August 31/Gold surges $8.35 once options expiry ceases with silver up 7 cents. In the access market gold rises another $8.00 to $1322.50 and silver rises another 9 cents to $17.60/Another potentially catastrophic hurricane heading towards the Caribbean and the Southern Eastern USA coast.

GOLD: $1316.85 UP   $8.35

Silver: $17.51  UP 7 CENT(S)

Closing access prices:

Gold $1321.50

silver: $17.60

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: $1308.57 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME:  $1322.55

PREMIUM FIRST FIX:  $6.02

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SECOND SHANGHAI GOLD FIX: $1311.37

NY GOLD PRICE AT THE EXACT SAME TIME: $1302.90

Premium of Shanghai 2nd fix/NY:$8.47

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LONDON FIRST GOLD FIX:  5:30 am est  $1305.80

NY PRICING AT THE EXACT SAME TIME: $1306.70

LONDON SECOND GOLD FIX  10 AM: $1311.75

NY PRICING AT THE EXACT SAME TIME. 1312.10

For comex gold:

SEPTEMBER/

NOTICES FILINGS TODAY FOR SEPT CONTRACT MONTH: 40 NOTICE(S) FOR  4000  OZ.

TOTAL NOTICES SO FAR: 40 FOR 4000 OZ  (0.1244 TONNES)

For silver:

SEPTEMBER

 2181 NOTICES FILED TODAY FOR

10,905,000  OZ/

Total number of notices filed so far this month: 2181 for 10,905,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

end

I wrote this yesterday:

“As I expected, the criminal bankers tried their best to keep gold and silver from rising so as to pocket underwritten options.  However they did not succeed in lowering the price of gold to $1300.00 and $17.25 silver where the bulk of options were underwritten. London based gold/silver options have an expiry tomorrow morning at around 10 -11 am.  After that we should see our precious metals rise.”  I guess I was right on that one!!

I did not expect a 2 billion dollar notional comex flash crash coming in the early hours of the evening last night.  However I was happy that the gold and silver rebounded beautifully.  I am comforted that the bankers could not cash any of the underwritten options which expired at 10 am this morning. Tomorrow is the dreaded non farm payrolls. This report is fabricated to the highest degree. However if the report is bad even with the fake numbers, gold/silver will be off to the races.

Let us have a look at the data for today

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In silver, the total open interest FELL BY AN APPRECIABLE 4480 contracts from 188,145 DOWN TO 178,343 DESPITE A TINY LOSS IN PRICE THAT SILVER UNDERTOOK WITH  YESTERDAY’S TRADING (DOWN 1 CENT). WE AGAIN HAD CONSIDERABLE TENDERING OF SEPT LONG COMEX SILVER INTO EFP’S WHICH GIVES THE PAPER PLAYERS A FIAT GAIN PLUS A DELIVERABLE PRODUCT BUT ON A DIFFERENT EXCHANGE.  THE OBLIGATION STILL RESTS WITH THE BANKERS. WE CERTAINLY HAD NEWBIE LONGS ENTER THE ARENA WITH SHORT COVERING FROM THE BANKERS.  HOWEVER THE EFPS OUTNUMBERED THE NEWBIE LONGS

RESULT: A HIGH DROP IN OI COMEX  DESPITE A ONE CENT PRICE DROP AND A FAIR SIZED GAIN IN SEPT EFP’S DELIVERABLE SILVER i.e.LONDON FORWARDS

 In ounces, the OI is still represented by just UNDER 1 BILLION oz i.e.  0.891 BILLION TO BE EXACT or 127% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MAY MONTH/ THEY FILED: 2181 NOTICE(S) FOR 10,905,000  OZ OF SILVER

In gold, the open interest FELL BY A CONSIDERABLE 3083 CONTRACTS WITH THE FALL  in price of gold ($5.00 LOSS YESTERDAY). The new OI for the gold complex rests at 534,892.

AS IN SILVER, THE GEOPOLITICAL LANDSCAPE WITH TRUMP THREATENING TO CLOSE GOVERNMENT IF HE DID NOT GET HIS WALL , THE DOVISH SPEECHES BY BOTH DRAGHI AND YELLEN ON FRIDAY AT JACKSON HOLE, THE HOUSTON FLOODING & NORTH KOREA FIRING MORE MISSILES CAUSED A HUGE NUMBER OF NEWBIE SPECS TO AGAIN ENTER THE GOLD ARENA WITH THE COMMERCIALS SUPPLYING THE NECESSARY PAPER LIKE DRUNKEN SAILORS. ONCE 1300 DOLLAR GOLD WAS PIERCED, MORE NEWBIE LONGS CAME EMBOLDENED CONTINUING THEIR QUEST OF TAKING ON THE BANKERS WHO RECIPROCATED IN KIND WITH  SHORT PAPER. SINCE TODAY IS OPTIONS EXPIRY DAY, ONE COULD HAVE BET THE FARM THAT THE BANKERS WOULD ATTACK. THEY PRESSED DURING YESTERDAY’S ACCESS MARKET AND THEN BANG, EARLY LAST NIGHT, ANOTHER FLASH CRASH WITH 2 BILLION DOLLARS IN NOTIONAL PAPER GOLD SENT GOLD CRASHING DOWN TO $1296. HOWEVER OUR ANCIENT METAL OF KINGS  RECOVERED SLOWLY BUT SURELY THROUGHOUT THE NIGHT AND THEN BLASTED FIRMLY INTO THE POSITIVE ONCE OPTIONS EXPIRY CEASED.

Result: A SMALL SIZED LOSS IN OI WITH THE BIGGER FALL IN PRICE IN GOLD COUPLED WITH A RAID ON WEDNESDAY AND A BIGGER FLASH CRASH LAST NIGHT. 

we had: 40 notice(s) filed upon for 40,00 oz of gold.

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

GLD:

Tonight , we had no  changes in gold inventory:

Inventory rests tonight: 816.43 tonnes

IN THE LAST 34 TRADING DAYS: GLD SHEDS 20.54 TONNES YET GOLD IS HIGHER BY $84.60 .

SLV

Today:  STRANGE!! WE HAD A HUGE CHANGE IN SILVER INVENTORY TONIGHT: A WITHDRAWAL OF 2.019 MILLION OZ

INVENTORY RESTS AT 331.178 MILLION OZ

end

.

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

1. Today, we had the open interest in silver FELL BY A LARGE 4480 contracts from 188,145 DOWN TO 178,343 (AND now A LITTLE FURTHER FROM THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) WITH YESTERDAY’S 1 CENT LOSS IN TRADING. SILVER RESPONDED TO 1) THE GEOPOLITICAL CLIMATE WHEREBY TRUMP THREATENED TO SHUT DOWN GOVERNMENT UNLESS HE GOT HIS WALL , 2) THE TWO DOVISH SPEECHES BY YELLEN 3) NORTH KOREA FIRING MORE MISSILES,4) THE HOUSTON FLOODING AND 5 THE PIERCING OF THE HUGE RESISTANCE LEVEL OF $17.25 WHICH NOW BECOMES THE NEW SUPPORT LEVEL. WE NO DOUBT HAD IN EXCESS OF 4,000 LONG SEPT. SILVER PLAYERS TENDERING THEIR LONGS FOR SEPT. EFP’S (BUT THAT OBLIGATION STILL RESTS WITH THE BANKERS BUT ON A DIFFERENT EXCHANGE LONDON). NEWBIE LONGS ENTERED THE ARENA WHEN THEY SAW ANOTHER FAILED RAID ATTEMPT. HOWEVER THE GAIN IN NEWBIE LONGS WAS FAR LESS THAN THOSE PAPER PLAYERS EXITING FOR EFP’S. THE BANKERS ORCHESTRATED A FLASH CRASH ON BOTH GOLD AND SILVER LAST NIGHT IN A VAIN ATTEMPT TO CAUSE UNDERWRITTEN OPTIONS CONTRACTS TO EXPIRE WORTHLESS. THE BANKERS HAD NO CHOICE BUT TO COVER SOME OF THEIR SHORTS AS THEY ARE STILL LOATHE TO SUPPLY ANY ADDITIONAL PAPER. THE FLASH CRASH RAID FAILED AS BOTH METALS SKYROCKETED TO THE POSITIVE LEVEL NEGATING THE BANKERS FROM PROFITING FROM THEIR UNDERWRITTEN OPTIONS..

RESULT:  A  MUCH LOWER OI AT THE COMEX, BUT A CORRESPONDING TRANSFER TO EFP’S IN LONDON WITH MUCH SHORT COVERING FROM THE BANKERS. 

(report Harvey)

.

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

3. ASIAN AFFAIRS

i)Late WEDNESDAY night/THURSDAY morning: Shanghai closed DOWN 2.81 POINTS OR 0.08%   / /Hang Sang CLOSED DOWN 124.31 POINTS OR 0.44%/ The Nikkei closed UP 139.70 POINTS OR 0.72%/Australia’s all ordinaires CLOSED UP 0.74%/Chinese yuan (ONSHORE) closed DOWN at 6.6010/Oil UP to 46.16 dollars per barrel for WTI and 51.05 for Brent. Stocks in Europe OPENED DEEPLY IN THE GREEN. Offshore yuan trades  6.6069 yuan to the dollar vs 6.6010 for onshore yuan. NOW THE OFFSHORE MOVED SLIGHTLY WEAKER  TO THE ONSHORE YUAN/ ONSHORE YUAN MUCH WEAKER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS MUCH WEAKER 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/SOUTH KOREA

b) REPORT ON JAPAN

c) REPORT ON CHINA

Last night China’s service sector crashed to its weakest level since May 2016:

( zero hedge)

4. EUROPEAN AFFAIRS

We knew this would happen.  The Euro boys have been quite happy these past few years living with a very low Euro. Now that Europe has picked up in growth and corporate profits, the ECB sends out a trial balloon that they are not happy with the new high in value of the Euro.  Draghi states that he is in no rush to taper  his QE purchases of bonds. This causes the Euro to tumble and the German Bunds rose in price (lower in yield.)  However inflation is running much higher than expected.

( zerohedge)

 

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

The USA orders Russia to close to annex consulates: one in San Francisco and the other in New York

( zero hedge)

6 .GLOBAL ISSUES

i)The loonie finally rises after two consecutive down days after Canada recorded it’s best economic growth in 15 years:

( zero hedge)

ii)Wow!! this came out of nowhere:  Mexico hints that it may balk on NAFTA and entirely abandon the agreements as they are working on alternatives…the Peso plummets as Mexico enjoys huge benefits from NAFTA

( zerohedge)

7. OIL ISSUES

i) Gasoline price surge this morning after the major pipeline conduit for gas from the Gulf to the East Coast has been shut down due to the Hurricane.

( zero hedge)

( zerohedge)

8. EMERGING MARKET

VENEZUELA

9.   PHYSICAL MARKETS

i)Last night

Gold Flash-Crashes Below $1300

( zerohedge)

10. USA Stories

i)Right after Draghi floated a trial balloon suggesting he wants a lower Euro, Mnuchin was interviewed and he stated that he states that a lower dollar is preferable for trade.  Down goes the dollar..

(courtesy zerohedge)

ii)Real personal spending shows a less than expected .3% month over month gain (.4%month over month expected) Incomes saw a modest .4% month over month gain.

( zero hedge)

iii)Pending homes sales falter in July by a large .8% month/month with expectations of a rise of .3%.  This completes all 3 housing data points which shows that the economy is not growing as expected

( zero hedge)

iv)It sure looks like Donald intentionally snubbed Gary Cohn the future Fed chairman?

( zero hedge)

v)Well it happened: we warned you last night that there is risk of an explosion at the huge Arkema Chemical Plant in Crosby Texas. Two explosions were reported:

( zero hedge)

vi)Hurricane Harvey may be the costliest natural disaster in USA history with a $190 billion price tag

 

( zero hedge)

vii)The uSA releases 500,000 barrels from its Strategic Reserve after news that the USA’s largest refinery may be shut down for two weeks.  The problem is the gasoline distribution not the lack of oil.  How will this help?
( zero hedge)
viii)Wells Fargo now admits it created 1.4 million more fake accounts that previous thought
( zero hedge)

ix)Just look at how corrupt is Comey

( zerohedge)

Let us head over to the comex:

The total gold comex open interest FELL BY A GOOD SIZED 3,983 CONTRACTS DOWN to an OI level of 534,892 WITH THE FAIR SIZED LOSS IN THE PRICE OF GOLD  ($5.00 LOSS IN   YESTERDAY’S trading). This time the bankers did supply the necessary gold short paper when newbie longs took on our criminal bankers realizing that the geopolitical climate in the states was getting to their liking as Trump threatened to close government unless he got his wall plus the two dovish speeches by Yellen and Draghi at Jackson Hole, THE FLOODING OF HOUSTON , and the firing of those North Korean missiles.With today being options expiry you could have bet the farm that the bankers would try and lower the price of both gold and silver to cause underwritten options to expire worthless.  They pressed yesterday afternoon in the access market and then bang, in the evening a criminal flash crash which is intended to injure long players. That brought gold down below $1296.00.  However this time, newbie longs entered on the lower price willing to take on the crooks.  Gold ( and silver) reversed hugely and won big today.

