GOLD: $1282.50 UP $8.00
Silver: $16.93 UP 23 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: $1300.79 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $1281.60
PREMIUM FIRST FIX: $19.19 (premiums getting larger)
SECOND SHANGHAI GOLD FIX: $1300.79
NY GOLD PRICE AT THE EXACT SAME TIME: $1282.30
Premium of Shanghai 2nd fix/NY:$19.49 (PREMIUMS GETTING LARGER)
LONDON FIRST GOLD FIX: 5:30 am est $1282.15
NY PRICING AT THE EXACT SAME TIME: $1281.90
LONDON SECOND GOLD FIX 10 AM: $1278.75
NY PRICING AT THE EXACT SAME TIME. 1279.90
For comex gold:
NOTICES FILINGS TODAY FOR OCT CONTRACT MONTH: 0 NOTICE(S) FOR nil OZ.
TOTAL NOTICES SO FAR: 2329 FOR 232,900 OZ (7.241TONNES)
5 NOTICES FILED TODAY FOR
Total number of notices filed so far this month: 390 for 1,950,000 oz
Let us have a look at the data for today
In silver, the total open interest SURPRISINGLY ROSE BY A STRONG 1979 contracts from 184,165 UP TO 186,144 WITH RESPECT TO FRIDAY’S TRADING (UP 10 CENTS). THE CROOKS TRIED TO COVER AS MUCH OF THEIR SILVER SHORTS AS POSSIBLE YESTERDAY BUT IT LOOKS LIKE THEY HAD NO SUCCESS..SO THEY TRIED ANOTHER RAID ON FRIDAY 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 RISE IN OI COMEX WITH THE 10 CENT PRICE RISE 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 FRIDAY MORNING BUT THAT FAILED AS WELL ON THE NORTH KOREAN NEWS.
In ounces, the OI is still represented by just UNDER 1 BILLION oz i.e. 0.931 BILLION TO BE EXACT or 133% of annual global silver production (ex Russia & ex China).
FOR THE NEW FRONT OCT MONTH/ THEY FILED: 5 NOTICE(S) FOR 25,000 OZ OF SILVER.
In gold, the open interest FELL BY A MUCH LARGER THAN EXPECTED 2,591 CONTRACTS DESPITE THE RISE in price of gold ($1.60 ) . The new OI for the gold complex rests at 514,151. OUR BANKER FRIENDS WERE MILDLY SUCCESSFUL IN COVERING SOME OF THEIR GOLD SHORTS. THE BANKERS WERE REACHING FOR CAPITULATION ON FRIDAY 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 RISE IN PRICE IN GOLD ($1.40)
we had: 0 notice(s) filed upon for NIL oz of gold.
With respect to our two criminal funds, the GLD and the SLV:
Tonight , ANOTHER BIG CHANGE in gold inventory at the GLD/ this time A DEPOSIT OF 4.43 TONNES
Inventory rests tonight: 858.45 tonnes.
Today: ANOTHER BIG change in inventory: ANOTHER DEPOSIT OF 1.227 MILLION OZ
INVENTORY RESTS AT 326.898 MILLION OZ
First, here is an outline of what will be discussed tonight:
1. Today, we had the open interest in silver ROSE BY 2102 contracts from 184,165 UP TO 186,144(AND now A LITTLE CLOSER TO 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. OUR BANKER’S ATTEMPTED RAID ON FRIDAY WAS ABORTED ON NEWS THAT NORTH KOREA WAS PLANNING A MISSILE LAUNCH CAPABLE OF HITTING THE WEST COAST OF THE USA AND THAT PUT AN END TO THE WHACKING.
RESULT: A GOOD SIZED INCREASE IN SILVER OI AT THE COMEX WITH THE TINY RISE IN PRICE OF 10 CENTS WITH RESPECT TO FRIDAY’S TRADING. OUR BANKER FRIENDS WERE UNSUCCESSFUL IN THEIR ATTEMPT TO COVER ANY OF OUR SILVER SHORTS AS 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
i)Late SUNDAY night/MONDAY morning: Shanghai closed up 25.43 points or .76% /Hang Sang CLOSED down 131.45 pts or .46% / The Nikkei closed /Australia’s all ordinaires CLOSED UP 0.48%/Chinese yuan (ONSHORE) closed up at 6.6240/Oil DOWN to 49,46 dollars per barrel for WTI and 55.54 for Brent. Stocks in Europe OPENED GREEN EXCEPT FTSE . ONSHORE YUAN CLOSED UP AGAINST THE DOLLAR AT 6.6240. OFFSHORE YUAN CLOSED STRONGER TO THE ONSHORE YUAN AT 6.6197 AND BOTH YUANS ARE STRONGER AGAINST THE DOLLAR. CHINA IS VERY HAPPY TODAY
3a)THAILAND/SOUTH KOREA/NORTH KOREA
SUNDAY/TRUMPS HINTS AT WAR WITH NORTH KOREA
(COURTESY ZERO HEDGE)
b) REPORT ON JAPAN
c) REPORT ON CHINA
4. EUROPEAN AFFAIRS
ii) Now Rajoy issued a veiled death threat against the Catalan leader if they declare independence
iii)At the end of the day, the Catalan President stated that he will declare a “gradual independence” tomorrow, whatever that means..
