Sept 14/China to stop all bitcoin exchanges (good for gold/silver)/Reuters confirms that North Korea set to launch an ICBM: both news propel gold/ Gold rises $1.15 but silver down 2 cents/China misses on 3 important data points/Copper faltering badly: deep discount from spot/over futures as all parts of the globe loaded with copper/More antics from Donald Trump/

GOLD: $1325.65 UP   $1.15

Silver: $17.77  DOWN 2 CENT(S)

Closing access prices:

Gold $1329.95

silver: $17.80

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: $1328.81 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME:  $1321.40

PREMIUM FIRST FIX:  $7.41

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

SECOND SHANGHAI GOLD FIX: $1323.20

NY GOLD PRICE AT THE EXACT SAME TIME: $1321.30

Premium of Shanghai 2nd fix/NY:$4.82

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

LONDON FIRST GOLD FIX:  5:30 am est  $1323.20

NY PRICING AT THE EXACT SAME TIME: $1322.85

LONDON SECOND GOLD FIX  10 AM: $1324.55

NY PRICING AT THE EXACT SAME TIME. 1325.25

For comex gold:

SEPTEMBER/

NOTICES FILINGS TODAY FOR SEPT CONTRACT MONTH: 0 NOTICE(S) FOR  nil  OZ.

TOTAL NOTICES SO FAR: 54 FOR 5400 OZ  (0.1679 TONNES)

For silver:

SEPTEMBER

 355 NOTICES FILED TODAY FOR

1,775,000  OZ/

Total number of notices filed so far this month: 5,253 for 26,265,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

end

Let us have a look at the data for today

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest ROSE BY A RATHER LARGE 764 contracts from  188,207 UP TO 188,971 DESPITE THE  DROP IN PRICE THAT SILVER UNDERTOOK IN YESTERDAY’S TRADING (DOWN 4 CENT(S). WE HAVE NOW HAD FOUR DAYS OF TORMENT AND YET THE SILVER OPEN INTEREST HARDLY BUDGES.  THE LONGS ARE REMAINING STOIC AND REFUSE TO GIVE IN TO THE ANTICS OF THE BANKERS. NO WONDER WE ARE UNDERGOING ANOTHER DAY OF TORMENT AS THE BANKS SEEMED TRAPPED IN THE OWN JUICE.

RESULT: A STEADY RISE IN OI COMEX  DESPITE THE 4 CENT PRICE LOSS. 

 In ounces, the OI is still represented by just UNDER 1 BILLION oz i.e.  0.946 BILLION TO BE EXACT or 135% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MAY MONTH/ THEY FILED: 264 NOTICE(S) FOR 1,320,000  OZ OF SILVER

In gold, the open interest FELL BY A TINY 1175 CONTRACTS DESPITE THE  LOSS  in price of gold ($4.20 LOSS YESTERDAY). The new OI for the gold complex rests at 579,431. WE SHOULD EXCEPT MORE TORMENT FROM THE CROOKS AS THE OPEN INTEREST IN GOLD JUST REFUSES TO GO DOWN. NO WONDER THE BANKERS ORCHESTRATED ANOTHER RAID THIS MORNING AS THE BANKERS TRY WITH NO LUCK TO FLEECE INVESTORS OF THEIR LONG POSITIONS.

Result: A SMALL INCREASE IN OI DESPITE THE  FALL IN PRICE IN GOLD ($4.20). THE COMMERCIALS SUPPLIED THE NECESSARY SHORT PAPER.  NO DOUBT THAT ANOTHER FLASH CRASH WILL BE ORCHESTRATED TODAY DUE TO THE  RISE IN OPEN INTEREST IN GOLD AND THE STEADY RISE IN OI IN SILVER

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

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD:

Tonight , we had no change in gold inventory last night:

Inventory rests tonight: 838.64 tonnes

SLV

Today: no change in inventory.

INVENTORY RESTS AT 327.088 MILLION OZ

end

.

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

1. Today, we had the open interest in silver ROSE BY A STEADY  764 contracts from 188,207  UP TO 188,971(AND now A LITTLE CLOSER TO THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) DESPITE YESTERDAY’S 4 CENT LOSS IN TRADING. OUR LONGS ARE STRONG AND REFUSE TO BUDGE WITH THE ANTICS OF OUR BANKERS.

RESULT:  A  STEADY RISE IN OI  AT THE COMEX  DESPITE THE FALL IN PRICE OF 4 CENTS. NO DOUBT ANOTHER RAID WILL BE CALLED UPON BY OUR BANKERS AS THE OPEN INTEREST ON BOTH GOLD AND SILVER REFUSE TO BUDGE 

(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 12.72 POINTS OR 0.38%   / /Hang Sang CLOSED DOWN 116.88 POINTS OR 0.428%/ The Nikkei closed DOWN 58.38 POINTS OR 0.29%/Australia’s all ordinaires CLOSED DOWN 0.10%/Chinese yuan (ONSHORE) closed WELL DOWN at 6.6556/Oil UP to 49.61 dollars per barrel for WTI and 55.56 for Brent. Stocks in Europe OPENED RED EXCEPT LONDON. Offshore yuan trades  6.6571 yuan to the dollar vs 6.6556 for onshore yuan. NOW THE OFFSHORE MOVED A LITTLE WEAKER  TO THE ONSHORE YUAN/ ONSHORE YUAN MUCH WEAKER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS A MUCH STRONGER TO THE DOLLAR AND THIS IS COUPLED WITH THE SLIGHTLY  WEAKER DOLLAR. CHINA IS NOT HAPPY TODAY 

 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)First:  North Korea threatens to sink Japan with nuclear weapons and then they state that they will reduce the USA to ashes:

( zero hedge)

ii)According to the Japanese Press, North Korea is preparing an intercontinental ballistic missile

( zero hedge)

 

b) REPORT ON JAPAN

c) REPORT ON CHINA

Big misses on 3 important Chinese data points;

i. Retail sales

2 Fixed asset investment

3. Industrial production

all missed and shows that the Chinese economy is faltering

( zero hedge)

4. EUROPEAN AFFAIRS

i)The pound surges and markets start to falter when the Bank of England warns that they will have some withdrawal of stimulus

( zero hedge)

ii)The pound surges to one year high after Carney is expecting tighter policy.  We have seen this jawboning before

( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

6 .GLOBAL ISSUES

7. OIL ISSUES

WTI rises above 50 dollars but gasoline falters as demand is ripped apart due to the hurricanes  (less driving vehicles)
( zero hedge)

8. EMERGING MARKET

VENEZUELA

We brought you this story yesterday and it is of no surprise:  Venezuela stops accepting dollars for oil payments. They will accept yuan or euros

( zerohedge)

9.   PHYSICAL MARKETS

i)Bitcoin crashes by 35% in Chinese trading as the second largest exchange is set to halt all trading. It seems that confirmation of last week’s Caixin report that China is about to halt all cryptocurrency exchange trading is confirmed.

( zerohedge)

ib It is official:  Beijing announces the shutting down of all local exchanges selling bitcoin by Sept 30.

( zero hedge)

 

ii)please pay attention to what William White former head economist for the BIS stated yesterday:

“the primary purpose of central banks is to influence the price of gold”

White claims that there is too much debt and debt bubbles are forming everywhere.  He claims that there must be bank bail ins to save the financial system.

this is a must read.

( Mike Kosares/GATA)

 

iii)Christian who was my counterparty at the hearings in March 2010 on gold/silver manipulation states that there is no evidence of gold manipulation anywhere and it is pure nonsense.  The problem: a UBS head trader was arrested for manipulation in gold and silver while he was talking to Kitco

( Kitco/GATA)

iv)We brought this story to you yesterday of a USB trader who is accused by the Government of manipulating precious metals.

( GATA/Bloomberg)

v)Dr Copper in trouble as spot Copper at a huge discount to the 3 month futures (contango). Nowhere in the globe is copper scarce and thus this indicates global growth is slowing

 

( zerohedge)

vi)Lawrie Williams offers some good reasons for gold to rise

 

( Lawrie Williams/Sharp’s Pixley)

vii)Gold trading early afternoon: gold spikes on another North Korean missile launch headline:

 

(courtesy zero hedge)

10. USA Stories

i)August sees USA consumer prices surging with energy costs and shelter costs spiking.  However it is wage inflation that the Fed wants/see below 2nd article)

( zero hedge)

ii)the Fed wants inflation to cause wages to rise.  However we are having inflation but no real wage growth: it plunged in August

( zerohedge)

iii)Perhaps the most important data point is retail sales and that is a figure that will influence the Fed. Bank of America reports on debit and credit card debt will show no doubt disappointing retail sales tomorrow

( zero hedge)

iv)Contrary to earlier reports there was no deal last night between the Democrats and Trump on DACA and the “Wall:

( zero hedge)

iv b) however he destroyed his base…

( zerohedge)

iv c)Then Trump took to the airwaves on many subjects.  He insists on his wall as part of an immigration deal and he will veto any single payer health bill.

( zerohedge)

v)We now have the discovery of another Democratic “secret server” and that may have prompted Awan’s firing

the story is getting better by the day

( zero hedge)

vi)The Federal trade Commission has launched an investigation into the Equifax breach that has left sensitive information on 143 million Americans exposed to hackers.

Equifax bonds crashed on the news
( zero hedge)

vii)Although these two counties have a tiny public pension system, it is still deficient by a lot of money.  CALPERS has decided to slash the pension payments to retirees in these two California towns by more than 90%.  Again the pension system is nothing but a PONZI scheme.

(courtesy zerohedge)

Let us head over to the comex:

The total gold comex open interest FELL BY A TINY 1175 CONTRACTS DOWN to an OI level of 579,431 DESPITE THE   LOSS IN THE PRICE OF GOLD  ($4.20 LOSS IN YESTERDAY’S trading). THE HIGH OPEN INTEREST IN GOLD RESULTS IN MORE BANKER TORMENT AS THESE CROOKS TRY AND LIBERATE GOLD LEAVES FROM THE GOLD TREE.  LATELY THAT THEY HAVE NOT SUCCEEDED

Result: a  SMALL  SIZED open interest INCREASE with a DROP  in the price of gold OF $4.20. 

The new non active September contract month saw it’s OI FALL BY 3 contracts DOWN to 813.   We had 3 notices filed UPON YESTERDAY so we LOST 0 contracts or an additional NIL oz will NOT stand AND 0 EFP’s WERE ISSUED which entitles them to a fiat bonus plus a deliverable contract on a different exchange and most likely that would be London.  These are private deals so we do not get to see the makeup of these deals only the number of EFP’s issued.

The next active contract month is Oct and here we saw a LOSS of 631 contracts DOWN to 39,278.

The November contract saw A GAIN OF 34 contracts UP to 413.

The very big active December contract month saw it’s OI LOSS OF 1683 contracts DOWN to 455,974.

We had 0 notice(s) filed upon today for  nil oz

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And now for the wild silver comex results.  Total silver OI ROSE BY A STEADY  764 CONTRACTS FROM 188,207 UP TO 188,971 DESPITE YESTERDAY’S  4 CENT LOSS IN PRICE.   DESPITE THE CONSTANT TORMENT FROM THE BANKERS, OUR LONGS REMAIN RESOLUTE DETERMINED TO TAKE ON OUR BANKERS AS NO SILVER LEAVES FELL FROM THE SILVER TREE.  DEMAND FOR PHYSICAL SILVER REMAINS EXTREMELY HIGH AS AGAIN THE AMOUNT STANDING FOR DELIVERY INCREASED AGAIN AND THIS TIME BY A WHOPPING 555,000 OZ.  WE HAVE BEEN WITNESSING THIS PHENOMENA FOR THE PAST 5 MONTHS.  (SEE BELOW).
RESULT:  A STEADY INCREASE IN OI AT THE COMEX  DESPITE A 4 CENT LOSS IN PRICE. DEMAND FOR PHYSICAL SILVER RISES AGAIN AS THE AMOUNT STANDING INCREASES FOR THE SEPT CONTRACT MONTH BY A WHOPPING 555,000 OZ.  THE BANKERS THIS TIME WERE RETICENT TO SUPPLY THE NECESSARY SHORT PAPER AS THEY COULD NOT CAUSE MORE SILVER LEAVES (OI) TO FALL!!. JUDGING FROM THE TRADING IN GOLD/SILVER TODAY, THE BANKERS SEEM TRAPPED AS THEY TRY TO GET OUT OF THEIR HUGE PAPER SHORTS.

We are now in the active contract month of September (and the last active month until December). Today we witness Sept. OI LOSS OF 155 contacts DOWN to 922. We had 264 notices filed yesterday, so we again gained 109 contracts or an additional 545,000 oz will stand for delivery. This phenomenon has been happening in silver for the past 5 months whereby the amount standing increases on each and every delivery day.  This queue jumping highlights the huge demand for silver that we have been witnessing around the globe. The next non active contract month for silver after September is October and here the OI LOST 48 contacts DOWN TO 1028. November saw a GAIN of 2 contract(s) and thus ADVANCING to 64. After November, the NEXT big active contract month is December and here the OI LOST 1,794 contracts DOWN to 157,789 contracts.

We had 355 notice(s) filed for  1,775,000 oz for the SEPT. 2017 contract

VOLUMES: for the gold comex

ESTIMATED VOLUME TODAY: xxx CONTRACTS

(not available today)

YESTERDAY’S confirmed volume was 322,691 which is VERY GOOD

volumes on gold are STILL HIGHER THAN NORMAL!

INITIAL standings for SEPTEMBER

 Sept.14/2017.

Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
803.75 oz
Scotia
25 kilobars
Deposits to the Dealer Inventory in oz    nil oz
Deposits to the Customer Inventory, in oz 
 NIL oz
No of oz served (contracts) today
 
0 notice(s)
NIL OZ
No of oz to be served (notices)
810 contracts
(81000 oz)
Total monthly oz gold served (contracts) so far this month
54 notices
5400 oz
0.1679 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   9,996.8  oz
Today we HAD  1 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: 803.75 oz
(25 kilobars)
total customer withdrawals; 803.75 oz
 we had 2 adjustment(s)
i) Out of International Delaware:  6943.752 oz was removed from the dealer and this landed into the customer account of International Delaware
ii) Out of Delaware: 3201.54 oz was adjusted from the dealer and this landed into the customer account of Delaware
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 0  contract(s)  of which 0 notices were stopped (received) by j.P. Morgan dealer and 0 notice(s) was (were) stopped/ Received) by j.P.Morgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
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 (54) x 100 oz or 5400 oz, to which we add the difference between the open interest for the front month of SEPT. (813 contracts) minus the number of notices served upon today (0) x 100 oz per contract equals 87,000  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 (54) x 100 oz  or ounces + {(813)OI for the front month  minus the number of  notices served upon today (0) x 100 oz which equals 87,000 oz standing in this  active delivery month of SEPTEMBER  (2.706 tonnes)
We LOST 0 contracts standing and 0 EFP’s were issued for September which gives the long holder a fiat bonus plus a deliverable product on another exchange and that most likely will be London.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Total dealer inventory 731,366.742 or 22.744 tonnes  (dealer gold continues to disappear)
Total gold inventory (dealer and customer) = 8,696,115.287 or 270.48 tonnes 
 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 270.48 tonnes for a  loss of 33  tonnes over that period.  Since August 8/2016 we have lost 34 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 13 MONTHS  84 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE AUGUST DELIVERY MONTH
September initial standings
 Sept 14  2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
5105.200 oz
CNT
Delaware
Deposits to the Dealer Inventory
599,607.700  oz
CNT
Deposits to the Customer Inventory 
 nil oz
No of oz served today (contracts)
355 CONTRACT(S)
(1,775,000 OZ)
No of oz to be served (notices)
567 contracts
(2,835,000 oz)
Total monthly oz silver served (contracts) 5253 contracts (26,265,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz
Total accumulative withdrawal  of silver from the Customer inventory this month 4,308,843.9 oz
today, we had  1 deposit(s) into the dealer account:
i) Into CNT: 599,607.700 oz
total dealer deposit: 599,607.700   oz
we had 0 dealer withdrawals:
total dealer withdrawals: nil oz
we had 2 customer withdrawal(s):
i) out of CNT: 4116.900 oz
ii) out of Delaware: 988.300 oz
TOTAL CUSTOMER WITHDRAWALS: 5105.200  oz
We had 0 Customer deposit(s):
***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: nil oz
 
 we had 1 adjustment(s)
i) Out of CNT:   613,110.356 oz was adjusted out of the dealer and this landed into the customer account of C NT
The total number of notices filed today for the SEPTEMBER. contract month is represented by 355 contract(s) for 1,775,000 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 5253 x 5,000 oz  = 26,265,000 oz to which we add the difference between the open interest for the front month of SEPT (922) and the number of notices served upon today (355) x 5000 oz equals the number of ounces standing.
 

 

.
 
Thus the INITIAL standings for silver for the SEPTEMBER contract month:  5253 (notices served so far)x 5000 oz  + OI for front month of SEPTEMBER(922 ) -number of notices served upon today (355)x 5000 oz  equals  29,100,000 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. (ON AUGUST 31 (FIRST DATE NOTICE) WE HAD 20.15 MILLION OZ STAND. THUS IN THE FIRST 15 DAYS OF SEPTEMBER, WE HAVE HAD A HUGE INCREASE OF  9.1 MILLION OZ STAND FOR DELIVERY AS DEALERS JUMP QUEUE TRYING TO FIND THE NECESSARY SILVER TO SUPPLY TO OUR LONGS.)
 