Result: a  GOOD SIZED open interest decrease with an good sized fall in the price of gold with GOLD’S HOLDING OF ITS 1300 SUPPORT LEVEL. GOLD RESERVES HUGELY FROM THE MASSIVE FLASH CRASH EARLY LAST NIGHT. 

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

The August contract month is now off the board.

The new non active September contract month saw it’s OI LOSE  159 contracts DOWN to 867.

The next active contract month is Oct and here we saw a LOSS of 4,825 contracts DOWN to 45,451.

The very big active December contract month saw it’s OI gain 1623 contracts up to 421,666.

We had 40 notice(s) filed upon today for  4,000 oz

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And now for the wild silver comex results.  Total silver OI FELL BY 4880 CONTRACTS FROM 188,145 DOWN TO 178,343 WITH  YESTERDAY’S  1 CENT LOSS IN PRICE.  SILVER RESPONDED TO THE GEOPOLITICAL CLIMATE WITH TRUMP THREATENING TO SHUT DOWN GOVERNMENT UNLESS HE GETS HIS WALL, THE TWO DOVISH SPEECHES BY YELLEN AND DRAGHI AT JACKSON HOLE, THE FLOODING OF HOUSTON AND THE FIRING OF THOSE NORTH KOREAN MISSILES. WE LOST IN EXCESS OF 4400+ CONTRACTS AS THESE PAPER PLAYERS TENDERED THEIR SEPT. LONGS FOR SEPT. EFP’S (BUT THAT OBLIGATION STILL RESTS WITH THE BANKERS BUT ON A DIFFERENT EXCHANGE LONDON). HOWEVER ONCE THE HUGE RESISTANCE LEVEL OF $17.25 HELD, NEWBIE LONGS BECAME EMBOLDENED TO TAKE ON THE BANKERS.  SOME OLD SPECS EXITED WITH PROFITS FROM A HIGHER PRICE EARLY YESTERDAY. THE BANKERS PRESSED GOLD AND SILVER YESTERDAY AFTERNOON AND THEN BANG, LAST NIGHT, THEY ORCHESTRATED ANOTHER FLASH CRASH SO AS TO CAUSE UNDERWRITTEN OPTION CONTRACTS TO EXPIRE WORTHLESS. THEY FAILED AGAIN AS SILVER RETURNED TO A HUGE GAIN ON THE DAY ONCE OPTIONS EXPIRY CEASED.
RESULT:  A GOOD SIZED DECREASE IN OI AT THE COMEX WITH A ONE CENT LOSS IN PRICE. WE HAD A GOOD SIZED TRANSFER OF LONGS FOR ANOTHER PHYSICAL DELIVERY PRODUCT, EFP’S ,WHEREBY THEY RECEIVE A FINANCIAL REWARD PLUS A DELIVERABLE PRODUCT IN LONDON. 
The August contract month is now off the board.

 

The next active contract month is September (and the last active month until December) saw it’s OI fall by 10,022 contacts down to 4103.  The next non active contract month for silver after September is October and here the OI GAINED 17 contacts UP TO 890. After October, the big active contract month is December and here the OI GAINED by 5,079 contracts UP to 156,730 contracts.

We had 2181 notice(s) filed for  10,905,000 oz for the SEPT. 2017 contract

VOLUMES: for the gold comex

ESTIMATED VOLUME TODAY: 200,466 CONTRACTS WHICH IS GOOD

YESTERDAY’S confirmed volume was 329,873 which is EXCELLENT

volumes on gold are STILL HIGHER THAN NORMAL!

INITIAL standings for SEPTEMBER

 August 31/2017.

Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
2,539.75 oz
Scotia
Deposits to the Dealer Inventory in oz    nil oz
Deposits to the Customer Inventory, in oz 
  NIL oz
No of oz served (contracts) today
 
40 notice(s)
4000 OZ
.1244 TONNES
No of oz to be served (notices)
827 contracts
(82,700 oz)
Total monthly oz gold served (contracts) so far this month
40 notices
4000 oz
0.1244 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   2,539.9  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; NIL  oz
We had 1 customer withdrawal(s)
i) out of Scotia: 2,539.85 oz
total customer withdrawals;  2,539.85 oz
 we had 0 adjustment(s)
For SEPT:

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 40  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 SEPTEMBER. contract month, we take the total number of notices filed so far for the month (40) x 100 oz or 4000 oz, to which we add the difference between the open interest for the front month of SEPT. (867 contracts) minus the number of notices served upon today (40) x 100 oz per contract equals 86,700  oz, the number of ounces standing in this active month of SEPT.
 
Thus the INITIAL standings for gold for the SEPTEMBER contract month:
No of notices served so far (40) x 100 oz  or ounces + {(869)OI for the front month  minus the number of  notices served upon today (40) x 100 oz which equals 86,700 oz standing in this  active delivery month of SEPTEMBER  (2.696 tonnes)
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Total dealer inventory 733,310.965 or 22.809 tonnes  (dealer gold continues to disappear)
Total gold inventory (dealer and customer) = 8,693,69.7 or 270.40 tonnes 
 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 270.40 tonnes for a  loss of 33  tonnes over that period.  Since August 8/2016 we have lost 84 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  84 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE AUGUST DELIVERY MONTH
September initial standings
 August 31  2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
nil oz
Deposits to the Dealer Inventory
nil  oz
Deposits to the Customer Inventory 
 156,914.350 oz
 HSBC
No of oz served today (contracts)
2105 CONTRACT(S)
(10,905,000 OZ)
No of oz to be served (notices)
1998 contracts
( 9,990,000 oz)
Total monthly oz silver served (contracts) 2105 contracts (10,905,000 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 nil 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) into Brinks:  156,914.350
***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: 156,914.350 oz
 
 we had 1 adjustment(s)
i) from CNT:  760,497.97 oz was adjusted out of the customer and this landed into the dealer account of CNT
ii) from HSBC: 2,006,454.200 oz was adjusted out of the customer account and this landed into the dealer account of HSBC
The total number of notices filed today for the SEPTEMBER. contract month is represented by 2105 contract(s) for 10,905,000 oz. To calculate the number of silver ounces that will stand for delivery in SEPTEMBER., we take the total number of notices filed for the month so far at 2105 x 5,000 oz  = 10,905,000 oz to which we add the difference between the open interest for the front month of SEPT (4103) and the number of notices served upon today (2105) x 5000 oz equals the number of ounces standing.
 

 

.
 
Thus the INITIAL standings for silver for the SEPTEMBER contract month:  2105 (notices served so far)x 5000 oz  + OI for front month of SEPTEMBER(4103 ) -number of notices served upon today (2105)x 5000 oz  equals  20,515,000 oz  of silver standing for the SEPTEMBER contract month. This is excellent for this  active delivery month. Silver is being constantly demanded at the silver comex and we witness again the amount of silver demanded daily increase right from the get go. 
Last yr on the first day notice for the Sept silver 2016 contract we had 17.070 million oz stand for delivery.
By month end:  16.075 million oz/
 
Volumes: for silver comex
ESTIMATED VOLUME TODAY: 37,745 CONTRACTS WHICH IS GOOD
YESTERDAY’s  confirmed volume was 111,942 contracts which is OUT OF THIS WORLD
FRIDAY’S CONFIRMED VOLUME OF 111,942 CONTRACTS WHICH EQUATES TO 559 MILLION OZ OF SILVER OR 80% 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:  41.715 million (close to record low inventory  
Total number of dealer and customer silver:   217.714 million oz
The record level of silver open interest is 234,787 contracts set on April 21./2017  with the price at that day at  $18.42
The previous record was 224,540 contracts with the price at that time of $20.44
end

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 6.2 percent to NAV usa funds and Negative 6.2% to NAV for Cdn funds!!!! 
Percentage of fund in gold 62.4%
Percentage of fund in silver:37.6%
cash .+0.0%( August 31/2017) 
2. Sprott silver fund (PSLV): STOCK   NAV RISES TO -0.21% (August 31/2017) 
3. Sprott gold fund (PHYS): premium to NAV RISES TO -0.35% to NAV  (August 31/2017 )
Note: Sprott silver trust back  into NEGATIVE territory at -0.21%/Sprott physical gold trust is back into NEGATIVE/ territory at -0.35%/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 31/no change in gold inventory at the GLD. Inventory rests at 816.43 tonnes

August 30/another deposit of 2.07 tonnes into the GLD inventory/inventory rests at 816.43 tonnes

August 29/a huge deposit of 9.16 tonnes of probable paper gold/inventory rests at 814.36 tonnes

AUGUST 28/a huge deposit f 5.91 tonnes of gold into GLD inventory/inventory rests at 805.20 tonnes

AUGUST 25/NO CHANGE IN GOLD INVENTORY/INVENTORY RESTS AT 799.29 TONNES

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

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
August 31 /2017/ Inventory rests tonight at 816.43 tonnes
*IN LAST 223 TRADING DAYS: 133.45 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 161 TRADING DAYS: A NET  23.98 TONNES HAVE NOW BEEN ADDED INTO  GLD INVENTORY.
*FROM FEB 1/2017: A NET  7.17 TONNES HAVE BEEN ADDED.

end

Now the SLV Inventory

AUGUST 31/STRANGE!! a huge withdrawal of 2.019 million oz with silver up today.

August 30/no change in silver inventory at the SLV/inventory rests at 333.178 million oz

August 29/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 333.178 MILLION OZ

AUGUST 28/no change in silver inventory at the SLV/Inventory rests at 333.178 million oz/

AUGUST 25/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 333.178 MILLION OZ

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

August 31.2017:

Inventory 331.761  million oz
end
  • 6 Month MM GOFO

    Indicative gold forward offer rate for a 6 month duration

    + 1.40%
  • 12 Month MM GOFO
    + 1.53%
  • 30 day trend

end

Major gold/silver trading/commentaries for THURSDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

4 Reasons Why “Gold Has Entered A New Bull Market” – Schroders

– 4 reasons why “gold has entered a new bull market” – Schroders
– Market complacency is key to gold bull market say Schroders
– Investors are currently pricing in the most benign risk environment in history as seen in the VIX
– History shows gold has the potential to perform very well in periods of stock market weakness (see chart)
– You should buy insurance when insurers don’t believe that the “risk event” will happen
– Very high Chinese gold demand, negative global interest rates and a weak dollar should push gold higher

This week gold broke through the key resistance of $1,300. For some time market commentators have been signalling this level as the point of entry for a new bull market.

Often price can be distracting when it comes to trying to figure out what is going on. Two Schroders fund managers called the new bull market in gold about a week before the price broke through the key level.

Gold has entered into a new bull market. As we have discussed previously, there are four main reasons for our stance:

  1. Global interest rates need to stay negative
  2. Broad equity valuations are extremely high and complacency stalks financial markets
  3. The dollar might be entering a bear market
  4. Chinese demand for gold has the potential to surge (indeed, investment demand in China for bar and coin already increased over 30% in the first quarter of 2017, according to the World Gold Council)

Whilst they offered up four key reasons for the strength in gold, they highlighted the issue of broad equity valuations and market complacency as the most ‘pertinent’ of the four drivers.

Given the current state of play in the world, James Luke and Mark Lacey ‘strongly believe gold could turn out to be an underowned and well-priced insurance policy.’

Extremely high broad equity valuations look precarious

Starting with the S&P500, Luke and Lacey believe that it is currently very expensive based on a variety of measures.

The S&P500 made an all-time high of 2478 in July and is now up just under 11.5% year-to-date (source Bloomberg, 17 August 2017).

The valuation of this index is expensive on a variety of measures. Whether we look at simple price/book, trailing price/earnings or enterprise value/cashflow (each of which are different ways to value a company), the index is trading on valuation multiples which are 60% to 100% higher than the historical median over the last 90 years.

Whichever your preferred metric, historical regression analysis suggests expected returns for equities, from today’s starting point, are very low.

Why is the S&P500 so overvalued? This is something we have covered previously. There is an almost infallible belief that future earnings growth will be supported by Trump’s drive to cut corporate tax and the the fact that companies’ cost of capital is at an all-time low.

