to end the impasse.

Of course, in the long run these shutdowns are just a waste of time as politicians ultimately cave to pressure from a base of constituents who have been whipped into a state of mass hysteria by a barrage of news flow on the damning impacts of a government shutdown.

There is little support for prioritizing debt payments in Congress, with Oklahoma Republican Tom Cole, a member of the House Budget Committee, calling it a “harebrained scheme that is apt to backfire.”

“Proposing to pay interest to the Chinese first, while stiffing American businesses and households that are owed payments by Treasury, hardly seems like a winning political strategy,” Wrightson’s Crandall said. “We’re not sure how the market would respond to that kind of payments twilight zone.”

And, in the end, the result is always the same:

Debt

The Illinois budget deal was announced last week but the real tragedy is that fact that in order to balance the books, the boys stated that the rate of return on assets will be 7% which is pie in the sky.  Obviously they kicked the can down the road and this will put futures liabilities even greater as thy cannot possibly fund the new retirees.

(courtesy zero hedge)

Illinois “Budget Deal” Is Likely The Death Knell For The State’s $130 Billion Underfunded Pensions

Last August, in a post that attempted to explain why public pensions are really about $8 trillion underfunded, as opposed to the $3-$5 trillion that you frequently see tossed around in the press, we described pensions in the following way:

Defined Benefit Pension Plans are, in many cases, a ponzi scheme.  Current assets are used to pay current claims in full in spite of insufficient funding to pay future liabilities… classic Ponzi.  But unlike wall street and corporate ponzi schemes no one goes to jail here because the establishment is complicit.  Everyone from government officials to union bosses are incentivized to maintain the status quo…public employees get to sleep better at night thinking they have a “retirement plan,” public legislators get to be re-elected by union membership while pretending their states are solvent and union bosses get to keep their jobs while hiding the truth from employees.

And while we weren’t specifically writing about Illinois at the time, that state’s recent “budget deal” perfectly mimics our point and illustrates precisely why America’s underfunded pension ponzi schemes continue to grow at alarming rates, despite going largely unnoticed by soaring equity markets, and will ultimately be the catalyst for a major correction in the U.S.

So, what are we talking about?  As Bloomberg points out today, one of the ways that Illinois managed to “fix” its budget crisis, was by simply “kicking the can down the road” on their future pension funding requirements…pensions which are already only ~35% funded as it is.

So, how did they do it?  Well, they simply decided to continue modeling future returns at a much higher rate than they’ll ever be able to reasonably achieve.  By leaving their discount rate at 7% they manage to reduce the present value of future liabilities and thus reduce current funding requirements.  In short, tweak one simple number and, like magic, your whole funding crisis “disappears.”

That spending plan, pushed through by lawmakers eager to keep Illinois’s bond rating from being cut to junk, allows the state to sink deeper into the hole by giving it five years to phase in hundreds of millions of dollars in increased contributions to four of its five retirement plans. Those extra payments stem from the funds’ decisions to roll back forecasts for what they expect to make on their investments, which means Illinois will need to set aside more money to ensure it can cover pension checks due in the decades ahead.

“The phase-in of the actuarial assumption is another exercise in kicking the can down the road, but we’re not sure how far the can travels,” said Dave Urbanek, spokesman for the Illinois Teachers’ Retirement System, the state’s largest pension, which has $73 billion of unfunded liabilities. “You pay less now, pay more later.”

After the stock market stumbled in 2015, Illinois’s four pension systems for teachers, state workers, judges and lawmakers all lowered their assumed investment rates of return, according to a March report from the Commission on Government Forecasting and Accountability. That, along with other accounting changes, added $9.67 billion to their unfunded liabilities, since they could no longer count on making as much on stocks, bonds and other holdings. The teachers and state employees systems dropped their rates of return to 7 percent, while the plans for judges and general assembly members cut their rates to 6.75 percent.

All four had negative investment returns in the 2016 budget year, according to the commission. The state university retirement system was the only one with positive returns, eking out a gain of just 0.2 percent, the report showed.

Of course, as we recently pointed out, the silly fake math games only work so long as you have enough cash to prop up the ponzi scheme.  Remember, Madoff’s ponzi only came crumbling down when he could no longer raise enough money from new investors to fund withdraws from redeeming investors. Unfortunately, at least for Illinois pensioners who think they have a retirement waiting for them, Illinois’ ponzi is about to run out of cash and meet the same fate as Madoff’s ponzi.

For those who missed, below is a post in which we explained why Illinois’ pensions could run out of money in as little as 4 years.

* * *

Chicago’s pension funds, along with several other large public pensions around the country, are in serious trouble (we recently discussed the destruction awaiting our financial markets here: “Are Collapsing Pensions “About To Bring Hell To America”?“).

