July 31/Gold and silver hold despite this being the last day for options expiry on London OTC contracts/War of words between USA, North Korea and China re the North Korea’s launching of that ICBM/South Korean officials state that they mave been looking at a surgical strike against North Korea/Putin retaliates by removing 755 USA delegates in Moscow/USA in its first strike against Maduro sanctions any personal dealings with Maduro himself/Trump threatens to end subsidy payments on Obamacare including Congress members/Treasury expects to issue 1/2 trillion in debt in 4th quarter: they claim that by Sept 30 they will hand only 60 billion USA inc cash left/

GOLD: $1268.00  DOWN $1.60

Silver: $16.79  UP 9 cent(s)

Closing access prices:

Gold $1269.60

silver: $16.85









Premium of Shanghai 2nd fix/NY:$4.33


LONDON FIRST GOLD FIX:  5:30 am est  $1266.35




For comex gold:



TOTAL NOTICES SO FAR: 1637 FOR 163700 OZ  (5.091 TONNES) 

For silver:



1,165,000  OZ/

Total number of notices filed so far this month: 233 for 1,165,000 oz


On Friday night I wrote the following:

“On yesterday’s commentary I thought we were going to have a raid today. I noticed that the gold/silver equity shares sold off badly yesterday and that is a sure sign that an attack will occur. Probably our crooks were blindsided today with the failure of the Republicans to pass the healthcare bill as well as lousy GDP report, the all important wage inflation is non existent and the passing of new sanctions against Russia. And then we can couple all of this with the new launching of a ICBM that could hit New York and Boston…and yet with all of that news, the gain in gold was less than 10 dollars and silver, 11 cents. However today again, the gold/silver equity shares fell off badly on closing and we have only Monday morning for options expiry. There has never been any time during any options expiry that the crooks have not generated a raid. So if they fail to raid on Monday, they are losing control as demand is far outstripping supply in our precious metals.


it now looks like the boys have lost control of the gold/silver market/for sure silver!




Let us have a look at the data for today



 In ounces, the OI is still represented by just OVER 1 BILLION oz i.e.  1.035 BILLION TO BE EXACT or 148% of annual global silver production (ex Russia & ex China).


In gold, the open interest rose by 7,287 as new speculators entered the gold arena after the long specs in July DEPARTED with their EFP’s which entitled them to a fiat bonus plus a futures contract and these are most likely London based forwards. The new OI for the gold complex rests at 439,648.

we had, ON FIRST DAY NOTICE: 1637 notice(s) filed upon for 163,700 oz of gold.


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


Today, no changes in gold inventory

Inventory rests tonight: 791.88 tonnes







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


(report Harvey)


2.a) The Shanghai and London gold fix report



2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg


 i)Late SUNDAY night/MONDAY morning: Shanghai closed UP 19.79 POINTS OR 0.61%   / /Hang Sang CLOSED UP 344.60 POINTS OR 1.28% The Nikkei closed DOWN 34.66 POINTS OR .17%/Australia’s all ordinaires CLOSED UP 0.32%/Chinese yuan (ONSHORE) closed UP at 6.7277/Oil UP to 49.54 dollars per barrel for WTI and 52.09 for Brent. Stocks in Europe OPENED IN THE GREEN , Offshore yuan trades  6.7330 yuan to the dollar vs 6.7277 for onshore yuan. NOW THE OFFSHORE IS WEAKER  TO THE ONSHORE YUAN/ ONSHORE YUAN  STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS  STRONGER TO THE DOLLAR AND THIS IS COUPLED WITH THE SLIGHTLY STRONGER DOLLAR. CHINA IS HAPPY TODAY 



Trump lashes out against China for failure to rein in North Korea.  The key phrase; “we will no longer allow this to continue”

zero hedge)

ii)This is something:  USA and Japan show an overwhelming force as it flies two B 1 B bombers over the Korean peninsula

( zero hedge)

iii)Good reason for gold to be down today…South Korea is preparing a surgical strike against North Korea taking out command centers and their nuclear facilities

( zero hedge)


Japan is certainly not happy that the uSA backed out of the TPP.  They have now decided to raise USA frozen beef import tariffs by 50%

( zerohedge)


China is angry and frustrated with the USA stating that the North Korean nuclear ambitions is not China’s problem/  China is North Korea’s largest trading partner.  China’s exports to North Korea continue to rise although imports form North Korea have fallen off

( zero hedge)



This ought to scare the living daylights out of European depositors: The EU is proposing an account freeze to halt bank runs.  It just may increase the chance of that bank run!!

( Mish Shedlock/Mishtalk)

Not good:  Rome’s entire transport system in disarray:
( zero hedge)
The EU seem to be inventing a new terminology;  “a Greek sabbatical from the EU” instead of a GREXIT
German economist Issing is calling for just that: a removal of Greece from the EU for 5 years but with a huge 50 billion euro bailout as well
good luck on that happening:
( zero hedge)



This is huge:  Putin retaliates by expelling a monstrous 755 USA diplomats form Russia as well as seizing two compounds:

( zero hedge)



Oil jumps above 50 dollars as the USA is engaged in preparations for sanctions against Venezuela’s oil industry. This would certainly bring bankruptcy to the country


( zero hedge)


i)War on the streets of Caracas as Maduro claims victory in the phony Assembly vote: the USA promises sanctions against Venezuela, against their state oil company and against Venezuelan government officials

( zero hedge)

ii)The sanctions just announced:  first off will be USA sanctions against Maduro personally.  Thus nobody can have dealings with him on a personal level

we will await round no2 , round 3..etc
(courtesy zero hedge)



10. USA Stories

i)Friday night:


Priebus resigns and Trump replaces him with General Kelly as new Chief of Staff;


( zero hedge)

ii)With new revelations on the Awan brothers and Fusion, Trump claims that Russia was actually against him as it seems that money was paid by the DNC to Fusion to discredit Trump.  Trump also wants to end the filibuster by claiming that 51% vote is enough to win passage of legislation on everything.

( zero hedge)

iii)Trump agrees to sign the Russian sanctions
( zerohedge)

iv)this is a biggy!!Trump threatens to end Obamacare payments which lessens the amount individuals have to pay for Obamacare.  This is essentially an Insurance bailout.  Trump is not playing favourites:  he  will also cut health benefits given to members of Congress

( zero hedge)

v)bankruptcies rise by 110% in the first half led by retail and the shale boys:

( zerohedge)

vi)Another soft data crash:  Chicago’s PMI which is a national manufacturing index survey crashed the most in 29 months.

( zero hedge)

vii)This is interesting:  factories cannot hire even if they want to due to drug test failures as well as math failures( zero hedge)

viii)The Dallas Mfg Fed index improves slightly but all the respondents warn that “prospects in the future are dimming”

( zero hedge)

ix) More of the Awan brothers/IT scandal.  It seems that Awan was frantically liquidating 2 million dollars of real estate ahead of his arrest


x)Another scandal:  this time against Chrsyler and UAW executives whereby millions were stolen from employee training centre programs enriching the pockets of 3 executives:

( zero hedge)

xi)Very important:  the treasury expects to issue 1/2 trillion dollars in debt in the 4th quarter.  They estimate that by Sept 30. they will have only 60 billion dollars left in the kitty and that should dissipate quite rapidly in the first week of October.  Thus the debt ceiling debate should commence by the 3rd or 4th week of September

( zerohedge)

Let us head over to the comex:

The total gold comex open interest ROSE BY 7,287 CONTRACTS UP to an OI level of 439,648 WITH THE  RISE IN THE PRICE OF GOLD ($9.30 with FRIDAY’S trading). The liquidation in the total gold comex( with the receiving of many EFP contracts) ALWAYS ENDS ON FIRST DAY NOTICE.

We are now in the contract month of August and it is the 3rd best of the delivery months after December and June.

The active August contract LOST 24,870 contract(s) to stand at 8,311 contracts. Thus by definition, the amount of gold initially standing for metal is 8311 contracts x 100 oz per contract = 831,100 oz or 25.85 tonnes. The most important question is how many of these contracts standing want to remove their gold from official gold warehouses. The dealers have only 21 tonnes registered or for sale.

The non active September contract month saw it’s OI rise by 131 contracts up to 1561.

The next active contract month is Oct and here we saw a rise of 1293 contracts up to 42,613.

The very big active December contract month saw it’s OI rise by 30,644 contracts up to 337,531.

We had 1,637 notice(s) filed upon today for   163,700 oz

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




We are now in the next big non active silver contract month of August and here the OI SURPRISINGLY LOST ONLY 1 contract. The August contract month has an OI standing of 393 contracts and thus by definition 393 contracts x 5000 oz per contract means that 1,965,000 oz will stand and that is huge for a non delivery month. Silver is being constantly demanded at the silver comex.

The next active contract month is September (and the last active month until December) saw it’s OI fall by 1355 contacts down to 142,100.  The next active contract month for silver after September is December and here the OI rose by 1464 contracts up to 55,296. Both September and December hold 95.6% of the open interest in the silver complex.

We had 233 notice(s) filed for 1,165,000 oz for the AUGUST 2017 contract

VOLUMES: for the gold comex

Today the estimated volume was 93,357 contracts which is POOR/

Yesterday’s confirmed volume was 339,794 contracts  which is HUGE

volumes on gold are STILL HIGHER THAN NORMAL!

Initial standings for AUGUST

 July 31/2017.

Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
6430.000 oz
Deposits to the Dealer Inventory in oz 4200.000  oz


Deposits to the Customer Inventory, in oz 
No of oz served (contracts) today
1,637 notice(s)
163,700 OZ
No of oz to be served (notices)
6674 contracts
(667,400 oz)
Total monthly oz gold served (contracts) so far this month
1637 notices
163,700 oz
5.091 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   185,392.5 oz
Today we HAD  1 kilobar transaction(s)/ 
We had 1 deposit into the dealer:
 i) Into brinks 4200.000 oz???
exact weight and not kilobars
total dealer deposits: 4200.00 oz
We had nil dealer withdrawals:
total dealer withdrawals:  0 oz
we had 0  customer deposit(s):
total customer deposits; nil  oz
We had 1 customer withdrawal(s)
i) Out of Scotia:  6430.000 oz
200 kilobars
total customer withdrawals; 6430.00 oz
 we had 0 adjustment(s)

Today, 0 notice(s) were issued from JPMorgan dealer account and 1573 notices were issued from their client or customer account. The total of all issuance by all participants equates to 1637  contract(s)  of which 0 notices were stopped (received) by j.P. Morgan dealer and 532 notice(s) was (were) stopped/ Received) by j.P.Morgan customer account.

To calculate the initial total number of gold ounces standing for the AUGUST. contract month, we take the total number of notices filed so far for the month (1637) x 100 oz or 163,700 oz, to which we add the difference between the open interest for the front month of AUGUST (8311 contracts) minus the number of notices served upon today (1637) x 100 oz per contract equals 831,100  oz, the number of ounces standing in this active month of AUGUST.
Thus the INITIAL standings for gold for the AUGUST contract month:
No of notices served so far (1637) x 100 oz  or ounces + {(8306)OI for the front month  minus the number of  notices served upon today (1637) x 100 oz which equals 831,100 oz standing in this  active delivery month of AUGUST  (25.85 tonnes)
Total dealer inventory 700,612.682 or 21.79 tonnes  (dealer gold continues to disappear)
Total gold inventory (dealer and customer) = 8,660.614.684 or 269.38 tonnes 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 269.38 tonnes for a  loss of 34  tonnes over that period.  Since August 8/2016 we have lost 85 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best.
I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold!

The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.
And now for silver
August initial standings
 July 31 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
nil oz
Deposits to the Dealer Inventory
nil  oz
Deposits to the Customer Inventory 
No of oz served today (contracts)
(1,165,000 OZ)
No of oz to be served (notices)
0 contracts
( NIL oz)
Total monthly oz silver served (contracts) 233 contracts (1,165,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz
Total accumulative withdrawal  of silver from the Customer inventory this month 4,001,565.6 oz
today, we had  0 deposit(s) into the dealer account:
total dealer deposit: nil   oz
we had 0 dealer withdrawals:
total dealer withdrawals: NIL oz
we had 0 customer withdrawal(s):
We had 2 Customer deposit(s):
 i) Into HSBC :  1,000,004.300 oz
ii) Into Scotia:  600,127.27 oz
***deposits into JPMorgan have stopped  again
In the month of March and February, JPMorgan stopped (received) almost all of the comex silver contracts.
why is JPMorgan bringing in so much silver??? why is this not criminal in that they are also the massive short in silver
total customer deposits: 1,600,131.57 oz
 we had 2 adjustment(s)
i) Out of Brinks:  326,818.320 oz was adjusted out of the dealer and this landed into the customer account of Brinks
ii) Out of CNT: 517,336.230 oz  was adjusted out of the customer and this landed into the dealer account of CNT
The total number of notices filed today for the AUGUST. contract month is represented by 233 contract(s) for 1,165,000 oz. To calculate the number of silver ounces that will stand for delivery in AUGUST., we take the total number of notices filed for the month so far at 233 x 5,000 oz  = 1,165,000 oz to which we add the difference between the open interest for the front month of AUGUST (393) and the number of notices served upon today (233) x 5000 oz equals the number of ounces standing


Thus the INITIAL standings for silver for the AUGUST contract month:  233 (notices served so far)x 5000 oz  + OI for front month of AUGUST(393 ) -number of notices served upon today (233)x 5000 oz  equals  1,965,000 oz  of silver standing for the AUGUST contract month. This is extremely high for a non active delivery month. Silver is being constantly demanded at the silver comex.
Volumes: for silver comex
Today the estimated volume was 30.844 which is FAIR
YESTERDAY’s  confirmed volume was 54,233 contracts which is EXCELLENT
Total dealer silver:  38.624 million (close to record low inventory  
Total number of dealer and customer silver:   215.512 million oz
The record level of silver open interest is 234,787 contracts set on April 21./2017  with the price at that day at  $18.42
The previous record was 224,540 contracts with the price at that time of $20.44

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 7.1 percent to NAV usa funds and Negative 7.2% to NAV for Cdn funds!!!! 
Percentage of fund in gold 62.6%
Percentage of fund in silver:37.3%
cash .+0.1%( July 31/2017) 
2. Sprott silver fund (PSLV): STOCK   NAV FALLS TO +0.10% (July 31/2017) 
3. Sprott gold fund (PHYS): premium to NAV RISES TO -0.57% to NAV  (July 31/2017 )
Note: Sprott silver trust back  into POSITIVE territory at +0.10/Sprott physical gold trust is back into NEGATIVE/ territory at -0.57%/Central fund of Canada’s is still in jail  but being rescued by Sprott.

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

(courtesy Sprott/GATA)

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

 Section: Daily Dispatches

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


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

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

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

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

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

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

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

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

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

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

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


And now the Gold inventory at the GLD






July 24/A massive 9.62 tonnes withdrawal and yet the price remains constant (down only 25 cents)..inventory drops to 809.62 tonnes

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 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



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 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

July 31 /2017/ Inventory rests tonight at 791.88 tonnes


Now the SLV Inventory

July 31/no change in silver inventory at the SLV/inventory rests at 342.677 million oz





July 24/no change in silver inventory despite its 4 cent drop/inventory remains at 347.121 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 7/Strange: no change in inventory (compare that with gold) Inventory rests at 341.731 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 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/

July 31.2017:
 Inventory 342.677  million oz
  • 6 Month MM GOFO

    Indicative gold forward offer rate for a 6 month duration

    + 1.19%
  • 12 Month MM GOFO
    + 1.43%
  • 30 day trend


Here is a review of the 3 latest comex waterfall (whacks) on gold and silver not including the current one we are undergoing.  I have taken the nadir of the gold price before it started to rise again and compared it to OI in both gold and silver with the OPEN INTEREST.  The OI readings are the following day but we are always one day behind so this compares exactly to the nadir price.
First waterfall ended Oct 6 2016/ Nadir price of gold at that date Oct 6 2016 : $1254.70 / OI for gold Oct 7/2016: 511,340//OI for silver/Oct 7.2016: 194,811
Second waterfall ended Dec 15.2016:Nadir Price of gold Dec 15.2016:      $1128.20              //OI for gold Dec 16/2016 401,798// OI for silver: Dec 16/16 161,570
Third waterfall ended May 10/2017: Nadir Price of gold May 10 2016:   $1220.95              //  OI for gold May 11: 425,252//  OI for silver May 11/17: 199,826
and for comparison while we are undergoing another waterfall these past several weeks
 Today’s price of gold $1268.00                                                                                                    OI for gold today: 439,648//Oi for silver  206,781
The first waterfall corresponds to a silver price of $17.30 on Oct 6
The second waterfall corresponds to a silver price of $15.90 on Dec 15
The third waterfall corresponds to a silver price of $17.37 on May 10
and today:  silver price of $16.80
Since the bottom of the second waterfall the price of gold at its nadir is about the same ($1220 and $1226), but the OI for gold is much higher along with silver OI also much higher. (425,252 and 439,648 OI for gold) accompanying  199,826 and 206,781 for silver)
It seems the data suggests power manipulation to control the price through paper!






Major gold/silver trading/commentaries for MONDAY



Bitcoin, ICO Risk Versus Immutable Gold and Silver

– Latest developments show risks in crypto currencies
– Confusion as bitcoin may split tomorrow
– SEC stepped into express concern over ICOs
– ICOs have so far raised $1.2 billion in 2017
– ICOs preying on lack of understanding from investors
– Physical gold not vulnerable to technological risk
– Beauty and safety in simplicity of gold and silver

Editor: Mark O’Byrne

Forks and ICOs solves bitcoin v gold debate

There is still a huge amount of noise in the bitcoin and cryptocurrency space but there have been a few developments of late which have pushed the space further into maturity.

From what I can tell from dinner party conversations people who are vaguely aware of bitcoin now know that there are two terms they need to throw into the chat in order to sound like they know what they are talking about. These two terms are ICO and Fork.

Price is also a major talking point at present. As ever the price of bitcoin remains volatile and headline-worthy.

This week will mark a point in cryptocurrency history as the most powerful of cryptocurrencies, bitcoin will experience a major technical change and the US regulator SEC has just made a significant announcement about fundraising in the space.

We have written previously about how bored we are with the bitcoin vs gold debate, but for those who still like to peddle it then they would do well to see how these latest developments put the issue to bed.

The break-up of the year

For a long time there has been a debate about the scaling of the bitcoin network. What is ultimately a required software upgrade has caused many arguments and fall-outs in recent years.

Pressure has been ramping up within the bitcoin community as to how certain problems can be resolved. The discussion may seem like something which is just technical but has at times become philosophical and political.

The main items up for debate are as follows:

Bitcoin is currently limited in the number of transactions it can process. Today, it can only process up to 1MB of transactions roughly every 10 minutes.

Owing to this limit, transactions take longer to approve during times of heavy use.

As all users pay a fee to miners to make transactions, this limitation on space has increased average fee costs.

Increasing the block size makes network nodes more costly, as node operators must store the entire copy of the blockchain as computer files.

Ref: CoinDesk

Ultimately, the above comes down to the fact that the bitcoin network has failed to address problems associated with its current block size which are long wait times and high fees for transactions.

The debate has become so heated for obvious reasons – bitcoin was delivered to the world with a fairly strong set of principles.

However many believe that these principles either have to change in order to protect the future of the currency, or that the software must be upgraded in order to protect the principles.

A solution (called SegWit2x) had seemingly been reached, a week or so back. However not everyone was in agreement. As a result, last week a separate group of users announced that on August 1st they will split from off from bitcoin and create a new cryptocurrency called Bitcoin Cash.

This will likely cause a fork in the bitcoin network and result in two versions of the Bitcoin blockchain and two separate digital currencies. At this point there is likely to be a taking of sides by companies that operate within the bitcoin space.