US companies may well receive a welcome reduction in the corporate tax rate, but the low cost of capital argument is flawed. Increasing interest rates are not supportive for equity valuations that are already high (versus history) as companies’ cost of capital increases. As unemployment continues to fall, inflation will start to pick up at the margin, regardless of the lag. Like it or not, we are firmly in a cycle of increasing nominal (not real) interest rates.

Gold and weak equity environments have history

As much as gold’s safe haven status is disputed in the mainstream, history cannot be ignored. This is something we admittedly bang-on about on a regular basis. It is something which is so simple and yet is refuted with the most complicated arguments.

Luckily Luke and Lacey agree on gold’s historical performance as evidence for it’s safe haven status.

 If we look back at gold price performance between 1961 and July 2017 (see chart above), it is very clear that gold price annual returns were positive, particularly during periods of high inflation, while stock market returns were negative.

We don’t see any argument as to why gold’s previous performance against a weak stock market will not repeat itself once markets wake-up to the real story.

What is the real story? As Luke and Lacey point out, stock market performance is not reason alone to argue that a gold bull market is in play. It is overall market complacency.

Market complacency: the market stalker

Market complacency is becoming a bit of a theme amongst financial commentators and analysts of late. Many seem perplexed as to why the market seems to be so enthusiastic and relaxed given the state of the world (Trump leadership, Venezuela, North Korea, global debt levels…to name a few).

when overall market complacency is high, the risk reward looks compelling

It is a known fact that the best time to buy insurance is at a time when the insurers don’t think it is very likely that the “risk event” will happen. For example, in the UK, household insurance premiums to cover flood risk increased by as much as 550% post the flooding in 2007 and again in 2014.

One of the most common measures for market complacency (or dissatisfaction) is the VIX Index. The index is a popular measure of the  implied volatility of the S&P500 index options over the next 30 days.

As we explained earlier in the week: The VIX index is often referred to as the ‘Fear Index’. Many believe this is a misnomer and does not portray  what is really going on. The index has been trading at historically low levels. Apparently investors continue to bet that the index will remain low if money keeps pouring into markets and the global economy carries on improving.

Schroders fund managers find the current state of the VIX perplexing.

At the moment the VIX is trading at a 27-year low. Investors are currently pricing in not just a stable pricing environment for the S&P500 for the next few months, but basically the most benign risk environment in the history of the index.

To us, this is odd from many angles. Not least because current extreme equity valuations are set against the startling fact that global central banks are moving towards an attempt to reverse the most extreme set of policies in the history of monetary policy. More visceral external factors are also lurking in the background.

Not just about equities and complacency

As with the financial crisis, the thing that causes the most damage is that which we turn a blind eye to. This is exactly what is happening right now by those pumping money into both the economy and financial markets.

However, the case for gold is not strong just because we think no one else is able to smell the (very strong) coffee.

Schroders also make an argument that Chinese demand, negative global interest rates and a potentially weak dollar will be major drivers of gold.

Image courtesy of Flickr, Pictures of Money

Conclusion

We have to agree with the authors of this insightful piece: gold is currently extremely undervalued and under appreciated given the amount of risk that is in the financial system.

At this time of heightened geopolitical risk, when Venezuela is on the brink of chaos and tensions are growing between North Korea and the US, there is the possibility of an event in the coming months which causes investors to seek to reduce their risk exposure.

In such circumstances, we strongly believe gold could turn out to be an underowned and well-priced insurance policy.

Full article where the above extracts were taken can be read here

Gold and Silver Bullion – News and Commentary

Gold reverses a dip below $1300 mark (FX Street)

Buffett Says Stocks Are ‘Less Attractive’ But Still Beat Bonds (Bloomberg)

Gold eases as dollar gains on strong economic data (Reuters.com)

U.S. Second-Quarter Growth Revised to 3% in Momentum Boost (Bloomberg)

U.S. private sector added most workers in five months in August: ADP (Reuters.com)

Source: Bloomberg

Gold Rally “Far From Over” as Stocks Vulnerable – Louise Yamada (CNBC)

“Constructive” On Gold For 2018 – Swiss Bank Pictet  (Bloomberg)

World Is Now Heading Into A “Perfect Storm” – Embry (King World News)

Credit Default Swaps Storing Trouble for China (FT.com)

Video: The Case for a 30-Year Bear Market In Stocks (Bloomberg)

Gold Prices (LBMA AM)

31 Aug: USD 1,305.80, GBP 1,013.17 & EUR 1,098.31 per ounce
30 Aug: USD 1,310.60, GBP 1,014.93 & EUR 1,096.71 per ounce
29 Aug: USD 1,323.40, GBP 1,020.34 & EUR 1,097.36 per ounce
25 Aug: USD 1,287.05, GBP 1,003.90 & EUR 1,090.90 per ounce
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

Silver Prices (LBMA)

31 Aug: USD 17.34, GBP 13.47 & EUR 14.62 per ounce
30 Aug: USD 17.44, GBP 13.49 & EUR 14.60 per ounce
29 Aug: USD 17.60, GBP 13.59 & EUR 14.62 per ounce
25 Aug: USD 17.02, GBP 13.26 & EUR 14.40 per ounce
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


Recent Market Updates

– Gold Reset To $10,000/oz Coming “By January 1, 2018” – Rickards
– Gold Surges 2.6% After Jackson Hole and N. Korean Missile
– Diversify Into Gold On U.S. “Political Instability” Advise Blackrock
– Trump Presidency Is Over – Bannon Is Right
– The Truth About Bundesbank Repatriation of Gold From U.S.
– Cyberwar Risk – Was U.S. Navy Victim Of Hacking?
– Global Financial Crisis 10 Years On: Gold Rises 100% from $650 to $1,300
– 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

end

Last night

Gold Flash-Crashes Below $1300

(courtesy zerohedge)

After the shenanigans in US mega-tech stocks over the last two days and the seemingly well orchestrated melt-up to pre-J-Hole levels in the dollar, why should anyone be surprised that ‘someone’ decided to try to sell $1.1 billion notional into the Asian open…

 

Sending Spot Gold back below the Maginot Line of $1300…

 

Silver followed suit… with 1300 contracts ($115 million notional) dumped at 21:43:30ET

 

The Dollar Index spiked as precious metals were ‘handled’ – note that in the last 48 hours, no dips in the dollar have been allowed…

 

Was The Bank of Japan at work again?

 

The flash crash lows coincided with the oddly-timed spike from Monday (that really had very little in the way of specific catalyst)…

One witty Twitterer asked mischieviously, “Was Kim buying Gold futures ahead of his launch?

Bitcoin rises to $4740 per coin which is backed by nothing but hot air.  I guess one way to look at this is the fact that gold would be trading at around $4700.00  if it were not manipulated by our criminal bankers.

Bitcoin Surges To New Record High, Overtakes Paypal & Netflix, Nears Morgan Stanley’s Market Cap

Amid chaotic swings in the dollar, and flash-crashes in precious metals, it seems anxious global investors have pushed into cryptocurrenciesas a safe-haven overnight with the top 5 virtual currencies all soaring.

Bitcoin has reached a new record high at $4740…

 

Pushing its total market cap near that of Morgan Stanley.

Bitcoin is now bigger than 425 of the S&P’s 500 members.

On a side note, GBTC (the bitcoin investment trust) is now trading at $927 (implying a Bitcoin price of $9270!) and trading at a $120% premium to NAV…

Buyer beware!



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 WEAKER 6.6010 (DEVALUATION SOUTHBOUND   /OFFSHORE YUAN MOVES SLIGHTLY WEAKER TO ONSHORE AT   6.6069/ Shanghai bourse CLOSED DOWN 2.81 POINTS OR 0.08%  / HANG SANG CLOSED DOWN 124.31 POINTS OR 0.44% 

2. Nikkei closed UP 139.70 POINTS OR 0.72%    /USA: YEN FALLS TO 110.57

3. Europe stocks OPENED DEEPLY IN THE GREEN     ( /USA dollar index RISES TO  93.18/Euro DOWN to 1.1843

3b Japan 10 year bond yield: FALLS  TO  +.009%/ GOVERNMENT INTERVENTION    !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 114.34/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  46.16 and Brent: 51.05

3f Gold DOWN/Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO  +.362%/Italian 10 yr bond yield DOWN  to 2.044%    

3j Greek 10 year bond yield FALLS to  : 5.540???  

3k Gold at $1306.00  silver at:17.35 (8:15 am est)   SILVER NEXT RESISTANCE LEVEL AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 14/100 in  roubles/dollar) 58.37-

3m oil into the 46 dollar handle for WTI and 51 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 110.57 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  0.9663 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1443 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

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

3r the 10 Year German bund now POSITIVE territory with the 10 year RISING to  +0.362%

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 2.145% early this morning. Thirty year rate  at 2.750% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

6. USA CASH BALANCES ON HAND: $64 BILLION

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

Global Stocks Rise On Strong Economic Data, Dollar Set To End Streak Of Monthly Declines

It’s groundhog day as S&P futures, European and Asian shares all rise overnight, while the dollar is poised to finally end its streak of monthly losses.

The Bloomberg Dollar Spot Index is finally headed for its first monthly gain since February, supported by renewed focus on better-than-forecast U.S. economic growth with the dollar getting an added boost after a Reuters report that Euro gains are worrying a growing number of ECB policy makers. The DXY is up 1.6% from multiyear low set on Tuesday while US Treasuries yields also rose in muted trading ahead of key core PCE inflation data due shortly Thursday and ahead of Friday’s jobs report.

Not helping the ECB case for a weaker Euro (and stronger dollar) was the latest Eurozone inflation data, which came in hotter than expected at the headline level, printing at 1.5% for August, above the 1.4% expected, and 1.3% in July, while inflation ex food and energy also came in stronger than the 1.2% expected, printing 1.3% in August, 0.1% higher than July. Core HICP inflation printed at 1.2%, matching the median forecast.

In addition to the ECB “trial balloon”, investors rediscovered a taste for a stronger dollar and commodities as upbeat Chinese economic data on Thursday, as well as stronger U.S. economic news, whetted appetite for riskier assets globally, even as tensions over North Korea simmered in the background. As reported overnight, the latest official PMI survey showed Chinese factory growth unexpectedly accelerated in August, confounding forecasts for a slight slowdown. The official PMI firmed to 51.7, from 51.4 in July, even as the service PMI tumbled. That gave a fresh boost to industrial metals, with copper nearing its highest since late 2014 and on track for gains of 7 percent for August.

A big gainer was U.S. gasoline which surged 6% to two-year peaks as flooding and damage from Tropical Storm Harvey shut nearly a quarter of U.S. refinery capacity. Prices are now up more than 20 percent in the past week. Gasoline advanced as Harvey continued to pound the energy-rich Gulf of Mexico coast, home to more than half of the U.S.’s refining capacity.

European share markets opened firmer, despite stronger inflation data and a higher euro, with the Eurostoxx 600 rising 0.8%, after hitting a 6 month low earlier in the week. The Stoxx Europe 600 Index followed gains in equity benchmarks from Tokyo to Sydney after U.S. equities advanced for a fourth day. European bourses rallied from the open led by mining and construction stocks, with base metals pushing higher through Asian session and European morning. Retail sector heavily underperforms after weak Carrefour earnings sees stock trade -15.1%. Most European bonds declined.

Meanwhile, no matter the news, the generic reaction is just to buy anything and everything: “It is almost like we have ended up with a default risk-on, which is in part predicated by the very benign pricing for what central banks do next,” said head of global macro strategy at State Street Global Markets, Michael Metcalfe. “And that is why the inflation numbers now will be important,” especially with energy prices and commodity prices having risen over the last couple of months. “The period where we could have expected favorable inflation numbers (for keeping interest rates low) may have passed.”

In Asia, Japan’s Nikkei closed up 0.7 percent, its best level in two weeks, helped by a pullback in the yen. MSCI’s broadest index of Asia-Pacific shares outside Japan edged down 0.1% on the day but was a modest 0.3% firmer for the month. The Topix index rose 0.6 percent at the close in Tokyo, paring its first monthly drop since March. Australia’s S&P/ASX 500 Index added 0.8 percent. The Kospi retreated 0.4 percent. Benchmark indexes dropped 0.6 percent in Hong Kong and fell in Shanghai, led by declines in banking stocks that had recently been surging.

Emerging market stocks took a breather too. But August has been their eighth straight month of gains and are now up almost 30 percent since the start of the year.

In addition to the European inflation U.S. core inflation figures, which will be closely watched by traders and the Fed as it looks to push on with its recent run of rate hikes, are also due later.

