GOLD: $1308.45 UP $14.00
Silver: $17.11 UP 16 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: $1299.46 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $1292.68
PREMIUM FIRST FIX: $6.78 (premiums getting larger)
SECOND SHANGHAI GOLD FIX: $1298.02
NY GOLD PRICE AT THE EXACT SAME TIME: $1293.70
Premium of Shanghai 2nd fix/NY:$4.32
LONDON FIRST GOLD FIX: 5:30 am est $1295.50
NY PRICING AT THE EXACT SAME TIME: $1293.19 ????
LONDON SECOND GOLD FIX 10 AM: $1293.30
NY PRICING AT THE EXACT SAME TIME. 1293.95
For comex gold:
NOTICES FILINGS TODAY FOR SEPT CONTRACT MONTH: 0 NOTICE(S) FOR NIL OZ.
TOTAL NOTICES SO FAR: 83 FOR 8300 OZ (0.2581 TONNES)
67 NOTICES FILED TODAY FOR
Total number of notices filed so far this month: 6,303 for 31,515,000 oz
Let us have a look at the data for today
In silver, the total open interest FELL BY 1321 contracts from 189,605 DOWN TO 188,644 WITH THE TINY FALL IN PRICE THAT SILVER UNDERTOOK IN FRIDAY’S TRADING (DOWN 5 CENTS ). ON FRIDAY, OUR BANKERS TOOK A LITTLE SIESTA FROM THE PREVIOUS 9 DAYS OF TORMENT. A TINY AMOUNT OF SILVER LONGS EXITED THE CASINO BUT MOST OF OUR SILVER PLAYERS ARE RESOLUTE WILLING TO TAKE ON OUR BANKERS. REMEMBER THAT WE HAVE NOW ENTERED OPTIONS EXPIRY WEEK SO EXPECT CONTINUAL WHACKING OF OUR PRECIOUS METALS.
RESULT: A SMALL FALL IN OI COMEX WITH THE 5 CENT PRICE FALL. A SMALL FRACTION OF LONGS LEFT BUT MOST OF OUR SILVER PLAYERS ARE RESOLUTE IN THEIR DETERMINATION TO TAKE ON THE BANKERS.
In ounces, the OI is still represented by just UNDER 1 BILLION oz i.e. 0.943 BILLION TO BE EXACT or 134% of annual global silver production (ex Russia & ex China).
FOR THE NEW FRONT MAY MONTH/ THEY FILED: 67 NOTICE(S) FOR 335,000 OZ OF SILVER
In gold, the open interest FELL BY A CONSIDERABLE 8,896 CONTRACTS DESPITE THE RISE in price of gold ($1.70 GAIN WITH FRIDAY’S COMEX TRADING. The new OI for the gold complex rests at 552,379. WE ARE AGAIN EXPERIENCING THE SAME PHENOMENON AS WE ENTER ‘FIRST DAY DELIVERIES WEEK’ IN AN ACTIVE DELIVERY MONTH, I.E. THE ISSUANCE OF A HUGE NUMBER OF EFP’S WHICH ENTITLE THE HOLDER TO THE FIAT PROFIT PLUS A FUTURE DELIVERABLE PRODUCT ON ANOTHER EXCHANGE PROBABLY A LONDON BASED FORWARD. IT SEEMS THAT OVER 8900 EFP CONTRACTS WERE ISSUED. THESE ARE ‘EMERGENCY’ CONTRACTS WHERE THE SHORT HOLDERS DO NOT HAVE PHYSICAL TO DELIVER UPON A LONG AND SO THEY OFF- LOAD IT TO A PHYSICAL ZONE LIKE LONDON. WE ARE NOW ENTERING OPTIONS EXPIRY WEEK SO EXPECT THE PRICES OF BOTH GOLD AND SILVER TO BE SUBDUED. IT FINISHES THIS COMING FRIDAY MORNING .
Result: A HUGE DECREASE IN OI WITH THE RISE IN PRICE IN GOLD ($1.70). DEMAND FOR GOLD STILL HIGH BUT LONGS TRANSFERRED TO ANOTHER PHYSICAL EXCHANGE LIKE LONDON.
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 got this huge news: we had another big change in gold inventory:
a huge deposit of 3.84 tonnes.
Inventory rests tonight: 856.08 tonnes. Whenever GLD inventory advances so does our gold price.
Today: a huge change in inventory: a deposit of 1.842 million oz/
INVENTORY RESTS AT 326.757 MILLION OZ
First, here is an outline of what will be discussed tonight:
1. Today, we had the open interest in silver FELL BY 1321 contracts from 189,865 DOWN TO 188,644 (AND now A LITTLE FURTHER FROM THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) DESPITE FRIDAY’S 5 CENT LOSS IN TRADING. WE LOST A TINY FRACTION OF LONGS BUT STILL THE MAJORITY OF SILVER LONGS ARE RESOLUTE WILLING TO TAKE ON THE BANKERS. WE HAVE NOW ENTERED OPTION’S EXPIRY WEEK
RESULT: A SMALL SIZED DROP IN SILVER OI AT THE COMEX WITH THE TINY LOSS IN PRICE OF 5 CENTS IN FRIDAY’S TRADING.
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 DOWN 10.98 POINTS OR 0.33% / /Hang Sang CLOSED DOWN 380.18 POINTS OR 1.36%/ The Nikkei closed UP 101.13 POINTS OR 0.50%/Australia’s all ordinaires CLOSED UP 0.02%/Chinese yuan (ONSHORE) closed WELL DOWN at 6.6230/Oil UP to 50.92 dollars per barrel for WTI and 57.55 for Brent. Stocks in Europe OPENED MOSTLY RED . Offshore yuan trades 6.6155 yuan to the dollar vs 6.6230 for onshore yuan. NOW THE OFFSHORE MOVED MUCH STRONGER TO THE ONSHORE YUAN/ ONSHORE YUAN HUGELY WEAKER (TO THE DOLLAR) AND THE OFFSHORE YUAN IS WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE STRONGER DOLLAR. CHINA IS NOT VERY HAPPY TODAY
3a)THAILAND/SOUTH KOREA/NORTH KOREA
i)FRIDAY NIGHT/SATURDAY MORNING
Pretty sure this earthquake was man made. It was probably natural and no doubt caused by the continual massive testing by the North Koreans
( zero hedge)
ii)SATURDAY/THE RHETORIC CONTINUES:
iii)Saturday night/Korean time/Sunday morning our time
The USA flies just off the coast of North Korea in a show of force against North Korea.
North Korea states that they threaten to shoot down USA bombers.
b) REPORT ON JAPAN
Abe announces a snap election and he will face a new challenger Koike, Toyko’s Governor. She states that she will form a new conservative party trying to oust Abe
c) REPORT ON CHINA
4. EUROPEAN AFFAIRS
ii)SUNDAY: THE SITUATION IN CATALONIA IS GETTING DIRE BY THE DAY: THIS TIME MADRID IS TAKING OVER THE CATALAN POLICE (MOSSOS). MOSSOS TOTALLY REJECTS THIS TAKEOVER AS MADRID VOWS TO STOP THE REFERENDUM VOTE. HOW THIS PLAYS OUT WILL DEFINE SPAIN FROM HERE ON IN.( ZEROHEDGE)
ii b)Catalonia’s drive for independence is far greater problem for Spain than the election of some the far right fellows in the German Bundestag: Catalonia represents around 15% of the population of Spain, yet represents 20% of its GDP and Catalonia provides more money in taxation than they receive in benefits
German establishment routed as the far right party Afd gets its first seats at the Bundesstag
( zero hedge)
iv)TARGET 2 IMBALANCES
5. RUSSIAN AND MIDDLE EASTERN AFFAIRS
i)Russia and the USA have a secret meeting with the subject matter: Syria. It seems that Russia is laying down the rules
ii)Now Iran closes the airspace to Iraqi Kurdistan ahead of its vote for independence
6 .GLOBAL ISSUES
7. OIL ISSUES
Oil rises but not gold? Fears due to the Kurdish referendum. Turkey threatens to cut off oil pipeline supplies through Iraq if independence vote proceeds. Turkey is afraid that all Kurds will unite into one country
( zero hedge)
8. EMERGING MARKET
9. PHYSICAL MARKETS
i)Charles Smith states that there is no country that can replace the USA as reserve currency for the world. However it does not stop the declining value of the uSA dollar\
(courtesy Charles Smith/gata)
ii)As highlighted to you on Friday night’s COT report, the bankers engaged in more spec rinsing (orchestrated raids for the past 10 days) as they try and cover their huge shortfall
( Craig Hemke/TFMetals)
iii)Both gold and silver are hugely backward on London and that necessitated a large mobilization of physical gold to supply to eastern countries who desired to liquidate uSA dollars
a must listen to audio from James Turk
iv)Marcos’ son denies an offer of gold to Filipinos and its government
( Manila Times/GATA)
v)The crackdown on cryptos on the Chinese Mainland has boosted Hong Kongs’ hope of becoming the hub for blockchain. I feel that the real winner will be blockchain’s use in the backing of bullion gold coin
10. USA Stories
i)As reported to you on Friday, a dam in the north west part of Puerto Rico is failing. They are evacuating as many citizens as possible as thousands could die if it broke, The country is completely flooded and there is no food or drinking water on the island.
ii b) The island is now “cash only”
iv)Republicans are desperate as they try to revise Obamacare repeal bill but defeat is almost certain( zero hedge)
v)I guess everybody heard about Trump’s war with profession sport players who take the knee when the National Anthem is played. I agree with Trump that going against the “THE FLAG” is not a proper forum to exercise your first amendment. However the media are using it to use with first amendment rights to criticize Trump.
( zero hedge)
vi)What a farce: With everybody complaining about Hurricane Harvey damage, the soft data Dallas Fed surges to a 10 yr high.
vi)Dave Kranzler talks about the phony Dallas Fed and compares it to the just released Chicago Natural Manufacturing report which showed a -.3% reading. This means that the economy contracted in August. So how could the Texas area show a gain when it was the one hit
( Dave Kranzler/IRD)
vii)First Equifax and now Deloitte: their entire internal email system has bee compromised and there would not doubt have a lot of sensitive stuff hacked
Let us head over to the comex:
The total gold comex open interest FELL BY A CONSIDERABLE 8,896 CONTRACTS DOWN to an OI level of 552,379 WITH THE RISE IN THE PRICE OF GOLD ($1.70 GAIN IN FRIDAY’S TRADING). WE ARE AGAIN EXPERIENCING THE SAME PHENOMENON AS WE ENTER ‘FIRST DAY DELIVERIES WEEK’ IN AN ACTIVE DELIVERY MONTH, I.E. THE ISSUANCE OF A HUGE NUMBER OF EFP’S WHICH ENTITLE THE HOLDER TO THE FIAT PROFIT PLUS A FUTURE DELIVERABLE PRODUCT ON ANOTHER EXCHANGE PROBABLY A LONDON BASED FORWARD. IT SEEMS THAT OVER 8900 EFP CONTRACTS WERE ISSUED FOR OCTOBER. THESE ARE ‘EMERGENCY’ CONTRACTS WHERE THE SHORT HOLDERS DO NOT HAVE PHYSICAL TO DELIVER UPON A LONG AT THE COMEX AND SO THEY OFF- LOAD IT TO A PHYSICAL ZONE LIKE LONDON
Result: a HUGE SIZED open interest DECREASE WITH THE RISE IN THE PRICE OF GOLD TO THE TUNE OF $1.70.
DEMAND DID NOT DISAPPEAR, BUT LONGS TRANSFERRED THEIR POSITION TO ANOTHER EXCHANGE LIKE LONDON
The next active contract month is Oct and here we saw a LOSS of 1524 contracts DOWN to 21,756.
The November contract saw A GAIN OF 49 contracts UP to 727.
The very big active December contract month saw it’s OI LOSS OF 7,161 contracts DOWN to 432,413.
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 86 contacts DOWN to 192. We had 130 notices filed yesterday, so we again gained 44 contracts or an additional 220,000 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 15 contacts UP TO 1067. November saw a GAIN of 4 contract(s) and thus RISING TO 77. After November, the NEXT big active contract month is December and here the OI LOST 1467 contracts DOWN to 150,102 contracts.
We had 67 notice(s) filed for 335,000 oz for the SEPT. 2017 contract
VOLUMES: for the gold comex
ESTIMATED VOLUME TODAY: 552,379 CONTRACTS / MONSTROUS!!
FRIDAY’S confirmed volume was 348,128 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||39,885.0 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)||6303 contracts (31,515,000 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||6,384,375.1 oz|
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 25./Another big deposit of 3.84 tonnes into GLD/Inventory rests tonight at 856.08 tonnes
Sept 22/with gold up only 1 dollar on the day we had a massive 6.21 tonnes of gold added to the GLD/.this is a good sign that gold will advance nicely this coming week.
Sept 21/no change in gold inventory tonight/inventory rests at 846.03 tonnes
Sept 20/no change in gold inventory tonight/inventory rests at 846.03 tonnes
Sept 19/another deposit of 2.07 tonnes of gold into the GLD/inventory rests at 846.03 tonnes
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 25./ a big deposit of 1.842 million oz into the SLV/inventory rests at 326.757 million oz/
Sept 22/no change in silver inventory at the SLV/Inventory rests at 324.915 million oz/
Sept 21/no change in silver inventory at the SLV/Inventory rests at 324.915 million oz
Sept 20/no changes in silver inventory/Inventory remains at 324.915 million oz
Sept 19/strange!! another withdrawal of 1.134 million oz despite the rise in silver/inventory rests at 324.915 million oz
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+ 1.32%
Major gold/silver trading/commentaries for MONDAY
Commodities King Gartman Says Gold Soon Reach $1,400 As Drums of War Grow Louder
– ‘Commodities King’ Gartman sees $1,400 gold surge in months
– “Gold is the one currency that will do the best of all…”
– Pullback below $1300 “is relatively inconsequential”
– Use gold price weakness to be a buyer “no question”
– Bullish on gold due to central banks and easy monetary policy and gold will be even higher in euro terms
– Gold will be the best of all, as a result of QE and expansionary policies
– Dalio reconfirms belief that ‘gold serves a purpose’ and portfolios should have exposure
– ‘Gold is a diversifying asset’ says Dalio
– Own allocated, segregated gold in Zurich or Singapore
Editor Mark O’Byrne
In an interview on CNBC, he said that the recent correction in gold is but a mere pullback prior to much higher prices and “gold is the one currency that will do the best of all.”
Earlier this year Dennis Gartman, of the Gartman Letter, successfully called this year’s gold rally. In the year-to-date the precious metal is up by nearly 13%, thus outperforming the S&P 500 which is 12% higher.
“A year from now, gold will be demonstrably higher than it is right now…I would certainly think we could see $1400 [an ounce] in dollar terms.”
Gartman’s prediction comes a few days after another respected investor, Ray Dalio, called for gold to be held in portfolios.
Both Gartman and Dalio encourage gold investment as they believe it is an excellent diversifier and will be among the best performing currencies.
Their comments came following an intense week both political and economic developments, across the globe.
Signals from central banks – nothing to see here?
Last week the U.S. Fed made clear that it is still on track to raise interest rates by the end 2017.
Gold stumbled as tighter monetary policy is seen to raise the opportunity cost of holding bullion.
This is not a cause for concern, says Gartman:
“This is a correction but let’s understand the last rally that we had took off from $1200 to $1370. The fact that we’ve fallen back below $1300 I think is relatively inconsequential,”
Why is Gartman so bullish on gold?
“The monetary authorities are all still remaining expansionary…In that instance, the one currency that will probably do the best of all is gold.”
Gartman says this despite the announcement by the U.S. Federal Reserve and previous comments from other central banks. Clearly, he argues, balance sheet unwinding is not going to happen immediately.
“[It] is going to take five or six years. This is not something that will occur overnight,”
As we explained last week following the Fed’s announcement, the plan to hike interest rates and reduce the size of its balance sheet does not make for a happy ending.
According to 100 years’ worth of data (provided by Incrementum Capital Partners via Frank Holmes), increased rates and a reduction in the balance sheet has historically preceded recessions.
A recession would likely kill the business cycle. Frank Holmes explains why this makes a case for holding gold in your portfolio:
Gold has historically shared a very low to negative correlation with stocks. Consider 2008, the height of the financial crisis: US stocks ended the year down more than 37 percent, while gold held its value, returning 3.4 percent.
So it is not surprising that Dennis Gartman remains bullish on gold. For the next five-to-six years the Federal Reserve, along with the Bank of England and European Central Bank (to name a few), will be seeking to do the impossible – undo all of their decade-long decisions without screwing up the economy even more.
The case for gold is clearly strong in the long-term, and just as much so in the short-term thanks to a certain ‘dotard’ and ‘Rocket Man’.
North Korea thinks Donald Trump is mentally deranged…
“Just heard Foreign Minister of North Korea speak at U.N. If he echoes thoughts of Little Rocket Man, they won’t be around much longer!”
Whilst markets’ concerns over North Korea have apparently lessened over the weekend, the last week has been full of machismo demonstrations from both sides.
Gold had a bit of a take-down following the Federal Reserve meeting however North Korea’s threats to test another hydrogen bomb, promptly increased support for the safe haven.
President Trump unimpressed UN attendees last week, referring to Kim Jong-Un as a the ‘Rocket Man on a suicide mission’. In response the North Korean Foreign Minister told the UN Trump was “mentally deranged person full of megalomania” and also on a “suicide mission”.
The U.S. decided a fly by of U.S. bombers would be a good way to demonstrate ‘strength’ whilst the North Koreans marched on Pyongyang against President Trump.
Gold plays a significant role during times of political and economic uncertainty. Whilst many argue that the war-of-words between the US and North Korea is nothing new, this is the first time we have seen actions escalate to this level.
Those who believe this is nothing new are perhaps assume things will ease off between the American ‘dotard’ and the North Korean despot.
When you look back at various events between 1976 and 2009 that have prompted a cause for concern for regarding North Korea, the gold price has declined.
This year however we have seen the price rally. This is because there are many positive factors in the gold market but also because the stakes are higher. With each tweet, statement, military demonstration and rocket test, the uncertainty increases significantly.
We have not been in a situation when a U.S. President is able to broadcast his thoughts with immediate effect to the world (including his enemy). Nor have we ever known North Korea to have the military capabilities it is so keen to demonstrate.
Gold thrives on uncertainty.
We are certain about the uncertainty
We are at an interesting juncture.
Data tells us that it is highly unlikely that central banks will successfully unwind without causing harm to the global economy.
Data also tells us that gold performs well as a safe haven during times of war and geopolitical upheaval.
However, there is no data to tell us how everything will play out. This is where uncertainty comes in.
Central banks are going to start unwinding, but we do not know how badly it will go wrong. North Korea will continue to try to destabilise the region and the U.S. but we do not know how far they will be allowed to get.
Gold will perform well in the coming months. If you want to be certain of its protection in a world of uncertainty, then you should own physical gold – allocated and segregated coins and bars – in the safest vaults, in the safest jurisdictions in the world.
Important guides to storage in Singapore and Switzerland:
News and Commentary
Gold Prices (LBMA AM)
25 Sep: USD 1,295.50, GBP 957.89 & EUR 1,089.26 per ounce
22 Sep: USD 1,297.00, GBP 956.15 & EUR 1,082.09 per ounce
21 Sep: USD 1,297.35, GBP 960.56 & EUR 1,089.00 per ounce
20 Sep: USD 1,314.90, GBP 970.53 & EUR 1,094.79 per ounce
19 Sep: USD 1,308.45, GBP 969.30 & EUR 1,091.25 per ounce
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
Silver Prices (LBMA)
25 Sep: USD 16.95, GBP 12.57 & EUR 14.27 per ounce
22 Sep: USD 16.97, GBP 12.52 & EUR 14.18 per ounce
21 Sep: USD 16.95, GBP 12.58 & EUR 14.24 per ounce
20 Sep: USD 17.38, GBP 12.84 & EUR 14.48 per ounce
19 Sep: USD 17.15, GBP 12.70 & EUR 14.31 per ounce
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
Recent Market Updates
– Bitcoin “Is A Bubble” but Gold Is Money Says World’s Biggest Hedge Fund Manager
– Pensions and Debt Time Bomb In UK: £1 Trillion Crisis Looms
– Gold Investment “Compelling” As Fed May “Kill The Business Cycle”
– “This Is Where The Next Financial Crisis Will Come From” – Deutsche Bank
– Global Debt Bubble Understated By $13 Trillion Warn BIS
– Bitcoin Price Falls 40% In 3 Days Underlining Gold’s Safe Haven Credentials
– 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
Charles Smith states that there is no country that can replace the USA as reserve currency for the world. However it does not stop the declining value of the uSA dollar\
(courtesy Charles Smith/gata)
Charles Hugh Smith: The demise of the dollar? Don’t hold your breath
Submitted by cpowell on Fri, 2017-09-22 13:28. Section: Daily Dispatches
9:31a ET Friday, September 22, 2017
Dear Friend of GATA and Gold:
The U.S. dollar is not likely to be displaced as the world reserve currency by another country’s currency, financial writer Charles Hugh Smith argues this week, because no other country has an economy large enough to support a reserve currency and the willingness to let its currency trade freely.
