GOLD: $1274.50 UP $1.40
Silver: $16.70 UP 10 CENT(S)
Closing access prices:
SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME)
SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)
SHANGHAI FIRST GOLD FIX: $n/a DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $n/a
PREMIUM FIRST FIX: $8.24 (premiums getting larger)
SECOND SHANGHAI GOLD FIX: $n/a
NY GOLD PRICE AT THE EXACT SAME TIME: $/na
Premium of Shanghai 2nd fix/NY:$13.00 (PREMIUMS GETTING LARGER)
LONDON FIRST GOLD FIX: 5:30 am est $not important
NY PRICING AT THE EXACT SAME TIME: $not important
LONDON SECOND GOLD FIX 10 AM: $1283.10
NY PRICING AT THE EXACT SAME TIME. 1283.10
For comex gold:
NOTICES FILINGS TODAY FOR OCT CONTRACT MONTH: 15 NOTICE(S) FOR 1500 OZ.
TOTAL NOTICES SO FAR: 2329 FOR 232,900 OZ (7.241TONNES)
15 NOTICES FILED TODAY FOR
Total number of notices filed so far this month: 385 for 1,925,000 oz
Let us have a look at the data for today
In silver, the total open interest SURPRISINGLY FELL BY 1378 contracts from 185,543 UP TO 184,165 WITH RESPECT TO YESTERDAY’S TRADING (DOWN 1 CENT ). THE CROOKS TRIED TO COVER AS MUCH OF THEIR SILVER SHORTS AS POSSIBLE YESTERDAY BUT IT LOOKS LIKE THEY HAD LIMITED SUCCESS..SO THEY TRIED ANOTHER RAID TODAY BUT THEIR PLAN WAS FOILED WITH THE NEWS THAT NORTH KOREA WAS PLANNING ANOTHER LONG RANGE MISSILE CAPABLE OF HITTING THE WEST COAST OF THE USA.
RESULT: A GOOD SIZED FALL IN OI COMEX DESPITE THE 1 CENT PRICE FALL AND CONSTANT TORMENT. IT SURE LOOKS LIKE OUR BANKERS FAILED AGAIN IN THEIR ATTEMPT TO COVER MUCH OF THEIR MASSIVE SILVER SHORTFALL SO ANOTHER RAID WAS ORCHESTRATED THIS MORNING BUT THAT FAILED AS WELL.
In ounces, the OI is still represented by just UNDER 1 BILLION oz i.e. 0.920 BILLION TO BE EXACT or 132% of annual global silver production (ex Russia & ex China).
FOR THE NEW FRONT OCT MONTH/ THEY FILED: 15 NOTICE(S) FOR 75,000 OZ OF SILVER.
In gold, the open interest FELL BY A MUCH LARGER THAN EXPECTED 4359 CONTRACTS WITH THE SLIGHT FALL in price of gold ($1.60 ) . The new OI for the gold complex rests at 516,742. OUR BANKER FRIENDS WERE QUITE SUCCESSFUL IN COVERING MORE OF THEIR GOLD SHORTS.THE BANKERS WERE REACHING FOR CAPITULATION BY CAUSING ANOTHER HUGE RAID ON GOLD AND SILVER BUT THAT WAS FOILED ON NEWS THAT NORTH KOREA WAS PLANNING ANOTHER LONG RANGE MISSILE LAUNCH.
Result: A GOOD SIZED DECREASE IN OI WITH THE FALL IN PRICE IN GOLD ($1.60)
we had: 15 notice(s) filed upon for 1500 oz of gold.
With respect to our two criminal funds, the GLD and the SLV:
Tonight , ANOTHER BIG CHANGE in gold inventory at the GLD/ this time A DEPOSIT OF 2.96 TONNES
Inventory rests tonight: 854.02tonnes.
Today: ANOTHER BIG change in inventory: ANOTHER WITHDRAWAL OF 944,000
INVENTORY RESTS AT 325.671 MILLION OZ
First, here is an outline of what will be discussed tonight:
1. Today, we had the open interest in silver FELL BY 1378 contracts from 185,543 DOWN TO 184,165(AND now A LITTLE FURTHER FROM THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) . IT SEEMS THAT OUR BANKERS WERE AGAIN UNSUCCESSFUL IN COVERING THEIR SILVER SHORTS. THE RATHER HIGH OI COMPARED TO GOLD NO DOUBT RESULTED IN TODAY’S ABORTED ATTEMPT AT CAPITULATION IN THE DOWN DRAFT OF OUR METAL PRICES. NEWS THAT NORTH KOREA WAS PLANNING A MISSILE LAUNCH CAPABLE OF HITTING THE WEST COAST OF THE USA PUT AN END TO THE WHACKING.
RESULT: A SMALL SIZED DECREASE IN SILVER OI AT THE COMEX WITH THE TINY FALL IN PRICE OF 1 CENT IN YESTERDAY’S TRADING. OUR BANKER FRIENDS WERE UNSUCCESSFUL IN THEIR ATTEMPT TO COVER ANY OF OUR SILVER SHORTS SO THEY TRIED AGAIN THIS MORNING . THEIR RAID WAS ABORTED ON THE KOREAN NEWS.
2.a) The Shanghai and London gold fix report
2 b) Gold/silver trading overnight Europe, Goldcore
and in NY: Bloomberg
3. ASIAN AFFAIRS
)Late THURSDAY night/FRIDAY morning: Shanghai closed /Hang Sang CLOSED / The Nikkei closed UP 62.15 POINTS OR 0.30%/Australia’s all ordinaires CLOSED UP 1.00%/Chinese yuan (ONSHORE) closed/Oil DOWN to 49,57 dollars per barrel for WTI and 55.95 for Brent. Stocks in Europe OPENED RED EXCEPT FTSE . ALL YUAN FIXINGS CLOSED
3a)THAILAND/SOUTH KOREA/NORTH KOREA
b) REPORT ON JAPAN
c) REPORT ON CHINA
4. EUROPEAN AFFAIRS
5. RUSSIAN AND MIDDLE EASTERN AFFAIRS
6 .GLOBAL ISSUES
7. OIL ISSUES
8. EMERGING MARKET
9. PHYSICAL MARKETS
10. USA Stories
Let us head over to the comex:
The total gold comex open interest FELL BY MUCH LARGER THAN EXPECTED 4359CONTRACTS DOWN to an OI level of 516,742 DESPITE THE TINY FALL IN THE PRICE OF GOLD ($1.60 FALL IN YESTERDAY’S TRADING). OUR BANKER FRIENDS WERE QUITE SUCCESSFUL IN THEIR ATTEMPT TO COVER SOME OF THEIR HUGE GOLD SHORTFALL. OCTOBER IS AN ACTIVE DELIVERY MONTH ALTHOUGH IT IS THE WEAKEST IN TERMS OF ACTUAL DELIVERIES AND OPEN INTEREST. WE CAN VISUALIZE THAT THROUGHOUT THE MONTH OF SEPTEMBER, THE CROOKS UTILIZED THE EMERGENCY EFP SCHEME TO TRANSFER OBLIGATIONS OVER TO LONDON. IT THEN STANDS TO REASON THAT IF THE EMERGENCY WAS IN FORCE THROUGHOUT THE MONTH OF SEPTEMBER IT WOULD CONTINUE ON FIRST DAY NOTICE. IT LOOKS LIKE ANOTHER 7200 LONG COMEX CONTRACTS WERE GIVEN 7200 EFP’S. WE HAVE NOW ENDED GOLDEN WEEK WHERE ALL OF CHINA IS OFF AND AS SUCH EXPECT GOLD TO FIRM UP NEXT WEEK WHICH IS ALSO AIDED WITH NEWS OF NORTH KOREA READY TO TEST ANOTHER MISSILE CAPABLE OF HITTING THE WEST COAST OF THE USA.
Result: a LARGER SIZED open interest DECREASE WITH THE SMALL SIZED FALL IN THE PRICE OF GOLD ($1.60) . BANKERS SUCCESSFUL IN THEIR ATTEMPT TO COVER THEIR GOLD SHORTFALL. BANKERS WERE TRYING FOR CAPITULATION IN THE WHACKING OF GOLD BUT THEIR PLAN WAS FOILED WITH NEWS OF NORTH KOREA PREPARING TO LAUNCH A MISSILE CAPABLE OF HITTING THE WEST COAST OF THE USA.
CHINA THREW OUT A TRIAL BALLOON LAST MONTH THAT THEY WERE CONSIDERING A YUAN BASED OIL CONTRACT ON THE SHANGHAI EXCHANGE AND THEN THE RECIPIENT OF YUAN WILL ALSO HAVE THE OPTION OF CONVERTING TO GOLD. I NOW STRONGLY BELIEVE THAT THAT IS THE REASON FOR THE CONSTANT TORMENT. THE BANKERS KNOW THAT THEIR GAME WILL BE UP ONCE WE GET A YUAN-PETRO SCHEME WITH A CONVERSION OF YUAN INTO GOLD.
I BELIEVE THE CHINESE WILL INTRODUCE THIS SCHEME AT THEIR BIG 5 YR FORUM BEGINNING ON OCT 18.
I WOULD IMAGINE THAT THE CHINESE WOULD TAKE IN ALL GOLD INITIALLY AT SAY $2,000…AND THE NEW GOLD RECEIVED WOULD BE USED TO SETTLE ON YUAN CASHED. IF 2,000 DOLLARS IS INSUFFICIENT TO RAISE ENOUGH GOLD, THEN FURTHER INCREASES WILL BE THE ORDER OF THE DAY UNTIL EQUILIBRIUM.
THE BANKERS FEARING THIS, HAS ORCHESTRATED HUGE RAIDS THESE PAST 2 WEEKS HOPING TO COVER AS MANY GOLD/SILVER SHORTS AS POSSIBLE.
We have now entered the active contract month of Oct and here we saw a LOSS of 196 contracts DOWN to 238 contracts. We had 199 notices filed yesterday so we SURPRISINGLY GAINED 3 contracts or 300 oz will stand for delivery at the comex and 0 EFP notices were given.
The November contract saw A loss OF 275 contracts down to 1556.
The very big active December contract month saw it’s OI LOSS OF 3985 contracts DOWN to 407,572.
We had 15 notice(s) filed upon today for 1500 oz
VOLUME FOR TODAY (PRELIMINARY) NOT AVAILABLE
CONFIRMED VOLUME YESTERDAY: 221,535
We had 15 notice(s) filed for 75,000 oz for the OCT. 2017 contract
|Withdrawals from Dealers Inventory in oz||nil|
|Withdrawals from Customer Inventory in oz||
|Deposits to the Dealer Inventory in oz||nil oz|
|Deposits to the Customer Inventory, in oz||
|No of oz served (contracts) today||
|No of oz to be served (notices)||
|Total monthly oz gold served (contracts) so far this month||
|Total accumulative withdrawals of gold from the Dealers inventory this month||NIL oz|
|Total accumulative withdrawal of gold from the Customer inventory this month||23,630.25 oz|
Today, 0 notice(s) were issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 15 contract(s) of which 0 notices were stopped (received) by j.P. Morgan dealer and 11 notice(s) was (were) stopped/ Received) by j.P.Morgan customer account.
|Withdrawals from Dealers Inventory||nil|
|Withdrawals from Customer Inventory||
|Deposits to the Dealer Inventory||
|Deposits to the Customer Inventory||
|No of oz served today (contracts)||
|No of oz to be served (notices)||
|Total monthly oz silver served (contracts)||385 contracts (1,925,000 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||2912.95 oz|
NPV for Sprott and Central Fund of Canada
Sprott WINS hostile 3.1 billion bid to take over Central Fund of Canada
Sprott Inc. to take control of rival gold holder Central Fund of Canada
Posted Oct 2, 2017 8:43 am PDT
Last Updated Oct 2, 2017 at 9:20 am PDT
TORONTO – Sprott Inc. (TSX:SII) says it has struck a deal to take control of rival gold-holding firm Central Fund of Canada Ltd. (TSX:CEF.A) after a protracted takeover effort.
