Sept 28/Gold rises by $1.55 to $1286.00/Silver up 3 cents/UBS agrees with us that the USA will not implement any meaningful tax reform/China orders all Northern Korean companies and personnel out of the country/Germany withdraws from Incirlik/

GOLD: $1286.00 UP   $1.55

Silver: $16.82  UP 3 CENT(S)

Closing access prices:

Gold $1287.50

silver: $16.87

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: $1293.84 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME:  $1283.30

PREMIUM FIRST FIX:  $9.54 (premiums getting larger)

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SECOND SHANGHAI GOLD FIX: $1291.23

NY GOLD PRICE AT THE EXACT SAME TIME: $1279.90

Premium of Shanghai 2nd fix/NY:$11.32 (PREMIUMS GETTING LARGER)  

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LONDON FIRST GOLD FIX:  5:30 am est  $1284.30

NY PRICING AT THE EXACT SAME TIME: $1282.30 ???

LONDON SECOND GOLD FIX  10 AM: $1283.35

NY PRICING AT THE EXACT SAME TIME. 1284.00???

For comex gold:

SEPTEMBER/

NOTICES FILINGS TODAY FOR SEPT CONTRACT MONTH: 484 NOTICE(S) FOR  48400  OZ.

TOTAL NOTICES SO FAR: 577 FOR 57700 OZ  (1.7947 TONNES)

For silver:

SEPTEMBER

 37 NOTICES FILED TODAY FOR

185,000  OZ/

Total number of notices filed so far this month: 6,575 for 32,875,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

end

Let us have a look at the data for today

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In silver, the total open interest FELL BY  1909 contracts from  186,997  DOWN TO 184,997  WITH THE GOOD SIZED FALL IN PRICE THAT SILVER UNDERTOOK IN YESTERDAY’S TRADING (DOWN 9 CENTS ). AGAIN TODAY, IT SURE LOOKS LIKE WE GOT  A SMALL AMOUNT OF BANKER SILVER SHORT COVERING AT THIS WEEK IS OPTIONS EXPIRY ON THE LONDON/OTC MARKET AND WE ALWAYS  ON THE RECIPROCAL END OF RAIDS

RESULT: A SMALL FALL IN OI COMEX  WITH THE  9 CENT PRICE FALL. IT LOOKS LIKE WE HAD A SMALL AMOUNT OF BANKER SHORTS COVERING.  THE BANKERS AGAIN ORCHESTRATE ANOTHER RAID TODAY AND FAILED AGAIN. 

 In ounces, the OI is still represented by just UNDER 1 BILLION oz i.e.  0.924 BILLION TO BE EXACT or 132% 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 9752 CONTRACTS WITH THE FALL  in price of gold ($13.65 DROP) WITH YESTERDAY’S COMEX TRADING.  The new OI for the gold complex rests at 539,885.  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 CONTINUAL RAIDS  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 ($13.65).

we had: 484 notice(s) filed upon for 48400 oz of gold.

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

GLD: WOW!! 

Tonight , NO CHANGES  in gold inventory at the GLD:

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  1909 contracts from 186,906  DOWN TO 184,997 (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 9 CENTS IN YESTERDAY’S TRADING. ANOTHER ATTEMPTED RAID ORCHESTRATED BY THE CROOKS 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 WEDNESDAY night/THURSDAY morning: Shanghai closed DOWN 5.60 POINTS OR 0.17%   / /Hang Sang CLOSED DOWN 220.83 POINTS OR 0.80%/ The Nikkei closed UP 96.06 POINTS OR 0.47%/Australia’s all ordinaires CLOSED DOWN 0.11%/Chinese yuan (ONSHORE) closed WELL DOWN at 6.6640/Oil UP to 52.65 dollars per barrel for WTI and 58.28 for Brent. Stocks in Europe OPENED GREEN/MIXED. Offshore yuan trades  6.6634 yuan to the dollar vs 6.6640 for onshore yuan. NOW THE OFFSHORE MOVED A LITTLE STRONGER TO THE ONSHORE YUAN/ ONSHORE YUAN HUGELY WEAKER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE WEAKER  DOLLAR. CHINA IS HAPPY TODAY

 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)North Korea

Rocket man claims that 5 million new soldiers have been forced to enlist ahead of his  “imminent provocation” with the west;

( zerohedge)

b) REPORT ON JAPAN

c) REPORT ON CHINA

A must read commentary suggesting what happened it August with respect to falling USA dollar and rising CNY and CNH. I am sure that Juckes is correct: China was for sure accumulating treasuries  (this is inthe Sept report) which in turn caused the rates on USA treasuries to fall and the dollar to fall.  The POBC was also no doubt buying the Eur/USA.  China was worried that they would be classified as the FX currency manipulator.  That all changed on Sept 8  and he have now witnessed a complete fall in both CNH and CNY :  China has abandoned their support for their currency and wish it to fall.

( zerohedge)

ii)Two days after the latest sanctions orchestrated by the USA in which they targeted 26 North Korean banks and personnel doing business with China, it was China today that ordered all North Korean businesses operating in China to close.  The noose is getting tighter and tighter around the neck of Kim.  What will be his next move as economically he has just been murdered…
( zero hedge)

4. EUROPEAN AFFAIRS

The world’s largest derivative player and convicted criminal bank Deutsche bank has just been downgraded by Fitch.  They comment that they : “No longer expect this franchise to recover this year
( Fitch/zerohedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

TURKEY/GERMANY/INCIRLIK

Not good:  Germany withdraws from the huge Turkey airbase Incirlik as Turkey turns towards Russia and China.  The big question is what will happen to all of those 3 million migrants.  The west will not allow Turkey to become a member of NATA

( zerohedge)

6 .GLOBAL ISSUES

 

Bali, Indonesia

As reported to you yesterday, the huge volcano around Bali is set to erupt.  Tens of thousands of people are fleeing this active Volcano

( zerohedge)

7. OIL ISSUES

i)Nick Cunningham discusses the pros and cons of a further rise in oil prices
( Nick Cunningham/OilPrice.com
(zerohedge)

8. EMERGING MARKET

9.   PHYSICAL MARKETS

i)Interesting:  bullion dealer Sharp Pixley will now accept payment in Bitcoin

( Reuters/GATA)

ii)We brought you this story yesterday where John Paulsen is targeting gold mining CEO’s for excessive pay.

I agree with him but they should also be punished for their silence in the manipulation of the metals and when this is over their lower stock options should be rescinded

( John Paulsen/Bloomberg/GATA)

 

iii)Golden week is coming tomorrow upon which China will be closed for business until Oct 9. Hoffman suggests that traders are front running knowing that the dominant physical player will be absent the first week of October.

( zerohedge)

iv)Today the “Wolf of Wall Street” agrees with Jamie Dimon of JPM that bitcoin is a fraud
(courtesy zerohedge)

10. USA Stories

i)trading early morning:

as I promised you, Trump tax reform has little chance of passing. Today UBS also stated that tax reform has little chance.

( zerohedge)

i b)Markets will not like this:  Gary Cohn states that he cannot guarantee taxes will not go up for the middle class.  The whole narrative for the past year as been the “stimulus” created by cutting taxes for the middle class.

( zerohedge)

ii)Wholesaler inventories surge due to plant shuttering/automobile makers are stocking up. This is positive for Q3 GDP but as sales plummet in Q4 this could go terribly wrong

( zero hedge)

iii)Hardly any change in Q2 at 3.1%.

( zero hedge)

iv)Bannon describes it is time for “war” on the Republican establishment as the anti Trumper Republicans are being attacked by more conservative leaning Republicans.

 

( zero hedge)

v) Nothing but fake news:  the Dept of Homeland Security was wrong as California also joined other states by reporting that the Russians did not hack their voting systems

( zero hedge)

 

vi)Seems that advertisers agree with Trump: One sponsor has decided to pull ads from the NFL

( zerohedge)

Let us head over to the comex:

The total gold comex open interest FELL BY MORE THAN EXPECTED 9752 CONTRACTS DOWN to an OI level of 539,885 WITH THE FALL IN THE PRICE OF GOLD  ($13.65 LOSS IN YESTERDAY’S TRADING).

Result: a  LARGER SIZED open interest DECREASE WITH THE GOOD SIZED FALL IN THE PRICE OF GOLD ($13.65.) 

 The new non active September contract month saw it’s OI FELL BY 0 contracts REMAINING AT  484.   We had 0 notices filed UPON YESTERDAY so we LOST 0 contracts or an additional NIL oz will not stand for delivery in this non active month of September.  We had 0 EFP’s ISSUED FOR SEPTEMBER which entitles them to a fiat bonus plus a deliverable contract on a different exchange and most likely that would be London.  These are private deals so we do not get to see the makeup of these deals only the number of EFP’s issued.

The next active contract month is Oct and here we saw a LOSS of 8524 contracts DOWN to 6.131 WITH ONE DAY TO GO BEFORE FIRST DAY NOTICE FRIDAY SEPT 29..

The November contract saw A GAIN OF 46 contracts UP to 1177.

The very big active December contract month saw it’s OI LOSS OF 4684 contracts DOWN to 428,428.

We had 484 notice(s) filed upon today for  48400 oz

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And now for the wild silver comex results.  Total silver OI FELL BY  1909 CONTRACTS FROM 186,906 DOWN TO 184,997 WITH YESTERDAY’S GOOD SIZED  24 CENT FALL IN PRICE. WE HAVE HAD  CONSTANT TORMENT FROM THE BANKERS THESE PAST 13 DAYS, AND IT CONTINUED  TODAY AS WE STILL HAVE OPTIONS EXPIRY ON OUR LONDON/OTC TO DEAL WITH AND THEY EXPIRE AT 9- 10 AM FRIDAY MORNING. HOWEVER OUR LONGS REMAIN RESOLUTE DETERMINED TO TAKE ON OUR BANKERS AS A TINY FRACTION OF SILVER LEAVES LEFT THE SILVER THEATRE. WE MUST HAVE HAD SOME BANKER SHORTS COVERING.  WE AGAIN WITNESS THE AMOUNT STANDING FOR SILVER DELIVERY INCREASE AND THIS TIME BY  135,000 OZ.  WE HAVE BEEN WITNESSING THIS PHENOMENA FOR THE PAST 5 MONTHS.  (SEE BELOW).
RESULT:  A SMALL DECREASE IN OI AT THE COMEX  WITH A 9 CENT LOSS IN PRICE. DEMAND FOR PHYSICAL SILVER RISES AGAIN AS THE AMOUNT STANDING INCREASES FOR THE SEPT CONTRACT MONTH BY  135,000 OZ.SILVER DEMAND REMAINS EXTREMELY STRONG/THE RAID ALL WEEK LONG HAD NEGLIGIBLE EFFECT ON OUR RESOLUTE LONGS. WE MUST HAVE HAD SOME SMALL NUMBER OF BANKERS COVER THEIR SHORTS WITH THE RISE IN SILVER PRICE

We are now in the active contract month of September (and the last active month until December). Today we witness Sept. OI LOSE 51  contacts DOWN to 37. We had 78 notices filed yesterday, so we again gained 27 contracts or an additional 135,000 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 104 contacts DOWN TO 918. November saw a GAIN of 70 contract(s) and thus RISING TO  201. After November, the NEXT big active contract month is December and here the OI LOST 2002  contracts DOWN to 146,207 contracts.

We had 37 notice(s) filed for  185,000 oz for the SEPT. 2017 contract

VOLUMES: for the gold comex

ESTIMATED VOLUME TODAY: 275,115 CONTRACTS / GOOD

YESTERDAY’S confirmed volume was 412,4110 which is EXCELLENT

volumes on gold are STILL HIGHER THAN NORMAL!

FINAL standings for SEPTEMBER

 Sept.28/2017.

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 
 64,300.00 oz
Scotia
2000 kilobars
No of oz served (contracts) today
 
484 notice(s)
48,400 OZ
No of oz to be served (notices)
0 contracts
(NIL oz)
Total monthly oz gold served (contracts) so far this month
577 notices
57700 oz
1.7947 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 we HAD  1 kilobar transaction(s)/ 
 WE HAD 0 DEALER DEPOSIT:
total dealer deposits: nil oz
We had nil dealer withdrawals:
total dealer withdrawals:  0 oz
we had 1 customer deposit(s):
i) Into Scotia: 64,300 oz (2000 kilobars)
  64300.00 oz  (dubious)
total customer deposits; 64,300.00  oz
We had 0 customer withdrawal(s)
total customer withdrawals; nil  oz
 we had 0 adjustment(s)
For SEPT:

Today, 0 notice(s) were issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 484  contract(s)  of which 0 notices were stopped (received) by j.P. Morgan dealer and 49 notice(s) was (were) stopped/ Received) by j.P.Morgan customer account.

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To calculate the FINAL total number of gold ounces standing for the SEPTEMBER. contract month, we take the total number of notices filed so far for the month (577) x 100 oz or 57700 oz, to which we add the difference between the open interest for the front month of SEPT. (484 contracts) minus the number of notices served upon today (484) x 100 oz per contract equals 57,700  oz, the number of ounces standing in this active month of SEPT.
 
Thus the FINAL standings for gold for the SEPTEMBER contract month:
No of notices served  (577) x 100 oz  or ounces + {(484)OI for the front month  minus the number of  notices served upon today (484) x 100 oz which equals 57,700 oz standing in this  active delivery month of SEPTEMBER  (1.797 tonnes)
We LOST 0 contracts OR AN ADDITIONAL NIL OZ WILL  STAND FOR GOLD and 0 EFP’s were issued for September which gives the long holder a fiat bonus plus a deliverable product on another exchange and that most likely will be London. IT IS OBVIOUS THAT  THERE IS HARDLY ANY GOLD TO DELIVER UPON LONGS IN SEPTEMBER.  THUS THE CROOKS  USE THE EFP’S TO TRANSFER THEIR OBLIGATION TO ANOTHER EXCHANGE. THIS IS WHY OVER 7400 EFP’S WERE ISSUED FOR OCTOBER THIS PAST FRIDAY.
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Total dealer inventory 692,502.452 or 21.54 tonnes  (dealer gold continues to disappear)
Total gold inventory (dealer and customer) = 8,761,405.917 or 272.516 tonnes 
 
I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold!

The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.
 