Smith does not directly address whether the reserve currency job might be done by a conglomeration of currencies, like the Special Drawing Rights issued by the International Monetary Fund, a conglomeration that some think could be expanded to include gold.
“Nobody wants to hold a currency that can be devalued overnight by some central authority,” Smith writes. “The only security in the realm of currencies is the transparent foreign-exchange market, which is large enough that it’s difficult to manipulate for long.”
But of course the U.S. dollar has been devalued overnight a few times in the last century, and anyone who believes that the foreign-exchange market is transparent and difficult to manipulate for long might do well to study the operations of the Bank for International Settlements, like the operations detailed here:
In any case Smith’s essay is pretty compelling for describing the enormity of the reserve currency business and the dollar’s continued domination of it. Smith’s essay is headlined “The Demise of the Dollar: Don’t Hold Your Breath” and it’s posted at his internet site, Of Two Minds, here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
As highlighted to you on Friday night’s COT report, the bankers engaged in more spec rinsing (orchestrated raids for the past 10 days) as they try and cover their huge shortfall
(courtesy Craig Hemke/TFMetals)
TF Metals Report: Time to lay low
Submitted by cpowell on Fri, 2017-09-22 15:20. Section: Daily Dispatches
11:20a ET Friday, September 22, 2017
Dear Friend of GATA and Gold:
Bullion banks are flushing speculative longs out of the gold and silver futures markets again, the TF Metals Report says today, gunning for the moving averages of prices, which had been bullish.
The TF Metals Report says: “”With the banks still firmly in charge (and not on the run or any of that other nonsense), we all knew that this latest spec rinse was coming and that it was only a matter of time. All we can do now is sit back and watch while we wait for the next entry point and rally. As of today it looks like we’ll need to give it about two weeks or so to play out.”
The commentary is headlined “Time to Lay Low” and it’s posted here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Both gold and silver are hugely backward on London and that necessitated a large mobilization of physical gold to supply to eastern countries who desired to liquidate uSA dollars
a must listen to audio from James Turk
Record BIS intervention against gold signifies panic, Turk tells KWN
Submitted by cpowell on Sat, 2017-09-23 13:47. Section: Daily Dispatches
9:48a ET Saturday, September 23, 2017
Dear Friend of GATA and Gold:
GoldMoney founder and GATA consultant James Turk, inteviewed this week by King World News, says the recent record intervention in the gold market by the Bank for International Settlements (http://www.gata.org/node/17646) signifies “panic behind the scenes” among governments and central banks.
Turk adds that he is skeptical of the Federal Reserve’s plan to sell assets when the U.S. economy is so weak.
He believes that by historical standards shares of gold mining companies are cheap relative to the gold price.
He says physical support for the metals is strong, the gold price is making higher lows, and the U.S. dollar continues its sharp decline.
Turk’s interview is 15 minutes long and can be heard at KWN here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Marcos’ son denies an offer of gold to Filipinos and its government
(courtesy Manila Times/GATA)
Marcos son denies offer of gold to Filipinos
Submitted by cpowell on Sun, 2017-09-24 16:15. Section: Daily Dispatches
Marcoses Deny Hand in ‘Gold Scam’
By Bernadette E. Tamayo
The Manila Times
Sunday, September 24, 2017
Former Philippine Sen. Ferdinand Marcos Jr. on Saturday denied reports that his family was offering cash and “gold” to the public.
He made the clarification after his family received reports of thousands of people gathering at the campus of the University of the Philippines at Los Banos in Laguna “because of promises of gold from the Marcoses.”
“We do not know of nor have any involvement of any of these gatherings,” Marcos said.
“It’s a scam pure and simple,” said the former senator, the only son of the late former President Ferdinand Marcos.
President Rodrigo Duterte last month claimed that the Marcos family, through an unidentified emissary, has expressed intention to “return” a portion of their wealth, including gold bars, to help the government fund its programs. …
… For the remainder of the report:
The crackdown on cryptos on the Chinese Mainland has boosted Hong kongs’ hope of becoming the hub for blockchain. I feel that the real winner will be blockchain’s use in the backing of bullion gold coin
China’s ICO Crackdown Boosts Hong Kong’s Hopes Of Becoming Blockchain Hub
China’s decision to shutter digital-currency exchanges based on the mainland, a strategy meant to extinguish the rampant fraud and abuse associated with initial coin offerings, or ICOs, is brightening Hong Kong’s hopes of asserting itself as a hub for blockchain technology.
As Bloomberg reports, while China has at least nominally embraced blockchain technology – even building a prototype digital yuan – Hong Kong’s city government has gone a step further by encouraging blockchain startups to set up shop in the city. One firm run by Johnson Leung, who has found success in finance and shipping, and now runs a blockchain startup, is focusing on applications for container ship operators.
The city’s embrace of blockchain is its latest attempt to nurture a domestic technology industry that could compliment the city’s dominance in banking and shipping. But as Bloomberg notes, betting on blockchain, a technology that has generated a ludicrous amount of hype, much of it undeserved, could be a risky proposition. Despite Hong Kong’s status as a financial hub, the city, one of the most expensive in the world for average working families, has zero “unicorns” – a term for startups valued at over $1 billion.
Skeptics say it’s a risky bet on an unproven technology – one with more than its fair share of hype and, in some cases, fraud. But a growing number of Hong Kong entrepreneurs and policy makers are convinced the online ledger system that underlies cryptocurrencies like bitcoin will eventually reshape everything from financial services to supply chains. They say the city’s laissez faire approach toward regulation, along with its expertise in finance and logistics, make it a natural hub for blockchain startups.
“I don’t see why Hong Kong can’t be a leader of blockchain technology,” said Leung, who co-founded 300cubits.tech after more than a decade in the financial industry that included stints as a research analyst at JPMorgan Chase & Co. and Jefferies Group LLC. “It’s so new that it’s not like any country has a huge advantage compared to us.”
As Bloomberg explains, the city’s government has been throwing resources at the technology, developing its own digital currency and testing different blockchain use-cases.
The city’s monetary authority is developing its own digital currency and is testing blockchains for trade finance, mortgage applications and e-check tracking. Hong Kong’s securities regulator has joined R3, a global consortium that develops blockchain technology for financial transactions, while a government-backed research institute has worked on a blockchain-based system for tracking property valuations, among other initiatives. Hong Kong Exchanges & Clearing Ltd., the city’s publicly-traded exchange monopoly, plans to start a blockchain platform for early-stage companies and their investors next year.
“Blockchain is a very high priority for us,” said Charles d’Haussy, head of fintech at InvestHK, a government economic development agency.
To be sure, the city is, like China, imposing restrictions on some of the shadier aspects of the blockchain ecosystem – namely ICOs, a new financing trend that involves selling a digital token that’s tied to a given platform or product. In theory, these tokens should get more valuable as the underlying product becomes more widely used. Some ICOs have raised millions of dollars, all without a working prototype – only a white paper that sketches out the company’s idea.
That doesn’t mean Hong Kong is giving the industry carte blanche. This month, the city’s Securities and Futures Commission told investors to be on the lookout for fraud in initial coin offerings – a form of cryptocurrency fundraising – and warned ICO issuers that they may be subject to local securities laws.
“We have to be very careful with this because on the one hand, we encourage innovation and free markets, but on the other hand, we do have to look after our small investors,” Paul Chan, Hong Kong’s financial secretary, said in a Sept. 11 interview.
Still, the city is taking a softer approach toward regulation than China, which banned ICOs this month and called for a halt in trading on domestic cryptocurrency exchanges.
In its battle to lure blockchain companies, Hong Kong is competing directly with its longtime rival, Singapore, which has also taken many steps to explore uses for blockchain technology while also encouraging the creation of a thriving startup community. As Bloomberg points out, Hong Kong doesn’t have a great track record when it comes to tech startups. Its Cyberport business incubator has been criticized as a housing development in disguise, while many local workers are reluctant to leave their steady jobs for riskier ventures because of the extremely high cost of living.
Building a sustainable blockchain hub in Hong Kong won’t be easy. Many applications for the technology, including Leung’s proposal to create digital tokens for the shipping industry, are still largely theoretical. (Leung says his tokens could be used in conjunction with so-called smart contracts to reduce the risk of default on shipping agreements.)
At the same time, competition to lure the most promising blockchain firms is fierce. Singapore, Hong Kong’s biggest regional rival, is pouring resources into its local fintech industry, as are other financial hubs including Dubai.
One official with InvestHK, the portion of the city government responsible for luring foreign investment, said that the city is keenly aware of the hype surrounding blockchain but has decided to move ahead anyway.
“There is hype, and there is the fast grab of money with ICOs in some cases,” d’Haussy said. “But what we are looking at building here in Hong Kong is an infrastructure for new businesses and existing businesses, to make sure the technology and innovations remain a key enabler for financial sector growth.”
So far at least, blockchain has been closely associated with fintech, or financial technology, which city officials believe should give Hong Kong an edge in attracting companies, given its large financial sector. Many of the city’s early startups include financially focused firms like BitMEX, a bitcoin derivatives exchange; Bitspark, a remittance platform; and Kenetic Capital, a blockchain investment firm. While Hong Kong doesn’t publish statistics on the growth of the local blockchain industry, InvestHK’s d’Haussy said anywhere from 10 to 20 companies are expected to raise funds via ICOs in the city over the next six months.
However, with the technology still largely unable to scale, the question of whether these companies will be able to survive long enough to achieve profitability before their backers throw in the towel. Not every function – especially not in the world of finance – is suitable for automation and decentralization. What works with blockchain, and what doesn’t, has yet to be thoroughly explored.
Which is, of course, one of the reasons why the industry is so interesting: The risks are large, but the payoffs, in terms of job creation and the attendant tax-revenue and growth bump, is potentially huge.
Here is Credit Suisse’s pick for the largest upside. Since the only Central Bank in the world is the buying gold stocks, this should be very helpful:
(courtesy John Ogg/247wallst.com)
Credit Suisse Still Sees Big Upside for 5 Large Cap Gold Producers
By Jon C. Ogg September 25, 2017 12:35 pm EDT
It is no secret that the bull market is now well into its eighth year. When analysts issue or reiterate Buy and Outperform ratings, they are currently implying upside of 8% to 15% in the larger S&P 500 index companies. There are cases where the upside price targets can imply higher gains, and there are many instances where the upside targets are only 5% or even less above the current share price.
Credit Suisse has updated many of the targets and valuations for its large cap precious metals producers, and even as some targets have been trimmed the implied upside comes with a range of 22% to 35%. The firm’s updating estimates for the third quarter and beyond were to be ahead of the Denver Gold Forum. They are calling for capital allocation to projects and for more potential in M&A with stronger sector balance sheets and an ability to add value in the existing portfolio.
What has happened in the past year is that the gold- mining stocks have by and large come down considerably from their 52-week highs. Specifically, the key exchange traded funds that track gold have rocketed higher in 2017 but are down handily from a year ago. The key gold price ETF (GLD) is up 12% so far in 2017 but down over 3% from a year ago. The key gold mining stock ETF (GDX) is up 12% year to date but down 15% from this time last year. It is normal to see analysts trim target prices after big sell- offs. After all, you can’t expect a whole group of stocks to easily rise 50% even if they have pulled back handily.
24/7 Wall St. has included trading history and how each new Credit Suisse target price compares with the Thomson Reuters consensus analyst target. Additional commentary has been included as well. Most of the firm’s investment views come with risks that range from commodity prices to operational to geopolitical.
Agnico Eagle Mines Ltd. (NYSE: AEM) was worth over $10.6 billion, and Credit Suisse’s target price went to $59 from $64. This is still about 28% higher than the prior closing price of $46.14. Its rating at Credit Suisse is Outperform, and the firm’s $59 target price is above the consensus analyst price of $56.71. Agnico Eagle Mines has a 52-week trading range of $35.05 to $56.08.
Agnico Eagle is considered a top pick from Credit Suisse. The firm’s report noted:
Agnico Eagle is a top pick for its strong exploration and project pipeline, strong balance sheet, track record and valuation which is more attractive versus peers on net asset value than investors realize due to Agnico Eagle mining below reserve grade (provides tailwind for future cash flow) and robust resource base which has higher than usual potential to convert into reserves over time. Commodity prices are the key risk to our view.
Barrick Gold Corp. (NYSE: ABX) was last seen trading at $16.33. Credit Suisse has an Outperform rating, and its prior $22.50 target price was trimmed to $22.00. This still implies upside of 35%, and its consensus target price is only $20.22. Barrick’s market value is $19 billion. Its shares have traded in a range of $13.81 to $20.78 over the past year.
The firm’s investment view on Barrick noted that Tanzanian negotiations an area of focus, and it said:
Barrick has delivered underlying net asset value per share growth over the last year and we expect that to continue due to management’s focus on ROIC and Barrick’s high quality asset base.
Goldcorp Inc. (NYSE: GG) has one of the odd scenarios where there is still well above average upside, but it comes with a Neutral rating from Credit Suisse. The latest closing price of $12.74 generates a $10.9 billion market cap. Credit Suisse’s target was lowered to $15.50 from $16.75, which is more or less in line with the $16.87 consensus target price. The firm expects 22% upside here. Goldcorp shares have a range of $11.91 to $17.87 over the past 52-weeks.
The investment view on Goldcorp said:
Goldcorp’s attractive growth profile is tempered by our view that execution risk remains high. In our experience, operational turnaround takes longer to effect than expected, but once started, delivers results more rapidly than expected. We do see GG more likely to rebound given FCF leverage in a gold bull run.
Kinross Gold Corp. (NYSE: KGC) is worth more than $5 billion in market value, based on its $5.29 share price, and Credit Suisse also has an unusual 30% upside to its unchanged target price of $5.50. Kinross has a consensus target price of $5.21, and its 52-week range is $2.88 to $4.91.
Credit Suisse’s neutral investment view note:
We rate Kinross as Neutral due to its 2016 re-rating which has brought valuation closer to peers and our desire to see Kinross’s capital allocation strategy delineated given its shorter than average reserve life. We retain a constructive bias on KGC due to its high leverage to gold and our positive gold price view.
ALSO READ: Top Analyst Says Buy Any Gold Pullback as Risks Mount
Newmont Mining Corp. (NYSE: NEM) is rated as Outperform at Credit Suisse, and $37.43 share price comes with a market cap of about $20 billion. The firm has maintained its prior target price of $48.50 and that would imply 30% upside. Newmont shares have a 52-week range of $30.19 to $40.05 and a consensus target price of $40.62.
On Newmont, Credit Suisse’s outperform view noted that it should do better based on operational consistency over the years 2014 to 2016 and due to a strong track record of adding to reserves and net asset value versus its peers. It is also said to have the strongest balance sheet among peers Barrick and Goldcorp.
WHAT A BUMMER..A MAN IS CAUGHT SMUGGLING GOLD INTO HIS COUNTRY (A ONE KILO BAR) HIDING IT UP HIS RECTUM.
(COURTESY SIMON BLACK/SOVEREIGN MAN/
Gold Smuggling Surges: Man Caught “Walking Suspiciously” With 1 Kilo Bar In Rectum
Earlier today in Sri Lanka’s Colombo International Airport, a passenger was arrested by local authorities and found to have stuffed nearly $30,000 worth of gold into his rectum.
That’s nearly 1 kilogram of gold. In his ass.
The gold had been carefully wrapped in plastic and included four small bars and multiple chains of jewelry.
Airport police were tipped off when they noticed the 45-year old man “walking suspiciously.” No sh*t, Sherlock.
And curiously this was not even close to the first incident of rectal gold smuggling in Sri Lanka.
Just last week another passenger was found with 314.5 grams of gold stuff inside her rectum. Amateur.
Gold, of course, has a long history of value and marketability, going back to ancient civilizations that have been extinct for thousands of years.
Archaeologists have unearthed dozens of graves, some of which date back more than 6,000 years, containing gold artifacts.
It is, by far, the oldest form of money that is still in existence today.
And it is a form of money. Despite you and I not being able to pay for a Starbucks coffee with gold, governments and central banks continue to hold the metal as part of their official international reserves.
Gold has also long been considered a traditional ‘safe haven’ asset. When the world goes crazy, the gold price spikes.
In the days after the 9/11 attacks 16 years ago, for example, the gold price shot up 33%. In the first few days of the Global Financial Crisis in September 2008, the gold price rose more than 20%.
And, until recently, every hint of a North Korean missile test sent the gold price higher.
In May 2013, for example, the North Korean missile test sent gold rising $54. Even earlier this year, North Korea’s missile test in April sent the gold price rising nearly $40.
Yet now, despite the prospects of war on the Korean peninsula being at the highest levels in decades, the gold price is actually falling.
This is totally backwards.
It’s not just the gold price, either. Physical demand for precious metals has also been lower in 2017, given the US mint’s dramatic 67% declinein sales earlier this year.
And the World Gold Council has also reported steep declines in gold demand so far in 2017– 18% in Q1 and 10% in Q2, most notably due to reduced demand from gold ETFs.
This trend makes sense given what we see in the news… or rather, don’t see in the news– have you noticed that no one really talks about gold anymore?
Gold commentary used to be a staple in financial media. Now the winds seem to have shifted– it’s all about cryptocurrency.
Cryptocurrency is definitely exciting. And with such absurd gains, it’s no wonder that crypto has been dominating headlines.
Crypto also represents the future.
Just today I received a payment to the bank account of our agriculture company here in Chile; the wire transfer originated in the United States, yet took three days to arrive.
Along the way, the banks took around $500 in fees. Around $150 of that was the wire transfer fees charged by the sending bank, receiving bank, and correspondent bank, plus another $40 in fees charged by SWIFT, the international payment messaging service.
On top of that, the sending bank charged a fat fee to convert the funds from dollars to pesos even though we explicitly instructed them to NOT convert.
Then the receiving bank charged another fat fee to fix the mistake and convert the funds back from pesos to dollars.
A cryptocurrency payment over the blockchain, on the other hand, would have taken minutes… maybe an hour or two at most. And cost less than $1.
As I’ve ranted about in the past, the crypto market is full of bubblicious irrationality at the moment. But the underlying technology is still revolutionary and highly disruptive.
(Not to mention our friends in Sri Lanka don’t have to cram any bitcoins into their rectums…)
But crypto’s power and potential is not in conflict with gold. Both represent a decentralized form of money. Both represent an alternative to the banking and monetary system.
It’s not a competition between gold and Bitcoin.
As a colleague of mine once said, I own gold for all the “I don’t knows.”
Will the US and North Korea go to war? I don’t know.
Will the US default on its enormous (and growing) $20+ trillion debt? I don’t know.
Will the central bank be able to expertly engineer the unwinding of its $4.5 trillion balance sheet and raise rates from historic lows without triggering any consequences whatsoever in financial markets? I don’t know.
By being 100% in dollars (or euros, pounds, renminbi, etc.), you are effectively saying, “Yes, I do. I know exactly what’s going to happen in the future. Everything is going to be fine forever, so I don’t need to hedge myself even one bit.”
That’s a pretty lofty bet.
Gold and crypto are both cut from the same cloth… and one trait they have in common is that they’re both for the “I don’t knows”.
This is not a question of either/or. The answer is both.
or use the link below15 Year Old Article Was RIGHT: Fort Knox Gold IS GONE!
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
2. Nikkei closed UP 101.13 POINTS OR 0.50% /USA: YEN RISES TO 112.14
3. Europe stocks OPENED MOSTLY IN THE RED ( /USA dollar index RISES TO 92.53 /Euro DOWN to 1.1876
3b Japan 10 year bond yield: FALLS TO -+.028%/ GOVERNMENT INTERVENTION !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 112.14/ 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:: 50,92 and Brent: 57.55
3f Gold DOWN/Yen DOWN
3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“HELICOPTER MONEY” OFF THE TABLE FOR NOW /REVERSE OPERATION TWIST ON THE BONDS: PURCHASE OF LONG BONDS AND SELLING THE SHORT END
Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.