Toronto-based Sprott said Monday it will pay $120 million in cash and stock for Central Fund of Canada Ltd.’s common shares and for the right to administer and manage the fund’s assets.
The deal, which requires approval from Central Fund shareholders, would see its class A shareholders transferred to a new Sprott Physical Gold and Silver Trust.
Sprott says the deal would add $4.3 billion to its assets under management, which are focused largely on holding physical precious metals on behalf of clients, and 90,000 investors to its client base.
In March, Sprott tried to go through the Court of Queen’s Bench of Alberta to allow Central Fund’s class A shareholders to swap their shares to Sprott after the family that controls Central Fund rebuffed their attempt to make a deal.
Last year Sprott took over Central GoldTrust, a similar fund controlled by the same family, after securing support from more than 96 per cent of shareholder votes cast.
And now the Gold inventory at the GLD
Oct 6/A DEPOSIT OF 2.96 TONNES OF GOLD INVENTORY INTO THE GLD/TONIGHT IT RESTS AT 854.02 TONNES
Oct 5/A LOSS OF 3.24 TONNES OF GOLD INVENTORY FROM THE GLD/INVENTORY RESTS AT 851.06 TONNES
Oct 4/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 854.30 TONNES
oCT 3/ A HUGE WITHDRAWAL OF 10.35 TONNES FROM THE GLD/INVENTORY RESTS AT 854.30 TONNES
Oct 2/STRANGE/WITH GOLD’S CONTINUAL WHACKING WE GOT A BIG FAT ZERO OZ LEAVING THE GLD/INVENTORY RESTS AT 864.65 TONNES
SEPTEMBER 29/no changes in gold inventory at the GLD/Inventor rests at 864.65 tonnes
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.
Now the SLV Inventory
Oct 6/NO CHANGE IN SILVER INVENTORY/ INVENTORY RESTS AT 325.671 MILLON OZ
Oct 5/ANOTHER WITHDRAWAL OF 944,000 OZ FROM THE SLV/INVENTORY RESTS AT 325.671 MILLION OZ
OCT 4/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 326.615 MILLION Z
Oct 3/A TINY WITHDRAWAL OF 143,000 FROM THE SLV FOR FEES/INVENTORY RESTS AT 326.615 MILLION OZ
Oct 2/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 326,757 MILLION OZ
SEPTEMBER 29/no changes in silver inventory at the SLV/inventory rests at 326.757 million oz/
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
Indicative gold forward offer rate for a 6 month duration+ 1.38%
Major gold/silver trading/commentaries for FRIDAY
Gold Investment In Germany Surges – Now World’s Largest Gold Buyers
– Gold investment in Germany surged in past 10 years
– Germans are largest gold buyers in world: WGC research
– Gold investment in Germany surges to €6.8B in 2016
– Gold demand per person is highest in world – double Chinese, UK and U.S. demand
– Gold one of the most popular investment for retail investors especially those with high incomes
– 59% of respondents agreed with the statement that
gold will never lose its value in the long-term
– 48% agreed with the statement that owning gold
makes me feel secure for the long-term
– Prudent Germans more aware of financial and monetary risks
Germany’s Golden Decade from the World Gold Council
Germany’s gold investment market has boomed in the past 10 years.
In the face of successive financial crises and loose monetary policy, German investors turned to gold to protect their wealth. In response, new product providers entered the market making it easier for people to invest.
Last year, more than €6bn was ploughed into gold investment products in Germany and, encouragingly, there is room for further growth: consumer research indicates there is latent retail demand which the industry can tap into.
Must read research from the World Gold Council confirming that prudent Germans are the largest gold buyers both in Europe and in the world has just been published and can be accessed on Gold.org here.
News and Commentary
Gold Prices (LBMA AM)
05 Oct: USD 1,278.40, GBP 969.28 & EUR 1,086.51 per ounce
04 Oct: USD 1,275.55, GBP 960.87 & EUR 1,085.11 per ounce
03 Oct: USD 1,270.70, GBP 959.00 & EUR 1,081.87 per ounce
02 Oct: USD 1,273.10, GBP 956.48 & EUR 1,084.55 per ounce
29 Sep: USD 1,286.95, GBP 963.15 & EUR 1,090.82 per ounce
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
Silver Prices (LBMA)
05 Oct: USD 16.66, GBP 12.64 & EUR 14.19 per ounce
04 Oct: USD 16.83, GBP 12.67 & EUR 14.29 per ounce
03 Oct: USD 16.61, GBP 12.53 & EUR 14.13 per ounce
02 Oct: USD 16.58, GBP 12.46 & EUR 14.12 per ounce
29 Sep: USD 16.86, GBP 12.60 & EUR 14.27 per ounce
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
Recent Market Updates
– Yahoo Hacking Highlights Cyber Risk and Increasing Importance of Physical Gold
– Safe Haven Silver To Outperform Gold In Q4 And In 2018
– Plan For Run On The Pound
– Russia Gold Rush Sees Record Reserves For Putin Era
– China Catalyst To Send Gold Over $10,000 Per Ounce?
– Gold Matches S&P 500 Performance In First 3 Quarters; Up 12% 2017 YTD
– Gold Standard Resulted In “Fewer Catastrophes” – FT
– 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
Alasdair Macleod: Interest rate increases won’t bother gold much
Submitted by cpowell on Thu, 2017-10-05 18:28. Section: Daily Dispatches
2:28p ET Thursday, October 5, 2017
Dear Friend of GATA and Gold:
GoldMoney research director Alasdair Macleod writes today that interest rate increases by central banks won’t knock the gold price down because they won’t keep up with inflation, central banks won’t have much room to raise them, and real rates may remain negative. Macleod’s analysis is headlined “The Upcoming Increase in Interest Rates” and it’s posted at GoldMoney here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Chinese gold market essentials
(courtesy Bullion star.Persson/gATA)
Bullion Star’s Chinese gold market essentials
Submitted by cpowell on Thu, 2017-10-05 23:39. Section: Daily Dispatches
7:39p ET Thursday, October 5, 2017
Dear Friend of GATA and Gold:
Bullion Star’s Torgny Persson today summarizes his internet site’s recent reports on China’s gold market. The summary is headlined “Chinese Gold Market Essentials” and it’s posted at Bullion Star here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
This is not good for the USA: Saudi Arabia will start to buy military equipment from Russia..another nail in the coffin of the USA dollar hegemony
Saudi Arabia will start buying military equipment from Russia
Submitted by cpowell on Fri, 2017-10-06 01:47. Section: Daily Dispatches
Russia, Saudi Arabia Cement New Friendship with King’s Visit
By Vladimir Soldatkin and Katya Golubkova
Thursday, October 5, 2017
MOSCOW — Russian President Vladimir Putin hosted Saudi Arabia’s King Salman for talks at the Kremlin today, cementing a relationship that is pivotal for world oil prices and could decide the outcome of the conflict in Syria.
King Salman, the first sitting Saudi monarch ever to visit Russia, led a delegation to Moscow that agreed joint investment deals worth several billion dollars, providing much-needed investment for a Russian economy battered by low oil prices and Western sanctions.
Saudi Arabia said it had signed a memorandum of understanding on the purchase from Russia of S-400 air defense systems. That marked a shift for the kingdom, which buys most of its military kit from the United States and Britain. …
… For the remainder of the report:
And now huge amount of energy deals along with missile defense systems
Russia, Saudi Arabia Announce Billions In Energy Deals, S-400 Missile System Purchase | Zero Hedge
What is most interesting is the currency of payment.
American hegemony in the region has taken a huge hit as a realignment of interests occurs.
It is only time now before the US will vacate the Middle East Especially Syria and Iraq. And with Turkey closing Kurdish airspace the Kurdish overreach will come now with a price and consequences as noose is tightened. Redrawing the map to Balkanize the Middle East just became much harder.
And the Iranians will find Saudi airspace a no go zone.
Expect more Middle East country cooperation and it would not be surprising to see the Chinese step next to invest in Saudi companies.
The big question is whether all this cooperation will lead to the Saudis selling oil priced in Yuan oil contracts exchangeable for gold on the Shanghai exchange come the 18th of this month. As this will be a psychological blow to the Dollar as the Petro dollar era comes to an end.http://www.zerohedge.com/news/2017-10-05/russia-saudi-arabia-sign-billons-energy-deals-during-historic-king-salman-visit
HSBC traders use code words to trigger front running. This was heard in the uSA in their criminal trial of manipulation of foreign exchange
HSBC traders used code word to trigger front-running, prosecutor says
Submitted by cpowell on Fri, 2017-10-06 11:31. Section: Daily Dispatches
By Patricia Hurtado
Friday, October 6, 2017
A group of HSBC Holdings currency traders in London and New York feverishly jumped ahead of a $3.5 billion client order after they were tipped off using the code words “my watch is off,” a U.S. prosecutor told a federal judge.
The buying frenzy was launched after Mark Johnson, HSBC’s former global head of foreign exchange whom the bank chose to lead the transaction, alerted the traders via a phone call that was recorded, the prosecutor said Thursday in Brooklyn. Johnson is on trial for fraud.
After the trial recessed for the day, prosecutor Carol Sipperly told U.S. District Judge Nicholas Garaufis that the government today wants the jury to hear the recordings, in which Johnson can be heard tipping off a trader in Hong Kong, a signal that she said eventually reached others on both sides of the Atlantic. Prosecutors say Johnson and Stuart Scott, the bank’s former head of currency trading in Europe, along with these other traders, bought pounds before the transaction, collectively making the bank $8 million in illicit profit. …
… For the remainder of the report:
“My Watch Is Off”: HSBC Traders Used Code Words To Trigger Front-Running Trades
According to prosecutor Carol Sipperly, former HSBC currency trader Mark Johnson used just four words to trigger a massive, international front-running operation that netted his firm some $8 million in illicit profits: “my watch is off.”
The bank’s former global head of foreign exchange alerted the traders around the globe via a phone call in December 2011 that was recorded, a prosecutor said Thursday. The gambit was designed to take advantage of a $3.5 billion client order to buy sterling, the U.S. says.
After Johnson’s trial recessed for the day, prosecutor Carol Sipperly asked that the jury hear the recordings on Friday, in which Johnson allegedly tipped off a trader in Hong Kong. That signal eventually reached others on both sides of the Atlantic, she said. Johnson was in New York that day, speaking to Stuart Scott, the bank’s former head of currency trading in Europe, who was in London, just before the transaction for its client, Cairn Energy Plc.
Prosecutors say Johnson and Scott, along with other traders, bought pounds before the transaction. Johnson is on trial in federal court in Brooklyn, New York, accused of a scheme that produced a $8 million profit for his bank.
“We actually have Mark Johnson telling Stuart Scott ‘Tell Ed my watch will be off,’” Sipperly said. “We have communications where the word ‘watch’ is used, and then within seconds, 20 seconds of ‘my watch is off,’ we have all that trading that’s been described. The word is instrumental in getting the information to the traders when it comes to their early front-running trades.”
Here is Mark Johnson on his way to court in New York…ironically sans watch.
For those who haven’t followed this particular story, Johnson was arrested roughly a year ago at JFK airport in New York after a nearly 3-year investigation into efforts on the part of several large investment banks to rig FX markets. Per Bloomberg:
Mark Johnson, HSBC’s global head of foreign exchange cash trading in London, was taken into custody at John F. Kennedy International Airport Tuesday and is scheduled to appear before a judge in federal court in Brooklyn Wednesday morning, said the people, who asked not to be named because the case hasn’t been made public. He’s charged with conspiracy to commit wire fraud, the people said.
