GOLD: $1254.75 UP $8.75
Silver: $16.49 UP 11 cent(s)
Closing access prices:
Gold $1255.10
silver: $16.54
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: $1253.46 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $1245.60
PREMIUM FIRST FIX: $7.86
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
SECOND SHANGHAI GOLD FIX: $1254.85
NY GOLD PRICE AT THE EXACT SAME TIME: $1246.45
Premium of Shanghai 2nd fix/NY:$8.40
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
LONDON FIRST GOLD FIX: 5:30 am est $1247.35
NY PRICING AT THE EXACT SAME TIME: $1247.65
LONDON SECOND GOLD FIX 10 AM: $1248.55
NY PRICING AT THE EXACT SAME TIME. $1250.00 ???
For comex gold:
JULY/
NOTICES FILINGS TODAY FOR APRIL CONTRACT MONTH: 0 NOTICE(S) FOR NIL OZ.
TOTAL NOTICES SO FAR: 149 FOR 14900 OZ (.4634 TONNES)
For silver:
JULY
54 NOTICES FILED TODAY FOR
270,000 OZ/
Total number of notices filed so far this month: 3010 for 15,050,000 oz
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
end
Gold advanced above its resistance level of $1240 to $1250.00. Silver broke above its resistance level of $16.40.
In other news, Trump replaces major personnel as the nation proceeds on a witch hunt to force him to resign.
In European news, Germany’s big 3 auto makers were caught again in anti trust behaviour and you can bet the farm that they will pay hefty fines.
Let us have a look at the data for today
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
In silver, the total open interest FELL BY 1473 contract(s) DOWN to 206,371 DESPITE THE RISE IN PRICE THAT SILVER TOOK WITH YESTERDAY’S TRADING (UP 5 CENT(S).TODAY WE HAD SPEC SHORTS AND BANKERS WORKING IN CONCERT TRYING TO COVER THEIR SHORTS. THE BANKERS ARE STILL HAVING AN AWFUL TIME TRYING TO SHAKE THE SILVER LEAVES FROM THE SILVER TREE.
In ounces, the OI is still represented by just OVER 1 BILLION oz i.e. 1.031 BILLION TO BE EXACT or 147% of annual global silver production (ex Russia & ex China).
FOR THE NEW FRONT MAY MONTH/ THEY FILED: 54 NOTICE(S) FOR 270,000 OZ OF SILVER
In gold, the total comex gold FELL BY 79 CONTRACTS DESPITE THE RISE IN THE PRICE OF GOLD ($3.50 with YESTERDAY’S TRADING). The total gold OI stands at 481,177 contracts. THE BANKERS ARE STILL LOATHE TO SUPPLY THE GOLD PAPER AND WISH TO COVER MORE OF THEIR SHORTS. SOME NEWBIE SPEC LONGS CONTINUE TO ENTER THE GOLD COMEX ARENA AGAIN. THE PLETHORA OF DATA RELEASED LAST FRIDAY SHOWING RETAIL SPENDING BASICALLY COLLAPSING ALONG WITH SMALLER INFLATION NUMBERS MUST BE SCARING OUR BANKERS TO DEATH.
we had 0 notice(s) filed upon for NIL oz of gold.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
With respect to our two criminal funds, the GLD and the SLV:
GLD:
Today no changes in gold inventory
Inventory rests tonight: 816.13 tonnes
for 6 consecutive days, gold rises appreciably and yet gold inventory drops at the GLD
GLD IS A MASSIVE FRAUD/INVENTORY SHOULD BE RISING NOT FALLING.
.
SLV
Today: : WE HAD NO CHANGES IN SILVER INVENTORY TONIGHT DESPITE SILVER BEING UP AGAIN BY 5 CENTS
INVENTORY RESTS AT 347.121 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 1473 contracts DOWN TO 206.371 (AND now A LITTLE FURTHER FROM THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787), DESPITE THE RISE IN PRICE FOR SILVER WITH RESPECT TO YESTERDAY’S TRADING (UP 5 CENTS ). JUDGING FROM WHAT HAPPENED IN GOLD, OUR BANKERS DID SUCCEEDED IN A SMALL WAY IN COVERING SOME OF THEIR SHORTS . MOST OF THE SPEC LONGS BASICALLY STOOD STOIC. SOME SPEC LONGS ENTERED THE ARENA TAKING ON THE BANKERS AS IT SEEMS THAT THE SHORTS (BOTH NEWBIE SPECS AND BANKERS) ARE TRAPPED AND CANNOT GET OUT OF THEIR MESS.
(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
)Late THURSDAY night/FRIDAY morning: Shanghai closed DOWN 6.88 POINTS OR 0.421% / /Hang Sang CLOSED DOWN 34.12 POINTS OR 0.13% The Nikkei closed DOWN 44.84 POINTS OR .22%/Australia’s all ordinaires CLOSED UP 0.46%/Chinese yuan (ONSHORE) closed UP at 6.7695/Oil DOWN to 46.67 dollars per barrel for WTI and 48.84 for Brent. Stocks in Europe OPENED IN THE RED,, Offshore yuan trades 6.7595 yuan to the dollar vs 6.7695 for onshore yuan. NOW THE OFFSHORE IS STRONGER TO THE ONSHORE YUAN/ ONSHORE YUAN STRONGER (TO THE DOLLAR) AND THE OFFSHORE YUAN IS MUCH STRONGER TO THE DOLLAR AND THIS IS COUPLED WITH THE WEAKER DOLLAR. CHINA IS VERY HAPPY TODAY
3a)THAILAND/SOUTH KOREA/NORTH KOREA
i)NORTH KOREA
USA now urges all American tourists to depart North Korea immediately as it bans all future tourists from visiting this country( zero hedge)
b) REPORT ON JAPAN
c) REPORT ON CHINA
A very important story. Rare earths which are used in the defense industry as well as mobile phones are dominated by the Chinese with 90% of the market. It is difficult to mine and yields are tiny. After 2012, China lowered the price on these rare earths which basically shut out everybody else from the market. Now China is raising the prices as they cite environmental concerns. However the uSA is concerned that China will not supply
an important story..
( zero hedge)
4. EUROPEAN AFFAIRS
( zero hedge)
oH oh!! THIS WILL NOT GO OVER WELL!! GERMAN AUTHORITIES STUMBLE ON DOCUMENTS OF AN AUTO CARTEL WITH SECRET MEETING AND THE PLANNING OF THE EMISSION SCANDAL. NO WONDER ALL 3 HAD THE SAME TECHNOLOGY HOW TO RIG THE EMISSIONS. THIS IS WILL RESULT IN MORE FINES FOR THE BIG 3 GERMAN AUTO MAKERS.
( zero hedge)
iii)GERMANY
A judge states that the German court system will collapse with the hundred of thousands of appeals filed:
(courtesy zero hedge)
5. RUSSIAN AND MIDDLE EASTERN AFFAIRS
6 .GLOBAL ISSUES
7. OIL ISSUES
OPEC is now exceeding 33 million barrels per day this month and thus breaking its promise of a cut in supply
This is forcing the WTI price to head toward the 45 dollar market
( zero hedge)
8. EMERGING MARKET
VENEZUELA
We discussed earlier in the week, that the USA was planning sanctions against Venezuela. One of the sanctions may be the halting of oil imports from that country
( Irina Slav/OilPrice.com)
9. PHYSICAL MARKETS
ii)Markets are begging the Fed to leave them alone as markets itself will behave properly without their interference.If Kevin Warsh, advisor to Trump, becomes the Fed head honcho he will be less likely to respond to small changes in inflation and other “noisy” indicator
(courtesy, Greg Ip/Chris Powell)
10. USA Stories
( Ryan McMaken/Mises Institute)
( zero hedge)
iii) a Trump changes in personnel:
Trump shakes up his legal time after revelation that Mueller is going after Trump’s operations. Kasowitz and Carrallo are out and they are being replaced by Ty Cobb, Jay Sekulow and John Dowd. What is interesting is that Trump is looking into how to pardon his key staff members targeted by the FBI including pardoning himself
iiib) Second: Spicer replaced by Scaramucci. Melissa McCarthy is now out of a job impersonating Spicer on Saturday night live!
( zero hedge)
iv)Trump goes on the offensive as it begins to investigate Mueller’s team for conflicts
v)Mueller seems not at all concerned with Trump as he asks the White House to preserve all records on Jr’s meeting with the Russian lawyer. When Hillary was asked to do the same thing, she did a ‘bleachbit'( zerohedge)
Let us head over to the comex:
The total gold comex open interest FELL BY 79 CONTRACTS DOWN to an OI level of 481,177 WITH THE RISE IN THE PRICE OF GOLD ($3.50 with YESTERDAY’S trading). Today we had new speculators enter the long side of gold comex casino with the bankers supplying the necessary paper. The bankers could not cover any of their gold shorts along with newbie spec shorts.
We are now in the contract month of JULY and it is one of the POORER delivery months of the year. .
The non active July contract GAINED 4 contract(s) to stand at 16 contracts. We had only 0 notices filed YESTERDAY morning, so we GAINED 4 contracts or an additional 400 oz will stand in this non active month of July. Thus 0 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 11,528 contracts DOWN to 182,192, as this month winds down prior to first day notice. The next non active contract month is September and here they GAINED another 55 contracts to stand at 903. The next active delivery month is October and here we gained 784 contracts up to 24,936. October is the poorest of the active gold delivery months as most players move right to December.
We had 0 notice(s) filed upon today for NIL oz
For those keeping score: in the upcoming front delivery month of August:
On July 21.2016: open interest for the front month: 273,673 contracts compared to July 21.2017: 180,687.
However last yr at this time we had a record OI in gold at 655,000 contract for the entire complex.
We are now in the next big active month will be July and here the OI GAINED 8 contracts RISING AT 171. We had 34 notices served yesterday so we gained 42 notices or an additional 210,000 oz will stand at the comex, and 0 EFP contracts were issued which entitles them to receive a fiat bonus and a future delivery contract (which no doubt is a London based forward).
The month of August, a non active month GAINED 13 contracts to stand at 442. The next big active delivery month for silver will be September and here the OI GAINED ANOTHER 332 contracts UP to 153,345.
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 have an increasing amount of silver standing in comparison to what happened a year ago
amt standing tonight: 15.630 million oz.
We had 54 notice(s) filed for 270,000 oz for the June 2017 contract
VOLUMES: for the gold comex
Today the estimated volume was 135,139 contracts which is fair/
Yesterday’s confirmed volume was 319,941 contracts which is excellent
volumes on gold are STILL HIGHER THAN NORMAL!
July 21/2017.
Gold | Ounces |
Withdrawals from Dealers Inventory in oz | nil |
Withdrawals from Customer Inventory in oz |
nil oz
|
Deposits to the Dealer Inventory in oz | NIL oz |
Deposits to the Customer Inventory, in oz |
nil oz
|
No of oz served (contracts) today |
0 notice(s)
NIL OZ
|
No of oz to be served (notices) |
12 contracts
1600 oz
|
Total monthly oz gold served (contracts) so far this month |
149 notices
14900 oz
.4150 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 | 136,361.4 oz |
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 0 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.
Silver | Ounces |
Withdrawals from Dealers Inventory | nil |
Withdrawals from Customer Inventory |
170,737,651 oz
BRINKS
CNT
DELAWARE
|
Deposits to the Dealer Inventory |
nil oz
|
Deposits to the Customer Inventory |
304,656.324 oz
CNT
DELAWARE
|
No of oz served today (contracts) |
54 CONTRACT(S)
(270,000 OZ)
|
No of oz to be served (notices) |
117 contracts
( 585,000 oz)
|
Total monthly oz silver served (contracts) | 3010 contracts (15,050,000 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 | 1,505,700.8 oz |
NPV for Sprott and Central Fund of Canada
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
Submitted by cpowell on Thu, 2017-03-09 01:19. 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 21/with gold up $8.75 again, we had no changes in gold inventory at the GLD/inventory rests at 816.13 tonnes
July 20/WITH GOLD UP AGAIN TODAY ($3.50) WE HAD NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 816.13 TONNES
jULY 19/STRANGE!! AGAIN WITH GOLD UP $0.50 WE HAD ANOTHER HUGE 5.32 TONNES WITHDRAWAL FROM THE GLD/INVENTORY RESTS AT 816.13 TONNES THIS GOLD IS HEADING TO SHANGHAI
July 18/STRANGE AGAIN/WITH GOLD UP $7.50 WE HAD ANOTHER HUGE 5.62 TONNES WITHDRAWAL FROM THE GLD/INVENTORY RESTS AT 821.45 TONNES
July 17/strange again! with gold up $4.20 we had another huge withdrawal of 1.77 tonnes/inventory rests at 827.07 tonnes
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
end
Now the SLV Inventory
July 21/STRANGE! WITH SILVER UP AGAIN TODAY (11 CENTS), NO CHANGE IN SILVER INVENTORY AT THE SLV
July 20/STRANGE! WITH SILVER UP AGAIN TODAY, THE SLV INVENTORY LOWERS BY 945,000 OZ/INVENTORY RESTS AT 347.121 MILLION OZ/
July 19/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 348.066 MILLION OZ
July 18/a huge 946,000 oz withdrawal from the SLV despite silver’s 16 cent gain!
Inventory rests at 348.066 million oz
July 17/no change in silver inventory at the SLV/Inventory rests at 349.012 million oz
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/
-
Indicative gold forward offer rate for a 6 month duration
+ 1.19% -
+ 1.45%
end
END
Today we receive the COT report. You will recall that during the last two reports the commercials massively covered a huge number of shorts as they went net long. The large specs went net short during the past two weeks.
let us see what today brings:
Gold COT Report – Futures | ||||||
Large Speculators | Commercial | Total | ||||
Long | Short | Spreading | Long | Short | Long | Short |
217,232 | 157,094 | 69,714 | 153,064 | 226,699 | 440,010 | 453,507 |
Change from Prior Reporting Period | ||||||
-405 | -283 | 4,955 | 5,246 | 4,965 | 9,796 | 9,637 |
Traders | ||||||
161 | 105 | 93 | 55 | 53 | 258 | 216 |
Small Speculators | ||||||
Long | Short | Open Interest | ||||
44,194 | 30,697 | 484,204 | ||||
-1,261 | -1,102 | 8,535 | ||||
non reportable positions | Change from the previous reporting period | |||||
COT Gold Report – Positions as of | Tuesday, July 18, 2017 |
Our large speculators
those large specs that have been long in gold pitched a tiny 405 contracts from their long side
those large specs that have been short in gold covered a tiny 283 contracts from their short side.
Large specs go net short by only 122 contracts
Our commercials
those commercials who have been long in gold added another 5246 contracts to their long side
those commercials who have been short in gold added 4965 contracts to their short side.
commercials go net long by 281 contracts
Our small specs:
those small specs that have been long in gold pitched 1261 contracts from their long side
those small specs that have been short in gold covered 1102 contracts from their short side.
Conclusions:
first of all, specs going net short has stopped
second: commercials seem to be trapped.