WE HAD AN INCREASE OF 109 CONTRACTS OR AN ADDITIONAL 545,000 OZ OF SILVER WILL STAND FOR DELIVERY IN THIS ACTIVE CONTRACT MONTH OF SEPTEMBER. THIS HAS BEEN THE 5th CONSECUTIVE MONTH THAT WE HAVE WITNESSED EITHER AN INCREASE (95% OF THE TIME) OR STANDING PAT (THE OTHER 5%).  WE HAVE NOT HAVE A DECREASE IN STANDING I.E. AS THEY DELIVERY MONTH PROCEEDS NOBODY WISHES AN EFP PRODUCT IN EXCHANGE FOR A DEPARTING LONG.SOMEBODY BIG WANTS SILVER IN A VERY BIG WAY.
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: xxx CONTRACTS
not provided today
YESTERDAY’s  confirmed volume was 92,814 contracts which is EXCELLENT
YESTERDAY’S CONFIRMED VOLUME OF 92,814 CONTRACTS WHICH EQUATES TO 464 MILLION OZ OF SILVER OR 66% 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:  43.694 million (close to record low inventory  
Total number of dealer and customer silver:   218.296 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 5.8 percent to NAV usa funds and Negative 5.8% to NAV for Cdn funds!!!! 
Percentage of fund in gold 62.3%
Percentage of fund in silver:37.7%
cash .+0.0%( Sept 14/2017) 
2. Sprott silver fund (PSLV): STOCK   NAV FALLS TO -0.40% (Sept 14/2017) 
3. Sprott gold fund (PHYS): premium to NAV FALLSS TO -0.75% to NAV  (Sept 14/2017 )
Note: Sprott silver trust back  into NEGATIVE territory at -0.40%/Sprott physical gold trust is back into NEGATIVE/ territory at -0.75%/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

Sept 14./no changes at the GLD/inventory rests at 838.64 tonnes

Sept 13/late last night a huge 4.14 tonnes of gold was added to the GLD inventory/inventory rests at 838.64 tonnes.

Sept 12/as of 5: 40 pm est, no changes in gold inventory at the GLD/Inventory rests at 834.50 tonnes

Sept 11/Today we had a rather large 2.37 tonnes of gold removed from the GLD/Inventory rests at 834.50 tonnes

Sept 8/we had a tiny withdrawal of .34 tonnes and probably that would be to pay for fees like insurance etc.

Inventory rests at 836.87 tonnes

Sept 7./no changes in gold inventory at the GLD/Inventory rests at 837.21 tonnes

SEPT 6/WE HAD ANOTHER DEPOSIT OF 5.91 TONNES INTO THE GLD/IN THE LAST TWO DAYS: 20.69 TONNES/INVENTORY RESTS AT 837.21 TONES

Sept 5/we had a huge deposit of 14.78 tonnes into the GLD/Inventory rests at 831.21 tonnes

Sept 1/ no change in gold inventory at the GLD/Inventory rests at 816.43 tonnes

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.

 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Sept 14 /2017/ Inventory rests tonight at 838.64 tonnes
*IN LAST 232 TRADING DAYS: 102.46 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 168 TRADING DAYS: A NET  54.97 TONNES HAVE NOW BEEN ADDED INTO  GLD INVENTORY.
*FROM FEB 1/2017: A NET  23.58 TONNES HAVE BEEN ADDED.

end

Now the SLV Inventory

Sept 14/no change in silver inventory at the SLV/Inventory rests at 327.088 million oz/

Sept 13/no change in silver inventory at the SLV/Inventory rests at 327.088 million oz/

Sept 12.2017/no change in silver inventory at the SLV/Inventory rests at 327.088 million oz/

Sept 11.2017: no change in silver inventory at the SLV/Inventory rests at 327.088 million oz/

Sept 8/no change in silver inventory at the SLV/Inventory rests at 327.088 million oz/

Sept 7/STRANGE!! WITH DEMAND FOR SILVER HUGE WE HAD ANOTHER 945,000 OZ WITHDRAWN. NO DOUBT THAT THIS IS CRIMINAL ACTIVITY AS SILVER IS WITHDRAWN AND USED TO CONTAIN THE RISE IN PRICE/INVENTORY RESTS AT 327.088 MILLION OZ/

SEPT 6/STRANGE WITH A HUGE DEMAND FOR SILVER THROUGHOUT THE WORLD THESE DOORKNOBS WITHDRAW A HUGE 3.148 MILLION OZ OF SILVER FROM THE SLV/INVENTORY RESTS AT 328.033 MILLION OZ

Sept 5/2017: no change in silver inventory at the SLV/Inventory rests at 331.178 million oz/

Sept 1/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 331.178 MILLION OZ

AUGUST 31/STRANGE!! a huge withdrawal of 2.019 million oz with silver up today./INVENTORY RESTS AT 331.178 MILLION OZ

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

 

Sept 14.2017:

Inventory 327.088  million oz
end
  • 6 Month MM GOFO

    Indicative gold forward offer rate for a 6 month duration

    + 1.36%
  • 12 Month MM GOFO
    + 1.54%
  • 30 day trend

end

Major gold/silver trading/commentaries for THURSDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

 

Oil Rich Venezuela Stops Accepting Dollars

  • President Maduro ‘ Venezuela will create a basket of currencies to free us from the dollar,”
  • Oil traders ordered to stop accepting U.S. dollar in exchange for crude oil
  • Order comes following calls from Russia and China to find alternatives to current reserve system
  • U.S. Dollar accounts for two-thirds of global trade
  • Venezuela has over ten-times more oil than United States
  • Super powers are gradually turning to gold to avoid using world’s main reserve currency
  • Are we seeing the beginning of the end for the U.S. dollar?

Source: The Burning Platform

The oil-rich country of Venezuela has stopped accepting the U.S. Dollar as payment for oil.

Last week President Maduro warned that the country would this week ‘free’ itself from the US dollar.

“Venezuela is going to implement a new system of international payments and will create a basket of currencies to free us from the dollar,”

Yesterday Venezuela temporarily suspended the sale of U.S. dollars through its Dicom auction system. This (and other moves) was in response to U.S. sanctions put in place by the Trump administration.

Trump claims the sanctions are there to punish the country’s autocratic leaders. Maduro claims Washington’s move was part of an “economic war”.

This morning The Wall Street Journal reports that the Venezuela is already telling oil traders not to accept the US currency.

Oil traders who export Venezuelan crude or import oil products into the country have begun converting their invoices to euros.

The state oil company Petróleos de Venezuela SA, known as PdVSA, has told its private joint venture partners to open accounts in euros and to convert existing cash holdings into Europe’s main currency, said one project partner.

The decision to suspend dollar trading on Diacom and to no longer accept the the U.S. currency for oil is potentially a major blow for the world’s reserve currency.

Venezuela’s decision comes at a time when other countries (namely Russia and China) are already finding ways to avoid using the U.S. dollar.

History shows us that currency domination does not last forever. Are we seeing the cracks in the latest global currency reserve system? Will those who seek to come out of the shadows and force of the US begin to build up their own systems to survive outside of the U.S. dollar and how important will gold be?

How important is oil to Venezuela

According to OPEC oil accounts for 95% of Venezuela’s exports. The country has ten times more oil reserves than the US, and nearly 70 billion more barrels than Saudi Arabia.

However, because of its heavy reliance on oil as an export this means it is heavily reliant on the price. Since President Maduro came to power the oil price has crashed. Inflation is out of control and the bolivar is practically worthless: $1,000 of local currency bought in 2013 would today be worth $1.20.

The Trump administration has made it clear that it will achieve a regime change through the destruction of what is an already severely  debilitated Venezuelan economy. Prior to the latest round of sanctions one could see a way out for Venezuela but not anymore.

It is clear that Venezuela will have to seek outside help in order to survive. That help will no doubt come from the other countries that are fed-up of or suffering as a result of U.S. dollar hegemony.

China is set to launch a crude oil futures contract priced in yuan and convertible into gold. This will give the likes of Russia and Iran a means of bypassing both the U.S. Dollar and sanctions. Now, it may also be an option for the world’s largest oil producer.

By making this convertible into gold it means countries are no longer held hostage by foreign currencies. Gold is a borderless currency which speaks everyone’s language.

Liberate us from the U.S. dollar

The new policy on oil payments has not been officially announced but it comes less than a week after both President Maduro and Vice President Tareck El Aissami called for liberation from the US dollar.

El Aissami (blacklisted by the US)  has called for other sovereign currencies to be used. On Friday he said, “To fight against the economic blockade there will be a basket of currencies to liberate us from the dollar.”

In an hour-long address to a new legislative body last week, President Maduro said, “If they pursue us with the dollar, we’ll use the Russian ruble, the yuan, yen, the Indian rupee, the euro,”

As mentioned in the introduction super-powers such as China and Russia are keen for countries such as Venezuela to join them in avoiding the U.S. dollar.

Plans have gone beyond just negotiating around U.S. sanctions and are now in full infrastructure building mode. Russia, China and Iran are all setting up a new financial system that will, in Putin’s words, focus on a “fair multipolar world”, and “against protectionism and new barriers in global trade.”

“Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies. We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.

Excessive domination

Oil rich nations are certainly weary of the U.S dollar’s excessive dominance over trade. Currently they have little choice over which currency to use.

One theory put forward in William R. Clark’s book Petrodollar Warfare is that the U.S. led wars ‘are fueled by the direct effect on the U.S. dollar that can result if oil-exporting countries opt to sell oil in alternative currencies. For example, in 2000, Iraq announced it would no longer use U.S. dollars to sell oil on the global market. It adopted the euro, instead.’ 

Even if countries are not oil-rich or fearful of the gun-wielding powers of the U.S.  they would still like the option to decide which currencies they trade in. Trading in the U.S. dollar can make life very difficult elsewhere.

When using the U.S. dollar foreign banks are required to clear payments through the US, even if they are doing business elsewhere. This can’t just happen,  a dollar clearing licence from US authorities is required. This can also be quickly taken away if Washington decides it wants to punish you somehow.

Will the euro want them? Gold will

In the short-term, the solution for Venezuela might not be as simple as accepting the euro.

Much of the current plan assumes that Europe will not sanction Venezuela. Should they also take a similar stance to the US then Maduro’s nation will be left with a choice of Rubles, Yuan and, of course, gold.

This is where Russia, China and Iran will certainly be on board. We know that all three countries hold huge amounts of gold and are very open to using it for trade purposes.

Jim Rickards explains:

China, Russia and Iran are coordinating a new international monetary order that does not involve U.S. dollars. It has several parts, which together spell dollar doom. The first part is that China will buy oil from Russia and Iran in exchange for yuan.

The yuan is not a major reserve currency, so it’s not an especially attractive asset for Russia or Iran to hold. China solves that problem by offering to convert yuan into gold on a spot basis on the Shanghai Gold Exchange.

This marks the beginning of the end of the petrodollar system that Henry Kissinger worked out with Saudi Arabia in 1974, after Nixon abandoned gold.

This is not some back-of-a-beer-mat plan. At last week’s BRICs summit members expressed full support to China moving away from the U.S. Dollar.

This is particularly pertinent at a time when U.S. Treasury Secretary is threatening to cut China out of the U.S. Dollar system

If China doesn’t follow these sanctions, we will put additional sanctions on them and prevent them from accessing the U.S. and international dollar system. And that’s quite meaningful.

But how meaningful is it when the Asian super-power is putting infrastructures (and deals) in place to trade in gold. Don’t forget, this is the world’s biggest buyer of gold. They will unlikely need the U.S. dollar forever.

How will this unfold?

Who knows how this will unfold. But what is clear is that the U.S. has been relatively short-sighted with how it has used the power of its currency.

As it has sought to sanction, threaten and bully countries into the using its currency, others have been slowly building up their gold reserves and infrastructure systems. This means that the U.S. dollar sanctions will soon not mean as much as they once did.

It is relatively easy to put controls on a country’s currency, but it is very difficult to do so with gold.

Whilst Venezuela is no doubt struggling with the impact of the sanctions from Washington they do have support from those elsewhere and that support is very interested in physical gold.

 

Related reading

 

 

http://info.goldcore.com/currency_wars_bye_bye_petro_dollar_buy_buy_gold_goldcore_insight

News and Commentary

Gold falls to lowest in nearly 2 weeks, U.S. inflation data in focus (Reuters.com)

Stocks Rally Stalls in Asia; Dollar Holds Advance (Bloomberg.com)

U.S. government posts $108 billion deficit in August (Reuters.com)

Wholesale Prices in U.S. Increase on Jump in Energy Costs (Bloomberg.com)

Ex-UBS Trader Accused by U.S. of Manipulating Metals Prices (Bloomberg.com)

Central London House Prices Post Worst Performance Since 2008 (Bloomberg.com)

Seen strong performance in gold: Marc Faber (MoneyControl.com)

China’s New Gold-Backed Oil Benchmark to Deal Blow to U.S. Dollar (TheTrumpet.com)

Former BIS Chief Economist Warns “More Dangers Now Than In 2007” (ZeroHedge.com)

What Britain’s best-loved estate agent can tell us about UK house prices (MoneyWeek.com)

Julian Robertson: “There’s A Bubble” And “It’s The Federal Reserve’s Fault” (ZeroHedge.com)

Gold Prices (LBMA AM)

14 Sep: USD 1,323.00, GBP 1,002.44 & EUR 1,111.58 per ounce
13 Sep: USD 1,332.25, GBP 1,003.85 & EUR 1,112.43 per ounce
12 Sep: USD 1,326.25, GBP 1,000.66 & EUR 1,109.41 per ounce
11 Sep: USD 1,338.75, GBP 1,015.31 & EUR 1,114.24 per ounce
08 Sep: USD 1,350.90, GBP 1,026.82 & EUR 1,120.71 per ounce
07 Sep: USD 1,340.45, GBP 1,026.52 & EUR 1,119.54 per ounce
06 Sep: USD 1,340.15, GBP 1,028.03 & EUR 1,122.11 per ounce

Silver Prices (LBMA)

14 Sep: USD 17.75, GBP 13.40 & EUR 14.91 per ounce
13 Sep: USD 17.91, GBP 13.50 & EUR 14.94 per ounce
12 Sep: USD 17.75, GBP 13.37 & EUR 14.87 per ounce
11 Sep: USD 17.85, GBP 13.51 & EUR 14.86 per ounce
08 Sep: USD 18.21, GBP 13.80 & EUR 15.09 per ounce
07 Sep: USD 17.79, GBP 13.59 & EUR 14.85 per ounce
06 Sep: USD 17.77, GBP 13.62 & EUR 14.90 per ounce

END

 

Bitcoin crashes by 35% in Chinese trading as the second largest exchange is set to halt all trading. It seems that confirmation of last week’s Caixin report that China is about to halt all cryptocurrency exchange trading is confirmed.

 

(courtesy zerohedge)

 

Bitcoin Crashes 35% In Chinese Trading: Second Largest Exchange To Halt All Trading

Yuan-denominated Bitcoin has crashed as much as 25% 35% in Chinese trading, plunging from 25,000 yuan to as a low of 16,000 on local exchanges BTCChina and OKCoin, following confirmation of last week’s Caixin report that China is halting all cryptocurrency exchange trading. China’s second largest exchange, BTC China, said that it would halt all trading on the platform beginning September 30, launching a liquidation panic.

In a statement released on Weibo, BTC China said that it would immediately stops accepting new account registrations on BTCChina Exchange. The decision was made after “carefully considering” Chinese regulatory bodies’ Sept. 4 announcement on preventing risks associated with token fundraising. A google-translated version of the statement:

China will stop all trading business on September 30th

 

Dear Bitcoal Chinese users: According to the September 4 issue of the “People’s Bank of China Central Office of the Ministry of Industry and Information Technology Ministry of Industry and Commerce, China Banking Regulatory Commission, China Securities Regulatory Commission on the prevention and treatment of the risk of the issuance of the currency,” the spirit of the document, adhering to the protection of investment risks, the maximum protection of users

 

The principle of interest, Bit Coin Chinese team by careful discussion, is to make the following decision:

 

1. Bit currency China’s digital asset trading platform today to stop the registration of new users;

 

2. September 30, 2017 Digital asset trading platform will stop all trading business.

 

Beitou China’s pool (pool) and other business will not be affected, continue to normal operation.

We apologize for the inconvenience. If you have any questions, please contact support@btcchina.com.

And on Twitter:

1/ After carefully considering the announcement published by Chinese regulators on 09/04, BTCChina Exchange will stop all trading on 09/30.

2/ BTCC products, including BTCC Pool, are not affected by this change. Please contact us at support@btcc.com if you have any questions. https://twitter.com/YourBTCC/status/908285586368167936 

The immediate result was a sharp plunge in the CNY-denominated price of bitcoin on exchanges like BTC China and OKCoin:

While China no longer dominates cryptocurrency trading – it accounted for nearly 90% of all trading in late 2016 before Beijing launched a series of measures to limit participaton – and is now responsible for less than 40% of global volumes, the Chinese selloff has spooked global markets, pushing bitcoin sharply lower on international exchanges as well like Coinbase, where it was trading at approximately $3,600 last.