The main difference between Bitcoin Cash and bitcoin is the block size. Bitcoin Cash will have a block size of 8MB, compared to Bitcoin’s 1MB block size. In theory Bitcoin Cash’s larger block size could prompt investors to flee Bitcoin in favour of the new currency. This would be negative for the original Bitcoin’s price.

Already I have received multiple emails from companies telling me which version they will be supporting and their reasons why.

So far it looks like the original bitcoin will be gaining the initial surge of support due to the unpredictability of something which was only announced a few day ago.

However, bitcoin owners will also end up with Bitcoin Cash (and a futures market is already open for the new currency) so we will watch this development with some interest.

What this whole drawn-out scenario will do, however, is serve as a reminder to regular crypto buyers and observers that no cryptocurrency is entirely without counterparties that can affect and arguably impact the future of your assets and the future value of them.

SEC, ICO and more acronyms

If you’ve been catching up with the latest series of House of Cards then ICO might sound like a reason for bitcoin to be banned outright as it is the fictional equivalent of ISIS.

But ICO in the real world is a very different thing, it stands for Initial Coin Offering.

An ICO is defined as

‘An unregulated means by which funds are raised for a new cryptocurrency venture. … In an ICO campaign, a percentage of the cryptocurrency is sold to early backers of the project in exchange for legal tender or other cryptocurrencies, but usually for Bitcoin.’

According to Autonomous NEXT, ICOs have raised $1.2 billion in 2017 alone. Given Ethereum raised ‘just’ $18.9 million in its 2014 ICO this shows phenomenal hype (or promise) in the space is growing rapidly.

The hype has even grabbed the attention of that expert-investor and cool-head that is Floyd Mayweather ahead of his big fight with Irish MMA champion Conor McGregor. McGregor is thought to be a bigger fan of gold than cryptos and has tweeted about bringing “more gold back to Dublin.”

When you see this sort of thing it is an example of hype and suggests valuations may be frothy and on the speculative side.

An ICO is really just a promise about the future of a cryptocurrency and the underlying technology.

Most of them are attempts to bring innovation to the fintech space. However concerns have been raised over the lack of due diligence being carried out by investors’ and some ICO projects are playing on this.

ICOs are the offering of crypto tokens which are bought by investors. This then funds ventures in the space. Inevitably the majority of them will fail, but many show great promise as we have seen with Ethereum.

ICOs are almost certainly here to stay. Not only are we seeing a similar movement of people from traditional banking into ICOs  as we did in the early days of blockchain tech. But  we have also seen the SEC feeling the need to get involved. As we have seen with bitcoin, this network effect of growing stakeholders is justifying the ongoing existence and development of ICOs.

Last week the SEC issued a guidance note that tokens issued by an Ethereum project called The DAO were securities.

“The Commission applied existing U.S. federal securities laws to this new paradigm, determining that DAO Tokens were securities.  The Commission stressed that those who offer and sell securities in the U.S. are required to comply with federal securities laws, regardless of whether those securities are purchased with virtual currencies or distributed with blockchain technology.”

This means that all ICOs may be subject to regulations. This announcement was received relatively positively in the crypto space, however some experts believe the SEC are showing a lack of understanding as to how these things work:

Blockchain engineer Elaine Ou pointed out on Twitter, ICO’s are “Untraceable, international, [have] no central authority, [and] funds can’t be frozen. The SEC ICO warning is the best ad for ICO’s.”

What it ultimately shows, however, is that the blockchain space continues to impress with innovation and the amount of money it attracts. However, it is all extremely new, there is a lot of hype and open to a number of threats as well as opportunities.

There will be significant creative destruction in the space.

Conclusion – Beauty and safety in simplicity of gold and silver

Many people bought bitcoin in the early days and have just sat on it.

Happy in the knowledge that it didn’t cost them much and they’ll wait and see what happens to it. Most of these people check-in with the price and whilst the volatility might scare them they are ultimately delighted with the long-term price performance.

The bitcoin price has (of course) felt the impact of the recent changes and debates. However the overall crypto space remains relatively resilient as the market-cap has remained fairly constant in the last week. However, the bitcoin price has faltered.

The problem is that this so-called hard fork has got a lot of people worried.

It has reminded bitcoin holders of the presence of counter-parties in the network, who are able to make decisions about your assets without your say so, whether they are the bitcoin miners or the regulators.

Many googled terms include ‘will I still have my bitcoin after the hard fork?…What will happen to my bitcoin?…Will I own bitcoin cash as well as bitcoin?’

There is confusion and with confusion comes doubt which is never good for price.

The ultimate lesson from all of this debacle is that bitcoin and other cryptos are not worthy substitutes for gold and silver, no matter how much some would like to push this idea.

The joy of owning physical gold which is segregated and allocated in your name is that no-one can announce that they don’t like how gold is mined so they’re changing what you own.

It cannot be manipulated in such a way. If you own gold coins or gold bars, it cannot disappear. It cannot be diluted or suffer a company take over or be hacked. It cannot be affected by alternative versions of it.

Gold is gold and silver is silver. They do not change and are immutable. There is both beauty and safety in this simplicity.

News and Commentary

China’s first-half gold output falls 10%, demand up (IndiaTimes.com)

India Trade Ministry Sees Scope for Lowering Gold Import Tax (Bloomberg.com)

EU explores account freezes to prevent runs at failing banks (Reuters.com)

IMF says dollar overvalued, euro, yen, yuan in line with fundamentals (Reuters.com)

Putin Says Hopes Retaliation Ends Once 755 U.S. Staff Ousted (BloombergQuint.com)

ECB’s 1.2 Trillion Euros QE. Source Bloomberg

Draghi Pledged ‘Whatever It Takes.’ It Took 1.2 Trillion Euros (Bloomberg.com)

Very Bullish Scenario For Gold – Goldcorp CEO (video) (Bloomberg.com)

Baruch Sees Gold Rolling Through $1,300 (video) (Bloomberg.com)

Toxic Fruit of Financialization: Risk Is for Those at the Bottom (DailyReckoning.com)

Miraculous gold rush movies buried under the Yukon ice (TheGuardian.com)

Gold best performing asset “since Australia sold its gold” (TheAustralian.com)

Gold Prices (LBMA AM)

31 Jul: USD 1,266.35, GBP 965.59 & EUR 1,079.06 per ounce
28 Jul: USD 1,259.60, GBP 961.96 & EUR 1,075.45 per ounce
27 Jul: USD 1,262.05, GBP 960.29 & EUR 1,076.53 per ounce
26 Jul: USD 1,245.40, GBP 956.72 & EUR 1,071.29 per ounce
25 Jul: USD 1,252.00, GBP 960.78 & EUR 1,074.59 per ounce
24 Jul: USD 1,255.85, GBP 962.99 & EUR 1,077.64 per ounce
21 Jul: USD 1,247.25, GBP 958.89 & EUR 1,071.39 per ounce

Silver Prices (LBMA)

31 Jul: USD 16.76, GBP 12.77 & EUR 14.29 per ounce
28 Jul: USD 16.56, GBP 12.66 & EUR 14.15 per ounce
27 Jul: USD 16.79, GBP 12.77 & EUR 14.34 per ounce
26 Jul: USD 16.37, GBP 12.54 & EUR 14.06 per ounce
25 Jul: USD 16.31, GBP 12.52 & EUR 14.00 per ounce
24 Jul: USD 16.50, GBP 12.66 & EUR 14.17 per ounce
21 Jul: USD 16.43, GBP 12.63 & EUR 14.11 per ounce

Recent Market Updates

– This Is Why Shrinkflation Is Making You Poor
– Gold A Good Store Of Value – Protect From $217 Trillion Global Debt Bubble
– Why Surging UK Household Debt Will Cause The Next Crisis
– Gold Seasonal Sweet Spot – August and September – Coming
– Commercial Property Market In Dublin Is Inflated and May Burst Again
– Gold Hedges Against Currency Devaluation and Cost Of Fuel, Food, Beer and Housing
– 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


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


1 Chinese yuan vs USA dollar/yuan STRONGER 6.7277(REVALUATION NORTHBOUND   /OFFSHORE YUAN MOVES WEAKER TO ONSHORE AT   6.7330/ Shanghai bourse CLOSED UP 19.79 POINTS OR 0.61%  / HANG SANG CLOSED UP 344.60 POINTS OR 1.28% 

2. Nikkei closed DOWN 34.66 POINTS OR .17%    /USA: YEN RISES TO 110.56

3. Europe stocks OPENED IN THE  GREEN      ( /USA dollar index RISES TO  93.46/Euro DOWN to 1.1733


3c Nikkei now JUST BELOW 17,000

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

3e WTI::  49.54 and Brent: 52.09

3f Gold DOWN/Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO  +.546%/Italian 10 yr bond yield DOWN  to 2.096%    

3j Greek 10 year bond yield RISES to  : 5.397???  

3k Gold at $1288.75  silver at:16.80 (8:15 am est)   SILVER BELOW  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN 58/100 in  roubles/dollar) 60.14-

3m oil into the 49 dollar handle for WTI and 52 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 


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  0.970-3 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1386 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 10 Year German bund now POSITIVE territory with the 10 year FALLING to  +0.546%

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 2.287% early this morning. Thirty year rate  at 2.8914% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

Global Stocks Rise On “Growth Optimism”, Ignore Political Turmoil; Dollar, Oil Creep Higher

S&P futures rose 0.1% on the last trading day of the month, trailing European and Asian markets boosted by China’s July Mfg. PMI, which despite declining from from 51.7 to 51.4, and missing expecations  of 51.5, saw the construction index rise to its highest level since December 13, sending Chinese iron ore futures surging and the European commodity sector broadly higher.

In equities, the MSCI All-Country World Index advanced 0.1%, and the MSCI Emerging Market Index increased 0.3%, while MSCI’s broadest index of Asia-Pacific shares outside Japan reversed early losses to rise 0.25%. Stocks have rebounding from Friday’s selloff spurred by raw-material producers on “optimism the global economy is gathering momentum” amid “evidence points to resilient global growth, with investors assessing numbers from the world’s top three economies” according to Bloomberg.

As noted above, China’s official factory gauge showed continued expansion in June, even as it slipped amid government efforts to curb financial risks. Japan’s industrial output expanded in June, while data Friday showed the U.S. economy accelerating in the second quarter. Investors remained wary after North Korea conducted a missile test late on Friday that it said proved its ability to strike the U.S. mainland. The U.S. responded by flying two bombers over the Korean peninsula on Sunday. But early jitters dissipated somewhat, with the Korean won reversing losses. The dollar was down 0.2 percent at 1,120.7 won, after jumping almost 0.7% on Friday. South Korea’s KOSPI fell 0.2%.

“The geopolitical overhang will likely keep topside moves in check early in the week as the disorganized U.S. and China policy towards North Korea is not helping matters,” Stephen Innes, head of Asia-Pacific trading at OANDA, wrote in a note.

In Europe, Anglo American, Rio Tinto Plc and BHP Billiton helped underpin the advance in the Stoxx Euro 600 Index as miners also propelled the MSCI All Country World Index toward a ninth month of gains. HSBC shares jumped as much as 3.7% to the highest since November 2014 on a $2 billion buyback as profit rose. Shares have climbed 26% this year, with the lender accounting for 13% of Hang Seng Index’s 24% YTD gain, most after Tencent.

Despite today’s 0.3% gain, the Stoxx 600 is flat for the month of July, in contrast with a gain of 2% for S&P 500 over the same period, according to Bloomberg. European stocks have been hurt by a strengthening euro which has fueled concerns for European earnings.

“Global expansion dynamics are well underway,” analysts at Candriam Investors Group wrote in a report. “The European recovery is well on track and is leading to above-trend growth in 2017-18. This has led us to increase our profit earnings expectations for euro-zone equities. The economic news flow is starting to become more supportive in the U.S., while emerging markets are benefiting from a good economic momentum.”

There is however, a latent risk: as Citi notes, political headlines may manifest themselves “the proposed healthcare bill is on life-support, tax reform is back in the news (though not yet on the table), and we await further reaction from the Trump administration to the diplomatic spat with Russia and to North Korea’s latest missile test – which, according to Korean newswires, may be imminently followed by another launch.”

A quick look at the FX book shows the Canadian dollar is biggest loser within G-10, while the yen and euro are mixed. Sovereign yields are near unchanged with the T-note yield at 2.29%. Asian stocks are broadly higher led by Australia and China.  Chinese shares rose 0.6%, buoyed by several leading companies’ forecasts for strong mid-year earnings. The blue-chip index and the Shanghai Composite both rose 0.6 percent.  Japan’s Topix index closed 0.2 percent lower after swinging between gains and losses. Australia’s S&P/ASX 200 Index rose 0.3 percent and South Korea’s Kospi index added 0.1 percent. Hong Kong’s Hang Seng Index added 1.1 percent. HSBC was among the biggest contributors to the advance (more below). West Texas crude traded above $50 a barrel for the first time since May, while copper rose to a two-year high and iron ore surged.

In the Asian session, the dollar index climbed with gains tempered by tensions over the weekend between U.S. and Russia, as wells as North Korea. In Europe, Euro, EGBs largely unchanged as euro area July inflation matches estimates. Pound slips against dollar. The Bloomberg Dollar Spot Index edged higher, paring its fifth straight month of declines, as investors prepare for a data-heavy week that will culminate with the release of non-farm payrolls data for July, while Apple, Pfizer, Tesla and Berkshire Hathaway will report earnings. The euro began the week on a soft note as investors waited for second-quarter growth data due Tuesday.  The Swiss franc was little changed against the euro, after posting its biggest weekly decline in more than two years; last week’s selloff was triggered by a host of factors, including stop losses and talk of initial public offer-related flows. The ruble slid 1.2% to 60.2550 per dollar, falling for a third day and the most among emerging-market currencies amid heightened geopolitical risks after Russia ordered expulsion of U.S. diplomats. Russian government bonds fell, driving the 10-year yield higher by 9bps.

Also overnight, the BOJ maintained its govt bond purchase plans for August unchanged from July. Below are Bloomberg’s comparisons between planned purchase ranges for August against those for July and the amounts BOJ offered to buy at the last operations:

  • 1-to-3 years: 200b-300b yen vs 200b-300b yen for July, 280b yen on July 28
  • 3-to-5 years: 250b-350b yen vs 250b-350b yen for July, 330b yen on July 28
  • 5-to-10 years: 350b-550b yen vs 350b-550b yen for July, 470b yen July 28
  • 10- to-25 years: 150b-250b yen vs 150b-250b yen for July, 200b yen on July 26
  • More than 25 years: 50b-150b yen vs 50b-150b yen for July, 100b yen on July 26
  • Up to 1 year: 50b-150b yen vs 50b-150b yen for July, 100b yen on July 26

U.S. crude futures climbed 0.3 percent to $49.87 a barrel, after earlier hitting $50.06, their first foray above $50 in two months. Brent crude advanced 0.5 percent to $52.78, adding to Friday’s 2 percent surge. Gold was little changed at $1,268.26 an ounce, after earlier climbing to its highest since June 14.

In rates, the yield on 10-year Treasuries advanced less than one basis point to 2.29%. Germany’s 10-year yield climbed one basis point. Britain’s 10-year yield fell less than one basis point.

Copper climbed 1.1 percent to $2.91 a pound, the highest in more than two years. Zinc gained 1.1 percent, nickel 0.7 percent and tin 1 percent Gold fell 0.2 percent to $1,266.98 an ounce after rising to $1,271.23, the highest since June 14. Gold remains on course for its biggest monthly advance since Feb., with prices trading near highest level in more than six weeks, as speculation that Federal Reserve will go slow on raising interest rates hurts dollar. Bullion for immediate delivery +2.2% this month, most since Feb.’s +3.1%. “U.S. GDP data was weaker than expected and inflation remains subdued, which could damp Fed rate hike expectations,” Guotai Junan Futures says in note. “Gold has scope to rise further in the near term.”

Markets are awaiting speeches by Cleveland Federal Reserve President Loretta Mester and San Francisco Fed President John Williams on Tuesday, for further insight into whether the central bank has turned more dovish in light of recently muted inflation.

“It is easy for uncertainty to increase about the Fed’s ability to raise rates next year if inflation remains low. We could see the dollar head below 110.00 yen under such circumstances,” said Junichi Ishikawa, senior forex strategist at IG Securities in Tokyo.

The slew of corporate earnings continues. Apple Inc., Tesla Inc., Berkshire Hathaway Inc. and Toyota Motor Corp. are all set to unveil results this week. Pending home sales and Dallas Fed manufacturing activity is expected later on Monday, along with earnings reports from Stifel Financial, Loews and others.

Overnight Bulletin Summary from RanSquawk

  • European equities trade higher with outperformance in the FSTE (+0.4%) amid gains in HSBC
  • USD-index has regained some ground against majors, while EUR inflation data saw the headline meet expectations
  • Looking ahead, highlights include Chicago PMI and Pending Home Sales

Market Snapshot

  • S&P 500 futures up 0.11% to 2,473.00
  • STOXX Europe 600 up 0.3% to 379.46
  • MXAP up 0.3% to 160.20
  • MXAPJ up 0.4% to 529.01
  • Nikkei down 0.2% to 19,925.18
  • Topix down 0.2% to 1,618.61
  • Hang Seng Index up 1.3% to 27,323.99
  • Shanghai Composite up 0.6% to 3,273.03
  • Sensex up 0.5% to 32,479.54
  • Australia S&P/ASX 200 up 0.3% to 5,720.59
  • Kospi up 0.07% to 2,402.71
  • US 10Y yield +0.35bps to 2.29%
  • German 10Y yield unchanged at 0.541%
  • Euro down 0.2% to 1.1726 per US$
  • Italian 10Y yield rose 2.7 bps to 1.829%
  • Spanish 10Y yield fell 3.1 bps to 1.494%
  • Brent Futures up 0.2% to $52.61/bbl
  • WTI up 0.2% to 49.80/bbl
  • Gold spot down 0.3% to $1,266.39
  • U.S. Dollar Index up 0.3% to 93.51

Top Overnight News

  • Inflation in the euro area remained well below the European Central Bank’s goal as policy makers prepare to discuss unwinding stimulus.
  • After the collapse of Obamacare repeal, Republicans may have to choose between pursuing another health bill or pushing through a tax overhaul this year, because there’s almost certainly not enough time to do both.
  • So how much did it end up taking after European Central Bank President Mario Draghi memorably said five years ago he’d do “whatever it takes” to save the euro? About 1.2 trillion euros.
  • The Saudi-led alliance that severed ties with Qatar reinstated a list of 13 demands that must be met before talks to resolve the eight-week crisis could start, just as as fresh economic data highlighted the impact of the unprecedented boycott on the Gulf nation.
  • Trump’s New Chief Has One Key Asset: Ivanka and Kushner’s Nod
  • Trump Hints Ending Subsidies to Insurance Cos if No Bill Passed
  • SoftBank Is Said to Plan Making Direct Offer for Charter; Charter Says Has No Interest in Acquiring Sprint
  • India Needs 2,100 Planes Worth $290b in 20 Years, Boeing Says
  • Astra’s Imfinzi Granted FDA Breakthrough Therapy in Lung Cancer
  • J&J Granted FDA Orphan Drug Status for Bedaquiline
  • Ford Takes Action to Help Address Concerns of First Responders
  • Five Banks Reach $111.2m Total Pact Over FX case, Law Firm Says
  • Lockheed Lands $3.69B Advance to Build 50 F-35s for Int’l Buyers
  • Alaska Air Says Hacker Accessed Virgin America Worker Passwords
  • Koch Network Readies Push for Lower Taxes After Border Tax Kill
  • Raytheon’s Troubled GPS III Ground Control Network Slips Again

Asia equity markets traded mixed ahead of this week’s key risk events and as participants digested Chinese Manufacturing PMI and further provocation from North Korea. ASX 200 (+0.4%) was underpinned by commodity names amid strength in the metals complex coupled with WTI crude’s brief reclaim of USD 50/bbl to the upside, while Nikkei 225 (-0.2%) was dampened by broad-based JPY strength. Geopolitical concerns pressured the KOSPI (-0.3%) following another North Korean missile test on Friday which it claimed was capable of striking mainland US, while both Hang Seng (+1%) and Shanghai Comp. (+0.6%) were positive despite Official Chinese Manufacturing PMI data missing estimates, as the Construction sub-index rose to its highest since December 2013. Finally, 10yr JGBs were flat and failed to benefit from the cautious risk tone in Japan, with demand subdued following a lacklustre BoJ Rinban announcement valued at just only JPY 325b1n of JGBs. PBoC injected CNY 160 bin 7-day reverse repos and CNY 80bln 14-day reverse repos. Chinese Official Manufacturing PMI (Jul) 51.4 vs. Exp. 51.5 (Prey. 51.7). Chinese Non-Manufacturing PMI (Jul) 54.5 (Prey. 54.90)

Top Asian News

  • China Is Said to Ask Waldorf Owner Anbang to Sell Assets Abroad
  • BOJ Keeps August Bond Purchase Ranges Unchanged From July
  • Biggest Indian Bank Surges as Deposit Rate Cut May Boost Profit
  • Sumitomo Mitsui 1Q Net Income Rises 31% to 241.5b Yen
  • SMFG Reports 1st Qtr Group Earnings Result
  • Panasonic Reports 1st Qtr Group Earnings Result (IFRS)
  • Tian Guoli Is Said to Be Named China Construction Bank Chairman

European bourses are higher across the board this morning led through material names, following the Chinese Mfg. PMI data, in which the construction index rose to its highest level since Dec’13. Firm earnings and an announcement to plan a USD 2bln share buyback from Europe’s largest bank, HSBC (+3%), has lifted financial names higher this morning with support for health care names also seen in the wake of earnings from Sanofi (+1.8%) whereby the Co. also raised their guidance. A cautious start was initially seen for German paper this morning ahead of this morning’s Eurozone CPI data with prices relatively unreactive to the release which saw the headline match expectations with core slightly firmer than anticipated. Peripheral debt outperforming its German counterpart with the BTPSs and Bonos tighter by 3bps. Some suggest BTPs are set to benefit from large month-end extensions.