According to Bloomberg, Johnson’s arrest comes more than a year after five global banks pleaded guilty to charges related to the rigging of currency benchmarks. HSBC, which wasn’t part of those criminal cases, in November 2014 agreed to pay $618 million in penalties to U.S. and British regulators to resolve currency manipulation allegations. HSBC, which still faces investigations by the Justice Department and other authorities for the conduct, has set aside $1.3 billion for possible settlements, according to an August filing.
Rob Sherman, an HSBC spokesman, and Peter Carr, a Justice Department spokesman, declined to comment.
According to the original DOJ complaint, HSBC was selected by Cairn Energy Plc to execute a foreign exchange transaction – which was going to require converting approximately $3.5 billion in sales proceeds into British Pound Sterling – in October 2011. But, before executing that trade, he tipped off a bunch of HSBC traders who loaded up their proprietary accounts with Pounds just before the massive trade sent the currency higher.
“As alleged, the defendants placed personal and company profits ahead of their duties of trust and confidentiality owed to their client, and in doing so, defrauded their client of millions of dollars,” stated United States Attorney Capers. “When questioned by their client about the higher price paid for their significant transaction, the defendants wove a web of lies designed to conceal the truth and divert attention away from their fraudulent trades. The charges and arrest announced today reflect our steadfast commitment to hold accountable corporate executives and licensed professionals who use their positions to fraudulently enrich themselves.”
“The defendants allegedly betrayed their client’s confidence, and corruptly manipulated the foreign exchange market to benefit themselves and their bank,” said Assistant Attorney General Caldwell. “This case demonstrates the Criminal Division’s commitment to hold corporate executives, including at the world’s largest and most sophisticated institutions, responsible for their crimes.”
Of course, we’re almost certain that if you pump a couple of beers into any trader on wall street and then ask for their opinion on this particular case you’ll quickly be informed that it’s just an effort to “criminalize behavior that is normal”…at least on wall street anyway.
Your early FRIDAY morning currency, Asian stock market results, important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight
2. Nikkei closed UP 62.15 POINTS OR 0.30% /USA: YEN RISES TO 113,25
3. Europe stocks OPENED RED EXCEPT FTSE ( /USA dollar index RISES TO 94.10/Euro DOWN to 1.1697
3b Japan 10 year bond yield: RISES TO -+.056%/ GOVERNMENT INTERVENTION !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 112.44/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!
3c Nikkei now JUST BELOW 17,000
3d USA/Yen rate now well below the important 120 barrier this morning
3e WTI:: 49.57 and Brent: 55.95
3f Gold DOWN/Yen DOWN
3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“HELICOPTER MONEY” OFF THE TABLE FOR NOW /REVERSE OPERATION TWIST ON THE BONDS: PURCHASE OF LONG BONDS AND SELLING THE SHORT END
Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.
3h Oil DOWN for WTI and DOWN or Brent this morning
3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO +.489%/Italian 10 yr bond yield UP to 2.176% /SPAIN 10 YR BOND YIELD UP TO 1.72%
3j Greek 10 year bond yield RISES TO : 5.621???
3k Gold at $1262.00 silver at:16.41(8:15 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50
3l USA vs Russian rouble; (Russian rouble DOWN 36/100 in roubles/dollar) 58.09-
3m oil into the 49 dollar handle for WTI and 55 handle for Brent/
3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/GOT A GOOD SIZED REVALUATION NORTHBOUND
JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 113.25DESTROYING 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 0.9818 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1485 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 +0.489%
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 2.384% early this morning. Thirty year rate at 2.9177% /
5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.
(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)
Dollar Surge Continues Ahead Of Jobs Report; Europe Dips As Catalan Fears Return
World stocks eased back from record highs and fell for the first time in eight days, as jitters about Catalonia’s independence push returned while bets on higher U.S. interest rates sent the dollar to its highest since mid August; S&P 500 futures were modestly in the red – as they have been every day this week before levitating to record highs – ahead of hurricane-distorted nonfarm payrolls data (full preview here). U.S. jobs report will also be released Friday with a speech on monetary policy by the New York Fed chief.
On Thursday the S&P 500 reached its latest all-time high after better-than-forecast American factory orders and hawkish comments by SF Fed President John Williams reinforced optimism in the world’s largest economy, and pushed the dollar higher. Oil fell and the gold price edged higher. The VIX declined to a new record low going back to 1990.
“Uncertainty about whether Catalonian parliament will meet on Monday persists,” Commerzbank strategists said in a note.
Friday’s other focus for markets will be U.S. jobs data due out at 830am ET. Wall Street consensus is for a 90,000 print down from 156,000 new jobs in August. The number however will be largely distorted by hurricanes, resulting in a drop in jobs offset by a rise in wages. The number will be largely meaningless, because as Bloomberg’s David Finnery writes, “any weakness will be attributed to hurricanes, while a beat on payrolls or wages would be seen as supporting a Federal Reserve interest rate increase in December.”
As Deutsche Bank writes overnight, it’s fair to say that inflation is a more important variable
than employment at the moment for central banks. An in-line ADP print
(135k) earlier in the week and decent employment component readings out
of the ISM’s makes it feel like the whisper number is slightly above the
market consensus for today of 80k (vs. 156k in August). DB economists expect a 50k reading, noting that the
initially reported September 2005 employment report, which followed
Hurricane Katrina, showed a -35k decline in nonfarm payrolls after
averaging 174k over the three months ending in August 2005. It’s worth
noting that the highest and lowest economist forecasts on Bloomberg for
today are 260k and -45k – so the street collectively appears pretty
confused. In these high intensity wage/inflation watching times, the
average hourly earnings will be key.
Since U.S. data this week has been solid on the whole, it has been one of the reasons for the dollar’s strength by also feeding bets that the Federal Reserve will raise U.S. interest rates for a third time this year in December. According to Reuters, interest rate futures traders are now pricing in an 86 percent likelihood of a December rate hike, up from 78 percent a week ago, according to the CME Group’s FedWatch Tool. Aberdeen Standard Investments Senior Investment Manager James Athey said the question now was what happens next year. Not only is inflation still subdued but the Fed could well get a new head.
“Investors need a lot of convincing about how far this Fed will hike without some decent wage growth and inflation,” he said. “In any case, the Fed’s thinking is going to be extremely hard to predict over the coming months as so many members change.”
Ahead of the payrolls report, Asian stocks rose, set to cap their best week since July, after U.S. economic reports and Fed speaker comments bolstered optimism on the global economy. The MSCI Asia Pacific Index climbed 0.2% to 163.17, its highest close in two weeks. With China’s holiday week coming to an end, and maindland market still closed, the Hang Seng Index posted its biggest weekly increase since mid-July and closed at its highest since December 2007 as Geely Automobile Holdings – the year’s top performer – helped offset loses by Macau casino operators. The Hang Seng Index rose 0.3% to 28,458.04 after earlier advancing as much as 0.9%; the index rose 3.3% on the week. Hang Seng China Enterprises Index adds 0.5% for weekly gain of 5%. Japan’s Topix index rose, completing its fourth weekly gain, as banks and insurance shares climbed. Australian shares advanced, halting a three-day slide, as BHP Billiton Ltd. and Rio Tinto Ltd. led a rally of metals producers.
European equities traded marginally flat, with underperformance evident in the IBEX: Spanish stocks and bond prices, which surged on Thursday, were sent tumbling back again as a Catalonian official said the region’s parliament would meet on Monday in defiance of a ruling by Spain’s constitutional court. Spain’s defiance also sent the euro scuttling back below $1.17 again and gave the dollar another leg up as it headed for a fourth consecutive week of gains a move that is also starting to apply pressure to currency-sensitive emerging markets. The higher than expected German Industry Orders paved no immediate bearish pressure in German Bunds, despite opening marginally weaker, led by the US following hawkish Fed commentary yesterday.
The Bloomberg Dollar Spot Index extended its gains, rising to an 11 week high as it moved above yearly trendline resistance before U.S. payrolls, while Treasuries were pressured after London stepped in. The Yen is set to post its fourth straight weekly loss against the dollar, which will make the longest streak since early July. The loonie hit a five-week low ahead of Canadian labor data, while the pound headed for its biggest weekly decline versus the dollar since last October’s ‘flash crash’ as doubts on Theresa May’s future as U.K. Prime Minister grew, with many of her own party members demanding she quit. Sterling was set for its steepest weekly drop against the euro since July. It could slip even further given the chaos within the Conservative party and less-than-encouraging U.K. economic data, analysts said. This is a swift turn in fortunes for the pound.
In rates, the yield on 10-year Treasuries advanced two basis points to 2.36 percent, the highest in more than 12 weeks. Germany’s 10-year yield rose three basis points. Britain’s 10-year yield was unchanged at 1.387 percent, the highest in eight month.
In commodities Brent crude was down 0.1 percent at $56.94 a barrel. The futures contract had jumped 2.1 percent overnight on signs Saudi Arabia and Russia would limit production through next year, although caution towards a tropical storm heading for the Gulf of Mexico cut short the advance. Gold gained 0.1 percent to $1,269.48 an ounce. Copper advanced 0.1 percent to $3.05 a pound, the highest in more than three weeks.
Aside from US nonfarm payrolls, looking ahead highlights include the Canadian jobs reports, BoE’s Haldane, Fed’s Bostic, Dudley and Kaplan.
- S&P 500 futures down 0.06% to 2,548.50
- VIX Index up 0.8%
- STOXX Europe 600 down 0.2% to 390.31
- MSCI Asia up 0.2% to 163.17
- MSCI Asia ex Japan up 0.4% to 538.72
- Nikkei up 0.3% to 20,690.71
- Topix up 0.3% to 1,687.16
- Hang Seng Index up 0.3% to 28,458.04
- Shanghai Composite up 0.3% to 3,348.94
- Sensex up 0.6% to 31,773.78
- Australia S&P/ASX 200 up 1% to 5,710.68
- Kospi up 0.9% to 2,394.47
- German 10Y yield rose 2.8 bps to 0.484%
- Euro down 0.1% to $1.1699
- Italian 10Y yield fell 4.4 bps to 1.857%
- Spanish 10Y yield rose 5.9 bps to 1.758%
- WTI crude down 0.5% to $50.53
- Brent drops 0.5% to $50.55
- Gold spot up 0.07% to $1,269.16
- U.S. Dollar Index up 0.1% to 94.06
Top Headline News
- U.S. President Donald Trump said a military gathering Thursday night might represent “the calm before the storm,” without clarifying his comments
- Crisis in Spain: Spanish Prime Minister Mariano Rajoy convenes his cabinet on Friday as Catalan lawmakers plan to hold a meeting on Monday defying a suspension by Spain’s Constitutional Court
- The Trump administration is set to release its blueprint for overhauling regulation of U.S. markets, an expansive list of priorities that touches on the stock, bond and derivatives trading that fuels Walls Street profits
- German manufacturing orders rose 7.8% y/y in August, the fastest expansion since 2016, in a sign that Europe’s largest economy is set to sustain its robust pace of growth
- With U.K. PM Theresa May’s leadership in doubt, four scenarios are that (1) May clings on, with lawmakers calculating a leadership battle would lead to another election that they may lose to Labour (perceived by markets as the least bad option), (2) that May is ousted, triggering a leadership race, (3) that May resigns and a consensus leader emerges, or (4) a general election where Labour’s Corbyn wins
- The national working group on Swiss franc reference rates recommended SARON as alternative to the Swiss franc Libor
- Japan Credit Rating Agency says it may consider downgrading Japan’s AAA sovereign rating if the government “completely’’ or “effectively’’ gives up its balanced-budget target
- Tokyo Governor Yuriko Koike’s opposition party released an election manifesto ahead of the Oct. 22 vote that distances it from the Bank of Japan’s controversial stimulus program while indicating that any change will be so gradual that it’s unlikely to roil markets
- HSBC Currency Unit Used Code to Trigger Front- Running, U.S. Says
- Costco Fourth Quarter EPS Beats Estimates
- U.S. Delays Announcement on Bombardier Jet Duties
Asian stocks took the impetus from another record day on Wall St where all major indices hit new all-time highs, with the S&P 500 posting its longest win streak in around 4 years and Nasdaq outperformed on tech strength. This underpinned sentiment in the region with ASX 200 (+1.04%) led higher by commodity names after gains in copper and crude oil. Nikkei 225 (+0.30%) printed its highest in 2 years but with gains somewhat capped as participants were tentative ahead of today’s Non-Farm Payrolls report and the extended weekend, while Hang Seng (+0.3%) also conformed to the global upbeat sentiment as Hong Kong participants picked up from where they left off on return from yesterday’s market closure. 10yr JGBs were subdued with a lack of demand seen amid gains in riskier assets and as the BoJ’s presence in the market for JPY 710bln of 5yr to super-long JGBs failed to support. RBA’s Harper says not ruling out a rate cut and a rate response could be warranted should a wider stalling of consumption happen.