Silver CO
Silver COT Report: Futures | |||||
Large Speculators | Commercial | ||||
Long | Short | Spreading | Long | Short | |
90,776 | 81,400 | 24,987 | 66,398 | 88,312 | |
-398 | 4,231 | 1,080 | 881 | -1,772 | |
Traders | |||||
105 | 65 | 46 | 41 | 33 | |
Small Speculators | Open Interest | Total | |||
Long | Short | 209,689 | Long | Short | |
27,528 | 14,990 | 182,161 | 194,699 | ||
534 | -1,442 | 2,097 | 1,563 | 3,539 | |
non reportable positions | Positions as of: | 165 | 126 | ||
Tuesday, July 18, 2017 | © Sil |
Our large speculators
those large specs who have been long in silver pitched a tiny 398 contracts from their long side
those large specs that have been short in silver added a large 4331 contracts to their short side
large specs go net short again by 4629 contracts
Our commercials
those commercials that have been long in silver added 881 contracts from their long side
those commercials that have been short in silver covered 1772 contracts from their short side.
commercials go net long by: 2653 contracts
Our small specs:
those small specs who have been long in silver added 534 contracts to their long side
those small specs who have been short in silver covered 1442 contracts from their short side.
Conclusions:
specs still going net short for the week with the commercials going net long again.very bullish.
Major gold/silver trading/commentaries for FRIDAY
GOLDCORE/BLOG/MARK O’BYRNE.
GOLD/SILVER
Gold Hedges Against Currency Devaluation and Cost Of Fuel, Food, Beer and Housing
– Gold hedge against currency devaluation – cost of fuel, food, housing
– True inflation figures reflect impact on household spending
– Household items climbed by average 964%
– Pint of beer sees biggest increase in basket of goods – rise of 2464%
– Bread rises 836%, butter by 1023% and fuel (diesel) up by 1375%
– Gold rises 2672% and hold’s its value over 40 years
– Savings eaten away by money creation and negative interest rates
– Further evidence of gold’s role as inflation hedge and safe haven
Editor: Mark O’Byrne
Gold hedges against rising cost of living
Remember when you were taught about the inflation of the Weimar Republic in Germany at school? More recently I was taught about the inflation of Zimbabwe. In both instances we were given examples of how much the staple food of people cost – the humble loaf of bread.
We were all supposed to be horrified and thank our lucky stars we didn’t live in such times. We thanked God that those days were gone and long in the past, never to be seen again.
Obviously we are not unfortunate enough to live in a country where the price of bread changes from us walking into the bakery to paying for the loaf. Nor do we have to carry huge wads of bank notes around in bricks as we saw in Zimbabwe.
Worthless 1 Trillion Zimbabwe Dollar Note (Wikimedia Commons)
But, there has still been a whopping devaluation in the pound, the dollar and all major fiat currencies – as much as of over 90% devaluation in some in the last forty or so years. Food items have increased on average by 964% in the UK.
A form of hyperinflation is has happened globally but just over a much longer time period.
Back in 2014 we wrote about the impact of inflation on household spending and the cost of living due to the devaluation of the pound since 1973. Needless to say three years on that the impact of inflation is even greater and the pound worth even less – especially after sterling’s sharp fall after Brexit.
Today a British Pound from 1973 is worth just eight pence. When we first reported on this issue in 2014 the value of a 1973 pound was worth nine pence. In contrast, since 1973, one ounce of gold has climbed by a whopping 2,673%. Today, the £100 of 1973 is worth just £9.01, compared to £9.48 in 2014.
These numbers show just how much damage has been done to the British pound and therefore the value of our medium of exchange and savings.
They also show how well you would have been protected by investing in gold. Had you done so you would have enjoyed the benefits of this time tested hedge against the long term ravages of inflation.
Cost of household goods rises by average of 964%
The £9.01 today wouldn’t get you too far given the prices found in the July 2017 RPI and CPI price list.
The price list also shows how many producers have been forced to lower prices thanks to supermarkets’ buying and pricing power. Bread and milk are just two key items which have been forced down in price since 2014. Despite this, their prices remain highly inflated since 1973.
A pint of a beer has felt the biggest surge of the food and drink items we selected, it has shot up by 2,464.3% from 14p to £3.59 per pint.
A sliced loaf of white bread has come down from £1.30 to £1.03 since 2014, but it is still up a huge 836% since 1973. The processed, mass produced bread of today is unlikely to be of the quality of the bread of then.
The butter your parents might have once slathered onto your morning toast might just have to be lightly dabbed on, given it costs nearly 11 times more than it did in 44 years ago. A 250 gramme slab of butter went from 13p to £1.46 or over 1000%.
Perhaps your fancy crepes for breakfast instead of toast. A dozen eggs are now 5 times what they once were, setting you back £2.02 when they once would have been a bargain at 33p. The flour to help you make those crepes has climbed almost as much in price, by 446% to 82p for 1.5kg.
That morning coffee you love so much? 100g of its instant form costs nearly 10 times more from 28p to £2.95. And the milk to make it a latte costs over 6 times more, climbing from 6p to 43p. Don’t forget the sugar, a kilo bag of sugar will now set you back now costs 68p, up from 11p – up over 500%.
Apples cost have climbed in price by 621%, from 28p per kilo to £2.02 per kilo. Other vegetables have also increased. Carrots – those magic vegetables to help you see in the dark will now cost you nearly 8 times what they would have in 1973. A kilo bag of carrots now costs 91p, up from 11p or a rise of 723%.
Sadly after beer and butter, the items which have climbed the most in this list of household essentials are not food and drink items. Instead, they’re the items which keep us safe and warm, and help us keep earning an increasingly valueless wage – home prices and fuel.
Diesel costs nearly 14 times more, from 8p in 1973 to to £1.18 in July this year. If you have even glanced at house prices recently then you won’t be surprised to hear they are practically unaffordable or that the price of the average detached house went from £16,980 to £345,833. The family home now costs nearly 2,000% more than in 1973.
Of course, what has beaten all of these in a climb in price? An ounce of gold, which has gone from £34 to £1051, an increase of over 2,600%.
What about from 50 years ago?
We have been going through a spate of changes here in the UK, of new paper notes some of which haven’t been changed (in design) since the 1950s. But, their spending power certainly has.
One of these is the fiver. Interestingly it was once standard to be able to get a £5 note from a cash machine. I don’t recall this (I was born in the 1980s) and when I was at university there was one cash machine which was almost a novelty because it did dispense of the notes. When the financial crisis hit banks and ATM companies decided to start reissuing £5 notes in order to ‘help people with their budgeting.’
Equivalent spending power 2017 (Source CityAM)
Why had the fiver stopped being issued in ATMs? Because the £5 had become small change. When you look at the figures in terms of what the £5 of today would have bought you back in 1957 then you really do get a good look at the damage that has been done to the British pound’s spending power.
Our American subscribers and clients will relate to this as the $5 note (USD) today does not buy what it bought 20, 30 or 40 years ago.
Households and savers hit from all angles
Every month we hear about where inflation is. Headlines are always screaming about whether or not inflation has hit the Bank of England MPC’s target. Rarely do we here about the ongoing damage being done to the value of the pound over a long term period.
On an annual basis we are not suffering as much today as perhaps we would have been in the 1970s to early 80s. My grandfather retired in the 1970s, he died just last year. The first few years of his retirement were fraught with inflation as the average rate was around 13%.
Annual Inflation Rate & Multiplier (1970 -1980)
Source Stephen Morley.org
Of course, a retirement as long as my grandfather’s will be near unimaginable for generations since. This is partly do with lifestyle choices but also thanks to the fact that we can no longer afford to save enough in order to enjoy such a break. Many retire in the hope that their pension pots and savings will grow thanks to interest rates. As we know from the last ten years, this just isn’t possible anymore.
As we wrote back in 2014, ‘If retail prices were to rise by 2.8% annually – in line with government targets – the value of money would decline by a further 67% over the next 40 years.’
‘If inflation follows this pattern, consumers would need £311 in 2053 to have the same spending power as an individual with £100 today – or more than £3 million to enjoy the equivalent lifestyle of a millionaire today.’
This isn’t just a problem for those who have retired. It is a daily problem for British households. Recently we wrote about shrinkflation and the impact it is having on British households. But even where size of common household items remains constant, consumers are seeing a huge fall in the amount they get for their money and what they are earning.
There are very few households in the UK at present who are not feeling badly hit from all angles. From the increased rise in the cost of living to their wages which are not keeping up with inflation. Even those who can afford to save are suffering thanks to the devaluation of the pound, low interest rates and the threat of negative rates.
Conclusion – what’s the real story?
Laughingly the Bank of England’s website reads ‘Price stability is defined by the Government’s inflation target of 2%’. In other words, climbing prices and a falling purchasing power of the sovereign currency is considered to be price stability.
Tell that to parents who are struggling to clothe, feed, transport, educate and look after the health care needs of their children. They might welcome a little bit of mild deflation. Especially those struggling to rent basic housing or buy a home.
The study which originally inspired us to look at this situation in more details was carried out by Lloyds, who at the time stated that ‘in 40 years, an individual would need £3 million to enjoy the same lifestyle as a millionaire today.’
To that we say, it’s a lot more simple than worrying about accumulating £3 million in the right time period in order to be able to retire comfortably or very comfortably.
Instead, look at the table again and realise what has held its value and protected people’s purchasing power – gold.
As it has throughout recorded history, gold has acted as hedge against inflation and a financial insurance against irresponsible and reckless governments and central banks. No matter what level of currency devaluation your country has seen, one ounce of gold is one ounce of gold, is recognised and liquid everywhere and has remained a store of value globally.
Gold is flat this year after falling 40% in recent years. However, it rose 8% last year but it is has performed very well over the long term – a 10, 20, 30 and 40 year time period.
Long term the value of your cash savings and deposits is being eaten away – especially in an era of zero percent and negative interest rates. Gold might continue to be unappreciated by the majority but a quick glance at these charts and all can see the protection it offers savers a
Related Content
Gold Hedges Against Surge In Cost Of Bread, Eggs, Beer and Fuel
News and Commentary
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Dollar Stays Weak on U.S. Politics; Aussie Falls (Bloomberg.com)
Gold marks longest win streak in 2 months as U.S. dollar sinks (MarketWatch.com)
Three things I wish I’d understood about money a long time ago (StansBerryChurcHouse.com)
The NEXT Credit Crisis Has Already Started (BonnerAndPartners.com)
Southern Europe’s Next Tipping Point – Italy (ZeroHedge.com)
Real Reason Stocks Are Setting Records? (DailyReckoning.com)
Video: Qatar Doha Bank Says Central Bank Has Enough Cash, Gold (Bloomberg.com)
Gold Prices (LBMA AM)
21 Jul: USD 1,247.25, GBP 958.89 & EUR 1,071.39 per ounce
20 Jul: USD 1,236.55, GBP 953.63 & EUR 1,075.06 per ounce
19 Jul: USD 1,239.85, GBP 950.84 & EUR 1,074.83 per ounce
18 Jul: USD 1,237.10, GBP 949.47 & EUR 1,071.82 per ounce
17 Jul: USD 1,229.85, GBP 940.71 & EUR 1,074.03 per ounce
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
Silver Prices (LBMA)
21 Jul: USD 16.43, GBP 12.63 & EUR 14.11 per ounce
20 Jul: USD 16.18, GBP 12.50 & EUR 14.07 per ounce
19 Jul: USD 16.23, GBP 12.44 & EUR 14.08 per ounce
18 Jul: USD 16.17, GBP 12.41 & EUR 13.99 per ounce
17 Jul: USD 16.07, GBP 12.30 & EUR 14.02 per ounce
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
Recent Market Updates
– Millennials Can Punt On Bitcoin, Own Gold and Silver For Long Term
– “Time To Position In Gold Is Right Now” says Jim Rickards
– Bloomberg Silver Price Survey – Median 12 Month Forecast Of $20
– “Bigger Systemic Risk” Now Than 2008 – Bank of England
– “Financial Crisis” Coming By End Of 2018 – Prepare Urgently
– Video – “Gold Should Probably Be $5000” – CME Chairman
– 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
You can’t lose if you join GATA at the New Orleans Investment Conference
Submitted by cpowell on Fri, 2017-07-21 00:47. Section: Daily Dispatches
8:50p ET Thursday, July 20, 2017
Dear Friend of GATA and Gold:
You’re being robbed — as part of the greatest financial crime in U.S. history.
The worst part: You and your family will be the victims.
The good part: There is a way to protect yourself. And I can guarantee that it will also deliver you a four-for-one profit.
You know all about this scandal.
You’re only too aware that your family’s financial well-being was mortgaged away when the Fed created oceans of debt and money, and then sent the newly created dollars to Wall Street to prop up stocks and bonds.
The result: A stock market exceeding all historical bounds of valuation, and debt loads reaching to the sky…And the absolute inevitability that the dollar (and every other fiat currency) will be trashed to wash away the value of those debts.
That means gold, silver, and mining stocks are going to soar.
In fact, they have already come off the bear market bottom. A new bull market is just now gaining steam.
Which means one more thing:
You need to be at this year’s New Orleans Investment Conference.
The dollar is going to be depreciated. It has to — it’s a matter of simple math.
That means gold has to rise significantly. Add in all the geopolitical crises brewing — from North Korea to terrorist attacks to a flurry of investigations in Washington and more — and we’ve never faced such a combination of risk and opportunity.
So my message is simple: You can’t afford to miss this year’s New Orleans Investment Conference.
You see, we’re gathering an amazing faculty — dozens of today’s leading experts in geopolitics, economics, and every investment sector — to give you insights unavailable anywhere else.
That includes conservative firebrand Tucker Carlson, Pulitzer Prize-winning commentator Charles Krauthammer, “Rich Dad, Poor Dad” author Robert Kiyosaki. …
Political muckracker Jonah Goldberg, Trump economic adviser Judy Shelton, international entrepreneur Simon Black, wealth and ivelihood preservationists Chris Martenson and Adam Taggart, influential market economist Peter Boockvar. …
Plus the latest predictions and picks from Dennis Gartman, Peter Schiff, Doug Casey, Rick Rule, Nick Hodge, Robert Prechter. …
… And the world’s leading authorities on gold, silver, mining stocks, and every investment sector, including Adrian Day, Brent Cook, The Real Estate Guys, Byron King, Mark Skousen, Eric Coffin, Gwen Preston, Louis James, Nick Giambruno, Lindsay Hall, Omar Ayales, Thom Calandra, GATA’s Chris Powell and Bill Murphy, and more.
When times are scary as they are now, when gold, silver, and mining stocks are beginning a new bull market, as they are now, the best place to be is the New Orleans Investment Conference.
More than four decades of history have proven this, time and time again.
It’s where the top metals and mining stock experts and most successful investors gather every year.
It’s where the most powerful investment strategies are detailed.
It’s where the hottest new opportunities are unveiled.
The results speak for themselves: The stock picks given out at the New Orleans Conference often multiply five, 10, even 20 or more times over after the event.
How reliable and profitable are these results?
Enough so that I can guarantee that you’ll quadruple your investment in the event or get your entire registration fee back.