Top European News

  • U.K. Consumer Borrowing Cools After Bank of England Warning
  • HSBC Rises as Second Quarter of Growth Backs Turnaround Story
  • Putin Says Hopes Retaliation Ends Once 755 U.S. Staff Ousted
  • Rolls- Royce Shares Fall; Is Said to Caution on Cash Flow to FT
  • Greece’s Road to Bailout Exit: 140 Reforms Down, More to Go
  • U.K. Takes Two Steps Forward, One Step Back on Brexit Plan
  • Italian Unemployment Declines; Jobs Growth Led by Temporary Work

In currencies, the USD-index begins the week slightly firmer, rising 0.1% overnight to pull off 15-months lows reached last week amid a raft of soft US data. USDCAD has been the notable mover with bargain hunting the likely catalyst, given Friday’s 1% decline. Major support lies around 1.2400 with the pair testing stalling at 1.2410¬20 multiple times last week. The antipodeans (AUD,NZD) will be in focus this week, both currencies slightly tailing off their 2Y highs. Last week, AUD reached the highest level since May’15 at 0.8066, however the currency has pulled off somewhat with the Aussie back below 0.80. Focus will be on the RBA statement, in which the central bank may sharpen their language on the AUD to temper its recent surge. NZD hovers above 0.75 with participants likely to keep an eye for latest GDT auction and jobs data which will guide price action. Cable: Another central bank to announce their latest decision will be the BoE who will announce their latest economic projections. It is likely the central bank will keep rates unchanged with inflation cooling to 2.6% in June and growth remaining tepid, this has subsequently reduced speculation over a near term rate rise. Since the last meeting, GBP has risen over 3% with the currency now above 1.31. Resistance ahead at 1.3150-60 with additional offers situated at 1.32 (option barrier level).

In commodities, Brent and WTI futures up a nudge this morning, the latter met resistance at USD 50. Over the weekend, Shell’s Pernis oil refinery had been forced to close after reports of a fire at the 404k bpd refinery. Also, source reports indicate the US could announce oil related sanctions on Venezuela as soon as today in a response to Sunday’s election. Industrial metals supported overnight from the Chinese PMI data, which saw Dalian iron ore futures hitting limit up in Asia, while steel rebar soared to a 3Y high. US could announce oil related sanctions on Venezuela as soon as today in a response to Sunday’s election, according to sources. Sources added that US is considering banning sales of US oil and refined products to Venezuela, but are not expected to include a ban on Venezuelan oil shipments to the US.

Looking at today’s session, we will get the Chicago PMI number (60 expected; 65.7 previous), the Dallas Fed manufacturing activity reading (13 expected; 15 previous) for July and June pending home sales (1% expected).

US Event Calendar

  • 9:45am: Chicago Purchasing Manager, est. 60, prior 65.7
  • 10am: Pending Home Sales MoM, est. 1.0%, prior -0.8%; NSA YoY, prior 0.5%
  • 10:30am: Dallas Fed Manf. Activity, est. 13, prior 15

DB’s Jim Reid concludes the overnight wrap

Welcome to the last day of July and the end of one life and start of a new one split between work and childcare, with nothing much in between. It’s likely that August will see a barbell of excitement with decent activity at either end but with a notable slowdown in the middle. This week we see the monthly PMIs/ISMs over the next couple of days which are a crucial barometer on realtime growth momentum, the BoE on Thursday (probably a lower key event after recent inflation numbers) and then payrolls on Friday which is always fun! Then a likely lull for 2-3 weeks before the Jackson Hole Symposium on August 24-26th with guest star Mr Draghi present for the first time since he attended and strongly hinted at QE three years ago. Will he tee-up further autumnal tapering and create some bond volatility?

We saw a little bit of bond vol on Friday after stronger German CPI (HICP 1.5% yoy vs 1.4% expected) saw 10 year Bunds climb from 0.53% to 0.58% in the morning session where they stayed until a slightly weaker than expected US Q2 GDP print (2.6% vs 2.7% annualised QoQ expected) helped see them reverse course again to close at 0.54%.

The US GDP print still represented a significant pick up from Q1 growth but that was revised down from 1.4% to 1.2%. The growth rebound was bolstered by strong Q2 consumer spending data that was in line with expectations at +2.8% SAAR (vs. +1.9% previous). Later in the day we got the final University of Michigan consumer sentiment reading for July which was revised marginally higher from 93.2 to 93.4.

This morning, China’s July manufacturing PMIs were a tad softer than expectations at 51.4 (vs. 51.5 expected; 51.7 previous), partly due to adverse weather conditions such as high temperatures in parts of China and floods in others as well as routine maintenance in some enterprises. There was also a small fall in the non-manufacturing PMI to 54.5 (54.9 previous). Focus will turn to the extent of economic growth in 2H, as China’s policy makers had previously indicated a preference for slower credit growth. Elsewhere, Japan’s industrial production for June beat expectations at 1.6% mom (vs. 1.5% expected; -3.6% previous). This morning in Asia, Chinese related bourses have all strengthened, with the Hang Seng (+0.7%) and the three Chinese markets up ~+0.6%. The Nikkei (-0.1%) and the Kospi (-0.3%) are both marginally weaker.

Global equity markets were on the softer side on Friday as US equities (S&P -0.1%; NASDAQ -0.1%) mostly dipped on the slightly lower than expected Q2 growth. However the Dow bucked the global trend to climb 0.16% (supported by solid results from Chevron) and to another new record close – the third day in a row. Earlier European equities (STOXX -1.0%) struggled as the Euro strengthened on the day and auto makers continue to weaken. Tobacco stocks fell heavily on both sides of the Atlantic as news filtered through that the US Food & Drug Administration plans to look at regulating nicotine levels in cigarettes. Across the region, other markets also softened, with the DAX (-0.4%), FTSE 100 (-1%), CAC (-1%) and FTSE MIB (-0.9%).

Over in government bonds, change in yields were modest for both US Treasuries (2Y: unch; 10Y: unch) and German Bunds (2Y: -1bp; 10Y: +1bp). Other sovereigns also had modest changes, although yields at 10Y slightly increased, while 2Y yields were marginally lower, with Gilts (2Y: -1bps; 10Y: +1bps), OATs (2Y: -1bps; 10Y: +1bps) and BTPs (2Y: +1bps; 10Y: +3bps).

Turning to currency, the US dollar index fell 0.6% on the back of softer Q2 GDP data, but has recovered a little this morning. The Euro/USD strengthened 0.6% to a new 30-month high of 1.175 and Sterling/USD was also up 0.5% to a fresh 10 month high. Commodity markets saw another day of strong performance, with the energy segment broadly higher on the day as oil rose again (WTI +1.4%) to end the week up over 8%. Precious metals were broadly higher (Gold +0.8%; Silver +1.0%), while industrial metals were slightly lower (copper: -0.3%; Aluminium -0.4%). Agricultural commodities were broadly higher on the day as well.

Away from the markets, voting efforts to repeal Obamacare have ended for now. Despite being health stricken, Senator McCain flew in last week to allow the senate to start the debate on healthcare legislation. In the end, it was McCain and two other senators that blocked the skinny repeal of Obamacare on a vote of 49-51 last Friday. Senate majority leader McConnell said “he’ll move on to other legislative business”, but Trump is not giving up, tweeting “…if a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies….will end very soon!” Trump is referring to ending subsidy payments to health insurance companies which help make insurance accessible to poorer Americans. The next payment is due 21 Aug and the Health and Humans Service Secretary Price has said on Sunday that “no decision (on the subsidy) has been made” either way.

The North Korean situation will also be giving Mr Trump some headaches after the state fired off more intercontinental missiles over the weekend. China has condemned the latest tests, but fell short of more aggressive actions as desired by Mr Trump. Conversely, the US has sent bombers to joint military exercises with South Korea on Saturday and the US ambassador to the UN has said “the time for talk is over…China must decide whether it is finally willing to take this vital step (to resolve this situation)..” The Krw/USD was up 0.8% last Friday and is little changed this morning.

Elsewhere, one thing appearing to head in a better direction for Mr Trump is tax reform. The Republicans are now more confident of overhauling the US tax code, with an outcome likely by the end of the year. This follows House speaker Ryan making a concession and ditching his controversial border adjusted tax last week, which was expected to raise $1trn of tax revenue over a decade. Obviously there is still a long way to go though.

Taking a look now at some of the other data out on Friday, in Europe we got advanced reading of France Q2 GDP which increased marginally more than expected to +1.8% YoY (vs. +1.6% expected; 1.1% previous). We also got the preliminary July CPI readings for France which came in line with expectations at +0.8% YoY (-0.4% mom), while German inflation was higher than expected at 1.5% YoY (as discussed above) which was the main story of interest. We also saw a group of Eurozone confidence indicators for July where economic confidence (111.2 vs. 110.8 expected), services confidence (14.1 vs. 13.4 expected) and industrial confidence (4.5 vs. 4.4 expected) beat estimates although the business climate did disappoint (1.05 vs. 1.14 expected). The final reading for the July consumer confidence indicator also saw no revisions from the initial reading of -1.7 (as expected).

Taking a look now at this week’s economic calendar. Today, we have German retail sales (+0.2% mom expected; +0.5% previous) and UK consumer credit data for June due, followed by the Eurozone unemployment rate (9.2% expected) for June and CPI estimate (+1.3% YoY expected) for July. In the US we will get the Chicago PMI number (60 expected; 65.7 previous), the Dallas Fed manufacturing activity reading (13 expected; 15 previous) for July and June pending home sales (1% expected). We kick off tomorrow in Asia where we will get the Caixin China manufacturing PMI reading and the final Nikkei Japan  manufacturing PMI reading for July. In Europe we will get July data for the UK Nationwide House Price index, followed by a first look at the remaining manufacturing PMIs out of Europe and the final July manufacturing PMIs for France, Germany and the Eurozone as a whole. We will also get the advance estimate for Q2 Eurozone GDP. In the US we will get personal income and spending numbers for June and the ISM manufacturing PMI for July. Wednesday is a quiet day in both the Europe and the US with no real data of note outside of ADP and the Eurozone PPI. Thursday’s calendar will round out July PMI data for the week. In Asia we will get the July composite and services PMI numbers for China (Caixin) and Japan (Nikkei). In Europe we get the July PMIs with the final services and composite PMIs for France, Germany and the Eurozone due as well as a first look at some of the same data for the rest of Europe. Thereafter all focus should shift to the BoE policy meeting. Over in the US we should also get jobless claims data followed by the ISM non- manufacturing composite for July. Thereafter we will get factory orders data as well as the final readings for durable and capital goods orders for June. Friday is relatively quiet day for data in both Asia and Europe with only German factory orders data for June due. The US should be in greater focus as the July payrolls number is due along with other labour market data. Alongside that we will also get the trade balance reading for June.

Onto other events, on Tuesday, trade ministers from the BRICS countries will meet in Shanghai. Then Wednesday, the Fed’s Mester will speak at a Community banking conference and the Fed’s Williams will speak in Las Vega’s on monetary



i)Late SUNDAY night/MONDAY morning: Shanghai closed UP 19.79 POINTS OR 0.61%   / /Hang Sang CLOSED UP 344.60 POINTS OR 1.28% The Nikkei closed DOWN 34.66 POINTS OR .17%/Australia’s all ordinaires CLOSED UP 0.32%/Chinese yuan (ONSHORE) closed UP at 6.7277/Oil UP to 49.54 dollars per barrel for WTI and 52.09 for Brent. Stocks in Europe OPENED IN THE GREEN , Offshore yuan trades  6.7330 yuan to the dollar vs 6.7277 for onshore yuan. NOW THE OFFSHORE IS WEAKER  TO THE ONSHORE YUAN/ ONSHORE YUAN  STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS  STRONGER TO THE DOLLAR AND THIS IS COUPLED WITH THE SLIGHTLY STRONGER DOLLAR. CHINA IS HAPPY TODAY 



Trump lashes out against China for failure to rein in North Korea.  The key phrase; “we will no longer allow this to continue”

(courtesy zero hedge)

Trump Lashes Out At China Over North Korea: “We Will No Longer Allow This To Continue”

One month after Trump’s ominously tweeted in the aftermath of Otto Warmbier’s death, that while he greatly appreciates the efforts of President Xi & China to help with North Korea, “it has not worked out”, confirming that the post Mar-A-Lago honeymoon period was officially over, moments ago the president blasted out his latest two tweets Saturday tweets, #12 and 13in which he said he was “very disappointed” in China.

“Our foolish past leaders have allowed them to make hundreds of billions of dollars a year in trade, yet they do NOTHING for us with North Korea, just talk. We will no longer allow this to continue. China could easily solve this problem!” Trump tweeted one day after North Korea launched its second successful ICBM in the past month, one which according to both experts and Kim Jong-Un, can reach most US metro areas.

Relations between the world’s two largest economies soured after an initial honeymoon between Trump and President Xi Jinping. The U.S. last month sanctioned a regional Chinese bank, a shipping company and two Chinese citizens over dealings with North Korea, which could be a precursor to greater economic and financial pressure on Beijing to rein in its errant neighbor.

Trump has also vowed to put more pressure on China to do help curb Pyongyang’s rapidly advancing programs, which however judging by the recent spike in Chinese exports to NKorea, has not been successful.

Meanwhile, the primary reason why China has been urging all involved parties to remain calm, yet does nothing to curb Kim’s provocative launches, is that as Bloomberg reports, “China is betting that U.S. President Donald Trump won’t make good on his threats of a military strike against North Korea, with Beijing continuing to provide a lifeline to Kim Jong Un’s regime.”

China on Saturday condemned the latest test while calling for restraint from all parties, a muted reaction to Pyongyang’s progress on an ICBM capable of hitting the U.S. mainland. Despite Kim’s provocations, analysts said Beijing still sees the collapse of his regime as a more immediate strategic threat, and doubts Trump would pull the trigger given the risk of a war with North Korea that could kill millions.


The military option the Americans are threatening won’t likely happen because the stakes will be too high,” said Liu Ming, director of the Korean Peninsula Research Center at the Shanghai Academy of Social Sciences. “It’s a pretext and an excuse to pile up pressure on China. It’s more like blackmail than a realistic option.”


Secretary of State Rex Tillerson singled out China and Russia as “economic enablers” of North Korea after Kim on Friday test-fired an intercontinental ballistic missile for the second time in a matter of weeks. While Tillerson said the U.S. wants a peaceful resolution to the tensions, the top American general called his South Korean counterpart after the launch to discuss a potential military response.

China’s biggest fears remain a collapse of Kim’s regime that sparks a protracted refugee crisis and a beefed-up U.S. military presence on its border. And now that Trump’s new Chief of Staff is a 45 year army veteran, who will be whispering in Trump’s ear just what any other general whispers to a president vis-a-vis “defensive-yet-offensive” wars, China’s “biggest fear” may be about to come true.


This is something:  USA and Japan show an overwhelming force as it flies two B 1 B bombers over the Korean peninsula

(courtesy zero hedge)

In Show Of “Lethal, Overwhelming Force” US Flies Two B-1B Bombers Over Korean Peninsula

Less than a month after the US flew two B-1B bombers over the Korean Peninsula to show off “US attack capabilities“, the US Air Force did it again on Sunday, when it the flew two supersonic B-1B bombers over the Korean peninsula in “a show of force” on Sunday after Pyongyang’s Friday test of an ICBM that can reach the continental US. The two B-1Bs flew alongside two Japanese F-2 jet fighters within Japanese airspace before conducting an exercise over South Korea with four South Korean F-15 fighters in response to the latest North Korean missile test, as well as the previous July 4 launch of the “Hwansong-14” rocket, the USAF.

“In a demonstration of ironclad U.S. commitment to our allies, two U.S. Air Force B-1B Lancers assigned to the 9th Expeditionary Bomb Squadron, deployed from Dyess Air Force Base, Texas, fly a 10-hour mission from Andersen Air Force Base, Guam, into Japanese airspace and over the Korean Peninsula” the statement by Pacific Air Forces Public Affairs said.

“North Korea remains the most urgent threat to regional stability,” Pacific Air Forces commander General Terrence J. O’Shaughnessy said in the statement.

“If called upon, we are ready to respond with rapid, lethal, and overwhelming force at a time and place of our choosing”.

–“If called upon, we are ready to respond w/rapid, lethal, & overwhelming force…” http://bit.ly/2hcv1mi 

The U.S. has in the past used overflights of the supersonic B1-B “Lancer” bomber as a show of force in response to North Korean missile or nuclear tests, most recently on July 8, although the “deterrence” of such drills leaves much to be desired.

North Korea through its state media often complains about flyovers by B-1B bombers, calling them rehearsals for a nuclear strike. On Saturday, the two B-1Bs took off from Andersen Air Force Base in Guam, flying alongside two Japanese jet fighters within Japanese airspace before conducting an exercise over South Korea with four South Korean jet fighters.

As reported on Saturday, North Korean leader Kim Jong Un personally supervised the midnight test launch of the missile on Friday night and said it was a “stern warning” for the United States that it would not be safe from destruction if it tries to attack, the North’s official KCNA news agency said adding that “all of the US is now within North Korean ICBM range.” North Korea’s state television broadcast pictures of the launch, showing the missile lifting off in a fiery blast in darkness and Kim cheering with military aides.

Meanwhile, even as China said it opposed North Korea’s missile launches, which it said violate UNS resolutions designed to curb Pyongyang’s banned nuclear and missile programs, Trump slammed Beijing saying he was “very disappointed in China”.

In a message on Twitter, he said: “Our foolish past leaders have allowed them to make hundreds of billions of dollars a year in trade, yet they do NOTHING for us with North Korea, just talk. We will no longer allow this to continue. China could easily solve this problem!” he tweeted.