A breakdown of global bitcoin exchanges by volume is shown below:

Also notable: as of this moment, China-denominated bitcoin is trading at about 17,000 yuan or just under US$2,500, indicating there is a nearly 30% arb between Chinese and offshore trading.

It remains to be seen if Chinese bitcoin fans will simply switch to other OTC/bilateral forms of trading, or simply take their trading to neighboring Japan and South Korea which remain eager advocates of trading in the crypto space.

end

 

It is official:  Beijing announces the shutting down of all local exchanges selling bitcoin by Sept 30.

(courtesy zero hedge)

 

 

Bitcoin Crashes 35% In China: Beijing To Shut All Local Exchanges By End Of September

Update: Confirming the other speculation, that China would halt all cryptocurrency exchange, Yicai reports that it is not just BTC China:

  • CHINA MAY SHUT ALL LOCAL BITCOIN EXCHANGES BY SEPT. END: YICAI

To which the response from the Bitcoin Association of Hong Kong is: “if China restricts growth in bitcoin” it will drive business to us”

* * *

Yuan-denominated Bitcoin has crashed as much as 25% 35% in Chinese trading, plunging from 25,000 yuan to as a low of 16,000 on local exchanges BTCChina (and as low as 20,000 on OKCoin), following confirmation of last week’s Caixin report that Beijing would stop cryptocurrency exchange trading. China’s second largest exchange, BTC China, said that it would halt all trading on the platform beginning September 30, launching a liquidation panic.

In a statement released on Weibo, BTC China said that it would immediately stops accepting new account registrations on BTCChina Exchange. The decision was made after “carefully considering” Chinese regulatory bodies’ Sept. 4 announcement on preventing risks associated with token fundraising. A google-translated version of the statement:

China will stop all trading business on September 30th

 

Dear Bitcoal Chinese users: According to the September 4 issue of the “People’s Bank of China Central Office of the Ministry of Industry and Information Technology Ministry of Industry and Commerce, China Banking Regulatory Commission, China Securities Regulatory Commission on the prevention and treatment of the risk of the issuance of the currency,” the spirit of the document, adhering to the protection of investment risks, the maximum protection of users

 

The principle of interest, Bit Coin Chinese team by careful discussion, is to make the following decision:

 

1. Bit currency China’s digital asset trading platform today to stop the registration of new users;

 

2. September 30, 2017 Digital asset trading platform will stop all trading business.

 

Beitou China’s pool (pool) and other business will not be affected, continue to normal operation.

We apologize for the inconvenience. If you have any questions, please contact support@btcchina.com.

 

end

please pay attention to what William White former head economist for the BIS stated yesterday:

 

“the primary purpose of central banks is to influence the price of gold”

 

White claims that there is too much debt and debt bubbles are forming everywhere.  He claims that there must be bank bail ins to save the financial system.

 

this is a must read.

 

(courtesy Mike Kosares/GATA)

 

 

Mike Kosares: Establishment economist warns more dangers now than 2007

 Section: 

9:40a ET Wednesday, September 13, 2017

Dear Friend of GATA and Gold:

USAGold’s Mike Kosares today calls attention to an interview just given by William R. White, the former official of the Bank for International Settlements who in 2005 candidly admitted (to an audience he considered reliable) that a primary purpose of central banks is to “influence” the price of gold. (See http://www.gata.org/node/4279.)

Kosares notes that White told Bloomberg News that the world economy today faces greater dangers than it did just before the financial crisis of 2008, that central banks have been “stoking debt bubbles,” that much debt can never be repaid, and that bank bail-ins will be required to restore the financial system

Kosares writes: “I consider White’s argument one of the strongest I have seen for gold and silver ownership as long-term safe-haven hedges. The catalyst for that debt deflation could be the realization in global financial markets that the central banks, as White describes it, have backed themselves into a corner over the past 10 years with nowhere to go. In other words, the next time around — the next time the black swan lands — we will be on our own, walking the high wire without a central bank safety net.”

Kosares’ commentary is headlined “Prominent Establishment Economist William White Warns ‘More Dangers Now than 2007” and it’s posted at USAGold here:

http://www.usagold.com/cpmforum/2017/09/13/prominent-establishment-econo…

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

END

 

Dr Copper in trouble as spot Copper at a huge discount to the 3 month futures (contango). Nowhere in the globe is copper scarce and thus this indicates global growth is slowing

 

(courtesy zerohedge)

“Dr.Copper”‘s Contango Crushes Economic Hype

We warned two weeks ago that China’s “Bronze Swan” was looming as the crackdown on leverage in the system by Chinese authorities may be forcing unwinds of the CCFDs – thus putting upward pressure on Copper futures (unwinding short positions) and selling physical copper (which would mean procuring the physical metal before passing it on). Those effects were exactly what we had been seeing in the market until the end of August.

And now, it appears, as StockBoardAsset.com notes, exhaustion has started to set in across industry metals…

Barclays has also called the copper rally overhyped, while Bank of America Merrill Lynch said it’s the metal most at risk of a reversal,with the optimism of investors in financial futures disconnected from slow conditions in the physical market.

“When you look at the state of the refined copper market, you certainly question why prices have risen so significantly,” Snowdon said by phone from London.

And finally, bear in mind that the lagged response to China’s credit impulse is about to hit base metals… The rise and fall in China’s credit impulse that has been so highly correlated (on a lagged basis) with copper for the last eight years…

 

And now, as Frik Els of Mining.com explains, Copper futures trading on the Comex market in New York suffered another sharp decline on Wednesday as analysts warn of a likely correction following weeks of speculative buying.

In massive volumes of 2.7 billion pounds in morning trade alone copper for delivery in December slumped to a low of 2.9710 a pound ($6,550 per tonne), down more than 2% from Tuesday’s close to a three-week low.

A week ago copper hit an intra-day high just shy of $3.18 a pound (more than $7,000 a tonne), the highest since September 2014. But disappointment about imports by China,  responsible for some 46% of global consumption of the metal, and receding supply worries saw the rally come to a screeching halt.

The prospect of a weakening renminbi also emerged as factor for the pullback after Chinese policymakers this week relaxed rules to curb speculation against the yuan which had been in place for nearly two years.

A correction on copper markets may also have been overdue as speculative interest have been running ahead of industry fundamentals. Hedge funds built successive record net long positions – bets on rising prices – in recent weeks which according to the latest report totalled the equivalent of more than $9 billion at today’s prices.

Reports at the end of July that China is planning to ban the importation of scrap copper by the end of next year, sparked the rally from copper’s summer lows, but caught many in the industry by surprise.

Investment banks and institutions are now catching up and according to the September survey by FocusEconomics released yesterday eight of the 24 analysts polled upgraded their fourth quarter forecasts compared to projections made the month before.

While no-one downgraded the outlook for copper, consensus forecasts remain well below ruling prices however.

Analysts project that prices will average $5,870 per tonne in Q4 2017 and $5,844 per tonne in Q4 2018. The lowest forecast for Q4 2017 is $4,899 per tonne, while the maximum forecast is $6,674 per tonne. Among the pessimists. Barclays, Deutsche Bank, JP Morgan and Macquarie all saw a prices average more than 15% below today’s price going into 2018.

The price forecasts for Q4 2017 were raised for nine metals and minerals, including aluminium, lead and iron ore. Tin was the only exception with economics lowering their price expectations for the rest of the year.

*  *  *

And finally, as Bloomberg details, here’s some more grist for the doubters who scoffed at copper’s rally to a three-year high earlier this month.

The metal for immediate delivery on the London Metal Exchange cost $40.75 less than benchmark three-month futures on Tuesday, the biggest discount since 2009.

That market structure, known ascontango, shows “there’s no part of the world where copper is really scarce,” said Rene van der Kam, Singapore-based managing director of trader Viant Commodities Pte Ltd. He says to expect more losses after a pullback in prices this week.

It appears “Dr.Copper” is about to be relegated to “ignore” status once again.

And why your average joe American should care… the Copper/Gold Ratio is misfiring and more likely to revert back to UST10Y levels. The correlation broke in late August.

 

end

 

Jeff Christian who was my counterparty at the hearings in March 2010 on gold/silver manipulation states that there is no evidence of gold manipulation anywhere and it is pure nonsense.  The problem: a UBS head trader was arrested for manipulation in gold and silver while he was talking to Kitco

 

(courtesy Kitco/GATA)

‘No evidence’ of gold market manipulation, CPM Group’s Christian insists

 Section: 

12:39p ET Wednesday, September 13, 2017

Dear Friend of GATA and Gold:

Interviewed today by Daniela Cambone of Kitco News, Jeff Christian, managing partner of metals consultancy CPM Group, declares that complaints of manipulation of the gold market are “just nonsense” for which there is “no evidence.”

Unfortunately Cambone failed to ask Christian to respond to even one of the many documents of gold market rigging by governments and central banks, like those GATA has compiled here —

http://www.gata.org/node/14839

— nor even about Deutsche Bank’s recent confession to manipulating both the gold and silver markets in collusion with other bullion banks:

https://www.law360.com/articles/871042/deutsche-bank-gets-nod-for-60m-go…

Cambone seems to have failed even to get Christian to acknowledge that his company is a consultant for central banks, whose largely surreptitious intervention in the gold market is the main source of manipulation.

But this is, after all, Kitco, and to get that internet site just to notice the manipulation issue may be a triumph.

Cambone’s interview with Christian is six minutes long and can be viewed at Kitco here:

http://www.kitco.com/news/video/show/Kitco-News/1703/2017-09-13/Gold-Man…

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

END

We brought this story to you yesterday of a USB trader who is accused by the Government of manipulating precious metals.

 

(courtesy GATA/Bloomberg)

Ex-UBS trader accused by U.S. of manipulating precious metals prices

 Section: 

The arraignment happened even as CPM Group Managing Director Jeffrey Christian was telling Kitco News that complaints of gold market manipulation are “nonsense.”

* * *

By Tom Schoenberg and David Voreacos
Bloomberg News
Wednesday, September 13, 2017

A former trader at UBS Group AG was charged today with conspiracy and fraud over his suspected role in manipulating the price of precious metals.

Andre Flotron, who worked at the bank in Switzerland and Stamford, Connecticut, is the second person publicly charged in the U.S. investigation into the fixing of gold, silver, platinum and palladium prices. Flotron, a Swiss citizen, was arrested while visiting his girlfriend in New Jersey. He was charged with conspiracy, wire fraud, commodities fraud, and spoofing. He faces as many as 25 years in prison on the most serious charge. …

… For the remainder of the report:

https://www.bloomberg.com/news/articles/2017-09-13/ex-ubs-trader-accused…

END

Armstrong Logic?

 

I had not planned on penning a public article today but my plans were changed by Martin Armstrong as he again is busy attempting to rewrite history.  He is again trying to scare people away from their only financial hurricane insurance, gold …why?  Any thinking person knows a credit disaster is coming.  Heck, even he has called for a pending financial disaster himself…but gold is not a safe harbor “this time”?
  As a reminder of past fallacy, Mr. Armstrong wrote back in September 2015 …”You are doomed if you cling to the idea that gold will rise simply because stocks decline. Gold was DEVALUED in 1934 since gold was MONEYWhat it could purchase for $20.67 then cost $35. (this line has since been deleted from his original article) The government confiscated gold and moved to a TWO-TIER monetary system with gold used exclusively for international settlements, not domestic.”  …Martin Armstrong
 
  The fact is, gold was REVALUED 70% higher versus the dollar (and much more versus other assets) as what previously required $20.67 to purchase one ounce of gold moved to $35.  I said at the time, what he wrote could not have been a typo or a mistake, his logic was in reverse and he was trying to rewrite history.
 ============================================== 
 
  Fast forward to present, he is at it again.  He recently posted https://www.armstrongeconomics.com/markets-by-sector/foreign-exchange/usd/am-i-certain-about-the-strong-dollar/  “Am I certain about the strong dollar?”  Let’s take a look at a few glaring “alterations” of history and poor logic according to Martin Armstrong.
  His article starts out with “You can denominate oil to peanuts in some other currency but that still will never put a dent in the dollar. Why? It is capital flows than count and trade is minimal“.
Um not quite right Martin, and we will save this for the end as it’s the main broken bone to the writing. 
  He then attacks the Euro.  While I do not disagree with his premise that the Euro is flawed because it is a common currency but consists of members with different credit ratings and different interest rates.  I do disagree with his historical recollection.  Martin tells us “In general, Europeans are still trapped in World War II thinking that a stronger currency means economic boom.”  This is absolutely not so (please read “The rotten heart of Europe” by Bernard Connolly).  For years prior to the Euro commencing, nation after nation DEVALUED their currency in order to receive cost benefit for their produced and traded goods.  And besides, hasn’t Mario Draghi continually tried to talk the Euro down and devalue versus other world currencies?  World currencies have been in a race to the bottom, I am not sure what Armstrong is looking at here.
  Then he goes on to say “the Chinese yuan will not replace the dollar untilAFTER 2032“.  Has he not seen China for at least the last five years or more readying itself to do its business without using dollars?  Trade deals, credit facilities, bourses and clearing facilities all being erected to the EXCLUSION of dollars?  Does he not see the rest of the world distancing themselves from the U.S. and following very closely along with China?  Plus, with history as a guide, the $20 trillion current US debt will double twice to $80 trillion by 2032, will the U.S. even be financially viable by then (is it even viable now)?  
  He went full circle to what he started with and the most flawed of all; “Denominating oil in yuan or euro means nothing.  Where will you park your cash?”.
  And then claims; “The ONLY time we get monetary reform is when the dollarRISES, not declines. Hey, if the dollar declines, then interest rates will continue to travel negative, gold will collapse, the stock market will implode, and Trump will emerge as the best president in history creating massive new American jobs exporting everything not just blue jeans, rock & roll, and US corrupt law. Emerging markets can keep borrowing dollars with no end, dumping commodities that are at excess supply, and everyone will be perpetually happy – the euro will be strong at last and magically the ECB can just keep European governments on life support without end.” 
  First, he is basically saying we will have economic nirvana with a weaker dollar and only at the expense of the stock market (and gold bulls of course).  A weak dollar sounds wonderful according to him, maybe even “the answer” to a failed system?  Unfortunately there is a thing called “history” which shows when a currency weakens or even collapses, stock markets, (gold), and assets in general skyrocket in that currency …just look at the results of Weimar, Zimbabwe or even Venezuela, their stock markets WENT UP in their own local currencies… not down.  If weak currencies (inflation) were such a good thing, why haven’t we already figured this one out and EVERYONE just print and devalue?  This has been tried over and over again throughout time and always ended up with the fiat currency being busted through over issuance.  “Printing” currency to devalue does not produce prosperity… if it did there would be no poverty anywhere on the planet.  This is historical fact, not opinion.  
  As for saying denominating oil in yuan, “means nothing”, can he really believe this?  According to Armstrong, “flow” is what is all important (I must agree), … and “trade is minimal”.  I beg to differ, TRADE is ALL IMPORTANT in today’s world and certainly affects capital flow very significantly “at the margin”.  If trade and settlement did not matter to the dollar, then why has the U.S. used its military for so long to enforce the petrodollar?  For that matter, why was the petrodollar scheme set up in the first place?  (It’s OK Martin, you know what happened on Aug. 15, 1971).  I bet Saddam and Mohamar might disagree with Armstrong’s take here if they were still living, what you actually settle oil (and other commodities) DOES MATTER because it affects “flow”, (and ultimately lives!).  
  I have a couple last questions.  How is it Martin that a weaker dollar will not bring forth “monetary reform”?  I understand your stronger dollar thesis where foreigners are financially blown up for borrowing in dollars that increase the difficulty in payoff and service of their debt.  But why would there need to be monetary reform if the reserve currency was acting like the reserve currency and remained a strong standard to be compared to and saved in?  
  How is it, a weaker (or significantly weaker) dollar cannot bring forth monetary reform?  What if the dollar is weaker because less people are using it …as they already are today?  What if the dollar is weaker because the Treasury/Federal Reserve balance sheets look like they are approaching junk bond status …and foreigners bail out of dollars …as they already are?  In reality, isn’t it the weak dollar itself (and poor financials of the issuer) that has prompted the rest of the world to seek a new reserve currency in the first place?  They are tired of seeing their “savings” in dollars depreciate AND don’t fancy playing the game of “never getting paid” …!  
  You see Martin, dollars only promise to pay more dollars and “settlement” is never really made.  With gold, because it is no one else’s liability, IS final settlement… (but you already know this of course).  This is just one more difference between a “currency” and “money” that you seem not to want the public to understand?  I am not sure why this is?  You used to be such a beacon of logic, what happened to it?  Where did it go? 
  One last question, what would John Edelson or Fred Manko say about your history?
 
Standing watch,
Bill Holter
Holter-Sinclair collaboration
And now an interview with X 22:
  
Please feel free to watch, my latest interview with X22 Spotlight.

end

 

Lawrie Williams offers some good reasons for gold to rise

 

(courtesy Lawrie Williams/Sharp’s Pixley)

LAWRIE WILLIAMS: Some encouragement for gold bulls – GLD adds 4 tonnes

After a minor couple of withdrawals during the week after the Labor Day holiday, investment in the world’s largest gold ETF – SPDR Gold Shares (GLD) – has turned positive again and has added just over 4 tonnes of gold in the past couple of days, despite the gold price falling in U.S. trade down, at one time, to below the $1,320 level. The fall in the gold price is probably attributable primarily to a small recovery in the U.S. dollar where the dollar index has risen back to above 92 after a consistent fall over the past few weeks down at one point to below 91.5. As a comparison, the dollar index at the beginning of the year was at over 103 in the first week in January and has thus fallen by around 11% from that level. Gold, even at its current lower price after its heady rise to above $1,350, has risen by 14% this year. (The S&P 500, as a comparison, is up around 17%). Consensus is that the dollar could well have further to fall yet.