The only way you can lose is to not attend.
And there are plenty of reasons to come:
With our amazing agenda this year, coupled with the remarkable turn the markets have made in our favor, you’re going to learn more, profit more, and just have more fun than you could anywhere else.
Don’t cheat yourself. Click on this link —
http://neworleansconference.com/wp-content/uploads/2017/07/NOIC2017_powe…
— to learn why this year’s New Orleans Conference is going to be the event of the decade.
Best wishes,
Brien Lundin, President and CEO
New Orleans Investment Conference
END
Markets are begging the Fed to leave them alone as markets itself will behave properly without their interference.
If Kevin Warsh, advisor to Trump, becomes the Fed head honcho he will be less likely to respond to small changes in inflation and other “noisy” indicator
(courtesy, Greg Ip/Chris Powell)
Greg Ip: Markets urge Fed to leave them alone
Submitted by cpowell on Fri, 2017-07-21 11:21. Section: Daily Dispatches
By Greg Ig
Dow Jones Newswires
via Fox Business, New York
Wednesday, July 18, 2017
http://www.foxbusiness.com/markets/2017/07/19/markets-to-fed-please-leav…
Bond yields around the world have surged since the European Central Bank hinted last month that its bond buying was coming to an end, a replay of the “taper tantrum” in 2013 when the Federal Reserve caught markets off guard with similar plans.
Both episodes are fodder for a view widespread in markets, that bonds long ago ceased to be an independent reflection of economic fundamentals and are now just a giant bet on what central banks do with their securities portfolios. According to this view, quantitative easing (QE), as this bond buying is known, zero to negative interest rates and detailed guidance on future monetary policy amount to market manipulation on a grand scale. Whatever the theoretical benefit to the economy, such manipulation muffles market signals, misallocates capital, and creates excesses that can come undone violently.
This critique has been around for years, but it stands to gain in prominence because it’s shared by some of the people who may one day run the Federal Reserve. Janet Yellen’s term as chairwoman expires next February and if President Donald Trump doesn’t reappoint her, there’s a good chance her successor will come from the financial industry. A banker or trader would not necessarily prefer higher or lower interest rates than an economist, but would be much less trusting of economic models and unwilling to deploy the exotic tools the Fed has used since 2009.The Fed has been led by economists almost continuously since 1970. Its last two chairmen, Ben Bernanke and Ms. Yellen, are prominent academic macroeconomists. Their economic training underpinned their use of QE, zero rates and forward guidance as a way of stimulating demand, getting unemployment down and holding inflation at its 2% target.
Economists have broadly praised these tools for helping bring the economy back from the brink of depression in 2008 to today’s low unemployment and inflation. On Wall Street, though, opinion has been much more ambivalent. This divide was highlighted by the 2013 taper tantrum, which Mr. Bernanke later blamed on traders’ “unreasonable and entirely inconsistent” belief that QE would go on forever. Traders, by contrast, say the Fed didn’t appreciate how QE had forced so many investors into the same trade, who all headed for the door at the first sign of a shift.
“Central bankers do not trust financial markets,” says James Bianco, who runs a Chicago-based financial markets advisory firm, recently wrote to clients that they can fix every problem in the economy “except when those cretins in the financial markets go off half-cocked.”
Indeed, many on Wall Street think central bankers have an exaggerated sense of their power. Last year just before being named Mr. Trump’s top economic adviser, Gary Cohn, president of Goldman Sachs Group Inc., said the Fed was undercut by forces beyond U.S. borders: “They’re constrained by the rest of the world and … the strength or weakness of your domestic currency.” Mr. Cohn, who will lead the search for Ms. Yellen’s successor, is widely considered a candidate.
Randall Quarles, a private-equity executive nominated as the Fed vice chairman for regulation, last year claimed that ” Years of near-zero interest rates have led to a rise in speculative positions across a wide range of asset classes, as all financial institutions find themselves under intense pressure to seek adequate returns.”
Kevin Warsh, a former investment banker who served with Mr. Bernanke on the Fed until 2011 and now serves on an outside advisory council to Mr. Trump, is also considered a potential Fed chairman. Mr. Warsh, a scholar at the conservative Hoover Institution, has criticized the Fed for changing course too often in response to noisy economic data and swings in asset prices, for believing it can manage interest rates and the dollar precisely enough to precisely target inflation, unemployment and economic growth and for treating markets “as a beast to be tamed, a cub to be coddled, or a market to be manipulated.”
A Fed under Mr. Warsh would presumably change course less often in response to new data or market movements, nor mind that inflation is a bit below 2% as it is now, and deeply reluctant to engage in QE or cut interest rates to zero.
Yet are these realistic prescriptions? Donald Kohn, who was Fed vice chairman under Mr. Bernanke, says the Fed needs to operate through markets to achieve its goals of low unemployment and stable inflation and thus it will always have to care about stocks, bonds, and the dollar, which in turn will be driven in part by actual and expected Fed policy. “It was true when rates were 5%, and when they were 0.125%.” Nor can the Fed simply ignore short-term data because it’s noisy because, he says, it may also contain a signal. Nor should the Fed forswear tools like QE which may be necessary if, in the future, interest rates hit zero again.
And it’s hard to argue with results: Unemployment is back to pre-recession levels, and if unconventional monetary policy isn’t the main reason why, it has hardly generated the calamities many critics predicted. Inflation did not skyrocket, no new financial crisis has come along, the dollar has not collapsed. Nor are Ms. Yellen and her colleagues oblivious to the distortions the Fed’s huge balance sheet may cause. It’s one reason they seem determined to start shrinking it in coming months. Every economist at the Fed learns a healthy respect for markets. Any financial pro who succeeds Ms. Yellen should have a corresponding appreciation for economics.
LAWRIE WILLIAMS: Russian central bank still adding to its gold reservesUnlike the other big central bank buyer of gold, China, Russia is continuing to add to its gold reserves and reporting its increases. China has not reported any reserve increases since last October, but the general belief is that it is almost certainly adding to its gold reserves big time regardless and only reporting its increases when it deems it opportune to do so. Certainly known gold flows into the country, together with its own gold output as comfortably the world’s No. 1 gold producer, suggests this as China’s estimated gold consumption probably only accounts for around half of that being absorbed by the country on an annual basis, and this disregards any gold being imported from unknown sources that may not find its way into official data.
In June Russia added a further 300,000 ounces (9.33 tonnes) of gold to its reserves according to the regular monthly statement of its gold holdings by the Russian Central Bank. This brings its current total holdings to some 1,716 tonnes – still the world’s sixth largest national holding as reported to the IMF – and continuing to close the gap with the official Chinese figure of 1,842.6 tonnes. The June additions are much smaller than those reported for May (700,000 ounces or 21.8 tonnes), but more than the 6.2 tonnes it added in April. Russian gold reserve additions do fluctuate on a month by month basis, but recently it has been adding to its gold reserves at around 200 tonnes annually. For H1 2017 the total to date is 100.9 tonnes so the nation is right on track to add a similar 200 tonne amount to its official gold reserves in the current year.
As we noted here a month ago, China has a track record of non-reporting of its reserve increases. Thus, as noted above, we don’t believe the Asian giant has ceased adding to its gold reserves at all and is holding these additions in accounts which it is not reporting until such a time it may feel politically, or financially, advantageous to do so. It has done this in the past only reporting big increases in its reported reserves at five or six year intervals. We suspect it has not yet reached its ultimate gold reserve target and one theory is that it considers it advantageous to continue the pretence that it has ceased buying gold as a device to keep the gold price suppressed in order to continue to adding to reserves at lower prices. We see as significant the fact that it only reported monthly additions to reserves in a 17 month runup period to the yuan (renminbi) being accepted as an integral part of the IMF’s Special Drawing Right (SDR) basket of key currencies (which also includes the US dollar, the Euro, the Japanese yen and the British pound sterling) which was finally confirmed in October last year. Ever since then, China has been reporting zero increases in its reserves on a monthly basis. We don’t think this is coincidental.
We noted also a day or so ago that Australia, the world’s second largest gold producer (just ahead of Russia itself in third place) has been sharply increasing its gold exports to mainland China and Hong Kong with a big new record Q1 figure (See: World No. 2 producer Q1 gold exports to China huge new record). Both China and Russia appear to see value in building up their gold reserves as a key element in cementing their respective positions in the global financial hierarchy.
-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 6.7695(REVALUATION NORTHBOUND /OFFSHORE YUAN MOVES STRONGER TO ONSHORE AT 6.7595/ Shanghai bourse CLOSED DOWN 6.88 POINTS OR 0.21% / HANG SANG CLOSED DOWN 34.12 POINTS OR 0.13%
2. Nikkei closed DOWN 44.84 POINTS OR .22% /USA: YEN FALLS TO 111.44
3. Europe stocks OPENED IN THE RED ( /USA dollar index FALLS TO 94.14/Euro UP to 1.1643
3b Japan 10 year bond yield: FALLS TO +.067%/ 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:: 46.67 and Brent: 48.84
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 DOWN for WTI and DOWN for Brent this morning
3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO +.497%/Italian 10 yr bond yield DOWN to 2.075%
3j Greek 10 year bond yield FALLS to : 5.271???
3k Gold at $1247.60 silver at:16.42 (8:15 am est) SILVER BELOW RESISTANCE AT $18.50
3l USA vs Russian rouble; (Russian rouble DOWN 7/100 in roubles/dollar) 58.97-
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 GOOD SIZED REVALUATION NORTHBOUND
JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 111.49 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 0.9499 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1062 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.
3p BRITAIN VOTES AFFIRMATIVE BREXIT/LOWER PARLIAMENT APPROVES BREXIT COMMENCEMENT/ARTICLE 50 COMMENCES MARCH 29/2017
3r the 10 Year German bund now POSITIVE territory with the 10 year FALLING to +0.497%
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 2.2393% early this morning. Thirty year rate at 2.8087% /POLICY ERROR)GETTING DANGEROUSLY HIGH
5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.
(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)
Euro Surges To 2-Year High In “Bipolar” Draghi Reaction; Futures Flat
The euro’s surge to an almost two-year high put a cap on the global market rally in Friday’s quiet session, with most major exchanges consolidating after a second strong week of gains. The MSCI Asia-Pacific index declined for first time in ten days while the European Stoxx 600 index was fractionally in the green as were US equity futures ahead of earnings reports from General Electric, Honeywell, Schlumberger and others. Oil gained with Brent flirting with $50, zinc rallied along with most base metals. European stocks are little changed, while Asian stocks decline with Tokyo shares falling for first time in three days.
Also overnight, AUD traders were caught wrongfooted for the second time in one week after the Aussie fell sharply following an unexpectedly dovish speech from RBA Deputy Governor Debelle, who said there’s no significance in the board’s neutral rate discussion, which earlier this week sent the Aussie surging. “No significance should be read into the fact the neutral rate was discussed at this particular meeting,” Debelle said in text of speech. “Most meetings, the board allocates some time to discussing a policy-relevant issue in more detail, and on this occasion it was the neutral rate.” In addition to the drop in AUDUSD, Australian sovereign yields all dropped 5-7 basis points in bull steepening move; three-year yield drops as much as nine basis points to 2.00% – the steepest decline since March on a closing basis. Kiwi rallied to highest since September 2016 on Finance Minister Joyce comments; yen little changed. S&P futures near unchanged. WTI crude holds near $47; Dalian iron ore falls 0.7%.
But most of the attention was on the EUR in the aftermath of Thursday’s paradoxical Draghi press conference, which led to a “bipolar” market reaction, seen as dovish by rates while hawkish by FX.
Summarizing the market reaction, Yann Quelenn, a market strategist at Swissquote Bank said,“Draghi tried to talk the Euro down, even going so far as to suggest that ECB’s quantitative easing could be increased and prolonged. But the currency markets were not buying Draghi’s line, and neither are we. Available bonds are too scarce, and turn to a taper is too clear to disguise.”
As a result, bonds jumped even as the euro headed for its strongest level against the dollar in almost two years on bets the European Central Bank will start tapering its stimulus program despite Draghi’s sounding particularly dovish, with the greenback already under pressure from U.S. political developments. Yields on Italian bonds dropped…
… while the EUR surged to the highest since August of 2015, and is up 11% for 2017…
… while the US dollar dropped to the lowest since August amid growing political concerns after reports that U.S. special counsel Robert Mueller expanded his investigation of Trump less than a day after the president told the New York Times that any digging into his finances would cross a red line.
“Everything speaks in favor of further EUR appreciation — increasing portfolio inflows, changing monetary policy, improved political risks,” according to Peter Kinsella, a London-based senior foreign-exchange and rates strategist at Commonwealth Bank of Australia. “It’s an armor-plated rally and it won’t stop”
Euro zone stock markets were modestly lower on the day, as some analysts against expressing concerns a stronger euro may do more to undermine growth going forward.
MSCI’s gauge of stocks across the globe was steady after rising for a 10th straight session on Thursday, its longest such streak since February 2015. It has advanced around 3 percent in the latest rally. In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan, which has gained about 5 percent in the past two weeks, eased 0.2 percent, dragged down by a fall in material and financial shares. Japan’s Nikkei dropped 0.2 percent.
“We can be pretty sure that when Draghi sat down for his press conference yesterday the last thing he expected to see was the euro hit its highest level in over two years and for equity markets to slide back,” said CMC Markets analyst Michael Hewson. “The strength of the euro does appear to be acting as a bit of a headwind for European stocks as they look to close the week sharply lower, in contrast to the performance of UK and US stocks this week.”
As of 6:10am ET, S&P500 futures were little-changed close to a record-high level as investors looked forward to a Federal Reserve meeting and manufacturing data next week. E-mini contracts were almost flat at 2,472.25 after the cash index ended Thursday within one point of its record-high close. Nasdaq 100 futures were also little-changed as the benchmark index climbed to all-time intraday highs for the second consecutive day. Contracts on the Dow Jones Industrial Average also held steady on Friday. European stocks are little changed, while Asian stocks decline with Tokyo shares falling for first time in three days.
In currencies, the Bloomberg Dollar Index was down 0.1 percent, in line for a weekly loss of 0.8 percent, at 10:41 a.m. in London, as the greenback weakened against most of its G-10 peers. The yen was up 0.2 percent at 111.71 per dollar. The euro climbed 0.1 percent to $1.1642 after reaching a 23-month high earlier in the session. The common currency has gained 1.6 percent this week, its second straight five-day advance.
In commodities, oil headed for a second weekly increase as U.S. crude inventories continued to shrink. West Texas Intermediate was 0.4 percent higher at $47.09 a barrel. Copper advanced 1.3 percent to $6,033 a ton, a four month high, leading a rally in industrial metals. Gold was poised for its first back-to-back weekly advance since June 2. Bullion for immediate delivery added 0.2 percent to $1,247.25 an ounce.
In rates, the yield on U.S. 10-year Treasuries fell two basis points to 2.24 percent. Benchmark yields in Germany dropped three basis points to 0.5 percent, down nine points this week. Yields in France dipped three basis points.
