August 24/Two huge whacks on gold and silver today but our precious metals are still resilient: gold down only $2.15 and silver down 9 cents/Greece hit with a huge influx of migrants from Turkey/Israel warns Putin that Iran must leave Syria or else they will attack/Trump wants his wall: if not he will shut down government/City of Hartford will likely file for bankruptcy protection/

GOLD: $1286.85  DOW $2.15

Silver: $16.98  DOWN 9 CENTS

Closing access prices:

Gold $1290.40

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: $1294.05 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME:  $1287.80

PREMIUM FIRST FIX:  $6.25

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SECOND SHANGHAI GOLD FIX: $1293.21

NY GOLD PRICE AT THE EXACT SAME TIME: $1289.60

Premium of Shanghai 2nd fix/NY:$3.61

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LONDON FIRST GOLD FIX:  5:30 am est  $1285.90

NY PRICING AT THE EXACT SAME TIME: $1286.20

LONDON SECOND GOLD FIX  10 AM: $1289.00

NY PRICING AT THE EXACT SAME TIME. $1289.10

For comex gold:

AUGUST/

NOTICES FILINGS TODAY FOR APRIL CONTRACT MONTH: 0 NOTICE(S) FOR  NIL  OZ.

TOTAL NOTICES SO FAR: 4584 FOR 458,400 OZ  (14.258 TONNES)

For silver:

AUGUST

 28 NOTICES FILED TODAY FOR

140,000  OZ/

Total number of notices filed so far this month: 1132 for 5,600,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

end

 

As I have mentioned we are in options expiry week and you should expect pressure on gold/silver for the next 6 trading days. Today, the bankers twice repelled gold/silver’s advance as they try and keep gold under $1300 and silver under $17.00. The USA has only $82. billion left in the kitty with a burn rate of around 3 billion per day. David Stockman believes that there is little chance for a clean rise in the debt ceiling without huge concessions to Democrats. This article is a must read..

Let us have a look at the data for today

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In silver, the total open interest ROSE by A HUGE 4,889 contracts from 187,227 UP TO 192,116 DESPITE THE TINY RISE IN PRICE THAT SILVER UNDERTOOK WITH  YESTERDAY’S TRADING (UP 9 CENTS). NO DOUBT THE GEOPOLITICAL LANDSCAPE WITH TRUMP THREATENING THAT HE WANTS HIS WALL OR HE WILL SHUT DOWN GOVERNMENT CAUSED MANY TO ENTER THE PRECIOUS METALS ARENA.  THE BANKERS HAD NO CHOICE BUT TO SUPPLY THE NECESSARY SHORT PAPER WITH THE NEWBIE SPECS ENTERING THE ARENA WITH RECKLESS ABANDON… SOME OLDER SPECS EXITED WITH A PROFIT.YESTERDAY,  THE BANKERS WERE TELEGRAPHING A RAID THIS MORNING (SILVER SUBDUED IN PRICE COMPARED TO GOLD) WHICH FAILED AGAIN.  THE BANKERS ARE GETTING QUITE NERVOUS WITH THEIR CONTINUED FAILED ATTEMPTS TO CONTROL THE PRECIOUS METALS ARENA.   

RESULT: A MUCH HIGHER OI WITH A SLIGHT PRICE INCREASE.

 In ounces, the OI is still represented by just UNDER 1 BILLION oz i.e.  0.966 BILLION TO BE EXACT or 138% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MAY MONTH/ THEY FILED: 28 NOTICE(S) FOR 140,000  OZ OF SILVER

In gold, the open interest ROSE BY A CONSIDERABLE 5,784 CONTRACTS WITH THE RISE  in price of gold ($3.35 GAIN  YESTERDAY .). The new OI for the gold complex rests at 506,227.

AS IN SILVER, THE GEOPOLITICAL LANDSCAPE WITH TRUMP THREATENING TO CLOSE GOVERNMENT IF HE DID NOT GET HIS WALL HAD A HUGE NUMBER OF NEWBIE SPECS ENTER THE GOLD ARENA WITH THE COMMERCIALS SUPPLYING THE NECESSARY PAPER. SOME OLD SPECS SOLD FOR A PROFIT, THINKING THAT THE PRECIOUS METALS WILL ALWAYS LOWER IN PRICE DURING OPTIONS EXPIRY WEEK.

Result: A HUGE GAIN IN OI with A RISE IN PRICE IN GOLD.

we had: 0 notice(s) filed upon for NIL oz of gold.

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

GLD:

Today, no changes in gold inventory:

Inventory rests tonight: 799.29 tonnes

IN THE LAST 29 TRADING DAYS: GLD SHEDS 37.68 TONNES YET GOLD IS HIGHER BY $54.35 .

SLV

Today:  WE HAD A BIG CHANGE IN SILVER INVENTORY TONIGHT: A WITHDRAWAL OF 1.229 MILLION OZ/

INVENTORY RESTS AT 333.178 MILLION OZ

end

.

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

1. Today, we had the open interest in silver RISE BY 4,889 contracts from 187,227 UP TO 192,116 (AND now A LITTLE CLOSER TO THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) WITH YESTERDAY’S 9 CENT GAIN IN TRADING. SILVER RESPONDED TO THE GEOPOLITICAL CLIMATE WHEREBY TRUMP THREATENED TO SHUT DOWN GOVERNMENT UNLESS HE GOT HIS WALL. NEWBIE SPECS ENTERED THE ARENA.  OLD SPECS THINKING THAT OPTIONS EXPIRY WEEK  NEVER WITNESSES A SILVER RISE, SOLD SOME OF THEIR LONGS FOR A PROFIT.  THE BANKERS HAD NO CHOICE BUT TO SUPPLY SOME NEW SHORTS AND AGAIN THEY COULD NOT COVER. THE BANKERS KEPT  SILVER IN CHECK TELEGRAPHING AN ATTEMPTED RAID WHICH AGAIN FAILED THIS MORNING

 

RESULT:  A MUCH HIGHER OI WITH A TINY HIGHER PRICE.

(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 WEDNESDAY night/THURSDAY morning: Shanghai closed DOWN 16.19 POINTS OR 0.49%   / /Hang Sang CLOSED UP 166.93 POINTS OR .43%/ The Nikkei closed DOWN 80.81 POINTS OR 0.42%/Australia’s all ordinaires CLOSED UP 0.15%/Chinese yuan (ONSHORE) closed UP at 6.6617/Oil DOWN to 48.14 dollars per barrel for WTI and 52.34 for Brent. Stocks in Europe OPENED GREEN , Offshore yuan trades  6.6613 yuan to the dollar vs 6.6617 for onshore yuan. NOW THE OFFSHORE MOVED STRONGER  TO THE ONSHORE YUAN/ ONSHORE YUAN STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS MUCH STRONGER TO THE DOLLAR AND THIS IS COUPLED WITH THE STRONGER DOLLAR. CHINA IS NOT  HAPPY TODAY 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)NORTH KOREA//USA

b) REPORT ON JAPAN

 Japanese bond market volume collapses to record lows due to the fact that they own most of the bonds.
( zero hedge)

c) REPORT ON CHINA

4. EUROPEAN AFFAIRS

Greece/Turkey

oh oh!! this is dangerous.  Greece has been hit with a sudden surge in refugees.  It sure looks like the renegated Erdogan released migrant holed up in Turkey onto Greece’s shores.  This of course will break the EU-Turkey immigration deal.  You will recall the Erdogan received $6 billion to house these refugees in camps.

( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

 

i)ISRAEL/RUSSIA/IRAN

Netanyahu warns Putin that Iran must leave Syria.  Israel is afraid of Iran’s increasing presence with respect to their Shia crescent controlling areas in Iraq, Syria and Lebanon.  Iran has been Israel’s enemy for thousands of years.

( zero hedge)

 

ii)RUSSIA/KOREAN PENINSULA

Russia deploys nuclear capable bombers over the Korean Peninsula. This should frighten Kim.  No doubt China will also send up their bombers and this could escalate very badly

 

( zero hedge)

6 .GLOBAL ISSUES

7. OIL ISSUES

i a)My namesake Hurricane is set to whack Texas crude production and refining capacity in the Gulf:

( zero hedge)

i b)Now Hurricane Harvey is expected to make landfall as a Category 3 Hurricane:

( zerohedge)

ii)We have been warning you about China’s massive buildup of oil in their SPR.  it now seems that China has surpassed the USA with well over 600 million barrels of oil stored under the ground. When China slows its imports, we may see oil at 20 dollars per barrel

( Irina Slav/OilPrice.com)

8. EMERGING MARKET

VENEZUELA

9.   PHYSICAL MARKETS

10. USA Stories

i)Existing home sales slump to 11 month lows as prices for homes were rising too fast

( zerohedge)

ii)Trump warns of debt ceiling mess as he blames McConnell and Ryan.  Interesting enough, strangely the stock market is not reacting at all to what the bond market is telling them.

( zero hedge)

 

iii)Sears holdings is near bankruptcy as same store sales plunge 11.5% and they are closing another 28 stores

( zerohedge)

 

iv)The following is a must read from David Stockman.  He describes the hopeless scene which will lead to a government shutdown. He describes in detail that with Bannon gone, the USA now has only the Kingdom of Goldman Sachs personnel and they will leave the country in total destruction. Trump is now alienated himself and there is no way that any deal will be struck and as such we will have a government shutdown.

as to this morning, the USA has only $82 billion in the kitty. Their burn rate is $3 billion  (Stockman made a typo error in this commentary as 2 billion….in previous commentaries he has stated correctly that the burn rate is $3 billion)  It looks like they may be out by Sept 21.

 

a must read…

( David Stockman/DailyReckoning)

 

v)Both the municipality of Hartford and the state of Connecticut are in serious trouble with the city looming for bankruptcy.  The state is not allowed to file for bankruptcy protection

( zero hedge)

Let us head over to the comex:

The total gold comex open interest ROSE BY CONSIDERABLE 5,794 CONTRACTS UP to an OI level of 506,227 WITH THE FAIR SIZED RISE IN THE PRICE OF GOLD ($3.35 with YESTERDAY’S trading).This time the bankers did supply the necessary gold short paper responding to the geopolitical climate in the states whereby Trump threatened to close government unless he got his wall. Newbie specs entered the arena with some older specs selling at a higher price for a profit as they realized that gold was going to be contained due to options expiry week. The bankers could not cover any of their shortfall.

Result: a huge higher open interest and a fair sized increase in the price of gold.

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 35 contract(s) to stand at 704 contracts. We had notices filed on YESTERDAY so we LOST 32 contracts or an additional 3200 oz will NOT stand at the comex and 32 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 LOSE 57 contracts DOWN to 1258.

The next active contract month is Oct and here we saw a LOSS of 169 contracts DOWN to 52,011.

The very big active December contract month saw it’s OI gain 4,977 contracts up to 395,064.

We had 0 notice(s) filed upon today for  NIL 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 ROSE BY A HUGE 4889 CONTRACTS FROM 187,227 TO 192,116 DESPITE YESTERDAY’S TINY 9 CENT GAIN IN PRICE (AND RAID). THIS TIME, THE BANKERS HAD NO CHOICE BUT TO  ADD TO THEIR SHORTFALL RESPONDING TO THE GEOPOLITICAL CLIMATE WHEREBY TRUMP THREATENED TO SHUT DOWN GOVERNMENT UNLESS HE GOT HIS WALL. NEWBIE SPECS ENTERED THE SILVER ARENA WITH RECKLESS ABANDON.  OLD SPECS SOLD AT A PROFIT THINKING THAT SILVER WILL NOT NECESSARY RISE MUCH IN OPTIONS EXPIRY WEEK. THE BANKERS KEPT SILVER SUBDUED IN PRICE WHICH IS THEIR SIGNAL TO ORCHESTRATE A RAID.  THEY TRIED TODAY BUT AGAIN IT FAILED MISERABLY.
RESULT: SLIGHT HUGE GAIN IN OI WITH A TINY GAIN IN PRICE.

We are now in the next big non active silver contract month of August and here the OI GAINED 13 contract UP TO 37. We had 15 notice(s) filed yesterday.  Thus we GAINED ANOTHER 28 contract(s) or an additional 140,000 oz will stand for delivery in this non active month of August and AGAIN zero EFP’s were issued for the August contract month. Please note that in gold we continually see EFP’s issued but not in silver!!

The next active contract month is September (and the last active month until December) saw it’s OI fall by 5,872 contacts down to 69,434.  The next non active contract month for silver after September is October and here the OI gained 109 contacts up TO 597. After October, the big active contract month is December and here the OI GAINED by 10,026 contracts UP to 108,690 contracts.

We had 28 notice(s) filed for  140,000 oz for the AUGUST 2017 contract

VOLUMES: for the gold comex

ESTIMATED VOLUME TODAY: 128,655 WHICH IS POOR

YESTERDAY’S confirmed volume was 248,771 which is GOOD

volumes on gold are STILL HIGHER THAN NORMAL!

Initial standings for AUGUST

 August 24/2017.

Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
nil oz
Deposits to the Dealer Inventory in oz    nil oz
Deposits to the Customer Inventory, in oz 
  nil oz
No of oz served (contracts) today
 
0 notice(s)
NIL OZ
No of oz to be served (notices)
704 contracts
(70400 oz)
Total monthly oz gold served (contracts) so far this month
4584 notices
458,400 oz
14.258 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   34,462.5  oz
Today we HAD  0 kilobar transaction(s)/ 
total dealer deposits: nil oz
We had nil dealer withdrawals:
total dealer withdrawals:  0 oz
we had 0 customer deposit(s):
total customer deposits; 0  oz
We had 0 customer withdrawal(s)
total customer withdrawals; nil oz
 we had 1 adjustment(s)
i) Out of Brinks:
5826.44 oz was adjusted out of dealer Brinks and into customer account of Brinks
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 0  contract(s)  of which 0 notices were stopped (received) by j.P. Morgan dealer and 0 notice(s) was (were) stopped/ Received) by j.P.Morgan customer account.