The other factor, of course, in the recent gold price weakness, is that the perceived geopolitical risk of military action by the U.S. against North Korea has diminished with the U.S. pushing the economic sanctions route to try and keep that country’s Supreme leader Kim Jong-un’s aggressive rhetoric and nuclear weaponry development and delivery advances in check. We somehow doubt the increased sanctions route will make any difference here and the perceived risk of military action will likely continue to wax and wane with further missile and bomb tests by the Asian country. Indeed sanctions may create major difficulties with China with an overt threat by U.S. Treasury Secretary Steve Mnuchin to cut China off from the U.S. financial system should it continue to trade with North Korea, although such a move would probably only accelerate China’s potential attack on the U.S. dollar in global trade.

There is very much a perception that Kim Jong-un and Donald Trump are both crying ‘wolf’ and that neither will – or indeed are capable of – carrying out their strongest militaristic threats. Following the United Nations’ decision to increase sanctions on North Korea, although not to the extent the U.S. would have liked, North Korea’s response was to further increase threats against the U.S. and its allies. A Reuters report today notes that “A North Korean state agency threatened on Thursday to use nuclear weapons to “sink” Japan and reduce the United States to “ashes and darkness” for supporting a U.N. Security Council resolution and sanctions over its latest nuclear test.”

Interestingly equities markets and currencies in the countries most under apparent threat from North Korea, are mostly unfazed by the threats – they have heard North Korean aggressive rhetoric many times before and are well aware that these threats have so far never been followed up by action.

However Kim may find provoking the U.S. is somewhat different in that the country may take his threats more seriously than his immediate Asian neighbours. After all, the U.S. mainland has not been threatened with nuclear attack since the peak of the cold war with Russia and its allies some years ago. And where U.S. security is threatened the nation tends to react. Take the Cuban missile crisis for example. In that case the Russians caved in to the U.S.’s counter threat. Will Kim do the same? Logic suggests he should, but he remains something of an enigma in this respect. It currently very much looks like his country will carry on with its weapons development programmes regardless of U.S./U.N. sanctions, particularly if China largely ignores these.

And therein lies another threat. Will President Trump impose sanctions on China. A trade war with China could well backfire on the U.S. and accelerate China’s overt trade ties with Russia and many Asian and other nations. China and Russia individually may not pose a serious economic or military risk to the U.S., but combined they could well be such.

The other major factor affecting gold sentiment in the U.S. and ultimately the gold price itself is what the U.S. Fed will do with interest rates – and most importantly when it may do it! Next week’s FOMC meeting will be watched closely for clues. But a recent report in the highly respected Financial Times commented that “Half of all market participants, for example, believe that the next Fed rate rise won’t be until September 2018 and others believe the US central bank will hold fire until the end of 2019.” The likelihood of a further U.S. interest rate rise this year, however small, seems to be coming less likely with every successive release of economic data. However we do still see the possibility of one more Fed rate rise this year as a possibility, if only to save a little face given its prediction at end-2016 of three or four rate rises this year in the progression towards U.S. interest rate ‘normalization’.

There is thus much that looks to be positive for gold, though, in the geopolitical and geo-economic short term. Asian demand for physical gold remains relatively strong and it would only take a small turn-around in North American sentiment to impact physical gold supply and positively affect the gold price as a result. We think this more likely than not – particularly if the war of words between North Korea and the U.S. continues, as do the North Korean missile and bomb tests. This dichotomy could run and run and a $1,400 gold price by the year end – as some analysts are predicting – does not seem outside the bounds of possibility.

https://www.sharpspixley.com/articles/lawrie- williams-some-encouragement-for-gold-bulls-gld-adds-4- tonnes_271750.html

14 Sep 2017

 

Gold trading early afternoon: gold spikes on another North Korean missile launch headline:

 

(courtesy zero hedge)

Gold, Yen Spike (Again) After Another North Korea Missile Launch Prep Headline

Gold and Yen spiked this morning (right before CPI) on the back of Nikkei headlines about preparation being observed for another North Korean missile launch (following overnight news that US officials had confirmed). Now Reuters reports that defense officials have confirmed to Fox News that North Korea is prepping for a new missile launch and gold and yen are bid once again.

 

end

 

Gold trading in access market tonight:

Gold jumps after Mnuchin says he is less concerned about inflation than with economic growth and he will do anything he can to create that growth:  (in other words QE 4!!)

(courtesy zerohedge)

Gold Jumps After Mnuchin Says “Less Concerned About Inflation Than Economic Growth”

In a potentially revealing glimpse of what is to come from the next Fed head, Treasury Secretary Steven Mnuchin, speaking during a Politico forum, told the audience:

“Although we respect the Fed’s independence, we are concerned about economic growth. We’re doing everything we can — whether it’s tax reform, whether it’s regulatory relief, whether it’s trade — to create economic growth. And we’re less concerned about inflation at the moment.”

Seemingly suggesting that the administration will do “whatever it takes” to get economic growth (cough QE moar cough), no matter what inflationary impact.

The reaction was quick – Gold jumped to the high of the day and USDJPY spiked lower – but no follow through for now…

Mnuchin also replayed Trump’s comments on Yellen, saying he “respected her” and “enjoys working with her” perhaps in some further conditioning for the market that Yellen may be asked to stay around (as long as she remains uber-dovish, perhaps).

 

 



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 HUGELY WEAKER AT 6.6556 (DEVALUATION SOUTHBOUND   /OFFSHORE YUAN MOVES SLIGHTLY WEAKER TO ONSHORE AT   6.6571/ Shanghai bourse CLOSED DOWN 12.72 POINTS OR 0.38%  / HANG SANG CLOSED DOWN 116.88 POINTS OR 0.42% 

2. Nikkei closed DOWN 58.38 POINTS OR 0.29%    /USA: YEN FALLS TO 110.43

3. Europe stocks OPENED MOSTLY IN THE RED     ( /USA dollar index FALLS TO  92.34 /Euro UP to 1.1901

3b Japan 10 year bond yield: RISES  TO  -+.05%/ GOVERNMENT INTERVENTION    !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 110.43/ 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::  49.61 and Brent: 55.56

3f Gold UP/Yen UP

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

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

3h Oil 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  +.398%/Italian 10 yr bond yield UP  to 2.062%    

3j Greek 10 year bond yield FALLS TO  : 5.429???  

3k Gold at $1323.50  silver at:17.72 (8:15 am est)   SILVER NEXT RESISTANCE LEVEL AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 24/100 in  roubles/dollar) 57.71-

3m oil into the 49 dollar handle for WTI and 55 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 HUGE SIZED DEVALUATION SOUTHBOUND 

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 110.43 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  0.9665 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1502 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  +0.398%

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 2.190% early this morning. Thirty year rate  at 2.794% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

Global Stocks Pull Back From All Time Highs On Poor Chinese Data; All Eyes On CPI

Global stocks backed off from all time highs, and S&P futures are unchanged ahead of the much anticipated US CPI report, which is expected to break a streak of five consecutive misses, while eyeing disappointing overnight Chinese economic data which missed across the board. European stocks and Asian markets were also modestly in the red, with the relentless global rally to new daily record highs taking a breather amid some concerns China’s economy is rolling over, which weighed on commodities including base metals, which in turned dragged down mining stocks. Most major currencies drifted before today’s other major report: the BOE rates decision, where the central bank is expected to keep rates unchanged.

As reported last night, Chinese retail sales, industrial production and fixed-asset investment all slowed and missed last month after a lackluster July as efforts to rein in credit expansion slammed the economy. Offsetting China’s weakness was the latest Australian employment report, according to which the country added 54,200 jobs in August from July, more than twice the 20,000 estimated. The jobless rate was steady at 5.6%. The Aussie dollar rallied past 80 cents to the U.S. currency on stronger-than-expected employment numbers, before paring gains on the disappointing Chinese economic data.

The sharp but brief dollar rally appears to have lost steam, with Trump denying a DACA deal was made with Democrats putting the recent euphoria over Trump’s Tax Reform in question, but the currency held most of its recent gains. Not even another threat by North Korea to nuke Japan had much of an impact on the value of the greenback.

Treasuries and bunds were little changed ahead of Thursday’s U.S. CPI report. The euro advanced against the Swiss currency after the SNB signaled the franc remains “highly valued” while cutting its economic outlook; the pound stuck to a tight range as investors waited to see how the Bank of England will try to balance policy amid faltering wages and faster inflation.

Shares fell in Asia, knocking MSCI’s All-Country World index which tracks shares in 46 countries, off a record high hit on Wednesday, when Asian shares hit their highest since 2007 and Wall Street closed at all-time peaks. Asian markets are mostly lower, led by China and Hong Kong.  Asia’s benchmark stock index, which has outperformed the U.S., traded just shy of its highest level since December 2007 ahead of the US CPI data report. The MSCI Asia Pacific Index fell 0.1% to 162.57, dragged by materials and telecom stocks. China’s Shanghai Composite Index closed lower after industrial output and retail reports suggested an unexpectedly slower pace of growth in the world’s second-biggest economy, while Japan stocks erased early gains. On the flip side, the Philippine benchmark rose to a record high as property and consumer-related shares gained after a report that the Senate will rein in the government’s plan to increase taxes on low-cost homes and sugary drinks. The momentum of Asia stocks wasn’t as strong as U.S. counterparts in this week’s rebound, said Margaret Yang, a market analyst at CMC Markets Singapore Pte Ltd, citing a greater year-to-date gain in the region. Investors are awaiting the U.S. inflation report that may determine whether the Federal Reserve delivers an interest-rate increase before year-end.

European shares opened lower. The STOXX 600 index dipped 0.1 percent with down 0.3 percent, following the mildly negative tone seen during Asia-Pacific trade as markets eye upcoming key risk events including the BoE rate decision and US inflation report. In terms of a sector breakdown, material names are the notable laggards amid downbeat industrial production and retail sales figures from China overnight, while energy names have been supported from the recent gains in WTI and Brent. Elsewhere, UK retail names have been dealt a helping hand after Next (+10%) upgraded their guidance, which has also provided support to some of their  domestic competitors including Marks & Spencer (+4.5%). From a fixed income perspective, paper has traded in a particularly tight range throughout the session after yesterday’s digestion of supply with just Ireland stepping up to the plate today. Note, tomorrow sees notable redemptions which some have suggested could guide price action later in the session (EUR 15.5bln IT principals, EUR 13bln GE, EUR 6bln FI, EUR 8bln AT, EUR 6bln EFSF, EUR 2bln coupons).

Following Friday’s PBOC margin announcement, the Yuan has been a one way train in reverse, and the onshore yuan has now dropped for a fifth day, heading for longest run of declines since early July, as China’s central bank weakens its daily fixing after overnight rise in the dollar. CNY falls 0.18% to 6.5568 per dollar as late afternoon in Shanghai, taking five-day retreat to 1.1%.  Investors were seen buying the dollar to close short USD/CNY positions before end of session, triggering stop-losses that pushed CNY weaker, according to Bloomberg.  Banks also cut short USD/CNY positions to avoid another overnight USD surge like Wednesday’s. Korean won weakest in Asia following the latest threat from North Korea.
Treasury yields are little changed. Australia’s 10-year yield up 6 bps.
Dalian iron ore futures drop.

The main event for European currency traders is likely to be the Bank of England policy meeting. While no change in rates is expected, investors will be watching whether there is any shift in the number of rate-setters voting for a rise after a jump in inflation last month. Weak wage growth and questions over what Brexit will mean for the economy suggest most policymakers will see the recent surge in inflation to well above the BoE’s target as temporary. Sterling held steady around $1.32 having risen as high as $1.3329 on Wednesday. The pound was also flat at 89.95 pence per euro.

The Swiss franc edged lower against the dollar and the euro after Switzerland’s central bank said its currency was highly valued and that the situation on the foreign exchange market was still fragile.

In rates, U.S. 10Y yields edged down 0.3 basis points to 2.192 percent. Bunds hit a 3-1/2-week high just shy of 0.42% after some harsh words from Jeff Gundlach. A weaker euro, which is down 1.7 percent from 2-1/2-year highs hit against the dollar last week, could encourage the European Central Bank to bring forward plans to withdraw monetary stimulus that has crushed euro zone bond yields.

“The weaker euro has amplified the headwinds facing the bond market,” said Rainer Guntermann, a strategist at Commerzbank. “With the euro off its highs, it is easier for the ECB to taper next year.”

Oil extended gains, trading at a five-week high amid demand optimism. Copper fell to near the lowest level in a month. Brent traded above $55/bbl, highest since mid-April, after IEA on Wednesday said worldwide demand is strong. WTI near $49.50. “In general it’s a bullish picture,” says Eugen Weinberg, head of commodities research at Commerzbank. “Yet again, the International Energy Agency confirmed the view that demand recently was extremely high”

Economic data includes initial jobless claims and August inflation. Oracle and Empire are reporting earnings

Bulletin Headline Summary from RanSquawk

  • GBP has been offered as we approach the BoE despite outside bets of further dissent on the MPC
  • The greenback has remained subdued to the benefit of its major counterparts while AUD/USD gained ground on strong jobs
  • Looking ahead, highlights include BoE, US CPI and ECB’s Weidmann

Market Snapshot

  • S&P 500 futures little changed at 2,493.30
  • STOXX Europe 600 down 0.1% to 380.79
  • MSCI Asia down 0.05% to 162.56
  • MSCI Asia ex Japan down 0.02% to 538.63
  • Nikkei down 0.3% to 19,807.44
  • Topix down 0.3% to 1,632.13
  • Hang Seng Index down 0.4% to 27,777.20
  • Shanghai Composite down 0.4% to 3,371.43
  • Sensex up 0.1% to 32,228.68
  • Australia S&P/ASX 200 down 0.1% to 5,738.68
  • Kospi up 0.7% to 2,377.66
  • German 10Y yield fell 0.2 bps to 0.399%
  • Euro up 0.1% to $1.19
  • Italian 10Y yield rose 1.5 bps to 1.748%
  • Spanish 10Y yield rose 1.1 bps to 1.591%
  • Gold spot little changed at $1,324.05
  • U.S. Dollar Index down 0.2% to 92.34

Top Overnight News

  • Saudis Are Said to Prep for Possible Aramco IPO Delay to 2019
  • North Korea Threatens to Use Nuclear Weapon to ‘Sink’ Japan
  • Apple Is Said to Discuss $3 Billion Stake in Bain Chip Bid
  • China’s Economy Cools Again as Industry, Retail, Investment Slow
  • Trump Blocks China-Backed Lattice Bid as Beijing Urges Fairness
  • U.K. Subjects Murdoch’s Fox to Wider Probe Over Sky Takeover Bid
  • Democrats Say They Have Tentative ‘Dreamers’ Deal With Trump
  • Munich Re Says It May Miss Profit Target on Irma, Harvey
  • Carney’s Rate Dilemma No Easier as Inflation Rears Up Again
  • Hermes Warning Raises Concern Strong Euro to Erode Luxury Sales
  • Australia employment surges in August, led by full-time roles
  • Saudis are said to prep for possible Aramco IPO delay to ’19
  • U.K. Aug. RICS house price index at 6, vs 1 in July
  • AT&T opens iPhone price war with buy-one-get-one-free offer

Asia equity markets were lacklustre with a non-committal tone seen for most of the day after the cautious gains in the US and as the region also digested key data releases. ASX 200 (-0.1%) and Nikkei 225 (-0.2%) were subdued with weakness across miners and discouraging Chinese data weighing on Australia, while a softer JPY struggled to keep the Japanese index afloat. Hang Seng (-0.5%) and Shanghai Comp. (-0.2%) also lacked demand as an increased liquidity effort by the PBoC was clouded by a miss on Chinese Industrial Production and Retail Sales data. 10yr JGBs were lower despite the subdued risk-tone seen across markets, with prices weighed following a weaker 20yr JGB auction where the b/c, amount and accepted prices were all lower than the prior month. PBoC injected CNY 60bln in 7-day reverse repos, CNY 30bln in 14-day reverse repos and CNY 10bln in 28-day reverse repos. PBoC set CNY mid-point at 6.5465 (Prev. 6.5382) Chinese Industrial Production (Aug) Y/Y 6.00% vs. Exp. 6.60% (Prev. 6.40%). Chinese Retail Sales (Aug) Y/Y 10.10% vs. Exp. 10.50% (Prev. 10.40%)

Top Asia News

  • ZhongAn Online Is Said to Set Terms for Up to $1.5 Billion IPO
  • India’s August Wholesale Inflation Rises Most in Four Months
  • Bullet Train Pact Sends Shares of India Power-Gear Maker Soaring
  • Morgan Stanley Upgrades Philippine Stocks to Overweight

European equities (Eurostoxx 50 -0.3%) have largely followed on from the mildly negative tone seen during Asia-Pacific trade as markets eye upcoming key risk events including the BoE rate decision and US inflation report. In terms of a sector breakdown, material names are the notable laggards amid downbeat industrial production and retail sales figures from China overnight, while energy names have been supported from the recent gains in WTI and Brent. Elsewhere, UK retail names have been dealt a helping hand after Next (+10%) upgraded their guidance, which has also provided support to some of their  domestic competitors including Marks & Spencer (+4.5%). From a fixed income perspective, paper has traded in a particularly tight range throughout the session after yesterday’s digestion of supply with just Ireland stepping up to the plate today. Note, tomorrow sees notable redemptions which some have suggested could guide price action later in the session (EUR 15.5bln IT principals, EUR 13bln GE, EUR 6bln FI, EUR 8bln AT, EUR 6bln EFSF, EUR 2bln coupons).