IN THE LAST 13 MONTHS  81 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE SEPT DELIVERY MONTH
September FINAL standings
 Sept 28  2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
 nil oz
Deposits to the Dealer Inventory
 nil oz
Deposits to the Customer Inventory 
 1,200,604.08 oz
CNT
No of oz served today (contracts)
37 CONTRACT(S)
(185,000 OZ)
No of oz to be served (notices)
0 contracts
(NIL oz)
Total monthly oz silver served (contracts) 6575 contracts (32,875,000 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
today, we had  0 deposit(s) into the dealer account:
total dealer deposit: nil   oz
we had 0 dealer withdrawals:
total dealer withdrawals: nil oz
we had 0 customer withdrawal(s):
TOTAL CUSTOMER WITHDRAWALS: nil  oz
We had 1 Customer deposit(s):
i) Into CNT: 1,200,604.08 oz
***deposits into JPMorgan have stopped  again
In the month of March and February, JPMorgan stopped (received) almost all of the comex silver contracts.
why is JPMorgan bringing in so much silver??? why is this not criminal in that they are also the massive short in silver
total customer deposits: 1,200,604.08  oz
 
 we had 2 adjustment(s)
i) Out of Brinks:  325,091.770 oz was adjusted out of the dealer and this landed into the customer acct of Brinks
ii) Out of CNT: 739,798.081 oz was adjusted out of the dealer and this landed into the customer account of CNT 
The total number of notices filed today for the SEPTEMBER. contract month is represented by 37 contract(s) for 185,000 oz. To calculate the number of silver ounces that will stand for delivery in SEPTEMBER., we take the total number of notices filed for the month so far at 6575 x 5,000 oz  = 32,875,000 oz to which we add the difference between the open interest for the front month of SEPT (37) and the number of notices served upon today (37) x 5000 oz equals the number of ounces standing.
 

 

.
 
Thus the FINAL standings for silver for the SEPTEMBER contract month:  6575 (notices served so far)x 5000 oz  + OI for front month of SEPTEMBER(37 ) -number of notices served upon today (37)x 5000 oz  equals  32,875,000 oz  of silver standing for the SEPTEMBER contract month. This is excellent for this active delivery month. Silver is being constantly demanded at the silver comex and we witness again the amount of silver demanded daily increase right from the get go. (ON AUGUST 31 (FIRST DATE NOTICE) WE HAD 20.15 MILLION OZ STAND. THUS IN THE FIRST 28 DAYS OF SEPTEMBER, WE HAVE HAD A HUGE INCREASE OF  12.8 MILLION OZ STAND FOR DELIVERY AS DEALERS JUMP QUEUE TRYING TO FIND THE NECESSARY SILVER TO SUPPLY TO OUR LONGS.)
 
WE HAD AN INCREASE OF 27 CONTRACTS OR AN ADDITIONAL 135,000 OZ OF SILVER WILL STAND FOR DELIVERY IN THIS ACTIVE CONTRACT MONTH OF SEPTEMBER. THIS HAS BEEN THE 5th CONSECUTIVE MONTH THAT WE HAVE WITNESSED EITHER AN INCREASE (95% OF THE TIME) OR STANDING PAT (THE OTHER 5%).  WE HAVE NOT HAD A DECREASE IN STANDING I.E. AS THEY DELIVERY MONTH PROCEEDS NOBODY WISHES AN EFP PRODUCT IN EXCHANGE FOR A DEPARTING LONG.SOMEBODY BIG WANTS SILVER IN A VERY BIG WAY.
Last yr on the first day notice for the Sept silver 2016 contract we had 17.070 million oz stand for delivery.
By month end:  16.075 million oz/
 
Volumes: for silver comex
ESTIMATED VOLUME TODAY: 64,532 CONTRACTS: (HUGE)
YESTERDAY’s  confirmed volume was 87,128 contracts which is EXCELLENT
YESTERDAY’S CONFIRMED VOLUME OF 87,128 CONTRACTS WHICH EQUATES TO 435 MILLION OZ OF SILVER OR 63% OF ANNUAL GLOBAL PRODUCTION OF SILVER EX CHINA EX RUSSIA). IN OUR HEARINGS THE COMMISSIONERS STRESSED THAT THE OPEN INTEREST SHOULD BE AROUND 3% OF THE MARKET.
 
Total dealer silver:  37.610 million (close to record low inventory  
Total number of dealer and customer silver:   219.978 million oz
Interestingly enough for the non active delivery month of August we had 6,245,000 oz stand and in Sept  32,875,000 oz stand for delivery for a total of 39,120,000 oz.  These oz should have been first removed from the dealer account and settle into the customer account.  This obviously did not happen.  If all of those deliveries wanted to sell their silver then they would receive a warrant and the silver would be classified as registered or for sale. For years we have not seen any evidence of settling for physical in either gold or silver.
The record level of silver open interest is 234,787 contracts set on April 21./2017  with the price at that day at  $18.42
The previous record was 224,540 contracts with the price at that time of $20.44
end

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 6.3 percent to NAV usa funds and Negative 6.4% to NAV for Cdn funds!!!! 
Percentage of fund in gold 62.8%
Percentage of fund in silver:37.2%
cash .+0.0%( Sept 28/2017) 
2. Sprott silver fund (PSLV): STOCK   NAV FALLS TO -0.52% (Sept 28/2017) 
3. Sprott gold fund (PHYS): premium to NAV FALLS TO -0.62% to NAV  (Sept 28/2017 )
Note: Sprott silver trust back  into NEGATIVE territory at -0.52%-/Sprott physical gold trust is back into NEGATIVE/ territory at -0.62%/Central fund of Canada’s is still in jail  but being rescued by Sprott.

Sprott’s hostile 3.1 billion bid to take over Central Fund of Canada

(courtesy Sprott/GATA)

Sprott makes hostile $3.1 billion bid for Central Fund of Canada

 Section: Daily Dispatches

From the Canadian Press
via Canadian Broadcasting Corp. News, Toronto
Wednesday, March 8, 2017

http://www.cbc.ca/news/canada/calgary/sprott-takeover-bid-central-fund-c…

Toronto-based Sprott Inc. said Wednesday it’s making an all-share hostile takeover bid worth $3.1 billion US for rival bullion holder Central Fund of Canada Ltd.

The money-management firm has filed an application with the Court of Queen’s Bench of Alberta seeking to allow shareholders of Calgary-based Central Fund to swap their shares for ones in a newly-formed trust that would be substantially similar to Sprott’s existing precious metal holding entities.

The company is going through the courts after its efforts to strike a friendly deal were rebuffed by the Spicer family that controls Central Fund, said Sprott spokesman Glen Williams.

“They weren’t interested in having those discussions,” Williams said.

 Sprott is using the courts to try to give holders of the 252 million non-voting class A shares a say in takeover bids, which Central Fund explicitly states they have no right to participate in. That voting right is reserved for the 40,000 common shares outstanding, which the family of J.C. Stefan Spicer, chairman and CEO of Central Fund, control.

If successful through the courts, Sprott would then need the support of two-thirds of shareholder votes to close the takeover deal, but there’s no guarantee they will make it that far.

“It is unusual to go this route,” said Williams. “There’s no specific precedent where this has worked.”

Sprott did have success last year in taking over Central GoldTrust, a similar fund that was controlled by the Spicer family, after securing support from more than 96 percent of shareholder votes cast.

The firm says Central Fund’s shares are trading at a discount to net asset value and a takeover by Sprott could unlock US$304 million in shareholder value.

Central Fund did not have any immediate comment on the unsolicited offer. Williams said Sprott had not yet heard from Central Fund on the proposal but that some shareholders had already contacted them to voice their support.

Sprott’s existing precious metal holding companies are designed to allow investors to own gold and other metals without having to worry about taking care of the physical bullion.

end

And now the Gold inventory at the GLD

Sept 28/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 864.65 TONNES

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.

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Sept 28 /2017/ Inventory rests tonight at 864.65 tonnes
*IN LAST 239 TRADING DAYS: 76.45 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 174 TRADING DAYS: A NET  80.98 TONNES HAVE NOW BEEN ADDED INTO  GLD INVENTORY.
*FROM FEB 1/2017: A NET  49.59 TONNES HAVE BEEN ADDED.

end

Now the SLV Inventory

Sept 28/NO CHANGES IN SILVER INVENTORY/INVENTORY RESTS AT 326.757 MILLION OZ/

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 28.2017:

Inventory 326.757  million oz
end
  • 6 Month MM GOFO

    Indicative gold forward offer rate for a 6 month duration

    + 1.34%
  • 12 Month MM GOFO
    + 1.57%
  • 30 day trend

end

Major gold/silver trading/commentaries for THURSDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

Gold Standard Resulted In “Fewer Catastrophes” – FT

Editor Mark O’Byrne

– “Going off gold did the opposite of what many people think” – FT Alphaville
– “Surprising” findings show benefits of Gold Standard
–  Study by former Obama advisor in 1999 and speech by Bank of England economist in 2017 make case for gold
– UK economy was ‘much less prone to extremes’ under than the gold standard – research shows
– ‘Gold standard seems to have produced fewer catastrophes for Britain’ – data shows 
– FT still wary of gold standard arguing ‘stability can be overrated and growth is worth having’
– Finding is not surprising and joins a wealth of evidence and research that shows gold’s importance as money, a store of value and safe haven asset

300 years ago last week on the 21st September, 1717 Sir Isaac Newton, Master of the Royal Mint of Great Britain, accidentally invented the gold standard.

Last month it was the 46th anniversary of President Nixon ending the gold standard. Since then the world has existed on a system of fiat paper and digital currency. It works so badly that it has lead to the global financial crisis, unending debt issues and a dramatic devaluation in sovereign currencies.

Despite this, much of the media and central banking system remain supporters of the current financial and monetary status quo.

They are so convinced that the time before fiat money was a disaster that anyone who suggests otherwise is labelled a gold-bug and told to move along.

Last week, there was a glimmer of light when the Financial Times’ Matthew C. Klein uncovered some 18-year old research into the gold standard and a recent speech by a Bank of England economist.

Mr Klein although a young man has quite an impressive journalistic c.v. He writes for FT Alphaville and Bloomberg View about the economy and financial markets.

He previously wrote for the Economist magazine and before that, Klein was a research associate at the Council on Foreign Relations (CFR), where he spent more than two years studying the history of the Federal Reserve and the intellectual history of monetary economics.

Going off gold did the opposite of what many people think

Klein writing in FT Alphaville draws on research from former economics advisor to President Obama, Christina Romer:

Imagine you can choose between living in two kinds of societies:

  1. Dynamic world prone to wild swings and big crashes, but ultimately more growth in the long run
  2. Safe and stable world with greater consistency, less volatility, and much lower risk of catastrophe

You might think that Americans and Europeans effectively decided to move from option 1 to option 2 between the late 19th and mid-20th centuries. Depending on your politics, you might attribute this to the stultification of modernity, or the triumph of the enlightened welfare state.

Regardless, you would be wrong.

The growth of government as a service provider and guarantor of financial security — backed by fiat money — has actually coincided with faster trend growth and greatervariance around that trend line. Moreover, the likelihood of particularly bad events has increased since the escape from the “golden fetters”.

Klein refers to this and subsequent information from Romer as ‘surprising findings’. They are not likely suprising to Klein but would be too many FT readers given its generally negative stance towards gold in recent years.

The gold standard: Reduced volatility 

Klein reports that in 1999, Romer made some interesting findings regarding the stability and volatility of various business cycles in the 20h century.

The findings initially suggest results that would make modern bankers rest on their laurels in terms of how they manage things today, but dig deeper and things don’t look so straight forward.

He reports that Romer concluded:

that business cycles had roughly the same amplitude both before WWI and after WWII. Volatility was slightly lower in the modern period:

Credit: FT, Romer

But this was entirely attributable to the unusual calm of 1985-1997:

Credit: FT, Romer

Given what’s happened since then, the pre-WWI period might look more stable than the era of the “countercylical” Federal Reserve. Romer measured the severity of a downturn by looking at how far industrial production fell from its peak and how long it took to return to its old level. Using her method, the financial crisis was about as painful as the depression of 1920 and the contraction of 1937 — and about 2.5 times as bad as any post-WWII downturn.

Bank of England’s economist makes case for gold

Gertjan Vlieghe, an economist and former economic assistant to Lord Mervyn King at the Bank of England, gave a speech last week entitled ‘Real Interest Rates and Risk’.

The speech presented research on and linked the history of interest rates, economic volatility, and stock market returns.

As Klein points out in the FT the most important part of the speech is most likely to the be most underreported.

Vlieghe’s research finds that whilst the UK economy off the gold standard was better at allocating resources, the dangers it brought to the financial system made it “more fragile” and “lead to a financial crisis”.

Vlieghe at the Bank of England says:

I suspect the increase in the importance of private sector debt and financial intermediation plays an important role, which in turn was facilitated by moving off the gold standard. An economy where debt and financial intermediation play a more important role can allocate resources more efficiently and achieve a higher growth rate, but also becomes more fragile. Small set-backs can have amplified downside effects and even lead to a financial crisis

Klein draws our attention to an interesting chart presented as part of Vlieghe’s speech.

Credit: FT, Vlieghe

Klein explains:

The table, based on nearly three centuries of UK data, shows that the economy grew much less (in per person terms) under the gold standard than in the period of fiat money, but was also much less prone to extremes.

The distribution of growth performance during the gold standard era was much more tightly concentrated around the average than the distribution in the epoch of fiat money. The comparison is even more stark when comparing average consumption, which is the best single measure of living standards. (That’s what the kurtosis numbers show.)

Credit: FT, Vlieghe

Klein clearly recognises that this shows the gold standard for what it is: a monetary system which brings far fewer disasters to an economy than one easily manipulated by central bankers and governments.

This, says Klein, requires some serious consideration.

the gold standard seems to have produced fewer catastrophes for Britain. There is no negative (or positive) skew in the distribution, unlike in the modern period, which has been blighted by several profoundly unpleasant downturns.

the standard arguments in favour of the flexible and “counter-cyclical” state we have today, need serious revision.

Very little desire for serious revision

Throughout history, the majority of fiat currencies have met a miserable end, succumbing to hyperinflation after just a few decades.

So far the current global fiat monetary system has survived just over 45 years. Few can seriously look at it and argue that it is healthy. It is increasingly unstable and is in terminal decline.

It is not unfathomable to expect it to fail in the coming financial crisis. Unfortunately bankers and governments have not woken up to this thought yet.

Ignorance is apparently bliss when it comes to believing a decade of money printing can be unwound without serious consequence.

Whilst it is refreshing to see the Financial Times take a positive look at the gold standard, it is unfortunate that they have failed to recognise this simple fact from looking at monetary history and at the wealth of research out there which makes very similar arguments.

One of the world’s most famous bankers, Alan Greenspan, recognised the destructive nature of the fiat system:

‘In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value …’ (Greenspan, 1967)

In a study which used data from 15 countries from as early as 1820 to as late as 1994, Rolnick and Weber (1997) found ‘money growth and inflation are higher’ under fiat standards than those seen in gold and silver standards. They found during the fiat standard the average inflation rate was 9.17% per year compared to 1.75% per-cent found in gold standards.

The result of the FT’s approach is their readers (you, I, central bankers, finance ministers) are easily swayed into believing that a system of debt, volatility, high returns and high risk is preferable to the gold standard. We come to believe it is ‘the norm’.