Top Asian News
- Bank Indonesia Sees Narrowing Window for Policy Rate Easing
- StanChart Is Said to Be Probed on $1.4 Billion Client Transfers
- Ivory Coast Starts Alstom Rail Talks After Hyundai Edged Out
European bourses have traded subdued, with Spain and Italy the noticeable under-performers, down around 0.50%; the former’s IBEX trades around session lows, following a Catalan official stating parliament will meet on Monday, not helped by the weakness specifically in peripheral banks. The higher than expected German Industry Orders paved no immediate bearish pressure in German Bunds, despite opening marginally weaker, led by the US following hawkish Fed commentary yesterday. The US will stay in focus later in the session, with focus on NFP, possibly touted to be an anomaly figure, following the catastrophic hurricanes seen in the States. Elsewhere, Spanish yields continue to trade higher, alongside other European bonds. The German 10y breaking through the 161.00 handle, likely a result of 25000 contracts pushing the asset class down from 161.08.
Top European News
- German Factory Orders Surge as Economy Sustains Strong Momentum
- With May’s Leadership in Doubt, Four Scenarios for Brexit
- U.K. Home-Price Inflation Accelerates to Fastest in Seven Months
- Swiss Working Group Recommends Saron as CHF-Libor Alternative
- EU Steelmakers Win Hot-Rolled-Coil Tariffs on Four More Nations
- Catalan Separatists Squeezed Further as Spain Tightens Grip
In currencies, the NFP trade has been evident across FX markets, with the majority of major pairs seeing range bound trade. The week’s strong US data has kept the greenback set for its fourth week of gains, as the DXY broke 94.00 in Asian hours. GBP has ground slowly lower through early European trade, as the currency continues to be hampered by concerns over PM May, with reports staying that around 30 rebels are calling for her immediate departure. The EUR dipped below 1.17 amid the strength in the USD-index, although 1.1690 holding firm for now, while cross related buying in EUR/GBP has stemmed the downside in EUR. Political woes escalating in the UK could likely see EUR/GBP back at 0.90. Huge expiries in EUR/USD likely to guide price action with 6.3bln worth of vanilla options from 1.1640-1.1750.
In commodities, WTI has consolidated above 50.00/bbl, but looks indecisive as non-farm Friday is the theme of the day. Commentary has been muted today, with Saudi Arabia making no firm pledge yesterday to extend a deal between OPEC, Russia and other producers on cutting supplies but said it was ‘flexible’. Copper was the metal highlight overnight, buoyed by news that the re-opening of one of the world’s biggest mines has run into trouble. Copper managed to break through the 3.00 handle on the news and has consolidated above 3.02. Precious metals have been in rangebound trade, with many likely set to await today’s payroll report.
Looking at the day ahead, the change in nonfarm and manufacturing payrolls, September unemployment rate, hourly earnings, wholesale inventories, and consumer credit are all due. Onto other events, BOE’s Chief economist Haldane speaks at the “Great Trust Shift” debate. In the US, we have three more Fed speakers, including: Bostic, Kaplan and Dudley, with the latter speaking on “The Monetary Policy Outlook and the Importance of Higher Education for Economic Mobility”.
US Event Calendar
- 8:30am: Change in Nonfarm Payrolls, est. 80,000, prior 156,000
- Change in Private Payrolls, est. 74,000, prior 165,000
- Change in Manufact. Payrolls, est. 10,000, prior 36,000
- Unemployment Rate, est. 4.4%, prior 4.4%
- Average Hourly Earnings MoM, est. 0.3%, prior 0.1%
- Average Hourly Earnings YoY, est. 2.5%, prior 2.5%
- Average Weekly Hours All Employees, est. 34.4, prior 34.4
- Labor Force Participation Rate, prior 62.9%
- Underemployment Rate, prior 8.6%
- 10am: Wholesale Trade Sales MoM, est. 0.0%, prior -0.1%; Wholesale Inventories MoM, est. 1.0%, prior 1.0%
- 3pm: Consumer Credit, est. $15.5b, prior $18.5b
DB’s Jim Reid concludes the overnight wrap
I got home last night from my US trip to find my wife on the floor changing one twin’s nappy whilst bottle feeding the other with her foot. I have never seen anything like it. After rushing to her aid we then eventually watched the final Narcos of season 3 – a season we have watched whilst feeding the twins on our laps of an evening. Given the shocking violence I’m wondering what impact this will have on them (Kray twins??) but needs must! Age appropriate programs are a bit of a barbell really as up to a certain age it surely doesn’t matter (I hope). However at what age should you stop a baby watching say a violent 18 movie, only to allow them again a decade and a half or so later? Answers welcome. Narcos comes highly recommended by the way. I can believe it’s actually a true story!
The Colombian politics in Narcos actually make current global political meanderings seem a bit dull, but the headlines continue to fly. However one could argue that the last 24 hours is a nice microcosm for markets in 2017. We’ve had plenty of headlines (mainly political) but volatility continues to remain historically low with the VIX below 10 for the 7th session in a row yesterday and in fact hitting the lowest closing level on record last night (9.19) beating the 9.31 in December 1993, but still higher than the intra-day low of 8.84 in July this year.
Equity markets continued to grind higher with a late bounce in Europe helping stocks to just about finish onside. The S&P 500 meanwhile rose +0.56% to finish higher for the 8th session in a row (longest run since July 2013) and also notch up yet another record high. It’s worth noting that the late recovery in Europe appeared to be driven by Spain, following the news that Catalan separatists are on the verge of putting off a definitive declaration of independence. This supposedly follows some on the Catalan side as pushing for a negotiated settlement. Prior to this, the Spanish Constitutional Court had announced that it was suspending a session of the Catalan Parliament on Monday although rebels say they are still planning to convene. The Spanish Press also reported that CaixaBank was considering a temporary move of its legal domicile to the Balearic Islands which might have helped temper the separatists push. In the evening, Banco Sabadell announced plans to move out of the region and into Alicante. It seems the Spanish Government are going to make this easier for companies to relocate in order to put pressure on the rebels. A strong 2 year auction was also a help to sentiment earlier in the session. 10yrs Bonds rallied 7.8bp (the best day since late July) and the IBEX rebounded +2.51%. Bunds on the other hand were broaldy flat on the day but 2.9bp off the intra-day lows at the close. Overall it feels like there are quite a few more ebb and flows to this Spanish story to come though. Will the Catalan’s Parliament meet on Monday and will they declare independence in the new few days? Or will the business community exodus create an incentive to negotiate.
Moving onto today, the payrolls report will be the next main market hurdle although the hurricane impacts will mean the information contained within it will have less value than normal. It’s also fair to say that inflation is a more important variable than employment at the moment for central banks. An in-line ADP print (135k) earlier in the week and decent employment component readings out of the ISM’s makes it feel like the whisper number is slightly above the market consensus for today of 80k (vs. 156k in August). Our US economists expect a 50k reading though. They’ve noted that the initially reported September 2005 employment report, which followed Hurricane Katrina, showed a -35k decline in nonfarm payrolls after averaging 174k over the three months ending in August 2005. It’s worth noting that the highest and lowest economist forecasts on Bloomberg for today are 260k and -45k – so the street collectively appears pretty confused. In these high intensity wage/inflation watching times, the average hourly earnings will be key. Our guys expect a solid 0.3% m/m partly for technical reasons.
Leading into the report Treasuries were flattish for much of the European session yesterday before yields spiked 3.8bp on the back of comments from the Fed’s Harker and Williams, before closing 2.5bp higher for the day. The former said that he had “pencilled in” a third rate hike this year for December, while Williams (a voter next year) sounded generally upbeat on the inflationary environment, noting that “as these (temporary) effects wane and the strong economy pushes inflation higher for prices….I am optimistic that inflation will move up to our 2% goal over the next couple of years”. Further, the “favourable employment numbers, combined with findings on inflation and steady pace of growth, are all behind my confidence that rates will need to rise to their new normal levels”. The odds of a December rate hike rose c3ppt overnight to 73.3% (per Bloomberg).
Staying with all things rates focused, the ECB meeting minutes weren’t a huge event but confirmed that there exists a trade-offs between the various taper announcements that could be made at the October meeting: We discovered that “the benefits from a longer intended purchase horizon, combined with a greater reduction in pace, were compared with those from a shorter period of purchases and larger monthly volumes”. This follows various ECB comments of late suggesting that the momentum is moving towards a taper to EUR30bn/month but with a 9 month commitment over EUR40bn for 6 months. It could be that this is a compromise between the hawks and doves in that there is less QE but the program is reduced more steadily with the added benefit that it would also get us past the Italian election and all the noise that could come with a fresh taper decision just as they have to vote. DB have changed their call for the October meeting from 40bln x 6mths to 30bln x 9mths, and dropped the call for a oneoff depo hike in mid-2018 but still sees the first refi rate hike in mid-2019.
This morning in Asia, markets have followed the positive lead from the US and are trading modestly higher. As we type, the Hang Seng (+0.44%), Nikkei (+0.25%) and ASX 200 (+0.80%) are all up modestly. The Chinese bourses and Kospi remain closed for holidays.
Turning to the UK, Conservative lawmaker Ed Vaizey publicly noted his concerns about PM May continuing as leader and then Grant Shapps (who served as Conservative Party Chaiman) said he has a list of colleagues who want to choose a new leader of the party. DB’s Oliver Harvey has published a timely note “Brexit update: leadership options” looking at potential implications and scenarios if there was a leadership change. His base case is PM May will stay on, at least until the current stage of Brexit negotiations and autumn Budget are concluded. This is in part given the lack of obvious replacements. Other less likely scenarios considered include a full leadership contest and an orderly transition to a new leader. Overall, he believes that developments continue to point to an EEA-based transitional deal as the realistic medium term direction of travel. Please refer to his note for more details.
Quickly recapping other market performance yesterday. Increased signs of stability at Spain boosted European markets, with Italian 10y bond yields down 4bp and equities broadly higher, with the Stoxx 600 (+0.16%), FTSE (+0.54%) and Italy’s FTSE MIB (+0.49%) all modestly higher, but the DAX dipping 0.02%. Over in the S&P, the rally was broad based with only two sectors marginally in the red (telco & utilities, both -0.1%), while gains were led by tech stocks (+1.06%) and financials.