Top European News

  • Vivendi Hit by Watchdogs on Telecom Italia, Mediaset Stakes
  • Syngenta Is Said to Plan $7 Billion Bond to Refinance M&A
  • Glapinski Wins Ally in Push for Stable Polish Rates Through 2018
  • SNB Says Franc Drop Has Reduced ‘Significant Overvaluation’
  • Macquarie Sells Its Stake in Copenhagen Airports to ATP
  • Next CEO Says Favorable Weather Helped Sales in Recent Months

In currenices, as has been in the case in other markets, price action has been on the light side ahead of key risk events. A bulk of the focus in the FX space thus far has been on CHF after the SNB kept rates unchanged as expected while tweaking their rhetoric on the CHF from ‘significantly overvalued’ to ‘highly valued’, however, the SNB also stated that they will remain active in the FX markets, subsequently leading to some choppy price action in the safe-haven. Elsewhere, NZD took a tumble in early trade after the latest News1 poll for the upcoming election put the Labour party in the lead; a result which was at odds with the NewsHub poll from earlier in the week. Finally, focus for FX markets will likely centre around GBP with markets looking to see whether or not the 2.9% Y/Y inflation rate in the UK will lead to any further dissents on the MPC.

In commodities, WTI crude futures continue to hold onto yesterday’s gains after the Nigerian energy minister stated that the nation would be willing to impose an output cap for six months if they were able to hit production levels of 1.8mln bpd. Elsewhere, gold has seen little in the way of price action while copper prices were sideways overnight amid a subdued risk tone which somewhat provided the metals complex mild respite from the prior day’s selling.

Looking at the day ahead, in the UK, we have the BOE rate decision, the asset purchase target as well as retail sales data for August. Over in the US, the August inflation along with the initial jobless claims and continuing claims are also due. Onto other events, there is the BOE and Swiss national bank official interest rate decision. The ECB governing council member Jens Weidmann will also speak in Frankfurt

US Event Calendar

  • 8:30am: Initial Jobless Claims, est. 300,000, prior 298,000; Continuing Claims, est. 1.97m, prior 1.94m
  • 8:30am: US CPI MoM, est. 0.3%, prior 0.1%; CPI Ex Food and Energy MoM, est. 0.2%, prior 0.1%
  • US CPI YoY, est. 1.8%, prior 1.7%; US CPI Ex Food and Energy YoY, est. 1.6%, prior 1.7%
  • 8:30am: Real Avg Weekly Earnings YoY, prior 1.08%; Real Avg Hourly Earning YoY, prior 0.7%
  • 9:45am: Bloomberg Consumer Comfort, prior 52.6

DB’s Jim Reid concludes the overnight wrap

The two main strands of conversations I had on returning to the office yesterday was a) how tired I looked and b) whether I was buying the new iPhone X. Without even knowing what features it has Apple had me at “new i…..”. Actually someone asked me if I was buying the new iPhone 8 instead and I was actually a little offended. I’m still dreading the day they get into cars. Regular readers will be aware how much I hate spending money on cars. However there would be a real risk of personal bankruptcy if and when the iCar comes out and updates itself every year.

Anyway before we preview an important day headlined by US CPI and the BoE meeting, straight to Chinathis morning where the latest monthly main data dump is out. August industrial production and retail sales were softer than expected. The IP was up 6% yoy (vs. 6.6% expected) – the slowest pace this year, and retail sales grew 10.1% yoy (vs. 10.5% expected) while fixed assets expanded 7.8% (vs. 8.2% expected). Asian markets generally weakened on the numbers after a firmer start to the session without being much changed overall. The Nikkei (-0.19%), Hang Seng (-0.42%) and Shanghai Comp (-0.17%) are all lower while the Kospi (+0.25%) is slightly higher.

Once the market has moved on from the Chinese data the main event today is US CPI with the market and DB at +0.3% mom for headline and +0.2% for core. Remember we have had 5 consecutive downside misses on the core. We also saw a miss on PPI yesterday (more later). Even an in line MoM core figure would result in the YoY rate slipping one tenth to 1.6% and to the lowest since Jan 2014. Our US economist Brett Ryan thinks CPI won’t bottom out until Q1 2018 but highlights that inflation tends to lag GDP growth by 5 or 6 quarters so any current weakness may reflect weak growth around the end of 2015/beginning 2016. In today’s PDF we’ve cropped their chart showing the tight relationship (with the lag) between the two over the last couple of decades. This is fine but inflation needs to start beating soon to suggest that the normal relationship between growth and inflation is still there and we’re not in a near perpetually low inflation world with today’s current policy choices. As an aside we still think inflation will edge up over time due to weaker demographics meaning a lower future supply of labour relative to the past and also due to policy slowly being more directed to fiscal over monetary largely due to populism and the fact that monetary policy alone has almost been fully exhausted. This week’s removal of the 1% pay cap for certain UK public sector workers is a small sign of the direction of travel. We acknowledge that this argument has no baring on the short-term inflation outlook but I think we’ll look back on 2016-17 as the secular trough in inflation.

As for the BoE consensus is of course for no change in policy but the devil is in the detail and the committee have a few signalling headaches given this week’s higher than expected inflation numbers. DB’s Oliver Harvey thinks the risks are that the MPC sounds increasingly uncomfortable about a sleepy market attitude towards interest rates. He thinks they are unlikely to be thrilled about the market reaction after the August 3rd inflation report when the broad GBP TWI fell 3% in the three weeks after (although recovered half of that since). He thinks the BoE are increasingly sceptical about benefits of a falling currency from a growth perspective, notwithstanding the impact on inflation persistence. Overall DB continue to expect the BoE to remain on hold until uncertainty about the Brexit transition diminishes. Too many aspects of the policy trade-off hinge on the outcome. There are justified concerns about the profile of future spare capacity and inflation, but protestations about these may cut little ice with the market absent a clear acceleration in wage growth or resolution of political uncertainty.

Moving on, the US tax reforms appears to gaining momentum although we have heard this before. On Fox news, Director of US office of management and business Mulvaney said the target release date for a framework of the tax plans will be on September 25th, while House Speaker Ryan also confirmed party leaders would release a Republican only “template” on tax in the last week of September. Elsewhere, the President has tweeted that “the approval process for the biggest Tax Cut & Tax Reform package…will soon begin”. For now, details are still sketchy, on the one hand Trump has reaffirmed his commitment to cut the corporate tax rate to 15% and said the tax change will benefit the middle class, not the wealthy. However, both the Treasury Secretary Mnuchin and Ryan noted the corporate tax rate is open to compromise, potentially towards c20% instead. Hopefully we will get some clarity soon.

Onto the market performance yesterday. US equities nudged up to another fresh record high, with the S&P up +0.08% (+11.5% YTD), the Dow (+0.18%) and the Nasdaq (+0.09%). Within the S&P, gains were led by the energy sector (+1.24%) while yield sensitive sectors such as real estate and utilities (-0.53%) fell slightly. European markets were also generally slightly higher, with gains also led by the energy sector. Across the region, the DAX (+0.23%) and CAC (+0.16%) rose slightly while the FTSE 100 dipped -0.28%.

Over in sovereign bonds, core European yields were mixed but little changed across the maturity spectrum, with Bunds (2Y: +1bp; 10Y: unch) and Gilts (2Y: +1bp; 10Y: +1bp) up a little in yield, but French OATs (2Y: +1bp; 10Y: -1bp) a little more mixed. Notably, peripherals such as Spain and Portugaloutperformed with 10y yields down c3bp. Over in the US, yields were slightly higher (2Y: +1bp; 10Y: +2bp).

Turning to currency markets, the US dollar index gained 0.69%, partly reflecting the increased momentum on tax reforms. Conversely, the Euro and Sterling fell 0.69% and 0.54% respectively versus the Greenback. In commodities, WTI oil rose 2.22% to a five week high, following an IEA forecast for global crude demand to be 1.7% higher in 2017 given stronger than expected consumption in Europe and US. Precious metals fell modestly (Gold -0.65%; Silver -0.74%) along with Copper (-0.66%). Elsewhere, LME Nickel dropped 5.25% overnight, but is still up c29% since June.

Away from the markets, in the EC President Juncker’s State of Union speech, he touched on a few topics, which included calling for a tighter EU integration where he proposed a series of overhauls such as the creation of i) an EU finance and economy minister, ii) a single president for the European Commission and Council, iii) an EU monetary fund and iv) an EU cybersecurity agency . On the EU economy, he noted it was growing as now the “wind is back in Europe’s sails” and the migration crisis had been brought under control. On Brexit, he noted that it would be “a very sad and tragic moment in our history…we will always  regret this…but I think you (UK) will regret it as well”.

Staying in Europe, the ECB’s executive board member and Chief economist Peter Paret noted “the baseline scenario for inflation going forward remains crucially contingent on very easy financing conditions, which  to a large extent, depend on the current accommodative policy stance.”

Finally, for those of you interested in the upcoming roll of the iTraxx and CDX indices, our team have published the report “CDS Index Roll: Europe & US, September 2017” which describes the index changes and estimates their impact on index spreads. It should be in your inbox, please contact Michal.Jezek@db.com if not.

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the core August PPI (ex-food and energy) was slightly below market at 0.1% mom (vs. 0.2% expected), although the base effect has helped the annual rate to nudge up to 2.0% yoy (vs. 1.8% previous; 2.1% expected). Notably, the healthcare series within the PPI, which is relevant to healthcare as measured in the core PCE deflator – fell 0.1% mom in August (the largest mom decline since October 2015). Elsewhere, the August federal budget data showed a slightly smaller deficit at -$107.7bln (vs. -$119bln expected) and MBA’s new mortgage applications index rose last week, with the four week average up 5% yoy.

In the UK, the July ILO unemployment rate fell to 4.3% (vs. 4.4% expected), which is the lowest level since 1976. However, growth in average weekly earnings was soft and lower than expected at 2.1% yoy (vs. 2.3%). Elsewhere, the claimant count rate was 2.3%, steady on a mom basis and the jobless claims change came in at -2.8k, which is similar to revised figure for the prior month. Over in Germany, the final reading on August inflation was unchanged at 0.2% mom and 1.8% yoy. Elsewhere, the Eurozone’s July IP was broadly in line at 0.1% mom and 3.2% yoy (vs. 3.3% expected), while employment across the euro area rose 0.4% qoq in Q2, leaving through-year growth steady at a solid 1.6% yoy.

Looking at the day ahead, in the UK, we have the BOE rate decision, the asset purchase target as well as retail sales data for August. In France and Italy, the final readings on the August inflation are due. Over in the US, the August inflation along with the initial jobless claims and continuing claims are also due. Onto other events, there is the BOE and Swiss national bank official interest rate decision. The ECB governing council member Jens Weidmann will also speak in Frankfurt

3. ASIAN AFFAIRS

i)Late WEDNESDAY night/THURSDAY morning: Shanghai closed DOWN 12.72 POINTS OR 0.38%   / /Hang Sang CLOSED DOWN 116.88 POINTS OR 0.428%/ The Nikkei closed DOWN 58.38 POINTS OR 0.29%/Australia’s all ordinaires CLOSED DOWN 0.10%/Chinese yuan (ONSHORE) closed WELL DOWN at 6.5556/Oil UP to 49.61 dollars per barrel for WTI and 55.56 for Brent. Stocks in Europe OPENED RED EXCEPT LONDON. Offshore yuan trades  6.5571 yuan to the dollar vs 6.5556 for onshore yuan. NOW THE OFFSHORE MOVED A LITTLE WEAKER  TO THE ONSHORE YUAN/ ONSHORE YUAN MUCH WEAKER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS A MUCH STRONGER TO THE DOLLAR AND THIS IS COUPLED WITH THE SLIGHTLY  WEAKER DOLLAR. CHINA IS NOT HAPPY TODAY 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

NORTH KOREA/USA

First:  North Korea threatens to sink Japan with nuclear weapons and then they state that they will reduce the USA to ashes:

(courtesy zero hedge)

North Korea Threatens To “Sink” Japan With Nuclear Weapons, “Reduce The US To Ashes”

Less than a day after US officials observed North Korea moving mobile missile launchers and engaging in preparations for what appears to be another missile test, a North Korean state committee has stepped up its belligerent rhetoric, threatening to use nuclear weapons to “sink” Japan and reduce the US to “ashes and darkness” after the UN Security Council passed new sanctions against the isolated country earlier this week, Reuters reported. The North also accused the US of “cooking up” the latest restrictive measures against it and demanded that the US be beaten “to death as a stick is fit for a rabid dog.

These latest threats follow reports from last night that US satellites had spotted the North’s military moving mobile missile launchers and preparing hard sites for what’s expected to be the country’s fourteenth missile test of 2017. The revelations followed reports of new commercial satellite imagery confirming an earlier analysis identifying numerous landslides throughout the Punggye-ri Nuclear Test Site on the slopes of Mt. Mantap (and beyond) resulting from North Korea’s sixth nuclear test. The data suggest that the hydrogen bomb test was up to three times more powerful than previously believed.

According to Reuters, North Korea’s Asia-Pacific Peace Committee, which handles the North’s external ties and propaganda, called for the breakup of the security council, which it accused of being “a tool of evil” made up of “money-bribed” countries that move at the order of the US. Then it turned its attention to Japan…

“The four islands of the archipelago should be sunken into the sea by the nuclear bomb of Juche. Japan is no longer needed to exist near us,” the committee said in a statement carried by the North’s official KCNA news agency.” (Juche, as a reminder, is the North’s unique ideology, developed by country founder Kim Il Sung, the grandfather of Kim Jong Un, which combines elements of Marxism with an emphasis on nationalism and self-reliance).

The committee continued to bash Japan, threatening to deliver “a telling blow” to its regional neighbor and longtime geopolitical foe, according to Bloomberg

“A telling blow should be dealt to them who have not yet come to senses after the launch of our ICBM over the Japanese archipelago,” a spokesman for the Korea Asia-Pacific Peace Committee said in Thursday’s KCNA statement. The committee is an affiliate of the ruling Workers’ Party.

Japanese Chief Cabinet Secretary Yoshihide Suga called the North’s comments “extremely provocative.”

“If North Korea stays the course that it is on, it will increasingly become isolated from the world,” Suga told reporters on Thursday in Tokyo. “Through implementing the new United Nations Security Council resolution and related agreements, the international community as a whole needs to maximize pressure on North Korea so that it will change its policy.”

Before turning its attention back to “US imperialists,” threatening to “annihilate”them as if they were “rabid dogs,” according to the Daily Mail.

“In a statement released by news agency KCNA, a spokesman for the regime said: ‘The army and people of the DPRK are unanimously demanding that the Yankees, chief culprit in cooking up the “sanctions resolution,” be beaten to death as a stick is fit for a rabid dog.

 

‘There’s limit to patience. Now is the time to annihilate the U.S. imperialist aggressors. Let’s reduce the U.S. mainland into ashes and darkness.”

The spokesman also called for the country to “vent our spite” by mobilizing all of the “means of retaliation” that the country has at its disposal.

‘Let’s vent our spite with mobilization of all retaliation means which have been prepared till now. These are voices of the Korean army and people.

The North’s missile tests have led analysts to believe that that its Hwasong-14 ICBM is capable of striking most of the US mainland. And it has already been fired over Japan.

According to the Daily Mail, the North claims that the nuclear warhead it tested at its Punggye-ri nuclear test site on Sept. 3 is small enough to fit atop the Hwasong-14 rocket. US and Japanese intelligence confirmed that the North had likely developed a nuclear warhead small enough to fit inside the missile. Increased activity around potential underground test sites in the country’s west and south suggest that the North is preparing to carry out still more nuclear tests.

North Korea in late August launched a ballistic missile over northern Japan in what it described as “muscle-flexing” to protest annual military drills between the US and South Korea, which the regime believes are merely dress rehearsals for an invasion. Leader Kim Jong Un called it a “meaningful prelude” to containing Guam, a US territory that the North threatened to strike with a nuclear weapon earlier this summer.

The threat to Japan comes a day after members of Japan’s ruling Liberal Democratic Party were considering visiting Pyongyang for talks with North Korean leaders.

“In the LDP there are some people seeking dialogue,” independent lawmaker Antonio Inoki told reporters in Tokyo following a trip to the North Korean capital. “There’s a change in atmosphere at the moment” about the need for talks rather than pressure, he said.”

Tokyo had criticized the visit, noting that all trips to North Korea by Japanese citizens are discouraged.