At the same time, Japanese Foreign Minister Fumio Kishida, meanwhile, held telephone talks with US Secretary of State Rex Tillerson. Both reportedly agreed on the need to put “the heaviest possible pressure” on North Korea, AFP reported. “We confirmed that we will closely cooperate in adopting a fresh UNSC (UN Security Council) resolution, including severe measures, and working on China and Russia,” Kishida told reporters.

In a Sunday statement, North Korea said it had been forced to develop long-range missiles and nuclear weapons because of hostile intent by “American imperialist beasts” looking for another chance to invade the country.

“If the United States sticks to its military adventurism against us and super-intensive sanctions schemes, we will respond with stern action of justice as we have already declared,” North Korea’s Foreign Ministry spokesman said in a statement on Sunday, KCNA reported.

Good reason for gold to be down today…South Korea is preparing a surgical strike against North Korea taking out command centers and their nuclear facilities
(courtesy zero hedge)


Japan is certainly not happy that the uSA backed out of the TPP.  They have now decided to raise USA frozen beef import tariffs by 50%

(courtesy zerohedge)

The Empire Strikes Back: Japan Jacks Up US Beef Import Tariffs To 50%

President Donald Trump’s decision to withdraw the US from the 12-nation Trans Pacific Partnership angered the Japanese, provoking fears of a bruising trade showdown between the world’s largest and third-largest economies. On Friday, the Japanese instituted a new policy that will do little to assuage those concerns.

After Japan signed a sweeping trade agreement with the European Union, a move that pundits warned would weaken the US’s position as a dominant player in the global economy, the country has taken another dramatic step clearly aimed at retaliating against the US: Japan said it would impose a temporary 50% tariff on frozen beef from the US and several other countries.

According to the Wall Street Journal, Japan’s decision to crack down on frozen beef imports was mandated by a 1994 global trade deal that would’ve been scrapped under the TPP. US trade groups are already warning about how the decision will negatively impact beef prices stateside.

“The U.S. Meat Export Federation said Japan’s move would have negative implications for both U.S. beef producers and Japanese restaurant chains that rely on frozen American beef. The group “will work with its partners in Japan to mitigate the impact” of the move as much as possible, said Chief Executive Philip Seng.

Under Japanese law, an additional tariff known as a safeguard is triggered when frozen-beef imports from all countries and frozen-beef imports from countries lacking free-trade deals with Japan – or “non-EPA countries” because they lack an economic partnership agreement with Japan – both increase by more than 17% from the same period a year earlier. The import volumes are reviewed each quarter.

US government officials couldn’t be reached immediately for comment.”

According to Japan’s Ministry of Finance, Japan imported 89,253 tons of frozen beef during the second quarter, with 37,823 tons coming from non-EPA countries. Both surpassed the “safeguard volume” initiated by the 1994 trade agreement. In Japan, frozen beef is widely used at restaurants to make hamburger patties and bowls of beef over rice, a popular fast-food item, according to WSJ. The safeguard duty affects around 12% of total beef supply in Japan, said Finance Ministry tariff official Koyu Izumi.

In recent months, frozen beef imports have been rising as merchants have sought to lock in prices before China resumes US beef imports as a part of a trade deal. China cracked down on US beef imports 14 years ago during a mad-cow diseases scare. But as beef grows in popularity among Chinese consumers, while memories of the scare have mostly faded, in the world’s second-largest economy are excited about the return of US beef to store shelves.

“American steak is delicious,” said one user on China’s Twitter-like Weibo service. “It doesn’t have the mutton smell of domestic beef,” according to Fortune Magazine.
Japan also temporarily blocked US beef imports in 2003 after the mad-cow scare, but it resumed imports in late 2005, halted them again shortly afterward, then fully restarted them in mid-2006. The US exported $1.5 billion of beef to Japan last year, according to data from the US Meat Export Federation cited by Reuters.

Furthermore, while Trump’s protectionist rhetoric has helped escalate tensions between the US and its partners, the US trade situation is improving. According to the latest reading on the US trade balance, released earlier this month, the US trader deficit shrunk in May. The trade deficit decreased in May2017 from an unrevised $47.6 billion in April (revised). The most notable declines were seen in China and the European, where deficits declined by $2.6BN and $2.0BN respectively.

Several rival countries do have economic agreements with Japan that has exempted their beef imports from the restrictions, potentially granting them an opening to supplant US suppliers and increase their market share. These countries include as Australia, Mexico and Chile, according to Reuters. The wire service reported that Japan’s Finance Minister Taro Aso is calling foreign leaders of the affected countries to explain the increase in tariffs. But seeing as much of the US beef industry is centered on midwestern states like Nebraska that sided with Trump during the election.

We suspect Trump won’t let this go that easily.



China is angry and frustrated with the USA stating that the North Korean nuclear ambitions is not China’s problem/  China is North Korea’s largest trading partner.  China’s exports to North Korea continue to rise although imports form North Korea have fallen off

(courtesy zero hedge)

An “Angry, Frustrated” China Hits Back Over Trump’s Latest Tweets

Two days after President Donald Trump tweeted he was “very disappointed” in China
following Pyongyang’s latest missile test adding that “we will no longer allow this to continue”, Beijing has hit back at Trump on Monday, saying the problem did not arise in China and that all sides need to work for a solution, according to a statement sent to Reuters by China’s Foreign Ministry.

“All parties should have a correct understanding of this,” it said, adding the international community widely recognized China’s efforts to seek a resolution. The essence of Sino-U.S. trade is mutual benefit and win-win, with a vast amount of facts proving the healthy development of business and trade ties is good for both countries, the ministry added.


Chinese Vice Commerce Minister Qian Keming, weighed in too, telling a news conference there was no link between the North Korea issue and China-U.S. trade. “We think the North Korea nuclear issue and China-US trade are issues that are in two completely different domains. They aren’t related. They should not be discussed together,” Qian said.

Also on Monday, the state-run nationalistic Chinese tabloid Global Times said that “Pyongyang is determined to develop its nuclear and missile program and does not care about military threats from the U.S. and South Korea” adding “how could Chinese sanctions change the situation?”

China wants both balanced trade with the United States and lasting peace on the Korean peninsula, its official Xinhua news agency added in a commentary. “However, to realize these goals, Beijing needs a more cooperative partner in the White House, not one who piles blame on China for the United States’ failures,” it added.

Reuters adds that “China has become increasingly frustrated with American and Japanese criticism that it should do more to rein in Pyongyang. China is North Korea’s closest ally, but Beijing is angry with its continued nuclear and missile tests.” China, with which North Korea does the large majority of its trade, has repeatedly said it strictly follows U.N. resolutions on North Korea and has denounced unilateral U.S. sanctions as unhelpful.

As reported yesterday, the U.S. Ambassador to the United Nations, Nikki Haley, said in a statement China must decide if it is willing to back imposing stronger U.N. sanctions on North Korea over Friday night’s ICBM test, the North’s second this month. Any new U.N. Security Council resolution “that does not significantly increase the international pressure on North Korea is of no value”, Haley said, adding that Japan and South Korea also needed to do more.

Separately, Japan’s PM Abe told reporters after his conversation with Trump that repeated efforts by the international community to find a peaceful solution to the North Korean issue had yet to bear fruit in the face of Pyongyang’s unilateral “escalation”. “International society, including Russia and China, need to take this seriously and increase pressure,” Abe said. He said Japan and the United States would take steps towards concrete action but did not give details. Abe and Trump did not discuss military action against North Korea, nor what would constitute the crossing of a “red line” by Pyongyang, Deputy Chief Cabinet spokesman Koichi Hagiuda told reporters.

Underscoring the rising severity of the North Korean situation, the United States flew two supersonic B-1B bombers over the Korean peninsula in a show of “lethal, overwhelming force” on Sunday in response to the missile test and the July 3 launch of the “Hwasong-14” rocket, the Pentagon said. The bombers took off from a U.S. air base in Guam and were joined by Japanese and South Korean fighter jets during the exercise.

“North Korea remains the most urgent threat to regional stability,” Pacific Air Forces commander General Terrence J. O’Shaughnessy said in a statement. “If called upon, we are ready to respond with rapid, lethal, and overwhelming force at a time and place of our choosing.”

Meanwhile, South Korea’s Kospi stock index, oblivious of the constant threat of military action in its northern neighbor, closed 0.07% in the green, just shy of all time highs.




This ought to scare the living daylights out of European depositors: The EU is proposing an account freeze to halt bank runs.  It just may increase the chance of that bank run!!

(courtesy Mish Shedlock/Mishtalk)

It’s Your Money But You Can’t Have It: EU Proposes Account Freezes To Halt Bank Runs

Authored by Mike Shedlock via MishTalk.com,

If there is a run on the bank, any bank in the EU, you better be among the first to get your money out.

Although it’s your money, the EU wants to Freeze Accounts to Prevent Runs at Failing Banks.

European Union states are considering measures which would allow them to temporarily stop people withdrawing money from their accounts to prevent bank runs, an EU document reviewed by Reuters revealed.


The move is aimed at helping rescue lenders that are deemed failing or likely to fail, but critics say it could hit confidence and might even hasten withdrawals at the first rumors of a bank being in trouble.


The proposal, which has been in the works since the beginning of this year, comes less than two months after a run on deposits at Banco Popular contributed to the collapse of the Spanish lender.


Giving supervisors the power to temporarily block bank accounts at ailing lenders is “a feasible option,” a paper prepared by the Estonian presidency of the EU said, acknowledging that member states were divided on the issue.


EU countries which already allow a moratorium on bank payouts in insolvency procedures at national level, like Germany, support the measure, officials said.


“The desire is to prevent a bank run, so that when a bank is in a critical situation it is not pushed over the edge,” a person familiar with German government’s thinking said.


The Estonian proposal was discussed by EU envoys on July 13 but no decision was made, an EU official said. Discussions were due to continue in September. Approval of EU lawmakers would be required for any final decision.


Under the plan discussed by EU states, pay-outs could be suspended for five working days and the block could be extended to a maximum of 20 days in exceptional circumstances, the Estonian document said.

Spooking Customers

I side with Charlie Bannister of the Association for Financial Markets in Europe (AFME), who says “We strongly believe that this would incentivize depositors to run from a bank at an early stage.”

Why Might Customers Want to Run?

Here are a trillion reasons: Over €1 Trillion Nonperforming EU Loans: EU vs US Percentages.

Non-Performing Loans


  • I am unsure why the graphs sometimes use different country codes than appears in the first column. Where different, I show both symbols. The list of country codes is shown below.
  • Forb ratio stands for forbearance ratio.
  • Cov ratio stands for coverage ratio: (Loans – Reserve balance)/Total amount of non-performing loans. It’s a measure of how prepared a bank is for losses.

Italy, Greece, Spain, Portugal, and Ireland have a combined €606 billion in non-performing loans.

The entire European banking system is over-leveraged, under-capitalized, and propped up by QE from the ECB. Simply put, the EU banking system is insolvent.

That the EU has to consider such drastic measures proves the point.


Not good:  Rome’s entire transport system in disarray:
(courtesy zero hedge)

Rome’s Transport System Faces “Meltdown,” On Brink Of Collapse

New York City’s deteriorating subway has a rival for world’s most dysfunctional public transportation system. After only three months on the job, Bruno Rota, the head of Rome’s public-transit company has announced that he’s leaving his post, saying that the Italian capital city’s decaying transportation system should declare bankruptcy, according to Reuters.

Rota’s departure is an embarrassment for the anti-establishment five-star movement and one of its most high-profile politicians, Rome Mayor Virginia Raggi. Since taking office last year, Raggi’s administration has been paralyzed by internal tumult while the city’s infrastructure has continued to decay. The party’s failures in Rome suggest that it’s not prepared to govern, and may have contributed to Five-Star’s losses in a series of municipal elections last month. Meanwhile, the situation could hurt the party’s chances in next year’s general election.

Rome Mayor Virginia Raggi

“Bruno Rota quit Atac on Friday, just three months after taking charge of the Italian capital’s bus, metro and tram network, saying he was unable to salvage the firm and feared possible legal action tied to any eventual collapse.


“It is an appalling scandal,” said Rota, who was called down to Rome after helping to turn around the transport system in the northern city of Milan. “The situation is worse than you can imagine,” he told la Repubblica newspaper.


Rota’s dramatic departure has triggered yet another crisis for the city’s 5-Star administration, which won power last year in what was seen as a litmus test of whether the anti-establishment group was ready to run Italy.”

City officials are publicly criticizing Raggi, saying that Rome needs a “change in direction” after the city nearly adopted water rationing laws last week amid a worsening drought.

“We need a change of direction. If we carry on like this we will fall apart. The whole city will fall apart,” Andrea Mazzillo, Rome’s third budget chief in a year, told la Repubblica.


In a statement on Facebook, Raggi ordered her team to stop complaining and promised to sort out problems at Atac, which has suffered from many years of chronic neglect and mismanagement.


The company has some 1.3 billion euros ($1.5 billion) of debts and a rate of absenteeism amongst its 12,000-strong workforce of 12 percent, company records show.”

Dozens of Atac buses and trains in need of repair are languishing in the company’s warehouses.

According to an internal Atac report, 36 percent of all the company’s buses are blocked in garages because they have broken down or are undergoing maintenance, with the figure rising to 50 percent for the city’s creaking fleet of trams.

There have also been several embarrassing accidents; earlier this month, a woman suffered severe injuries. When she got dragged down a platform after her handbag was trapped in the door of the train. Videos showed the driver was eating lunch at the wheel and didn’t notice.

Years of underfunding have left the company barely able to pay its employees and contractors, as some Italian newspapers reported that Atac buses were being left in the streets by contractors that had been stiffed by Atac.

“The company is unmanageable. It doesn’t have any money left in its accounts,” said Rota, adding that Atac was no longer able to guarantee the regular payment of salaries or to buy the spare parts it needed to repair its ageing buses and metro trains.


Italian newspapers reported that broken down buses were being left in the street because Atac had not paid the private contractor which it uses to pick up its stranded vehicles.”

Meanwhile, Mayor Raggi offered the usual platitudes…

“‘The situation at Atac is serious, but we are not frightened by adversity and we will move ahead,’ said Raggi on Facebook.”

To be sure, Atac has been a shambles for years. And while the transportation difficulties have engendered dissatisfaction with Raggi, it’s unclear if the incident will negatively impact the five-star movement’s electoral chances. Italian voters have a reputation for being mercurial. Case in point: The center-right party of Prime Minister and billionaire media mogul Silvio Berlusconi, who suffered through a series of scandals during his time in office, is leading the 2018 polls with 30% of the vote,according to CNBC.

The EU seem to be inventing a new terminology;  “a Greek sabbatical from the EU” instead of a GREXIT
German economist Issing is calling for just that: a removal of Greece from the EU for 5 years but with a huge 50 billion euro bailout as well
good luck on that happening:
(courtesy zero hedge)


“The Euro Crisis Is Not Over” Former ECB Chief Economist Urges “Greek Sabbatical From EU”

Otmar Issing, former Chief Economist and Member of the Board of the European Central Bank and the German Bundesbank, brings back the specter of Grexit scenarios, demanding a Euro-sabbatical for Greece.

KeepTalkingGreece.com reports that, in an interview with business news magazine WirtschaftswocheIssing warned of a new flare-up of the euro crisis.

“The euro crisis is not over yet,” said the economist, one of the architects of the Euro.

Issing called on a policy that would include EU treaties allowing the possibility of temporary withdrawal from the monetary union.

States like Greece would do well with a Sabbatical outside the monetary union. However, it should be accompanied by massive aid from other countries and a growth-oriented economic policy. And one would have to make re-entry into the euro zone dependent on fundamental reforms, ” Issing said.

Issing no longer relies on the Stability and Growth Pact, a core element of the economic and monetary union. “I would not have considered the dimension of its dismantling by the governments”.

Otmar Issing lashed out at the Greek government saying “the government is still in an anti-growth policy.”

He also criticized Italy saying

“It also did not seize the opportunity. The country has saved tens of billions of interest without using the leeway. ”

The Wirtschaftswhoche article has the title “Economist demands Euro-sabbatical for Greece.”

I don’t know exactly what institutional role 81-year-old Otmar Issing currently has other than sitting at a dusty desk as president of the Center for Financial Studies (CFS) at the Goethe University in Frankfurt am Main since 2006. He is also Goldman Sachs adviser etc etc etc.

He has been calling for Grexit since 2010 saying Euro exit would be good for Greece at least once a year… Leaving the euro might help struggling Greece, German chief economist, euro architect and former European Central Bank (ECB) board member Otmar Issing told CNBC on Tuesday.

The euro is irreversible – but if it is irreversible for every country has become an open question,” Issing told CNBC.

Then, Issing told CNBC in September 2015…

“For Greece, there are very good arguments that it would do well outside the euro area for some time to come, but it all depends on the Greek government’s reactions”

What he does not say it that the “massive aid from other countries” that will accompany the Euro-Sabbatical or Grexit would be one more bailout.

If I remember well, Finance Minister Wolfgang Schaeuble had estimated a total of at least 50 billion euros for a 5-year- euro sabbatical. Schaebule offered Varoufakis & Co a temporary Grexit plan in March 2015, as part of the European lenders blackmail towards Greece.

*  *  *

What we learned from Issing’s interview is that we now have a political correct term Euro-Sabbatical that sounds not so scary as Grexit.



This is huge:  Putin retaliates by expelling a monstrous 755 USA diplomats form Russia as well as seizing two compounds:

(courtesy zero hedge)

“It’s Time To Retaliate”: Putin Expels 755 U.S. Diplomats

When Russia warned on Friday that it would retaliate proportionately after it announced it would seize two diplomatic compounds used by the US in Russia and added that it would reduce the number of US diplomatic service staff in the country to equal the number of Russian diplomats in the US by September 1, calculated by the local press at 455, it wasn’t joking.

Moments ago, speaking in an interview on the Rossiya 1 TV channel, Vladimir Putin said that 755 American diplomats will be expelled, or as he phrased it “will have to leave Russia as a result of Washington’s own policies”, a move which as we previewed on Friday will make the diplomatic missions of Russia and the United States of equal staffing.

Speaking late on Sunday, the Russian president said that the time for retaliation has come: “we’ve been waiting for quite a long time that maybe something would change for the better, we had hopes that the situation would change. But it looks like, it’s not going to change in the near future… I decided that it is time for us to show that we will not leave anything unanswered.”

Putin added that “the personnel of the US diplomatic missions in Russia will be cut by 755 people and will now equal the number of the Russian diplomatic personnel in the United States, 455 people on each side” Putin said, adding that “because over a thousand employees, diplomats and technical personnel have been working and are still working in Russia, and 755 of them will have to cease their work in the Russian Federation. It’s considerable.

Putin also told the Russian audience that “the American side has made a move which, it is important to note, hasn’t been provoked by anything, to worsen Russian-US relations. [It includes] unlawful restrictions, attempts to influence other states of the world, including our allies, who are interested in developing and keeping relations with Russia,”

According to Reuters, Putin also said that Russia is able to impose additional measures against U.S. but he is against such steps for now.

“We could imagine, theoretically, that one day a moment would come when the damage of attempts to put pressure on Russia will be comparable to the negative consequences of certain limitations of our cooperation. Well, if that moment ever comes, we could discuss other response options. But I hope it will not come to that. As of today, I am against it.”

As we reported late last week, following the House’s approval of new sanctions against Russia, Iran and North Korea, the Russian foreign ministry told Washington to reduce the number of its diplomatic staff in Russia, which currently includes more than 1,200 personnel, to 455 people as of September 1.