The U.S. dollar index rose to 92.929 and away from a 2.5 year low of 91.621 touched on Tuesday. The dollar also bounced to 110.60 yen, off a 4-1/2-month low of 108.25. The euro retreated to $1.1850 from its top of $1.2069, weighed in part by speculation the European Central Bank might start to protest at the currency’s strength.  “The ECB meeting is coming up next week and there are rising risks of verbal intervention from Mario Draghi,” said Deutsche Bank strategist George Saravelos. “Despite this the euro level does not appear particularly extreme and most importantly the ECB has not been driving recent appreciation anyway,” he added. “Verbal rhetoric may cause a correction but is unlikely to be enough to derail euro strength.”

The currency has risen sharply this year against the dollar as pessimism over the euro bloc has dissipated and its economy has started to gain some traction.

The bounce in the dollar shaved 0.5 percent off the price of gold to $1,302.50 an ounce, short of Tuesday’s 9-1/2-month high of $1,325.94. West Texas Intermediate crude increased 0.3 percent to $46.10 a barrel. Gasoline for September advanced for an eighth day, up more than 4.4 percent to $1.9673 a gallon. Earlier the front-month contract touched the highest since July 2015.

Economic data include jobless claims, July pending home sales, personal income and spending as well as August Chicago PMI. Discount retail store operator Dollar General and Palo Alto Networks are among companies reporting results.

Bulletin Headline Summary from RanSquawk

  • Euro equities trade higher whereas EUR was relatively unmoved from the release of European
    inflation data
  • Harvey continued to exert influence over the energy space despite being downgraded to a tropical
    depression
  • Looking ahead, highlights include US PCE, Chicago PMI, Canadian GDP and BoE’s Saunders

Market Snapshot

  • S&P 500 futures up 0.2% to 2,461.00
  • Brent Futures little changed at $50.87/bbl
  • Gold spot down 0.1% to $1,307.09
  • U.S. Dollar Index up 0.07% to 92.95

Top Overnight News from Bloomberg

  • Trump’s Tax-Cut Bid Hits New Obstacle: Hurricane Harvey’s Costs
  • Trump’s Impatience Emerging as Biggest Threat to Nafta Agreement
  • America’s Jobs Engine Keeps Defying Forecasts for 2017 Slowdown
  • Mobius Says Investors Are Rotating Out of U.S. Stocks Into EM
  • Carrefour Slumps on Warning, Raising Pressure on CEO for Reboot
  • BofA CEO Says He’s Confident Clients Will Pay for Research
  • Euro-Area Inflation Gathers Pace as ECB Weighs Future Stimulus
  • Fox Said to Continue Ion Talks as 5 Sinclair Deals Renewed
  • Southern Is Said to Seek $25 Billion Nuke Plant’s Completion
  • Ctrip Second Quarter Revenue Beats Estimates
  • Costco Aug. Comp. Sales Beat Estimates

Asia stocks traded mixed as the region mulled over a slew of data releases including varied Chinese PMIs. Nonetheless, ASX 200
(+0.79%) and Nikkei 225 (+0.72%) were positive as early momentum rolled over from Wall St where tech outperformed and US
GDP data beat estimates, with Nikkei 225 coat-tailing on the advances in USD/JPY above 110.00. Shanghai Comp. (-0.08%) and
Hang Seng (-0.44%) traded negative after the PBoC refrained from open market operations, and as participants also digested
Chinese PMI data in which Official Manufacturing PMI topped estimates but Non-Manufacturing PMI slowed. Finally, 10yr JGBs are
lower with demand sapped amid outperformance of Japanese stocks and mixed 2yr auction.
Chinese NBS Manufacturing PMI (Aug) 51.7 vs. Exp. 51.3 (Prev. 51.4). NBS Non-Manufacturing PMI (Aug) 53.4 (Prev. 54.5)
Bank of Korea 7-Day Repo Rate (Aug) 1.25% vs. Exp. 1.25% (Prev. 1.25%).

Top Asian News

  • Don’t Blame the Secretary Over Noble Group Fracas, Says ISDA
  • Jokowi Forms Task Force to Steer Indonesia’s Marquee Investors
  • BOJ Cuts 5-to-10 Year Bond Buy Range by 50b Yen for September
  • India Inflation More Likely to Guide RBI’s Hand, DBS Bank Says
  • China Bonds Feel the Heat Again as PBOC Tightens, Stocks Advance
  • ANA to Sell 140 Billion Yen of Bonds for Buyback, Jet Purchases

European equities trade higher across the board (Eurostoxx 50 +0.5%) with sentiment continued to be supported in the region
despite mixed performance seen overnight in Asia. In terms of sector specifics, material names lead the way higher with prices in
China supported by a beat on expectations for Chinese Official Manufacturing PMI. To the downside, energy names lag as prices
continue to feel the squeeze from the fallout of Harvey, while consumer staples also linger in the red after French retailheavyweight
Carrefour (-12.5%) trade markedly lower following a disappointing outlook. Fixed income markets have once again been hampered by the upside in equities despite an absence of supply from the Eurozone for the rest of the week. More specifically, Bunds have faced selling pressure throughout the session before finding  support at the 165.00 handle with further support said to lie below at 164.81. There was no substantial change in bunds after the release of the EU data. US Treasuries tracked risk sentiment, with the belly of the curve underperforming following a couple of strong sections on the back of stellar supply in the area. The long end ended relatively flat. However, concerns over rising North Korean tensions, and risks surrounding the US debt ceiling remain at the forefront of investors’ thought processes. US Sep’17 10y T-note futures settled at 127.02+, down 3+ ticks.

Top European News

  • German Unemployment Falls as Nation Braces for General Elections
  • Devil in the Detail: Brexit Talks Are Making Little Progress
  • UBS Is Said to Be Leaning Toward Frankfurt for EU Trading Hub
  • Nasdaq Sees Nordic Power Primacy Challenged by German Rival
  • AstraZeneca Made Bid for Daiichi Sankyo Last Yr: Nikkei Business
  • European Mining Stocks Climb After China Steel Mill Gauge Jumps

In currencies, GBP is modestly lower by around 0.2% as Brexit headwinds keep GBP pressured yet again. This morning saw comments from BoE Hawk, Saunders who continued to outline the case for a rate hike, whilst also downplaying the importance of such action. Today we saw the release of Eurozone inflation which was a beat of 1.5 on the expected 1.4 with previous 1.3%. However, EUR finding some mild support this morning amid cross related buying in EUR/GBP which has broken back above 92.00. NZD downward spiral continues, which has largely been the case since the back-end of July amid recent soft domestic economic data, while uncertainty looms over the general election.

In commodities, Harvey continued to exert influence over the energy space despite being downgraded to a tropical depression, with RBOB futures
rising to a fresh 2-year high after reports that the Colonial Pipeline (the largest refined products pipeline in the US) will shut its main
gasoline line today. This pressured WTI crude futures although prices have since recovered, while gold (-0.4%) saw a mini flash
crash and briefly slipped below USD 1300/oz before paring the majority of the move in the following minute, with the initial dip in
prices attributed to a sudden large sell order.
Russia produced 10.9mln bpd in Aug, subsequently exceeding their quota, according to IFAX citing sources.

Looking at the day ahead, the July PCE and personal income and spending data will be the focus, while initial jobless claims, continuing claims, pending home sales and Chicago PMI are also due. Away from the data, China President Xi Jinping will host the 9th BRICS summit.

US Event Calendar

  • 7:30am: Challenger Job Cuts YoY, prior -37.6%
  • 8:30am: Initial Jobless Claims, est. 238,000, prior 234,000; Continuing Claims, est. 1.95m, prior 1.95m
  • 8:30am: Personal Income, est. 0.3%, prior 0.0%; Personal Spending, est. 0.4%, prior 0.1%; Real Personal Spending, est. 0.3%, prior 0.0%
  • 8:30am: PCE Deflator MoM, est. 0.1%, prior 0.0%; PCE Deflator YoY, est. 1.4%, prior 1.4%
    • PCE Core MoM, est. 0.1%, prior 0.1%; PCE Core YoY, est. 1.4%, prior 1.5%
  • 9:45am: Chicago Purchasing Manager, est. 58.5, prior 58.9
  • 9:45am: Bloomberg Consumer Comfort, prior 52.8
  • 10am: Pending Home Sales MoM, est. 0.4%, prior 1.5%; Pending Home Sales NSA YoY, est. 0.5%, prior 0.7%

DB’s Jim Reid concludes the overnight wrap

Just a quick one from me this morning before passing over to Craig and Jeff. At around 1.55pm on Tuesday James Montgomery John Reid and Edward (Eddie) Fitzwilliam John Reid entered this world weighing c.5lb 13oz (2.635kg) and c.4lb 15oz (2.222kg) respectively. Poor Eddie had his umbilical cord wrapped around him possibly restricting his recent growth so it was good to get them out when we did. They both had blood sugar issues for over 24 hours but with intense feeding and glucose gels have now seemingly stabilised. Fingers crossed all seems well now but they are so small. Trudi is absolutely exhausted after being up for nearly 40 hours at one point and I’m a little tired but difficult to moan when I sneaked 4 hours in here and there. For most of the pregnancy we were going to call them Montgomery and Bartholomew. We finally ruled out the latter because of fears of him being forever associated with Bart Simpson. He’s one of my favourite TV characters but we were not sure it was wise to risk Bartholomew being shortened and little Bart having to play up to his name.

As for Monty. We love that name. However with 2 days to go we tried it out at home to see how it sounded and every time we did Bronte ran in from the other room and demanded a treat. That seemed an untenable situation longer term. So Montgomery is a middle name. So James and Eddie were late bloomers but suit them perfectly. In case you’re interested in between my many duties I created a rough video still collage of the boys’ first 24 hours. The link to it is on my Bloomberg message header or I’m sure Craig can send it to you. See you in a couple of weeks. Over to Craig and Jeff.

It’s a bit difficult to compete with that news, but a decent run of macro data in the last 24 hours has proved to be a welcome distraction for markets from the recent geopolitical headlines. We’ll jump into the details further down but in summary higher than expected inflation prints in both Spain and Germany during the morning yesterday were then followed up by a stronger than expected ADP employment report in the US and a larger than expected upward revision to Q2 GDP. Overnight China has also reported a beat in its August manufacturing PMI which has added to the good news.

Looking ahead to today, macro data should remain front and centre as we’ll get the personal income and spending prints in the US this afternoon along with the Fed’s favored inflation measure in the July PCE data. So this will certainly be worth keeping an eye on given that we’d argue that inflation data and the outcome of the debt ceiling debate have taken over as the two most important considerations for the Fed outlook now. Our US economists expect the core PCE deflator to show a +0.2% mom rise while the market is slightly below that at +0.1% mom. Should our economists’ forecast be correct then the YoY rate should hold at +1.5% and unchanged versus June.

Over in markets, by the closing bell last night the S&P 500 finished +0.46% which believe it or not is actually the fourth consecutive daily gain for the index and the longest streak since May. President Trump didn’t completely stay out of the headlines after tweeting that “talking is not the answer” in response to the  latest North Korea missile test but that appeared to be largely ignored, in part asDefence Secretary Mattis later  said “we’re never out of diplomatic solutions”.

Separately, a headline from rating agency Standard & Poor’s suggesting that a failure to raise the debt limit would likely be more catastrophic than the failure of Lehman appeared punchy at first glance but was also taken with a pinch of salt. Elsewhere, the Nasdaq also finished +1.05% and the Dow +0.12%. In Europe the Stoxx 600 (+0.70%) snapped a run of three consecutive days closing in the red. That coincided with the Euro weakening -0.74% which means it is around -1.50% down from the peak level of 1.2070 made on Tuesday.

Staying with Europe, we thought it would be worth highlighting a couple of reports from DB research yesterday. The first is Mark Wall’s ECB preview in which he runs through his expectations for the ECB meeting on September 7th. In summary Mark is not expecting a policy announcement. A QE exit step is expected in the next few months, but concerns about market overshooting suggests the exit signal could be weak in September. Mark believes the ECB will leave the current rhetoric framework – “confidence, patience, persistence and prudence” – largely intact in September while adding a mild verbal warning that the EUR exchange rate is “important” to growth and inflation. Rather than signal exit in advance, Mark thinks that the ECB strategy will be to wrap the exit decision in dovishness when it is announced in October.

On a related topic, George Saravelos published a report yesterday morning addressing what might be next for the Euro now that his 1.20 EUR/USD target had been met so soon. He notes the risk of verbal intervention from Draghi at the ECB meeting. However George also notes that despite this the Euro level does not appear particularly extreme and most importantly the ECB has not been driving recent appreciation anyway. ECB verbal rhetoric may cause a correction but is unlikely to be enough to derail Euro strength. George and his team see the risks as still skewed towards the Euro overshooting above 1.20 at some point  this year rather than permanently reversing lower.

