August 14/3rd consecutive raid attempt by our bankers failed with respect to gold and silver/Open interest in silver continues to fall despite the rise in price which indicates banker capitulation/GLD STOPS ITS BLEEDING OF GOLD ANS INVENTORIES RISE BY 4.14 TONNES/China announces a halt to all imports containing coal, iron, iron ore and seafood from North Korea/ The Ukraine is the source of engines on those North Korean missiles: and the Ukraine is an ally of the USA?/

GOLD: $1284.70  DOWN $3.10

Silver: $17.14  up 6 cent(s)

Closing access prices:

Gold $1282.20

silver: $17.08

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

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

SHANGHAI FIRST GOLD FIX: $1292.87 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME:  $1287.85

PREMIUM FIRST FIX:  $5.02

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SECOND SHANGHAI GOLD FIX: $1290.15

NY GOLD PRICE AT THE EXACT SAME TIME: $1285.70

Premium of Shanghai 2nd fix/NY:$4.45

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LONDON FIRST GOLD FIX:  5:30 am est  $1281.10

NY PRICING AT THE EXACT SAME TIME: $1281.95 

LONDON SECOND GOLD FIX  10 AM: $1282.30

NY PRICING AT THE EXACT SAME TIME. $1282.30 

For comex gold:

AUGUST/

NOTICES FILINGS TODAY FOR APRIL CONTRACT MONTH: 34 NOTICE(S) FOR  3400  OZ.

TOTAL NOTICES SO FAR: 4521 FOR 452,100 OZ (14.062 TONNES) 

For silver:

AUGUST

 20 NOTICES FILED TODAY FOR

100,000  OZ/

Total number of notices filed so far this month: 830 for 4,150,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

end

 

 

Today, the bankers tried to raid both gold and silver for the third consecutive day and failed again.  The open interest in silver continues to fall despite a rise in price and it sure looks like banker capitulation as they try to extricate themselves from their mess. Another good indicator of trouble for our bankers is that the bleeding of gold has stopped  (physical gold supplying Eastern countries e.g. China, Russia and Turkey). Today 4.14 tonnes of gold was added to inventories. SLV showed no gain or loss of silver inventory.

Let us have a look at the data for today

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In silver, the total open interest SURPRISINGLY FELL BY A HUGE  4967 contracts from 194,445 down to 189,478 DESPITE THE  RISE IN THE PRICE THAT SILVER TOOK WITH RESPECT TO FRIDAY’S TRADING (UP 4 CENT(S) AND THE FAILED RAID. SIMPLE EXPLANATION: THE BANKERS HAVE CAPITULATED….THEY ARE TRYING TO COVER THEIR SHORTFALL AT HIGHER AND HIGHER PRICES. THE BANKERS ARE HAVING EXTREME DIFFICULTY IN SUPPLYING ADDITIONAL SHORT PAPER AND LONGS CONTINUE TO ADVANCE TAKING ON THE BANKER SHORTS. THE BATTLE OF WATERLOO WILL BE FAST APPROACHING 

 In ounces, the OI is still represented by just UNDER 1 BILLION oz i.e.  0.947 BILLION TO BE EXACT or 135% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MAY MONTH/ THEY FILED: 20 NOTICE(S) FOR 100,000  OZ OF SILVER

In gold, the open interest ROSE by A CONSIDERABLE 5,002 WITH the RISE in price of gold ($4.10 GAIN ON FRIDAY.)  The new OI for the gold complex rests at 480,915.  IN COMPLETE CONTRAST TO SILVER, THE BANKERS SUPPLIED THE MASSIVE AMOUNT OF PAPER SHORT GOLD WHICH WAS GOBBLED UP BY THE LONGS.  THE NEWBIE SPEC SHORTS HAVE NO DOUBT COVERED THEIR SHORT POSITION BY NOW.  I WROTE THE FOLLOWING TO MY FRIENDS OVER THE WEEKEND: “WE MUST BE COGNIZANT OF ANOTHER RAID THIS COMING WEEK AS THE OI FOR GOLD IS EXTREMELY HIGH AND THE NOOSE IS AROUND THEIR NECKS IN SILVER.”  THE CROOKS DID NOT TAKE LONG TO INITIATE ANOTHER RAID TODAY

we had: 34 notice(s) filed upon for 3400 oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD:

Today, a big change in gold inventory: a deposit of 4.14 tonnes into the GLD

Inventory rests tonight: 791.01 tonnes

 

IN THE LAST 21 TRADING DAYS: GLD SHEDS 45.96 TONNES YET GOLD IS HIGHER BY $45.85 . 

SLV

Today: : WE NO CHANGES IN SILVER INVENTORY TONIGHT:

INVENTORY RESTS AT 335.825 MILLION OZ

end

.

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

1. Today, we had the open interest in silver FALL BY  4,967 contracts from 194,445 DOWN TO 189,478 (AND now A LITTLE FURTHER FROM THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787). THE FALL IN OPEN INTEREST WAS ACCOMPANIED BY A SMALL RISE IN PRICE AND FOR THE FIRST TIME WE ARE WITNESSING BANKER CAPITULATION.  BANKERS ARE LOATHE TO SUPPLY NEW SHORT PAPER AND THE LONGS CONTINUE TO ENTER THE ARENA PURCHASING WHATEVER SILVER THEY CAN AND WILLING TO TAKE ON OUR CROOKED BANKERS. 

(report Harvey)

.

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

3. ASIAN AFFAIRS

i)Late SUNDAY night/MONDAY morning: Shanghai closed UP 28.92 POINTS OR 0.90%   / /Hang Sang CLOSED UP 366.72 POINTS OR 1.36% The Nikkei closed DOWN 192.64 POINTS OR .98%/Australia’s all ordinaires CLOSED UP 0.61%/Chinese yuan (ONSHORE) closed DOWN at 6.6720/Oil DOWN to 48.49 dollars per barrel for WTI and 51.72 for Brent. Stocks in Europe OPENED DEEPLY IN THE GREEN , Offshore yuan trades  6.6874 yuan to the dollar vs 6.6720 for onshore yuan. NOW THE OFFSHORE IS WEAKER  TO THE ONSHORE YUAN/ ONSHORE YUAN WEAKER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS MUCH WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE SLIGHTLY STRONGER DOLLAR. CHINA IS NOT HAPPY TODAY 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)NORTH KOREA//USA

North Korea states that its army is “on standby” waiting for an order to attack

( zero hedge)

ii)China announces today that it will halt all imports of coal, iron ore, iron and seafoods from North Korea beginning today. These are the dominant importing items from North Korea and it will cripple the nation. It seems that Trump’s threat of tariffs against China is working.

( zero hedge)

 

b) REPORT ON JAPAN

c) REPORT ON CHINA

i)Saturday:

Trump warns Xi that on  the USA will initiate tariffs and begin the trade war against China

( zero hedge)

ii)Monday
China slams Trump’s trade war as Xi states that it is basically a distraction from their “domestic turmoil”
( zero hedge)

iii)Overnight, a Chinese bank suffers a rare bank run on rumours.  The bank in question: Linshang Bank denied it has troubles( zero hedge)

iv)Overnight, Chinese macro data misses on all fronts:  retail sales, industrial production and fixed asset investment. It did not matter as their stock market ignored the reports

 

( zero hedge)

v)This is a huge red flag for those believing that the global economy is booming and a red flag for crude oil bulls.  The demand side for Chinese oil refining tumbles badly

 

( zero hedge)

4. EUROPEAN AFFAIRS

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

6 .GLOBAL ISSUES

UKRAINE/NORTH KOREA

 

My goodness, this is shocking:  USA “ally” Ukraine is the source of North Korean Missile engines.  It also questions the huge donations given by Ukraine donors to the Clinton foundation.

 

(courtesy zero hedge)

7. OIL ISSUES

8. EMERGING MARKET

9.   PHYSICAL MARKETS

i)SATURDAY:

bitcoin spikes to over $3800.00 per coin.

( zerohedge)

ii)SUNDAY:

NOW OVER $4,000.00 PER COIN

( zerohedge)

iii)A must see interview:  Ronan Manly interviewed by Real Vision. They talk about the fractional reserve market for gold (Ponzi) and how their is considerable danger to investors holding exchange traded funds

 

(Ronan Manly/Bullion star/Real Vision/Pal)

iv)The Wall Street Journal still is not ready to write about how gold is rigged, swapped etc.

( Chris Powell/GATA)

v)It did not take long for people to scam individuals.  In London scam artists were arrested after cold calling individuals to buy fake cryptocurrencies

( London’s Telegraph/GATA)

vi)China’s domestic gold market

bullionstar/Ronan Manly)

vii) Reuters reports that India’s gold imports are rebounding in number due to many factors including a good monsoon.

( Reuters/GATA)

viii)GATA Chairman interviewed by Goldseek

 

( GATA/Bill Murphy/Chris Powell)

10. USA Stories

i)The rout in retail continues as JCPenny tumbles

 

( Mish Shedlock/Mishtalk)

ii)USA quietly launches a crackdown on cryptocurrencies

( zero hedge)

iii)After CEO, Ken Frazier resigns from the President’s manufacturing advisory board for lack of response to the Charlottesville riots on the weekend, Trump responds by attacking the pharmaceutical giant for ripping off the public with high drug prices.

 

( zero hedge)

iv)The real truth behind the USA  S and P earnings:

 

( Wolf Richter/WolfStreet.com)

v)A terrific commentary from Dave Kranzler of IRD as he highlights things that I have been signalling to you:  higher student debt, higher auto loans and higher credit card debt:  the consumer is buried in debt:

 

( Dave Kranzler/IRD)

vi)The clowns are at it again:  Dudley warns that his fellow clowns will probably hike rates and begin to drawdown on it’s balance sheet.

No way!! unless he wishes to throw the uSA into an economic tailspin as they remove liquidity

 

(courtesy zerohedge)

Let us head over to the comex:

The total gold comex open interest ROSE BY A HUGE 5002  CONTRACTS UP to an OI level of 480,915 WITH THE RISE IN THE PRICE OF GOLD ($4.10 with FRIDAY’S trading). NEWBIE LONGS ENTERED THE ARENA ESPECIALLY NOTICING THE FAILED RAID ON FRIDAY.  THE BANKERS CONTINUE TO SUPPLY THE SHORT PAPER. NEWBIE SPEC SHORTS ARE NOW COMPLETELY OUT OF THEIR POSITIONS. THE HUGE RISE IN OPEN INTEREST WILL BE ADDITIONAL FODDER FOR THE CROOKS TO RAID IN THE COMING WEEK.

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 6 contract(s) to stand at 1256 contracts. We had 19 notices filed on FRIDAY so we GAINED 13 contracts or an additional 1300 oz will stand at the comex and 0 EFP’s were issued which entitles the long holder to a fiat bonus plus a futures contract and most probably that would be a London based forward.

The non active September contract month saw it’s OI GAIN 63 contracts UP to 1585.

The next active contract month is Oct and here we saw a GAIN of 167 contracts UP to 50,206.

The very big active December contract month saw it’s OI GAIN 3,323 contracts up to 374,468.

We had 34 notice(s) filed upon today for   3400 oz

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

LAST YEAR WE HAD A MONSTROUS 44.7 TONNES OF GOLD INITIALLY.  BY THE CONCLUSION OF THE AUGUST CONTRACT MONTH 44.358 TONNES STOOD FOR DELIVERY.

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And now for the wild silver comex results.  Total silver OI SURPRISINGLY FELL BY 4967 CONTRACTS FROM 194,445 DOWN TO 189,478 DESPITE FRIDAY’S SMALL SIZED 4 CENT GAIN . THERE IS NO QUESTION THAT WE ARE HAVING CONTINUAL BANKER CAPITULATION AS THEIR HUGE SHORTS IN SILVER IS CHOKING THEM TO DEATH. I HAVE WARNED YOU, THE NOOSE IS GETTING TIGHTER AROUND OUR FRIENDLY BANKERS’ NECKS. NO DOUBT THAT THE HUGE DELAY IN  SILVER DELIVERIES (IN LONDON) ACCOMPANIED WITH THE HUGE GLOBAL DEMAND FOR SILVER IS FINALLY WEIGHING IN ON OUR CROOKS.  NEWBIE SPEC LONGS ENTERED THE SILVER COMPLEX ON FRIDAY WITNESSING THE FAILED RAID. ON THE SUPPLY SIDE: THE BANKERS WERE JUST PLAIN LOATHE TO SUPPLY THE NECESSARY PAPER.  THUS A HUGE DECLINE IN SILVER OI WITH A SMALL SIZED RISE IN PRICE.

We are now in the next big non active silver contract month of August and here the OI  FELL BY 41 contracts DOWN TO 119. We had 88 notice(s) filed yesterday.  Thus we GAINED 47 contract(s) or an additional 235,000 oz will stand for delivery in this non active month of August and zero EFP’s were issued for the August contract month.

The next active contract month is September (and the last active month until December) saw it’s OI fall by 8779 contacts down to 103.727.  The next non active contract month for silver after September is October and here the OI gained 13 contacts up TO 96. After October, the big active contract month is December and here the OI GAINED by 3,560 contracts UP to 74,734 contracts.

We had 20 notice(s) filed for 100,000 oz for the AUGUST 2017 contract

VOLUMES: for the gold comex

 

FRIDAY’S confirmed volume was 278,960

 

 

volumes on gold are STILL HIGHER THAN NORMAL!

Initial standings for AUGUST

 August 14/2017.

Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
2025.45 oz
SCOTIA
63 KILOBARS
Deposits to the Dealer Inventory in oz   oz
Deposits to the Customer Inventory, in oz 
32.15 oz
BRINKS
1 KILOBAR
No of oz served (contracts) today
 
34 notice(s)
3400 OZ
No of oz to be served (notices)
1222 contracts
(122,200 oz)
Total monthly oz gold served (contracts) so far this month
4521 notices
452,100 oz
14.062 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   19,750.2  oz
Today we HAD  2 kilobar transaction(s)/ 
total dealer deposits: nil oz
We had nil dealer withdrawals:
total dealer withdrawals:  0 oz
we had 1  customer deposit(s):
i) Into Brinks: 32.15 oz  (one kilobar)
total customer deposits;  32.15  oz
We had 1 customer withdrawal(s)
 i) Out of Scotia:  2025.45 oz
(63 kilobars)
total customer withdrawals;  2025.45 oz
 we had 0 adjustment(s)
 
For AUGUST:

Today, 0 notice(s) were issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 34  contract(s)  of which 0 notices were stopped (received) by j.P. Morgan dealer and 0 notice(s) was (were) stopped/ Received) by j.P.Morgan customer account.

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To calculate the initial total number of gold ounces standing for the AUGUST. contract month, we take the total number of notices filed so far for the month (4521) x 100 oz or 452,100 oz, to which we add the difference between the open interest for the front month of AUGUST (1256 contracts) minus the number of notices served upon today (34) x 100 oz per contract equals 574,300  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 (4521) x 100 oz  or ounces + {(1256)OI for the front month  minus the number of  notices served upon today (34) x 100 oz which equals 574,300 oz standing in this  active delivery month of AUGUST  (17.863 tonnes)
 we GAINED 13 contracts or an additional 1300 oz will stand for delivery and 0 EFP’s for August were issued.
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Total dealer inventory 758,510.492 or 23.59 tonnes  (dealer gold continues to disappear)
Total gold inventory (dealer and customer) = 8,632,167.752 or 268.49 tonnes 
 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 268.49 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.
 
IN THE LAST 12 MONTHS  85 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE AUGUST DELIVERY MONTH
 
August initial standings
 August 14 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
745,723.963 oz
Brinks
Delaware
Scotia
Deposits to the Dealer Inventory
nil  oz
Deposits to the Customer Inventory 
877,391.270
oz
Brinks
Scotia
No of oz served today (contracts)
20 CONTRACT(S)
(100,000 OZ)
No of oz to be served (notices)
99 contracts
( 495,000 oz)
Total monthly oz silver served (contracts) 830 contracts (4,150,000 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 2,056,136.4 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 3 customer withdrawal(s):
ii) out of Brinks: 1,000.000 oz ???
ii) out of Delaware:  3038.483 oz
iii) out of Scotia: 741,685.48 oz
TOTAL CUSTOMER WITHDRAWALS:  745,723.963 oz
We had 2 Customer deposit(s):
 i) Into Brinks:  235,300.328 oz
ii) Into Scotia:  642,090.95
***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: 877,391.270 oz
 
 we had 0 adjustment(s)
The total number of notices filed today for the AUGUST. contract month is represented by 20 contract(s) for 100,000 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 830 x 5,000 oz  = 4,150,000 oz to which we add the difference between the open interest for the front month of AUGUST (119) and the number of notices served upon today (20) x 5000 oz equals the number of ounces standing
 

 

.
 
