GOLD: $1307.35 DOWN $14.05
Silver: $17.14 DOWN 50 CENT(S)
Closing access prices:
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: $1325.89 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $1319.40
PREMIUM FIRST FIX: $6.49
SECOND SHANGHAI GOLD FIX: $1319.20
NY GOLD PRICE AT THE EXACT SAME TIME: $1316.20
Premium of Shanghai 2nd fix/NY:$3.00
LONDON FIRST GOLD FIX: 5:30 am est $1314.40
NY PRICING AT THE EXACT SAME TIME: $1312.10
LONDON SECOND GOLD FIX 10 AM: $1312.10
NY PRICING AT THE EXACT SAME TIME. 1312.35
For comex gold:
NOTICES FILINGS TODAY FOR SEPT CONTRACT MONTH: 0 NOTICE(S) FOR nil OZ.
TOTAL NOTICES SO FAR: 54 FOR 5400 OZ (0.1679 TONNES)
198 NOTICES FILED TODAY FOR
Total number of notices filed so far this month: 5,677 for 28,385,000 oz
Let us have a look at the data for today
In silver, the total open interest SURPRISINGLY ROSE BY A RATHER LARGE 1217 contracts from 191,548 UP TO 192,765 DESPITE THE NASTY DROP IN PRICE THAT SILVER UNDERTOOK IN FRIDAY’S TRADING (DOWN 13 CENTS AND 20 CENTS FROM ITS HIGH POINT). WE HAVE NOW HAD SEVEN DAYS OF TORMENT AND YET THE SILVER OPEN INTEREST REFUSES TO BUDGE SOUTHBOUND….ONLY ADVANCES NORTHBOUND. THE LONGS ARE REMAINING STOIC AND REFUSE TO GIVE IN TO THE ANTICS OF THE BANKERS AND NEWBIE SPECS ARE COGNIZANT OF SILVER SCARCITY (AND DEMAND) AS THE PILE INTO THE SILVER ARENA. THE BANKERS SEEM TRAPPED IN THE OWN JUICE…THEY ARE DESPERATELY TRYING TO FORCE SOME OF THE SILVER LEAVES TO FALL FROM THE SILVER TREE BUT SO FAR TO NO AVAIL. THE BOYS HAVE DECIDED ANOTHER RAID IS NECESSARY AS THEY WHACK AGAIN.
RESULT: A STEADY RISE IN OI COMEX DESPITE THE 13 CENT PRICE LOSS. BANKERS FAILED IN THEIR ATTEMPT TO CAUSE SILVER LEAVES (oi) TO FALL.ANOTHER RAID ATTEMPT TODAY TO FORCE OI CONTRACTION.
In ounces, the OI is still represented by just UNDER 1 BILLION oz i.e. 0.964 BILLION TO BE EXACT or 137% of annual global silver production (ex Russia & ex China).
FOR THE NEW FRONT MAY MONTH/ THEY FILED: 226 NOTICE(S) FOR 1,130,000 OZ OF SILVER
In gold, the open interest FELL BY A NORMAL 3,282 CONTRACTS WITH THE FALL in price of gold ($4.25 LOSS ON FRIDAY ). The new OI for the gold complex rests at 573,483. THE BANKERS ORCHESTRATED ANOTHER RAID FRIDAY MORNING WORRIED ABOUT THE STEADY OI RISE IN SILVER AND THE HIGH OI IN GOLD. THEY FAILED MISERABLY IN SILVER AND HAD LITTLE EFFECT ON GOLD.
Result: A SMALL DECREASE IN OI DESPITE THE FALL IN PRICE IN GOLD ($4.25). THE COMMERCIALS SUPPLIED THE NECESSARY SHORT PAPER. THE FRIDAY DAY FAILED MISERABLY SO THEY ORCHESTRATED ANOTHER RAID TODAY.
we had: 0 notice(s) filed upon for nil oz of gold.
With respect to our two criminal funds, the GLD and the SLV:
Tonight , we had a huge change in gold inventory:
a massive 5.32 tonnes of gold deposit despite gold’s whack!!!
Inventory rests tonight: 843.96 tonnes
Interestingly from the first day of the raid, Sept 12 to today we have gained 9.46 tonnes instead of losing any gold!! I wish the authorities can explain this???
Today: a huge change in inventory. a withdrawal of 1.039 million oz
INVENTORY RESTS AT 326.049 MILLION OZ
From Sept 12 until today, we have only lost 1.039 million oz i.e. what we lost today. The other 5 days we lost zero.
First, here is an outline of what will be discussed tonight:
1. Today, we had the open interest in silver ROSE BY A STEADY 1217 contracts from 191,548 UP TO 192,765(AND now A LITTLE CLOSER TO THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) DESPITE FRIDAY’S 13 CENT LOSS IN TRADING. OUR LONGS CONTINUE TO BE STRONG AND REFUSE TO BUDGE WITH THE ANTICS OF OUR BANKERS. NEWBIE LONGS CONTINUE TO ENTER THE ARENA COGNIZANT OF SILVER SCARCITY AND DEMAND. BANKERS ORCHESTRATE ANOTHER RAID THIS MORNING TRYING TO FORCE SILVER OI TO CONTRACT.
RESULT: A STEADY RISE IN OI AT THE COMEX DESPITE THE FALL IN PRICE OF 13 CENTS ON FRIDAY. WE HAD ANOTHER RAID FRIDAY MORNING BY OUR BANKERS TRYING TO FORCE SILVER LONGS TO DEPART THE SILVER TREE. THEY FAILED MISERABLY!! SO THEY TRIED AGAIN THIS MORNING.
2.a) The Shanghai and London gold fix report
2 b) Gold/silver trading overnight Europe, Goldcore
and in NY: Bloomberg
3. ASIAN AFFAIRS
i)Late SUNDAY night/MONDAY morning: Shanghai closed UP 9.24 POINTS OR 0.28% / /Hang Sang CLOSED UP 352.18 POINTS OR 1.27%/ The Nikkei closed FOR HOLIDAY/Australia’s all ordinaires CLOSED UP 0.40%/Chinese yuan (ONSHORE) closed WELL DOWN at 6.5690/Oil DOWN to 49.77 dollars per barrel for WTI and 55.26 for Brent. Stocks in Europe OPENED GREEN . Offshore yuan trades 6.5700 yuan to the dollar vs 6.5690 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 WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE SLIGHTLY WEAKER DOLLAR. CHINA IS HAPPY TODAY
3a)THAILAND/SOUTH KOREA/NORTH KOREA
North Korea vows to complete the nuke program and reach ” military equilibrium” with the uSA.
The USA is not amused..
( zero hedge)
ii)Nikki Haley, Ambassador to the UN states that General Mattis will “take care” of North Korea if diplomacy fails
( zero hedge)
b) REPORT ON JAPAN
Abe set to hold a snap election and that sends the yen southbound and gold with it
( zero hedge)
c) REPORT ON CHINA
i)Kyle Bass, the lone holdout in the shorting of the yuan states correctly that China has 40 trillion dollars of assets ((debt) with only 2 trillion dollars of assets. The country is trying to rein in its global expansion but the imbalances will cause huge problems for China and for the globe
( Kyle Bass/zerohedge)
ii)This ought to cause gold to skyrocket despite the crooked banks incessant supply of non backed gold paper: USA CLAIMS CHINA IS A THREAT TO THE GLOBAL TRADING SYSTEM!!
The risk of course is China dumping her 2 trillion usa dollars worth of reserves
4. EUROPEAN AFFAIRS
700 Catalan mayors defy Madrid. Catalonia is experiencing continual police raids trying to find secret ballot boxes ahead of the Oct referendum vote:
5. RUSSIAN AND MIDDLE EASTERN AFFAIRS
This is interesting: we now a race for Deir Ezzor in Syria which houses most of its oil fields. The western side of the attack (west of the Euphrates River) is coming from Syrian of opposition forces (SDF) allying itself with the USA, while the east is being attacked by Russian-Syrian Government-Iranian forces.
this may not end well..
6 .GLOBAL ISSUES
Nobody living on the island of Barbuda for the first time in 300 years:
7. OIL ISSUES
8. EMERGING MARKET
9. PHYSICAL MARKETS
ii)The price of bitcoin bounces by 1100 dollars up to $4100 as the world wakes up to China’s lack of influence in the Crypto currency trading.(courtesy zero hedge)
iii)Ronan Manly outlines the true gold demand within China and it is much higher than that calculated by the crooked World Gold Council
( Ronan Manly./Bullion star)
iv)India imported $1,380,000 oz of gold in August (42.30 tonnes) and for the year so far: 337.4 tonnes. (15.24 billion)/if we extrapolate for the year, India is heading for 500 tonnes. However this does not include smuggling. India is a huge buyer of gold and silver.
( Times of India/GATA)
v)Join GATA at their annual New Orleans conference in October
( GATA/Brine Lundin)
vi)This is interesting: the BIS now states that global debt has been underestimated by a huge 13 trillion dollars.
vii)India foolishly may exclude gold from future tax free trade agreements due to huge current account deficiencies. However the citizens of India are wealthier.
( Times of Inda/Mumbia/GATA)
10. USA Stories
i)Pennsylvania is the next state to run into trouble as they are having budgetary problems. They have run out of cash leaving 860 million of unpaid bills
( zero hedge)
ii)An excellent commentary from John Mauldin has he describes the huge pension problems in the USA. He highlights the problems facing Texas which has no sales tax. The state lives on increases in property taxes. With many homes falling in value, how will the state fund itself
( John Mauldin)
( zero hedge)
iv)Hurricane Maria threatens Puerto Rico as a category 4 storm:
iv b) This is deadly: $696 billion of unpaid mortgage balances in the Hurricane Harvey and Irma damaged areas of concern. If these guys walk away from their homes, it will be catastrophic for the banks. Puerto Rico missed the first blast but it is direct target of Hurricane Marie.
v)Massive protests in St Louis over ex-cop’s acquittal.
(courtesy zero hedge)
vii)Justice department begins a criminal probe into Equifax Executive stock sales:
viii)An excellent interview of Chris Martenson who states that central banks are petrified with respect to hyperinflationary threats which will occur when China dumps the dollar:
( Chris Martenson/Greg Hunter)
Let us head over to the comex:
The total gold comex open interest FELL BY A NORMAL 3,282 CONTRACTS DOWN to an OI level of 573,483 DESPITE THE NASTY FALL IN THE PRICE OF GOLD ($4.25 LOSS IN FRIDAY’S trading and down $13.45 from its high point). THE CONTINUAL HIGH OPEN INTEREST IN GOLD RESULTS IN MORE BANKER TORMENT AS THESE CROOKS TRY AND LIBERATE GOLD LEAVES (OPEN INTEREST) FROM THE GOLD TREE. WITH THE SMALL FALL IN OPEN INTEREST IN THE GOLD COMPLEX, THEY HAVE SUCCEEDED IN LIBERATING ONLY A TINY NUMBER OF OPEN INTEREST. IN SILVER THEY FAILED MISERABLY..IT’S OI ROSE APPRECIABLY! THUS ANOTHER RAID THIS MORNING TRYING TO FORCE SILVER OI TO CONTRACT.
Result: a NORMAL SIZED open interest DECREASE with a FALL IN THE PRICE OF GOLD TO THE TUNE OF $4.25 (and $13.45 from its high point)/ANOTHER RAID THIS MORNING.
The new non active September contract month saw it’s OI FELL BY 295 contracts DOWN to 816. We had 0 notices filed UPON YESTERDAY so we LOST 295 contracts or an additional 29,500 oz will not stand AND obviously a huge error in reporting on Thursday where we had 298 additional contracts standing or 298,000 oz. We had 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 110 contracts DOWN to 38,877.
The November contract saw A LOSS OF 3 contracts DOWN to 435.
The very big active December contract month saw it’s OI LOSS OF 3496 contracts DOWN to 448,726.
We had 0 notice(s) filed upon today for nil oz
We are now in the active contract month of September (and the last active month until December). Today we witness Sept. OI LOSS OF 135 contacts DOWN to 601. We had 226 notices filed yesterday, so we again gained 91 contracts or an additional 455,000 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 GAINED 30 contacts UP TO 971. November saw a LOSS of 7 contract(s) and thus FALLING TO 57. After November, the NEXT big active contract month is December and here the OI LOST 106 contracts DOWN to 156,689 contracts.
We had 198 notice(s) filed for 990,000 oz for the SEPT. 2017 contract
VOLUMES: for the gold comex
ESTIMATED VOLUME TODAY: 259,286 CONTRACTS WHICH IS VERY GOOD
FRIDAY’S confirmed volume was 328,689 which is EXCELLENT
volumes on gold are STILL HIGHER THAN NORMAL!
|Withdrawals from Dealers Inventory in oz||nil|
|Withdrawals from Customer Inventory in oz||
|Deposits to the Dealer Inventory in oz||nil oz|
|Deposits to the Customer Inventory, in oz||
|No of oz served (contracts) today||
|No of oz to be served (notices)||
|Total monthly oz gold served (contracts) so far this month||
|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, 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.
|Withdrawals from Dealers Inventory||nil|
|Withdrawals from Customer Inventory||
|Deposits to the Dealer Inventory||
|Deposits to the Customer Inventory||
|No of oz served today (contracts)||
|No of oz to be served (notices)||
|Total monthly oz silver served (contracts)||5677 contracts (28,355,000 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||4,426,867.2 oz|
WHICH IS HUGE
NPV for Sprott and Central Fund of Canada
Sprott’s hostile 3.1 billion bid to take over Central Fund of Canada
Sprott makes hostile $3.1 billion bid for Central Fund of Canada
Submitted by cpowell on Thu, 2017-03-09 01:19. Section: Daily Dispatches
From the Canadian Press
via Canadian Broadcasting Corp. News, Toronto
Wednesday, March 8, 2017
Toronto-based Sprott Inc. said Wednesday it’s making an all-share hostile takeover bid worth $3.1 billion US for rival bullion holder Central Fund of Canada Ltd.
The money-management firm has filed an application with the Court of Queen’s Bench of Alberta seeking to allow shareholders of Calgary-based Central Fund to swap their shares for ones in a newly-formed trust that would be substantially similar to Sprott’s existing precious metal holding entities.
The company is going through the courts after its efforts to strike a friendly deal were rebuffed by the Spicer family that controls Central Fund, said Sprott spokesman Glen Williams.
“They weren’t interested in having those discussions,” Williams said.
Sprott is using the courts to try to give holders of the 252 million non-voting class A shares a say in takeover bids, which Central Fund explicitly states they have no right to participate in. That voting right is reserved for the 40,000 common shares outstanding, which the family of J.C. Stefan Spicer, chairman and CEO of Central Fund, control.
If successful through the courts, Sprott would then need the support of two-thirds of shareholder votes to close the takeover deal, but there’s no guarantee they will make it that far.
“It is unusual to go this route,” said Williams. “There’s no specific precedent where this has worked.”
Sprott did have success last year in taking over Central GoldTrust, a similar fund that was controlled by the Spicer family, after securing support from more than 96 percent of shareholder votes cast.
The firm says Central Fund’s shares are trading at a discount to net asset value and a takeover by Sprott could unlock US$304 million in shareholder value.
Central Fund did not have any immediate comment on the unsolicited offer. Williams said Sprott had not yet heard from Central Fund on the proposal but that some shareholders had already contacted them to voice their support.
Sprott’s existing precious metal holding companies are designed to allow investors to own gold and other metals without having to worry about taking care of the physical bullion.
And now the Gold inventory at the GLD
Sept 18/a huge 5.32 tonnes of gold deposit into the GLD despite gold’s whack today/inventory rests at 843.96 tonnes
Sept 15./strange!!no change in GLD after the whacking of gold/inventory remains at 838.64 tonnes
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.
Now the SLV Inventory
Sept 18/a withdrawal of 1.039 million oz from the SLV/Inventory rests at 326.049 million oz
Sept 15./no change in silver inventory at the SLV/Inventory rests at 327.088 million oz/
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
Indicative gold forward offer rate for a 6 month duration+ 1.34%
Major gold/silver trading/commentaries for MONDAY
Bitcoin Price Falls 40% In 3 Days Underlining Gold’s Safe Haven Credentials
– Bitcoin price action shows cryptos vulnerable to commentary and government policies
– Bitcoin falls to low of $2,980, down by $1,000 in week as China flexes muscles
– Volatility major issue: In 3 days btc fell 40% before bouncing 25% off lows
– BIS state risks of cryptos cannot yet be fully assessed and says technology still unproven
– Apple and Google developing a payment API for cryptos – may give governments full oversight
– Bitcoin and cryptos current volatility and exposure to governments underlines gold’s safe haven status
Even for bitcoin last week was an eventful week. The price hit a recent low of $2,980, falling 40% and recovering by nearly 25% in the space of three days.
Last week was a good example of the vulnerabilities in the cryptocurrency space to government announcements regarding the infrastructure the ecosystem.
This last year has seen unprecedented progress and development in the bitcoin and crypto arena. From the price reaching new highs to an explosion in Initial Coin Offerings.
The fall in price by over $1,000 should serve as a reminder that markets will stumble when they try to run before they can walk. As much as early adopters like to declare bitcoin the new currency and declare is true safe haven, the last week has shown that gold is a far better long-term safe haven.
Reasons for bitcoin’s (and other cryptos’) fall last week was mainly thanks to further crackdowns on bitcoin exchanges by the Chinese government. On Thursday bitcoin fell 16% against the U.S. dollar as the Chinese announced they were closer to shutting down cryptocurrency exchanges.
This week commentators believe crypto traders have now priced in the negative news from the East, however last week’s performance was yet another example of how vulnerable bitcoin still is to government announcements.
This weekend and this morning the price has begun to recover following a report from the Bank of International Settlements.
The BIS report said central banks needed to carefully consider their approach to the cryptocurrency markets.