Jumping to the latest in Asia now where the highlight has been China’s August manufacturing PMI which was slightly stronger than expected at 51.7 (vs 51.3 expected) and up from 51.4 in July. In the details new orders and business activity rose during the month. The non-manufacturing PMI did however weaken 1.1pts to 53.4. In Japan industrial production has slowed to a still solid +4.7% yoy (vs. +5.2% expected).

Markets have been a bit more mixed in Asia. Led by a retreat for banks, the Shanghai Comp (-0.65%) and Hang Seng (-0.57%) are both in the red, along with the Kospi (-0.20%). By contrast the Nikkei (+0.75%) and ASX (+0.69%) have firmed. Elsewhere, WTI Oil is flat following a third consecutive decline yesterday as Tropical Storm Harvey has now impacted c.20% of US’s refining capacity, but US gasoline prices continue to surge, up +6.12% this morning and so bringing the cumulative gain to around 20% over the past four days and prices to a fresh two-year high.

Away from the markets, yesterday Trump spoke in Missouri on his tax plan, warning Congress not to miss a “once in a generation opportunity” to boost the economy with a massive overhaul of the US tax code. However, the speech was more focused on “why” the US tax system needed to change, rather than providing details on “how” it can be change. He did say “Ideally….we would like to bring our business tax rate down to 15%” and that “I am fully committed to working with Congress to get this job done, and I don’t want to be disappointed by Congress”. Elsewhere on the Brexit talks, EU negotiator Barnier said he can’t agree to UK demands to be flexible until he knows what the UK wants, he said “to be flexible you need two points, our point and their point”, and that “we need to know their position and then I can be flexible”.

Back to that macro data yesterday. In the US, ahead of payrolls on Friday, the ADP employment change for August was higher than expected at 237k (vs 188k), the most since March. In light of this, our US team has raised the estimate for Friday’s official payrolls report by 15k to 200k. Elsewhere, US 2Q GDP was revised higher from 2.6% qoq to 3.0% qoq and stronger than expected (vs 2.7% expected) lifting through-year growth to 2.2% saar. While the stats are backward looking, it is encouraging that the revision has pushed quarterly growth to its highest level since 1Q15 after being driven by firmer estimates of final demand. Within the details, personal consumption was revised up to 3.3% qoq (vs 3.0% expected) and business investment was revised up 1.7pps to 6.9% saar. There were no revisions to the core PCE (+0.9% qoq).

Over in Germany, inflation data for August was slightly higher than expected at +0.2% mom (vs +0.1% expected), lifting the annual growth rate to +1.8% yoy (vs +1.7% expected). Spain’s HICP also rose +0.2% mom in August, lifting through-year inflation to +2.0% yoy. Elsewhere, the Eurozone’s August economic confidence index was better than expected at 111.9 (vs 111.3), which is the highest reading since July 2007. Confidence firmed across the industrial and service sectors in August, while the final reading for consumer confidence was in line at -1.5. Back to the UK, the BOE July mortgage approvals was slightly higher than expecte d at 68.7k (vs 65.5k), to be the strongest reading since March last year. Elsewhere, the credit lending was modestly softer than expected, with net consumer credit at 1.2bln (vs 1.5bln) and net lending on dwellings at 3.6bln (vs 3.8bln).

Looking at the day ahead, Germany’s July retail sales will be out in early morning (+2.9% yoy expected). Then we have the July unemployment rate for the Eurozone (9.1% expected) and Italy, along with the August unemployment change stats for Germany. Thereafter inflation data for the Eurozone (+1.2% yoy at the core), Italy and France are also due. Over in the US, as mentioned earlier the July PCE and personal income and spending data will be the focus, while initial jobless claims, continuing claims, pending home sales and Chicago PMI are also due. Away from the data, China President Xi Jinping will host the 9th BRICS summit.

 END

3. ASIAN AFFAIRS

i)Late WEDNESDAY night/THURSDAY morning: Shanghai closed DOWN 2.81 POINTS OR 0.08%   / /Hang Sang CLOSED DOWN 124.31 POINTS OR 0.44%/ The Nikkei closed UP 139.70 POINTS OR 0.72%/Australia’s all ordinaires CLOSED UP 0.74%/Chinese yuan (ONSHORE) closed DOWN at 6.6010/Oil UP to 46.16 dollars per barrel for WTI and 51.05 for Brent. Stocks in Europe OPENED DEEPLY IN THE GREEN. Offshore yuan trades  6.6069 yuan to the dollar vs 6.6010 for onshore yuan. NOW THE OFFSHORE MOVED SLIGHTLY WEAKER  TO THE ONSHORE YUAN/ ONSHORE YUAN MUCH WEAKER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS MUCH WEAKER 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/SOUTH KOREA

b) REPORT ON JAPAN

end

c) REPORT ON CHINA

Last night China’s service sector crashed to its weakest level since May 2016:

(courtesy zero hedge)

China’s Services Economy Growth Just Cratered

Amid the global growth party of hope-strewn PMIs across the world (all of which have been shown time and time again to hold zero correlation to actual economic data)China’s non-manufacturing data just puked in the punchbowl, crashing to its weakest level since May 2016(despite amodest uptick in manufacturing).

Is China’s lagged credit impulse finally starting to leak into reality?

 

Manufacturing PMI rose from 51.4 to 51.7 in August but employment fell, new export orders fell, and both input and output prices soared. Notably large enterprises actually downticked with medium-size entities the most hopeful.

On the services side, non-manufacturing PMI tumbled to 53.4 (still expansionary, we hear bulls cry) – the weakest since May 2016 as new orders, business expectations, and inventories weakened.

end

4. EUROPEAN AFFAIRS

We knew this would happen.  The Euro boys have been quite happy these past few years living with a very low Euro. Now that Europe has picked up in growth and corporate profits, the ECB sends out a trial balloon that they are not happy with the new high in value of the Euro.  Draghi states that he is in no rush to taper  his QE purchases of bonds. This causes the Euro to tumble and the German Bunds rose in price (lower in yield.)  However inflation is running much higher than expected.

(courtesy zerohedge)

 

 

5. RUSSIA AND MIDDLE EASTERN AFFAIRS

The USA orders Russia to close to annex consulates: one in San Francisco and the other in New York

(courtesy zero hedge)

US Orders Closure Of Russian Consulate In San Francisco

Tit for tat.

Exactly one month after Vladimir Putin ordered the expulsion of 755 US diplomats from Russia, as well as the seizure of two diplomatic compounds used by the US in Russia on July 31, moments ago the US State Department announced that “in the spirit of parity invoked by the Russians”, the US has ordered the Russian government to close its San Francisco consulate, a chancery annex in Washington and a consular annex in New York City.


Russian consul general in SF

Russia was given two days, or until September 2, to complete the closures.

The State Department explains that “with this action both countries will remain with three consulates each.”

And, in the spirit of “generosity”, the US added that “while there will continue to be a disparity in the number of diplomatic and consular annexes, we have chosen to allow the Russian Government to maintain some of its annexes in an effort to arrest the downward spiral in our relationship.”

Full statement below:

Achieving Parity in Diplomatic Missions

 

The United States has fully implemented the decision by the Government of the Russian Federation to reduce the size of our mission in Russia. We believe this action was unwarranted and detrimental to the overall relationship between our countries.

 

In the spirit of parity invoked by the Russians, we are requiring the Russian Government to close its Consul. General in San Francisco, a chancery annex in Washington, D.C., and a consular annex in New York City. These closures will need to be accomplished by September 2.

 

With this action both countries will remain with three consulates each. While there will continue to be a disparity in the number of diplomatic and consular annexes, we have chosen to allow the Russian Government to maintain some of its annexes in an effort to arrest the downward spiral in our relationship.

 

The United States hopes that, having moved toward the Russian Federation’s desire for parity, we can avoid further retaliatory actions by both sides and move forward to achieve the stated goal of both of our presidents: improved relations between our two countries and increased cooperation on areas of mutual concern. The United States is prepared to take further action as necessary and as warranted.

Whether in the “full spirit of parity” Russia will next dump a few thousand soliders in nations neighboring the US, we don’t know, but we are confident that an escalating Russian response to this latest US move is inevitable and imminent.

END

6 .GLOBAL ISSUES

The loonie finally rises after two consecutive down days after Canada recorded it’s best economic growth in 15 years:

(courtesy zero hedge)

Loonie Spikes After Canada’s Best First-Half Economic Growth In 15 Years

Thanks to a surge in government spending in Q2, Canada’s GDP grew at 4.5% SAAR. This is the best growth since Q3 2011 and is the best growth of all G-7 nations in Q2.

This is higher than the highest economist estimate…

Bloomberg reports that Canada’s consumers, benefiting from a buoyant jobs market and rising home values, are on a tear. Household consumption rose at an annualized 4.6 percent pace in the second quarter, following a 4.8 percent gain in the second quarter. That’s the best two-quarter gain since before the 2008 recession.

It’s a tale of two industries for Canada’s housing market. Residential construction was little changed with repair and renovation work posting stronger gains but overall residential investment figures were hurt by slumping activity in the resale market. Total investment in residential structures fell at an annualized 4.7 percent pace due to a sharp decline in the so-called ownership transfer costs associated with real estate transactions(down an annualized 24.1 percent)

The surge in growth should help cement the chances the Bank of Canada will continue raising interest rates in coming months as the nation’s economy nears full capacity, and that expectation has prompted notable strength in the Loonie…

Canada’s economic growth over the past two quarters was the best first half for the economy since 2002.

Wow!! this came out of nowhere:  Mexico hints that it may balk on NAFTA and entirely abandon the agreements as they are working on alternatives…the Peso plummets as Mexico enjoys huge benefits from NAFTA
(courtesy zerohedge)

Peso Tumbles After Mexico Hints May Balk On NAFTA, “Preparing Alternatives”

Mexico’s Economy Minister Ildefonso Guajardo sent the Mexican peso reeling Thursday afternoon after he hinted Mexico may balk on trade talks with the US, telling lawmakers from Mexico’s ruling PRI that Mexico’s trade representatives would not negotiate with the US “under threat,” highlighting the intensifying tensions between the US, Mexico and Canada a day before the second round of Nafta negotiations is set to begin.

A day after he hinted that Mexico was working on a “Plan B” should the talks fail and Nafta be allowed to dissolve, Guajardo unveiled that Mexico is in advanced negotiations with Europe, and that talks with Latin American neighbors Brazil and Argentina are moving forward. He also said that the Pacific Alliance, a Latin American trade bloc, is in discussions to admit New Zealand and Singapore.

The strongly worded speech came after Trump repeatedly threatened to “terminate” the US’s Nafta membership – something that’s allowed under the treaty, given 180 days’ notice, with the most recent threat coming during yesterday’s speech in Missouri. Details from the meeting were released on one PRI’s twitter accounts.

Hay planes alternativos para diversificar las opciones de comercio internacional mexicano, todo con acciones inmediatas @ildefonsogv

This is how  Bloomberg summarized the comments:

  • MEXICO NEEDS TO PREPARE ITS ALTERNATIVE: GUAJARDO
  • EUROPE, BRAZIL, ARGENTINA TALKS ADVANCED: GUAJARDO
  • MEXICO LOOKS TO INCORPORATE AUSTRALIA IN NEW TRADE DEALS: MIN

Guajardo’s comments sent the dollar higher against its Mexican rival…

Guajardo’s comments echoed similar remarks made by Meixco’s Foreign Minister Luis Videgaray, who threatened to “walk away” from the negotiating table if Trump decides to withdraw the US from the trade bloc.

Here’s Reuters:

“Asked in Washington if Mexico would continue negotiating if Trump pulled the trigger on the six-month process of withdrawing from the trade deal, Videgaray responded with an emphatic ‘No.’”

According to Reuters, the first five-day round of talks between the three countries concluded in Washington on Aug. 20, with all sides committing to follow an accelerated process in revamping the agreement. Unsurprisingly, the talks appear to have already hit a snag. As we reported shortly after the conclusion of the first round, Mexico, the US and Canada already disagree over the US’s demand that the revamped agreement require that a “substantial” portion of autos and auto parts produced under the pact be manufactured in the US.

A clause in the NAFTA agreement allows any of the three countries to withdraw from the deal after giving 180 days notice, and Trump has proven more than willing to use this as a cudgel.

Of course, this kind of tough rhetoric fits in with the US negotiating strategy outlined in a 17-page document that was released back in July. In it, Lighthizer lays out a simple objective: “improve the U.S. trade balance and reduce the trade deficit with Nafta countries.”

Among other things, the document makes the unexpected assertion that no country should manipulate currency exchange to gain an unfair competitive advantage, which, according to a team of economists from Citi, was its only notable surprise:

“That line of focus centers on FX: “Through an appropriate mechanism, ensure that the Nafta countries avoid manipulating exchange rates in order to prevent effective balance of payments adjustment or to gain an unfair competitive advantage.”