3h Oil UP for WTI and UP for Brent this morning
3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO +.411%/Italian 10 yr bond yield DOWN to 2.103%
3j Greek 10 year bond yield RISES TO : 5.563???
3k Gold at $1294.20 silver at:16.94 (8:15 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50
3l USA vs Russian rouble; (Russian rouble UP 21/100 in roubles/dollar) 57.29-
3m oil into the 50 dollar handle for WTI and 57 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 112.14 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 0.9737 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1555 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.
3p BRITAIN VOTES AFFIRMATIVE BREXIT/LOWER PARLIAMENT APPROVES BREXIT COMMENCEMENT/ARTICLE 50 COMMENCES MARCH 29/2017
3r the 10 Year German bund now POSITIVE territory with the 10 year FALLING to +0.411%
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 2.236% early this morning. Thirty year rate at 2.769% /POLICY ERROR/FLATTENING OF THE CURVE)
5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.
(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)
Global Stocks Mixed After “Nightmare Victory” For Merkel; Chinese Property Developers Crash
European stocks rose as the euro tumbled following Germany’s election result which was dubbed a “Nightmare Victory” for Merkel and could lead to potentially complicated coalition talks and perhaps even another early election. U.S. equity-index futures point to a lower open, while Asian equities slide after a plunge in Chinese property developer names over worries of new real estate curbs as well as tech stocks following more iPhone delivery concerns. S&P500 futures are steady, down slightly by just over -0.1%, after closing little changed on Friday.
For those who missed it, in the main political event over the weekend, the German election results showed Chancellor Merkel set for a 4th term after her CDU/CSU won the most votes, but performed weaker than expected and will need to undertake coalition discussions. In terms of the number of seats, CDU/CSU won 246 seats, SPD won 153 seats, AfD won 94 seats, FDP won 80 seats, Die Linke won 69 seats and Grune won 67 seats. Given the abysmal performance of the SPD (worst performance since WW2), the party have efused to enter into a Grand Coalition and instead will form the opposition (to avoid AfD becoming the opposition). As such, Merkel will now have to try and form a ‘Jamaica’ Coalition with the FDP and Green parties. However, the FDP initially distanced themselves from forming such an alliance. Furthermore, according the CSU are reportedly considering their historical alliance with the CDU following yesterday’s result. Further reports suggest that the CSU are set to vote on their alliance with Merkel’s CDU, However, according to a report on Germany’s n-tv, CSU leader Seehofer said his party would remain a partner with Merkel’s CDU, although Seehofer said he wants CSU leadership to vote on joint caucus.
“The question is obviously now what it means for policy going forward” in Germany, Mitul Kotecha, head of Asia FX and rates strategy at Barclays Bank Plc, said on Bloomberg Television in reference to the election. “Investors are going to be closely following announcements on policy, especially given that fact that the AfD is not just nationalist, but also anti-euro to some extent.” As Bloomberg adds, the process of building a new government could take weeks, so markets may well move on from the result quickly.
The Euro pushes lower through European trading as investors digested these political developments. German election fallout with smaller mandate for Merkel is coupled with latest Italian polls showing support for populist Five Star Movement. The resulting slide in the common currency, which saw the EURUSD slide below 1.189 this morning, sent European stocks modestly higher although the reaction was decided mixed among another session of near record low volumes as trader paralysis continues in a centrally-planned market. The Stoxx Europe 600 Index fell less than 0.1%, as losses in banks and miners offset gains in travel-and-leisure and media shares. Tullow Oil jumped 6.8% after saying Ghana’s new maritime boundary as determined by a tribunal doesn’t affect the TEN fields, and it expects to resume drilling around the end of the year.
Also over the weekend, New Zealand held its general election on Saturday which resulted to a hung parliament, as no party gained the 61 seats needed for a majority. In terms of the projected results, the incumbent National Party won 58 seats, main opposition Labour Party won 45 seats, New Zealand First won 9 seats, Green Party won 7 seats, ACT won 1 seat and the Maori Party won 0 seats. The result has been broad-based weakness for the Kiwi with the AUDNZD rising over 100 pips from its Friday close of 1.0860.
Separately, North Korea’s Foreign Minister stated that President Trump’s labelling of Kim Jong Un as ‘Rocketman’ has made North Korean rockets’ visit to entire US mainland inevitable, while there were also separate reports that US Air Force B-1B Lancer Bombers flew over the waters east of North Korea on Saturday. Elsewhere, on Monday Japan PM Abe confirmed recent rumors, and announced he would dissolve the lower house of parliament on September 28th, to call a snap election and further cement his power following the recent spike in popularity.
The yen pared a drop as Japan’s prime minister unveiled a fresh stimulus package and said he’ll dissolve the lower house of parliament ahead of a general election. Stocks in Europe edged higher helped by the weaker euro, but shares in developing nations headed for a third day retreating.
Asian equities fell, with the region’s benchmark set for a third day of declines from its highest level in almost a decade, as investors weighed the outlook for returns and political uncertainty prompted some to cash in some of the gains from this year’s rally. The MSCI Asia Pacific Index retreated 0.5% to 162.25 in Hong Kong as about three stocks declined for every two that gained. Japanese stocks advanced, with the Topix closing at a fresh two-year high, as the yen weakened against the dollar on speculation of fiscal stimulus by Abe. “Some investors have decided to take some of their gains from the table after the recent rally drove valuations up in many Asian markets,” said John Teja, a director at PT Ciptadana Sekuritas Asia in Jakarta. “The biggest risk for the region and global equities market in general remains the political risk on the Korean peninsula.” The Asian equities benchmark has surged about 20 percent so far this year, putting it on course for its best annual performance since 2009, underpinned by low interest rates and an improving outlook for earnings growth.
Of note, the Hang Seng Mainland Properties Index plunged more than 5% overnight, its biggest single day drop, after China introduced new curbs on real estate over the weekend. The move send the Hang Seng lower by 1.4%, its biggest drop in 6 weeks.
Also notable, China’s offshore Yuan tumbled to 6.6205 as China’s recent push to weaken the currency, including the weakest fixing since August 31, sent the CNH to the lowest level since August 28.
In rates, the yield on 10-year Treasuries fell one basis point to 2.24 percent, the lowest in a week. Germany’s 10-year yield declined four basis points to 0.41 percent. Britain’s 10-year yield fell one basis point to 1.341 percent, the largest drop in more than two weeks.
In commodities, gold fell 0.2 percent to $1,295.40 an ounce. West Texas Intermediate crude declined 0.1 percent to $50.63 a barrel, while Brent pushed to the highest level since February.
The week is full of Fed speakers, with Yellen set to discuss monetary policy on Tuesday, while the calendar sets off with Dudley, Evans and Kashkari taking the podium today. Investors will look for cues on monetary policy as Fed and ECB officials speak this week: “In the U.S., the mystery of the missing inflation will likely feature in a slate of Fed-speak, with core inflation stuck at 1.4%,” Societe Generale strategists including Stephen Gallagher wrote in note.
President Donald Trump and Republican leaders plan to release a tax framework this week that would dramatically cut taxes for corporations and the wealthy and includes a proposal to cut the corporate tax rate to 20 percent from 35 percent. Scheduled earnings on Monday include Red Hat, Synnex.
- S&P 500 futures down 0.1% to 2,495.75
- VIX up 5% to 10.07
- STOXX Europe 600 up 0.1% to 383.59
- MSCI Asia down 0.5% to 162.23
- MSCI Asia ex Japan down 0.9% to 533.88
- Nikkei up 0.5% to 20,397.58
- Topix up 0.5% to 1,672.82
- Hang Seng Index down 1.4% to 27,500.34
- Shanghai Composite down 0.3% to 3,341.55
- Sensex down 1.3% to 31,494.47
- Australia S&P/ASX 200 up 0.03% to 5,683.73
- Kospi down 0.4% to 2,380.40
- German 10Y yield fell 1.6 bps to 0.431%
- Euro down 0.4% to $1.1907
- Italian 10Y yield fell 0.2 bps to 1.814%
- Spanish 10Y yield unchanged at 1.627%
- WTI Futures down 0.2% to $50.6/bbl;
- Brent crude up 0.6% to $57.18
- Gold spot down 0.4% to $1,292.12
- U.S. Dollar Index up 0.2% to 92.38
Top Overnight News
- Merkel’s Christian Democratic Union-led bloc is meeting in Berlin on Monday in the wake of the defeat of its Social Democratic Party challenger even while falling to the worst result since 1949
- Ifo Sept. german business confidence index unexpectedly dropped a second month to 115.2, vs est. 116.0
- New Zealand Prime Minister Bill English has claimed a mandate to form the next government after winning the biggest slice of the vote in Saturday’s election, even as opposition leader Jacinda Ardern refuses to concede defeat
- Japan’s Prime Minister Shinzo Abe said he will dissolve the lower house of parliament on Sept. 28; general election set for Oct. 22, according to three people with knowledge of his ruling coalition’s plans
- Japan’s Abe to order relevant officials to come up with 2t yen economic package at economic, fiscal panel meeting today, Yomiuri reports, without attribution
- Hellman & Friedman to Buy Payments Firm Nets for $5.3 Billion
- Switch Inc. Is Said to Aim for Year’s Third- Biggest Tech IPO
- ABB Bolsters U.S. Business With $2.6 Billion GE Unit Deal
- Unilever Buys Korean Makeup Firm for $2.7 Billion from Goldman
- Coty Is Said to Mull Selling Some Fragrance Brands: WWD
- Brazil Regulator Is Said to Back AT&T/Time Warner, Globo Says
- Blackstone Is Said to Buy UIOF for Rs800 Crore: Economic Times
- Amazon Unit Plans to Open Data Centers in Middle East by 2019
- IPhone Disappointment Hammers Suppliers, Fuels Taiwan Outflows
- European, U.S. Apple Suppliers May Move After DigiTimes Report
- Top BP Executive Warns OPEC Needs to Prolong Oil Output Curbs
- Iron Ore Succumbs to Bear Market and May Extend Slump Into $50s
- Equifax’s Massive Hack Has a Tiny Silver Lining
- Trump Tax Plan Said to Cut Taxes for Wealthy and Whack NY and NJ
- GOP Revises Obamacare Repeal With Bill Headed to Likely Defeat
- Lockheed Says Talks Ongoing With Japan on Supply of THAAD System
Asia equity markets began the week subdued as FX took much of the focus amid post-election hangovers from New Zealand and Germany where the incumbents in both won most votes but failed to get majorities, which moves the process on to coalition negotiations. ASX 200 (+0.1%) and Nikkei 225 (+0.4%) were positive with the latter the outperformer on JPY weakness, while a 4- month high Japanese Nikkei Manufacturing PMI and reports that PM Abe is considering a JPY 2tln economic package added to upbeat tone. Chinese markets were subdued with Shanghai Comp. (-0.4%) and Hang Seng (-1.1%) negative, as property names suffered from tighter restriction announcements, although the losses in the mainland were stemmed following a firm liquidity operation heading into next week’s National Day holidays. 10yr JGBs were relatively flat as pressure in the safe-haven from a positive risk sentiment in Japan, was counterbalanced by the BoJ’s presence in the market for a respectable amount just shy of JPY1trl in JGBs with 1yr-10yr maturities.
Top Asian News
- China Developers Plunge as Government Expands Tightening
- China Is Said to Plan Closer Oversight of State Company Funds
- Unilever in $2.7 Billion Deal for Korean Cosmetics Maker
A tepid start for European bourses with a sense of anxiety among investors following the result of the German election and a surprise rise in support for the far-right AFD party, subsequently, Chancellor Merkel has been left with a less stable position. Notable underperformers have been financial and commodity related names. However, the initial opening gap in European trade was filled through the session, aided by the performance in oil markets. A slight tick lower in German yields have supported bunds this morning with the yield modestly flatter. A soft start for peripherals as spreads widen against their German counterpart with Spain and Italy wider by 1.6bps and 1bps respectively. Further, Saudi Arabia plan to return to the global conventional bond market, as the Kingdom seeks to address the budget deficit and underpin economic reform efforts. Bunds saw a bid following the results of the German Ifo, with extensions of the move evident of political German uncertainty, as Twitter reports stated that the CSU are considering their historical alliance with the CDU following yesterday’s result.
Top European News
- BOE Seeks Brexit Deal to Protect Existing Derivative Contracts
- German Business Confidence Unexpectedly Drops for Second Month
- Turkish Stocks Decline As Kurdish Referendum Weighs on Sentiment
- Peripheral Euro Bonds Sell Off in Aftermath of German Election
In FX, the EUR suffered following the weekend results despite Chancellor Merkel being set for a fourth term. Merkel’s CDU/CSU performed weaker than expected and will now need to undertake coalition discussions, likely set to attempt to form a ‘Jamaica’ Coalition with the FDP and Green Parties, with FDP being an initial hurdle. EUR/USD rejected 1.20 on Friday, and struggled as Asian trade began, trading through 1.19, now consolidating just above these levels. EUR/GBP saw similar price action, finding support ahead of September’s lows. A break through the 0.8774 area could see trade once again in the start of 2017’s trading range. NZD was also heavy following their election results, and in line with Germany, despite a victory for the National Party, a majority was also not secured. This places the next government at the hands of New Zealand First Party’s leader and effective ‘kingmaker’ Winston Peters, who is all too familiar with this obligation having supported both the National Party and main opposition Labour in past governments. NZD/USD find some support following initial selling pressure, support at September 18th’s low held, with some buying evident around these levels. AUD/NZD held just through 1.0800, yet continuing to show a downward trend following the stacked offers seen around 1.1150 through September.
In commodities, prices were mostly range-bound which kept WTI subdued, while copper was unchanged amid a subdued risk tone. Elsewhere, gold (-0.3%) was pressured from early trade due to a firmer greenback, after the currency benefitted from political uncertainty weighing on a couple of its major counterparts post-elections.
On today’s calendar we have Germany’s IFO indicators on business climate, expectations and current assessment all of which missed expectations (Current Conditions 123.6 vs Exp. 124.8; Expectations 107.4, Exp. 107.9; Business Climate 115.2, exp. 116). Over in the US, there is the Chicago Fed National and Dallas Fed manufacturing activity index.
US Event Calendar
- 8:30am: Chicago Fed Nat Activity Index, est. -0.2, prior 0
- 8:30am: Fed’s Dudley Speaks on Workforce Development
- 10:30am: Dallas Fed Manf. Activity, est. 11.5, prior 17
- 12:40pm: Fed’s Evans Speaks on Economy and Monetary Policy
- 6:30pm: Fed’s Kashkari Speaks at Townhall in Grand Forks, North Dakota
DB’s Jim Reid concludes the overnight wrap
3 months today until Xmas. How time flies. Normally I’d associate Xmas with relaxing, lie-ins and having good family time. However Xmas will now be forever associated in my eyes with the utter chaos of my current life. I’ll let readers do their own arithmetic but 2 year old Maisie was due on September 23rd and the twins were technically due yesterday (they are nearly 4 weeks now!). So to avoid yet more chaos in 12 months’ time this Xmas you’ll be most likely to find me in a Tibetan monastery.
One wonders how whether Mrs Merkel would like her own private retreat to prepare herself for the difficult time ahead after a disappointing yet still overwhelming victory in yesterday’s German election. As we highlighted last week, the election was always going to be purely about the coalition arithmetic and deals. These are likely to be more difficult after the results. To recap Mrs Merkel’s CDU/SCU polled 33% (37% in final polls on Friday) against the SPD’s 20.5% (22% in final polls). Combined these two parties saw their lowest share of the vote since World War II (since 1949 for Merkel’s party). The AfD (Alternatives for Germany) came third with 12.6% of votes (11% expected on Friday) and will now be the first far right party in the Bundestag since the Nazi party. They beat the pro-business FDP (10.7% – Free democrats Party), Greens (8.9%) and the post-Communist Left (9.2%). Given that the SPD now want to be the main opposition rather than join in another grand coalition, the so called Jamaican coalition of the CDU/SCU, FDP and Greens is likely, but there will be some big idealogical differences to negotiate around. The FDP are known to be against further Euro integration which will be one of the key takeaways from the election. The FDP leader Christian Lindner has indicated a willingness to join in coalition talks, but said that “We want to organise a change of direction for our country” and also tweeted that “€60bn Eurozone budget flowing into France or Italy is inconceivable for us…a line in the sand”. Meanwhile, a leading Green politician told broadcaster ZDF that talks will be “very hard, we are far apart on many issues”.
I spoke to DB’s Mark Wall after the results and we discussed the impact on euro area integration. As Mark said, earlier this summer the “Macron Pivot” suggested a surprising counter thrust against anti-EU populism. Marcon turned to Merkel for support to strengthen the euro area with a new integration push. However her capacity to reciprocate may be a lot more limited now. Some might see Macron’s proposals — due to be fleshed out in a speech tomorrow — as unhelpful in the circumstances, in timing if not in substance. Mark thinks Germany will be less able to relax its traditional demand for strong conditionality on any new common funds and the speed of progress towards an agreement could now be slower and more fraught. If the result takes upward pressure off the euro it may help cement an ECB exit announcement on 26 October in line with baseline expectations (six month extension of QE at EUR40bn), but hopes for a significant policy rebalancing for the euro area, facilitated by easier fiscal policy/support for economic convergence, are likely to get dialled back. It could also make it more difficult for Merkel to gather the support necessary for a Weidmann Presidency of the ECB, if that was the plan. So lots to chew over.
Elsewhere, France’s Macron suffered a small set back with his party losing 6 seats as the Senate renewed 170 out of its 348 seats. Notably, the practical impact is likely limited near term as the National assembly (where Macron has a clear majority) has the final say in legislations over the Senate. However it perhaps reflects that his honeymoon as leader has been pretty short.
This morning, the EURUSD is trading a touch weaker (-0.18%) as we type. Asian markets are mixed but little changed as we type, with the Kospi (-0.44%), Hang Seng (-0.83%) and Chinese bourses (-0.3%) all down modestly, while the Nikkei (+0.58%) and ASX 200 (+0.19%) are both up slightly. Japanese stocks have been helped by reports that Japan’s Abe will announce a fresh stimulus package alongside the expected snap election decision later this morning.
After the dust has settled in Germany, the most important event of this week is likely to be the latest on the tax reform agenda in the US. This weekend in between going to 2nd birthday parties, changing tens of nappies, trying to watch Liverpool play while bathing a toddler, hours of sterilising bottle feeding and milk expressing equipment, and being forced into action every couple of hours at night, I managed to read the very useful “A primer on tax reform and the upcoming budget debate” by DB’s Brett Ryan. In reading this you get a feel for how complicated things are and how possible it’ll be that nothing gets done. Regular legislation would take 60 votes in the Senate and bipartisan support and allow for proper tax reform. However this is seemingly impossible. The reality is that any changes will likely be made through the reconciliation process. However this first requires a budget being passed by Congress which hasn’t been achieved since the Democratic super-majority in 2009-10.
The only good news is that we think that any positive tax reform has been priced out of markets so there’s a limit to how much disappointment there can be to continued failure. This week we would expect a vague outline of what will be pursued from the so-called “Big 6” (including Treasury Sec Mnuchin, Gary Cohn, Ryan, Senate majority leader McConnell). Overnight, the Washington post reported Republicans were “targeting” a corporate tax rate of 20%, but plans remains fluid. Elsewhere, Trump said “we’ll see what happens, but I hope it’s going to be 15%”, while Treasury Secretary Mnuchin said the upcoming tax plan will be “getting rid of lots of deductions”.
So with German politics in a state of flux and US politics increasingly fraught, suddenly the UK looks a bit of a stable safe haven after Mrs May’s speech on Friday. Although it hasn’t unlocked doors, it’s been seen as a step in the right direction away from the likelihood of a hard Brexit. In the speech, PM May clarified: 1) UK would seek a transitional deal that would allow continue market access on current terms for c2 years post Brexit (under the framework of ‘the existing structure of EU rules and regulations), which in effect leaves UK as a rules taker in the EU until March 2021, 2) UK is committed to the current EU budgetary round to 2020 and meeting past financial commitments, but avoided explicit numbers on the divorce bill, but 3) in terms of a future trade agreement, there was little new in terms of content, although she ruled out both EEA and Canada style options. Overall, DB’s Oliver Harvey believes the tone of her speech was constructive and the initial reaction from EU negotiator Barnier has been cautiously positive. For more details. Later on, the Times reported Mrs May is willing to pay up to GBP40bln in return for a transition deal. Focus now turns to the EU-UK Brexit talks which resume today.