The Russian order is likely to mean consular services in Russia will be “very hard hit,” Michael McFaul, a former U.S. ambassador to Moscow told Bloomberg. “Russians will have to wait much longer to get a visa,” he said by email. Furthermore, according to Bloomberg, Russia’s reaction was harsher than many officials had signaled, “and threatens to cast the two nuclear-armed powers into a fresh spiral of tensions, even as relations are already at their lowest since the Cold War.” For Trump, the worsening conflict poses a dilemma between his oft-stated desire to build ties with Russia and mounting political opposition to that effort in Washington, amid congressional inquiries and an FBI investigation into interference in the elections and the Trump campaign’s possible ties with Russia.

“Totally unwarranted, disproportionate move by the Kremlin,” Andrew Weiss, a former top Russia expert on the National Security Council and now vice-president for studies at the Carnegie Endowment for International Peace, said on Twitter.

* * *

Today’s expulsion comes one day after a bizarre statement by US Secretary of State Rex Tillerson, who tried to to portray the latest round of Russian sanctions legislation as a sign Americans want Russia to improve relations with the US; it was promptly mocked by Moscow.  On Saturday, Tillerson said the overwhelming House and Senate votes in favor of the sanctions “represent the strong will of the American people to see Russia take steps to improve relations with the United States.” He added that he hoped potential future U.S.-Russia cooperation would make the sanctions unnecessary at some point.

“We will work closely with our friends and allies to ensure our messages to Russia, Iran, and North Korea are clearly understood,” Tillerson’s statement concluded.

Moscow, however, was less than thrilled with Tillerson’s attempt to mitigate the latest round of anti-Russian sanctions, as the Russian Embassy in Washington said in a series of tweets that it was bewildered.

“The statement made by the @StateDept on July 29 regarding a new sanctions legislation approved by Congress cannot but raise eyebrows,” it said. “Washington still doesn’t get the fact that pressure never works against @Russia, bilateral relations can hardly be improved by sanctions.”

And now we await the US re-retaliation in what is once again the same tit-for-tat escalation that marked the latter years of the Obama regime, as the US Military Industrial Complex breathes out a sigh of relief that for all the posturing by Trump, things between Russia and the US are back on autopilot.



Robert H to me: on the above story



These are a few facts that you probably won’t find anywhere else.

On Friday morning of July 28, Russia’s Foreign Ministry ordered the United States to cut the number of its diplomatic staff and Embassy workers on the territory of Russia to be equal to the number of Russian diplomatic missions in the United States as of the time in December, when former president Obama ordered 35 Russian diplomats to leave the country.  Reportedly  Russia had 455 in at that time.

What many people fail to understand, that it’s not a number that is important, but the parity principle, when countries have the same number of people in corresponding embassies. Since the 1990s, the US had much larger representation on the territory of Russia.

From PBS, we know that the US has anywhere from 1100 to over 1500 personnel in Russia.

This workforce will be reduced to 455. If, however, the US decides to expel more Russian diplomats on Monday in retaliation, the same number of the US diplomats will be added to the equation. Until, as you might guess, there will be none, since we know that US Senators are not rational beings and prone to uncontrollable rage, lapses of judgment, and other public demonstrations of senility. I personally think that the next step will be revoking the visas of the Russia UN representatives. Then you will see shit fly, and tensions rise quickly.

There is also a very interesting and delicate situation with the Ambassadors, because as of July 26, the US Senate has stalled the appointment of new ambassador to Russia. This is not a random act.

“The US Senate has deliberately put off the hearing on the appointment of former Utah Governor Jon Huntsman as new Ambassador to Russia. This story has been carried by zero hedge I think.  According normal diplomatic procedure, there should there be a simultaneous change in the chiefs of diplomatic missions, …  they would assume office practically at the same time.

Washington has already approved the nomination of numerous ambassadors to various countries, but the hearing on the new envoy to Moscow has not been held. The US Department of State says publicly that they are waiting for the new ambassador to Russia to be appointed but cannot influence the procedure in anyway.

The US Embassy in Moscow likewise said they have no specific information on the issue, as the Senate does not notify anyone about anything.

Because of this, Moscow cannot send Deputy Foreign Minister Anatoly Antonov to replace Sergey Kislyak who has already left Washington, while US Ambassador John Tefft is waiting for Huntsman’s arrival.”

As of Saturday July 29, Putin has not signed a decree to appoint the new Ambassador to the US, per Peskov’s statement on the matter.

Maybe this is a good thing and then maybe not. As I do not remember the last time such a situation has existed.

If tensions build over North Korea who talks to who and what will the Europeans do ?
The times are a changing, and we should be ready with the popcorn, because there is more going. On than meets the eye.



Oil jumps above 50 dollars as the USA is engaged in preparations for sanctions against Venezuela’s oil industry. This would certainly bring bankruptcy to the country


(courtesy zero hedge)

WTI Jumps Above $50 On Report US Prepping Sanctions Against Venezuela Oil Industry

After both Brent and WTI rose above their respective 50DMAs on Friday, capping 2017’s best weekly rally for oil, the rising tide is accelerating as the latest CFTC COT data confirmed, when net specs boosted bullish Nymex WTI crude oil bets by 27K net-long positions to 423K, the highest in two months, as producers continued to cover short hedges, sending their net position to the most bullish since the summer of 2015.

Meanwhile, oil started the Sunday session jumping out of the gate, with WTI rising above $50 for the first time since May in early Asian trading, following the usual non-material weekend chatter and “noise” out of OPEC (which to exactly nobody’s surprisecan’t stop pumping“), however what has attracted traders’ attention, is a WSJ report that following last week’s latest round of sanctions, and after today’s vote to overhaul Venezuela’s constitution further entrenching Maduro’s unpopular regime, US government officials are considering announcing sanctions against Venezuela’s oil industry as early as Monday, although as the WSJ notes, a full-blown “embargo against Venezuelan crude oil imports into the U.S. is off the table for now.”

In its latest escalation, last Wednesday the U.S. government levied additional sanctions on 13 high-ranking Venezuelan officials for alleged corruption, human-rights violations and undermining democracy in the South American country. On Friday Mike Pence vowed “strong and swift economic actions” if the vote goes ahead.

While Maduro’s government has responded defiantly, “dismissing sanctions and warnings from Washington”, with Maduro insisting the government would notch a triumph in Sunday’s vote, the potential collapse in oil trade between Venezuela could cripple the country even more, while sending the price of oil sharply higher.

In fact, in a note from last week posted here, Barclays Warren Russell explains just what will happen should Trump expand Venezuela’s sanctions to impact its oil sector: a sharper and longer disruption (eg, exceeding three months) could raise oil prices at least $5-7/b and flatten the curve structure despite an assumed return of some OPEC supply, a more robust US shale response, and weaker demand. It may be just the opportunity OPEC needs to exit its current strategy. US producer hedging activity would pick up if WTI moves to $50-55, limiting price upside potential.”

Furthermore, among the downstream consequences, is that refining margins should deteriorate if Venezuelan crude oil supply is curtailed. US refiners will be negatively affected by any sanctions related to trade constraints. On the other hand, China and India could benefit if Venezuelan oil is offered at a discount to comparable grades, Barclays suggests.

Finally, looking at Venezuela from a longer-term perspective, this is how Barclays estimates the local investment climate:

It is too early to assess the investment appetite in Venezuela in a post-Maduro environment. Though Venezuela’s assets are large, they are not short-cycle. Companies with deep connections to the country are likely to maintain a presence, but wait for the political landscape to stabilize before making incremental investments. Either way, it looks like Venezuela’s production trend is down over the near term.

Of course, the higher the price of oil goes, the more profitable shale will be, the more oil it will produce and so on, in the diabolic feedback loop that will assure oil does not go too far above $50 for the foreseeable future, as Goldman explained efficiently in just three bullet points last Thursday:

  • Oil prices have rebounded over the past month on large inventory draws, a declining US rig count and strong demand data, suggesting that the rebalancing is accelerating.
  • We remain, however, cautiously optimistic on prices from the current level with the recent improvements in fundamentals needing to be sustained for oil prices to rally meaningfully further.
  • In fact, too large a price recovery now would only increase the downside risks to our year-end $55/bbl WTI price forecast given the fast velocity of shale’s supply response.

At which point it’s back to square one. For now, however, the bulls get to enjoy the next few days until the momentum reverses once again.

* * *

For those who are eager for more reasons to buy oil, there are more details in the full Barclays excerpt below and posted here first last week:

Looming risk of sanctions against Venezuela

The Trump administration is considering a wide variety of sanctions against the Venezuelan regime, which could range from sanctions on several senior government officials to targeting PDVSA’s ability to transact in US dollars, according to Reuters. This would not be the first time the Trump administration has taken action against Venezuela. The US already imposed sanctions on Venezuela’s vice president (February 2017), eight members of the Supreme Court (May 2017), and other military and government officials. The most recent Supreme Court sanctions were in response to the court’s decision to disband the democratically elected congress. The administration’s recent discussion of potential new sanctions would aim to keep elections “free and fair” and prevent President Maduro from being able to establish a dictatorship, which could occur as early as July 30.

The Trump administration is likely to proceed cautiously and incrementally with any sanctions. In contrast to the energy-related sanctions imposed on Russia and Iran, the more entrenched connections between US companies and consumers and the Venezuelan oil industry lead us to believe that the US administration will take a cautious approach.

Venezuela produces around 2.2 mb/d of oil and NGLs, which represents roughly 2% of the global petroleum market. Its Orinoco heavy oil plays a critical role as a feedstock for complex refineries around the world, particularly along the US Gulf Coast. Close to half of its 1.8 mb/d of oil exports go to OECD countries, with Asia consuming most of the remainder. Venezuela is the third largest exporter of oil to the US (?750 kb/d), behind Canada (3.2 mb/d) and Saudi Arabia (1.1 mb/d).

As a guide to potential outcomes, we examine US sanctions on Iran and Russia and their impact on the oil market. We find that the sanctions on Russia have not had a noticeable effect on its production or the oil market, while sanctions against Iran lowered its production and exports and supported oil prices. For more on sanctions on Russia and Iran, see the Appendix of this report.

We see several important differences between the situation in Venezuela and those in Iran and Russia.

  1. Unlike Russia and Iran, Venezuela is at significant risk of political and economic collapse. Low oil prices have greatly reduced the government’s ability to pay its outstanding debts while funding imports of basic goods. As a result, President Maduro has taken decisions that have resulted in a deteriorating quality of life for Venezuelans in recent years. Amid the current instability, even limited sanctions are likely to have an outsized effect on the oil market.
  2. A collapse in Venezuela could turn it into a regional crisis. More than 1.5mn Venezuelans have already fled the country because of the current crisis, this number could increase exponentially, affecting neighboring countries, particularly Colombia. The international community will need to support the region in a refugee crisis. In the case of Colombia, the situation could have additional implications because there are nearly 2mn Colombian and Colombian descendants living in Venezuela. Those people would likely be the first to cross the border and the Colombian government cannot deny them their rights as Colombian citizens. This could become significant fiscal burden for the Colombian government.
    Venezuela needs to import oil and refined products to produce oil. Roughly 50% of Venezuelan production is heavy oil, which is typically blended with diluent for transportation purposes. Without access to diluent imports from the US and elsewhere, certain Orinoco projects may be at risk of being shut-in. A trade embargo, sanctions that affect PDVSA, or a sovereign default could be catalysts for heavy oil shut-ins in the Orinoco. We estimated earlier this year that a default could take around 300 kb/d of heavy oil production offline (Commodities special report: The black swans of 2017, January 2017).
  3. The current state of Venezuela’s refinery sector necessitates fuel imports, which have been met in part by imports from the US. Plagued by underinvestment, Venezuela’s refineries have been running well below nameplate capacity, with Bloomberg recently reporting that the Puerto La Cruz refinery is running at 15% utilization. Restricting fuel shipments to Venezuela would result in increased dependency on the PDVSA’s dilapidated plants and imports from other origins to prevent the country coming to a standstill.
  4. Venezuela’s oil sector is much more intricately connected to the North American energy system, due to CITGO’s presence in the US and the dependence of other US refineries on Venezuelan feedstock. This interdependency with the US and the lesser connection with other OECD countries, mean Venezuela’s position in the international energy system is quite different to that of Russia or Iran.

If the US does impose further sanctions on Venezuela, it would likely take into account these differences. The use and timing of various sanctions will likely depend on how much the conflict escalates in the coming days and whether other factors (such as the potential for default on sovereign debt payments due in October and November), might be a catalyst for political change in the near future. In our view, if the Trump administration decides to issue sanctions, it would proceed conservatively and become increasingly restrictive only if its goals are not being achieved. One of the stated goals of the Trump administration is for Venezuela to hold “free and fair elections,” according to the White House press statement on July 17, 2017. Before implementing more aggressive sanctions, the administration is likely to seek multilateral support from other nations.

The EU recently expressed a willingness to impose sanctions on Venezuela as well. We believe sanctions could turn out to be a double-edged sword. Multilateral sanctions implemented after having exhausted negotiations are most likely to be successful. Nonetheless, history shows that sanctions alone are not enough to trigger political change, eg, Cuba, North Korea, and Syria. This finally depends on the level of internal pressure, which in Venezuela seems high.

Sanctions against individuals

Additional US-imposed sanctions against government officials may be the next step. Such sanctions are likely to cause some inconvenience but probably would have only a limited impact on Venezuela’s oil industry, in our view.

Sanctions on Venezuela’s energy sector

Sanctions could take several forms, ranging from sanctions similar to those imposed on Russia to more disruptive ones that could completely halt existing operations.

  • Sanctions that prohibit or limit investment in new exploration and production activity would not likely have an immediate direct impact on Venezuelan production. Many of the companies with equity stakes in Venezuela’s new greenfield developments are headquartered in non-OECD countries. Furthermore, due to the current upstream investment environment and the increasing political risk within Venezuela, we believe upstream spending on greenfield projects is limited, with many projects shelved for future reconsideration.
  • Sanctions prohibiting businesses from operating in Venezuela would be much more disruptive to Venezuela’s current contribution to the oil market. A policy that would limit US producer and service company operations and further investment in Venezuela, would require PDVSA and other international companies to step in to maintain operations. This scenario is likely to exacerbate Venezuela’s declining production profile.

Sanctions against PDVSA

The US could take an even more drastic approach by issuing direct sanctions against PDVSA. In an extreme scenario, if the NOC is banned from banking activity in the US and from trading with US entities, the impact would likely be swift and very damaging to Venezuelan oil production. Directly targeting PDVSA will also likely lead to a sovereign debt default in 2017. This action would affect Venezuela’s petroleum imports and exports.

  • PDVSA would have to find new destinations for nearly half of its oil exports, assuming production does not collapse. Currently, Venezuela ships more than 700 kb/d of oil to the US and nearly 100 kb/d to the EU. China and India would likely be alternative destinations for some of this crude.
  • PDVSA would also need to find a new source for some of its diluent needs. Algerian and Nigerian crude and condensates were previously used for diluent purposes and could substitute for shipments of US crude and products used in the transport of heavy oil. PDVSA could ask it JV partners to import diluent, but the capacity to do this would depend on the extent of sanctions and other countries’ participation. Even if possible, this could also increase the production cost of these fields to levels that are not financially viable, which could ultimately result in shut-ins.

We believe the US would implement such measures only as a last resort. In addition, the US would likely seek multilateral support from other nations before taking this route. Such an action is likely to be severely disruptive to Venezuela as well as the oil market and its participants.

Sanctions against PDVSA would likely also mean that US producers and service companies conducting business in Venezuela would have to cease operations, which would have an outsized effect on oil production compared to the effect of the US-imposed sanctions on Russia. Compared with Russia, Venezuela is much more reliant on foreign oilfield service companies for oil extraction.

Discussions of broader sanctions likely limits Venezuela’s access to capital

Regardless of whether new sanctions are imposed, discussion of broader sanctions could limit the Venezuelan government’s ability to raise financing and to make debt payments coming due in October and November. Moreover, it could change the government’s willingness to pay. If the current government wants to remain in control and not negotiate, it may be unwilling to use the few assets left to service its debt. As mentioned above, default alone would have a significant impact on oil production and the domestic economy.

The US could sell oil from the SPR to steady the market

We believe the US would consider the sale of oil from the strategic petroleum reserve (SPR) in order to smooth any price volatility that may result from a disruption to supply from Venezuela. The previous US administration was willing to tap the SPR to steady markets after the Libyan supply disruption, and we believe the current administration would consider this option as well. The US did not sell oil from the SPR during the 2002-03 Venezuelan supply disruption and prices rose by more than 40% during that period, although other factors also contributed. We doubt a disruption will result in a 40% price increase in the event of a supply disruption, but we think prices will rise nonetheless. For this reason, we think the US government would consider using the SPR as a backstop.

At present, we believe the price response to a disruption would be more muted than previous disruptions due to the apparent increased willingness of the US to use its SPR, the fact that OPEC could raise quotas, and US producers would begin to respond to sustained higher prices.



War on the streets of Caracas as Maduro claims victory in the phony Assembly vote: the USA promises sanctions against Venezuela, against their state oil company and against Venezuelan government officials

(courtesy zero hedge)

Opposition Threatens “War In The Streets” As Maduro Claims Victory In Venezuela Assembly Vote

Despite US threats of “strong and swift economic sanctions” that the WSJ reported overnight could cut off a crucial source of revenue for Venezuela’s financially distressed state oil company, PDVSA, the socialist state’s leader Nicolas Maduro is claiming victory in a vote to create a new “constituent assembly,” a vote that US government officials have labeled a “sham.”

The ruling Socialist party’s candidates purportedly won all 545 seats in the vote. Venezuela electoral council head Tibisay Lucena said more than 41% of the country’s registered voters participated, a number that is being widely discreditr by outside sources. Per press reports, the assembly will now replace the opposition controlled Congress, which was annulled by the Maduro-allied Supreme Court in March, allowing Maduro to rewrite the country’s constitution, cementing his hold on power as his favorability rating with the public falls below 30%.

The U.S., Colombia, Spain, Peru, the EU and Argentina have already said they will not recognize the results of the vote, which was boycotted by the country’s opposition parties.

According to Bloomberg, opposition leader Henrique Capriles claimed the real participation in the vote was closer to 15% of registered voters. An unofficial referendum held by the opposition several weeks ago received more than 7.6 million votes against the current regime. Torino Capital’s Francisco Rodriguez said the firm’s exit polls recorded 3.6 million votes. Counting of the ballots was said to begin Sunday night, after the vote was extended by an hour as opposition protests across the country turned violent.

As has become all too common in Venezuela, where daily antigovernment protests are frequently marred by government killings, several fatalities have been recorded as supporters of Maduro’s government headed to the polls, according to Al Jazeera.Ten people, including an election candidate, were killed on the day of the vote as protesters tried to shut down polling stations by erecting barriers in the street. During clashes with masked protesters, soldiers fired into crowds, sometimes with live ammunition, according to AFP.

Opposition activists have promised to continue the daily protests that have seen more than 120 deaths since mid-April as clashes between soldiers and the opposition threaten to explode into a “war in the streets,” according to AFP.

Among other, an opposition leader was killed as scuffles broke out between soldiers and masked protesters:

“Shootings at protests killed a 13-year-old and a 17-year-old in the western state of Tachira. A soldier was also shot dead there. The death toll also included a 30-year-old regional leader of a youth opposition party in the northeast town of Cumana and two protesters in the western state of Merida.


Anti-Maduro activists wearing hoods or masks erected barricades on roads and scuffles broke out with security forces who moved in quickly to disperse the demonstrators.


Al Jazeera’s Lucia Newman, reporting from the capital Caracas, said that it was a “sad and bloody day in Venezuela”. She said that half a dozen protesters with bullet wounds were rushed to neighboring Colombia for treatment.”

The State Department released a statement in response to the “flawed election,”  saying it would soon “take action” against the “architects of authoritarianism” in Maduro’s government, according to Fox.

“The United States stands by the people of Venezuela, and their constitutional representatives, in their quest to restore their country to a full and prosperous democracy,” the State Department said in a statement, according to Reuters.