( zero hedge)
5. RUSSIAN AND MIDDLE EASTERN AFFAIRS
Iran threatens the USA if new sanctions are passed
( zero hedge)
the uSA suspends all non immigrant visa services due to the arrest of the USA embassy employee in Istanbul
iii)The Turkish lira crashes 4% following the visa suspension drama:
6 .GLOBAL ISSUES
7. OIL ISSUES
8. EMERGING MARKET
9. PHYSICAL MARKETS
i)A great article on the huge total debt in the UK economy. The IMF warns that this could lead to a financial crash if house (or asset prices) fall
( Duncan/London’s Daily Mail)
10. USA Stories
i)The White House over the weekend has now revealed that in order for the dreamers to stay in the USA he wants money for the wall. The democrats are saying no!
ii)War of words over the weekend between Bob Corker and the President. The senator claims that Trump’s actions could threaten World War iii
( zero hedge)
iv)Looks like the wine industry is going to be affected:Wildfires engulf NAPA, Sonoma and 6 other counties
Let us head over to the comex:
The total gold comex open interest FELL BY MUCH LARGER THAN EXPECTED 2,591 CONTRACTS DOWN to an OI level of 514,151 DESPITE THE TINY RISE IN THE PRICE OF GOLD ($1.40 RISE IN FRIDAY’S TRADING). OUR BANKER FRIENDS WERE MILDLY 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 VISUALIZED 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 WHEREBY ANOTHER 7200 LONG COMEX CONTRACTS WERE GIVEN 7200 EFP’S. WE HAVE NOW ENDED GOLDEN WEEK WHERE ALL OF CHINA WAS OFF AND AS SUCH EXPECT GOLD TO FIRM UP THIS WEEK WITH CHINA RETURNING TO ACTIVE DUTY PURCHASING OUR PRECIOUS METALS.
Result: a LARGER SIZED open interest DECREASE WITH THE SMALL SIZED RISE IN THE PRICE OF GOLD ($1.40) . BANKERS MILDLY 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.
IN SEPTEMBER,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 3 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 18 contracts DOWN to 220 contracts. We had 15 notices filed yesterday so we LOST 3 contracts or 300 oz will NOT stand for delivery at the comex and 3 EFP notices were given.
The November contract saw A loss OF 161 contracts down to 1395.
The very big active December contract month saw it’s OI LOSS OF 4289 contracts DOWN to 403,283.
We had 0 notice(s) filed upon today for NIL oz
VOLUME FOR TODAY (PRELIMINARY) 201,749 AVAILABLE
CONFIRMED VOLUME FRIDAY: 384,881
We had 5 notice(s) filed for 25,000 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||xxx oz|
Today, 0 notice(s) were issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 0 contract(s) of which 0 notices were stopped (received) by j.P. Morgan dealer and 0 notice(s) was (were) stopped/ Received) by j.P.Morgan customer account.
|Withdrawals from Dealers Inventory||nil|
|Withdrawals from Customer Inventory||
|Deposits to the Dealer Inventory||
|Deposits to the Customer Inventory||
|No of oz served today (contracts)||
|No of oz to be served (notices)||
|Total monthly oz silver served (contracts)||390 contracts (1,950,000 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||xx 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 9/ANOTHER DEPOSIT OF 4.43 TONNES INTO GLD/INVENTORY RESTS AT 858.45 TONNES
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
Now the SLV Inventory
Oct 9/A HUGE DEPOSIT OF 1.227 MILLION OZ INTO THE INVENTORY OF THE SLV/INVENTORY RESTS AT 326.898 MILLION OZ
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+ 1.36%
Major gold/silver trading/commentaries for MONDAY
Perth Mint Gold Coins Sales Double In September
– Perth Mint gold coins see sales double on month in September
– Perth Mint silver bullion coin sales surge 78% in September
– Perth Mint sold 46,415 ounces of gold in September
– Nearly six times more gold coins sold at Perth Mint than U.S. Mint in September
– Sales surge at Perth Mint from low base; could indicate trend change and higher demand in coming months
The Perth Mint’s sales of gold products doubled in September from a month earlier, while silver sales surged 78 percent, the mint said in a blog post on its website on Tuesday.
Sales of gold coins and minted bars jumped to 46,415 ounces in September from 23,130 ounces a month ago, the mint said.
Silver sales during the month also rose to 697,849 ounces, compared with 392,091 ounces in August.
The Perth Mint refines more than 90 percent of newly-mined gold in Australia, the world’s No. 2 gold producer after China.
Spot gold prices recorded their biggest monthly drop for the year in September, pressured by the strength of the U.S. dollar amid increasing prospects of a December interest rate hike by the Federal Reserve.
September Perth Mint gold coins sales topped U.S. Mint one ounce American Gold Eagle sales of 8,000 ounces by nearly six fold.
Perth Mint gold sales topped the U.S. Mint gold sales for the seventh month in a row.
Gold sales at the Perth Mint in September 2017 were down 21% from September 2016 sales of 58,811 ounces.
Perth Mint gold sales were up 101% in September from 23,130 ounces sold in August.
Sales of American Gold Eagles at the U.S. Mint in September 2017 were at a seventeen year low.