 

Citi Economics highlighted this as one of the most controversial risks of inclusion in these guidelines. However, it also cited belief that if included in the principles, this issue may need to be addressed separately. Specifically for countries like CAD and MXN.”

Seeing as unilaterally withdrawing from the agreement risks igniting a global trade war – something the Trump administration, for all its bluster on trade, has appeared hesitant to do – Trump’s threats are probably just that. However, with the administration increasingly desperate for a ‘W’, walking away isn’t out of the question.

Given Trump’s history of maintaining a hard line during negotiations, we imagine he will instruct his people not to relent until they’ve wrung a few face-saving concessions from the US’s “partners.”

For his part, Canadian Prime Minister Justin Trudeau has said only that his government will work “seriously” to improve Nafta.

One former Mexican diplomat offered some perspective for US investors that we thought was interesting. Jorge Guajardo, a former Mexican ambassador to China, said that people in the US don’t understand how politically unpopular the appearance of collaboration with the Trump government might be for Mexico’s ruling party – this could suggest that the talks might be futile, because Mexico’s politicians, nor Trump, can afford to lose face with the public.

Whatever the outcome, it appears currency traders aren’t willing to give the Trump administration the benefit of the doubt, just like the T-bills market appears to be taking the threat of a debt-ceiling breach seriously.
Yet, oddly, none of this has meaningfully translated to stocks.

People in US aren’t considering, as NAFTA negotiations progress, how little political appetite there is in Mexico to partner w/ Trump’s USA.

 

By Tweeting and bullying México, Trump is all but hanging the death knell on NAFTA and all future cooperation in all areas btwn countries.

Mexico and US cooperate in National security (detaining terrorists before they enter US), fighting drug trafficking, migration, etc.

 

Mexico and US cooperate in National security (detaining terrorists before they enter US), fighting drug trafficking, migration, etc.

All that cooperation, plus trade, will come to an end much sooner than people realize. The USA has not had a hostile neighbor for a while.

Whatever the outcome, it appears currency traders aren’t willing to give the Trump administration the benefit of the doubt. A similar pattern of behavior has been playing out in the T-bills market, which appears to be taking the threat of a debt-ceiling breach seriously.  Of course, none of this has had any impact on stocks…

7. OIL ISSUES

Gasoline price surge this morning after the major pipeline conduit for gas from the Gulf to the East Coast has been shut down due to the Hurricane.

(courtesy zero hedge)

(courtesy zerohedge)

8. EMERGING MARKET

VENEZUELA/USA

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   1.1843 DOWN .0047/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/HOUSTON FLOODING/EUROPE BOURSES DEEPLY IN THE GREEN

USA/JAPAN YEN 110.57 UP 0.104(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 1.2862 DOWN .0058 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED

THERESA MAY FORMS A NEW GOVERNMENT/STARTS BREXIT TALKS

USA/CAN 1.2655 UP .0026 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/(TRUMP INITIATES LUMBER TARIFFS ON CANADA)

Early THIS THURSDAY morning in Europe, the Euro FELL by 47 basis points, trading now ABOVE the important 1.08 level  FALLING to 1.1843; / Last night the Shanghai composite CLOSED  DOWN 2.81 POINTS OR 0.08%     / Hang Sang  CLOSED  DOWN 124.31 POINTS OR 0.44% /AUSTRALIA  CLOSED UP 0.74% / EUROPEAN BOURSES OPENED DEEPLY IN THE GREEN  

The NIKKEI: this THURSDAY morning CLOSED UP 139.70 POINTS OR 0.72%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 124.31 POINTS OR 0.44%  / SHANGHAI CLOSED DOWN 2.81 POINTS OR 0.08%   /Australia BOURSE CLOSED UP 0.74% /Nikkei (Japan)CLOSED UP 139.70  POINTS OR 0.72%   / INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: 1306.50

silver:$17.38

Early THURSDAY morning USA 10 year bond yield:  2.145% !!! UP 1   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  2.7500, UP 1  IN BASIS POINTS  from TUESDAY night.

USA dollar index early THURSDAY morning: 93.18 UP 30  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: 2.832% DOWN 3 in basis point(s) yield from WEDNESDAY 

JAPANESE BOND YIELD: +.009%  DOWN 1/5   in   basis point yield from WEDNESDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.562% DOWN 2   IN basis point yield from WEDNESDAY 

ITALIAN 10 YR BOND YIELD: 2.045 DOWN 3  POINTS  in basis point yield from WEDNESDAY 

the Italian 10 yr bond yield is trading 49 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.361% UP 1/2  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 1.1885 DOWN .0006 (Euro DOWN 6 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 110.13 DOWN 0.343(Yen UP 34  basis points/ 

Great Britain/USA 1.2892 DOWN  0.0028( POUND DOWN 28 BASIS POINTS)

USA/Canada 1.2521 DOWN .0108 (Canadian dollar UP 108 basis points AS OIL ROSE TO $47.20

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This afternoon, the Euro was DOWN  by 6 basis points to trade at 1.1885

The Yen ROSE to 110.13 for a GAIN of 34  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 28  basis points, trading at 1.2892/ 

The Canadian dollar ROSE by 108 basis points to 1.25210,  WITH WTI OIL RISING TO :  $47.20

The USA/Yuan closed at 6.5901/
the 10 yr Japanese bond yield closed at +.0009%  DOWN 1/5 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 1  IN basis points from WEDNESDAY at 2.131% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.728 DOWN 2 in basis points on the day /

Your closing USA dollar index, 92.82  DOWN 7 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  65.36 POINTS OR 0.89%
German Dax :CLOSED UP 53.37 POINTS OR 0.44%
Paris Cac  CLOSED UP 29.25 POINTS OR 0.58% 
Spain IBEX CLOSED UP 53.70 POINTS OR 0.52%

Italian MIB: CLOSED UP 166.56 POINTS OR 0.77% 

The Dow closed UP 55.67 OR 0.25%

NASDAQ WAS closed UP 60.36  POINTS OR 0.95%  4.00 PM EST

WTI Oil price;  47.20 at 1:00 pm; 

Brent Oil: 52.52 1:00 EST

USA /RUSSIAN ROUBLE CROSS:  58.07 DOWN 44/100 ROUBLES/DOLLAR (ROUBLE HIGHER BY 44 BASIS PTS)

TODAY THE GERMAN YIELD RISES TO  +0.361%  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:$47.07

BRENT: $52.75

USA 10 YR BOND YIELD: 2.119%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.726%

EURO/USA DOLLAR CROSS:  1.1907 UP .0016

USA/JAPANESE YEN:109.96  DOWN  0.507

USA DOLLAR INDEX: 92.63  DOWN 26  cent(s)  

The British pound at 5 pm: Great Britain Pound/USA: 1.2929 : UP 10 POINTS FROM LAST NIGHT  

Canadian dollar: 1.2479 UP 151 BASIS pts 

German 10 yr bond yield at 5 pm: +0.361%

END

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

TRADING IN GRAPH FORM FOR THE DAY

Gold Pops, S&P Stops, And Bonds Have Best Month Since Brexit

One look at the last few days in stocks and all we can say is…

 

Gold and The Long Bond were the best performers in August with stocks and the dollar unchanged-ish

 

Trannies were best among the major indices in August followed by Nasdaq. Small Caps lagged. S&P just managed to close green for August.

 

Treasury yields tumbled in August… the biggest monthly drop for 10Y yields since Brexit (June 2016)

 

With the yield curve flattening dramatically… August saw 2s10s collapsed 15bps to below 80bps (the biggest flattening since Feb 2016) near its flattest level since Aug 2016

 

Debt Ceiling anxiety has exploded during August…

 

Despite the last two days panic-buying, The Dollar Index ended the month lower – the 6th monthly loss in a row… (NOTE the morning’s spike on ECB leaks failed to hold and keep the dollar green for the month)

 

And notably, of all the majors, Yuan was the strongest against the greenback and cable weakest on the month (this was GBP’s weakest month since Oct 2016)…

 

In virtual currency-land, Bitcoin surged 65% on the month to a new record high…

*  *  *

Back to this week’s action…

Today’s biggest headline-maker was the 14% explosion in September RBOB futures as they expired (amid zero liquidity), but Oct Futs also spiked as more refiners were shut down…

 

Rather oddly, given the huge cut in demand (from refinery shutdowns),WTI futures spike today magically, back above $47…

 

All that mattered in stock land today was gettingh the cash S&P above 2470.3 for a green month… Sheer panic right at the close saved the day (S&P now up 9 of last 10 months)

 

FANG Stocks ended the month unchanged despite a massive 5% rip in the last week…

 

This week’s meltup in stocks is entirely opposite to the strength in bonds and bullion…

 

10Y yields rolled back to a 2.11% handle today…

 

The Dollar Index spiked this morning as EUR tumbled on a Reuters story about ECB, but Mnuchin spoiled the party and the dollar started sinking…

 

Gold flash-crashed overnight (with spot breaking below $1300), but precious metals players just bought the dip and sent it back to the post-Korea-Missile highs…

 

Finally, we note that gas prices at the pump hit a 2-year high today… and The Fed’s about to get its transitory inflation if RBOB plays through…

 

end

Right after Draghi floated a trial balloon suggesting he wants a lower Euro, Mnuchin was interviewed and he stated that he states that a lower dollar is preferable for trade.  Down goes the dollar..

(courtesy zerohedge)

 

Same Day FX Wars? Dollar Tumbles After Mnuchin Says “Weaker Dollar Better”, Undoing Euro Losses

The smell of currency war is rising in the air.

Less than six hours after the ECB lobbed the first trial balloon of the day, when Reuters reported that ECB policymakers were “growing worried” about the recent rapid gains in the Euro, sending the EURUSD sharply, if briefly lower, the entire move is now a distant memory following jawboning from US Treasury Secretary Steven Mnuchin, who moments ago said on CNBC that “having a weaker dollar is somewhat better for trade, a statement which immediately spooked algos into dumping the USD…

… selling the USDJPY by 30 pips to 109.90…

… and sending the EURUSD right back to 1.19, where it was before the ECB’s Reuters “intervention.”

And while Mnuchin also added that a strong USD in the long-term “reflects confidence”, algos decided to ignore that. His key statement below:

As it relates to trade, having a weaker dollar is somewhat better for us. What I’ve said consistently is: Where the dollar is in the short-term is less of a concern for me. I do think over long periods of time, the dollar strength is an indication of the reserve currency and the confidence that people have in the U.S. economy.”

Then again, when asked by Liesman if a strong dollar is good for the U.S., he responded “it’s not a question of whether it’s better or not, it’s somewhat inevitable given the strength of the U.S. economy and the confidence that people have.”

While not nearly as FX moving, Mnuchin also said that the Administration’s aim is to get a 15% tax rate, explicitly said he was working with Gary Cohn and other lawmakers on the tax plan. Mnuchin also said that he meets with Yellen on a weekly basis and has a “constructive dialog” with the Fed chair, although he refused to comment on her future, and said Trump would decide the next Fed chair.

More amusingly, on the topic of the tax package he vowed that “there absolutely is a tax package”, that revenue neutrality remains under discussion, and promised that the tax reform package will pacy for itself with US “growth.”

Finally, he said that while more money is needed for Harvey, he wouldn’t say how much, while on the topic of the debt ceiling he did note that “nobody would let the US default.”

His key comments courtesy of Bloomberg:

  • MNUCHIN: HAVING A WEAKER USD IS SOMEWHAT BETTER FOR U.S. TRADE
  • MNUCHIN: THERE ABSOLUTELY IS A TAX PACKAGE
  • MNUCHIN: TAX PACKAGE SHOULD BE PAID FOR WITH ECONOMIC GROWTH
  • MNUCHIN HE’S BEEN WORKING WITH COHN, LAWMAKERS ON TAX PLAN
  • MNUCHIN SAYS BLUEPRINT TO BE RELEASED FOR CONGRESSIONAL REVIEW
  • MNUCHIN SAYS REVENUE NEUTRALITY IS UNDER DISCUSSION
  • MNUCHIN: PLAN INCLUDES MIDDLE-CLASS TAX CUT, SIMPLIFICATION
  • MNUCHIN SAYS OBJECTIVE IS TO GET CORPORATE TAX RATE TO 15%
  • MNUCHIN: TAX PACKAGE SHOULD BE PAID FOR WITH ECONOMIC GROWTH
  • MNUCHIN: SEPT. 29 DEBT CEILING DATE COULD MOVE A LITTLE
  • MNUCHIN SAYS WE’RE ON TRACK TO GET TAX PLAN BY YEAR END
  • MNUCHIN SAYS NEXT BIG CASH DATE IS SEPT. 15 W/ CORPORATE TAXES

end

Real personal spending shows a less than expected .3% month over month gain (.4%month over month expected) Incomes saw a modest .4% month over month gain.