Bulletin Headline Summary from RanSquawk and Bloomberg
- RBA speakers temper AUD appreciation
- EU equities trade subdued following yesterday’s volatility
- Germany and Turkey traded barbs over democratic values as relations between the NATO allies slumped to their lowest ebb of the postwar period.
- The International Monetary Fund agreed to a new conditional bailout for Greece, ending two years of speculation on whether it would join in another rescue and giving the seal of approval demanded by many of the country’s euro-area creditors.
- As Parliament breaks for the summer, Prime Minister Theresa May needs to come up with answers to the political drama unfolding at home and threatening her Brexit strategy as investors predict more trouble on the horizon for a country once seen as the stable counterpoint to European turmoil.
- Looking ahead, highlights include Canadian CPI
Market Snapshot
- S&P 500 futures rise 0.2% to 2475.20
- STOXX Europe 600 unchanged at 384.07
- MXAP down 0.2% to 159.13
- MXAPJ down 0.2% to 524.46
- Nikkei down 0.2% to 20,099.75
- Topix down 0.2% to 1,629.99
- Hang Seng Index down 0.1% to 26,706.09
- Shanghai Composite down 0.2% to 3,237.98
- Sensex up 0.04% to 31,918.38
- Australia S&P/ASX 200 down 0.7% to 5,722.84
- Kospi up 0.3% to 2,450.06
- EUR/USD: +0.1% to 1.1641
- USD/JPY: -0.2% at 111.71
- GBP/USD: +0.3% to 1.3005
- German 10Y yield fell 2.3 bps to 0.507%
- Italian 10Y yield fell 7.8 bps to 1.821%
- Spanish 10Y yield fell 4.4 bps to 1.441%
- Brent Futures up 0.7% to $49.62/bbl
- Gold spot up 0.3% to $1,247.58
- U.S. Dollar Index down 0.2% to 94.17
Top Overnight News
- Trump Inquires About Power to Pardon; Aussie Tumbles After RBA Comments; Power Struggle at Guggenheim
- Trump Removal of Mueller Likely Would Trigger Justice Purge
- Ten of the nation’s biggest lenders including JPMorgan Chase & Co. and Bank of America Corp. together made $30 billion last quarter, just a few hundred million short of the record in the second quarter of 2007
- Mario Draghi said policy makers are still waiting for inflation to catch up with the economic recovery as they put off discussions on winding back stimulus until after the summer
- President Donald Trump’s interview with the New York Times on stirred speculation he may consider firing Special Counsel Robert Mueller for investigating Trump’s business dealings as part of the Russia probe
- The International Monetary Fund agreed to a new conditional bailout for Greece, ending two years of speculation on whether it would join in another rescue and giving the seal of approval demanded by many of the country’s euro-area creditors
- OPEC and Russia’s plan to clear the global oil glut hasn’t worked as they hoped, but there’s little expectation the world’s largest producers will act more aggressively when they meet this weekend
- Investors may turn to equity at the expense of debt given he rolling five-year return on global stocks has outpaced government debt over the past three months as weighted by the standard deviation of gains
- ACS Studies Counterbid to Atlantia’s $19 Billion Abertis Offer
- Paysafe Gets 590p/Share Takeover Proposal from CVC, Blackstone
- Microsoft Regains Turnaround Momentum on Strong Cloud Growth
- EBay Rattles Investor Faith With Slow Merchandise Growth
- Visa’s Kelly Extends First-Year Win Streak as Outlook Raised
- Zinc’s Rally Set to Endure as Top Producer Predicts $3,000
- Google Says Russia Leads in State Requests to Remove Content
- Exxon to Challenge Treasury Finding It Violated Russia Sanctions
- Credit Suisse’s Once-Mighty Stocks Unit Withers Under Thiam
- Delta Wins Lease Deal for Air Terminal at New York’s LaGuardia
Asia equity markets traded marginally in the red, following the lacklustre close on Wall St. amid a slew of earnings releases which were ultimately mixed. ASX 200 underperformed, led by the soft resources, metals and energy sectors, whilst Nikkei 225 also traded in the red to conform to the tone in the region, as JPY’s indecision during the session offered no direction for the currency. Elsewhere, Shanghai Comp. and Hang Seng both traded subdued, with the PBoC’s increased open market operations of CNY 140bln failing to lift the Chinese bourses. Finally, 10yr JGBs trade marginally higher amid the cautiousness in the region, with the curve steepening as the super-long end underperforms. Participants also await the auction for 10yr, 20yr and 30yr government paper.
Top Asian News
- HNA Group’s Dealings With U.S. Travel Startup to Be Probed
- OZ Minerals Says CFO Luke Anderson to Leave Co. in September
- Bank Indonesia Says Rate Review Delayed by Swearing-in Ceremony
- RBA’s Aussie Dollar Rollercoaster Shows Dilemma for Global Peers
- Reliance to Give One Free Share for Each Held After 8-Year Gap
- Huhtamaki Shares Fall as Indian Tax Reform Hits Demand
- China Artificial Intelligence Bid Seeks $59 Billion Industry
- AAC Drops Most in 7 Years as Jefferies Cites Revenue Warning
European equity markets trade mixed amid currency influence. Subdued trade has been evident, following yesterday’s ECB press conference, with EU bourses trading range bound for the morning. The FTSE out-performs as it benefits from the weaker GBP. Telecoms out-perform as earnings continue to dictate the state of play, following a strong report from T-Mobile US being followed by a beat for Vodafone. Fixed Income markets have been led by bunds, with the latest ECB survey being responsible for a second round of bidding in German paper. The survey cut the inflation forecast by 0.10% for 2017 — 2019, with the statement stating that risks are still tilted to the downside.
Top European News
- U.K. Government Borrowing Jumps as Inflation Boosts Debt Costs
- Landis+Gyr Trades Below Offer in Largest Swiss IPO Since 2006
- European Banks’ 2Q Likely to Be Better Than U.S. Peers: HSBC
- SKF CEO Says Electric Cars May Hurt Part of Bearing Business
- ECB: Professional Forecasters Cut Inflation Outlook Through 2019
- Siemens Slams Brakes on Russia After Turbines Spotted in Crimea
- Hochtief Slumps as ACS Mulling Abertis Bid Lowers Buyout Chance
- Swatch’s Strong Forecast Bolsters Decision to Keep Workers
In currencies, RBA Deputy Governor Debelle stated no automatic reason to conform to recent hikes abroad. New Zealand Finance Minister Joyce stated NZ firms are coping well with NZD at current levels, added NZD reflects strong NZ economy. FX markets have slowed this morning, as FX traders seem non-excitant following yesterday’s volatility. The price action largely came overnight from the antipodeans. Comments from New Zealand’s Finance Minister Joyce stated that NZ firms are coping well with NZD at current levels further adding that a strong NZD reflects strong NZ economy and he is unperturbed by NZD strength. NZD/AUD broke through 0.94 as bulls arrived, consolidating just below at 0.9390, a firm break of this level could see a test of 0.9480. Further, Aussie weakness aided the NZD/AUD push, as RBA Deputy Governor Debelle stated that there is no automatic reason to conform to recent hikes abroad.
In commodities, precious metals have continued their bullish grind, spurred by the Trump reports yesterday. Gold looks toward 1250.00, as July’s recovery continues. Oil continues to struggle to find any real direction, however, WTI’s July 43.65 upward trendline continues to provide support, WTI bulls would need to see a firm break of 48.50 to indicate a change in momentum
No economic data is scheduled in the US.
DB’s Jim Reid concludes the overnight wrap
Good practise today for the arrival of the twins as a late night work dinner coupled with waking 45 minutes before my already early alarm has left me feeling decidedly sleep deprived. It was an interesting macro dinner with 26 clients and DB representatives including our own CEO. The consensus from clients seemed to be that the carry trade would survive the summer but with question marks about what happens once both the ECB and the Fed start their imminent balance sheet changes. There was plenty of optimism on Europe with the Euro seen as likely to appreciate further with perhaps that appreciation eventually being the risk to growth. On the other hand there was plenty of negativity on the UK with Brexit seen as a potential disaster for the economy, Gilts and Sterling. I’m not quite so sure on the Brexit impact but there is certainly huge execution risk. Curveballs that could derail the short-term carry party were that Mr Trump might decide to turn to the delicate geo-political issues (e.g. North Korea) to divert attention away from the legislative challenges and also that the upcoming debt ceiling deadline around October could be really interesting. The latter being another test of Mr Trump’s relationship with Congress. Finally on the dinner, one client remarked that this was the first of such gatherings in a long time where nobody had really mentioned buying very historically cheap volatility. That he thought might be a sign that now might be the time.
So an interesting night and given that it occurred on an important Draghi day it was interesting that there wasn’t much discussion on what he said at his press conference. All the talk yesterday leading into the event was on whether or not we would get an affirmation of the hawkish signals made in Sintra last month. In the end it felt like Draghi was checking in for his summer holiday, not pulling back from the Sintra sentiments but also not wanting to rock the boat with new info and risk being called back from hols to deal with a disturbed market in illiquid conditions. In fairness it wasn’t a completely damp squib and we thought our European chief economist Mark Wall summed it up nicely with a “two steps forward, one step back” conclusion. Mark noted a few dovish elements from the meeting including the unchanged language on inflation in the press statement, the fact that the committees have not yet been tasked with studying the policy options, the use of Praet’s more cautious “patience” watchword, the technical reinterpretation of the word “reflation” he used in Sintra, and once again the confidence in the flexibility of the asset purchase programme which in Mark’s mind is a hint that if it needs to continue it can.
On the other hand, Draghi appeared fairly undeterred by the post-Sintra tightening of markets which seemed to give the green light for the Euro to surge another 1% yesterday and break-through 1.160 for the first time since August 2015. Govies chopped around but the range for core markets wasn’t particularly ground breaking. 10y Bunds traded as high at 0.557% and as low as 0.520% in a short space of time before eventually finishing near the bottom of that range and 1.2bps lower on the day. French and Dutch 10y bonds were also 2.6bps and 1.4bps lower. There was a decent rally for the periphery however with yields in Italy and Spain 8.4bps and 9.6bps lower, respectively. It was notable that the move for latter now means that the Spain-Germany 10y spread is at the narrowest since 2015.
So where does that leave the ECB? With the council deliberately avoiding setting expectations for the timing of a policy decision, Mark believes that this reduces the probability of a decision as soon as September. December might however also be considered too late and so in Mark’s view an announcement on October 26th now feels most likely with committees tasked on September 7th. The onus now will be on the inflation data in the coming months. Financial conditions and of course economic growth shouldn’t be underestimated either. Next month’s Jackson Hole speech will benefit from another month of inflation data and is likely to be the next big event for markets.
That rally for the Euro appeared to weigh on equity bourses in Europe with the Stoxx 600 eventually closing -0.38%. Across the pond the S&P 500 slipped into the red in the first hour of trading after US special counsel Robert Mueller announced that he was examining a broad range of financial transactions involving President Trump. That story broke one day after Trump told the NY Times that any investigations around his personal finances would be crossing a red line. Markets recovered however and the S&P 500 (-0.02%) eventually ended little changed. The Dollar index ended the session down -0.50% while Gold was +0.26%.
This morning in Asia it’s been a fairly quiet end to the week although the tone is slightly risk off. The Nikkei (-0.25%), Hang Seng (-0.24%), Shanghai Comp (-0.11%) and ASX (-0.40%) have all slipped into the red. Commodities are broadly unchanged along with the USD.
Jumping to the latest on Brexit, this morning the Guardian are reporting that the UK cabinet will agree to the free movement of EU citizens for up to 4 years as part of a transitional deal. The article suggests that a consensus in the cabinet has been secured, with the news likely to help the softer-Brexit camp. One to watch today potentially.
Yesterday’s economic data was a bit of a sideshow but for completeness, in the UK, June retail sales (ex-auto fuel) was slightly higher than expectations (+0.9% mom vs. +0.5% expected). Over in the US initial jobless claims fell 15k to 233k last week, lower than expectations of 245k while the Philadelphia Fed’s headline manufacturing index fell 8.1pts to a still solid 19.5 in July, albeit a bit below market expectations (23.0), with many of the key component indices also weaker (including shipments and new orders index).
Before we take a look at today’s calendar, this morning our European equity strategy team have published a first take on Q2 earnings season. DB’s Wolf von Rotberg highlights that so far Q2 is off to a weak start: with around 20% of Stoxx 600 companies having reported, only 47% of companies have beaten on EPS, down from the stellar 63% in Q1 and below the historical average of 53%. Most of the reports so far are from non-euro earners – and with the euro up 4% during Q2, FX pressures are likely to keep the Q2 beat ratio subdued once the euro earners start reporting. FX strength is also leaving its mark on the full-yearconsensus earnings expectations, with Euro area earnings revisions having turned sharply negative over the past two weeks. The team see downside risk to their expectation of 10% EPS growth this year, given our FX strategists’ recent 14% upward revision to their year-end projection for the EUR trade-weighted index (every 10% rise in the EUR TWI lowers EPS by 5%).
Looking at what is a very quiet day ahead now. In the UK, public sector net borrowing data for June is due. Across the Atlantic, there are no prints due in the US, however Canada will release data on June CPI (Bloomberg est: 1.1% yoy) which could worth a watch given the recent focus on global inflation. Away from the data, US earnings seasons remains a focus, with General Electric, Honeywell International, Colgate-Palmolive and Fifth Third Bancorp schedule to report.
3. ASIAN AFFAIRS
i)Late THURSDAY night/FRIDAY morning: Shanghai closed DOWN 6.88 POINTS OR 0.421% / /Hang Sang CLOSED DOWN 34.12 POINTS OR 0.13% The Nikkei closed DOWN 44.84 POINTS OR .22%/Australia’s all ordinaires CLOSED UP 0.46%/Chinese yuan (ONSHORE) closed UP at 6.7695/Oil DOWN to 46.67 dollars per barrel for WTI and 48.84 for Brent. Stocks in Europe OPENED IN THE RED,, Offshore yuan trades 6.7595 yuan to the dollar vs 6.7695 for onshore yuan. NOW THE OFFSHORE IS STRONGER TO THE ONSHORE YUAN/ ONSHORE YUAN STRONGER (TO THE DOLLAR) AND THE OFFSHORE YUAN IS MUCH STRONGER TO THE DOLLAR AND THIS IS COUPLED WITH THE WEAKER DOLLAR. CHINA IS VERY HAPPY TODAY
3a)THAILAND/SOUTH KOREA/NORTH KOREA
NORTH KOREA
USA now urges all American tourists to depart North Korea immediately as it bans all future tourists from visiting this country
(courtesy zero hedge)
US Urges All Nationals In North Korea To “Depart Immediately”, Bans Tourists From Visiting
Dennis Rodman will be disappointed to learn that the US is set to ban all citizens from traveling to North Korea, according to two agencies that operate tours there. Koryo Tours and Young Pioneer Tours said the ban would be announced on 27 July to come into effect 30 days later, the BBC reported. “After the 30-day grace period any US national that travels to North Korea will have their passport invalidated by their government.” The ban comes one month after US student Otto Warmbier died following his imprisonment by the Kim regime.