We will cover this in more depth tomorrow and compare and analyse the sharp increase in Perth Mint gold coin and silver coin demand with the still very low US Mint demand.
News and Commentary
Gold Prices (LBMA AM)
09 Oct: USD 1,282.15, GBP 976.23 & EUR 1,092.01 per ounce
06 Oct: USD 1,268.20, GBP 970.43 & EUR 1,083.93 per ounce
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
Silver Prices (LBMA)
09 Oct: USD 16.92, GBP 12.86 & EUR 14.41 per ounce
06 Oct: USD 16.63, GBP 12.73 & EUR 14.20 per ounce
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
Recent Market Updates
– Survey shows UK and US Pensions Crisis is Imminent
– Gold Investment In Germany Surges – Now World’s Largest Gold Buyers
– 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
A great article on the huge total debt in the UK economy. The IMF warns that this could lead to a financial crash if house (or asset prices) fall
(courtesy Duncan/London’s Daily Mail)
Your early MONDAY morning currency, Asian stock market results, important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight
2. Nikkei closed /USA: YEN RISES TO 112,69
3. Europe stocks OPENED GREEN EXCEPT FTSE ( /USA dollar index RISES TO 93.72/Euro UP to 1.1737
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:: 49.46 and Brent: 55.54
3f Gold UP/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 FALLS TO +.448%/Italian 10 yr bond yield UP to 2.107% /SPAIN 10 YR BOND YIELD DOWN TO 1.66%
3j Greek 10 year bond yield FALLS TO : 5.61???
3k Gold at $1280.35 silver at:16.91(8:15 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50
3l USA vs Russian rouble; (Russian rouble DOWN 23/100 in roubles/dollar) 58.38-
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 112.69DESTROYING 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 0.9798 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1503 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.
3p BRITAIN VOTES AFFIRMATIVE BREXIT/LOWER PARLIAMENT APPROVES BREXIT COMMENCEMENT/ARTICLE 50 COMMENCES MARCH 29/2017
3r the 10 Year German bund now POSITIVE territory with the 10 year FALLING to +0.448%
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 2.359% early this morning. Thirty year rate at 2.893% /
5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.
(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)
Global Markets Bounce As Germany, China, Spain Lift World Stocks, Turkey Crash Ignored
With no North Korean nuclear test over the weeknd contrary to a Friday morning rumor, S&P futures rebounded and edged higher as European stocks gain, led by Spanish shares after mass demonstrations in favor of Spanish unity and speculation Catalonia may back down on unilateral independence demands, while Chinese mainland stocks reopened catching up to gains missed during the holiday week following last weekend’s RRR cut.
World shares rose to start the week, with Chinese stocks hitting 21-month highs and the German index setting a new record, while political uncertainty triggered big moves in sterling, the Turkish lira and Spanish debt. US futures are also pushing higher in anticipation of the start of Q3 earnings season which begins later this week, with a number of Wall Street banks including JPMorgan, BofA and Citi set to report. While equities are open, the US bond market is closed today for the Columbus day holiday, while Asian markets were relatively quiet following holidays in Japan, South Korea and Taiwan.
European stocks climbed at the start of a week in which investors were closely watching developments in Catalonia as well as U.S. earnings season kicks off. The Stoxx Europe 600 Index adds 0.23%, following four straight weeks of gains. All industry groups except miners climb. The IBEX 35 Index is up 1% as a senior member in the Catalan administration calls for dialogue with Spain, although the gauge is still down 1.2% since Catalans voted for independence in an illegal referendum. After a weekend of mass demonstrations in favor of Spanish unity, Raul Romeva, foreign affairs chief for the separatist government in Barcelona, insisted that the door was open for talks if Prime Minister Mariano Rajoy was willing to grasp the opportunity
As Bloomberg breaks down local markets, 18 out of 19 Stoxx 600 sectors rise; 407 Stoxx 600 members gain, 171 decline. Top Stoxx 600 outperformers include: CaixaBank +2.6%, Centamin +2.5%, TDC +2.4%, Man Group +2.4%, Metro Bank +2.0%. The Stoxx Euro 600 Index also received a boost from data showing German industrial output rebounded from a summer lull with its best month in six years. The euro nudged higher, while most European bonds rose. Gold climbed and crude oil erased earlier gains.
“As regards Catalonia, it is difficult to have much conviction with respect to the eventual outcome,” JPMorgan Chase & Co strategist Mislav Matejka said in a note. “However, we believe that this will be seen as a localized issue, where the dips should be bought.”
Sterling rose 0.6 percent to $1.3112 on reports that British Prime Minister Theresa May, facing threats to oust her, might sack her foreign minister, Boris Johnson. Reports stated that the UK is said to be searching and hoping for the best, but is also continuing making preparations in case it should end up with no deal in Brexit talks. (Telegraph) Further to this, PM May is set to warn EU leaders today that Britain will make no more concessions on Brexit until they compromise on opening trade and transition talks. (Times) UK PM May reportedly suggested over the weekend that she is prepared to demote Foreign Secretary Boris Johnson as part of a cabinet rejig. However, separate reports suggest that if May was to fire him, he will simply say ‘no’, according to his allies.