(courtesy zero hedge)

Real Personal Spending Disappoints In July, Savings Rate Tumbles To Lowest Since Dec 2016

Following June’s MoM decline in incomes, Americans saw a modest 0.4% bounce in July (better than expected). However, their spending grew less than expected (up 0.3% MoM vs 0.4% expectations).

However, real personal spending rose just 0.2% MoM in July (below expectations).

This sent the US personal savings rate down to just 3.5%, the lowest since December 2016.

 

As Bloomberg notes, one bright spot was that wages and salaries rose 0.5 percent in July for a second month, the best back-to-back performance since the first two months of 2017.

However, both private and government wage growth is the weakest since Dec 2016.

While real disposable incomes gained, the saving rate dipped to the lowest this year. Faster pay growth would allow Americans to ramp up their spending while also socking away more cash for the future.

The data on prices showed inflation remains stubbornly below the Federal Reserve’s 2 percent goal. The central bank’s preferred inflation gauge has matched or topped policy makers’ target in just two months since 2012. While less convenient for the Fed, low price pressures help to boost consumer purchases.

end

 

Pending homes sales falter in July by a large .8% month/month with expectations of a rise of .3%.  This completes all 3 housing data points which shows that the economy is not growing as expected

 

(courtesy zero hedge)

Pending Home Sales Slump Completes July Triple Whammy For Housing ‘Recovery’

Following a plunge in existing home sales and new home sales, pending home sales slumped in July, dropping 0.8% MoM (missing expectations of a 0.3% rise). This completes the triple whammy of misses and drops for July’s housing data…

 

Bloomberg notes that the decline in contract signings, the fourth in the last five months, highlights that a limited number of properties for sale remains the biggest hurdle for the housing market. That’s particularly true for those wanting to buy for the first time as rising home prices are outpacing gains in wages.

The Realtors group reduced its projection of sales this year to 5.49 million from last month’s estimate of 5.56 million. Supply is failing to keep up with demand, and the outlook for sales is also less favorable because purchases in the Houston area will likely slow in the aftermath of Hurricane Harvey, the NAR projects.

“The housing market remains stuck in a holding pattern with little signs of breaking through,” Lawrence Yun, NAR’s chief economist, said in a statement.

 

“The pace of new listings is not catching up with what’s being sold at an astonishingly fast pace.”

 

“Buyer traffic continues to be higher than a year ago, the typical listing has gone under contract within a month since April, and inventory at the end of July was 9 percent lower than last July,” Yun said.

 

“The reality, therefore, is that sales in coming months will not break out unless supply miraculously improves. This seems unlikely given the inadequate pace of housing starts in recent months and the lack of interest from real estate investors looking to sell.”

end

The USA in the latest Challenger, Gray and Christmas report suggest that total layoffs in August total 33,825 or an increase of 19.4% from last month

(Challenger, Gray and Christmas)

US planned layoffs total 33,825 in Aug, up 19.4% from prior monthTerri CullenU.S.-based employers announced plans to cut payrolls by 33,825 in August, up 19.4 percent from number of job cuts announced in July, according to outplacement firm Challenger, Gray & Christmas.The August job-cut total is 5 percent higher than the same month last year, when 32,188 cuts were announced. This month’s total marks the first increase in job cuts in the past five months of payroll cuts in March.Year-to-date, employers announced 289,132 planned job cuts, down 26.1 percent from the 391,288 cuts announced through the first eight months of 2016.

“Although job cuts have risen this month, they continue to be significantly lower compared to the same time last year,” said John Challenger, CEO of Challenger. “Although we have seen high layoffs in retail with store closings and some companies filing for bankruptcy, there has also been increased hiring in new areas of the sector as retailers build out their e-commerce platforms. Shipping and technology jobs are expanding and going unfilled. We are seeing a labor market in which skilled technical and logistics/supply chain talent is in high demand,” said Challenger.

-END-

It sure looks like Donald intentionally snubbed Gary Cohn the future Fed chairman?

 

(courtesy zero hedge)

Did Trump Just Intentionally Snub Gary Cohn?

In our preview this morning, we noted that it seemed odd that Trump’s tax speech had reportedly been drafted by White House aide Stephen Miller, the leader of the nationalist arm of the White House staff, as opposed to his Chief Economic Advisor Gary Cohn.

While notable because it indicated that Trump might return to his populist roots in his first tax reform cheerleading session, most didn’t ascribe any more value to the information than that.

That is until Trump took the stage earlier this afternoon and thanked a litany of advisors for their help in crafting his tax policies but noticeably left out Gary Cohn.  As The Hill notes, Trump gave credit to everyone from Mnuchin to Linda McMahon and host of local Missouri politicians but seemingly snubbed Cohn.

As Trump took the stage in Springfield, Mo., to kick off his tax reform push, he welcomed his administration’s major players in the debate who joined him at the event but failed to mention Cohn, who was also there.

 

Trump specifically named Secretary of the Treasury Steve Mnuchin, Secretary of Commerce Wilbur Ross and Small Business Administrator Linda McMahon, who flew with the president to the event.

 

Trump went on to name the long list of Missouri lawmakers who sat in the crowd, joking at one point that he debated whether to name them all because “I have so many.”

Gary Cohn

 

Of course, this could mean absolutely nothing, or it could mean that there was more to the rumors that surfaced over the weekend and last week about rising tensions between Cohn and Trump.

Over the weekend, Axios noted rising tensions over tariffs and a continued power struggle between Trump and the “globalists” in the White House who continued to resist the President’s controversial economic agenda in the absence of Steve Bannon.

“John, you haven’t been in a trade discussion before, so I want to share with you my views. For the last six months, this same group of geniuses comes in here all the time and I tell them…

 

‘Tariffs. I want tariffs.’ And what do they do? They bring me IP. I can’t put a tariff on IP.

 

“China is laughing at us,… Laughing.”

 

“John, I want you to know, this is my view. I want tariffs. And I want someone to bring me some tariffs.

 

“John, let me tell you why they didn’t bring me any tariffs,” he said.

 

“I know there are some people in the room right now that are upset. I know there are some globalists in the room right now. And they don’t want them, John, they don’t want the tariffs. But I’m telling you, I want tariffs.”

Meanwhile, this latest sign of a ‘stressed’ relationship also comes after Cohn expressed some concerns to the FT over how Trump handled the Charottesville tragedy.  The interview resulted in immediate speculation that Cohn’s resignation was imminent.Here was our take from last week:

As discussed earlier, in an unexpectedly harsh response to Trump’s Charlottesville comments, Trump’s top economic adviser Gary Cohn said in an FT interview published this morning that the administration needs to be more unequivocal in condemning hate groups, but added he was “reluctant” to quit over its response to a recent protest.’

 

“I believe this administration can and must do better in consistently and unequivocally condemning these groups and do everything we can to heal the deep divisions that exist in our communities,” Cohn told the FT in his first public comments since the controversy.

 

Cohn said that as a “patriotic American” he did not want to leave his job as the director of the national economic council. “But I also feel compelled to voice my distress over the events of the last two weeks.” He added that “Citizens standing up for equality and freedom can never be equated with white supremacists, neo-Nazis, and the K.K.K.,” Mr. Cohn said. “I believe this administration can and must do better in consistently and unequivocally condemning these groups and do everything we can to heal the deep divisions that exist in our communities.”

 

Cohn added, “As a Jewish American, I will not allow neo-Nazis ranting ‘Jews will not replace us’ to cause this Jew to leave his job” and said that Trump’s administration said that the White House “can and must do better” in consistently condemning hate groups. Cohn’s remarks were in stark contrast to a statement from the Treasury secretary, Steven Mnuchin, who defended the president. Mnuchin is also Jewish, and is also a former Goldman employee.

Then again, maybe it’s just all a big misunderstanding….

POTUS just listed + thanked a long list of WH officials + pols in the room, but did not name Gary Cohn, who recently criticized Trump.

Re: Gary, WH spox emails to note that staff is typically not called out in prepared remarks, only Cabinet members. So not intentional slight

 

What say you?  Media attempt to “criminalize behavior that is normal”…or is Yellen safe in her Fed seat for just a little longer?

END

Well it happened: we warned you last night that there is risk of an explosion at the huge Arkema Chemical Plant in Crosby Texas. Two explosions were reported:

(courtesy zero hedge)

 

Two Explosions Reported At Arkema Chemical Plant In Texas

When the CEO of Arkema America, Richard Rowe, warned late Wednesday that the company is powerless to prevent an imminent explosion at its Crosby, TX chemical plant, all we could do was wait for the inevitable. We didn’t have long to wait, because just a few hours later, on Thursday morning, Arkema said it has been notified about two explosions at the doomed Crosby plant.


Source: Bloomberg

At approximately 2:00am local time, the company announced that two explosions and black smoke were reported. According to ABC, several people were taken to hospital.

Arkema confirming 2 explosions at their chemical plant + black smoke. EMS workers tell me people WERE taken to hospital. 

A sheriff’s deputy was among those taken to the hospital after inhaling fumes, according to a tweet from the Harris County Sheriff’s Office. Nine other deputies drove themselves to the hospital as a precaution.

One deputy taken to hospital after inhaling fumes from Archem plant in Crosby. 9 others drove themselves to hospital as precaution.

Arkema had already evacuated workers, and local authorities had cleared the area prior to the blow. From the statement:

At approximately 2 a.m. CDT, we were notified by the Harris County Emergency Operations Center (EOC) of two explosions and black smoke coming from the Arkema Inc. plant in Crosby, Texas. Local officials had previously established an evacuation zone in an area 1.5 miles from our plant, based on their assessment of the situation.

An Arkema spokesperson stated late Wednesday that a fire at the site was inevitable. “The fire will happen. It will resemble a gasoline fire. It will be explosive and intense in nature… as the temperature rises, the natural state of these materials will decompose. A white smoke will result, and that will catch fire. So the fire is imminent. The question is when,” spokesperson Janet Smith said.


The Arkema Inc. chemical plant on Aug. 30

Rachel Moreno, a spokeswoman for the county fire marshal’s office, said it is unclear whether all residents obeyed the evacuation order for the 1.5 mile radius of the plant, adding that the office has received an unconfirmed report of a woman who may still be in the evacuation zone.

The company also said it is working closely with federal, state and local authorities to manage the situation, according to a statement on its website.

As Arkema stores organic peroxides at several locations on the site, the threat of additional explosions remains, it said, adding that the best course of action is to let the fire burn itself out.

We have been working closely with public officials to manage the implications of this situation, and have communicated with the public the potential for product to explode and cause an intense fire. Organic peroxides are extremely flammable and, as agreed with public officials, the best course of action is to let the fire burn itself out.

 

We want local residents to be aware that product is stored in multiple locations on the site, and a threat of additional explosion remains. Please do not return to the area within the evacuation zone until local emergency response authorities announce it is safe to do so.

Organic peroxides are a family of compounds that are used in a wide range of applications, such as making pharmaceuticals and construction materials.

As a reminder, on Wednesday the company said it has “no way to prevent” a potentially large explosion and fire at its facility near Houston, after flooding due to Tropical Storm Harvey. The Arkema plant in Crosby, Texas, some 25 miles northeast of Houston, was evacuated late Tuesday. Working with authorities, the company also urged everyone within a mile and a half of the plant to evacuate, and shut down a stretch of Highway 90 that runs alongside the plant, which produces organic peroxides for things like acrylic-based paint.

“We have an unprecedented 6 feet of water throughout the plant,” Arkema’s North American operations Chief Executive Rich Rowe said in a teleconference Wednesday with reporters. Rowe said that the plant lost primary power and two emergency backup power sources, which led to a shutdown of “critical refrigeration needed for our materials.” He said that means those materials “could now explode and cause a subsequent and intense fire,” and added that “the high water that exists on site, and the lack of power, leave us with no way to prevent it.”

Rowe said about 300 people in all have been evacuated, but said it wasn’t a mandatory evacuation, so he’s not certain whether the 1.5-mile radius around the facility is currently devoid of people. He said it is mostly a rural area, so there are “a limited number of homes” within the area. Rowe said local officials told him the water level in the area could actually continue to rise over the course of the next three to six days, and as such Arkema, which is based in France, believes the chemicals will start to degrade well before that happens.

“And once the chemicals begin to degrade we would be in a situation where we could be looking at a fire and/or an explosion,” he said. As soon as the chemicals begin to degrade they start to “self-accelerate” in a type of no-turning-back mode, he added.