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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 (4584) x 100 oz or 458,400 oz, to which we add the difference between the open interest for the front month of AUGUST (704 contracts) minus the number of notices served upon today (0) x 100 oz per contract equals 528,800  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 (4584) x 100 oz  or ounces + {(704)OI for the front month  minus the number of  notices served upon today (0) x 100 oz which equals 528,800 oz standing in this  active delivery month of AUGUST  (16.447 tonnes)
 we LOST 32 contracts or an additional 3200 oz will NOT stand for delivery and 32 EFP’s for August were issued.(FOR FIAT BONUS PLUS ANOTHER DELIVERABLE CONTRACT WHICH MOST LIKELY IS A LONDON BASED FORWARD)
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Total dealer inventory 752,484.587 or 23.405 tonnes  (dealer gold continues to disappear)
Total gold inventory (dealer and customer) = 8,697,722.75 or 269.91 tonnes 
 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 269.91 tonnes for a  loss of 32  tonnes over that period.  Since August 8/2016 we have lost 83 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  83 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE AUGUST DELIVERY MONTH
August initial standings
 August 24  2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
nil oz
Deposits to the Dealer Inventory
nil  oz
Deposits to the Customer Inventory 
599,873.000
oz
???
CNT
No of oz served today (contracts)
28 CONTRACT(S)
(140,000 OZ)
No of oz to be served (notices)
9 contracts
( 45,000 oz)
Total monthly oz silver served (contracts) 1132 contracts (5,600,000 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 3,265,727.9 oz
today, we had  0 deposit(s) into the dealer account:
total dealer deposit: nil   oz
we had 0 dealer withdrawals:
total dealer withdrawals: nil oz
we had 0 customer withdrawal(s):
TOTAL CUSTOMER WITHDRAWALS: nil oz
We had 1 Customer deposit(s):
 i)  CNT:  599,873.000 oz was deposited into CNT??
exact weight  xxx.000 oz
***deposits into JPMorgan have stopped  again
In the month of March and February, JPMorgan stopped (received) almost all of the comex silver contracts.
why is JPMorgan bringing in so much silver??? why is this not criminal in that they are also the massive short in silver
total customer deposits: 599,873.000 oz
 
 we had 0 adjustment(s)
The total number of notices filed today for the AUGUST. contract month is represented by 28 contract(s) for 140,000 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 1132 x 5,000 oz  = 5,600,000 oz to which we add the difference between the open interest for the front month of AUGUST (37) and the number of notices served upon today (28) x 5000 oz equals the number of ounces standing
 

 

.
 
Thus the INITIAL standings for silver for the AUGUST contract month:  1132 (notices served so far)x 5000 oz  + OI for front month of AUGUST(24 ) -number of notices served upon today (37)x 5000 oz  equals  5,645,000 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 28 contracts or an additional 140,000 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 24/2016 we had 54,622 contracts standing vs this yr at 70,560. JUDGING FROM WHAT WE HAVE BEEN EXPERIENCING IN SILVER, NEXT WEEK’S FIRST DAY STANDING WILL BE A DILLY!!
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
ESTIMATED VOLUME TODAY:  81,619 WHICH IS EXCELLENT
YESTERDAY’s  confirmed volume was 105,407 contracts which is OUT OF THIS WORLD
FRIDAY’S CONFIRMED VOLUME OF 105,407 CONTRACTS WHICH EQUATES TO 527 MILLION OZ OF SILVER OR 75% 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:  38.318 million (close to record low inventory  
Total number of dealer and customer silver:   215.932 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 7.0 percent to NAV usa funds and Negative 7.0% to NAV for Cdn funds!!!! 
Percentage of fund in gold 62.7%
Percentage of fund in silver:37.3%
cash .+0.0%( August 24/2017) 
2. Sprott silver fund (PSLV): STOCK   NAV FALLS TO -0.59% (August 24/2017) 
3. Sprott gold fund (PHYS): premium to NAV FALLS TO -0.37% to NAV  (August 24/2017 )
Note: Sprott silver trust back  into NEGATIVE territory at -0.59%/Sprott physical gold trust is back into NEGATIVE/ territory at -0.37%/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 24/no change in gold inventory at the GLD/inventory rests at 799.29 tonnes

August 23/no change in gold inventory at the GLD/Inventory rests at 799.29 tonnes

August 22/no change in gold inventory at the GLD/Inventory rests at 799.29 tonnes/

AUGUST 21/this is good!! a huge deposit of gold into the GLD to the tune of 3.85 tonnes/Inventory rests at 799.29 tonnes

August 18/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 795.44 TONNES

August 17/late last night, a deposit of 4.43 tonnes of gold at the GLD/inventory rests at 795.44 tonnes/the bleeding of gold has stopped.

August 16/no change in gold inventory at the GLD. Inventory rests at 791.01 tonnes

August 15/no change in gold inventory at the GLD/inventory rests at 791.01 tonnes

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

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August 24 /2017/ Inventory rests tonight at 799.29 tonnes
*IN LAST 219 TRADING DAYS: 150.59 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 158 TRADING DAYS: A NET  6.84 TONNES HAVE NOW BEEN ADDED INTO  GLD INVENTORY.
*FROM FEB 1/2017: A NET  9.97 TONNES HAVE BEEN WITHDRAWN.

end

Now the SLV Inventory

AUGUST 24/A HUGE WITHDRAWAL OF 1.229 MILLION OZ FROM THE SLV/INVENTORY RESTS AT 333.178 MILLION OZ

August 23/no change in silver inventory at the SLV/Inventory rests at 334.407 million oz

August 22/no change in silver inventory at the SLV/inventory rests at 334.407 million oz.

AUGUST 21/no change in silver inventory/inventory rests at 334.407 million oz/

August 18/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY REST AT 334.407 MILLION OZ

August 17/A WITHDRAWAL OF 1.418 MILLION OZ LEAVES THE VAULTS OF THE SLV (WITH SILVER UP 25 CENTS YESTERDAY?)/INVENTORY RESTS AT 334.407 MILLION OZ

August 16/no change in silver inventory at the SLV/Inventory rests at 335.825 million oz/

August 15/no change in silver inventory at the SLV/Inventory rests at 335.825 million oz.

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

August 24.2017:

Inventory 333.178  million oz
end
  • 6 Month MM GOFO

    Indicative gold forward offer rate for a 6 month duration

    + 1.35%
  • 12 Month MM GOFO
    + 1.49%
  • 30 day trend

end

Major gold/silver trading/commentaries for THURSDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

Cyberwar Risk – Was U.S. Navy Victim Of Hacking?

– U.S. Navy collisions: More than a coincidence?
– Latest U.S. Navy collision is fourth involving a Seventh Fleet warship this year
– Have US Navy vessels become victims of hacking asks Rickards
– Chief of Naval Operations, Adm. John Richardson, has not ruled out cyber intrusion
– “Once is happenstance. Twice is coincidence. The third time it’s enemy action…” – Ian Fleming
– Cyber security cause for concern in autonomous vehicles, aeroplanes and now ships
– Serves as reminder that a connected world can expose and create vulnerabilities
– Cyber security a major threat to banking and financial industry
– Investors should hold physical gold as insurance against hacking, cyber attacks

Source: Navylive

The tragic U.S.Navy incident of the USS John McCain earlier in the week has raised several questions about the cause. Many are wondering if it was more than human error given this is not an isolated incident.

In the last year there have been four collisions in the area, including the latest one. So far in 2017, 17 US sailors have died in the Pacific southeast in events which have been attributed to accidental collisions with civilian vessels.

  • In January the USS Antietam ran aground near Yosuka, Japan.
  • In May the USS Champlain collided with a South Korean fishing vessel.
  • On June 17th seven US sailors died when the USS Fitzgerald — operating near Yokuska — collided with a container ship from the Philippines. It was determined that “the bridge team lost situational awareness.”

Pentagon and intelligence insider Jim Rickards points out “when the same basic incident happens twice, you have to raise your eyebrows. When you have a low-probability event that happens twice, in other words, the likelihood of coincidence becomes infinitesimal.”

“Once is happenstance. Twice is coincidence. The third time it’s enemy action.” – Ian Fleming
Four 7th Fleet collisions in one year.

Rickards and others are wondering if the Navy’s decades-old reliance on old electronic guidance systems has become the victim of multiple cyberattacks.

There are two main ways a hacker can interfere with a warship: by attacking its GPS  or a malware attack on its computer network.

Rickards isn’t the only one asking questions. Experts at cybersecurity firms have also been voicing their concerns, as reported by Tim Johnson in McClatchyDC:

“When you are going through the Strait of Malacca, you can’t tell me that a Navy destroyer doesn’t have a full navigation team going with full lookouts on every wing and extra people on radar,” said Jeff Stutzman, chief intelligence officer at Wapack Labs, a New Boston, New Hampshire, cyber intelligence service.

“There’s something more than just human error going on because there would have been a lot of humans to be checks and balances,” said Stutzman, a former information warfare specialist in the Navy.

Todd E. Humphreys, a professor at the University of Texas and expert in satellite navigation systems, echoed a similar concern: “Statistically, it looks very suspicious, doesn’t it?”

Understandably the U.S. Navy are trying to keep a lid on any theories of cyber attack. However, in a tweet on Monday Chief of Naval Operations, Adm. John Richardson, did not rule out a cyber attack as a potential cause of the fatal collision:
“No indications right now … but review will consider all possibilities…”

Rickards: Is Someone Attacking the U.S. Navy?

Rickards is always worth reading and he wrote this in the Daily Reckoning:

Some recent tragic incidents involving the US Navy have captured my attention.

There have been two deadly incidents within the past two months, in which Navy warships have collided with merchant vessels.

In the first incident, seven sailors were killed in June when the destroyer USS Fitzgerald collided with a cargo ship near Yokosuka, Japan.

Then this month the USS John McCain, a ship just like the Fitzgerald, collided with an oil tanker near the Strait of Malacca, close to Singapore. Sadly, 10 sailors are lost.

What’s going on here?

Is the Navy losing situational awareness? Are the crews not properly trained? Are they not keeping watch?

We don’t know at this point. It’s all under investigation.

But there’s one possibility I want to raise, and I want to be very clear about this:

I’m raising the possibility for public debate. It’s speculation on my part; I do not have any hard evidence. So I want to be clear that this is not something based on any actual intelligence I have.

But if there were just one incident, if one civilian vessel had collided with one destroyer, the assumption would be that it was just an accident. Maybe there was some equipment failure or the crew on watch failed to detect the ship for whatever reason.

But when the same basic incident happens twice, you have to raise your eyebrows. When you have a low-probability event that happens twice, in other words, the likelihood of coincidence becomes infinitesimal.

You have to basically multiply one low probability by another low probability, and what you end up with is an extremely remote chance that both events are purely accidental.

Is it possible that our adversaries, whether North Korea or Russia or perhaps even China — who are extremely good at hacking — have hacked into the navigation systems of these civilian vessels?

I was ridiculed yesterday for suggesting cyber-attacks on US destroyers. As they say in the Navy, “Now hear this”: http://bit.ly/2xmzl5F 

Could they be using them as, in effect, battering rams or propeller torpedoes to crash into US naval vessels?

I started a discussion about this topic on Twitter. Here’s what I posted:

“Second tragic collision of U.S. warship with merchant vessel raises suspicion of nav system hacking on merchantmen. Are we already at war?”

It received a lot of comments. One was a very interesting comment from former Vermont governor and presidential candidate Howard Dean.

Dean said, “It’s a possibility. I’m not sure if maybe experts talked about this. How about putting some knowledgeable intelligence folks on it?”

I agree completely.

Again, I don’t want to jump to conclusions. But we should at least consider the possibility that someone’s combining cyberwarfare with kinetic techniques to attack American ships.

In other words, hacking into a system to turn a civilian merchant vessel into a battering ram to attack US vessels remotely.

This is something the Russians have worked on. That’s not speculation. We do have intelligence that the Russians have actually tried techniques like this on vessels in the Black Sea.

I’m not the only one asking questions about these incidents, though. Here’s what a former Navy information warfare specialist and current chief intelligence officer at a cyber intelligence service has to say about yesterday’s collision:

“When you are going through the Strait of Malacca, you can’t tell me that a Navy destroyer doesn’t have a full navigation team going with full lookouts on every wing and extra people on radar.”

He adds:

“There’s something more than just human error going on because there would have been a lot of humans to be checks and balances.”

Again, I want to make it clear: I have no proof that hackers were behind these recent incidents.

And if it’s not true, it would be a relief because the problem would be easier to fix through better training and improved protocols.

Again, it could all just be coincidence. But I don’t think we should ignore these incidents. The odds of these low-probability events taking place in such a limited amount of time at least make you scratch your head.

You can bet the US Navy will be doing everything possible to get to the bottom of this.

This isn’t just about the U.S. Navy

Sadly, possible cyberattacks on ships are not just isolated to the U.S. Navy. Civilian shipping is also thought to have fallen victim to sabotage.

On June 27th a global computer attack affected thousands of ships.

Maersk was forced to manually track cargo amid the attack. Earlier this month CEO Soren Skou announced losses of up to $300 million.

Autonomous ships are close to setting sail. This follows a similar pattern in other forms of transport including cars and aeroplanes. All will be exposed to the risks of cyber attacks.

“There is already a lot of interest in cyber protection of cars and autonomous vehicles, we can deduce from that, there might be a way to control ships and airplanes,” Itay Glick, the founder of cyber security firm Votiro, told news.com.au.

“Whenever control of the vessel is done by computer, or navigation is done by computer, there is a big risk for a cyber attack on that computer.”

Given the push for automation in our lives, this is a problem which could potentially just be getting started.

Everything is being automated

We are growing increasingly used to our day-to-day lives being automated.

I can now order washing detergent without really being aware that I need to, my phone effectively reads my mind as it prompts me (without instruction) about things I must do, I never consciously pay a bill any more, the heating in my house no longer requires my input and I don’t even need a key to enter my home.

My life is automated.

Sounds great, the problem is (aside from increasing weight gain as I don’t have to go anywhere)  that it is all online. It is out there for others to see, should they want to.

This means it is highly vulnerable to cyber attack. One day I could be locked out of a boiling hot house which is overrun with washing detergent and final demands for bills I haven’t paid.

The same can be said for our investments and banking. Understandably we do it all online. We should do this because it makes life easier but we should also be aware of the risks it brings and how to protect ourselves.

By owning allocated and segregated physical gold with GoldCore you are protecting yourself against potential hackers in two ways.

First: GoldCore works extremely hard to provide the highest level of security for their clients – both online and offline.

Second: Gold is a tangible asset. This means it cannot just disappear at the touch of a few buttons, courtesy of a few hackers. Should there be a global cyberattack on the financial system, the primary wealth would no longer be primarily digital (cash, stocks and bonds etc).

Instead, tangible wealth would become more important.

Gold will not only be important because of its tangible nature but also because of its role as a safe haven in times of geopolitical risks. A cyberattack whether on the U.S. Navy, a civilian ship, an election or across the financial sphere is an attack. It is a weapon being fired by one party on another.

Whilst we do not know what or who has caused these tragic incidents which have befallen the U.S. Navy, we should learn from them.

Modern digital systems including electronic banking and financial systems have vulnerabilities. We should arm our portfolios with gold bullion, as our insurance and safe haven.