Turning to currencies, the US dollar index gained 0.54% to a 2 months high, following stronger than expected macro data and hawkish Fed speak. Elsewhere, Sterling weakened 0.97%, partly due to increased concerns on a potential leadership change, but the Euro/USD (-0.41%) didn’t seem to be impacted by the ECB minutes which reaffirmed that the stronger Euro “represented a source of concern, which required monitoring”. Moving onto commodities, WTI oil snapped a three day losing streak to be up 1.62% overnight asSaudi Arabiais reportedly interested in acquiring Russian oil assets and both countries would continue cooperation on mitigating the excess global crude supply. We shall learn more as Saudi’s King is scheduled to visit Russia later in the week.
Elsewhere, precious metals were little changed (Gold -0.52%; Silver +0.07%). Away from the markets, BOE’s McCafferty has reaffirmed his hawkish bias. He said the little slack left in the economy “is likely to disappear quite quickly, while inflation is projected to persistently overshoot the target”. Further, he said rates could rise several times before BOE starts to unwind the bond purchase program. Elsewhere, he noted that “until recently, financial markets appear to believe….Brexit uncertainties effectively tied our hands…this, we felt was a misreading of our reaction function”. The odds of a rate hike in December is currently at 79.4% (per Bloomberg).
Turning back to Puerto Rico’s municipal debt ordeal, where President Trump had earlier suggested that the government’s debt should be wiped clean to help the island to recover from Hurricane Maria. Overnight, we got the official confirmation from White House Press Secretary Sarah Sanders, who said “there’s a (bankruptcy) process for how to deal with the Puerto Rico’s debt….the President wants it to go through that process and that’s the stage we’re at on that”. Puerto Rico’s benchmark 2035 bond was broadly unchanged at 38c/$. The day before, the price tumbled down from 44c/$ to as low as 30c/$ intraday, before recovering to 38c/$ after Trump’s Budget director Mick Mulvaney said we should not take Mr Trump’s comments too literally.
Staying in the US, the senate has voted (65-32) to confirm Randal Quarles as a new Fed governor, becoming the first of several new Fed nominees President Trump will choose over the coming weeks and months.
Finally, IMF’s Managing Director Largarde has provided a glimpse of what to expect in next week’s IMF World Economic outlook report. Speaking at Harvard University, she noted that a cyclical pickup in investment and trade in advance economies (particularly Europe) is creating better than expected growth. Elsewhere, US growth will be above trend this year and next.
Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the macro data was broadly better than market expectations. August factory orders was stronger than expected at 1.2% mom (vs. 1%) and is now up 5.7% yoy. The final readings on August core durable goods orders was revised up to 0.5% mom (vs. 0.2% expected) and capital goods were also higher at 1.1% mom (vs. 0.9% expected). Elsewhere, the weekly initial jobless claims (260k vs. 265k expected) and continuing claims (1,938k vs. 1,950k expected) were also marginally better than expected. Finally, the August trade deficit was slightly narrower at -$42.4bln (vs. -$42.7bln expected), which is the smallest deficit in 11 months.
In Europe, Switzerland’s September CPI was higher than expected at 0.8% yoy (vs. 0.5% yoy previous, 0.2% mom) and the highest since 2011. Elsewhere, the Eurozone’s retail PMI was stronger than expected at 52.3 (vs. 50.8 previous), led by gains from France (53.3 vs. 50.4 previous) and Italy (50.2 vs. 48 previous), but partly offset by Germany (52.8 vs. 53.0 previous).
Looking at the day ahead, Germany’s August factory orders (0.7% mom expected) will be due early. Then we have France’s August trade and budget balance along with Italy’s retail sales and UK’s Halifax house price index. Over in the US, the change in nonfarm and manufacturing payrolls, September unemployment rate, hourly earnings, wholesale inventories, and consumer credit are all due. Onto other events, BOE’s Chief economist Haldane speaks at the “Great Trust Shift” debate. In the US, we have three more Fed speakers, including: Bostic, Kaplan and Dudley, with the latter speaking on “The Monetary Policy Outlook and the Importance of Higher Education for Economic Mobility”.
3. ASIAN AFFAIRS
i)Late THURSDAY night/FRIDAY morning: Shanghai closed /Hang Sang CLOSED / The Nikkei closed UP 62.15 POINTS OR 0.30%/Australia’s all ordinaires CLOSED UP 1.00%/Chinese yuan (ONSHORE) closed/Oil DOWN to 49,57 dollars per barrel for WTI and 55.95 for Brent. Stocks in Europe OPENED RED EXCEPT FTSE . ALL YUAN FIXINGS CLOSED
3a)THAILAND/SOUTH KOREA/NORTH KOREA
North Korea Planning To Test Fire Missile Capable Of Reaching U.S. West Coast; Stocks Slide
Is this the stormy weather that Donald Trump was referring to yesterday?
Russian news agency Sputnik reports, that according to a Russian lawmaker, who has just returned from North Korea, Pyongyang is ready to test a missile capable of reaching the US western coast.
As Sputnik adds, “Pyongyang is planning to test-fire a missile that is capable of reaching the western coast of the US, Anton Morozov, a member of the Russian State Duma Committee on International Affairs told RIA Novosoti.”
“They [North Korea] are preparing to launch a new high range missile. They even gave us calculations, showing that the missile was capable of reaching the western coast of the US,” Morozov said.
The Russian delegation was on an official visit in the North Korean capital on October 2-6, the Russian embassy in North Korea said earlier. The lawmakers discussed bilateral cooperation with the Russian ambassador to North Korea.
The market reaction upon hearing the news has been quite negative, with a trapdoor opening below the S&P as safe-haven bonds are bid.
While gold spiked higher (as USDJPY tumbled back below 113.00).
b) REPORT ON JAPAN
POUND REBOUNDS A BIT AFTER MAY STATES THAT SHE HAS THE FULL SUPPORT OF HER CABINET
(COURTESY ZERO HEDGE))
Pound Spikes After May Says She Has “Full Support” Of Her Cabinet
Amid speculation and doubts that UK Prime Minister Theresa May could be forced to resign as soon as Christmas amid a mutiny of Tory MPs following her disastrous conference speech, which resulted in the pound’s biggest weekly decline since last October’s flash crash, moments ago the UK Press Association reported that Theresa May said she is providing “calm leadership” with the “full support” of her cabinet, which sent the pound surging in kneejerk reaction.
Prime Minister Theresa May says she is providing “calm leadership” and she has the “full support” of her Cabinet
— Sky News Newsdesk (@SkyNewsBreak) October 6, 2017
“What the country needs is calm leadership and that’s what I’m providing with the full support of my cabinet,” May told Sky News in an interview in her Maidenhead constituency.
Separately, the BBC reports that this morning the UK government has mounted an operation to show that nothing has changed in the Conservative Party in the last few days and that Theresa May’s leadership remains on track and that she is, to use another of her famous phrases. just “getting on with the job.”
Following the report, cable promptly spiked by as much as 30 pips, briefly regaining 1.31, before resuming a slide lower.
Spanish Stocks, Bonds Slump As Catalan Parliamentary Debate Looms
Hopes of a ‘stall’ in secession proceedings have been dashed amid speculation that Catalonia’s regional parliament will convene on Monday, despite a suspension ordered by the central government in Madrid.
The bounce yesterday has been erased…
It’s now very clear what the establishment’s strategy is…
As The Duran.com reports, Enric Millo, a Spanish official in Catalonia has offered the first attempt at an apology for the police brutality that marred the Catalan independence referendum on the 1st of October.
Spanish police were filmed beating civilians, shooting unarmed individuals with rubber bullets, as well as harassing and assaulting women and the elderly. The scenes caused a great deal of consternation, even among those who support the Spanish position vis-a-vis Catalonia.
Today, Enric Millo, who represents the Madrid regime, spoke in Catalonia and said,
“When I see these images, and more so when I know people have been hit, pushed and even one person who hospitalised, I can’t help but regret it and apologise on behalf of the officers that intervened”.
Having passed the law making it easier for companies to leave Catalonia, Spain’s Economy Minister Mendez proclaimed rather quickly that “the business exodus from Catalonia was very sad,” with Guindos adding snidely that “irresponsible policies have economic responses.”
Mendez also lashed out at Puigdemont, saying that he “is breaking social cohesion” in the nation.
The IMF has chimed in… (via Bloomberg)
The International Monetary Fund said the Catalan crisis could have an impact on Spain’s economy, which has been one of the best performing in the euro area in recent years. In its latest assessment, the IMF said the banking system has become more resilient, while the economy has benefited from structural reforms and wage moderation as well as a favorable global backdrop. The report, based on an Article IV consultation that ended on Sept. 20, would usually attract attention in Spain, but it’s been overtaken by the political drama related to the secessionist push in Catalonia.
“The outlook for the Spanish economy is currently strong,” Andrea Schaechter, IMF mission chief, said in an interview.
“However, prolonged tensions and uncertainty related to Catalonia could weigh on confidence and investment decisions.”
On a humorous note, Spain’s Election Watchdog rejected the Catalan vote.
Spanish yields are rising across the entire yield curve with 10Y up 7bps and 2Y decoupling from Germany…
“The more conservative international investors, who have just cautiously returned to Spain in recent quarters, should remain inclined to reduce risk until the situation clears,” wrote Commerzbank AG strategist Christoph Rieger.
“Spreads should thus stay elevated at least until Monday’s scheduled session of the Catalan Parliament,” he said, referring to the yield premium demanded to hold Spanish bonds over their German counterparts.
JPMorgan is desperately tryting to play down the potential for contagion…
“It is not a threat to the euro,” said Jan Loeys, chief investment strategist at JPMorgan Chase & Co., in an interview with Bloomberg Television.
“This is a local problem. There will be affects on the local banks, local asset prices — yes, Spanish equity prices will be hurt a bit.”
5. RUSSIA AND MIDDLE EASTERN AFFAIRS
6 .GLOBAL ISSUES
THIS IS GOING TO HURT CANADA: TRUMP HIKES TARIFFS ON BOMBARDIER TO 300%. CANADA AND THE UK (NORTHERN IRELAND ARE FURIOUS)
Trade Wars Escalate: Trump Admin Hikes Tariffs On Bombardier To 300%
In a decision that’s bound to infuriate the leaders of Canada and the UK, the US Commerce Department on Friday tacked on an additional 80% tariff against Bombardier C-Series Jets imported from the US’s northern neighbor, adding to a 220% preliminary levy authorized last week. The ruling is the culmination of a long-running feud between Boeing and Bombardier; Boeing accused its rival in April of benefiting from anticompetitive government subsidies. US customs will now begin imposing the now 300% combined tariff, potentially complicating Delta Air Lines’ pending purchase order of 75 C-Series jets, a deal that would’ve been worth some $5 billion to Bombardier. As the National Post noted, the decision will make it effectively impossible for Bombardier to sell its planes in the US. It also has important ramifications for the aerospace industry in both Canada and the UK, and also casts doubt on Bombardier’s future after a rocky stretch of thin sales.
“The United States is committed to free, fair and reciprocal trade with Canada, but this is not our idea of a properly functioning trading relationship,” Commerce Secretary Wilbur Ross said in a statement.
“We will continue to verify the accuracy of this decision, while do everything in our power to stand up for American companies and their workers.”
Bombardier hasn’t responded to the decision, but last week said the 220% tariff was “absurd and divorced from the reality about the financing of multibillion-dollar aircraft programs” and that it would push for the decision to be reversed in the coming months. Bombardier has long maintained that Boeing can’t justify its claim of being harmed by the C-Series since it doesn’t manufacture any jets of comparable size.