But a system which repeatedly fails cannot be ‘the norm.’ Surely the one that we ultimately return to after each failure should be ‘the norm’?

Did we learn anything about money?

Following the financial crisis, a 2009 UN report concluded that the disaster was not a result of failures, instead the result of bad political choices:

‘…our multiple crises are not the result of a failure or failures of the system. Rather, the system itself – its organization and principles, and its distorted and flawed institutional mechanisms – is the cause of many these failures… our global economy is but one of many possible economies, and, unlike the laws of physics, we have a political choice to determine when, where, and to what degree the so- called laws of economic behaviour should be allowed to hold sway.’

Luckily gold’s role as a store of value and important monetary asset is being increasingly appreciated. This is happening both on the part of governments and individuals alike.

Major holders and buyers of gold include the world’s largest central banks, the largest global banks, the largest insurance companies in the world, the largest hedge funds in the world, the largest pension funds in the world and of course many wealthy and prudent investors.

The idea of returning gold to the monetary system is clearly not a crazy one – it is already slowly happening and the Chinese look set to take the lead in this regard.

The mainstream media should not be surprised by this. After all, the evidence shows gold’s ability to protect wealth, reduce volatility and protect us from the policies of central banks and increasingly populist governments.

Klein’s article can be read in full here Going off gold did the opposite of what many people think – FT Alphaville

News and Commentary

Gold rises from 1-mth lows; palladium at discount to platinum (Reuters.com)

Ex-UBS metals trader indicted over alleged metals price rigging (Reuters.com)

Bonds Slide as Dollar Climbs on Tax Plan, Economy (Bloomberg.com)

Trump proposal slashes taxes on businesses, the rich amid deficit worries (Reuters.com)

Billionaire Paulson Targets CEOs Of Poorly Performing Gold Miners (Bloomberg.com)

 Source: City AM

London house prices to fall this year and next on Brexit – Experts (CityAM.com)

This Is Not A Time To Buy Anything – Zell Warns Retail Real Estate Market Is A “Falling Knife” (ZeroHedge.com)

A Real Republic of Opportunity would Tax Land and Property to the Hilt (DavidMCWilliams.ie)

You’re Likely A Lot Less Prepared For Crisis Than You Realize (PeakProsperity.com)

Jim Rogers on why you should get “less passive” today (StansBerryChurcHouse.com)

Gold Prices (LBMA AM)

28 Sep: USD 1,284.30, GBP 961.04 & EUR 1,091.40 per ounce
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)

28 Sep: USD 16.82, GBP 12.53 & EUR 14.28 per ounce
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

– Financial Advice From Man Who Made $1+ Billion in 1929 – Importance Of Being Patient and “Sitting”
– “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

END

Interesting:  bullion dealer Sharp Pixley will now accept payment in Bitcoin

(courtesy Reuters/GATA)

Bullion dealer Sharps Pixley to accept payment in bitcoin

 Section: 

From Reuters
Wednesday September 26, 2017

LONDON — London bullion dealer Sharps Pixley will allow customers to pay for gold and other precious metals using digital currency bitcoin, the company said Tuesday.

Sharps Pixley, which last year opened Britain’s first showroom making gold coins and bars available to private investors in London’s elite district of Mayfair, said it would offer the service though payment processor BitPay. …

… For the remainder of the report:

http://www.reuters.com/article/gold-bitcoin-sharps-pixley/london-gold-de…

END

 

We brought you this story yesterday where John Paulsen is targeting gold mining CEO’s for excessive pay.

I agree with him but they should also be punished for their silence in the manipulation of the metals and when this is over their lower stock options should be rescinded

 

(courtesy John Paulsen/Bloomberg/GATA)

Billionaire John Paulson targets gold-mining CEOs over pay

 Section: 

By Anders Melin, Danielle Bochove, and Luzi-Ann Javier
Bloomberg News
Tuesday, September 26, 2017

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. …

… For the remainder of the report:

https://www.bloomberg.com/news/articles/2017-09-26/billionaire-paulson-t…

 

END

 

Golden week is coming tomorrow upon which China will be closed for business until Oct 9. Hoffman suggests that traders are front running knowing that the dominant physical player will be absent the first week of October.

(courtesy zerohedge)

Is This The Real Driver Of Gold’s Recent Weakness?

If you are a precious metals investor then you may be wondering why the price of gold and silver has been slammed in recent weeks… amid ever-increasing nuclear Armageddon rhetoric, storms, quakes, floods, and a central bank (that is notoriously bad at forecasting) about to attempt to do something with its balance sheet that has never been achieved…

The answer is surprisingly simple… China’s Golden Week Holiday.

As SHTFplan.com’s Mac Slavo wrote a year ago, and appears to be proved correct once again… Ask the expert pundits on financial media and you’ll get a swath of explanations for how the strength of the dollar or the improving health of the global economy are to blame.

One could reasonably argue that dollar strength this week could certainly put downward pressure on the gold price. So, too, could one make the point that mainstream perspective is such that the economy is improving, which means investors aren’t in panic mode and have no reason to hold a safe haven asset. But neither of these arguments could realistically lead to the smack down we witnessed this week.

So what happened?

Well known gold and silver analyst Andy Hoffman suggests the answer could be much simpler than we have been led to believe.

There’s no reason… there’s not even a propaganda meme of why [gold has been smashed]… there isn’t even a such thing as negative news for precious metals anymore…

 

The fact is, [like the last few years, when prices collapsed], China is closed for the week.

One glance at the last few years gold price action suggests he may well be correct…

After this Friday’s close, China will be on vacation for its Golden Week National Holiday and this weakness appears to be traders front-running the traditional chaos that the rest of the world plays when China leaves the playing field.

China will be back in business on October 9th, and that means the Shanghai Gold Exchange, which opened in 2015 to counter Western manipulation of precious metals, will likely help re-balance prices to where they were before this recent takedown.

We could be wrong, but something tells us gold and silver prices won’t stay this low for much longer and that they could well see a complete turnaround when China reopens on October 9th.

Today the “Wolf of Wall Street” agrees with Jamie Dimon of JPM that bitcoin is a fraud
(courtesy zerohedge)

The “Wolf Of Wall Street” Says Jamie Dimon Is Right About Bitcoin

The guy who made tens of millions of dollars misleading American retirees into buying worthless pink sheet stocks says he agrees with J.P. Morgan Chase & Co. CEO Jamie Dimon’s comment that bitcoin is “a fraud.”

Jordan Belfort, the inspiration for Leonardo DiCaprio’s character in the 2013 Martin Scorsese film “The Wolf of Wall Street,” told the Street that he believes Dimon is right, adding that bitcoin “isn’t a great model.”

In what may eventually be revealed as an important distinction, Belfort’s take was somewhat more nuanced than Dimon’s. While the JPM CEO predicted that all digital currencies would eventually become worthless, Belfort said there might be room for one.

“I’m not saying cryptocurrencies, there won’t be one – there will be one – but there has to be some backing by some central governments out there.

 

If any digital currency demonstrates long-term viability, it will probably be one that’s backed by a central bank.”

Two weeks ago, Dimon sent the price of bitcoin tumbling when he called the digital currency a fraud and said he would fire any JPM traders caught trading it. He added that it made people like his daughter feel like “geniuses” for buying in early.

“It’s a fraud. It’s making stupid people, such as my daughter, feel like they’re geniuses. It’s going to get somebody killed. I’ll fire anyone who touches it.”

Surprisingly, given bitcoin’s role in helping disrupt the financial services industry, not every Wall Street CEO shares Dimon’s dim view on the digital currency. Two days ago, Morgan Stanley CEO James Gorman told WSJ that he believes Dimon is wrong and that “bitcoin is certainly more than a fad.” However, he conceded that “there is a government risk to it” – alluding to Chinese authorities’ decision to shutter local bitcoin exchanges. Joining Dimon and Belfort in the skeptics’ corner is Bridgewater Associates Founder Ray Dalio, who said last week that he believes bitcoin is in a bubble.

Circling back to Belfort, he explained to the Street that he just couldn’t wrap his head around bitcoin…

“Basically, the idea that it’s being backed by nothing other than a program that creates artificial scarcity it seems kind of bizarre to me.”

He also claimed that he knows people who lost money in the Mt. Gox hack, and that the incident served as a wakeup call.

“They could steal it from you I know people who have lost all their money like that…”

Of course, Dimon’s statement didn’t stop JP Morgan Securities from transacting in a bitcoin-linked exchange-traded product traded on Nasdaq Stockholm, prompting an algorithmic liquidity provider called Blockswater to sue Dimon for “spreading false and misleading information” about bitcoin.

Traders, meanwhile, have continued to vote with their wallets: Bitcoin finally filled the “Dimon gap” yesterday, and has continued to climb on Thursday…

Interview with Jim Cook

Theodore Butler | September 28, 2017 – 9:32am

Here’s a recent interview I did with Jim Cook, President of Investment Rarities, Inc., for whom I’ve consulted for more than 17 years (where did the time go?). It’s gotten to the point where about the only interviews I do are with Cook, but that’s not due to our long relationship. Rather, it’s because he comes prepared and wastes no words, making my role easy. With Cook, it’s always about getting to the heart of the matter, with the least amount of fluff as required.

Cook: Are you disappointed with the recent price action in silver?
Butler: Of course, I thought we might finally be breaking out.

Cook: What happened?
Butler: It’s the same old story. As I outlined previously, we were setup for a strong rally at the recent lows, but whether the rally was of the now-typical $2 to $3 variety or the big one was based upon whether JPMorgan added aggressively to COMEX silver short positions. JPMorgan, once again, stopped the silver rally cold by adding massive amounts of short contracts, just as they have on every silver rally over the past ten years.

Cook: How many contracts did they add?
Butler: Over the course of eight weeks JPMorgan added 23,000 new short contracts, the equivalent of 115 million ounces (on top of the 75 million ounces they were already short).

Cook: Why are they doing this?
Butler: To make both short term and long term profits.

Cook: How do they do that?
Butler: JPMorgan buys back the added short positions at lower prices. They have always made short term profits, with never a loss – a track record impossible in a free market. Secondly, since they continue to buy physical silver hand over fist at their self-created lower prices, JPM will profit immensely on their massive physical position whenever they take their foot off the neck of the price.

Cook: How much actual silver do you think they hold? 
Butler: At least 650 million ounces.  (Harvey; this is criminal)

Cook: How much longer do you think JPMorgan will be suppressing the price of silver so that they can accumulate more on the cheap?
Butler: That’s the billion dollar question to which I have no crystal ball. Truth be told, I thought they would have let it go when they held half as much silver as they do now. Back then they held three times as much as was held by the Hunt Brothers or Warren Buffett. Now JPM holds up to six times as much.

Cook: Can they do this forever?
Butler: Why would they? There’s no payoff for accumulating forever. The only plausible explanation for anyone massively acquiring any asset is the expectation of higher prices. JPMorgan is accumulating silver for one reason and one reason only – to make as large a profit as possible.

Cook: Is it possible the Government has given JPMorgan a mandate to hold down the price of gold and silver?
Butler: I know this is a popular opinion that seems to make sense, but there’s little direct proof of that. Besides, there’s a much better explanation. (Harvey: Butler is nuts)

Cook: What is that?
Butler: JPMorgan and other big banks are having a field day taking money away from the managed money traders (the longs) in full view and making billions of dollars in the process. I think that’s the prime motive for the price manipulation, rather than some broad government conspiracy. The motive is big and easy money.

Cook: Could the regulators put an end to this manipulation which you call a serious crime in progress?
Butler: Sure, they could, but I doubt they will. They are probably embarrassed for not having intervened to this point. How does the CFTC come out now and crack down on JPMorgan after letting them slide for nearly ten years?

Cook: What’s the downside of the price of silver at today’s levels?
Butler: A dollar or so, maybe more if JPMorgan and the commercials so decide. They need to get the technical funds to sell so that they can buy back their short positions. The only way JPMorgan and the commercials can do that is by rigging a series of new price lows that induces the technical funds to sell. I call it slicing the salami. That process seems to be underway and once it is complete, there will be little or no risk of lower prices.

Cook: What’s the upside for silver?
Butler: Almost unlimited. That’s what makes silver the best investment opportunity around. The risk in the short term is limited and when this current rig job on the COMEX is complete, there will be virtually no risk remaining – only massive profit potential.

Cook: A lot of people have been holding silver patiently for a long time. What do you say to them to ease their frustration?
Butler: Understanding the facts for why silver prices remain so low and why they will explode, are the only real solution to any frustration for why silver prices haven’t moved higher. They are the reason to expect much higher prices to come. It would be far more frustrating if we didn’t know about the COMEX and JPMorgan.

Cook: Are you backing off your prediction that people can make ten times their money with silver?
Butler: Heck no. In fact it’s a lot more likely, mathematically, for silver to go up ten times from the current price than it will be at higher prices. And considering how little actual silver exists in the world and how much of that is now owned by JPMorgan, the odds for a ten-bagger are better than ever.

Ted Butler
September 28, 2017



Your early THURSDAY morning currency, Asian stock market results,  important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight

 
 i) Chinese yuan vs USA dollar/yuan HUGELY WEAKER AT 6.6640 (DEVALUATION SOUTHBOUND   /OFFSHORE YUAN MOVES  STRONGER TO ONSHORE AT   6.6634/ Shanghai bourse CLOSED DOWN 5.60 POINTS OR 0.17%  / HANG SANG CLOSED DOWN 220.83 POINTS OR 0.80% 

2. Nikkei closed UP 96.06 POINTS OR 0.47%    /USA: YEN FALLS TO 112.58

3. Europe stocks OPENED MIXED/ GREEN   ( /USA dollar index FALLS TO  93.26 /Euro UP to 1.1775

3b Japan 10 year bond yield: RISES  TO  -+.074%/ 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::  52.65 and Brent: 58.28

3f Gold DOWN/Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO  +.493%/Italian 10 yr bond yield DOWN  to 2.128%    

3j Greek 10 year bond yield FALLS TO  : 5.734???  

3k Gold at $1285.25  silver at:16.80 (8:15 am est)   SILVER NEXT RESISTANCE LEVEL AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 8/100 in  roubles/dollar) 58.12-

3m oil into the 52 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 112.58 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  0.9734 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1464 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  +0.493%

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 2.335% early this morning. Thirty year rate  at 2.885% /

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

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

Global Bond Rout Accelerates Even As Dollar Rally Fizzles

In a continuation of trading patterns observed over the previous two days, on Thursday the global bond rout deepened in the aftermath of the release of President Trump’s tax-cut plan, Janet Yellen’s recent hawkish comments and renewed optimism over the health of the U.S. economy. While global stocks were mostly mixed as investors tried to assess the implications of the much-anticipated tax proposal, there was less doubt in the bond market, where 10Y Treasurys tumbled as a result of heavy stop loss selling once the 200-DMA (2.3255%) was taken out, sending yields to three month highs around 2.35% as accelerating selling spread to all global rate products.