“Central banks will have to consider not only consumer preferences for privacy and possible efficiency gains — in terms of payments, clearing and settlements — but also the risks it may entail for the financial system and the wider economy, as well as any implications for monetary policy,”
For many in the crypto space this was further validation for the likes of bitcoin etc. Whilst the BIS did not give their backing to central banks’ involvement in blockchain currencies it was an acknowledgement of them and the need for the authorities to find a way to deal with them.
Risks were at the forefront of the BIS’ minds, with cyber-attacks being the most obvious cause for concern.
“Some of the risks are currently hard to assess,” the report stated, given how little is known about the impact of cyber-attacks and their resilience.
This was yet another cautionary report from a leading monetary authority. The BIS and the Chinese regulators are just the most recent bodies to publish their concerns.
We recently covered the issue of ICOs. A primary concern for many governments. ICOs are encouraging misinformed investors to jump on the tails of the crypto boom and sometimes put money into ventures that are extremely high risk .
We expect further words of warning between now and the end of the year. In the coming weeks the UAE government are also expected to issue their thoughts on cryptocurrencies.
It will be interesting to see how the volatility plays out with each new decision from higher authorities. In the mean time, the tech community may even be working with governments to make sure they are happy with the infrastructure that supports bitcoin.
Governments will soon want in
Currently bitcoin and cryptocurrencies are being seen as the new tech guys, like those in Silicon Valley before them they are breaking new ground and challenging our thoughts and government policies over something we thought was long past debate.
For Silicon Valley they challenged how we communicate, for bitcoin etc its what money is and how we use it.
But the pioneers might not last long. Over the weekend One River Asset Management’s Eric Peters outlined his biggest concern when it comes to cryptocurrencies:
Once private markets perfect cryptocurrency technology, governments will commandeer it, killing today’s pioneers. Then with every cryptodollar, yen, euro and renminbi registered on their servers, they’ll have complete dominion over money, laundering, taxation.
This may seem an extreme viewpoint but reality shows he might not be far off. Last week the World Wide Web Consortium (W3C) with the help of Microsoft, Google, Facebook, Apple and Mozilla, announced work on the Payment Request API.
The new API will sit in browsers and allow ‘new payment types, including bitcoin, ether any any other available cryptocurrency (as well as more traditional online payment methods) to be stored directly in the browser.’
Given all code developed in the U.S. is subject to government intelligence oversight users might want to be wary about using such a payment method. This could be an early step that allows third-party access to your transactions and possibly your online wallet. Confiscation and theft spring to mind.
Gold proves itself once again
Volatility, cyber-attacks and investment fraud are just some of the concerns regarding the bitcoin community. Add to that the new possibility that governments could have oversight into your crypto spending then it all seems even less appealing.
Gold is all too often compared to bitcoin. The latter is frequently called the new gold. For many, the surge in the bitcoin price has been to the detriment of the gold price. In truth, they may ultimately end up being complementary assets. For now, the new kid on the block is far from being able to offer the same qualities that we see in gold.
When you buy physical, segregated gold you cannot link it to an API which may or may not expose it to hackers or government’s sticky fingers. When you buy gold bullion or coins you can be careful not to invest in something that exposes you to a big pile of hot air and fraud.
Finally, gold is not a volatile currency. It does not react like a toddler when a government makes an announcement. Governments are not paranoid about gold and the possibility that it puts investors’ money at risks. Governments already own gold, they understand it. Gold has been around for millennia and its role is far past debate.
This last week, in fact the last year, serves as an important reminder that the shiniest and safest asset might not be the newest one and that investors should look for the calm amongst the storm.
News and Commentary
Gold Prices (LBMA AM)
18 Sep: USD 1,314.40, GBP 970.16 & EUR 1,100.68 per ounce
15 Sep: USD 1,325.00, GBP 977.32 & EUR 1,109.16 per ounce
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
Silver Prices (LBMA)
18 Sep: USD 17.53, GBP 12.94 & EUR 14.66 per ounce
15 Sep: USD 17.70, GBP 13.03 & EUR 14.81 per ounce
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
Recent Market Updates
– Gold Up, Markets Fatigued As War Talk Boils Over
– Oil Rich Venezuela Stops Accepting Dollars
– Massive Equifax Hack Shows Cyber Risk to Deposits and Investments Today
– British People Suddenly Stopped Buying Cars
– Buy Gold for Long Term as “Fiat Money Is Doomed”
– Conor McGregor – Worth His Weight In Gold?
– Gold Has 2% Weekly Gain,18% Higher YTD – Trump’s Debt Ceiling Deal Hurts Dollar
– ‘Things Have Been Going Up For Too Long’ – Goldman CEO
– Physical Gold In Vault Is “True Hedge of Last Resort” – Goldman Sachs
– Bitcoin Falls 20% as Mobius and Chinese Regulators Warn
– Gold Surges To $1338 as U.S. Warns of ‘Massive’ Military Response
– Precious Metals Outperform Markets In August – Gold +4%, Silver +5%
– 4 Reasons Why “Gold Has Entered A New Bull Market” – Schroders
For your perusal, below are our most popular guides in 2017:
Gold Tumbles Most Since July (As Bitcoin Bounces)
Gold is down over 1% this morning, extending recent weakness to 3-week lows on the basis that the world didn’t end (and the debt ceiling was extended) we presume. Notably, both USDJPY and Bitcoin are mirroring the precious metal’s move…
It seems gold’s stop-run over the election night highs prompted the reversal…
Kuroda has been busy the last week or so saving the world with Yen-carry trades…
But it seems the sudden realization that China’s crackdown in crypto is not such a big deal has prompted some rotation…
The dollar index is on the rise also.
“Most Draconian Measures Ever”: China Expands Bitcoin Crackdown Beyond Exchange Trading
Last week bitcoin plunged over 40% from all time highs hit as recently as three weeks ago on news that China had ordered local exchanges to halt trading in the cryptocurrency. Since then, defying naysayers yet again, bitcoin staged a remarkable comeback, rising from under $3000 to $4000 in the last few days of trading, but China appears to be nowhere near done, and as the WSJ reports this morning, Beijing is moving toward a “broad clampdown on bitcoin trading, testing the resilience of the virtual currency as well as the idea its decentralized nature protects it from government interference” in what the paper dubs the “most draconian measures any government has taken to control bitcoin.“
According to the WSJ, regulators have decided on a “comprehensive ban on channels for the buying or selling of the virtual currency in China” that goes beyond plans to shut commercial bitcoin exchanges. The still unofficial policy was communicated to several industry executives at a closed-door meeting in Beijing on Friday, “according to people who were at the meeting.”
The move is notable because until last week, many China bitcoin entrepreneurs thought authorities might shut down only commercial trading activity while tolerating peer-to-peer, or over-the-counter, bitcoin platforms, which enable buyers and sellers to find each other and trade directly. However, it now appears that this was only the beginning as two years after we first warned that bitcoin will be used largely to circumvent Chinese capital controls (and said it would soar as a result when its price was just $230), the government has decided to put a complete end to the use cryptocurrencies as a means of offshoring “hot money.” Word of a more serious tightening spread after the meeting and at least one Chinese platform last week announced it would halt one-on-one trading services per official instructions.
Incidentally, this is what we predicted back in September 2015 when bitcoin was trading about 20x lower:
… if a few hundred million Chinese decide that the time has come to use bitcoin as the capital controls bypassing currency of choice, and decide to invest even a tiny fraction of the $22 trillion in Chinese deposits, bitcoin (whose total market cap at last check was just over $3 billion), sit back and watch as we witness the second coming of the bitcoin bubble, one which could make the previous all time highs in the digital currency, seems like a low print.
In retrospect, we were right and it took China years to figure this out, and now – in a long belated reaction – the WSJ describes the Chinese plan as “some of the most draconian measures any government has taken to control bitcoin.”
Some more details:
The crackdown on the bitcoin ecosystem represents Beijing’s possibly biggest effort so far to limit expansion of a system to rival the yuan. In a previous crackdown, in 2009, the central bank banned the use of tokens valued at billions of dollars created in China’s massive online-gaming networks for real-world purchases. A quasiregulatory body called the National Internet Finance Association of China (NIFA) warned investors about virtual currency trading in a statement last week and said that bitcoin platforms lack “legal basis” to operate in the country.
Confirming that Beijing is focused on bitcoin as a source of capital ouflow, WSJ quotes Li Lihui, a NIFA official, who told a technology conference in Shanghai on Friday that the goal of China’s monetary regulation is to ensure that “the source and destination of every piece of money can be tracked.”
So what is next in line for bitcoin in China?
A broader clampdown will likely include blocking mainland access to websites of foreign bitcoin exchanges such as Coinbase in the U.S. and Bitfinex in Hong Kong, say people familiar with the matter.
A lack of clarity from regulators has fueled worries about how far the government will go. One uncertainty, for example, is whether the ban will affect bitcoin deals made over social-messaging apps such as WeChat . People in the industry say a wave of bitcoin users in recent days migrated from WeChat to the encrypted messaging service Telegram.
Industry advocates hail bitcoin for allowing users to transact with each other without the involvement of a central authority. In reality, users access the market for virtual currencies via services and businesses that are centralized in real locations and therefore are susceptible to third parties. Any attempt by China to interfere broadly in the bitcoin network would test that notion further.
Blocking overseas exchange sites would add them to a long list of websites Beijing considers too sensitive, including Google and Facebook.
Of course, Chna’s crackdown is a double edged sword: after all bitcoin was created precisely with the contingency of a government crackdown in mind, and as such should bitcoin prove resilient to Beijing’s actions it will only make it that much more valuable, sending its price even higher. Furthermore, China would be effectively shutting itself out of a growing global market and potentially, lagging in blockchain development.
As we pointed out last week, as recently as last year, China accounted for the bulk of global bitcoin trading activity, but its share has dropped dramatically since the government started attempting to cool the market. China now accounts for less than 15% of bitcoin trading volume.
For now, Chinese authorities haven’t made public their stance on virtual currency trading, however it is coming.
A document passed around at Friday’s meeting and reviewed by The Wall Street Journal instructs Beijing-based exchanges to unwind their operations and provide information on bank accounts used for clients’ deposits by Wednesday.
Then there is the question of mining: “while China’s sway in bitcoin trading volumes has faded, the country remains a major creator of new bitcoin through a process called mining. Chinese bitcoin miners operate a vast collection of computers for the purpose in remote areas like northwestern Xinjiang, where they can access electricity for cheap.”
Until now, Chinese miners considered themselves immune from Beijing’s evolving stance on bitcoin trading. One entrepreneur said miners are now worried about authorities moving to limit their operations. “Using VPNs as a workaround will be difficult,” he said, referring to virtual private networks that allow users to circumvent China’s so-called Great Firewall.
Chinese miners loom large in the global bitcoin mining network, also serving an important role in the upkeep of the bitcoin ledger. Potential interference in how they connect to and use the internet could disrupt, at least temporarily, both the creation of new bitcoin and the speed at which global bitcoin transactions are confirmed, say people in the industry.
There is a slight possibility the draconian measures are just a political gimmick ahead of next month’s critical communist party Congress. The stepped-up tightening by regulators comes as China’s top leaders have been vocal about battling money laundering, in advance of an important leadership transition this fall. Last week, China’s State Council released guidelines aimed at better coordination between regulators to address the transfer of capital for illicit purposes.
Then again, maybe China just wants to take the BIS’ advice and launch its own official, PBOC-backed digital currency which it can track, tax and “adjust” as it sees fit, a step which India is currently contemplating.
Meanwhile, keep an eye on the price of bitcoin. If the news of today’s expanded Chinese crackdown fails to send the price of cryptos lower, the market may have “priced in” China’s aggressive intervention. In which case, the next move may be higher, and substantially so.
The price of bitcoin bounces by 1100 dollars up to $4100 as the world wakes up to China’s lack of influence in the Crypto currency trading.
(courtesy zero hedge)
Bitcoin Bounces $1100, Tops $4100 As World Wakes Up To China’s Waning Crypto Influence
Despite headlines from WSJ of “the most draconian measures ever” against Bitcoin, the cryptocurrency is trading up over $1100 from its post-China-“ban” lows and has topped $4100 once again this morning as the world slowly wakes up to the nonsense that shutting down a completely decentralized system is possible, and the fact that China has long-since lost any standing as a major trading hub in the cyrpto world.
Bitcoin just topped $4100 (up over $1100 from the lows last week)…
Ether is up 50% from last week’s lows – just topping $300 again…
And all cryptos are strongly bid today…
And here’s one simple chart to explain why “shutting China’s Bitcoin exchanges” is not really that big a deal…
As CoinDesk’s Marc Hochstein details, this ain’t Mt. Gox – and bitcoin survived that, too.
All else equal, that means the market may take less time to recover from the latest sell-off than from the one that took place in 2013 (you know, when the People’s Bank of China suddenly declared that bitcoin was not a currency and ordered payment processors to stop accepting it).
Just a reminder of how bad the fallout from that that really was, during the three years it took bitcoin to recover from those bombshells, it lost nearly half its value, dropping from an all-time high of $1,150 to under $500.
But that was at a time when Chinese bitcoin trading accounted for as much as 90% of global volume (as shown in the chart below from CoinDesk’s second-quarter State of Blockchain report.)
This state of affairs persisted until as recently as January of this year:
Since then, however, China’s share of bitcoin trading volume has fallen dramatically.
This is likely for two reasons: China’s January ban on no-fee trading on the country’s exchanges dramatically reduced volume there; and the rise of trading volumes in Japan and South Korea as shown in the chart below:
“Global trading volume now appears more distributed than ever before,” our State of Blockchain report noted in June.
Remember also, this time around there hasn’t been any formal guidance from government – and it appears local exchanges Huobi and OKCoin will continue letting users trade between cryptocurrencies. In short, this is far from a blanket ban.
Of course, there are many variables that influence the price of bitcoin, so there is no guarantee of a speedier recovery.
But thanks to this more diversified market, and in context, still limited action, it stands to reason that the regulatory interventions of a single country (even the world’s most populous country) should have less impact on the bitcoin price over the long term.
* * *
The bottom line is simple – China, Shmyna… and as far as Jamie Dimon is concerned “storm in a teacup”
As we noted earlier, China’s crackdown is a double edged sword: after all bitcoin was created precisely with the contingency of a government crackdown in mind, and as such should bitcoin prove resilient to Beijing’s actions it will only make it that much more valuable, sending its price even higher. Furthermore, China would be effectively shutting itself out of a growing global market and potentially, lagging in blockchain development.
Ronan Manly outlines the true gold demand within China and it is much higher than that calculated by the crooked World Gold Council
(courtesy Ronan Manly./Bullion star)
Bullion Star: Gold demand within the Chinese gold market
Submitted by cpowell on Sun, 2017-09-17 14:02. Section: Daily Dispatches
10a ET Sunday, September 15, 2017
Dear Friend of GATA and Gold:
Bullion Star this week presents a primer on gold demand in China, arguing that it is far larger than the demand calculated by the World Gold Council. Bullion Star’s report is headlined “Gold Demand within the Chinese Gold Market” and it’s posted here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
India imported $1,380,000 oz of gold in August (42.30 tonnes) and for the year so far: 337.4 tonnes. (15.24 billion)
if we extrapolate for the year, India is heading for 500 tonnes. However this does not include smuggling. India is a huge buyer of gold and silver.
(courtesy Times of India/GATA)
India’s gold imports jump three-fold from April to August
Submitted by cpowell on Sun, 2017-09-17 14:33. Section: Daily Dispatches
From the Press Trust of India
via The Times of India, Mumbai
Sunday, September 17, 2017
The country’s gold imports recorded a three-fold jump to $15.24 billion during the April-August period of the current fiscal period, commerce ministry data showed.
Gold imports, which have a bearing on the country’s current account deficit, stood at $5.08 billion from April to August 2016-17. (113 tonnes)
In August this year imports of the precious metal rose to $1.88 billion from $1.11 billion in the same month of the previous fiscal period. …
… For the remainder of the report:
This ought to tell you something!! Each year from 2010 through to 2015 we had considerable gold swaps among Central banks. In 2016 we had 0 swaps. Now in 2017, we have a massive 438 tonnes of gold recorded. Swap gold transactions are location swaps. So if the USA entered into an arrangement with the Bank of England’s gold, the The Bank of England would take ownership of gold at Fort Knox and the USA would get to use the England’s gold in Europe. Since the LBMA is the centre of all physical gold, it is easy to understand why gold swaps have increased each year. Swaps can also be used when supplies are tight where the BIS creates unallocated gold into the hands to bullion banks.
(courtesy Robert Lambourne)
BIS gold swaps soar from zero to record high
By Robert Lambourne
Saturday, September 16, 2017
Disclosures in the August statement of account published by the Bank for International Settlements indicate that during August the bank increased substantially its use of gold swaps.
An estimated 130 tonnes of new gold swaps were made last month, worth about $5.9 billion at the month-end gold price, and the total level of gold swaps at the end of August was close to 500 tonnes.
This is the BIS’ highest level of gold swaps recorded since the bank first reported the use of gold swaps in its annual report for the financial year ended March 31, 2010.
A review of the previous use of gold derivatives by the BIS reveals that the transactions in the year ending March 31, 2010, were far more substantial than anything done by the bank in the years immediately before.
The use of gold swaps reported by the BIS in recent times is summarized below:
March 2010: 346 tonnes
March 2011: 409 tonnes.
March 2012: 355 tonnes.
March 2013: 404 tonnes.
March 2014: 236 tonnes.
March 2015: 47 tonnes.
March 2016: 0 tonnes.
March 2017: 438 tonnes…
Join GATA at their annual New Orleans conference in October
(courtesy GATA/Brine Lundin)
You can’t lose if you join GATA at the New Orleans conference
Submitted by cpowell on Sun, 2017-09-17 14:42. Section: Daily Dispatches
10:40a ET Sunday, September 17, 2017
Dear Friend of GATA and Gold:
You’re being robbed — as part of the greatest financial crime in U.S. history.