Thus the INITIAL standings for silver for the AUGUST contract month:  830 (notices served so far)x 5000 oz  + OI for front month of AUGUST(119 ) -number of notices served upon today (20)x 5000 oz  equals  4,650,000 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 and we witness again the amount of silver increases daily right from the get go.
We GAINED ANOTHER 47 contracts or an additional 235,000 oz wishes to stand for delivery in this non active month of August and  0 EFP’s were issued for the silver August month.
At this point in the delivery cycle last year on August 15/2016 we had 108,939 contracts standing vs this yr at 104,335.
Last yr on the first day notice for the Sept silver contract we had 17.070 million oz stand for delivery.
By month end:  16.075 million oz/
 
 
 
 
Volumes: for silver comex
FRIDAY’s  confirmed volume was 108,994 contracts which is OUT OF THIS WORLD
FRIDAY’S CONFIRMED VOLUME OF 108 994 CONTRACTS WHICH EQUATES TO 544 MILLION OZ OF SILVER OR 78% OF ANNUAL GLOBAL PRODUCTION OF SILVER EX CHINA EX RUSSIA). IN OUR HEARINGS THE COMMISSIONERS STRESSED THAT THE OPEN INTEREST SHOULD BE AROUND 3% OF THE MARKET.
 
Total dealer silver:  38.348 million (close to record low inventory  
Total number of dealer and customer silver:   216.113 million oz
The record level of silver open interest is 234,787 contracts set on April 21./2017  with the price at that day at  $18.42
The previous record was 224,540 contracts with the price at that time of $20.44
end

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 7.2 percent to NAV usa funds and Negative 7.1% to NAV for Cdn funds!!!! 
Percentage of fund in gold 62.6%
Percentage of fund in silver:37.4%
cash .+0.0%( August 14/2017) 
2. Sprott silver fund (PSLV): STOCK   NAV FALLS TO +0.11% (August 14/2017) 
3. Sprott gold fund (PHYS): premium to NAV FALLS TO -0.56% to NAV  (August 14/2017 )
Note: Sprott silver trust back  into POSITIVE territory at +0.11/Sprott physical gold trust is back into NEGATIVE/ territory at -0.56%/Central fund of Canada’s is still in jail  but being rescued by Sprott.

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

(courtesy Sprott/GATA)

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

 Section: Daily Dispatches

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

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

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

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

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

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

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

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

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

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

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

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

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

end

And now the Gold inventory at the GLD

August 14/this is good!!: a gain of 4.14 tonnes of gold into the GLD inventory/the removal of GLD gone to the east has now stopped probably because there is no physical to send/inventory rests at 791.01 tonnes

August 11/no change in gold inventory/Inventory rests at 786.87 tonnes

August 7/no changes in gold inventory at the GLD/Inventory rests at 787.14 tonnes

AUGUST 4/ANOTHER LOSS OF 4.48 TONNES OF GOLD FROM GLD INVENTORY/INVENTORY RESTS AT 787.14 TONNES.THIS IS A HUGE CRIME SCENE!!

August 3/no change in gold inventory at the GLD/Inventory rests at 791.88 tonnes

August 2/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 791.88 TONNES

Aug 1/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 791.88 TONNES

July 31/NO CHANGES AT THE GLD/INVENTORY RESTS AT 791.88 TONNES

July 28/ANOTHER MASSIVE WITHDRAWAL OF 3.54 TONNES OF GOLD WITH GOLD UP $9.15/INVENTORY RESTS AT 791.88 TONNES

July 27/LATE LAST NIGHT, A HUGE WITHDRAWAL OF 5.03 TONNES WITH GOLD UP $10.45 ON THE DAY/INVENTORY RESTS AT 795.42 TONNES

July 26/NO CHANGE IN GLD INVENTORY WITH GOLD DOWN $2.55/INVENTORY RESTS AT 800.45 TONNES

July 25/A MASSIVE 9.17 TONNES OF GOLD WITHDRAWN FROM THE GLD/INVENTORY RESTS AT 800.45 TONNES

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 20/WITH GOLD UP AGAIN TODAY ($3.50) WE HAD NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 816.13 TONNES

jULY 19/STRANGE!! AGAIN WITH GOLD UP $0.50 WE HAD ANOTHER HUGE 5.32 TONNES WITHDRAWAL FROM THE GLD/INVENTORY RESTS AT 816.13 TONNES  THIS GOLD IS HEADING TO SHANGHAI

July 18/STRANGE AGAIN/WITH GOLD UP $7.50 WE HAD ANOTHER HUGE 5.62 TONNES WITHDRAWAL FROM THE GLD/INVENTORY RESTS AT 821.45 TONNES

July 17/strange again! with gold up $4.20 we had another huge withdrawal of 1.77 tonnes/inventory rests at 827.07 tonnes

July 14/strange@!!with gold up $12.00 today, we had a huge withdrawal of 3.55 tonnes/inventory rests at 828.84 tonnes

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

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

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

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

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

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

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

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

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
August 14 /2017/ Inventory rests tonight at 791.01 tonnes
*IN LAST 212 TRADING DAYS: 158.87 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 150 TRADING DAYS: A NET  1.44 TONNES HAVE NOW BEEN WITHDRAWN FROM  GLD INVENTORY.
*FROM FEB 1/2017: A NET  18.25 TONNES HAVE BEEN WITHDRAWN.

end

Now the SLV Inventory

August 14./no change in silver inventory/inventory rests at 335.825 million/

August 11/no change in silver inventory tonight.  However we lost 3,781 million oz from Tuesday through Thursday. Inventory rests at 335.825 million oz/

August 7/no change in silver inventory at the SLV/Inventory rests at 339.606 million oz

AUGUST 4/A WITHDRAWAL OF 945,000 OZ/INVENTORY RESTS AT 339.606 MILLION OZ

August 3/A WITHDRAWAL OF 1,181,000 OZ FROM THE SLV/INVENTOR RESTS AT 340.551 MILLION OZ/

August 2/NO CHANGES IN SILVER INVENTORY AT THE SLV

INVENTORY RESTS AT 341.732 MILLION OZ/

August 1/A HUGE WITHDRAWAL OF 945,000 OZ/INVENTORY RESTS AT 341.732 MILLION OZ/

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

July 28/ A HUGE WITHDRAWAL OF 1.15 MILLION OZ OF SILVER LEAVES THE SLV DESPITE SILVER BEING UP 11 CENTS TODAY/INVENTORY RESTS AT  342.677 MILLION OZ

July 27/NO CHANGE IN SILVER INVENTORY/INVENTORY RESTS AT 343.812 MILLION OZ WITH SILVER UP 13 CENTS TODAY.

July 26/NO CHANGE IN SILVER INVENTORY/INVENTORY RESTS AT 343.812 MILLION OZ

July 25/A MASSIVE 3.309 MILLION OZ OF INVENTORY WITHDRAWN FROM THE SLV DESPITE SILVER’S 10 CENT RISE TODAY.

July 24/no change in silver inventory despite its 4 cent drop/inventory remains at 347.121 million oz

July 21/STRANGE! WITH SILVER UP AGAIN TODAY (11 CENTS), NO CHANGE IN SILVER INVENTORY AT THE SLV/inventory 347.121 million oz/

July 20/STRANGE! WITH SILVER UP AGAIN TODAY, THE SLV INVENTORY LOWERS BY 945,000 OZ/INVENTORY RESTS AT 347.121 MILLION OZ/

July 19/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 348.066 MILLION OZ

July 18/a huge 946,000 oz withdrawal from the SLV despite silver’s 16 cent gain!

Inventory rests at 348.066 million oz

July 17/no change in silver inventory at the SLV/Inventory rests at 349.012 million oz

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

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

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

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

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

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

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

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

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

August 14.2017:

 Inventory 335.825  million oz
end
  • 6 Month MM GOFO

    Indicative gold forward offer rate for a 6 month duration

    + 1.29%
  • 12 Month MM GOFO
    + 1.46%
  • 30 day trend

end

 

SATURDAY: bitcoin spikes to over $3800.00 per coin.

(courtesy zerohedge)

Bitcoin Spikes Over $3800 As Institutional Investor Interest Soars

Bitcoin is now up over 45% since the fork on August 1st, notably spiking this week (to a record high over $3800) as US-North Korea tensions escalated and both Fidelity (retail) and Goldman (institutional) noted investor interest in cryptocurrencies is soaring.

Fidelity announced Wednesday that it started allowing clients to view bitcoin and other cryptocurrencies on its website, a rare move for an established institution.

Hadley Stern, senior vice president at Fidelity Labs, said “the big story is you can transfer value through software and software alone. This is a huge societal breakthrough.”

 

And regardless of whether bitcoin will survive, it could be like the Napster of blockchain technology, Stern said, where it is the first of its kind but the next products, in this case Spotify and Apple Music, get better and better.

 

“I do think [cryptocurrencies] will make things, whether it’s bitcoin or something else, faster and cheaper and create new products and services that we can’t even imagine,” Stern said.

 

While some critics are skeptical of how bitcoin is used, Stern said that banning the cryptocurrency would be like banning the web or open internet protocols.

 

“Whether governments like it or not, it’s here to stay,”he said.

And as we noted earlier in the week, Goldman Sachs wrote in a note that it is becoming more difficult for institutional investors to ignore Bitcoin and the cryptocurrency market.

The debate has shifted from the legitimacy of the ‘fiat of the internet’ to how fast new entrants are raising funds.

 

The hype cycle is in full effect with Bitcoin, the first, largest and most widely recognized cryptocurrency up almost 200% YTD (v 11% for the S&P 500) and a host of other emerging ‘altcoins’ growing in scope and presence (witness the growth of Ethereum).

 

Whether or not you believe in the merit of investing in cryptocurrencies (you know who you are) real dollars are at work here and warrant watching especially in light of the growing world of initial coin offerings (ICOs) and fundraising that now exceeds Internet Angel and Seed investing.

 

And with the fork out of the way, it seems that demand is having an impact…

Aditionally, as CoinTelegraph reportsBitcoin could pass $100,000 by February 2021; a Harvard academic has said announcing Bitcoin is the first digital currency to follow Moore’s Law. In emailed comments, investor Dennis Porto said that after analyzing Bitcoin’s performance, it was the “first” currency to follow the digital technology rule.

“Moore’s law specifically applied to the number of transistors on a circuit but can be applied to any digital technology,” Porto wrote. “Any technology that is growing exponentially (i.e., ‘following Moore’s law’) has a doubling time.”

Porto makes the assertion that Bitcoin price has de facto doubled every eight months since its inception.

“This poses a unique opportunity for investors,” he added, something which was well-received in social media circles.

While multiple well-known commentators have contributed their opinions on how much one Bitcoin will cost in the next five or 10 years, $100,000 by 2021 is at the bolder end of the spectrum.

 

This week, Max Keiser repeated his faith in Bitcoin reaching $5,000 in the coming months.

While Bitcoin is surging, Bitcoin Cash is sliding, falling to 4th largest virtual currency by market cap…

 

But Ethereum – which we noted previously appeared to be acting like a World War III indicator – continues to surge well above $300…

 

END

 

SUNDAY: NOW OVER $4,000.00 PER COIN

(courtesy zerohedge)

Bitcoin Blows Through $4000 As Asian Demand Soars

While many of the largest cryptocurrencies are fading modestly this morning, Bitcoin is holding on to dramatic gains which saw the largest virtual currency spike to as high as $4190 as Yen, Yuan, and Won trading activity dominated volumes.

Bitcoin Cash remains in 4th place overall by market cap but Bitcoin is the only currency higher among the top 5 this morning.

 

Soaring past $4000…

 

As CoinTelegraph reports, the trading of Bitcoin in Japanese yen has accounted for almost 46 percent of total trade volume worldwide.The trading of Bitcoin in US dollar accounted for around 25 percent, while the trading of Bitcoin in South Korean won and Chinese yuan accounted for approximately 12 percent each.

Additionally, anticipated demand is being priced in after VanEck filed for an ‘active strategy’ Bitcoin ETF:

The Fund seeks to achieve its investment objective by investing, under normal circumstances, in U.S. exchange-traded bitcoin-linked derivative instruments (“Bitcoin Instruments”) and pooled investment vehicles and exchange-traded products that provide exposure to bitcoin (together with Bitcoin Instruments, “Bitcoin Investments”).

 

The Fund is an actively managed exchange-traded fund (“ETF”) and should not be confused with one that is designed to track the performance of a specified index.

 

The Fund’s strategy seeks to provide total return byactively managing the Fund’s investments in Bitcoin Investments.

Bitcoin’s solid performance in early August reflected that of gold’s amidst the selloff in stocks and bonds around the world due to the growing apprehensions over North Korea’s nuclear threat.

And the latest moves this weekend in the crypto world suggest gold will open well north of $1300 tonight.

 

end

A must see interview:  Ronan Manly interviewed by Real Vision. They talk about the fractional reserve market for gold (Ponzi) and how their is considerable danger to investors holding exchange traded funds

 

(Ronan Manly/Bullion star/Real Vision/Pal)

 

The Wall Street Journal still is not ready to write about how gold is rigged, swapped etc.

(courtesy Chris Powell/GATA)

 

Wall Street Journal still isn’t ready to question central banking

 Section: 

12:42p ET Friday, August 11, 2017

Dear Friend of GATA and Gold:

The Wall Street Journal’s feeble attempt this week to acknowledge the issue of gold market rigging by the U.S. government at least landed on the newspaper’s front page today. You can see its display at the lower left side of the page here:

http://www.gata.org/files/WallStreetJournalFrontPage-08-11-2017.jpg

The report signifies that the situation with gold has become crazy enough that it now can be discussed in polite company. The report also signifies that no one who wants to maintain respectability can yet pose the right specific questions to anyone in authority. Even former U.S. Rep. Ron Paul, hero of limited government and sound money, always declined to pose the right specific questions to the right people despite his long membership on the House Financial Services Committee, during which he often got a few minutes to confront Federal Reserve and Treasury Department officials but much preferred to make speeches instead.

Note how artfully the Journal’s report was written and edited. It’s posted at GATA’s internet site here:

http://www.gata.org/node/17562

Through comments by experts associated with GATA’s work and views — Bullion Star’s Ronan Manly, Sprott Asset Management’s John Embry, GoldMoney’s James Turk, futures market analyst James McShirley, and Peter Boehringer, founder of the movement in Germany to repatriate that country’s gold — the report cites complaints and suspicion that the U.S. government is involved with other central banks in leasing and swapping gold to control the monetary metal’s price.

As it pursued the issue, the Journal was given documentation of this by GATA, including:

— Federal Reserve Board member Kevin M. Warsh’s letter to GATA’s lawyer in 2009 admitting the Fed’s participation in gold swaps:

http://www.gata.org/node/7819

— Warsh’s own essay in the Journal in 2011 in which he asserted that “policy makers are finding it tempting to pursue ‘financial repression’ — suppressing market prices that they don’t like”:

http://www.gata.org/node/10839

— The secret March 1999 report of the staff of the International Monetary Fund confirming that central banks conceal their gold leasing and swapping to facilitate their surreptitious interventions in the currency markets:

http://www.gata.org/node/12016

— And New York Federal Reserve Bank President William Dudley’s videotaped refusal in March 2016 to answer in public a question about gold leasing and swapping by the Fed:

http://www.gata.org/node/16341

But having given voice to these complaints and suspicion, the Journal declined to question any Federal Reserve or Treasury Department official about them. This violated the most elementary principle of journalism — to report all sides of a story, especially when someone in the story has been criticized or accused.

Of course the Fed and Treasury don’t want to tell their side here, and in fairness to the Journal it must be acknowledged that just giving voice to complaints about central banking is politically incorrect in the extreme. Committing actual journalism against central banking would be treason to the elite that controls the powerful realm from which the Journal takes its very name.

After all, as was explained by the assistant to the prime minister in “Yes, Prime Minister,” the BBC’s brilliant comedy series of some years ago, “The only way to understand the press is to remember that they pander to their readers’ prejudices”:

https://www.youtube.com/watch?v=DGscoaUWW2M

Defective as it is, the Journal’s report will reach a wide audience and spread suspicion. The report was linked for a few hours on the Drudge Report internet site.

But it may be a while before The Wall Street Journal thinks that its readers are ready to be told that the market economy the newspaper long has purported to defend has become a predatory illusion, and longer still before the newspaper is ready to admit that it knowingly has helped to sustain this illusion.