The Commerce Department was expected to announce the preliminary anti-dumping duties yesterday, but last night said it would hold off until today. Bombardier has said it’s confident the American penalties will be overturned and Canadian Prime Minister Justin Trudeau has blasted Boeing for its complaint, and has said the Canadian government will halt all orders of Boeing equipment until the company drops the complaint. The Premier of Quebec Philippe Couillard has painted the tariffs as “an attack on Quebec” and has said that the province will “resist” the decision. Trudeau is due to visit Washington on Oct. 10 for two days of talks on trade and other issues with President Trump as Canada, Mexico and the US struggle to revise the Nafta trade agreement before their self-imposed year-end deadline. Experts have said they don’t expect the Bombardier tariff to impact Nafta talks.
Bombardier’s shares have benefited recently from rumors that the company is on the verge of closing major deals with Chinese airlines, but there was little reaction on Friday because the decision was widely expected.
U.K. Prime Minister Theresa May said she was “bitterly disappointed” by last week’s decision, considering Bombardier employs more than 4,000 people at a factory in Belfast, an important constituecy for May’s conservative party. UK Trade Secretary Liam Fox and Irish Foreign Minister Simon Coveney reportedly discussed the Bombardier tariffs with Commerce Secretary Wilbur Ross this week.
The case now goes to the International Trade Commission, which is expected to make a final ruling to decide whether Boeing suffered damages as a result of Bombardier’s anti-competitive practices. If an affirmative ruling is returned, damages will be assessed.
After Boeing initially requesting an 80% anti-dumping tariff, it hiked that figure to 143.35% after it accused Bombardier of withholding information in the ongoing investigation. The company alleged in a document filed last week that Bombardier had “refused to provide virtually all the information the Department of Commerce requested for its dumping calculations” and that a higher adverse facts available (AFA) margin should be applied “to address Bombardier’s intransigence and its concealment of the true dumping margin.”
Bombardier replied by filing a document claiming it had “responded to each and every request for information by the Department and provided the Department with thousands of pages of evidence.” Delta also filed documents with the Department of Commerce, reiterating that Boeing never competed for the order that eventually went to Bombardier.
Here’s a timeline of the Boeing-Bombardier dispute courtesy of the Canadian Press:
A timeline of the commercial dispute between Boeing and Bombardier:
- – April 27: Chicago-based Boeing Co. asks the U.S. Department of Commerce and the U.S. International Trade Commission (ITC) to take action against Bombardier’s business practices.
- – May 18: The Department of Commerce confirms the beginning of an investigation. Ottawa replies by questioning a military order from Boeing for new Super Hornet jet fighters.
- – June 9: ITC gives the go-ahead for Washington to continue its investigation into CSeries sales south of the border.
- – 28 June: The Department of Commerce agrees to delay the disclosure of its preliminary decision on possible punitive duties by two months, until Sept. 25, at Boeing’s request.
- – Sept. 4: Boeing International Division President Marc Allen says the U.S. giant has no intention to back down and withdraw its complaint against Bombardier.
- – Sept. 5: British Prime Minister Theresa May, in a telephone conversation with U.S. President Donald Trump, pleads in favour of the Quebec manufacturer, which has more than 4,000 employees in Belfast, Northern Ireland.
- – Sept. 13: Demonstrations in downtown Montreal of hundreds of union members in the aeronautics sector who denounce the Boeing approach.
- – Sept. 20: Bombardier workers in Toronto walk off the job to attend a rally to support company’s battle against Boeing.
- – Sept. 24: JetBlue becomes latest U.S. airline to write to the ITC urging it to deny Boeing’s petition, saying tariffs on the aircraft would harm competition and result in higher airfares.
- – Sept. 26: Department of Commerce announces a 219.63 per cent preliminary countervailing duty on CSeries exports to the U.S.
- – Oct. 6: Department of Commerce announced 79.82 per cent preliminary anti-dumping duties on the Bombardier aircraft.
- – Dec. 18: Department of Commerce expected to release its final countervailing and anti-dumping determinations.
- – Feb. 1: ITC expected to make its final determination in Boeing complaint.
Read the Commerce Department’s fact sheet on the decision:
7. OIL ISSUES
Oil tumbles below 50 dollars:
8. EMERGING MARKET
Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings FRIDAY morning 7:00 am
Euro/USA 1.1698 DOWN .0017/ SPAIN VS CATALONIA/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 RED EXCEPT UK FTSE
USA/JAPAN YEN 113.25 DOWN 0.463(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 1.3050 DOWN .0060 (Brexit March 29/ 2017/ARTICLE 50 SIGNED
THERESA MAY FORMS A NEW GOVERNMENT/STARTS BREXIT TALKS
USA/CAN 1.2553 UP .0015 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/(TRUMP INITIATES LUMBER TARIFFS ON CANADA)
Early THIS FRIDAY morning in Europe, the Euro FELL by 317basis points, trading now ABOVE the important 1.08 level FALLING to 1.1697; / Last night the Shanghai composite CLOSED / Hang Sang CLOSED /AUSTRALIA CLOSED UP 1.00% / EUROPEAN BOURSES OPENED ALL RED EXCEPT UK FTSE
The NIKKEI: this FRIDAY morning CLOSED UP 62.15 POINTS OR 0.30%
Trading from Europe and Asia:
1. Europe stocks OPENED IN THE RED EXCEPT FTSE
2/ CHINESE BOURSES / : Hang Sang CLOSED / SHANGHAI CLOSED /Australia BOURSE CLOSED UP 1.00% /Nikkei (Japan)CLOSED UP 62.15 POINTS OR 0.30% / INDIA’S SENSEX IN THE GREEN
Gold very early morning trading: 1266.10
Early FRIDAY morning USA 10 year bond yield: 2.384% !!! UP 4 IN POINTS from THURSDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. (POLICY FED ERROR)
The 30 yr bond yield 2.9177, UP 3 IN BASIS POINTS from THURSDAY night. (POLICY FED ERROR)
USA dollar index early FRIDAY morning: 94.10 UP 14 CENT(S) from THURSDAY’s close.
This ends early morning numbers FRIDAY MORNING
And now your closing FRIDAY NUMBERS
Portuguese 10 year bond yield: 2.414% UP 1 in basis point(s) yield from THURSDAY
JAPANESE BOND YIELD: +.056% UP 1 in basis point yield from THURSDAY/JAPAN losing control of its yield curve/
SPANISH 10 YR BOND YIELD: 1.709% UP 1 IN basis point yield from THURSDAY
ITALIAN 10 YR BOND YIELD: 2.147 DOWN 1 POINTS in basis point yield from THURSDAY
the Italian 10 yr bond yield is trading 45 points HIGHER than Spain.
GERMAN 10 YR BOND YIELD: +.459% DOWN 1/5 IN BASIS POINTS ON THE DAY
IMPORTANT CURRENCY CLOSES FOR FRIDAY
Closing currency crosses for FRIDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/400 PM
Euro/USA 1.1736 DOWN .0032 (Euro UP 32 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/
USA/Japan: 112.64 DOWN 0.147(Yen UP 15 basis points/
Great Britain/USA 1.3069 DOWN 0.0044( POUND DOWN 44 BASIS POINTS)
USA/Canada 1.2537 DOWN .0031 Canadian dollar UP 31 basis points AS OIL FELL TO $49.32
This afternoon, the Euro was ROSE 22 basis points to trade at 1.1736
The Yen ROSE to 112.64 for a GAIN of 15 Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE
The POUND FELL BY 44 basis points, trading at 1.3069/
The Canadian dollar ROSE by 31 basis points to 1.2537, WITH WTI OIL FALLNG TO : $49.32
Your closing 10 yr USA bond yield UP 2 IN basis points from THURSDAY at 2.3625% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 2.8976 UP 1 in basis points on the day /
Your closing USA dollar index, 93.79 DOWN 17 CENT(S) ON THE DAY/400 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 FRIDAY: 1:00 PM EST
London: CLOSED UP 14.88 POINTS OR 0.20%
German Dax :CLOSED DOWN 12,11 POINTS OR .09%
Paris Cac CLOSED DOWN 19.31 POINTS OR 0.36%
Spain IBEX CLOSED DOWN 29.20 POINTS OR 0.29%
Italian MIB: CLOSED DOWN 173.72 POINTS OR 0.47%
The Dow closed DOWN 1.72 OR 0.01%
NASDAQ WAS closed UP 4.82 POINTS OR 0.07% 4.00 PM EST
WTI Oil price; $49.32 1:00 pm;
Brent Oil: 55.59 1:00 EST
USA /RUSSIAN ROUBLE CROSS: 58.18 UP 45/100 ROUBLES/DOLLAR (ROUBLE LOWER BY 45 BASIS PTS)
TODAY THE GERMAN YIELD RISES TO +0.459% FOR THE 10 YR BOND 4.PM EST EST
This ends the stock indices, oil price, currency crosses and interest rate closes for today
Closing Price for Oil, 4 pm/and 10 year USA interest rate:
WTI CRUDE OIL PRICE 5:00 PM:$49.32
USA 10 YR BOND YIELD: 2.363% (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)
USA 30 YR BOND YIELD: 2.898%
EURO/USA DOLLAR CROSS: 1.1736 UP .0022
USA/JAPANESE YEN:112.64 DOWN 0.147
USA DOLLAR INDEX: 93.79 DOWN 17 cent(s)/
The British pound at 5 pm: Great Britain Pound/USA: 1.3069 : DOWN 44 POINTS FROM LAST NIGHT
Canadian dollar: 1.2537 UP 31 BASIS pts
German 10 yr bond yield at 5 pm: +0.459%
And now your more important USA stories which will influence the price of gold/silver
TRADING IN GRAPH FORM FOR THE DAY
Investors “Most Euphoric” In 23 Years Despite Korea, Crap Data, Crude Crash, & Coming Storms
Trannies ended the week lower (first down-week in 7 weeks), Dow outperformed on the week (4th week up in a row)… The S&P record-high streak is over…
Nasdaq managed to close in the green and a new record high today…
Investors have not been this ‘euphoric’ of the S&P 500 since 1994…
VIX and the S&P were both higher on the week for the first time since February…
VIX was pumped and dumped again in a desperate effort to get the S&P green and to a new record high for the 7th day in a row… (NOTE its the 8th day in a row that stocks ramped after Europe closed)
Just look at VIX at the close!
Notably Russell 2000 and its implied vol remain seriously decoupled…
But, uncertainty about VIX (VVIX) has never been higher relative to the uber-complacent level of VIX…
Energy and Retailers were the week’s laggards as Financials and tech led…
As ‘hard’ economic data has collapsed (not the soft survey data), so high-tax companies have soared (and yet we are told that tax reform is ‘not priced in’)…
Walgreens and CVS were AMZN’d…
FANG Stocks had their 2nd best week in 3 months, ending at record highs…
“high-tax” companies are dramatically underperforming the market since trump unveiled his tax plan…
Bank stocks recoupled with the flatter yield curve post-FOMC midweek, but then decoupled again the last 2 days…
Treasury yields ended the week higher with some serious volatility today…
With yields spiking on the poor payrolls data (hawkish on the earnings data) but then North Korean headlines spooked them lower…
As rate-hike odds for December hit 80%…
The Dollar Index rose for the 4th straight week (longest streak since Oct 2016)…
Bitcoin rallied for the 2nd week in a row…but was notably less volatile this week…
Crude crashed almost 5% this week – the worst week in 5 months, ending back below $50 (and below its 200DMA). Gasoline fell for the 2nd week in a row…
While gold spiked today in North Korea headlines it remained lower on the week (4th weekly drop in a row – longest streak since Dec). Silver managed to scramble back into the green for the week today…
Finally, we note that the market’s most important driver – central bank liquidity – has tumbled in the last month, but the most since Nov…
Which does not bode well for stocks…
The official jobs report numbers: Payrolls tumble by 33,000, it;s first drop in 7 years. Wages surge due to labour shortages. Revisions to the two previous months lowered job gains by 38,000
September “Hurricane” Payrolls Tumble 33,000, First Drop In Seven Years, As Wages Surge Due To Labor Shortages
As noted earlier, Wall Street was completely clueless ahead of today’s payroll, with most expecting a small positive print but two brave forecasters went so far as to predict that the recent hurricanes would result in a negative print, and sure enough, moments ago the BLS reported that in September, the US economy lost 33,000 hurricane distorted jobs, the first payrolls decline since September 2010.