“If Boris Johnson were to leave or be demoted as the weekend press is suggesting, that would be showing May’s leadership and that her vision of Brexit is the one that (the government) will be going forward with and that markets should be aligned to,” said Viraj Patel, an FX strategist at ING Bank in London.
The most notable event in European trading was the plunge in Turkey’s lira which slumped to a record low against a basket of currencies including the euro and the dollar, and the nation’s stocks slumped, after U.S. and Turkey each suspended visa services for citizens looking to visit the other country.
Also in Europe, German Chancellor Merkel’s CDU/CSU agreed on refugee cap issue which clears a major hurdle in pursuing coalition discussions. Germany and France reportedly dashed UK hopes of fast-track talks on transition deal and said that a divorce bill must be resolved first. EU was reported on Friday to significantly step up backroom Brexit talks with Labour Party over concerns PM May’s government will fall. Pressure on the BoE to raise interest rates may be building more rapidly than first thought after a mistake by the ONS led to domestic inflation being understated with companies’ employment costs rising faster than previously expected.
In Asia, the MSCI Asia Pacific Index added 0.1% to 163.41 as of 11:40 a.m. in Hong Kong, with Australian banks leading gains after a politician said he’s opposed to a regional levy. Stocks in New Zealand set a new record while the local dollar slipped as the major political parties vied to form the new government. The S&P/NZX 50 benchmark rose 0.4 percent, topping 8,000 for the first time. In Hong Kong, the Hang Seng Index slipped after hitting a 10-year high on Friday.
Chinese stocks rose as trading resumed after a week-long holiday but an Asia-wide benchmark was little changed as markets in Japan, South Korea and Taiwan were closed. On their first day of trade after a week-long holiday, Chinese blue-chip stocks touched their highest levels since late 2015, partly in a delayed reaction to a targeted cut in the amount of cash some banks must hold in reserve bank announced a week ago. Mainland Chinese markets rose Monday, although the advance faded as banks were unable to hold on to much of their early gains. The Shanghai Composite Index closed up 0.8% at 3,374.38 after rising as much as 1.8% to touch the highest since January 2016, while the Shenzhen Composite Index added 1.3%, the most since Aug. 28. Financials also took the lead in mainland China, where stocks tracked last week’s advance in offshore trading, after the central bank’s decision to cut reserve ratios.
Also notable was the big move higher in Chinese rates, with 10Y futures closing down 0.36%, the biggest one day move in 2 months. A big reason for this was the surge in the Yuan, which jumped over 300 pips, pushing the USDCNH below 6.62 from nearly 6.66 earlier.
Also worth noting that on Monday, Business activity in China’s services sector grew at its slowest pace in 21 months in September as the pace of new business cooled, according to the Caixin Markit PMI survey, in contrast with official data from the National Bureau of Statistics (NBS) showing a faster pace of growth. Specifically, the Chinese Caixin Services PMI printed at 50.6 in September vs. Exp. 53.1 (Prev. 52.7); a 21-month low.
Oil trades around $50, as OPEC Sec-Gen Mohammad Barkindo says that oil producers are succeeding in re-balancing oversupplied market, though they may need to take further steps to sustain recovery into 2018. Production is increasing at Sharara, Libya’s biggest oil field, after it re-opened on Oct. 4, and is now expected to produce up to 250,000bbls/day/
In rates, Spain’s 10-year yield dipped six basis points to 1.645 percent, the lowest in more than a week. Germany’s 10-year yield decreased one basis point to 0.45 percent, the lowest in a week. Britain’s 10-year yield rose one basis point to 1.369 percent.
Gold hit a one-week high as tension over North Korea saw some investors seek safety in the metal. It rose 0.5 percent to $1,282 an ounce. West Texas Intermediate crude decreased less than 0.05 percent to $49.27 a barrel, the lowest in almost four weeks. Copper decreased 0.2 percent to $3.02 a pound.
In other news, Fed’s Rosengren (Non-Voter, Soft Hawk) said that the Fed must respond to very tight labor markets or may damage the economy and that prudent risk management would argue for the continued gradual removal of accommodation to minimize risk that could shorten the economic recovery. US House Speaker Ryan stated that tax reform is on track for implementation by January 2018.
Bulletin Headline Summary from RanSquawk
- European equities trade mostly higher with Spanish assets outperforming amid hopes for some form of mediation
- GBP remains a key focus for FX markets amid the shifting political landscape and potential understating of UK inflation form the ONS
- Today’s calendar is particularly light. Today is US Columbus Day Holiday but markets remain open
- S&P 500 futures up 0.1% to 2,548.00
- STOXX Europe 600 up 0.2% to 390.24
- MSCI Asia down 0.02% to 163.28
- MSCI Asia ex Japan down 0.09% to 538.38
- Nikkei up 0.3% to 20,690.71
- Topix up 0.3% to 1,687.16
- Hang Seng Index down 0.5% to 28,326.59
- Shanghai Composite up 0.8% to 3,374.38
- Sensex up 0.2% to 31,887.30
- Australia S&P/ASX 200 up 0.5% to 5,739.26
- Kospi up 0.9% to 2,394.47
- German 10Y yield fell 0.7 bps to 0.452%
- Euro up 0.03% to $1.1734
- Brent Futures down 0.2% to $55.51/bbl
- Italian 10Y yield fell 0.4 bps to 1.853%
- Spanish 10Y yield fell 6.5 bps to 1.644%
- Brent Futures down 0.2% to $55.51/bbl
- Gold spot up 0.3% to $1,280.92
- U.S. Dollar Index down 0.04% to 93.77
Top Overnight News
- Trump demands that Congress deliver funding for his border wall and make dramatic changes to immigration policy in exchange for letting young people brought illegally to the U.S. as children stay in the country.