Bund futures slid from the open, with yield curves steepening as 10y yield briefly breached 0.5% for the first time since early August amid a surge in volume after the Treasury sell-off gained momentum in Asian hours.

“The market had given up on the Trump reflation trade and this is coming back with a bit more detail on tax plans,” said Commerzbank analyst Rainer Guntermann. “At the same time, this gives the Fed more ammunition to hike rates in the coming months.” Trump’s tax plan offered to lower corporate income tax rates, cut taxes for small businesses and reduce the top income tax rate for individuals.

Also helping to boost the dollar, the plan included lower one-time low tax rates for companies to repatriate profits accumulated overseas, which analysts say would lead to a temporary phase of sizable dollar buying. At the same time, others said it could be an uphill battle to get the changes approved. “It is hard to expect this proposal to pass the Congress smoothly.” Takafumi Yamawaki, chief fixed income strategist at J.P. Morgan Securities. “We have to pay attention to how the Republicans will view this,” he added “It is possible that the net fiscal spending will be smaller than what the stock markets expect.”

Meanwhile, after rising early in the session to a six-week high, the US dollar pared gains as the euro rose with German regional inflation data pointing to continued potential overheating. That offered some support to Treasuries, after a slide in Asian hours as a global selloff in core bonds continued.

  • German Hesse State CPI YY (Sep) 2.1% (Prev. 1.8%)
  • German Hesse State CPI MM (Sep) 0.3% (Prev. 0.0%)
  • German Brandenburg State CPI YY (Sep) 1.6% (Prev. 1.8%)
  • German Brandenburg State CPI MM (Sep) 0.2% (Prev. 0.1%)
  • German Saxony State CPI YY (Sep) 2.0% (Prev. 1.9%)
  • German Saxony State CPI MM (Sep) 0.2% (Prev. 0.2%)
  • German Bavaria State CPI YY (Sep) 1.8% (Prev. 1.8%)
  • German Bavaria State CPI MM (Sep) 0.2% (Prev. 0.2%)
  • German NRW State CPI MM (Sep) 0.1% (Prev. 0.1%)
  • German NRW State CPI YY (Sep) 1.9% (Prev. 1.9%)

US futures were little changed, with European stocks were steady holding onto recent gains as rising banks balanced retailers, while Asian stocks were mixed, generally lower except Japan where the latest Yen weakness sent local stocks up 0.5%. Gold touched the lowest in a month.

In Europe, the Stoxx Europe 600 Index fell less than 0.01% as publication time. The U.K.’s FTSE 100 Index climbed less than 0.05 percent, while Germany’s DAX Index jumped 0.3 percent to the highest in more than 12 weeks. Banks rose to fresh seven week highs, though that was partly offset as miners struggled and as underwhelming results from one of Europe’s biggest fashion chains, H&M, weighed on retailers, while weakness in Chinese commodity markets continued overnight.  Financials began where they left off yesterday and behave as one of the outperforming sectors in the Stoxx 600. And despite the positive open some EU markets lost early gains, as a fall among basic resources and the more defensive, consumer and health sectors weigh.

Emerging markets were the big losers from the surging dollar and as Treasury yield spike higher. MSCI’s emerging markets equity index was down 0.6% and was on course for its sixth straight daily decline.

Asian markets slipped as they headed to cap a third straight quarter of gains, the longest such winning streak since 2013. Japanese equities rose as the dollar strengthened, while Chinese shares fell ahead of a week-long holiday from Monday. The MSCI Asia Pacific Index dropped 0.2 percent, declining for a sixth day, the longest stretch of losses since Dec. 27. Energy stocks paced the retreat as crude oil fell for a third day, with China Petroleum & Chemical Corp. and PetroChina Co. the biggest drags on the industry gauge. ASX 200 (+0.1%) and Nikkei 225 (+0.47%) initially picked up on the recent US momentum however, Asia-Pac bourses pulled back from best levels amid a lack of catalysts to fuel the advances and as China clouded the tone with Hang Seng (-0.80%) and Shanghai Comp. (-0.2%) both subdued as investors took risk off the table ahead of the mainland’s week-long closure for National Day holidays.

“Japanese stocks rise today is boosted by the sentiment from the weaker yen,” Andy Ferdinand, head of research at PT Samuel Sekuritas Indonesia, says by phone from Jakarta. “Some traders might decide to tidy their books before the long holiday in China to avoid any unwanted surprises.”

The greenback did check back against the yen easing off to 112.62 yen to the dollar having hit a 2-1/2-month high of 113.26 yen the previous day. The Canadian dollar also reversed losses after suffering its biggest drop in eight months on Wednesday, after Bank of Canada Governor Stephen Poloz dampened expectations for further interest rate hikes this year. Canada’s loonie was last at C$1.2468 to the U.S. dollar, having early slid to its lowest in a month.

Commodities were mixed, rebounding after earlier losses, with West Texas Intermediate crude gaining 1.1% to $52.69 a barrel, the highest in more than five months, while gold dropped 0.1% to $1,281.30 an ounce, the weakest in more than six weeks. Copper increased 0.4 percent to $6,462.00 per metric ton on the largest climb in more than two weeks.

In geopolitical news, South Korea is said to believe North Korea could conduct action between October 10th-18th which coincides with North Korea’s Communist Party Founding and China’s Communist Party Congress, according to sources.

Brexit rumors have reemerged, with the EU Parliament saying no sufficient progress on Brexit talks, with sources saying the EU are reportedly in discussions with bringing forward talks about the Brexit transition period. At the same time, PM May has stressed the opportunity that Brexit and free markets bring.

Central bankers from the U.S., U.K. and Australia are among speakers at a Bank of England conference starting in London on Thursday, ensuring the focus will stay firmly on the policy outlook for some of the world’s biggest economies. But that won’t be the only thing on investors’ minds; data is also due on U.S. growth and spending, end-of-quarter volatility may be near and major markets including China will shut next week for a holiday.

Jobless claims, consumer comfort, 2Q gross domestic product, inventories are due Thursday

Market Snapshot

  • S&P 500 futures down 0.05% to 2,503.25
  • VIX Index retreats 1.4%, third day of declines
  • STOXX Europe 600 down 0.02% to 385.54
  • MSCI Asia down 0.2% to 160.54
  • MSCI Asia ex Japan down 0.6% to 526.47
  • Nikkei up 0.5% to 20,363.11
  • Topix up 0.7% to 1,676.17
  • Hang Seng Index down 0.8% to 27,421.60
  • Shanghai Composite down 0.2% to 3,339.64
  • Sensex up 0.1% to 31,202.16
  • Australia S&P/ASX 200 up 0.1% to 5,670.39
  • Kospi up 0.02% to 2,373.14
  • German 10Y yield rose 2.2 bps to 0.49%
  • Euro up 0.09% to $1.1756
  • Brent Futures down 0.09% to $57.85/bbl
  • Italian 10Y yield rose 2.7 bps to 1.857%
  • Spanish 10Y yield rose 1.5 bps to 1.661%
  • Gold spot down 0.08% to $1,281.80
  • U.S. Dollar Index up 0.06% to 93.42

Bulletin Headline Summary From Ransquawk

  • European markets trade mixed, financials continue to out-perform
  • Greenback gives back slight ground following Trump’s Tax Plan
  • Looking ahead, highlights include German CPIs, US GDP, PCE figures and a slew of central bank speakers

Top Overnight News

  • Trump and Republican leaders announced a tax framework that would represent a major legislative win this year, while economists disagree on the value of cutting the corporate tax rate
  • Alphabet Inc. was ordered by regulators to stop promoting its own shopping search results over competitors’ and to make changes designed to give rivals fairer treatment by Sept. 28
  • Hong Kong’s appeal as a derivatives hub is growing as Brexit and MiFID II rules set to complicate transactions in Europe
  • The
    Bloomberg Dollar Spot Index extended its advance to a six- week high in
    Asian session before trimming gains as Europe came to the market;
    EUR/USD traded as low as 1.1721 before reversing losses in European
    session amid quarter-end flows and profit taking on shorts.
  • Treasuries
    continued to slide in Asian hours with futures volumes running ~200% of
    recent averages for the session. Losses accelerated after breaking
    200-DMA. Buying of downside in options was seen, in strikes offering
    protection beyond 2.50% in 10y yields. Bunds futures flushed lower from
    the open in Europe, briefly breaching 0.50% for the first time since
    early August, and Treasuries extended losses before stabilizing. On the
    curve the 10y point has seen sharp underperformance.
  • Japan’s opposition forces appeared set to consolidate around Tokyo Governor Yuriko Koike, whose new political group narrowed a gap in opinion polls with Prime Minister Shinzo Abe’s ruling party weeks ahead of a general election
  • European Union leaders are considering going some way to meet one of the U.K.’s demands; they are discussing bringing forward talks about the transition period that would follow Brexit, according to three people familiar with the situation
  • BOE’s chief economist Haldane told Sky News he’s among the majority of policy makers who believe that the economy is “nearing the point” where a reduction in some stimulus might be warranted and that signs on pay growth have become more ‘encouraging’
  • Euro-area economic confidence surged more than economists forecast in September; “A very substantial degree of monetary accommodation is still needed in the euro area for underlying inflationary pressures to gradually build up,” ECB Governing Council member Erkki Liikanen said
  • CAD
    trimmed losses vs USD after drifting below 1.25 for the first time in
    almost four weeks in late Asian hours following soft comments by BOC’s
    Poloz Tuesday.
  • NZD fell a fourth day; RBNZ held official
    cash rate at record-low 1.75% and said monetary policy will remain
    accommodative for a considerable period.
  • Senate Judiciary Tech Subcmte Sets Oct. 4 Hearing on Equifax; Facebook, Twitter, Google Invited to Nov. 1 Senate Cmte Hearing

Asia equity markets traded mixed after momentum from US petered out and as China prepares for National Day Golden Week. ASX 200 (+0.1%) and Nikkei 225 (+0.47%) initially took firm impetus from the gains on Wall St, where Trump tax plans and outperformance in financials and tech led the S&P 500 to fresh intraday records. However, Asia-Pac bourses have pulled back from best levels amid a lack of catalysts to fuel the advances and as China clouded the tone with Hang Seng (-0.80%) and Shanghai Comp. (-0.2%) both subdued as investors took risk off the table ahead of the mainland’s week-long  closure for National Day holidays. 10yr JGBs were lower amid a positive risk tone in Japan and after Japanese yields rose across the curve to mirror their US counterparts, while today’s 2yr auction also failed to provide support with its b/c and lowest accepted price weaker than prior. PBoC injected CNY 50bln via 14-day reverse repos and CNY 20bln via 28-day reverse repos. PBoC set CNY mid-point at 6.6285 (Prev. 6.6192) Japan’s lower house of parliament was dissolved as expected ahead of snap elections.

Top Asian News

  • Hedge Funds Bet Billions on Japan Stocks Before Abe Called Vote
  • Indonesia Pledges to Guard Currency as Rupiah Nears 10-Month Low
  • Bank Indonesia Keeps Exchange Rate Target at 13,420/USD Yr- End
  • Toshiba Inks $18 Billion Deal to Sell Chip Arm to Bain Group
  • China to Start New Energy Vehicle Production Quota From 2019

European equities opened with a marginal bid, following President Trump’s tax plan, sending the greenback and global yields higher. Financials have begun where they left off yesterday and behave as one of the outperforming sectors in the Stoxx 600. Despite the positive open some EU markets lost early gains, as a fall among basic resources and the more defensive, consumer and health sectors weigh. The US fiscal package sell-off has found some support in Europe, with bund yields finding some resistance around the 0.50% level, despite a brief spike through this level we have consolidated below.

Top European News

  • EU Is Said to Consider Brexit Compromise on Transition Talks
  • Carney Hails BOE Independence, But Says It Can’t Do Everything
  • Liikanen Sees Need for Very Substantial Degree of Accommodation
  • Novartis Is Said to Consider Acquisition of Advanced Accelerator
  • Deutsche Boerse Said to Take Stake in Big Data Company Trifacta
  • Etihad Airways Appoints Tony Douglas as CEO to Lead Overhaul

In currencies, the greenback remains on the front foot with this being down to somewhat of a corrective move which may continue in the short term. The strength in the USD has been pushed USD/JPY through 113.00 with bulls eyeing key levels of 114.00 through 114.50 (July high). Slight uncertainty from the German election has pressured EUR down to the low 1.17s. EUR relatively flat this morning with month-end buying in EUR/GBP providing some modest support. German CPI regional figures have been mixed, with EUR not finding any momentum following the figures, with anticipation likely to now be on the headline German CPI figure. Last night the RBNZ kept the key interest rate unchanged as expected, stating that accommodation will remain for some considerable time. This is seen in the futures where a hike is not fully priced in until the back-end of next year. The RBNZ also toned down its rhetoric on the currency, given the slightly TWI easing of NZD and as such from the release there was a muted reaction.

In commodities, WTI continues to trade within the week’s range, yet does continue to recede at the top end, bulls will look to break through this 52.50 area to spur further pressure toward this run. Markets have been aided by early comments from a KPC official says, expects OPEC to extend oil supply cuts beyond March 2018. Gold continues to grind lower amid the recent risk tone, now trading to an over one-month low, weighed upon by the week’s bullish dollar.

Looking at the day ahead, there is the third reading of 2Q GDP (3% expected), Core PCE and personal consumption. Elsewhere, the Kansas City Fed manufacturing activity index, August wholesale inventories and stats on continuing claims and initial jobless claims are also due. Onto other events, the Fed’s George and Fischer will speak. In the UK, the BOE will hosts the “20 years on” independence conference from the government, with BOE’s Carney, Praet and Lautenschlaeger due to speak

US Event Calendar

  • 8:30am: GDP Annualized QoQ, est. 3.0%, prior 3.0%; Personal Consumption, est. 3.3%, prior 3.3%
    • GDP Price Index, est. 1.0%, prior 1.0%; Core PCE QoQ, est. 0.9%, prior 0.9%
  • 8:30am: Initial Jobless Claims, est. 270,000, prior 259,000; Continuing Claims, est. 1.99m, prior 1.98m
  • 8:30am: Advance Goods Trade Balance, est. $65.1b deficit, prior $65.1b deficit, revised $63.9b deficit
  • 8:30am: Wholesale Inventories MoM, est. 0.4%, prior 0.6%; Retail Inventories MoM, prior -0.2%, revised -0.1%
  • 9:45am: Bloomberg Consumer Comfort, prior 50.6
  • 9:45am: Fed’s George Speaks on Economy and Monetary Policy
  • 11am: Kansas City Fed Manf. Activity, est. 14.5, prior 16
  • 10am: Fed’s Fischer Speaks at BOE Independence Conference, London
  • 1:30pm: Fed’s Raphael Bostic to Speak about Careers in Economics

DB’s Jim Reid concludes the overnight wrap

Today sees a very high quality conference of speakers to celebrate the 20th anniversary of the Independence of the Bank of England. How time flies! Watch out for headlines emanating from the event. The surprise announcement just after the UK election in May 1997 was the main reason I’m in Research today as the events around that day proved how average I was at my job at the time. I realised I had to find a new one. Yes as a young bond salesman the shock BoE Independence announcement led to a huge rally in Gilts that day and every client was on the phone to us simultaneously to try to buy Gilts. I got a call from my biggest client to buy him tens of millions of the 7% 2002 issue. However at the same time every other client was trying to do the same thing and quite frankly their sales person was older, more pushy and more aggressive than me. I was at the back of the queue. From that moment I’d worked out that sales was actually quite difficult. So to all the salespeople on this list……. I admire you!! To all the clients I covered…. “I’m sorry”.