“We will continue to take strong and swift actions against the architects of authoritarianism in Venezuela, including those who participate in the National Constituent Assembly as a result of today’s flawed election.”

UN Ambassador Nikki Haley called the vote a “sham” on Twitter.

Maduro’s sham election is another step toward dictatorship. We won’t accept an illegit govt. The Venezuelan ppl & democracy will prevail.

The European Union has also condemned the results, according to Reuters.

“We will not recognise this election,” said European Parliament head, Antonio Tajani. “It is very clear that the current regime is clinging to power. The will of the people is to change the regime. It is necessary to go to elections now.”

Meanwhile, members of the Socialist party are celebrating their “victory,” according to Reuters, as Venezuelan media broadcast footage of Maduro voting at a polling station in Caracas.

“The constituent assembly will start its work right away,” Diosdado Cabello, deputy head of the Socialist Party, told a post-election rally in Caracas that featured singers, dancers and culminated after midnight in the announcement of the official vote count and a fiery speech by Maduro.

“Good morning Venezuela. We have a constituent assembly!” he shouted. “I ask our countrymen to close ranks so that the assembly can be a place of dialogue.”

Agence France Presse published footage of the violence that broke out near one polling station.

The crackdown on protesters began before the vote as the government issued a ban on protesting during the vote.

Meanwhile, traffic across Venezuela’s border with Colombia came to a standstill on Sunday, according to AFP.

The sanctions just announced:  first off will be USA sanctions against Maduro personally.  Thus nobody can have dealings with him on a personal level
we will await round no2 , round 3..etc
(courtesy zero hedge)

U.S. Sanctions Venezuela’s President Maduro, Freezes U.S. Assets

Tyler Durden's picture

The Treasury’s Office of Foreign Assets Control (OFAC) has personally sanctioned Venezuelan President Nicolas Maduro, adding him to the list of specially designated nationals, freezing any U.S. assets he may have and generally blocking U.S. persons from transactions involving him.

Today’s sanction is a follow up to last week’s announcement by the Trump administration in which the Treasuey revealed sanctions on 13 senior Venezuelan officials in an attempt to deter Maduro from moving forward with plan to rewrite Venezuela’s constitution in what opponents regard as a potential power grab move. Needless to say, that particular attempt failed.

Today’s escalation comes in response to this weekend’s election which gives Venezuela’s ruling party new, sweeping powers. State Department spokeswoman Heather Nauert charges the new assembly formed from this election “is designed to replace the legitimately elected National Assembly and undermine the Venezuelan people’s right to self-determination.”

From the Treasury Department:

Venezuela-related Designation


Specially Designated Nationals List Update
The following individual has been added to OFAC’s SDN List:


MADURO MOROS, Nicolas (Latin: MADURO MOROS, Nicolás), Caracas, Capital District, Venezuela; DOB 23 Nov 1962; POB Caracas, Venezuela; citizen Venezuela; Gender Male; Cedula No. 5892464 (Venezuela); President of the Bolivarian Republic of Venezuela (individual).

In response to US criticism of the move, Reuters reported that Maduro told a crowd of supporters: “Why the hell should we care what Trump say? We care about what the sovereign people of Venezuela say.”

As we noted yesterday, and as observed earlier today, oil has spiked on concerns that escalating US sanctions against Venezuela could cripple the local oil industry, sending oil prices as much as $5-7/b higher according to a calculations by Barclays.

As discussed previously, Barclays Warren Russell explained what could happen should Trump expand Venezuela’s sanctions to impact its oil sector: “a sharper and longer disruption (eg, exceeding three months) could raise oil prices at least $5-7/b and flatten the curve structure despite an assumed return of some OPEC supply, a more robust US shale response, and weaker demand. It may be just the opportunity OPEC needs to exit its current strategy. US producer hedging activity would pick up if WTI moves to $50-55, limiting price upside potential.”

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



GBP/USA 1.3121 UP .0015 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED



Early THIS MONDAY morning in Europe, the Euro FELL by 12 basis points, trading now ABOVE the important 1.08 level  FALLING to 1.1733; Europe is still reacting to Gr Britain HARD BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and now the Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ TRUMP HEALTH CARE BILL DEFEAT AND MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED  UP 19.79 POINTS OR .61%     / Hang Sang  CLOSED UP 344.60 POINTS OR 1.28% /AUSTRALIA  CLOSED UP 0.32% / EUROPEAN BOURSES OPENED  IN THE GREEN 

We are seeing that the 3 major global carry trades are being unwound. The BIGGY is the first one;

1. the total dollar global short is 9 trillion USA and as such we are now witnessing a sea of red blood on the streets as derivatives blow up with the massive rise in the rise in the dollar against all paper currencies and especially with the fall of the yuan carry trade. The emerging market which house close to 50% of the 9 trillion dollar short is feeling the massive pain as their debt is quite unmanageable.

2, the Nikkei average vs gold carry trade ( NIKKEI blowing up and the yen carry trade HAS BLOWN up/and now NIRP)

3. Short Swiss franc/long assets blew up ( Eastern European housing/Nikkei etc.

These massive carry trades are terribly offside as they are being unwound. It is causing global deflation ( we are at debt saturation already) as the world reacts to lack of demand and a scarcity of debt collateral. Bourses around the globe are reacting in kind to these events as well as the potential for a GREXIT>

The NIKKEI: this MONDAY morning CLOSED DOWN 34.66 POINTS OR .17%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 344.60 POINTS OR 1.28%  / SHANGHAI CLOSED UP 19.79 POINTS OR 0.61%   /Australia BOURSE CLOSED UP 0.32% /Nikkei (Japan)CLOSED DOWN 34.99  POINTS OR .17%   / INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: 1267.90


Early MONDAY morning USA 10 year bond yield: 2.287% !!!  UP 0  IN POINTS from FRIDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%.

 The 30 yr bond yield  2.8914, UP 0  IN BASIS POINTS  from FRIDAY night.

USA dollar index early MONDAY morning: 93.46 UP 20  CENT(S) from FRIDAY’s close.

This ends early morning numbers  MONDAY MORNING


And now your closing MONDAY NUMBERS

Portuguese 10 year bond yield: 2.881% DOWN 4 in basis point(s) yield from FRIDAY 

JAPANESE BOND YIELD: +.083%  UP  7/10   in   basis point yield from FRIDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.500% DOWN 3   IN basis point yield from FRIDAY 

ITALIAN 10 YR BOND YIELD: 2.1094 DOWN 3 POINTS  in basis point yield from FRIDAY 

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





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

Euro/USA 1.1815 UP .0070 (Euro UP 70 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 110.41 DOWN  0.178(Yen UP 18 basis points/ 

Great Britain/USA 1.3191 UP  0.0070( POUND UP 70

basis points) 

USA/Canada 1.2491 UP .0024 (Canadian dollar DOWN 24 basis points AS OIL FELL TO $49.33


This afternoon, the Euro was UP  by 70 basis points to trade at 1.1815


The POUND ROSE BY 70  basis points, trading at 1.3191/ 

The Canadian dollar FELL by 24 basis points to 1.2491,  WITH WTI OIL FALLING TO :  $49.33

The USA/Yuan closed at 6.7266/
the 10 yr Japanese bond yield closed at +.083%  UP  7/10 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN  0  IN basis points from FRIDAY at 2.292% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.905  DOWN 0 in basis points on the day /

Your closing USA dollar index, 92.94  DOWN 32 CENT(S)  ON THE DAY/1.00 PM 

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

London:  CLOSED UP 3.63 POINTS OR 0.05%
German Dax :CLOSED DOWN 44.45 POINTS OR 0.37%
Paris Cac  CLOSED DOWN 37.62 POINTS OR 0.73% 

Italian MIB: CLOSED UP 56.55 POINTS/OR 0.26%

The Dow closed UP 60.81 OR 0.28%

NASDAQ WAS closed DOWN 26.55  POINTS OR 0.42%  4.00 PM EST
WTI Oil price;  49.33 at 1:00 pm; 

Brent Oil: 51.95 1:00 EST




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

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


BRENT: $52.17


USA 30 YR BOND YIELD: 2.8999%


USA/JAPANESE YEN:110.25  DOWN  0.340

USA DOLLAR INDEX: 92.82  DOWN 44  cent(s) 

The British pound at 5 pm: Great Britain Pound/USA: 1.3213 : UP 94 POINTS FROM LAST NIGHT  

Canadian dollar: 1.2478 down 62 BASIS pts 

German 10 yr bond yield at 5 pm: +0.543%


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


July Jolts: Tech Tops, Trannies Trounced, Dollar Demolished, & VIX Vaporized

Just seemed appropriate…


July was a month of extremes across asset classes…

  • Nasdaq Composite surged over 3.5% – best month since Feb 2017 (up 11 of last 13 months)
  • FANG Stocks spiked 10% – best month since Oct 2015 (up 11 of last 13 months)
  • Dow Transports tumbled over 3.5% – worst month since Brexit (June 2016)
  • VIX hit a record intraday low of 8.84
  • 30Y Treasury Yields rose 6bps – the biggest monthly rise since Nov 2016
  • WTI Crude spiked 9%, back above $50 – best month since April 2016
  • FX ‘VIX’ surged – biggest spike since Nov 2016
  • Dollar Index weakest since Dec 2014 –  worst month since Jan 2017 – longest losing streak since 2011

And finally

  • US Economic ‘Hard’ Data slumped for the 4th month in a row – longest losing streak since Sept 2010, lowest monthly close since Feb 2009

*  *  *

Quite a divergence between Tech and Trannies this month… (record highs former and two-month lows latter) – Trannies are down 9 of the last 11 days for the biggest drop since Brexit (June 2016)


Ugly close though…


5th record close in a row for The Dow… Thanks to Boeing!! (on the month Boeing accounted for 310 of The Dow’s 570 point gain)


VIX crashed to an all-time record intraday low during the month after The Fed statement…but after last week’s modest turmoil in tech, VIX has remained elevated…


However, as Nasdaq has soared  – SOMEONE has been buying downside protection…

To its most extreme level since November


The Tech sector outperformed on the month with retailers bouncing back from an early month bloodbath to end green…


FANG Stocks exploded higher by over 10% in July – the best month since Oct 2015 thanks to a yuge 22% gain in NFLX (and AMZN briefly helped). However, the last three days have started to show some strains (worst since the last week of June)


And this happened…From $29.44 to $13.10 in 5 months


The dollar index suffered its fifth monthly loss in a row (worst since Jan)

This is its longest losing streak since 2011… (lowest monthly close since Dec 2014 for Bloomberg Dollar Index)…

The Dollar Index broke below 93 for the first time since May 2016

  • EURUSD  (up 5mo in a row) – best month since Mar 2016
  • GBPUSD (up 4 of last 5 mo) – highest monthly close since July 2016 (right after Brexit plunge)
  • USDJPY biggest monthly drop since Jan 2017
  • USDCAD (down 3 mo in a row) – lowest monthly close since May 2015

As BofA notes, the DXY is now off more than 9% from the highs of December and is not that far from the lows of May last year. Meanwhile positioning has completely flipped around with investors having gone from long to short the USD and EUR positioning having gone the other way.

The main reason for the USD weakness, in our view, is the downgrading of US growth expectations both care of a sluggish Q1 (a mixed Q2), a reduced probability of big tax cuts, soft inflation prints and more robust growth elsewhere.

The risk reward on the USD therefore seems to be shifting. Expectations on US in terms of growth, inflation and fiscal policy are now pretty low, while positioning is clearly the other way around. For the catalyst, we probably need to see stronger US growth and/or some better inflation prints to bring a December Fed tightening back on the cards. Interestingly the US economic surprise index has started to turn. Bond yields also seem to have found a floor too suggesting that it requires more negative surprises to drive them lower. Catching turning points in currencies is always tricky as they tend to trend but we are inclined to think we are not that far away for the USD.

Furthermore, Dollar ‘VIX’ soared in July…decoupling from the rest of the world’s assets…


And as the dollar tumbled so the long-end of the yield curve was dumped with 30Y yields up 6bps – the biggest monthly rise in yield since Nov 2016…but notice that the short-end rallied…


July saw the biggest steepening in 2s30s since Nov 2016…


WTI Crude briefly tagged $50 handle in overnight trading but ended lower on the day, fell during the day, then ripped back above $50 as NYMEX closed.

After 4 straight down months, this was Crude’s best month since December – up over 7%…

As the dollar free-falled (free-fell?) in July, so Gold gained – having its best month since February with its highest monthly close since Oct 2016

*  *  *

So what happens in August?




Friday night:


Priebus resigns and Trump replaces him with General Kelly as new Chief of Staff;


(courtesy zero hedge)

Trump Fires Priebus, Names Gen. Kelly New Chief Of Staff

After Thursday’s bizarre, widely publicized breakdown by Anthony Scaramucci, Trump had no choice: he had to pick either the former SkyBridge founder or his Chief of Staff, Reince “paranoid schizophrenic” Priebus.

Moments ago Trump made his decision – Priebus has been fired, replaced by retired four-star Marine general John Kelly, and current Homeland Security head, John Kelly who Trump frequently credits for dramatically reducing the number of undocumented immigrants coming into the U.S. from Mexico. He called Kelly “a true star” in a tweet announcing the appointment.

Trump tweeted: “I am pleased to inform you that I have just named General/Secretary John F Kelly as White House Chief of Staff. He is a Great American and a Great Leader. John has also done a spectacular job at Homeland Security. He has been a true star of my Administration.”

I am pleased to inform you that I have just named General/Secretary John F Kelly as White House Chief of Staff. He is a Great American….

…and a Great Leader. John has also done a spectacular job at Homeland Security. He has been a true star of my Administration

Trump announced the decision on Twitter as his plane landed at Andrews. Trump also tweeted his token thanks to Priebus “for his service and dedication to his country” saying “we accomplished a lot together and I am proud of him!.”

I would like to thank Reince Priebus for his service and dedication to his country. We accomplished a lot together and I am proud of him!

Priebus had initially gotten into a van with White House policy adviser Stephen Miller and White House social media director Dan Scavino on the tarmac, but shortly after the two men left the van and left Priebus alone, according to the White House pool. The former chief of staff’s car then pulled out of the president’s motorcade and left while Trump remained on Air Force One.

According to press reports the final straw for Reince Priebus was the overnight failure by Senate republicans to pass Obamacare repeal as a result of John McCain’s stunning decision to vote against the GOP.

Then again, according to NBC, it wasn’t Trump who fired Priebus, but Priebus who resigned on Thursday. And just to make things even more convoluted, Reuters also reports that Trump originally informed Priebus two weeks ago that he would be replacing him as White House chief of staff.

Assuming Priebus was indeed fired first, that would mark the11th time Trump has told someone “you’re fired” since the election. The list, in chronological order, includes:

  • Yates
  • Flynn
  • Walsh
  • Bharara
  • Comey
  • Dubke
  • Shaub
  • Corralo
  • Spicer
  • Short
  • Priebus

* * *

In any case, speaking to reporters, Trump called Priebus a “good man” but called Kelly a “star.”

“Reince is a good man,” he said at Andrews Air Force Base outside of Washington, D.C., after a trip to New York to talk about his push to end gang violence. “John Kelly will do a fantastic job. Gen. Kelly has been a star, done an incredible job thus far, respected by everybody. He’s a great American,” he said.

WaPo’s Robert Kosta tweets that “Kushner’s allies soured on Priebus b/c they saw the msg/strategy on Russia as off/weak…”

How Trump’s decision will be greeted by the more moderate part of his base remains to be seen, although with Trump siding against Priebus, it may mean that Bannon could be next on the chopping block, a move which would infuriate a core part of Trump’s electorate, a material gamble for a president with a precarious approval rating.

As for ret. Gen. John Kelly, the current low profile Homeland Security Secretary, a quick reminder who he is:  he was in the military for 45 years – a very long time, even for a general. He was once the head of US Southern Command, putting much of the US’ immediate vicinity under his purview – including the control of Guantanamo Bay.

Here Kosta adds that “Kushner and Bannon both really like Kelly, which made the decision easier. Someone who has appeal to the two main blocs in WH…”

His full bio is below.

General Kelly was born and raised in Boston, MA. He enlisted in the Marine Corps in 1970, and was discharged as a sergeant in 1972, after serving in an infantry company with the 2nd Marine Division, Camp Lejeune, NC. Following graduation from the University of Massachusetts in 1976, he was commissioned and returned to the 2nd Marine Division where he served as a rifle and weapons platoon commander, company executive officer, assistant operations officer, and infantry company commander. Sea duty in Mayport, FL, followed, at which time he served aboard aircraft carriers USS Forrestal and USS Independence. In 1980, then Captain Kelly transferred to the U.S. Army’s Infantry Officer Advanced Course in Fort Benning, GA. After graduation, he was assigned to Headquarters Marine Corps, Washington, DC, serving there from 1981 through 1984, as an assignment monitor. Captain Kelly returned to the 2nd Marine Division in 1984, to command a rifle and weapons company. Promoted to the rank of Major in 1987, he served as the battalion’s operations officer.


In 1987, Major Kelly transferred to the Basic School, Quantico, VA, serving first as the head of the Offensive Tactics Section, Tactics Group, and later assuming the duties of the Director of the Infantry Officer Course. After three years of instructing young officers, he attended the Marine Corps Command and Staff College, and the School for Advanced Warfare, both located at Quantico. Completing duty under instruction and selected for Lieutenant Colonel, he was assigned as Commanding Officer, 1st Light Armored Reconnaissance Battalion, 1st Marine Division, Camp Pendleton, CA. Holding this command position for two years, Lieutenant Colonel Kelly returned to the East Coast in 1994, to attend the National War College inWashington, DC. He graduated in 1995, and was selected to serve as the Commandant’s Liaison Officer to the U.S. House of Representatives, Capitol Hill, where he was promoted to the rank of Colonel.


In 1999, Colonel Kelly transferred to joint duty and served as the Special Assistant to the Supreme Allied Commander, Europe, in Mons, Belgium. He returned to the United States in 2001, and was assigned to a third tour of duty at Camp Lejeune, now as the Assistant Chief of Staff G-3 with the 2nd Marine Division. In 2002, selected to the rank of Brigadier General, Colonel Kelly again served with the 1st Marine Division, this time as the Assistant Division Commander. Much of Brigadier General Kelly’s two-year assignment was spent deployed in Iraq. He then returned to Headquarters Marine Corps as the Legislative Assistant to the Commandant from 2004 to 2007. Promoted to major general, he returned to Camp Pendleton as the Commanding General, I Marine Expeditionary Force (Forward). The command deployed to Iraq in early 2008 for a year-long mission, replacing II Marine Expeditionary Force (Forward) as Multinational Force-West in Al Anbar and western Ninewa provinces. LtGen Kelly commanded Marine Forces Reserve and Marine Forces North from October 2009 to March 2011. General Kelly comes to United States Southern Command from his previous position as the Senior Military Assistant to the Secretary of Defense from March 2011 to October 2012.

What happens next is a great unknown for this rollercoaster administration, but with a military veteran now whispering in Trump’s ear every day, Kim Jong-Un’s days are now numbered.

Meanwhile, the message from today’s events seems to be that Trump has largely cut most – if not all – ties with the Republican party.




With new revelations on the Awan brothers and Fusion, Trump claims that Russia was actually against him as it seems that money was paid by the DNC to Fusion to discredit Trump.  Trump also wants to end the filibuster by claiming that 51% vote is enough to win passage of legislation on everything.

(courtesy zero hedge)


“Senate Republicans Look Like Fools” Trump Urges End To Filibuster, Claims Russia Was Against Him In 2016

After a turmoil-filled evening, President Trump is wasting no time this morning telling the American people (via Twitter) just how he feels about Russia, Republican Senators, and the Filibuster.