News and Commentary

Gold eases ahead of Jackson Hole central bankers meeting (Reuters.com)

U.S. Policy, Jackson Hole Weigh on Asian Trading (Bloomberg.com)

Trump’s comments roil capital markets, oil rises (Reuters.com)

Germany Finishes Bringing Gold Reserves Back From France and U.S. (Bloomberg.com)

Germany repatriates all the gold it planned to recover — or was going to get (DW.com)

German central bank completes move of €24bn worth of gold (FT.com)

Source: Bloomberg

Wall Street Banks Warn Downturn Is Coming (Bloomberg.com)

World’s Largest Ad Company Crashes After Dismal Earnings (ZeroHedge.com)

Fitch Threatens US with Downgrade (WolfStreet.com)

There is gold in Fort Knox vaults, but who owns it? (KingWorldNews.com)

United Nations Issues Rare “Early Warning” – Signals Potential Civil Conflict In America (ZeroHedge.com)

Gundlach¹s favored gauge says the 10-year US gov bonds to break down (MarketWatch.com)

Gold Prices (LBMA AM)

24 Aug: USD 1,285.90, GBP 1,003.26 & EUR 1,090.44 per ounce
23 Aug: USD 1,286.45, GBP 1,004.33 & EUR 1,091.68 per ounce
22 Aug: USD 1,285.10, GBP 1,000.71 & EUR 1,091.95 per ounce
21 Aug: USD 1,287.60, GBP 999.82 & EUR 1,096.52 per ounce
18 Aug: USD 1,295.25, GBP 1,004.34 & EUR 1,102.65 per ounce
17 Aug: USD 1,285.90, GBP 998.12 & EUR 1,096.74 per ounce
16 Aug: USD 1,270.15, GBP 985.13 & EUR 1,082.29 per ounce

Silver Prices (LBMA)

24 Aug: USD 16.93, GBP 13.20 & EUR 14.36 per ounce
23 Aug: USD 17.06, GBP 13.32 & EUR 14.48 per ounce
22 Aug: USD 17.02, GBP 13.27 & EUR 14.48 per ounce
21 Aug: USD 17.02, GBP 13.20 & EUR 14.48 per ounce
18 Aug: USD 17.15, GBP 13.30 & EUR 14.60 per ounce
17 Aug: USD 17.02, GBP 13.23 & EUR 14.55 per ounce
16 Aug: USD 16.68, GBP 12.96 & EUR 14.25 per ounce


Recent Market Updates

– Mnuchin: I Assume Fort Knox Gold Is Still There
– Buffett Sees Market Crash Coming? His Cash Speaks Louder Than Words
– Gold, Silver Consolidate On Last Weeks Gains, Palladium Surges 36% YTD To 16 Year High
– Must See Charts – Gold Hedges USD Devaluation, Rise in Oil, Food and Cost of Living Since Nixon Ended Gold Standard
– World’s Largest Hedge Fund Bridgewater Buys $68 Million of Gold ETF In Q2
– Diversify Into Gold Urges Dalio on Linkedin – “Militaristic Leaders Playing Chicken Risks Hellacious War”
– Gold Has Yet Another Purpose – Help Fight Cancer
– Gold Up 2%, Silver 5% In Week – Gundlach, Gartman and Dalio Positive On Gold
– Great Disaster Looms as Technology Disrupts White Collar Workers
– Gold Sees Safe Haven Gains On Trump “Fire and Fury” Threat
– Silver Mining Production Plummets 27% At Top Four Silver Miners
– Gold Consolidates On 2.5% Gain In July After Dollar Has 5th Monthly Decline
– Gold Coins and Bars See Demand Rise of 11% in H2, 2017

END

A very important interview of Ronan Manly by Jay Taylor on gold derivatives

(courtesy Ronan Manly/Jay Taylor)

Gold researcher Ronan Manly interviewed by newsletter writer Jay Taylor

 Section: 

2:35p ET Wednesday, August 23, 2017

Dear Friend of GATA and Gold:

Gold researcher Ronan Manly was interviewed today by newsletter writer Jay Taylor about gold’s relationship with gold derivatives — “paper gold” — and whether the former can ever break free of the latter. Manly notes that his attendance at GATA’s conference in London in 2011 prompted him to renew his research into the monetary metals. The interview is a little less than a half-hour long and can be heard at Taylor’s internet site here:

https://jaytaylormedia.com/media/taylor20170822.mp3

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

 

 

END

Ronan Manly correctly states that Mnuchin’s visit to Fort Knox  proves nothing about the USA gold reserves because they no doubt have down gold swaps with other sovereigns.

(courtesy Ronan Manly/Bullionstar/GATA)

Ronan Manly: Mnuchin’s PR visit to Fort Knox proved nothing about U.S. gold reserves

 Section: 

7:45p ET Wednesday, August 23, 2017

Dear Friend of GATA and Gold:

Gold researcher Ronan Manly writes today that regardless of the propaganda purposes of U.S. Treasury Secretary Steven Mnuchin’s visit to Fort Knox this week, it established nothing about the U.S. gold reserves. Manly’s commentary is headlined “Mnuchin’s PR Visit to Fort Knox Proves Nothing About the U.S. Gold Reserves” and it’s posted at Bullion Star here:

https://www.bullionstar.com/blogs/ronan-manly/mnuchins-pr-visit-fort-kno…

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

 END
And on the same subject as above, John Embry weighs in on the gold at Fort Knox.  He believes two things:
1. all the gold is not there as China and other eastern nations have mobilized movement of Western gold into their countries
2. gold swaps make it impossible to determine who the rightful owner is of physical gold at Fort kNox
3. there are huge number of  obligations per oz of physical which also causes problems as to ownership when the dust settles on a collapse
a must see interview
(courtesy John Embry/Kingworldnews/GATA)

Embry to KWN: Sure, there’s gold in the vaults, but who claims ownership?

 Section: 

8:44p ET Wednesday, August 23, 2017

Dear Friend of GATA and Gold:

Responding to U.S. Treasury Secretary Steven Mnuchin’s visit to Fort Knox this week, Sprott Asset Management’s John Embry tells King World News that the most important issue isn’t whether there is gold in central bank vaults but rather how many ownership claims attach to it. Embry’s interview is posted at KWN here:

http://kingworldnews.com/john-embry-mnuchin-was-just-being-clever-all-th…

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

END

Bill Holter (with this new hip) comments on Jim Rickards piece:

Hi Bill/Harvey, the following was my comment on JSMinset regarding Rickards:
Bill Holter’s Commentary
So Jim Rickards says he has seen no proof the gold is gone and has seen “proof” the gold IS in Ft. Knox. If this is the case, PLEASE SHOW US THE PROOF! Funny he mentions Eric Sprott in this article. Eric and I met Jim Rickards in London at the GATA conference in August 2011. He was adamant the Treasury would mark gold up to $10,000. I asked him in front of a dozen people if he knew there had not been an audit of the gold since the 1950’s? He tipped his head and said, “Really, I was not aware of that”? I saw his reaction with my own eyes, he had no idea there had been no audit. Afterwards, Eric said to me “if he doesn’t know there has not been an audit since the 1950’s, what else doesn’t he know?”
Let me say this, “if” Mr. Rickards is truly “ex CIA” then I believe he is using their playbook by giving 90% truth with a “hook” in there. The “HOOK” being the gold is there! I also believe “ex CIA” is about as common as “ex mafia”… As for the gold, seeing it has been delivered internationally for over 20 years and demand has exceeded mine+scrap supply during this time period …it had to come from “somewhere”. That “Somewhere” can only be from places where it once existed …Western vaults! Please show us your proof Mr. Rickards!!!
end

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

 
 

1 Chinese yuan vs USA dollar/yuan STRONGER 6.6617 (REVALUATION NORTHBOUND   /OFFSHORE YUAN MOVES MUCH STRONGER TO ONSHORE AT   6.6613/ Shanghai bourse CLOSED DOWN 16.19 POINTS OR 0.49%  / HANG SANG CLOSED UP 266.93 POINTS OR .43% 

2. Nikkei closed DOWN 80.81 POINTS OR 0.42%    /USA: YEN FALLS TO 109.36

3. Europe stocks OPENED IN THE GREEN     ( /USA dollar index RISES TO  93.30/Euro DOWN to 1.1793

3b Japan 10 year bond yield: FALLS  TO  +.027%/ 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::  48.14 and Brent: 52.34

3f Gold DOWN/Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO  +.383%/Italian 10 yr bond yield DOWN  to 2.112%    

3j Greek 10 year bond yield FALLS to  : 5.549???  

3k Gold at $1286.30  silver at:16.92 (8:15 am est)   SILVER BELOW  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN 8/100 in  roubles/dollar) 59.15-

3m oil into the 48 dollar handle for WTI and 52 handle for Brent/

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation  (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/GOT A SMALL SIZED REVALUATION NORTHBOUND 

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 109.36 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  0.9647 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1376 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  +0.383%

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 2.185% early this morning. Thirty year rate  at 2.756% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

Global Markets Rise As Shutdown Fears Recede; All Eyes On Wyoming As Jackson Hole Begins

U.S. stock-index futures are fractionally in the green as European shares rise, Asia is mixed and oil drops modestly. Global risk staged a rebound and markets unwound some of yesterday’s safe-haven moves as U.S. government shutdown fears receded and concerns about the Trump administration’s ability to enact its fiscal agenda were put on the back-burner in European trading. Bored investors are marking time as they wait to see whether the gathering of policy makers in Wyoming will offer any hints on the process of unwinding stimulus.

The MSCI World index, which fell to a five-week low on Monday, was flat on Thuesday while gains by cyclical stocks helped Europe’s STOXX 600 index inch up 0.5%, even as shares of UK’s Dixons Carphone plummeted up to 29% after the mobile phone retailer downgraded expectations for full-year profit, reflecting tougher conditions in the mobile market as customers hold on to handsets for longer. It was the worst-performing among European retail stocks so far this year, even before today’s decline wiped a third off its market value. British sub-prime lender Provident Financial recovered slightly from its sharp falls earlier in the week, up 2.7 percent.

MSCI’s index of Asia-Pacific shares ex-Japan gained, shaking off jitters that gripped markets after U.S. President Donald Trump threatened to shut down the U.S. government and end the North American Free Trade Agreement. Japan’s Nikkei fell 0.4%, dragged down a stronger yen and by steel makers, after reports that the country’s biggest producer was cutting prices. Japan’s Topix index fell 0.5 percent. South Korea’s Kospi index increased 0.4 percent and Australia’s S&P/ASX 200 Index added 0.1 percent. Hong Kong’s Hang Seng Index rose 0.4 percent as the market reopened after being shut on Wednesday. The Japanese yen fell 0.3 percent to 109.35 per dollar.

The dollar strengthened against major G-10 peers in another quiet overnight session; the Korea won strengthens for a fourth day as North Korea tensions appear to be blowing off. Treasury futures are modestly lower while the 10-year JGB yield fell to 0.025%, the lowest since May, following a strong auction. The Hang Seng reopened with gains after Wednesday’s typhoon-induced break, sending H-shares approach 2017 highs. Over in China, the offshore yuan climbed to its highest level since September as the PBOC strengthened the Yuan fixing and skipped open market operations, draining a net 100 billion yuan from the market. WTI crude little changed; Dalian iron ore 2.5% higher.

Oil is modestly lower despite traders starting to watch tropical depression Harvey, which could strengthen into the first hurricane to strike Texas since 2008, forcing workers to be evacuated from Gulf of Mexico platforms, and sending cotton rallying as airlines prepare for flight disruptions. On Wednesday, the EIA reported that U.S. crude and gasoline stockpiles fell while production rose.

On Tuesday, Trump said he would be willing to risk a government shutdown to secure funding for a wall along the Mexico border. Those comments came before a late-September deadline to raise the U.S. debt ceiling or risk defaulting on debt payments. As a result, Fitch said failure to raise the debt ceiling soon would lead it to review the United States’ sovereign rating with “potentially negative implications.”

Markets will be focusing on the central banking symposium in Jackson Hole, Wyoming, which kicks off today and where Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi are both due to speak on Friday, although new policy messages were considered unlikely. Still, “there are concerns about what central bankers will say as the market appears stretched, especially Wall Street, where valuations look to have reached a limit,” said Enrico Vaccari, a fund manager at Italy’s Consultinvest. Vaccari said he saw risks of a stock market correction after Jackson Hole that was unlikely to leave Europe stocks unscathed, even though valuations in the regions had become attractive again compared with their U.S. peers. “Europe can’t make it on its own, especially because of the super-euro,” he said.

As Bloomberg notes this morning, “expectations for meaningful comments from the key speakers at Jackson Hole – Federal Reserve Chair Yellen and European Central Bank President Mario Draghi – seem fairly low, but amid lackluster August trading the event is significant enough to capture the focus of most investors. If nothing else, it’s a welcome distraction from U.S. politics. All major U.S. equity benchmarks fell on Wednesday after President Donald Trump’s threat to shut down the government.”

“Major central banks, including the Fed, are in transition from providing ever more accommodation to gradually removing accommodation,” said Kevin Harris, analyst at Roubini Global Economics. “Recent Fed commentary contains hints of running a risk of pushing growth just a bit to see if more gains are available. Jackson Hole may offer further clues about this prospect.”

Across FX, the USD edged up against some other major currencies after falling on worries about a possible U.S. government shutdown. The dollar is down 14% against the euro this year. The dollar index which tracks the U.S. currency against a basket of six other major currencies, gained 0.2 percent to 93.311 on Thursday, following the previous day’s 0.4 percent slide. The euro slipped 0.1% at $1.1790, after climbing 0.4% on Wednesday on surveys that showed German and French manufacturing and services were expanding .

In commodities, oil was steady, holding on to most of their recent gains after another fall in U.S. crude inventories indicated a tighter market, and as a tropical storm headed towards oil producing facilities in the Gulf of Mexico. Brent was flat at $52.58 per barrel

Economic data include initial jobless claims and existing home sales. Broadcom, CIBC, Autodesk, VMware, Dollar Tree, Ulta Beauty, Hormel and Tiffany are among companies reporting earnings.