Bonds yesterday went the other way to that seen on that fateful 1997 day. Yields rose across the globe as firstly Yellen’s words the previous night set the tone but more importantly optimism over Trump’s tax speech later in the day grew. Strong Durable Goods didn’t harm the story either. The reality has been for some time that tax reform is looking increasingly tough but that markets were pricing a near zero probability of anything passing. Such an outcome might still be the case but when expectations are so low any hopes can help the reflation trade.

On the back of Mr Trump’s tax framework, the S&P 500 rose 0.41% back towards its record high, 10-year treasury yields jumped 7.5bps to 2.311% and the US dollar index gained 0.42% yesterday. Before we recap Mr Trump’s proposals, it’s worth noting that his plans are unfunded and initial estimates by DB’s Peter Hooper and Brett Ryan suggests it could cost up to US$3trn over 10 years, so it will be interesting which part of his plans will eventually make it to formal legislations.

In terms of specifics it seems to be broadly similar to the leaked details as mentioned in our note yesterday, which includes: 1) cutting the corporate tax rate to 20% (from 35% existing) with businesses allowed to immediately write off their non-building capex for at least five years, 2) companies with untaxed offshore profits (c$2.6trn est.) will be subject to a one-time tax, but the rate is unclear, 3) simplify and cut the individual tax rate to 12%, 25% and 35% (from 39.6%), but leaving the door open for Congress to set a fourth tax bracket for high income earners, 4) middle income earners will benefit from a $12k deduction (c2x higher), 5) for pass-through entities (eg: partnerships and limited liability companies), their tax rate will be capped at 25%, and 6) repealing the existing individual alternative minimum tax (AMT), the estate tax and eliminating most itemized deductions (tax incentives for home mortgage interest and charitable contributions are retained).

Early reactions on the political front have been somewhat mixed. Trump called the tax framework as “revolutionary change” and the 20% corporate tax rate as a “perfect number” and non-negotiable. Elsewhere, House speaker Ryan said “this is a now or never moment” and “we can finally get this done” and the Ways and Means Chairman Kevin Brady of Texas said the committee “is ready to turn this framework into legislation”. Conversely, the Senate Finance committee Chairman Orrin Hatch has pledged his committee “would not be a rubber stamp” of the plans, and Senator Bernie Sanders said the  plans are “providing hundreds of billions in tax breaks to the wealthiest people and most profitable corporations”. We shall wait and see how Mr Trump’s plans evolve into legislations. Our US team’s early take is that they see a prospect of some reforms occurring at the corporate level (particularly for small corporates), but the potential for substantive reform of personal tax is much lower.

Turning to the bond market sell-off. In the US, 10y treasury (2y: +3.5bp; 10y: +7.5bp yesterday) yields arenow up c30bp since early September and back at similar levels to late July. They’ve climbed another +2.7bps overnight to 2.337%. In Europe, core bond yields rose c6p (Bunds 10y +6bp; Gilts +5bp; OATs +6bp) while peripherals slightly outperformed with yields up 3-6bp (Italian BTPs +3bp; Portugal: +6bp; Spain +4bp). At the 2 year part of the curve, core bond yields rose by c2bp with US yields hitting 9-year highs.

This morning Asian markets are trading mixed but little changed. As we type, The Nikkei (+0.30%) and ASX 200 (+0.13%) are up slightly, while the Kospi (-0.14%), Hang Seng (-0.34%) and Shanghai Comp. (-0.17%) are marginally softer.

Back onto markets performance yesterday now. US bourses have all strengthened back towards their record highs. The S&P rose 0.41%, with gains led by the financials (+1.30%) and tech (+1.14%) sectors, while utilities and real estate names fell, partly reflecting the prospects of higher yields. Elsewhere, the Dow (+0.25%) and Nasdaq (+1.15%) have traded higher. In Europe, markets were also higher, with the Stoxx 600, DAX and FTSE all up c0.4%, while the peripherals slightly outperformed (FTSE MIB +0.85%; IBEX 35 +1.76%). Notably, the US small cap index (Russell 2000) had one of the best days since March, rising 1.92% yesterday on the back of Trump’s tax plans.

Turning to currencies, the US dollar index strengthened 0.42% (up 2.2% since early Sep.), while the Euro and Sterling fell 0.41% and 0.53% respectively. In commodities, WTI oil was little changed (+0.50%) while precious metals fell modestly (Gold -0.87%; Silver -0.29%) given the risk on bias. Elsewhere, other base metals are trading a bit mixed (Copper +0.02%; Zinc +0.14%; Aluminium -0.37%) but little changed this morning.

Away from the markets and onto central bankers’ commentaries now. In the US, the Fed’s Bullard sounded a bit dovish, noting “the current level of the policy rate is appropriate” given that inflation “has surprised to the downside in recent months”. Elsewhere, the Fed’s Rosengren said “it’s my view that regular and gradual removal of monetary accommodation seems appropriate”. Notably, the odds of a December rate hike as per Bloomberg remains at 70%. Over in Canada, after hiking rates twice since July (+0.50%) to 1%, BOC’s Governor Poloz sounded a bit more cautious, noting there is no  “predetermined path for interest rates” and “the appropriate path for interest rates in this situation is very difficult to know”.

Over in Europe, Germany’s long serving Finance Minister Wolfgang Schaeuble (c8 years in the role) is expected to leave Merkel’s cabinet and take up the role of President of the lower house. Some sees his departure as Germany becoming more accommodating towards the Euro area, but the possibility of a member from the FDP taking up the finance post could mean little will change.

Back in the UK, Bloomberg reports that EU leaders are considering bringing forward talks on the transition period post Brexit as a small concession to kick start the Brexit talks. Elsewhere, the US Commerce Department has imposed a 220% import duties on Canada’s Bombardier jets, citing a complaint by Boeing that the aircraft had received improper subsidies in Canada (Bombardier shares fell 7.49%). The reduced demand for these aircrafts could lead to job losses for workers at the Northern Ireland plants that help build these jets.

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the August core capital goods orders (non-defence and ex aircraft) was above markets expectations at 0.9% mom (vs. 0.3% expected) and up 3.6% yoy. The durable goods orders (ex-transport) was in line at 0.2% mom, although the underlying reading is likely stronger given the prior month has been revised upwards by 0.2ppt. Elsewhere, pending home sales fell 2.6% mom (vs. -0.5% expected), partly impacted by Hurricane Harvey, while MBA mortgage applications fell 0.5% (vs. -9.7% previous).

In Europe,Italy’s September business confidence index rose to a 10-year high at 108.0 (vs. 107 previous). Elsewhere, confidence indicators on manufacturing (110.4 vs. 108.2 expected) and consumers (115.5 vs.110.6 expected; highest since January 2016) were also above expectations. In France, consumer confidence was a touch softer at 101 (vs. 103 expected) while the Eurozone’s M3 money supply expanded at 5% (vs. 4.6% expected). In the UK, the September CBI’s Distributive Trades Survey for September was fairly upbeat, with a net 42% of retailers reporting that sales had grown over the past year – the strongest result in two years.

Looking at the day ahead,Germany’s September CPI (0.1% mom, 1.9 yoy expected) and GfK consumer confidence readings will be due. For the Eurozone, there is a range of confidence indicators including: consumers, business climate, economy and industrial. Over in the US, there is the third reading of 2Q GDP (3% expected), Core PCE and personal consumption. Elsewhere, the Kansas City Fed manufacturing activity index, August wholesale inventories and stats on continuing claims and initial jobless claims are also due. Onto other events, the Fed’s George and Fischer will speak. In the UK, the BOE will hosts the “20 years on” independence conference from the government, with BOE’s Carney, Praet and Lautenschlaeger due to speak

3. ASIAN AFFAIRS

i)Late WEDNESDAY night/THURSDAY morning: Shanghai closed DOWN 5.60 POINTS OR 0.17%   / /Hang Sang CLOSED DOWN 220.83 POINTS OR 0.80%/ The Nikkei closed UP 96.06 POINTS OR 0.47%/Australia’s all ordinaires CLOSED DOWN 0.11%/Chinese yuan (ONSHORE) closed WELL DOWN at 6.6640/Oil UP to 52.65 dollars per barrel for WTI and 58.28 for Brent. Stocks in Europe OPENED GREEN/MIXED. Offshore yuan trades  6.6634 yuan to the dollar vs 6.6640 for onshore yuan. NOW THE OFFSHORE MOVED A LITTLE STRONGER TO THE ONSHORE YUAN/ ONSHORE YUAN HUGELY WEAKER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE WEAKER  DOLLAR. CHINA IS HAPPY TODAY 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

NORTH KOREA/USA

Rocket man claims that 5 million new soldiers have been forced to enlist ahead of his  “imminent provocation” with the west;

(courtesy zerohedge)

North Korea Claims 5 Million New Soldiers Enlisted Ahead Of “Imminent Provocation”

In what is probably a “slightly” exaggerated figure, North Korea claimed on Thursday that some 4.7 million students and workers have volunteered to join or re-enlist in the North Korean army since Kim Jong Un called Donald Trump a “dotard” and vowed to retaliate against the US for President Donald Trump’s threats to “destroy” North Korea. If accurate, that figure would represent nearly 20% of the North’s population (the country is believed to be home to 25 million people, making it about half the size, population-wise as South Korea).

Furthermore, according to the Rodong Sinmun, North Korea’s biggest newspaper  among the volunteers were 1.2 million women, which was cited by South Korean news agency Yonhap.

Of course, North Korea has made similar claims in the past when tensions with the US have intensified. Pyongyang usually claims that its young citizens voluntarily enlisted in the military in its propaganda campaigns aimed at bolstering national solidarity – even as recently as last month.

North Korea made a similar assertion last month when it condemned the UN Security Council for adopting US-led resolutions over Pyongyang’s launches of intercontinental ballistic missiles in July.

On Tuesday, the US imposed another round of meaningless new sanctions on North Korea’s banks, after President Donald Trump claimed an important victory by revealing that China had instructed its banks to halt business with North Korea. The president reiterated during a press conference with Spanish leader Mariano Rajoy that the US was “totally prepared” to use a military option against the North, which he said would be “totally devastating.” Earlier this week, National Security Advisor HR McMaster said the US had prepared “four or five different scenarios” for how the crisis with North Korea could be resolved, ominously adding that “some are uglier than others.”

In other news, South Korean officials said they expect more provocative acts by North Korea over the next month to coincide with the anniversary of the founding of the North Korean community party and China’s once-every-five-years Community Party Congress, according to Reuters.

North Korea has a widely observed penchant for marking holidays with demonstrations of its military strength. Reuters said National Security Adviser Chung Eui-yong said he expected Pyongyang to act around Oct. 10 and 18, but gave no additional details, during a meeting with President Moon Jae-in on Thursday.

The South Korean security adviser also claimed in a report that a conflict between the North and the US could erupt because of an accidental incident, according to Park Wan-ju, a lawmaker and head spokesman of the ruling Democratic Party.

“The president said the United States speaks of military and diplomatic options, but South Korea can’t go through war again,” said Park.

Tensions on the Korean peninsula have been simmering since Trump was inaugurated, as the president has engaged in an escalating war of words with North Korea. Last week, North Korea’s foreign minister accused the US during a speech at the UN of having “declared war” on North Korea, citing Trump’s threats.

 end
Two days after the latest sanctions orchestrated by the USA in which they targeted 26 North Korean banks and personnel doing business with China, it was China today that ordered all North Korean businesses operating in China to close.  The noose is getting tighter and tighter around the neck of Kim.  What will be his next move as economically he has just been murdered…
(courtesy zero hedge)

Beijing Orders All North Korean Businesses To Close

In the latest sign that China is moving to dramatically limit its exposure to its restive neighbor and long-time economic dependent, Chinese authorities on Thursday ordered all North Korean firms to stop doing business in the world’s second-largest economy, fulfilling Beijing’s obligations according to the latest round of UN Security Council sanctions, which were passed two weeks ago.

The order comes just days after President Donald Trump revealed that the People’s Bank of China had asked the country’s banks to sever their business ties with North Korea.

Specifically, they were ordered to stop providing financial services to North Korean customers and to wind down existing loans, severing one of North Korea’s most reliable connections to the global financial system. It was reported that the banks were warned that continuing to transact with North Korean business could result in embarrassment and economic losses, according to Russia Today.

After the UN Security Council passed new sanctions two weeks ago, the Chinese Commerce Ministry said North Korean firms and joint ventures in China would be closed within 120 days.

Meanwhile, on Tuesday, the US announced sanctions against eight North Korean banks and 26 individuals. The new punitive measures followed President Trump’s executive order targeting North Korea’s access to the international banking system.

Perhaps the intensifying economic desperation in the isolated country has helped push more young men and women to volunteer for the country’s army. According to official propaganda, nearly 5 million North Koreans have volunteered for the army over the past week. That’s a staggering success rate for the country’s recruiters, considering the North has a population of about 25 million people.

China’s President Xi Jinping has sought to sooth Trump’s doubts about Beijing’s commitment to denuclearizing North Korea, though the Chinese government has continued to advocate for talks between the two countries that could eventually lead to a peaceful settlement.

Pyongyang has accused the US of “declaring war” on the North, claiming that Trump’s violent rhetoric and repeated promises to “destroy” North Korea and topple the Kim regime constituted a declaration of war. Of course, the US has denied this, and both sides have continued to trade increasingly detailed threats. The North, for example, recently threatened to test a hydrogen bomb over the Pacific Ocean. Meanwhile, Trump responded that the US has devised “four or five” military options for dealing with North Korea.

US officials have expressed hope that the economic sanctions will force North Korea to the negotiating table. However, their economy has proven resilient so far. But will China’s decision to sever ties with the North make a difference? We should know soon. 

b) REPORT ON JAPAN

end

A must read commentary suggesting what happened it August with respect to falling USA dollar and rising CNY and CNH. I am sure that Juckes is correct: China was for sure accumulating treasuries  (this is inthe Sept report) which in turn caused the rates on USA treasuries to fall and the dollar to fall.  The POBC was also no doubt buying the Eur/USA.  China was worried that they would be classified as the FX currency manipulator.  That all changed on Sept 8  and he have now witnessed a complete fall in both CNH and CNY :  China has abandoned their support for their currency and wish it to fall.