China-based Young Pioneer Tours, which had taken Warmbier to North Korea, and Koryo Tours said the ban will come into force on July 27 – the anniversary of the end of the Korean War – with a 30-day grace period. Koryo Tours added that the Swedish embassy in Pyongyang, which handles consular affairs for the United States in the North, informed it of the ban, but did not say how long it would last. The U.S. embassy in the South Korean capital, Seoul, did not immediately respond to a request for comment.
Rowan Beard said that the 30-day grace period would “give leeway for any [Americans] currently in the country as tourists or on humanitarian work”. Simon Cockerill, of Koryo Tours, said: “It remains to be seen what the exact text is, but the indication is it’s just a straight up ban on Americans going.” Mr Cockerill told the BBC the agency would still conduct tours and take Americans until the ban came into effect.
Additionally, Rowan Beard of Young Pioneer Tours, told the BBC the embassy was urging all US nationals to depart immediately. He said the embassy was trying to check on the number of US tourists left in the country.
For now there has been no official confirmation from the US: the state department continues to have an alert dated 9 May strongly warning US citizens not to travel to North Korea.
As the BBC adds, there has been movement towards a ban for a while in the US, which increased with the Warmbier death.
In May, two congressmen introduced the North Korea Travel Control bill to cut off the foreign currency the country earns from American tourists. The House foreign affairs subcommittee is scheduled to take up the draft legislation on 27 July but it would still have to go to the Senate. So there could be an executive order. Last month, Secretary of State Rex Tillerson said: “We have been evaluating whether we should put some type of travel visa restriction to North Korea. We have not come to a final conclusion, but we are considering it.” Apart from the treatment of Americans in North Korea, tension has been increasing over Pyongyang’s nuclear programme.
Some are suggesting the US is using the date the ban is set to be announced – 27 July – to cloud North Korea’s Victory Day on the same day. It was not clear if the urge to clear out US citizens from North Korea is a precursor to more “aggressive” (or kinetic) action by the US government.
end
b) REPORT ON JAPAN
end
c) REPORT ON CHINA
A very important story. Rare earths which are used in the defense industry as well as mobile phones are dominated by the Chinese with 90% of the market. It is difficult to mine and yields are tiny. After 2012, China lowered the price on these rare earths which basically shut out everybody else from the market. Now China is raising the prices as they cite environmental concerns. However the uSA is concerned that China will not supply
an important story..
(courtesy zero hedge)
Rare Earth Mania And China/US Trade Spat 2.0?
We doubt that many have heard of it, or know what it’s used for, but the price of Praseodymium-Neodymium (sold in oxide form) has been on a tear, up 43% ytd.
Neodymium and Praseodymium, collectively known as NdPr, are two of the family of seventeen rare earth elements (REEs). The price of several other REEs, like Terbium – Ticker SHRATBOX (really) and also used in very powerful permanent magnets – have been rising too (up 36% ytd).
Unfortunately for the rest of the world, especially the US, China has a monopoly on the rare earths market with 85-90% of global production.
REEs are strategically important due to their (small but critical) applications in products used for the defense and technology sectors – including today’s mainstay of human existence, the mobile phone. China’s dominance arose from undercutting almost every other mining and processing player in the decades prior to its WTO entry.
The current story behind the higher prices is that China is getting serious (again) about the environmental impact of REE mining, and is making renewed efforts to curb significant levels of illegal production. On Monday, managing director of Australian-based rare earth producer, Lynas Corp (who just happened to note how her company is “highly leveraged to any increase in price for NdPr”) commented.
“Demand has always been strong, growth for the magnetic materials will increase as there is greater adoption, particularly for electric vehicles…(and) wind turbines. The second thing, however is that the Chinese central government has been very active over the last six months in ensuring that a lot of what had been announced recently, has actually been enforced on the ground…they have inspected a lot of plants to ensure that they have proper documentation for their raw materials and that has helped to eliminate illegal supply.”
The environmental impact in China is certainly horrendous (see BBC report, “The dystopian lake filled by the world’s tech lust” here). Sometimes described as “hell on earth” or “the worst place on earth”, this is one view of the Baotou toxic lake, 20 minutes from Inner Mongolia’s largest city with 2.5 million inhabitants.
Okay but…
Obviously, the most important issue these days is what does it all mean for equity prices? Higher rare earth prices are beginning to have an impact. This is the chart for the industry behemoth, China Northern Rare Earth Group.
Closer to home, the price of the VanEck Rare Earth/Strategic Metals ETF has also been moving higher, even though some of holdings are plays on non-REE strategic metals, like moly and titanium.
With a market cap of $62m and small/mid cap constituents, things could get interesting if REE prices enter a sustained bull phase.
Adding insult to injury for its strategic interests, the last remaining rare earth mine in the United States, Mountain Pass in California, has recently been sold to a consortium including Shenghe Resources Holding, which has alleged ties to the Chinese Government.
Two days ago, Michael Silver, CEO of advanced materials manufacturer, American Elements Corp., met with Trump’s chief strategist, Steve Bannon, and Chief of Staff, Reince Priebus, at the White House. In “This CEO Wants Trump to Nationalize the Only Rare-Earth Mine in America”, Bloomberg reported.
“The mine should be converted to a national laboratory ‘dedicated to rebuilding America’s rare-earth mining industry so the world knows it is safe to build high-tech manufacturing plants in the U.S.,’ Silver said…he’s proposing the U.S. government apply the Takings Clause of the 5th Amendment and acquire Mountain Pass by eminent domain.”
If anybody’s thinking that surging rare earth prices, China/US tensions and soul-searching about how the US could have let China dominate the global supply of such critical materials, sounds familiar… they’d be correct. It feels a bit like 2010 when there was a sudden mania followed by a collapse in rare earth stock prices. Below is the Lynas Corp chart during 2010-12.
In the end, China backed down on substantial cuts to export quotas, which it had justified on environmental grounds. In part, this was due to WTO intervention at the behest of western countries led by the US.
The NdPr price peaked in Summer 2011 and never really recovered (chart below). Some analysts speculated whether the resolution of the rare earths dispute, peak in the gold price and the beginning of the ramp in Chinese gold imports through Hong Kong were linked. There was no evidence to support the assertion.
This time around, we have no idea whether the situation in rare earths will come close to the fun that was had in 2011, however, we remain mindful of the quote attributed to Deng Xiaoping that: “There is oil in the Middle East, but there is rare earth in China.”
4. EUROPEAN AFFAIRS
Anarchists Raid Bank Of Greece In Downtown Athens
Security measures in the building of the Bank of Greece in downtown Athens are not as good as they should be.
As KeepTalkingGreece reports, a crowd of anarchists from the well-known group Ruvikonas entered the Bank of Greece on Wednesday afternoon.
Some 20 people entered the Bank of Greece from a side entrance at 1:40 pm, threw leaflets and fled.
The Bank personnel tried to hide under the desks and behind counters, media reported.
Some of the leaflets read:
“Bank of Greece is the doorman of the Memoranda”
Police squads arrived at the Bank, detained several people in the surrounding area. The detainees are – or meanwhile were – to be set free as they are not in connection with the raid.
END
oH oh!! THIS WILL NOT GO OVER WELL!! GERMAN AUTHORITIES STUMBLE ON DOCUMENTS OF AN AUTO CARTEL WITH SECRET MEETING AND THE PLANNING OF THE EMISSION SCANDAL. NO WONDER ALL 3 HAD THE SAME TECHNOLOGY HOW TO RIG THE EMISSIONS. THIS IS WILL RESULT IN MORE FINES FOR THE BIG 3 GERMAN AUTO MAKERS.
(courtesy zero hedge)
German Automakers Tumble Following “Bombshell” Cartel Allegations, Dax Slides
For more than 20 years, the German auto industry has been operating like a cartel, according to a new “bombshell” report, which has sent the shares of Germany’s biggest automakers reeling.
Spiegel is reporting that the big three German car companies – Volkswagen, Daimler and BMW – have been holding secret “working groups” since the 1990s, where they would discuss, production costs, suppliers, strategy and – importantly – emissions purification. The meetings were initially reported to regulators by Volkswagen in a filing with German competition authorities. The magazine described the meetings as “one of the biggest cartel cases in German economic history.”
It was at these meetings that the companies agreed on the appropriate gas purification standards for their diesel vehicles, thus laying the groundwork for the diesel scandal that has resulted in massive fines for these companies both in Germany and the US. The working groups also selected suppliers, helping to set costs for vehicle components. The ongoing discussions allegedly involved more than 200 employees in 60 working groups in areas including auto development, gasoline and diesel motors, brakes and transmissions. Talks may have also involved the size of tanks for AdBlue fluid for diesel autos, according to Bloomberg.
The allegations are guaranteed to result in more fines for the automakers, which were just beginning to move on from the diesel emission scandal that rocked the industry.
“These allegations look very serious and would mean more than 20 years of potential collusion,” said Juergen Pieper, a Frankfurt-based analyst with Bankhaus Metzler told Bloomberg. “There seems to be a never-ending story of bad news about the industry’s bad behavior.”
As Bloomberg explains, European carmakers are shoring up diesel as they need it to bridge the gap between tightening rules for greenhouse-gas emissions as they invest in ramping up electric-car plans.
The Spiegel report followed announcements by Audi and Mercedes this week that they’re recalling diesel vehicles to update pollution-control software amid probes by environmental authorities into potential emissions violations.
German authorities first became aware of the problem when they raided Volkswagen’s offices last year, searching for evidence that the company sought to rig steel prices. Instead, it found evidence of collusion between German automakers. Two weeks later, VW submitted a voluntary admission to antitrust authorities, as did Daimler in hopes of minimizing penalties.
Following the report, which assures billions more in settlement costs and litigiation fees are coming, the shares of Germany’s Big-3 have all tumbled on the news:
… dragging the Dax to session lows, which is starting to affect US stocks.
END
GERMANY
A judge states that the German court system will collapse with the hundred of thousands of appeals filed:
(courtesy zero hedge)
“Everything Will Collapse” German Judge Warns As Refugees Flood System With Appeals
Hundreds of thousands of migrants who’ve appealed decisions by Germany’s immigration courts have brought the country’s legal system to the brink of collapse, a German judge warned on Friday.
More than 1.3 million migrants have arrived in Germany since the beginning of 2015. Since then, the sheer number of cases filed has overwhelmed the civil courts of the country, said Robert Seegmuller, chairman of the Association of German Administrative Law Judges, speaking to the publishing house Redaktionsnetzwerk Deutschland.
“The situation is dramatic for administrative courts,”Seegmuller told RND. “We are now completely stretched to our limits.”
Seegmuller had been complaining since spring about the number of lawsuits being filed against the Federal Office for Migration and Refugees. Thousands of applicants have challenged decisions delivered on their cases by the office, including deportation orders back to potentially unsafe countries such as Afghanistan. RND estimates there are approximately 250,000 asylum-related cases waiting to be brought before the courts.
“The administrative court system cannot endure such a figure in the long run. At some point, everything will collapse,” Seegmüller warned. “Things may go well for a while, but not permanently.”
Just like in the US, where illegal immigrants have plotted to launch mass appeals to slow down the immigration process, the German legal system is struggling with a shortage of judges and other personnel, the judge added.
In recent months, Germany’s migrant situation, which had been pushed off the front pages after the late 2015 and early 2016 turmoil, one again reemerged drmatically, following reports that a group of right-wing German soldiers allegedly plotted the assassinations of left-wing politicians, intending to blame the crimes on migrants. One suspect had obtained a second identity as a Syrian refugee, leading to a review of some 100,000 asylum decisions, which in turn has throttled the German immigration system, nearly bringing it to a standstill, and created an even greater backlog of admissions.
5. RUSSIA AND MIDDLE EASTERN AFFAIRS
Lavrov Scoffs At Western Media: “Trump-Putin May Have Met Multiple Times… In The Bathroom”
Headlines ripped across social media – ‘the Russians admit that Trump and Putin may have met more than 3 times’ – sparking an instant ‘I told you so’ from the ‘left’ proving the conspiracy of collusion is correct. However, we note that the source of this new story, Russian Foreign Minister Sergie Lavrov, compared these conversations to “children mingling at a kindergarten,” making fun of an NBC reporter, adding “maybe they met in the toilet?”
“When you are bought by your parents to a kindergarten do you mix with the people who are waiting in the same room to start going to a classroom?
I remember when I was in that position I did spend five or ten minutes in the kindergarten before they brought us to the classroom.”
As a reminder, while the White House didn’t use this analogy to explain press reports of a second, undisclosed Trump-Putin conversation at the G20 meeting in early July, it fits.
“There was no ‘second meeting’ between President Trump and President Putin, just a brief conversation at the end of a dinner.
The insinuation that the White House has tried to ‘hide’ a second meeting is false, malicious and absurd,” a White House Official said.
And now it seems Lavrov is piling on to Western media’s constant efforts to paint the relationship one way, adding:
“They might have met even much more than just three times,”
“After the dinner was over…I was not there…President Trump apparently went to pick up his wife and spent some minutes with President Putin…so what?” Lavrov said.
Turkey Poised To Invade Syria’s Idlib Province As Inter-Jihadist Violence Rages
Two Salafi-jihadi factions in Syria’s Idlib province have been engaged in a brutal inter-“rebel” (or rather inter-jihadist) war this week, prompting Turkey to prepare a potential invasion to protect its favored factions on the ground. On Thursday, Hay’at Tahrir al-Sham (HTS/Al-Qaeda) continued to capture towns in Idlib’s countryside from rival Ahrar al-Sham and Turkish backed FSA groups after an uneasy truce between the rebel factions quickly collapsed days prior, causing the weaker Ahrar al-Sham to call in Turkish support.
Multiple reports coming out of the region indicate that Turkey has been transferring hundreds of jihadists from its former Euphrates Shield forces in northern Aleppo province (the Turkish occupied “Jarabulus pocket”) to Turkey’s Hatay border region, where they began entering Idlib through the Ahrar controlled Bab al-Hawa crossing. However, in the early morning hours of Friday HTS reportedly captured part of the Bab al-Hawa crossing in a significant blow that could trigger a bigger Turkish response. A larger force may be awaiting word from Ankara for a full scale invasion involving Turkish Army troops which might come at any moment.
What is certain is that things are about to get even bloodier, and either Turkey will occupy yet more Syrian land, or the Syrian Army will eventually move in to mop up Idlib once the warring groups have depleted and utterly exhausted each other. The latter scenario is a likely possibility given increased Russian leverage over Turkish actions: Turkey would have to seek a nod from Moscow before occupying Idlib overtly. So far, Turkey’s proxy forces are being swallowed up by the more formidable HTS.
Ahrar al-Sham tank/ via jihadi social media.
Dozens of militants from both factions have been killed across the rebel controlled Idlib province in a week that’s seen dramatic shifts in the geopolitical landscape over Syria, including sudden news of the White House’s ending the CIA weapons program, as well as Turkey’s leaking of US forward operating base locations in northern Syria through its state-run news channel, further escalating tensions between Turkey and the US.