- Republican lawmakers are expressing unease over the limited details about middle-class relief in the tax framework their leaders released last month.
- Turkey’s markets took a hammering Monday amid a deepening standoff between the U.S. and President Recep Tayyip Erdogan’s government. The lira, stocks and bonds tumbled after the two NATO members suspended visa services for each other’s citizens.
- Yuan jumped most in a month as China’s foreign-exchange reserves posted an eighth straight monthly increase in September with the pressure of cash outflows easing amid capital controls
- German industry rebounded from a summer lull with its best month in six years, keeping Europe’s largest economy on a solid footing in the second half of the year as output increased 2.6% in August from July, compared to an estimated gain of 0.9%
- Oil producers are succeeding in re-balancing an oversupplied market, though they may need to take further steps to sustain the recovery into 2018, OPEC Secretary-General Mohammad Barkindo said Sunday, without elaborating on any such measures
- After a weekend of mass demonstrations in favor of Spanish unity, Raul Romeva, foreign affairs chief for the separatist government in Barcelona, insisted that the door was open for talks if Prime Minister Mariano Rajoy was willing to grasp the opportunity
- Seafarers Fret Over New Assault on Jones Act in Wake of Storms
- Big Pharma Gets a Boost as China Speeds Up New Drug Approvals
- Facebook to Require Certain Ads to be Manually Reviewed: Axios
- Russia May Restrict U.S. Media to Retaliate for RT: Izvestia
- Equinix Buys Istanbul Data Center From Zenium for $93m Cash
Asia equity markets traded mostly higher as China reopened for the 1st time in over a week, although market closures in Japan, South Korea and Taiwan kept trade relatively quiet. ASX 200 (+0.5%) was lifted by broad strength aside from energy names which underperformed after oil prices fell 3% on Friday and Shanghai Comp. (+0.8%) surged on return from holiday as it played catch up and took its first opportunity to react to the PBoC’s targeted RRR reduction. However, some gains were later pared after a 21-month low Caixin Services PMI release, while Hang Seng (-0.5%) lagged as the mainland stole the limelight and with weakness seen in gambling and energy names. Chinese Caixin Services PMI (Sep) 50.6 vs. Exp. 53.1 (Prev. 52.7); 21-month low. Chinese Caixin Composite PMI (Sep) 51.4 (Prev. 52.4). PBoC skipped open market operations for a net daily drain of CNY 180bln, but gauged demand for MLF loans which are expected to be issued on Friday.
Top Asian News
- Noble Group Explains Why Gas Sale Earned Less Than Expected
- New Zealand Coalition Talks Start in Earnest, Deadline Looms
- Yuan Jumps Most in a Month as Foreign-Exchange Reserves Climb
- Foreigners Buy Most Mainland Chinese Shares Since August 2015
- China Bank Rally Fizzles Out in Blow to Eager Hong Kong Traders
Spanish equities firmly in the green, led by the politically sensitive financial sector after demonstrations over the weekend in Barcelona and Madrid supporting pro-unity. Additionally, Caixabank (+3%) have also been permitted to move their HQ away from Catalonia. European equities in general are trading modestly higher, while the DAX yet again hit a fresh record high. Commerzbank shares are higher this morning following reports that the Credit Agricole Chief said the bank would be interested in the German lender if they were up for sale. UK Gilts lagging their core and some non-core EU counterparts, largely on reports that the ONS has miscalculated unit labour costs, which should be considerably higher (2.4% instead of the reported 1.6%), and in theory push the BoE closer towards lifting the Bank rate. Short Sterling futures also acknowledging the increased risk of near term tightening, and perhaps prone to more downside given that November hike probability remains sub-70%. Spanish debt outperforming in contrast amidst some conciliatory noises from Catalonia, with the 10 year Bono yield down around 1.64% from recent 1.80% approx. peaks and spread to German Bunds narrowing to circa 119 bp. Caution still warranted however, with the regional parliament due to convene on Tuesday and potentially ‘declaring Independence’ following the referendum. Staying with the Eurozone periphery, Portuguese bonds are in focus today as the country is high on the EU agenda, and again on Wednesday when supply comes to the table via the first cash auction since S&P upgraded the sovereign last month.