(courtesy zerohedge)

 The world’s largest derivative player and convicted criminal bank Deutsche bank has just been downgraded by Fitch.  They comment that they : “No longer expect this franchise to recover this year

(courtesy Fitch/zerohedge)

Deutsche Bank Downgraded, Fitch “No Longer Expects Franchise To Recover This Year”

Fitch has downgraded Deutsche Bank to BBB+ from A- due to continued pressure on earnings, combined with concerns over theprolonged implementation of its recovery strategy.

Moody’s and S&P remain at A3 and A- respectively (on a like for like rating basis), and while DB bond yields had fallen to the lowest levels since March 2015, the last few weeks have seen risk picking back up (yields now at 2-month wides) and the stock remains near its recent lows…

Full Statement:

Fitch Ratings has downgraded Deutsche Bank AG’s (Deutsche Bank) Long-Term Issuer Default Rating (IDR) to ‘BBB+’ from ‘A-‘ and Short-Term IDR to ‘F2’ from ‘F1’. The Outlook on the Long-Term IDR is Stable. At the same time, Fitch has downgraded the bank’s Viability Rating (VR) to ‘bbb+’ from ‘a-‘. All debt and deposit ratings have also been downgraded by one notch.

The rating actions have been taken in conjunction with Fitch’s periodic review of the Global Trading and Universal Banks (GTUB), which comprises 12 large and globally active banking groups.

KEY RATING DRIVERS: IDRS, VR, DCR, DEPOSIT AND SENIOR DEBT RATINGS

The downgrades reflect continued pressure on Deutsche Bank’s earnings, combined with prolonged implementation of its strategy. We no longer expect revenue to demonstrate any clear signs of franchise recovery this year and we expect necessary further restructuring costs to continue to erode net income.

Deutsche Bank’s strategic restructuring came later than those of most of its GTUB peers’. In addition, the scale and scope of what it has to do plus strategic revisions earlier this year mean that Deutsche Bank has further to go to complete its business restructuring than any of the other GTUBs.

Consequently, we expect it to take some time before the bank will be able to deliver on earnings targets, including a post-tax return on tangible equity (RoTE) of around 10% in a more supportive interest rate environment.

Revenue is suffering from low capital market volatility combined with persistently low interest rates, particularly in Europe, where the bank is strongest. Franchise erosion in capital markets, notably in prime services, in 4Q16 has been reversed to some extent, but it will take time for client demand to return fully in light of intense competition and due to subdued client trading activity given low market volatility. We expect additional restructuring costs from the integration of Deutsche Postbank AG (Postbank) and from further necessary expenses on IT systems.

Positively for the ratings, capitalisation was boosted by the bank’s rights issue in April, and the planned IPO of a minority stake in its asset management division together with further asset disposals during the next 12-18 months gives it flexibility to add a further EUR2 billion to common equity. Deutsche Bank’s end-June 2017 fully loaded Common Equity Tier 1 (CET1) ratio was 14.1%, and the bank’s leverage ratio was 3.8%, with management targeting to maintain the CET1 ratio “comfortably above” 13% and achieve a leverage ratio of 4.5%.

The strategic reorientation announced in March towards a more balanced universal banking business model should improve earnings stability, but Fitch will look for evidence that it can achieve healthy profitability out of its large domestic deposit base, and that it can draw on its franchise strengths of a solid German private and corporate customer base extended to global corporate banking and debt capital markets solutions.

Despite notable widening of spreads on unsecured market funding in 2016 and some institutional deposit outflows in 4Q16, we believe that Deutsche Bank retains strong, well-diversified funding by geography, product and customer, and maintains ample liquidity. It reported liquidity reserves of EUR285 billion as at end-June 2017, a large proportion of which were in cash or deposits with major central banks.

*  *  *

Successful completion of Deutsche Bank’s restructuring together with sustainable improvement in earnings could result in an upgrade of the ratings provided risk appetite does not increase or the bank’s liquidity profile does not weaken significantly to achieve this. This would demonstrate franchise improvement and would likely require higher market share in targeted markets.

Given the rating level, we do not expect a further downgrade of the ratings unless implementation of the strategic plan meets notable setbacks, particularly around the integration of Postbank. New, substantial litigation or restructuring costs that prevent the bank from retaining capitalisation on target would also be negative for the ratings.

Deutsche Bank’s DCRs, deposit and debt ratings are primarily sensitive to changes in the Long-Term IDR. In addition, Deutsche Bank’s DCRs, deposit rating and senior preferred debt ratings are sensitive to the amount of subordinated and non-preferred senior debt buffers relative to the recapitalisation amount likely to be needed to restore viability and prevent default on more senior derivative obligations, deposits and structured notes.

5. RUSSIA AND MIDDLE EASTERN AFFAIRS

TURKEY/GERMANY/INCIRLIK

Not good:  Germany withdraws from the huge Turkey airbase Incirlik as Turkey turns towards Russia and China.  The big question is what will happen to all of those 3 million migrants.  The west will not allow Turkey to become a member of NATA

(courtesy zerohedge)

NATO Splinters: Germany Completes Withdrawal From Turkey’s Incirlik Airbase

Several months after an unprecedented collapse in relations between two NATO member states, on Thursday Germany’s military announced it has finished its withdrawal from Turkey’s strategic airbase Incirlik, which as a reminder was prompted by Ankara’s refusal to allow visits by German parliamentarians. Going forward, Bundeswehr planes will instead be based in Jordan.

As we reported at the time, in June Germany’s parliament, which ultimately decides on deployments, voted overwhelmingly to leave Incirlik amid a multifaceted dispute with Turkish President Recep Tayyip Erdogan over his post-coup crackdown. As a “parliamentary army,” the Bundeswehr requires a vote of approval from Bundestag lawmakers for each foreign deployment and a parliamentary committee regularly evaluates Germany missions abroad.

As Deutsche Welle reports, Germany’s transfer of reconnaissance and refueling aircraft from Incirlik to Jordan’s al-Asrak airbase had been “an unprecedented, mammoth task” according to German contingent commander Stefan Kleinheyer said Wednesday.

The Bundeswehr relocated a set of Tornado reconnaissance jets, a German refueling aircraft, logistical equipment and 260 personnel to Jordan. The troops are involved in oversight of the US-led aerial campaign against “Islamic State” (IS) militia in adjacent Syria. According to German Defense Minister Ursula von der Leyen the unit was being redeployed to a Jordanian air base used by numerous NATO partners.

The two countries tried to patch up badly damaged relations In early September, when seven German parliamentarians visited NATO’s Konya airbase in central Turkey under a compromise access arrangement via the military alliance. At the time, Germany’s Foreign Ministry said that visit was only a temporary compromise, adding that Berlin would endeavor to arrange politically “smoother” parliamentary oversight in Turkey in the future.

However, despite detente attempts, the tensions have remained after Turkish military officers who sought asylum in Germany were deemed by Erdogan to have been among plotters of the failed coup. Amid high German-Turkish tension, several German cities barred rallies by pro-Erdogan politicians.

Separately, also on Thursday, in a tit for tat “hostage” exchange, Turkish President Recep Tayyip Erdogan suggested that Ankara could free a detained US pastor if Washington extradites Muslim cleric Fethullah Gulen, who Turkey accuses of being behind last year’s failed coup attempt. “‘Give us the pastor back,’ they say. You have one pastor as well. Give him (Gulen) to us,” Erdogan said during a speech to police officers at the presidential palace in Ankara.

“The (pastor) we have is on trial. Yours is not – he is living in Pennsylvania. You can give him easily. You can give him right away.”

Erdogan was referring to pastor Andrew Brunson, who was detained in Turkey on terrorism charges last October. According to Turkish media, Brunson’s charges include being part of Gulen’s network. However, the US says the pastor has been wrongfully imprisoned and has called for his release. Previously, Trump asked Ankara to return Brunson to the US in May, according to the White House.

Meanwhile, Turkey continues to have an increasingly tense relationship with the EU, which criticized Erdogan’s actions following the coup. The crackdown negatively impacted Turkey’s lengthy efforts to receive EU membership, with German Chancellor Angela Merkel making her opinion clear that Turkey should not become a member of the bloc. Erdogan has responded with his own thoughts on the EU, telling Reuters last week that the bloc has “never kept their promises” when it came to Turkey gaining membership.

As a result, Erdogan has broadly pivoted toward Russia, recently completing the purchase of an advanced S-400 missile batter from Moscow.

NATO Splinters: Germany Completes Withdrawal From Turkey’s Incirlik Airbase

Several months after an unprecedented collapse in relations between two NATO member states, on Thursday Germany’s military announced it has finished its withdrawal from Turkey’s strategic airbase Incirlik, which as a reminder was prompted by Ankara’s refusal to allow visits by German parliamentarians. Going forward, Bundeswehr planes will instead be based in Jordan.

As we reported at the time, in June Germany’s parliament, which ultimately decides on deployments, voted overwhelmingly to leave Incirlik amid a multifaceted dispute with Turkish President Recep Tayyip Erdogan over his post-coup crackdown. As a “parliamentary army,” the Bundeswehr requires a vote of approval from Bundestag lawmakers for each foreign deployment and a parliamentary committee regularly evaluates Germany missions abroad.

As Deutsche Welle reports, Germany’s transfer of reconnaissance and refueling aircraft from Incirlik to Jordan’s al-Asrak airbase had been “an unprecedented, mammoth task” according to German contingent commander Stefan Kleinheyer said Wednesday.

The Bundeswehr relocated a set of Tornado reconnaissance jets, a German refueling aircraft, logistical equipment and 260 personnel to Jordan. The troops are involved in oversight of the US-led aerial campaign against “Islamic State” (IS) militia in adjacent Syria. According to German Defense Minister Ursula von der Leyen the unit was being redeployed to a Jordanian air base used by numerous NATO partners.

The two countries tried to patch up badly damaged relations In early September, when seven German parliamentarians visited NATO’s Konya airbase in central Turkey under a compromise access arrangement via the military alliance. At the time, Germany’s Foreign Ministry said that visit was only a temporary compromise, adding that Berlin would endeavor to arrange politically “smoother” parliamentary oversight in Turkey in the future.

However, despite detente attempts, the tensions have remained after Turkish military officers who sought asylum in Germany were deemed by Erdogan to have been among plotters of the failed coup. Amid high German-Turkish tension, several German cities barred rallies by pro-Erdogan politicians.

Separately, also on Thursday, in a tit for tat “hostage” exchange, Turkish President Recep Tayyip Erdogan suggested that Ankara could free a detained US pastor if Washington extradites Muslim cleric Fethullah Gulen, who Turkey accuses of being behind last year’s failed coup attempt. “‘Give us the pastor back,’ they say. You have one pastor as well. Give him (Gulen) to us,” Erdogan said during a speech to police officers at the presidential palace in Ankara.

“The (pastor) we have is on trial. Yours is not – he is living in Pennsylvania. You can give him easily. You can give him right away.”

Erdogan was referring to pastor Andrew Brunson, who was detained in Turkey on terrorism charges last October. According to Turkish media, Brunson’s charges include being part of Gulen’s network. However, the US says the pastor has been wrongfully imprisoned and has called for his release. Previously, Trump asked Ankara to return Brunson to the US in May, according to the White House.

Meanwhile, Turkey continues to have an increasingly tense relationship with the EU, which criticized Erdogan’s actions following the coup. The crackdown negatively impacted Turkey’s lengthy efforts to receive EU membership, with German Chancellor Angela Merkel making her opinion clear that Turkey should not become a member of the bloc. Erdogan has responded with his own thoughts on the EU, telling Reuters last week that the bloc has “never kept their promises” when it came to Turkey gaining membership.

As a result, Erdogan has broadly pivoted toward Russia, recently completing the purchase of an advanced S-400 missile batter from Moscow.

6 .GLOBAL ISSUES

Bali, Indonesia

As reported to you yesterday, the huge volcano around Bali is set to erupt.  Tens of thousands of people are fleeing this active Volcano

(courtesy zerohedge)

Tens Of Thousands Flee As Active Bali Volcano Set To Erupt

In the latest example of a natural cataclysm displacing tens of thousands of people, and as reported earlier this week, the number of people taking shelter in makeshift evacuation centers on the Indonesian island of Bali has surged to around 104,000, officials said on Thursday, as residents fled the area around a rumbling, active volcano that is expected to erupt momentarily.

Mount Agung, the largest volcano on the island, located some 50 miles from the tourist hub of Kuta, has been shaking since August, and its tremors have increased in both intensity and strength, prompting the Balinese government to evacuate prisoners from local jails and evacuated tourists and residents away from the base of the volcano. The island’s government has declared a state of emergency, according to Reuters.

Thousands more people have been forced to flee in recent day as the government set up an exclusion zone around the volcano’s perimeter.

According to experts who spoke with the Guardian, an eruption is imminent.

Last week Indonesian authorities announced the highest possible alert warning, and besides the evacuations they’ve also set up an exclusion zone that stretches 12km from the crater in some places. Scott Bryan, an associate professor from the Queensland University of Technology, says there have been “very good indications” that an eruption is imminent.

 

“The fact that the seismic tremors beneath the volcano are increasing in number, intensity, and the reduction in their depth in the last week or so, is a very good indication that magma is moving up to the surface,” he said.

As white smoke started rising from the mountain earlier this week, the Balinese government raised Mount Agung’s alert status to the highest level last week. The last time the mountain erupted, in 1963, a thousand people were killed, hundreds were injured and thousands more villagers had to abandon their homes.

With the volcano deemed too dangerous for humans, the government is housing evacuees in tents, school gyms, and government buildings in neighboring villages. Reuters reports that, while there are plentiful stocks of food, water, medicines, and other supplies, evacuees are worried that the eruption could leave them permanently displaced. One farmer worried the lava flows could destroy his house, leaving him destitute.

“If my house is destroyed I don’t know how to restart my life. I don’t know where my kids will sleep and all I can do now is pray,” said Gusti Gege Astana, 40.

Officials said there are also 30,000 cattle within the danger zone around the volcano, and efforts are being made to move the livestock so as not to leave farmers financially ruined. An elderly woman who was alive during the 1963 eruption told Reuters that the evacuation instructions came earlier this time.

“Back then we weren’t evacuated until it got really dangerous. Life went on as normal when ash and gravel was falling on us, until the big lava came out and destroyed everything,” said 82-year-old Gusti Ayu Wati.

Indonesia has nearly 130 active volcanoes, more than any other country. Many of these show high levels of activity but it can be weeks or even months before an eruption occurs.