On Wednesday Al-Masdar News reported the extent of initial fighting, which even involved tanks and other major weapons systems:
Full-scale war has broken out between a number of major Idlib-based militant factions. Opposition media is indicating that the forces involved are seizing entire townships from each other throughout Idlib and Hama, even going so far as to use heavy weapons (i.e. tanks) to do so.
…Ahrar Al-Sham is currently storming HTS bases at the town of Harem in northern Idlib. The two groups are also exchanging fire in the town of Salqin where both have bases. The engagement has thus far left 16 people dead, most of which are Ahrar al-Sham fighters.
Video: Hayat Tahrir al-Sham Clashes With Ahrar al-Sham In Idlib Province/Source: SouthFront
Idlib’s in-fighting can be seen as a mini civil war for leadership and land among terrorist factions. Some reports link the cause of this week’s major escalation to a dispute over the presence of FSA and more “nationalist” flags being flown by Ahrar-aligned groups. Hay’at Tahrir al-Sham (HTS), which opposes FSA leaning groups, is essentially the current iteration of al-Nusra Front (now calling itself Fateh Al Sham), which is a coalition led by al-Qaeda’s main off-shoot in Syria. While ISIS has been the focus of international headlines over the past years, Nusra has been no less barbaric in unleashing terrorism on civilians, and like ISIS it seeks to establish an Islamic caliphate.
Nusra’s ideology is indistinguishable from that of ISIS, and the two were the same organization as they fought as one in Northern and Eastern Syria throughout much of 2013. More recently Nusra has made multiple attempts to rebrand itself in the hopes of attracting more external support. But rival Ahrar al-Sham has had more success in this area as it’s been a favored so-called “moderate” opposition group of choice among prominent think tanks such as The Brookings Institution (which has a location in Qatar) – this in spite of being more accurately called the “Syrian Taliban” by some prominent experts for its brutal sharia style rule.
Shockingly, the group landed an op-ed piece in The Washington Post in 2015, and made a direct appeal to the American public, defending itself as “moderate” and not “extremist”. Even now, Syrian opposition media and friendly political and media allies in the West are championing the cause of Ahrar al-Sham, continuing to claim it represents the true spirit of the “revolution”.
Map source: Andrew Illingworth, Oz Analysis
But Ahrar al-Sham also has organizational roots in al-Qaeda, though external patrons – especially Qatar and Turkey – have long seen the group as a viable partner on the ground. Even the US has at times entered into a de facto relationship with both groups now vying for control of Idlib: in 2015 both Nusra and Ahrar were key leading factions of the umbrella organization “Army of Conquest” which captured Idlib City from the Syrian government in March 2015. As was widely reported at the time, US intelligence officers assisted the al-Qaeda stacked Army of Conquest from a US-Turkish led “operations room” in southern Turkey.
This week it was revealed that Trump made the decision earlier this month to shut down the years-long CIA covert program to aid rebel groups in Syria, while the Pentagon continues to support the Kurdish-led SDF as it fights in Raqqa and elsewhere. Various media pundits have immediately begun blaming the renewed Idlib chaos on Trump’s closure of the CIA program. The Daily Beast’s Roy Gutman (who actually believes Assad created ISIS) laments:
As moderate rebel groups in Syria tried to digest the news that the U.S. will soon cease all covert support for them—a sudden revelation they learned from press reports—northern Syria descended into further chaos.
…Now the very existence of moderate local forces backed by the U.S. hangs in the balance.
And more absurdly the usual neocons are using this as an opportunity to call for revived CIA intervention a mere two days after the covert program’s termination was announced: David Ignatius, quickly out with a teary-eyed post mortem on the CIA’s Syria campaign (which he gleefully boasts in its heyday “may have killed or wounded 100,000 Syrian soldiers and their allies”), writes:
Contrast the sad demise of the CIA’s anti-Assad program in western Syria with the rampaging campaign against the Islamic State in the east. What’s the difference? In the east, motivated, well-organized Syrian fighters are backed by U.S. warriors on the ground and planes in the sky. In this game, halfway is not the place to be.
Take your pick: Syrian al-Qaeda (HTS) or Syrian Taliban (Ahrar al-Sham)? As the jihadists of Idlib continue kill each other off the weeping and gnashing of teeth in Washington is sure to intensify.
6 .GLOBAL ISSUES
7. OIL ISSUES
OPEC is now exceeding 33 million barrels per day this month and thus breaking its promise of a cut in supply
This is forcing the WTI price to head toward the 45 dollar market
(courtesy zero hedge)
.
WTI Tumbles Towards $45 Handle After Tanker-Tracker Signals OPEC Supply At 2017 Highs
Despite the ‘bullish’ inventory data (and demand), WTI Crude just sank towards a $45 handle – red on the week – as tanker-tracking firm Petro-Logistics signals OPEC crude supply rising again this month will be the highest this year (along with US shale output at record highs).
As Bloomberg notes, supply from OPEC members is set to exceed 33 million barrels a day this month, more than 600,000 barrels a day higher than the first-half average, according to Petro-Logistics. The data could reinforce skepticism about the effectiveness of the Organization of Petroleum Exporting Countries’ production cuts as officials from the group gather for meetings in St. Petersburg, Russia.
This pushed prices below the pre-DOE data lows…and red for the week.
Oil remains in a bear market on concern that growing output in the U.S., Libya and Nigeria is offsetting other producers’ curbs, meaning stockpiles aren’t shrinking fast enough. The report from Petro-Logistics found that Saudi Arabia, the United Arab Emirates and Nigeria are behind the extra barrels. The latter is exempt from making cuts as it tries to recover from disruption due to theft,sabotage and attacks by rebels.
The findings of Petro-Logistics further weaken “the foundations under the output deal, which is what the market is also saying by sending prices lower,” said Jens Naervig Pedersen, analyst at Danske Bank A/S. “It puts pressure on OPEC before the meeting this weekend.”
Oil bulls hope remains with the rig count later today and more headlines of hope ahead of Monday’s meeting of oil leaders
end
8. EMERGING MARKET
VENEZUELA
We discussed earlier in the week, that the USA was planning sanctions against Venezuela. One of the sanctions may be the halting of oil imports from that country
(courtesy Irina Slav/OilPrice.com)
U.S. May Halt Oil Imports From Venezuela
Authored by Irina Slav via OilPrice.com,
The Trump administration is mulling over sanctions against senior Venezuelan government officials, and additional measures could include sanctions against the country’s oil industry, such as halting imports into the U.S., according to senior Washington officials who spoke to media.
The goal of the sanctions is to prevent the Nicolas Maduro government from having things its way at a July 30 election for a Constituent Assembly that, the U.S. administration believes, would serve to cement Maduro’s power and turn Venezuela into a “full dictatorship.”
The Constitutional Assembly vote was proposed by the government as a means of tackling the political crisis that Venezuela slid into last year, after the election of a new parliament where the opposition had a majority that put it at odds with the government. A Constituent Assembly can rewrite the country’s constitution, and many observers see the move as an attempt to strengthen the current regime’s hold on power.
After months of often violent protests, the opposition has now called a 24-hour national strike after conducting an unofficial referendum that, Al Jazeera reports, suggested overwhelming opposition to the idea of voting for a Constituent Assembly and equally overwhelming support for transparent parliamentary elections.
Russian Sputnik quoted Venezuela’s Foreign Minister Samuel Moncada as saying Venezuela will reconsider its relations with the U.S. should Washington go ahead with the sanctions, which, for the time being, seem to target two senior government officials: Defense Minister Vladimir Padrino Lopez and the second most senior figure in the ruling Socialist Party, Diosdado Cabello. The allegations against them are for rights violations.
Venezuela is the third-largest oil exporter to the US, with the daily rate of imports for the week to July 7 at 823,000 barrels, according to the EIA, about 30,000 bpd less than Saudi Arabia’s daily exports to the U.S.
In 2016, Venezuelan imports accounted for 9.5 percent of total U.S. crude imports.
Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings FRIDAY morning 7:00 am
Euro/USA 1.1643 UP .0015/REACTING TO + huge Deutsche bank problems + USA election:/TRUMP HEALTH CARE DEFEAT//ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/ /USA FALLING INTEREST RATES AGAIN/EUROPE BOURSES ALL IN THE RED
USA/JAPAN YEN 111.48 DOWN 0.399(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 1.3008 UP .0043 (Brexit March 29/ 2017/ARTICLE 50 SIGNED
THERESA MAY FORMS A NEW GOVERNMENT/STARTS BREXIT TALKS
USA/CAN 1.2594 DOWN .0003 (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 15 basis points, trading now ABOVE the important 1.08 level RISING to 1.1643; Europe is still reacting to Gr Britain HARD BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and now the Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ TRUMP HEALTH CARE BILL DEFEAT AND MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED DOWN 6.88 POINTS OR 0.21% / Hang Sang CLOSED DOWN 34.12 POINTS OR 0.13% /AUSTRALIA CLOSED UP 0.46% / EUROPEAN BOURSES OPENED IN THE RED
We are seeing that the 3 major global carry trades are being unwound. The BIGGY is the first one;
1. the total dollar global short is 9 trillion USA and as such we are now witnessing a sea of red blood on the streets as derivatives blow up with the massive rise in the rise in the dollar against all paper currencies and especially with the fall of the yuan carry trade. The emerging market which house close to 50% of the 9 trillion dollar short is feeling the massive pain as their debt is quite unmanageable.
2, the Nikkei average vs gold carry trade ( NIKKEI blowing up and the yen carry trade HAS BLOWN up/and now NIRP)
3. Short Swiss franc/long assets blew up ( Eastern European housing/Nikkei etc.
These massive carry trades are terribly offside as they are being unwound. It is causing global deflation ( we are at debt saturation already) as the world reacts to lack of demand and a scarcity of debt collateral. Bourses around the globe are reacting in kind to these events as well as the potential for a GREXIT>
The NIKKEI: this FRIDAY morning CLOSED DOWN 44.84 POINTS OR .22%
Trading from Europe and Asia:
1. Europe stocks OPENED ALL IN THE RED
2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 34.12 POINTS OR 0.13% / SHANGHAI CLOSED DOWN 6.88 POINTS OR 0.21% /Australia BOURSE CLOSED UP 0.46% /Nikkei (Japan)CLOSED DOWN 44.84 POINTS OR .22% / INDIA’S SENSEX IN THE GREEN
Gold very early morning trading: 1248.25
silver:$16.40
Early FRIDAY morning USA 10 year bond yield: 2.2393% !!! DOWN 2 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 2.8087, DOWN 2 IN BASIS POINTS from THURSDAY night.
USA dollar index early FRIDAY morning: 94.14 DOWN 16 CENT(S) from WEDNESDAY’s close.
This ends early morning numbers FRIDAY MORNING
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And now your closing FRIDAY NUMBERS
Portuguese 10 year bond yield: 2.908% DOWN 10 in basis point(s) yield from THURSDAY
JAPANESE BOND YIELD: +.067% DOWN 1 in basis point yield from THURSDAY/JAPAN losing control of its yield curve
SPANISH 10 YR BOND YIELD: 1.451% DOWN 3 IN basis point yield from THURSDAY
ITALIAN 10 YR BOND YIELD: 2.072 DOWN 4 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: +.506% DOWN 2 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 1.1659 UP .01031 (Euro UP 31 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/
USA/Japan: 111.15 DOWN 0.738(Yen UP 74 basis points/
Great Britain/USA 1.2972 UP 0.0008( POUND UP 8
basis points)
USA/Canada 1.2552 DOWN .0048 (Canadian dollar UP 48 basis points AS OIL FE;; TO $45.97
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This afternoon, the Euro was UP by 31 basis points to trade at 1.1659
The Yen ROSE to 111.15 for a GAIN of 24 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 8 basis points, trading at 1.2972/
The Canadian dollar ROSE by 48 basis points to 1.2552, WITH WTI OIL FALLING TO : $45.97
Your closing 10 yr USA bond yield DOWN 1/2 IN basis points from THURSDAY at 2.234% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 2.8026 DOWN 1 in basis points on the day /
Your closing USA dollar index, 94.02 DOWN 29 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 34.96 POINTS OR 0.13%
German Dax :CLOSED DOWN 207.19 POINTS OR 1.66%
Paris Cac CLOSED DOWN 81.56 POINTS OR 1.57%
Spain IBEX CLOSED DOWN 138.20 POINTS OR 1.31%
Italian MIB: CLOSED DOWN 236.47 POINTS/OR 1.10%
The Dow closed DOWN 31.71 OR 0.15%
NASDAQ WAS closed down 2.25 POINTS OR 0.04% 4.00 PM EST
WTI Oil price; 45.97 at 1:00 pm;
Brent Oil: 48.13 1:00 EST
USA /RUSSIAN ROUBLE CROSS: 59.24 UP 34/100 ROUBLES/DOLLAR (ROUBLE LOWER BY 34 BASIS PTS)
TODAY THE GERMAN YIELD FALLS TO +0.506% 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:$45.69
BRENT: $47.97
USA 10 YR BOND YIELD: 2.2358% (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)
USA 30 YR BOND YIELD: 2.8079%
EURO/USA DOLLAR CROSS: 1.1664 UP .0035
USA/JAPANESE YEN:111.13 DOWN 0.758
USA DOLLAR INDEX: 93.95 DOWN 36 cent(s)
The British pound at 5 pm: Great Britain Pound/USA: 1.2992 : UP 28 POINTS FROM LAST NIGHT
Canadian dollar: 1.2538 up 59 BASIS pts
German 10 yr bond yield at 5 pm: +0.506%
END
And now your more important USA stories which will influence the price of gold/silver
TRADING IN GRAPH FORM FOR THE DAY
Traders ‘Stunned’ As Nasdaq Fails To Rise, Debt-Ceiling Despair Inverts Yield Curve
As Stocks soared…
And today…
The day started off badly with — European stocks fell to the lowest level in 10 days as concern about potential antitrust collusion sent carmakers toward the worst decline in more than a year. Euro Stoxx 600 has now erased all the gains from the French Election euphoria…
Nasdaq failed to achieve its 11th day in a row of gains as early European weakness was just too much for the machines to overcome… though they tried… (11 days would have been the longest winning streak since July 2009) Dow ended the week red, Trannies worst week since Brexit
LPL’s Ryan Detrick notes that the Nasdaq has been up for 10 consecutive sessions for the first time since Feb ’15. Since 1980, this has happened 21 other times, and the next month on average for Nasdaq was +2.6%, higher 16 of those 21 times overall.
VIX was clubbed to new lows in an effort to pump up stocks and go for the 11th daily win… but failed… VIX closed at 9.31!! That is the lowest weekly VIX close in history
Utes were the week’s best-performing sector (not exactly growthy) and financials worst…
FANG Stocks are up 11 days in a row and had their best week since Oct 2016 (thanks to NFLX) and the best 2-week gains (11%!) since July 2015
Bonds and Stocks recoupled this week…
As a reminder this has been an epic short-squeeze – the last time shorts were this low was at the peak for the S&P in Q2007…
Treasury yields tumbled this week… first weekly close lower in yields in the last 4 (2nd biggest weekly yield decline in 4 months)
With 10Y back below 2.25% back to pre-Fed-rate-hike levels…
The yield curve flattened dramatically this week – 2s10s down 9bps – biggest drop since the first week of 2017
Debt Ceiling concerns are really beginning to accelerate in short-term debt markets…
The Dollar Index was crushed this week, down 1% for the second week in a row to its lowest since May 2016.