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

* * *

end

It did not take long for people to scam individuals.  In London scam artists were arrested after cold calling individuals to buy fake cryptocurrencies

(courtesy London’s Telegraph/GATA)

 

Police shut down scam ‘cryptocurrency boiler room’ in London financial distrct

 Section: 

By Cara McGoogan
The Telegraph, London
Friday, August 11, 2017

Police have shut down a fraudulent cryptocurrency business in the City of London after it was found to be cold calling investors and attempting to sell them fake online money.

Fraudsters allegedly set up the business in London’s square mile in an attempt to legitimise their activity persuading victims to invest in a fictional cryptocurrency.

The City of London Police arrested a man on Wednesday on suspicion of helping to set up the scam call centre, or “boiler room,” on Old Broad Street, which is around the corner from the Bank of England.

The man is accused of trying to entice victims to invest in a fictional cryptocurrency, the police said. …

… For the remainder of the report:

http://www.telegraph.co.uk/technology/2017/08/11/police-shut-scam-crypto…

 

END

China’s domestic gold market

bullionstar/Ronan Manly)

 

Bullion Star’s primer on China’s domestic gold market

 Section: 

1:27p ET Sunday, August 13, 2017

Dear Friend of GATA and Gold:

Bullion Star this weekend published its primer on the Chinese domestic gold market, the world’s largest physical gold market and perhaps the gold market most controlled by government. The primer is headlined “Mechanics of the Chinese Domestic Gold Market” and it’s posted here:

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

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

 

 

END

 

 

Reuters reports that India’s gold imports are rebounding in number due to many factors including a good monsoon.

(courtesy Reuters/GATA)

 

 

 

India’s gold imports rebound on restocking, good monsoon, top refiner says

 Section: 

By Rajendra Jadhav
Reuters
Sunday, August 13, 2017

PANAJI, India — India’s gold imports are likely to jump by a third in 2017 to 750 tonnes on restocking by jewellers and as good monsoon rainfall is expected to boost demand in rural areas during the upcoming festive season, a leading refiner told Reuters.

Higher imports by the world’s second biggest consumer will support global prices, which are trading near their highest level in two months, but could widen the country’s trade deficit.

“Demand and imports are normalising after taking a hit last year. Jewellers are restocking after destocking last year,” said Rajesh Khosla, managing director of MMTC-PAMP India, the country’s biggest refinery. …

… For the remainder of the report:

https://in.reuters.com/article/india-gold-imports-idINKBN1AT053

END

 

GATA Chairman interviewed by Goldseek

 

(courtesy GATA/Bill Murphy/Chris Powell)_

On GoldSeek Radio, GATA Chairman Murphy looks for key to gold’s next rise

 Section: 

8p ET Sunday, August 13, 2017

Dear Friend of GATA and Gold:

GATA Chairman Bill Murphy is interviewed today by GoldSeek Radio’s Chris Waltzek about what it will take to push the monetary metals into a new bull market. The interview is eight minutes long and begins at the 17:15 mark here:

http://news.goldseek.com/radio/1502684603.php

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

 


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

 
 

1 Chinese yuan vs USA dollar/yuan WEAKER 6.6720 (DEVALUATION SOUTHBOUND   /OFFSHORE YUAN MOVES WEAKER TO ONSHORE AT   6.6874/ Shanghai bourse CLOSED UP 28.82 POINTS OR 0.90%  / HANG SANG CLOSED UP 366.72 POINTS OR 1/36% 

2. Nikkei closed DOWN 192.64 POINTS OR .98%    /USA: YEN RISES TO 109.72

3. Europe stocks OPENED DEEPLY IN THE GREEN     ( /USA dollar index RISES TO  93.38/Euro DOWN to 1.1794

3b Japan 10 year bond yield: FALLS  TO  +.058%/ GOVERNMENT INTERVENTION    !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 114.34/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  48.49 and Brent: 51.72

3f Gold UP/Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO  +.425%/Italian 10 yr bond yield UP  to 2.045%    

3j Greek 10 year bond yield FALLS to  : 5.55???  

3k Gold at $1280.50  silver at:16.97 (8:15 am est)   SILVER BELOW  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 3/100 in  roubles/dollar) 59.81-

3m oil into the 48 dollar handle for WTI and 51 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 DEVALUATION SOUTHBOUND 

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 109.72 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  0.9689 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1427 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

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

3r the 10 Year German bund now POSITIVE territory with the 10 year FALLING to  +0.425%

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 2.220% early this morning. Thirty year rate  at 2.816% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

VIX Tumbles, S&P Futures, Global Stocks Rebound Sharply As Korea Fears Fade

 

The VIX tumbled by nearly 3 vols, down to 13.10 last, or over 18% lower and global stocks and S&P futures rebounded sharply on Monday as tensions over an imminent conflict with Pyongyang receded after U.S. officials played down the likelihood of a nuclear conflict with North Korea, recovering from fears of a U.S.-North Korea nuclear standoff drove them to the biggest weekly losses of 2017, while the dollar too rose off four-month lows it had hit against the yen.

As DB summarizes the latest events in the ongoing N.Korean crisis, this could be a pivotal week in the stand-off as last week Kim Jong-un did say that they would be ready to attack Guam by “mid-August” which if we are being literal is this week. However a lack of much news on the story over the weekend is surely a positive for now. Indeed the CIA’s director Pompeo tried to calm nerves by speaking to Fox news on Sunday, noting that “…I’ve seen no intelligence that would indicate that we’re in (the cusp of a nuclear war) today…” and would not be surprised if NK tested another missile. Further, national security adviser McMaster also said there’s no indication war will break out. Perhaps these comments were a response to Trump’s comments on Friday that “military solutions are…locked and loaded, should NK act unwisely…”.

European shares bounced after falling nearly 3% last week, with the STOXX 600 up 0.7% following on from a 0.9 percent jump in MSCI’s index of Asia-Pacific shares outside Japan. The Stoxx Europe 600 Index headed for its first gain in four days, tracking increases across markets including South Korea. As the chart below shows, Still, Europe may be due for a pullback: the MSCI Europe Index hasn’t had a 10% correction in more than a year.

Gains were led by bounces in Australia, Hong Kong and South Korea while the MSCI world index rose 0.2%. That said, as the following chart from Cantillon Consulting shows, the MSCI world index is finally testing the support of the channel established during the Trump reflation move: it either snaps or rebounds to new highs.

Japan failed to partake in the region’s gains however, slipping 1 percent to three-month lows despite an impressive GDP print showing robust 1.1% Q2 growth in Japan (more below), driven by worries over the potential impact of the yen’s recent surge against the dollar. Japanese investors also repatriated cash held overseas, keeping the USDJPY below 110. The dollar rose 0.5 percent to 109.70 after slipping to 108.720 on Friday, its weakest since April 20. Against a basket of currencies it firmed 0.2 percent, rising off last week’s 10-day lows .

“As long as the geopolitics ease, we look for dollar/yen to gradually grind higher, back above the 110.00 level, along with gently rising U.S. yields,” ING Bank analysts told clients.

“The risk aversion has stabilized and investors have gotten used to the North Korea situation a little bit – as long as it doesn’t escalate further,” said Daniel Lenz, a strategist at DZ Bank in Frankfurt.

That said, expectations of an all clear may be premature: North Korea’s Liberation Day celebration on Tuesday to mark the end of Japanese rule could see tensions rise again, markets are relieved that the weekend had passed without more rhetoric. This may be reflect in the ongoing surge in bitcoin, which jumped for the second consecutive weekend, and hit a new all time high above $4,200 this morning.

In overnight data, Japan printed the strongest GDP in over two years, after the economy was said to have grown at a 4% annualized rate in Q2, a 6th consecutive quarter of growth. Meanwhile, economic data out of China disappointed across the board as Chinese retail sales and industrial production for July missed estimates.

South Korea’s won led a rebound in most Asian emerging-market currencies after several top U.S. national security officials said a nuclear war with North Korea wasn’t imminent. The MSCI Asia index ex Japan advanced for the first time in four days amid steady sovereign bonds. “With the geopolitical concerns surrounding North Korea appearing to stabilize a little, we could see the USD/Asia complex be fairly range-bound today with a slight downward bias,” said Julian Wee, a senior market strategist at National Australia Bank in Singapore. Japan’s yen weakened, after rallying the most since May last week on haven demand. Gold halted its advance amid the efforts by U.S. officials to soothe the escalating tensions on the Korean peninsula.  Bloomberg Dollar Spot Index jumps 0.23%, first gain in three days

In China, the yuan gave up earlier gains with the offshore exchange rate falling most in six weeks as the dollar jumps and the People’s Bank of China sets a weaker-than-expected daily reference rate. The CNY dropped 0.05%, erasing an advance of as much as 0.16%, to 6.6700 per dollar, after the PBOC strengthened the yuan reference rate 0.06% to 6.6601, weaker than Mizuho Bank’s est. of 6.6573 and Nomura’s 6.6562.

In rates, 10-year TSY yields inched higher after falling on Friday to six-week lows following data showing that U.S. consumer prices rose just 0.1 percent last month, below economists’ forecast of a 0.2% gain. Euro zone bond yields also rose, with investors interpreting the robust Japanese data as a sign that the global economy is indeed on the mend. While Japan is not expected to dismantle its stimulus program any time soon, analysts reckon that signs of global recovery gives euro zone and U.S. central banks a reason to start rolling back some of their asset purchases. The yield on Germany’s 10-year government bond was up 4.5 bps to 0.43%, a move mirrored by most other euro zone debt.

Commodities trading was mixed overnight with safe-haven gold (-0.2%) pulling back from 9-week highs amid the improved risk sentiment. Demand for copper was subdued alongside weaker iron ore prices after Chinese Industrial Production data for July missed expectations, while WTI was quiet overnight with prices unchanged during Asia trade. Crude prices seeing a modest move lower, however prices are still up significantly from last week’s gains with Brent remaining above $52. Much like fixed income, gold and silver prices are bearing the brunt of a more risk on environment. Libya’s top oil field is said to drop on security threats.

Bulletin Headline Summary from RanSquawk

  • Equities in the Green
  • Brexit Whispers Once Again Begin

Market Snapshot

  • S&P 500 futures up 0.6% to 2,454.30
  • VIX down 2.94 to 13.10, -18.33%
  • STOXX Europe 600 up 0.8% to 375.08
  • MSCI ASIA down 0.1% to 158.25
  • MSCIA Asia ex Japan up 0.8% to 520.33
  • Nikkei down 1% to 19,537.10
  • Topix down 1.1% to 1,599.06
  • Hang Seng Index up 1.4% to 27,250.23
  • Shanghai Composite up 0.9% to 3,237.36
  • Sensex up 0.9% to 31,494.28
  • Australia S&P/ASX 200 up 0.7% to 5,730.41
  • Kospi up 0.6% to 2,334.22
  • German 10Y yield rises 4bps to 0.42%
  • Euro down 0.2% to 1.1803 per US$
  • US 10Y yield rises 2bps to 2.21
  • Italian 10Y yield falls 1bp to 2.02%
  • Spanish 10Y yield fell 2bps to 1.44%
  • Gold spot down 0.6% to $1,281.92
  • U.S. Dollar Index up 0.3% to 93.32

Top Overnight News

  • Two top U.S. national security officials sought to assuage fears of imminent nuclear war with North Korea following days of heightened rhetoric by President Donald Trump, as America’s top general prepares to meet with South Korea’s leader
  • Patrick Drahi’s Altice NV is considering asking Canada Pension Plan Investment Board and BC Partners to help fund a potential bid to buy cable broadcaster Charter Communications Inc.
  • JPMorgan Chase & Co. is proposing to charge as little as $10,000 a year for equity research, the lowest price to emerge so far, as the Wall Street giant seeks to grab market share when a European ban on free analysis for clients is imposed
  • Venezuela will defend itself from the “madness” of Donald Trump, its defense minister said, a day after the U.S. president said he’s considering a military option in response to the escalating political and economic crisis in the oil-producing nation
  • The pros who make their living forecasting the economy overwhelmingly expect President Donald Trump and his fellow Republicans to push through tax cuts in time for next year’s congressional elections
  • Rovio Entertainment Oy is planning an initial public offering as early as next month that could value the maker of the Angry Birds mobile games and movie at about $2 billion
  • Angry Birds Maker Is Said to Plan IPO at $2 Billion Value
  • Toshiba Chip Sale Talks Are Said to Stall On Payment Timing
  • Cathay ‘Begging With Golden Bowl’ to Win Back Chinese Fliers
  • Alibaba and Tencent Looking Riskier And Placing Bigger Bets
  • Stada Appeals to Hedge Funds to Push Through Bain, Cinven Bid
  • MGM Resorts Bets on Wealthier Masses to Catch Up in Macau
  • Survival of Brokers’ Morning Notes in Balance as MiFID Looms
  • China Economy Loses Momentum as Factory Output, Investment Slow
  • China July industrial output 6.4% vs 7.1% est; retail sales 10.4% vs 10.8% est; fixed-asset investment 8.3% vs 8.6% est
  • Japan 2Q GDP 1.0% vs 0.6% est; y/y 4.0% vs 2.5% est; business spending 2.4% vs 1.2% est; private consumption 0.9% vs 0.5% est
  • RBA’s Kent says interest rates unlikely to rise any time soon; RBA will be cautious when time to normalize
  • New Zealand 2Q retail sales 2.0% vs 0.7% estimate
  • Macri candidates leading key provinces in Argentina’s primaries

Asian equity markets traded mostly higher following the rebound of US stocks last Friday on Wall Street where the NASDAQ outperformed amid tech strength, while a miss on CPI dampened prospects of a December Fed hike. The improvement in risk sentiment was also supported as some geopolitical concerns abated which saw ASX 200 (+0.7%) and KOSPI (+0.6%) positive throughout the session, however Nikkei 225 (-0.8%) bucked the trend despite strong GDP numbers, as Friday’s Asian session losses caught up with the index on its return from a long weekend. Elsewhere, Hang Seng (+1.2%) and Shanghai Comp (+0.4%) were positive following a firm liquidity operation by the PBoC, although gains in the mainland bourse were capped as Industrial Production and Retail Sales data added to the recent trend of disappointing Chinese data releases. Finally, 10yr JGBs traded flat as participants mulled over strong GDP numbers and losses in Japanese stocks, with demand also dampened from a lack of a Rinban announcement by the BoJ.
Japanese GDP (Q2 P) Q/Q 1.0% vs. Exp. 0.6% (Prey. 0.3%). Japanese GDP Annualized (Q2 P) 4.0% vs. Exp. 2.5% (Prey. 1.0%);

Chinese data reported overnight was weak across the board:

  • Chinese Industrial Production (Jul) Y/Y 6.4% vs. Exp. 7.1% (Prey. 7.6%).
  • Chinese Industrial Production YTD (Jul) Y/Y 6.8% vs. Exp. 6.9% (Prey. 6.9%).
  • Chinese Retail Sales (Jul) Y/Y 10.4% vs. Exp. 10.8% (Prey. 11.0%).
  • Chinese Retail Sales YTD (Jul) Y/Y 10.4% vs. Exp. 10.5% (Prey. 10.4%)

PBoC injected CNY 110bln in 7-day reverse repos and CNY 100bln in 14-day reverse repos. PBoC set CNY mid-point at 6.6601 (Prey. 6.6642) According to the China Commerce Ministry, China is to ban some imports from North Korea based on US resolution, the ban is to include imports of Iron ore, Coal, Lead and seafood (effective Tuesday August 15th)

Top Asian News

  • Hong Kong Stock Exchange Trading Hall to Close in October: SCMP
  • Alibaba, Tencent, Telstra Options Overprice Earnings-Day Moves
  • Gold Giant Gains to Record as India’s Tax Shift Seen as Plus
  • HSBC Lowers USD/SGD Forecast With MAS Seen Tightening in April
  • Sunac Is Said to Consider Strategic Investor for Leshi: Caixin

A relief rally in Europe to begin the week with much of the gains stemming from financials, while RWE is making solid gains after strong earnings results. Elsewhere, Danone are among the best performers this morning following reports that Kraft and Coke are seen as possible buyers for the company. Demand for riskier assets amid the quiet newsflow over tensions on the Korean peninsula has subsequently hampered EGBs. German curve has been bear steepening this morning, while peripheral spreads are slightly tighter. UK Chancellor Hammond and Trade Minister Fox stated that the Brexit transition period will be limited and will be intended to avert a cliff edge. The ministers also added that the transition period cannot be an alternate path for staying in the EU. Markets have been unfazed by the speech, with the indecision and uncertainty continuing to be evident in sterling.