The worst part: You and your family will be the victims.
The good part: There is a way to protect yourself. And I can guarantee that it will also deliver you a four-for-one profit.
You know all about this scandal.
You’re only too aware that your family’s financial well-being was mortgaged away when the Fed created oceans of debt and money, and then sent the newly created dollars to Wall Street to prop up stocks and bonds.
he result: A stock market exceeding all historical bounds of valuation, and debt loads reaching to the sky … and the absolute inevitability that the dollar (and every other fiat currency) will be trashed to wash away the value of those debts.
That means gold, silver, and mining stocks are going to soar.
In fact, they have already come off the bear market bottom. A new bull market is just now gaining steam.
Which means one more thing:
You need to be at this year’s New Orleans Investment Conference.
The dollar is going to be depreciated. It has to — it’s a matter of simple math.
That means gold has to rise significantly. Add in all the geopolitical crises brewing — from North Korea to terrorist attacks to a flurry of investigations in Washington and more — and we’ve never faced such a combination of risk and opportunity.
So my message is simple: You can’t afford to miss this year’s New Orleans Investment Conference.
You see, we’re gathering an amazing faculty — dozens of today’s leading experts in geopolitics, economics, and every investment sector — to give you insights unavailable anywhere else.
That includes conservative firebrand Tucker Carlson, Pulitzer Prize-winning commentator Charles Krauthammer, “Rich Dad, Poor Dad” author Robert Kiyosaki. …
Political muckracker Jonah Goldberg, Trump economic adviser Judy Shelton, international entrepreneur Simon Black, wealth and ivelihood preservationists Chris Martenson and Adam Taggart, influential market economist Peter Boockvar. …
Plus the latest predictions and picks from Dennis Gartman, Peter Schiff, Doug Casey, Rick Rule, Nick Hodge, Robert Prechter. …
… And the world’s leading authorities on gold, silver, mining stocks, and every investment sector, including Adrian Day, Brent Cook, The Real Estate Guys, Byron King, Mark Skousen, Eric Coffin, Gwen Preston, Louis James, Nick Giambruno, Lindsay Hall, Omar Ayales, Thom Calandra, GATA’s Chris Powell and Bill Murphy, and more.
When times are scary as they are now, when gold, silver, and mining stocks are beginning a new bull market, as they are now, the best place to be is the New Orleans Investment Conference.
More than four decades of history have proven this, time and time again.
It’s where the top metals and mining stock experts and most successful investors gather every year.
It’s where the most powerful investment strategies are detailed.
It’s where the hottest new opportunities are unveiled.
The results speak for themselves: The stock picks given out at the New Orleans Conference often multiply five, 10, even 20 or more times over after the event.
How reliable and profitable are these results?
Enough so that I can guarantee that you’ll quadruple your investment in the event or get your entire registration fee back.
The only way you can lose is to not attend.
And there are plenty of reasons to come:
With our amazing agenda this year, coupled with the remarkable turn the markets have made in our favor, you’re going to learn more, profit more, and just have more fun than you could anywhere else.
Don’t cheat yourself. Click on this link —
— to learn why this year’s New Orleans Conference is going to be the event of the decade.
Brien Lundin, President and CEO
New Orleans Investment Conference
This is interesting: the BIS now states that global debt has been underestimated by a huge 13 trillion dollars.
Global debt may be underestimated by $13 trillion, BIS warns
Submitted by cpowell on Mon, 2017-09-18 00:56. Section: Daily Dispatches
By Saikat Chatterjee
Sunday, September 17, 2017
LONDON — Global debt may be under-reported by around $13 trillion because traditional accounting practices exclude foreign exchange derivatives used to hedge international trade and foreign currency bonds, the Bank for International Settlements said today.
BIS researchers said it was hard to assess the risk this “missing” debt poses but that the main worry was a liquidity crunch like the one that seized foreign-exchange swap and forwards markets during the financial crisis.
The $13 trillion unaccounted-for exposure exceeds the on-balance-sheet debt of $10.7 trillion that data shows was owed by firms and governments outside the United States at end-March. …
… For the remainder of the report:
India foolishly may exclude gold from future tax free trade agreements due to huge current account deficiencies. However the citizens of India are wealthier.
(courtesy Times of Inda/Mumbia/GATA)
India may exclude gold from future trade agreements
Submitted by cpowell on Mon, 2017-09-18 01:04. Section: Daily Dispatches
By Deepshikha Sikarwar
The Times of India, Mumbia
Sunday, September 17, 2017
A big spike in gold imports from countries with which India has trade agreements has caused alarm in the government, which now plans to exclude the yellow metal from such agreements in the future.
“Provisions of trade agreements have been abused to import gold at zero or lower duty,” a government official said. The surge in gold imports has worsened the country’s current account deficit.
The issue has been discussed between the ministries of finance and commerce and industry, the nodal ministry for negotiating trade agreements, the official said.
The finance ministry is of the view that gold should be kept out of free-trade agreements India negotiates going ahead. The country is at present negotiating an FTA with the European Union, and the Regional Comprehensive Economic Partnership, a proposed FTA between Asean member states and six Asia-Pacific countries including India, China, and Japan. …
… For the remainder of the report:
Your early MONDAY morning currency, Asian stock market results, important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight
1 Chinese yuan vs USA dollar/yuan HUGELY WEAKER AT 6.5690 (DEVALUATION SOUTHBOUND /OFFSHORE YUAN MOVES SLIGHTLY WEAKER TO ONSHORE AT 6.5700/ Shanghai bourse CLOSED UP 9.24 POINTS OR 0.28% / HANG SANG CLOSED UP 352.18 POINTS OR 1.27%
2. Nikkei closed /USA: YEN RISES TO 111.21
3. Europe stocks OPENED MOSTLY IN THE GREEN ( /USA dollar index FALLS TO 91.80 /Euro UP to 1.1965
3b Japan 10 year bond yield: FALLS TO -+.029%/ 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:: 49.77 and Brent: 55.26
3f Gold DOWN/Yen DOWN
3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“HELICOPTER MONEY” OFF THE TABLE FOR NOW /REVERSE OPERATION TWIST ON THE BONDS: PURCHASE OF LONG BONDS AND SELLING THE SHORT END
Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.
3h Oil DOWN for WTI and DOWN for Brent this morning
3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO +.442%/Italian 10 yr bond yield UP to 2.04%
3j Greek 10 year bond yield FALLS TO : 5.451???
3k Gold at $1314.30 silver at:17.49 (8:15 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50
3l USA vs Russian rouble; (Russian rouble DOWN 16/100 in roubles/dollar) 57.70-
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 111.21 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 0.9583 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1466 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 +0.442%
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 2.211% early this morning. Thirty year rate at 2.774% /POLICY ERROR)GETTING DANGEROUSLY HIGH
5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.
(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)
Global Stocks Storm To New Record High Ahead Of Historic Fed Announcement
Last week’s bullish sentiment that sent the S&P not only to a new all time highs, but a burst of last-second buying pushed above 2,500 for the first time ever, has carried through to the new week, with European and Asian shares rallying across the board, US futures again the green, and world stocks hitting a new record high on Monday ahead of a historic Fed meeting in which the FOMC is expected to announce the start of the shrinkage of its balance sheet.
“The FOMC’s latest verdict will be of special interest,” said Daniel Lenz, an analyst at DZ Bank in Frankfurt. “The Fed could well set the balance-sheet-reduction process in motion.”
MSCI’s index of world stocks hit a new all-time high, adding to gains seen on Friday when Wall Street set its own record level, while Europe’s main stock index opened at a six-week high on Monday and MSCI’s broadest index of Asia-Pacific shares ex-Japan rose to heights not seen since late 2007.
As DB’s Jim Reid summarizes the week’s key events, this week will be dominated by 3 of the most powerful women in the world “and I’m not talking about Daenerys Targaryen, Cersei Lannister and Sansa Stark. Instead we have our real world version with Mrs Yellen likely to announce the end of Fed reinvestment on Wednesday, Mrs Merkel firm favourite with the pollsters to see a big election win on Sunday and Mrs May set to outline her latest Brexit vision in Florence on Friday. Of the three, Mrs May’s speech is currently the least predictable but after a big week for the UK last week (GBPUSD +2.98%, GBPEUR +3.75%, 10yr Gilts +32bps, and the November hike probability from 18.4% to 64.5% according to Bloomberg’s calculator), Sterling assets are seeing some significant volatility at the moment.”
Before we get there, however, there is much optimism and the Stoxx Europe 600 jumped the most in almost a week as 16 of 19 sectors advanced, rising 0.3% in early trading, the highest in almost six weeks. The European rally was led by banks, telecoms and utilities, while travel & leisure shares underperform as Ryanair falls after saying it plans to cancel flights amid crew issues. The Stoxx Europe reached its highest level since Aug. 8. The FTSE 100, recently hit by a surge in the pound, is up 0.4%. Shares in Ryanair drop 3.3% after the Irish airline said it will scrap 40 to 50 flights daily for six weeks. Fingerprint sinks 21% after warning on its revenue outlook.
Asian equities rose more than a percent, the most in two months, after the record-breaking Wall Street session on Friday amid optimism the U.S. will pursue a peaceful resolution to North Korea’s nuclear threats. The MSCI Asia Pacific ex-Japan Index added 1% as of 4:39 p.m. in Hong Kong to trade close to its highest level since December 2007. The Philippines benchmark gauge, South Korea’s Kospi index and Hong Kong’s Hang Seng Index are the three biggest gainers Monday with an advance of more than 1 percent each. S.Korea’s Kospi index climbed 1.4% and Australia’s main gauge was up 0.5% at the close. The Hang Seng Index in Hong Kong gained 1.3% . The Shanghai Composite Index was 0.3% higher. Japan markets are shut for respect-for-the-aged day. The Japanese yen fell as much as 0.5 percent to 111.37 per dollar, the weakest in almost eight weeks before recoupoing some losses and trading at 111.20 last.
Hong Kong shares rallied Monday as developers were buoyed by policy hopes and brokerages gained after China relaxed rules on stock-index futures trading. Hang Seng Index jumps 1.3%, most in a month, to close above 28,000 resistance level for first time since Aug. 30 as developers extend rally into third day, with China Resources Land Ltd. jumping 7.5% to highest since May 2015; China Overseas Land & Investment Ltd. gains 4.9%. According to Bloomberg, concerns over possible tightening before the 19th Party Congress has waned after data showed home prices increased in fewer cities in August, reducing the probability of more curbs, says Toni Ho, analyst at Rhb Osk Securities Hong Kong Ltd.
U.S. futures also rose after equities increased from Australia to Hong Kong. The gains come after the S&P 500 Index broke through 2,500 for the first time on Friday and the Dow Jones Industrial Average chalked another record.
Not all is certain however, as an address by President Trump to world leaders at the United Nations on Tuesday, and elections in Germany and New Zealand will add extra political uncertainty to the mix this week. But the main event will be the above mentioned Fed meeting on Tuesday and Wednesday, at which it is virtually guaranteed to take another step toward policy normalisation amid what is rapidly becoming a global trend. As a reminder, Canada has already hiked interest rates twice in recent months – the last time in a shock move that surprised most traders – while the Bank of England shocked many last week by flagging its own coming increases. The European Central Bank is meanwhile expected to shed more light on plans to exit its extraordinary stimulus in October.
Political uncertainty also made a surprise appearance after sources said Japanese Prime Minister Shinzo Abe was considering calling a snap election for as early as next month to take advantage of his improved approval ratings and disarray in the main opposition party.
And yet persistently subdued global inflation despite a pick-up in growth remains the “trillion dollar” question for central banks looking to normalize policy, a report from Bank for International Settlements said on Sunday. As such, investors are far from convinced the Fed will move on rates again this year, with a December change put at less than a 50 percent probability in the futures market.
“It is fair to say that in our recent travels most of the investors we have spoken to question not just a December hike, but whether the Fed will hike at all again this cycle,” said Tom Porcelli, chief U.S. economist at RBC Capital Markets. “When you press investors on the why, the standard reply is the lack of inflationary pressures.”
In any case, overnight the dollar was stronger, reaching an eight-week high against the yen, as investors await the widely telegraphed Fed announcement, as oil climbed while safe havens continued to slide as investors breathed a sigh of relief that the weekend passed with no new provocation by North Korea. Currency traders started the week by adding risk-on positions amid optimism the U.S. will pursue a peaceful resolution to North Korea’s nuclear threats; the dollar climbed against the yen as 10-year Treasuries held last week’s losses in London trading; sterling fell as some investors took money off the table following the pound’s best week versus the greenback since 2009, while the euro swung between losses and gains as a report cited ECB Governing Council member Hansson advocating a “somewhat broader recalibration” of stimulus.
The U.S. dollar rose to an almost eight-week high against yen after U.S. Secretary of State Rex Tillerson said his country is seeking a peaceful outcome to end the nuclear standoff with North Korea, and as Japanese markets were closed for holiday. The USD was also supported by 10-year Treasury yields, which rose to the highest level in almost a month as bets build for Fed to announce timing of balance-sheet tapering after policy meeting Wednesday, and rising U.S. stock futures. The ten falls against almost all major peers as investors expect BOJ to maintain stimulus when it sets policy on Thursday; Japanese Prime Minister Shinzo Abe said he’ll decide on calling a snap election after he returns from a trip to the U.S., giving the pair a lift on speculation of further continuation of Abenomics.
In rates, U.S. Treasury yields jumped a hefty 14 bps last week, but were little changed on Monday, as were most developed bond markets. In Europe, the eye-catching move was a sharp slide in Portuguese yields on the country regaining an investment grade rating after 5-1/2 years. The yield on 10-year Treasuries gained one basis point to 2.21 percent, the highest in almost a month. Germany’s 10-year yield advanced less than one basis point to 0.44 percent. Britain’s 10-year yield decreased less than one basis point to 1.31 percent, the first retreat in more than a week.
U.S. crude oil prices rose above $50 per barrel on Monday and were near last week’s multi-month highs as the number of U.S. rigs drilling for new production fell and refineries continued to restart after getting knocked out by Hurricane Harvey. Talk of monetary tightening and a bounce in the dollar put gold on the defensive. The precious metal was off 0.4 percent at $1,314.43 an ounce.
Investors will be keeping a close eye on a speech by BOE Governor Mark Carney later on Monday. HSBC sees two more rate hikes by the BoE between now and the end of next year. Economic data include NAHB Housing Market Index for September. Houghton Mifflin and Steelcase are reporting earnings.
Bulletin Headline Summary from RanSquawk
- European and Asian markets in the green
- In FX, the greenback gains some ground
- Looking ahead, highlights include BoE’s Carney and BoC’s Lane
- S&P 500 futures up 0.3% to 2,503.50
- STOXX Europe 600 up 0.3% to 382.00
- MSCI Asia up 0.6% to 163.29
- MSCI Asia ex Japan up 1.1% to 544.11
- Nikkei up 0.5% to 19,909.50
- Topix up 0.4% to 1,638.94
- Hang Seng Index up 1.3% to 28,159.77
- Shanghai Composite up 0.3% to 3,362.86
- Sensex up 0.7% to 32,493.91
- Australia S&P/ASX 200 up 0.5% to 5,720.60
- Kospi up 1.4% to 2,418.21
- German 10Y yield fell 0.5 bps to 0.428%
- Euro down 0.2% to $1.1926
- Italian 10Y yield rose 1.9 bps to 1.786%
- Spanish 10Y yield fell 5.5 bps to 1.554%
- Brent futures up 0.4% to $55.74/bbl
- Gold spot down 0.4% to $1,314.44
- U.S. Dollar Index up 0.2% to 92.03
Top Overnight News
- Inflation in the euro-area rose an annual 1.5% in Aug., matching the median economist forecast in a Bloomberg survey
- The PBOC has drafted plans to allow foreign investors greater access to the country’s financial sector, including a proposal to give overseas firms control of their joint ventures in China, according to people familiar with the discussions
- U.K. house prices grew at the slowest annual pace in more than five years this month as a slump in London weighed on the market
- Base effects from energy and unprocessed food prices “will exert a strong impact on the projected path for headline HICP inflation in the coming quarters,” ECB says
- The kiwi dollar has dropped whenever opinion polls show the main opposition Labour Party is ahead, while the currency jumped a full U.S. cent after a survey last week put the ruling National Party in the lead
- AT&T-Time Warner Deal Said on Track to Win U.S. Nod by November
- Trading Execution Prices Are Seen Plunging in MiFID Share Grab
- Economists Boost Euro-Area Outlook, See Best Year in a Decade
- U.K. Outlook Seen as Rosier as BOE Edges Closer to Rate Hike
- Fingerprint Plunges After Warning Revenue Will Miss Estimates
- S. Korea Says Additional N. Korea Missile, Nuke Tests Likely
Asia equity markets began the week strongly, with significant profits after last Friday’s gains in US, where all majors eked fresh record levels and the S&P 500 just about surmounted the 2500 level. This supported the Asia-Pac region and lifted ASX 200 (+0.4%) and KOSPI (+1.1%) from the get-go, with strength in financials front-running the sectors in Australia. Shanghai Comp. (+0.3%) and Hang Seng (+1.0%) were also positive after better than expected lending data and a substantial liquidity injection of CNY 300bln by the PBoC, although gains across the region were somewhat contained with Japan away for holiday and ahead of key risk events including the FOMC this week. The PBOC is said to draft plan for foreign access to the finance sector. As reported over the weekend, Japanese PM Abe is reported to be considering dissolving the lower house for a snap election next month and informed the ruling coalition of his plans, with October 22nd seen as a likely date for the snap elections. Chinese House Prices YY (Aug) 8.3% (Prev. 9.7%). Chinese House Prices increased M/M in 46 out of 70 cities (Prev. 56) and increased Y/Y in 68 out of 70 cities (Prev. 70). PBoC injected CNY 280bln via 7-day reverse repos and CNY 20bln via 28-day reverse repos, most since January: the People’s Bank of China added the most cash into financial system via open-market operations since January, as it seeks to ensure ample liquidity before end-quarter regulatory checks and a week-long holiday early next month.