Overnight Bulletin Summary

  • EU bourses slightly higher this morning, however Dixons Carphone loses 1/3 of its value
  • NZD fails to be supported by firm trade balance, while GBP dips as household spending hits lowest since Q4 2014
  • Looking ahead, highlights include US existing home sales, jobless claims and the beginning of the Jackson Hole Symposium,

Market Snapshot

  • S&P 500 futures up 0.1% changed at 2,444.25
  • STOXX Europe 600 up 0.5% to 375.80
  • VIX Index down 2.7% to 11.92
  • Brent futures down 0.2% to $52.45/bbl
  • Gold spot down 0.4% to $1,286.23
  • U.S. Dollar Index up 0.2% to 93.35
  • MSCI Asia down 0.07% to 159.95
  • MSCI Asia ex Japan up 0.4% to 530.03
  • Nikkei down 0.4% to 19,353.77
  • Topix down 0.5% to 1,592.20
  • Hang Seng Index up 0.4% to 27,518.60
  • Shanghai Composite down 0.5% to 3,271.51
  • Sensex up 0.1% to 31,602.08
  • Australia S&P/ASX 200 up 0.1% to 5,745.48
  • Kospi up 0.4% to 2,375.84
  • German 10Y yield rose 0.3 bps to 0.38%
  • Euro down 0.1% to $1.1790
  • US 10Y yield rose 1.4 bps to 2.18%
  • Italian 10Y yield rose 1.8 bps to 1.827%
  • Spanish 10Y yield fell 0.3 bps to 1.569%

Top Overnight News

  • Donald Trump’s threats to shut down the government in October over border wall funding triggered concerns on Capitol Hill and could complicate Congress’s job of raising the debt ceiling
  • OPEC Joint Ministerial Monitoring Committee: oil market moving in the right direction as stockpiles drop in July; see compliance with output cuts at 94%
  • Qatar said it will return its ambassador to Iran and seek stronger relations with its Persian neighbor as the gas-rich nation’s standoff with four Arab countries drags on
  • U.K. 2Q P GDP unrevised q/q 0.3%; household spending 0.1% vs 0.3% est; ONS notes weakest 1H growth since 2012
  • U.K. consumer-spending growth slowed in the second quarter as car sales fell and business investment stagnated
  • Norway 2Q GDP q/q: 1.1% vs 0.6% est; Statistics Norway highlight a broad rise in consumer spending at +1.2%
  • Elliott Is Said to Buy More Stada Shares to Win Higher Price
  • Deutsche Bank Is Said to Halve MiFID Fixed- Income Research Price
  • Hedge Funds’ MiFID Defection Highlights Limit of EU Rule Revamp
  • Amazon’s Whole Foods Deal Wins Swift U.S. Antitrust Approval
  • ECB’s Hansson Shrugs Off Euro Gains for Now as QE Talks Near
  • Hedge Fund Crusade Stymied as Japan Inc. Clings to Cross-Shares
  • Schneider, Eaton Are Said in Race to Buy L&T Electrical Unit: ET
  • Ex-Intel CFO’s Exit ‘Highly Negative’ for Chipmaker: Rosenblatt
  • Crackdown Risk Has China’s Hottest Stocks Looking Vulnerable

Asia equity markets traded with an indecisive tone following the downbeat finish on Wall St. where sentiment was dampened by Trump’s threats to shut down the government and terminate NAFTA. ASX 200 (+0.2%) was mildly positive amid strength in material names and with the largest movers in the index driven by recent earnings, while Nikkei 225 (-0.3%) declined as exporters suffered from USD/JPY’s brief slip to below 109.00. Elsewhere, Shanghai Comp. (Unch.) and Hang Seng (+0.1%) were choppy as the PBoC refrained from operations which resulted to a CNY 100bln daily net liquidity drain, while participants also digested a slew of earnings. Finally, 10yr JGBs saw mild support from the cautious tone in Japanese stocks and as yields declined in which the 20yr yield fell to its lowest since December. PBoC refrained from open market operations today. (Newswires) PBoC set CNY mid-point at 6.6525 (Prey. 6.6633)

Top Asian News

  • No. 1 China Equities Fund Bought Only Three Stocks This Year
  • Mitsui Buys Fairfax Stake in First Capital for $1.6 Billion
  • Billionaire Porn King Reinvents Himself as Japan’s Startup Guru
  • Toshiba, WD Are Said to Seek Signing Chip Deal on Aug. 31: Asahi
  • Ford Names Jason Luo Chairman, CEO for Ford China
  • Infosys Founders Are Said to Plot Board Coup to Retake Control
  • Dividends Frozen as Santos Takes Razor to $2.9 Billion Debt Pile
  • Japan Shares Dip as Steelmakers Drop on Toyota Price- Cut Reports
  • Vietnam Asks Taiwan to Stop Live Military Drills on Spratlys

European markets are slightly higher this morning, with the Eurostoxx trading higher by 0.2%. Notable mover this morning is the shares of Dixons Carphone which has slumped as much as 32%. This came after a surprise profit warning from the company amid a tough phone market and lower earnings from its software division.  EGBs are modestly lower today with German yields ticking higher. The curve showing a slight flattening bias with the short-end underperforming marginally. Recent weakness in peripheral debt relative to German debt has come to a halt with spreads tightening, Bono’s and BTPs narrower by 0.3bps and lbps respectively.

Top European News

  • Dixons Carphone Plunges as Mobile Slowdown Leads to Warning
  • U.K. Consumer Spending Barely Grows, Restraining Economy
  • Hungary’s NBH ‘Closely Examining’ More Monetary Easing

In currenices, narrow ranges overnight with many looking towards the Jackson Hole Symposium. However, price action had been dictated by the recovery in the USD¬index. Elsewhere, NZD continues to be pressured from yesterday’s GDP downgrade in the government forecasts and as such last night’s better than expected trade balance data failed to support the currency. GBP fell in the wake of the secondary GDP report, which showed household spending falling to its lowest level since Q4 2014 as consumers grapple with negative real earnings growth.

In commodities, crude prices have held onto yesterday’s gains, while major oil producers, including Shell and Exxon announced that they were curbing some oil and gas output at facilities in the Gulf of Mexico ahead of a storm expected to hit the Texas coast. Additionally, the committee of OPEC and Non-OPEC stated that all options for a possible cut and or extension is on the table for the next monitoring meeting in September 22nd.

Looking at the day ahead, the UK’s preliminary Q2 GDP came in line with expectations at +0.3% qoq and +1.7% yoy, as expected. Data on France’s business and manufacturing confidence index printed at 111, beating expectations of 108 and above July’s revised 108. In the US, there is the Kansas City Fed manufacturing index, initial jobless claims, continuing claims and existing home sales data. Away from the data, as noted earlier the Jackson Hole symposium kicks off. Back in Italy, the ECB governing council member Visco (governor of Italy) will speak.

US Event Calendar

  • Aug. 24-Aug. 26: Kansas City Fed hosts annual Jackson Hole Policy Symposium
  • 8:30am: Initial Jobless Claims, est. 238,000, prior 232,000; Continuing Claims, est. 1.95m, prior 1.95m
  • 9:45am: Bloomberg Consumer Comfort, prior 52.1
  • 10am: MBA Mortgage Foreclosures, prior 1.39%; Mortgage Delinquencies, prior 4.71%
  • 10am: Existing Home Sales, est. 5.55m, prior 5.52m; MoM, est. 0.54%, prior -1.8%
  • 11am: Kansas City Fed Manf. Activity, est. 11, prior 10

DB’s Jim Reid concludes the overnight wrap

we’ve got a more reliable event to look forward to today with the annual Jackson Hole symposium kicking off this evening. While it does officially start tonight the heavy hitters (Yellen and Draghi) are actually scheduled to speak tomorrow so it’s unlikely we get much of interest today. As we’ve been saying over the last few days it does feel like expectations have been pegged back a bit for a number of reasons. This appears to be particularly the case for the ECB and after Mario Draghi’s damp squib of a speech in Lindau yesterday morning there isn’t much reason for that view to change.

That said it probably won’t stop markets spending today second guessing what we may or may not hear, but away from that the other theme resonating around markets at the moment seems to be the various chatter about a possible US government shutdown. The latest threat from President Trump in which he vowed to shut down the government should Congress not fund the border wall, in addition to the talk about ending NAFTA, seemed to undo much of the optimism around the tax reform talk and resulted in risk assets taking a few chips off the table yesterday. A NY Times report suggesting a rift in the relationship between Trump and Senate Majority Leader Mitch McConnell seemingly didn’t help either although McConnell has since issued a statement saying that he and Trump are working towards a unified agenda. Notwithstanding all of the noise and bluster, developments and headlines out of Washington continue to be the main driver for markets for the time being as investors by and large appear fairlyrelaxed around the general central bank message for now.

Back to the debt ceiling, the federal government has until sometime between late-September and mid-October in order to avoid a technical default by raising the ceiling and it feels like the story has plenty of room to run until then when Congress returns to Washington in early September. Previous experience in 2011 and 2013 showed that the debates became important fiscal turning points so it’s not to be underestimated. So the next six weeks have the potential to be interesting.

Staying with politics, yesterday the UK government released a position paper on judicial arrangements post Brexit. DB’s Oliver Harvey noted that the paper confirmed that the UK will leave the direct jurisdiction of the CJEU after Brexit, but has proposed a new dispute-resolution mechanism to govern the transitional agreement and any disputes arising from the future partnership. Oliver notes that the mechanism is conceptually very similar to the EFTA court that guarantees the EEA agreement. In his view the paper is a positive step, particularly as the question of legal enforceability is probably the largest sticking point in upcoming negotiations.

For all the politics talk, there was some good news to report from yesterday’s economic data and specifically the August flash PMIs. Germany surprised to the upside with the manufacturing PMI moving back to 59.4 (vs. 57.6 expected) and not far from the recent peak of 59.6. The services PMI recovered slightly to 53.4 (vs. 53.3), bringing the composite PMI to 55.7 and a full point above July. Our economists believe the stronger PMI readings confirm their view that the German economy should continue to expand at a robust pace in the next quarters, but at the same time signal growing capacity pressures and, hence, rising overheating risks.

Meanwhile the Euro-area flash PMI remained stable with manufacturing gains compensating a small services decline. The composite PMI edged up slightly to 55.8 which continues to suggest that the economy is growing at an annual rate of c.2.5% yoy. The details also suggest a slight decline in the data for the periphery. Our economists also noted that despite recent Euro appreciation, the input prices print was up, suggesting that price pressures in the euro-area are not falling (contrary to what some people have suggested).

The ECB’s Hansson didn’t appear to have much concerns about the recent Euro rally either, noting that it is largely a reflection of the region’s economic momentum. Elsewhere, he said he doesn’t yet have a firm view on how the stimulus package should be in design after 2017. On inflation, he noted “Let’s be a bit more patient…it’s just going to take us a bit more time…it will come eventually, have faith that these relationships (Phillips curve) exist..”.

Those PMIs helped the Euro climb another +0.38% versus the Greenback yesterday, while against Sterling the single currency rallied +0.57% yesterday and edged +0.06% higher this morning to the highest level since October 2009. Sovereign bond yields were briefly higher however reversed in the afternoon as risk aversion turned. 10y Bunds ended 2bp lower to 0.374% and Treasuries were around 5bp lower to 2.167%, although yields are slightly higher this morning. Meanwhile in equity land, the S&P 500 and Dow closed -0.35% and -0.40% respectively. European markets also ended weaker with the Stoxx 600 down -0.50%. Notably, WPP, the world’s largest advertising group fell 11% yesterday (the worst trading day in 19 years), after cutting its’ fully year sales outlook post a drop in customer demand.

This morning in Asia, trading volumes have been fairly light and markets opened a bit mixed. The Nikkei has dipped -0.19% and China bourses are down a similar amount while on the other hand the Kospi (+0.49%), ASX (+0.16%) and Hang Seng (+0.61%) have all edged higher with the latter in particular resuming trading after a day off following typhoon Hato.

Wrapping up the rest of the data from yesterday. In the US, the August manufacturing PMI was lower than expected at 52.5 (vs. 53.5), but the services PMI increased 2.2pts to 56.9 (vs. 55.0), the highest level since April 2015. Overall the composite index rose to 56.0 (last seen in May 2015). New home sales for July fell 9.4% mom (vs. 0% expected), but on a three-month average, new home sales are still up 4.2% yoy, with the recent slowdown in growth likely reflecting underlying building activity. Elsewhere, MBA mortgage applications fell 0.5% last week.

Looking at the day ahead, the UK’s preliminary Q2 GDP (+0.3% qoq and +1.7% yoy expected) will be out, then data on private consumption (0.4% qoq expected), export / import, index of services and total business investment are due. France’s business and manufacturing confidence index will also be due. Over in the US, there is the Kansas City Fed manufacturing index, initial jobless claims, continuing claims and existing home sales data. Away from the data, as noted earlier the Jackson Hole symposium kicks off. Back in Italy, the ECB governing council member Visco (governor of Italy) will speak.

 END

3. ASIAN AFFAIRS

i)Late WEDNESDAY night/THURSDAY morning: Shanghai closed DOWN 16.19 POINTS OR 0.49%   / /Hang Sang CLOSED UP 166.93 POINTS OR .43%/ The Nikkei closed DOWN 80.81 POINTS OR 0.42%/Australia’s all ordinaires CLOSED UP 0.15%/Chinese yuan (ONSHORE) closed UP at 6.6617/Oil DOWN to 48.14 dollars per barrel for WTI and 52.34 for Brent. Stocks in Europe OPENED GREEN , Offshore yuan trades  6.6613 yuan to the dollar vs 6.6617 for onshore yuan. NOW THE OFFSHORE MOVED STRONGER  TO THE ONSHORE YUAN/ ONSHORE YUAN STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS MUCH STRONGER TO THE DOLLAR AND THIS IS COUPLED WITH THE STRONGER DOLLAR. CHINA IS NOT  HAPPY TODAY 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

NORTH KOREA/USA

b) REPORT ON JAPAN

Japanese bond market volume collapses to record lows due to the fact that they own most of the bonds.
(courtesy zero hedge)

Japanese Bond Market Volume Collapses To Record Low

With volatility at record lows…

The Japanese bond market remains paralyzed with trading volumes hitting record lows as private bondholders no longer dare to even breathe without instructions from the central bank.

Gross purchases of JGBs by investors dropped 22% to 12.6t yen ($115.1b) in July, the least since May 2016, according to the latest data from Japan Securities Dealers Association Monday. On a rolling 12-month average basis, the volume was at an all-time low.

 

As far back as 2014, traders were warning that Japan’s bond market is dead… and so is its stock and FX markets…

The Bank of Japan’s unprecedented asset purchase program has released a creeping paralysis that is freezing government bond trading, constricting the yen to the tightest range on record and braking stock-market activity.

 

 

“All the markets have been quiet,” said Daisuke Uno, the Tokyo-based chief strategist at Sumitomo Mitsui Banking Corp. “We’ve already seen the BOJ dominance of JGBs since last year, but recently participants in currency and stock markets are also decreasing as those assets have traded in narrow ranges.”