Top European News

  • Hammond, Fox Say Transition Won’t Be Back Door to Staying in EU
  • Pandora Shares Fall; Carnegie Says FY Guidance Is ‘Stretched’
  • Draghi Gets Help From Euro Zone’s Northerners Wanting More Pay
  • London’s Big Ben Bell to Fall Silent Next Week for Four Years
  • Merkel’s Election Rivals Roll Out the Big Guns to Narrow Gap
  • Allianz Looks to Buy Bunds After ECB Gives Tapering Steer
  • Brace for Pound Turbulence as Economics and Politics Collide

In currencies, as newsflow covering the spat between North Korea and the US simmers down, the USD index has been trading at better levels against the Yen which has pressured major pairs. In turn, EUR tripped through 1.18 to hover near session lows. Poor data out of China damped AUD, as Chinese Industrial Production and Retail Sales missed across the board. As the data was digested, AUD/USD came off best levels, and trades around session lows, through 0.79 once again. A clear break through 0.7840 is needed to indicate any clear change of direction. Yen has seen some unwinding of the risk off positions taken throughout last week’s trade, amid the growing geopolitical tensions. USD/JPY’s June’s low just through 109.00 saw some bids waiting, as the pair has come off best levels, with bulls likely to look to test 110.00.  The pound has seen rangebound trade throughout the Asian session despite Brexit commentary emerging from the woodworks once again. Comments from UK Chancellor Hammond and Trade Minister Fox stated that the Brexit transition period will be limited and will be intended to avert a cliff edge. The ministers also added that the transition period cannot be an alternate path for staying in the EU. Markets have been unfazed by the speech, with the indecision and uncertainty continuing to be evident in sterling.

In commodities, trading was mixed overnight with safe-haven gold (-0.2%) mildly pulling back from 9-week highs amid an improvement in global risk sentiment. Conversely, demand for copper was subdued alongside weaker iron ore prices after Chinese Industrial Production data for July missed expectations, while WTI quiet overnight with prices unchanged during Asia trade. Crude prices seeing a modest move lower, however prices are still up significantly from last week’s gains with Brent remaining above USD 52. Much like fixed income, gold and silver prices are bearing the brunt of a more risk on environment. Libya’s top oil field is said to drop on security threats.

On today’s calendar there is no major economic data and no Fed speakers

DB’s Jim Reid concludes the overnight wrap

Hopefully you all had a good weekend? Mine involved picking up our new car and having to deal with epic meltdown tantrums. On Saturday we took Maisie to the swings where she couldn’t stop smiling and laughing. She was so so happy. We then said it was time to go home and the response was to throw herself on the floor and roll about in pain like a diving footballer looking for a penalty, scream and shout, cry at the top of her voice and basically embarrass us. The same thing happened the following day at the first of her friends to have a second birthday party. She had a wonderful time and wouldn’t stop giggling for two hours. Everybody remarked what a credit to us she was. Then when she was told we had to leave the humiliation of us as parents began. The only thing that calmed her down on both days was her new favourite TV show Peter Rabbit!! TV is becoming our saviour as bad parents……… until we turn it off and then the tantrums start again!!!!

Markets were obviously in semi tantrum mode over the course of the last seven days. This time last week we suggested how it was likely we would now be in for a summer lull for a couple of weeks and that it was set to be extremely quiet. We went on to say that if anything was guaranteed to ensure that something would blow up then it was that comment. So we were half right! To be fair in July the one thing that we raised that we thought could break the summer calm was that Mr Trump might look to distract from his legislative difficulties so far and up the ante against Korea. Tensions have been bubbling for a few weeks. It was impossible to predict the timing and a big risk to position for it but it was an observable risk. However it does take two to tango and Kim Jong-un has been highly provocative of late.

This could be a pivotal week in the stand-off as last week Kim Jong-un did say that they would be ready to attack Guam by “mid-August” which if we are being literal is this week. However a lack of much news on the story over the weekend is surely a positive for now. Indeed the CIA’s director Pompeo tried to calm nerves by speaking to Fox news on Sunday, noting that “…I’ve seen no intelligence that would indicate that we’re in (the cusp of a nuclear war) today…” and would not be surprised if NK tested another missile. Further, national security adviser McMaster also said there’s no indication war will break out. Perhaps these comments were a response to Trump’s comments on Friday that “military solutions are…locked and loaded, should NK act unwisely…”. On this whole episode I’m not sure what it is about Augusts. In my career, this month has often created volatility from nowhere. With people on holiday thin trading can certainly exacerbate market wobbles. Interestingly the WSJ over the weekend discussed how North Korean provocations haven’t had much impact on markets in the past. They examined 80 international incidents involving their nuclear program since 1993 and their impact on financial markets. They suggested that there hasn’t been much of a risk off in response to nuclear escalations. I suppose the reality is that its noise and bluster until it isn’t. In the last 20 years it’s been mostly noise and then diplomacy. The worry that markets might have at the moment is that the Trump administration could be unpredictable relative to his predecessors. With his popularity low and legislative failures hurting then it’s possible to envisage a scenario where he reacts more aggressively than earlier presidents.

So far the sell-off has been relatively measured it’s just that in the context of very very calm markets recently it’s still been a bit of a shock. In our list of global assets we regularly review, Silver (+4.9%) and Gold (+2.4%) were the best performers last week. Gilts (+1.1% – the longest duration govt bond market), Bunds (0.6%) and Treasuries (+0.5%) were also towards the top of the leader board and showing pretty strong weekly numbers for fixed income. In terms of equities the highlights were the Nikkei (-1.1% but closed Friday), S&P 500 (-1.4%), FTSE (-2.1%), DAX (-2.3%), FTSE-MIB (-2.7%) and the IBEX (-3.5%). Note that European Banks (-4.0%) were one of the worse performers mostly responding to the drop in yields. Diving down more specifically on this for 10 year yields we saw Bunds -8bps, Gilts, -8bps, UST -6bps, OATs -6bps, Spain flat and Italy +4bps. In credit the sell-off was fairly measured with Crossover +11bps, iTraxx Europe +3bps, Sen Fins +2bps and US CDX IG +2bps on the week. Overall these type of moves wouldn’t normally merit a specific mention but in the low vol world they have shaken things up a bit. We’d also note the VIX rose 55% last week from 10.0 to 15.51 but off the week’s (and year’s) highs of 16.04. Thursday  actually saw the highest volume day ever for VIX options.

For equities so far the moves haven’t been that large. In today’s PDF we reproduce a table from DB’s Binky Chadha looking at major geo-political events and US market sell-off. So spreading the net wider than just North Korea and also at actual events rather than aggressive rhetoric. He highlights 28 such events since the start of WWII and suggests that the average behaviour of the S&P 500 around geopolitical events is of a sharp short-lived selloff with 1) a median sell off of -5.7%, 2) 3 weeks to find a bottom, 3) Another 3 weeks to recover to prior levels and 4) Significantly higher markets 3 months (+6.5%) and 12 months (+13%) on.

This morning, Asian markets were broadly higher as new escalations in the conflict is good news for now. Japan’s preliminary 2Q GDP beat expectations at 1% qoq (vs. 0.6% expected) and 4% yoy (vs. 2.5% yoy), but the Nikkei fell 0.8%, partly reflecting a catch up effect as last Friday was a holiday. Also, our Japanese economist believe the 2Q trends appears too good to be sustained, partly as major leading indicators of investment appear to have already peaked. Elsewhere, Chinese data was softer than expectations, with the July IP at 6.4% yoy (vs. 7.1%, 7.6% previous) and retail sales at 10.4% yoy (vs. 10.8%). Chinese markets have dipped a little after the news, but have continued to strengthen afterwards, with the Hang Seng up 1.2% and Chinese bourses up 0.4% to 1.7% as we type. The Kospi is up 0.7% and the Won up 0.4%.

Onto Friday’s US July inflation numbers, which missed for the fifth consecutive month. Headline inflation was lower than expected at 0.1 % mom (vs. 0.2%) and 1.7% yoy (vs. 1.8%), but core inflation was in line at 1.7% yoy. DB’s Luzzetti argued there were some outliers and saw some tentative signs of an improving underlying trend (medical services inflation). Even so, the team acknowledge that it is difficult to dismiss the string of recent soft inflation prints. Looking ahead, core CPI inflation is still expected to remain near recent levels in yoy terms through 2017, but on a mom basis, DB expects a rebound through year end, which if it occurs would support a Dec 17 rate hike. However that hike must be more in doubt at the moment.

Elsewhere, the Dallas Fed’s Kaplan said that whilst he was a strong advocate of the two recent rate hikes, “I at this stage want to see continued evidence – or more evidence – that we’re making progress on reaching our inflation objective, …I’m willing to be patient”. According to Bloomberg’s implied probability function, the chance of a rate hike in Dec 17 has fallen from ~38% to ~26% post the CPI data and Fed speeches.

Elsewhere, in an attempt to get Brexit talks back on track. The UK government plans to issue three discussion papers ahead of the next round of talks on 28th August. The papers could set out proposals for Northern Ireland and borders with Ireland, continuity on the availability of goods and confidentially & access to official documents after Brexit.

Before we take a look at today’s calendar, we wrap up with other data releases from Friday. In the US, there was the aforementioned CPI stats. Over in Europe, the final July inflation readings for Germany and France was released, both had no change relative to their flash readings. For Germany, it was 0.4% mom and 1.5% yoy, and for France, it was -0.4% mom and 0.8% yoy.

To the week ahead now. Today starts with the Eurozone’s industrial production (IP) stats for June. Onto Tuesday, Japan’s final reading for June IP and capacity utilisation stats as well as German’s preliminary 2Q GDP stats will be due early in the morning. Then UK’s July CPI, PPI and retail price index are due. Over in the US, there will be quite a lot of data, including: July retail sales, import / export price index for July, empire manufacturing stats, NAHB housing market index and US foreign net transactions for June. Turning to Wednesday, the Eurozone and Italy’s preliminary 2Q GDP stats are due. Then for UK, we have the July jobless claims and claimant count rate and the June ILO unemployment data. Across the pond, we get the FOMC meeting minutes along with the July housing starts and MBA mortgage applications stats. For Thursday, Japan’s July trade balance, exports/ imports data along with France’s ILO unemployment rate will be out early in the morning. Then the Eurozone’s July CPI and UK’s July retail sales are due. In the US, quite a lot of data again, including: July IP, conference board US leading index, the Philadelphia Fed business outlook survey, initial jobless claims and continuing claims stats. Finally on Friday, Germany’s PPI will be due early in the morning. Follow by the Eurozone’s June current account stats and construction output data. In the US, various University of Michigan sentiment index are also due

 END

3. ASIAN AFFAIRS

i)Late SUNDAY night/MONDAY morning: Shanghai closed UP 28.92 POINTS OR 0.90%   / /Hang Sang CLOSED UP 366.72 POINTS OR 1.36% The Nikkei closed DOWN 192.64 POINTS OR .98%/Australia’s all ordinaires CLOSED UP 0.61%/Chinese yuan (ONSHORE) closed DOWN at 6.6720/Oil DOWN to 48.49 dollars per barrel for WTI and 51.72 for Brent. Stocks in Europe OPENED DEEPLY IN THE GREEN , Offshore yuan trades  6.6874 yuan to the dollar vs 6.6720 for onshore yuan. NOW THE OFFSHORE IS WEAKER  TO THE ONSHORE YUAN/ ONSHORE YUAN WEAKER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS MUCH WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE SLIGHTLY STRONGER DOLLAR. CHINA IS NOT HAPPY TODAY 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

NORTH KOREA/USA

North Korea states that its army is “on standby” waiting for an order to attack

(courtesy zero hedge)

.

North Korea Says Army Is “On Standby Waiting For An Order Of Attack”

Global markets are closed for the weekend, so we will need to wait until tomorrow evening to see how investors react to the latest back-and-forth between the North Korean government and President Donald Trump. In North Korea’s latest salvo in its war of words, a state-run newspaper declared in an editorial that the country’s Paektusan army is now “on standby to launch fire into its [the US’s] mainland, waiting for an order of final attack.”

The comments follow a Friday report from KBS World Radio, the official international broadcasting station of South Korea (which is owned by the Korean Broadcasting System), that “North Korean authorities have dispatched emergency standby orders to the leaders of the ruling Workers’ Party committees and civil defense units.”

Here’s more from Fox News:

“North Korea took its turn Saturday in the country’s escalating, back-and-fourth with President Trump, with the state-run newspaper saying leader Kim Jung Un’s revolutionary army is “capable of fighting any war the U.S. wants.”

The assertion was made in an editorial that also states the Paektusan army is now “on the standby to launch fire into its mainland, waiting for an order of final attack.”

 

The editorial also argues that the United States ‘finds itself in an ever worsening dilemma, being thrown into the grip of extreme security unrest by the DPRK. This is tragicomedy of its own making. … If the Trump administration does not want the American empire to meet its tragic doom in its tenure, they had better talk and act properly.’”

Late last week, in a response to domestic criticism about Trump’s bellicose commentary, the president said that his rhetoric concerning North Korea – particularly his now infamous promise to respond with “fire and fury and…power” if North Korean leader Kim Jong Un continues to threaten the US – may not have been “tough enough.”

* * *

Fox also reported that Chinese leader Xi Jinping pleaded with Trump to tone down his rhetoric during a Friday night phone call with the US president.

“During Trump’s phone conversation Friday with Xi, the Chinese leader also requested that the U.S. and North Korea tone down their recent rhetoric and avoid actions that could worsen tensions between the two nations, Chinese Central Television reported.

 

‘At present, the relevant parties must maintain restraint and avoid words and deeds that would exacerbate the tension on the Korean Peninsula,’ Xi was quoted as saying.”

As we noted last night, it doesn’t look like Xi was able to sweet-talk Trump into once again delaying an investigation into China’s trade practices that many expect will lead to an all-out trade war between the world’s two largest economies. China is North Korea’s only major benefactor, and is responsible for 90% of the country’s foreign trade. Trump’s decision comes despite an IMF warning last month that “inward-looking” policies could derail a global recovery that has so far been resilient to raising tensions over trade. We also have noted the tendency, throughout history, for trade wars to blossom into the real thing…

Indeed, it seems that relations between the two world powers are deteriorating once again even after Trump praised China for signing off on the latest round of UN Security Council sanctions against the North – which are expected to reduce North Korea’s exports by more than $1 billion.

But despite Xi’s repeated jawboning and half-hearted promises to act, China has so far been reluctant to take meaningful action to curb North Korea’s nuclear program. Now any effort would probably be too little, too late, as the US and Japan now believe the North has developed a nuclear warhead small enough to fit inside on of its ICBMs. This newfound capability could allow the North to deliver a nuclear payload to the US mainland – a fact that was not lost on global markets this week.

The escalating tensions between NK and the US – particularly Kim Jong Un’s threat to launch a missile at Guam, a US island territory in the Pacific – helped keep the S&P 500 below its 50DMA for the longest stretch since April

…and the Chinese VIX to its highest level of the year.

On Monday, we will learn if US investors are sufficiently terrified to dump stocks…or if “buy-the-f**king-all-out-nuclear-war-dip becomes the mantra of the day.

end

 

China announces today that it will halt all imports of coal, iron ore, iron and seafoods from North Korea beginning today. These are the dominant importing items from North Korea and it will cripple the nation. It seems that Trump’s threat of tariffs against China is working.

(courtesy zero hedge)

 

 

China Bans Coal, Lead, Iron Imports From North Korea

China’s Ministry of Commerce said that Beijing will halt imports of coal, iron, iron ore and seafood from North Korea starting on Tuesday, cutting an important economic lifeline for the Pyongyang regime, as it implemented a package of sanctions passed by the United Nations Security Council on August 6.

China accounts for roughly 90% of North Korean trade but moved earlier in February to suspend North Korea’s coal imports until the end of the year. Coal normally accounts for about half of North Korea’s exports, but despite the coal ban, overall trade between the two countries remained healthy according to WaPo.

Last month China announced that imports from North Korea fell to $880 million in the six months that ended in June, down 13% from a year earlier. Notably, China’s coal imports from North Korea dropped precipitously, with only 2.7 million tons being shipped in the first half of 2017, down 75 percent from 2016. But a 29 percent spike in Chinese exports to North Korea — North Korea bought $1.67 billion worth of Chinese products in the first six months of the year — helped push total trade between the two countries up 10 percent between January and June, compared with the same period last year.