Top Asian News
- China PBOC Is Said to Draft Package for Financial Market Opening
- Abe Says He’ll Decide on Snap Japan Election After Trip to U.S
- Saudis Said to Weigh Raising Gasoline Prices by End- November
- Chinese Online Insurer ZhongAn Starts $1.5 Billion Hong Kong IPO
- Iron Ore Bears Push for Control as Futures Drop Near Bear Market
- Qatar to Buy 24 Typhoon Jets to Beef Up U.K. Defense Partnership
- BYD Extends Weekly Surge on China’s Plan to Boost Electric Autos
European equity markets trade in the green across the board, following the global price action, as the US saw fresh
record levels once again, highlighted by the S&P 500, which closed above the 2500 level. All 10 sectors trade in the green,
led by Telecoms, which outperformed in the US on Friday, trading up over 1% with Telecom Italia leading the FTSE MIB charge.
BAE Systems are one of the outperformers in the UK, following news that they have secured a Typhoon fighter aircraft deal with
Qatar which could be worth more than GBP 2bln.
Portuguese yields underperform, following their rating upgrade curtesy of S&P on Friday. 10 y spreads trade more than
20bps tighter to Bunds, as such the 2y Portuguese yield now trades firmly in the negative (-0.09%). The European triple A’s
continue to trade alongside the hawkish bank rhetoric with Bunds and Gilts trading around session lows.
Top European News
- London Slumps as U.K. Sellers Raise Home Prices Least Since 2012
- Portugal Bonds Lead Peripheral Rally on Sovereign Rating Upgrade
- Natixis Unlikely to Buy AXA Investment Management Unit: JPMorgan
- European Telco Rally Overdue, May Rotate Quickly: Deutsche Bank
- ECB Sees Base Effect Affecting Inflation in the Coming Quarters
In currencies, the European morning has been dictated by the greenback, as the DXY has broken out of the overnight range. A push through 92.00 helped many of the dollars major pairs to see some volatility. USD/JPY trades at session highs, firmly back in Apr – Aug trading range, looking like a test of 114.00 is now possible. GBP/USD continues to struggle to break 1.36, however traders are likely to await Carney at 16:00BST. Sterling has seen some early choppy trade, with early week, Monday thin trade evident. Cable managed to spike through overnight highs, back through 1.36. However, trade quickly stalled, with pending offers pushing the pair back towards overnight lows, looking for a break of 1.3550.
In commodities, oil has seen an early bid amid no real fundamental news, WTI trades back through 50.00/bbl looking towards August’s 50.51 high. Another pending hurricane could cause continued Energy concerns, as Hurricane ‘Maria’ is forecast to become another Category 4. Precious metals continue to come off highs, as geopolitical concerns have dampened in the market with gold seemingly set to see another outside down day. A key tech level to watch will be the 1295 area, which behaved as resistance up until August 28th.
Looking at the day ahead, Monday starts with the final reading of the Eurozone’s August inflation, which printed largely as expected although there was some upside in core prints. Over in the US, there is the NAHB Housing market index and total net TIC flows for July. Also on Monday, US’s lead negotiator on the NAFTA talks will speak and lay out the US’s priorities. There are also other speakers, including: i) BOE’s governor Mark Carney giving a lecture at IMF’s headquarters, ii) Bank of Canada’s deputy governor Timothy Lane, iii) ECB’s supervisory board member Angeloni speaking at an Italian banking conference, as well as iv) Germany’s Merkel and EC President Juncker speaking at the 75th birthday of Germany’s longest serving finance minister.
US Event Calendar
- 10am: NAHB Housing Market Index, est. 67, prior 68
- 11am: BOE Governor Carney Speaks at IMF in Washington, DC
- 4pm: Total Net TIC Flows, prior $7.7b
- 4pm: Net Long-term TIC Flows, prior $34.4b
DB’s Jim Reid concludes the overnight wrap
Mondays are the new Fridays. At least they are for me at the moment as being back to work allows me to escape from the madhouse at home. One example sums this up. At the moment we put the feeding bottles and expressing units in the steriliser case and then in the microwave every 3 hours. This goes on at 1000 watts for 6 minutes. We have now done this nearly 200 times in the 3 weeks of having the twins. We do it on autopilot and can literally do it in our sleep which we frequently do. So yesterday morning I get home from walking Bronte with Maisie to find the microwave on and the contents of it splattering everywhere within in. It only had 5 seconds to run, I rushed to turn it off and found that my wife had put her porridge in it and on autopilot left it cooking for 6 minutes on 1000 watts. It was absolutely everywhere and glued to the sides. For someone who is very switched on this showed how tired she is. She had collapsed on the sofa. My poor wife never did get round to eating her breakfast as the twins then demanded to feed again.
This week will be dominated by 3 of the most powerful women in the world and I’m not talking about Daenerys Targaryen, Cersei Lannister and Sansa Stark. Instead we have our real world version with Mrs Yellen likely to announce the end of Fed reinvestment on Wednesday, Mrs Merkel firm favourite with the pollsters to see a big election win on Sunday and Mrs May set to outline her latest Brexit vision in Florence on Friday. Of the three, Mrs May’s speech is currently the least predictable but after a big week for the UK last week (GBPUSD +2.98%, GBPEUR +3.75%, 10yr Gilts +32bps, and the November hike probability from 18.4% to 64.5% according to Bloomberg’s calculator), Sterling assets are seeing some significant volatility at the moment.
Indeed bonds generally had a more difficult week than of late on the back of stronger than expected US and UK inflation, a hawkish shift from the BoE, a slightly less severe hurricane than feared in the US, and haven fatigue when it came to the still tense North Korean situation. Over the week, Gilts were clearly the underperformer with yields up c30bp across maturities (2Y: +27bp; 10Y +32bp). To be fair, other core bond yields were also up 6-15bp, with UST 10Y (2Y: +12bp; 10Y: +15bp), Bunds (2Y: +6bp; 10Y: +12bp) and French OATs (2Y: +7bp; 10Y: +9bp) all higher for the week. Peripheral bonds modestly outperformed, in particular Portugal where 10yr bond yields rose only 1bp for the week, likely supported by S&P’s upgrade of its sovereign credit rating back to investment grade.
Bonds will probably take a lot of their lead from the Fed this week. They have been signalling for some time that reinvestment tapering will be announced at this meeting (Wednesday) with our expectations being that it will start on October 1st. Mrs Yellen’s press conference and how she steers markets on the chances of a December hike will arguably be more important as will the latest dot plot changes. For those who have missed it, DB’s Peter Hooper has detailed the team’s expectations, with particular focus on potential changes to the Fed’s forecasts, rate expectations in the dot plot, and inflation narrative. He expects the Committee will signal, via its economic projections and in Yellen’s commentary during the press conference, that it still anticipates raising rates one more time this year so long as incoming data are supporting its projections for inflation and growth.
As for Mrs Merkel, assuming the polls are correct the main focus post the election will be on the composition of the coalition. This is the main area of uncertainty. The process normally takes 1-2 months but could take longer if negotiations are protracted.
Not to be outdone by that power trio, we also have Mr Trump’s debut speech (Tuesday morning) at the big UN get together in NY this week. Whilst not likely to be immediately market moving, his view on both the UN and America’s role in the world are clearly vital issues going forward.
This morning in Asia, markets have followed the positive lead from the US and are trading higher as we type. The Nikkei is closed for a holiday but the Kospi (+1.06%), Hang Seng (+1.01%), Chinese bourses (up c0.4%) and ASX 200 (+0.54%) are all higher.
Quickly recapping the market’s performance on last Friday. The S&P edged up 0.18% to another record new high, closing marginally above 2,500. Elsewhere, both the Dow and the Nasdaq rose c0.3%. Within the S&P, gains were led by the telco sector (+1.78%), partly offset by weakness in health care and discretionary consumer sectors. European markets were modestly weaker, with the Stoxx 600 and Dax down 0.28% and 0.17% respectively, but the FTSE fell more (-1.10%), likely impacted by the more hawkish BOE, stronger pound and concerns about the fresh terrorist event on the London Underground.
Moving to currencies, the US dollar index fell 0.27% following lower than expected August retail sales figures. Elsewhere, Sterling jumped for the second consecutive day, up 1.46% against the Greenback and 1.21% vs. the Euro. In commodities, WTI oil was broadly unchanged, while precious metals (Gold -0.72%; Silver -1.16%) and base metals (Copper -0.40%; Aluminium -0.70%) fell modestly.
Away from the markets, the BOE’s more hawkish message from Thursday was further reinforced by the usually dovish Gertjan Vlieghe (a member of the MPC), who in a speech on Friday said “The evolution of the data is increasingly suggesting that we are approaching the moment when bank rate may need to rise”. Elsewhere, the Centre for Economics and Business Research has upgraded the outlook for UK, now expecting economic growth of 1.6% (+0.3ppt) and 1.4% (+0.2ppt) in 2017 and 2018 respectively. The cause for the upgrade reflects a pickup in manufacturing and that the worst of the consumer spending squeeze has now passed.
Staying in the UK, British executives from 120 businesses have signed a letter urging PM Theresa May to seek a three year transition period after Brexit, warning that failure to secure sufficient time would jeopardize “our collective prosperity”. Turning back to North Korea, US Secretary of State Rex Tillerson reiterated his preference for a diplomatic solution, he noted “if our diplomatic efforts fails… our military option will be the only left….but (let’s) be clear, we seek a peaceful solution to this”.
Before we take a look at today’s calendar, we wrap up with other data releases from Friday. In the US, macro data were overall slightly lower than expected. Headline August retail sales fell 0.2% mom (vs. +0.1% expected), this coupled with some modest downward revisions has meant through year growth is now 3.5% yoy. Core retail sales (ex-auto and gas) were also weaker than expected, down 0.1% mom (vs. +0.3% expected). While part of the weakness may have been due to the impacts from Hurricane Harvey, the underlying picture is still likely a bit softer nonetheless. Moving along, the August IP was also below market at -0.9% mom (vs. +0.1% expected). Core manufacturing output was down 0.3% mom, but according to the Fed’s estimates, Hurricane Harvey subtracted c0.75pps from both headline and manufacturing output in August, so the underlying performance of the manufacturing sector looks a bit stronger this month. Even so, the overall weakness in IP, when combined with the retail sales report, means that the Atlanta Fed’s GDPNow model of Q3 GDP growth was slashed by eight-tenths to 2.2% saar. Elsewhere, the empire manufacturing survey beat at 24.4 (vs. 18 expected) and the University of Michigan’s consumer sentiment index was also above market at 95.3 (vs. 95 expected).
Onto the week ahead now. Data wise Monday starts with the final reading of the Eurozone’s August inflation along with Italy’s trade balance. Over in the US, there is the NAHB Housing market index and total net TIC flows for July. Onto Tuesday, the Eurozone’s current account and construction output stats are due. There is also the ZEW survey on economic growth for Germany and the Eurozone. Over in the US, there are housing starts, building permits, current account balance and the import / export price index. Turning to Wednesday, Germany’s August PPI along with the Japanese trade balance and exports & imports stats will be out early in the morning. In the UK, there is the retail sales release for August. Over in the US, the main event is the FOMC rate decision along with data on MBA mortgage applications and existing home sales. For Thursday,Japan’s all industry activity index will be due early in the morning along with the BOJ policy rate decision later on. Then the Eurozone’s confidence index and ECB’s economic bulletin is also due. In the UK, data on the Finance loans for housing, private sector and public sector borrowing are due. Over in the US, there are numerous data, including: Conference board leading index, Philadelphia Fed business index, FHFA house price index, initial jobless claims and continuing claims. Finally on Friday, Japan will release data on the buying of Japanese bonds and stocks early in the morning. In France, there is the final reading of 2Q GDP and wages. Over in Canada, there is the August inflation and retail sales. Elsewhere, the Markit PMIs on services, manufacturing and Composite will be available for the US, Eurozone,Germany and France
Onto other events, on Monday, US’s lead negotiator on the NAFTA talks will speak and lay out the US’s priorities. There are also other speakers, including: i) BOE’s governor Mark Carney giving a lecture at IMF’s headquarters, ii) Bank of Canada’s deputy governor Timothy Lane, iii) ECB’s supervisory board member Angeloni speaking at an Italian banking conference, as well as iv) Germany’s Merkel and EC President Juncker speaking at the 75th birthday of Germany’s longest serving finance minister. Moving to Tuesday, there is the general debate of the UN general assembly and Germany’s Merkel will give a preelection interview to RTL television. Turning to Wednesday, there is the FOMC rate decision in the US, followed by Yellen’s speech at 14:30 EDT. Elsewhere, EU’s Chief Brexit negotiator Michael Barnier will speak and the OPEC’s panel of technical representatives will meet to discuss production cuts. Then onto Thursday, there is the BOJ rate decision. Back in Europe, the ECB’s Mario Draghi will give a welcome address at the European systemic risk board’s annual conference in Frankfurt and the ECB’s Frank Smets will also speak. Finally, on Friday, we have three Fed speakers, including John Williams, Esther George and Robert Kaplan. Over in Europe, the ECB’s Vice President Constancio will speak and the EU foreign ministers will also hold an informal meeting. In the UK, PM Theresa May will give her big speech updating her government’s position on Brexit.
3. ASIAN AFFAIRS
i)Late THURSDAY night/FRIDAY morning: Shanghai closed UP 9.24 POINTS OR 0.28% / /Hang Sang CLOSED UP 352.18 POINTS OR 1.27%/ The Nikkei closed FOR HOLIDAY/Australia’s all ordinaires CLOSED UP 0.40%/Chinese yuan (ONSHORE) closed WELL DOWN at 6.5690/Oil DOWN to 49.77 dollars per barrel for WTI and 55.26 for Brent. Stocks in Europe OPENED GREEN . Offshore yuan trades 6.5700 yuan to the dollar vs 6.5690 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 WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE SLIGHTLY WEAKER DOLLAR. CHINA IS HAPPY TODAY
3a)THAILAND/SOUTH KOREA/NORTH KOREA
North Korea vows to complete the nuke program and reach ” military equilibrium” with the uSA.
The USA is not amused..
(courtesy zero hedge)
North Korea Vows To Complete Nuke Program, Reach “Military Equilibrium” With The US
Shortly after the UN Security Council “strongly condemned” North Korea’s “highly provocative” ballistic missile launch over Japan on Friday, Kim Jong Un vowed he would complete his nation’s nuclear program despite escalating international sanctions. On Saturday, state-run news agency KCNA quoted the leader, who said that North Korea is nearing its goal of “equilibrium of real force” with the U.S. and claimed that North Korea’s nuclear program is nearly complete.
KCNA added that Friday’s latest missile test was aimed at “calming down the belligerence of the U.S.” and “confirming action procedures of actual war,” the state-run agency said in a statement. Kim personally guided the launch of the latest Hwasong-12 missile, it added.
Hwasong-12 missile lifting off from Pyongyang, on Aug. 29.
KCNA also said that Kim expressed great satisfaction over the launch, which he said verified the “combat efficiency and reliability” of the missile and the success of efforts to increase its power. While the English version of the report was less straightforward, AP noted that the Korean version quoted Kim as declaring the missile as operationally ready. He vowed to complete his nuclear weapons program in the face of strengthening international sanctions, the agency said.
Photos published by North Korea’s state media showed the missile being fired from a truck-mounted launcher and a smiling Kim clapping and raising his fist while celebrating from an observation point.
It was the first time North Korea showed the missile being launched directly from a vehicle, which experts said indicated confidence about the mobility and reliability of the system.
In previous tests, North Korea used trucks to transport and erect the Hwasong-12s, but moved the missiles on separate firing tables before launching them.
Kim also said the country, despite “limitless” international sanctions, has nearly completed the building of its nuclear weapons force and called for “all-state efforts” to reach the goal and obtain a “capacity for nuclear counterattack the U.S. cannot cope with.”
“As recognized by the whole world, we have made all these achievements despite the U.N. sanctions that have lasted for decades,” the agency quoted Kim as saying.
Kim said the country’s final goal “is to establish the equilibrium of real force with the U.S. and make the U.S. rulers dare not talk about military option for the DPRK,” referring to North Korea’s official name, the Democratic People’s Republic of Korea.
More importantly, he indicated that more missile tests would be forthcoming, saying that all future drills should be “meaningful and practical ones for increasing the combat power of the nuclear force” to establish an order in the deployment of nuclear warheads for “actual war.”
Prior to the launches over Japan, North Korea had threatened to fire a salvo of Hwasong-12s toward Guam, the U.S. Pacific island territory and military hub the North has called an “advanced base of invasion.”
Separately, on Saturday China rebuffed U.S. demands to cut off oil exports to North Korea as a way to dissuade Kim Jong-Un’s regime from pursuing nuclear weapons, saying instead it was American leaders who needed to “tone down their rhetoric and come to the negotiating table.” China will implement all United Nations Security Council resolutions, “no more, no less,” Cui Tiankai, China’s ambassador to the U.S., told reporters at a briefing in Washington when asked if China would cut oil shipments. Any further steps would need to be worked out with the agreement of the entire UN Security Council, he said.
On Thursday, Secretary of State Rex Tillerson demanded that China use its role as the main exporter of oil to North Korea to force Kim to abandon his nuclear weapons and ballistic missile programs. Hours earlier, North Korea had launched a missile over Japan, the latest in a series of actions that have rattled the international community and prompted a new round of U.S.-led sanctions.
Cui said the U.S., not China, needed to take more responsibility for the issue. “They cannot just leave the issue to China alone, and honestly I think the United States should be doing more, much more than now, so that there is real effective international cooperation on this issue, Cui said.