Meanwhile, the country’s tourism agency issued a letter reassuring travelers that the island remains safe to visit, and that flights are operating normally. The letter was issued following reports that some tourists were reconsidering visiting the island.

“The island is safe except for areas around Mount Agung. We urge tourists to continue visiting,” the letter said.

About 1.2 million Australians visit Indonesia each year, and tens of thousands are expected to flock to Bali in the next few weeks as most states break for school holidays, the Guardian noted. In 2015 thousands of Australian vacationers were stranded as the eruption of Mount Raung, another Balinese volcano, erupted.

7. OIL ISSUES

(zerohedge)
Nick Cunningham discusses the pros and cons of a further rise in oil prices
(courtesy Nick Cunningham/OilPrice.com

8. EMERGING MARKET

VENEZUELA

Maduro is telling his generals to prepare for war against the USA. Newsweek reports that there maybe a coup attempt by them as Maduro’s popularity wanes

(courtesy zerohedge0

Maduro To Generals: Prepare For War With “Criminal Empire” US

After barely managing to scrape together the nearly $200 million needed to make a bond payment earlier this month (the country made the payment a week late), Embattled Venezeulan President Nicolas Maduro is refocusing his attention on the US, warning military leaders Tuesday to begin preparing for war with the US. Maduro’s call to arms comes after the US has repeatedly tightened sanctions against Maduro’s regime and the country’s state-run oil company; earlier this week, the Trump administration blocked Venezeulan officials from entering the US as part of the White House’s new “targeted” travel ban. Trump has also repeatedly threatened a military intervention if Maduro doesn’t leave voluntarily.

Maduro is probably still brooding over Trump’s call for the world community to help restore “democracy and political freedoms” to Venezeula by ousting Maduro (to which Maduro reportedly responded in typical leftist fashion by comparing Trump to Hitler).  Trump made those remarks last week during his first address to the UN General Assembly. Earlier this year, Trump said he wouldn’t rule out a military option for dealing with Venezuela, adding that the US has an obligation to take of the country because it’s “our neighbor.”

Maduro said Trump’s threats were the reason for him ordering the military to be on alert.

“We have been shamelessly threatened by the most criminal empire that ever existed and we have the obligation to prepare ourselves to guarantee peace,” said Maduro, who wore a green uniform and a military hat as he spoke with his army top brass during a military exercise involving tanks and missiles. “We need to have rifles, missiles and well-oiled tanks at the ready….to defend every inch of the territory if needs be,” he added.

Over the summer, the US announced sanctions to prevent PDVSA, Venezuela’s state-owed oil company, from issuing new debt (sanctions that conveniently avoided existing bonds held by Goldman Sachs), while also preventing Citgo, the US subsidiary of PDVSA, from repatriating dividends. The US has also passed sanctions against many top Venezuelan officials. Tensions between Maduro and Trump started escalating shortly after Trump’s inauguration, when the US blacklisted Venezuelan Vice President Tareck El Aissami for drug trafficking.

Maduro referenced the sanctions during his speech at the military base. As he spoke, Russian military planes flew in the sky as part of the training exercise, according to Newsweek.

“The future of humanity cannot be the world of illegal sanctions, of economic persecution,” Maduro said.

Of course, Maduro doesn’t have the manpower to stand up to the US’s much-larger military. The embattled leader has managed to cling to power in Venezuela despite mounting political and economic crises that have inspired months of deadly anti-government demonstrations in the streets of the capital, Caracas and many other cities around the country.

As Newsweek reports, Defense Minister Vladimir Padrino has backed Maduro through the unrest, but Reuters reported back in August that there may be growing support for a military-backed coup against Maduro, whose approval rating remains at all-time lows, even as he has succeeded in consolidating power and marginalizing his opposition.

The country has managed to avoid financial calamity with the help of Russia and China. However, Newsweek reports that China is beginning to limit its exposure to Venezuela amid the mounting political unrest.

end

HUMOUR STORY OF THE DAY

TRICKY QUESTION???

Thursday Humor: America’s “Enhanced Immigrant Vetting” Exposed

The DS-160, Online Nonimmigrant Visa Application form, is for temporary travel to the United States.

Consular Officers use the information entered on the DS-160 to process the visa application and, combined with a personal interview,determine an applicant’s eligibility for a nonimmigrant visa.

Here it is. Read carefully before answering...

 

END

Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings THURSDAY morning 7:00 am

Euro/USA   1.1737 UP .0026/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 MIXED 

USA/JAPAN YEN 112.58 DOWN 0.301(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 1.3422 UP .0025 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED

THERESA MAY FORMS A NEW GOVERNMENT/STARTS BREXIT TALKS

USA/CAN 1.2465 DOWN .0017 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/(TRUMP INITIATES LUMBER TARIFFS ON CANADA)

Early THIS THURSDAY morning in Europe, the Euro ROSE by 26 basis points, trading now ABOVE the important 1.08 level  RISING to 1.1775; / Last night the Shanghai composite CLOSED  DOWN 5.60 POINTS OR 0.17%     / Hang Sang  CLOSED  DOWN 220.83 POINTS OR 0.80% /AUSTRALIA  CLOSED DOWN 0.11% / EUROPEAN BOURSES OPENED ALL MIXED

The NIKKEI: this THURSDAY morning CLOSED UP 96.06 POINTS OR 0.47%  

Trading from Europe and Asia:
1. Europe stocks  OPENED MIXED

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 220.83 POINTS OR 0.80%  / SHANGHAI CLOSED DOWN 5.60 POINTS OR 0.17%   /Australia BOURSE CLOSED DOWN 0.11% /Nikkei (Japan)CLOSED UP 96.06 POINTS OR 0.47%   / INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: 1285.55

silver:$16.81

Early THURSDAY morning USA 10 year bond yield:  2.335% !!! UP 2   IN POINTS from WEDNESDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. (POLICY FED ERROR)

The 30 yr bond yield  2.885, UP 2 IN BASIS POINTS  from WEDNESDAY night. (POLICY FED ERROR)

USA dollar index early THURSDAY morning: 93.26 DOWN 10  CENT(S) from WEDNESDAY’s close. 

This ends early morning numbers  THURSDAY MORNING

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And now your closing THURSDAY NUMBERS

Portuguese 10 year bond yield: 2.419% DOWN 5  in basis point(s) yield from WEDNESDAY 

JAPANESE BOND YIELD: +.074%  UP 1 &  1/ 2  in   basis point yield from WEDNESDAY/JAPAN losing control of its yield curve/

SPANISH 10 YR BOND YIELD: 1.626% down 2  IN basis point yield from WEDNESDAY 

ITALIAN 10 YR BOND YIELD: 2.122 DOWN 3 POINTS  in basis point yield from WEDNESDAY 

the Italian 10 yr bond yield is trading 50 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.479% UP 2  IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR THURSDAY

Closing currency crosses for THURSDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/1:00 PM 

Euro/USA 1.1785 UP .0356 (Euro UP 35 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 112.47 DOWN 0.418(Yen UP 42  basis points/ 

Great Britain/USA 1.3441 UP  0.0013( POUND UP 13 BASIS POINTS)

USA/Canada 1.2440 DOWN .0042(Canadian dollar UP 42 basis points AS OIL FELL TO $51.27

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This afternoon, the Euro was ROSE 35 basis points to trade at 1.1785

The Yen FELL to 112.47 for a GAIN of 42  Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  

The POUND ROSE BY 43  basis points, trading at 1.3441/ 

The Canadian dollar ROSE by 42 basis points to 1.2417,  WITH WTI OIL FALLING TO :  $51.27

The USA/Yuan closed at 6.6610/
the 10 yr Japanese bond yield closed at +.074 UP  1 AND 1/2%   IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 2  IN basis points from WEDNESDAY at 2.316% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.87514 UP 2  in basis points on the day /

Your closing USA dollar index, 93.20  DOWN 13 CENT(S)  ON THE DAY/1.00 PM/BREAKS RESISTANCE OF 92.00 

Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for THURSDAY: 1:00 PM EST

London:  CLOSED UP  9.31 POINTS OR 0.13%
German Dax :CLOSED UP 47.24 POINTS OR 0.37%
Paris Cac  CLOSED UP 11.81 POINTS OR 0.22% 
Spain IBEX CLOSED DOWN 40.40 POINTS OR 0.39%

Italian MIB: CLOSED DOWN 34.52 POINTS OR 0.15% 

The Dow closed UP 40.19 OR 0.18%

NASDAQ WAS closed UP 00.19  POINTS OR 0.00%  4.00 PM EST

WTI Oil price;  51.27  1:00 pm; 

Brent Oil: 57.03 1:00 EST

USA /RUSSIAN ROUBLE CROSS:  58.07 DOWN 13/100 ROUBLES/DOLLAR (ROUBLE HIGHER BY 13 BASIS PTS)

TODAY THE GERMAN YIELD RISES TO  +0.479%  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:$51.59

BRENT: $57.63

USA 10 YR BOND YIELD: 2.306%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.868% 

EURO/USA DOLLAR CROSS:  1.1785 UP .0036

USA/JAPANESE YEN:112.27  DOWN  0.609

USA DOLLAR INDEX: 93.14  DOWN 22  cent(s)/

The British pound at 5 pm: Great Britain Pound/USA: 1.3439 : UP 41 POINTS FROM LAST NIGHT  

Canadian dollar: 1.2431 UP 52 BASIS pts 

German 10 yr bond yield at 5 pm: +0.479%

END

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

TRADING IN GRAPH FORM FOR THE DAY

Stocks Up, Bonds Up, Gold Up, & Dollar Down But ‘Middle-Class-Miracle’ Fades

 

Odd day. Low volume, small range in stocks. Good macro. Some questions over just how ‘miraculous’ Trump’s tax plan will be for the middle-class… but the day’s trend across FX, bond, and commodities was set early on when Asia closed and dollar-sellers, bond-buyers, and precious-metal-purchasers came back to play…

 

Risk is “Contained”…

 

Tech stocks disappointed today (Nasdaq was red until the panic-buying into the close) as Trannies outperformed…new record for Russell 2000, S&P and Trannies

 

VIX was clobbered again desperate to keep S&P green above 2507.5…

 

Value slightly outperformed Growth today…

 

While most major stock indices ended green today, we note that “high-tax” stocks actually underperformed, wiping out yesterday’s exuberance…

 

And while most sectors clung to a slight gain, Retailers were under pressure…

 

And FANG Stocks ended in the red…

 

Treasury yields were mixed on the day with the long-end underperforming…

 

And while US Treasuries stabilize, we note that 10Y JGBs are back near the ‘BOJ Panic’ 10bps yield limit levels (having unleashed unlimited buying in NovFeb, and July to stop the selling pressure)…

 

10Y Treasury yields ended the day unch as buyers arrived once Asia closed…

 

The Dollar Index rolled over today after Asia closed (first down day this week)

 

The question is what happens next?

 

Bitcoin closed marginally lower after yesterday’s big day…

 

 

Gold managed to close green (barely) after rallying non-stop from Asia’s close…

 

Don’t forget that after tonight’s close in China, it’s Golden Week and we know what happens to gold

Trading this morning:

as I promised you, Trump tax reform has little chance of passing. Today UBS also stated that tax reform has little chance.

(courtesy zerohedge)

Market Gives Up Trump-Tax-Hope Gains After UBS Says “Tax Reform Won’t Happen”

Well that de-escalated quickly…

 

Following yesterday’s breathless rip higher in small cap stocks (which are down today) and ‘high-tax’ stock outperformance (which is collapsing today), it appears ‘sell the news’ is more today’s meme as many on Wall Street question the chances of getting a bill through… and what its effect would be.

As UBS’ Seth Carpenter wrote overnight: “We don’t believe that tax reform or even sizable tax cuts will happen. Even if a tax cut of 1 percent of GDP somehow happens, it is not a game changer.”

Larger tax cuts than we anticipate are likely the single, most-easily identifiable upside risk to our forecast. Our baseline forecast incorporates no fiscal stimulus in 2017. For 2018, we have incorporated only modest corporate and personal tax cuts. Even with the new tax proposal from the Administration, our outlook remains unchanged. We are sceptical that a large fiscal stimulus package that increases the deficit will occur. There has not been substantial legislation passed so far this year, despite control of the Congress and the White House by a single party. Moreover, the fiscally conservative wing of the Congress will have to confront another vote to raise the debt limit next year in the context of any decision made about fiscal policy.

We could, of course, be wrong. While we do not expect the passage of a substantial tax reform package, there will be strong motivation to pass something. There is clear, long-running desire for tax reform. Moreover, 2018 is a mid-term election year, and without major legislative achievements to date, there is a clear incentive for the governing party to demonstrate an ability to produce results. The Administration released an outline of a tax reform proposal, but the Congress will dictate the finalform of any legislation. Put differently, a proposal from an Administration is non-binding.

Tax reform has historically been extremely difficult, in part because there are many different views on what sectors should receive preferential treatment. Even for the Senate to reach 50 votes in order to pass a reform package, in our view, the Administration’s proposal would have to be pared back. The debt ceiling was recently suspended until December. Given the Treasury Secretary’s ability to use what are referred to as “extraordinary measures” to finance the government into 2018, a new vote on the debt limit will be necessary next year.

For fiscal conservatives, voting for a substantial increase in the debt limit while also voting for a tax package that will substantially increase the deficit will likely prove an uncomfortable set of votes, particularly because 2018 is a mid-term election year.

The estimates of the budgetary impact of the Administration’s proposal range widely. We do not think it is useful to wade into that debate, as the Congress will craft any legislation that arises. A plausible—though still to our minds, extremely unlikely—scenario would be tax cuts that amount to roughly 1 percent of GDP. Tax cuts of this size would justifiably be seen as large and would probably achieve political goals. But in our view, even a tax package of this size would change our forecast by a matter of degree, not of kind.

Fiscal multipliers, which tell us how much each dollar of fiscal stimulus is worth for overall output, are notoriously difficult to estimate precisely. Most estimates find that multipliers from tax cuts are smaller than multipliers from spending. Moreover, if taxes are reduced for agents with a relatively low marginal propensity to spend, the multiplier will be lower still.  ad fiscal stimulus been enactedwhen the economy was far from full employment and the Fed was trying to be as accommodative as possible, the effects would likely have been larger. But with the unemployment rate at historically low levels and with the Fed already embarking on a path of policy tightening, fiscal stimulus will in part likely lead to further policy rate hikes to prevent an overheating in the economy.

The table below presents a range of estimates on fiscal multipliers from a survey published by the Congressional Budget Officeand the CBO’s own work. We present the 25th and 75thpercentile of the distribution of the estimates.

Corporate tax cuts are generally found to have relatively low multipliers as do tax cuts for the upper-end of the income spectrum. Tax cuts for lower and middle class families tend to have higher multipliers, as these households tend to spend a larger fraction of additional disposable income. In transforming the dollar amount of a tax cut into stimulus, however, because of the progressive nature of the tax system, across-the-board tax cuts will tend to cut taxes substantially more for upper income households.