While the September number was expected to be noise, the historical revisions were more problematic: total nonfarm payroll employment for July was revised down from +189,000 to +138,000, while August was revised up from +156,000 to +169,000. With these revisions, employment gains in July and August combined were 38,000 less than previously reported. After revisions, job gains have averaged 91,000 over the past 3 months.
Offsetting the poor headline print from the Establishment survey, according to the BLS Household Survey, the number of employed Americans soared by 906,000 to 154.435 million, a sharp 1.6% jump from the year prior.
The BLS also reported that the unemployment rate tumbled from 4.4% to 4.2%, on expectations of no change…
… as some 1.47 million people were not at work due to bad weather. This is how the BLS explained it:
In September, 1.5 million workers had a job but were not at work for the entire reference week due to bad weather, the highest level for this series over the past 20 years. This series is highly sensitive to the timing of weather events and thus does not capture the immediate effect of all such events on the job market.
Meanwhile, as jobs tumbled, the labor shortage created by the hurricanes pushed wages sharply higher as we had previewed, and as the BLS confirmed moments ago: in September, average hourly earnings rose by 0.5% M/M, above the 0.3% expected, and far above the 0.2% in August, while on an annual basis, the increase was an outlier 2.9%, also well above the 2.5% expected, and the highest since the financial crisis.
As a result of the spike in wages, the odds of Fed hike by year-end have climbed above 75% for the first time. Which, of course, is precisely as Bloomberg’s David Finnerty said earlier:
“Any weakness will be attributed to hurricanes, while a beat on payrolls or wages would be seen as supporting a Federal Reserve interest rate increase in December.“
Sure enough that’s precisely how the market reacted.
Commenting on the Hurricane impact, this is what the BLS said:
In September, a sharp employment decline in food services and drinking places and below-trend growth in some other industries likely reflected the impact of Hurricanes Irma and Harvey.
The storms caused large-scale evacuations and severe damage to many homes and businesses. In the establishment survey, employees who are not paid for the pay period that includes the 12th of the month are not counted as employed. Many employees in areas affected by the hurricanes were likely off payrolls during the reference pay period for September.
Our analysis suggests that the net effect of these hurricanes was to reduce the estimate of total nonfarm payroll employment for September. There was no discernible effect on the national unemployment rate. No changes were made to either the establishment or household survey estimation procedures for the September figures. For both surveys, collection rates generally were within normal ranges, both nationally and in the affected states. In the establishment survey, employees who are not paid for the pay period that includes the 12th of the month are not counted as employed. In the household survey, persons with a job are counted as employed even if they miss work for the entire survey reference week (the week including the 12th of the month), regardless of whether or not they are paid. For both surveys, national estimates do not include Puerto Rico or the U.S. Virgin Islands.
Elsewhere, the participation rate rebounded from 62.9% to 63.1% as the number of people not in the labor force shrank by 368,000 to 94.417 million even as the number of employed Americans surged by over 900,000.
Some more details from the report:
Total nonfarm payroll employment was little changed in September (-33,000), after adding an average of 172,000 jobs per month over the prior 12 months. In September, a steep employment decline in food services and drinking places and below-trend growth in some other industries likely reflected the impact of Hurricanes Irma and Harvey. Employment rose in health care and in transportation and warehousing.
Employment in food services and drinking places dropped sharply in September (-105,000), as many workers were off payrolls due to the recent hurricanes. Over the prior 12 months, food services and drinking places had added an average of 24,000 jobs per month.
In September, health care added 23,000 jobs, in line with its average monthly gain over the prior 12 months (+27,000). The employment increase in ambulatory health care services (+25,000) was partially offset by a decline in nursing care facilities (-9,000).
Employment in transportation and warehousing increased by 22,000 in September. Job gains occurred in warehousing and storage (+5,000), couriers and messengers (+4,000), and air transportation (+3,000).
Employment in financial activities changed little in September (+10,000). A job gain in insurance carriers and related activities (+11,000) largely reflected hurricane-recovery efforts. The gain was partly offset by losses in activities related to credit intermediation (-4,000) and in commercial banking (-3,000). Over the year, financial activities has added 149,000 jobs.
In September, employment in professional and business services was little changed (+13,000). Over the prior 12 months, job growth in the industry had averaged 50,000 per month.
Manufacturing employment was essentially unchanged in September (-1,000). From a recent employment trough in November 2016 through August of this year, the industry had added an average of 14,000 jobs per month.
Employment in other major industries, including mining, construction, wholesale trade, retail trade, information, and government, showed little change over the month.
The average workweek for all employees on private nonfarm payrolls was unchanged at 34.4 hours in September. In manufacturing, the workweek also was unchanged at 40.7 hours, and overtime held steady at 3.3 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.6 hours. (See tables B-2 and B-7.)
In September, average hourly earnings for all employees on private nonfarm payrolls rose by 12 cents to $26.55. Over the past 12 months, average hourly earnings have increased by 74 cents, or 2.9 percent. In September, average hourly earnings of private-sector production and nonsupervisory employees increased by 9 cents to $22.23. (See tables B-3 and B-8.)
The change in total nonfarm payroll employment for July was revised down from +189,000 to +138,000, and the change for August was revised up from +156,000 to +169,000. With these revisions, employment gains in July and August combined were 38,000 less than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.) After revisions, job gains have averaged 91,000 over the past 3 months.
Strange!!with 3 hurricanes the BLS reports that full time jobs soar by 935,000 and part timers by 81,000. Great fiction!!
What Hurricane: Full-Time Jobs Soar By 935,000, Biggest Increase In The 21st Century
Not only was there much confusion ahead of the September payrolls report, there was just as much confusion inside it, because while the market decided to ignore the 33,000 drop in payrolls (as per the Establishment Survey), the first monthly decline in 7 years and instead focus on the just as widely expected spike in average hourly earnings, a result of hurricane-induced labor shortages, what it appears to have forgotten is the “other” Household Survey, which showed a vastly different picture. Here, according to the BLS the number of employed Americans soared by 906,000 one of the biggest monthly increases on record.
However, an even more dramatic observation was revealed when digging into the components of this increase, because according to the BLS, while the number of part-time workers increased last month by 81,000…
… it was the full-time increase that was an absolute outlier: at 935,000 this was the single biggest monthly increase in the 21st century (excluding the bizarro Jan 2000 print), and one of the 4 highest monthly prints in history.
Which begs the question: if three hurricanes can result in a near-record increases in full-time jobs, maybe it’s time for a few strategically placed tactical nukes above the US: surely that will remove all the slack in the economy overnight, and unleash the long-awaited wage hyperinflation.
TRADING IN NY
Stocks and bonds sink as a December rate hike odds hit 80% despite the worst jobs data in 7 years
Stocks, Bonds Sink As Dec Rate-Hike Odds Hit 80% After Worst Jobs Data In Over 7 Years
The utterly useless data gushed forth by The BLS this morning – affected dramatically in all directions by Irma and Harvey – did not worry the algos who sent Dec rate-hike odds soaring (to 80%) and sparked selling in bonds and stocks.
December is a done deal on the back of statistically ridiculous data which saw average hourly earnings rise at the highest level since the financial crisis.
Of course, that is not a surprise because as we reported earlier, “Any weakness will be attributed to hurricanes, while a beat on payrolls or wages would be seen as supporting a Federal Reserve interest rate increase in December.”
Well, what happened is that the jobs drop was attributed to hurricanse while the wage growth was attributed to the… economy?
In any case, the dollar is spiking:
And bonds and stocks are sinking:
oh oh!! we lost a few bartenders and waiters
(courtesy zero hedge)
Where The September Jobs Were: Waiter And Bartender Devastation
The September jobs report was a bizarre exercise in “goalseeked” data: from the first drop in Establishment Survey payrolls in 7 years, to the near record monthly surge in full-time jobs and Household Survey employment, to the erroneous calculation in average hourly earnings, virtually everything about the latest payrolls report was off.
Still, accurate or fabricated, here is the breakdown of the seasonally-adjusted job gains and losses that took place in the hurricane-impacted month.
As SouthBay Research points out, the biggest sign of Hurricane drag was found in Leisure and Hospitality which plunged by -111K, a drop due to a loss of 105K waiter and bartender jobs: the one category that for the past 7 years was the “plough hourse” of the so-called US recovery; this was the worst monthly drop in history for this category.
And while we find it delightfully ironic that in the one month in which waiters/bartenders lost the most jobs on record is when average wages (allegedly) soared, the September drop will be revised in the coming days and should move higher next month. After all, many people fleeing Florida and Houston had to stay in hotels and motels, for example. And certainly eat out more.
Some other September jobs highlights:
- Goods Production +9K (as expected): Not Hurricane impacted. The reflation trade has ended and factories are now coasting.
- Trade, Transportation: +26K (as expected): Slightly hurricane impacted. Building supplies up (+5K), for example. Also trucking up +9K as suppliers raced to ensure shipments were not impacted.
- Professional Services: +12K (Slightly below expectations): Softer consulting and management payrolls brought the figure down
- Education: +14K (as expected)
- Healthcare: +13K (much lower than expected) Social Assistance (emergency care, childcare, etc) was 30K below my data. Given the level of emergency support, this is unusual…
- Government: +7K. No hurricane impact and in line with expectations.
- Information: -9K. A surprising drop in what has traditionally been one of the best paying job sectors.
- Leisure/Hospitality: -111K (much lower than expected) Very hurricane impacted. This will likely be revised up
Below is a breakdown of the monthly changes across the main job categories in September:
And from Bloomberg, here are the industries with the highest and lowest rates of employment growth for the most recent month. Additionally, monthly growth rates are shown for the prior year. The latest month’s figures are highlighted. Wage data are shown when available
(courtesy Mish Shedlock/Mishtalk)
20% Of Illinois Lawmakers To Quit (To Save Their Pensions?)
20% of the Illinois House announced will not run for reelection, many of them are cowardly, corrupt Republicans who voted for a tax hike.
It’s a Huge Stampede for the Door the likes of which Illinois has never seen. They do not want to face voters after passing a huge tax hike.
Thirty state lawmakers in the 100th General Assembly will not be holding their seats in the 101st General Assembly. And that’s not even counting those who might be ousted at the ballot box next year.
The exodus is unlike anything Springfield insiders have ever seen.
In the House, 23 lawmakers will not return to their seats in the 101st General Assembly. That’s nearly a whopping 20 percent of the chamber. The situation is less severe in the Senate, where seven members are certain not to return.
Of the 30 total members of the General Assembly who will not hold on to their seats, three have resigned. Twenty are not running for re-election. Two are House members running for Senate seats. And the remaining five are running for office outside the General Assembly: one for governor, two for lieutenant governor, one for attorney general, and one for a seat on Chicago’s Metropolitan Water Reclamation District (yes, really.)
But the most likely driver is pretty obvious to most Illinoisans: the rage of constituents.
I am not digging into this right now, but I remember in older years, where some politicians would be eligible to get government pensions if they “retired” from their seats as opposed to getting voted out.