While the latest move to halt imports of iron, iron ore, lead and lead ore, and seafood products will put significantly more pressure on Pyongyang, it is unlikely to be enough to convince Pyongyang to abandon its nuclear program, which it sees as essential to its own survival, experts say.

The announcement comes after days of increasingly bellicose rhetoric between President Trump and North Korean leader Kim Jong-un, which however appears to have moderated somewhat in the past 48 hours when contrary to some expectations, there were no escalations – and no missile or nuclear tests by North Korea – over the weekend. Last weekend, the UN Security Council approved tough sanctions against Pyongyang with analysts estimating that the action could cost North Korea US$1 billion in foreign revenue a year. The sanctions were in response to North Korea’s two intercontinental ballistic missile tests last month, which Kim boasted could now strike any part of the United States.

Indicating China’s reluctance to implement the sanctions, Chinese Foreign Minister Wang Yi said in a regional forum last week that his country would pay a price for implementing the sanctions, given China’s traditional economic ties with North Korea.

On Monday Beijing also warned the Trump administration not to split the international coalition over North Korea by provoking a trade war between China and the United States. The warning comes as President Trump is expected to sign an executive memorandum Monday afternoon instructing his top trade negotiator to launch an investigation into Chinese intellectual property violations, a move that could eventually result in severe trade penalties.  In China, these proposed measures were seen as an attempt to put pressure on Beijing to act more strongly against North Korea, and at the same time an attempt to shift the blame for the world’s failure to rein in Pyongyang’s nuclear and missile programs onto China alone.

b) REPORT ON JAPAN

end

c) REPORT ON CHINA

Saturday:

Trump warns Xi that on  the USA will initiate tariffs and begin the trade war against China

(courtesy zero hedge)

Trump Warns Xi: Trade War With China Begins Monday

As if there weren’t enough geopolitical stress points in the world to fill a lifetime of “sleepy, vacationy” Augusts, late on Friday night President Trump spoke to Chinese President Xi Jinping and told him that he’s preparing to order an investigation into Chinese trade practices next week, according to NBC. Politico confirms that Trump is ready to launch a new trade crackdown on China next week, citing an administration official, a step that Trump delayed two weeks ago under the guidance of his new Chief of Staff Gen. Kelly, but now appears imminent. It is also an escalation which most analysts agree will launch a trade war between Washington and Beijing.

As Politico details, Trump on Monday will call for an investigation into China over allegations that the nation violated U.S. intellectual property rights and forced technology transfers, the official said. While it’s unclear how much detail Trump will get into in the announcement, administration officials expect U.S. Trade Representative Robert Lighthizer to open an investigation against China under Section 301 of the Trade Act of 1974. The ordering of the investigation will not immediately impose sanctions but could lead to steep tariffs on Chinese goods. Trump has expressed frustration in recent months over what he sees as China’s unfair trade policies.

As we discussed two weeks ago, Trump had planned to launch the trade investigation more than a week ago, but he delayed the move in favor of securing China’s support for expanded U.N. sanctions against North Korea, the senior administration official said.

The pending announcement also comes amid heightened tension between the United States and China, even after the Trump administration scored a victory in persuading Beijing to sign onto new United Nations sanctions on North Korea. Still, Trump has delayed trade action before, amid pressure from business groups and major trading partners:

Two Commerce Department reports examining whether to restrict steel and aluminum imports on national security grounds were expected by the end of June but have been bottled up in an internal review. Trading partners raised threats of retaliation and domestic steel users complained of being hurt by price increases and restricted supply.

The trade investigation will immediately strain relations between the U.S. and China as the two countries wrestle with the unpredictable situation over North Korea.  Should Trump follow through, the move will lay the groundwork for Trump to impose tariffs against Chinese imports, which will mark a significant escalation in his efforts to reshape the trade relationship between the world’s two largest economies. In other words, even if there is now conventional war announced with either North Korea or Venezuela, Trump’s next step is to launch a trade war against China.

“The United States government can, and does, work with countries to address serious concerns such as North Korea while also pursuing measures to address economic concerns, such as the theft of U.S. intellectual property,” a U.S. National Security Council official said.

It wasn’t immediately clear how China would react to the move.

When reports of the potential trade investigation first emerged more than a week ago, China’s Commerce Ministry stressed the importance of U.S.-China trade ties and of resolving differences “through dialogue and consultation.”

 

“We would like to emphasize that the Chinese government has always attached importance to intellectual property protection,” a spokesman said. “The results are there for all to see.”

Trump, who has been residing at his golf club in Bedminster, New Jersey, for the past week, plans to return to Washington on Monday to officially announce the trade investigation. The decision will not only take action against alleged Chinese violations of U.S. companies’ intellectual property rights, but could also be perceived as an attempt by the U.S. government to crank up the pressure on Beijing to rein in North Korea. “I think China can do a lot more,” Trump told reporters on Thursday. “And I think China will do a lot more.”

As CNN adds, the trade investigation is expected to be only one part of a multi-pronged push by the Trump administration to counter perceived Chinese trade abuses.  The administration has been eyeing other moves to rebalance the U.S.-China trading relationship. But analysts have cautioned that Trump faces a huge challenge in his desire to significantly reduce the U.S. trade deficit with China, which last year stood at more than $300 billion. “Protection measures against some specific items, such as steel and aluminum, may gain political favors, but are not likely to be of much help to rebalance trade,” economists at the Institute of International Finance wrote in a research note this week.

* * *

Meanwhile, as we reported previouslyChina state media signaled the nation would hit back immediately against any trade measures, as it has done in past episodesThis time around, the need to project strength domestically is compounded by the looming twice-a-decade leadership reshuffle that may further entrench President Xi Jinping’s power.

Chinese officials have mulled stemming U.S. imports should retaliation be necessary. Under a draft plan, soybeans have been singled out as the top product that can be dialed back, according to people familiar with the matter. Autos, aircraft and rare-earth commodities have also been identified as potential categories for restriction, the people said.

Still, Trump’s offensive comes at a very sensitive time for Beijing: just weeks ahead of the 19th Party Congress, when Xi Jinping wants everything in his economy to be perfect. “Ahead of the 19th Party Congress, the last thing that China will want is a trade war,” said Callum Henderson, a managing director for Asia-Pacific at Eurasia Group in Singapore. “It is also important that Beijing does not look weak in this context. As such, expect a cautious, proportional response.”

Of course, ultimately the big question – as Bloomberg puts it – is whether the Trump administration is willing to risk a trade war as it ups the ante. The IMF warned last month that “inward-looking” policies could derail a global recovery that has so far been resilient to raising tensions over trade. The problem, for both the US and China, is that as Trump gets increasingly more focused on distracting from his numerous domestic scandals, he is likely to take ever more drastic action in the foreign arena, whether that means “hot war” with North Korea, or trade war with China.

“So far, it’s all been posturing, with little action,”’ said Scott Kennedy, a U.S.-China expert at the Center for Strategic and International Studies in Washington. “Pressure is building to do something, so the U.S. doesn’t look like a complete paper tiger.”

And while we await the formal announcement on Monday and China’s retaliation, below again is a breakdown of the biggest US state winners and losers if and when trade war with China breaks out, from “Winners And Losers When Trade War Breaks Out Between The US And China

* * *

Who stands to lose – and win – if the U.S. takes aim at the unbalanced trade relationship with China? With total bilateral trade of more than half a trillion dollars a year, the list of potential losers is very long as Bloomberg analyzed recently. The most notable examples include:

  • U.S. companies such as Apple Inc., which assemble their products in China for sale in the U.S., and those tapping demand in China’s expanding consumer market.
  • U.S. agricultural and transport-equipment firms, which meet China’s demand for soy beans and aircraft.
  • Manufacturing firms from the U.S. that import intermediate products from China as an input into their production process.
  • Retailers including Wal-Mart Stores Inc. and the U.S. consumers that benefit from low-price imported consumer electronics, clothes and furniture.
  • Other trade partners caught in the crossfire of poorly-targeted tariffs. On steel, for example, U.S. direct imports from China account for less than 3% of the total — below Vietnam.

And while conventional wisdom is that the US has a chronic trade deficit with China – it does – the U.S. also runs a nearly $17 billion trade surplus with China for agricultural products. China consumes about half of U.S. soybean exports, America’s second largest planted field crop. Soybean farms are mostly located in the the upper Midwest (Illinois, Iowa, Indiana, Minnesota and Nebraska). The volumes are so significant that a spike in soybean exports was a noticeable contributor to GDP growth in the second half of last year as readers may recall. China is also a major buyer of U.S. aircraft, perhaps the only areas of manufacturing where the U.S. retains a competitive edge (though not for much longer). The U.S. also has an $8 billion dollar trade surplus with China in the transportation equipment category.

U.S. Trade Balance With China by Product

How about geographically?

It may come as a surprise that on a state-by-state basis, eight U.S. states are running surpluses with China, six of which supported Trump in last year’s presidential election, including West Virginia. In 2016, Louisiana registered the largest surplus, at 2.9% of the state’s GDP. Louisiana’s exports to China are likely inflated given that 60% of U.S. soybean exports are shipped through the Gulf coast. Washington state was second at 1.6% of GDP, largely due to aerospace exports.

Tennessee maintains the largest trade deficit with China at 6.5% of GDP, meaning tariff-induced increases in the price of imports could have the biggest impact on this state.

The biggest losers? Mississippi, Georgia, Illinois and  California, all of which maintain deficits at more than 3% of GDP.

For the sake of brevity, we will not discuss another, more troubling, aspect of conventional wisdom, namely that trade wars almost inevitably lead to real wars. Aside for the US military industrial complex, there are no winners there.

China slams Trump’s trade war as Xi states that it is basically a distraction from their “domestic turmoil”
(courtesy zero hedge)

China Slams Trump’s “Trade War” Announcement, Says It Is A Distraction From “Domestic Turmoil” In The U.S.

Today at 3pm, President Trump will sign a memo addressing “China’s laws, policies, practices, and actions related to intellectual property, innovation, and technology” effectively launching the first shot in what many predict will blossom into an all-out trade war with China. As discussed over the weekend, administration officials said Saturday that memo will direct U.S. Trade Representative Robert Lighthizer to consider investigating China over its IP policies, especially the practice of forcing U.S. companies operating in China to transfer technological know-how.

Predictably, China is not happy. In an editorial published in the China Daily, the government lashed out at Trump, warning him thatby “politicizing” trade, he risks “exacerbating” the US’s “economic woes,” and “poisoning” the relationship between the world’s two largest economies.

Here’s Reuters:

“In an editorial, the official China Daily said it was critical the Trump administration doesn’t make a rash decision it will regret.

 

“Given Trump’s transactional approach to foreign affairs, it is impossible to look at the matter without taking into account his increasing disappointment at what he deems as China’s failure to bring into line the Democratic People’s Republic of Korea,” the English-language paper said.

 

‘But instead of advancing the United States’ interests, politicizing trade will only acerbate the country’s economic woes, and poison the overall China-U.S. relationship.’”

For those who’ve been too busy enjoying their August vacation to keep track of all the international conflicts flaring up around the globe, Trump is preparing to order US Trade Representative Robert Lighthizer to launch an investigation under section 301 of the Trade Act of 1974. The law, which was commonly used during the Reagan administration, has fallen into disuse since the launch of the WTO. It has more recently been used as a tool by trade unions.  The investigation should pave the way for the US to take potentially aggressive retaliatory actions against China, such as imposing tariffs on Chinese imports or rescinding licenses for Chinese companies wanting to do business in the US.

During the campaign, Trump’s rhetoric about “punishing” the Chinese for their unfair trade practices helped differentiate his message from milquetoast centrists like “low energy” Jeb Bush. But after triumphing over Hillary Clinton, and subsequently filling his administration with Goldman Sachs alumni like Gary Cohn, the president appeared to change his mind. However, according to media reports, he had yet another change of heart earlier this summer, when he started siding with Steve Bannon and the anti-globalist contingent of his advisers during discussions about trade.  

And after initially delaying the investigation two weeks ago on the advice of his new chief of staff, General John Kelly, it appears Trump is finally ready to disrupt one of the world’s most complex bilateral trade relationshipsThe editorial also pushed back against the notion that China is somehow responsible for Pyongyang’s actions.

“The China Daily said it was unfair for Trump to put the burden on China for dissuading Pyongyang from its actions.

 

‘By trying to incriminate Beijing as an accomplice in the DPRK’s nuclear adventure and blame it for a failure that is essentially a failure of all stakeholders, Trump risks making the serious mistake of splitting up the international coalition that is the means to resolve the issue peacefully,’ it said.

 

‘Hopefully Trump will find another path. Things will become even more difficult if Beijing and Washington are pitted against each other.’”

The move against China over trade was also seen here as an attempt to distract attention away from Trump’s domestic problems. “Bashing China cannot solve U.S. economic problems, experts say,” the state-run Xinhua news agency proclaimed. The nationalist Global Times newspaper even tried to link developments to violence and “racial hatred” that broke out in Charlottesville at the weekend.

The source of “global instability may not be North Korea’s nuclear ambitions nor Europe’s regufee crisis, but the chaos in the US,” it wrote. “The public is also concerned that Trump is using international disputes to divert public attention away from the domestic turmoil.”

* * *

That said, the argument that China doesn’t bear some responsibility for the North’s actions is refuted by simple economic staitstics.  China is North Korea’s most prominent benefactor, and its economic support has been a lifeline to the North’s government; without it, the Kim regime probably would’ve collapsed decades ago. China is responsible for 90% of North Korea’s foreign trade.

Last month China announced that imports from North Korea fell to $880 million in the six months that ended in June, down 13 percent from a year earlier. Notably, China’s coal imports from North Korea dropped precipitously, with only 2.7 million tons being shipped in the first half of 2017, down 75 percent from 2016. But a 29 percent spike in Chinese exports to North Korea — North Korea bought $1.67 billion worth of Chinese products in the first six months of the year — helped push total trade between the two countries up 10 percent between January and June, compared with the same period last year

China also harbors North Korea laborers whose remittances are another crucial source of foreign currency for the North’s economy. According to a recent poll, nearly two-thirds of US voters believe China should take a leading role in the de-nuclearization of the Korean peninsula.

As we wait for Trump to give the order, the only question left is will the US and China reach a last-minute deal to once again delay the investigation. It’s not out of the question: President Xi Jingping is hoping to tighten his grip on power at this fall’s National Congress of the Communist Party. In the meantime, maintaining economic stability remains paramount.

end

 

Overnight, a Chinese bank suffers a rare bank run on rumours.  The bank in question: Linshang Bank denied it has troubles

(courtesy zero hedge)

Chinese Bank Suffers ‘Rare’ Bank Run, Police Arrest “Rumor-Spreaders”

Chinese police questioned 27 people, detained 12 and “severely” reprimanded 15, over the spreading of gossip about Linshang Bank – a lender with 61 billion yuan ($9.1 billion) in deposits – which caused a rare bank run in Eastern China.

The South China Morning Post reports that a few disgruntled employees at Shandong Sanwei Oil Group, an agricultural processing company, were unhappy after they were placed on leave when production lines were closed at the firm.

The employees spread a rumour that the firm was collapsing with billions of yuan in unpaid loans and that it might also bring down Linshang Bank, the report added.

 

The rumour spread quickly among residents, triggering a run on the local branch of the bank, according to the article. At one point more than 500 depositors gathered outside the branch demanding to withdraw their money.

The bank said in a brief statement on its website that the spate of withdrawals at one of its branches in Linyi in Shandong province on Monday was caused by “a few individuals spreading rumours” that the bank was in trouble.

The lender urged the public “not to believe in or spread rumours to jointly maintain good financial order”.

“In the face of rumors, we hope the public reacts rationally, does not believe in rumors, does not rumor-monger, to avoid harming their own interests.”

 An official in the bank’s general affairs office told the South China Morning Post on Thursday the situation was now back to normal. A clerk at the bank’s Bancheng branch also said normal operations had resumed.

“Our branch managers have been explaining to our clients … and most clients left the branch without withdrawing money after they knew it was just untrue gossip,” the clerk said.

As SCMP notes,regional banks in less developed areas are regarded as the weak links in China’s financial system as lenders often give large loans to local enterprises and may expose themselves to greater risks if local economic growth slows.

A rumour that a rural lender in Sheyang county in Jiangsu province had run out of money three years ago triggered a three-day run on the bank, which forced it to place stacks of cash behind teller windows to ease depositors’ panic.