With the mainstream media generally ignoring the ongoing DWS-Awan Brothers debacle and shrugging off Fusion GPS involvement, Trump’s first tweet of the day should open a few eyes (although probably not)…

In other words, Russia was against Trump in the 2016 Election – and why not, I want strong military & low oil prices. Witch Hunt! https://twitter.com/foxandfriends/status/890848095424180225 

As a reminder, The Hill notes that the Senate Judiciary Committee heard testimony this week claiming that Fusion GPS founder Glenn Simpson and others evaded registering as foreign agents even though the firm worked on part of an influence campaign to overturn the Magnitsky Act, which was passed to punish Russian officials in 2012.

As we detailed here

Graham: So, I just want to absorb that for a moment. The group that did the dossier on President Trump hired this British spy, wound up getting it to the FBI. You believe they were working for the Russians?


Browder: That’s correct.  And in the Spring and Summer of 2016 they were receiving money indirectly from a senior Russian government official.

The White House subsequently brought up the testimony, linking it to the dossier, in a press briefing.

“Today there was public testimony that further discredited the phony dossier that’s been the source of so much of the fake news and conspiracy theories, and we learned that the firm that produced it was also being paid by the Russians,” White House Press Secretary Sarah Huckabee Sanders said

The firm this week accused the White House of trying to “smear” it for investigating the president’s alleged ties to Russia. The company called it “a nonsensical argument that Russia had an agent investigate and expose Russia’s influence on the election.” The Senate Judiciary Committee has subpoenaed Fusion GPS founder Simpson for testimony.

But then he refocused his aim on Healthcare, filibuster, and Republican Senators…

Republican Senate must get rid of 60 vote NOW! It is killing the R Party, allows 8 Dems to control country. 200 Bills sit in Senate. A JOKE!

The very outdated filibuster rule must go. Budget reconciliation is killing R’s in Senate. Mitch M, go to 51 Votes NOW and WIN. IT’S TIME!

Republicans in the Senate will NEVER win if they don’t go to a 51 vote majority NOW. They look like fools and are just wasting time……

….8 Dems totally control the U.S. Senate. Many great Republican bills will never pass, like Kate’s Law and complete Healthcare. Get smart!

If the Senate Democrats ever got the chance, they would switch to a 51 majority vote in first minute. They are laughing at R’s. MAKE CHANGE!


Of course – President Trump may need to adjust the ‘rules’ a little more since ’49’ seems to the magic number that Republican Senators can’t count above. Still, not a bad start for a Saturday morning rant.


Trump agrees to sign the Russian sanctions
(courtesy zerohedge)

Trump Confirms He Will Sign Russia Sanctions Bill

Following the approval from overwhelming majorities in both the House (419-3) and Senate (98-2), President Trump has just confirmed that he will sign the Russia sanctions bill into law.  The confirmation comes despite days of speculation after Anthony Scaramucci told CNN that Trump could sign the sanctions bill or “veto the sanctions and negotiate an even tougher deal against the Russians.”

“President Donald J. Trump read early drafts of the bill and negotiated regarding critical elements of it.  He has now reviewed the final version and, based on its responsiveness to his negotiations, approves the bill and intends to sign it.”

JUST IN: President Trump to sign Russia sanctions, White House says. POTUS “approves the bill and intends to sign it.”


Your move, Mr. Putin.

* * *

For those who missed it, here is some background on the bill from our prior posts:

Two days after the House passed bipartisan legislation in a 419-3 vote codifying and imposing further sanctions against Russia, Iran and North Korea and preventing the president from acting unilaterally to remove certain sanctions on Russia, moments ago the Senate also overwhelmingly approved the measure in a 98-2 vote.  Only Senators Rand Paul and Bernie Sanders voting no. The bill will now head to the White House where it will be either signed into law by the president or vetoed, setting up a potential showdown with the White House over Russia. The move marks congressional Republicans’ first rebuke of Trump’s foreign policy, where the administration’s warmer stance toward Russia has drawn heavy skepticism from both parties.

The three countries named in the bill are accused of violating “the international order” by Senator Bob Menendez, the former chairman of the foreign relations committee.

Under the bill, existing sanctions on Russia for its aggression in Ukraine and interference in the 2016 election would be codified into law. New sanctions would go into effect against Iran for its ballistic missile development, while North Korea’s shipping industry and people who use slave labor would be targeted amid the isolated nation’s efforts to launch an intercontinental ballistic missile (ICBM).

While a full breakdown of the key details in the legislation is provided at the bottom of this post, in a nutshell the sanctions target Russian gas and pipeline developments by codifying six of Barack Obama’s executive orders implementing sanctions on Russia for its alleged interference in the US elections.

John McCain lauded the bipartisan process that supported the bill: “We will not tolerate attacks on our democracy!” the Senator, who chairs the armed services committee, said from the Senate floor. “That’s what this bill is all about.”

The Senate passage now sends the sanctions bill to Trump’s desk, although lawmakers expressed mixed expectations on whether the president would sign it into law. In recent days, White House press secretary Sarah Huckabee Sanders offered mixed messages in recent days.  On Sunday, Sanders told ABC’s “This Week” that the administration supports the bill. But on Monday, she told reporters on Air Force One that Trump is “going to study that legislation” before making a final decision.

* * *

Should Trump sign the bill into law, a prompt Russian response is imminent. On Thursday, Russia’s Kommersant newspaper reported that Russia is planning “symmetrical” response to earlier U.S. actions, including expelling diplomats and seizing U.S. Embassy properties, if and when Trump signs the new sanctions legislation.

It noted that Russia may take the Serebryany Bor vacation complex, and send home 35 diplomats, the same number as the Russian diplomats who were expelled by Barack Obama late in December. Komersant added that Russia may also limit maximum number of U.S. diplomatic personnel, which currently exceeds Russian staff in U.S.

Also on Thursday, Vladimir Putin said that Russia would be forced to retaliate if Washington pressed ahead with what he called illegal new sanctions against Moscow, describing U.S. conduct towards his country as boorish and unreasonable.

“As you know, we are exercising restraint and patience, but at some moment we’ll have to retaliate. It’s impossible to endlessly tolerate this boorishness towards our country,” Putin told a joint news conference during a press conference in Findland.

“When will our response follow? What will it be? That will depend on the final version of the draft law which is now being debated in the U.S. Senate.”

Putin also spoke about an ongoing diplomatic row between Moscow and Washington which erupted last December when then U.S. President Barack Obama ordered the seizure of Russian diplomatic property in the United States and the expulsion of 35 Russian diplomats.

“This goes beyond all reasonable bounds,” said Putin. “And now these sanctions – they are also absolutely unlawful from the point of view of international law.” Calling the proposed sanctions “extremely cynical,” Putin said the demarche looked like an attempt by Washington to use its “geopolitical advantages … to safeguard its economic interests at the expense of its allies”.

* * *

But while Russia’s adverse reaction is to be expected, it is the EU’s response that will be closely watched.

According to an internal memo leaked to the FT earlier in the week, Brussles said it should act “within days” if new sanctions the US plans to impose on Russia prove to be damaging to Europe’s trade ties with Moscow. Retaliatory measures may include limiting US jurisdiction over EU companies. The memo, reported by the Financial Times and Politico, has emerged amid mounting European opposition to a US bill seeking to hit Russia with a new round of sanctions.

Morning London, while you were sleeping this was our most read story http://on.ft.com/2tsZBtu 

Photo published for EU ready to retaliate against US sanctions on Russia

EU ready to retaliate against US sanctions on Russia

Brussels fears effort to punish Moscow’s election meddling will hurt energy companies


The document said European Commission chief Jean-Claude Juncker was particularly concerned the sanctions would neglect the interests of European companies. Juncker said Brussels “should stand ready to act within days” if sanctions on Russia are “adopted without EU concerns being taken into account,” according to the Financial Times.

The EU memo also warns that “the measures could impact a potentially large number of European companies doing legitimate business under EU measures with Russian entities in the railways, financial, shipping or mining sectors, among others.”

The freshly leaked memo suggests that the EU is seeking “a public declaration” from the Trump administration that it will not apply the new sanctions in a way that targets European interests.  Other options on the table include triggering the ‘Blocking Statute,’ an EU regulation that limits the enforcement of extraterritorial US laws in Europe. A number of “WTO-compliant retaliatory measures” are also being considered, according to the memo.

Over the weekend, we reported that Brussles expressed its concerns over the sanctions bill, when the European Commission said in a statement that “the Russia/Iran sanctions bill is driven primarily by domestic considerations,” adding that it “could have unintended consequences, not only when it comes to Transatlantic/G7 unity, but also on EU economic and energy security interests.” 

And so, trapped between looking like a Russian crony on one hand if he refuses to sign the bill, and inflaming relations with not only Moscow but also Europe if he does sign, it will be up to Trump to determine if the feud with Russia escalates even more and involves European nations who are far closer to Russia in socio-economic terms than they would like to admit. 

* * *

Finally, courtesy of Goldman, here are the main details of the legislation:

Here are the main details of the draft legislation:

  • Codifies existing US sanctions on Russia and requires Congressional review before they are lifted.
  • Reduces from 30 days to 14 days the maximum allowed maturity for new debt and new extensions of credit to the state controlled financial institutions targeted under the sectoral sanctions.
  • Reduces from 90 days to 60 days the maximum allowed maturity for new debt and new extensions of credit to sectoral sanctions targets in the energy sector, although this largely only brings US sanctions in line with existing EU sanctions, which already impose a 30-day maximum for most energy companies.
  • Expands the existing Executive Order authorising sectoral sanctions to include additional sectors of the Russian economy: railways and metals and mining.
  • Requires sanctions on any person found to have invested $10 million or more, or facilitated such an investment, in the privatisation of Russian state-owned assets if they have “actual knowledge” that the privatisation “unjustly benefits” Russian government officials or their close associates or family members.
  • Authorises (but does not require) sanctions “in coordination with allies” on any person found to have knowingly made an investment of $1 million or more (or $5 million or more in any 12-month period), or knowingly provided goods or services of the same value, for construction, modernisation, or repair of Russia’s energy export pipelines.
  • Orders the treasury, in consultation with the Director of National Intelligence and the Secretary of State, to prepare detailed reports within the next 180 days:
    • on Russia’s oligarchs and parastatal companies including individual oligarchs’ closeness to the Russian state, their involvement in corrupt activities and the potential impact of expanding sanctions with respect to Russian oligarchs, Russian state-owned enterprises, and Russian parastatal entities, including impacts on the entities themselves and on the economy of the Russian Federation, as well as the exposure of key US economic sectors to these entities.
    • on the impact of debt- and equity-related sanctions being extended to include sovereign debt and the full range of derivative products.
this is a biggy!!Trump threatens to end Obamacare payments which lessens the amount individuals have to pay for Obamacare.  This is essentially an Insurance bailout.  Trump is not playing favourites:  he  will also cut health benefits given to members of Congress
(courtesy zero hedge)

Trump Threatens To End Obamacare Payments And “Insurance Bailouts” Unless Repeal Passes

With the Senate having failed to repeal Obamacare, after a critical “Nay” vote by John McCain crushed Trump’s biggest campaign promise shortly after midnight on Thursday, Trump has plans to kill Obamacare slowly, and this time he has vowed to take insurance companies and members of Congress down with it.

The president on Saturday threatened to end key payments to Obamacare insurance companies if a repeal and replace bill is not passed. “After seven years of ‘talking’ Repeal & Replace, the people of our great country are still being forced to live with imploding ObamaCare!” Trump tweeted, followed by: “If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies and BAILOUTS for Members of Congress will end very soon!.”

After seven years of “talking” Repeal & Replace, the people of our great country are still being forced to live with imploding ObamaCare!

If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies and BAILOUTS for Members of Congress will end very soon!

This is not the first time Trump has made a similar threat: the president previously threatened to withhold Cost Sharing Reduction payments, or CSR, which lower the amount individuals have to pay for deductibles, co-payments and insurance. While the White House announced earlier this month that key ObamaCare subsidies to insurers would be paid this month, the administration did not make a commitment beyond July.  Trump’s threat may have a significantly adverse impact on the insurance sector when it opens on Monday.

Incidentally, Trump is not wrong when he claims that insurance companies have received implicit taxpayer-funded bailout: as the chart below shows, insurance company stocks are up 700% since Obama became president, more than double the S&P’s return.

After the Friday morning Senate vote, Trump wasted no time to threaten to sabotage Obamacare.  “3 Republicans and 48 Democrats let the American people down,” the president tweeted at 2:25 a.m. Friday. “As I said from the beginning, let Obamacare implode, then deal. Watch!”

As Bloomberg notes, there are two key ways the President of the U.S. could undermine the law: asking his agencies not to enforce the individual mandate created under Obamacare; and stopping funds for subsidies that help insurers offset health-care costs for low-income Americans. Both moves could further disrupt the Affordable Care Act’s individual markets and eventually lead to higher premiums, or rather even higher premiums that Obamacare itself has led to.

Where does this leave Trump’s implosion threat?

One of the first steps the president could take would be to stop the monthly CSRs. The administration last made a payment about a week ago for the previous 30 days, but hasn’t made a long-term commitment. Trump has called the subsidies a “bailout” for insurance companies in the past, and he just did it again on Saturday.  “We are still considering our options,” Ninio Fetalvo, a spokesman for Trump, said in an e-mail. Meanwhile, America’s Health Insurance Plans, a lobby group for the industry, said premiums would rise by about 20 percent if the payments aren’t made. Many insurers have already dropped out of Obamacare markets in the face of mounting losses and blamed the uncertainty over the future of the cost-sharing subsidies and the individual mandate as one of the reasons behind this year’s hikes in premium.

“If certainty is not brought to the market and policymakers in Washington fail to establish stabilization measures, consumers face the prospect of significantly higher costs,” Ceci Connolly, chief executive officer of the Alliance of Community Health Plans, wrote.

Another way Trump could hamper the ACA is to instruct Price’s department to direct little or no support to open enrollment when people sign up for Obamacare plans near the end of the year. It could include ignoring website upkeep, not advertising the enrollment period and offering little help for people who have difficulty signing up.

Finally, the Trump administration could simply choose not to enforce the penalties surrounding the individual mandate of Obamacare for uninsured people or broaden exemptions to the law. The Internal Revenue Service, which enforces the penalty, said in January it would no longer reject filings if taxpayers didn’t indicate whether they had insurance. Unless the IRS follows up with each silent filing, this could let some uninsured people dodge the penalty.

As Bloomberg observes, all the moves would have an impact over time. For now, only one thing is certain: nothing is certain. As Larry Levitt, senior vice president of the Kaiser Family Foundation, puts it in a series of tweets:“The big question in health care now is what will happen with the individual insurance market,” Levitt said. “Insurers will be reading all the tea leaves for what the administration will do with cost-sharing payments and the individual mandate.”

Actually, one more thing is certain: while opinions on Trump’s approach to Obamacare repeal may differ, virtually all Americans can unite behind Trump’s threat to finally end bailouts of members of Congress. Whether or not he will follow up and enforce it, is a different matter entirely.





Another scandal:  this time against Chrsyler and UAW executives whereby millions were stolen from employee training centre programs enriching the pockets of 3 executives:

(courtesy zero hedge)

Federal Indictment Alleges Chrysler And UAW Execs Stole Millions From Employee Training Programs

For any UAW employees out there who still think their union is anything more than a ponzi scheme designed to effectively tax membership while enriching a few ‘bosses’ at the top of the pyramid, you should probably take note of a federal indictment that was filed late last week alleging that Chrysler executives conspired with UAW leaders to siphon millions in funds earmarked for employee training to line their own pockets.

As Automotive News points out, as of now, only two Chrysler employees have been charged but the indictment lays out a scenario in which many more charges could be levied against Chrysler employees and other high-ranking UAW officials who may have been involved.?

The indictment, unsealed last week, describes the alleged illegal dealings of former FCA labor relations chief Alphons Iacobelli, deceased UAW Vice President General Holiefield and his widow, Monica Morgan, a prominent Detroit photographer. Morgan will be arraigned in a Detroit federal court today, July 31. Iacobelli will be arraigned Tuesday, Aug. 1.


Federal investigators claim the three were at the center of a conspiracy from 2009 through 2014 that included Iacobelli personally pocketing $1 million and helping funnel $1.2 million from the UAW- Chrysler National Training Center to Holiefield, Morgan and other high-ranking members of the union.


The indictment specifically mentions at least eight unnamed people while vaguely mentioning “other” groups of people. Separately, federal officials announced fraud charges against former FCA financial analyst Jerome Durden, who is accused of creating false tax returns to hide payments to Holiefield, Iacobelli and other beneficiaries who were not identified.


“More could be charged,” said Peter Henning, a former federal prosecutor in Washington, D.C., and professor at Wayne State University Law School. Henning said it’s typical in investigations such as these for additional witnesses, informants and co-conspirators to be named after the initial round of arraignments.

So, what did they buy with their embezzled funds?

Alphons Iacobelli, Chrysler’s Labor Relations Chief, apparently really needed a brand new Ferrari and $100,000 pool in his back yard...

• A $350,000 Ferrari 458 Spider

• Lease on a private jet

• 2 limited-edition Mont Blanc pens costing $37,500 each

 A $96,000 swimming pool, outdoor kitchen and outdoor spa at his home in Rochester Hills, Mich.

• $73,000 in landscaping

• More than $300,000 in personal credit card expenses

• Paid off a relative’s student loan for $44,491

…looks like it all turned out really nice.



Meanwhile, UAW Vice President General Holiefield and his widow, Monica Morgan, invested their stolen loot in jewelry, designer clothes and expensive vacations.

• Paid off the $262,219.71 mortgage on their Harrison Township, Mich., home. Less than a year later, Morgan took out a new mortgage for $130,000.

• Credit card charges of $200,000 for jewelry, designer clothes and furniture

• $30,000 in airfare for San Diego, Miami, Las Vegas and Los Angeles

• 4 nights at the Beverly Hills Hotel for $3,100 per night



But federal investigators appear to think the situation involved more than two people. In addition to the eight unnamed FCA executives or UAW leaders in the indictment, “other” groups of people are referenced as well.

The document says Bob King, who was UAW president from June 2010 to June 2014, told Iacobelli and Holiefield in 2011 that they could “go to jail” for giving union and charity business to Morgan, Holiefield’s girlfriend at the time. They married in 2012.


King, according to the indictment, instructed them to stop giving business to Morgan. The three allegedly reacted to King’s warning by setting up a new company in early 2012, the indictment said.


Other unnamed people, according to the indictment, were responsible for approving the illegal spending.


“It’s quite possible some of the unnamed people in the indictment are going to cooperate and provide information and testimony,”Henning said.

Of course, the UAW was ‘blindsided’ by these latest corruption allegations.

“The UAW is appalled at the allegations contained in the Department of Justice’s (DOJ) indictment, which constitute a betrayal of trust by a former vice president of our union. The UAW has zero tolerance for corruption or wrongdoing of this kind at any level,” according to the statement. “The UAW had absolutely no knowledge of the fraudulent activities detailed in this indictment until they were brought to our attention by the government. We nevertheless take responsibility for not doing more to exert our influence over the governance policies of the (UAW-Chrysler National Training Center), which might have uncovered this corruption sooner.”


Fiat Chrysler issued a statement saying the Auburn Hills automaker has cooperated fully with the U.S. Attorney’s Office and “intends to pursue all potential legal remedies against Mr. Iacobelli and any other culpable parties.”


“FCA US and the UAW were the victims of malfeasance by certain of their respective employees that held roles at the National Training Center (NTC), an independent legal entity,” the company said in a statement. “These egregious acts were neither known to nor sanctioned by FCA US. “

We simply can’t imagine why the OEMs can’t seem to turn a profit on their U.S. plants..