Top European News
- German Industrial Output Jumps Most in 6 Years After Summer Lull
- Catalonia Calls for Talks With Spain Ahead of Critical Week
- Statoil’s Arctic Exploration Comeback Ends With Another Miss
- This Company Says Its Software Can Pick Soccer Stars
In currencies, GBP starting the week on the front foot amid a flurry of reports over the weekend, which has subsequently led to GBP being the early outperformer. Reports over the weekend noted that PM May could look to reassert her authority with a cabinet, which may lead to Foreign Minister Boris Johnson being demoted. Alongside this, reports noted that the ONS understated its latest unit labour cost reading, consequently placing pressure on the BoE to raise rates. Last week’s decline also represents a slight opportunity to buy given expectations for a rate rise next month is at a modest 66%. NZD underperforming this morning, dampened by political uncertainty ahead of this week’s announcement by New Zealand First Party head and kingmaker Winston Peters on which party they will back to form the next government. NZD over 20 pips, which has briefly saw AUD/NZD over 1.10. TRY weakened 6% overnight after a deterioration of diplomatic ties between US and Turkey, in the latest signs of fraying relations between the NATO allies, as both sides suspended non-immigrant visa services to the citizens of the other.
In commodities, there is very little in the way of newsflow in the commodity complex, both oil and precious metal prices are firmer amid the softer greenback. Friday’s CFTC report for Oct 6th showed speculators cut net long gold and silver bets for the 3rd consecutive week BSEE stated on Saturday that 92% of current Gulf of Mexico production was shut in due to Hurricane Nate, but on Sunday reported that there was no damage to offshore oil facilities. OPEC Secretary General Barkindo stated consultations are underway for extension of OPEC cuts past March 30th and that extraordinary steps may be needed in 2018 for stability. (Newswires) Libya’s Sharara oil field output has risen to 250k bpd, according to sources.
US Event Calendar: nothing major scheduled
Central Banks speakers: nothing major scheduled
DB’s Jim Reid concludes the weekend wrap
It’ll likely be a slow start to this week with Columbus Day in the States today (fixed income markets closed, equities open) but it’ll end with a bang with US CPI on Friday. Although if the weekend papers are anything to go by, I wouldn’t get too worried about CPI given that a guy called Dave Meade suggesting that October 15th would mark the start of a 7 year period where the world will eventually end. As of next Sunday he predicts that the world will be hit with a tempest of tsunamis, earthquakes, hurricanes and nuclear war. As an analyst who makes predictions himself I couldn’t help but look back on some of his previous calls. The most startling was that the apocalypse will take place on September 23 of this year. So unless I’ve missed something he hasn’t necessarily always been accurate. Although I’ve noticed that Liverpool haven’t won since September 23rd so maybe this is what the apocalypse feels like. Whilst we’re on the subject I certainly haven’t had a good night’s sleep since and feel shattered so the more I think about it maybe he’s on to something.
Anyway back to US CPI. As is well known now, the data missed expectations for 5 months in a row until last month so with lots of discussion about the Fed’s rate hike profile and new Chair and board composition, this number is about as big as it gets at the moment. PPI the day before will give us a teaser and the Fed minutes on Wednesday will provide some interesting context to the hawkish meeting last month. Outside of the data three US banks kick start Q3 earnings on Thursday/Friday. For a full view of the week ahead and also the key DB Research macro pieces of last week see our new document “Next week…. This week” out on Friday. This is a new document aimed at giving readers a view of the week ahead by around lunchtime UK time on a Friday. We’ve copied the text at the end for the week ahead but in the note we also include a cut out and keep table of major global events. All feedback to me as to whether you do or don’t find it useful as we’re trialling it for now.
Ahead of CPI, it was the average hourly earnings that stole the show within Friday’s payroll report. This was much less impacted by the hurricane and saw the YoY rate rise to 2.9% (2.6% expected) with a 0.2% upward revision to the previous month. 10 year US treasuries spiked from 2.364% to 2.40% in the aftermath but headlines suggesting that North Korea is planning to test missiles capable of hitting the US west coast returned them to 2.36% (+1bp) at the close. Later on, Trump tweeted that “…only one thing will work!” re NK and when asked to clarify his earlier comments on “the calm before the storm”, he said “you’ll find out”.
Back to inflation and it’s very easy to say that there’s no price pressures, but after Friday US annual average hourly earnings are now at their highest since June 2009. A few weeks ago we also showed a graph that suggested US CPI lags growth by around 18 months so it’s possible the soft inflation patch in 2017 reflects weak growth in late 2015/ early 2016. So perhaps the stronger growth since H2 2016 will mean inflation surprises an unprepared market in early 2018. Obviously many people have wrongly called the end of the disinflation trend over the last decade (perhaps longer) and been burnt but we stand by our view in last year’s long-term study that 2016 will mark the multi decade inflection point for inflation and bond yields. From this point on because of demographics, populism and the start of a shift from monetary to fiscal policy we’ve felt the trend is slowly reversing. It won’t be a straight line but for us the start of a trend is already in place.
This morning in Asia, markets are trading broadly higher. Chinese bourses (Shanghai comp +1.24%; CSI +1.85%) are up following the Golden week break, led by the banks (ICBC +2.67%) as a delayed reaction to the reserve ratio cut announced last weekend. The ASX 200 is up 0.60%, but the Hang Seng is down 0.30%, while the Nikkei and Kospi are closed today for holidays. Elsewhere, the September Chinese Caixin composite PMI came in slightly lower than the prior month (51.4 vs. 52.4 previous).