While Chinese and Russian leaders have continued to urge the two sides to sit for diplomatic talks, Japanese Prime Minister Shinzo Abe instead stressed the need for more economic pressure while belittling the possibility of a dialogue. He told the Nikkei this week that Japan was in agreement with the US and South Korea that dialogue would only be possible when North Korea committed to complete and verifiable denuclearization, something which North Korea would never agree to.

end

 

According to the Japanese Press, North Korea is preparing an intercontinental ballistic missile

(courtesy zero hedge)

North Korea Preparing For ICBM Launch: Japan Press

Gold spiked and USDJPY tumbled as headlines from Japan’s Nikkei newspaper confirmed US military officials’ observations last night that North Korea is said to show signs of missile launch preparation.

As the Nikkei adds, citing an unidentified Japanese government official, the missile is being prepared for launch has engine for liquid fuel, suggesting missile is an ICBM. It adds that the missile is said to be fueled already, ready for launch. As Japan’s Asahi further notes, the North Korean missile prep may be for a Hwason 14 ICBM and adds that missile prep is said to have started on Wednesday. 

The immediate reaction was a risk-off spike in the Yen and dollar.

This Nikkei report comes after North Korea’s threats overnight that it will “sink” Japan and reduce America to “ashes.”

And comes on the heels of the release of satellite imagery showing notable instability around the site of North Korea’s nuclear bomb testing facility, NBC reports that three US military officials have observed North korea moving mobile missile launchers and preapreing hard sites in the last 48 hours.

JUST IN: North Korea observed moving mobile missile launchers & preparing hard sites in last 48 hours, per 3 U.S. senior military officials

This comes just hours after 38North.org exposes details new commercial satellite imagery confirms earlier 38 North analysis identifying numerous landslides throughout the Punggye-ri Nuclear Test Site on the slopes of Mt. Mantap (and beyond) resulting from North Korea’s sixth nuclear test. These disturbances are more numerous and widespread than seen after any of the North’s previous five tests, and include additional slippage in pre-existing landslide scars and a possible subsidence crater. However, it is unclear from the imagery whether this subsidence is due to what has been reported as “a cave-in that was externally observable,” associated with the 4.6 magnitude event that occurred eight minutes after the test.

There also appears to be increased water drainage in the North Portal Area, likely stimulated by the large underground nuclear test. Such underground water flow stimulation (brought about by expansion of existing cracks and fissures) could also be expected to promote the transport of radionuclides to the surface, and is not inconsistent with a more recent reportthat some radionuclides (traces of Xenon-133) were detected in the environment following the test (by South Korea).

An apparent rectangular subsidence “crater” appears in the stratified volcanics at the basalt escarpment lip on the western corner of Mt. Mantap. This “crater” is likely what has been reported as a possible “collapse chimney crater,” but could also just be induced slippage prompted by the massive tremor.  We may know more once synthetic aperture radar (SAR) imagery becomes available to potentially plot the epicenter of all of the surface disturbances.

Imagery from September 8 also shows a large tractor/trailer cargo truck in the South Portal Area for the first time, and mining carts and other equipment are present outside the West Portal. Such activity, coming shortly after the largest underground nuclear test conducted at Punggye-ri to date (via the North Portal), suggests that onsite work could now be changing focus to further prepare those other portals for future underground nuclear testing.

For the first time in over a year, activity was noted within the South Portal Area. A large tractor/trailer cargo truck was located in the area between the primary and secondary tunnel portals. The purpose of the vehicle is as yet unknown. It remains to be seen, however, whether or not the North Portal will ever be used for another nuclear test. There are still two unused additional tunnel complexes (served by the South and West Portals) that are also deemed potentially capable of conducting nuclear tests, albeit for tests having lower yields than that of the sixth test.

Read more here…

As North38 concludes, we also see no reason to alter our previous assessment that regardless of whether this most recent test was an operational warhead for an ICBM or simply a device, the yield of the test clearly shows North Korean progress in increasing the yields of their nuclear weapons.

The significance of this is that it has the potential to dramatically increase the threat posed by its Strategic Force(responsible for ballistic missiles) as individual nuclear warheads potentially now have 10-times (or more) greater destructive power. This would allow fewer missiles to be employed to ensure destruction of a given target, and increase the target areas threatened by North Korean ICBMs by allowing a larger number of targets to be engaged with the current missile inventory. If the claim that the device just tested has a variable yield is true (from tens to hundreds of kilotons), then this may also imply the North Koreans intend to adopt an expanded policy of using nuclear weapons, including tactical use, in addition to deterring threats to existence of the state. By doing so, they would join countries such as the United States, Russia, China, Pakistan, etc. that have policies regarding the use of tactical nuclear weapons, clearly further destabilizing the Korean peninsula situation.

END

b) REPORT ON JAPAN

 

c) REPORT ON CHINA

Big misses on 3 important Chinese data points;

i. Retail sales

2 Fixed asset investment

3. Industrial production

all missed and shows that the Chinese economy is faltering

(courtesy zero hedge)

Chinese Economic Data Misses Across The Board As Credit Impulse Slump Kicks In

The brief encounter with a ‘recovery’ that China’s economic data enjoyed in the first half of 2017 has evaporated as the reality of a collapsing credit impulse strikes across the board. Retail Sales, Fixed Asset Investment, and Industrial Production all missed expectations  and slowed dramatically.

Tonight’s big China data dump to ignore includes:

  • Retail Sales +10.1% YoY (+10.5% exp), well below July’s 10.4% gain
  • Fixed Asset Investment +7.8% YoY (+8.2% exp), well below July’s 8.3% rise
  • Industrial Production +6.0% YoY (+6.6% exp), drastically weaker than July’s 6.4% gain

The first half bounce is officially dead…

 

China’s macro data disappointments are just beginning…

 

In fact China’s credit impulse is the worst in the world…

Yuan continues to tumble (3rd day in a row of weaker fix)…

Is China back in the currency war game now that credit is no longer holding up the economy?

end

The pound surges and markets start to falter when the Bank of England warns that they will have some withdrawal of stimulus

(courtesy zero hedge)

Pound Surges After BOE Keeps Rates Unchanged, Warns “Some Withdrawal Of Stimulus Is Likely”

As expected, the BOE kept its interest rate unchanged at 0.25%, in a 7-2 vote, while maintaining the rest of its bond monetization programs in line in a 9-0 vote.

MPC holds  at 0.25%, maintains government bond purchases at £435bn and corporate bond purchases at £10bn.

After an initial kneejerk reaction lower, GBPUSD has surged as traders digest the hawkish addition of language by the BOE that “some withdrawal of monetary stimulus is likely to be appropriate over the coming months in order to return inflation sustainably to target.”

Some further hawkish details in the statement:

All MPC members continue to judge that, if the economy follows a path broadly consistent with the August Inflation Report central projection, then monetary policy could need to be tightened by a somewhat greater extent over the forecast period than current market expectations.  A majority of MPC members judge that, if the economy continues to follow a path consistent with the prospect of a continued erosion of slack and a gradual rise in underlying inflationary pressure then, with the further lessening in the trade-off that this would imply, some withdrawal of monetary stimulus is likely to be appropriate over the coming months in order to return inflation sustainably to target.  All members agree that any prospective increases in Bank Rate would be expected to be at a gradual pace and to a limited extent.

As a result, the GBPUSD is higher by nearly 100 pips on the news, while Gilt futures have tumbled to session lows on the surprisingly hawkish tone out of the central bank

And as cable surge, the natural reaction is for stocks to drop, and sure enough, the FTSE 100 has dropped 0.4%, erasing gains of as much as 0.2% as sterling spike as high as 1.3307.

Some additional comments from the BOE:

The impact of Brexit on GBP:

The circumstances since the referendum on EU membership, and the accompanying depreciation of sterling, have been exceptional.  Monetary policy cannot prevent either the necessary real adjustment as the United Kingdom moves towards its new international trading arrangements or the weaker real income growth that is likely to accompany that adjustment over the next few years.  The MPC’s remit specifies that, in such exceptional circumstances, the Committee must balance any trade-off between the speed at which it intends to return inflation sustainably to the target and the support that monetary policy provides to jobs and activity.  Recent developments suggest that remaining spare capacity in the economy is being absorbed a little more rapidly than expected at the time of the August Report, and that inflation remains likely to overshoot the 2% target over the next three years.

On the US economy:

Since the August Report, the relatively limited news on activity points, if anything, to a slightly stronger picture than anticipated.  GDP rose by 0.3% in the second quarter, as expected in the MPC’s August projections, although initial estimates of private final demand were softer than anticipated.  The unemployment rate has continued to decline, to 4.3%, its lowest in over 40 years and a little lower than forecast in August.  Survey indicators are consistent with continued strength in employment growth.  Evidence continues to accumulate that the rate of potential supply growth has slowed in recent years.  Overall, the latest indicators are consistent with UK demand growing a little in excess of this diminished rate of potential supply growth, and the continued erosion of what is now a fairly limited degree of spare capacity.  Underlying pay growth has shown some signs of recovery, albeit remaining modest

Pound impact on inflation:

The sterling exchange rate has been volatile and the price of oil has increased.  Headline and core CPI inflation in August were slightly higher than anticipated.  Twelve-month CPI inflation rose to 2.9% and is now expected to rise to above 3% in October.

As Bloomberg summarizes the move, the pound has rallied as the potential BOE tightening overshadows today’s expected decision: “Since U.K. CPI data Tuesday, market priced in higher probability that Chief Economist Andy Haldane would join the hawkish camp and move the MPC vote to 6-3; thus initially cable dropped to as low as 1.3155” however now, “Market focus turned to BOE’s guidance that “some withdrawal of monetary stimulus was likely to be appropriate over the coming months in order to return inflation sustainably to target,” pushing the pound higher.

 

 

end

 

The pound surges to one year high after Carney is expecting tighter policy.  We have seen this jawboning before

(courtesy zero hedge)

Pound Surges To One Year High After Carney Says He Is “Among Majority” Expecting Tighter Policy

Having surged earlier in the day following an unexpectedly hawkish BOE statement, moments ago GBPUSD jumped to fresh session highs after BOE Governor Mark Carney said the pound’s decline is boosting prices, and added that he’s among the majority of MPC with view that policy may need to be tightened in coming months.  Some other comments:

  • CARNEY SAYS HE SEES SHIFT IN BALANCING ACT FOR BOE
  • CARNEY SAYS WE WILL TAKE DECISION ON RATES BASED ON DATA
  • CARNEY SAYS POSSIBILITY OF A RATE HIKE HAS DEFINITELY INCREASED
  • CARNEY SAYS TALKING ABOUT A MODEST ADJUSTMENT IN INTEREST RATES

The jawboning, which in typical central banker fashion was not accompanied by any action, sent cable to session highs just shy of 1.3400…

… and the highest since last September.

Adding to the urgency, is a note from Goldman in which the bank has revised its call, and instead of seeking a first rate hike in Q4 2018, Goldman now expects it to take place in November. The full note:

European Views: BoE — on hold, but greater urgency in its tightening bias. We change our call to a November hike

  • The BoE’s MPC voted 7-2 to leave Bank Rate unchanged (at 0.25%) at its September policy meeting. Mr McCafferty and Mr Saunders continued to vote for an immediate rate increase.
  • All MPC members agreed that “monetary policy could need to be tightened by a somewhat greater extent over the forecast period than current market expectations”. But in a key hawkish development relative to what we expected, “a majority of MPC members” signalled that they have a bias towards tightening policy “over the coming months”.
  • The bias to tighten policy in coming months is based on “the prospect of a continued erosion of slack and a gradual rise in underlying inflationary pressure”. It would require some downside news to discourage the MPC from raising rates in coming months.
  • We change our call to expect a 25bp rate rise in November, rather than a first rate rise in 2018Q4. We do not change our fundamental outlook for the UK economy. We view today’s communication as hawkish news on the BoE’s reaction in the face of a broadly unchanged outlook. After November, we expect the next subsequent rate rise in 2018Q4.

In parting we will just say that the BOE has been here many times before, with Carney warning of imminent rate hikes as far back as 2014. We are still waiting…

5. RUSSIA AND MIDDLE EASTERN AFFAIRS

6 .GLOBAL ISSUES

END

7. OIL ISSUES

 WTI rises above 50 dollars but gasoline falters as demand is ripped apart due to the hurricanes  (less driving vehicles)
(courtesy zero hedge)

WTI Crude Tops $50, Breaks Above Key Technical Level

For the first time since August 10th, WTI crude is trading back above $50 (following the biggest crude inventory build in 6 months and a rebound in production last week).

The gains seem driven by refinery restarts and increased IEA/OPEC demand forecasts, and improved OPEC production cut compliance. This move also follows China’s lowest crude output since 2009 (amid dismal economic data).

The good news (for now) is that RBOB prices are continuing to slide as refiners and pipelines come back on line after Harvey.

WTI also broke above a key technical level…

“It seems like it’s driven by WTI, with prices above their 200-day moving average,” UBS analyst Giovanni Staunovo says of price increase

8. EMERGING MARKET

VENEZUELA

We brought you this story yesterday and it is of no surprise:  Venezuela stops accepting dollars for oil payments. They will accept yuan or euros

(courtesy zerohedge)

De-Dollarization Spikes – Venezuela Stops Accepting Dollars For Oil Payments

Did the doomsday clock on the petrodollar (and implicitly US hegemony) just tick one more minute closer to midnight?

Source: The Burning Platform

Apparently confirming what President Maduro had warned following the recent US sanctions, The Wall Street Journal reports that Venezuela has officially stopped accepting US Dollars as payment for its crude oil exports.

As we previously noted, Venezuelan President Nicolas Maduro said last Thursday that Venezuela will be looking to “free” itself from the U.S. dollar next week. According to Reuters,

“Venezuela is going to implement a new system of international payments and will create a basket of currencies to free us from the dollar,” Maduro said in a multi-hour address to a new legislative “superbody.” He reportedly did not provide details of this new proposal.

Maduro hinted further that the South American country would look to using the yuan instead, among other currencies.

“If they pursue us with the dollar, we’ll use the Russian ruble, the yuan, yen, the Indian rupee, the euro,” Maduro also said.

*  *  *

And today, as The Wall Street Journal reports, in an effort to circumvent U.S. sanctions, Venezuela is telling oil traders that it will no longer receive or send payments in dollars, people familiar with the new policy said.

Oil traders who export Venezuelan crude or import oil products into the country have begun converting their invoices to euros.

 

The state oil company Petróleos de Venezuela SA, known as PdVSA, has told its private joint venture partners to open accounts in euros and to convert existing cash holdings into Europe’s main currency, said one project partner.

 

The new payment policy hasn’t been publicly announced, but Vice President Tareck El Aissami, who has been blacklisted by the U.S., said Friday, “To fight against the economic blockade there will be a basket of currencies to liberate us from the dollar.

There is no major market reaction for now – a modest bid to Bitcoin and some weakness in EUR and Gold (seems someone wants this to look like nothing).

However, as Nomura debt analyst Siobhan Morden warns:

“You can say whatever you want for your domestic propaganda and make it look like you’re retaliating against the U.S…. This political posturing will only be to their detriment.”

So what happens if Europe also sanctions Venezuela? Will Rubles or Yuan… or Gold be the only way to buy Venezuela’s oil?

*  *  *

This decision by the nation with the world’s largest proven oil reserves comes just days after China and Russia unveiled the latest Oil/Yuan/Gold triad at the latest BRICS conference.

It’s when President Putin starts talking that the BRICS reveal their true bombshell. Geopolitically and geo-economically, Putin’s emphasis is on a “fair multipolar world”, and “against protectionism and new barriers in global trade.” The message is straight to the point.

“Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies. We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.”

“To overcome the excessive domination of the limited number of reserve currencies” is the politest way of stating what the BRICS have been discussing for years now; how to bypass the US dollar, as well as the petrodollar.

Beijing is ready to step up the game. Soon China will launch a crude oil futures contract priced in yuan and convertible into gold.

This means that Russia – as well as Iran, the other key node of Eurasia integration – may bypass US sanctions by trading energy in their own currencies, or in yuan.

Inbuilt in the move is a true Chinese win-win; the yuan will be fully convertible into gold on both the Shanghai and Hong Kong exchanges.

The new triad of oil, yuan and gold is actually a win-win-win. No problem at all if energy providers prefer to be paid in physical gold instead of yuan. The key message is the US dollar being bypassed.

RC – via the Russian Central Bank and the People’s Bank of China – have been developing ruble-yuan swaps for quite a while now.

Once that moves beyond the BRICS to aspiring “BRICS Plus” members and then all across the Global South, Washington’s reaction is bound to be nuclear (hopefully, not literally).

Washington’s strategic doctrine rules RC should not be allowed by any means to be preponderant along the Eurasian landmass. Yet what the BRICS have in store geo-economically does not concern only Eurasia – but the whole Global South.

Sections of the War Party in Washington bent on instrumentalizing  India against China – or against RC – may be in for a rude awakening. As much as the BRICS may be currently facing varied waves of economic turmoil, the daring long-term road map, way beyond the Xiamen Declaration, is very much in place.

*  *  *

Having threatened China today with exclusion from SWIFT, we suspect Washington is rapidly running out of any great ally to sustain the petrodollar-driven hegemony (and implicitly its war machine). Cue the calls for a Venezuelan invasion in 3…2..1…!