Asked what specifically the U.S. should do, Cui said “they should refrain from issuing more threats” and “do more to find an effective way to resume dialogue and negotiation.”
For now, neither threats nor dialogue have made any progress at de-escalating the increasingly more hostile standoff.
Nikki Haley, Ambassador to the UN states that General Mattis will “take care” of North Korea if diplomacy fails
(courtesy zero hedge)
Haley Warns World: Mattis Will “Take Care” Of North Korea If Diplomacy Fails
During an appearance CNN’s “State of the Union” Sunday morning, US Ambassador to the United Nations Nikki Haley admitted something that most of the international community – perhaps including Kim Jong Un himself – has known for weeks: The United Nations Security Council has just about reached the limit of its ability to economically punish North Korea.
Responding to a question by CNN’s Dana Bash about whether President Donald Trump’s famous “fire and fury” remark was an empty threat, Haley insisted that the US has held back out of a sense of “responsibility.” But now that diplomatic solutions appear to be dwindling, she would be “perfectly happy” handing the situation off to Defense Secretary James Mattis, the source of some of the US’s harshest rhetoric against North Korea. Mattis, Haley said, would “take care of it.”
“What we’re doing is being responsible where North Korea is being irresponsible and reckless. We were being responsible by trying to use every diplomatic possibility that we could possibly do. We’ve pretty much exhausted all the things that we could do at the Security Council at this point.”
“I said yesterday I’m perfectly happy kicking this over to General Mattis because he has plenty of military options. So, I think that the fire and fury – while he said this is what we can do to North Korea – we want to be responsible and go through all diplomatic means to get their attention first. If that doesn’t work, General Mattis will take care of it.”
At least one member of the Trump administration, former chief strategist Steve Bannon, has admitted that the White House doesn’t have a viable military strategy for North Korea where “ten million people in Seoul don’t die in the first 30 minutes from conventional weapons.”
But the “all options remain on the table” line has been key to the US’s posturing. Haley reiterated that, should the North strike the US or its allies, “[it] will be destroyed.”
“You’d have to ask the President what ‘fire and fury’ meant. If the US has to defend itself, or defend its allies in any way, North Korea will be destroyed. We don’t want that. Something is going to have to be done. We’re trying every other possibility that we have but there are a whole lot of military options on the table.”
However, Haley did praise the latest round of UN sanctions, ignoring the fact that the US had to capitulate on several of its demand – including cutting off the North’s oil supply and its trading partners – to win the support of Russia and China.
“The facts are the facts. The first sanctions bill that was the largest ever that we had done to North Korea was $1 billion and was a punch in the gut. This one, which we passed in a week, was $1.3 billion and that didn’t count the reduction of 30% of the oil which was made up of 55% reducing their diesel and gasoline that they use to move the missiles. You take that with the elimination of joint ventures and the laborers which we consider modern day slavery that total 90% of North Korea’s, it is being cut off. We have economically strangled North Korea at this point.”
“I think everybody in the international community sees what a big deal it is and the biggest deal is enforcement. North Korea is already feeling the pinch. It’s the reason you see them reacting the way they are. This wasn’t just a hit to North Korea, it was a hit to China – they have to take a hit when they do 90% of North Korea’s trade.”
The administration has been repeating the same line for months, yet nothing has been done. Of course, the North Korean conflict has the dynamics of a geopolitical Mexican standoff – that’s what makes it so difficult. At least the regime knows that if it were to strike the US or one of its allies, it would trigger Article 5 of the North Atlantic Treaty – not to mention a massive counterattack by the US. Such a move would be tantamount to suicide; the regime knows this, and the public does, too. The latest poll shows most Americans believe war is unlikely, a sentiment that has been clearly conveyed by the financial markets.
But still, how much more progress can Kim make toward achieving his goal of obtaining a weapon powerful and accurate enough to strike the US before the generals who Trump surrounds himself with convince their leader that the time for action has arrived?
b) REPORT ON JAPAN
Abe set to hold a snap election and that sends the yen southbound and gold with it
(courtesy zero hedge)
Yen Weaker After Abe Decides To Hold Snap Elections
Despite Japan being closed for holiday, the Yen has started off on the back foot, with the USDJPY rising 20 pips following a weekend Nikkei report that Prime Minister Shinzo Abe has decided to dissolve the lower house with a general election to follow next month, hoping to capitalize on an uptick in public support before the opposition has a chance to regroup and mount a formidable challenge.
According to the Nikkei, the plan is rooted in the assumption that an early dissolution would work to the advantage of Abe’s Liberal Democratic Party and junior coalition partner Komeito. The Democratic Party, the main opposition group, is mired in turmoil, with multiple members reportedly looking to defect. Abe’s other goal would be to head off the advance of Tomin First no Kai (Tokyoites First) onto the national political scene. The face of the group is Tokyo’s popular governor, Yuriko Koike.
Abe is expected to make the final call after assessing the North Korea situation. The logic is that the rogue state’s recent missile launches and nuclear test might actually work in the LDP’s favor – the conventional wisdom being that the public will prefer an experienced, relatively hawkish leader like Abe.
The prime minister met with LDP Secretary-General Toshihiro Nikai at the prime minister’s office on Friday, upon returning from a visit to India.
Abe’s decision is likely reinforced by his recent sharp rebound in the polls: having seen his approval rating plunge to record lows as recently as two months ago following a series of cabinet corruption scandals, on Friday, a poll conducted by Japan’s Jiji founds that the approval rating for Abe’s Cabinet rose 5.2% points to 41.8%, exceeeding disapproval for first time in 3 months. The poll cited the government responses to the North Korean missile launches and nuclear test as a reason behind rise in approval, although it is not exactly clear just what those “responses” have been, besides empty jawboning and threats. According to the 2,000 individuals survedy, Abe’s disapproval fell 7.4 ppts to 36.7%
Sensing a change in the political winds, senior Komeito officials gathered for an emergency meeting on Saturday. The party shares the view that a dissolution is possible before the end of the year, and intends to begin preparing for an election. Also on Saturday, Komeito officials discussed the matter with senior officials of Soka Gakkai, a lay Buddhist organization that serves as the party’s base. Soka Gakkai is to hold a campaign strategy meeting on Sunday.
For now, the market response has been muted, with the USDJPY spiking above 111 at the open, although that may be more a function of the S&P finally hitting a new record high just north of 2,500.
c) REPORT ON CHINA
Kyle Bass, the lone holdout in the shorting of the yuan states correctly that China has 40 trillion dollars of assets ((debt) with only 2 trillion dollars of assets. The country is trying to rein in its global expansion but the imbalances will cause huge problems for China and for the globe
(courtesy Kyle Bass/zerohedge)
Kyle Bass: China’s $40 Trillion Banking System Has “Largest Imbalances I’ve Ever Seen”
Kyle Bass’s Hayman Capital has been having a rough year thanks to its widely publicized bet against China’s currency, which has more than reversed its 2016 decline – its largest annual drop since 1994 – as the People’s Bank of China has cracked down on potentially destabilizing capital outflows.
However, Bass – unlike a handful of other former China bears who’ve been forced to scale back, or even reverse, their positions – has said that he is standing by his belief that China’s corporate sector is massively overleveraged, and overdue for a collapse that could destabilize the global economy. Chinese banks, according to Bass, have more than $40 trillion in assets held against $2 trillion in equity.
The dollar’s bull run against the yuan last year helped spark capital outflows as wealthy Chinese worried about the depreciation of their currency. In response, the PBOC tightened restrictions on foreign-exchange transactions for individuals, local companies – quashing a roaring international M&A boom – and even foreign companies, which in some cases have struggled to pull their money out of the world’s second-largest economy.
“So what’s going on right now? Let’s get the elephant out of the room. Let’s talk about China.
Kyle Bass: OK, how much time do we have?
RP: As long as you need. Where are we? What the hell’s going on?
KB: We’re in the such late stages of a game that is the largest global imbalance I’ve ever seen in my life.When you look at on balance sheet and off balance sheets, you look at on balance sheet in the banks, you look in the shadow banks. The number of total credit in the system, China is right at $40 trillion. Think about the number I just said. $40 trillion. And that’s using an exchange rate of call it 6.7 to the dollar, right? So it’s grown 1,000% in a decade. And we’re on a $40 trillion credit system on $2 trillion of equity on maybe $1 trillion of liquid reserves.
RP: Where do you get the equity and liquid reserves from?
KB: Well, it’s the amount of equity in the banks of China. It’s right at about $2 trillion. So that’s kind of a stated number. The reserves is my own calculation, right? The Chinese magically have leveled their reserves out around $3 trillion, which happens to be the minimum level of IMF reserve adequacy as defined by the IMF rule.
RP: So what have they been doing now? So, they were under pressure, and then everything kind of eased off, I guess, as the dollar started weakening a bit.
KB: Yeah. Actually, they’ve done three things. Well, so four things have caused this, quote, easing off that you refer to. Three have been driven by SAFE and the PBOC, one that’s been driven by our illustrious Trump. So the first three are, number one, they essentially halted all cross-border M&A. So if you look at the parabola of M&A coming out of China from 2012 to 2016, it reached dizzying heights in 2016. In 2017, it’s like 15% of the 2016 number and no new deals being announced. Now, they’ll always be some outbound M&A that’s driven by really policy at the Communist Party level, right?
They’ll always buy copper mines in Uganda. They’ll always invest in ports in Greece. They’ll always do things that are from a strategic perspective and a policy perspective. The things that the Communist Party needs to procure resources for its people over the long-term. But when you look at the rampant M&A of money leaving China, they just put a halt to it in November of 2016.
And the second thing they did was they made it impossible for multinational corporations to get their profits and or working capital out of China. And that’s something that has been a problem for a lot of the multinationals that do business in China.”
When asked how he intends to trade China’s inevitable unraveling, Bass said he believes the “ultimate” arbiter of China’s “entire macro situation” is its currency. He intends to remain short, with a target date between November 2017 and June 2018.
“RP: Somebody’s going to be holding that baby in the end, and China’s got the biggest basket in the short dollar issue.
KB: Yeah, but just think, just since January, the dollar index has gone roughly 103 to 92 and change. It’s come in 10% in less than a year. That is an enormous move. And it’s actually pretty beneficial to the US from a trade perspective, right?
KB: Trump figured out very quickly that making America great again doesn’t mean a big, strong dollar. But I think the fourth thing that’s really affected the exchange relationship has been Trump’s inability to get anything done on the Affordable Care Act repeal and replace. Therefore, nothing’s being done on comprehensive tax reform. All we’re hearing now is there’s going to be a tax cut. Well, that’s not going to balance anything. And so his kind of inability to get anything done has also forced the dollar much lower.
RP: So, give us some timings how this plays out. What kind of ways are you looking at? Are you just looking at a currency trade here? Is that the most efficient way of doing this?
KB: That’s it. The ultimate arbiter of the entire macro situation I just described to you is the currency. So that’s where we stay.
RP: And what about a time horizon? I know it’s difficult. I don’t want to pin you down.
KB: Well, no, it actually requires you to pin me down because our investors pin us down.
RP: OK, so when the f***’s this going to happen?
KB: So my best guess is between November and call it June. November 2017, June 2018.”
Foreign multinationals have continued to do business in China despite an array of obstacles, including the Chinese economy’s implicit bias toward state-controlled companies. But now that the Chinese have erected all these barriers preventing multinationals from repatriating profits, Bass expects companies will eventually give up on the “carrot” that is the unrivaled growth potential of the world’s second-largest economy.
“RP: It sounds like they’ve got a temporary fix in place. So what changes the dynamic of that then forces those reserves lower? Because if we’re looking for this whole situation to kind of, you know, the apple carts get upset, how does that happen?
KB: Yeah. What’s interesting to me is, so – the answer is I’m not sure. I know that in an effort to maintain economic and political stability for the 19th Party Congress, which happens this November 2017, Xi, and Wang, and the ruling elite of China wanted to maintain the stability, needed to maintain it at all costs. And so they’ve tied a knot at the end of their proverbial rope and they’ve been hanging on. But imagine if you’re Qualcomm, Ford, GM, Visa and you can’t get money out of China, you have a US auditor. And so you go through the end of the year, and they’re going to have to rethink how those profits are classified and maybe even how the working capital is classified.
And so it’s my view that they can’t do this forever. And to the extent that a multinational doing business in China is really having severe restrictions on their capital, they’ll just move to Cambodia, or Vietnam, or they’ll move somewhere in the region and start doing business elsewhere.
China wields this economic sword so beautifully. The carrot is so large. The delusion of riches is so great that companies and even investors are willing to suspend disbelief to chase that carrot, and the Chinese know it. And they do a masterful job.”
After highlighting the fact that the real risks to the Chinese economy involve financial stability, President Xi Jinping has begun a crackdown on shady WMP issuance and risky lending in the banks. But as Bass says, “it doesn’t matter who you parachute in to pilot the Titanic after it hit the iceberg.”
“So I think they’re kind of focused on getting through the NPC, and we’ll see what happens.
RP: When is that?
KB: So the way the Chinese electoral system works, it’s every five years. And so that’s this November. So they have kind of a presidential cycle every five years.
RP: And so, I’ve heard this before, is that seems to be a significant date that they just want things to go smoothly, and then they can take some harder measures to try and rectify the economy afterwards.
KB: That’s correct.
RP: And do you get any sense of that within China itself when you talk to people?
KB: You know, they’ve spent a lot of time on trying to get banks to do debt for equity swaps. Xi himself has said the real risk in the economy is financial stability. And really, he’s trying to crack down on excessive WMP issuance and risky lending in the banks. But it’s like, it doesn’t matter who you parachute in to pilot the Titanic after it hit the iceberg. It almost doesn’t matter.
My point is they have some brilliant people at the PBOC. They have some brilliant people in the Communist Party. But we had a lot of brilliant people in the United States that have been running capital markets for over 100 years, and you know how bad we screwed it up. And we only had $17 trillion on balance sheet in the banks, maybe another $5 trillion off balance sheet in an economy $17.5 trillion, and we detonated our banking system. They’ve got four times what we had.”
In summary, China’s crackdown on outflows and bad debt were meant to ensure stability ahead of the Communist Party’s quinquennial leadership elections in November. Afterward, Bass expects a certain degree of complacency to develop regarding the economy. The country’s banking system has become too sprawling to control.
The collapse will arrive, Bass assures his listeners. Profiting from it is a matter of getting the timing right – something that’s incredibly difficult for short sellers.
This ought to cause gold to skyrocket despite the crooked banks incessant supply of non backed gold paper.
The risk of course is China dumping her 2 trillion usa dollars worth of reserves
US Fires Latest Shot In China Trade War: Warns Beijing Is “Threat To World’s Trading System”
It’s been at least a few weeks since the topic of trade war with China dominated the news flow, so moments ago U.S. Trade Representative Robert Lighthizer decided to poke that particular wound, in during a speech in Washington said that “China’s coordinated effort to create national champions and distort markets is a threat to the world’s trading system.“
Some headlines from his speech, via Reuters:
- USTR LIGHTHIZER SAYS THERE IS A GROWING FEELING AMONG VOTERS THAT GLOBAL TRADING SYSTEM NOT FAIR TO U.S. WORKERS
- USTR LIGHTHIZER SAYS “WE WILL HAVE CHANGE IN TRADE POLICY”
- USTR LIGHTHIZER SAYS U.S. CAN COMPETE IF CONDITIONS ARE FAIR
- USTR LIGHTHIZER SAYS HE AND TRUMP BELIEVE U.S. SHOULD BE MORE PROACTIVE IN TRADE POLICY, DEMAND RECIPROCITY
- USTR LIGHTHIZER SAYS HE AND TRUMP BELIEVE THAT TRADE DEFICITS MATTER
- USTR LIGHTHIZER SAYS SCALE OF CHINA’S EFFORT TO SUBSIDIZE INDUSTRIES IS A THREAT TO WORLD TRADING SYSTEM
- USTR LIGHTHIZER SAYS 301 PROBE INTO CHINA’S INTELLECTUAL PROPERTY PRACTICES COULD LEAD TO WTO CASES
Bloomberg provides some further details, quoting the US trade rep as saying that “WTO isn’t equipped to deal with the problem, and the U.S. must find other ways to defend our workers, companies and economic system.” As a result, Lighthizer says “we will have change on trade policy”, a statement that certainly did not come from the Goldman circle of close Trump advisors.
He also said that “the real policy difference is not over whether we want efficient markets, but how do we get them” adding that the US “must be proactive, as years of talking about the problems haven’t worked” and that “we must demand reciprocity.”
Finally, the US trade rep said that he agrees with President Trump that trade deficits matter and that he agrees macroeconomic factors have an impact on trade deficits, but terms of trade also matter.
In light of what Bank of America just said, namely that the fate of the ongoing game of chicken between the US and North Korea rests in the hands of China, and that any potential provocations by the US could result in a volatile outcome…
If China’s willingness to give more ground may be limited (even with the approach of its 19th Party Congress on Oct 18), the market is not pricing much in terms of the risk of a deterioration of the US-China relationship.... Washington has been threatening trade sanctions against China to force Chinese compliance on North Korea. We suspect an escalation of tension between Washington and Beijing would likely be accompanied by CNH weakening (intentional on the part of Beijing or not).
… we eagerly await Beijing’s response to this latest escalation in (per) trade war tensions between the two economic giants.
700 Catalan mayors defy Madrid. Catalonia is experiencing continual police raids trying to find secret ballot boxes ahead of the Oct referendum vote:
“They’ve Lost The Plot” – 700 Catalan Mayors Defy Spanish Government Amid Police Raids
“The only thing I ask of (Catalan) mayors is that they comply with the law, and as such don’t participate in an illegal referendum,” Prime Minister Mariano Rajoy urged this week, calling for a return to “rationality and legality” and promised to block the vote.