The Euro was the week’s best performer among the majors (nearing 1.17 – highest weekly close since Jan 2015)…Cable was weakest this week.
We note that in general it is tracking last year’s post-Dec-rate-hike trajectory…
The problem is – there is no Trump Effect to levitate the dollar in H2 this time. The Dollar is on target for the 6th monthly drop in the last 7.
Gold is up 6 days in a row (9 of the last 10), breaking above its 50-, 100-, and 200-day moving-averages…
This is gold’s best week in 3 months…
WTI Crude closed the week back at a $45 handle (down for the 7th week in the last 9)… as OPEC supply is projected to hit 2017 highs
Bitcoin soared 25% this week – its biggest rise since Brexit…
Finally, there’s this…
Have a great weekend ‘Murica!
end
The correct formula for M2 is the one used by the Mises Institute. Here the M2 is falling badly which indicates that the economy in the USA is heading for a big recession
(courtesy Ryan McMaken/Mises Institute)
Money Supply Growth Tumbles To Lowest Since Lehman
(courtesy zero hedge)
Here Are America’s Most Underfunded Corporate Pensions
We spend a lot of time talking about the public pension crisis because, well, it’s a massive $5 – $8 trillion dollar overhang on the economy and one which will undoubtedly result in some heartache for investors at some point in the future. Unfortunately, there are some problems that are too large for even U.S. taxpayers to fix and, with an underfunding of $52,000 (mid-point) per household, somehow we suspect this is one of them.
Of course, our nation’s various governmental institutions aren’t the only ones to have unwittingly created massive ponzi schemes from which there is no escape. In fact, as Bloomberg points out today, as of the end of 2016 over 90% of the top 200 corporate pensions in the S&P were unfunded to the tune of $382 billion.
Here’s a look at the funded status of the top 20:
Meanwhile, just the top 20 corporate pension funds are underfunded by over $100 billion.
So what happens when these massive corporate obligations become so underfunded that they can’t possibly ever be fixed? As the 400,000 pensioners in the Central States Pension Plans are all too familiar, the obligations get handed over the Pension Benefit Guaranty Corporation (PBGC), an entity which is nearly bankrupt itself, at which point payouts are slashed leaving retirees with about half of the monthly income they expected in retirement. Per CBS:
February was a bad month for Larry Burruel and thousands of other retired Ohio iron workers. His monthly take-home pension was cut by more than half from $3,700 to $1,600.
Things have been rough in the Rust Belt, but this was a particularly powerful punch in the pocketbook for Burruel, who started in the trade at 19 and worked 36 years before opting for early retirement to make way for younger workers. Unfortunately, this sagging industry doesn’t have enough younger workers to pay for retirees like Burruel, whose pension plan is in what the U.S. Treasury Department calls “critical and declining status.”
Burruel and the 400,000 members of his Central States Pension Fund are the canaries in the coal mine as far as pension cutbacks go. At least 50 Midwestern pension plans — mostly the kind jointly administered by trustees for a labor union and a group of employers — are in this decrepit condition. Several plan sponsors have already applied to the Treasury Department to cut back retirees’ allotments.
This cross-section of America includes more than a million former truck drivers, office and factory employees, bricklayers and construction workers who are threatened with cutbacks that could last the rest of their lives.
Who could have guessed that the efforts of our government and largest corporations to backstop the investing risk of millions of households across the country would end so poorly?
END
end
Now the changes in the Trump team:
First
Trump shakes up his legal time after revelation that Mueller is going after Trump’s operations. Kasowitz and Carrallo are out and they are being replaced by Ty Cobb, Jay Sekulow and John Dowd. What is interesting is that Trump is looking into how to pardon his key staff members targeted by the FBI including pardoning himself
(courtesy zero hedge)
Trump Legal Shake Up: Kasowitz Out As Personal Attorney, Corrallo Resigns
There’s been a shakeup in President Trump’s legal team. According to CBS News White House correspondent Major Garrett, Marc Kasowitz is out as Mr. Trump’s personal attorney, while Kasowitz’s spokesman, Mark Corallo – who has had a rocky relationship with Trump in the past – has resigned.
While Kasowitz had represented Trump since the early 2000s, and led his defense in the Trump University fraud case, the prominent lawyer recently made negative headlines when he sent threatening emails to a retired public relations professional who had said Kasowitz should resign. In his first response, Kasowitz wrote “F*** you,” according to ProPublica. Kasowitz wrote a number of emails after that, including one that said, “And you don’t know me, but I will know you How dare you send me an email like that I’m on you now You are f****** with me now Let’s see who you are Watch your back, b****.”
Corallo is a longtime GOP operative who worked for the House committee that investigated President Clinton in the 1990s before going to the Justice Department under former Attorney General John Ashcroft, according to Politico. Politico reports Corallo had been handling the White House’s defense in the Russia investigation. In a bizarre incident, last month The New York Times reported that Corallo had previously used Twitter to criticize the president and his administration.
“Hey Mr. President, where’s all the ‘winning?’” Corallo tweeted last month, a reference to former President Bill Clinton. He also used Twitter to criticize Trump’s reliance on son-in-law and White House adviser Jared Kushner, calling Kushner part of the “swamp” Trump promised to drain. Corallo’s message also split from that of many other Trump allies, who were critical of Mueller. What may have sealed Corallo’s fate is that days before he accepted the role as Kasowitz’s spokesman, he praised Mueller for his integrity and honor.
On Friday morning, Corallo, confirmed he has resigned in an emailed statement, while giving no other details about his departure.
After the shake up Trump’s legal team will be composed of Ty Cobb, Jay Sekulow and John Dowd, CBS reports. Cobb joined the president’s legal team earlier this week.
That team has been pushing back against Special Counsel Robert Mueller’s Russia probe, trying to keep it from expanding into the business dealings of Trump and his family, Garrett reports. The president’s legal team is trying to keep the special counsel focused, to the extent it can, on the Russia angle. In an interview The New York Times published Wednesday, Trump called the special counsel’s investigation a “violation,” saying it crossed a red line.
With multiple and overlapping probes from the special counsel’s office to the Capitol, some investigators are also looking into purchases of units in Trump properties. Mr. Trump told the Times “it’s possible there’s a condo or something,” but said he doesn’t make any money off Russia. CBS News also reported that Mueller is investigating the business dealings of Paul Manafort, Trump’s former campaign manager. The U.S. attorney’s office in Manhattan had been looking into Manafort, according to a source, but now that probe has been turned over to Mueller’s investigators.
Separately, on Thursday night, the WaPo reported citing “people familiar with situation” that Trump has asked advisers about the power to pardon aides, family members and even himself in connection with special counsel Robert Mueller’s Russia probe. The newspaper added that Trump’s lawyers are looking at ways to limit or undercut Mueller’s investigation by alleging conflicts of interest.
Spicer Resigns As White House Press Secretary, Replaced By Anthony Scaramucci
It’s official: moments ago the much anticipated departure of (now former) White House press secretary and communications director, Sean Spicer took place, when according to the NYT, Spicer resigned on Friday morning, “telling President Trump he vehemently disagreed with the appointment of New York financier Anthony Scaramucci as communications director.”
Mr. Trump offered Mr. Scaramucci the job at 10 a.m. The president requested that Mr. Spicer stay on, but Mr. Spicer told Mr. Trump that he believed the appointment was a major mistake, according to person with direct knowledge of the exchange.
News of Spicer’s resignation was promptly greeted with trolling by many…
… including Maxine Waters:
To all those who bought the “No” contract: congratulations: it’s payout time:
Meanwhile, as noted above, Trump appointed former SkyBridge Capital founder Anthony Scaramucci as White House Communications Director.
Scaramucci has been a vocal supporter of the president, having served in a top financial advisory role on Trump’s campaign. He has been an ardent defender of the president in television interviews.
He was also the subject of the recent hit piece from CNN that the network was forced to retract and apologize to him for, a piece that inaccurately accused him of being under multiple investigations—he is not under any—for “meetings” that never happened with Russian bankers. Three senior CNN editorial officials resigned over the story, amounting to what is still developing into one of the biggest scandals in journalistic history.
While news of Scaramucci’s appointment first broke on Thursday night, White House chief of staff Reince Priebus tried to scuttle the appointment of Scaramucci due to a reported long-running feud with him, according to Breitbart, which adds that Steve Bannon, the ex-Executive Chairman of Breitbart News now the White House chief strategist, also objected to the Scaramucci appointment.
Bannon and Priebus have an alliance inside the White House where they are frequently at loggerheads with the “West Wing Democrats” like National Security Adviser H.R. McMaster, National Economic Council director Gary Cohn, Jared Kusher, Ivanka Trump, and others.
Those opposed to the Scaramucci appointment did not succeed.
Steve Bannon In “Self-Imposed Exile” After Disputes With Trump’s Inner Circle
Back in February when Time Magazine ran a cover dubbing Steve Bannon “The Great Manipulator,” we wondered whether there was any truth to the assertion or if it was just a clever attempt to sow discord in the White House. Here’s what we said previously in a post entitled “Is Steve Bannon ‘The Great Manipulator’ Or Is It All Just More ‘Fake News’“.
Various mainstream media outlets would like for you to believe there is discord in the White House between President Trump and Steve Bannon. The typical narrative goes something like this: Steve Bannon is “The Great Manipulator” (as Time Magazine described him) pulling all the strings from behind the scenes and Trump, the perpetual narcissist, is growing weary of competing for the spotlight.
The question is whether any of it is true or if this is just more “fake news” from a mainstream media intent upon doing anything possible to sow the White House discord they so desperately seek?
Of course, if the media were actively looking to leverage a “character flaw” of a President they see as intent upon always capturing the spotlight, putting staff members on the cover of prominent national magazine covers would be a great way to execute that plan.
Of course, if sowing discord was the intent then it just may have worked. As Politico points out today, following alleged disputes between Steve Bannon, Jared Kushner and others within Trump’s inner circle, Bannon has apparently resorted to living his daily life in “self-imposed exile” in the White House.
Steve Bannon has largely disappeared from the White House’s most sensitive policy debates — a dramatic about-face for an operative once characterized as the most powerful man in Washington.
Bannon, chastened by internal rivalries and by President Donald Trump’s growing suspicion that he is looking out for his own interests, is in a self-imposed exile,having chosen to step back from Trump’s inner circle for the sake of self-preservation, according to several White House advisers who spoke to POLITICO on the condition of anonymity to avoid angering a colleague.
He was absent from Trump’s recent trips to Europe for the G-20 summit and from his visit with French president Emmanuel Macron. Bannon’s non-attendance is all the more noteworthy given his interest in European history and politics, particularly his antipathy to the European Union.
As Politico notes, whereas Bannon was, not long ago, a near-constant presence in the Oval Office — often seen standing over Trump’s shoulder or sitting in on calls with world leaders — he now spends hours camped out at the conference table in the office of White House Chief of Staff Reince Priebus, reading the news or working on his phone.
Meanwhile, it’s apparently not just the Oval Office where Bannon’s presence has been limited as he’s pretty much removed himself from all policy discussions as well.
For Bannon, reduced visibility has brought reduced influence. On trade, his protectionist views are well known; though he initially joined a series of White House meetings begun in the spring to resolve disagreements between advisers with disparate views on the subject, from free traders like economic adviser Gary Cohn to protectionists like National Trade Council director Peter Navarro, he has not shown up at one in six weeks.
Nor did Bannon attend a major policy meeting on Tuesday on trade policy towards China, even though he is known to favor tough economic measures towards Beijing. He did, however, have time for a meeting with former Trump campaign aides David Bossie and Corey Lewandowski that focused on political issues, including how to woo back Republican senators who had abandoned Trump on health care.
Bannon has not been entirely absent from the West Wing’s heftiest policy discussions. On Monday, he attended a meeting of the NSC’s Principals Committee, which includes top officials from throughout the government, according to a senior White House aide. Though the president removed Bannon from the NSC in April, the aide estimated that Bannon has been at approximately 20 percent of the Principals Committee meetings since then. Bannon has reportedly dueled with McMaster over troop levels in Afghanistan and Iraq and Syria, in each case warning against deeper U.S. involvement.
“He follows everything closely. He knows what’s going on. I don’t know if he has a feeling that strategically it’s better if his hands aren’t directly on things, but he’s definitely in the fold on the legislative agenda,” said Sam Nunberg, a former Trump political adviser.
Of course, following controversies surrounding everyone from Bannon to Kellyanne Conway and Sean Spicer, there have been never-ending media reports of late suggesting that a shakeup of the White House staff is inevitable at some point in the not so distant future…a shakeup which Politico thinks could come next month…
But he now plays a surprisingly minor role in key administration policy debates. White House aides speculate about whether Bannon is trying to protect his job amidst long-running talk of a White House staff purge. Several West Wing advisers said they expect Trump to decide once and for all on a White House shakeup during his planned vacation next month, when he is expected to consult with friends beyond the Beltway. “If there is a big staff shakeup, it will be in August,” said a senior White House aide. “My guess is that Bannon probably sees that and doesn’t want to be in the press.”
…mission accomplished?
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Trump Preparing Counteroffensive; Begins Investigating Mueller’s Team For Conflicts
Over the past two days there have been some rather substantial developments in Special Counsel Mueller’s investigation into alleged ties between President Trump and the Kremlin. First came the news yesterday that Mueller planned to expand his probe to review Trump’s personal business transactions, an announcement which sent stocks tumbling on the day (see: Mueller Expands Probe Into Trump Business Transactions: Dollar Tumbles, Stocks Slammed). Meanwhile, just this morning we learn that the Trump legal team has been shaken up with Kasowitz out (not terribly surprising after his recent email meltdown) and Corrallo resigning (see Trump Legal Shake Up: Kasowitz Out As Personal Attorney, Corrallo Resigns).
Now, as the New York Times points out, Trump may be preparing a counter-offensive aimed at identifying potential conflicts of interest among the people hired by Mueller in order to force recusals.
President Trump’s lawyers and aides are scouring the professional and political backgrounds of investigators hired by the special counsel Robert S. Mueller III, looking for conflicts of interest they could use to discredit the investigation — or even build a case to fire Mr. Mueller or get some members of his team recused, according to three people with knowledge of the research effort.
The search for potential conflicts is wide-ranging. It includes scrutinizing donations to Democratic candidates, investigators’ past clients and Mr. Mueller’s relationship with James B. Comey, whose firing as F.B.I. director is part of the special counsel’s investigation.
The effort to investigate the investigators is another sign of a looming showdown between Mr. Trump and Mr. Mueller, who has assembled a team of high-powered prosecutors and agents to examine whether any of Mr. Trump’s advisers aided Russia’s campaign to disrupt last year’s presidential election.