Allied Van Lines
Truth in Accounting asks Fleeing or Flocking?
United Van Lines has published an annual interstate migration study for decades. Looking at that study, along with state government financial conditions and related factors, you typically see that states in bad financial shape also tend to have lower trust in state government, and in turn, higher out-migration in recent years.
In addition to states’ migration trends, United Van Lines recently began publishing an analysis of cities. Using a slightly different method, the moving company reported the 10 cities with the highest net in-migration as well as out-migration.
We took a look at those cities to see how they fare in Truth in Accounting’s latest analysis of financial conditions of the nation’s 50 largest cities. Of the 50 largest municipalities, the average Taxpayer Burden calculated for the nine cities with the highest in-migration is one-fourth as high as the average for cities with the highest out-migration. Four of the cities with the highest out-migration rates were New York, Chicago, Boston and San Diego, according to United Van Lines.
Here’s another way to look at it — the average Taxpayer Burden for the six states that have the 10 cities with the highest net out-migration runs five times as high as the average of the Taxpayer Burden for the nine states that are home to the top 10 cities for in-migration.
Illinois, New York and New Jersey account for five of the 10 cities with high net out-migration rates in the United Van Lines study. You can see the lists of the cities United Van Lines ranked here.
We will be releasing an updated report on the finances of the 50 largest cities in the US in January 2018.
Goodbye Illinois, Hello Florida
The Chicago Tribune reported Fed-up Illinois homeowners consider moving: ‘It’s not just the property taxes on my home; it’s all of them’
The day after the Illinois legislature voted to raise the individual income tax rate from 3.75 to 4.95 percent, Northfield-based financial planner Ellen Rogin said she started getting phone calls from clients who are residents of Chicago with second homes in Florida.
The clients, according to Rogin, were saying “I’m worried about Illinois. Should I be moving to Florida?”
Rogin said anyone considering a move has to look at lifestyle, not just taxes.
Chicago certified public accountant Debbie Lessin said that when people consider a move for tax reasons in retirement, they may be missing a crucial element of Illinois’ tax system.
Illinois doesn’t tax retirement income from Social Security, pensions and IRAs, an advantageous provision for retirees living in the state, she said.
The above synopsis is from the Tribune courtesy of Mary Pat Campbell.
Tempest in an Academic Teapot: The Problem with Illinois is Not Complicated Math https://t.co/oLR8cgJp6p spoiler: the problem is people
— Mary Pat Campbell (@meepbobeep) October 3, 2017
Will CIA Director Mike Pompeo Replace Rex Tillerson As Secretary Of State?
Secretary of State Rex Tillerson rushed to an impromptu meeting at the White House yesterday to discuss “a path forward” with White House Chief of Staff John Kelly and Defense Secretary James Mattis as rumors swirled that President Donald Trump – infuriated by reports that Tillerson called him a “fucking moron” – is weighing whether to fire the former ExxonMobil CEO. And in the latest installation in the ongoing leakfest over Tillerson’s purported “disloyalty,” Axios is reporting that the White House already has a candidate in mind to replace Tillerson, and surprisingly it’s not the “logical” choice of UN Ambassador Nikki Haley.
Trump advisers and allies are floating the idea of replacing Tillerson with CIA Director Mike Pompeo, reasoning that he’s already familiar with the situation room, and could feasibly make the switch without much of a disruption.
Axios reports that Trump is comfortable with Pompeo and has sought his advice on topics ranging from immigration to dealing with Congress. Pompeo personally delivers the President’s Daily Brief, making him one of the few people Trump spends a great deal of time with on a daily basis. Pompeo is also reportedly one of the few in the administration who knows how to convey tough news to the president, and how to push back without turning off Trump. It’s also believed that Pompeo, formerly a Congressman from Kansas, would accept the job. Trump reportedly doesn’t see Pompeo as a “showboat”, which is Trump-speak for a–hole.
But perhaps most importantly, Axios reports that Pompeo possess a “credibility” that Tillerson lacks. It’s widely known by world leaders that Pompeo is a part of the Trump “inner circle”. Tillerson, meanwhile, has always been viewed as an outsider in the administration. Sources tell Axios that Trump knows that a reshuffle would bring trigger an avalanche of bad press – something that Kelly is trying hard to avoid. After the rash of high-profile firings this year, Kelly is hoping to put off further dismissals until at least next year.
Axios claims the relationship between Trump and Tillerson is broken beyond repair, due largely to the president’s perception that Tillerson didn’t try hard enough to blunt “moron-gate” (we guess holding an impromptu press conference specifically to deny the story and praise the president as “smart” just didn’t cut it). Regardless of whether Tillerson actually said it, the lackluster response was, in the end, more damning than the alleged act of disloyalty.
Furthermore, Trump reportely seethed with rage after seeing media coverage on Wednesday and Thursday focusing on the Tillerson scandal, overshadowing his own “successful” trip to meet with and console victims of the Las Vegas shooting.
Trump has blasted NBC as “fake news” for publishing a report about Tillerson’s alleged remarks. But, apparently, his anger over the story is genuine.
The upshot is: Pompeo’s ascension into the highest ranks of the administration is increasingly looking like a matter of if, not when.
Tillerson Summoned To White House As Furious Trump Raged Over “Moron” Comment
Barely a week after HHS Secretary Tom Price resigned following reports that he’d spent more than $1 million in taxpayer funds traveling in private jets, speculation that Secretary of State Rex Tillerson’s head is next on the chopping block has reached a fever pitch.
After reporting earlier in the week that Tillerson had privately criticized Trump, allegedly calling him a “fucking moron”, shortly before the former Exxon CEO was close to submitting his resignation, NBC reported late Thursday that the secretary had been summoned to the White House by Chief of Staff John Kelly for an impromptu meeting to discuss “a path forward.”
Kelly summoned Tillerson, and their ally Defense Secretary James Mattis, to the White House, where the three of them huddled to discuss a path forward, according to three administration officials. The White House downplayed Kelly’s decision to stay in Washington, saying he did so to manage day-to-day operations.
Needless to say the president was not happy, and as NBC adds, “Trump was furious when he saw the NBC News report, which was published shortly before 6 a.m. Wednesday. For the next two hours the president fumed inside the White House, venting to Kelly, officials said. He left for Las Vegas shortly after 8 a.m., 20 minutes behind schedule.”
Tillerson scrambled to pull together a statement, while his spokesman publicly apologized for his comments about Pence and Haley, saying he “spoke out of line about conversations I wasn’t privy to.” Tillerson delivered a statement praising Trump and insisting he never considered resigning, but it’s what he didn’t say that further enraged Trump, officials said.
Meanwhile Vice President Mike Pence was likewise “fuming” in Phoenix, where he was traveling: he and Tillerson spoke on the phone before the secretary’s public appearance on Wednesday morning.
Pence was incensed upon learning from the NBC report that Tillerson’s top spokesman had said he once privately questioned the value of Nikki Haley, the U.S. ambassador to the United Nations. Officials said the spokesman, R.C. Hammond, fabricated an anecdote that Pence had asked Tillerson in a meeting whether Haley, who is seen as a possible successor if Tillerson, is helpful or harmful to the administration.
Tillerson’s initial reluctance to deny that he’d made the “moron” comment during an impromptu press conference on Wednesday infuriated Trump – though the spokeswoman from the state department later denied that Tillerson had made the comment.
Tensions intensified after Trump appeared to directly contradict Tillerson for the second time this week when reports emerged that the president had decided to “decertify” the Iran deal – effectively placing its fate in the hands of Congress – shortly after Tillerson had said that the administration was still weighing its options. Earlier in the week, Trump tweeted that he’d told his secretary of state not to bother pursuing a dialogue with North Korea after Tillerson revealed during a meeting in Beijing that the US had established a direct line of communication with Kim Jong Un’s increasingly isolated regime.
But while Kelly was working to soothe the president’s anger, NBC News reported that Vice President Mike Pence was also angry with Tillerson after his top spokesman publicly shared an anecdote claiming that Pence had once asked Tillerson whether UN Ambassador Nikki Haley was “helpful or harmful” to the administration.
Pence was incensed upon learning from the NBC report that Tillerson’s top spokesman had said he once privately questioned the value of Nikki Haley, the U.S. ambassador to the United Nations. Officials said the spokesman, R.C. Hammond, fabricated an anecdote that Pence had asked Tillerson in a meeting whether Haley, who is seen as a possible successor to Tillerson, is helpful or harmful to the administration.
Assuming Tillerson stays on, he will most likely need to find a new chief spokesman. As the public learned when Trump fired former National Security Advisor Mike Flynn, once Pence decides he wants somebody gone, they’re done.
Hammond is seen by the White House, particularly Pence’s office, as untrustworthy, officials said. It’s unclear if he will remain in his post, according to three administration officials.
Pence was “very annoyed anyone would misrepresent anything he said, particularly in private meetings,” one White House official said.
Speculation about Tillerson’s future in the White House intensified after the Washington Post published a report alleging that the secretary of state often didn’t return the president’s calls, and that the two men often clashed over Tillerson’s “traditional” approach to policies from Iran to climate change to North Korea, as well as Tillerson’s “frustration” at being overruled.
The first signs of a rift between the two men appeared following Trump’s controversial comment that there were good people “on both sides” after a white nationalist demonstrator rammed his car into a crowd of protesters during a White Nationalist rally in Charlottesville, killing one and injuring dozens more. When questioned about Trump’s comment, Tillerson famously said that the president “speaks for himself.”
In summary, the list of senior administration officials that have been shown the door is already disconcertingly long. The list includes:
- Tom Price
- Sebastian Gorka
- Steve Bannon
- Anthony Scaramucci
- Reince Priebus
- Sean Spicer
- Michael Dubke
- Walter Shaub
- James Comey
- Michael Flynn
- Sally Yates
- Preet Bharara
- Katie Walsh
- Mark Corralo
- Michael Short
… Will Tillersons’ be the next name added to this list? Or will this pass, much like the rumors that Trump intended to get rid of Jeff Sessions only to have his mind changed in the last moment? Or will Tillerson invoke the “suicide pact” he reportedly made with Treasury Secretary Steven Mnuchin and Secretary of Defense James Mattis?
Yesterday’s calm before the storm comment by Trump viewed as serious according to press secretary Sarah Sanders
White House Says Trump’s “Calm Before The Storm” Comment Is “Extremely Serious”
Following President Trump’s “calm before the storm” comments last night, reporters tried to ask him once again what he meant today, to which he responded “you’ll see.” However, during The White House Press Briefing, Sarah Sanders replied to questions suggesting the President’s comments were “extremely serious,” however without offering an explanation.
Sarah Sanders suggested POTUS “calm before the storm” comments are “extremely serious.” But offered no explanation what they meant.
— Jim Acosta (@Acosta) October 6, 2017
When asked if Trump was referring to military action when he said “calm before the storm.” Sarah Sanders replied “We’re never going to say in advance what the president’s going to do. You’ll have to wait and see.”
Then, in a follow up question “how seriously should America’s public or America’s adversaries take these comments”, the White House press secretary said “I think you can take the president protecting the American people always extremely seriously. He’s been very clear that that’s his number one priority.”
— ABC News Politics (@ABCPolitics) October 6, 2017
Earlier in the day, Trump continued the cryptic mystery: shortly after signing a manufacturing executive order, a reporter asked what he meant when he said that a gathering of military leaders at the White House the evening before was “the calm before the storm,” U.S. President Donald Trump did not elaborate, and said again, “You’ll find out.”
And then he winked.
— CBS News (@CBSNews) October 6, 2017
I will see you MONDAY night. YOU MAY RECEIVE THE COMMENTARY VERY LATE IN THE EVENING