 

 

The flows on both the buying side and selling side continue to fall,” said Takehito Yoshino, the chief fund manager at Mizuho Trust & Banking Co., a unit of Japan’s third-biggest financial group by market value. “Falling volatility is a very serious problem for traders and dealers who are unable to get capital gains.”

And now, as more market participants throw in the towel on a rigged, centrally planned market, the result will – no could – be a further loss of market function, and a guaranteed crash once the BOJ and other central banks pull out (which is why they can’t). As the Nikkei politely concludes,

“if the bond and money markets lose their ability to price credit based on future interest rate expectations and supply and demand, the risk of sudden rate volatility from external shocks like a global financial crisis will rise.”

Translation: in a world where only central banks trade, everyone else is destined to forget forget what trading, and certainly selling, means.

end

c) REPORT ON CHINA

 

4. EUROPEAN AFFAIRS

Greece/Turkey

oh oh!! this is dangerous.  Greece has been hit with a sudden surge in refugees.  It sure looks like the renegated Erdogan released migrant holed up in Turkey onto Greece’s shores.  This of course will break the EU-Turkey immigration deal.  You will recall the Erdogan received $6 billion to house these refugees in camps.

(courtesy zero hedge)

Greece Hit By Sudden Surge In Refugees – Did Erdogan Break EU-Turkey Immigration Deal?

As tensions soar between Ankara and Berlin, following Germany’s angry response to Erdogan’s call for those of Turkish descent to vote against Merkel,coincidentally huge wave of refugees has suddenly started appearing on Greek coasts, making some wonder if Erdogan has broken his EU-Immigration deal.

The last six days have seen over 1,200 refugees and migrants arrive Greece from Turkey.

New Arrivals:

  • August 18: 105
  • August 19: 308
  • August 20: 136
  • August 21: 397
  • August 22: 250
  • August 23: 174

Source: Greek Migration Ministry

In addition, 84 new arrivals were recorded on the islands of Lesvos and Samos, on Wednesday.

As KeepTalkingGreece.com reports,  two people assigned to operate the boat engines were arrested.

A FRONTEX vessel rescued 48 refugees off the small island of Ro in the south-eastern Aegean.

2,400 people arrived in Greece August 1-20, 2017. Half of them arrived within just the last days.

Local authorities observe the incising number of arrivals with “keen concern” to see whether the phenomenon is temporary linked to the good weather conditions or if there is a more general trend. They already warn that the situation on the islands is slowly getting out of control.

More than 14,000 people are trapped on the Greek islands that have hosting capacity for 5,576 people.

Total numbers on the islands: 14,221

  • in hotspots: 8,179
  • in unofficial hotspots: 3,449

Reports from the island of Chios underline that a lot of refugees and migrants live outside the hotspots, spread across land plots without tents or any other facilities.

“Little kids are seen to walk around without shoes and sleep in carton boxes,” PolitisChios.gr reports from the area around unofficial hotspot of VI.AL.

On the island of Samos the situation is reportedly not much better

Sudden migrant flow increase – a Turkish plan?

According to the correspondent of AthensNewsAgency on the island of Lesvos, the Turkish Coast Guard has announced that it had zero intervention in the issue of refugees and migrants from the Turkish coast to the Greek islands as of August 15th.

However, the increase of the refugee and migrants flow does coincide with the bitter row between Ankara and Berlin.

Last Friday, President Erdogan described the main German political parties as “enemies of Turkey” and urged his German of Turkish descent to not vote for Merkel’s CDU, the Social-democrats and the Greens.

German politicians responded with fury to Erdogan’s remarks.

@NikolasGeorgiou

Meanwhile in Athens, Afghan migrants staged a protest outside the Ministry of Migrations and the offices of the European Commission demanding the annullation of the EU-Turkey deal, ‘equal rights treatment of protection seekers’ and a stop of deportations of Afghan migrants form EU countries.

Last year, the European commission had excluded Afghans from its refugees lists claiming their lives were not at risk if they should be deported to Afghanistan. They were no longer war refugees, Brussels ruled.

The Afghan protest was supported by Greek solidarity groups.

5. RUSSIA AND MIDDLE EASTERN AFFAIRS

ISRAEL/RUSSIA/IRAN

Netanyahu warns Putin that Iran must leave Syria.  Israel is afraid of Iran’s increasing presence with respect to their Shia crescent controlling areas in Iraq, Syria and Lebanon.  Iran has been Israel’s enemy for thousands of years.

(courtesy zero hedge)

Netanyahu To Putin: Iran Must Leave Syria Or “We Will Act”

For Netanyahu and other Israeli officials the chief concern was never the black clad death cult which filmed itself beheading Americans and burning people alive.  “Let the Sunni evil prevail,” they say.

Israel is threatening to escalate military action in Syria against perceived Iranian interests. This week Netanyahu declared“we will act when necessary according to our red lines” while hinting he prefers ISIS presence in Syria as opposed to Iran aligned fighters at his border. This comes as ISIS is now crumbling, and at a time when most world leaders of nations driving the external proxy war in Syria have toned down their rhetoric regarding the future fate of the Assad government.

After years of a regular drumbeat of bellicose statements emanating from the West and repeat talk of “Assad must go”, “red lines”, and years of constantly failed predictions that “regime demise is imminent,” there now seems a general acceptance that the Syrian government has emerged victorious in the 6-year long conflict. Not only did Trump this summer order the closure of the CIA’s regime change program which targeted Assad, but it appears even Gulf nations – lately embroiled in their own inter-GCC political civil war and airing of dirty laundry – have been forced to temper their rhetoric. Turkey also has reluctantly shiftedits priorities in Syria after its well-known and documented regime change machinations – which included facilitating the transfer of tens of thousands of foreign jihadists (the core of which joined ISIS) across its southern border – have largely backfired. International media too, generally reflecting undeniable geopolitical realities, have bluntly headlined stories with “And the winner is: Assad” and “We have to accept that Assad will win in Syria” and “How Assad is Winning”.

But it appears Benjamin Netanyahu didn’t get the memo. On Wednesday the Israeli Prime Minister told Russian President Putin that Israel would not tolerate an Iranian presence in Syria and further signaled willingness to go to war in Syria to curtail Iranian influence. “Iran is already well on its way to controlling Iraq, Yemen and to a large extent is already in practice in control of Lebanon,” Netanyahu told Putin, adding further that, “We cannot forget for a single minute that Iran threatens every day to annihilate Israel. Israel opposes Iran’s continued entrenchment in Syria. We will be sure to defend ourselves with all means against this and any threat.”


Image source: Sputnik International

The two leaders met for three hours in the Black Sea resort of Sochi – their sixth such meeting since September 2015. Putin did not respond publicly to the provocative words on Syria during the portion of the meeting open to reporters. Netanyahu later told Israeli reporters covering the meeting that:

Bringing Shi’ites into the Sunni sphere will surely have many serious implications both in regard to refugees and to new terrorist acts. We want to prevent a war and that’s why it’s better to raise the alarm early in order to stop deterioration.

Netanyahu’s reference to “the Sunni sphere” came after he summarized the closed door part of the discussion as dealing with “Iran’s attempt to establish a foothold in Syria in the places where ISIS was defeated and is leaving.” Netanyahu’s comments are a reflection of an extremely disturbing view which has become so prominent within Israeli defense circles as to be considered establishment: that ISIS is ultimately preferable to Iran and Assad. This is to say that continued ISIS presence in Syria and Iraq is a viable option and possibly better than pro-Iranian or even Russian spheres of influence in the Israeli prime minister’s mind. Of course, this “lesser evil is ISIS” view is nothing new. In Israel, for example, there are even “respected” think tanks tied in with major public universities which openly call for allowing ISIS to thrive in Syria.

The Begin-Sadat Centre for Strategic Studies, for example, which is one of Israel’s most internationally visible and influential think tanks (and located on the campus of Israel’s second largest university), published a policy paper last year which made a direct appeal to Israel’s Western partners with the unambiguous message contained in the essay’s title: “The Destruction of Islamic State is a Strategic Mistake.” Author and Director of the Begin-Sadat Centre, Efraim Inbar, argued against a Western military campaign to destroy ISIS while envisioning the group as an effective tool in sowing terror and chaos in Iran and Syria, with the added benefit of keeping Russia bogged down in defense of the Assad government. Inbar spelled this out clearly:

The continuing existence of IS [Islamic State] serves a strategic purpose. The American administration does not appear capable of recognizing the fact that IS can be a useful tool in undermining Tehran’s ambitious plan for domination of the Middle East.

While acknowledging the Islamic State’s utter genocidal brutality, the paper concluded:

The Western distaste for IS brutality and immorality should not obfuscate strategic clarity.


policy paper published by an influential Israeli think tank which contracts with NATO argues that ISIS is a “useful tool” for Israel’s strategic defense. 

Various current and former Israeli defense officials have echoed this point of view over the years, including former Israeli Ambassador to the US Michael Oren, who in 2014 surprised the audience at Colorado’s Aspen Ideas Festival when he said in comments related to ISIS that, “the lesser evil is the Sunnis over the Shias.” Oren, while articulating Israeli defense policy, fully acknowledged he thought ISIS was “the lesser evil”. Likewise, for Netanyahu and other Israeli officials the chief concern was never the black clad death cult which filmed itself beheading Americans and burning people alive, but the possibility of, in the words of Henry Kissinger, “a Shia and pro-Iran territorial belt reaching from Tehran to Beirut” and establishment of “an Iranian radical empire.”

Former Israeli Ambassador Michael Oren: “Let the Sunni evil prevail.”

Of course, such a perspective also tends to assume that Syrian and Iraqi sovereignty is non-existent (but instead seen as a mere extension of Iran and Russia), even as both countries now stand in better position in terms of operational sovereignty with Syria having liberated Aleppo and Iraq having regained Mosul. And that’s perhaps why there’s increasingly uninhibited truth-telling in Israel, the Gulf, and D.C. these days: the party is over in terms of the hoped for regime change in Syria. Perhaps now there’s simply more blunt and open talk wherein assumptions are laid bare as introspective strategists realign their talking points while still eyeing the ultimate neocon prize of regime change in Iran.

Though still rarely acknowledged in international reports, Israel has engaged in overt acts of war in Syria since at least 2012 and 2013, when it launched a massive missile attack against a Syrian defense technology facility in Jamraya outside of Damascus. In 2016 Israel went so far as to target Damascus International Airport, killing a well-known Hezbollah commander. In a significant admission last week, the head of Israel’s air force acknowledged nearly one hundred IDF attacks on convoys inside Syria over the course of the past 5 years. Earlier this summer Netanyahu himself was caught on a hot mic bragging that Israel had struck Syrian targets at least “a dozen times”. And this is to say nothing of Israel’s covert support to al-Qaeda linked groups in Syria’s south, which has reportedly involved weapons transfers and treatment of wounded jihadists in Israeli hospitals, the latter which was widely promoted in photo ops involving Netanyahu himself. As even former Acting Director of the CIA Michael Morell once directly told the Israeli public, Israel’s “dangerous game” in Syria consists in getting in bed with al-Qaeda in order to fight Shia Iran.

Perhaps the biggest blow to Israeli plans for rolling back Iranian presence in Syria came mid-summer of this year, when Trump agreed to a southwest Syria ‘de-escalation zone’ with Russia, which would necessarily involve Iranian cooperation. The agreement implicitly acknowledges Iran’s troop presence in Syria as legitimate, and as reported at the time further “ignored Israel’s positions almost completely.” But analysts are in general agreement that the US-Russia brokered deal has been relatively successful and a step in the right direction. Even the Reuters report on this week’s Netanyahu-Putin meeting seemed to acknowledge the deal’s effectiveness:

Russia has so far shown forbearance toward Israel, setting up a military hotline to prevent their warplanes or anti-aircraft units clashing accidentally over Syria.

But given that Israel has already invested itself so heavily in the push to remove Assad while routinely launching attacks on Hezbollah with impunity, it is unlikely to disengage from Syria anytime soon, even as close Western allies publicly change their tune. Netanyahu’s brazen words to Putin that ‘preventative’ escalation in Syria to destroy what Israeli defense officials commonly call the “Iranian land bridge” (or the so-called ‘Shia crescent’) may in reality be empty diplomatic posturing, yet it does reveal increased Israeli desperation as even the West is seeming to ignore Netanyahu’s repeatedly declared “red lines”.

Regardless, Netanyahu remains the Syria regime change lobby’s best hope. Already, within less than 24 hours of Netanyahu’s Russia visit, neocon columnists are calling for him to unilaterally “take action”:

If he really expects others , especially Putin, that he means business this time, he will have to go beyond words and into actions, as clearly Israel could not and should not allow Iran to turn South Syria into another South Lebanon.

With ISIS foldingrefugees returning to their homes, stability taking root over large swathes of Syria, and successful de-escalation zones holding over parts of the country, it appears that only Netanyahu (along with terror groups like ISIS) is left unhappy in the region. Yet Syria continues on its current hopeful trajectory and path to recovery.

end

 

RUSSIA/KOREAN PENINSULA

Russia deploys nuclear capable bombers over the Korean Peninsula. This should frighten Kim.  No doubt China will also send up their bombers and this could escalate very badly

 

(courtesy zero hedge)

Russia Deploys Nuclear-Capable Bombers Near Korea

With the U.S. periodically sending the occasional sortie of B1 bombers, accompanied by South Korean fighters, over the Korean peninsula to simulate what a (very fast) war with Pyongyang would look like, the airspace over the biggest geopolitical hotspot in the world today just got a little hotter after Russia deployed nuclear-capable strategic bombers over the Pacific Ocean, the Sea of Japan, the Yellow Sea and the East China Sea, prompting Japan and South Korea to scramble jets to escort them, Reuters reported.

Russia’s Defense Ministry said in a statement the Tupolev-95MS “Bear” bombers, flew over neutral waters and were accompanied by Russian Sukhoi-35S fighter jets and A-50 early warning and control aircraft. The Russians gave no details about the overall number of aircraft that had taken part in what it called “scheduled flights over neutral waters” and did not say when or why the mission took place.


Russian TU-95 bomber

The TU-95MS bombers were refueled in mid-air during the mission, the ministry said and added that “at certain stages of the flight route, Russian strategic missile carriers were accompanied by aircraft from the Air Force of the Republic of Korea and the Air Self-Defense Forces of Japan,” the ministry said, Russian news agency TASS reported. It did not specify how many aircraft were involved or when the mission took place.

Escalating matters, South Korea’s Yonhap reported that the Russians violated South Korea’s air defense identification zone, known as KADIZ, but did not enter the country’s airspace on Wednesday.