However, as Reuters reports, the mayors are not complying…
More than 700 mayors from across Catalonia gathered in Barcelona on Saturday to confirm their support for a planned independence referendum that Madrid has declared illegal.
The mayors met with Catalonia’s regional head Carles Puigdemont in a show of defiance, following Spanish prosecutors warning earlier this week that officials engaging in any preparations for the vote could be charged with civil disobedience, abuse of office and misuse of public funds.
Barcelona mayor Ada Colau, who has reached an agreement with the Catalan regional government to allow voting in the city, criticized Madrid’s response to the crisis in a short speech in the city hall.
“It’s a disgrace that we have a government that is incapable of dialogue and instead dedicates itself to pursuing and intimidating mayors and the media,” Colau said.
So far, 740 of 948 municipal leaders have said they would allow municipal spaces to be used for the referendum,according to the Association for Municipalities for Independence (AMI).
As this was taking place, Reuters reports that Spanish police have raided several print shops and newspaper offices in recent days in a hunt for voting papers, ballot boxes and leaflets to be used for the referendum.
The searches are part of a concerted effort by the government to prevent the ballot from going ahead, amid fears that a vote to break away could trigger a political crisis even if Spain does not recognize the outcome.
“They’ve lost the plot,” said Albert Batet, mayor of the town of Valls and one of those summoned for questioning. “They are persecuting mayors, the press, printers. They are stretching the limits of democracy.”
Catalonia’s president Carles Puigdemont, who faces criminal charges for organizing the referendum, says he has over 6,000 ballot boxes ready to deploy next month, but their whereabouts are a secret.
“Right now, we have no idea where they are,” said Toni Castejon, spokesman for the Catalan police force union.
On Friday, police confiscated 100,000 campaign leaflets in a raid in Catalonia, the Interior Ministry said, without saying where. Catalonia’s top court issued a warning on Friday to seven newspapers, many of them online, not to publish campaign notices for the referendum, a court spokesman said on Saturday.
And furthermore, in its latest desperate move to stop the October 1 independence referendum, MishTalk.com’s Mike Shedlock notesthe Spanish Government is Poised to Seize Catalan Finances.
Finance Minister Cristóbal Montoro said a mechanism had been approved for the state to take control of the autonomous region’s finances. Madrid is seeking to stop the Catalan government spending public money on its planned independence referendum.
If the deadline is not met, the central government will take over the funding of most essential public services in the region, Mr. Montoro said.
Catalan President Carles Puigdemont launched his campaign for a “Yes” vote on Thursday night in the town of Tarragona, telling a rally at a former bullring: “Vote, and in so doing bring light to darkness that has lasted for too many years.” The crowd shouted back, “Independence”, “We will vote” and “We’re not afraid”, AFP news agency reports.
Public finances are a particularly sore point for Catalans who for years have contributed more to the state budget than they get back in spending on public services.
More than 700 Catalan mayors who have agreed to help stage the referendum now face criminal investigation and police have been ordered by Spanish prosecutors to seize ballot boxes, election flyers and any other item that could be used in the referendum.
The separatists have promised to declare independence within days if, as expected, the Yes vote prevails at the referendum.
Spanish Government Rejects Dialog Request
The Telegraph reports Spain threatens to cut funding for Catalonia over the independence referendum.
The Spanish government on Friday dismissed a letter from Catalan leaders offering talks over their looming independence referendum as “a trap”, and announced it would intervene in Catalonia’s finances to ensure that “not one euro” of public money was used to fund the “illegal” vote.
In the letter, addressed to Spanish Prime Minister Mariano Rajoy and King Felipe VI and carried by a number of media, the leaders said they were seeking talks “to make possible what in a democracy is never a problem nor still less a crime: to listen to the voice of the citizens”.
At a press conference following a cabinet meeting, Mr Méndez de Vigo said the government considered it “a sarcasm” that “at this stage of the game” Catalan leaders were speaking of dialogue when “they have only put on the table a referendum yes or yes.”
The spokesman also took aim at Ada Colau, the Barcelona mayor, over her support of the vote, warning she would be “responsible for her actions” and that she was “either with the law or against it”.
The ministers also delivered an ultimatum for Mr. Puigdemont – sign an agreement that public funds would not be diverted for the referendum within 48 hours or the government would seize control of the part of the Catalan budget destined for services and salaries.
A Metroscopia/El Pais poll published on Sunday found that 56 percent of Catalans think the referendum in its current form is illegal, and 82 percent – including 40 percent of voters for Mr. Rajoy’s PP – blame his government for “strengthening rather than weakening” independence forces.
Juncker in Hot water
EC president Jean-Claude Junker created quite a stir when he said the EU would respect a yes vote. His office now says he was misinterpreted.
It took several clarifications from Juncker to deny he said what he said.
LATEST: Second clarification on Catalonia from Juncker’s office: “We are calling Euronews to make sure they correct the misleading tweet…”. pic.twitter.com/xg0VZGpAFR
Recall that Baseball great Yogi Berra said: “I never said most of the things I said.”
Also recall Jean-Claude Juncker is famous for his statement “When it becomes serious, you have to lie“.
Cable Drops Back Below 1.35 After Carney Walks Back Rate-Hike Comments
Having sent cable 4 big figures higher after his hawkish comments last week, BoE Governor Carney is out desperate to reassure markets he won’t break anything by explaining that any rate hikes will be “limited and gradual.” Cable has started to leak lower on the headlines…
“There remain considerable risks to the U.K. outlook,” he said, noting how consumers, companies and markets respond to progress in the Brexit process.
There are also global factors that justify tightening soon, according to the governor. In his view, the case is reinforced by the possibility that global equilibrium interest may be rising “meaning that monetary policy has to move in order to standstill.”
On Brexit, Carney said leaving the European Union will at least temporarily reduce the openness of the economy because any replacement deals with other trade partners will take time to be agreed and to have an impact.
While quitting the EU may have a disinflationary impact because the bloc is such a huge export market for the U.K.,there’s an inflationary upside from reduced migration and a smaller labor force, as well as less investment, which cuts the economy’s potential growth. Carney has also called this a reduced “speed limit” for the economy.
He used a French phrase to sum up this view — “reculer pour mieux sauter” or “stepping back in order to jump better.”
Furthermore, Carney warned that the UK Economy is likely to underperform the G-7 average until mid-2018.
After reaching its stroingest since Brexit, cable is sliding, but the reaction is modest for now…
As we suspect the market’s spike to a 60% chance of Nov rate hike was overdone…
5. RUSSIA AND MIDDLE EASTERN AFFAIRS
This is interesting: we now a race for Deir Ezzor in Syria which houses most of its oil fields. The western side of the attack (west of the Euphrates River) is coming from Syrian of opposition forces (SDF) allying itself with the USA, while the east is being attacked by Russian-Syrian Government-Iranian forces.
this may not end well..
Will The US Bomb? First Images Of Syrian Army Crossing The Euphrates River In Deir Ezzor
A correspondent with Al-Masdar News based in Damascus has confirmed that the Syrian Amy has crossed the Euphrateswhich runs through Deir Ezzor on Monday. The river forms a natural demarcation line separating Syrian government forces and their allies from the US-backed Syrian Democratic Forces (SDF):
DAMACUS, SYRIA (4:00 P.M.) – The Syrian Army was capable today of crossing the Euphrates River after fully recapturing Sakr Island located to the north of Deir Ezzor Airbase.
Heavy Russian and Syrian airstrikes have pushed ISIS militants away from the eastern bank, paving the way for the government troops to set foot in the eastern bank for the first time in years.
With crossing the river, the government forces are inching closer to re-take the remaining territories under ISIS control. However, this will also put the Syrian forces face to face with the US-backed Kurdish forces; which launched its own offensive against the Islamic State in Deir Ezzor.
Other Middle East monitoring groups as well as regional correspondents have also confirmed the breaking news which could lead to a fresh outbreak of direct hostilities between the US-SDF alliance and Syria-Russia alliance:
We noted over the weekend that as Russian and Iran-backed Syrian troops are moving in from the west, and with US-backed SDF forces operating mostly on the east side, the two factions have mostly stayed out of each other’s way in their “fight against ISIS” with the Euphrates acting as a dividing line. It now appears that dividing line has been breached by the Syrian Army – as Russian media is now keen to show the world (see screen shot of a Russian broadcast from location today).
On Saturday, a senior aide to President Bashar al-Assad said the government would fight any force, including the U.S.-backed militias, to recapture the entire country. ”I‘m not saying this will happen tomorrow … but this is the strategic intent,” Bouthaina Shaaban said in a TV interview according to Reuters.
Deir Ezzor situation map as of Monday morning (9/18). Source: Within Syria Blog
Ironically, The U.S.-led coalition said last week that the SDF did not plan to enter Deir Ezzor city, where Syrian troops recently broke an Islamic State siege that had lasted three years. Just a few days later, however, they appeared to have changed their mind.
Meanwhile, seeking to maintain the offensive momentum, a pro-Damascus military alliance launched attacks on Saturday from the southern corner of Deir Ezzor province to drive Islamic State from the Iraqi border. The last local vestige of the Islamic State is also coming under attack by U.S.-backed Iraqi government forces just over the border from Syria’s Deir Ezzor inside Iraq.
With the fate of Deir Ezzor – and much of the oil in the region – set to be sealed in the coming days, the Syrian war which has gradually disappeared from both the front pages and the public consciousness is now making a strong comeback in world headlines, especially as Syria/Russia/Iran seems to now be gaining full control of this key regional outpost.
You r saying there is a mistrust & getting it wrong again. Deal made last week: No US proxies capable 2defeat ISIShttps://twitter.com/Charles_Lister/status/909775630270595073 …
The airspace over Deir Ezzor is potentially growing even more dangerous as there have long been rumors that the US coalition previously declared a de facto no fly zone (NFZ) over the north/eastern side of the Euphrates. In the meantime, Syrian and Russian air operations in the area will only increase with Syrian army advances.
According to Reuters over the weekend U.S.-backed militias, which have included various and assorted Al-Qaeda offshots, spinoffs and reverse mergers, said they came under attack from Russian jets and Syrian government forces in Deir Ezzor province.
As there’s been no military response from the US coalition after the reported attacks, it’s likely that the two sides are talking through a long established military deconfliction phone line. In the weeks prior to things heating up in Deir Ezzor, The Navy Times initially described the deconfliction line as follows:
The U.S. is talking multiple times a day with Russia to deconflict ground and air operations in Syria, according to Gen. Stephen Townsend, commander of the U.S.-led coalition against ISIS in Iraq and Syria.
Russia and the coalition have agreed to some deconfliction lines in the middle Euphrates River valley,” Townsend said, but he added that “not all of it yet” has been decided.
…It became clear that there needed to be a ground component to the deconfliction hotline with Russia, Townsend said. “It gets tougher [to communicate] with a force that isn’t friendly but not necessarily an adversary,” Townsend explained. “Those rehearsals have allowed us to come up with measures that seem to work,” he said. “We were able to work through that then.” Between air and ground deconfliction, “someone is talking to the Russians multiple times a day,” Townsend said. “It’s a fact of life.”
Will the US and its SDF proxy on the ground allow the Syrian Army to recapture sovereign Syria territory across the Euphrates? At this moment at least, it is looking like the US will not intervene on behalf of its proxy. Syria is probably further feeling new impetus as Iraqi Kurdistan is now threatening to move forward with its September 24 referendum on the establishment of an independent Kurdish state, which would no doubt attempt to carve out SDF occupied parts of eastern and northern Syria.
6 .GLOBAL ISSUES
Nobody living on the island of Barbuda for the first time in 300 years:
Irma’s Aftermath: “For The First Time In 300 Years, There’s Not A Single Living Person On Barbuda”
Exactly one week ago, Prime Minister Gaston Browne surveyed the damage on his tiny Caribbean island of Barbuda and declared that Hurricane Irma had completely devastated the island and left 90% of all dwellings leveled. Browne went on to say that Irma’s “absolute devastation” meant that Barbuda was “basically uninhabitable” for the 1,800 people who called it home.
Now, according Barbuda’s Ambassador to the United States, Ronald Sanders, the entire island has been evacuated for the first time in 300 years leaving “not a single living person on the island of Barbuda.” Per the USA Today:
“The damage is complete,” says Ambassador Ronald Sanders, who has served as Antigua and Barbuda’s ambassador to the U.S. since 2015. “For the first time in 300 years, there’s not a single living person on the island of Barbuda — a civilization that has existed on that island for over 300 years has now been extinguished.”
“This was a huge monster,” he says. “The island and the people on the island had absolutely no chance.”
“We’ve had most of the people we’ve brought over to Antigua in shelters,” says Sanders. “We’ve tried to make living accommodations as good as humanly possible in these circumstances. Fortunately, we had planned ahead for this hurricane, and we had ordered supplies in from Miami and the United States before the hurricane hit.”
As the following aerial footage from the BBC shows, not a single structure was left untouched by Irma’s 185 mph winds.
Meanwhile, even though Barbuda residents have been evacuated to safety on Antigua, Sanders says the mass evacuation has resulted in an unsustainable situation with massively overcrowded schools and unsanitary living quarters in government facilities.
Though Barbudan evacuees are safe, Sanders says the situation is not ideal — people are living in cramped quarters in government facilities and nursing homes, including some 500 school-aged children. Now that school is back in session, Antigua must find room for these students.
“The situation is unacceptable, and it’s costly,” he says. “We’re going to have to keep this going for sometime because Barbuda’s not going to be rebuilt in a hurry, and when we do rebuild it, we’re going to have to rebuild to massive hurricane standards. This is going to take a while. There is no electricity there, there is no potable water anymore, there is no structure in which people can survive. We have a mammoth task on our hands.”
Sanders says the world must step up and help Barbuda.
“We are a small island community — the gross domestic product of Antigua is $1 billion a year,” he says. “We cannot afford to take on this responsibility by ourselves. Barbuda is not just a disaster, it’s a humanitarian crisis. We are hopeful that the international community will come to our aid, not because we’re begging for something we want, but because we’re begging for something that is needed.”
Finally, Sanders took the opportunity to remind us all that, in his scientific opinion as an Ambassador, Hurricane Irma was the direct result of all of our contributions to global warming….
“We believe climate change is here to stay — it’s a reality, despite all of the naysayers,” he says. “We know that these things have occurred as a result of the profligacy of the countries that are rich, and have abused the system. We, unfortunately, who contribute less than naught point naught percent of pollution of the world’s atmosphere, are the world’s greatest victims.”
Oh well, we probably just don’t understand the math…
7. OIL ISSUES
8. EMERGING MARKET
Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings MONDAY morning 7:00 am
Euro/USA 1.1965 UP .0022/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 ALL IN THE GREEN
USA/JAPAN YEN 111.21 UP 0.368(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 1.3544 DOWN .0047 (Brexit March 29/ 2017/ARTICLE 50 SIGNED
THERESA MAY FORMS A NEW GOVERNMENT/STARTS BREXIT TALKS
USA/CAN 1.2194 UP .0003 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/(TRUMP INITIATES LUMBER TARIFFS ON CANADA)
Early THIS MONDAY morning in Europe, the Euro ROSE by 22 basis points, trading now ABOVE the important 1.08 level RISING to 1.1965; / Last night the Shanghai composite CLOSED UP 9.24 POINTS OR 0.29% / Hang Sang CLOSED UP 352.18 POINTS OR 1.27% /AUSTRALIA CLOSED UP 0.40% / EUROPEAN BOURSES OPENED ALL IN THE GREEN )
The NIKKEI: this MONDAY morning CLOSED FOR HOLIDAY
Trading from Europe and Asia:
1. Europe stocks OPENED ALL IN THE GREEN
2/ CHINESE BOURSES / : Hang Sang CLOSED UP 352.18 POINTS OR 1.27% / SHANGHAI CLOSED UP 9.24 POINTS OR 0.28% /Australia BOURSE CLOSED UP 0.40% /Nikkei (Japan)CLOSED HOLIDAY / INDIA’S SENSEX IN THE GREEN
Gold very early morning trading: 1315.00
Early MONDAY morning USA 10 year bond yield: 2.211% !!! UP 2 IN POINTS from FRIDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%.
The 30 yr bond yield 2.774, UP 1 IN BASIS POINTS from FRIDAY night.
USA dollar index early MONDAY morning: 91.80 DOWN 7 CENT(S) from FRIDAY’s close.
This ends early morning numbers MONDAY MORNING
And now your closing MONDAY NUMBERS
Portuguese 10 year bond yield: 2.436% DOWN 37 in basis point(s) yield from FRIDAY
JAPANESE BOND YIELD: +.029% DOWN 0 in basis point yield from FRIDAY/JAPAN losing control of its yield curve/
SPANISH 10 YR BOND YIELD: 1.587% DOWN 2 IN basis point yield from FRIDAY
ITALIAN 10 YR BOND YIELD: 2.072 DOWN 1/2 POINTS in basis point yield from FRIDAY
the Italian 10 yr bond yield is trading 48 points HIGHER than Spain.