The problem is that the pending doom surrounding these massive public pension obligations often get clouded over by complicated actuarial math with a plan’s funded status heavily influenced by discount rates applied to future liability streams.

Take Chicago’s largest pension fund, the Municipal Employees Annuity and Benefit Fund of Chicago (MEABF), as an example.  Most people focus on a funds ‘net funded status’, which for the MEABF is a paltry 20.3%.  But the problem with focusing on ‘funded status’ is that it can be easily manipulated by pension administrators who get to simply pick the rate at which they discount future liabilities out of thin air.

So, rather than lend any credence to some made up pension math, we prefer to focus on actual pension cash flows which can’t be manipulated quite so easily.

And a quick look at MEABF’s cash flows quickly reveals the ponzi-ish nature of the fund.  In both 2015 and 2014, the fund didn’t even come close to generating enough cash flow from investment returns and contributions to cover it’s $800mm in annual benefit payments…which basically means they’re slowing liquidating assets to pay out liabilities.

Of course, like all ponzi schemes, liquidating assets to pay current claims can only go on for so long before you simply run out of assets.

So we decided to take a look at when Chicago’s largest pension fund would likely run out of money.

On the expense side, annual benefit payments are currently just over $800 million and are growing at a fairly consistent pace due to an increasing number of retirees and inflation adjustments guaranteed to workers.  Assuming payouts continue to grow at the same pace observed over the past 15 years, the fund will be making annual cash payments to retirees of around $1.3 billion by 2023.

Investment returns, on the other hand, are much more volatile but have averaged 5.5% over the past 15 years.  That said, the fund took big hits in 2002 (-9.3%) and 2008 (-27.1%) following the dotcom and housing bubble crashes.

But, just to keep it simple, lets assume that today’s market is not a massive fed-induced bubble and that the MEABF is able to produce consistent 5.5% (their 15-year average) returns every year in perpetuity.  Even then, the fund will only generate roughly $500mm per year in income compared to benefit payments growing to $1.3 billion…see the problem?

Which, of course, means that the fund has likely just entered a period of perpetual cash outflows which will not stop until either (i) the city decides to cut back retiree payments or (ii) the fund runs out of money.

And, putting it all together, even if Chicago’s largest pension generates consistent positive returns for the foreseeable future, it will literally run out of cash in roughly 6 years.

And while we hate to be pessimistic, lets just take a look at what happens if, by some small chance, today’s market gets exposed as a massive bubble and we have another big correction in 2018.

Such a correction would force the fund to liquidate over $1.5 billion in assets in 2018 alone….

….and the system would run out of cash completely within 4 years.

The risk associated with America’s pension ponzi schemes have largely been overlooked by investors to date because so long as they can meet annual benefit payments then plan administrators can just continue to ‘kick the can down the road’ and pretend that nothing is wrong.   

Of course, that strategy ceases to work when the pensions actually run out of cash…which could happen sooner than you think…and when it does, America’s retirees will suddenly find themselves about $5 trillion poorer than they thought they were.

END

Let us wrap up the week, with this offering from Greg Hunter of uSAWatchdog

(courtesy Greg Hunter/USAWatchdog)

Trump Jr. Treason – NOT, Russian Lawyer Worked for Democrats, Fed Rate UpdateBy Greg Hunter On July 14, 2017 In Weekly News Wrap-Ups

There is still no there there with the Russian collusion story in its latest version featuring Donald Trump Jr. This looks more like an episode of “Punk’d,” but there is no crime and no treason according to renowned lawyer Alan Dershowitz. What this really is all about is a fight between good and evil. It’s that simple. The Deep State and the MSM are doing everything they can to destroy Trump and his team. This is why President Trump held a prayer meeting at the White House where ministers laid hands on him in a prayer circle.

Breitbart.com is out with a new story about how the Russian lawyer at the center of the Donald Trump Jr. Russian collusion hype has a long history of working with Democrats. Attorney General Loretta Lynch gave Natalia Veselnitskaya a “special” visa extension in 2015. The question is why?The other question is how many traps are going to be set and debunked before the Deep State and the MSM accept that Donald Trump is the rightful elected President of the United States.

Fed Head Janet Yellen says the Federal Reserve may not raise rates much more, but that might not be enough to keep them from spiking when the Fed unloads its balance sheet of all the “toxic” mortgages it bought in the 2008 financial meltdown. Gregory Mannarino of TradersChoice.net says the Fed will not allow rates to rise because it would melt down the financial markets—again.

Join Greg Hunter as he talks about these stories and more in the Weekly News Wrap-Up.

Video Link

http://usawatchdog.com/trump-jr- treason-not-russian-lawyer-worked-for-democrats-fed-rate- update/#more-19223

END

Harvey.

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