While bank runs in China are unusual, the rapidity of this run (from gossip to deposit demands) makes us wonder just how fragile confidence must be among the average Jao. As a reminder, China’s central bank launched a deposit insurance system in May 2015, adopting Western-style protection for depositors. The maximum payout level is set at 500,000 yuan per depositor for each bank.

 

 

END

 

Overnight, Chinese macro data misses on all fronts:  retail sales, industrial production and fixed asset investment. It did not matter as their stock market ignored the reports

 

(courtesy zero hedge)

 

 

China Macro Data Misses Across The Board In July, Worst Since 2016

Confirming the credit impulse peak is passed (June’s surprise beats), China’s July macro-economic data is ugly. Retail Sales, Industrial Production, and Fixed Asset Investment all fell and missed notably. For now the reaction is absolutely nothing…

National Bureau of Statistics reports some ugly data for July:

  • China July Industrial Output MISS Rises 6.4% Y/y; Est. 7.1% (range 6.5%-8.7%, 37 economists)
  • Fixed-asset investment excluding rural households MISS up 8.3% y/y in Jan.-July; est. 8.6% (range 8.4%-9.3%, 35 economists)
  • July retail sales MISS rose 10.4% y/y; est. 10.8% y/y (range 9.5%-11.5%, 37 economists)

China data is the weakest since 2016…

We wonder just how bad it will get…

For now there is zero reaction anywhere as it appears traders are numb to global nuclear war concerns, epic Japanese growth, and dismal Chinese data.

 

 

end

 

This is a huge red flag for those believing that the global economy is booming and a red flag for crude oil bulls.  The demand side for Chinese oil refining tumbles badly

 

(courtesy zero hedge)

 

Big Red Flag For Crude Bulls: Chinese Oil Refining Tumbles Most In Three Years As Fuel Demand Slides

Slowly but surely, what we have claimed for the past year – that it is the demand side of the oil equation, not the supply, and especially the “Chinese wildcard” that is the critical factor in setting prices – is starting to emerge and be factored in by markets. And so, just days after we posted “Another Red Flag For Oil? China’s Crude Imports Slump To 7-Month Low” arguably catalyzed by the increasingly full Chinese Strategic Petroleum Reserve, overnight we got another major red flag – once again out of China – when Bloomberg reported that China’s oil refining dropped the most in three years for the month of July, while crude output retreated from the highest this year, “as the world’s largest consumer showed signs of losing momentum.”

According to Bloomberg calculations based on NBS data released on Monday, as shown in the chart below oil processing in July dropped 4.4 percent from the previous month to about 10.76 million barrels a day. While daily refining output typically falls from June to July on maintenance, last month’s fall was the biggest seasonal decline since 2014. Crude oil output fell 3% to 3.84 million barrels a day.

Separate data from industry consultant SCI99 revealed that state refineries in northwest and southern China at the end of July cut runs to 66.9% and 64.68% of capacity, respectively, the lowest since 2014, while independent refiners, known as teapots, were operating at around 58.78% near the lowest since May 5.

The news has pressured oil prices lower all morning despite a generally risk on tone across global equities.

“We’ve been drifting lower in the morning and now are reclaiming some of those losses,” says Ole Hansen, head of commodity strategy at Saxo Bank. “There’s not a lot to get your teeth into today” Hansen said adding that “Libya could have had a bit more a positive impact on a day where we hadn’t had the Chinese product demand news”

The sharp slowdown in Chinese refining comes amid news that the pace of China’s economic expansion slowed last month, as broader data Monday showed factory output and investment moderated amid the government’s push to cool the property sector and reduce leverage. Official figures last week showed crude imports also fell in July, slipping to the lowest in six months, while net product exports jumped 19 percent.

A weaker macro economy has to some extent also affected fuel demand,” Li Li, an analyst with Shanghai-based commodities researcher ICIS-China told Bloomberg. “Runs are low because teapots have done some additional maintenance as they run down stocks and they also lowered runs amid stringent environmental checks.

As Bloomberg reported last month, the world’s largest refiner, state-run China Petroleum & Chemical Copr. known as Sinopec, will process about 1 million metric tons a month (about 240,000 barrels a day) less than it previously planned over June to August because of weaker fuel demand growth and competition from teapots.

Suggesting that the weakness is broad based, and not simply a one-time event, Bloomberg also notes that China is on pace to produce the least amount of crude since 2009, even as its three biggest oil companies aim to raise combined spending for the first time in four years after the country’s crude production fell at a record pace in 2016. That contrasts with a surge in natural gas production, which is being encouraged by the President Xi Jinping’s government as an alternative to coal. Crude output from January to July averaged about 3.9 million barrels a day, down about 173,000 barrels a day, according to Bloomberg calculations. The International Energy Agency forecasts full-year output may drop by 150,000 barrels a day.

Some additional details revealed in the latest set of data:

  • Total crude production in July was down 2.9 percent from the same month last year at 16.25 million metric tons.
  • Production in the first seven months of the year totaled 112.79 million tons, down 4.8 percent from same period last year.
  • Natural gas output in July rose 14.7 percent year-on-year to 11.7 billion cubic meters.
  • Natural gas output in the first seven months is up 8.8 percent to 85.8 billion cubic meters.
  • Oil refining in July totaled 45.5 million tons, a 0.4 percent year-on-year rise.
  • Refining in the first seven months is up 2.9 percent at 320.71 million tons.

Finally, slamming the longer-term outlook for oil was none other than the world’s (formerly) biggest oil bull, Andy Hall – who as reported last week is shutting down his flagship commodities fund – saying in his August 1 letter that oil market fundamentals for 2018 “have deteriorated”, and adding that OPEC’s talk of extending oil production cuts is a “sign of weakness, not of strength”, while noting that U.S. shale firms can “profitably hedge” extra 2018 output at current prices.

4. EUROPEAN AFFAIRS

5. RUSSIA AND MIDDLE EASTERN AFFAIRS

Russia

6 .GLOBAL ISSUES

UKRAINE/NORTH KOREA

 

My goodness, this is shocking:  USA “ally” Ukraine is the source of North Korean Missile engines.  It also questions the huge donations given by Ukraine donors to the Clinton foundation.

 

(courtesy zero hedge)

 

NYT Shocking Report: US “Ally” Ukraine Is Source Of North Korean Missile Engines

When the US State Department supported Ukraine domestic forces and nationalist elements to stage a successful and deadly coup against then pro-Russian president Viktor Yanukovych in 2014, the outcome was supposed to be a nation that is a undisputed US ally and persistent threat, distraction and non-NATO opponent to bordering Russia. Instead, it now appears that it has been Ukraine which was, as the NYT writes, the secret behind the success of North Korea’s ballistic missile program.

Specifically, in a blockbuster report this morning, the NYT alleges that North Korea has been making black-market purchases of powerful rocket engines from a Ukrainian factory citing “expert analysis being published Monday and classified assessments by American intelligence agencies.”

The studies may solve the mystery of how North Korea began succeeding so suddenly after a string of fiery missile failures, some of which may have been caused by American sabotage of its supply chains and cyberattacks on its launches. After those failures, the North changed designs and suppliers in the past two years, according to a new study by Michael Elleman, a missile expert at the International Institute for Strategic Studies.

According to the report, analysts who studied photographs of Kim Jong-un, inspecting the new rocket motors concluded that they derive from designs that once powered the Soviet Union’s missile fleet. “The engines were so powerful that a single missile could hurl 10 thermonuclear warheads between continents.”

Since the alleged engines have been linked to only a few former Soviet sites, government investigators and experts have focused their inquiries on a missile factory in Dnipro, Ukraine, on the edge of the territory where Russia is fighting a low-level war to break off part of Ukraine. During the Cold War, the factory made the deadliest missiles in the Soviet arsenal, including the giant SS-18. It remained one of Russia’s primary producers of missiles even after Ukraine gained independence.


Ukraine President Poroshenko visiting the Yuzhmash plant in Dnipro in 2014

However, after the 2014 coup which ousted Ukraine’s pro-Russian president, Viktor Yanukovychthe state-owned factory, known as Yuzhmash, has fallen on hard times. The Russians canceled upgrades of their nuclear fleet.

“The factory is underused, awash in unpaid bills and low morale. Experts believe it is the most likely source of the engines that in July powered the two ICBM tests, which were the first to suggest that North Korea has the range, if not necessarily the accuracy or warhead technology, to threaten American cities.

In other words, it is America’s latest Eastern European “ally” that is behind what is rapidly emerging as a potential nuclear threat that can blanket as much as half of the continental US.

“It’s likely that these engines came from Ukraine — probably illicitly,” Elleman told the NYT in an interview“The big question is how many they have and whether the Ukrainians are helping them now. I’m very worried.”

Bolstering his conclusion, he added, was a finding by United Nations investigators that North Korea tried six years ago to steal missile secrets from the Ukrainian complex. Two North Koreans were caught, and a U.N. report said the information they tried to steal was focused on advanced “missile systems, liquid-propellant engines, spacecraft and missile fuel supply systems.” Investigators now believe that, amid the chaos of post-revolutionary Ukraine, Pyongyang tried again.

Considering Ukraine is a close US ally – just ask John McCain – maybe a phone call to current Ukraine president, oligarch billionaire Poroshenko, should suffice?

To be sure, the factory itself would never admit this stunning allegation: last month, Yuzhmash denied reports that the factory complex was struggling for survival and selling its technologies abroad, in particular to China. Its website says the company does not, has not and will not participate in “the transfer of potentially dangerous technologies outside Ukraine.”

Making matters worse of the US “allies” in Ukraine, American investigators do not believe that denial, though they say there is no evidence that the government of President Petro O. Poroshenko, who recently visited the White House, had any knowledge or control over what was happening inside the complex.

The obvious implication here is that – if accurate – Ukraine had been working with North Korea for years, well into the administration of Barack Obama, the same president under whom the Ukraine coup was greenlight, which would also suggest that the current North Korean crisis is explicitly a consequence of Obama’s foreign policies.

Which is why we read the following amusing disclaime in the NYT:How the Russian-designed engines, called the RD-250, got to North Korea is still a mystery.

Furthermore, Elleman told the NYT that the fact that the powerful engines did get to North Korea, despite a raft of United Nations sanctions, suggests a broad intelligence failure involving the many nations that monitor Pyongyang. Failure or perhaps just US intel closing its eyes to what Ukraine may be doing through the back door.

The NYT writes that “it is unclear who is responsible for selling the rockets and the design knowledge, and intelligence officials have differing theories about the details. But Mr. Elleman makes a strong circumstantial case that would implicate the deteriorating factory complex and its underemployed engineers. “I feel for those guys,” said Mr. Elleman, who visited the factory repeatedly a decade ago while working on federal projects to curb weapon threats. “They don’t want to do bad things.”

One can only imagine what Elleman would “feel for those guys” if the factory turned out to be Russian, or Chinese.

Describing North Korea’s long history of smuggling rocket technology over the decades – mostly from the former USSR – the NYT writes that eventually, the North turned to an alternative font of engine secrets — the Yuzhmash plant in Ukraine, as well as its design bureau, Yuzhnoye. The team’s engines were potentially easier to copy because they were designed not for cramped submarines but roomier land-based missiles. That simplified the engineering.

Economically, the plant and design bureau faced new headwinds after Russia in early 2014 invaded and annexed Crimea, a part of Ukraine. Relations between the two nations turned icy, and Moscow withdrew plans to have Yuzhmash make new versions of the SS-18 missile. In July 2014, a report for the Carnegie Endowment for International Peace warned that such economic upset could put Ukrainian missile and atomic experts “out of work and could expose their crucial know-how to rogue regimes and proliferators.”

It was right: The first clues that a Ukrainian engine had fallen into North Korean hands came in September when Mr. Kim supervised a ground test of a new rocket engine that analysts called the biggest and most powerful to date. Norbert Brügge, a German analyst, reported that photos of the engine firing revealed strong similarities between it and the RD-250, a Yuzhmash model.

Alarms rang louder after a second ground firing of the North’s new engine, in March, and its powering of the flight in May of a new intermediate-range missile, the Hwasong-12. It broke the North’s record for missile distance. Its high trajectory, if leveled out, translated into about 2,800 miles, or far enough to fly beyond the American military base at Guam.

 

On June 1, Mr. Elleman struck an apprehensive note. He argued that the potent engine clearly hailed from “a different manufacturer than all the other engines that we’ve seen.”

 

Mr. Elleman said the North’s diversification into a new line of missile engines was important because it undermined the West’s assumptions about the nation’s missile prowess: “We could be in for surprises.”

 

That is exactly what happened. The first of the North’s two tests in July of a new missile, the Hwasong-14, went a distance sufficient to threaten Alaska, surprising the intelligence community. The second went far enough to reach the West Coast, and perhaps Denver or Chicago.

If the NYT report is accurate, perhaps it is time to re-evaluate the logic behind ongoing US support of Ukraine: as a reminder, two weeks ago the WSJ reported that Pentagon and State Department officials have devised plans to hit Russia where it hurts the most, and supply Ukraine with antitank missiles and other weaponry, and are now seeking White House approval at a time when ties between Moscow and Washington are as bad as during any point under the Obama administration. In light of the news that Ukraine may be responsible for weaponizing the biggest nuclear threat to the US, perhaps it might not be a bad idea to “delay” or maybe even this deadly support for Ukraine, even if it means an outpouring of fury from neo-cons like John McCain.

* * *

Finally, in light of the above, perhaps it is time to re-address the following article from March 2015: “Clinton Foundation’s Deep Financial Ties to Ukrainian Oligarch Revealed” which based on a WSJ report, showed that more than any other nation, it was Ukraine donors that were the most generous, especially the Victor Pinchuk foundation: “Between 2009 and 2013, including when Mrs. Clinton was secretary of state, the Clinton Foundation received at least $8.6 million from the Victor Pinchuk Foundation, according to that foundation, which is based in Kiev, Ukraine. It was created by Mr. Pinchuk, whose fortune stems from a pipe-making company. He served two terms as an elected member of the Ukrainian Parliament and is a proponent of closer ties between Ukraine and the European Union.”

As the WSJ reported at the time:

In 2008, Mr. Pinchuk made a five-year, $29 million commitment to the Clinton Global Initiative, a wing of the foundation that coordinates charitable projects and funding for them but doesn’t handle the money. The pledge was to fund a program to train future Ukrainian leaders and professionals “to modernize Ukraine,” according to the Clinton Foundation. Several alumni are current members of the Ukrainian Parliament.

 

The Pinchuk foundation said its donations were intended to help to make Ukraine “a successful, free, modern country based on European values.” It said that if Mr. Pinchuk was lobbying the State Department about Ukraine, “this cannot be seen as anything but a good thing.”

end

 

CANADA/USA

 

This will not be good for Canada as there seems to be no progress in the uSA/Canada timber trade war

 

(courtesy zerohedge)

Canadian Lumber Stocks Tumble On Report US-Canada Timber Trade War To Escalate

Canadian lumber stocks are diving this morning following a report from BMO analyst Mark Wilde who writes that “prospects for a near-term settlement of the U.S./Canadian lumber dispute have faded“, prompting him to downgrade the main players in the space. The report has sent the stocks of West Frasier Timber (WFT), Canfor (CFP) and Interfor (IFP) as much as 6%, 4.6% and 6.2% lower, respectively.

What prompted the bold call? As the BMO analyst notes, “our sources report little substantive negotiation between Canadian and U.S. interests and little real movement in positions. Moreover, there appears to be internal divisions on both sides of the border.

These include differences between U.S. Commerce Secretary, Wilbur Ross, and U.S. Trade Representative, Robert Lighthizer. Ross is reportedly more inclined to take a deal, while the USTR is apparently taking a firmer line in negotiations. There also appear to be differences amongst members of the U.S. Lumber Coalition.

 

On the Canadian side, the divisions are mainly between the East and the West. Large, low-cost Western Canadian producers are more inclined to take a harder approach, pursuing litigation and paying countervailing (CVD)/anti-dumping (ADD) duties in the interim.

So with no near-term resolution to the ongoing lumber dispute between the two NAFTA neighbors, the alternative is a steadily progressing trade war. As a result, as Wilde writes, “we anticipate a period of  countervailing and anti-dumping duties on Canadian lumber imports as well as continued litigation around those duties.” As regards the 3 abovementioned stocks, the analyst notes that at current stock price levels, “we think the big risk is downside disappointments. Thus, we are downgrading West Fraser, Canfor, and Interfor to Market Perform. We are also downgrading Weyerhaeuser and Rayonier ratings to Market Perform. The key issue in timber is continued soft pricing on southern sawlogs. We are not making any changes to our price targets.