GERMAN 10 YR BOND YIELD: +.455% UP 3 IN BASIS POINTS ON THE DAY
IMPORTANT CURRENCY CLOSES FOR MONDAY
Closing currency crosses for MONDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/1:00 PM
Euro/USA 1.1934 DOWN .0009 (Euro DOWN 9 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/
USA/Japan: 111.58 UP 0.738(Yen DOWN 74 basis points/
Great Britain/USA 1.3479 DOWN 0.0125( POUND DOWN 125 BASIS POINTS)
USA/Canada 1.2324 UP .01330 (Canadian dollar DOWN 133 basis points AS OIL FELL TO $49.90
This afternoon, the Euro was DOWN by 9 basis points to trade at 1.1934
The Yen FELL to 111.58 for a LOSS of 74 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 FELL BY 113 basis points, trading at 1.3479/
The Canadian dollar FELL by 133 basis points to 1.2324, WITH WTI OIL RISING TO : $49.90
Your closing 10 yr USA bond yield UP 1 IN basis points from FRIDAY at 2.197% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 2.769 DOWN 3 in basis points on the day /
Your closing USA dollar index, 91.79 DOWN 33 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 MONDAY: 1:00 PM EST
London: CLOSED UP 37.81 POINTS OR 0.52%
German Dax :CLOSED UP 40.58 POINTS OR 0.32%
Paris Cac CLOSED UP 15.41 POINTS OR 0.30%
Spain IBEX CLOSED UP 21.700 POINTS OR 0.20%
Italian MIB: CLOSED UP 135.25 POINTS OR 0.61%
The Dow closed UP 63.01 OR 0.28%
NASDAQ WAS closed UP 6.17 POINTS OR 0.10% 4.00 PM EST
WTI Oil price; 49.90 1:00 pm;
Brent Oil: 55.52 1:00 EST
USA /RUSSIAN ROUBLE CROSS: 58.11 DOWN 58/100 ROUBLES/DOLLAR (ROUBLE LOWER BY 58 BASIS PTS)
TODAY THE GERMAN YIELD RISES TO +0.455% FOR THE 10 YR BOND 4.PM EST EST
This ends the stock indices, oil price, currency crosses and interest rate closes for today
Closing Price for Oil, 5 pm/and 10 year USA interest rate:
WTI CRUDE OIL PRICE 5:00 PM:$49.93
USA 10 YR BOND YIELD: 2.229% (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)
USA 30 YR BOND YIELD: 2.803%
EURO/USA DOLLAR CROSS: 1.1947 UP .0005
USA/JAPANESE YEN:111.45 up 0.614
USA DOLLAR INDEX: 92.03 UP 15 cent(s)/
The British pound at 5 pm: Great Britain Pound/USA: 1.3493 : DOWN 93 POINTS FROM FRIDAY NIGHT
Canadian dollar: 1.2289 down 99 BASIS pts
German 10 yr bond yield at 5 pm: +0.455%
And now your more important USA stories which will influence the price of gold/silver
TRADING IN GRAPH FORM FOR THE DAY
Tech Tumble Spooks Stocks (Briefly) As VIX Curve Steepens To 7-Month Highs
“A day above ground is a day to buy stocks…”
Trannies were weakest on the day as dip-buyers rescued stocks from red after a mid-afternoon slump…ugly close
Futures show the overall trading a little better – weakness from the EU open, a panic-bid at the US open, big selling pressure mid-afternoon, then rescue into the close (though sellers appears as ETFs settled)…
While short-term Vol sellers remain extremely active – with a crash below 10 sparking this morning’s buying-panic at the open (following Friday’s quad witch)…
The term structure has steepened dramatically with 6-month risk premia at the highest relative to 1 month since February…
This could be a problem for those expecting this ramp to continue...
Nasdaq ‘VIX’ was a notable outlier today…
Tech stocks tumbled hard mid-afternoon after comments from Harvard Law’s Lessig on regulating code…
Healthcare stocks did slide a bit on renewed chatter about a repeal bill…
(NOTE: NFLX spiked at the open after a good night at The Emmys)
Financials mirrored Tech’s decline, surging above their 50DMA…
Bond yields continue to catch up to stocks after the world did not end…
Treasury yields rose on the day with the long-end underperforming (NOTE – 2Y at its highest since July 10th ahead of FOMC)…Bonds did rally into the last few minutes of the day…
Japan was closed last night.
NOTE – 10Y Yields are back to the same level as Aug16 – FOMC Minutes day…
Rate-hike odds for December are back above 50%…
The Dollar Index rose on the day, tagging the lows from payrolls day…
FX markets were volatile with central bankers desperate to walk back recent strength… first BoE’s Carney, then BoC’s Lane…
In alternative currency land – Bitcoin spiked as gold sank today…
Bitcoin is up almost 40% from the lows over the weekend…
WTI bounced off $50 but ended the day lower as RBOB rose modestly…
And finally, as a reminder, Americans have never been more bullish of US stocks…A record high 65% of respondents in UMich’s consumer survey believe stock prices will be higher in 12 months…
trading late in the day: something happened!
Stocks Suddenly Slammed – Nasdaq Plunges Into Red
Well that escalated quickly…
Some chatter than Lawrence Lessig’s comments on regulating ‘code’ spooked some of the mega tech stocks, FANG tumbled…
And that dragged everything down…
VIX spiked back above 10…
And in case you were looking for a catalyst, there is none (same as with the panic-bid at the open).
Pennsylvania is the next state to run into trouble as they are having budgetary problems. They have run out of cash leaving 860 million of unpaid bills
(courtesy zero hedge)
Pennsylvania Will Run Out Of Cash Tonight, Leaving $860MM Of Bills Unpaid
As equity markets spike to all new highs with each passing day, the number of fiscal crises springing up within local and state governments around the country are reaching somewhat alarming levels, even if they’re being completely ignored by investors. As Reuters notes this morning, the state of Pennsylvania may become the latest example government failure when it runs out of cash later tonight leaving some $860 million worth of bills unpaid.
Pennsylvania could run out of cash on Friday, leaving $860 million of bill payments up in the air as lawmakers continue to argue over a revenue package that is more than two months overdue.
The state legislature passed a $32.5 billion spending plan on June 30, the end of the fiscal year and the deadline for the current year’s budget.
But it failed to agree on a revenue package to pay for those expenses, and the state has been borrowing money from its own short-term investment pool.
Treasurer Joe Torsella has said he will not issue more such loans and that the state’s general fund will likely run down to zero on Friday.
While Pennsylvania will be able to make some payments – including nearly $102 million of debt service costs due on Friday – it will not be able to pay all the bills that are due, said Treasury spokesman Mike Connolly.
An estimated $860 million of payments for various items, possibly including schools and Medicaid, could be delayed until the legislature fully funds the budget.
Not surprisingly, Pennsylvania’s funding crisis has only been exacerbated by a political dispute over whether the state’s budget gap should be filled with extra taxes and/or expense cuts.
On Wednesday night the state House of Representatives narrowly approved a revenue package, but the Senate appeared likely to reject it unless a compromise can be reached over the weekend.
“We plan to take a few days to review the House plan. At this point, we will return Monday,” said Jennifer Kocher, a spokeswoman for Senate Republicans.
The Senate had passed its own plan in July, proposing to close a $2.3 billion budget gap with borrowing and two new taxes: a first-ever severance tax on natural gas and a gross receipts tax on consumer utility bills.
But tax-averse Republicans in the House balked and did not pass their own bill until Wednesday night. It proposes no new taxes but would raise about $1 billion by selling a portion of the funding stream from the 1998 tobacco settlement, in which tobacco companies agreed to pay U.S. states for tobacco-related healthcare costs.
All of which should serve to comfort Pennsylvania public employees that their jobs, and 56% funding pensions, are “money good.”
(courtesy John Mauldin)
(courtesy zero hedge)
“Starts With A Whimper, Ends With A Bang”: Trader Previews Fed’s Balance Sheet Reduction
Ahead of this week’s main central bank event, in which Wall Street consensus broadly expects the Fed to officially announce balance sheet shrinkage in this week’s FOMC meeting, with the actual process set to begin in October, here is a less than bullish preview of what may happen from Bloomberg commentator Garfield Reynolds, who covers FX, bonds and commodities.
Fed’s Pruning Will Send Yields Higher for Longer: Macro View
The Federal Reserve’s plan to trim its balance sheet is likely to begin with barely a whimper for markets, but there’s plenty of potential for it to end with a bang as the three-decade bull run for bonds gets killed off.
Fed Chair Janet Yellen has been very clear that she and the other FOMC members are keen to reduce the central bank’s asset holdings while making the beginning of the end of QE as harmless as possible to broader markets.
Expectations Yellen will announce the plan to trim the Fed’s balance sheet this week make the meeting that starts Wednesday a potentially key pivot point for markets that have become accustomed to endless, bottomless central bank largess.
While the Fed’s balance sheet is now only the third-largest in the G-10 (currency effects and extended purchases have allowed the ECB and BOJ to move past it), it does oversee the world’s reserve currency for one thing, and for another it will be the first of the majors to actively trim assets.
And that largess mentioned above has already shown signs of fading.
- The BOJ is tapering by stealth and the ECB is approaching its own tapering as both banks face practical constraints on the assets they can buy.
- The combined balance sheets of the Fed, ECB, BOJ and BOE have flattened out over the past six months when viewed relative to their combined economies. They stood at an unprecedented and impressive 37% of their GDP at the end of August, but the pace of increase has slowed to a crawl and the Fed’s move may signal this is the peak.
The surge in central bank assets coincided with the collapse in the term premium – a gauge that seeks to measure the extra compensation investors need to own long-term Treasuries – which hasn’t been above zero since January 2016.
Officials at the Fed and the Reserve Bank of Australia are among those who have pointed to the key role term premiums play in guiding nominal yields.
Reduced central bank balance sheets should put a floor under nominal yields, and while it’s unlikely to lead to any sudden surges, the gradual removal of the gravitational pull of QE makes the upside risk for yields prone to exponential acceleration.
The whole set-up is reminiscent of the 2000 millennium bug anxieties. For all the dire warnings of IT Armageddon, the change came and went without much fuss, but the dot-com bubble that we all knew had become massively overblown did eventually pop. And the fact that it burst later rather than on cue made the collapse all the more spectacular.
Market expectations for G10 rate hikes are already at the highest since 2014 (see chart here). The Fed’s balance sheet actions may be the catalyst for investors to register that global policy tightening is accelerating.
Hurricane Maria threatens Puerto Rico as a category 4 storm:
Hurricane Maria Could Make Landfall In Puerto Rico As A Category 4 Storm
Does this look familiar?
Less than two weeks after Hurricane Irma hammered the Caribbean, leaving the tiny island of Barbuda uninhabitable and hundreds of thousands of Puerto Ricans without power, Hurricane Maria is expected to follow closely behind its predecessor, delivering another destructive blow to the region before most areas affected by Irma have had time to recover. As Hurricane Maria hastens toward the eastern Caribbean, forecasters are warning that it could strengthen into a major storm by the time it passes through the Leeward Islands later Monday, according to CBS. That poses a huge problem for residents of the Caribbean.
After reaching category-one hurricane strength on Sunday, CBS reports that Maria is expected to quickly become much stronger over the next two days and follow a path that would take it near many of the islands wrecked by Hurricane Irma and on to Puerto Rico, the Dominican Republic and Haiti.
The National Hurricane Center has already issued advisories for much of the Caribbean. Here’s a summary of the NHC’s latest update, including stats about Maria’s location and attributes as of 5 a.m. Monday. Note that the storm has maximum wind speeds of 90 mph….
“Significant strengthening is forecast during the next 48 hours, and Maria is expected to become a dangerous major hurricane before it moves through the Leeward Islands,” according to the National Hurricane Center’s latest update.
SUMMARY OF 500 AM AST…0900 UTC…INFORMATION
ABOUT 100 MI…160 KM E OF MARTINIQUE
ABOUT 130 MI…215 KM ESE OF DOMINICA
MAXIMUM SUSTAINED WINDS…90 MPH…150 KM/H
PRESENT MOVEMENT…WNW OR 290 DEGREES AT 13 MPH…20 KM/H
MINIMUM CENTRAL PRESSURE…977 MB…28.85 INCHES
SUMMARY OF WATCHES AND WARNINGS IN EFFECT:
A Hurricane Warning is in effect for…
* St. Kitts, Nevis, and Montserrat
A Tropical Storm Warning is in effect for…
* Antigua and Barbuda
* Saba and St. Eustatius
* St. Lucia
A Hurricane Watch is in effect for…
* Puerto Rico, Vieques, and Culebra
* U.S. Virgin Islands
* British Virgin Islands
* Saba and St. Eustatius
* St. Maarten
* St. Martin and St. Barthelemy
A Tropical Storm Watch is in effect for…
* St. Vincent and the Grenadines
Indeed, Maria is likely to be at category 3 or 4 storm by the time it moves into the extreme northeastern Caribbean Sea, according to NHC forecasts. While only one of three storms churning in the Atlantic Ocean, it poses the biggest threat to the Caribbean, which is struggling to recover from Irma.
Hurricane conditions should begin to affect parts of the Leeward Islands later Monday and Monday night, potentially causing a storm surge that raises water levels by four to six feet near Maria’s center. The storm was predicted to bring 6 to 12 inches of rain across the islands, with more in isolated areas.
But in what’s perhaps the biggest concern, at least for the US government, Maria could make landfall on Puerto Rico, causing potentially more devastation than Irma, which passed close by the island, but didn’t make landfall.
To wit, Puerto Rico Gov. Ricardo Rossello said officials had prepared about 450 shelters with a capacity for nearly 68,000 people, or even 125,000 in an emergency. He said schools were cancelled for Monday and government employees would work only a half day. Officials in the Dominican Republic urged people to leave areas prone to flooding and said fishermen should remain in port, according to CBS.
Worse still, some forecasters are warning that by the time Maria makes landfall in PR, it could be a category four storm.
#HurricaneMaria could hit Puerto Rico on Wednesday as a Cat 4. https://twitter.com/NHC_Atlantic/status/909610439008555008 …
Meanwhile the National Hurricane Center reports that Hurricane Jose – one of three active storms in the Atlantic – has begun to weaken as it moves northward past the east coast of the US. While the storm appears to be too far away from the coastline to threaten a landfall, it could create “potentially dangerous surf and rip currents…along the east coast of the US” from Delaware to Cape Cod. Early Monday, Jose was centered about 280 miles east-southeast of Cape Hatteras, North Carolina, and was moving north at 9 mph. It had maximum sustained winds of 85 mph.
In the Pacific, Tropical Storm Norma threatened Mexico’s Los Cabos resort area at the southern end of the Baja California peninsula seemed to ease as forecasters said the storm’s center was likely to remain offshore.
$700 Billion Unpaid Mortgage Balances In Hurricane Harvey And Irma Disaster Areas
Even as the damage from Hurricanes Harvey and Irma is still being tallied, a preliminary assessment released last week by Black Knight Financial Services estimated that as many as 300,000 borrowers in the vicinity of Houston could become delinquent on their loans and 160,000 could become seriously delinquent, or more than 90 days past due.
That number is roughly four times the original prediction because new disaster zones were designated and more homes flooded when officials released water from reservoirs to protect dams, according to CNBC’s Diana Olick. In total, the number of mortgaged properties in Texas disaster zones is 1.18 million, with Black Knight adding that Houston disaster zones contain twice as many mortgaged properties than Katrina zones, with four times the unpaid principal balance.
Putting the Harvey damange in context, after Hurricane Katrina mortgage delinquencies in Louisiana and Mississippi disaster areas spiked by 25%. The same could happen in Houston, as borrowers without flood insurance weigh their options and decide to walk away from the property. While they will get some federal relief, if rebuilding would cost more than the principal in their homes, they could decide to walk away according to Olick.
What about Irma?
According to a preliminary analysis by Black Knight released today, Florida FEMA-designated disaster areas related to Hurricane Irma include a whopping 3.1 million mortgaged properties. As Black Knight’s EVP Ben Graboske explained, both the number of mortgages and the unpaid principal balances of those mortgages in FEMA-designated Irma disaster areas are significantly larger than in the areas impacted recently by Hurricane Harvey.
Quantifying the damage, Black Knight calculates that Irma-related disaster areas contain nearly three times as many mortgaged properties as those connected to Hurricane Harvey, and nearly seven times as many as those connected to Hurricane Katrina in 2005. In dollar terms, this means that there is some $517 billion in unpaid principal balances in Irma-related disaster areas, nearly three times the amount as in those related to Harvey and more than 11 times of those connected to Katrina.
“While the total extent of the damage from Hurricane Irma is still being determined, it is clear that the size and scope of the disaster is immense,” said Graboske.
“Indeed, in terms of the number of mortgaged properties and their associated unpaid principal balances, Irma significantly outpaces even the number of borrowers impacted by Hurricane Harvey. With FEMA expanding the number of Irma-related designated disaster areas late Wednesday, Sept. 13, to a total of 37 Florida counties, more than 90 percent of all mortgaged properties in the state now fall into such areas. More than 3.1 million properties are now included in FEMA-designated Irma disaster areas, representing approximately $517 billion in unpaid principal balances. In comparison, Harvey-related disaster areas held 1.18 million properties – more than twice as many as with Hurricane Katrina in 2005 – with a combined unpaid principal balance of $179 billion. Irma-related disaster areas now contain nearly seven times as many mortgaged properties as those connected to Katrina, with more than 11 times the principal balances.
Combining the preliminary estimates for both Harvey and Irma suggests that over 3.3 million total mortgaged properties are located in Irma and Harvey-related FEMA Disaster zones, while the dollar amount of total unpaid mortgage balances in these two zones is massive: between Irma’s $517 billion and Harvey’s $179 billion, the total potential damage could impact as much as a $696 billion in notional mortgage values, which banks could be on the hook for if current occupiers decide to simply walk away.
Based on back of the envelope analyses by Black Knight, an extrapolation of the Katrina damage would suggest that Florida could suffer as much as 750,000 mortgage delinquencies as a result of Hurricane Irma.
To be sure, there are mitigating circumstances: Florida borrowers likely have more insurance and less exposure to loss, but for those homes with the most damage, homeowners will be making the same calculation as those that suffered devastating flooding after Harvey. Another issue in Florida according to Olick is that even a decade later, the housing market is still recovering from the foreclosure crisis. Five percent of Florida borrowers still owe more on their mortgages than their homes are worth, and an additional 5 percent have very little equity in their homes. Home prices in Fort Myers, which saw considerable flooding from Irma, are still 29 percent below what they were during the housing boom.
Still, in order to avoid a surge in foreclosures, lenders are more likely to offer borrowers, even seriously delinquent borrowers, options to catch up, although the biggest risk to lenders will be in Houston, where some homeowners may see no good reason to stay.