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   1.1901 UP .0013/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 mostly IN THE RED EXCEPT LONDON 

USA/JAPAN YEN 110.43 DOWN 0.051(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 1.3235 UP .0028 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED

THERESA MAY FORMS A NEW GOVERNMENT/STARTS BREXIT TALKS

USA/CAN 1.2179 DOWN .0012 (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 ROSE by 13 basis points, trading now ABOVE the important 1.08 level  RISING to 1.1901; / Last night the Shanghai composite CLOSED  DOWN 12.72 POINTS OR 0.38%     / Hang Sang  CLOSED  DOWN 116.88 POINTS OR 0.42% /AUSTRALIA  CLOSED DOWN 0.10% / EUROPEAN BOURSES OPENED  MOSTLY IN THE RED (EXCEPT LONDON)

The NIKKEI: this THURSDAY morning CLOSED DOWN 58.38 POINTS OR 0.29%

Trading from Europe and Asia:
1. Europe stocks  OPENED  MOSTLY THE RED 

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 116.88 POINTS OR 0.42%  / SHANGHAI CLOSED DOWN 12.72 POINTS OR 0.38%   /Australia BOURSE CLOSED DOWN 0.10% /Nikkei (Japan)CLOSED DOWN 58.38 POINTS OR 0.29%   / INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: 1324.15

silver:$17.72

Early THURSDAY morning USA 10 year bond yield:  2.190% !!! DOWN 0   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  2.794, DOWN 0 IN BASIS POINTS  from WEDNESDAY night.

USA dollar index early THURSDAY morning: 92.34 DOWN 18  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: 2.814% DOWN 1/2 in basis point(s) yield from WEDNESDAY 

JAPANESE BOND YIELD: +.05%  UP  1 & 1/2  in   basis point yield from WEDNESDAY/JAPAN losing control of its yield curve/

SPANISH 10 YR BOND YIELD: 1.602% up 2  IN basis point yield from WEDNESDAY 

ITALIAN 10 YR BOND YIELD: 2.059 UP 2 POINTS  in basis point yield from WEDNESDAY 

the Italian 10 yr bond yield is trading 46 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.413% UP 1  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 1.1877 DOWN .0011 (Euro DOWN 11 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 110.71 UP 0.214(Yen DOWN 21  basis points/ 

Great Britain/USA 1.3390 UP  0.0184( POUND UP 184 BASIS POINTS)

USA/Canada 1.2212 UP .0042 (Canadian dollar DOWN 42 basis points AS OIL ROSE TO $50.12

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This afternoon, the Euro was DOWN  by 11 basis points to trade at 1.1877

The Yen FELL to 110.71 for a LOSS of 21  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  

The POUND ROSE BY 184  basis points, trading at 1.3390/ 

The Canadian dollar FELL by 42 basis points to 1.2212,  WITH WTI OIL RISING TO :  $50.12

The USA/Yuan closed at 6.5560/
the 10 yr Japanese bond yield closed at +.050%  UP 1 & 1/2 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 1  IN basis points from WEDNESDAY at 2.192% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.792 UP  1  in basis points on the day /

Your closing USA dollar index, 92.28  DOWN 24 CENT(S)  ON THE DAY/1.00 PM/BREAKS RESISTANCE OF 92.00 

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 DOWN  84.31 POINTS OR 1.14%
German Dax :CLOSED DOWN 13.12 POINTS OR 0.10%
Paris Cac  CLOSED UP 7.61 POINTS OR 0.15% 
Spain IBEX CLOSED DOWN 9.90 POINTS OR 0.10%

Italian MIB: CLOSED UP 47.84 POINTS OR 0.22% 

The Dow closed UP 45.30 OR 0.20%

NASDAQ WAS closed DOWN 31.10  POINTS OR 0.48%  4.00 PM EST

WTI Oil price;  50.12  1:00 pm; 

Brent Oil: 55.69 1:00 EST

USA /RUSSIAN ROUBLE CROSS:  57.52 DOWN 42/100 ROUBLES/DOLLAR (ROUBLE HIGHER BY 42 BASIS PTS)

TODAY THE GERMAN YIELD RISES TO  +0.402%  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:$49.73

BRENT: $55.23

USA 10 YR BOND YIELD: 2.1883%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.7692%

EURO/USA DOLLAR CROSS:  1.1906 UP .0019

USA/JAPANESE YEN:110.39  DOWN  0.094

USA DOLLAR INDEX: 92.14  DOWN 38  cent(s)/

The British pound at 5 pm: Great Britain Pound/USA: 1.3398 : UP 192 POINTS FROM LAST NIGHT  

Canadian dollar: 1.2176 down 9 BASIS pts 

German 10 yr bond yield at 5 pm: +0.413%

END

 

HUMOUR STORY OF THE DAY

Leaked White House Memo Reveals McMaster’s Plan To Crackdown On White House Leaks

In perhaps the most ironic story of the week (so far), a leaked White House memo to Buzzfeed News reveals that National security advisor H.R. McMaster urged senior government officials to warn agency employees against leaks of both classified and unclassified information.

“For those with access to classified information, a review of the non-disclosure agreement reminds us of the responsibilities that come with access to, and penalties for unauthorized disclosure of, classified information,” the memo, which BuzzFeed obtained and posted, reads.

 

“However, it is equally important to discuss the importance of protecting controlled unclassified and personally identifiable information from unauthorized public disclosure.”

As The Hill details,McMaster in the memo said the disclosing classified and some unclassified information “causes harm to our Nation and shakes the confidence of the American people.”

 “In this era of unprecedented unauthorized disclosures, it is important to take time to review with your workforce their roles and responsibilities in safeguarding United States Government information,” the memo reads.

Coming just days after a leaked memo from Attorney General Jeff Sessions suggested the use of lie detector tests across a wide swathe of staff to root-out leakers, McMasters’ memo leak suggests The White House is still struggling with containment.

\

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

TRADING IN GRAPH FORM FOR THE DAY

Bitcoin Bloodbaths, Tech Stocks Tumble After Dismal China Data, Korea Concerns

 

Dismal China data, 3 North Korea “prepping missiles” headlines and a North Korean “threat” headline – probably nothing…

 

Chinese economic data plunged overnight – the biggest disappointment to market expectations in 6 months…

 

Of course, US equity traders bought the fucking dip at the open into the European close, but were disappointed that yesterday’s panic bid never showed up…

 

The Dow was the only major index to close higher today with Nasdaq worst…

 

 

FANG Stocks tumbled after 3 straight up days… (NOTE that the BTFDers were there again at the open)

 

Yesterday’s high volume panic-buying extravaganza at the close in AAPL did not show up this time…

 

Financials managed to tag their 50DMA but ended back below it…

 

Equifax bonds crashed to record lows today…

 

North Korean headlines drove gold and USDJPY traders crazy today…

 

Copper’s drop and Gold’s gains are catching down to Treasury’s concerns…

 

Treasury yields ended the day mixed with 30Y 1bps lower and the rest of the curve 1-2bps higher… still an ugly week though!

 

30Y yield ended back below the pre-H-Bomb test levels…

 

The Dollar Index drifted lower today after 3 days up… (NOTE it tagged the pre-payrolls level after CPI and dumped)

 

Meanwhile, Cable spiked above 1.34 – the highest in over a year – after Carney hinted at rate hikes…

 

Bitcoin bloodbath’d today, now down 34% from record highs… BTC’s 14% crash (in USD terms) was the biggest since Jan 2015 (when China last tried to crack down on the virtual currency)…

Bitcoin is setting up for the worst 2-week drop since Dec 2013.

It seems hedgers are rotating back to precious metals…

 

Copper remains the week’s biggest loser as China’s lagged credit impulse starts to impact the real economy and fantasy speculation…

 

WTI Crude managed to get back above $50 (briefly) but rolled over after NYMEX close…

 

END

First the jobless claims:  The natural disaster is worse than man made Lehman

(courtesy zerohedge)

Harvey ‘Messed With Texas’

Judging by the explosion in jobless claims in Texas, it appears a ‘natural disaster’ is a bigger problem than a ‘man-made’ one…

We suspect this is not the “net positive” outcome that Fed officials believe Harvey to be…

 

Interestingly – this morning’s massive spike in shelter cost inflation wasdriven by the biggest jump in Shelter costs in Texas!!

Which presumably makes sense amid the destruction of so many homes (supply).

Let’s just hope – for Texas-sake – this is transitory too.

end

 

 

August sees USA consumer prices surging with energy costs and shelter costs spiking.  However it is wage inflation that the Fed wants/see below 2nd article)

(courtesy zero hedge)

August Consumer Prices Surge As Shelter Costs Spike Most Since 2005

After disappointing (for The Fed’s inflationistas) producer prices growth yesterday, consumer prices jumped 0.4% MoM in August – the biggest spike since January. Gains were driven by soaring energy costs (offset by a big decline in vehicle prices).

 

Year over Year, CPI remains below The Fed’s mandat at +1.9% but that is hotter than expected and the highest since April..

 

As the breakdown shows, the gains were largely driven by rising energy and shelter costs (and note that vehicle prices are tumbling)

The motor vehicle insurance index continued to rise, increasing 1.0 percent in August. The recreation index also increased in August, rising 0.2 percent. The medical care index rose 0.1 percent in August. The index for physicians’ services advanced 0.4 percent, and the hospital services index increased 0.2 percent. The apparel index rose 0.1 percent in August, as did the indexes for alcoholic beverages and for household furnishings and operations. The index for new vehicles was unchanged in August after declining in July.

The index for airline fares, which rose 0.7 percent in July, fell 1.0 percent in August. The index for used cars and trucks continued to decline, falling 0.2 percent. The indexes for tobacco, for education, for wireless telephone services, and for personal care all declined 0.1 percent over the month

And in core inflation, the shelter index was the main contributor to the rise, increasing 0.5 percent, its largest increase since October 2005.

The rent index increased 0.4 percent, and the index for owners’ equivalent rent rose 0.3 percent. The index for lodging away from home rose sharply, increasing 4.4 percent after decreasing 4.2 percent in July.

  • Rent Inflation+3.9% YoY
  • Shelter inflation +3.3% YoY

So great news – the cost to drive and to have a roof over your head just surged!

Still absent Food, Energy, and Shelter, consumer prices in America are rising at almost the slowest rate on record…

 

The market is confused…

(courtesy zerohedge)

Despite ‘Hope’ For Higher Incomes, Real Wage Growth Plunges In August

Hope‘ for higher incomes is not working…

Real hourly earnings plounged 0.6% in August – not exactly what Americans were ‘hoping’ for.

 

Especially as the costs of shelter jumped most since 2005!!

Probably transitory!

end

Perhaps the most important data point is retail sales and that is a figure that will influence the Fed. Bank of America reports on debit and credit card debt will show no doubt disappointing retail sales tomorrow

 

(courtesy zero hedge)

Three Reasons Why Retail Sales Are About To Disappoint Bigly

On Friday the Department of Commerce will report August retail sales, a material report which all else equal, may influence whether the Fed proceeds with its plans to unveil balance sheet tapering in its upcoming FOMC meeting. However, as we discussed last week, the report, together with virtually all other high frequency economic reports, will be materially distorted by the destructive aftermath of hurricane Harvey (Irma’s impact will be felt in the September retail report).

While Goldman recently showed the historical impact of hurricanes and other natural disasters on virtually every economic data series…

… of particular interest in the coming days will be the biggest driver behind the US economy, namely retail spending, and specifically whether the recent natural disasters led to a sharp – and potentially sustained – slump. According to internal Bank of America credit and debit card spending data released as usual just days ahead of the official government report, there does appears to be a substantial adverse impact. The question is how much of this is secular, and how much is a continuation of recent weakness in retail spending. Further complicating matters is a seasonal quirk, with the August spending report coming at the peak “back to school” spending period, coupled with the recent Amazon Prime Day which led to further distortions in retail spending patterns.

As BofA’s Michelle Meyer calculates, retail sales ex-autos, as measured by BAC aggregated credit and debit card datadeclined 0.1% mom seasonally adjusted in August, leaving the 3-month moving average tracking flat for the month. Consumers shifted spending to gasoline stations, which were up strongly in the month, owing in part to Hurricane Harvey.

After controlling for the increase in gasoline spending, retail sales ex-autos and gasoline declined 0.4%: one of the sharpest declines YTD, and a confirmation of the continuing divergence between BofA (blue line) which has hugged the flatline in recent months, and official government data, which while week, has demonstrated modest Y/Y growth.

According to Bank of America, there are three key factors influencing the data this month:

  1. Hurricane Harvey;
  2. the pull-forward of retail spending into July by Amazon Prime Day; and
  3. back-to-school shopping.

In an attempt to isolate the influence of Hurricane Harvey which made Texas landfall on August 25, BofA first examined daily spending in Texas which shows that spending picked up in the days heading into the hurricane but remained depressed through the event and in the days after, as one would expect.

Meyer explains:

We estimate that the net reduction of spending in Texas sliced 0.1-0.2pp from the monthly growth rate of total retail sales ex-autos in August. We then dug deeper and looked at the impact by the type of spend which reveals that necessary items (food and gasoline) increased in the month while more discretionary items declined (Chart 2). We also measured spending by major region in Texas (MSAs) which shows significant decline in Houston but continued growth in regions not hit by Harvey (Chart 3)

The charts below provide further evidence that Harvey caused a net drag to spending in the areas hit directly. In contrast, there was trend-like growth in MSAs in Texas which were not directly impacted by Harvey.

However, it wasn’t just Harvey explaining the sharp drop in ex-gasoline sales. In addition to the adverse reginal impact from Harvey, August retail sales were also likely held
back by the strong success of Amazon Prime-day in July. BofA data shows that Prime Day pulled forward activity from August into July.

Finally, and perhaps most concerning, the third indication that retail sales are set to disappoint, BofA writes that while it did not find much of a story for the back-to-school season, its proxy for back-to-school sales showed growth of just 2.4% yoy, down more than 50% the 5.4% yoy pace last year.

This is a problem because according to the National Retail Federation’s annual survey, families were projected to spend approximately $29.5bn on back-to-school items which would translate to an 8% yoy increase from the prior year’s spending plans. Unfortunately, those spending plans have not translated to actual spending as expectations have once again overshot spending patterns as they did in 2011 and 2012 but were below in 2013-2015.

Finally, broken down by category, BofA finds that on a % mom basis, consumer spending declined in most categories in August with only food and beverage, gasoline stations and cruise showing an increase. As noted above, spending on food and beverage and gasoline stations likely saw a boost due to Hurricane Harvey as households stocked up on essentials.

BofA’s Bottom line: the weakness in August retail sales, already expected to come in at near stall-speed levels, is likely exaggerated by the hurricane and July prime-day.

The good news is that while Hurricane Irma may depress spending in September, retail sales typically bounce back after a natural disaster, suggesting upside into 4Q. Unless, of course, it forces an even greater decline in spending, as the following charts showing the secular decline in retail sales indicate.

Contrary to earlier reports there was no deal last night between the Democrats and Trump on DACA and the “Wall:

(courtesy zero hedge)

Trump: “No Deal Was Made Last Night On DACA… The Wall Will Be Built”

As we reported late last night, there was ample confusion after the end of Schumer and Pelosi’s dinner with Donald Trump at the White House, when the top Democrats issued a statement according to which Trump had agreed to a deal on DACA in exchange to border security, but no wall, to wit: “We had a very productive meeting at the White House with the President. The discussion focused on DACA. We agreed to enshrine the protections of DACA into law quickly, and to work out a package of border security, excluding the wall, that’s acceptable to both sides. ” No sooner had this statement hit the tape however, before the White House press secretary Sarah Sanders immediately denied that this had happened: “While DACA and border security were both discussed, excluding the wall was certainly not agreed to”, while White House legal affairs director Marc Short said the Dems’ DACA statement was “misleading,” and said no deal on DACA or border wall $$ was reached tonight.

Unable to reconcile this glaring confusion, we said “Or, in other words, deal but no deal at the same time. Hopefully by tomorrow morning someone will know what really happened.

Well, tomorrow has arrived and that someone appears to be president Trump himself, who moments ago tweeted that “No deal was made last night on DACA. Massive border security would have to be agreed to in exchange for consent. Would be subject to vote.”

No deal was made last night on DACA. Massive border security would have to be agreed to in exchange for consent. Would be subject to vote.

He then asked rhetorically, “Does anybody really want to throw out good, educated and accomplished young people who have jobs, some serving in the military? Really!…..”

Does anybody really want to throw out good, educated and accomplished young people who have jobs, some serving in the military? Really!…..

And just to confirm his position on “the WALL” Trump shot down any speculation that he is conceding on this issue: “The WALL, which is already under construction in the form of new renovation of old and existing fences and walls, will continue to be built.

The WALL, which is already under construction in the form of new renovation of old and existing fences and walls, will continue to be built.

And as we await the response from the top Democrats, who now appear to have put optics and politics ahead of an issue which they claim to care so deeply about, we wonder if this confusion is not indicative of certain problems facing Trump as he continues to pivot away from Republicans and toward Democrats, and whether the tax reform momentum may not have stalled materially as a result.

end

however he destroyed his base…

(courtesy zerohedge)

Right “Explodes In Anger” Over Trump’s New Immigration Push

Trump’s base woke up to a fairly surprising flip-flop this morning from the White House on DACA and the infamous, beautiful border wall which was discussed repeatedly on the campaign trail throughout 2016.  It all started when Chuck Schumer and Nancy Pelosi released the following statement after their White House dinner with the President last night:

“We had a very productive meeting at the White House with the President. The discussion focused on DACA. We agreed to enshrine the protections of DACA into law quickly, and to work out a package of border security, excluding the wall, that’s acceptable to both sides.”