Finally, here are the summary highlights from the BMO report which, if accurate, suggest that even as Trump prepares to launch trade war with China, the ongoing “lumber war” with Canada is set to get worse before it gets better.

  • Comments by high-ranking Canadian government officials and some U.S. corporate executives have fed hopes that a negotiated settlement is close at hand. Our sources report little substantive negotiation between Canadian and U.S. interests and little real movement in positions. Moreover, internal divisions exist on both sides of the border. On the U.S. side, there appear to be differences between U.S. Commerce Secretary, Wilbur Ross, and U.S. Trade Representative, Robert Lighthizer, as well as amongst members of the U.S. Lumber Coalition. On the Canadian side, the divisions are between Eastern and Western Canada.
  • Continued uncertainty on the trade issue isn’t good for lumber stocks. Moreover, the combination of continued countervailing and anti-dumping duties during 2018 and a strengthening Canadian dollar are both apt to put pressure on FY18 earnings estimates. In our view, it’s hard to see the stocks pushing much higher in the near term in the face of that headwind. For that reason, we are downgrading West Fraser, Canfor, and Interfor to Market Perform from Outperform.
  • To be clear, we aren’t arguing the cycle is over for lumber producers. The “medium term” looks much more constructive. Over the next three-five years, we think the combination of reduced lumber supplies from Canada, improving lumber demand, and continued low southern sawlog prices could produce a period of abnormally rich margins for southern sawmills. We may be entering something of a Golden Age for southern sawmills. The three largest Canadian lumber producers have been increasing the proportion of their production in the southern U.S. and should benefit from the sawlog cost/lumber price arbitrage.
  • The timeline on recovery in southern sawlog prices remains unclear. A decade of subpar demand and improving forest productivity has created significant inventory build in southern plantation forests. That “overhang” has southern sawlog prices at ~60% of 2005 levels – in nominal terms – and threatens to dampen/delay a recovery in sawtimber pricing across many parts of the south. Indeed, after a modest price recovery, southern sawlog prices have declined for the past seven quarters. In private conversations, we’re encountering an increasing sense of caution – and even, skepticism – about the recovery among timber investment professionals. As such, we are downgrading WY and RYN to Market Perform from Outperform.

7. OIL ISSUES

8. EMERGING MARKET

VENEZUELA

end

end

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

Euro/USA   1.1794 DOWN .0026/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP HEALTH CARE DEFEAT//ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/ /USA RISING INTEREST RATES AGAIN/EUROPE BOURSES ALL IN THE GREEN 

USA/JAPAN YEN 109.72 UP 0.548(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/   HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST/LABOUR PARTY LOSES IN LOCAL ELECTIONS

GBP/USA 1.2975 DOWN .0032 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED

THERESA MAY FORMS A NEW GOVERNMENT/STARTS BREXIT TALKS

USA/CAN 1.2701 UP .0028 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/TRUMP INITIATES LUMBER TARIFFS ON CANADA)

Early THIS MONDAY morning in Europe, the Euro FELL by 26 basis points, trading now ABOVE the important 1.08 level  FALLING to 1.1794; 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 28.92 POINTS OR 0.90%     / Hang Sang  CLOSED UP 366.72 POINTS OR 1.56% /AUSTRALIA  CLOSED UP 0.61% / EUROPEAN BOURSES OPENED  DEEPLY 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 192.64 POINTS OR .98%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 366.72 POINTS OR 1.36%  / SHANGHAI CLOSED UP 28.92 POINTS OR 0.90%   /Australia BOURSE CLOSED UP 0.61% /Nikkei (Japan)CLOSED DOWN 192.64  POINTS OR 0.98%   / INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: 1279.45

silver:$16.96

Early MONDAY morning USA 10 year bond yield: 2.220% !!!  UP 3   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  2.816, UP 3  IN BASIS POINTS  from TUESDAY night.

USA dollar index early MONDAY morning: 93.38 UP 31  CENT(S) from FRIDAY’s close.

This ends early morning numbers  MONDAY MORNING

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And now your closing MONDAY NUMBERS

Portuguese 10 year bond yield: 2.809% DOWN 5 in basis point(s) yield from FRIDAY 

JAPANESE BOND YIELD: +.058%  DOWN 1/2   in   basis point yield from FRIDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.436% DOWN 2   IN basis point yield from FRIDAY 

ITALIAN 10 YR BOND YIELD: 2.020 DOWN 2 POINTS  in basis point yield from FRIDAY 

the Italian 10 yr bond yield is trading 59 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.407% UP 2  IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR MONDAY

Closing currency crosses for MONDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/5:00 PM 

Euro/USA 1.1786 DOWN .0033 (Euro DOWN 33 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 109.48 UP 0.312(Yen DOWN 31 basis points/ 

Great Britain/USA 1.2976 DOWN  0.0030( POUND DOWN 30 BASIS POINTS)

USA/Canada 1.2699 UP .0025 (Canadian dollar DOWN 25 basis points AS OIL FELL TO $48.43

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This afternoon, the Euro was DOWN  by 33 basis points to trade at 1.1786

The Yen FELL to 109.48 for a LOSS of 31  Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND FELL BY 30  basis points, trading at 1.2976/ 

The Canadian dollar FELL by 31 basis points to 1.2699,  WITH WTI OIL FALLING TO :  $48.43

The USA/Yuan closed at 6.6712/
the 10 yr Japanese bond yield closed at +.058%  DOWN 1/2 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 2  IN basis points from FRIDAY at 2.206% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.798 UP 1 in basis points on the day /

Your closing USA dollar index, 93.37  UP 30 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 43.93 POINTS OR 0.60%
German Dax :CLOSED UP 151.06 POINTS OR 1.26%
Paris Cac  CLOSED UP 60.75 POINTS OR 1.20% 
Spain IBEX CLOSED UP  178.30 POINTS OR 1.73%

Italian MIB: CLOSED UP 368.09 POINTS/OR 1.72%

The Dow closed UP 135.39 OR 0.62%

NASDAQ WAS closed UP 83.68  POINTS OR 1.34%  4.00 PM EST

WTI Oil price;  48.43 at 1:00 pm; 

Brent Oil: 51.31 1:00 EST

USA /RUSSIAN ROUBLE CROSS:  59.66 DOWN 18/100 ROUBLES/DOLLAR (ROUBLE HIGHER BY 18 BASIS PTS)

TODAY THE GERMAN YIELD RISES TO  +0.407%  FOR THE 10 YR BOND  4.PM EST EST

END

 

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

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

WTI CRUDE OIL PRICE 5:00 PM:$47.50

BRENT: $50.64

USA 10 YR BOND YIELD: 2.224%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.8120%

EURO/USA DOLLAR CROSS:  1.1782 down .0038

USA/JAPANESE YEN:109.72  UP  0.0546

USA DOLLAR INDEX: 93.43  up 36  cent(s) 

The British pound at 5 pm: Great Britain Pound/USA: 1.2963 : down 43 POINTS FROM LAST NIGHT  

Canadian dollar: 1.2726 UP 52 BASIS pts 

German 10 yr bond yield at 5 pm: +0.407%

END

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

TRADING IN GRAPH FORM FOR THE DAY

Stocks, Dollar Bounce On Relief World Did Not End This Weekend

The world did not come to an end this weekend and that’s all the excuse markets needed to squeeze higher again…

 

World did not end – yay! Buy Stocks, Dump Gold…

 

But bonds and bullion remain the winners since Trump spoke last week…

 

December rate-hike odds bounced higher today but remain well below levels before CPI/PPI hit last week…

 

Trannies and Small Caps were panic bid but one glance at the chart below and its clear that The Dow and S&P went nowhere from the gap higher open…

 

All the indices remain red post-“fire-and fury”…

 

The S&P bounced back above its 50DMA but Small Caps remain below theirs…

 

Financials and Tech outperformed (though notably drifted only marginally higher from the opening gap) and Energy underperformed as oil lagged…

 

FANG Stocks retraced half the “Fire & Fury” losses then faded…

 

VIX was clubbed back down towards its 200DMA (at 11.99) but failed to make it…

 

Another quick rip and dip in vol…

 

VXX (VIX ETF) tumbled back below its 50DMA..

 

Treasury yields remain below last week highs but were marginally higher on the day, thanks to comments from The Fed’s Dudley on balance sheet normalization…

 

However, 30Y yields never even made it back to Friday’s highs…

 

The Dollar Index rallied on the day…erasing the post-CPI plunge thanks to Dudley’s comments…

 

With all the majors weaker against the greenback…

 

We wonder if this is the start of 2016 deja vu all over again…

 

Gold sank modestly lower after failing to tag $1300 into Friday’s close…

 

Ugly day for WTI Crude…

 

Finally, don’t worry America – FED’S DUDLEY SAYS ASSET PRICES CONSISTENT WITH ECONOMY’S PERFORMANCE…

hhmm.

end

The rout in retail continues as JCPenny tumbles

 

(courtesy Mish Shedlock/Mishtalk)

 

Retail Rout Returns (But Don’t Blame Amazon)

Authored by Mike Shedlock via MishTalk.com,

JCPenney announced a $62 million dollar loss for the quarter. With the announcement, its share price plunged 16% breaking the $4 barrier for the first time. Stocks under $5 are considered “penny” stocks.

This was the worst week for Retailers since Dec 2016…

Please consider JCPenney Nosedives to All-Time Low on Big Loss.

Yup. JCPenney is now a penny stock — a Wall Street term for a company trading under $5. JCPenney (JCP) said it lost $62 million in its second quarter. That’s more than a year ago. The retailer also said that same store sales — a measure of how well stores open at least a year are doing — fell more than 1% during the quarter.

 

JCPenney is the latest department store chain to announce dismal results. Macy’s (M), Kohl’s (KSS) and Dillard’s (DDS) all reported a decline in same store sales on Thursday as they struggle to compete against Amazon (AMZN, Tech30) and Walmart (WMT).

 

The massive shift in the retail landscape has led many chains to shut down underperforming stores.

 

JCPenney is one of them, announcing earlier this year it would be closing 138 stores. JCPenney wound up delaying the closings by a month though after consumers rushed to many of the stores to take advantage of the massive liquidation sales.

 

Ellison also said during the analyst call that JCPenney expects many retailers to ramp up promotions and discounts to try and lure shoppers into their stores. The CEO warned these sales may be even more aggressive than “what we’ve traditionally seen.”

Don’t Blame Amazon

Amazon is not to blame, but Amazon sure does not help either.

Retail is massively overbuilt. That’s the big problem. And it’s not just the box retailers. The fast food restaurants are all cannibalizing each other’s sales too.

Vitaliy Katsenelson accurately states It’s not just Amazon’s fault. Changing consumer habits are killing old retail biz

Retail stocks have been annihilated recently, despite the economy eking out growth. The fundamentals of the retail business look horrible: Sales are stagnating and profitability is getting worse with every passing quarter.

 

Jeff Bezos and Amazon get most of the credit, but this credit is misplaced. Today, online sales represent only 8.5 percent of total retail sales. Amazon, at $80 billion in sales, accounts only for 1.5 percent of total U.S. retail sales, which at the end of 2016 were around $5.5 trillion. Though it is human nature to look for the simplest explanation, in truth, the confluence of a half-dozen unrelated developments is responsible for weak retail sales.

 

Our consumption needs and preferences have changed significantly. Ten years ago we spent a pittance on cellphones. Today Apple sells roughly $100 billion worth of i-goods in the U.S., and about two-thirds of those sales are iPhones.

 

Consumer income has not changed much since 2006, thus over the last 10 years $190 billion in consumer spending was diverted toward mobile phones. Between phones and their services, this is $340 billion that will not be spent on T-shirts and shoes.

 

But we are not done. The combination of mid-single-digit health-care inflation and the proliferation of high-deductible plans has increased consumer direct health-care costs and further chipped away at our discretionary dollars. Health-care spending in the U.S. is $3.3 trillion, and just 3 percent of that figure is almost $100 billion.

 

Then there are soft, hard-to-quantify factors. Millennials and millennial-want-to-be generations (speaking for myself here) don’t really care about clothes as much as we may have 10 years ago.

 

All this brings us to a hard and sad reality: The U.S. is over-retailed. We simply have too many stores. Americans have four or five times more square footage per capita than other developed countries. This bloated square footage was created for a different consumer, the one who in in the ’90s and ’00s was borrowing money against her house and spending it at her local shopping mall.

Hugely Overbuilt

Malls, retail stores, and fast food restaurants are all hugely overbuilt. Analysts still have not put 2 and 2 together on what this means.

It’s the overbuilding of all kinds of retail and fast food stores that has provided the high job growth, low wage growth environment that we are in.

You can blame (or thank) the Fed for that, depending on your view.

Regardless, the expansion will come to an end at some point. And when it does, the Fed governors will not know what hit them.

Lowering interest rates further will not do a thing for the economy in this overbuilt setup, once the turn takes place.

end

USA quietly launches a crackdown on cryptocurrencies

(courtesy zero hedge)

 

US Launches Quiet Crackdown On Cryptocurrencies

While all eyes were distracted with the Trump-demeaning headlines of the foreign sanctions bill, few spotted the hidden mandate that foreign governments monitor cryptocurrency circulations as a measure to combat “illicit finance trends” in an effort to “combat terrorism.”

As Coinivore reports, the bill requires the governments to develop a “national security strategy” to combat the “financing of terrorism and related forms of illicit finance.”

Governments will be further required to monitor “data regarding trends in illicit finance, including evolving forms of value transfer such as so-called cryptocurrencies.”

According to the bill, an initial draft strategy is expected to come before Congress within the next year, and will see input from U.S. financial regulators, the Department of Homeland Security, and the State Department.

The bill calls for:

“[A] discussion of and data regarding trends in illicit finance, including evolving forms of value transfer such as so-called cryptocurrencies, other methods that are computer, telecommunications, or internet-based, cybercrime, or any other threats that the Secretary may choose to identify.”

Interestingly enough, Coindesk reports, “the new bill echoes another submitted in May as part of a wider Department of Homeland Security legislative package.” That measure, as CoinDesk reported at the timecalls for research into the potential use of cryptocurrencies by terrorists. 

Like the DHS bill, the new sanctions law doesn’t constitute a shift in policy, but rather indicates that Congress is taking steps to explore the issue more closely.

Just more examples of the U.S. government trying to impose its will upon other nations and citizens who never lived there, as witnessed with the arrest of Alexander Vinnik in Greece, BTC-E’s alleged CEO according to the Department Of Justice.

 

end

 

After CEO, Ken Frazier resigns from the President’s manufacturing advisory board for lack of response to the Charlottesville riots on the weekend, Trump responds by attacking the pharmaceutical giant for ripping off the public with high drug prices.

 

(courtesy zero hedge)

Furious Trump Responds To Merck CEO: Attacks “Ripoff” Drug Prices

Well that didn’t take long.

Seconds after the resignation of Merck CEO Kenneth C. Frazier from the president’s Manufacturing Council:

“I am resigning from the President’s American Manufacturing Council.

 

Our country’s strength stems from its diversity and the contributions made by men and women of different faiths, races, sexual orientations and political beliefs.

 

America’s leaders must honor our fundamental values by clearly rejecting expressions of hatred, bigotry and group supremacy, which run counter to the American ideal that all people are created equal.

 

As CEO of Merck and as a matter of personal conscience, I feel a responsibility to take a stand against intolerance and extremism.”

President Trump has responded, via Twitter, to the resignation (and lambasting) of Merck CEO Ken Frazier

Now that Ken Frazier of Merck Pharma has resigned from President’s Manufacturing Council,he will have more time to LOWER RIPOFF DRUG PRICES!

And now we have the news cycle narrative for today.

The first reaction is in…

“How can you abide by this?” – @andrewrsorkin, on CEOs on POTUS’s manufacturing council, now that POTUS has responded to Merck

@CNBC

Who will be next to leave?