“As the Russian aircraft entered the KADIZ in formation yesterday morning, a squadron of our Air Force jets made an emergency sorties,” an official speaking on conditions of anonymity told Yonhap. As Newsweek adds, “unlike a country’s airspace, an air defense identification zone (ADIZ) is not a concept enshrined in international law. A country may declare an ADIZ unilaterally, as a way to require foreign military aircraft to identify themselves and their plans.”

While the Japanese have not yet commented on the incident, they aren’t unaccustomed to Russian bombers flying around their airspace. Japan scrambled its fighter jets in April to head off six Russian military planes—including two TU-95 bombers—that flew across the Pacific and over the Sea of Japan before returning to Russia following a course over Japan’s island of Hokkaido, without violating Japan’s airspace.

Russia, which shares a border with North Korea, has repeatedly voiced concerns over the risk of a military confrontation on the Korean Peninsula, inviting all parties to de-escalate their belligerent rhetoric. Along with China, Russia called on the U.S. to halt its annual joint military drills in South Korea, which began on Monday, in exchange for Pyongyang stopping its missile tests. Moscow, along with Beijing, has express concerns about Japan’s plan to increase its nuclear missile defense capabilities with the deployment of the land-base U.S. Aegis Ashore system, as Deputy Foreign Minister Sergei Ryabkov told Chinese and Japanese media in an interview reported in Russia’s state-run news agency Ria Novosti.

Meanwhile, in a move that will be seen as another provocation by both Russia and China, moments ago Yonhap also reported that temporary deployment of four additional THAAD launchers in South Korea is expected to be completed “in the near future.”

Speaking before a parliamentary budget committee, Chung Eui-yong, the chief of the National Security Office, was responding to a
question over whether the deployment can be completed within the year: “(We) anticipate that the deployment of four additional launchers will be completed in the near future.

Soon after North Korea launched another long-range missile on July 28, South Korean president Moon Jae-in ordered his government to seek the deployment of additional THAAD launchers to a southern county in addition to the two already deployed launchers.

The full-on deployment of the missile defense system has been suspended pending an environmental impact assessment, which the Moon administration views as a legitimate domestic procedure for any military deployment.

 

Asked if the Moon administration sees the North’s freeze on its nuclear program as a condition for denuclearization negotiations, Chung said that the freeze could be an “entrance” to the negotiations. But he reiterated that the basic position of Seoul and Washington is not to accept the North’s possession of nuclear arms.

Meanwhile, with Russia now openly projecting military power above the Korean peninsula, it is only a matter of time before China does the same and the skies over the world’s most volatile, nuclear-tipped hotspot become dangerously busy.

END

 

6 .GLOBAL ISSUES

7. OIL ISSUES

My namesake Hurricane is set to whack Texas crude production and refining capacity in the Gulf:

(courtesy zero hedge)

 

Hurricane Harvey Set To Wreak Havoc On Texas Crude Production And Refining Capacity

According to the latest warning from the National Hurricane Service (NHS), Harvey looks to be the first hurricane to strike the Texas coast since 2008.  According to NHS models, the storm is expected to gain hurricane-force winds by tomorrow afternoon and make landfall in Texas at 1AM on Saturday.  Of course, heavy flooding and storm surge warnings have been issued for most of the Texas coast.

Per Bloomberg, Harvey is expected to make landfall as a Category 1 or 2 hurricane.

“It could intensify right up to landfall on Friday,” said Jeff Masters, co-founder of Weather Underground in Ann Arbor, Michigan. “I expect a Category 1 hurricane at landfall, but I cannot rule out a Category 2.”

 

Harvey is expected to bring multiple hazards including heavy rainfall, storm surge and possible hurricane conditions to parts of the Texas coast on Friday. Heavy rainfall is expected to spread across portions of south, central and eastern Texas and the lower Mississippi Valley from Friday through early next week and could cause life-threatening flooding, according to the advisory.

Harvey

 

Nearly the entire Texas coastline from Corpus Christi to Galveston are projected to be hit by hurricane force winds.

 

Meanwhile the rainfall forecast is calling for up to 20 inches of rain for those cities at the center of the storm.

 

In terms of economic impacts, nearly one-third of America’s refining capacity currently sits in the path of the storm and large E&P companies have already started to evacuate staff from offshore rigs which will reduce oil imports to the Texas coast.

The Gulf Coast from Corpus Christi, Texas, to Lake Charles, Louisiana, is home to nearly 30 refineries — making up about 7 million barrels a day of refining capacity, or one-third of the U.S. total. It’s in the path of expected heavy rainfall. Flooding poses risks to operations and may cause power failures.

 

“Biggest impact of this storm will be a significant reduction of crude oil imports into the Texas Gulf Coast, resulting in refineries cutting crude rates,” Andy Lipow, president of Lipow Oil Associates in Houston, said by email. “There will also be a significant impact on petroleum product exports impacting supplies into Mexico.”

 

Exxon Mobil Corp. had said it’s cutting output at its Hoover production platform in the Gulf of Mexico ahead of the storm. The company’s also working on plans to evacuate staff in stages from offshore facilities that will be in the path of the storm, Suann Guthrie, a spokeswoman, said by email. Royal Dutch Shell Plc shut production at its Perdido platform and evacuated the facility.

 

Anadarko Petroleum Corp. said earlier this week it’s removing nonessential staff from some production platforms in the Gulf of Mexico in response to weather conditions. Cheniere Energy Inc. “activated” the severe weather team at its Sabine Pass LNG export terminal in Louisiana, Eben Burnham-Snyder, a spokesman, said by email. “At this time no production impacts expected.”

Meanwhile, cotton prices have also rallied on speculation the storm will threaten U.S. crops.

Cotton

 

American Airlines has already started allowing people traveling through Houston and nine other cities on certain dates to re-book their flights without a fee because of the storm. United Continental is offering the same in eight cities, while Delta is offering a similar waiver for Houston flights.

Meanwhile, State Farm Mutual Automobile Insurance has the largest share in the market for home coverage in Texas, followed by Allstate Corp., Farmers Insurance and United Services Automobile Association, according to data compiled by A.M. Best Co.

 

 

end

 

Now Hurricane Harvey is expected to make landfall as a Category 3 Hurricane:

(courtesy zerohedge)

Harvey To Make Landfall As Cat 3 Hurricane, Bring 40 Inches Of Rain: Latest Updates

Hurricane Harvey, which until this morning a Tropical Storm, is now set to be the first hurricane to strike the Texas coast since 2008. According to the NHS, which issued a hurricane warning from Port Mansfield to Matagorda, TX including Corpus Christi, Harvey is “rapidly intensifying”, and is forecast to be a “major hurricane.”

The hurricane, whose top winds reached 85 miles per hour at 1pm on Thursday, up from 45 mph earlier, is forecast to become a Category 3 storm with 125 mph winds by Friday as it nears Texas coast. The NHS has urged that ‘preparations along the middle Texas, coast should be rushed to completion today.”

“The storm is getting stronger than expected,” said Matt Rogers, meteorologist and co-founder of Washington-based Commodity Weather Group.

Harvey is currently located 335 miles southeast of Corpus Christi, Texas, moving north-northwest at 10 mph, and is expected to make landfall in Texas at 1AM on Saturday.

According to the Weather Prediction Center, more than 20 inches (51 centimeters) of rain from Corpus Christi to Houston is expected over the next week while some models forecast as much as 40 inches (1 meter) of rain through next Tuesday in southeast past of Texas.

A storm surge of up to 12 feet expected near the Padre Island National Seashore to Sargent. Storm surge accounts for close to half of all hurricane deaths.

“Preparations to protect life and property should be completed by tonight,” Robbie Berg, a hurricane specialist at the center, wrote in an analysis. “Life-threatening flooding is expected across much of the Texas coast from heavy rainfall.”

In advance of landfall, FEMA is sending staff and food and water supplies to the region.

“The primary impacts will be from widespread and potentially catastrophic flooding, with total rainfall amounts over the next week exceeding a foot in a large area from Corpus Christi to the Louisiana coast and then up to 100 miles inland from there,” said Weather Channel chief meteorologist, Todd Crawford. “Many locations in those areas may exceed two feet. Clearly Houston is at risk for historic rainfall amounts over the next week.”

Among the key concerns as Harvey barrels down toward Texas, is the massive oil E&P and refining infrastructure in its projected path as shown in the Bloomberg map below.

As a result, the Bureau of Safety and Environmental Enforcement (BSEE) said in a statement that 9.56%, or 167.2kbpd of Gulf of Mexico oil production has been shut in preparation. Houston pilots have shut the Houston ship channel for inbound sailings as of 12:30pm local time. Corpus Christi ship pilots have also suspended some boardings. All foreign ships, except for one, are leaving the port to steer clear of the storm.

“It is definitely going to be an issue for the ship channels in the Gulf,” said Shunondo Basu, a meteorologist and natural gas analyst at Bloomberg New Energy Finance.

Oil refiners in the Gulf Coast, home to as much as half of the nation’s refining capacity, began to shutter operations. Here is a quick recap of why the local infrastructure is so critical: “the US Gulf of Mexico is home to about 17 per cent of the nation’s crude oil output, which stands at 9.5m barrels a day, according to the US energy department. More than 45% of the nation’s oil refining capacity is also along the US Gulf Coast, with a third lying between Corpus Christi, Texas and Lake Charles, Louisiana.”

Below is a list of the key operations that have already been shuttered, courtesy of Bloomberg:

Refineries:

  • Flint Hills Corpus Christi East, West Plants, capacity 293k b/d
  • Magellan Corpus Christi, Texas, splitter, capacity 50k b/d
  • Citgo Corpus has begun shutting operations ahead of Hurricane Harvey, capacity 163k b/d

Ports, Terminals, Pipelines:

  • Mansfield sees Corpus Christi fuel terminals closing Friday
  • Corpus Christi ship pilots suspend incoming boardings
  • NuStar prepares to shut Corpus Christi, Texas, oil terminal
  • Tennessee Gas: Force Majeure at S. Texas Stations 1, 9 Aug. 25
  • Mexico’s Cayo Arcas, Dos Bocas ports reopen after bad weather
  • Kinder Morgan Inc.’s Tennessee gas pipeline declared force majeure for stations in south Texas
  • All major Ports have already been shut to large vessels Wednesday because of Harvey

Platforms:

  • Anadarko shuts four Gulf platforms before Harvey, evacuates staff
  • Noble Corp. evacuates Paul Romano rig in Gulf ahead of Harvey, and moved staff to shore
  • Shell shuts, evacuates Perdido platform ahead of Harvey
  • Exxon shut Galveston 209 and Hadrian South crude and nat gas platforms; Cutting Gulf Hoover Platform Rates Ahead of Harvey,

According to Bloomberg, Policyholder-owned State Farm Mutual Automobile Insurance has the largest share in the market for home coverage in Texas with 19.6% market share as of 2016; Allstate has the second highest exposure, with 10.9% market share. Also exposed is Farmers Insurance and United Services Automobile Association, according to data compiled by A.M. Best Co. According to Sandler O’Neill analyst Paul Newsome the following insurers will be impacted should the hurricane make landfall: Allstate, Travelers, Chubb, Progressive, Hartford, AIG, United Insurance, MetLife, AmTrust, QBE, Argo, and State National. Sandler said that “typically, only hurricanes that are category 2 and above can have a material financial impact on big public insurers.”

Analysts said the major hit to the industry would probably be caused by flooding and power cuts leading to disruption at refineries and problems for companies seeking to use the Houston shipping channels.

“The biggest impact of this storm will be a significant reduction of crude oil imports into the Texas Gulf Coast,” said Andy Lipow of Lipow Oil Associates, a Houston-based consultancy, quoted by the FT.

The immediate impact on commodity prices is unclear: while oil supplies could be disrupted, natural gas demand could fall, Commodity Weather Group’s Matt Rogers told Bloomberg. When hurricane Ike hit Texas in 2008, power outages cut electricity demand, reducing the need for gas and depressing prices. Furthermore, despite a temporary scaling-back in output, the impact of production declines because of hurricanes has been mitigated by the rise in output from inland basins, driven by the US shale revolution.

And while the impact on oil prices has so far been muted, with WTI settling at $47.43/bbl, down almost a dollar on the day, the impact on refined products is much clearer: with more than 45% of the nation’s oil refining capacity along the Gulf Coast, Gasoline RBOB crack spreads have surged as much as ~12% as many refiners are expected to be closed for the coming days. At the same time, October gasoline futures climbed as much as 1.9% to $1.5575/gal. According to Citi, the heavy rainfall forecast on Texas Gulf Coast could translate into lost refining volumes of over 2MM bbls, as 4.9MM bpd of Texas refining capacity is located in the highest precipitation zone

We have been warning you about China’s massive buildup of oil in their SPR.  it now seems that China has surpassed the USA with well over 600 million barrels of oil stored under the ground. When China slows its imports, we may see oil at 20 dollars per barrel

(courtesy Irina Slav/OilPrice.com)

8. EMERGING MARKET

VENEZUELA

end

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

Euro/USA   1.1793 DOWN .0021/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP HEALTH CARE DEFEAT//ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/ /USA FALLING INTEREST RATES AGAIN/EUROPE BOURSES GREEN

USA/JAPAN YEN 109.36 UP 0.464(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/   

GBP/USA 1.2819 UP .0017 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED

THERESA MAY FORMS A NEW GOVERNMENT/STARTS BREXIT TALKS

USA/CAN 1.2528 DOWN .0014 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/(TRUMP INITIATES LUMBER TARIFFS ON CANADA)

Early THIS WEDNESDAY morning in Europe, the Euro FELL by 21 basis points, trading now ABOVE the important 1.08 level  FALLING to 1.1793; / Last night the Shanghai composite CLOSED  DOWN 16.19 POINTS OR 0.49%     / Hang Sang  CLOSED  UP 166.93 POINTS OR .43% /AUSTRALIA  CLOSED UP 0.15% / EUROPEAN BOURSES OPENED IN THE GREEN  

The NIKKEI: this WEDNESDAY morning CLOSED DOWN 80.81 POINTS OR 0.42%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 166.93 POINTS OR .43%  / SHANGHAI CLOSED DOWN 16.19 POINTS OR 0.49%   /Australia BOURSE CLOSED UP 0.15% /Nikkei (Japan)CLOSED DOWN 80.81  POINTS OR 0.42%   / INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: 1286.00

silver:$16.90

Early THURSDAY morning USA 10 year bond yield:  2.185% !!! UP 2   IN POINTS from WEDNESDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%.

The 30 yr bond yield  2.756, UP 2  IN BASIS POINTS  from WEDNESDAY night.