To seek a recusal, Trump’s lawyers can argue their case to Mueller or his boss, Deputy Attorney General Rod Rosenstein. The Justice Department has explicit rules about what constitutes a conflict of interest. Prosecutors may not participate in investigations if they have “a personal or political relationship” with the subject of the case. Making campaign donations is not included on the list of things that would create a “political relationship.”
Of course, these developments come as Mueller’s team has allegedly requested documents from the Internal Revenue Service related to Paul Manafort’s criminal tax investigation that had been opened long before the Trump campaign began. Manafort was never charged in that case. Federal investigators have also contacted Deutsche Bank about Trump’s accounts, and the bank is expecting to provide information to Mueller.
Of course, Newt Gingrich, a former ‘informal advisor’ to President Trump, was among the first to point out the potential conflicts of interest among the folks being hired to fill Mueller’s team.
“Republicans are delusional if they think the special counsel is going to be fair. Look who he is hiring.check fec reports. Time to rethink.”
As The Hill noted around the same time, several of Mueller’s early, notable hires have all been contributors to Hillary’s and/or Obama’s previous campaigns and Jeannie Rhee actually represented the Clinton Foundation.
Michael Dreeben, who serves as the Justice Department’s deputy solicitor general, is working on a part-time basis for Mueller, The Washington Post reported Friday.
Dreeben donated $1,000 dollars to Hillary Clinton’s Senate political action committee (PAC), Friends of Hillary, while she ran for public office in New York. Dreeben did so while he served as the deputy solicitor general at the Justice Department.
Jeannie Rhee, another member of Mueller’s team, donated $5,400 to Hillary Clinton’s presidential campaignPAC Hillary for America.
Andrew Weissmann, who serves in a top post within the Justice Department’s fraud practice, is the most senior lawyer on the special counsel team, Bloomberg reported. He served as the FBI’s general counsel and the assistant director to Mueller when the special counsel was FBI director.
Before he worked at the FBI or Justice Department, Weissman worked at the law firm Jenner & Block LLP, during which he donated six times to political action committees for Obama in 2008 for a total of $4,700.
James Quarles, who served as an assistant special prosecutor on the Watergate Special Prosecution Force, has donated to over a dozen Democratic PACs since the late 1980s. He was also identified by the Washington Post as a member of Mueller’s team.
Starting in 1987, Quarles donated to Democratic candidate Michael Dukakis’s presidential PAC, Dukakis for President. Since then, he has also contributed in 1999 to Sen. Al Gore’s run for the presidency, then-Sen. John Kerry’s (D-Mass.) presidential bid in 2005, Obama’s presidential PAC in 2008 and 2012, and Clinton’s presidential pac Hillary for America in 2016.
Meanwhile, Trump himself, in a move that surprised a few people on his own legal team, seemed to ramp up the pressure on Mueller alleging to the New York Times that the mere fact that he was interviewing to replace Comey as FBI Director at the time of his appointment as Special Counsel created a conflict of interest.
Mr. Trump’s advisers are split on how far to go in challenging the independence of Mr. Mueller, a retired F.B.I. director and one of the most respected figures in law enforcement. Some advisers have warned that dismissing Mr. Mueller would create a legal and political mess.
Nevertheless, Mr. Trump has kept up the attacks on him. In his interview with The Times, which caught members of his legal team by surprise, he focused on the fact that Mr. Mueller had interviewed to replace Mr. Comey as the F.B.I. director just a day before Mr. Mueller was appointed special prosecutor, saying that the interview could create a conflict.
“He was sitting in that chair,” Mr. Trump said during the Oval Office interview. “He was up here, and he wanted the job.” Mr. Trump did not explain how the interview created a conflict of interest.
Mr. Trump also said Mr. Mueller would be going outside his mandate if he begins investigating matters unrelated to Russia, like the president’s personal finances. Mr. Trump repeatedly declined to say what he might do if Mr. Mueller appeared to exceed that mandate. But his comments to The Times represented a clear message to Mr. Mueller.
“The president’s making clear that the special counsel should not move outside the scope of the investigation,” Sarah Huckabee Sanders, a White House spokeswoman, said during a news briefing on Thursday.
Of course, we suspect that any effort to limit the ‘scope’ of the Special Counsel’s investigation will only result in a redoubling of Mueller’s efforts…the only question is how far Trump is willing to push in his ‘counteroffensive.’
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Mueller seems not at all concerned with Trump as he asks the White House to preserve all records on Jr’s meeting with the Russian lawyer. When Hillary was asked to do the same thing, she did a ‘bleachbit’
(courtesy zerohedge)
Mueller Instructs White House To Preserve All Records On Jr.’s Meeting With Russian Lawyer
After we noted earlier this morning that Trump intended to launch a counteroffensive against an investigation he has frequently referred to as a “witch hunt,” Special Counsel Mueller has just fired back with a request that all White House staff preserve all records related to Donald Trump Jr.’s now infamous June 2016 meeting with Russian lawyer Natalia Veselnitskaya. Apparently he wasn’t deterred.
As usual, today’s latest Trump-Russia revelation came from anonymous sources speaking to CNN:
Special counsel Robert Mueller has asked the White House to preserve all documents relating to the June 2016 meeting at Trump Tower that Donald Trump Jr., Jared Kushner and Paul Manafort had with a Russian lawyer and others, according to a source who has seen the letter.
Mueller sent a notice, called a document preservation request, asking White House staff to save “any subjects discussed in the course of the June 2016 meeting” and also “any decisions made regarding the recent disclosures about the June 2016 meeting,” according to the source, who read portions of the letter to CNN.
The letter from Mueller began: “As you are aware the Special Counsel’s office is investigating the Russian government’s efforts to interfere in the 2016 presidential election, including any links or coordination between the Russian government and individuals associated with the campaign of Donald Trump. Information concerning the June 2016 meeting between Donald J Trump Jr and Natalia Veselnitskaya is relevant to the investigation.”
The preservation request is broad and includes text messages, emails, notes, voicemails and other communications and documentation regarding the June 2016 meeting and any related communication since then.
As you’re undoubtedly aware by now, the meeting in question was setup through a British publicist who reached out to Trump Jr. with the promise of damaging information from the Russian government about then-Democratic presidential nominee Hillary Clinton. Along with Trump Jr. and Veselnitskaya, the meeting attendees included Trump’s son-in-law Jared Kushner and then-Trump campaign chairman Paul Manafort, among others (see: NBC Reports Former Soviet Intelligence Officer Attended Meeting With Don Jr., But There’s A Catch…).
Meanwhile, this is just the latest in a string of escalations in hostilities between Special Counsel Mueller and the White House which seemed to intensify when Mueller announced that he planned to expand his probe to review Trump’s personal business transactions (see: Mueller Expands Probe Into Trump Business Transactions: Dollar Tumbles, Stocks Slammed).
Of course, we all remember how respectful Hillary Clinton was of federal ‘preservation requests’…
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Another terrific commentary tonight from David Stockman on the ridiculous stock market
(courtesy David Stockman/DailyReckoning)
The “Chuck Prince Market” Redux — Only More Dangerous
[Urgent Note: David Stockman warns that the nation’s economy and a massive debt ceiling hangs in the balance as Wall Street’s peak bull stocks carry on. The economist is on a mission to send his new book TRUMPED! A Nation on the Brink of Ruin… and How to Bring It Back out to every American who responds, absolutely free. Click here for more details.]
“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing,” he said in an interview with the FT in Japan.
We are at that moment again. Only this time the danger of a thundering crash is far greater. That’s because the current blow-off top comes after nine years of even more central bank policy than Greenspan’s credit and housing bubble.
The Fed and its crew of traveling central banks around the world have gutted honest price discovery entirely. They have turned global financial markets into outright gambling dens of unchecked speculation.
Central bank policies of massive quantitative easing (QE) and zero interest rates (ZIRP) have been sugar-coated in rhetoric about “stimulus”, “accommodation” and guiding economies toward optimal levels of inflation and full-employment.
The truth of the matter is far different. The combined $15 trillion of central bank balance sheet expansion since 2007 amounts to monetary fraud of epic proportions.
The massive injection of fiat credit has drastically falsified prices in the debt and money markets. Through the channels of cap rates, carry trades and corporate financial engineering, the prices of equities and all other risk assets, have been falsified too.
Bond and stock prices are way too high, and that reality has infected the very foundations of the financial system. Like the hapless Chuck Prince last time, today’s traders and robo-machines have lost all contact with the fundamentals of corporate performance, macroeconomic outlooks and the political risks of a Washington.
Traders today are just dancing – blindly. That’s why the Russell 2000 hit 1442 the other day, capitalizing the earnings of small and mid-cap domestic companies at 87.5 times.
That’s crazy in its own right. As measured by valued added output of the U.S. business sector, the main street economy – where most of these companies live — has expanded at a tepid 2.1% annual rate since 2002. By contrast, the RUT index has increased by 10% per annum since then.
At the same time, the level of speculation in the hyper-momentum tech stocks is even more stunning.
We are in the blow-off stage of the Fed’s third and greatest bubble of this century. Yet the stock market has narrowed drastically during the last thirty months, as is typical of a speculative mania. This narrowing means that the price-earnings ratio (PE) among the handful of big winners have soared.
FAANGs and Bubble Finance
In the case of the so-called “FAANGs + M” (Facebook, Apple, Amazon, Netflix, Google and Microsoft), the group’s weighted average PE multiple has increased by 50%.
That’s caused the market cap of these six super-momentum stocks to soar from $1.7 trillion to $3.1 trillion during the period or by 82%.
The combined earnings of the group have grown by just 20%. 75% of this huge gain in market cap is attributable to multiple expansion, not operating performance.
The degree to which the casino’s speculative mania has been concentrated in the FAANGs + M can also be seen by contrasting them with the other 494 stocks in the S&P 500. The market cap of the index as a whole rose from $17.7 trillion in January 2015 to $21.2 trillion at present, meaning that the FAANGs + M account for 40% of the entire gain!
If this concentrated gain in a handful of stocks sounds familiar that’s because this rodeo has been held before. The Four Horseman of Tech (Microsoft, Dell, Cisco and Intel) at the turn of the century saw their market cap soar from $850 billion to $1.65 trillion or by 94% during the manic months before the dotcom peak.
At the March 2000 peak, Microsoft’s PE multiple was 60 times, Intel’s was 50 times and Cisco’s hit 200 times. Those nosebleed valuations were really not much different than Facebook today at 40, Amazon at 190 and Netflix at 217 times PE.
The point is, even great companies do not escape drastic over-valuation during the blow-off stage of bubble peaks.
That spectacular collapse was not due to a meltdown of their sales and profits. Like the FAANGs +M today, the Four Horseman were quasi-mature, big cap companies that never really stopped growing.
For example, Cisco’s revenues have increased from $15 billion to $50 billion annually during the last 17 years and its net income has tripled to $10 billion. Yet Cisco’s market cap today is just $160 billion or only 30% of its 17-years ago bubble peak.
The reason is PE normalization. In this case, the company’s hideously inflated 200 times PE multiple imploded with the tech crash. It now stands at 15 times PE.
Amazon and the Chuck Prince Market Redux
Amazon is now set for that kind of PE implosion during this cycle. It’s stock price doubled from $285 per share in January 2015 to $575 by October of that year; and then it doubled again to $1026 in the 20 months since.
Along the way it picked up a hefty $350 billion in added market cap. That’s nearly $12 billion of value gain per month!
Amazon is now 24 years-old, not a start-up; and it hasn’t invented anything explosively new like the iPhone or personal computer. Yes, it is taking retail market share by leaps and bounds, but that’s inherently a one-time gain that can’t be capitalized to infinity.
Indeed, 91% of its sales involves sourcing, moving, storing and delivering goods — a sector of the economy that has grown by just 2.2% annually in nominal dollars for the last decade.
Amazon embodies the speculative mania of the current market. It is simply ludicrous to put a multiple of 190 times PE on a company that runs a profitless $130 billion e-Commerce sales juggernaut.
Even as its stock price has tripled during the last 30 months, AMZN has experienced two sharp drawdowns of 28% and 12%, respectively. As shown in the first chart below, both times it plunged to its 200-day moving average in a matter of a few weeks.
A similar drawdown to its 200-day moving average today would result in an immediate 16% sell-off. But when, not if, the broad market plunges into a long overdue correction the ultimate drop will exceed that by a greater magnitude.
In the meanwhile, the market mindlessly melts-up because the Fed has destroyed all of Wall Street’s natural forces of financial discipline. Eight years of central bank money printing and intrusion have destroyed short-sellers and caused day-traders and robo-machines to be wired to buy every dip.
Never mind about the gong show in Washington. Or even the fact that the Keynesian economists in the Fed’s Eccles Building does actually intend to normalize rates and shrink the Fed’s balance sheet.
The talking heads wandering around Wall Street have come to the delusional belief that the bubble can live forever without help from Washington or the Fed.
With only a small share of companies having reported, LTM earnings for the S&P 500 have already dropped below $105 per share on a GAAP basis. That’s still below the $106 per share posted way back in September 2014 and barely above the $100 per share reported in 2013.
Make no mistake, this is the Chuck Prince Market Redux. Only the daredevils and Wall Street dancing machines would dare buy the S&P 500 at 25 times PE, the Russell 2000 at 88 times PE, Amazon at 190 times PE.
For everyone else, the present blow-off top is surely a godsend.
Never has there been a better opportunity to get out of harm’s way, nor a clearer warning that a thundering crash is waiting just around the bend.
Regards,
David Stockman
for The Daily Reckoning
Let’s close out the week with this offering from Greg Hunter of USAWatchdog
(courtesy Greg Hunter/USAWatchdog)
Trump Stops Syrian War, Mueller Witch Hunt Continues, Bankers Keep Cheating
By Greg Hunter On July 21, 2017 In Weekly News Wrap-Ups
Did President Donald Trump just signal an end to the Syrian civil war? President Trump just announced he was ending a covert CIA program to arm the so-called rebels. It was ISIS and al Qaeda we were supporting because the Free Syrian Army has long been dismantled. Is this the deal that Trump was cutting in his more than two hour meeting at the G-20? The Syrian war has taken the lives of nearly 500,000 people and displaced millions more.
Special Prosecutor Robert Mueller is expanding his probe. Now, he’s going beyond the so-called Russian collusion story and probing Trump’s business transactions. Mueller and his staff of mostly Democrat lawyers (who are also donors to top Democrats) are going to be looking at transactions as old as 10 years. Trumps says this is unfair, and Mueller is crossing the line if he delves into the family business.
You can chalk up another fine for another big bank for market rigging. This time it’s BNP Bank, and it was fined $246 million after traders for the bank were caught in chat rooms rigging the currency markets. Nobody goes to jail for felony law breaking, and the best part for them is shareholders are the ones that actually pay the fines, not the criminal bankers.
Join Greg Hunter as he talks about these stories and more in the Weekly News Wrap-Up.
Video Link
http://usawatchdog.com/trump- stops-syrian-war-mueller-witch-hunt-continues-bankers-keep- cheating/
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We will see you MONDAY night
Harvey.
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