Quickly recapping the market’s performance on Friday. US (S&P +0.06%) and European equities (Stoxx 600 +0.09%) were little changed following North Korea’s threat of testing a hydrogen bomb over the Pacific Ocean. Gold rose 0.47% and core bond markets were slightly firmer (UST 10y yields -2.7bp; Bunds -0.7bp; Gilts -0.9bp), partly reflecting the bias for safe haven assets. The US dollar index dipped 0.10% while Sterling fell 0.56% not helped by Moody’s late downgrade. In commodities, WTI oil rose 0.22%, while Iron Ore continues to fall (-3.83%; -12% for the week) on growing concerns of reduced demand from Chinese steel producers.
Away from the markets and onto central bankers’ commentaries. In the US, the Fed’s John Williams said “I do expect us to need to raise rates gradually….it’s not like we need to raise rates a lot over the next couple of years”. He also noted a “new normal” for rates may be 2.5%. Elsewhere, the Fed’s Esther George reiterated “I support an approach that removes (financial) accommodation in small doses” and the Fed’s Robert Kaplan noted “there are number of reasons the US isn’t reaching its inflation target and a number of those are not transitory”. Over in Europe, ECB’s VP Vitor Constancio noted “the recent euro appreciation may have a more limited dampening effect on inflation than what would be implied by historical averages”.
Before we take a look at today’s calendar, we wrap up with other data releases from Friday. The MarkitSeptember flash PMIs for Germany and Eurozone was above market’s expectations. In Germany, the composite PMI rose 2ppts to 57.8 (vs. 55.7 expected), marking a 77 month high. The solid growth was driven by both the manufacturing sector (60.6 vs. 59 expected) and the services sector (55.6 vs. 53.7 expected). The Eurozone’s composite PMI also surprised on the upside, with the index up 1ppt to 56.7 (vs. 55.6 expected), just below this year’s cyclical highs. DB’s Peter Sidorov noted the rise was seen in both sectors, with manufacturing reaching new cyclical highs (led by Germany). In services, there were big rebounds in both Germany and France.
Over in the US, the composite PMI fell 0.7pts to 55.6 (vs. 55.3 previous), with a 0.2pt rise in the manufacturing PMI to 53.0 more than offset by a 0.9pt decline in the services PMI to 55.1 (vs. 55.7 expected). Elsewhere, the final readings for France’s 2Q GDP was broadly unchanged at 0.5% qoq and 1.8% yoy (vs. 1.7% expected).
To the week ahead now. Today starts with Germany’s IFO indicators on business climate, expectations and current assessment. Over in the US, there is the Chicago Fed National and Dallas Fed manufacturing activity index. Onto Tuesday, Japan’s services producer price index will be out early in the morning. Then in France, there is manufacturing and business confidence indicators. In the UK,finance loans for housing are due. Over in the US, there is the CB consumer confidence index, Richmond Fed manufacturing index, CoreLogic house price data for key cities as well as new home sales data. Turning to Wednesday, Italy’s July industrial orders along with confidence indicators on manufacturing, consumer and economic sentiment will be due. France’s consumer confidence and the Eurozone’s M3 money supply data are also due. Over in the US, there is durable and capital goods orders for August, pending home sales and MBA mortgage applications. For Thursday, Germany’s September CPI (with state based CPI data) and GfK consumer confidence readings will be due. For the Eurozone, there is a range of confidence indicators including: consumers, business climate, economy and industrial. Over in the US, there is the third reading of 2Q GDP, Core PCE and personal consumption. Elsewhere, the Kansas City Fed manufacturing activity index, August wholesale inventories and stats on continuing claims and initial jobless claims are also due. Finally on Friday, there will be numerous data out of Japan early in the morning, including: August national CPI, IP, jobless rate, retail sales and vehicle production. Further, China’s Caixin China PMI manufacturing index and UK’s GfK consumer confidence will also be out early. Then we have CPI for the Eurozone along with CPI & PPI for France and Italy. In Germany, there is unemployment change for September. In the UK, there is the final reading of 2Q GDP along with mortgage approvals and money supply M4 stats. Over in the US, there is PCE core for August, personal income and spending, the Chicago PMI along with the University of Michigan consumer sentiment index.
3. ASIAN AFFAIRS
i)Late SUNDAY night/MONDAY morning: Shanghai closed DOWN 10.98 POINTS OR 0.33% / /Hang Sang CLOSED DOWN 380.18 POINTS OR 1.36%/ The Nikkei closed UP 101.13 POINTS OR 0.50%/Australia’s all ordinaires CLOSED UP 0.02%/Chinese yuan (ONSHORE) closed WELL DOWN at 6.6230/Oil UP to 50.92 dollars per barrel for WTI and 57.55 for Brent. Stocks in Europe OPENED MOSTLY RED . Offshore yuan trades 6.6155 yuan to the dollar vs 6.6230 for onshore yuan. NOW THE OFFSHORE MOVED MUCH STRONGER TO THE ONSHORE YUAN/ ONSHORE YUAN HUGELY WEAKER (TO THE DOLLAR) AND THE OFFSHORE YUAN IS WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE STRONGER DOLLAR. CHINA IS NOT VERY HAPPY TODAY
3a)THAILAND/SOUTH KOREA/NORTH KOREA
FRIDAY NIGHT/SATURDAY MORNING
Pretty sure this earthquake was man made. It was probably natural and no doubt caused by the continual massive testing by the North Koreans
(courtesy zero hedge)
Earthquake Detected Near North Korea Nuclear Test Site; China “Suspects Explosion”
In what may be the latest major escalation involving North Korea – and potentially the nation’s 7th nuclear test – China’s earthquake administration said it detected a magnitude 3.5 earthquake in North Korea, which it suspects “was caused by an explosion”, raising fears that the rogue state has tested another nuclear bomb. The Chinese administration said in a statement on its website that the quake was recorded at a depth of zero kilometers, while Xinhua said the epicenter was in roughly the same place as a similar shallow earthquake on 3 September, which turned out to be caused by North Korea’s sixth and largest nuclear test.
However, in analyzing the same earthquake, South Korea came to a different conclusion, and said it was likely to be natural or man-made such as a nuclear test. South Korea’s weather agency assessed the seismic activity as a natural event.
“The quake is presumed to have occurred naturally,” an agency official said, according to South Korea’s Yonhap news agency. “A sound wave, which is usually generated in the event of an artificial earthquake, was not detected.”
“We use several methods to tell whether earthquakes are natural or manmade,” an official, who asked for anonymity, told the Independent. “A key method is to look at the seismic waves or seismic acoustic waves and the latter can be detected in the case of a manmade earthquake. In this case we saw none. So as of now we are categorizing this as a natural earthquake.”
Furthermore, all of North Korea’s previous six nuclear tests registered as earthquakes of magnitude 3.9 or above. The last test on 3 September registered as a 6.3 magnitude quake. A secondary tremor detected after that test could have been caused by the collapse of a tunnel at the mountainous site, experts said at the time.
Additionally, the US Geological Survey said that it detected a magnitude 3.5 quake in the area of previous North Korean nuclear tests, but that it was unable to confirm whether the event was natural. North Korea’s weakest nuclear test, its first, which it carried out in 2006, generated a magnitude 3.9 quake.
As shown previously, satellite photos of the area after the 3 September quake showed numerous landslides that were apparently caused by the huge blast, which North Korea said was a hydrogen bomb. It is possible the tremor was linked to ongoing landslide activity.
Overview of Punggye-ri Nuclear Test Site Before the nuclear test:
Nuclear proliferation watchdog CTBTO said on Saturday it had detected two seismic events in North Korea on Saturday but they were probably not deliberate explosions.
“Two #Seismic Events! … unlikely Man-made! Similar to “collapse“ event 8.5 mins after DPRK6! Analysis ongoing,” CTBTO Executive Secretary Lassina Zerbo said in a Twitter post.
Concerns about another North Korea test have been heightened ever since Foreign Minister Ri Yong Ho, who is currently in New York for a United Nations meeting, warned on Thursday that Kim could consider a hydrogen bomb test of an unprecedented scale over the Pacific. Ri told reporters that a test of “the most powerful detonation of an H-bomb” was one possible “highest-level” action against the US.
But he said that he did not know exactly what his state’s exact plans were. “We have no idea about what actions could be taken as it will be ordered by leader Kim Jong-un,” he added.
The quake comes amid heightened tensions around the Korean Peninsula, as the North has been maintaining a torrid pace in nuclear and weapons tests. The state said its recent nuclear test was a detonation of a thermonuclear weapon built for its developmental intercontinental ballistic missiles. In two July flight tests, those missiles showed potential capability to reach deep into the US mainland when perfected.
SATURDAY/THE RHETORIC CONTINUES:
North Korea Tells UN “Trump Is On A Suicide Mission…Inevitably Will Visit Rockets On Entire US Mainland”
Speaking at the United Nations General Assembly, in response to President Trump’s address earlier in the week, North Korean Foreign Minister Ri took direct aim at Trump:
“None other than Trump himself is on a suicide mission.”
“President Trump is trying to turn UN into a gangsters nest where bloodshed is order of the day.”
“Pyongyang will take merciless pre-emptive action if needed.”
“POTUS might not realize what he’s uttered from his mouth, but we will make sure that he bears consequences far beyond his words…”
“President Trump committed an irreversible mistake… making the visit of our rockets to the entire U.S. mainland all the more inevitable.“
“The U.S. claims that the DPRK’s possession of H-bomb and ICBM constitutes a global threat…but such claim is a big lie…
Saturday night/Korean time/Sunday morning our time
The USA flies just off the coast of North Korea in a show of force against North Korea.
U.S. B-1B Bombers Fly Just Off Coast Of North Korea: 4 Reasons Why This Time It’s Different
Just before North Korea’s foreign minister was due to address the United Nations, the Pentagon announced that U.S. Air Force B-1B Lancer bombers escorted by fighter jets flew in international airspace over waters east of North Korea on Saturday, in a show of force which “demonstrated the range of military options available to President Donald Trump.” The flight was the farthest north of the demilitarized zone separating North and South Korea that any U.S. fighter jet or bomber has flown in the 21st century, the Pentagon added.
B-1B Lancer prepares to take off from Andersen AFB, Guam, Sept. 23, 2017
According to Reuters, the B-1B Lancer bombers came from Guam and the U.S. Air Force F-15C Eagle fighter escorts came from Okinawa, Japan. The Pentagon saod the operation showed the seriousness with which it took North Korea’s “reckless behavior.”
“This mission is a demonstration of U.S. resolve and a clear message that the President has many military options to defeat any threat,” said Pentagon spokeswoman Dana White, calling North Korea’s weapons program “a grave threat” adding that “we are prepared to use the full range of military capabilities to defend the U.S. homeland and our allies.”
The DMZ is a strip of land running across the Korean Peninsula near the 38th Parallel, separating North Korea from South Korea. It was created in 1953, following the armistice which ended the Korean War.
The patrols came after officials and experts said a small earthquake near North Korea’s nuclear test site on Saturday was probably not man-made, easing fears Pyongyang had exploded another nuclear bomb just weeks after its last one. Reversing its original assessment, China’s Earthquake Administration said the quake was not a nuclear explosion and had the characteristics of a natural tremor.
While the US has flown similar sorties before, according to The Aviationist, the show of force is a bit more interesting than usual, for four reasons:
- it is the farthest north of the Demilitarized Zone (DMZ) any U.S. fighter or bomber aircraft have flown off North Korea’s coast in the 21st century;
- unlike all the previous ones, the latest sortie was flown at night, hence it was not a show of force staged to take some cool photographs;
- no allied aircraft is known to have taken part in the mission at the time of writing, whereas most of the previous B-1 missions near the Korean Peninsula involved also ROKAF (Republic Of Korea Air Force) and/or JASDF (Japan’s Air Self Defense Force) jets;
- it was a U.S. Air Force job: no U.S. Marine Corps F-35B stealth jet took part in the show of force this time, even though the STOVL (Short Take Off Vertical Landing) variant of the Joint Strike Fighter has taken part in all the most recent formations sent over Korea to flex muscles against Pyongyang. The photo here below shows the “package” assembled for Sept. 14’s show of force.
b) REPORT ON JAPAN
Abe announces a snap election and he will face a new challenger Koike, Toyko’s Governor. She states that she will form a new conservative party trying to oust Abe
Abe Announces Japan Snap Election, Will Face New Challenger
As if the just concluded German elections, and the upcoming referendums in Catalonia and Iraqi Kurdistan were not enough, here comes Japan.
Shortly following Sunday night reports that Japanese Prime Minister Shinzo Abe plans to launch a new economic stimulus package of around 2 trillion yen ($17.8 billion) by the end of this year, which sent the Yen sliding to session lows and the USDJPY rising as high as 112.50 before fading the entire move, on Monday the Japanese premier confirmed recent rumors when he said he would dissolve parliament’s lower house on Thursday for a snap election, as he seeks a fresh mandate to overcome “a national crisis”. Abe, in power for five years with the success of his famous Abenomics always just beyond reach, said he needed a mandate to shift some revenues from a planned future tax hike to social spending such as education, besides seeking support for a tough stance toward North Korea’s repeated missile and nuclear tests.
“I will dissolve the lower house on Sept. 28,” Abe told a nationally televised news conference on Monday according to Reuters. Earlier, the head of Abe’s junior coalition partner, Natsuo Yamaguchi, said he understood the election would be held on Oct. 22.
The decision is aimed to take advantage of Abe’s recently surge in favorable ratings following a crash in support for Abe as early as two months ago as a result of ongoing corruption scandals in his party, as well as ongoing opposition disarray. The main opposition Democratic Party is struggling with single-digit ratings and much depends on whether it can cooperate with liberal opposition groups.
Abe’s image as a strong leader has bolstered his ratings amid rising tension over North Korea’s nuclear arms and missile programs and overshadowed opposition criticism of the premier for suspected cronyism scandals that had eroded his support.
As the FT notes, “the general election will decide whether Japan continues with its stimulative economic policies and whether Mr Abe has the political strength to drive through a revision to Japan’s war-renouncing constitution.”
Abe, whose ratings have risen to around 50% from around 30% in July, is gambling his ruling bloc can keep its lower house majority even if it loses the two-thirds “super majority” needed to achieve his long-held goal of revising the post-war pacifist constitution to clarify the military’s role. According to Reuters, A weekend survey by the Nikkei business daily survey showed 44% of voters planned to vote for Abe’s Liberal Democratic Party (LDP) versus just 8% for the main opposition Democratic Party and another 8% for a new party launched by popular Tokyo Governor Yuriko Koike.
The Nikkei poll was far more positive for Abe’s prospects than a Kyodo news agency survey that showed his LDP garnering only 27.7% support, with 42.2% undecided.
Still, while Abe starts from a strong position, the early election has prompted a drastic realignment among Japan’s opposition, with Tokyo governor Yuriko Koike declaring, just hours before Abe’s election announcement, that she would lead a new conservative, reform-minded “Party of Hope”, to offer voters an alternative to the LDP.
“Our ideal is to proceed free of special interests,” Koike, a former LDP member, told a news conference. “I am raising my flag for real,” declared Ms Koike at a press conference timed to upstage the prime minister. She said the party would run on her signature anti-establishment platform of reform and opposition to vested interests. “The thing Japan lacks is hope,” she said quoted by the FT.
Previously, Ms Koike had sponsored the launch of the new party but stayed behind the scenes. Now she has declared herself as its leader, indicating she will take a prominent role in the election campaign.
Confirming the ongoing power rotation, Mineyuki Fukuda, a deputy minister in the cabinet office, said he was quitting the ruling Liberal Democratic party to stand for the new Party of Hope. He joins a series of established politicians, most of them defectors from the opposition Democratic party, who will run under Ms Koike’s banner.
* * *
Abe’s election platform will see him promise to go ahead with a planned rise in the national sales tax to 10% from 8% in 2019 but increase the proportion of revenue spent on child care and education, delaying a target of putting the budget in the black in the fiscal year ending March 2021. As noted above, also on Monday, Abe asked his cabinet to compile a 2-trillion-yen ($17.8-billion) economic package by year-end to focus on child care, education and encouraging corporate investment, while maintaining fiscal discipline. The Yomiuri newspaper said earlier the funding would cover the three years from April 2018 until sales tax revenue kicks in.
Abe also wants a minor revision to the constitution that would explicitly recognise the legality of Japan’s Self-Defence Forces. Ms Koike backs constitutional reform, increasing the odds that supporters of a change will secure the two-thirds parliamentary majority needed to pass a revision, and will subsequently take it to a national referendum for approval.
* * *
Meanwhile, critics of Abe’s decision says the prime minister risks risked creating a political vacuum at a time of rising geopolitical tension over North Korea. And, given the unexpected results seen in other major developed countries, political analysts are not ruling out a “nasty surprise” for the Japanese leader.
“Abe’s big gamble could yield a big surprise,” veteran independent political analysts Minoru Morita said.
For a vivid example of just that, see the outcome from Sunday’s “nightmare victory” for Merkel, which virtually nobody had expected, yet which overnight set Germany’s right wing AfD party as the country’s third most powerful political entity.
Defiant Catalans Block Spain’s Military Boats From Landing; Spain Seizes “.CAT” Domain
Spain’s plan to send boatloads of military police to Catalonia to prevent its independence referendum has backfired with dockers in two ports staging a boycott and a third refusing access.
The Express writes Police boats Blocked by Catalan ports as unrest threatens to Rip Spain Apart.
More than 4,000 members of Spain’s Guardia Civil are being dispatched to the troubled region amid concerns over divided loyalties in the autonomous community’s own police force, the Mossos d’ Esquadra.
Spanish authorities wanted to house the Guardia Civil officers on four cruise ships – two in Barcelona, one in Tarragona and another in Palamos.
But as thousands took to the streets to protest against the detention of Catalan officials, local dock workers joined the backlash.
The Assembly of Stevedores of the Port of Barcelona announced that workers would not provide any services to boats carrying security forces, a decision it said was taken “in defence of civil rights”.
Colleagues in Tarragona quickly followed suit and the Catalan government then denied permission to dock in Palamos – which, unlike Barcelona and Tarragona, falls under regional rather than national control.
More than 40,000 people have gathered in Barcelona to protest over the arrests and the intervention of the Spanish government in the Catalan independence vote.
Many of the angry protesters have been waving Catalonia’s red and yellow flag while chanting “We will vote” and “Hello Democracy!”
In a television address, Catalan’s President Carles Puigdemont said: “The Spanish state has by all rights intervened in Catalonia’s government and has established emergency rule.
“We condemn and reject the anti-democratic and totalitarian actions of the Spanish state.”
A spokesman for the Catalan National Assembly said: “They made a big mistake; we wanted to vote and they declared war.”
Catalans are split on the issue of independence but support for a vote is high and few are happy with Spanish police arresting Catalan leaders.
Tensions have been further fuelled by reports that some of those detained are likely to face charges of sedition, which carries a lengthy prison sentence.
Support for a Vote
The Spanish newspaper La Vanguardia (via Mish translation) notes ‘The Times’ joins foreign dailies asking for a referendum for Catalonia.
The Times joins the list foreign newspapers that support a referendum. Le Monde and the New York Times also support a referendum.
In an editorial, The Times, a historic British conservative daily, accuses prime minister Mariano Rajoy of “repression.”
The text of the British newspaper is especially blunt against the reaction of the Spanish state. The editorial maintains that Spain is in a serious “constitutional crisis” with risk of “rupture”, the greatest since “the end of the Franco dictatorship.”
The editorial also accuses Rajoy of “feeding the crisis”. The Times ventures to ask the central government to allow the referendum even if it is contrary to the Spanish Magna Carta.
Spain Seizes “.CAT” Domain
The New York Times reports In Catalonia, Spain Seizes the .Cat Internet Domain
On the same day this week that the Spanish authorities stormed the offices of the Catalan regional government, detaining at least 14 people, a less-noticed raid took place.
The puntCat foundation, which oversees the registry of websites with the “.cat” domain, tweeted Wednesday that its offices had also been raided and that one of its senior executives had been arrested.
Given the web’s rich cat history, you’d think that domain names ending in .cat would be another online feline gold mine. [But] almost all sites with the .cat suffix belong to the Catalan-speaking community thanks to the efforts of the puntCAT (“dot-cat” in Catalan), the foundation approved in 2005 to manage its registry by Internet Corporation for Assigned Names and Numbers, a global organization. That made it one of the first domain suffixes to explicitly refer to a language and culture, paving the way for others, when it first appeared online in 2006.
In a letter to ICANN, the foundation said that the Spanish authorities had asked it to “block all .cat domain names that may contain any kind of information about the forthcoming independence referendum.”
“We are being requested to censor content and suppress freedom of speech,” the organization added.
The internet naming corporation said, “We are aware of the reports about Fundacio PuntCAT, the registry operator for .CAT, and we continue to monitor the situation.”
The Catalan President says “We Will Vote on Independence Whether Spain Likes it or Not”.
Carles Puigdemont is the 130th president of Catalonia.
What follows is Puigdemont’s message in the Washington Post
After three centuries under Spanish rule, on Oct. 1, citizens of Catalonia will finally have the chance to exercise their right to self-determination. More than 5 million eligible voters will have the right to decide on a simple question: “Do you want Catalonia to become an independent state in the form of a republic?”
The way to this historic referendum was paved by a majority decision of the Catalonian parliament. In our last regional election in September 2015, pro-independence parties won 47.8 percent of the vote, which gave them an absolute majority of seats. Unionist parties won 39.1 percent of the votes, a clear defeat, while the rest of the votes went to parties that defend the right to self-determination but are not necessarily in favor of independence. So there can be no denying the democratic legitimacy of our current Catalonian government. For this reason, after making several unsuccessful efforts to agree on the terms of the referendum with Spanish President Mariano Rajoy, I initiated the referendum.
In stark contrast to the governments of Canada or Britain, Madrid has refused to accept this democratic challenge, and has opted instead for the path of authoritarian repression. In most parts of the developed world, police protect ballot boxes, polling stations, and voters. In Catalonia today, the situation is the opposite. Spanish security forces are confiscating ballots and ballot boxes, stripping campaign posters from the walls, and intimidating citizens. They have arrested officials of the Catalan government, tapped telephones, raided private residences, and banned political rallies.
It seems incredible that this could happen in Spain in the 21st century. One French journalist recently noted that the Spanish government is acting more like Nicolás Maduro’s Venezuelan dictatorship than a healthy European democracy. And consider the fact that Catalonia, Spain, and other European countries are currently on maximum alert against jihadi terrorism. Instead of working to prevent possible attacks, Spain’s police forces are working to prevent the exercise of democracy. This is profoundly irresponsible.
The Spanish government has also gravely violated the freedom of expression and of information. Not only has it prohibited both public and private media from broadcasting advertisements about the referendum, it has also moved to block Catalan government websites that inform the public about the vote. Madrid has even blocked proxy servers, a procedure employed by only the most totalitarian regimes. The Spanish government not only wants to keep Catalans from voting, but also to prevent them from being informed.
The Spanish government has to understand that its behavior is unacceptable from the point of view of democracy and civil rights. Four decades after the death of the dictator Francisco Franco, we still find that authoritarian instincts rule at the heart of the Madrid government. Respect for minorities is a fundamental human right, and the right of self-determination is an irrevocable right of all nations.
Our commitment to the right of self-determination and to the will of the Catalan people to decide its own future remains unshaken. The repression of the Spanish government will not be able to change that. On Oct. 1, citizens of Catalonia will exercise their right to decide whether they want to become a new independent republic, just like other peoples of the world have done before them. This is the moment of the people of Catalonia, but we are not alone in this fight. We call on democrats around the world to give support to this long struggle between freedom and authoritarianism.
I support Catalonia Independence and apparently so do most Mish readers.
SUNDAY: THE SITUATION IN CATALONIA IS GETTING DIRE BY THE DAY: THIS TIME MADRID IS TAKING OVER THE CATALAN POLICE (MOSSOS). MOSSOS TOTALLY REJECTS THIS TAKEOVER AS MADRID VOWS TO STOP THE REFERENDUM VOTE. HOW THIS PLAYS OUT WILL DEFINE SPAIN FROM HERE ON IN.
Spain In Crisis: Catalan Police Reject Madrid Takeover, Vow To “Resist”
Spain found itself on the verge of a full-blown sovereign crisis on Saturday, after the “rebel region” of Catalonia rejected giving more control to the central government in defiance of authorities in Madrid who are trying to suppress an independence referendum on Oct. 1.
As tensions rise ahead of the planned Catalan referendum on October 1, and as Madrid’s crackdown on separatist passions took a turn for the bizarre overnight when as we reported Spain’s plan to send boatloads of military police to Catalonia to halt the referendum backfired with dockers in two ports staging a boycott and refused access, on Saturday Spain’s Public Prosecutor’s Office told Catalan Police chief Josep Lluis Trapero that his officers must now obey orders from a senior state-appointed police coordinator, Spanish news agency EFE reported on Saturday.
The Catalan Police, however, disagreed and as Bloomberg reports, the SAP union – the largest trade group for the 17,000-member Catalan Police, known as Mossos d’Esquadra – said it would resist, hours after prosecutors Saturday ordered that it accept central-government coordination. The rejection echoed comments by Catalan separatist authorities.
“We don’t accept this interference of the state, jumping over all existing coordination mechanisms,” the region’s Interior Department chief Joaquim Forn said in brief televised comments. “The Mossos won’t renounce exercising their functions in loyalty to the Catalan people.”
The Mossos are one of the symbols of Catalonia’s autonomy and for many Catalans the prosecutor’s decision may be reminiscent of the 1936-39 Spanish Civil War and subsequent dictatorship of Francisco Franco, when the Mossos were abolished.
In a joint press conference today with the Catalan home affairs minister Joaquim Forn and the Mossos chief Josep Lluís Trapero, Forn said that the move by Spain was “unacceptable”.
“We denounce the Spanish government’s will of seizing the Mossos, as they did with Catalonia’s finances” Forn said adding that that “the Catalan government does not accept this interference, it bypasses all the institutions that the current legal framework already has in place to guarantee the security of Catalonia.” Additionally, Trapero expressed his intention to not accept the measure, which he described as “interference by the state”, and also warned that “it skips over all the bodies of the legal framework to coordinate the security of Catalonia”.
Earlier on Saturday, El Pais reported that Civil Guard Colonel Diego Perez de los Cobos, chief of staff of the Interior Ministry’s security department, was named by a prosecutor to coordinate the efforts of the Civil Guard, the National Police and the local Mossos. Spanish media reported unnamed Home Office sources as saying the measure did not mean withdrawing any powers from the Mossos formally, but rather requiring them to submit to a joint coordination operation to stop the Catalan referendum taking place on October 1.
However, shortly after the reshuffling, Catalan police chief Josep Lluis Trapero rejected giving up control to the central government during a meeting with the heads of the other police forces on Saturday, adding that all possible legal challenges would be studied. According to La Vanguardia Trapero “protested at that meeting about the decision to impose central government control” on the regional police force.
Also on Saturday morning, as the police meeting in Barcelona took place, the regional interior minister, Forn, published a defiant message on Twitter: “We will encounter many difficulties. The state wants to take control of our self-government, but they will not stop us! #HelloRepublic”.
Ironically, as Bloomberg writes, while Mossos chief Trapero reports to the regional government, his force’s funding is mostly provided by Madrid and it’s supposed to take orders from judges and prosecutors from across the country. Article 155 of the Spanish Constitution lets the central government take control of a regional administration if it poses a threat to the national interest. Rajoy has already made moves in that direction.
Earlier this week, the budget ministry took over management of Catalan’s finances and will issue paychecks to more than 200,000 public workers in the region, including the police.
That said, any more direct challenge to the Mossos would be fraught with risk because Trapero, its leader, has become something of a local hero since leading the response to the terrorist attacks in August. Separatists are selling T-shirts with his face printed on them.
According to Reuters, the Catalan government also believes that the Mossos takeover bypasses the Catalan statute – article 164 – and constitutional law and the Spanish prosecutor that ruled in favour of Madrid taking control had overstepped his legal boundaries, saying that it had no power to rule on who had the authority to issue orders to Mossos.
The prosecutor had ordered that the Catalan police, the Spanish National Police and Spain’s Guardia Civil be managed from the Ministry of Home Affairs in Madrid. The decision, according to the prosecution, aims at “reinforcing the operation to prevent crime and to keep public order” a week before the October 1 independence referendum.
The decision was announced during a meeting between the prosecutor and the chiefs of the three police forces.
The disobedience will fuel further speculation the Mossos will not work with the national Civil Guard in Spain’s largest regional economy. The standoff came a day after Prime Minister Mariano Rajoy’s government acknowledged it’s sending more reinforcements to help control street demonstrations and carry out a separate court order to halt the vote.
Additionally, the latest move by Madrid will also increase the tension between the two sides which increasingly looks like it could descend into a direct confrontation as neither side appears to be willing to back down.
Catalan President Carles Puigdemont speaking a pro-independence rally
Carles Puigdemont, Catalonia’s president, called the independence vote in an attempt to push the secession movement forward after decades of political and legal fights over the region’s traditions and language. Since Rajoy took office in 2011, he’s had persistent clashes with separatists seeking to foment a backlash against Madrid. Catalonia is home to about 7.5 million people, or 16 percent of the population, but accounts for a fifth of the economy, on a par with Portugal and Finland.
Several pro-independence groups have called for widespread protests on Sunday in central Barcelona. “Let’s respond to the state with an unstoppable wave of democracy,” a Whatsapp message which was used to organize the demonstration read.
The Catalonian government opened a new website on Saturday with details of how and where to vote on Oct. 1, challenging several court rulings that had blocked previous sites and declared the referendum unconstitutional.
“You can’t stem the tide,” Catalonia’s president Carles Puigdemont said on Twitter in giving the link to the new website.
But Spanish Prime Minister Mariano Rajoy insisted again that the vote should not go ahead. “It will not happen because this would mean liquidating the law,” he said at the PP event in Palma de Mallorca. Acting on court orders, the Spanish state police has already raided the regional government offices, arrested temporarily several senior Catalan officials accused of organizing the referendum and seized ballot papers, ballot boxes, voting lists and electoral material and literature. The finance ministry in Madrid has also taken control of regional finances to make sure public money is not being spent to pay for the logistics the vote or to campaign.
How this escalating clash between Madrid and Catalonia is resolved over the coming week will define the fate of Spain for years to come.
German establishment routed as the far right party Afd gets its first seats at the Bundesstag
(courtesy zero hedge)
German Establishment Routed: AfD Second In Former East Germany; Result “Less Market Friendly Than Expected”
Update: here is the latest breakdown according to ARD:
- Merkel’s CDU/CSU projected to win 32.9% of votes
- SPD projected to win 20.8%
- AfD projected to win 13.1%
- FDP projected to win 10.5%
- Greens projected to win 8.9%
- Left projected to win 8.9%
The following Bloomberg projection of the Bundestag’s projected seat breakdown shows just how strong the AfD surge has been in context, and how splintered Germany’s establishment is as a result.
The first sellside comments on today’s German elections – which as a reminder was a disaster for the German establishment, following the worst showing for the CDU/CSU since 1949 and the worst result for the SPD since 1945 with support for both parties tumbling since the 2013 elections…
… have started to trickle, in and according to SEB, the result is ‘less market-friendly’ than expected.
Quoted by Bloomberg, SEB cross-asset strategist Thomas Thygesen said that the result is a victory for Angela Merkel as expected, but her mandate going into negotiations about deeper euro integration does not look quite as strong.
“It looks like marginally less market-friendly than expected,” Thygesen said adding that “I’d say this is in line with our expectation that the euro would pause around $1.20 vs dollar and then maybe retrace a couple of percent over the autumn.”
“The AFD above 10% suggests that even here the stakes are high: if the European project doesn’t fly this time in a way that voters like, Germany could look less politically stable in a few years.”
A note from Pantheon’s Claus Vistesen is similarly concerned about the election outcome and the viability of the upcoming coalition:
At a first glance, it seems that building a coalition government will be a little trickier than markets had expected. If the exit polls prove accurate, the major parties—CDU and SPD—have suffered a drastic setback compared to the elections in 2013. CDU is projected to come out top with 32.5, of the votes, but this is far-, from the 42% in 2013. Similarly, the social democratic SPD have been pegged back to 20%, compared to just under 30.9, in 2013. The voter-flight from the two main parties appears to have gone in two opposite directions. The populist—and nominally EU sceptic—AFD is set to become the third-biggest party in the Bundestag with 13.5% of the votes, significantly better than the polls were predicting heading into today’s vote. But the liberal FDP also is expected to have had a good day, securing 10.5% of the votes.
Assuming the exit polls are accurate, Angela Merkel—who almost surely will remain as chancellor—has two options, assuming that a government with AFD is out of the question. She can form a two-party grand coalition with SPD or she can go for a coalition with the greens—set to gain 9.4%—and FDP. Our bet is on the latter—we doubt the SPD will go into a grand coalition given its after all scathing defeat—but this will be a slender coalition. Mrs. Merkel is a battle-hardened builder of coalitions, but she will need to draw on all her experience to form one, which can actually get things done.
On balance then, we see the exit polls are slightly negative from the point of view of risk assets in the Eurozone and the euro exchange rate.
The result also increases the risk of re-elections, but we would put the probability of this at under 15%.
* * *
Finally, in yet another shock for Germany’s establishment, according to Europe Elects, the nationalist AfD was the second strongest party in former East Germany, the more economically backward segment of Germany.
We now await other analyst observations which we expect will be equally dour on today’s election result, and as a result the EURUSD is set to tumble once it opens for early trading.
“Forget Germany, Spain Is The Real Problem”
Following yesterday’s German election, which despite Merkel’s 4th victory was a rout for the establishment “grand coalition” parties of CDU/CSU and SPD which saw its worst election performance since the 1940s offset by a surge in the ascendant right-wing AfD, there have been numerous analyst reactions to the “sudden reemergence” of populism in Europe, but one we find perhaps the most insightful and useful, comes from Bloomberg macro commentator Mark Cudmore, who writes this morning that for all the concerns, it’s not so much Germany as what is about to happen in European peer Spain, where Catalonia is set to hold an independence referendum on October 1, that should be on traders’ radars.
Below is his latest Macro View explaining why…
Euro Crisis Trading May Be Due for an Encore
The euro is once again set to suffer from an outsized political premium. Spain, rather than Germany, is the real problem.
The AfD’s strong performance in the German election and the lack of a clear coalition are both concerns at the margin, but they wouldn’t provide a sustainable headwind for the euro in isolation.
Much more worrying is Catalonia’s planned independence referendum on Oct. 1. Investors have been ignoring this story, but this week will see it take center stage.
The heavy-handed response by the central government in Spain has significantly elevated the probability of civil unrest as well as potentially increasing support for independence for the region.
People opposed to breaking away probably won’t vote, so any poll that proceeds will return an unrepresentative and overwhelming result for independence. If Mariano Rajoy is able to snuff out the illegal referendum, it’ll only intensify the demands for another, more official independence vote. Failing to stop it means there’ll be a symbolic declaration of independence.
Either way, it’s probably going to lead to an increasing clamor for Catalan separation. The seriousness of the situation seems to have been overlooked by many investors, but it won’t be for much longer. The negatives are myriad.
Divisions within Europe are mounting again. Any success by Catalonia sets a dangerous precedent for other want-away regions, not just in Spain.
It emphasizes that many of the structural imbalances in the euro zone haven’t been fixed. Inequality is still growing.
On the back of AfD’s performance in Germany, it’s a reminder that large swathes of the population remain unhappy with the region’s policies. And once again, it’ll be an excuse for euro-bearish financial commentators to hype up the risk from Italian elections next year.
The beginning of the euro’s impressive rally coincided with Emmanuel Macron winning the French presidential election and thereby quashing political fears in the region. A correction in the euro is now likely to coincide with Spain and Germany bringing those risks back into the light.
The ECB’s Target2 Lies – Exposing The Real Capital Flight From Italy & Spain
The ECB claims that Target2 does not represent capital flight. Evidence says the ECB is wrong, especially for Italy and Spain.
I have discussed this previously, but let’s recap Target2 before taking a look at new charts.
Project Syndicate writer, Hans-Werner Sinn, explains why the ECB’s asset purchases and Target2 imbalances constitute “Europe’s Secret Bailout”.
Under the ECB’s QE program, which started in March 2015, eurozone members’ central banks buy private market securities for €1.74 trillion ($1.84 trillion), with more than €1.4 trillion to be used to purchase their own countries’ government debt.
The QE program seems to be symmetrical because each central bank repurchases its own government debt in proportion to the size of the country. But it does not have a symmetrical effect, because government debt from southern European countries, where the debt binges and current-account deficits of the past occurred, are mostly repurchased abroad.
For example, the Banco de España repurchases Spanish government bonds from all over the world, thereby deleveraging the country vis-à-vis private creditors. To this end, it asks other eurozone members’ central banks, particularly the German Bundesbank and, in some cases, the Dutch central bank, to credit the payment orders to the German and Dutch bond sellers. Frequently, if the sellers of Spanish government bonds are outside the eurozone, it will ask the ECB to credit the payment orders.
In the latter case, this often results in triangular transactions, with the sellers transferring the money to Germany or the Netherlands to invest it in fixed-interest securities, companies, or company shares. Thus, the German Bundesbank and the Dutch central bank must credit not only the direct payment orders from Spain but also the indirect orders resulting from the Banca de España’s repurchases in third countries.
The payment order credits granted by the Bundesbank and the Dutch central bank are recorded as Target claims against the euro system.
For the GIPS countries [Greece, Italy, Portugal, and Spain], these transactions are a splendid deal. They can exchange interest-bearing government debt with fixed maturities held by private investors for the (currently) non-interest-bearing and never-payable Target book debt of their central banks – institutions that the Maastricht Treaty defines as limited liability companies because member states do not have to recapitalize them when they are over-indebted.
If a crash occurs and those countries leave the euro, their national central banks are likely to go bankrupt because much of their debt is denominated in euro, whereas their claims against the respective states and the banks will be converted to the new depreciating currency. The Target claims of the remaining euro system will then vanish into thin air, and the Bundesbank and the Dutch central bank will only be able to hope that other surviving central banks participate in their losses. At that time, German and Dutch asset sellers who now hold central bank money will notice that their stocks are claims against their central banks that are no longer covered.
A quick perusal of Target2 Balances for January shows capital flight has largely stabilized but the imbalance in Spain hit a new record.
ECB’s Story on Target2 Doesn’t Add Up
Financial Times Alphaville guest writer Marcello Minenna makes a case in pictures for what I have long stated.
It’s interesting to note that Minenna is the head of Quantitative Analysis and Financial Innovation at Consob, the Italian securities regulator.
Minenna says the ECB’s Story on Target2 Doesn’t Add Up
Mienna compares France with its stable Target2 balance to Italy and Spain.
France Target2 Over Time
The red line with dots represents the imbalance. As of July France had a Target2 liability of 12.2 billion. France shows no correlation to ECB asset purchases.
Germany Target2 Surplus
Italy Target2 Liability
Spain Target2 Liability
Mienna goes over what various colored bars represents and concludes“For Italy and Spain, the QE programme has facilitated capital outflows by domestic investors. Elsewhere, it has not.”
This is what I concluded long ago. For discussion, please see Target2 and Secret Bailouts: Will Germany be Forced Into a Fiscal Union with Rest of Eurozone?
5. RUSSIA AND MIDDLE EASTERN AFFAIRS
Russia and the USA have a secret meeting with the subject matter: Syria. It seems that Russia is laying down the rules
Russia Warns US In Unprecedented “Secret” Face-To-Face Meeting Over Syria, But What’s The Endgame?
The moment the first Russian jet landed in Syria at the invitation of the Assad government in 2015, Putin placed himself in the driver’s seat concerning the international proxy war in the Levant. From a strategic standpoint the armed opposition stood no chance of ever tipping the scales against Damascus from that moment onward. And though US relations with Russia became more belligerent and tense partly as a result of that intervention, it meant that Russia would set the terms of how the war would ultimately wind down.
Russia’s diplomatic and strategic victory in the Middle East was made clear this week as news broke of “secret” and unprecedented US-Russia face to face talks on Syria. The Russians reportedly issued a stern warning to the US military, saying that it will respond in force should the Syrian Army or Russian assets come under fire by US proxies.
The AP reports that senior military officials from both countries met in an undisclosed location “somewhere in the Middle East” in order to discuss spheres of operation in Syria and how to avoid the potential for a direct clash of forces. Tensions have escalated in the past two weeks as the Syrian Army in tandem with Russian special forces are now set to fully liberate Deir Ezzor city, while at the same time the US-backed SDF (the Arab-Kurdish coalition, “Syrian Democratic Forces”) – advised by American special forces – is advancing on the other side of the Euphrates. As we’ve explained before, the US is not fundamentally motivated in its “race for Deir Ezzor province” by defeat of ISIS terrorism, but in truth by control of the eastern province’s oil fields. Whatever oil fields the SDF can gain control of in the wake of Islamic State’s retreat will then used as powerful bargaining leverage in negotiating a post-ISIS Syria. The Kurdish and Arab coalition just this week captured Tabiyeh and al-Isba oil and gas fields northeast of Deir Ezzor city.
The race is underway for Syria’s most oil rich province. Syrian War Report (9/22/17) courtesy of SouthFront.
At various times the Syrian-Russian side has come under mortar fire from SDF positions, even as Russia and the US are theoretically said to coordinate through a special military hotline. The SDF for its part claims it too has come under attack from the Syrian Army. The most significant event occurred just over a year ago when the US coalition launched a massive air attack on Syrian government troops in Deir Ezzor near the city’s military airport at the very moment they were fighting ISIS. The US characterized it as a case of mistaken identity while Syria accused the US coalition of directly aiding ISIS by the attack. The end result was about 100 Syrian soldiers dead and over a hundred more wounded while ISIS terrorists were able to advance and entrench their positions.
Though US officials disclosed few elements of this week’s unusual meeting, the US side did confirm Russia’s threat of returning fire should Syrian soldiers come under attack. US coalition spokesman Colonel Ryan Dillon confirmed that, “They had a face-to-face discussion, laid down maps and graphics.” But the Russians publicly delivered further details outlining its message to the US military. Russian Major-General Igor Konashenkov said in a statement,“A representative of the U.S. military command in Al Udeid (the U.S. operations center in Qatar) was told in no uncertain terms that any attempts to open fire from areas where SDF fighters are located would be quickly shut down.” He added that, “Fire points in those areas will be immediately suppressed with all military means.” Russia has further openly accused the US of violating previously agreed to ‘de-escalation’ zones in Idlib (as part of Astana talks) using al-Qaeda proxies to engaged the Syrian Army in Idlib.
The US coalition hinted in its statements that future military-to-military talks could continue regarding coordination in Syria. Though Russian warnings sound alarmist, and though the situation is increasingly very dangerous for the prospect of escalation, the US side appears to be in a vulnerable enough position to listen. The fact that the meeting occurred in the first place and was publicly acknowledged by the Pentagon is hugely significant as a US ban on such direct military talks was put in place after the collapse in relations between the two nations following the outbreak of the Ukraine proxy war in 2014.
In reality some degree of US-Russian back channel communication and intelligence sharing probably existed long before the SDF made gains in Syria’s east – this according to Seymour Hersh’s 2016 investigation entitled, “Military to Military”. Though (ironically) the CIA’s push for regime change against Damascus was still operational and presumably in full gear at that time, the Pentagon’s actions in Syria were always perhaps more humble regarding pursuit of regime change.
But what are current Pentagon plans for its SDF proxy?
It’s no secret that the core component force of the SDF – the Kurdish YPG – has at times loosely cooperated with the Syrian government when the situation pragmatically served both sides. At the same time Damascus has over the past few years recognized the Kurds as a militarily effective buffer against both ISIS and other powerful jihadist groups like al-Nusra Front and Ahrar al-Sham. While many Russian and pro-Damascus analysts have accused the SDF of being a mere pawn of US imperialism meant to permanently Balkanize the region, this is only partially true – the truth is likely more nuanced.
No doubt, the US is laying plenty of concrete in the form of forward operating bases across Kurdish held areas of northern and eastern Syria (currently about a dozen or more). And no doubt the US is enabling the illegal seizure of oil fields formerly held by the Islamic State, but Kurdish and US interests are not necessarily one and the same. The Kurds know that the best they can hope for in a post-war Syria is a federated system which allows Kurdish areas a high degree of autonomy. They also know, as decades of experience has taught them, that they will eventually be dumped by the US should the political cost of support grow too high or become untenable. For now the Kurds are gobbling up as many oil fields as possible before they are inevitably forced to cut deals with Damascus.
Though the US endgame is the ultimate million dollar question in all of this, it appears at least for now that this endgame has something to do with the Pentagon forcing itself into a place of affecting the Syrian war’s outcome and final apportionment of power: the best case scenario being permanent US bases under a Syrian Kurdish federated zone with favored access to Syrian oil doled out by Kurdish partners. While this is the ‘realist’ scenario, there’s of course always the question that an independent Iraqi Kurdistan could one day be realized out of the merging of Kurdish northern Iraq and Syria. But this would be nothing less than a geopolitical miracle. For now, early voting has begun in the Kurdish diaspora ahead of the planned for September 25th referendum on Kurdish independence, with the very first votes reportedly being cast in China.
Turkey, Iraq Threaten “Military Intervention” As Iraqi Kurds Hold Independence Referendum
One day after a “Nightmare Victory” for Angela Merkel in the German elections, which has unleashed a nationalist “earthquake” in the Bundestag, on Monday in another closely watched election, polls opened in Iraq’s Kurdish-run provinces and disputed territories as Iraqi Kurds cast ballots in support for independence from Baghdad in a historic but non-binding and furiously challenged vote.
Millions are expected to vote on Monday across the three provinces that make up the Kurdish autonomous region, as well as residents in disputed territories — areas claimed by both Baghdad and the Kurds, including the oil-rich city of Kirkuk.
The vote is being carried out despite mounting regional opposition to the move, including virtually every neighboring nation, except the odd stance by Israel whose Prime Minister Benjamin Netanyahu stunned the region when he commented specifically of the referendum on Sept 13 saying, “Israel supports the legitimate efforts of the Kurdish people to achieve their own state.”
In an attempt to appease the vocal opposition, the prime minister of Iraq’s northern Kurdish region said the referendum doesn’t mean “redrawing borders” and will not result in immediate independence. Nechirvan Barzani says that even if the result of the vote is a “yes,” the region will resolve its disputes with Baghdad peacefully. He spoke at a press conference on Monday morning in Irabil, the Kurdish regional capital. Voting is taking place across the region and in disputed territories claimed by both Baghdad and the Kurds, including the oil-rich city of Kirkuk.
Last week, the United States joined the broader chorus, warning that the vote will likely destabilize the region amid the fight with the Islamic State group. As reported yesterday, Baghdad also came out strongly against the referendum, demanding on Sunday that all airports and borders crossings in the Kurdish region be handed back to federal government control.
On Monday, the diplomatic and economic noose around Iraqi Kurdistan tightened further when Turkey said it doesn’t recognize the Iraqi Kurdish region’s referendum on support for independence from Baghdad and insists its results will be “null and void.”
Turkey’s Foreign Ministry released a statement as polls opened in Iraq’s Kurdish-run provinces and disputed territories on Monday, with Ankara calling on the international community, and especially regional countries, not to recognize the vote either. It also urged Iraq Kurdish leaders to abandon “utopic goals,” accusing them of endangering peace and stability for Iraq and the whole region. The ministry reiterated that Turkey would take all measures to thwart threats to its national security. On Saturday, Turkey’s parliament met in an extraordinary session to extend a mandate allowing Turkey’s military to send troops over its southern border if developments in Iraq and Syria are perceived as national security threats.
As noted earlier, the price of Brent (and WTI) jumped this morning after Turkish President Erdogan warned that Turkey could cut off the pipeline that carries oil from northern Iraq to the outside world, further intensifying the pressure on the Kurdish autonomous region over its independence referendum. Erdogan spoke shortly after Prime Minister Binali Yildirum said Ankara could take punitive measures involving borders and air space against the Kurdistan Regional Government (KRG) over the referendum and would not recognize the outcome. Yildirim also said on Monday that officers and experts from Iraq’s army would join military exercises that Turkey launched along the border in an apparent warning to the Iraqi Kurds.
Iraq, of course, was just as livid, with Baghdad residents strongly criticizing the Iraqi Kurds’ independence referendum, saying it would raise sectarian tensions and create an “Israel in Iraq”… which may explain why Bibi is for it. An Arabic newspaper headline on Monday said “Kurdistan into the unknown,” a reference to the name Kurds use for their region. According to AP, journalist Raad Mohammad said the vote represents a “division of Iraq,” and added that it was “unacceptable for the Iraqi people as well as many other countries.”
Another Baghdad resident, Ali al-Rubayah, described the referendum as a “black day in the history of the Kurds,” adding that “today, the Kurds are trying to make an Israeli state in the north of Iraq.” Lawyer Tariq al-Zubaydi said the referendum was inappropriate amid the “ongoing threat of terrorism and Islamic State” and that a “unified country is better for all.”
As AP adds, an Iraqi lawmaker said the country’s parliament has approved several tough measures in response to the vote. Shiite lawmaker Hakim al-Zamili says the measures will force Baghdad to act to “protect Iraq’s unity and to deploy troops in all areas” where they were before the 2014 blitz by the Islamic State group. Al-Zamili says measures approved on Monday also call for closing all border crossings with the Kurdish region and banning oil trade. He says the parliament considers the Kurdish referendum unconstitutional and calls for taking legal measures against all Kurdish officials and employees who took part in the vote. Bloomberg has a full breakdown of the measures adopted by Iraq today:
- Iraq parliament voted to close border crossings with Kurdistan, return oil fields in north of Kirkuk, other disputed areas to the control and supervision of the federal govt, the legislature said on its website.
- Also voted to prevent companies from carrying out exploration work in joint and disputed areas subject to lawsuits
- Oil exports should only be done via federal govt
- Army chief must take all legal, constitutional measures to protect Iraq’s unity
- Deploy troops in areas that had been under Iraq’s control before 2014 and in Kirkuk
A “troica” against the referendum was formed when Iran joined Iraq and Turkey in describing the Iraqi Kurdish referendum as “untimely and wrong” and reiterated its support for Iraq’s territorial integrity. Foreign Ministry spokesman Bahram Ghasemi told reporters on Monday that the vote could “lead to developments and happenings that could affect all people of the region and especially Kurdish people.” Ghasemi reiterated that Iran supports the “territorial integrity and democratic process” in Iraq.
As reported yesterday, Iran’s Supreme National Security Council closed off the country’s airspace to the Iraqi Kurdish area at the request of the central government in Baghdad. More from AP:
Since Sunday, Iran’s powerful Revolutionary Guard has been having a military exercise in its northwestern Kurdish region bordering Iraq in a sign of Tehran’s concerns over the Iraqi Kurdish vote. Iran and Iraq have been close allies since the 2003 U.S.-led invasion of Iraq toppled dictator Saddam Hussein. Both are opposed to Kurdish independence.
In June, the country’s Supreme Leader Ayatollah Ali Khamenei told visiting Iraqi Prime Minister Haider al-Abadi, that Iraq “should remain integrated” and that advocates of Kurdish independence are “opponents of the independence and identity” of Iraq.
Even Syria jumped on the bandwagon, when its foreign minister said the country doesn’t recognize the Iraqi Kurdish referendum saying Damascus rejects any measure that could break up neighboring Iraq. The Syrian state news agency SANA says Walid al-Moallem spoke on Sunday in New York. Syria’s has a large Kurdish minority that last week had its own vote as part of a move toward a federal system within Syria.
As AP explains, “Syria, like Turkey and Iran, opposes the vote in Iraq, fearing that Kurdish communities within Syria might eventually do the same.” Al-Moallem described the Iraqi Kurdish vote as a “step that we do not recognize” and stressed that the government in Damascus only recognizes a “sole, united Iraq. He says: “We reject any measure the leads to dividing Iraq.”
Finally, closing the loop on today’s independence referendum, Turkish President Erdogan said he had spoken to Russia’s president Vladimir Putin over the phone about the Kurdish vote and while he did not elaborate whether Russia, too, is against the vote, said that that Putin would visit Ankara on Thursday to discuss developments in the region, including the Kurdish referendum.
So with virtually everyone, not only its neighbors but also the US and potentially Russia, breathing down the neck of millions of Iraqi Kurds with warnings that the vote will not stand, and only Israel on the side of secession, we look forward to how Barzani will respond to the vote which is expected to pass overwhelmingly in favor of independence, and whether this will serve as the next military geopolitical strike point in the middle east.
We knew that this was inevitable: Russia blames the USA for the death of a top General in Syria
Russia Blames US For Death Of Top General In Syria
Shortly after Russia disclosed on Sunday that a top Russian military commander, Lieutenant General Valery Asapov – who was serving as one of Russia’s “military advisers” in Syria – was fatally wounded by an exploding shell in a mortar attack by ISIS terrorists, on Monday the Russian Deputy Foreign Minister Sergei Ryabkov said that the “two-faced policy” of the United States was to blame for the death of the Russian General in Syria.
“The death of the Russian commander is the price, the bloody price, for two-faced American policy in Syria,” Ryabkov told reporters, according to RIA.
The Russian Defense Ministry said on Sunday that Asapov had been killed by Islamic State shelling near Deir al-Zor; his death was revealed around the time Moscow disclosed what it said was photographic evidence showing US special operations located at Islamic State positions in Syria.
Russia has complained about what it has suggested are “suspiciously friendly ties” between U.S.-backed militias, U.S. special forces, and Islamic State in the area, accusing Washington of trying to slow the advance of the Syrian army.
As a reminder, on Sunday the Russian Ministry of Defense published aerial images which they say show US Army special forces equipment located north of the Syrian town of Deir ez-Zor, where IS militants are deployed. The US troops do not face any “resistance from the ISIS militants,” while their positions have no screening patrol, which could indicate that they “feel absolutely safe” in the area, the ministry said. The US Central Command however denied the accusations in a written statement to RT.
“The allegations are false. For operational security, we do not comment on ongoing operations or the current positions of Coalition personnel and our partner forces,” the Combined Joint Task Force-Operation Inherent Resolve said.
Ryabkov also questioned Washington’s intention to fight Islamic State in Syria.
“The American side declares that it is interested in the elimination of IS … but some of its actions show it is doing the opposite and that some political and geopolitical goals are more important for Washington,” Ryabkov said according to Reuters.
Meanwhile, in keeping with the growing escalation between Russia and the US over Deir Ezzor, earlier on Monday, American-backed Syrian militias again accused Russian warplanes of striking their positions in the oil-rich province, near a natural gas field they seized from Islamic State last week. Russia denied that.
Despite the growing escalations, the Russian and US militaries maintain “intensive” contacts at different levels, Ryabkov said.
6 .GLOBAL ISSUES
7. OIL ISSUES
Oil rises but not gold? Fears due to the Kurdish referendum. Turkey threatens to cut off oil pipeline supplies through Iraq if independence vote proceeds. Turkey is afraid that all Kurds will unite into one country
(courtesy zero hedge)
WTI Hits 4-Month Highs Over $51 Amid Kurdish Referendum Concerns
For the third time in 10 days, WTI Crude futures broke above $51 (this time running stops back to its highest level since May) amid growing concerns over the potential reactions to the results of the forthcoming Kurdish independence vote.
Positive comments from Russia and OPEC over clearing the global glut helped, but it is the potential for supply disruption from the Kurdish independence vote that is having the most impact on WTI and Brent.
President Tayyip Erdogan warned on Monday Turkey could cut off the pipeline that carries oil from northern Iraq to the outside world, intensifying pressure on the Kurdish autonomous region over its independence referendum.
The Kurds, which make up about one-fifth of Iraq’s 38 million people, have long-standing grievances against the government in Baghdad. They won a large degree of autonomy under the post-Saddam Iraqi constitution adopted in 2005, and nationalism has deepened since Kurdish troops scored battlefield successes against Islamic State and brought the city of Kirkuk under their control. Turkey fears the independence vote could set back its own campaign to stamp out a Kurdish insurgency it’s been battling for three decades.
Erdogan spoke shortly after Prime Minister Binali Yildirum said Ankara could take punitive measures involving borders and air space against the Kurdistan Regional Government (KRG) over the referendum and would not recognize the outcome.
Brent spikes to its highest levels since July 2015: on North Korea and Kurdistan news
(courtesy zero hedge)
Brent Crude Spikes To Highest Since July 2015
North Korean war-talk has extended early gains for Brent Crude (driven by anxiety over the post-Kurd-referendum fallout), pushing prices to their highest since July 2015.
To the highest since July 2015…
As Bloomberg reports, Kurdish oil supplies may be in jeopardy as Turkey, Iran and the Iraqi central government in Baghdad sought to isolate the semi-autonomous Kurds as balloting began on Monday. Meanwhile, OPEC and its partners implemented more than 100 percent of their agreed cuts last month, OPEC Secretary-General Mohammad Barkindo said Friday in Vienna, providing more fuel to the oil rally.
“It’s pretty clear the Kurds are going to vote for independence and we will have yet another geopolitical hot spot in the Middle East that threatens a significant amount of oil supply,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said by telephone.
At the same time, “the cooperation and the strong effort by OPEC is registering with the market.”
Brent crude oil futures curve has moved into backwardation in recent weeks, indicator of supply tightness…
And the Brent-WTI spread reaches its highest since August 2015…
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 1.1876 DOWN .0070/REACTING TO +GERMAN ELECTION WHERE ALT RIGHT PARTY ENTERS THE BUNDESTAG/ huge Deutsche bank problems + USA election:/TRUMP HEALTH CARE DEFEAT//ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/ /USA FALLING INTEREST RATES AGAIN/HOUSTON FLOODING/EUROPE BOURSES MOSTLY IN THE RED
USA/JAPAN YEN 112.14 UP 0.197(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 1.3488 DOWN .0011 (Brexit March 29/ 2017/ARTICLE 50 SIGNED
THERESA MAY FORMS A NEW GOVERNMENT/STARTS BREXIT TALKS
USA/CAN 1.2321 DOWN .0013 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/(TRUMP INITIATES LUMBER TARIFFS ON CANADA)
Early THIS MONDAY morning in Europe, the Euro FELL by 79 basis points, trading now ABOVE the important 1.08 level FALLING to 1.1876; / Last night the Shanghai composite CLOSED DOWN 10.98 POINTS OR 0.33% / Hang Sang CLOSED DOWN 380.19 POINTS OR 1.36% /AUSTRALIA CLOSED UP 0.02% / EUROPEAN BOURSES OPENED MOSTLY IN THE RED
The NIKKEI: this MONDAY morning CLOSED UP 101.13 POINTS OR 0.50%
Trading from Europe and Asia:
1. Europe stocks OPENED IN THE GREEN
2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 380.19 POINTS OR 1.36% / SHANGHAI CLOSED DOWN 10.98 POINTS OR 0.33% /Australia BOURSE CLOSED UP 0.02% /Nikkei (Japan)CLOSED UP 101.13 POINTS OR 0.50% / INDIA’S SENSEX IN THE RED
Gold very early morning trading: 1294.45
Early MONDAY morning USA 10 year bond yield: 2.236% !!! DOWN 1 IN POINTS from FRIDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. (POLICY FED ERROR)
The 30 yr bond yield 2.769, DOWN 2 IN BASIS POINTS from FRIDAY night. (POLICY FED ERROR)
USA dollar index early MONDAY morning: 92.53 UP 36 CENT(S) from FRIDAY’s close.
This ends early morning numbers MONDAY MORNING
And now your closing FRIDAY NUMBERS
Portuguese 10 year bond yield: 2.448% UP 2 in basis point(s) yield from FRIDAY
JAPANESE BOND YIELD: +.028% DOWN 1 in basis point yield from FRIDAY/JAPAN losing control of its yield curve/
SPANISH 10 YR BOND YIELD: 1.624% UP 1/2 IN basis point yield from FRIDAY
ITALIAN 10 YR BOND YIELD: 2.107 DOWN 1/3 POINTS in basis point yield from FRIDAY
the Italian 10 yr bond yield is trading 49 points HIGHER than Spain.
GERMAN 10 YR BOND YIELD: +.402% DOWN 5 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 1.1846 DOWN .01000 (Euro DOWN 100 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/
USA/Japan: 111.58 DOWN 0.359(Yen UP 36 basis points/
Great Britain/USA 1.3452 DOWN 0.0030( POUND DOWN 30 BASIS POINTS)
USA/Canada 1.2346 UP .0013(Canadian dollar DOWN 13 basis points AS OIL ROSE TO $51.76
This afternoon, the Euro was DOWN 100 basis points to trade at 1.1846
The Yen ROSE to 111.538 for a GAIN of 36 Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE
The POUND ROSE BY 86 basis points, trading at 1.3452/
The Canadian dollar FELL by 13 basis points to 1.2346, WITH WTI OIL RISING TO : $51.96
Your closing 10 yr USA bond yield DOWN 8 IN basis points from FRIDAY at 2.219% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 2.763 DOWN 4 in basis points on the day /
Your closing USA dollar index, 92.67 UP 49 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 DOWN 9.25 POINTS OR 0.13%
German Dax :CLOSED UP 2.46 POINTS OR 0.02%
Paris Cac CLOSED DOWN 14.16 POINTS OR 0.27%
Spain IBEX CLOSED DOWN 88.50 POINTS OR 0.86%
Italian MIB: CLOSED DOWN 141.26 POINTS OR 0.63%
The Dow closed down 9.64 OR 0.04%
NASDAQ WAS closed up 4.23 POINTS OR 0.52% 4.00 PM EST
WTI Oil price; 51.67 1:00 pm;
Brent Oil: 58.48 1:00 EST
USA /RUSSIAN ROUBLE CROSS: 57.70 UP 20/100 ROUBLES/DOLLAR (ROUBLE LOWER BY 20 BASIS PTS)
TODAY THE GERMAN YIELD RISES TO +0.402% 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:$52.14
USA 10 YR BOND YIELD: 2.219% (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)
USA 30 YR BOND YIELD: 2.761% (yield curve flattens)
EURO/USA DOLLAR CROSS: 1.1848 DOWN .0099
USA/JAPANESE YEN:111.68 DOWN 0.253
USA DOLLAR INDEX: 92.66 UP 49 cent(s)/
The British pound at 5 pm: Great Britain Pound/USA: 1.3467 : down 16 POINTS FROM LAST NIGHT
Canadian dollar: 1.2374 DOWN 38 BASIS pts
German 10 yr bond yield at 5 pm: +0.402%
And now your more important USA stories which will influence the price of gold/silver
TRADING IN GRAPH FORM FOR THE DAY
Techs Wrecked, Financials Falter As Korean Threats Spark Gold Gains
Well that all escalated rather quickly…
Brent spiking (Kurds and Korea), Gold spiking (Korea), AAPL tumble (weak orders), FANG bloodbath… large into small and growth into value.
The day’s broad activity was driven by North Korean headlines which sparked a bid for gold (and early anxiety over Europe after Germany’s election)...
Gold regains the lead year-to-date…
But Stocks suffered some more serious drawdowns with Tech stocks worst 4-day loss in 3 months to one-month lows… Small Caps reached a new intraday record high early on (and Trannies clsoed green)…
Nasdaq VIX Spiked above 16 – back to the upper end of recent trading band but notably not as big a spike as prior tech wrecks…
S&P VIX spiked above 11 intraday (back above its 50- and 100-DMA) as S&P lost its 2500 level… but the machines did their best to ramp the S&P back
And VVIX (expectations for the uncertainty of VIX going forward) has never been higher relative to VIX…
Big switch from growth to value today…
FANG Stocks worst day since early June.
Facebook’s (election-related headlines) and Netflix’s (Fox streaming headlines) worst day since Nov 2016…
AAPL down 12 of the last 15 days (and down almost 10% from its record highs) closing below its 50- and 100DMA (filling the earnings night gap higher)…
Bank stocks continue to decouple from the yield curve…
Treasury yields fell on the day on a safe haven bid with more 2s30s flattening…trading died after the kneejerk on korea headlines…
Interstingly, the dollar index was well bid today (back to FOMC-Day highs)…
Driven by EUR weakness on the heels of Merkel’s horrible election outcome…
Despite the dollar strength, Gold surged off its 50DMA (and Silver off its 100DMA) back above $1310…
WTI Crude surged above $52 (on the back of Kurdish referendum fallout concerns) and RBOB followed oil prices higher…
But Brent spiked to its highest since July 2015 with a massive backwardation and dramatically rich to WTI…
Finally, Bitcoin also spiked on the North Korean headlines…
Well that didn’t work… yet…
As reported to you on Friday, a dam in the north west part of Puerto Rico is failing. They are evacuating as many citizens as possible as thousands could die if it broke, The country is completely flooded and there is no food or drinking water on the island.
“Thousands Could Die” – Puerto Rico Scrambles To Evacuate River Valley As Dam Fails
Days after Hurricane Maria passed over the island and made its way west toward the Dominican Republican, Puerto Rico is still struggling with the initial response to the storm – rescuing people stranded in remote villages, and moving thousands into government shelters. Meanwhile the island’s first responders are making due without electricity, gas or cell phone service after the storm dealt a knockout blow to its infrastructure.
In what was perhaps the most destructive blow to the island’s aging infrastructure, the NWS warned Friday that the Guajataca Dam in northwest Puerto Rico would soon fail, prompting the agency to issue a flash flood emergency warning for Isabela and Quebradillas municipalities. Now, authorities are scrambling to evacuate the residents of the river valley below the dam before their communities are entirely submerged. If the authorities don’t act quickly, “thousands could die” one official in charge of the rescue response said.
According to federal reservoir data, the lake behind the dam, Lago de Guajataca, rose more than three feet between Tuesday and Wednesday, when the storm was still directly over the island. More recent data were unavailable. With floodwaters gushing into the Guajataca river valley, Reuters reports that emergency officials were scrambling Friday and Saturday to evacuate its nearly 70,000 residents before their villages have been completely submerged.
Video published by CBS shows waters gushing over the top of the 90-year-old dam, sending a wall of water racing into the valley below.
The National Weather Service warned of “imminent failure” and urged residents in the area to “move to higher ground now.”
The evacuation of the valley is perhaps the most high-stakes rescue effort of the past week, according to Abner Gomez, executive director of Puerto Rico’s emergency management agency. Gomez said Friday that the dam’s floodgates suffered mechanical damage during the storm, which made it impossible for authorities to open and let out normal water currents.
He added that “there is no way to fix it” right now considering the conditions and said if the dam tops over or fails structurally, “thousands of people could die.”
The Puerto Rico Electric Power Authority, which operates the dam, says that the failure is already causing flash flooding downstream. The dam lies across the Guajataca River to form a reservoir that can hold roughly 11 billion gallons of water.
According to Weather.com, local media have reported that residents of one small community near the dam are refusing to evacuate, forcing authorities to invoke a law that allows responders to evacuate children and the elderly in an emergency.
The latest crisis comes as the death toll on Puerto Rico rose to 21 on Friday, when authorities said eight people had died in Tao Baha 30 miles from San Juan, where more than 4,000 people have been rescued from floodwaters.
Meanwhile, some shelters are running out of food and other essential supplies, creating a situation that the island’s governor, Ricard Rossello, described as a “humanitarian emergency.”
Maria made landfall in Puerto Rico early Wednesday as a powerful Category 4 hurricane with 155 mph winds – the first Category 4 to hit the island since 1932. The storm wiped out the island’s power grid and dumped 20 to 30 inches of rain in 24 hours, with some areas seeing as much as 40 inches. The storm could leave most of the island without power for weeks – or possibly up to six months in some areas.
“People Are Going To Start Dying” – Puerto Rico’s Battered Hospitals On Verge Of Failure
A week after then-category 4 Hurricane Maria made landfall in densely populated eastern Puerto Rico, electricity remains offline across most of the island, while supplies of staples like gas, food and water are dwindling. Shelters on the island are reportedly running low on food, and the government managers of the emergency response effort are scrambling to evacuate 70,000 people from a river valley that’s in danger of being completely submerged after a nearby dam failed.
And now, Reuters is reporting that hospitals across the island are struggling to continue providing medical services to patients after the storm left many of them flooded, strewn with rubble or relying on diesel-powered generators that will soon run out of fuel. For some, the only option is to evacuate to the United States for treatment.
Among these patients is a baby with a heart defect who had the misfortune of being born just before Maria hit.
“Among them is Cheira Ruiz and her baby girl Gabriellyz, who was born two weeks ago with a serious heart defect. The newborn was admitted to the Centro Cardiovascular de Puerto Rico in the capital shortly before Maria slammed into the island last Wednesday, but it was impossible for doctors to operate in such precarious conditions.”
Gabriellyz was among the first infants cleared to take a medical flight out of Puerto Rico since the storm. Her parents, who live two hours south of the capital, found out the good news Friday when emergency officials knocked on their door in the town of Guanica and told them to pack for the trip to Miami. With phone service out, the doctors had called one of the island’s radio stations, which broadcast their plea for help in locating the couple.
Hours before the flight was scheduled to depart, the parents learned there was only room for one of them. Mother and baby would fly alone to Miami.
“I’m trying to be strong,” Ruiz said on Saturday.”
Across the island, the scene is nightmarish as motorists and pedestrians line up for blocks waiting to purchase scare resources like fuel to power the generators. Cellular service, internet, and email have vanished, and radio has become a primary source of information. In what sounds like a plot detail from the Mad Max movies, fuel is in such short supply on the island that deliveries to hospitals are made by armed guards to fend off looters. Hospitals trying to transfer critical patients are being turned down by other facilities, simply because there is no room, or they can’t afford to purchase fuel.
For hospitals across this region, the challenges are mounting. After the power went out, back-up generators at some hospitals failed quickly. Other hospitals are running critically low on diesel. Fuel is so precious that deliveries are made by armed guards to prevent looting, according to Dr. Ivan Gonzalez Cancel, a cardiovascular surgeon and director of the heart transplant program at Centro Cardiovascular.
“Another hospital wants to transfer two critical patients here because they don’t have electricity,” Gonzalez Cancel said. “We can’t take them. We have the same problem.”
Another problem is that nurses and doctors are running low on gasoline for their daily commutes to work. Puerto Ricans are waiting as long as seven hours at the island’s few functioning filling stations. Marilyn Rivera Morales, a nurse at a hospital cardiovascular center run by Dr. Ivan Gonzalez Cancel who spoke with Reuters, said she had enough gas left to drive to the hospital for two more days.
“How will they keep coming here if they don’t have gas?” Gonzalez Cancel wondered.
Gonzalez’s cardiovascular center was “in shambles,” he told Reuters. Running without air conditioning, the walls of the operating room were dripping with condensation and floors were slippery. Most patients had been discharged or evacuated to other facilities, but some patients remained because their families could not be reached by phone. On the sidewalk outside the cardiac center on Saturday, Jorge Rivera and his wife Dorca approached Gonzalez Cancel to ask about the woman’s father, a patient still inside waiting for triple-bypass surgery. The couple are residents of Savannah, Georgia who were in Puerto Rico to care for their loved one.
The Doctor responded with what we imagine was unwelcome news: They’d have better luck if they took Dorca’s father elsewhere.
With the hospital scaling down operations and the island’s infrastructure on its knees, Gonzalez Cancel estimated he would not perform another open heart surgery for a month or more. His advice to the couple: leave.
“I am talking to you, not as a physician, I am talking to you as a human being,” he said. “Get him on a plane. You can be in Miami in two and a half hours.”
But of course, even leaving the island is a process fraught with difficulty.
With the island’s main airport still crippled, Gonzalez Cancel said he needed to secure a special waiver from authorities to obtain the medical evacuation flight for baby Gabriellyz. Travelers at the airport on Sunday were told that passengers who do not already have tickets may not be able to secure flights out until October 4.
With the situation on the island set to get worse before it gets better, some – Hillary Clinton among them – are calling on President Donald Trump to send the navy to Puerto Rico to help with the recovery effort. The devastation caused by Maria is similar to that wrought by hurricanes Katrina, Harvey and Irma, Reuters noted. But Puerto Rico’s remoteness and fragile infrastructure have made the logistics of organizing a disaster response very challenging.
Dr. Gonzalez Cancel also said the island needs the military to help with its recovery effort.
“We need a massive military response,” surgeon Gonzalez Cancel said. Because if more help doesn’t arrive soon, “people are going to start dying.”
Waiting for news about his father-in-law, Rivera, the Georgia resident and a 49-year-old Iraq War veteran, said the U.S. military could only do so much. He forecast the island would take months to get back on its feet.
“You need God pretty much to fix every light bulb,” he said.
Dr. Juan Carlos Sotomonte, the medical director of the Centro Medico‘s cardiovascular unit, said intervention – divine or otherwise – is needed fast.
“If this is not taken care of, people are going to start dying,” he said.
Making matters worse, the difficulties facing Puerto Rico’s hospitals may just be the calm before the storm. As supplies continue to dwindle and the island’s strapped finances hinder the recovery effort, the precarious situation facing Puerto Rico’s hospitals will probably worsen before it gets better.
Hurricane Maria Has Transformed Puerto Rico Into A “Cash Only” Economy
Electricity, internet access and cell phone service have been offline in parts of Puerto Rico for a whole week. And with the island still struggling to rescue people stranded in remote villages, those managing the emergency recovery effort have yet to focus their attentions on the monumental task that looms ahead: Rebuilding the island’s devastated infrastructure, from communications to sewers and water treatment plants that have been damaged by flash flooding and 155 mph winds that Hurricane Maria visited upon the island.
The damage, as Bloomberg reports, has essentially knocked Puerto Rico’s economy back into the 1950s. For locals who’re struggling to begin the process of rebuilding their damaged homes, shops across the island are only accepting cash.
The cash economy has reigned in Puerto Rico since Hurricane Maria decimated much of the U.S. commonwealth last week, leveling the power grid and wireless towers and transporting the island to a time before plastic existed. The state of affairs could carry on for weeks or longer in some remote parts of the commonwealth, and that means it could be impossible to trace revenue and enforce tax rules.
The situation further frustrates one of the many challenges already facing a government that has sought a form of bankruptcy protection after its debts swelled past $70 billion: boosting revenue by collecting money that slips through the cracks.
The cash-only economy could create problems for the island’s cash-strapped government, as business owners will no doubt be tempted to avoid declaring some of their revenues, depriving PR’s government of badly needed revenue.
In fact, the power blackout only exacerbates a situation that has always been, to a degree, a fact of life in Puerto Rico. Outside the island’s tourist hubs, many small businesses simply never took credit cards, with some openly expressing contempt for tax collectors and others claiming it was just a question of not wanting to deal with the technology.
But those were generally vendors of bootleg DVDs, fruit stands, barbers – not major supermarkets. Now, the better part of the economy is in the same boat.
And after a week without power, the few ATMs on the island that still work have run dry, while most others are simply out of service.
As Bloomberg reports, many Puerto Ricans were still living off what money they thought to withdraw ahead of the storm. When a branch of Banco Popular in San Juan opened on Monday morning, the line stretched about 200 people deep for banking and ATM services. People fanned themselves with whatever they could find and held umbrellas against the sun. At the back stood Giddel Galliza, 64, a music teacher.
“I didn’t want to come because of the lines,” he said. “I need money for basic needs, food, gas – my tank is full but it won’t be forever. I normally pay with my card.”
A similar situation unfolded at a Banco Santander across the street. Erasmo Santiago, a 63-year-old mailman, said he was actually a Popular client but opted to pay a fee and go for the slightly shorter line. “I have my mom living with me, she’s 83,” he said. “So I need money.”
Some store owners, even those in areas of San Juan that are heavily policed, worry that carrying so much cash could leave them vulnerable to a robbery.
In post-hurricane San Juan on Monday, commerce picked up ever so slightly. With a little effort, you could get the basics and sometimes more: diapers, medicine, or even a gourmet hamburger smothered in fried onions and gorgonzola cheese.
But almost impossible to find was a place that accepted credit cards.
“Cash only,” said Abraham Lebron, the store manager standing guard at Supermax, a supermarket in San Juan’s Plaza de las Armas. He was in a well-policed area, but admitted feeling like a sitting duck with so many bills on hand. “The system is down, so we can’t process the cards. It’s tough, but one finds a way to make it work.”
Ultimately, turning the ATMs back on probably ranks lower on the island’s list of priorities than, say, keeping the diesel generators that are powering hospitals in operation, or evacuating 70,000 people from a river valley in danger of being flooded after a nearby dam failed.
Depending on how long outages persist, Puerto Ricans in some areas may need to resort to bartering for essential goods, as residents find ever more creative ways to transact in the absence of modern technology.
Obamacare Repeal Officially Dead After Cruz Says No
In a sudden change of heart that kills senate Republicans’ effort to pass a bill to repeal and replace Obamacare before a rule allowing Republicans to circumvent a Democratic filibuster expires at the end of the month, Texas Sen. Ted Cruz is now saying he won’t support the Graham-Cassidy Obamacare repeal bill.
Cruz, who revealed his position during a panel discussion at a Texas Tribune conference in Austin, suggested that the proposal also lacks the vote of Sen. Mike Lee, according to Politico. The Texas Republican said he and Lee offered amendments to the Graham-Cassidy proposal last week that would go further in bringing down Obamacare premiums but that the changes weren’t included in the latest draft of the bill.
The latest blow to the seven-year-long Obamacare repeal effort comes as President Donald Trump escalates feuds with both North Korea and US professional sports leagues. Cruz’s opposition means that, with both he and McCain saying no and at least two other moderates leaning toward a no, that even if Trump manages to flip Sen. Rand Paul, he wouldn’t be able to muster the 50 votes needed for Vice President Mike Pence to break a tie.
“Right now, they don’t have my vote and I don’t think they have Mike Lee’s vote either,” Cruz said during a panel discussion at the Texas Tribune festival in Austin that also included Sen. John Cornyn.
Both Cruz and Cornyn – a member of senate Republican leadership – had said they back the way the bill would convert Obamacare funding into a system of block grants to states. But while Cornyn said he would vote for the bill as it stands, Cruz said that he wants to see more changes, but declined to elaborate.
Ironically, Texas and other states that didn’t expand coverage under Obamacare would fare well under the Graham-Cassidy plan, according to Politico, which cited an independent analyses of the bill showing it would save the state some $35 billion between 2020 and 2026.
Rand Paul reiterated his opposition to the bill during an appearance on “Meet the Press” Sunday morning, saying he would only support the bill if the block-grant provision that Cruz purportedly supports (or at least, once supported) is dropped.
“What it sets up is a perpetual food fight over the formula,” he said. “What happens when Democrats win? They’re going to claw back that money from Republican states to give to Democrat states.”
Trump had said during a rally on Friday that Paul might “come around” then tweeted Saturday that he might’ve found a way to gain the Kentucky Republican’s support. News of Cruz’s opposition must’ve pleased the dozens of protesters who gathered outside the University of Texas auditorium where Cruz was speaking to protest repealing the bill.
* * *
Here’s a roundup of where key senators stand on Graham-Cassidy. As it suggests, the bill now has a very low chance of passing.
Republicans are desperate as they try to revise Obamacare repeal bill but defeat is almost certain
(courtesy zero hedge)
Republicans Scramble To Revise Obamacare Repeal Bill As Defeat Looms
After Texas Senator Ted Cruz revealed Sunday that he wouldn’t support Graham-Cassidy, effectively quashing the Republicans’ chances of repealing and replacing Obamacare before the crucial Sept. 30 deadline, Bloomberg reported that the GOP senate leadership was scrambling late Sunday to revise the bill to win support from a small but critical group of holdout senators and secure the 50 votes needed to allow the tie-breaking vote in favor cast by Vice President Mike Pence.
Cruz, who had previously said he supported a system of scrapping the Obamacare Medicaid expansion in favor of providing block grants to states, the crux of the Graham-Cassidy, told a crowd in Texas that he had changed his mind, but didn’t elaborate as to why. Meanwhile, Senator Rand Paul took to the Sunday shows to reiterate that he’s against the bill because he believes block grants would foster infighting over funding between the states.
Some of the changes, which come as the Sept. 30 expiration of the fast-track provision that forestalls a Democratic filibuster, are designed to appeal to moderate holdouts like Lisa Murkowski of Alaska, while others appeared tailored to lure conservative skeptics like Rand Paul of Kentucky. Trump has vowed to win the support of the Kentucky senator, although some theorize that, since the current system is popular in Paul’s home state, that he will invent libertarian-sounding objections to any bill the Republicans present.
Bill Cassidy and Lindsey Graham
But even if GOP leadership manages to change a handful of votes, the bill’s chances of passing remain low, virtually guaranteeing that the Republicans will be forced to accept the status quo after seven years of campaigning to scrap Obamacare. And although the GOP could still try to resurrect the health-care effort later this year, the effort’s collapse will raise serious doubts about Congressional Republicans’ ability to win legislative battles on behalf of the president.
As Bloomberg points out, even Trump appeared to concede that the outlook for repeal isn’t great, admitting as much during a press conference with reporters.
“Eventually we will win on that. My primary focus, I must tell you – has been from the beginning, as you can imagine – is taxes.”
Indeed, the administration appears to already be ceding ground on taxes after leaked highlights from the bill suggested that Republicans would shoot for a 20% corporate tax rate after Trump had called for 15%.