USA dollar index early THURSDAY morning: 93.30 UP 16  CENT(S) from WEDNESDAY’s close.

This ends early morning numbers  THURSDAY MORNING

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And now your closing THURSDAY NUMBERS

Portuguese 10 year bond yield: 2.867% UP 5 in basis point(s) yield from WEDNESDAY 

JAPANESE BOND YIELD: +.027%  DOWN 1   in   basis point yield from WEDNESDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.598% UP 3   IN basis point yield from WEDNESDAY 

ITALIAN 10 YR BOND YIELD: 2.112 DOWN 1  POINTS  in basis point yield from WEDNESDAY 

the Italian 10 yr bond yield is trading 51 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.376% DOWN 1/5  IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR THURSDAY

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

Euro/USA 1.1804 DOWN .0012 (Euro DOWN 12 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 109.31 UP 0.417(Yen DOWN 42 basis points/ 

Great Britain/USA 1.2797 DOWN  0.0006( POUND DOWN 6 BASIS POINTS)

USA/Canada 1.2532 DOWN .0011 (Canadian dollar UP 11 basis points AS OIL ROSE TO $47.23

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This afternoon, the Euro was DOWN  by 12 basis points to trade at 1.1804

The Yen FELL to 109.31 for a LOSS of 42  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 6  basis points, trading at 1.2797/ 

The Canadian dollar ROSE by 11 basis points to 1.2532,  WITH WTI OIL RISING TO :  $47.23

The USA/Yuan closed at 6.6620/
the 10 yr Japanese bond yield closed at +.027%  DOWN 1 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 0  IN basis points from WEDNESDAY at 2.183% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.7620 DOWN 0 in basis points on the day /

Your closing USA dollar index, 93.25  UP 10 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 THURSDAY: 1:00 PM EST

London:  CLOSED UP 24.41 POINTS OR 0.33%
German Dax :CLOSED UP 6.53 POINTS OR 0.05%
Paris Cac  CLOSED DOWN 2.76 POINTS OR 0.04% 
Spain IBEX CLOSED UP  19.30 POINTS OR 0.19%

Italian MIB: CLOSED UP 109.59 POINTS OR 0.51% 

The Dow closed DOWN 28.69 OR 0.13%

NASDAQ WAS closed DOWN 7.08  POINTS OR 0.11%  4.00 PM EST

WTI Oil price;  47.23 at 1:00 pm; 

Brent Oil: 51.69 1:00 EST

USA /RUSSIAN ROUBLE CROSS:  59.06 UP 7/100 ROUBLES/DOLLAR (ROUBLE LOWER BY 7 BASIS PTS)

TODAY THE GERMAN YIELD FALLS TO  +0.376%  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:$47.62

BRENT: $52.10

USA 10 YR BOND YIELD: 2.194%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.7677%

EURO/USA DOLLAR CROSS:  1.1801 DOWN .0014

USA/JAPANESE YEN:109.55  UP  0.659

USA DOLLAR INDEX: 93.29  UP 14  cent(s) 

The British pound at 5 pm: Great Britain Pound/USA: 1.2799 : DOWN 4 POINTS FROM LAST NIGHT  

Canadian dollar: 1.2521 DOWN 22 BASIS pts 

German 10 yr bond yield at 5 pm: +0.376%

END

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

TRADING IN GRAPH FORM FOR THE DAY

Stocks & Bonds Stumble On Donald’s Debt-Ceiling-Doubts & Harvey Hammering Houston

Terrible housing data for the second day in a row, debt ceiling fears surging in bill markets, chaos in the energy complex as Hurricane Harvey nears landfall, more McConnell-Trump turmoil… and while stocks were lower, only Trannies really dropped… The market said…

 

Debt Ceiling Default Doubts continue to surge…

 

Trannies were worst again but Small Caps managed gains…

 

Futures show what an odd day it was – algos lifted equity futures bit by bit overnight into the cash open and then stocks were dumped… and then when Europe closed, buying resumed…

 

Trannies also remain the only major index lower on the week…

 

Trannies closed in the red for 2017…

 

After Europe closed, S&P and VIX traded in a very narrow range…

 

S&P remains below its 50DMA…

 

Nasdaq VIX ended the day lower (after jumping higher in early going) as did Russell 2000 VIX…

 

FANG Stocks fell once again, but dip-buyers charged back in as Europe closed…

 

The AMZN headlines (cutting prices at Whole Foods) slammed the Packaged Foods index…

Food retailers led declines after Hormel and JM Smucker results missed estimates and Amazon said it would start cutting prices at Whole Foods locations next week, sending stocks like United Natural Foods, Kroger and Costco lower; the merger is expected to close Monday.

 

Treasury yields rose modestly on the day

 

30Y yields are outperforming on the week…

 

The Dollar Index rose modestly on the day (though its range was very small), but remains lower on the week…

 

On the week, cable was weakest and the Loonie was strongest against the dollar…

 

Bitcoin extended gains off Tuesday’s lows as the civil war officially ended today…

 

Gold slipped lower by a few bucks but remains in a narrow range for last few days...

 

As Hurricane Harvey looks set to hammer Texas and shut in refining and production capacity, we note WTI is down (presumably refiners offline meaning less demand) as RBOB jumps over 3% (less supply from refiners)

Hurricane Harvey set to hit the refinery hub of the U.S. where some 45% of capacity is located. The closing of production facilities in preparation for the storm has reduced the need for raw product resulting in a lack of demand for raw crude.

And the Gasoline-WTI crack has spiked…

 

Finally, we note that for the first time since May, AAII sees more bears than bulls…

 

Which is odd since total assets in bear market funds just crashed to a record low…

end

 

Trading this morning

 

As highlighted by David Stockman for the past month:  Odds for a government shutdown surge to as high as 75%

 

 

(courtesy zero hedge)

Market Odds Of Government Shutdown Surge: Republican Sees “Chances As High 75%”

One week after Goldman raised its odds for a government shutdown from 33% to 50%, days after Treasury Secretary Steven Mnuchin issued the loudest warning yet that the debt ceiling situation has to be resolved over the next month, and one day after Compass Point said that after Trump’s Phoenix rally shutdown threat, the “odds of a government shutdown are now dramatically higher“, this morning the market-implied odds of a government shutdown have spiked to the highest yet, with the Oct. 12 – Sept. 28 T-Bill spread spiking by another 4bps to 20bps…

… the highest since the Bill “kink” first emerged.

Confirming the market’s increasingly gloomy sentiment – or at least the bond market’s, stocks continue to trade on whatever is the latest CTA momentum whim – this morning Axios reports “top White House and GOP leadership officials tell us the chances of a market-rattling government shutdown are rising by the day — and were even before Trump threatened at his raucous Phoenix rally on Tuesday night to use a shutdown as leverage to get funding for a border wall.” Quoting a “top Republican source” who puts the chance as high as 75%, Axios adds that “the peculiar part is that almost everyone I talk to on the Hill agrees that it is more likely than not.”

Axio’s Jonathan Swan also notes that it may all come down to Trump’s mood, as “Trump is spoiling for a fight and the [conservative House] Freedom Caucus haven’t had a fight for a while. That’s a dangerous dynamic.”

Meanwhile, away from the bond market, the Vix-term structure suggests that a government crisis will take place not in late September but the end of the year.

This makes sense as based on the Treasury’s funding mechanisms, the showdown could come either in September or December, or both. Axios notes that according to “officials at both ends of Pennsylvania Avenue who are up to their necks in tax reform think passage probably doesn’t happen until early next year” and adds that “a September shutdown could be better for tax reform than a Christmas shutdown, because it would allow conservatives and Trump to get it out of their system.”

Meanwhile, Trump should not expect any help from Democrats who feel that Trump is “boxed in” largely due to the brewing war with Senate majority leader Mitch McConnell.

“Democrats have made clear we will not support funding for President Trump’s misguided, ineffective border wall,” Rep. Joseph Crowley (N.Y.), chairman of the House Democratic Caucus, warned Wednesday in an email to The Hill.

 

“If President Trump and Republicans insist on wasting taxpayers’ money, they will be to blame for any government shutdown.”

 

The sentiment is widely shared among Democrats –– Senate Minority Leader Chuck Schumer (D-N.Y) and House Minority Leader Nancy Pelosi (D-Calif.) issued similar statements Wednesday –– and they’ll have plenty of leverage in the fight.

As a result:

  • Trump is at war with Senate Leader McConnell and several other Republicans, complicating communications and compromising trust.
  • Congressional leadership doesn’t want a shutdown and can pass the fall bare necessities — continuing resolution / debt ceiling / Children’s Health Insurance Program extension — using mostly Democratic votes.
  • But the Freedom Caucus will hammer Speaker Ryan for doing so, and conservatives in the Senate will hammer Leader McConnell.

Adding to the uncertainty Axios also points out that following Bannon’s departure, “Trump is surrounded more and more by conventional/mainstream folks, which could actually make him feel more compelled to buck them.”

Finally, in a separate report from The Hill this moring, “with just 12 legislative days scheduled for September –– and the spending debate complicated by a Sept. 29 deadline to raise the debt ceiling –– the Republicans have little room for error. And Trump’s prime-time shutdown threat poses yet another hurdle, forcing GOP leaders to find a legislative sweet-spot that satisfies the president’s border-wall demand without alienating the Democrats, whose votes will be essential to keep the government running.”

The question then becomes how long before the stock market finally “notices” what is going on with T-Bills and panicks, adding urgency to the process. As we reported earlier this week, according to Deutsche Bank, “it is not unusual for equity markets to be comparatively sanguine until it is within the month of the deadline“, according to Deutsche Bank.

In 2011, the VIX oscillated somewhat in the months ahead (with modest rises at a roughly similar lead to the debt ceiling deadline as the current rise in vol), but the meaningful move higher did not come until about a week prior to the eventual resolution. In 2013 (when the debt ceiling deadline coincided with a government shutdown), the larger pop in equity vol occurred about three weeks before, peaking about a week prior to the resolution. It has not been uncommon to see some degree of equity drawdown about two months ahead of the debt ceiling deadline, with another more muted sell-off arising alongside with the aforementioned rise in volatility, though through this lens the evidence is perhaps somewhat less conclusive.

We are now within one month of the month deadline..

end

 

Existing home sales slump to 11 month lows as prices for homes were rising too fast

 

(courtesy zerohedge)

Existing Home Sales Slump To 11-Month Lows; NAR Warns “Prices Are Rising Way Too Fast”

For the first time since 2015, existing home sales fell in back to back months (-2.0% in June, -1.3% in July), dramatically missing expectations of a 0.5% bounce.

Following the plunge in new home sales, existing home sales tumbled to their lowest SAAR since Aug 2016 as inventories dropped mdoestly (and home prices rose 6.2% YoY)

The median existing-home price for all housing types in July was $258,300, up 6.2% from July 2016 ($243,200). July’s price increase marks the 65th straight month of year-over-year gains.

Total housing inventory at the end of July declined 1.0% to 1.92 million existing homes available for sale, and is now 9.0% lower than a year ago (2.11 million) and has fallen year-over-year for 26 consecutive months. Unsold inventory is at a 4.2-month supply at the current sales pace, which is down from 4.8 months a year ago.

Home purchases broken down by price bucket:

NAR’s chief economist Larry Yun is getting increasingly more worried about the state of the frothy market:

“July was the fourth consecutive month that the typical listing went under contract in under one month,”… “This speaks to the significant pent-up demand for buying rather than any perceived loss of interest. The frustrating inability for new home construction to pick up means inadequate supply levels will keep markets competitive heading into the fall.”

And concluded rather stunningly:“Home prices are still rising above incomes and way too fast in many markets.”… “Realtors continue to say prospective buyers are frustrated by how quickly prices are rising for the minimal selection of homes that fit buyers’ budget and wish list.”

Probably a good time to start hiking rates again and normalizing the long-end of the yield curve?

end

 

Trump warns of debt ceiling mess as he blames McConnell and Ryan.  Interesting enough, strangely the stock market is not reacting at all to what the bond market is telling them.

 

(courtesy zero hedge)

 

Trump Warns Of Debt Ceiling “Mess”; Blames McConnell, Ryan

Conveniently coming just as warned that according to the T-Bill market, the odds of a government shutdown are now the highest they have been this cycle, moments ago Trump tweeted what appears to be a warning that the debt-ceiling process is setting up for failure, saying he had requested that Mitch McConnell and Paul Ryan tie the debt ceiling legislation into the V.A. Bill (which passed), adding that they did not do it, and as a result we “now have a big deal with Dems holding them up (as usual) on Debt Ceiling approval. Could have been so easy-now a mess!”

The implication: the fingerpointing has begun over what even Trump now admits will be a debt-ceiling “mess” has begun, as has the scapegoating, and in Trump’s view the blame will, or should, ultimately fall on Congressional Republican leadership in the face of McConnell and Ryan. While it is unlikely that Trump’s latest escalation will accelerate a compromise, it virtually guarantees that the feud between the republican controlled Congress and the President will escalate further, effectively making either a debt-ceiling or government shutdown crisis increasingly likely.

Meanwhile, the stock market continues to blissfully ignore what the bond market is saying, which as we showed moments ago, has pushed the implied odds of a shutdown to the highest yet.

 

 

end

 

Sears holdings is near bankruptcy as same store sales plunge 11.5% and they are closing another 28 stores

 

(courtesy zerohedge)

 

Sears Same-Store Sales Plunge 11.5%; To Close Another 28 Stores

Near insolvent retailer Sears Holdings reported another quarterly loss, with same store sales plunging in Q2 more than expected as the company offered more margin-crushing discounts amid an industry that is, in the words of Dick’s CEO, in “panic mode“. The company blamed a “retail environment that remained challenging, with continued softness in store traffic and elevated price competition.”

For Q2, Eddie Lampert’s company reported a net loss of $251 million, or $2.34 per share from $395 million or $3.70 per share, a year earlier. The adjusted loss was $1.16 a share, beating expectations loss of $2.48 per share, while revenue tumbled from $5.66 billion to $4.37 billion Y/Y primarily due to store closures, modestly beating expectations of $4.21 billion.

As part of its restructuring effort and attempt to return to profitability, Sears has been trimming its real estate portfolio, cutting costs and seeking additional liquidity. The retailer announced that it will be closing an additional 28 Kmart stores this year, in addition to the 180 Sears and Kmart stores that have already been shuttered this year, and the 150 stores that are slated to be closed by the end of the third quarter.

And while the company’s cost-cutting is a welcome, if long overdue, change a bigger problem for Kmart is the collapse in store traffic, as same-store sales plunged 11.5%, worse than the expected 7.1 percent decline.