Very important:  the treasury expects to issue 1/2 trillion dollars in debt in the 4th quarter.  They estimate that by Sept 30. they will have only 60 billion dollars left in the kitty and that should dissipate quite rapidly in the first week of October.  Thus the debt ceiling debate should commence by the 3rd or 4th week of September

(courtesy zerohedge)




Treasury To Issue Half A Trillion Dollars In Debt In Q4

In the first warning sign that the US Treasury is burning through more cash than previously expected, at 3pm today the Treasury Department announced that in its latest forecast of end-of-September cash balance it anticipated only $60 billion of cash on hand, nearly half the $115 billion it forecast in its previous report in May, according to the Department’s marketable borrowing estimates.  The treasury also expects to borrow $96 billion in net marketable debt in the current quarter, down from $98 billion forecast previously.

This drawdown in cash, and jump in government outlays, was to be expected following the latest Monthly Statement from the Treasury which showed a surge in government outlays, which hit a record high $429 billion in June, for reasons discussed previously.

However, the second, and more troubling warning sign was that in its initial forecast of calendar Q4 marketable borrowing needs, the Treasury now expects a near record $501 billion in net marketable debt to be issued from October through December. This amount will be nearly equal to the actual marketable debt borrowed in the last 4 quarters, which amounts to $527 billion. The full sources and uses can be found here.

Also, as shown in the chart below, this amount of upcoming quarterly issuance will be just shy of the previous record hit in the months of the financial crisis, and represents a dramatic change in the recent direction of declining borrowing.

Source: Reuters

One reason for this surge in Q4 debt issuance coupled with the low level of borrowing in 3Q suggests the debt ceiling will be a “significant limiting factor on auction sizes” as it doesn’t allow for upsizes or provide space for new tenors, Jefferies economists Ward McCarthy and Thomas Simons write.

They also adds that the borrowing announcement suggests coupon sizes will increase in 4Q, since it’ll be difficult to put together “a feasible auction calendar” that increases borrowing by more than $500b “focused entirely in bills,”

Treasury said it expects to borrow $96b in 3Q, with quarter-end cash balance of $60b; expects to borrow $501 billion in 4Q, with quarter-end cash balance of $360 billion.

As a result, the borrowing projections reflect a “high degree of uncertainty regarding the timeline for Congress to address the debt ceiling.”

The good news is that much of this debt will go toward building a cash cushion, as the projected debt needs are only $179 billion for the 4th calendar quarter, leaving an estimated $360 billion in cash as of December 31, 2017.

The Treasury also reported that in the April through June quarter, it issued $35 billion in net marketable debt, compared with its May prediction of $26 billion, and ended the quarter with a cash balance of $181 billion, down from the initial estimate of $200 billion. In April 2017, Treasury estimated net marketable borrowing of $26 billion and assumed an end-of-June cash balance of $200 billion.  The increase in borrowing was driven primarily by lower receipts.



bankruptcies rise by 110% in the first half led by retail and the shale boys:

(courtesy zerohedge)


Another soft data crash:  Chicago’s PMI which is a national manufacturing index survey crashed the most in 29 months.
(courtesy zero hedge)

Chicago PMI Crashes Most In 29 Months As Stagflation Strikes

After exploding to its highest since May 2014 in June, Chicago Purchasing Managers gave up hope in July.

PMI plunged most since Feb 2015 to 58.9 – erasing all of July’s “surprise” gains as new order growth slowed and prices paid accelerated.

Only 2 components were rising:

  • Prices paid rose at a faster pace
  • New orders rose at a slower pace
  • Employment rose at a slower pace
  • Inventories rose at a faster pace
  • Supplier deliveries rose at a slower pace
  • Production rose at a slower pace
  • Order backlogs rose at a slower pace

Are ‘soft’ surveys about to start waking up to reality?


This is interesting:  factories cannot hire even if they want to due to drug test failures as well as math failures

(courtesy zero hedge)

An Ohio Factory Owner Is Eager To Hire Workers, There Is Just One Problem…

Tyler Durden's picture

In April, the Fed’s otherwise boring Beige Book revealed an striking anecdote about the current state of the US labor market: as the Boston Fed commented at the time, the qualified labor shortage had gotten so bad, that the hit rate on hiring after a simple math and drug test, has collapsed below 50%. To wit:

Labor markets in the First District continued to tighten somewhat. Many employers sought to add modestly to head counts (although one manufacturer laid off about 4 percent of staff over the last year), while wage increases were modest. Some smaller retailers noted increasing labor costs, in part driven by increases in state minimum wages being implemented over a multi-year period. Restaurant contacts, particularly in heavy tourism regions, expressed concern about possible labor shortages this summer, exacerbated by an expected slowdown in granting H-2B visas. Half of contacted manufacturers were hiring, though none in large numbers; several firms said it was hard to find workers.


One respondent said that during a recent six-month attempt to add to staff for a new product, two-thirds of applicants for assembly line jobs were screened out before hiring via math tests and drug tests; of 400 workers hired, only 180 worked out.

Fast forward to today when we have a practical example of how severe this quandary has become for employers.

According to WTVR, an Ohio factory owner said on Saturday that although she has numerous blue-collar jobs available at her company, she struggles to fill positions because so many candidates fail drug tests. Regina Mitchell, co-owner of Warren Fabricating & Machining in Hubbard, Ohio, told The New York Times this week that four out of 10 applicants otherwise qualified to be welders, machinists and crane operators will fail a routine drug test. While not quite as bad as the adverse hit rate hinted at by the Beige Book, this is a stunning number, and one which indicates of major structural changes to the US labor force where addiction and drugs are keeping millions out of gainful (or any, for that matter) employment.

Speaking to CNN’s Michael Smerconish, Mitchell said that her requirements for prospective workers were simple: “I need employees who are engaged in their work while here, of sound mind and doing the best possible job that they can, keeping their fellow co-workers safe at all times,” she said.


This has proven to be a problem.

“We have a 150-ton crane in our machine shop. And we’re moving 300,000 pounds of steel around in that building on a regular basis. So I cannot take the chance to have anyone impaired running that crane, or working 40 feet in the air.”

While President Trump addressed his blue-collar base in Ohio this week, returning to his campaign theme of getting local communities back to work and returning jobs to America from overseas, the problem may not be a scarcity of jobs: it is workers who are not under the influence. As Mitchell said she has jobs… she just doesn’t have sober applicants. For 48 of the 50 years her company has been around, drug abuse had never been an issue, she told Smerconish.

“It hasn’t been until the last two years that we needed to have a policy, a corporate policy in place, that protects us from employees coming into work impaired,” she said.

As discussed here repeatedly in recent months, opioid use is on the rise across the country, but especially in Ohio. In 2014, the state had the second-largest number of opioid-related deaths in the United States and the fifth-highest rate of overdose.

This opioid epidemic that we’re experiencing … it seems like it’s worse than in other places all over the country,” Mitchell said.

Ohio’s new law on medical marijuana, which went into effect in 2016 and allows those with a qualifying condition and a recommendation from a physician to buy the drug legally, was another hurdle for employers to overcome, she said.

“The difficult part about marijuana is, we don’t have an affordable test that tells me if they smoked it over the weekend or smoked it in the morning before they came to work. And I just can’t take the chance of having an impaired worker running a crane carrying a 300,000-pound steel encasement,” she said.


For now, she said, there are almost 12,000 open skilled labor jobs in Mahoning County. “There are good-paying jobs and the opportunity for people in our area. We just can’t find people to show up who can pass a drug test,” she said.

Maybe instead of focusing how to perpetuate the US waiter and bartender job recovery, the BLS – and the administration – should contemplate how to eliminate the pervasive addiction problem which is rapidly becoming a structural hurdle for America’s millions of unemployed.



The Dallas Mfg Fed index improves slightly but all the respondents warn that “prospects in the future are dimming”

(courtesy zero hedge)

Dallas Fed Activity Improves But Respondent Warns “Prospects For Better Are Dimming”

After peaking in February, Dallas Fed’s Manufacturing Outlook has slid almost constantly until July which just saw it bounce modestly from 15.0 to 16.8 (stil below May’s levels)


Reading The Dallas Fed’s breakdown reports,  one wuld think everything is awesome!.

The production index, a key measure of state manufacturing conditions, rose 11 points to 22.8, indicating output grew at a faster pace than in June.



Other measures of current manufacturing activity also indicated a pickup in growth. The new orders and the growth rate of orders indexes rose several points each, coming in at 16.1 and 12.2, respectively. The capacity utilization index moved up to 18.1 and the shipments index increased three points to 11.6.


Perceptions of broader business conditions improved again in July, with a sharp pickup in outlooks. The general business activity index edged up to 16.8, marking a 10th consecutive positive reading. The company outlook index jumped 15 points to 25.9, reaching its highest level since 2010.


Labor market measures indicated slightly stronger employment gains and longer workweeks this month.The employment index has been positive all year and edged up to 11.2, its highest reading since the end of 2015. Twenty-one percent of firms noted net hiring, compared with 9 percent noting net layoffs. The hours worked index ticked up to 9.8.


Prices and wages continued to rise in July. The raw materials prices index held steady at 15.5, while the finished goods prices index moved up slightly to 5.6. The wages and benefits index remained somewhat elevated at 20.6.


Expectations regarding future business conditions continued to reflect optimism. The indexes of future general business activity and future company outlook held steady at 31.6 and 34.8, respectively. Other indexes of future manufacturing activity showed mixed movements but remained solidly in positive territory.

But, respondents did not seem to be so exuberant…

  • The foreign competition for new equipment is extremely competitive and our company is not able to match their selling prices.
  • Things are going poorly in the economy. We have no projects, and business is slow.
  • We are experiencing the summertime blues. Business is very dull July to date.
  • We are feeling more confident about the economy improving. More buyers seem to be more confident and placing orders with increased volumes and deliveries further into the future.
  • One huge order has spurred our manufacturing. However, nothing similar is expected in the near future.
  • There has been a notable decline in orders from energy industry customers over the past 30 days given the drop in oil prices. There is very little visibility on customer demand in the second half of the year.
  • The drop in oil prices in 2015 forced us out of our comfort zone and into new industries and locations. We have found that manufacturing technology from the oil industry applies equally well to defense, aerospace, heavy vehicle manufacturing and power generation. As oil recovers, we will also benefit from working in these new markets.
  • The increases in business are small but measurable. We have been trying to add employees over the last six months, with no qualified candidates available.
  • Grocery store deli and fast-food chain activity remains fairly slow. We are seeing increased activity, with convenience store remodels driven by increased food offerings.

And what about this!!

  • I cannot explain it, but we are slower than we have ever been at this time and it seems like we are not the only ones.This is crazy how summer-vacation mindset seems to have set in and companies are just not committing to projects. Most everyone I have spoken to in the graphic arts community is complaining of the same thing. If this doesn’t turn around quickly, there will be some significant cutbacks around here—something that will be very painful, as we are down to only talented workers with no fat to trim.

And finally there’s this…

  • Washington, D.C., is still a significant contingent factor for a better or worse outlook. Prospects for better are dimming.


More of the Awan brothers/IT scandal.  It seems that Awan was frantically liquidating 2 million dollars of real estate ahead of his arrest



Wasserman Schultz IT Staffer “Frantically” Liquidating $2 Million In Real Estate Assets

Tyler Durden's picture

As the mainstream media continues to report 24×7 on their Russian collusion narrative in a shameless attempt to take down a Republican administration without any actual evidence of wrongdoing, the Democrats find themselves embroiled in yet another actual scandal, with actual crimes, where people have actually been arrested by the FBI while actually trying to flee the country…yet shockingly, none of these actual crimes seem to be of any interest at all to traditional media outlets.

Be that as it may, the rather curious case of Imran Awan continues with the latest development coming courtesy of the Daily Caller who notes that Imran was frantically liquidating nearly $2 million in real estate holdings right up until the day has was arrested at Dulles airport.

Imran Awan, a congressional aide arrested by the FBI after wiring $300,000 to Pakistan and misrepresenting the purpose, had previously wired money to the country and was frantically liquidating multiple real estate properties on the day he was arrested, The Daily Caller News Foundation Investigative Group has learned.


Imran’s real estate properties provide a source of money that could be sent directly to Pakistan when two upcoming home sales close. Prosecutors have since filed paperwork saying they fear “the dissipation of the proceeds of the fraud and destruction of evidence in other locations.”


Imran was arrested July 24 — four months after the FBI says his wife Hina Alvi moved to Pakistan after learning the family was the subject of a criminal investigation into their work as IT administrators for House Democrats. On the day of Imran’s arrest, the couple accepted a buyer for one house owned by Hina with an asking price of $618,000 (Hawkshead Dr.) and listed another property for sale at $200,000 (Pembrook Village), real estate records show.


On June 20, a third house his wife owned was “sold” to his brother-in-law for $360,000 (Sprayer St.). In November 2016, a fourth home his wife owned was “sold” to his brother Jamal for $620,000 (Linnett Hill Dr.).In both cases, the bank financed nearly all of the purchase.



So why real estate?  As the Daily Caller notes, title companies, unlike individuals, can wire large sums of money to international bank accounts without arousing the suspicions of federal investigators.

Title companies can wire large sums abroad without attracting the suspicion Imran did at the bank, and with Hina — the nominal sole owner of each of the houses — residing in that country, it would be natural to send the proceeds to her.


In addition to the three houses sold or slated to be sold since June 20, Imran’s lawyer, Chris Gowen, told The New York Times that the $283,000 wire in January was preceded by other similar transfers to Pakistan. “Gowen said the transfer represented the latest payment by his client for a piece of property he was buying in the country,” The Times reported.


Gowen would not tell TheDCNF whether the proceeds of the $360,000 June 20 home sale were wired to Pakistan, nor where the income from the two upcoming sales would go. The office of the U.S. Attorney for the District of Columbia declined to comment on whether it would block the disbursements.


The value of the known homes that have been sold since November or are currently being sold is $1.8 million. There is also the $283,000 January wire transfer from the Congressional bank, in addition to previous wires of unknown amounts that Imran’s lawyer acknowledged.


Since Imran’s lawyer said the January wire of nearly $300,000 was the latest in a series of wires, the transfers may have been about moving money from the $4 million in House payments or other sources.

As we noted last week, Imran Awan was charged with bank fraud after being picked up by the FBI as Dulles airport while attempted to flee to Pakistan via Qatar.  That said, it is still unclear whether that charge is just a placeholder for other charges that are yet to come.

While details are scarce, media reports have alleged that Awan and his brothers potentially ran a procurement scheme in which they bought equipment, then overcharged various House members that employed their IT firm.  Meanwhile, some congressional technology aides have alleged that the Awan’s were blackmailing representatives based on the contents of their emails and files, due to the fact that these representatives have displayed unwavering and intense loyalty towards the former aides.

As background, Imran was first employed in 2004 by former Democrat Rep. Robert Wexler (FL) as an “information technology director”, before he began working in Rep. Debbie Wasserman Schultz’s office in 2005.

The family was paid extremely well, with Imran Awan being paid nearly $2 million working as an IT support staffer for House Democrats since 2004. Abid Awan and his wife, Hina Alvi, were each paid more than $1 million working for House Democrats. In total, since 2003, the family has collected nearly $5 million.

In total, Imran’s firm was employed by 31 Democrats in Congress, some of whom held extremely sensitive positions on the House Permanent Select Committee on Intelligence and the House Committee on Foreign Affairs.


Of course, one of the most intriguing parts of the Awan narrative is precisely why former DNC Chair Debbie Wasserman-Schultz (DWS) decided to keep him on her taxpayer-funded payroll right up until his arrest and whether that decision had anything to do with the whole DNC / Hillary email scandals that erupted last summer.

A preliminary hearing for Awan is scheduled for August 21.


And now for more entertainment, Scaramucci is fired.  So he lasts 10 days and on top of that, his wife is divorcing him.


(courtesy zero hedge)

Scaramucci Fired As Trump’s Communications Director After Just 10 Days

Tyler Durden's picture

That didn’t take long: just over a week after Anthony Scaramucci was appointed as the new White House communications director, and just three days after Trump fired the Mooch’s arch nemesis Reince Priebus, the NYT reports that Trump has removed Scaramucci from the role of Communications Director, under instruction from Trump’s new chief of staff, Gen. Kelly.

According to the NYT, Scaramucci’s abrupt removal came just 10 days after the wealthy New York financier was brought on to the West Wing staff, a move that convulsed an already chaotic White House and led to the departures of Sean Spicer, the former press secretary, and Reince Priebus, the president’s first chief of staff.

The decision to remove Mr. Scaramucci, who had boasted about reporting directly to the president not the chief of staff, John F. Kelly, came at Mr. Kelly’s request, the people saidMr. Kelly made clear to members of the White House staff at a meeting Monday morning that he is in charge.


It was not clear whether Mr. Scaramucci will remain employed at the White House in another position or will leave altogether.

ABC adds that Scaramucci offered his resignation to Gen. Kelly this morning, with a request to be moved to the Ex-Im bank.

WH sources tell ABC that @Scaramucci offered his resignation this morning to Gen. Kelly w/ request to move to Ex-Im bank.

The White House had a brief, and polite, statement on the departure: “Mr. Scaramucci felt it was best to give Chief of Staff John Kelly a clean slate and the ability to build his own team”

And so, having first lost his now ex-wife to Trump, Scaramucci has also lost Trump himself.

Meanwhile, someone just made an absolute killing on PredicIt, with the
contract “Will Anthony Scaramucci’s role as WH communications director
end in August 2017 or earlier
?” surging from 15 cents to 100 in the blink of an eye.

Or, as Trump would say, no chaos at all, just look at the stock market.

Highest Stock Market EVER, best economic numbers in years, unemployment lowest in 17 years, wages raising, border secure, S.C.: No WH chaos!

Finally, with the ouster of Scarmucci, the list of high-ranking personnel fired by Trump rises to 12:

  • Sally Yates, the acting attorney general and an appointee of former President Barack Obama, was fired by Trump just ten days after he assumed office. Yates had refused to uphold the Trump administration’s controversial travel ban in January.
  • Michael Flynn resigned in February after serving in the position for less than a month. Flynn misled Vice President Mike Pence and other administration officials about the contents of his phone conversations with Sergey Kislyak, Russia’s ambassador to the US. Flynn reportedly discussed the Obama administration’s sanctions against Russia with Kislyak prior to Trump assuming office.
  • Katie Walsh, the former deputy chief of staff and close ally to chief of staff Reince Priebus left the White House just nine weeks into the job to run America First, a pro-Trump group outside of the government.
  • Preet Bharara, the former US Attorney for the Southern District of Manhattan and ‘Sheriff’ of Wall Street, was fired by Trump in March after Bharara refused to submit a resignation letter to Attorney General Jeff Sessions.
  • James Comey, the former FBI durector, was fired by Trump in May.
  • Michael Dubke, the former White House communications director, resigned in May. Dubke was replaced by Anthony Scaramucci, the founder of a hedge fund and a top Trump donor. Scaramucci was fired after just 10 days on the job (see below).
  • Walter Shaub, the former director of the Office of Government Ethics, resigned earlier this month after clashing with the White House over Trump’s complicated financial holdings. Shaub called Trump’s administration a “laughingstock,” following his resignation, and advocated for strengthening the US’s ethical and financial disclosure rules, per The New York Times.
  • Mark Corralo, spokesman for President Donald Trump’s legal team, resigned on July 20 within two months of being on the job.
  • Sean Spicer, the embattled former White House press secretary, resigned on July 21 after telling Trump he vehemently disagreed with the selection of Anthony Scaramucci as White House communications director.
  • Micheal Short, the former White House press aide, resigned the same day as Spicer, after Scaramucci revealed plans to fire him.
  • Reince Priebus, the former White House chief-of-staff, resigned just six months into his tenure after a public feud with Anthony Scaramucci, the White House communications director.
  • And now, Anthony Scaramucci, who “resigned” as the new White House Communications Director on July 31, after just 10 days on the job.

Meanwhile, live footage of Sean Spicer:

LIVE: Footage of Sean Spicer





Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: