GOLD: $1284.45 DOWN $13.65
Silver: $16.79 DOWN 9 CENT(S)
Closing access prices:
Gold $1282.85
silver: $16.78
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: $1304.39 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $1295.15
PREMIUM FIRST FIX: $9.24 (premiums getting larger)
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
SECOND SHANGHAI GOLD FIX: $1300.85
NY GOLD PRICE AT THE EXACT SAME TIME: $1294.55
Premium of Shanghai 2nd fix/NY:$6.30
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
LONDON FIRST GOLD FIX: 5:30 am est $1291.30
NY PRICING AT THE EXACT SAME TIME: $1289.60 ???
LONDON SECOND GOLD FIX 10 AM: $1282.55
NY PRICING AT THE EXACT SAME TIME. 1283.40???
For comex gold:
SEPTEMBER/
NOTICES FILINGS TODAY FOR SEPT CONTRACT MONTH: 0 NOTICE(S) FOR nil OZ.
TOTAL NOTICES SO FAR: 93 FOR 9300 OZ (0.2892 TONNES)
For silver:
SEPTEMBER
78 NOTICES FILED TODAY FOR
390,000 OZ/
Total number of notices filed so far this month: 6,538 for 32,690,000 oz
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
end
Today Gold falls by $13.65 and yesterday by $6.95 and yet GLD rises by 8.57 tonnes????. Silver falls by 24 cents yesterday and today by 9 cents and yet it’s inventory remains constant???
these two vehicles are nothing but frauds. For many months a huge amount of gold inventory left the GLD. This was probably real physical inventory and that gold went to satisfy countries of eastern persuasion. Gold and silver are hugely backward in London and it is thus impossible for the crooks to add real physical inventory. Thus only paper obligations are added and when this blows up,(a physical default) the bang will be huge and heard around the globe.
Let us have a look at the data for today
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
In silver, the total open interest FELL BY ONLY 1026 contracts from 187,932 DOWN TO 186,906 WITH THE GOOD SIZED FALL IN PRICE THAT SILVER UNDERTOOK IN YESTERDAY’S TRADING (DOWN 24 CENTS ). AGAIN TODAY, IT SURE LOOKS LIKE WE GOT JUST A TINY AMOUNT OF BANKER SILVER SHORTS WERE ABLE TO COVER. THIS WEEK IS OPTIONS EXPIRY ON THE LONDON/OTC MARKET AND ALWAYS THEY RAID LIKE CLOCKWORK.
RESULT: A SMALL FALL IN OI COMEX WITH THE HUGE 24 CENT PRICE FALL. IT LOOKS LIKE WE HAD A TINY AMOUNT OF BANKER SHORTS COVERING. THE BANKERS AGAIN ORCHESTRATE ANOTHER RAID TODAY.
In ounces, the OI is still represented by just UNDER 1 BILLION oz i.e. 0.935 BILLION TO BE EXACT or 134% of annual global silver production (ex Russia & ex China).
FOR THE NEW FRONT MAY MONTH/ THEY FILED: 78 NOTICE(S) FOR 390,000 OZ OF SILVER
In gold, the open interest FELL BY A LARGE 8713 CONTRACTS WITH THE FALL in price of gold ($6.95 DROP) WITH YESTERDAY’S COMEX TRADING. The new OI for the gold complex rests at 549,637. WE ARE NOW IN THE MIDDLE OF OPTIONS EXPIRY WEEK SO IT IS NOT A SURPRISE THAT THE CROOKS CONTINUED WITH THEIR RAIDING. THERE IS NO DOUBT THAT THE RAID TODAY HAS THE OBJECT OF INTEREST BEING SILVER AND NOT GOLD AS WE STILL WITNESS STUBBORN LONGS REFUSE TO BUDGE FROM THEIR SILVER TREE.
Result: A LARGE SIZED DECREASE IN OI WITH THE GOOD SIZED FALL IN PRICE IN GOLD ($6.90).
we had: 0 notice(s) filed upon for NIL oz of gold.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
With respect to our two criminal funds, the GLD and the SLV:
GLD: WOW!!
Tonight , A HUGE CHANGE in gold inventory at the GLD: A DEPOSIT OF 8.57 TONNES WITH GOLD DOWN$13.65 TODAY
Inventory rests tonight: 864.65 tonnes.
SLV
Today: a no changes in inventory:
INVENTORY RESTS AT 326.757 MILLION OZ
end
.
First, here is an outline of what will be discussed tonight:
1. Today, we had the open interest in silver FELL BY ONLY 1026 contracts from 187,932 DOWN TO 186.906 (AND now A LITTLE FURTHER FROM THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) . AGAIN TODAY, IT SEEMS THAT A TINY FRACTION OF OUR BANKER SHORTS COVERED. THEY NEED TO COVER A MUCH HIGHER NUMBER WHEN RAIDS ARE ORCHESTRATED. SO THEY TRIED AGAIN TODAY.
RESULT: A SMALL SIZED DROP IN SILVER OI AT THE COMEX WITH THE GOOD SIZED RISE IN PRICE OF 24 CENTS IN YESTERDAY’S TRADING. ANOTHER RAID ORCHESTRATED FOR TODAY SEEMS TO HAVE FAILED IN SILVER.
(report Harvey)
.
2.a) The Shanghai and London gold fix report
(Harvey)
2 b) Gold/silver trading overnight Europe, Goldcore
(Mark O’Byrne/zerohedge
and in NY: Bloomberg
3. ASIAN AFFAIRS
i)Late TUESDAY night/WEDNESDAY morning: Shanghai closed UP 1.58 POINTS OR 0.05% / /Hang Sang CLOSED UP 129.42 POINTS OR 0.47%/ The Nikkei closed DOWN 63.14 POINTS OR 0.31%/Australia’s all ordinaires CLOSED DOWN 0.07%/Chinese yuan (ONSHORE) closed WELL DOWN at 6.6390/Oil DOWN to 51.90 dollars per barrel for WTI and 58.20 for Brent. Stocks in Europe OPENED GREEN. Offshore yuan trades 6.6427 yuan to the dollar vs 6.6390 for onshore yuan. NOW THE OFFSHORE MOVED MUCH WEAKER 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)North Korea
Trump says that he is prepared to use “devastating military option on North Korea
( zerohedge)
b) REPORT ON JAPAN
c) REPORT ON CHINA
4. EUROPEAN AFFAIRS
Germany
5. RUSSIAN AND MIDDLE EASTERN AFFAIRS
Iraqi Kurdistan
the fun begins as 92% voted in favour of independence. Now Iraqi troops have been sent to Kirkuk to prevent the Kurds from taking full control. Also Turkey and Iran are engaging in war games on the border with Iraq. Turkey is afraid that Kurdistan will morph into a huge Kurdistan encompassing the Kurds of Turkey, Iran and Syria.
( zerohedge)
6 .GLOBAL ISSUES
i)Canada
This is getting ugly. The USA slaps an initial 220% on financially strapped Bombardier who introduced a new C series jet which seems superior to jets produced by Boeing. Boeing claims that with discounts, the jet has been offered to Delta for 19 million dollars, something that Bombardier reported as absurd. Without the facts, the Commerce dept slapped a 220% tariff which will cause severe harm to Bombardier and will effect jobs in both Canada and Northern Ireland. This will also hurt NAFTA talks terribly.
( zerohedge)
Canada/
7. OIL ISSUES
8. EMERGING MARKET
9. PHYSICAL MARKETS
ii)Interesting article from London’s Financial times: Samson states that the USA dollar is no longer the dominant safe haven( Samson/London’s Financial Times/GATA)
iii)The ” king” of bitcoin…
( Bloomberg/GATA)
iv) Bitcoin soars back to above $4100 as the crooks have no way to short cryptos. The ECB admits that it has no power to regulate these vehicles. They can control gold and silver but have not figured out a way to control Bitcoin et al.
( zerohedge)
10. USA Stories
i)Trump’s support for Strange backfires as anti establishment candidate Judge Roy Moore wins Alabama by a landslide
( zero hedge)
i b) Surprisingly Trump is emboldened by the victory of anti establishment Moore even though it was not his pick. He has now gone nuclear on the NFL
ii)Yesterday we brought you the story that Hartford’s debt has been reduced to severe Junk (CC) and the city may enter bankruptcy proceedings shortly. Now we see that the state of Connecticut, will no doubt rise above New Jersey to become the second worst rating state in the union as they scramble to close a $3.5 billion budget shortfall as their fiscal crisis worsens
iii)This is a strange one: JPMorgan has committed fraud in their handles of an estate of Max Hopper, a former American Airlines executive who innovated the SABRE reservation system. Max had an estate of around 19 million dollars but the court verdict ordered JPMorgan to pay 4 billion dollars because of fraud and breach of duty..something that these guys have been doing in the precious metals market for years..( zerohedge)
v)Now that the repeal of Obamacare is off, we now witness 2018 premiums skyrocket. Now the big state of Florida sees that its premiums are surging by 45%
( zerohedge)
vi)Slight rise in durable goods orders after a big July collapse.
( zerohedge)
vii)Now Pending home sales plummet: basically the housing market is dead!
viii b)And this comment: the key is a loss of 1.5 trillion dollars over 10 years and this must be put into the budget resolution and it must pass in both the Senate and House( zerohedge)
x) We have outlined this to you on numerous occasions i.e. the dire shape that the Kentucky pension system is in.
Let us head over to the comex:
The total gold comex open interest FELL BY MORE THAN EXPECTED 8713 CONTRACTS DOWN to an OI level of 549,637 WITH THE FALL IN THE PRICE OF GOLD ($6.95 LOSS IN YESTERDAY’S TRADING).
Result: a LARGER SIZED open interest DECREASE WITH THE GOOD SIZED RISE IN THE PRICE OF GOLD ( $6.95.)
The next active contract month is Oct and here we saw a LOSS of 4827 contracts DOWN to 14,655.
The November contract saw A GAIN OF 293 contracts UP to 1131.
The very big active December contract month saw it’s OI LOSS OF 6620 contracts DOWN to 433,112.
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 LOSE 151 contacts DOWN to 88. We had 157 notices filed yesterday, so we again gained 6 contracts or an additional 30,000 oz will stand for delivery. This phenomenon has been happening in silver for the past 5 months whereby the amount standing increases on each and every delivery day. This queue jumping highlights the huge demand for silver that we have been witnessing around the globe. The next non active contract month for silver after September is October and here the OI LOST 73 contacts UP TO 1022. November saw a GAIN of 46 contract(s) and thus RISING TO 141. After November, the NEXT big active contract month is December and here the OI LOST 1827 contracts DOWN to 148,209 contracts.
We had 78 notice(s) filed for 390,000 oz for the SEPT. 2017 contract
VOLUMES: for the gold comex
ESTIMATED VOLUME TODAY: 371,945 CONTRACTS / EXCELLENT
YESTERDAY’S confirmed volume was 384,465 which is EXCELLENT
volumes on gold are STILL HIGHER THAN NORMAL!
Sept.27/2017.
Gold | Ounces |
Withdrawals from Dealers Inventory in oz | nil |
Withdrawals from Customer Inventory in oz |
nil oz
|
Deposits to the Dealer Inventory in oz | nil oz |
Deposits to the Customer Inventory, in oz |
nil oz
|
No of oz served (contracts) today |
0 notice(s)
NIL OZ
|
No of oz to be served (notices) |
484 contracts
(48,400 oz)
|
Total monthly oz gold served (contracts) so far this month |
93 notices
9300 oz
0.2892 tonnes
|
Total accumulative withdrawals of gold from the Dealers inventory this month | NIL oz |
Total accumulative withdrawal of gold from the Customer inventory this month | 39,990.7 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.
Silver | Ounces |
Withdrawals from Dealers Inventory | nil |
Withdrawals from Customer Inventory |
121,496.08 oz
Scotia
|
Deposits to the Dealer Inventory |
nil oz
|
Deposits to the Customer Inventory |
nil oz
|
No of oz served today (contracts) |
78 CONTRACT(S)
(390,000 OZ)
|
No of oz to be served (notices) |
10 contracts
(50,000 oz)
|
Total monthly oz silver served (contracts) | 6538 contracts (32,690,000 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 | 6,505,871.2 oz |
NPV for Sprott and Central Fund of Canada
Sprott’s hostile 3.1 billion bid to take over Central Fund of Canada
(courtesy Sprott/GATA)
Sprott makes hostile $3.1 billion bid for Central Fund of Canada
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
http://www.cbc.ca/news/canada/calgary/sprott-takeover-bid-central-fund-c…
Toronto-based Sprott Inc. said Wednesday it’s making an all-share hostile takeover bid worth $3.1 billion US for rival bullion holder Central Fund of Canada Ltd.
The money-management firm has filed an application with the Court of Queen’s Bench of Alberta seeking to allow shareholders of Calgary-based Central Fund to swap their shares for ones in a newly-formed trust that would be substantially similar to Sprott’s existing precious metal holding entities.
The company is going through the courts after its efforts to strike a friendly deal were rebuffed by the Spicer family that controls Central Fund, said Sprott spokesman Glen Williams.
“They weren’t interested in having those discussions,” Williams said.
Sprott is using the courts to try to give holders of the 252 million non-voting class A shares a say in takeover bids, which Central Fund explicitly states they have no right to participate in. That voting right is reserved for the 40,000 common shares outstanding, which the family of J.C. Stefan Spicer, chairman and CEO of Central Fund, control.
If successful through the courts, Sprott would then need the support of two-thirds of shareholder votes to close the takeover deal, but there’s no guarantee they will make it that far.
“It is unusual to go this route,” said Williams. “There’s no specific precedent where this has worked.”
Sprott did have success last year in taking over Central GoldTrust, a similar fund that was controlled by the Spicer family, after securing support from more than 96 percent of shareholder votes cast.
The firm says Central Fund’s shares are trading at a discount to net asset value and a takeover by Sprott could unlock US$304 million in shareholder value.
Central Fund did not have any immediate comment on the unsolicited offer. Williams said Sprott had not yet heard from Central Fund on the proposal but that some shareholders had already contacted them to voice their support.
Sprott’s existing precious metal holding companies are designed to allow investors to own gold and other metals without having to worry about taking care of the physical bullion.
end
And now the Gold inventory at the GLD
Sept 27/WOW!! WITH GOLD DOWN $13.25, WE HAD A HUGE 8.57 TONNES OF GOLD ADDED TO THE GLD/
Sept 26/no changes in gold inventory at the GLD/Inventory rests at 856.08 tonnes
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.
end
Now the SLV Inventory
Sept 27/STRANGE!! SILVER IS HIT FOR 24 CENTS YESTERDAY AND. 9 CENTS TODAY AND YET NO CHANGE IN SILVER INVENTORY/INVENTORY RESTS AT 326.757 MILLION OZ
Sept 26./no change in silver inventory at the SLV/.inventory rests at 326.757 million oz
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
Sept 27.2017:
-
Indicative gold forward offer rate for a 6 month duration
+ 1.35% -
+ 1.56%
end
Major gold/silver trading/commentaries for WEDNESDAY
GOLDCORE/BLOG/MARK O’BYRNE.
GOLD/SILVER
Financial Advice From Man Who Made $1+ Billion in 1929 – Importance Of Being Patient and “Sitting”
Editor Mark O’Byrne
– Listen to Jesse Livermore and ignore the noise of short term market movements, central bank waffle and daily headlines
– Stock and bond markets are overvalued but continue to climb… for now
– What goes up must come down and investors should diversify and rebalance portfolios despite market noise
– Behavioural biases currently drive markets, prompting legendary investors to be confused and opt out
– Lesson is to prepare portfolios for long-term and invest in assets that will act as hedge in next market correction or crash
– Gold performs well over the long-term and delivers to those “sitting” and being patient
When it comes to your investment portfolio it is harder than ever to sift through market and central bank noise and focus on the fundamental drivers and long-term strategy.
Take for example a quick glance at financial news pages this morning:
- A story about bitcoin’s rise from $200 in 2013 to $5000 just three weeks ago – a gain of 2,400%
- Fed rate hike odds in December have soared to 78% thanks to Yellen’s “noisy” comments yesterday
- Luxury homes in London’s best neighborhoods are set to rise by 20.3% over next five years – allegedly
- Warnings of supply gap in oil production next year
Meanwhile, we look at more quiet, conservative gold and it has varied no more than $200/oz over the last four years.
It can be difficult to correlate this with a background of markets that are teeming with behavioural biases. Market reactions are short-tempered thanks to this age of instant information… and disinformation.
Greed and fear become more exaggerated than ever and greed is currently dominant.
The most recent individual to get frustrated with this state of affairs is money manager Hugh Hendry. Hendry recently decided to close his hedge fund, after 15 years. Hendry joined the likes of Eric Mindich, Leland Lim and John Burbank all of whom have shuttered hedge funds this year.
Market frustrations make us want to jump on money making bandwagon
In his round of send-offs Hendry explained how frustrating he had found markets. By nearly every measure they are over-priced, but few seem to care.
Hendry told Bloomberg:
“To my great, great, great horror, I became deeply correlated to the travails of President Trump’s presidency and of course these geopolitical events, which were sparked off in the Korean peninsula.”
Markets are reacting to short-termisms and click-bait headlines.
Consider this: stocks, bonds and property prices are at all-time highs. They’re not alone, private equity and some collectibles (considered alternative assets) are also at all time highs.
But they keep on going.
Occasionally it can feel as though nothing will take the steam out of the sails of markets which by all measures should be dramatically faltering.
Momentum is a powerful thing … especially in the short term.
At the end of H1 2017 the S&P500, the Dow and Nasdaq Composite posted their biggest gains in recent years.
Stock prices fluctuate on a daily, monthly and even quarterly basis. These fluctuations often have very little to do with the fundamental value of the business.
Short-termism, speculation and stock buy backs are the main drivers of stocks today.
In 1960 the average period for holding a NYSE stock was eight years and four months. Today, according to Credit Suisse, the average period for holding a stock across the broader US stock market is four months.
We know from experience that this kind of trading behaviour and pricing activity cannot continue.
What goes up must come down. But obviously no-one knows when.
This is frustrating in this day and age. At a time when information is at my fingertips it can be infuriating to not have an answer.
But, we must be patient.
Importance of patience – a time-old skill
We were reminded of one of the greatest examples of investing with patience by Tim Price of Price Value International.
Price tells the story of Jesse Livermore, a legendary trader.
Livermore was extraordinary. Born in 1877, Livermore ran away from home as a child and soon began trading stocks.
By the time he was 20, he had already amassed a fortune of $3 million, more than $75 million in today’s money.
Livermore sold short, i.e. bet that stock prices would fall, just prior to the 1907 crash, as well as the 1929 crash.
His bets were so lucrative that, going into the Great Depression, Livermore had a fortune of more than $100 million, or about $1.4 billion today.
But Livermore wasn’t just great at making money from overheated markets. He was also a master of losing money.
This book is widely and rightly regarded as an investment classic. It is also crammed with valuable observations about the practice of speculation and successful trading.
Among them, the importance of being patient and disciplined:
“After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made big money for me. It was always my sitting.”
The success of long-term investing and damage of short-term reactions is not just anecdotal.
In its 2016 Quantitative Analysis of Investor Behaviour, US investment firm Dalbar found the leading cause of 20 years of diminished returns was investors’ own behaviour.
They tended to indulge in ‘panic selling, excessively exuberant buying and attempts at market timing’.
Time pressures of thinking
We shouldn’t be surprised that investors struggle to take a Jesse Livermore approach these days. Not only are we surrounded by instant news but we are also pressured into delivering regular results.
Hedge fund managers such as Hendry have to give their clients regular updates. All of us who hold investments with managers receive quarterly or annual reports. Money managers must report their results.
Of course, this is good for transparency but can you imagine how most people these days would feel if they thought money managers were telling them their investments hadn’t done very much? They would want to move their money, they’re not seeing much change which in today’s minds means their is little value.
This is why we like gold
For precisely this point, we like gold. It requires patience, over the long-term it likes to filter out the noise that comes from the likes of Trump tweets and pumped up stocks.
Gold has performed extremely well since 1999. During the tech-fuelled stock market collapse of 2000-2003 gold stood strong. It made further gains during the disaster of the Iraq war, further boosted by the likes of Enron-esque scandals.
Following the financial crisis in 2007/ 2008, it posted some of its biggest gains.
Not bad for something that has just sat in the background for the last near-twenty years.
Regardless of how much gold you choose to hold in your portfolio the main message is clear: do not manage your portfolio on a daily basis, consider it as something which requires care over the long-term. This is why gold serves a portfolio so well.
This is something those who are just beginning to consider their long-term finances should seriously pay attention to.
Millennials take note
Earlier this year The World Gold Council’s John Reade, chief market strategist and head of research (and former managing partner at Paulson & Co.) spoke about the need for millennials to consider not only long-term investing and diversification but how gold played a key role.
“Millennials are an interesting case study; they are going to be working and investing a long time so you need to think about more than just the short term … Gold is a great diversifier for a portfolio but it is more than that. It is a source of returns that is commiserate with equities over the last 10, 20 years.”
Investing in gold is a commitment for the long-term. In order to enjoy long-term investing, participants must have both patience and an ability to tolerate periods of less-than-desireable performance.
It is vital millennials consider the performance of an asset over a long-period of time, as they are just starting to build their portfolios and need to prepare for the next 20, 30, 40 years or more.
The most prominent financial event in millennial’s memory is the collapse of Lehman brothers. Those who invested in gold before or soon after the financial crash have fared well.
Gold is the true reward of patient investing
Investing expert Warren Buffet famously stated that his preferred time to hold a stock is “forever.”
We know that equities are different to gold bullion but there is some transferable knowledge here.
The precious metal has delivered solid returns on a long-term basis. Investors must not be put off by the weaker performance of the last four years. Instead they should ask what has driven the price over the last ten, twenty and forty years since the end of the Gold Standard.
Those long-term drivers have not suddenly disappeared. Currencies continue to be devalued, savers continue to earn very little on their savings and uncertainty is ever-growing in the political and economic worlds.
Gold is a proven hedge against instability and market turmoil. In recent years it has gained in popularity thanks to low interest rates and financial uncertainties.
In the long-term, holding on to gold has been shown to be quite lucrative for many investors. But the key is a long-term focus, patience and “sitting” …
News and Commentary
Gold prices steady after Hawkish Yellen comments (Reuters.com)
Stocks Mixed in Asia as Consolidation Continues (Bloomberg.com)
Hedge fund Paulson & Co calls for joint shareholder action vs gold miners (Reuters.com)
Billionaire John Paulson Targets Gold CEOs Over Pay (Bloomberg.com)
Gold settles lower after back-to-back daily gains (MarketWatch.com)
Bullion surges as North Korea tensions resurface. Source: Bloomberg
U.S. Dollar No Longer the Dominant ‘Haven’ Currency – BOAML (Gata.org)
Thoughts on global gold mine supply (Gold.org)
If China links oil to gold, the world will change (Plata.com)
What Would Happen If the Moon Was Made of Gold? (HuffingtonPost.com)
Gold Prices (LBMA AM)
27 Sep: USD 1,291.30, GBP 963.83 & EUR 1,099.54 per ounce
26 Sep: USD 1,306.90, GBP 969.59 & EUR 1,105.38 per ounce
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
Silver Prices (LBMA)
27 Sep: USD 16.89, GBP 12.58 & EUR 14.38 per ounce
26 Sep: USD 17.01, GBP 12.67 & EUR 14.43 per ounce
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
Recent Market Updates
– “Gold prices to reach $1,400 before the end of the year” – GoldCore
– Commodities King Gartman Says Gold Soon Reach $1,400 As Drums of War Grow Louder
– 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”
Interviewed by The Daily Coin, Turk describes new mechanism for monetizing gold
Submitted by cpowell on Tue, 2017-09-26 13:31. Section: Daily Dispatches
9:30a ET Tuesday, September 26, 2017
Dear Friend of GATA and Gold:
GoldMoney founder James Turk, interviewed by The Daily Coin’s Rory Hall, describes a new mechanism GoldMoney is offering by which gold and silver owners can monetize their gold by lending and borrowing it while avoiding the banking system. The interview is headlined “James Turk: Gold and Silver Solutions to Monetary Madness” and it’s posted at The Daily Coin here:
http://thedailycoin.org/2017/09/25/james-turk-gold-and-silver-solutions-…
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
END
Interesting article from London’s Financial times: Samson states that the USA dollar is no longer the dominant safe haven
(courtesy Samson/London’s Financial Times/GATA)
U.S. dollar no longer the dominant ‘haven’ currency, analysts say
Submitted by cpowell on Tue, 2017-09-26 19:43. Section: Daily Dispatches
By Adam Samson
Financial Times, London
Tuesday, September 26, 2017
Has the king of currencies been dethroned?
The dollar is no longer the catch-all haven currency of the past.
Thank “idiosyncratic risks,” say analysts at Bank of America Merrill Lynch.
Adarsh Sinha, a strategist at the U.S. investment bank, crunched the numbers and found that the greenback hasn’t really been “safe” since 2014. It has tended to depreciate against most of the major currencies during nervous episodes, he notes.
“Perhaps unsurprisingly, this coincided with the end of Fed [quantitative easing] and the emergence of more aggressive easing by the European Central Bank and Bank of Japan,” said Mr Sinha.
An analysis from SEB yields a similar result, showing that the buck tends to correlate positively with the S&P 500, the stock barometer that provides something of a gauge for risk appetite, except during times of exceptional financial stress. …
… For the remainder of the report:
https://www.ft.com/content/02793986-463c-3106-89ea-9e903fad2a5d
END
The ” king” of bitcoin…
(courtesy Bloomberg/GATA)
Maybe they really do ring a bell at the top
Submitted by cpowell on Tue, 2017-09-26 23:37. Section: Daily Dispatches
A Crypto Fund King Says Bitcoin Will Be the Biggest Bubble Ever
By Erik Schatzker
Bloomberg News
Tuesday, September 26, 2017
Mike Novogratz is reinventing himself as the king of bitcoin.
The swaggering macro manager who flamed out at Fortress Investment Group is starting a $500 million hedge fund to invest in cryptocurrencies, initial coin offerings, and related companies. Novogratz will put up $150 million of his own money and plans to raise $350 million more by January, mainly from family offices, wealthy individuals, and fellow hedge fund managers, said a person familiar with his plans.
At that size, the Galaxy Digital Assets Fund would be the biggest of its kind and signal a growing acceptance of cryptocurrencies such as bitcoin and ether as legitimate investments. For Novogratz, 52, the fund marks a comeback to professional money management after humbling losses at Fortress and almost two years of self-imposed exile from Wall Street.
Novogratz, in an interview with Bloomberg Television, declined to confirm or deny that he’s raising a fund, citing regulatory constraints. He did talk at length about his recent experience with digital assets and why he’s eager to trade them.
“This is going to be the largest bubble of our lifetimes,” Novogratz said. “Prices are going to get way ahead of where they should be. You can make a whole lot of money on the way up, and we plan on it.” …
… For the remainder of the report:
https://www.bloomberg.com/news/articles/2017-09-26/mike-novogratz-is-set…
end
Bitcoin soars back to above $4100 as the crooks have no way to short cryptos. The ECB admits that it has no power to regulate these vehicles. They can control gold and silver but have not figured out a way to control Bitcoin et al.
(courtesy zerohedge)
Bitcoin Soars Back Above $4100 As ECB Admits “No Power To Regulate Cryptocurrencies”
Cryptocurrencies are extending their post-China-crackdown gains, with Bitcoin spiking back above $4100 this morning. A number of catalysts have been posited, from chatter of Mike Novogratz new fund to talk of Japan’s shift to virtual currency before the Olympics in 2020. However, most chatter revolves around Mario Draghi’s admission that The ECB is powerless to regulate or prohibit cryptocurrencies.
Bitcoin is back at key support/resistance…
In fact, most of the crypto space is higher this morning…
As CoinTelegraph reports, Mario Draghi, the erstwhile president of the European Central Bank (ECB) made some startling comments during his presentation yesterday at the Hearing of the Committee on Economic and Monetary Affairs.
When asked about cryptocurrency regulations or bans, similar to the political decisions the Chinese central government has enforced, Draghi made it clear that there is no way to ban Bitcoin, or to even regulate it, saying:
“It would actually not be in our powers to prohibit and regulate them. We have to ask what effects cryptocurrencies have on the economy.”
He added that they are still far too immature to be considered a viable payment methodology – a conclusion that was reached by the ECB in tandem with the Central Bank of Japan last week.
Additionally, banks in Japan are considering creating a digital currency, the J-Coin, intended to eliminate cash as a payment option. CoinTelegraph reports that the news broke through an article indicating that the coin is being planned with the blessing of financial regulators for before the 2020 Olympic Games in Tokyo and is intended to streamline the financial system.
Recently, Japan has once again become the largest Bitcoin exchange market with 50.75 percent market share of the global Bitcoin exchange market.
But Japan is currently functioning as a 70 percent cash economy – a figure that by far exceeds most developed nations where digital transactions have taken the place of cash. These cash transactions create far more cost in the financial world than digital transactions.
The J-Coin is intended to function in tandem with the Yen, rather than replacing it. The coin would be exchanged at a one-to-one ratio. The service for the coin would be offered freely but would be a means of tracking transactions that is far more complex in a cash-based society.
The coin will likely see release in the coming years, though the infrastructure of the system is not yet clear. It may be based on Blockchain technology, but the specifics are as yet unreleased. Recent reports from the Bank of Japan indicate that it does not consider Blockchain technology ‘mature’ enough to handle transactions.
The suggestion of a government cryptocurrency falls in line with the idea that governments around the world are seeking to start their own proprietary cryptocurrencies.
end
Maybe they should target the manipulation by the banks and the silence by CEO’s of this manipulation.
(courtesy Bloomberg)
Billionaire John Paulson Targets Gold CEOs Over Pay
By Anders Melin, Danielle Bochove, and Luzi- Ann Javier
September 26, 2017, 2:30 PM EDT
His hedge fund firm leads formation of shareholder council
Gold stocks have underperformed spot price of metal since 2010
Billionaire John Paulson is building a coalition of major investors in some of the world’s top gold producers to curb years of “value destruction” and excessive executive compensation in the industry.
“The days of CEOs getting rich while shareholders lose has got to end,” Paulson said Tuesday in an emailed statement ahead of a presentation by Paulson & Co. at the Denver Gold Forum. “Management must be accountable.”
The group, to be named the Shareholder’s Gold Council, aims to unify and amplify the voices of institutional investors on matters including board appointments, pay plans and merger activity, said Marcelo Kim, a partner at the hedge fund firm who oversees investments in natural resources.
“Returns have been dreadful,” Kim said in a phone interview. “If we get enough investors on board, these companies won’t have any other choice but to listen to us.”
Shares Slump
Shares of 15 gold miners tracked by Bloomberg Intelligence, led by Yamana Gold Inc. and Kinross Gold Corp., have slumped 59 percent since the end of 2010, compared with a slide of 8.5 percent for the precious metal. Several producers poured money into new mines earlier this decade, just as gold prices began to fall, leaving them larded with debt.
Companies in the industry have incurred $85 billion of write-offs since 2010, much of it attributable to ill- advised mergers, while still richly rewarding chief executive officers, according to Paulson & Co.’s presentation. A lack of engagement between boards and investors, and the absence of activists, allowed the companies to do business this way, it said.
The net debt of big mining companies tracked by Bloomberg Intelligence surged almost sevenfold over four years to a record $33.2 billion in 2014, fueled by capital spending.
Paulson & Co. has been in talks with Tocqueville Asset Management LP about its plans for the Shareholder’s Gold Council, Kim said. Vanguard Group Inc., BlackRock Inc., State Street Corp. and Van Eck Associates Corp. are among other large investors in several of the mining companies mentioned in the presentation.
The industry is ripe for this kind of oversight because it’s relatively small and most of the outstanding shares are held by a limited number of investors, Kim said. The group will function much like proxy adviser Institutional Shareholder Services Inc., making recommendations on voting matters such as compensation and the appointment of board members.
Paulson, 61, started a fund that invested in mining companies and bullion-related derivatives in January 2010 with about $250 million of his own money, betting that prices would rise amid unprecedented monetary stimulus. The fund jumped 35 percent in its first year, but then posted losses in some subsequent years after gold peaked in 2011.
— With assistance by Katherine Burton
Your early WEDNESDAY 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 DOWN 63.14 POINTS OR 0.31% /USA: YEN RISES TO 112.96
3. Europe stocks OPENED IN THE GREEN ( /USA dollar index RISES TO 93.43 /Euro DOWN to 1.1737
3b Japan 10 year bond yield: RISES TO -+.059%/ 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:: 51,90 and Brent: 58.20
3f Gold DOWN/Yen DOWN
3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“HELICOPTER MONEY” OFF THE TABLE FOR NOW /REVERSE OPERATION TWIST ON THE BONDS: PURCHASE OF LONG BONDS AND SELLING THE SHORT END
Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.
3h Oil DOWN for WTI and DOWN for Brent this morning
3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO +.467%/Italian 10 yr bond yield UP to 2.149%
3j Greek 10 year bond yield RISES TO : 5.775???
3k Gold at $1289.90 silver at:16.86 (8:15 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50
3l USA vs Russian rouble; (Russian rouble DOWN 36/100 in roubles/dollar) 58.19-
3m oil into the 51 dollar handle for WTI and 58 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 112.96 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 0.9747 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1440 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.
3p BRITAIN VOTES AFFIRMATIVE BREXIT/LOWER PARLIAMENT APPROVES BREXIT COMMENCEMENT/ARTICLE 50 COMMENCES MARCH 29/2017
3r the 10 Year German bund now POSITIVE territory with the 10 year RISING to +0.467%
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 2.289% early this morning. Thirty year rate at 2.8293% /
5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.
(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)
Dollar Surges, Bonds Dump Ahead Of Trump Tax Plan
S&P futures are set for a higher open (+ 0.1%) despite the expected hit to the Dow from Nike which is down over 3% on unexpectedly poor revenue growth, as European stocks gain while Asian shares dropped. Like yesterday when the big story was the jump in the USD ahead of Yellen’s (rather hawkish) speech, so today the greenback’s levitation has continued, this time propelled by today’s unveiling of Trump’s tax plan.
On the eve of its unveiling, Trump said lawmakers should expect a “very, very powerful document” that would cut taxes “tremendously” for the middle class. If passed, the plan would be Trump’s first significant legislative win since taking office in January. ”The idea that Trump could be reaching across the aisle, talking about tax cuts to middle and low income households, if it comes to pass, we are talking a pretty material fiscal boost to the U.S. economy. This sort of easy fiscal policy is why the markets are reacting the way they have,” said Mark Dowding, co-head of investment grade at BlueBay Asset Management.
Based on leaks to date, what we know is that Trump will unveil a 35% individual tax rate (although Congress will decide whether to create a higher bracket), and the rate on corporations will be set at 20%, down from the current 35%, while the standard deduction will double. Trump’s “basic idea about tax reform should lead to higher Treasury yields,” supportive of the dollar, said Brown Brothers Harriman fx strategist Masashi Murata.” He was right: the Bloomberg Dollar Spot Index rose to the highest level since Aug. 18 and Treasury yields jumped to the highest in two months. Broad dollar strength was fueled by Janet Yellen’s hawkish tone in which she cautioned against tightening “too gradually” which sent December rate hike odds to 70%…
… and expectations for U.S. tax reforms dominated currency trends Wednesday, with Asia’s emerging-market currencies falling while the yen took the biggest hit among peers. The Australian and New Zealand dollars also declined, while the euro extended losses below $1.18, as the pound briefly fell below $1.34 amid lingering Brexit uncertainties.
“Yellen’s comments gave more certainty about another rate hike by the end of the year,” said DZ Bank rates strategist Daniel Lenz. “Further details of Trump’s tax plans and whether this proceeds smoothly will be of interest — it should be a boost to the economy and mean a generally higher bond yield environment.”
Stocks in Europe climbed, with all major country benchmarks in the green, helped by the morning declines in the EUR and GBP against the USD. Cyclical sectors that had surged on the prospect of “Trumpflation” resulting from the president’s pro-growth campaign pledges were the day’s top gainers, with miners up 0.9 percent. Financials outperformed, as Standard Charted and RBS have received broker upgrades, with the sector further benefiting from the increased chance of a December move from the FOMC.
Asian equity markets were mostly lower amid a lack of catalysts as the MSCI’s index of Asia-Pacific shares outside Japan dipped 0.1 percent. The ASX 200 (-0.1%) was negative amid weakness seen in commodity stocks and gold miners after the precious metal slipped below USD 1300/oz, while Nikkei 225 (-0.3%) failed to benefit from a weaker currency and was pressured on mass ex-dividends with over 120 stocks in Nikkei 225 and over 1000 in the TOPIX trading ex-dividend today. Chinese markets outperformed their peers with Hang Seng (+0.5%) and Shanghai Comp. (+0.05%) kept afloat after firmer Chinese Industrial Profit growt.
China’s central bank set its daily currency fixing stronger than expected on Wednesday, a move interpreted by traders as a show of support for the yuan before the start of a week-long holiday. As a result, the onshore yuan strengthened for the first time in three sessions, although the offshore Yuan since pared all gains and was trading at 6.64 at last check. China’s seven-day repo rate dropped 3bps to 3.12%; while overnight funding cost rises 1bp to 2.90%. In offshore markets,the overnight CNH Hibor rose 38bps to 2.21% while the HKD strengthend 0.03% to 7.8096 per dollar, paring earlier gain of as much as 0.09%.
Meanwhile, Treasury 10-year yields jumped to an eight-week peak, while 2-year hit highest since 2008, driving up those on bunds and gilts as well. Ten-year TSY yields climbed seven basis points to an eight-week high of 2.30 percent. Two-year U.S. Treasury yields touched their highest since 2008 after Fed Chair Janet Yellen said on Tuesday it would be “imprudent” to keep rates on hold until U.S. inflation hit 2 percent. Bunds dropped from the open as the Treasury sell-off, which started late on Teusday on reports of Trump tax plan, gained momentum with various factors contributing, before 10y yields stalled just shy of 2.30%. According to Bloomberg, block sellers were seen in bund futures add pressure as stops are run. Weakness in JGBs added to the rates selling pressure.
WTI crude slid a second day, but remained close to $52 a barrel after data showed U.S. stockpiles dwindled last week. Safe havens including gold, the yen and the Swiss franc extended declines as North Korea dropped off the radar for the time being. Copper rose for the first day in six as traders closed positions before the quarter-end and a holiday in China. The industrial metal rose 1.1 percent to $6,485 a ton. “You see not only that demand in China is doing well, but also that in the longer term demand will increase even more from other sectors, like the electric vehicle industry. At this stage the fundamentals are very supportive of stronger prices,” ABN Amro analyst Casper Burgering said.
Market Snapshot
- S&P 500 futures up 0.1% to 2,499.00
- STOXX Europe 600 up 0.3% to 385.10
- MSCI Asia down 0.4% to 160.55
- MSCI Asia ex Japan down 0.02% to 528.70
- Nikkei down 0.3% to 20,267.05
- Topix down 0.5% to 1,664.43
- Hang Seng Index up 0.5% to 27,642.43
- Shanghai Composite up 0.05% to 3,345.27
- Sensex down 0.7% to 31,367.47
- Australia S&P/ASX 200 down 0.1% to 5,664.28
- Kospi down 0.07% to 2,372.57
- German 10Y yield rose 4.9 bps to 0.457%
- Euro down 0.5% to $1.1735
- Brent Futures down 0.2% to $58.31/bbl
- Italian 10Y yield rose 1.6 bps to 1.83%
- Spanish 10Y yield rose 0.5 bps to 1.617%
- Brent Futures down 0.2% to $58.31/bbl
- Gold spot down 0.2% to $1,290.95
- U.S. Dollar Index up 0.6% to 93.48
Bulletin Headline Summary from Ransquawk
- European equities trade marginally positive, as financials out-perform
- The greenback continues to gain ground against its major pairs, with pricing now at 80% for December
- Looking ahead, highlights include US durables, Pending Home Sales, DoE, RBNZ rate decision, President Trump on Tax and further central bank speak
Top Overnight News
- President Donald Trump and Republican leaders will launch an urgent effort to get a major legislative win this year, announcing a long-awaited tax plan that will immediately set off a fight over how much top earners should pay
- Siemens AG and Alstom SA agreed to merge their rail businesses in a deal that brings together former arch-rivals from Germany and France to create a European transportation giant aimed at countering competition from China
- The U.S. Commerce Department slapped import duties of 220 percent on the C Series plane Tuesday, citing improper subsidies after a complaint by Boeing Co.The preliminary determination threatens to upend Bombardier’s planned deliveries next year to Delta Air Lines Inc., which ordered at least 75 jets with a list value of more than $5 billion
- Volkswagen AG’s Scania unit was fined 880.5 million euros ($1.03 billion) by the European Union for price-fixing, a year after other members of a truck cartel reached a record settlement with regulators
- Federal Reserve Chair Janet Yellen said gradually raising interest rates is the most appropriate policy approach amid higher uncertainty about inflation, reinforcing the U.S. central bank’s forecast for another hike this year
- China’s central bank set its daily currency fixing stronger than expected on Wednesday, a move interpreted by traders as a show of support for the yuan before the start of a week-long holiday
- The Brexit bill may have just gotten even bigger. As the U.K. and EU haggle over the size of Britain’s exit payment, documents show pension costs for EU officials rose more than 5% in 2016. Higher pension costs will increase what the EU thinks the U.K. should pay
- Tokyo Governor Yuriko Koike launched a new national party, giving her less than a month to pull together a political force capable of repeating local election victories over PM Shinzo Abe on the national stage
- Standard Chartered, CaixaBank Lead Europe Banks Rally on Yellen
- Morneau Won’t Budge on Deficits Despite Canada’s Red-Hot Growth
- Manafort’s Offer to Russian Is Said to Be Tied to Disputed Deal
- Nike Declines After Athletic Giant Gives Bleak Outlook for U.S.
- Micron Sees More Good Times Ahead in Memory Chip Market
- Chip Equipment Stocks May Move After ‘Big’ Micron Capex Forecast
- Cintas FY Revenue View Midpoint Beats Est.; Shares Rise 4%
- Gas Flow From Tamar Offshore Reserve Restarted
- Alstom, Siemens Forget High-Speed-Rail Feud Amid Asian Onslaught
Asia markets were mixed amid a lack of catalysts and after similar indecisiveness on Wall St. where the DJIA posted a 4th consecutive loss and the Nasdaq outperformed as tech rebounded from its worst performance in over a month. ASX 200 (-0.1%) was negative amid weakness seen in commodity stocks and gold miners after the precious metal slipped below USD 1300/oz, while Nikkei 225 (-0.3%) failed to benefit from a weaker currency and was pressured on mass ex-dividends with over 120 stocks in Nikkei 225 and over 1000 in the TOPIX trading ex-dividend today. Chinese markets outperformed their peers with Hang Seng (+0.5%) and Shanghai Comp. (+0.05%) kept afloat after firmer Chinese Industrial Profit growth, although upside was limited amid the absence of open market operations by the PBoC. Finally, 10yr JGBs were subdued and tracked the losses in USTs, as a risk averse tone in Japan and BoJ Rinban operation for JPY 880bln of JGBs failed to inspire demand. Chinese Industrial Profits (Aug) Y/Y 24.0% (Prev. 16.5%). PBoC refrained from open markets operations today. PBoC set CNY mid-point at 6.6192 (Prev. 6.6076)
Top Asian News
- Singapore Home Prices Have Bottomed, Hong Kong ‘Crazy,’ BNP Says
- No Volatility Here: How Taiwan’s Currency Became World’s Dullest
- The Mystery of the $1.8 Billion Korean Bond Selloff
- China Iron Rises From June-Low as Mills Seek Supply Before Break
- Indonesia Supreme Court Rejects Semen Indonesia’s Review Request
European equities trade in marginal positive territory with US futures pointing to a recovery over the pond, while European bourses have been helped by the morning struggles for EUR & GBP. Financials out-perform, as Standard Charted and RBS have received broker upgrades, with the sector further benefiting from the increased chance of a December move from the FOMC. Fixed income markets struggled overnight, as the pricing of tightening from the Fed was evident. Bunds have found some support around the 161.16 level, although any further hawkish follow-up from today’s Fed speakers could act as a further drag on prices. In the periphery, spreads are modestly tighter, although price action could become increasingly focused on the fallout of the upcoming Catalonian independence referendum. The headline issuance will come from the US today, with 2y FRN and 5y note auctions expected.
Top European News
- Cryptocurrency Derivatives? You Bet. This Trader Has 295% Return
- Sabadell, CaixaBank Share Rise as Catalan Concerns Subside
- Carillion Surges on M&A Speculation, Short Interest Elevated
- Italian Manufacturing Confidence Rises to Highest in 10 Years
- Cerberus’s Bawag Plans the First Austrian Bank IPO in 12 Years
In currencies, a bullish greenback has dictated FX price action following Yellen’s hawkish skew, stretched into early European trade, as some key levels have been broken. USD/JPY trades through September’s highs, finding some resistance curtesy of a 2017 trendline, alongside the touted 112.70 – 113.00 range, with heavy stops called around these levels. EUR/USD has also suffered, now in August’s range looking back towards 1.17. The NZ rate decision will be expected on the NY closing bell, with expectations on the RBNZ to remain on hold. The bank may reiterate comments that its monetary policy is to remain accommodative for a considerable time. Kiwi trade remains with concern of the election results, as a coalition is yet to be formed and New Zealand’s kingmaker party has stated that they will not decide on a partner before Oct. 7. Canadian Finance Minister Morneau said he sees higher rates ahead given where the economy is at but noted rates are still historically low, while he added the Canadian economy can do well with the currency at current levels.
In commodities, WTI crude futures have seen a modest pullback this morning from the advances seen in the wake of last night’s API draw with sentiment turning this morning amid reports Nigeria’s NNPC expects their force majeure on Bonny Light to be lifted ‘very soon’. Precious metals have weakened, as money moves from risk off flow. Gold has broken through the month’s lows, through 1288.00 and the previous heavy resistance seen through the year. Russian energy minister Novak says will examine extending OPEC oil output pact beyond March if makes sense, according to Die Presse.
Looking at the day ahead, there is durable and capital goods orders for August, pending home sales and MBA mortgage applications. Onto other events, we have three more Fed speakers, including: Bullard, Brainard and Rosengren. Further, President Trump will speak at Indiana on tax reform. Elsewhere, France’s finance minister is due to present the 2018 budget and outlook for the next 5 years.
US Event calendar:
- 7am: MBA Mortgage Applications, prior -9.7%
- 8:30am: Durable Goods Orders, est. 1.0%, prior -6.8%; Durables Ex Transportation, est. 0.2%, prior 0.6%
- 8:30am: Cap Goods Orders Nondef Ex Air, est. 0.3%, prior 1.0%; Cap Goods Ship Nondef Ex Air, est. 0.1%, prior 1.2%
- 10am: Pending Home Sales MoM, est. -0.5%, prior -0.8%; NSA YoY, est. -0.5%, prior -0.5%
Fed speakers:
- 9:15am: Fed’s Kashkari Speaks at Higher Education Event
- 1:30pm: Fed’s Bullard Speaks on Economy and Monetary Policy
- 2pm: Fed’s Brainard Speaks at Minority Banker Forum
- 7pm: Fed’s Rosengren to Speak to Money Marketeers in New York
DB’s Jim Reid concludes the overnight wrap.
The main things to discuss today are Yellen and Macron’s speeches yesterday and the fact that we should get a bit more info about the next steps towards any hopes of Trump’s tax plans surfacing.
Firstly, Mrs Yellen’s speech on inflation and monetary policy had a few mixed messages, but the bond markets seemed to take a slightly hawkish bias from it. Yellen repeated her view that the current low inflation likely reflects many factors, some of which are temporary and some may be structural such as underlying changes in firms and consumer behaviour as well as the growing importance of global supply chains and online shopping. Notably, she suggested the Fed “may have misjudged the strength of the labour market, the degree to which longer-run inflation expectations are consistent with our inflation objectives”. In terms of what this means for rates, she cautioned the Fed “should be wary of wary of moving too gradually”, in part given the possibility that the labour market could overheat and create inflationary problems down the track. Conversely, “persistently easy monetary policy might also eventually lead to increased leverage and other developments”. For these reasons, she noted that “it would be imprudent to keep monetary policy on hold until inflation is back to 2%”. Nonetheless, she conceded the Fed will stay flexible, noting we “must be ready to adjust our assessment of economic conditions and outlook when new data warrant it”. The probability of a December rate hike (per Bloomberg) has now increased 3.4ppt to 66.6%.
Staying in the US, President Trump is expected to speak at Indiana today (5pm local time / EDT) on tax reforms, although it’s unclear what level of details will emerge. Bloomberg reports the tax framework could include: 1) cutting the corporate tax rate to 20% (from 35% existing) with businesses allowed to immediately write off their capex for five years, 2) cut the top individual tax rate to 35% (from 39.6% existing), with other tax brackets at 12% and 25%, 3) for companies looking to repatriate profits back to US, there will be a one-time tax, but the rate is unclear and 4) for pass-through entities (eg: partnerships and limited liability companies), their tax rate will be capped at 25%. We will wait and see the exact details, although a reminder that DB’s Brett Ryan’s “A primer on tax reform and the upcoming budget debate”, showed that getting tax reforms implemented will not be easy.
Moving on now to Macron’s vision for a “profound transformation” of the EU. At a high level, he said “Europe needs to be an economic and monetary power” that could rival China and US and that the “Europe we know (today) is too weak, too slow, too ineffective”. Further, time was running out to counter the rise of far-right nationalism and “give Europe back to its citizens”. In his one hour and 40 minutes speech, he has outlined a range of proposals, including: the need for a common EU budget and finance minister, common EU policies on defence, asylum and corporate tax rates, as well as the formation of European universities, a digital protection agency, border police, civil protection force as well as a common military intervention force. Notably, Macron has acknowledged that his vision will require support from Mrs Merkel, which will be more challenging post the election result.
Thus far, responses have been somewhat mixed. The EC President Juncker said “Europe requires courage” and “we now need a closely united, stronger and democratic Europe” and Germany’s Greens co-leader Cem Oezdemir said it was a ‘strong speech” and “now need close collaboration with Paris”. On the flip side, Hans Michelbach (a member of Merkel’s parliamentary caucus) said Macron’s proposals were “unsuited to moving Europe forward”. Elsewhere, Czech’s ANO party leader Andrej Babis said “all these proposals…all of this further integration…Juncker and Macron should think of why Brexit happened”.
Moving on to another hot topic at the moment, overnight, President Trump has reiterated that “we’re totally prepared for…military option (on North Korea)… but (it’s) not a preferred option”. Elsewhere in the Asia session China’s August industrial profits grew 24% yoy (vs. 16.5% previous) – the most in four years, with statistics officials attributing the growth to faster producer price inflation and lower costs. Asian markets are trading a bit mixed, as we type, the Nikkei (-0.29%) and ASX 200 (-0.34%) are down slightly, the Kospi is broadly flat, while the Hang Seng (+0.50%) and CSI 300 (+0.07%) is marginally higher.
Turning to market performance yesterday now. US bourses were little changed with the S&P (+0.01%) and Nasdaq (+0.15%) up slightly, while the Dow dipped 0.05%. Within the S&P, tech stocks partly recovered (+0.40%) from yesterday’s sell off. Elsewhere, the real estate and consumer staples sector advanced slightly, but other sectors were all in the red. European markets were mixed and also little changed, with the Stoxx 600 (+0.03%) and DAX (+0.08%) marginally higher, while the FTSE 100 dipped 0.21%.
Over in government bonds, core bond yields were slightly higher while peripherals outperformed, leading to a small reversal of Monday’s trend. At the 10y part of the curve, core bond yields were c1bp higher (UST +1.6bp, Bunds +0.8bp, OATs +0.6bp) but changes at the 2y maturities were mixed but little changed. Elsewhere, peripherals have outperformed at the 10y part of the curve, with Portugal (2Y: +1bp; 10Y: -4bp) and Spanish (2Y: unch; 10Y: -2bp) bond yields down modestly.
Turning to currencies, the EURUSD weakened 0.46% and is now down c2% from earlier in the month. The US dollar index strengthened 0.34% following Yellen’s speech, while GBPUSD was broadly flat. In commodities, WTI oil dipped 0.65% after stronger gains on the day before following reports that Turkey may restrict Kurdish oil exports that passes through its territory. Elsewhere, precious metals were modestly lower (Gold -1.28%; Silver -2.12%), while other base metals are mixed but little changed this morning (Copper -0.08%; Aluminium -0.15%; Zinc +0.47%).
Away from markets now and onto Brexit. The EC President Donald Tusk met with UK PM Theresa May yesterday and noted that there is “not sufficient progress yet” on Brexit talks and that PM May’s concessions doesn’t go far enough, noting the “philosophy of having a cake and eating it is finally coming to an end”. Elsewhere, Bloomberg reports that sources familiar to the Irish government’s preparation for Brexit expect the post Brexit transition period to extend beyond two years (flagged by PM May) to as much as five.
Over in the US, final efforts to repeal Obamacare has effectively ceased for now with Senator Collins of Maine also opposing the change. Co-sponsors for the health bill Bill Cassidy and Lindsey Graham said “we don’t have the votes (for a repeal)” but remained hopeful, noting “we’re coming back to this after taxes (reform).”
Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the Richmond Fed manufacturing index for September was above markets’ expectations at 19 (vs. 13 expected) and now back at its high for the year with improvements in both the shipments and new orders index. The Conference board consumer confidence index was a touch lower than expected at 119.8 (vs. 120), although the weakness is in the context of a downward revision (-2.5pt) to the prior month’s reading. Elsewhere, new home sales fell 3.4% mom in August (560k vs. 585k expected), with much of the decline due to lower building in South, likely reflecting some impacts from Hurricane Harvey. Notably, house prices as per the CoreLogic house price index for 20 key cities have slightly beat at 5.8% yoy (vs. 5.7% expected).
In France, the September business confidence (109 vs. 110 expected) and manufacturing confidence (110 vs. 110 expected) was broadly in line and remains at a six-year high. Elsewhere, UK’s August finance loans for housing came in at GBP$41.8bln (vs. GBP$41.7bln).
Looking at the day ahead, Italy’s July industrial orders and confidence indicators on manufacturing, consumer and economic sentiment will be due this morning. Then 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. Onto other events, we have three more Fed speakers, including: Bullard, Brainard and Rosengren. Further, President Trump will speak at Indiana on tax reform. Elsewhere, France’s finance minister is due to present the 2018 budget and outlook for the next 5 years.
3. ASIAN AFFAIRS
i)Late TUESDAY night/WEDNESDAY morning: Shanghai closed UP 1.58 POINTS OR 0.05% / /Hang Sang CLOSED UP 129.42 POINTS OR 0.47%/ The Nikkei closed DOWN 63.14 POINTS OR 0.31%/Australia’s all ordinaires CLOSED DOWN 0.07%/Chinese yuan (ONSHORE) closed WELL DOWN at 6.6390/Oil DOWN to 51.90 dollars per barrel for WTI and 58.20 for Brent. Stocks in Europe OPENED GREEN. Offshore yuan trades 6.6427 yuan to the dollar vs 6.6390 for onshore yuan. NOW THE OFFSHORE MOVED MUCH WEAKER 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
NORTH KOREA/USA
Trump says that he is prepared to use “devastating military option on North Korea
(courtesy zerohedge)
Trump Says U.S. Prepared To Use “Devastating, Military Option” On North Korea
On Tuesday, as President Trump imposed another round of meaningless new sanctions on North Korea’s banks, Trump said that while he encouraged the world to work together to end the country’s nuclear program, the U.S. is “totally prepared” for a military option, which he said would be “totally devastating” for North Korea. Which at least provides some additional detail to what H.R. McMaster meant, when he said overnight that the U.S. has prepared “four or five different scenarios” for how the crisis with North Korea will be resolved, adding ominously that “some are uglier than others.”
“We are totally prepared for the second option — not a preferred option — but if we take that option it will be devastating I can tell you that,” Trump said during a joint news conference Tuesday at the White House with Spain’s Prime Minister Mariano Rajoy. “For North Korea that is called the military option. If we have to take it we will.”
The president added that North Korea’s nuclear weapons threaten “the entire world with unthinkable loss of life” and “all nations must act now to ensure the regime’s complete denuclearization.”
Trump said his tough words for Kim Jong Un were a reply to the North Korean leader’s own words. “He’s saying things that should never, ever be said,” Mr. Trump said.
Trump also declared North Korea an “outlaw regime” and thanked Chinese President Xi Jinping for breaking banking ties with his Asian neighbor and for placing new restrictions on Pyongyang while enforcing new United Nations sanctions on Kim Jong Un’s regime.
“I applaud China’s recent action to restrict its trade with North Korea,” Trump added. “In particular I applaud China for breaking all banking relationships with North Korea. I want to thank President Xi.”
The U.S. Treasury Department stepped up measures Tuesday in the effort to choke off North Korea from the international financial system by imposing new penalties on banks and individuals linked to the country’s financial networks.
According to Bloomberg, the U.S. designated eight North Korean banks and 26 North Korean nationals who act as representatives for the country’s banks, operating in China, Russia, Libya and the United Arab Emirates.
One day prior, North Korean Foreign Minister Ri Yong Ho escalated tensions by declaring that his country would be within its rights to shoot down U.S. warplanes flying in international airspace, arguing that Trump’s tough language at the United Nations last week amount to a declaration of war. That startled financial markets, coming just days after the Pentagon sent planes near North Korea’s border.
As discussed this morning, Trump’s National Security Adviser H.R. McMaster said that the U.S. has gamed out four or five different scenarios for dealing with North Korea and “some are uglier than others.” Speaking at an event in Washington hosted by the Institute for the Study of War, McMaster said that “there’s not a ‘precision strike’ that solves the problem,” and “there’s not a military blockade that can solve the problem. What we hope to do is avoid war, but we cannot discount that possibility.”
Subsequently, speaking before the Senate Armed Services Committee on Tuesday, Marine General Joseph Dunford, chairman of the Joint Chiefs of Staff, said that North Korea hasn’t made military moves to match its rhetoric. “While the political space is clearly very charged right now, we haven’t seen any change in the posture of North Korean forces,” Dunford said. “We watch that very carefully. We clearly posture our forces in the event of a provocation or a conflict.” Nonetheless, Dunford also said it’s best to assume that North Korea already has the capability to hit the U.S. mainland with a nuclear-armed ballistic missile and is likely to overcome any remaining engineering issues.
b) REPORT ON JAPAN
end
c) REPORT ON CHINA
endScha
4. EUROPEAN AFFAIRS
Germany’s Finance Minister Schauble Out, To Become Bundestag President
The man who made “nein” a household word everywhere, and especially Greece, will no longer be in charge of Europe’s biggest economy.
As part of the fallout from Sunday’s disastrous, for the CDU election, election which will see Merkel govern in a three-way coalition with the minor German parties, it was expected that Germany’s iconic finance minister Wolfgang Schauble would be kicked out of his post. It also means that Germany’s pro-business, low-tax FDP, whose support Merkel is likely to need, will be put in charge of the coveted finance ministry position.
That was confirmed moments ago by the German news agency dpa, which reported that Schauble is to step aside from the German finance ministry position he has held since 2009, to become president of the German Bundestag, or lower house of parliament.
According to Bild, Angela Merkel and Volker Kauder, the leader of the CDU-CSU conservative bloc in the Bundestag, asked Schauble to take over the role which has been vacant since the departure of the veteran CDU MP Norbert Lammert. Schaeuble will be nominated by CDU-led caucus at next meeting Oct. 17 and Schaeuble would take up the post when next Bundestag meets next month.
Schäuble has been the longest-serving MP in the Bundestag, first elected some 45 years ago.
While the move may seem a gentle form of retirement for the cranky finmin, the FT notes that the role of managing debate in the Bundestag “will become much harder with the arrival of the anti-immigration Alternative for Germany which won 13 per cent of the vote and 94 parliamentary seats.”
Speaking at Schaeuble’s 75th birthday celebration last week, Merkel paid tribute to his 45 years as a member of parliament, but gave no clear signal that she wanted to retain him in the post after the election.
Confined to a wheelchair since being shot at an election rally in 1990, Schaeuble is widely respected in Germany as a steward of the nation’s finances, and enjoyed Merkel’s strong support during the euro zone debt crisis, which almost tore the currency bloc apart. But he is a hate figure in Greece and other parts of southern Europe for his insistence on austerity at a time of deep recession in return for euro zone bailout loans.
end
Catalan Police Ordered To Close And Occupy Polling Stations To Stop Vote Going Ahead
The Catalan Police (Mossos) have been ordered by the Public Prosecutor’s Office to close and occupy all premises that will or might be used as polling stations in the region to prevent them from being used for Sunday’s independence referendum vote, suspended by the Constitutional Court.
The Public Prosecutor’s Office confirmed to The Spain Report on Wednesday morning that the document and the orders it contains were genuine.
Officers must close and cordon off the centres until 9 p.m. on Sunday evening and make it clear that the police cordon is not to be broken, warning people they are liable to criminal prosecution if they do so.
They have been ordered to remove anyone already in the polling stations, and seize any items being used for the vote, “especially ballot boxes, computers, ballot papers and election documents and propaganda”.
They may repeat the removals and seizures if people try to break the police line during the day.
The cordons and closures must be in place by Saturday, September 30.
Mossos officers must report any infractions of the polling station orders, and may request local police, National Police and Civil Guard back up if they believe they need it.
The Catalan Police must also prevent people designated as polling officers from being able to access the premises designated as polling stations, which is due to happen from 7:30 a.m. on Sunday.
Finally, the Mossos have been told to prevent the vote taking place anywhere within 100 metres of the designated premises, “including on public streets”.
Catalan Police chiefs are worried about the public order and manpower requirements stemming from the order, Spanish media reported.
The prosecutor says that despite efforts by the central government to disable the logistical preparation for the vote, Catalan leaders are insisting some kind of vote will take place on Sunday.
Also on Wednesday morning, the Catalan First Minister unilaterally called a meeting of the Catalan Security Council, a regional policing body. That move was rejected by the Home Office two days ago.
A meeting of senior police chiefs in the region is taking place this morning. The prosecutor’s office in Catalonia told The Spain Report that the polling station issue would likely be on the agenda.
* * *
Finally, one comment on this report caught our eye and seemed to clarify much of what is occurrring…
The Catalan people are living in a police state. The true colours of the Popular Party government in Madrid are now being seen clearly.
Quasi-military police imported in ferries waiting in Barcelona and Tarragona ports. Legitimate meetings broken up. Private houses entered and searched. Drivers stopped and their cars searched. Civil servants dragged before the courts. The rule of law forbidding the public to gather in their local schools. All reminiscent of the fascism from which the Popular Party has now found the “courage” to re-emerge.
Quite disgraceful.
Catalunya will be well out of this backward country .
5. RUSSIA AND MIDDLE EASTERN AFFAIRS
Iraqi Kurdistan
the fun begins as 92% voted in favour of independence. Now Iraqi troops have been sent to Kirkuk to prevent the Kurds from taking full control. Also Turkey and Iran are engaging in war games on the border with Iraq. Turkey is afraid that Kurdistan will morph into a huge Kurdistan encompassing the Kurds of Turkey, Iran and Syria.
( courtesy zerohedge)
Iraq Deploys Troops To Kirkuk After Kurdistan “Yes” Vote; Turkey Threatens Blockade
Immediately on the heels of the Iraqi Kurdistan “yes” vote, the Iraqi parliament approved sending troops to the disputed Kirkuk region to prevent the Kurdistan Regional Government (KRG) from taking full control of the oil-rich area. Preliminary official results out Wednesday indicate a 92% vote in favor of Kurdish independence. A written statement produced by Baghdad said the decision aims to protect Iraqi citizens residing in the contested area between Baghdad and Erbil. But the decision is also no doubt motivated by protection of Kirkuk’s multiple oil and gas fields, which Baghdad has now ordered the KRG to hand over, including all other oil facilities throughout northern Iraq.
The KRG held its deeply controversial referendum on Kurdish independence Monday, which as expected resulted in a “yes” vote to declare the autonomous Iraqi region a new state. Kurdish leader Masoud Barzani announced the results of the referendum on live TV Tuesday, while attempting to ease tensions by urging “serious dialogue” with the Baghdad government instead of threats of sanctions and troop presence. Barzani further warned Iraqi Kurds of “facing hardships” while also pleading with world powers to “to respect the will of millions of people”.
Currently, Israel is the only country which has voiced public support for Kurdish independence – something which has earned the condemnation of Turkey, Iran, and others in the region. Israel stands accused of using the Kurds of to Balkanize Iraq and the broader Arab region.
Turkey for its part has come close to warning Israel that it could cut diplomatic ties should Israel continue in its public support of an independent Kurdistan. This week Turkish President Recep Tayyip Erdogan warned, “If they do not review, we cannot take a lot of steps that we were about to take with Israel” – to which Israeli lawmakers responded that such threats were “empty”.
Kurdish-Iraqi disputed regions of Iraq. The tan areas are disputed but are officially under the control of the Iraqi government. The pink sections are disputed but part of the KRG since 1991. Map source: Wiki Commons
But Erdogan had more direct and harsher words for Kurdish leadership, saying in a televised speech Tuesday that, “If Barzani and the Kurdish Regional Government do not go back on this mistake as soon as possible, they will go down in history with the shame of having dragged the region into an ethnic and sectarian war.” While referencing what appears to be an emerging Israeli-Kurdistan open alliance and mutual support, Erdogan further stated, “Who will recognize your independence? Israel. The world is not about Israel. You should know that the waving of Israeli flags there will not save you.”
Both Iran and Turkey have amassed troops and significant military hardware along their borders with Kurdistan, including tanks which are participating in war games as a show of force. Iraqi troops have reportedly joined Turkish troops in conducting joint military exercises in the region. As we previously reported, Iran immediately closed its airspace to the two international airports located in territory administered by the KRG, and Baghdad has demanded that these be handed over as well.
The Baghdad government has further declared closure of airspace over Kurdish northern Iraq, prompting some regional carriers to indefinitely suspend flights into Erbil. Lebanon’s Middle East Airlines (MEA) was the first to announce it would be suspending flights “until they solve the issue.” And Royal Jordanian, FlyDubai, Turkish Airlines and EgyptAir are among the latest to join the growing list. Iraqi PM Abadi has given the KRG three days to surrender not only the airports, but all land crossings as well. Border crossings into Syrian Kurdis areas of Syria have reportedly been kept open by the KRG and/or Kurdish militias administering the crossings.
Image source: Iraq Energy Institute
But more significant is Turkey’s threat of blockade on the region. Kurdistan’s Ministry of Trade and Industry estimates business exchanges with Turkey and Iran exceed $10 billion per year. Kurdistan imports 95% of its agriculture needs from Turkey and Iran and depends on Turkey to export its oil. Turkey has long been a key economic and trade lifeline to landlocked Iraqi Kurdistan. By the numbers, the KRG controls over 20% of Iraqi oil (Iraq produces around 4.35 million barrels per day and Kurdistan 900,000 b/d), its energy reserves are estimated around 45 billion barrels of oil and 150 trillion cubic meter of gas, and it exports around 600.000 b/d via Turkey. Oil has long been the source of dispute between Baghdad and Erbil, and is especially contested when it comes to fields along the conventional disputed “borders” of Kurdish Iraq, of which Kirkuk is part.
Kirkuk fell under the control of Kurdish forces in 2014 after ISIS took control of large swathes of the country. As ISIS was defeated and retreated from some areas, Kurdish Peshmerga fighters moved in. On Wednesday Abadi told Iraqi lawmakers that that he will “enforce the rule of the federal authority in the Kurdish region with the power of the constitution,” while adding that he doesn’t want “a fight between the Iraqi citizens.”
Though Baghdad has signaled on multiple occasions that it will avoid military confrontation and has “ruled out use of force” while seeking dialogue, it is unclear what will actually happen once Iraqi and Kurdish forces attempt to maintain control of the same disputed city. In the meantime Baghdad has formally requested that the KRG rescind the referendum – something unlikely to happen – and has warned that meaningful dialogue would not be possible until such a step be taken.
6 .GLOBAL ISSUES
Canada
This is getting ugly. The USA slaps an initial 220% on financially strapped Bombardier who introduced a new C series jet which seems superior to jets produced by Boeing. Boeing claims that with discounts, the jet has been offered to Delta for 19 million dollars, something that Bombardier reported as absurd. Without the facts, the Commerce dept slapped a 220% tariff which will cause severe harm to Bombardier and will effect jobs in both Canada and Northern Ireland. This will also hurt NAFTA talks terribly.
(courtesy zerohedge)
Trade War Escalates After US Slaps Canada’s Bombardier Jet With 220% Tariff
The fourth round of Nafta talks began in Ottawa over the weekend, and as US Trade Rep Robert Lighthizer and his Mexican and Canadian counterparts scramble to produce a deal by the end of the year – a self-imposed, “soft” deadline – Boeing inflamed trade tensions by winning a decision to slap a massive tariff on struggling Bombardier’s C-Series jet, potentially severing one of the last lifelines for the once-proud aircraft manufacturer.
As Bloomberg reports, the Commerce Department slapped import duties of 220% on Bombardier’s C Series plane Tuesday, agreeing with Boeing’s complaint that “improper” government subsidies allowed Bombardier to illegally dump their jets on the US market. The preliminary determination threatens to upend Bombardier’s planned deliveries next year to Delta Air Lines Inc., which ordered at least 75 jets with a list value of more than $5 billion, an order which was critical for Bombardier after a rocky stretch of weak sales.
The penalties create a new hurdle for Bombardier’s Chief Executive Officer Alain Bellemare, who is trying to turn the company around after the C-Series came in more than two years late and $2 billion over budget.
The announcement promptly slammed Bombardier securities, and this morning its euro-denominated bonds maturing in 2021 tumbled the most in more than two years. According to Bloomberg, the senior unsecured notes are currently down by more than seven price points at 99.963.
The decision is only the latest provocation from US trade hawks, who’ve sought to impose stiffer import penalties on a range of Canadian industries, frequently blaming government subsidies. In August, Commerce Secretary Wilbur Ross provoked an angry response from Canadian Prime Minister Justin Trudeau – who threatened a “thickening” of the US-Canada border.
The Bombardier-Boeing spat has roiled trade relations just as the U.S. tries to renegotiate NAFTA.
“Even our closest allies must play by the rules,” U.S. Commerce Secretary Wilbur Ross said in announcing the decision on Canadian jets with 100 to 150 seats.
Meanwhie, Canadian officials who are participating in the Nafta talks quickly criticized the Commerce Department’s decision, with Foreign Affairs Minister Chrystia Freeland saying Canada “strongly disagrees” with the U.S. probes into its aerospace industry.
“This is clearly aimed at eliminating Bombardier’s C Series aircraft from the U.S. market,” said Freeland, who was scheduled to dine with U.S. Trade Representative Robert Lighthizer in Ottawa on Tuesday during the third round of Nafta talks.
U.K. Prime Minister Theresa May earlier said, “I am bitterly disappointed by the initial Bombardier ruling. The government will continue to work with the company to protect vital jobs for Northern Ireland.” Bombardier is the largest manufacturing company in Northern Ireland; its rail division employs ~3,500 in the U.K., according to the company’s website.
Of course, the decision is only a preliminary finding and must be upheld by the US International Trade Commission for it to take effect in a final decision expected next year, which is, notably, after the deadline for renegotiating Nafta, as Reuters points out. Delta is alleging that Bombardier is engaging in harmful business practices similar with those used by European rival Airbus SE to win business in the 1990s, according to Boeing.
In a statement, Bombardier called the decision “absurd.”
“We strongly disagree with the Commerce Department’s preliminary decision,” Bombardier said in a statement, calling the magnitude of the proposed U.S. duty “absurd.”
The simple truth is that Bombardier created a superior aircraft that is more efficient, more comfortable, and quieter. The C Series serves a market segment not supported by any U.S. manufacturer. Delta wants to bring this remarkable new aircraft to the U.S. flying public. Boeing wants to prevent U.S. passengers from realizing these benefits, irrespective of the harm that it would cause to the U.S. aerospace industry and the cost to airlines and consumers.
And although the ITC’s decision is months away, Bombardier has reason to worry: the tribunal earlier this month ruled in favor of the bankrupt US subsidiary of a German solar panel manufacturer, clearing the way for President Donald Trump to slap import tariffs on cheap foreign solar panels, which are almost exclusively manufactured in China. The move was interpreted as an escalation of the soft trade war that began when Trump ordered an investigation into China’s IP policies that could clear the way for more tariffs.
However, as Reuters explains, to win its case before the ITC, Boeing must prove it was harmed by Bombardier’s sales practices, despite not using one of its own jets to compete for the Delta order. Dan Pearson, a senior fellow at the libertarian Cato Institute think tank in Washington, said before the announcement that proving this argument could be difficult for Boeing.
“This (ITC case) cannot be a slam dunk,” said Pearson, a former ITC chairman. “I‘m having a hard time figuring out how Boeing was harmed by this.”
According to Reuters, the Commerce Department’s announcement and accompanying fact sheet on the preliminary duty order did not provide any rationale or methodology for how it calculated the 220% duty. The CSeries has a “sticker price” of $79.5 million, but carriers like Delta usually receive discounts of about 50%. If imposed, the duties would more than triple the cost of a CSeries aircraft sold in the U.S. to about $61 million per plane, based on Boeing’s assertion that Delta received the planes for $19 million each. Bombardier has disputed the $19 million sales figure.
Though the Bombardier-Boeing dispute has expanded to two Continents, British Prime Minister Theresa May asked the Commerce Department to go easy on Bombardier to protect manufacturing jobs in Northern Ireland, and angered Canadian Prime Minister Justin Trudeau, who put a planned purchase of Boeing Super Hornet fighter jets on hold in retaliation for Boeing’s complaint, Reuters reports that the spate probably wont’ affect Nafta negotiations, according to unnamed Canadian officials.
A source familiar with the Canadian government’s thinking said the Boeing trade dispute was “separate” from the NAFTA talks.
“This in no way is part of our conversation” the source said. “People should not read too much into this piece today.”
Reuters points out that the size of the tariff is unusually high, though Commerce did approve a massive 256% final duty on Chinese cold-rolled steel last year.
Bombardier shares are down 15% over the past month due to uncertainty surrounding the Commerce Department’s decision. Bombardier, which also has a rail business, has endured a string of bad luck this year. Earlier, it missed out an opportunity to combine the rail business with Siemens, the German manufacturer. Instead, Siemens decided to combine the business with French rail operator Alstom.
UK Slams Tariffs On Bombardier: “This Is Not What We Expect From A Long-Term Partner”
It appears the Commerce Department’s preliminary ruling, issued late last night, to slap a 220% tariff on Canadian aircraft manufacturer Bombardier could trigger an all-out trade war between the UK and Canada (on one side) and the US (on the other) as public officials in the UK and Canada blasted the ruling and threatened retaliation should the sanctions, which still need to be approved by the US International Trade Commission, become permanent.
Earlier today, the Commerce Department ruled that Bombardier’s jets should face the levy because the company received anticompetitive government subsidies. The ruling comes after Boeing said the Bombardier C-Series jet would not exist without hundreds of millions of dollars in launch funding from the governments of Canada and Britain, or a $2.5 billion equity infusion from the province of Quebec and its largest pension fund in 2015. Boeing brought the complaint after Delta Air Lines agreed in April 2016 to purchase 75 C-Series jets, an order worth some $5 billion.
The preliminary ruling – which comes as the US, Canada and Mexico are holding their fourth meeting to renegotiate Nafta – has met with praise from Boeing, and criticism from virtually everybody else involved.
The UK, which does a brisk business with Boeing, is threatening to cut ties with the company if the decision against Bombardier is finalized. The reason? Bombardier has a large plant in Belfast, employing some 4,200 people in Northern Ireland, a region that the UK’s ruling conservative party relies on heavily for support. If Bombardier, which is already struggling, takes another hit, those people could lose their jobs, potentially threatening the conservatives’ tenuous grip on power after losing their majority in snap elections over the summer, according to Reuters.
UK Defense Minister Michael Fallon said in a TV interview today that the ruling could jeapordize Boeing’s business relationship with the UK government.
“This is not the behavior we expect from Boeing and it could indeed jeopardize our future relationship with them,” British Defence Secretary Michael Fallon told reporters in Belfast at a briefing in the historic Harland & Wolff shipyard, a few hundred yards from the Bombardier plant.
“Boeing has significant defense contracts with us and still expects to win further contracts. Boeing wants and we want a long term partnership but that has to be two way.”
“Boeing is an important investor in the United Kingdom and an important employer in the United Kingdom but we would prefer this kind of issue to be settled on a negotiated basis,” Fallon said.
“This is not the kind of behavior that we expect from a long-term partner and I’ve made that very clear to Boeing,” Fallon told reporters.
http://players.brightcove.net/624246174001/ryaWt2q-W_default/index.html?videoId=5590404612001
Britain recently ordered the Boeing P-8 maritime surveillance plane and a new fleet of Apache attack helicopters. Its armed forces have deployed Chinook helicopters, the C-17 transport plane and the E-3 Sentry airborne early warning and command post.
Meanwhile, British Business Secretary Greg Clark said on Wednesday he was confident he would be able to have the U.S. anti-subsidy complaint against Bombardier dismissed.
“We’ve been working very closely with the Canadian government to make it clear that this is a complaint that is unjustified,” Clark told Sky TV.
“What needs to happen now by the trade commission is that they look to see whether there has been any detriment to Boeing,” he added.
“There hasn’t been because this aircraft does not compete with Boeing so we’re confident that we will be able to demonstrate that and have this case dismissed.”
Threatening language aside, the Gaurdian points out that Boeing has substantial leverage should the UK act to curtail its business relationship with the defense contractor. Boeing employs or supports more than 10,000 jobs in the UK; any tit-for-tat retaliation could affect them.
Even the labor party, which isn’t politically dependent on Northern Ireland and thus has less of an incentive to care about the potential closure of a Bombardier plant there, has joined in the Boeing bashing. Labour leader Jeremy Corbyn has just told his party conference in Brighton that the tariffs imposed on Bombardier planes threaten “thousands of jobs”. He called on Prime Minister Theresa May to leverage her “special relationship” with the US to try and protect workers in Northern Ireland.
“Thousands of jobs are now at stake…a Prime minister is betting our economic future on a deregulated trade deal with the US might want to take a moment to explain how 220% tarifsf are going to boost our exports from this country.”
Of course, once the ITC issues its ruling, the Trump administration will have the final say on tariffs. Will May’s relationship with the president be enough to save Bombardier? Or will Trump side with Boeing and spin the tariffs as a bid to protect US workers – throwing red meat to his base in the process?
What do you think?
Loonie Loses All ‘Surprise Rate Hike’ Gains As Canada’s Poloz Gets Cold Feet
The Canadian Dollar is tumbling – erasing all the gains following September’s surprise rate-hike – as in his first speech since the, Bank of Canada Governor Stephen Poloz warns there is no “predetermined path for interest rates” and said the central bank will proceed “cautiously” as it assess the performance of the economy from here on.
“Monetary policy will be particularly data dependent in these circumstances and, as always, we could still be surprised in either direction. We will continue to feel our way cautiously as we get closer to home”
“The appropriate path for interest rates in this situation is very difficult to know, because there are a number of unknowns around the inflation outlook”
“We will not be mechanical in our approach to monetary policy”
And on that the Loonie is tumbling…
As Bloomberg notes, Poloz is seeking to balance bringing interest rates back to more normal levels amid the strongest growth spurt in more than a decade, while at the same time not harming the fledgling recovery. Wednesday’s speech — like one given by Deputy Governor Tim Lane last week — may be interpreted as a further attempt by policy makers to pare expectations that the central bank is moving headlong into more rate increases, after hiking borrowing costs twice since July.
7. OIL ISSUES
WTI/RBOB Sink After Surprise Gasoline Build, Crude Production Rise
Amid record crude exports, DOE reported a surprise draw for crude inventories and surprise build for gasoline inventories which along with another rise in crude production sent both WTI and RBOB lower in the initial market reaction.
DOE
- Crude -1.85mm (+3.1mm exp)
- Cushing +1.18mm (+750k exp)
- Gasoline +1.1mm (-1.1mm exp)
- Distillates -814k (-2.05mm exp)
Distillate demand falls 12.15% to 3.75 million barrels a day — the lowest since early June. Inventories fell by a smaller-than-expected 814,000 barrels.
Total crude exports jumped to a record as tankers cleared a backlog at Gulf Coast ports and the Brent-WTI spread surged over the past two weeks…
Bloomberg Intelligence energy analyst Fernando Valle:
The wide WTI-Brent differentials were a major incentive for U.S. refiners to quickly ramp up production following disruptions.
That drove the moderate crude draws and disappointing figures for refined product stocks this week.
But there are reasons to remain bullish on cracks; demand remains elevated for gasoline and distillate despite the effects of hurricanes and the end of summer driving season, and it likely will boost 3Q refining earnings.
Production continue to rebound…
The Kneejerk reaction is a drop in both crude and gasoline prices…
end
8. EMERGING MARKET
VENEZUELA
end
Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings WEDNESDAY morning 7:00 am
Euro/USA 1.1737 DOWN .0047/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 ALL GREEN
USA/JAPAN YEN 112.96 UP 0.578(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 1.3411 DOWN .0032 (Brexit March 29/ 2017/ARTICLE 50 SIGNED
THERESA MAY FORMS A NEW GOVERNMENT/STARTS BREXIT TALKS
USA/CAN 1.2396 UP .0032 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/(TRUMP INITIATES LUMBER TARIFFS ON CANADA)
Early THIS WEDNESDAY morning in Europe, the Euro FELL by 47 basis points, trading now ABOVE the important 1.08 level FALLING to 1.1737; / Last night the Shanghai composite CLOSED UP 1.68 POINTS OR 0.05% / Hang Sang CLOSED UP 129.42 POINTS OR 0.47% /AUSTRALIA CLOSED DOWN 0.07% / EUROPEAN BOURSES OPENED ALL IN THE GREEN
The NIKKEI: this WEDNESDAY morning CLOSED DOWN 63.14 POINTS OR 0.31%
Trading from Europe and Asia:
1. Europe stocks OPENED GREEN
2/ CHINESE BOURSES / : Hang Sang CLOSED UP 129.42 POINTS OR 0.47% / SHANGHAI CLOSED UP 1.68 POINTS OR 0.05% /Australia BOURSE CLOSED DOWN 0.07% /Nikkei (Japan)CLOSED DOWN 63.14 POINTS OR 0.31% / INDIA’S SENSEX IN THE RED
Gold very early morning trading: 1289.35
silver:$16.85
Early WEDNESDAY morning USA 10 year bond yield: 2.289% !!! UP 5 IN POINTS from MONDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. (POLICY FED ERROR)
The 30 yr bond yield 2.829, UP 5 IN BASIS POINTS from MONDAY night. (POLICY FED ERROR)
USA dollar index early WEDNESDAY morning: 93.43 UP 46 CENT(S) from TUESDAY’s close.
This ends early morning numbers WEDNESDAY MORNING
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And now your closing WEDNESDAY NUMBERS
Portuguese 10 year bond yield: 2.462% DOWN 2 in basis point(s) yield from TUESDAY
JAPANESE BOND YIELD: +.059% UP 2 in basis point yield from TUESDAY/JAPAN losing control of its yield curve/
SPANISH 10 YR BOND YIELD: 1.646% UP 3 IN basis point yield from TUESDAY
ITALIAN 10 YR BOND YIELD: 2.151 UP 3 POINTS in basis point yield from TUESDAY
the Italian 10 yr bond yield is trading 50 points HIGHER than Spain.
GERMAN 10 YR BOND YIELD: +.468% UP 6 IN BASIS POINTS ON THE DAY
END
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IMPORTANT CURRENCY CLOSES FOR WEDNESDAY
Closing currency crosses for WEDNESDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/1:00 PM
Euro/USA 1.1756 DOWN .0026 (Euro DOWN 26 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/
USA/Japan: 112.56 UP 0.191(Yen DOWN 19 basis points/
Great Britain/USA 1.3397 DOWN 0.0044( POUND DOWN 44 BASIS POINTS)
USA/Canada 1.2417 UP .0053(Canadian dollar DOWN 53 basis points AS OIL ROSE TO $52.08
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This afternoon, the Euro was DOWN 26 basis points to trade at 1.1756
The Yen FELL to 112.56 for a LOSS of 19 Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE
The POUND FELL BY 44 basis points, trading at 1.3397/
The Canadian dollar FELL by 53 basis points to 1.2417, WITH WTI OIL RISING TO : $52.08
Your closing 10 yr USA bond yield UP 6 IN basis points from TUESDAY at 2.298% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 2.8514 UP 7 in basis points on the day /
Your closing USA dollar index, 93.23 UP 26 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 WEDNESDAY: 1:00 PM EST
London: CLOSED UP 27.77 POINTS OR 0.38%
German Dax :CLOSED UP 52.21 POINTS OR 0.41%
Paris Cac CLOSED UP 13.20 POINTS OR 0.25%
Spain IBEX CLOSED UP 179.30 POINTS OR 1.76%
Italian MIB: CLOSED UP 191.54 POINTS OR 0.85%
The Dow closed UP 56.39 OR 0.25%
NASDAQ WAS closed UP 73.19 POINTS OR 1.15% 4.00 PM EST
WTI Oil price; 52.08 1:00 pm;
Brent Oil: 57.81 1:00 EST
USA /RUSSIAN ROUBLE CROSS: 58.14 UP 30/100 ROUBLES/DOLLAR (ROUBLE LOWER BY 30 BASIS PTS)
TODAY THE GERMAN YIELD RISES TO +0.468% FOR THE 10 YR BOND 4.PM EST EST
END
This ends the stock indices, oil price, currency crosses and interest rate closes for today
Closing Price for Oil, 5 pm/and 10 year USA interest rate:
WTI CRUDE OIL PRICE 5:00 PM:$52.05
BRENT: $57.64
USA 10 YR BOND YIELD: 2.310% (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)
USA 30 YR BOND YIELD: 2.863%
EURO/USA DOLLAR CROSS: 1.1748 DOWN .0036
USA/JAPANESE YEN:112.79 UP 0.395
USA DOLLAR INDEX: 93.45 UP 48 cent(s)/
The British pound at 5 pm: Great Britain Pound/USA: 1.3383 : down 57 POINTS FROM LAST NIGHT
Canadian dollar: 1.2476 DOWN 112 BASIS pts
German 10 yr bond yield at 5 pm: +0.468%
END
And now your more important USA stories which will influence the price of gold/silver
TRADING IN GRAPH FORM FOR THE DAY
Small Caps Surge Most Since Election As Bonds Suffer Worst Rut In Over 50 Years
Today in Small Caps…
Small Caps exploded over 2% higher – the biggest gain since the election – on Trump Tax hype… (we note that marketd di roll over a little once Trump began speaking)
(NOTE – today was the biggest short-squeeze in 2 months)
VIX was monkeyhammered back to a 9 handle… because why not…2500 was rescued once again…
Interestingly, while Russell 2000 melted up insanely, its VIX also rose notably…
Quite a decoupling…
In an ironic move, The Fed’s Bullard warned that “equity valuations may be stretched” and the S&P ripped to a new record high above 2510…
While the market seemed to sell off on the leaked tax plan details, we note that ‘high tax’ corporations extended their recent gains relative to the market…
The last 6 days have seen the biggest spike in ‘high-tax corps relative to the market’ since the election… (NOTE – the last surge was in June as Mnuchin shared his one-pager and once again we are back at the election level that stalled hope before)
Notably the initial spike faded quickly then accelerated but once the Republicans began their press conference, high-tax stocks underperformed the market, but that did not last long…
FANG Stocks were bid with both hands and feet…
Ugly day in bond-land as Treasury yields surged extending losses after yesterday’s hawkish Yellen comments…
This was the 30Y Yield’s biggest spike since the election…back to the same level as at the June Fed rate-hike…
The yield curve steepened massively… as bank stocks underperformed the market
Will Gundlach be right after all?
But, as Bloomberg notes, the world’s most important bond market is stuck in its worst rut in more than half a century. Ten-year U.S. Treasury yields have been locked between 2.01 percent and 2.63 percent in 2017 — a measly 62 basis points. That’s the tightest trading range since 1965 and analysts see little capacity for a breakout going forward: The median year-end estimate of 62 analysts and strategists surveyed by Bloomberg is for 2.48 percent.
The Dollar Index rallied to its highest in over 6 weeks (since Aug 16th when the FOMC Minutes were released)…
The Loonie was the big mover after Poloz backed away from continued rate hikes…
FX Volatility is trading at the upper end of its multi-year range relative to stock vol…
WTI rebounced but RBOB did not after DOE inventory/production data…
Copper, Gold, and Silver are all down on the week…
Gold tumbled to a $1280 handle (one-month lows) as the dollar surged and Bitcoin spiked towards $4200…
Erasing Bitcoin’s post-Dimon drop after Gorman’s comments…
Bitcoin also pushed back well ahead of The Swiss National Bank…
Finally, there is this…hope is a strategy after all…
end
Trump’s support for Strange backfires as anti establishment candidate Judge Roy Moore wins Alabama by a landslide
(courtesy zero hedge)
Trump Stumped As Bannon-Backed Roy Moore Wins Alabama Republican Primary By Landslide
President Trump congratulates Moore for his victory…
In a serious rebuke for President Trump (and perhaps moreso for Senate Majority Leader Mitch McConnell), ousted judge and alt-right favorite Roy Moore has won the Alabama Republican Primary by a landslide.
The Steve Bannon-backed candidate, who defied court orders to remove the Ten Commandments from his courtroom and refused to recognize gay marriage after the Supreme Court’s June 2015 ruling legalizing same-sex marriage, is leading by 9.6 points with 92% of the votes counted…
Interestingly, former Trump deputy assistant Sebastian Gorka, who backed Moore, said despite Trump backing the establishment favorite, a Moore victory strengthens Trump…
“But guess what happens – when Judge Moore wins on Tuesday, it will strengthen the president because now he’ll be able to go to the establishment GOP – to the swamp dwellers and say, ‘Hey guys, we are back on my agenda. This wasn’t worth it.’
So, the president is going to stay – he’s going to return to the Make America Great Again agenda. We just have to help him, and we’re going to do it from the outside by endorsing people like Judge Moore.”
* * *
As we detailed earlier, after weeks of increasingly bitter and expensive campaigning pitching Steve Bannon-backed former state Supreme Court Chief Justice Roy Moore (well-known anti-establismentarian) against President Trump-backed Senator Luther Strange (establishmentarian), judgment day has finally arrived.
Heading in the polls had Moore a strong favorite (but Strange showing well in recent weeks)
With polls having closed at 8pmET, early results favored Moore heavily.
However, as Politco reported this evening,President Donald Trump began distancing himself from a Luther Strange loss before ballots were even cast, telling conservative activists Monday night the candidate he’s backing in Alabama’s GOP Senate primary was likely to lose — and suggesting he’d done everything he could do given the circumstances.
Trump told conservative activists who visited the White House for dinner on Monday night that he’d underestimated the political power of Roy Moore, the firebrand populist and former judge who’s supported by Trump’s former chief strategist Steve Bannon, according to three people who were there.
And Trump gave a less-than full-throated endorsement during Friday’s rally.
While he called Strange “a real fighter and a real good guy,” he also mused on stage about whether he made a “mistake” by backing Strange and committed to campaign “like hell” for Moore if he won.
Trump was encouraged to pick Strange before the August primary by son-in-law and adviser Jared Kushner as well as other aides, White House officials said. He was never going to endorse Alabama Republican Rep. Mo Brooks, who has at times opposed Trump’s agenda, and knew little about Moore, officials said.
* * *
HotAir.com explained earlier how to interpret the result (and the likely fallout)…
If Strange shocks the world, it’ll be Trump’s crowning glory as president (so far).
He’ll be credited for singlehandedly dragging a lackluster establishmentarian past a well-known populist in a very red state.
His influence over the Republican base will be seen as total and unassailable.
Not even the combined forces of Steve Bannon, Sarah Palin, Sebastian Gorka, Nigel Farage, and Breitbart could counter the gravitational pull of the MAGA north star, as it turned out.
If Strange doesn’t shock the world, if he goes down in flames despite Trump’s best efforts for him over the past two weeks, populism, not Trumpism, will be seen as dominant among the base.
Bannon will exult (privately) that he and Moore taught Trump a hard lesson, that he can’t expect rank and file Republicans to line up behind him unless he sticks to a populist agenda.
Depending on the margin, Trump may be left sweating out a way to spin the defeat.
- If Strange loses by a few points, it’s easy — “Big Luther got close with my help, ran a good race!”
- If he loses by 16, not so easy. Trump will blame McConnell and voter unhappiness at Senate paralysis on ObamaCare but a landslide loss for his guy is a rebuke any way you slice it.
* * *
So, it appears the trend looks like that first bullet point comes into play… and here it is…
Trump Goes Nuclear: NFL Will “Go To Hell”
It appears Moore’s victory in Alabama last night has rekindled President Trump’s more boisterous populist side – as many suspected it might – as he congratulated Roy Moore’s “really great race.”
In a brief discussion with reporters at The White House this morning, Trump pulled no punches urging “the toughest possible travel ban”and then took a serious swing at The NFL once again warning:
“I think The NFL is in a box, the only thing that is doing well for The NFL is the pre-game…
They can’t have people disrespecting the national anthem. The NFL has to change or their business is going to go to hell.”
It appears ‘change’ is happening…
Just one week after many members of the Patriots kneeled during the national anthem, a new report indicates thatthey will all stand together as a team next time out.
Trump says Dallas Cowboys owner Jerry Jones promised him America’s Team will stand for the National Anthem:‘Jerry is a winner who knows how to get things done’.
Or this…
Interestingly, former Trump deputy assistant Sebastian Gorka, who backed Moore, said despite Trump backing the establishment favorite, the Moore victory strengthens Trump…
“But guess what happens – when Judge Moore wins on Tuesday, it will strengthen the president because now he’ll be able to go to the establishment GOP – to the swamp dwellers and say, ‘Hey guys, we are back on my agenda. This wasn’t worth it.’
So, the president is going to stay – he’s going to return to the Make America Great Again agenda. We just have to help him, and we’re going to do it from the outside by endorsing people like Judge Moore.”
And that appears to be the approach Trump has taken this morning.
As he additionally noted, he’s “not happy” with Health and Human Services Secretary Price, is looking closely at his private plane use.
Connecticut Lawmakers Scramble To Close $3.5 Billion Budget Shortfall As Fiscal Crisis Worsens
Despite a series of credit-rating cuts by all three of the major ratings agencies earlier this year, Connecticut still boasts a higher rating than Illinois and New Jersey. But that could soon change.
Lawmakers are squabbling over how to close a massive deficit expected to stretch to $3.5 billion over the next two years, which has left Connecticut as the only state in the US without a budget for the current fiscal year. And if lawmakers fail to pass a budget by the end of the month, it could trigger further cutbacks and in essential services.
The wealthiest state per capita, Connecticut has struggled to stabilize its deteriorating finances as generous (and underfunded) pension obligations and the departure of wealthy taxpayers like hedge-fund billionaire Paul Tudor Jones, Aetna and GE – two Fortune 500 companies that have decided to relocate their headquarters to New York City and Boston, respectively – have drained the state’s coffers, threatening to trigger a financial chain reaction that could end with the bankruptcy of the state’s historic capital, Hartford.
Initially one of roughly a dozen states that faced last-minute budget battles in June, the state has now gone nearly three months without a budget. It has been operating under an emergency order signed by Gov. Dannel Malloy that includes dramatic cuts in state funding for social services programs. Those cutbacks will expand if the standoff continues for another week, growing to encompass essential funding that Connecticut cities and municipalities rely on to fund public services from education to public safety, according to the New York Times.
The executive order that controls state spending has already frozen millions of dollars in contracts and grants and limited support sent to municipalities. If a new budget is not reached by Oct. 1, many towns and cities are expecting a much smaller fraction of the usual amount from the state – or nothing at all.
This month, city officials in Hartford, which faces a nearly $50 million deficit, sent a letter to the state cautioning that a failure to reach a budget compromise with sufficient aid would make pursuing bankruptcy almost inevitable. The officials, including the mayor, Luke Bronin, noted that further cuts would force them to eliminate, and not simply reduce, essential city services.
And now that Gov. Malloy has said he will reject a Republican sponsored proposal that passed both the Connecticut State Senate and the Assembly, lawmakers are scrambling to head back to the drawing board as their constituents warn of potentially devastating cuts if they’re not able to pass something – anything – that resembles a budget.
To be sure, the Republican proposal also called for dramatic cutbacks to the state’s share of municipal spending, as well as its contribution to the state university system.
“I was surprised when the budget went through,” said Sen. Len Fasano, a Republican leader, even though he helped orchestrated the effort. “I think it takes a lot of courage,” he added, referring to the Democrats who supported the plan.
At the University of Connecticut, which stood to lose at least $200 million over two years, its president, Susan Herbst, wrote a letter to students, faculty and alumni, warning of closing campuses and departments, ending majors and programs, as well as reductions in research, athletics and financial aid.
Mr. Malloy has vowed to veto the legislation, citing “irresponsible changes” to pensions, a lack of sufficient support for Hartford and other cities and cuts to school funding that he saw as excessive and threatening districts that struggled the most.
Some towns would have their entire state contribution cut, forcing them to cut public services to the bare minimum.
In Portland, a town of about 10,000 south of Hartford, officials said that if a budget were not reached by the start of next month, they stand to received just over $10,000 from the state – not the $4.6 million they had expected. “You just can’t do this to communities,” said Susan Bransfield, the first selectwoman.
“They need to leave the partisanship at the door, and put Connecticut first.”
Meanwhile, towns across the state have been unable to pass their budgets without knowing how much money they will receive from the state. Connecticut has seen its population decline over the past three years as Gov. Malloy has passed a series of tax hikes. Regardless of the outcome of this round of state-budget-chicken, Connecticut residents should probably brace for the possibility that taxes could rise further, while government services endure painful cutbacks
end
This is a strange one: JPMorgan has committed fraud in their handles of an estate of Max Hopper, a former American Airlines executive who innovated the SABRE reservation system. Max had an estate of around 19 million dollars but the court verdict ordered JPMorgan to pay 4 billion dollars because of fraud and breach of duty..something that these guys have been doing in the precious metals market for years..
(courtesy zerohedge)
JPMorgan Ordered To Pay Over $4 Billion To Widow And Family
A Dallas jury ordered JPMorgan Chase to pay more than $4 billion in damages for mishandling the estate of a former American Airlines executive.
Jo Hopper and two stepchildren won a probate court verdict over claims that JPMorgan mismanaged the administration of the estate of Max Hopper, who was described as an airline technology innovator by the family’s law firm. The bank, which was hired by the family in 2010 to independently administer the estate of Hopper, was found in breach of its fiduciary duties and contract. In total, JP Morgan Chase was ordered to pay at least $4 billion in punitive damages, approximately $4.7 million in actual damages, and $5 million in attorney fees.
The six-person jury, which deliberated a little more than four hours starting Monday night and returned its verdict at approximately 12:15 a.m. Tuesday, found that the bank committed fraud, breached its fiduciary duty and broke a fee agreement, according to court papers.
“The nation’s largest bank horribly mistreated me and this verdict provides protection to others from being mistreated by banks that think they’re too powerful to be held accountable,” said Hopper in a statement. “The country’s largest bank, people we are supposed to trust with our livelihood, abused my family and me out of sheer ineptitude and greed. I’m blessed that I have the resources to hold JP Morgan accountable so other widows who don’t have the same resources will be better protected in the future.”
“Surviving stage 4 lymphoma cancer was easier than dealing with this bank and its estate administration,” Mrs. Hopper added.
Max Hopper, who pioneered the SABRE reservation system for the airline, died in 2010 with assets of more than $19 million but without a will and testament, according to the statement. JPMorgan was hired as an administrator to divvy up the assets among family members. “Instead of independently and impartially collecting and dividing the estate’s assets, the bank took years to release basic interests in art, home furnishings, jewelry, and notably, Mr. Hopper’s collection of 6,700 golf putters and 900 bottles of wine,” the family’s lawyers said in the statement. “Some of the interests in the assets were not released for more than five years.”
The bank’s incompetence caused more than just unacceptably long timelines; bank representatives failed to meet financial deadlines for the assets under their control. In at least one instance, stock options were allowed to expire. In others, Mrs. Hopper’s wishes to sell certain stock were ignored. The resulting losses, the jury found, resulted in actual damages and mental anguish suffered by Mrs. Hopper. With respect to Mr. Hopper’s adult children, the jury found that they lost potential inheritance in excess of $3 million when the Bank chose to pay its lawyers’ legal fees out of the estate account to defend claims against the Bank for violating its fiduciary duty.
Confirming that much of America does not hold Wall Street in high regard, the court’s verdict form showed that jurors awarded $8 billion in punitive damages against the bank. Alan Loewinsohn, attorney for Jo Hopper, said in an interview there may be duplication of some of the damage findings. He asked the jury to take into account the bank’s worth and asked them for $2 billion in punitive damages. “I believe they used that figure for the other parties in the case as well,” he said.
As a result, he said, the punitive damage award could end up being “somewhere between $4 billion and $8 billion.” The verdict form also shows jurors were advised to consider factors including “the net worth of JPMorgan.” JPM has a market cap of about $330 billion.
At the lower end of that range, the jury’s award would erase almost two-thirds of the $6.6 billion profit that JPMorgan generated globally during the second quarter. According to Bloomberg, it would rank high among the largest sanctions ever levied against the bank – somewhere between the $2.6 billion it agreed to pay in 2014 for allegedly failing to stop Bernard Madoff’s Ponzi scheme, and a $13 billion settlement it reached with government authorities in 2013 for its handling of mortgage bonds that fueled the financial crisis.
“Mrs. Hopper asked the jury to send a message loud enough for JP Morgan to hear it all the way to Park Avenue in Manhattan,” said Loewinsohn, “Hopefully, that message has been received.”
Probably not: sadly for widow Hopper, she is unlikely to see the full award: large punitive damages verdicts like the one in the Hopper case are often scaled back because the U.S. Supreme Court has ruled they can’t be disproportionate to actual damages. In this case, the jury awarded less than $5 million in actual damages.
The bank said it acted in a professional manner and in good faith on Hopper’s estate and is “highly confident” the jury verdict won’t stand under Texas law.
“Clearly the award far exceeds any possible interpretation of Texas tort reform statutes,” Andrew Gray, a spokesman for the bank, said in an emailed statement. “There has been no judgment entered by the court based on this verdict.”
Mattis Targeted By Taliban Rocket Attack At Afghan Airport
Defense Secretary James Mattis was the target of a failed rocket attack near a key Afghanistan airport Wednesday, the Taliban said, though the attack occurred after he had left the airport. Hours after Mattis landed, as many as 40 rockets were fired at Kabul’s Hamid Karzai International Airport from an unknown location and landed in an open area, according to Najib Danish, spokesman for the Afghan Interior Ministry. US military officials added that a barrage of up to 40 rounds of munitions hit the airport, including 29 rocket-propelled grenades.
According to CNN, Mattis and NATO Secretary General Jens Stoltenberg had already left the airport at the time of the incident, Danish said. No one was injured.
No U.S. personnel were injured, but a spokesperson for the Afghan Interior Ministry said five Afghan civilians were wounded in the attack. According to media reports, Kabul airport chief Yaqub Rassouli said airplane hangars and some helicopters were also damaged.
The Taliban, which claimed responsibility for the attack, said that Mattis was the target. ISIS has now also claimed the attack. A Taliban spokesman tweeted that the attack was aimed at the secretary’s plane.
Afghan President Ashraf Ghani said at a press conference that his country’s special forces are “dealing with” the incident. Mattis, standing with Ghani, called the attack a “criminal act by terrorists.”
“It’s designed to go after generally innocent people to make some sort of statement,” the U.S. defense chief said. “This is a classic definition of what the Taliban are up to right now. It defines their approach to how they see their role here and if in fact this is what they have done, they will find the Afghan security forces continuing on the offensive against them in every district of the country right now. So it is what it is, but it’s also the reason why we band together, and we don’t question what we’re doing here.”
This was Mattis’s first trip to Afghanistan since President Donald Trump announced a new South Asia strategy that will send an additional 3,000 U.S. troops to the country. There are approximately 11,000 U.S. forces there now advising and assisting the Afghan military’s fight against the Taliban, as well as adding additional firepower to the counterterrorism mission against ISIS and Al Qaeda.
end
Now that the repeal of Obamacare is off, we now witness 2018 premiums skyrocket. Now the big state of Florida sees that its premiums are surging by 45%
(courtesy zerohedge)
2018 Obamacare Premiums Surge 45% In Key Swing State Of Florida
As Congress continues to debate whether or not Obamacare is “working,” folks in the key swing state of Florida just found out that their insurance premiums for 2018 are going to surge by 45% in a single year. Per the Miami Herald:
Health insurers selling Affordable Care Act plans in Florida will raise monthly premiums by nearly 45 percent on average next year, the state’s Office of Insurance Regulation said Tuesday.
Florida regulators said most of the average rate hike — 31 percentage points — came from standard plans sold on the ACA exchange at healthcare.gov. Insurers raised rates for those plans due to the political uncertainty that has plagued the healthcare debate, specifically whether the Trump administration will stop paying subsidies that lower out-of-pocket costs for low-income Americans.
Of the 1.43 million Floridians with an ACA plan in 2017, about three in four, or more than 1 million people, received a cost sharing reduction, according to federal estimates. Nine in 10 Floridians, or about 1.33 million received a separate subsidy that reduced their monthly rate, called the advance premium tax credit.
Most Floridians with a standard ACA plan and a premium subsidy won’t see their monthly costs rise, and some may even pay less than they did the prior year. But the brunt of the 2018 rate hikes will fall squarely on the 7 percent of Floridians, about 66,000 people statewide, who earn too much to qualify for any financial aid to lower their costs of coverage.
To put that surge into perspective, the average healthcare plan in Florida will now cost roughly $8,000 per year to cover a single person, a $2,500 increase YoY. Meanwhile, that implies that the average cost of covering a family of 4 is well over $1,500 per month ($18,000 per year), making it easily the second largest expense for most family budgets and in many cases the largest. Needless to say, most American families aren’t prepared for their largest expenses to surge 45% in a single year.
Meanwhile, and to our great shock no less, the Miami Herald was able to find an “expert” from the University of Miami to explain why this is all Trump’s fault.
Steven Ullmann, a healthcare policy expert with the University of Miami, said insurers are playing defense by raising plan premiums to deal with the uncertainty over the cost sharing subsidies.
“There’s so much indecision,” he said. “That’s the killer.”
The Trump administration has been funding cost sharing subsidies month-to-month, without making the long-term commitment that insurers say would help stabilize the ACA insurance market.
Will the Trump administration enforce the ACA’s employer mandate, which requires any company with more than 50 employees to offer health insurance to their workers? What about the individual mandate requiring every eligible American who doesn’t get insurance through work to buy a health plan or pay a fine that is either 2.5 percent of household income or $695 per adult and $347.50 for each child younger than 18?
The Trump administration also has slashed the federal government’s advertising and outreach budget for the upcoming open enrollment season, which has been shortened from three months last year to about 45 days this year. Open enrollment for 2018 coverage on healthcare.gov runs from Nov. 1 through Dec. 15.
All of this could dissuade the very people that the ACA, also known as Obamacare, needs to thrive, Ullmann said — young and healthy individuals who don’t need a lot of healthcare.
Of course, the esteemed UofM professor makes some great points if you can ignore the fact that Florida’s 2018 Obamacare increases are not some new phenomenon that started once Trump took office, but rather just a continuation of a devastating trend that has been ongoing since 2013.
But sure, it’s all Trump’s fault.
end
Slight rise in durable goods orders after a big July collapse.
(courtesy zerohedge)
Durable Goods Orders Bounce After July Collapse, Aircraft Orders To The Rescue Again
Following July’s collapse in Durable Goods Orders (post-Boeing hangover), hope was high for a rebound in August (despite Harvey and Irma’s impact) and preliminary data showed a better than expected 1.7% MoM rise.
July’s plunge was the worst since Aug 2014’s post-Boeing hangover… August preliminary data showed a 1.7% rise (against expectations of a 1.0% gain).
Among the biggest drivers of this rebound was non-defense aircraft orders which jumped 44.8% MoM
And finally, just a quick reminder that fun-durr-mentals don’t matter (for now)…
Pending Home Sales Plunge; NAR Admits “The Housing Market Has Essentially Stalled”
After dismal drops in existing and new home sales, this morning’s pending home sales data for August was a disaster, tumbling 2.6% MoM (3.1% YoY) to its lowest SAAR since January 2016.
This is the second YoY decline in sales in a row, with SAAR tumbling to its lowest since Jan 2016…
Lawrence Yun, NAR chief economist, says this summer’s terribly low supply levels have officially drained all of the housing market’s momentum over the past year.
“August was another month of declining contract activity because of the one-two punch of limited listings and home prices rising far above incomes,” he said.
“Demand continues to overwhelm supply in most of the country, and as a result, many would-be buyers from earlier in the year are still in the market for a home, while others have perhaps decided to temporarily postpone their search.”
With little relief expected from the housing shortages that continue to plague several areas, Yun believes the housing market has essentially stalled.
Further complicating any sales improvement in the months ahead is the fact that Hurricane Harvey’s damage to the Houston region contributed to the South’s decline in contract signings in August, and will likely continue to do so in the months ahead. Furthermore, the temporary pause in activity in Florida this month in the wake of Hurricane Irma will slow overall sales even more in the South.
Yun now forecasts existing-home sales to close out the year at around 5.44 million, which comes in slightly below (0.2 percent) the pace set in 2016 (5.45 million). The national median existing-home price this year is expected to increase around 6 percent. In 2016, existing sales increased 3.8 percent and prices rose 5.1 percent.
“The supply and affordability headwinds would have likely held sales growth just a tad above last year, but coupled with the temporary effects from Hurricanes Harvey and Irma, sales in 2017 now appear will fall slightly below last year,” said Yun.
“The good news is that nearly all of the missed closings for the remainder of the year will likely show up in 2018, with existing sales forecast to rise 6.9 percent.”
Of course, none of those fun-durr-mentals matter…
All You Need To Know About Trump Tax Reform: Goldman Explains
This afternoon, during a speech in Indianapolis, President Trump will unveil the long-anticipated Republican tax reform proposal that calls for substantial business and individual tax cuts. As has been leaked previously, the tax plan is anticipated to disclose a 35% individual tax rate (although Congress may push it higher), a tax rate on corporations and pass thrus that will be around 20% and 25% respectively, while doubling the standard deduction to $12,000 for individuals. While offsetting these will be such proposed tax increases as the elimination of state and local tax deductibility, according to Goldman, the proposal will likely reduce federal revenues by around $4 trillion over ten years (or 1.7% of GDP over that period).
By contrast, as Goldman’s Alec Phillips writes in an overnight report, the debate in Congress has ranged from revenue-neutral tax reform to a recently floated proposal in the Senate that might allow for a $1.5 trillion tax cut over ten years (0.6% of GDP over that period). Even if this tentative budget agreement in the Senate becomes official the forthcoming proposal would have to be scaled substantially to fit within the fiscal constraints Congress is likely to impose.
In other words, for all the hype, the final Trump tax cut – if it passes – will be a pale shadow of its initial proposal.
That said, and as the recently surging dollar has confirmed, tax reform is finally starting to move and recent developments suggest a rising probability that tax legislation will be enacted by early 2018. Following the expected release of the tax proposal this week, Goldman now expect the Senate Budget Committee to vote on its fiscal year 2018 budget resolution the week of October 2, which looks likely to include a “reconciliation instruction” for a net tax cut of $1.5 trillion over ten years. If a similar instruction is finalized by the House and Senate (probably by late October), enactment of tax reform by early 2018 would become more likely in Goldman’s view, as it would allow for a corporate rate reduction and some individual tax relief while allowing lawmakers to avoid some of the most controversial base-broadening measures that might otherwise be necessary to offset the cost of the tax cuts.
So with that in mind, here are Goldman’s thoughts on tax reform ahead of Trump’s announcement this afternoon.
Thoughts on Tax Reform Ahead of the President’s Announcement
The White House is expected to release an outline of tax reform that is meant to represent a consensus among White House officials and House and Senate Republican leaders. Some details have begun to trickle out through various media reports, and appear to represent a middle ground between the House Republican “blueprint” on tax reform and the President’s prior proposal. Exhibit 1 compares prior proposals with what has been reported of the upcoming White House proposal and what we expect a plausible end result might be. We note that there has been little detail reported regarding a few areas, like taxation of capital income (we assume no change) and treatment of corporate interest expense (we do not expect the White House to propose repeal of interest deductibility, but some type of limitation might be floated).
Exhibit 1: Prior Tax Proposals vs. Reported White House Plan
That said, the White House proposal will represent only an opening bid, and many provisions are likely to change during the course of the legislative process. In particular, we expect any proposal to repeal the state and local tax deduction to face substantial political friction, in light of the fact that Republicans can afford to lose only 23 votes in the House, assuming no Democratic support, and there are 28 Republican House members from New York, New Jersey, and California alone, and dozens more from other states with substantial state and local income taxes. Exhibit 2 shows the cumulative number of House members in the top 20 high tax states, measured by per capita itemized income tax and property tax deductions.
Exhibit 2: Proposal to Repeal State and Local Deduction Would Likely Face Opposition
The other aspect of the reported proposal that seems likely to change, in our view, is the interplay between corporate rate reductions, full expensing of capital investment, and potential limitations on corporate interest deductibility. While House Republicans have consistently favored full expensing of business investment, the cost of which would be offset by partly repealing the deductibility of corporate interest expense, the President stopped short of endorsing this concept in the campaign and the White House tax reform outline earlier this year was silent on the issue. While the White House might propose to temporarily allow businesses to fully deduct capex for several years in return for limiting interest deductibility, many businesses appear to support the former more than they oppose the latter.
We would also expect the 20% corporate tax rate that the White House looks likely to propose to drift higher as the debate continues. The corporate income tax is projected to take in around $3.75 trillion over the next ten years (1.6% of GDP over that period); reducing the rate to 20% would take projected receipts down to around $2.1 trillion (0.9% of GDP), for a revenue loss of around $1.6 trillion (0.7% of GDP). To offset the cost of cutting the rate by nearly half, the corporate tax base would need to be nearly doubled.
However, there are simply not enough politically feasible opportunities to eliminate deductions and other tax preferences to broaden the base by this amount. For example, the Tax Policy Center recently estimated that eliminating all corporate tax preferences would allow the corporate tax rate to come down to 26% without losing revenues. However, some of the changes this would require, such as ending accelerated depreciation, are extremely unlikely to be included in a reform proposal since most lawmakers want to change policy in the opposite direction (i.e., increasing investment incentives). The Tax Foundation estimates that repealing all corporate tax preferences except for those dealing with depreciation and foreign income would raise around $900bn over ten years (0.4% of GDP) at current tax rates. However, this would only be enough income to reduce the corporate tax rate to around 28% in a revenue-neutral manner. Some of these would undoubtedly be too controversial, suggesting that a revenue-neutral tax reform would struggle to achieve a rate much below 30%.
This is why the tentative budget agreement in the Senate could be so important. As we noted last week, an agreement to allow for a $1.5 trillion (0.6% of GDP) tax cut in the upcoming budget resolution for fiscal year 2018 was reached in principle between Senator Toomey (R-PA), who has supported a larger tax cut, and Senator Corker (R-TN), who has been cautious on tax cuts, citing deficit concerns. If an agreement is finalized over the next few weeks that allows for a tax cut of around $1.5 trillion to pass via the budget reconciliation process, a corporate rate cut would become much easier since a portion of the cost would not need to be paid for.
At this point a budget agreement calling fSenate Budget Committee is likely to vote as soon as next week on a draft budget resolution for FY 2018, which looks likely to include a reconciliation instruction to the Senate Finance Committee to cut taxes by around $1.5 trillion over ten years (the details could be released later this week).or a net tax cut looks like the most likely outcome, but three hurdles need to be overcome. First, the Second, the full Senate will debate and vote on the resolution. This will take only 51 votes to pass, but some Republican senators might raise concerns related to the fiscal implications of the tax cut. A few Republicans have also recently raised the possibility that they will seek to pair tax reform with another effort to repeal and replace the Affordable Care Act (ACA), which would be a major setback for tax reform if it occurred. Third, the House also needs to pass its own version of the budget resolution, and an earlier version called for revenue-neutral tax reform. We expect the House will end up closer to the tax cut called for under the tentative agreement in the Senate, but this remains a source of uncertainty. We would not expect the budget resolution to be finalized until late October.
Even if the budget agreement calls for a meaningful net tax cut, the proposed changes the President looks likely to announce on September 27 seem likely to be scaled back as the congressional debate progresses, given the likely cost of the proposal the White House is likely to release compared with the fiscal constraints the plan will face in Congress. Wiifficult to estimate the cost of the plan, but as a very rough estimate we expect policies similar to those laid out in recent press reports would reduce tax receipts by around $4 trillion over ten years on a static basis. Even if the upcoming budget resolution targets a tax cut of $1.5 trillion over ten years, this suggests that the plan released this week will need to be scaled back substantially.
end
And this comment: the key is a loss of 1.5 trillion dollars over 10 years and this must be put into the budget resolution and it must pass in both the Senate and House
(courtesy zerohedge)
Goldman: Trump Tax Cut “Smaller Than Expected”; Here’s What Can Kill It
Just hours before the Trump tax plan was leaked this morning, Goldman noted that “even if this tentative budget agreement in the Senate becomes official the forthcoming proposal would have to be scaled substantially to fit within the fiscal constraints Congress is likely to impose” which we summarized as follows:
In other words, for all the hype, the final Trump tax cut – if it passes – will be a pale shadow of its initial proposal
Goldman also presented the following comparison table to summarize how the expected plan would fare in context:
Moments ago Goldman again took aim at the Trump tax plan – now published ahead of Trump’s speech today – and has concluded that the Tax plan details are largely as expected “but suggest a slightly smaller net tax cut than earlier reports.”
1. Details have been released regarding the tax reform plan outlined by the “Big Six” negotiators from the White House, House and Senate, and look roughly as expected based on press reports over the last few days. Overall, this proposal can be characterized as resembling the House Republican “blueprint” on tax reform, with a few changes: a smaller tax cut for upper income earners, no border adjusted tax, and some type of minimum or global tax on foreign corporate income as part of a shift to a territorial system.
2. We estimated that the revenue loss associated with the proposal based on details that had been released as of last night might be $3-4 trillion over ten years on a static basis, but the proposal released this morning looks like it might be at the lower end of that range, because the proposal essentially replaces the existing personal exemption and standard deduction with a new larger standard deduction, rather than simply increasing the standard deduction alone.
3. Regardless of the exact cost, the proposal still looks likely to reduce revenues by more than the $1.5 trillion over ten years envisioned in the tentative Senate budget agreement reported last week. Either the budget agreement will need to expand, or the tax cut will need to contract (though additional base broadening or smaller rate reductions) for tax reform to pass in the House and, in particular, the Senate.
4. We therefore continue to focus in particular on the outlook for the Senate’s budget resolution, details of which are likely to become known in coming days, with a vote in the Senate Budget Committee possible next week (the week of Oct. 2). If the House and Senate are able to pass a budget resolution that makes room for a tax cut of $1.5 trillion as has recently been discussed, we believe this would substantially raise the odds of enactment of tax reform in 2018.
Goldman also explained what is the one even that can assure the Trump tax plan joins Obamacare repeal on the compost heap of failed campaign promises:
By contrast, a revenue-neutral tax “instruction” in the final budget resolution would make reform difficult, as would failure to agree on a budget resolution at all.
The bottom line:
The details of the tax reform outline from the “Big Six” have been released and are largely in line with expectations. The size of the net tax cut for individuals looks somewhat smaller than the details floated in the press over the last few days, though the corporate provisions are largely as expected.
We continue to think that the plan will need to be scaled back to meet fiscal constraints in Congress.
The next issue to focus on will be the size of the tax cut “instruction” in the Senate’s budget resolution, which is likely to be unveiled in coming days.
In other words, smaller already, and set to get even smaller in the coming weeks… assuming it ever passes, of course.
Stocks Sink After Trump Tax Plan Leak – Here’s What Wall Street Thinks
US equity markets ran up overnight but appeared to hit a ‘sell the news’ moment as President Trump’s tax plan was leaked.
For now, it seems like the takeaway is that Trump wants Corporate/Small Business cuts at all costs and is willing to stick it to rich people with “at least as progressive” actions, if that’s what it takes to get the cuts. As Wall Street analysts generally agree for now, the devil is very much in the details… and those are yet to come.
COWEN (Chris Krueger)
- Offers initial takeaways: “The low bar was met” but the devil’s in the details, with no explicitly detailed offsets and no revenue/deficit number
- Creates way more questions than answers although progress has been made as 9 pages tops the 5-paragraph precis released earlier this year
- No revenue number makes the rest “almost an academic exercise”; highlights there was nothing on Obamacare taxes or capital gains, no Roth-ification, bank tax or border adjustment
- Still believes nothing will pass on taxes this year or next
GOLDMAN (Jan Hatzius)
- Prior to release, had written that proposal seemed likely to reduce revenues by ~$4t over 10 years; by contrast, debate in Congress has ranged from revenue-neutral tax reform to recent proposal allowing for $1.5t tax cut over 10 years
- Sees proposal as having to be scaled substantially to fit within fiscal constraints Congress is likely to impose
- Even so, tax reform is “finally starting to move,” recent developments suggest rising probability tax legislation will be enacted by early 2018
KBW (Brian Gardner)
- Reminds investors outline was expected to be more of a wish list than a final document; tax rates in plan are subject to change, may rise once Congress actually writes legislation; sees corporate rate as likely to be higher than 20%
- Had expected most of details of other tax policy issues (deductions, exemptions, etc.) would be left out, since policymakers didn’t want to give interest groups targets to shoot at this early in the process
BMO (Aaron Kohli, Ian Lyngen)
- Prior to release, had “plenty of open questions,” including the Senate reaction, whether there’s enough support within GOP rank- and-file to push reforms through in the House, and how cuts will be accounted for in offsetting revenue
- Expects debate on eliminating state/local tax deductions; also worries proposal is simply a “more exacting” version of Trump’s tax reform wish list; “it’s always folly to presume that precision implies accuracy and we fear that’s what the markets are currently trading”
- BMO on board with notion that a sizable cut will boost inflation over the next few years; not as certain anything more than minor cut will pass
HEIGHT SECURITIES (Stefanie Miller)
- Suggests investors “take a step back and evaluate” why Big Six are releasing tax framework; the blueprint’s purpose isn’t to set final policy details, but rather to advance the process and give Freedom Caucus Members cover
- Also provides tax writers opportunity to offer opening salvo ahead of more serious negotiations down the road
- No matter what’s in the blueprint, still puts 75% odds on Congress passing measure that cuts corporate rate to at least 25%
end
The truth on inflation and unemployment/
a must read..
(courtesy Raul Meijjer/Automatic Earth)
Why Doesn’t Janet Yellen Resign?
Authored by Raul Ilargi Meijer via The Automatic Earth blog,
You would think, certainly if you were as naive and innocent as I am, that when you get offered the job of Chair of the Federal Reserve, you must be sure, before accepting, that you have the credentials and the knowledge required. If you don’t, it looks as if you don’t take the job seriously. Janet Yellen, who’s been Chair since January 2014, doesn’t seem to agree.
In a speech Tuesday for the National Association for Business Economics Yellen ‘honestly’ admitted that she doesn’t understand inflation, control of which is the Fed’s no.1 task (it’s debatable whether that’s a good idea). She doesn’t understand a bunch of other issues either. Those are her own words, not mine. Here are these own words:
“My colleagues and I may have misjudged the strength of the labor market, the degree to which longer-run inflation expectations are consistent with our inflation objective, or even the fundamental forces driving inflation..”
Clear enough, you would think. But she didn’t offer her resignation. And for an important post like Fed chair, that is a major problem. As she undoubtedly does. So why is she keeping her job? Doesn’t she realize that when you don’t understand the issues you deal with, you’re prone to make disastrous mistakes?
Yellen and her colleagues work with models, and the models are wrong. The Fed’s predictions for things like inflation are ridiculously off, all the time. That may be news to her, but it’s old hash for many people in her field. So that she’s surrounded solely by people who don’t understand these things either is not an excuse.
So what does she expect now? That she will start to understand them all of a sudden, after years and years of not being able to? That reality will change to comply with her models? We can discount the option that she will suddenly begin using entirely different models, they’re all she has. But what then?
Under her predecessor Ben Bernanke, who never conceded he had no idea either but still didn’t, the Fed lowered interest rates to near zero Kelvin and bought trillions of dollars in bonds and securities. Now Yellen for some reason thinks it’s time to get rid of the stuff.
But on what basis does she make such a decision, if she self-admittedly doesn’t even understand the fundamental forces in play? How is that different from handing a box of matches to a 3-year old? Isn’t she really simply an academic dropped in a casino? From CNBC:
Yellen said a regular pace of rate hikes ahead is likely still warranted, though Fed officials are looking closely at the assumptions underlying those projections. While conceding that the Fed may need to slow the removal of accommodation, she also said the central bank “should also be wary of moving too gradually.”
There comes a point when naive innocent me starts asking: what does that even mean? Rate hikes are warranted but we don’t know why? Accommodative policies have been going too fast but they shouldn’t be too slow? Based on what? It can only be based on models that have proven faulty, can’t it, because they have no others.
* * *
Here are a few pointers for the occupants of the Marriner S. Eccles Federal Reserve Board Building.
Inflation is money velocity multiplied by money and credit supply. MV = PY. M is money supply, V is velocity, P is price level and real GDP is Y.
Velocity of money means consumer spending. 70% of US GDP is consumer spending. But American consumers are neck deep in debt and have very little money left to spend. Much of what they spend, they must borrow.78% of Americans live paycheck to paycheck. So forget about money velocity.
Moreover, as for the Fed’s second mandate after inflation, full employment, they don’t get that one either.
They seem to act on the presumption that any one job is just like the other. And then bleat: “My colleagues and I may have misjudged the strength of the labor market”.
But America has turned into a nation where the gig economy (the natural successor to first the knowledge economy, then the service economy), waiters, greeters and people working 3 jobs just to make ends meet have become the norm.When in the present circumstances you claim to have almost ‘achieved’ full employment, as Yellen and the Fed do, you must really be blind as a bat.
The other side of the equation is money supply. Interestingly, the Fed has issued tons of it, but handed it all to its owner banks. If they had spent it inside the economy itself, we could have been looking at a whole other picture. If those trillions would have gone to investment, manufacturing etc., instead of propping up banks and companies buying their own shares, Yellen might have actually seen some inflation.
If Americans have no money to spend, there can not be inflation. Simple. But the same stupid faulty predictions just keep coming:
So why is anybody still paying attention to Janet Yellen? Well, because she has her finger on the biggest financial trigger on the planet. No matter how shaky and uneducated that finger may be. Or do we pay attention exactly because we know what’s behind that shaky finger? Do we all put everything on red just because grandma does it too?
The craziest thing of all is that in reactions in the media to Yellen’s speech, she’s praised for admitting she has no clue what she’s doing. That takes the cake. And eats it too. Praised for admitting you’re terribly unfit for your job. That’s just great. That’s Bizarro world.
It’s well past best before time to get rid of Janet Yellen, and all the intellectual but idiots who work at the Fed. What is it, 1,000 PhDs, or was that 10,000? But the only thing that makes any real sense of course, the only thing that can save the nation, is to get rid of the Fed and its braindead mandates, interests and occupants altogether.
Hedgeye got this one painfully right:
And yeah, I know Yellen could be fired too if she doesn’t resign, but with Goldman Sachs all over the White House, what are the odds? And who would come in when she goes? She’s ideal, who’s going to get angry at a barely 5′ grandmother even is she clearly out of her depth and league?
Teachers Demand $3,200 From Each Kentucky Household To Fund Pension Ponzi For 2 Years
We have written frequently over the past couple of weeks about the disastrous public pension funds in Kentucky that are anywhere from $42 – $84 billion underfunded, depending on which discount rate you feel inclined to use. As we’ve argued before, these pensions, like the ones in Illinois and other states, are so hopelessly underfunded that they haven’t a prayer of ever again being made whole.
That said, logic and math have never before stopped pissed off teachers and/or clueless legislators from throwing good money after bad in an effort to ‘kick the can down the road’ on their pension crises. As such, it should come as no surprise at all that the Lexington Herald Leader reported today that Kentucky’s 365,000 teachers and other public employees are now demanding that taxpayers contribute a staggering $5.4 billion to their insolvent ponzi schemes over the next two years alone. To put that number in perspective, $5.4 billion is roughly $3,200 for each household in the state of Kentucky and 25% of the state’s entire budget over a two-year period.
Kentucky’s General Assembly will need to find an estimated $5.4 billion to fund the pension systems for state workers and school teachers in the next two-year state budget, officials told the Public Pension Oversight Board on Monday.
That amount would be a hefty funding increase and a painful squeeze for a state General Fund that — at about $20 billion over two years — also is expected to pay for education, prisons, social services and other state programs.
“We realize this challenge is in front of us. That’s obviously part of the need for us to address pension reform,” said state Sen. Joe Bowen, R-Owensboro, co-chairman of the oversight board.
“In the short-term, yeah, we’re obligated to find this money,” Bowen said. “And everybody is committed to do that. We have revealed this great challenge. We have embraced this great challenge, as opposed to previous members of the legislature, perhaps.”
In presentations on Monday, the pension oversight board was told that total employer contributions for KRS in Fiscal Years 2019 and 2020 would be an estimated $2.47 billion each year, up from $1.52 billion in the current fiscal year. Nearly $995 million of that would be owed by local governments. The remaining $1.48 billion is what the state would owe.
The Teachers’ Retirement System estimated that it would need a total of $1.22 billion in Fiscal Year 2019 and $1.22 billion in Fiscal Year 2020. That would include not only an additional $1 billion to pay down the system’s unfunded liabilities but also $139 million to continue paying the debt service on a pension bond that won’t be paid off until the year 2024.
Of course, the $5.4 billion will do absolutely nothing to avoid an inevitable failure of Kentucky’s pension system but what the hell…
As we’ve said before, the problem is that the aggregate underfunded liability of pensions in states like Kentucky have become so incredibly large that massive increases in annual contributions, courtesy of taxpayers, can’t possibly offset liability growth and annual payouts. All the while, the funding for these ever increasing annual contributions comes out of budgets for things like public schools even though the incremental funding has no shot of fixing a system that is hopelessly “too big to bail.”
So what can Kentucky do to solve their pension crisis? Well, as it turns out they hired a pension consultant, PFM Group, in May of last year to answer that exact question. Unfortunately, we suspect that PFM’s conclusions, which include freezing current pension plans, slashing benefit payments for current retirees and converting future employees to a 401(k), are somewhat less than palatable for both pensioners and elected officials who depend upon votes from public employee unions in order to keep their jobs…it’s a nice little circular ref that ensures that taxpayers will always lose in the fight to fix America’s broken pension system.
Be that as it may, here is a recap of PFM’s suggestions to Kentucky’s Public Pension Oversight Board courtesy of the Lexington Herald Leader:
An independent consultant recommended sweeping changes Monday to the pension systems that cover most of Kentucky’s public workers, creating the possibility that lawmakers will cut payments to existing retirees and force most current and future hires into 401(k)-style retirement plans.
If the legislature accepts the recommendations, it would effectively end the promise of a pension check for most of Kentucky’s future state and local government workers and freeze the pension benefits of most current state and local workers. All of those workers would then be shifted to a 401(k)-style investment plan that offers defined employer contributions rather than a defined retirement benefit.
PFM also recommended increasing the retirement age to 65 for most workers.
The 401 (k)-style plans would require a mandatory employee contribution of 3 percent of their salary and a guaranteed employer contribution of 2 percent of their salary. The state also would provide a 50 percent match on the next 6 percent of income contributed by the employee, bringing the state’s maximum contribution to 5 percent. The maximum total contribution from the employer and the employee would be 14 percent.
For those already retired, the consultant recommended taking away all cost of living benefits that state and local government retirees received between 1996 and 2012, a move that could significantly reduce the monthly checks that many retirees receive. For example, a government worker who retired in 2001 or before could see their benefit rolled back by 25 percent or more, PFM calculated.
The consultant also recommended eliminating the use of unused sick days and compensatory leave to increase pension benefits.
Meanwhile, PFM warned that the typical “kick the can down the road approach” would not work in Kentucky and that current retiree benefits would have to be cut.
“This is the time to act,” said Michael Nadol of PFM. “This is not the time to craft a solution that kicks the can down the road.”
“All of the unfunded liability that the commonwealth now faces is associated with folks that are already on board or already retired,” he said. “Modifying benefits for future hires only helps you stop the hole from getting deeper, it doesn’t help you climb up and out on to more solid footing going forward.”
Of course, no amount of math and logic will ever be sufficient to convince a bunch of retired public employees that they have been sold a lie that will inevitably fail now or fail later (take your pick) if drastic measures aren’t taken in the very near future
end
Gold Price Will Explode When System Breaks – Gordon Long
By Greg Hunter On September 27, 2017 In Market Analysis
By Greg Hunter’s USAWatchdog.com
Private investor Gordon Long contends the price of gold will shock the world when it revalues to reflect the massive amount of currency that has been printed globally. Long explains, “That is correct, and it won’t be something that is gradual, it will be very abrupt. The system will break . . . and the financial markets will freeze up. When they come out of the other end of that freeze, and it may be a number of weeks because the next crisis will be global and much more complex than 2008. We could control that with the Federal Reserve . . . and this one you cannot do because you cannot get agreement with all those countries. Never mind understanding the complexity. So, when we come out on the other side . . . there will be a massive revaluation in the U.S. dollar. . . . Gold could jump to $5,000 or $10,000 an ounce or something like that. . . . It will be massive. They will have to put some stability in the monetary system, and the only way they can do it is having something they cannot print. This is what has gotten us into this problem. We have to get back to sound money. It will have to be gold. What percentage of backing will determine what the value the gold will be.”
On the value of the U.S. dollar, Long contends, “Personally, I think the revaluation of the U.S. dollar will be well over 70% devaluation. It doesn’t mean the world is coming to an end. It just means you have to go through this to reset. Those who prepare and understand why this is happening and watch for the signals, there’s going to be fortunes transferred. They are being transferred right now, frankly. One other big caveat on gold prices going way up, expect the government to tax it like you have never seen before.”
Long says the stock market hitting one all-time high after another, despite all the economic headwinds, shows the public is in a “delusional phase.” The latest nuclear war threat from North Korea shows the extreme delusion going on, and Long contends, “This is about as clear of an example as you are going to get. This is more serious than the Cuban Missile Crisis, and the fact the market has not even blinked during this tells you we no longer know how to price risk. It’s not being priced correctly. . . . It’s almost pure speculation at this point, and maybe straight out gambling.”
When is it all going to come crashing down? Long predicts, “I think there is a scare coming this fall. That scare will allow central banks to start more quantitative easing and other programs. They will be guaranteeing the markets and guaranteeing assets because they can’t have this pension system collapse, and it’s all in the stock market. I think we are talking about the spring of next year.” (When it all totally implodes.)
Join Greg Hunter as he goes One-on-One with investor Gordon Long, founder of MATASII.com.
Video Link
https://usawatchdog.com/gold-price-will-explode-when- system-breaks-gordon-long/
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After the Interview:
Gordon Long also points out, “27 times the stock market has hit all-time new highs, and yet, fundamentals have never been worse. If there is a 5% to 8% decline in the stock market it’s over. They can’t have more of a decline than that because of the extreme degree of debt leverage.
-END-
Well that about does it for tonight
I will see you Thursday night.
Harvey.
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