Trying to put a favorable spin on another lousy quarter, CEO Eddie Lampert said that “we are making progress on the strategic priorities we outlined earlier this year and remain focused on returning our Company to profitability… While the third quarter has historically been our most difficult quarter over the past several years, we are working towards making meaningful improvement in our performance this year as a result of the restructuring actions we have put in place.”

As noted above, Sears same-store sales fell 11.5%, including a decline of 9.4% for Kmart stores, and a drop of -13.2% at Sears stores. Spinning the worse than expected drop in traffic, Sears said that July was the best quarter for the company in terms of comparable sales, “as the restructuring program actions, including the closing of unprofitable stores, have begun to take effect.”

Sears said it continues to explore opportunities for its Sears Home Services and Sears Auto Centers, as well as its Kenmore and Diehard brands. This could include “potential partnerships or other transactions that could expand distribution of our brands and service offerings to realize significant growth,” the company said in a statement.

On the balance side, the struggling retail chain said it has been working to generate additional liquidity and ended the second quarter with $442 million cash on hand, compared with $286 million at the end of the first quarter. Sears has used up $605 million of its $1.5 billion revolving credit facility, leaving about $191 million in availability. Total debt at the end of the latest period was $3.5 billion, compared to $4.2 billion at the end of the first quarter of 2017, following recent asset sales.

Sears also said it has reached an agreement with Metropolitan Life to annuitize an additional $512 million of its pension liability, under which MLIC will pay future pension benefit payments to roughly 20,000 retirees, helping Sears further trim administrative overhead.

As discussed earlier in the year, Sears’ deteriorating financial conditions forced the retailer to disclose that there was “substantial doubt” about its ability to “continue as a going concern.” Met with fears by the Street that a bankruptcy was looming, Sears countered by saying it remained focused on trying to improve its business, saying the language was in adherence to regulatory standards, CNBC otes.

To ease bankruptcy fears, last month Sears said it would begin selling Kenmore-branded and Alexa-enabled appliances on Amazon, although that announcement had little effect on company shares, which have fallen more than 40% over the past 12 months.

END

 

The following is a must read from David Stockman.  He describes the hopeless scene which will lead to a government shutdown. He describes in detail that with Bannon gone, the USA now has only the Kingdom of Goldman Sachs personnel and they will leave the country in total destruction. Trump is now alienated himself and there is no way that any deal will be struck and as such we will have a government shutdown.

as to this morning, the USA has only $82 billion in the kitty. Their burn rate is $3 billion  (Stockman made a typo error in this commentary as 2 billion….in previous commentaries he has stated correctly that the burn rate is $3 billion)  It looks like they may be out by Sept 21.

 

a must read…

(courtesy David Stockman/DailyReckoning)

 

 

 

 

 

 

 

David Stockman On America’s Goldman Sachs Regency

Authored by David Stockman via The Daily Reckoning,

There’s not many tears being shed over Steve Bannon’s departure. His ethno-nationalist and protectionist worldview are opposite to true notions of liberty, free markets and a minimalist state.

While Bannonism presented itself as a coherent alternative ideology to mainstream Big Government, it actually boiled down to an incoherent potpourri of cultural resentments and prejudices, economic shibboleths and amateur historical theorizing. His message appealed to the alt-Right because it proposed to replace oppressive statism with a more right wing version rooted in protectionism and nativism.

Notwithstanding the rotten essence of Bannonism, however, the firebrand self-promoter who was the Donald’s chief strategist got it right in his parting shots at his internal White House enemies. In so many words, he correctly asserted that the nation will now be ruled by a Goldman Sachs Regency and a team of generals.

The move embodies the essence of Albert Einstein’s famous definition of insanity: Doing the same thing over and over and expecting a different result.

“The Trump presidency that we fought for, and won, is over,” Bannon told the conservative Weekly Standard on the Friday after his White House departure.

 

“We will make something of this Trump presidency. But that presidency is over.”

The Donald will now function, as Robert Wenzel aptly described it, as “something of a tweet master frontman” with the Vampire Squid riding higher than ever before.

Expect him to be riding even higher than when the George W. Bush handed a blank check to Wall Street for a bailout at the Treasury led by former Goldman CEO, Hank Paulson.

Goldman’s crew in the current White House – Gary Cohn, Steve Mnuchin, Dina Powell and Jared Kushner – are likely to bring about the final destruction of the Trump presidency. The cast of characters will eventually trigger a thundering collapse in the markets which will finally crush Goldman Sachs and its posse of gamblers and crony capitalist.

In the coming battles over crucial economic issues surrounding the debt ceiling, tax reform and healthcare, Trump will be getting the worst advice imaginable. The Donald will be pushed into attempting to make “bipartisan” deals that will blow the tenuous GOP majorities to smithereens, and do so in the name of status quo statism.

Right after Labor Day the destructive game plan of the Goldman Regency will show up in battles over a “clean” debt ceilingPundits make the move sound easy with the notion that GOP leadership only needs a modest number of Democrats to supplement their own rank and file votes to enact a debt ceiling increase. Such fiscal finesse would permit the government to borrow all the money needed to pay bills and protect the sacred credit rating of the U.S. Treasury.

Except it doesn’t work that way. If there is any cooperation at all, iwill be only on the basis of a quid pro quo that requires Trump to give up the Wall, tax cuts, proposed deep domestic spending cuts and to fund the insurance bailouts required to forestall premium increases and coverage cancellations during the 2018 insurance (and election) year.

By demanding this kind of quid pro quo as a side deal, rather than as an explicit rider to the debt ceiling bill, it will have the same effect. The Freedom Caucus and the vast majority of conservative leaning congressional Republicans will jump ship.

Washington is heading for weeks of fraught indecision, backroom maneuvering and contentious political in-fighting that will scare the Wall Street casino that it is stuck in complacency.

The fact is that the market is breaking down beneath the shrinking number of Big Cap stocks and levitating averages. This has all set-up a severe downside shock within the coming weeks.

As to the market’s weakening internals, consider that there are 2,800 stocks on the New York Stock Exchange (NYSE). Back in early 2013 when the bull market was still being super-charged with massive QE purchases by the Federal Reserve, 85% or 2,380 of them were above their 200-DMA. By contrast, currently only 1,050 of them (37.5%) are above that level, meaning that the bull is getting very tired.

That vulnerability is also evident in other indices, but especially in the Russell 2000 (RUT). The index is a huge cross section of primarily domestic companies with an average market cap of just $2 billion. But the RUT is now 6.5% below its July 25 high of 1450, and, more importantly, has now plunged below its 200 displaced moving average after the huge bounce from the Trump Reflation euphoria.

The RUT is still trading at an absurd 88 times the reported net income of its constituent companies. When the market plunged into its mini-swoon of January-February 2016, the RUT dropped more than 200 points or 21% below its 200-DMA. That would be 1090 today – with much lower levels to come once the selling momentum accelerates.

It will do just that because the RUT is being fueled by huge inflows from several ETFs (iShares, Vanguard and SPDR all have a tracking ETF) and various other forms of passive indexing. The robo-machines and day-traders have not simply been voting for Trump and an incipient economic and profits boom. What they’ve been doing is chasing the index up a nearly 30% incline between early November 2016 and the July 25 peak shown in the chart below. Now they are now stranded in the nosebleed section of the outfield bleachers.

Russell David Stockman Goldman Sachs

The same pattern is evident in the Dow Transports, as well. After peaking at 9,742 on July 14, the index is down by 6.4% and has dropped well below its 200-DMA. Moreover, there is no reason it should be even remotely at current levels based on real activity in the main street economy.

Nearly all measures of domestic activity are flat-lining and threatening to roll-over. That is clearly the case with car sales, brick and mortar retail, housing starts, restaurant traffic (July was down 4.5%) and much more.

2 Dow Jones Index Goldman Sachs Stockman

The idea that corporate profits are about to rebound sharply is getting steadily debunked by the so-called “in-coming data.” At $104 per share, the June twelve month earnings of the S&P 500 were still 2% below their September 2014 level. Current earnings of the Russell 2000 at $15.50 per share are actually 7.2% below their July 2015 level of $16.70.

It is only a matter of time before Wall Street gamblers discover they are home alone on the earnings front.  All this while gridlock in Washington will intensify suddenly and dramatically. The Treasury’s cash balance is now down to $82 billion, and at its current $2 billion burn rate per calendar day it will be gone by the end of September.

It will come as no surprise that Goldman Regency’s spokesman, Treasury Sec. Mnuchin, has been out once again insisting on a “clean” debt ceiling bill.

Treasury Secretary Steven Mnuchin, speaking at an event in Louisville, said that “we need to raise the debt limit and it’s my strong preference is that there’s a clean raise of the debt limit.”

While Mnuchin conceded that he is “all for spending controls” and Congress has the “absolute right and the absolute obligation” to oversee spending, the Treasury secretary issued another stark warning that “he’ll run out of authority by end-September to stay under the debt ceiling.”

This means that Congress will have just days to reach a compromise on the debt ceiling when it returns from recess. But this will not be the Congress of September 2008 that rolled-over to pass the bailout TARP bill at the insistence of Secretary Paulson. This time Goldman’s bag-man will be told “no dice.”

After all, the Dems now have a President to hound from office and the Freedom Caucus will not again be intimidated by Wall Street into obeisance. Expect a full throated war between Washington, Wall Street and the establishment that is attempting to overturn the 2016 election.

Bannon on the outside will likely prove to be the Goldman Regency’s worst nightmare. There is not a chance that while he is back at Breitbart he’ll tolerate a “capitulation to the left” deal for even a New York minute.

END

 

Both the municipality of Hartford and the state of Connecticut are in serious trouble with the city looming for bankruptcy.  The state is not allowed to file for bankruptcy protection

(courtesy zero hedge)

Hartford Bankruptcy Looms As CT Gov Admits “We Spent Money On Wrong Things”

Connecticut Governor Daniel Malloy is among the country’s least popular governors after forcing through two tax hikes that sent individuals and corporations fleeing from the state. Luckily for the state and its people, Malloy apparently has no interest in sticking around to take the heat when it comes time for the next hike: He has announced that he will not seek a third term.

Connecticut has gone without a budget for two months, and is facing devastating cutbacks in municipal services if one isn’t passed soon. But Malloy took time off this week from grappling with legislators to speak with a reporter from Reuters, he offers little insight into what lead to the state’s precarious fiscal situation. Instead, he blames it on overspending on prisons.

“The state invested in the wrong things for a period of time. It allowed its higher educational institutions to suffer while it sought to placate communities with respect to other forms of local reimbursement,” Malloy told Reuters during an interview in his office on Thursday.

 

“We built too many prisons, which we’re still paying off even while we’re closing them,” he said. The Democrat took office in 2011 and is not seeking a third term.”

Prisons are only a small part of the state’s problem. Choked by outmigration and a debt-service burden that’s the highest in the nation compared with revenues, Connecticut’s fiscal situation is deteriorating rapidly. And after two months without a budget, Reuters reports that, unless lawmakers act soon, the government of one of the wealthiest states in the country will begin cutbacks in education spending and municipal aid as Malloy tries to close an expected $3.5 billion budget shortfall over the coming two years.

Connecticut is one of a handful of US states on the verge of a Greece-style debt-crisis, as it struggles to service some $23 billion in municipal debt, all while lawmakers keep one eye on the state’s unfunded pension liabilities, which have climbed to a terrifying $50 billion, thanks to the generous retirement packages enjoyed by Connecticut state employees.

Back in May, all three of the main rating agencies downgraded the credit rating on the state’s general-obligation bonds, sending the state’s credit risk soaring. Meanwhile, municipal debt for the city of Hartford, Connecticut’s once-proud capital, has been downgraded to junk status.Health-insurance giant Aetna, which was founded in Hartford nearly 200 years ago, recently dealt the city a major blow when it announced plans to relocate its headquarters to New York City, though most of the company’s 6,000 employees will remain in the state.

About a year earlier, General Electric, which had been headquartered in Fairfield, CT for decades, announced it would re-locate to Boston, where it would face a lower tax bill AND access to top-flight talent, who typically prefer to work and live in trendy urban hubs.

After meeting with Millstein & Co, the same firm that tried to help Puerto Rico reorganize its massive debt burden, State Comptroller Denise Nappier proposed a new tax-secured revenue bond program, which she says will lower borrowing costs and boost reserves. The bonds would be issued in lieu of general-obligation bonds, according to Reuters.

But that’s a long-term solution. Right now, the state still desperately needs a budget, or its municipalities will be faced with devastating cuts.

“…until lawmakers craft a budget, the state’s fiscal uncertainty is causing havoc among municipalities. Some are considering whether to delay the start of school or dip into reserves.

 

And for Hartford, the longer the state goes without a budget, the closer the city comes to a possible bankruptcy filing, said Hartford Mayor Luke Bronin, a 38-year-old former U.S. Treasury official.

 

“The lack of a state budget… makes a liquidity challenge come that much faster,” he said.”

By some measures, Connecticut has the worst debt problem in the country.

“It has the most net tax-supported state debt per capita in the nation at $6,505, versus a median of $1,006, according to Moody’s Investors Service.

 

It has the highest debt service costs as a portion of state revenues, as well as debt relative to gross domestic product, Moody’s said.”

During fiscal 2017, CT spent $2.85 billion servicing debt – the most in seven years.

“The $2.85 billion of principal and interest the state paid on its bonds in fiscal 2017 was the highest in six years, according to preliminary unaudited information from State Treasurer Denise Nappier’s office that has not yet been published.”

A crisis at the state level promises to ripple across the state, destabilizing municipalities that have taken state aid for granted for too long.

“Further, the state’s budget crunch is threatening its cities including the state capital of Hartford, which is considering bankruptcy due, in part, to its dependence on state aid.

 

Connecticut has borrowed for decades to fund school construction, whereas nearly all other states typically borrow at the local level for those projects.

 

Lack of county governments means some other local costs are picked up by the state, including for all of its detention facilities.”

As with many of its troubled peers, Connecticut’s financial struggles began with the crisis.

“Connecticut has piled on debt to bolster its public pensions, selling $2.3 billion of bonds in April 2008.

 

And again in December 2009, the state sold $916 million of economic recovery notes to close a budget deficit after depleting its rainy day fund during the Great Recession.”

Beyond that, its decline has been hastened by a combination of forces. A deteriorating local economy, coupled with a plunge in hedge fund profits, have strained the state’s already narrow tax base. Meanwhile, high taxes have inspired wealthy hedge fund types to move to states that are more tax-friendly, like Florida.

Despite its desperate financial situation, the state still leads the country in one important metric…

…college basketball championships.

(courtesy zero hedge)

I will see you Friday  night

Harvey.

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