Rowe didn’t get specific about the amount of chemicals on site or just how big the blast might be, except to say that the analysis of the quantity of chemical is what led authorities to decide on the 1.5-mile evacuation zone they deemed appropriate.

end

 

Hurricane Harvey may be the costliest natural disaster in USA history with a $190 billion price tag

 

(courtesy zero hedge)

 

Harvey May Be “Costliest Natural Disaster In US History” With $190 Billion Price Tag

Tropical Storm Harvey made its second landfall near Cameron, La. on Wednesday after slamming Houston with a staggering 50 inches of rain, the largest rainfall ever recorded in the Continental US. Given the unprecedented devastation, which will likely leave large swaths of Houston, America’s fourth-largest city, uninhabitable for weeks if not months, storm-watchers have scrambled to revise their initial forecasts for damages. Initially, the consensus projection was somewhere around $40 billion, with Moody’s forecast that property damage caused by the storm would total between $30 billion and $40 billion.

If accurate, that would leave Harvey as the fourth-most expensive hurricane in US history, after Hurricane Andrew (1992), Superstorm Sandy (2012) and Hurricane Katrina (2005). However, after five days of torrential rains, one forecaster believes the $30-$40 billion figure would barely cover a quarter of the damage.

Dr. Joel N. Myers, founder, president and chairman of AccuWeather, now believes Harvey could become the costliest natural disaster in US history, ultimately costing the US economy an eye-popping $190 billion in property damage and lost productivity once the “total destruction is completed.” Such an astronomical price tag would be more than the combined costs of Hurricanes Katrina and Sandy, he said.

Here’s USA Today:

“Hurricane Harvey could be the costliest natural disaster in U.S. history with a potential price tag of $190 billion, according to a preliminary estimate from private weather firm AccuWeather.

 

This is equal to the combined cost of Hurricanes Katrina and Sandy, and represents a 0.8% economic hit to the gross national product, AccuWeather said.

 

‘Parts of Houston, the United States’ fourth largest city, will be uninhabitable for weeks and possibly months due to water damage, mold, disease-ridden water and all that will follow this 1,000-year flood,’ said AccuWeather president Joel Myers.”

While many analysts are focused on southwest Texas and western Louisiana, Myers warned that Harvey could continue to inflict severe damage even after being downgraded to a tropical depression – which is expected Wednesday – the storm will continue to dump as much as 10 inches of rain on the Mississippi Valley.

“Though Harvey will slowly weaken into a depression as it tracks inland, it will still produce more rain – 3 to 6 inches from southwestern Louisiana up along the Arkansas/Mississippi border and into western Tennessee/Kentucky through Friday. Some areas could see as much as 10 inches of rain.

 

Flash flood watches are in effect for much of the Mississippi Valley due to the heavy rain threat.

 

‘AccuWeather cautions that the negative impact from the storms are far from over. There will be more flooding, damage, fatalities and injuries,’ Myers said. ‘We urge all citizens near the path of Hurricane Harvey to remain vigilant and be prepared to take immediate action if flood waters rise.’”

Accuweather isn’t the only firm forecasting damages that’re much higher than the national average. Risk Management Solutions believes the total economic loss could be somewhere between $70 and $90 billion.

While property damage is expected to account for a sizable chunk of this cost, some sell side analysts believe the storm could ultimately have a postive impact on GDP if it triggers a construction boom, which would be positive for GDP. Sell-side research analysts have offered conflicting views. So far, Citigroup and Goldman Sachs expect storm-related productivity losses will lead to a net negative impact on Q3 GDP, while. J.P. Morgan, meanwhile, predicts that the post-storm rebuilding will boost GDP in Q3 and Q4. Of course, the size of said boom will probably depend on how much money Congress earmarks for federal assistance. Trump, who has promised to swiftly pass an aid bill, is shaping up for a battle with Congressover the legislation as some conservative lawmakers will likely ask that any additional spending be offset by cuts elsewhere.

But with an estimated 30,000 Texans staying in shelters because of the storm, Goldman’s Jan Hatzius, Goldman’s chief economist, that due to the human tragedy from Hurricane Harvey, the odds of a govenment shutdown happening during the coming weeks have been again reduced back to Goldman’s original estimate of 33%.

The Wall Street Journal appears to agree with JPM.

“Even the largest storms have typically not permanently damaged the U.S. economy. This is in part because storm often spark construction booms that employ tens of thousands of people to clean up and rebuild.

 

Gross domestic product, the main yardstick of economic growth, doesn’t account for property damage but it does account for rebuilding, so the measure can climb after storms due to activity involved in rebuilding.”

Harvey will also impact the economy in other less obvious ways.

“Other economic measures could be skewed in the weeks ahead. The initial weeks after similarly large storms have sometimes produced rising claims by waylaid workers for unemployment insurance. After Hurricane Katrina, for example, jobless claims climbed by over 100,000 per week, although the high-level of claims didn’t persist.”

FEMA Administrator Brock Long has said that Harvey will be “unfathomably expensive for both the private sector and taxpayers.” If Moody’s forecast is accurate, Harvey will cement its position as the fourth-most costly storm in US history behind Hurricane Andrew, which ravaged Florida in 1992.

Since the storm first struck Friday night, damage estimates have been in a state of flux. On Tuesday morning, disaster analyst Chuck Watson had pegged $42 billion as a reasonable estimate for the cost of destruction Tropical Storm Harvey would leave in its wake.

By the end of the day, he’d added another $10 billion.

To be sure, with rains expected to pummel Texas for the next few days, any estimate of the storm’s final total will likely be premature. One twitter user, a purported environmental engineer and Houston resident, believes damages could exceed $500 billion.

If accurate, JPM’s construction-boom thesis might not be far from the mark. Though, at that point, US insurers would likely begin to experience significant stress.

The uSA releases 500,000 barrels from its Strategic Reserve after news that the USA’s largest refinery may be shut down for two weeks.  The problem is the gasoline distribution not the lack of oil.  How will this help?
(courtesy zero hedge)

US Releases 500,000 Barrels Of Oil From Strategic Reserve As Largest US Refinery May Be Shut For 2 Weeks

The U.S. Energy Department announced on Thursday that it would release 500,000 barrels of crude oil from the US Strategic Petroleum Reserve as a result of the disruption to the US petroleum industry following Hurricane Harvey amid fears of a surge in motor fuel prices, which have been compounded by the previously reported shuttering of the Colonial pipeline. According to the DOE statement, the oil will be delivered to the Phillips 66 refinery in Lake Charles, Louisiana, a plant which has not been affected by the storm.

According to Reuters, the release – the first emergency release from the reserve since 2012 – will include 200,000 barrels of sweet crude and 300,000 barrels of sour crude oil. It was an exchange agreement, meaning the government will loan crude to Phillips 66, which is required to replace the reserve’s oil at a later date.

The Energy Department “will continue to provide assistance as deemed necessary, and will continue to review incoming requests for SPR crude oil,” spokeswoman Jess Szymanski said.

The reserve, a legacy from the 1970s Arab oil embargo which caused panic over fuel supply, currently contains 679 million barrels of oil. It is a small release of crude for a country that uses nearly 20 million barrels of petroleum daily.

Furthermore, it is unclear what if any benefit the SPR release will do to surging gasoline prices, as the bottleneck is not oil supply but rather refining capacity: as of this moment roughly 20% of US refining is offline as a result of Harvey. As we reported this morning, gasoline prices surged in morning trade after the Colonial Pipeline which operates the biggest U.S. fuel transport system, said it would shut its main lines to the Northeast amid outages at pumping points and lack of supply from refiners.

Separately, and confirming that the gasoline price spike may last longer than initially expected, moments ago Reuters reported that Motiva Enterprises’ Port Arthur, Texas refinery, the largest in the US, may be shut as long as two weeks for assessment of the plant and repair of any damage, sources familiar with plant operations said on Thursday. The 603,000 barrel per day (bpd) Port Arthur Refinery was shut on Wednesday due to flooding from Tropical Storm Harvey.

And while gasoline has soared to 2 year highs as shown earlier

 

… it now appears that the euphoria has also shifted to oil, which moments ago spiked sharply higher, even if the catalyst for the move was not initially clear.

end
Wells Fargo now admits it created 1.4 million more fake accounts that previous thought
(courtesy zero hedge)

Wells Admits It Created 1.4 Million More Fake Accounts Than Previously Thought

Remember the outrage one year ago when it was revealed that in its push to pad its top, and bottom line, Warren Buffett’s favorite bank had engaged in outright criminal account churning and “cross selling”, opening some 2.1 million unauthorized client accounts without permission (subsequently this extended to unsolicited car insurance policies extended on Wells auto loans). Well it turns out there was not nearly outrage, because as the bank revealed this morning, the “real” number was higher. 67% higher.

According to the outside review whose findings were released today, Wells Fargo said employees created two-thirds more bogus accounts than initially thought. According to the review, an additional 1.4 million “potentially unauthorized” deposit and credit-card accounts opened when the bank was encouraging employees to sell multiple products to retail customers, bringing the total to about 3.5 millionaccording to a statement Thursday from the San Francisco-based firm. The revised estimate covers January 2009 to September 2016, almost twice as long as the period examined in the initial review.

Wells new CEO was, predictably, all apologies:

“We apologize to everyone who was harmed by unacceptable sales practices that occurred in our retail bank,” said Wells Fargo CEO Tim Sloan. “To rebuild trust and to build a better Wells Fargo, our first priority is to make things right for our customers, and the completion of this expanded third-party analysis is an important milestone. Through this expanded review, as well as the class action settlement, free mediation services, and ongoing outreach and complaint resolution, we’ve cast a wide net to reach customers and address their remaining concerns. Our commitment has never been stronger to build a better bank for our customers, team members, shareholders and communities.”

However, as Bloomberg writes, the discovery is “a sign the bank is still struggling to move past a scandal that sparked record fines and congressional investigations.” Furthermore, “the disclosure of even more fraudulent accounts threatens to catapult Wells Fargo back into the political crosshairs just as Congress returns Sept. 5 from its summer recess.”

The scandal came to light almost a year ago after regulators slapped Wells Fargo with fines of $185 million over its sales practices, prompting congressional hearings and resulting in the bank naming new leaders, clawing back executives’ pay and beginning an overhaul of its retail division.

“New data should cause some lawmakers to re-engage on the issue,” Isaac Boltansky, an analyst with Compass Point Research & Trading, told Bloomberg before the new tally was announced. Democrats will again argue it proves Washington needs to keep rules tight on financial firms, while Republicans will continue to fault Consumer Financial Protection Bureau officials for not spotting the misconduct themselves, Boltansky said.

As Bloomberg writes, Wells Fargo had agreed to expand its review after Washington lawmakers lambasted the company following former Chief Executive Officer John Stumpf’s testimony last September about the bank’s sales practices. Under pressure, the bank agreed to review records dating back to 2009, rather than through 2011 as it initially did.

The company said it has paid or identified $10.7 million in customer compensation related to the investigation. The figure includes $7 million of refunds, up from $3.3 million the bank had previously disclosed. It also includes $3.7 million related to what it described as the “complaints process/mediation.”

 

“Today’s announcement is a reminder of the disappointment that we caused to our customers and stakeholders,” CEO Tim Sloan said on a conference call Thursday with reporters. “We apologize to everyone who was harmed by unacceptable sales practices that occurred in our retail bank.”

 

Democrats led by Representative Maxine Waters of California earlier this month called for a House Financial Services Committee hearing about a separate scandal at Wells Fargo involving unwanted car insurance imposed on auto-loan customers. And Senator Elizabeth Warren of Massachusettswrote to the Federal Reserve to again press for the removal of board members who served during the original accounts review period of 2011 to 2015.

Today’s revelation was partially expected: in March the bank warned investors that its initial bogus-accounts estimate was probably too low, saying in its annual filing that a new search by a third-party firm “could lead to, among other things, an increase in the identified number.”

Wells Fargo has worked to minimize the impact of the new tally, describing the additional accounts as those it couldn’t rule out from lacking customer authorization.

The company said in the statement that it “erred on the side of its customers during the review”, so the figures might include some accounts that were properly authorized. When it fined Wells Fargo last year, the CFPB ordered the bank to identify all customers affected by its sales misconduct and set aside $5 million for those harmed.

On the other hand, the new review doesn’t go back as far as 2002, the year that executives first knew about the sales misconduct and fired employees over it, according to investigators hired by the company’s board. Lawyers representing customers who said they were harmed by the bank’s abusive sales practices claimed in a lawsuit that Wells Fargo employees probably created 3.5 million bogus accounts starting in May 2002. Wells Fargo is awaiting final approval to settle that case for $142 million.

end

Just look at how corrupt is Comey

 

(courtesy zerohedge)

I will see you FRIDAY  night

Harvey.

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