That statement was followed up by a tweet storm (we covered it here) from the President this morning which seemingly revealed his complete support for DACA and referred to ‘The Wall’ as a “renovation of old and existing fences and walls” rather than the “physically imposing” yet “aesthetically pleasing” structure that he repeatedly promised his supporters.

The apparent flip flop by the President resulted in an immediate backlash from some of his most vocal supporters with Ann Coulter wondering aloud over twitter, “at this point, who DOESN’T want Trump impeached?”

 

Meanwhile, former Congressman and nationally syndicated radio host Joe Walsh blasted Trump for getting “screwed by Chuck and Nancy.”

No wall.
DACA enshrined.

Trump didn’t make a deal w Chuck and Nancy. Trump got screwed by Chuck and Nancy.

Trump just screwed his base.

NONE of this is a surprise. I voted 4 Trump knowing he wasn’t a Conservative & knowing he had no core.

I voted 4 the wall & against amnesty

 

And, not surprisingly, Trump’s former Chief Strategist Steve Bannon took direct aim at the White House with a series of negative headlines.

Breitbart

Breitbart

 

So what say you?  Clever, calculated move by a President just looking for small policy achievements or did Trump just destroy his base and cement his fate as a one-term President?

end

 

Then Trump took to the airwaves on many subjects.  He insists on his wall as part of an immigration deal and he will veto any single payer health bill.

(courtesy zerohedge)

 

Trump “Insists On Wall” As Part Of Immigration Deal, Will “Veto Single Payer” Healthcare

On his return trip from Florida, President Trump spoke to reporters aboard Air Force 1 and the result was a burst of headlines, among which Trump’s comments on Yellen, whom he “respects”, the stock market which is “doing very well”, the border wall, which contrary to overnight speculation, Trump will insist on being part of the immigration deal, on Iran, “we are not going to stand for what they are doing”, about DACA, the recent hurricanes, which haven’t changed his mind on climate change, and finally on “white supremacists, saying “we have some pretty bad dudes on the other side as well.”

Here are select headlines, on the wall, Mexico and hurricans:

  • TRUMP TELLS REPORTERS HE WILL INSIST ON WALL AT SOUTHERN BORDER AS PART OF IMMIGRATION DEAL: “THEY CAN’T OBSTRUCT THE WALL”
  • TRUMP SAYS SPOKE WITH MEXICO’S PRESIDENT ABOUT EARTHQUAKE, HURRICANES
  • TRUMP: IRMA, HARVEY HAVEN’T CHANGED HIS MIND ON CLIMATE CHANGE

On Iran:

  • TRUMP SAYS IRAN IS VIOLATING “THE SPIRIT” OF IRAN NUCLEAR DEAL AND “WE ARE NOT GOING TO STAND FOR WHAT THEY ARE DOING”

On upcoming trips;

  • TRUMP SAYS WILL VISIT CHINA, JAPAN AND SOUTH KOREA IN NOVEMBER, BUT IS UNDECIDED ABOUT ATTENDING SUMMITS IN VIETNAM AND THE PHILIPPINES
  • TRUMP SAYS WILL VISIT U.S. VIRGIN ISLANDS, PUERTO RICO SOMETIME NEXT WEEK OR THE FOLLOWING WEEK TO SEE DAMAGE FROM HURRICANE IRMA

On Yellen and the stock market:

  • TRUMP SAYS HE RESPECTS YELLEN, SAYS “THE STOCK MARKET IS DOING VERY WELL”

On DACA

  • TRUMP SAYS HE’S NOT WORRIED ABOUT REPUBLICAN REACTION ON DACA
  • MANY REPUBLICANS LIKE IT,’ TRUMP TELLS REPORTERS OF DACA

On taxes:

  • TRUMP SAYS TAX REFORM WILL BE REVENUE NEUTRAL IF ECONOMIC GROWTH IS TAKEN INTO ACCOUNT

Trump decided to double down and told reporters he and Tim Scott discussed white supremacists and “we have some pretty bad dudes on the other side as well.”

Trump tells reporters on AF1 he and Tim Scott discussed white supremacists and “we have some pretty bad dudes on the other side as well.”

  • TRUMP: YOU HAVE SOME VERY BAD PEOPLE ON OTHER SIDE

And on Antifa: “You look at what’s happened since Charlottesville, a lot of people are saying… ‘Gee, Trump might have a point.'””

TRUMP re Antifa: “You look at what’s happened since Charlottesville, a lot of people are saying… ‘Gee, Trump might have a point.'”

Perhaps now that Trump is friendlier with the Dems than GOP, the media will let that particular comment slide.

Finally, Trump also tweeted that he would veto any single payer law that reaches his desk.

Bernie Sanders is pushing hard for a single payer healthcare plan – a curse on the U.S. & its people…

…I told Republicans to approve healthcare fast or this would happen. But don’t worry, I will veto because I love our country & its people.

end

 

 

We now have the discovery of another Democratic “secret server” and that may have prompted Awan’s firing

the story is getting better by the day

(courtesy zero hedge)

Discovery Of Another Democratic “Secret Server” May Have Prompted Imran Awan’s Firing, Report

The mysterious case of Imran Awan, Debbie Wasserman Schultz’s now indicted former IT staffer, continues to grow more interesting by the day.  As we’ve noted before, Awan and his wife, Hina Alvi, have so far only been charged with bank fraud and conspiracy though new allegations of wrongdoing seemingly surface on a daily basis.

Now, the latest revelation comes via an exclusive report from The Daily Caller which suggests that Awan may have been fired only after Capitol Police discovered a “secret server” being housed by the House Democratic Caucus.

A secret server is behind law enforcement’s decision to ban a former IT aide to Democratic Rep. Debbie Wasserman Schultz from the House network.

 

Now-indicted former congressional IT aide Imran Awan allegedly routed data from numerous House Democrats to a secret server. Police grew suspicious and requested a copy of the server early this year, but they were provided with an elaborate falsified image designed to hide the massive violations. The falsified image is what ultimately triggered their ban from the House network Feb. 2, according to a senior House official with direct knowledge of the investigation.

 

The secret server was connected to the House Democratic Caucus, an organization chaired by then-Rep. Xavier Becerra. Police informed Becerra that the server was the subject of an investigation and requested a copy of it. Authorities considered the false image they received to be interference in a criminal investigation, the senior official said.

 

Data was also backed up to Dropbox in huge quantities, the official said. Congressional offices are prohibited from using Dropbox, so an unofficial account was used, meaning Awan could have still had access to the data even though he was banned from the congressional network.

 

Awan had access to all emails and office computer files of 45 members of Congress who are listed below. Fear among members that Awan could release embarrassing information if they cooperated with prosecutors could explain why the Democrats have refused to acknowledge the cybersecurity breach publicly or criticize the suspects.

DWS

 

According to the DC, the “secret server” was discovered when California Congressman, and chair of the House Democratic Caucus, Xavier Becerra asked to have his server wiped clean (you know, like with a cloth) in advance of his departure to take his new seat as Attorney General of California.

On Jan. 24, 2017, Becerra vacated his congressional seat to become California’s attorney general. “He wanted to wipe his server, and we brought to his attention it was under investigation. The light-off was we asked for an image of the server, and they deliberately turned over a fake server,” the senior official said.

 

“They were using the House Democratic Caucus as their central service warehouse … It was a breach. The data was completely out of [the members’] possession. Does it mean it was sold to the Russians? I don’t know,” the senior official said.

 

Capitol Police considered the image a sign that the Awans knew exactly what they were doing and were going to great lengths to try to cover it up, the senior official said. The House Sergeant-at-Arms banned them from the network as a result.

 

The senior official said the data was also funneled offsite via a Dropbox account, from which copies could easily be downloaded. Authorities could not immediately shut down the account when the Awans were banned from the network because it was not an official account.

 

“For members to say their data was not compromised is simply inaccurate. They had access to all the data including all emails. Imran Awan is the walking example of an insider threat, a criminal actor who had access to everything,” the senior official said.

Meanwhile, these latest allegations come after Congressman Trent Franks (R-AZ) appeared on Fox News yesterday to share his prediction that the Awans could be working on a broader immunity deal with prosecutors in return for a “significant” and “pretty disturbing” story about Debbie Wasserman Schultz.

“I don’t want to talk out of school here but I think you’re going to see some revelations that are going to be pretty profound.  The fact that this wife is coming back from Pakistan and is willing to face charges, as it were, I think there is a good chance she is going to reach some type of immunity to tell a larger story here that is going to be pretty disturbing to the American people.”

 

“I would just predict that this is going to be a very significant story and people should fasten their seat belts on this one.”

 

This all follows speculation that surfaced last week suggesting that even if the Awans were originally acting to protect/extort Debbie Wasserman Schultz, that may have all changed on April 6, 2017 when Imran seemingly led U.S. Capitol Police directly to her laptop.  Per The Daily Caller:

A laptop that Rep. Debbie Wasserman Schultz has frantically fought to keep prosecutors from examining may have been planted for police to find by her since-indicted staffer, Imran Awan, along with a letter to the U.S. Attorney.

 

U.S. Capitol Police found the laptop after midnight April 6, 2017, in a tiny room that formerly served as a phone booth in the Rayburn House Office Building, according to a Capitol Police report reviewed by The Daily Caller News Foundation’s Investigative Group. Alongside the laptop were a Pakistani ID card, copies of Awan’s driver’s license and congressional ID badge, and letters to the U.S. attorney. Police also found notes in a composition notebook marked “attorney-client privilege.”

 

The laptop had the username “RepDWS,” even though the Florida Democrat and former Democratic National Committee chairman previously said it was Awan’s computer and that she had never even seen it.

 

The laptop was found on the second floor of the Rayburn building — a place Awan would have had no reason to go because Wasserman Schultz’s office is in the Longworth building and the other members who employed him had fired him.

Of course, we’re certain this is just more attempts to “criminalize behavior that is normal.”

end

Equifax Bonds Crash As FTC Confirms Investigation Into Massive Hack

 The Federal trade Commission has launched an investigation into the Equifax breach that has left sensitive information on 143 million Americans exposed to hackers.
Equifax bonds crashed on the news
(courtesy zero hedge)

While not entirely surprising given the demands from politicians, The Hill reports that The Federal Trade Commission on Thursday announced that it had launched an investigation into the Equifax breach that left sensitive information for 143 million Americans exposed to hackers.

“The FTC typically does not comment on ongoing investigations,” FTC spokesman Peter Kaplan said in an email.

 

“However, in light of the intense public interest and the potential impact of this matter, I can confirm that FTC staff is investigating the Equifax data breach.”

It is extremely rare for the agency to publicly confirm an investigation.

As The Hill notes, Congress has also been scrutinizing the credit reporting agency. Multiple committees have announced hearings on the breach and on Wednesday the House Commerce Committee invited Equifax CEO Richard Smith to testify before on the company’s handling of the crisis.

While many have focused on the chaos in the company’s stock price, we note that Equifax bonds have collapsed (with no dead cat bounce) to record lows (record high yields)…

Although these two counties have a tiny public pension system, it is still deficient by a lot of money.  CALPERS has decided to slash the pension payments to retirees in these two California towns by more than 90%.  Again the pension system is nothing but a PONZI scheme.
(courtesy zerohedge)

CalPERS Slashes Pension Payments To Retirees In Two More California Towns By Up To 90%

While we’ve yet to experience any large municipal pension failures, which is just a matter of ‘when’ rather than ‘if’, the small pension failures sprinkled across the state of California are starting to pile up.  As The Sacremento Bee points out today, public workers in Trinity and Imperial counties are just the latest to have their pensions slashed by up to 90% as their cities admit what most of us have known for some time, namely that they’re running ponzi schemes which simply don’t have the funding required to payout the benefits they’ve promised.

Trinity County Waterworks District No. 1 west of Redding and Niland Sanitary District from Imperial County are in line to become the third and fourth government agencies to break with CalPERS over the past 12 months in a manner that shortchanges their retirees.

 

The CalPERS Board of Administration is scheduled next week to vote on ending contracts with the two small districts because they’re in default.

 

In Trinity, five current and former employees will see their promised pensions slashed by 70 percent. Niland’s five beneficiaries will see a 92 percent to 100 percent cut in pension benefits, according to CalPERS’ staff reports.

 

To fully fund their workers’ pensions, the two districts would have to muster up hefty termination fees. CalPERS asks for that money up front, and then moves the separating agency to a low-risk fund called the terminated agency pool.

 

CalPERS says Niland owes about $200,000 to cover the long-term costs of its employees’ pensions in the terminated agency pool, while Trinity owes some $1.6 million. Trinity has asked CalPERS for a 30-year, no-interest payment plan to cover the termination fee, but the district and the pension fund have not reached a deal, according to CalPERS.

Cali

 

Of course, as mentioned above, these pension cuts will impact a tiny number of retirees but that is all the more telling as elected officials are only willing to admit to their ponzi schemes in instances where the political carnage can be ‘managed’…certainly a handful of people here and there are ‘expendable.’

As you may recall, last October we wrote about the unfortunate situation in Loyalton, California whereby CalPERS was threatening to slash pension payments to a group of retired city workers after their City Council members failed to understand basic pension accounting and the unintended consequences of terminating their plan (see “Pension Benefits In Tiny California Town To Be Slashed As “Ponzi Scheme” Is Exposed“).  That was followed by retirees of the East San Gabriel Valley Human Services Consortium getting similar cuts after their former municipal employer failed to pay their pension dues.

But her former employer, East San Gabriel Valley Human Services Consortium, left a $406,027 unpaid bill to the California Public Employees’ Retirement System, which manages benefits for 3,000 local governments and districts. As Calpers, the nation’s largest public pension, deals with a growing gap between what’s been promised and what’s been set aside, it may slash the checks of Lynch and 190 other workers by 63 percent — the rate by which the agency has fallen short.

 

“We were always told that it was set in stone. Now to find out that’s not true — is the sky blue? Is water wet?” Lynch, who lives in a 1994 motor home, said of her pension. “We’ve paid 100 percent of our responsibility into it. I just don’t understand how they can come along and cut so much out.”

Of course, while they try to lay it off, CalPERS certainly deserves a healthy portion of the blame here as they’ve been willing participants in perpetuating one of the largest public pension ponzi schemes in the country for years now.  Just last December we noted CalPERS’ decision to only modestly decrease their discount rate by 50 bps, a move which their finance committee chairman all but admitted was politically motivated to allow “municipalities and other government agencies some breathing room” rather than lower it to where it should be and take the risk of bankrupting half of the state of California.  Here’s what we wrote:

A few weeks ago we asked whether CalPERS would rely on sound financial judgement and math to set their rate of return expectations going forward or whether they would cave to political pressure to maintain artificially high return hurdles that
they’ll never meet but help to maintain their ponzi scheme a little longer
 (see “CalPERS Weighs Pros/Cons Of Setting Reasonable Return Targets Vs. Maintaining Ponzi Scheme“).  The decision faced by CALPERS was whether their long-term assumed rate of return on assets should be lowered from the current 7.5% down to a more reasonable 6%.  Well, we now have our answer and it seems the board erred on the side of maintaining the ponzi with a decision to reduce the fund’s discount rate by only 50 bps, to 7%, to be phased in over 3 years.

 

Of course, this decision should come as little surprise to our readers as we concluded our previous post with the following prediction:

 

We’ve seen this battle between math/logic and politicians played out numerous times in states all across the country.  Somehow we suspect that “math/logic” will continue to lose…better to bury your head in the sand for a couple of more years and pretend there is no problem.

 

Meanwhile, Richard Costigan, chairman of the CalPERS finance committee, who owed that “this is just a start,” more or less admits that the decision was politically motivated to allow “municipalities and other government agencies some breathing room before they absorb the impact.”

Calpers

 

Of course, while CalPERS is the largest public pension in the U.S. it’s certainly not the worst off from a financial perspective (yes, we’re talking about you Illinois).  In fact, there is roughly $2 trillion in total underfunded state and local pension liabilities around the country.

Pension

 

That said, the situation looks even more dire if you adjust that underfunding amount to reflect an appropriate discount rate rather than the 7.5% “dream rate” that CalPERS and most of America’s other pension ponzis use.  In fact, we recently took a stab at calculating the real taxpayer liability outstanding to America’s public pensions and found it to be closer to $5 – $8 trillion (see “An Unsolvable Math Problem: Public Pensions Are Underfunded By As Much As $8 Trillion“).

We decided to take a look at what would happen if all federal, state and local pension plans decided to heed the advice of Mr. Gross. As one might suspect, the results are not pleasant.  We conservatively assume that public pensions are currently $2.0 trillion underfunded ($4.5 trillion of assets for $6.5 trillion of liabilities) even though we’ve seen estimates that suggest $3.5 trillion or more might be more appropriate.  We then adjusted the return on asset assumption down from the 7.5% used by most pensions to the 4.0% suggested by Mr. Gross and found that true public pension underfunding could be closer to $5.5 trillion, or over 2.5x more than current estimates.  Others have suggested that returns should be closer to risk-free rates which would imply an even more draconian $8.4 trillion underfunding.

 

 Pension Underfudning

But we can kick this can down the road for a while longer…so feel free to keep buying stocks irrespective of how close valuation multiples get to infinity.

end

that about does it for tonight

I will see you FRIDAY  night

Harvey.

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