Meanwhile, the new version of Graham-Cassidy partially tries to win over holdouts by offering more federal funding for their states, including multiple provisions offering more money to Lisa Murkowski, or “Lisa M”’s Alaska. The revised bill also includes changes to controversial provisions about pre-existing conditions coverage.
Under the revised version, states would have to describe how their health plans “shall maintain access to adequate and affordable health insurance coverage for individuals with pre-existing conditions.” The original language said each state had to show how it “intends” to have adequate and affordable access to coverage.
The bill continues, however, to give states broad new authority to allow insurance companies to provide skimpier plans with far fewer benefits while charging higher premiums to the sick and the old.
Under the new version, states could let insurers impose deductibles that are higher than the limits set by the Affordable Care Act, or remove the health law’s limits on the costs that an individual family can incur in a year entirely. They could also offer coverage that lacks some of the ACA’s benefits, such as maternity care, prescription drugs or mental health. Plus, states could let insurers widen the gap between how much old people and young people are charged. And states could remove requirements that insurers cover preventive-health treatments and immunizations.
Democrats were quick to criticize the bill.
“Despite an attempt to appear to add money for a select few states, this bill is just as bad for those states and the rest of the states because it still contains a massive cut to Medicaid, and would throw our health insurance system into chaos while raising premiums,” Senate Minority Leader Chuck Schumer said in a statement late Sunday.
The health-care industry, another group that opposes Graham-Cassidy, mobilized on Sunday to convince senators who are on the fence not to vote for the bill.
The bill provoked an unusually strong backlash from the health-care industry as well. Groups representing doctors, hospitals and insurers signed a letter Saturday urging the Senate to reject the Graham-Cassidy bill.
The groups said the bill would undermine protections for patients with pre-existing conditions, result in dramatic cuts to Medicaid and “drastically” weaken the individual insurance markets. The letter was signed by the American Medical Association, the American Academy of Family Physicians, the American Hospital Association, and America’s Health Insurance Plans, which represents major insurers.
Republicans might have another shot at repealing some of Obamacare’s more controversial provisions later this year when they adopt a budget resolution that could allow room for Obamacare repeal provisions, although trying to combine the two complicated policies might make the overall package even harder to pass.
Senate Finance Chairman Orrin Hatch of Utah said last week that there’s a “chance” of pairing taxes with health-care provisions. “But it’s not easy,” he added.
Mitch McConnell still needs to decide whether to call for a vote on Graham-Cassidy.
McConnell still has to decide whether to go through with a vote, which would likely happen Wednesday. While Trump has urged GOP leaders to make every possible effort to repeal Obamacare, some Republicans will be reluctant to take a vote on a bill that many privately are uncomfortable with.
A CBO analysis of the bill is expected later Monday.
The nonpartisan Congressional Budget Office will release a partial analysis of the Graham-Cassidy proposal as early as Monday. It will examine the proposal’s impact on the federal deficit, but a full review of the effect on U.S. health coverage and costs won’t be ready for weeks. The Senate Finance Committee will hold the only hearing on the bill Monday afternoon, and it doesn’t plan to vote on the measure. Senate Republicans will have a private lunchtime meeting Tuesday, where GOP leaders can make a last plea for support.
The Brookings Institution estimated Friday that the Graham-Cassidy plan would reduce the number of people with health coverage by about 21 million a year from 2020 through 2026. The good news is that for all the twists and turns in this ongoing process, the fate of Obamacare repeal should be sealed by mid-week.
(courtesy zero hedge)
Trump Escalates War With NFL In Early Tweetstorm
Update: Proving that he was just getting warmed up earlier this morning with his latest rant against the NFL, Trump now seems to want ‘#StandForOurAnthem‘ to go viral.
* * *
After igniting an NFL firestorm over the weekend with a series of tweetstorms bashing players who refused to stand for the national anthem (something we covered in detail here), Trump is at it again this morning with new tweets highlighting the disgruntled crowds that booed the kneeling players.
“Many people booed the players who kneeled yesterday (which was a small percentage of total). These are fans who demand respect for our Flag!”
“The issue of kneeling has nothing to do with race. It is about respect for our Country, Flag and National Anthem. NFL must respect this!”
Some of the loudest such ‘boos’ came for the New England Patriots at Gillette Stadium when a number of Patriots kneeled for the anthem.
Meanwhile, Tom Brady responded to Trump’s continued attacks this morning saying that he “disagrees” with the President and thinks his tweets are “just divisive.” Presumably, that means that Brady is of the opinion that exploiting his star power to make a political statement is not equally divisive? Per WEEI:
“Yeah, I certainly disagree with what he said. I thought it was just divisive,” Brady said. “Like I said, I just want to support my teammates. I am never one to say, ‘Oh, that is wrong. That is right.’ I do believe in what I believe in. I believe in bringing people together and respect and love and trust. Those are the values that my parents instilled in me. That is how I try and live every day. I have been blessed to be in locker rooms with guys all over the United States over the course of my career. Some of my great friends are from Florida, Virginia, New York, Montana, Colorado, Texas. The one thing about football is it brings so many guys together — guys you would never have the opportunity to be around. Whether it was in college, and all the way into the pros. We’re all different, we’re all unique. That is what makes us all special.”
“Hopefully it brings everyone together. I think that is what unity and love — like I said after the game, those are the things that concern me. When you’re in a locker room full of 53 players, you’re working to a common goal. You support the guys that you play with and you support your coaches, coaches support you. You just do the best you can do. You’re navigating through life. These things aren’t easy. Everyone deals with different challenges in their life and you respect everyone’s opinions and views. You don’t have to agree with everything. It’s hard to agree with your own wife on everything from day-to-day. I have so much respect for my teammates and what we’re trying to accomplish. Hopefully we can keep marching toward this end of the season, keep making improvements, get better and win more football games.”
Brady said he heard the boo’s during and after the anthem from some in the crowd and said people can do what they want to do.
“Yeah, I did,” he said. “No, I think everyone has the right to do whatever they want to do. If you don’t agree, that is fine. You can voice your disagreement, I think that is great. It’s part of our democracy. As long as it is done in a peaceful, respectful way, that is what our country has been all about.”
On the other hand, and not terribly surprisingly, NASCAR’s strong condemnation of protesting the national anthem, which Richard Petty said would earn anyone on his team an immediate dismissal, drew praise from the White House. Per the Associated Press:
It appeared no drivers, crew or other team members participated in a protest during the national anthem to start the NASCAR Cup series race Sunday in Loudon, New Hampshire. Several team owners and executives had said they wouldn’t want anyone in their organizations to protest.
Richard Childress, who was Dale Earnhardt’s longtime team owner, said of protesting, “It’ll get you a ride on a Greyhound bus.” Childress says he told his team that “anybody that works for me should respect the country we live in. So many people gave their lives for it. This is America.”
Hall of Fame driver Richard Petty’s sentiments took it a step further, saying: “Anybody that don’t stand up for the anthem oughta be out of the country. Period. What got ’em where they’re at? The United States.”
When asked if a protester at Richard Petty Motorsports would be fired, he said, “You’re right.”
Of course, it’s only a matter of time until we see if this controversy caused any dips in ratings for the increasingly politicized NFL.
that about does it for tonight
What a farce: With everybody complaining about Hurricane Harvey damage, the soft data Dallas Fed surges to a 10 yr high.
Dallas Fed Surges Near 10-Year Highs Despite Every Respondent Complaining About Hurricane Damage
If ever there was a reason to completely dismiss the farce that ‘soft’ survey data is of any use at all, this is it.
Having hovered around 17.0 for the last four months, The Dallas Fed Manufacturing Outlook survey spiked to 21.3 in September – just shy of its highest since 2010 – despite the total and utter devastation of Houston and much of the energy complex during this month thanks to Hurricane Harvey.
This print was 5 standard deviations above expectations as economists expected some pullback as Harvey impacted the state’s economy…
New Orders surged, the number of employees surged, the average workweek surged, capacity utilization jumped, and shipments spiked…
All of that as ports were closed, infrastructure was crushed, people were unable to get to work, homes were devastated, and every respondent complained about the impact of Harvey!
- Hurricane Harvey resulted in increased raw material costs and increased inventory. We expect raw material prices to stay elevated for about six months and then eventually settle back down, but not to the pre-hurricane level, possibly 50 percent of the difference.
- Harvey did not impact our assets located in Louisiana but did materially slow logistics (rail, barge, truck) assets in Southwest Louisiana and Southeast Texas to service our plants in Louisiana. This slowed delivery of product to our customers. Lower production in Texas due to the storm coupled with solid demand caused product prices to rise. We also saw some energy-based feedstock prices rise in the same period.
- Hurricane Harvey is affecting delivery and availability of raw materials. This may take a few more weeks to resolve.
- We lost approximately seven days of production due to Hurricane Harvey. We are fully back online
- We may see an increase in business in our building and construction products related to the recent weather in Texas and Florida.
- The level of new starts in construction has already peaked and is on a slight decline. It is still good but declining from past months.
- The storm caused the need for repairs in the refinery. This backlog of field and shop work repairs will last 30 to 60 days. We cannot hire enough qualified people to fill the need for this time period.
- Hurricane destruction will slow growth for a short period, and then recovery will increase growth.
- Harvey shut us down for a few days, but we did not sustain any damage. Business is good.
- Harvey seriously impacted our facilities, employees and customers, shutting us down for two weeks. Turnaround maintenance work has been pushed into next year, leaving a hole for us to fill.
- The hurricane impact in Houston and Louisiana has caused interruption of plastic packaging film supplies, causing short-term price increases due to supply/demand imbalances. Labor shortages continue to crop up, with the quality of the available workforce in the metroplex reaching levels (low) not seen since 1999–2000.
- Hurricane Harvey seriously damaged the Southeast Texas business community. Already negatively affected by the general downturn of the oil business and, for us, the printing and USPS mail volume decline, the hurricanes hitting Houston (and shortly afterwards, Florida) have been an economic disaster for local small businesses. The situation is sadly reminiscent of the weeks following the 9/11 attack. Marketers and businesses locally are hesitant to gear back up.
- Currently, the largest hindrance to continued construction growth is the availability of trained construction labor.
- The bulk of our sales are centered around Houston, Austin and San Antonio. The hurricane directly affected our sales in these areas.
Dave Kranzler talks about the phony Dallas Fed and compares it to the just released Chicago Natural Manufacturing report which showed a -.3% reading. This means that the economy contracted in August. So how could the Texas area show a gain when it was the one hit
(courtesy Dave Kranzler/IRD)
Can The Fed “Normalize” Without Collapsing The System?
The official lies about the economy keep mounting. The Dallas Fed reports that its regional economic activity metric surged in early September, despite the complete shut-down of Houston for a few days during the “measurement” period. The “general activity” index spiked up to a 7-month high. Clearly the quality of this report is suspect, to say the least.
Contrary to this report, the Chicago Fed’s National Activity Index plunged to -0.31. It was the weakest reading since last August and a huge plunged from the July reading of 0.03. The Street was expecting 0.11. Because of the nature of this index (85 sub-components measured at the national level) it takes a lot to “move the needle” for this metric. A negative point-three-one reading implies that the national economy broadly contracted during August.
Clearly the Dallas Fed propaganda was intended to reinforce the Fed’s empty threat to raise interest rates and “normalize” its balance sheet . Silver Doctors invited me onto their Friday weekly market podcast to discuss the latest propaganda that spewed forth from the Fed’s FOMC meeting earlier in the week, the western Central Banks’ losing battle to push the price of gold lower and the continuing deterioration in the U.S. political and economic system:
The precious metals is in the early stages of another bull market run, like the one that occurred from 2001-2011. This one is being driven by the China-led movement to remove the dollar as the world’s reserve currency and replace with a currency that will incorporate incorporating gold back into the monetary system. The Mining Stock Journal is a bi- weekly newsletter that will help you get invested ahead of the next huge capital flow into the precious metals sector. To find more, click here: Mining Stock Journal
“Best 20 quid a month I’ve ever spent.” – subscriber from the UK
First Equifax and now Deloitte: their entire internal email system has bee compromised and there would not doubt have a lot of sensitive stuff hacked
Massive Hack At Deloitte: Entire Internal Email System Compromised, Client Emails Exposed
Another day, another major hacking.
The Guardian reports that in the latest corporate cyber breach, one of the world’s “big four” accounting and consultancy firms, Deloitte, was been targeted by a sophisticated hack that “compromised the confidential emails and plans of some of its blue-chip clients.” And just like Equifax, New York-headquartered Deloitte was similarly the victim of a cybersecurity attack that went unnoticed for months. The Guardian understands Deloitte discovered the hack in March this year, but it is believed the attackers may have had access to its systems since October or November 2016.
Responding to questions from the Guardian, Deloitte confirmed it had been the victim of a hack but insisted only a small number of its clients had been “impacted”. It would not be drawn on how many of its clients had data made potentially vulnerable by the breach. Alas, the company has yet to provide a full disclosure of just who and which clients were violated: an estimated 5 million emails were in the hacked email cloud and could have been been accessed by the hackers. Deloitte said the number of emails that were at risk was a fraction of this number but declined to elaborate.
While unlike Equifax Deloite is not a public public company and is not accountable to countless shareholders, with $37 billion in revenue last year and over 263,000 worldwide employees, Deloitte is a corporate behemoth which provides auditing, tax consultancy and – like Equifax – high-end cybersecurity advice to some of the world’s biggest banks, multinational companies, media enterprises, pharmaceutical firms and government agencies. Here the Guardian reports that Deloitte clients “across all of these sectors had material in the company email system that was breached. The companies include household names as well as US government departments.”
So far, six of Deloitte’s clients have been told their information was “impacted” by the hack. Deloitte’s internal review into the incident is ongoing.
The hacker compromised the firm’s global email server through an “administrator’s account” that, in theory, gave them privileged, unrestricted “access to all areas”.
Embarrassingly, the administrator level hack required only a single password and did not have “two-step“ verification, much like Deloitte and other companies strongly urge everyone to do.
As the Krebs on Security blog separately notes, “according to a source close to the investigation, the breach dates back to at least the fall of 2016, and involves the compromise of all administrator accounts at the company as well as Deloitte’s entire internal email system”
The source told KrebsOnSecurity they were coming forward with information about the breach because, “I think it’s unfortunate how we have handled this and swept it under the rug. It wasn’t a small amount of emails like reported. They accessed the entire email database and all admin accounts. But we never notified our advisory clients or our cyber intel clients.”
This same source said forensic investigators identified several gigabytes of data being exfiltrated to a server in the United Kingdom. The source further said the hackers had free reign in the network for “a long time” and that the company still does not know exactly how much total data was taken.
Penetrating the unknown number of emails involved breaching the Microsoft cloud used the by the company. Emails to and from Deloitte’s 244,000 staff were stored in the Azure cloud service, which was provided by Microsoft. This is Microsoft’s equivalent to Amazon Web Service and Google’s Cloud Platform.
In addition to emails, the Guardian adds the hackers had “potential access to usernames, passwords, IP addresses, architectural diagrams for businesses and health information. Some emails had attachments with sensitive security and design details.”
Until today’s report, the hack had been disclosed to the public: the breach, which was US-focused, was regarded as so sensitive that only a handful of Deloitte’s most senior partners and lawyers were informed.
The team investigating the hack is understood to have been working out of the firm’s offices in Rosslyn, Virginia, where analysts have been reviewing potentially compromised documents for six months.
It has yet to establish whether a lone wolf, business rivals or state-sponsored hackers were responsible.
Translation: while Putin wasn’t accused of hacking Equifax, he may yet get the blame this time.
Making this breach even more complicated, it is still unknown what information the hackers acquired: Guardian sources said if the hackers had been unable to cover their tracks, it should be possible to see where they went and what they compromised by regenerating their queries. This kind of reverse-engineering is not foolproof, however.
“In response to a cyber incident, Deloitte implemented its comprehensive security protocol and began an intensive and thorough review including mobilising a team of cybersecurity and confidentiality experts inside and outside of Deloitte,” a spokesman said. “As part of the review, Deloitte has been in contact with the very few clients impacted and notified governmental authorities and regulators.
“The review has enabled us to understand what information was at risk and what the hacker actually did, and demonstrated that no disruption has occurred to client businesses, to Deloitte’s ability to continue to serve clients, or to consumers. We remain deeply committed to ensuring that our cybersecurity defences are best in class, to investing heavily in protecting confidential information and to continually reviewing and enhancing cybersecurity. We will continue to evaluate this matter and take additional steps as required.”
“Our review enabled us to determine what the hacker did and what information was at risk as a result. That amount is a very small fraction of the amount that has been suggested.”
Deloitte declined to say which government authorities and regulators it had informed, or when, or whether it had contacted law enforcement agencies.
Of course, as noted above, the breach is a deep embarrassment for Deloitte, which offers clients advice on how to manage the risks posed by sophisticated cybersecurity attacks. If only the company had followed its own advice. Even more awkward, in 2012 Deloitte was ranked the best cybersecurity consultant in the world and has a “CyberIntelligence Centre” to provide clients with “round-the-clock business focussed operational security.” It is unclear if that unit was also hacked.
While we await an official statement from Deloitte, what comes next is lots of lawsuits and even more settlements. According to the Guardian, on 27 April Deloitte hired US law firm Hogan Lovells on “special assignment” to review what it called “a possible cybersecurity incident”. The Washington-based firm has been retained to provide “legal advice and assistance to Deloitte LLP, the Deloitte Central Entities and other Deloitte Entities” about the potential fallout from the hack.
Let us close out the evening with this terrific interview of Greg Mannarino and Greg Hunter
(courtesy Greg hunter/USAWatchdog)
Fed Going to Kill Dollar – Gregory Mannarino
By Greg Hunter On September 24, 2017 In Market Analysis
By Greg Hunter’s USAWatchdog.com (Early Sunday Release)
Trader/analyst Gregory Mannarino says Fed Head Janet Yellen “lied” when she spoke last week about the “mystery” of not hitting the Fed’s inflation targets. Mannarino explains, “It’s no mystery. You have to choke or laugh or barf when you hear her say something like that, and no one checks her on that. It’s an absolute lie, an incredible lie . . . the economy is dead in the water. It’s Economics 101. That’s why she can’t create inflation. It’s no mystery. The cash isn’t moving. The cash is not moving because the economy is going nowhere. She can perpetuate the lie because she has managed to inflate the stock market. The average person looks at the stock market and says the stock market is going up. So, that means our economy is doing well. It’s an incredible thing, but it’s just not the truth. This is how they can twist people’s minds. By keeping the market elevated, it is an illusion. The illusion becomes real to the uninformed.”
Mannarino says rates are going higher, and that will be bad for house prices. Mannarino explains, “If Yellen is successful and the yield curve starts to normalize, because right now it’s flat, that would put pressure on housing, and cash would come out of housing. You would lose the wealth effect. You can get a selloff in bonds, a selloff in the stock market, and this could turn into something very, very ugly, which it’s going to do one way or the other. Again, if Janet Yellen is successful, the cost of money or the cost of cash will rise. What does that mean? That means the dollar, theoretically, should get stronger. Multinational companies’ earnings are going to suffer. That will put more pressure on the stock market. . . . It’s kind of unusual that the Fed is choosing right now to normalize their balance sheet. The Fed is talking about getting rid of those mortgage-backed securities right now at the top of a housing market bubble. They know it’s a bubble, and they re-inflated that bubble on purpose.”
Mannarino also warns that bills for storm damage and bankrupt states are piling up. U.S. territory Puerto Rico was destroyed by a hurricane and is bankrupt. States like Illinois, Pennsylvania and Ohio are also having debt problems. Mannarino contends, “This is how they are going to kill the currency. The Fed is going to be forced to print more cash out of thin air and loan them money, whatever it’s going to be, and then the currency dissolves. We’ve seen this before. . . . At some point, we are going to face an absolute and complete meltdown of the system. The debt based economic model is fraudulent. It’s a Ponzi scheme. The federal government is going to be asked to do something, and that will kill the currency, and we are going to get hyperinflation. That’s when the cash is going to start to move.”
In closing, Mannarino says, “The central banks are going to take everything. You will be a serf at some particular time, serving your masters like you do already. I think we are going to be experiencing a new middle age– period.”
Join Greg Hunter as he goes One-on-One with Gregory Mannarino, founder of TradersChoice.net.
I will see you TUESDAY night. HOWEVER I WILL BE AWAY FOR MOST OF THE DAY AND THUS I WILL BE PROBABLY LATE IN DELIVERING THE COMMENTARY AND I MAY MISS A FEW IMPORTANT DEVELOPMENTS