Turning to Spain’s Catalonia, over the weekend there has been more pressure on Catalan authorities to avoid declaring independence. On Saturday, a business delegation (Cercle d’Economia – with board members from CaixaBank and Banco Sabadell) met with Catalan President Puigdemont and “asked him to directly remove the shadow of a declaration by saying that it won’t happen”. Then on Sunday, crowds reportedly numbering 350k marched through Barcelona chanting “I’m Catalan and Spanish”. That said, President Puigdemont said on Sunday that “what’s happening in Catalonia is real, whether they like it or not…millions of people have voted”. Notably, the Catalan regionalgovernment was supposed to meet today (9th October) to potentially proclaim independence, a meeting which the Spanish Constitutional Court has since suspended. So we shall find out more in the coming days on how this evolves and whether they defy the courts. Finally, for those who may have missed, please refer to DB’s Marc de-Muizon’s “Catalan independence Q&A” note for background.
Over to Brexit, the FT noted that according to European diplomats, Germany and France have demanded more clarity from UK on the Brexit divorce bill before negotiations proceed to talks on a post Brexit transition deal. The fifth round of talks will resume today, so we shall find out more then. Elsewhere, UK’s PM May is apparently busy pondering a cabinet reshuffle, when asked about Foreign Secretary Boris Johnson, she said “I’m the PM, and part of my job is to make sure I always have the best people in my Cabinet.”
Quickly recapping market performance on Friday. US equities softened, with the S&P 500 (-0.11%) and Dow (-0.01%) down marginally while the Nasdaq rose 0.07%. The S&P didn’t therefore add to its run of 8 consecutive days of gains with most sectors modestly in the red (Telco -2.0%; consumer staples -0.95%), but partly offset by stronger tech stocks (+0.29%). European markets also retreated modestly, with the Stoxx 600 (-0.40%) and DAX (-0.09%) both down, but the FTSE rose 0.20%. Elsewhere, the VIX rose 0.46 to 9.65, but remains below 10 for the 8th consecutive day.
Turning to currencies, the US dollar index dipped 0.17%, while Euro advanced 0.16% but Sterling fell 0.40%. This morning, Lira/USD fell 2.96% back to its recent lows in April. Over the weekend, the US and then Turkey have each suspended Visa services for citizens seeking to visit the other country. The move follows the arrest of a Turkish national who works at the US consulate in Istanbul for alleged involvement in the July 2016 coup attempt against Erdogan. In commodities, WTI oil fell 2.95% to $49.29/bbl on Friday, partly in anticipation to potential impacts from hurricane Nate which hit US Gulf Coast over the weekend. However, early reports suggest damages were less severe than expected, with Oil now trading c0.3% higher this morning. Elsewhere, precious metals were modestly higher on Friday (Gold +0.67%; Silver +1.45%) following higher geopolitical tensions, while other LME base metals (Copper -0.50%; Aluminium -0.85%; Zinc -1.61%) fell slightly.
Away from markets and onto US central bankers’ commentaries where the messaging on rates was a little mixed. On the wait and see side, the Fed’s Kaplan said “I’m open-minded about December (rate hike), but I’m not there yet.” Then the Fed’s Bostic (who votes in 2018), said “If we continue to see strength and that robust energy in the economy, I will be comfortable with a conversation about increasing rates. But we have to wait and see about those things.” Finally, the Fed’s Bullard reconfirmed his more dovish take, noting that “I’m getting more concerned that we might make a policy mistake.”
Conversely, the NY Fed Dudley noted that “even though inflation is currently below our longer-run objective, I judge that it is still appropriate to continue to remove monetary policy accommodation gradually”. Then the Fed’s Rosengren followed up with “prudent risk management would argue for the continued gradual removal of monetary policy accommodation…” and that inflation “is still not at the level that I would expect it to be, but we’re definitely seeing that tight labour markets are causing wages and salaries to gradually go up as well”. Further, he noted that inflation “will be much closer to 2%” a few months into 2018. The odds of a December rate hike is now 78.5% (up c5ppt from Thursday – as per Bloomberg).
Staying in the US, the rhetoric between Trump and Senator Bob Corker intensified over the weekend after Trump tweeted that Corker “didn’t have the guts to run (for a third term), (he) wanted to be Secretary of State, I said No Thanks”. In response, Corker wrote back “it’s a shame the White House has become an adult day care centre”. It will be interesting to see how the normally budget deficit focused Corker will vote on the upcoming tax reforms now that he won’t be running a third term.
Elsewhere, as per Bloomberg, Germany’s Merkel may be one step closer in forming the Jamaica coalition government (with CDU and CSU) after agreeing to cap the annual limit on migration to 200k p.a.
We wrap up with other data releases from Friday. In the US, the September nonfarm payrolls fell for the first time since 2010 and was materially below market expectations at -33k (vs. 80k expected), mainly reflecting the disruptions from Hurricane Harvey and Irma and the difficulties in estimating this impact (consensus ranged from -45k to +260k). In the details, the leisure and hospitality sector posted a 111k fall in jobs, likely the most impacted sector from the storms. Elsewhere, the employment data was solid, with the unemployment rate at a 16 year low of 4.2% yoy (vs. 4.4% expected) and stronger than expected average hourly earnings at 2.9% yoy (vs. 2.6%, coupled with a 0.2% upward revision to previous month). Finally, the final reading of August wholesale inventories was revised slightly lower to 0.9% mom (vs. 1% expected), while consumer credit grew $13.1bln (vs. $15.5bln expected).