Taking all of these multipliers together, we believe a reasonable assumption is that a compromise tax cut that would come out of the Congress would have a multiplier of about 0.5 or lessThat is, each dollar cut in taxes translates to 50 cents on output. In the case of a tax cut that amounts to 1 percent of GDP, then, we would expect to see something like a one-half percentage point increase in GDP. The specifics of the tax plan will matter greatly:  whether the tax cut is permanent or temporary will matter, how much focus is paid to business versus individual taxes, and other considerations. Regardless, a tax cut of roughly this size would push our forecast for 2018 up to no more than 2¾ percent if the tax cut is rapidly enacted. That type of growth would clearly be an acceleration compared to recent growth rates, and the unemployment rate would fall further than our current projection of 4.0 percent. We currently envision two rate hikes from the Fed in 2018, one in June and one in December. That outlook is less aggressive than the FOMC currently projects, because we think inflation will rise less rapidly than the Fed does. With a substantial tax cut, inflation could rise as rapidly as the Fed envisions, and the downside uncertainty to inflation would be meaningfully reduced. As a result, the Fed would likely hike three times next year under such a scenario. A fourth hike would be possible if the tax package is implemented this year and the data show a sharper-than-anticipated decline in the unemployment rate right away.

The takeaway for us  is to be wary. We see little likelihood of a meaningful tax cut. But even if taxes were cut substantially, the size of the package would likely be of a size that would lead to only a modest revision to our outlook.

*  *  *
So back to the de-hoping cycle…

end

 

Markets will not like this:  Gary Cohn states that he cannot guarantee taxes will not go up for the middle class.  The whole narrative for the past year as been the “stimulus” created by cutting taxes for the middle class.

(courtesy zerohedge)

Gary Cohn: “I Can’t Guarantee” Taxes Won’t Go Up For The Middle Class

While proclaiming that “the biggest winners will be everyday American workers,” President Trump’s top economic adviser, Gary Cohn told ABC News’ George Stephanopoulos that he can’t guarantee that taxes won’t go up for some middle-class families under the administration’s sweeping tax overhaul.

“The biggest winners will be the everyday American workers as jobs start pouring into our country, as companies start competing for American labor and as wages start going up at levels that you haven’t seen in many years,” Trump said.

Following Matt Drudge’s cries of “betrayal” yesterday, it appears confusion truly reigns as to just who benefits from the so-called ‘greatest tax cuts in the history of the world’ as we know absolutely nothing because the government has yet to release the income brackets (or get close to guessing at just how ‘progressive’ and ‘punitive’ the optional 4th bracket will be).

Reflecting on what President Trump called “The Middle Class Miracle”, Cohn remarked…

“I can’t guarantee anything,” said Cohn, the director of the White House Economic Council. “You can always find a unique family somewhere.”

 

He said Trump’s plan is “purely aimed at middle-class families.” But Cohn acknowledged that “it depends which state you live in.”

 

“When we looked at the tax plan and we look at what it does for Americans, we are very confident that Americans are getting a great deal here,” he replied.

 

“We’ve also said that wealthy Americans are not getting a tax cut.”

 

So “everyday Americans” win, “can’t guarantee” that the middle-class won’t pay more, and the rich will definitely feel the ‘progressive’ pinch (though definitions of ‘everyday’, ‘middle-class’, and ‘rich’ are unclear). However, it appears clear there is one cohort of ‘losers’…

 

Wholesaler inventories surge due to plant shuttering/automobile makers are stocking up. This is positive for Q3 GDP but as sales plummet in Q4 this could go terribly wrong

(courtesy zero hedge)

Wholesale Inventories Surge As Plant-Shuttering-Automakers ‘Stock Up’

Wholesale Inventories jumped 1.0% MoM in August, the fourth consecutive build in inventories in a row and the fastest monthly build since Nov 2016.

This is the fastest annual growth rate for inventories since June 2015 as it appears producers embrace the idea that ‘if they build it, they will come’.

Perhaps most notably, motor vehicles saw the biggest rise (+1.2% MoM, +7.4% YoY) as sales collapse.

This appears positive for Q3 GDP (restocking) but we wonder with Auto sales dumping (and automaker shuttering plants), what could go wrong?

end

 

Hardly any change in Q2 at 3.1%.

(courtesy zero hedge)

Final Q2 GDP Comes In At 3.1%, Higher Than Expected

With just two days left until the end of the third quarter, what happened in Q2 will hardly provoke a market reaction, which is why when the BEA announced that the third and final Q2 GDP print was revised from 3.0% to 3.1%, (or specifically from 3.049% to 3.06%) it hardly inspired a move in risk assets, even though it did come in fractionally better than the 3.0% expected, and more than double the 1.2% Q1 GDP print.

The revision to the third estimate of GDP growth mainly reflected an upward revision to private inventory investment, notably farm inventories. Personal consumption rose 3.3% in 2Q after rising 1.9% prior quarter, while its contribution to the change in GDP was 2.24% in 2Q, slightly below the 2.28% in the previous revision. Nonresidential fixed investment, or spending on equipment, structures and intellectual property rose 6.7% in 2Q after rising 7.2% prior quarter.

The increase in real GDP in the second quarter primarily reflected positive contributions from PCE, nonresidential fixed investment, exports, federal government spending, and private inventory investment that were partly offset by negative contributions from residential fixed investment and state and local government spending. Imports increased.

The acceleration in real GDP in the second quarter reflected an upturn in private inventory investment, an acceleration in PCE, a deceleration in imports, and an upturn in federal government spending that
were partly offset by a downturn in residential fixed investment, a deceleration in exports, and a downturn in state and local government spending.

For the inflation watchers, the GDP price index rose 1.0% in 2Q after rising 2.0% prior quarter, while Core PCE q/q rose 0.9% in 2Q after rising 1.8% prior quarter

The BEA also reported that Corporate Profits Rose 0.7% Q/Q in Q2, after falling 2.1% in prior quarter.  On an annual basis , corporate profits were up 6.4% in 2Q after rising 3.3% prior quarter. Notably Financial industry profits declined 7.1% in 2Q after falling 7.9% prior quarter.

Federal Reserve bank profits down 10.6% in 2Q after rising 2.7% prior quarter. Finally, nonfinancial sector profits rose 4.9% in 2Q after rising 0.3% prior quarter.

end

 

Bannon describes it is time for “war” on the Republican establishment as the anti Trumper Republicans are being attacked by more conservative leaning Republicans.

 

(courtesy zero hedge)

“There’s A Time For War”: Bannon Vows Full Assault On Republican Establishment

Following Roy Moore’s decisive win in Alabama earlier this week (something we covered here), Steve Bannon has predictably seized on the momentum vowing that it is only the beginning of his “war” against the Republican establishment.  Per McClatchy:

“There’s a time and season for everything under heaven. And sometimes there’s a time for peace. And sometimes there’s a time for war,” he told a raucous, religious revival-style crowd packed into a barn.

 

“Yeah!” a woman yelled back.

 

“We’re not going to hug out our differences,” he continued. “We’re going to have to fight for our differences.”

With several seats opening up in the Senate in 2018, including Senator Bob Corker’s of Tennessee who recently announced his retirement, conservatives see no reason why they can’t beat out establishment Senators across the deep south.

The hard-right’s fight for total control of Donald Trump’s Washington is just getting started.

 

The victory of deeply conservative candidate Roy Moore in Tuesday’s hotly contested Alabama Senate primary has emboldened activists and potential candidates alike, threatening to set off a wave of tough GOP races and ushering in a new era of internecine Republican warfare that party leaders had hoped would end when they won control of the government.

 

“There’s no doubt in my mind that this is going to be a determining factor for a lot of Deep South states, no question,” said Mississippi State Sen. Chris McDaniel, who lost a hugely controversial primary contest against Sen. Thad Cochran in 2014 but is considering another Senate primary run in 2018. “If Alabama can send a true conservative to Washington, and Texas can send a true conservative to Washington, so can Mississippi and Tennessee and Florida and other states.”

Bannon

Of course, it’s not just the deep south.  Arizona is also likely to draw a lot of attention from Bannon allies as Senator Jeff Flake, a consistent and vocal Trump Critic, is up for re-election and Senator John McCain is suffering from severe health issues which could result in another special election at any moment.

Led by Breitbart News head Steve Bannon, Trump’s former chief strategist, they sought to make the race a referendum on Senate Majority Leader Mitch McConnell, who has grown increasingly unpopular with the base. And they took Moore’s win as a sign that other incumbents will be vulnerable to the same kind of anti-Washington messaging, even though it’s the Republican Party that controls the White House, the House and the Senate.

 

“If you can defeat a guy like Luther Strange by simply tying him to Mitch McConnell, what does that mean for guys like Jeff Flake and Dean Heller, who are literally Never Trumpers, or a guy like Roger Wicker, who’s in Senate leadership?” said Andy Surabian, a senior adviser to Great America Alliance, a group with close ties to Bannon that supported Moore in Alabama. His comment was in reference to GOP senators from Arizona, Nevada and Mississippi. “I hope none of them have a long-term lease in Washington D.C.”

 

Arizona is an obvious next priority for many of these Trump-aligned activists and organizations.

 

There, Flake—a frequent and vocal Trump critic whom Trump has clashed with repeatedly—is already facing a primary challenge from Kelli Ward, who unsuccessfully primaried Sen. John McCain last cycle but this time around has received Twitter support from Trump. Pro-Ward efforts have been boosted by major Trump donor Robert Mercer, who is close to Bannon. Eric Beach, the co-chair of Great America Alliance who is also assisting Ward, devoted space to the race in a broader USA Today op-ed published after Alabama.

 

“Establishment, beware,” he wrote. “We’re coming for you in 2018.”

Meanwhile, Nevada also looks to be a target…

Some conservative activists have also turned their attention to the Nevada Senate race. Trump, as president, hasn’t been as critical of Heller as he has been of Flake, but some see an opportunity to highlight Heller’s past criticism of Trump from the 2016 campaign, something they expect will rile up a conservative base already miffed that Hillary Clinton won Nevada (though Heller said last month—close to a year after the election—that he did vote for Trump).

 

On Tuesday night, Heller’s primary challenger, Danny Tarkanian, tweeted his congratulations to Moore and added: “Primary voters showed they’ll drain the swamp across country.” In an interview with McClatchy ahead of the election, he argued that Heller would be in a weaker position with the staunchly pro-Trump GOP base than Strange was, because Strange embraced Trump.

 

“I haven’t seen that Luther Strange was a Never Trumper, that he did anything against Trump,” said Tarkanian, who has run for office multiple times before but met with Bannon recently. “On the contrary, Heller was one of the first Never Trumpers in Nevada. He cost Trump the election in Nevada.”

And while it’s impossible to predict how these various races will play out, it seems fairly certain that 2018 won’t be a predictable and/or tame off-year election season.

end

 

Nothing but fake news:  the Dept of Homeland Security was wrong as California also joined other states by reporting that the Russians did not hack their voting systems

(courtesy zero hedge)

“Clear That DHS Was Wrong”: California Says Russians Did Not Hack Voting Systems

Last Friday the Department of Homeland Security (DHS) dropped a “bombshell” statement that sent a “thrill up the leg” (to quote Chris Matthews) of every CNN reporter across the country.  The news from DHS implied that the election systems of 21 states around the country had been hacked, or at least were close to being hacked, which set off a new wave “Russian collusion” speculation in the U.S. news media (see: DHS Notifies 21 States Of Hacker Targeting; Election Officials Blame “Russian Government Cyber Actors”).

That said, according to California Secretary of State Alex Padilla who released a statement this morning in response to the DHS, the whole thing was just a bunch of “fake news.”  Padilla noted that after requesting additional information from DHS on the “hacks” it quickly became clear that their “conclusions were wrong” and that “California’s elections infrastructure and websites were not hacked or breached by Russian cyber actors.”

“Last Friday, my office was notified by the U.S. Department of Homeland Security (DHS) that Russian cyber actors ‘scanned’ California’s Internet-facing systems in 2016, including Secretary of State websites. Following our request for further information, it became clear that DHS’ conclusions were wrong.”

 

“DHS confirmed that Russian scanning activity had actually occurred on the California Department of Technology statewide network, not any Secretary of State website. Based on this additional information, California voters can further rest assured that the California Secretary of State elections infrastructure and websites were not hacked or breached by Russian cyber actors.”

 

“Our notification from DHS last Friday was not only a year late, it also turned out to be bad information. To make matters worse, the Associated Press similarly reported that DHS has reversed itself and ‘now says Russia didn’t target Wisconsin’s voter registration system,’ which is contrary to previous briefings.”

 

“The work of our intelligence agencies is critical in defending against cyber threats. I remain committed to a partnership with DHS and other intelligence agencies, however, elections officials and the American public expect and deserve timely and accurate information.”

Hackers

Meanwhile, this comes after another stunning and embarrassing reversal from the DHS earlier this week in which they first blamed Russians for hacking the Wisconsin election systems, then reversed and said it wasn’t the Russians then reversed further and said there was actually no hack on the WI election system at all.

But in a stunning reversal – one which we doubt will put endless rumors of Russian cyberinterference to bed – the AP now reports that DHS has told Wisconsin that the Russian government was not involved in the cyber-targeting.

 

In an email to the state’s deputy elections administrator that was provided to reporters at the Wisconsin Elections Commission meeting on Tuesday, Homeland Security said that initial notice of Russian involvement was made in error. Also, as we noted at the time, the government did not originally assign blame to the Russians when news of the alleged “scanning” initially broke on Friday although most medias jumped at the opportunity to blame Putin.

 

Infuriated by the error, some state officials said that DHS should provide an expalanation for the errror, or at least issue an apology to state elections officials, who were understandbly unnerved by the news of Russian involvement.

 

Wisconsin’s chief elections administrator Michael Haas told AP that Homeland Security had assured the state that it had not been targeted – by Russians, or anybody else, for that matter. 

 

“Wisconsin was not provided any information that indicated before the November election that Russian government actors were targeting election systems,” Haas said. He said one theory is that Homeland Security saw suspicious activity from IP addresses targeting state election systems in other states and assumed that was the intent in Wisconsin as well.

 

Others were apparently in shock: “It’s been a difficult process trying to piece all of this together,” said Wisconsin Elections Commission spokesman Reid Magney. “We’re trying to understand what happened.”

So, for folks, like WI’s Elections Commission spokesman Reid Magney, who are still “trying to understand what happened”…allow us to clarify: NOTHING HAPPENED.  Hillary Clinton lost an election…other than that, not much happened that hasn’t happened in every election since the 1950’s.

(courtesy zerohedge)

 

 

 

end

 

 

 

 

Well that about does it for tonight

 

I will see you FRIDAY night.

Harvey.

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