There was some silver lining: “As Irma forged its path of destruction through the Caribbean, one relatively positive development was that Puerto Rico escaped the direct hit many had predicted. From a mortgage performance perspective, this was particularly good news, as delinquencies there were already quite high leading up to the storm. At more than 10 percent, Puerto Rico’s delinquency rate is nearly three times that of the U.S. average, as is its 5.8 percent serious delinquency rate. In contrast, the disaster areas declared in Florida have starting delinquency rates below the national average, providing more than a glimmer of optimism as we move forward.”
Unfortunately, Hurricane Maria, now a Category 3, is expected to hit Puerto Rico some time on Wednesday, adding to the damage already suffered from Irma, and potentially sending the already bankrupt territory reeling even deeper into the financial hole.
“Massive Protest” In St. Louis Over Ex-Cop’s Acquittal Turns Violent, Tear Gas Deployed As 32 Arrested
Protesters in St. Louis Friday night blocked highways, damaged public and private property, broke windows, threw rocks at the mayor’s house and threw bricks at police officers who in turn responded by firing tear gas, after Jason Stockley, a white ex-cop was acquitted in the 2011 fatal shooting of a black man earlier on Friday. At least 32 people were arrested, the St. Louis Metropolitan Police Department said. Ten officers were injured – 9 St. Louis Police Department officers and one Missouri Highway Patrol officer – two of whom were transported to a hospital with injuries sustained after being hit by a brick.
Some officers were wearing protective gear due to items being thrown at them.
As reported on Friday, the protests were expected after St. Louis Circuit Judge Timothy Wilson found 36-year-old Jason Stockley not guilty of first-degree murder and armed criminal action. On Dec. 20, 2011, the then-police officer shot 24-year-old Lamar Smith five times after a high-speed chase and crash.
Protesters march in St. Louis, after a judge found a white former police officer,
Jason Stockley, not guilty of first-degree murder in the death of a black man
Stockley and his partner at the time, Brian Bianchi, were trying to apprehend Smith for a suspected drug deal at a Church’s Chicken restaurant, according to court documents. Stockley was facing up to life in prison without parole had he been convicted of both charges.
Crowds of people gathered today near the courthouse in downtown St. Louis to protest the ruling. Police blocked streets nearby so demonstrators could march. Missouri Gov. Eric Greitens, anticipating protests in response to the controversial ruling, released a statement saying he understood the verdict is painful for many St. Louisans.
Police guard on-ramps to Interstate 64 as protesters gather, Sept. 15, 2017.
According to ABC St. Louis affiliate KDNL, “hundreds of people were part of the massive protest.”
Just after 10 p.m. local time, police declared the gathering an “unlawful assembly,” tweeting, “those refusing to leave are subject to arrest.”
Less than 20 minutes after tweeting that the protest was an unlawful assembly, police announced tear gas had been dispersed, tweeting, “Tear gas was deployed because agitators became violent towards officers and destroyed property at Kingshighway & Waterman #stlverdict.”
Police then took to Twitter documenting the violent aspects of the protest, including the blocking by protesters of highways and other thoroughfares and other acts of civil disobedience.
Police line up as protesters gather, Friday, Sept. 15, 2017, in St. Louis
“Agitators have converged on Mayor Krewson’s house,” police tweeted at 9:47 p.m. “Throwing rocks and breaking windows, despite being instructed not to.”
A subsequent tweet read, “Agitators refuse to disperse causing property damage near Mayor’s home. Those who don’t comply w/police orders subject to arrest #stlverdict.”
According to ABCNews, the violence continued past 11 p.m., with police tweeting at 10:29 p.m., “Destruction of public and private property continues in the #CWE neighborhood. We are doing everything we can to keep you safe #stlverdict.” Then at 11:30 p.m. police tweeted, “Agitators are being warned that this is no longer a lawful assembly. If they do not disperse, they will be subject to arrest. #stlverdict.”
Earlier, officials also tweeted a video of protesters stomping on the hood of a police car.
Video from the protests showed demonstrators marching while chanting phrases including “no justice, no peace” and “if you kill our kids, we’ll kill your economy.”
Damone Smith, a 52-year-old electrician who was among the motorists re-routed away from the area, told the St. Louis Post-Dispatch that he believed the verdict to be “disgusting.” “I’m proud of these people protesting,” Smith, who is black, told the Post-Dispatch. “If you look like me, then you feel like there is no other way to express yourself in this kind of verdict. Time and time again, African-American men are killed by police, and nobody is held accountable.”
Meanwhile, some demonstrators were seen openly carrying rifles on the streets, which is legal in Missouri, according to The Associated Press, but there have been no reports of weapons being fired.
Earlier in the evening, police said the protests have been “for the most part” nonviolent, adding “there have been some tense moments where agitators became destructive.”
Protesters march down, Friday, Sept. 15, 2017, in downtown St. Louis
Several companies — including Wells Fargo, Stifel and Nestle Purina Petcare — sent thousands of employees home as protests grew Friday morning, the Post-Dispatch reported.
Stockley told the Post-Dispatch on Friday that he “can feel for” and “understand” what Smith’s family is going through. “I know everyone wants someone to blame, but I’m just not the guy,” Stockley told the local newspaper. Stockley’s acquittal also elicited outrage from several local officials, condemning the anxiously awaited bench verdict.
“This not-guilty verdict of a police officer who violently killed a citizen is another slap in the face to the black community in St. Louis,” Missouri state Rep. Michael Butler said in a statement. “And a shot in the heart to the family of the victim,” he said of Smith.
A protester runs from the police, Friday, Sept. 15, 2017, in St. Louis, as protesters
rally around the home of St. Louis Mayor Lyda Krewson
“This system and all the politicians calling for peace are ignoring the pain this verdict causes our communities,” Butler added. “We will be nonviolent but we will not settle on peace. No justice. No peace.”
St. Louis Mayor Lyda Krewson offered a more measured response, though equally emotional.
“My thoughts and prayers are with the family and friends of Anthony Lamar Smith, our police, judge, prosecutor, our citizens who find no comfort or justice, and everyone involved in this difficult case,” she said in a statement. “I am appalled at what happened to Anthony Lamar Smith. I am sobered by this outcome. Frustration, anger, hurt, pain, hope and love all intermingle.”
“We know this verdict causes pain for many people,” Gov. Greitens said. “I’m committed to protecting everyone’s constitutional right to protest peacefully, while also protecting people’s lives, homes and communities. For anyone who protests, please do so peacefully.”
Stockley’s defense attorneys argued that the then-officer acted “reasonably” in self-defense in killing a drug suspect he believed was reaching for a hidden gun. Prosecutors alleged that Stockley planted a .38-caliber revolver in Smith’s Buick after he shot him.
In his verdict, Wilson wrote that the court “is simply not firmly convinced of [Stockley’s] guilt.” And because prosecutors “failed to prove beyond a reasonable doubt that [Stockley’s] use of deadly force was not justified in self-defense,” Wilson wrote that he could not address lesser charges of homicide, including involuntary manslaughter.
Toys R Us facing imminent bankruptcy:
(courtesy zero hedge)
Facing Imminent Bankruptcy, Toys “R” Us Enters Death Spiral
Last week’s news that Toys “R” Us has hired bankruptcy lawyers Kirkland & Ellis to help restructure its heavy debt load, came as a shock to the company’s creditors, who promptly sent its bond crashing from nearly par at the start of the month to 43 cents on the dollar as of Friday.
As Bloomberg first reported, K&E is focused on the $400MM in bond due 2081, while Toys “R” Us has also retained Lazard to help with debt refinancing. They will have their hands full: in addition to shrinking sales and heightened competition, Toys ‘R’ Us has been burdened with debt from an LBO12 years ago as a result of which Toys “R” Us’s private equity owners, Bain Capital, KKR and Vornado Realty Trust, loaded up the company with $7.5 billion in debt.
Last year, the retailer extended maturities on some of borrowings, giving it more time to execute a turnaround plan by Chief Executive Officer Dave Brandon. As part of his comeback bid, he was looking to spruce up stores with more toy demonstrations and other experiences – seeking an edge on online sites such as Amazon. However, last week’s realization that the company is considering a debt-for-equity exchange, confirmed many worst fears that not only was the turnaround faltering but that underlying business was far weaker than expected.
The imminent restructuring, which judging by the shocking bond crash was completely unexpected, would help Toys “R” Us get its house in order ahead of the all-important holiday season, when the company has its biggest sales surge. Alas, now that the iconic toy retailer appears likely to cramdown at least one if not more creditor classes in some form of pre-pack Chapter 11, said sales surge may not happen at all if the company’s suppliers suddenly get cold feet and refuse to stock up the company with much needed inventory.
Which is precisely what is happening.
Making matters worse, according to the WSJ, Toys ‘R’ Us could file for bankruptcy as soon as next week, while Bloomberg adds that nervous suppliers have scaled back shipments and tightened terms to the retailer ahead of the crucial holiday selling season, on worries they may not got repaid and their payables would be lumped alongside other unsecured pre-petition claims.
The vendors are balking as Toys “R” Us continues talks with lenders over a new loan that would allow the company to stay open while it works out a recovery plan through bankruptcy proceedings, said the people, who asked not to be identified because discussions are private. The loan is being marketed by Lazard Ltd. to banks and existing creditors, said one of the people.
Just like in the case of Sears discussed here at the end of August, suppliers have pulled back in part because the cost to insure their shipments to cash-strapped Toys “R” Us has become too expensive, according to Bloomberg sources. Since vendors traditionally rank among other unsecured creditors under a bankruptcy waterfall schedule, their decision on whether to continue shipping goods can play a large role in determining a retailer’s fate.
Unfortunately for Toys “R” Us, now that it has entered the self-reinforcing death spiral of collapsing liquidity and panicked vendors, it needs to find a financial solution immediately and resume shipments because the cash-strapped chain makes about 40% of its sales during the fourth-quarter holiday season. Much of its strategy revolves around getting exclusive products from key vendors, along with support for advertising and marketing.
For now, the toy merchant has been seeking to refinance $400 million of debt that comes due next year, although media reports suggest that the process has stalled. As a result, the company is now openly flirting with bankruptcy as an option although no decision about seeking court protection has been made.
Still, as Bloomberg calculates, Toys “R” Us has remained oddly profitable, generating $790 million in EBITDA, the most since 2012, yet even that is not enough to appease vendors many of whom now demand payment upfront. Not everyone thought: Hasbro is among toymakers that hasn’t curtailed shipments, spokeswoman Julie Duffy wrote in an email. “We continue to partner and ship, conducting business as usual, while managing our risk across all retailers to the appropriate levels,” Duffy wrote.
Hasbro may regret this decision very soon as according to the the company’s 5 Year CDS, which in recent days have soared to 46 points upfront…
… the probability of default in the next five years is now 93%, and 60% over the next 12 months.
A Toys ‘R’ Us restructuring would add to a list of 25 retailers, including Rue21, Gymboree and Payless Shoe Source, that have filed for bankruptcy since the beginning of 2017. Another big box chain, Staples Inc., recently agreed to be taken private in a leveraged buyout.
While industrywide, toy sales have been strong in recent years, much of the growth is shifting to online sellers like Amazon.com Inc. and discounters like Wal-Mart Stores Inc. Amazon’s toy sales were up 24% last year, compared with 5% for the overall market and five years of declines for Toys “R” Us, according to analytics firm One Click Retail.
The company is not alone as it finds it is woefully behind in its competition with Amazon: some large toy brands, such as Lego and Star Wars, have also struggled recently, while the collectible Shopkins toys, which Toys ‘R’ Us helped launch, is on the downswing. Earlier this month, Lego AS reported its first decline in sales in 13 years and said it would cut 8% of its workforce. Another toy maker, Mattel Inc., replaced its chief executive earlier this year after a slide in holiday sales.
Ultimately, whatever the fate of Toys ‘R’ Us may be, it will inevitably go through bankruptcy court: according to the WSJ, in recent weeks Toys ‘R’ Us’s advisers have been hunting for a DIP loan to fund operations under chapter 11, effectively guaranteeing that a bankruptcy filing is now just a matter of days.
Justice department begins a criminal probe into Equifax Executive stock sales:
Justice Department Begins Criminal Probe Into Equifax Executive Stock Sales
The U.S. Justice Department has opened a criminal investigation into whether top officials at Equifax violated insider trading laws when they sold stock before the company disclosed that it had been hacked, according to people familiar with the investigation.
Equifax disclosed earlier this month that it discovered a security breach on July 29. The three executives sold shares worth almost $1.8 million in early August. The company has said the managers didn’t know of the breach at the time they sold the shares.
As we noted previously, Senator Heidi Heitkamp, a Democrat who sits on the Senate Banking Committee, said it was “disturbing” that it appeared executives sold their stock before disclosing material information to the public.
“If that happened, somebody needs to go to jail,” Heitkamp said at a credit union industry conference in Washington.
“It’s a problem when people can act with impunity with no consequences. How is that not insider trading?”
- Corporate vice president and chief financial officer John W. Gamble Jr. sold 6,500 shares at a price of $145.596, valued at $946,374, on August 1, 2017. (See the SEC’s Form 4, “Statement of Changes in Beneficial Ownership,” here.) In 2016, Gamble received $632K in salary, $759K in non-equity incentive plan compensation, $1.2M in stock awards, and $17K in all other compensation, totaling $2.7 million. He has an estimated net worth of $12.2 million. (Source: Bigwigs).
- Workforce Solutions president Rodolfo O. Ploder, of 1550 Peachtree St. NW, Atlanta, GA 30309, sold 1,719 shares at a price of $145.70, valued at $250,458, on August 2, 2017. (See the SEC’s Form 4 here.) In 2016, Ploder received $500K in salary, $600K in non-equity incentive plan compensation, $785K in stock awards, and $105K in all other compensation, totaling $2 million. He has an estimated net worth of $19.8 million. (BigWigs).
- Chief marketing officer and U.S. Information Solutions president Joseph Michael Loughran III, of 1550 Peachtree St. NW, Atlanta, GA 30309, sold 3,000 shares at a price of $33.60 (total value: $100,800) and 4,000 shares at a price of $146.0247 (total value: $584,099), on August 1, 2017. (See the SEC’s Form 4 here) He has an estimated net worth of $12.3 million. (BigWigs).
The total value of Equifax shares sold by Gamble, Ploder and Loughran 2 days after Equifax had discovered the data breach and 37 days before the company informed the public about the breach is $1.88 million.
In a statement, while admitting that the three executives had sold a “small percentage” of their shares, Equifax insists the executives “had no knowledge that an intrusion had occurred at the time they sold their shares.”
Bloomberg reports that the probe will be handled by the U.S. attorney’s office in Atlanta, where the credit firm’s headquarters is located, said one of the people.
A spokesman for the U.S. attorney’s office in Atlanta declined to comment.
As Simon Black previously raged, bear in mind, these “insider sales” have to be reported to the Securities and Exchange Commission, so there is a public record every time a company executive sells stock.
These executives would have known this, and that the public would find out they sold their stock right after the data breach was discovered.
This suggests to me that these guys are either complete idiots… or they simply don’t care… both of which seem par for the course at Equifax.
Moreover, given that the company is responsible for making the SEC filings, it’s obvious that Equifax knew about these executives selling their stock. Clearly they don’t care either.
(courtesy Chris Martenson/Greg Hunter)
“Central Banks Are Petrified” Chris Martenson On The Hyperinflationary Threat Of “China Dumping The Dollar”
Resource analyst and futurist Chris Martenson says everyone should be taking notice of our “dangerous markets.”
At the center of the danger zone is the declining U.S. dollar. Martenson explains,
“We are talking about a steady erosion of the dollar as a reserve currency. I think that is most likely. The only thing that could make that really go fast is some kind of war. The United States and China, we got to keep our eye on this because Trump has been threatening a trade war with China. China responded and said if you do that, we may dump the dollar. . . . So, there is all this trade and financial back and forth and maybe even actual war at some point…
China has the ability to really impact the dollar in a big way on the world stage. We better hope it does not come to that because a slow erosion we can adjust to; a quick erosion is going to really roil the markets and maybe blow a few of them up.”
artenson contends the U.S. could see hyperinflation in a short time if China “dumps the dollar.” Martenson explains,
“The way that works is let’s say they want to unload $500 billion on some Tuesday morning. Who is going to buy that $500 billion? Who is on the other side of that trade? Well, if there are not enough people bidding for those dollars, the price has to fall until you find enough people to absorb those, and the dollar would fall in value against all other sorts of other things such as other currencies, oil, gold, silver and all those things…
We would be looking for a paired event. What we would be looking for is interest rates starting to rise on Treasuries and the dollar starting to fall in value in value against a variety of things. Once we see those two things, we know we have a financial war or a monetary war…
That’s what blows up the derivatives market. That’s what makes difficulties for traders. That’s what makes the high frequency computers say I don’t like this and bolt and instantly evaporate from the markets.”
Martenson also points out,
“The Dow is hitting all-time highs. So, it can’t be that bad, right? The Dow is used as a signaling device, and it says have faith in your leadership and everything is fine. Under the covers, obviously, things are not fine. The people I talk to are nervous and worried. One reason is because it’s fall, and that is sometimes when we see these corrections, but the other reason is everything we track is getting more and more fragile.
These markets . . . are held together by confidence. . . . I can’t tell you the number of people that used to be investors that say they just don’t trust these markets. They are rigged and they understand that. They don’t want any part of that.”
In closing, Martenson contends,
“By many metrics, this market has never been more expensive. . . . What goes up has to come down. . . . I am convinced the central banks are so petrified to let a 1% or a 2% correction happen …
What does it mean when the central banks are so petrified that they can even allow a correction to get started? That’s what people should be focused on.”
Join Greg Hunter as he goes One-on-One with Dr. Chris Martenson of PeakProsperity.com.
that about does it for tonight
I will see you TUESDAY night