Here’s the full list of members on the new manufacturing council:

  • Andrew Liveris, The Dow Chemical Company
  • Bill Brown, Harris Corporation
  • Michael Dell, Dell Technologies
  • John Ferriola, Nucor Corporation
  • Jeff Fettig, Whirlpool Corporation
  • Mark Fields, Ford Motor Company
  • Ken Frazier, Merck & Co., Inc.
  • Alex Gorsky, Johnson & Johnson
  • Greg Hayes, United Technologies Corp.
  • Marillyn Hewson, Lockheed Martin Corporation
  • Jeff Immelt, General Electric
  • Jim Kamsickas, Dana Inc.
  • Klaus Kleinfleld, Arconic
  • Brian Krzanich, Intel Corporation
  • Rich Kyle, The Timken Company
  • Thea Lee, AFL-CIO
  • Mario Longhi, U.S. Steel
  • Denise Morrison, Campbell Soup Company
  • Dennis Muilenburg, Boeing
  • Elon Musk, Tesla
  • Doug Oberhelman, Caterpillar
  • Scott Paul, Alliance for American Manufacturing
  • Kevin Plank, Under Armour
  • Michael Polk, Newell Brands
  • Mark Sutton, International Paper
  • Inge Thulin, 3M
  • Richard Trumka, AFL-CIO
  • Wendel Weeks, Corning

end

 

The real truth behind the USA  S and P earnings:

 

(courtesy Wolf Richter/WolfStreet.com)

 

Stock Market Warning Siren Is Blaring

Authored by Wolf Richter via WolfStreet.com,

Are we blinded yet by the brilliance of corporate earnings?

“Adjusted” earnings growth is 10.2% year-over-year in the second quarter, according to FactSet, based on the 91% of the companies in the S&P 500 that have reported results. The energy sector was a key driver, with 332% “adjusted” earnings growth from the oil-bust levels of a year ago.

The sectors with double-digit earnings growth: information technology (14.7%), utilities (10.8%), and financials (10.3%). The rest were single digit. Earnings in the consumer discretionary sector declined.

Revenues grew 5.1%, also led by the energy sector. At the beginning of Q2 last year, the WTI grade of crude oil traded at $35 a barrel. In Q2 this year, WTI ranged from $42 to $53 a barrel.

So the Wall-Street hype machine is cranking at maximum RPM to propagate the great news that earnings are soaring, and that this is the reason why stocks should also be soaring, and forget everything else. The hype machine carefully avoids showing the bigger picture which is dismal for earnings and ludicrous for stock valuations.

Aggregate earnings per share (EPS) for the S&P 500 companies on a trailing 12-months basis rose for the second quarter in a row.

 

That’s the foundation of the Wall Street hype.

 

But here’s the thing with these EPS: they’re now back where they had been in… May 2014.

Yep. More than three years of earnings stagnation. No growth whatsoever, even for “adjusted” earnings. In fact, on a trailing 12-month basis, aggregate EPS of the S&P 500 companies are down about 5% from their peak in Q4 2014. And yet, over the same three-plus years of total earnings stagnation, the S&P 500 index has soared 34%.

This chart shows those “adjusted” earnings per share for the S&P 500 companies (black line) and the S&P 500 index (blue line). Chart via FactSet (click to enlarge). I marked August 2012 as the point five years ago, and May 2014:

And these are not earnings under the Generally Accepted Accounting Principles (GAAP). FactSet uses “adjusted” earnings for its analyses. These are the earnings with the bad stuff “adjusted” out of them by management to manipulate earnings into the most favorable light. Not all companies report “adjusted” earnings. Some only report GAAP earnings and live with the consequences. But others put adjusted earnings into the foreground, and that’s what Wall Street dishes up.

Since August 2012, the trailing 12-month “adjusted” earnings per share of the companies in the S&P 500 index rose just 12% in total. About the rate of inflation – nothing more. Over the same five years, the S&P 500 Index soared 72%.

And there’s another thing: these earnings per share are heavily influenced by the share count. Companies have been on a huge borrowing binge over these years, fueled by historically low interest rates, and a big part of that borrowed money wasn’t used to create new things, expand, invest, or invent, but to buy back their own shares. This type of financial engineering lowered the share count, and thus artificially increased earnings per share. Growth in EPS due to financial engineering is fake earnings growth.

This is the peculiar situation of today: On average, these companies have stagnating earnings per share propped up by “adjusting” these earnings and by financial engineering. The price-earnings multiple (P/E ratio) for stagnating companies should be low. In January 2012, the P/E ratio for the companies in the S&P 500 index was 14.9. And that was high. As of Friday, the aggregate P/E ratio is 24.3:

But look what happened. The P/E ratio peaked in March at 26.6. Since then, the S&P 500 has ticked up 3% and earnings have risen to this glorious level Wall Street has been hyping and the P/E ratio has come down a wee tiny bit…. back to where it had been in the fall of 2016.

In the five-year picture, earnings per share – however doctored they’d been – expanded just 12%. But share prices skyrocketed 73%. And thus the P/E ratio soared. These phases of “multiple expansion” are part of the stock market’s boom and bust cycle. They’re invariably followed by periods of multiple contraction.

Multiple contraction doesn’t stop at the average long-run P/E ratio but falls far below it, because that’s how the long-run average P/E ratio is formed: by periods far above the average (right now) and by periods far below the average. In the past, this type of multiple contraction from the top of the range to the lower end of the range – the process of “reversion to the mean” – offered some hair-raising rides for the stock market overall and for ludicrously overvalued stocks in particular, with many money-losing companies not making it to the next phase.

No one knows the date when this process kicks off in earnest, though everyone wants to know it so they can scurry out of the way beforehand. But when enough folks are trying to scurry out of the way, they’ll will precipitate the beginning of that process. That’s always how it happens.

The last big enthusiastic buyer, China, is leaving the party. Read…  This Hits the Wheezing Commercial Real Estate Bubble at Worst Possible Time

end

 

 

Another widespread fraud with respect to Wells Fargo.  This time they have scammed mortgage borrowers out of $43.00 per month for unrequested and pointless “home warranty service” insurance from American Home Shield

(courtesy of Boing/Boing)

and special thanks to Robert H for sending this to us

 

ANOTHER FRAUD AT WELLS FARGO

 

 

 

It’s been a whole day since we learned about another example of systematic, widespread fraud by America’s largest bank Wells Fargo (ripping off small merchants with credit card fees), so it’s definitely time to learn about another one: scamming mortgage borrowers out of $43/month for an unrequested and pointless “home warranty service” from American Home Shield, a billion-dollar scam-factory that considers you a customer if you throw away its junk-mail instead of ticking the “no” box and sending it back.

$43/month gets you pretty much nothing: people who tried to actually use their AHS insurance found it impossible to get them to actually do anything in exchange for this money.

Here’s a quick Wells Fargo fraud scorecard: stealing thousand of cars with fraudulent repos; defrauding mortgage borrowersblackballing whistelblowerscreating 2,000,000+ fraudulent accounts, and stealing millions with fraudulent fees and penalties.

Starting at least in 2009, Wells Fargo and AHS entered into a marketing and payment processing agreement. Wells allowed AHS to solicit their mortgage customers to buy home warranty service, through phone calls, junk mail, and inserts in monthly mortgage statements. Wells would then collect the monthly payments for AHS as an additional charge to the mortgage.

According to one borrower from Newark, New Jersey, AHS claimed its junk mail constituted a “binding contract” that automatically finalized if borrowers didn’t reply to turn it down. “No signature, no affirmation and YET it is considered a BINDING CONTRACT??” the borrower wrote.

 

END

 

A terrific commentary from Dave Kranzler of IRD as he highlights things that I have been signalling to you:  higher student debt, higher auto loans and higher credit card debt:  the consumer is buried in debt:

 

(courtesy Dave Kranzler/IRD)

Household Debt At Record Level – Bigger Than China’s GDP

The economy continues to grow weaker despite all of the Fed, Wall St. and media propaganda to the contrary. The economy is growing weaker due to the deteriorating financial condition of the consumer, which is by far the biggest driver of GDP in the United States. The only way the policy-makers can avoid a systemic collapse is “helicopter” money printing, in which printed cash or digital currency credits is, in some manner, distributed to the populace.

The Fed reported that non-revolving consumer debt (not including mortgage debt) hit $2.6 trillion at the end of the first quarter. Student loans outstanding hit a record $1.44 trillion. Recall that at least 40% of this debt is in some form of delinquency, default or “approved” non-pay status. Auto loans hit a record $1.2 trillion. Of this, at the very least  30% is subprime. A meaningful portion of the auto debt is of such poor credit quality when it’s issued that it is not even rated. Credit card debt is now over $1 trillion dollars and at a record level. The average outstanding balance per capita is $9600 per card for those who don’t pay in full at the end of the month.  Just counting the households with credit card debt  balances, the average balance per household is $16,000.  The average household auto loan balance for all households with a car loan is over $29,000.

The data shows a consumer that is buried in debt and will likely begin to default at an accelerating rate this year. In fact, I’d call these statistics an impending economic and financial disaster. Credit card companies are already warning about credit charge-offs. Synchrony (which issues credit cards for Amazon and Walmart) reported that its credit card charge-offs would rise at least 5% in 2017. Capital One (Question: “What’s in your wallet?” – Answer: “Not money”) reported that credit card charge-offs soared 28% year over year for Q1.  Synchrony, Capital One and Discover combined increased their Q1 provision for bad loans by 36% over last year’s provisions taken.

The monthly consumer credit report last week showed a $12.4 billion increase over May. A $16 billion increase was expected by Wall St. Keep in mind that every month of credit expansion is another new all-time high in consumer debt. Credit card debt outstanding increased by $4.1 billion, which is troubling for two reasons. First, it’s likely that financial firms are lending to less than qualified borrowers, as evidenced by the rising credit card delinquency and charge-off rates. Second, given the declining household real disposable income and savings rate, it’s likely that households are using credit card debt to pay for non-discretionary expenses. The smaller than expected increase in credit is being attributed primarily to slower growth in auto loans.

Speaking of the auto industry, Bloomberg reported last week that auto dealers, in a desperate bid to increase sales and reduce inventory, cut prices on new cars and trucks in July by the most since March 2009. It also reported that used car prices dropped 4.1%. This graph from Meridian Macro Researchcaptures the rapid deterioration auto sales (click to enlarge):

The chart shows rate of change in motor vehicle freight carload volume on a year over year basis vs. per capita auto sales. As you can see, the last time these two metrics were showing negative growth (a decline) and heading lower was 2008. The entire “boom” in auto sales since the “cash for clunkers” program, which ran from July 2009 to November 2009, has been artificially created by a massive expansion in Government- enabled credit and Fed money printing. The impending crash in the auto industry is unavoidable unless the Government resorts to outright “helicopter” money printing (i.e. giving cash directly to households rather than to the banks).

One of the best barometers of consumer financial health is restaurant sales, which are entirely dependent on the relative level of household disposable income that can be allocated to non- discretionary expenditures. Black Box Intelligence’s monthly restaurant industry snapshot,  released Thursday,  showed another monthly decline in restaurant sales and traffic – this one steeper than the past couple of months. I believe this is the 17th successive monthly year-over-year decline. Comp sales (year over year for July) were down 2.8% and comp traffic dropped 4.7%. The latter is more significant, as it better represents actual sales volume because dollar sales are boosted by price inflation. In contrast to these Real World numbers, the BLS reported in its employment report for July that the restaurant industry created 57,000 new jobs. This is not just flagrant misrepresentation of reality for propaganda purposes, it’s outright fraud.

In terms of specifics with the July restaurant numbers, sales declined in 183 of the 195 markets covered by the Black Box Intelligence survey. The worst region was the midwest, where sales declined 3.6% and traffic dropped 5.2%. The best region was California, with sales down 0.7% (price inflation) and traffic down 3.6%. Not surprisingly, the fine dining category outperformed the other industry segments, as it reflects the growing disparity in income and wealth between the upper 1% and the rest. The quick service segment turned in the worst performance.

The above analysis was excerpted from the Short Seller’s Journal, which is dedicated to digging truth out from the Government, Fed and  financial media propaganda.  Contrary to the message conveyed by the stock market’s inexorable climb higher, the average U.S. household, along with the Government at all levels (Federal to local municipal), is on the ropes financially and economically.  The Short Seller’s Journal exposes this reality.   Hundreds of stocks are plumbing 52-week and all-time lows. The Short Seller’s Journal helps you find these stocks before they plunge and take advantage of the most overvalued and most inefficiently-priced stock market in history.   You can find out more here:   Short Seller’s Journal information.

***

end

 

The clowns are at it again:  Dudley warns that his fellow clowns will probably hike rates and begin to drawdown on it’s balance sheet.

No way!! unless he wishes to throw the uSA into an economic tailspin as they remove liquidity

 

(courtesy zerohedge)

 

Dudley Warns “Market’s Rate Hike Expectations Are Unreasonable” Sending Yields, Dec. Odds Higher

One day after the 5th consecutive miss in US CPI, NY Fed President William Dudley threw currency and eurodollar traders for another loop when he said on Monday that it was not “unreasonable” to think that the central bank would begin trimming its balance sheet in September and sees another rate hike this year – supposedly in December – should economic data hold up, ignoring the message sent from monthly inflation reports.

In an interview with the AP, Dudely warned that “the expectations of market participants are unreasonable,” when asked if the expectation of the Fed reducing its bond holdings in September was accurate. The news sent the dollar and yields higher, pushing the 10Y from 2.2050% briefly to 2.2230%, although the move was subsequently faded. The news also sent December rate hike odds modestly higher on the day, up to 33% from 25% earlier, after Dudley said that he expects another rate rise as long as economic data meets his expectations. “I would expect — I would be in favor of doing another rate hike later this year.”

Despite the lack of inflation, Dudley expanded “my outlook for the economy hasn’t changed materially since the beginning of the year. Continue to look for growths around 2%, slightly above trend, growth sufficient to continue to tighten the labor market. I did not raise my growth forecast after the Election because of the prospect of fiscal stimulus because I felt that there was a lot of uncertainty about how big it would be, what its composition would be, and when it would actually take effect. So, I always viewed it as a risk to the forecast. In other words, an upside risk to the forecast, but I never put it into my baseline forecast.”

Pressed on inflation, the NY Fed president said “the reason why inflation won’t get up to 2% very quickly on a year-over-year basis is because we’ve had these very low inflation readings over the last 4 or 5 months. So it’s going to take time for those to sort of drop out of the year-over-year calculation.”

“Now the reason why I think you’d want to continue to gradually remove monetary policy accommodation, even with inflation somewhat below target, is that 1) monetary policy is still accommodative, so the level of short-term rates is pretty low, and 2) and this is probably even more important, financial conditions have been easing rather than tightening. So despite the fact that we’ve raised short-term interest rates, financial conditions are easier today than they were a year ago.”

Some more highlights from his interview transcript, courtesy of Bloomberg:

“The stock market’s up, credit spreads have narrowed, the dollar has weakened, and those have more than offset the effects of somewhat higher short-term rates and the very modest increases that we’ve seen in longer-term yields.

 

On December hike odds, Dudley said that “If it (data) evolves in line with my expectations, I would expect — I would be in favor of doing another rate hike later this year.”

 

“I think that if the economy continues to grow above trend, and the labor market continues to tighten, I do think we’ll get to the point where that will lead to higher wages and that will show up in terms of higher inflation.”

 

“Now, the question is at what level of the unemployment rate will that all take place? So, if there are these secular forces that are pushing inflation lower, perhaps we can actually go to a somewhat lower unemployment rate. I would actually view — rather than people wringing their hands that this is so awful that inflation is low, it actually might be a good thing because it could allow you to run the economy at a little bit higher level of resource utilization, which I think … people get employed, they get job skills, they’d be able to build their human capital over time. (00:07:29) The productive capacity of the US economy would be greater — all those things would be good things.”

There was also the amusing, token take on the stock market as reflective of the current state of the economy:

“My own view is that — I’m not particularly concerned about where our asset prices are today for a couple of reasons. The main one is that I think that the asset prices are pretty consistent with what we’re seeing in terms of the actual performance of the economy.”

Which of course, is a “fake news”:

Dudley also spoke on balance sheet reduction:

“And second of all, we can obviously announce the start of the program but delay the actual start date. So I think that — I don’t think the debt limit will have big impact on our decision about whether to start or not start the balance sheet normalization process…  It’s one of the reasons why the reinvestment process, phasing that down, is going to happen very gradually, that we’re not just going to stop abruptly because we want to make sure that the adjustments are small, the model is gentle, and don’t have a big consequence for financial statements.So far I would say that the market reaction has been extraordinarily mild. As expectations have gone from relatively low probability that we’re going to start this to a very high probability that we’re going to start this relatively soon. And so that makes me more confident that when we start, it’s not going to have a big consequence for financial statements.”

Finally, on whether Gary Cohn will replace Janet Yellen:

“I don’t want to evaluate the various candidates for the Federal Reserve, except to say that I think Gary is a reasonable candidate. He knows a lot about financial markets. He knows lots about the financial system. I don’t think you have to have a PhD in Economics, which I have, to be a Chair of the Fed or Governor or a President of one of the Federal Reserve Banks.

end

 

WELL THAT ABOUT DOES IT FOR TONIGHT

I will see you Tuesday night

Harvey.

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