In Europe, the macro data was broadly higher than expected. Germany’s August factory orders beat market expectations at 3.6% mom (vs. 0.7% expected) and 7.8% yoy (vs. 4.7%). The increase in August was broad-based, with domestic orders up 2.7% mom and foreign orders up 4.3% mom. In France, the August trade balance deficit was narrower than expected at $-4.5bln (vs. -$5.4bln). Over in Spain, the industrial output for August was stronger than expected at 1.8% yoy (vs. 1%). In the UK, the Halifax house price index also beat expectations at 0.8% mom (vs. 0%) and 4.0% yoy (vs. 3.6% expected). Finally, Italian retail sales were lower than expected at -0.3% mom (vs. 0.2%) and -0.5% yoy (vs. 0.8% expected).
3. ASIAN AFFAIRS
i)Late SUNDAY night/MONDAY morning: Shanghai closed up 25.43 points or .76% /Hang Sang CLOSED down 131.45 pts or .46% / The Nikkei closed /Australia’s all ordinaires CLOSED UP 0.48%/Chinese yuan (ONSHORE) closed up at 6.6240/Oil DOWN to 49,46 dollars per barrel for WTI and 55.54 for Brent. Stocks in Europe OPENED GREEN EXCEPT FTSE . ONSHORE YUAN CLOSED UP AGAINST THE DOLLAR AT 6.6240. OFFSHORE YUAN CLOSED STRONGER TO THE ONSHORE YUAN AT 6.6197 AND BOTH YUANS ARE STRONGER AGAINST THE DOLLAR. CHINA IS VERY HAPPY TODAY.
3a)THAILAND/SOUTH KOREA/NORTH KOREA
SUNDAY/TRUMPS HINTS AT WAR WITH NORTH KOREA
(COURTESY ZERO HEDGE)
Trump Hints At War With North Korea: “Sorry, But Only One Thing Will Work”
When we commented on this morning’s Trump tweetstorm, in which he covered everything from the fake (and not so fake) media, to RNC donors, to reaching out to Democrats on Obamacare repeal, to “late night” comedians and their “one-sided coverage” of Trump, we said that Trump has yet to make a comment on the most cryptic topic of the last week, his repeated suggestions that the current situation is a “calm before the storm.”
Moments ago, he may have done just that, when in his latest pair of tweets, Trump ominously suggested that following 25 years of failed diplomacy with North Korea, there is “only one thing that will work.”
“Presidents and their administrations have been talking to North Korea for 25 years, agreements made and massive amounts of money paid hasn’t worked, agreements violated before the ink was dry, makings fools of U.S. negotiators. Sorry, but only one thing will work!”
The tweets prompted profoundly existential questions such as this one:
While Trump did not specify what that “one thing” is (at least not yet), it stands to reason that the president is referring to some sort of military intervention, i.e. war, which of course would most likely prompt a retaliation by North Korea, one which according to the 38 North website could result in over 2 million fatalities and nearly 8 million injuries.
For those who missed it, here again is “What Would A North Korean Nuclear Attack Look Like?”
Reports that North Korea is planning to test an ICBM capable of reaching the US west coast opened a trapdoor under stocks this morning, suggesting that investors are taking president’s ominous warnings about “the calm before the storm” seriously.
But in the unlikely event that you’re not sufficiently terrified already, researchers at Johns Hopkins have sought to quantify the horrifying consequences of a North Korean nuclear strike in a new research reportpublished by the university’s 38th Parallel project.
The US carrying out any military option raises a significant risk of military escalation by the North, including the use of nuclear weapons against South Korea and Japan. According to the calculations presented below, if the “unthinkable” happened, nuclear detonations over Seoul and Tokyo with North Korea’s current estimated weapon yields could result in as many as 2.1 million fatalities and 7.7 million injuries.
In the report, author Michael Zagurek calculates that an all-out nuclear strike launched by North Korea against Tokyo or Seoul could kill as many as 2.1 million people and injure another 8 million. Combined, the number of dead and injured would equal 10% of the South Korean population – affirming that a nuclear strike by the North would be – by a considerable margin – the single deadliest attack in human history. By comparison, the US killed a combined 120,000 Japanese civilians when dropped nuclear bombs over Hiroshima and Nagasaki.
To hear Zagurek tell it, investors and ordinary citizens alike are underestimating the likelihood of a nuclear conflict. As Zagurek explains, tipping the world into a potentially civilization conflict could result from an accidental miscalculation by either side. In the most likely scenario, an accidental miscalculation during a missile or nuclear test in the Pacific impacts US military assets in Guam, triggering an overwhelming military response by the US.
With the North Korean regime fearing the imminent destruction of its nuclear arsenal, as the logic goes, the Kim regime would fire off all 25 of its nukes – at least, that was the number upon which Zagurek based his calculations – at either Japan or Seoul.
But ruling out the possibility of an accident like that described above, how much longer can North Korea and the US trade threats before a military conflict becomes inevitable?
If the status quo is unacceptable and diplomacy has been ineffective, then at what point do military responses become probable? The tension between North Korea, its neighbors and the United States are now extremely high, antagonized further by bombastic exchanges between the US and DPRK during the United Nations General Assembly meetings and continued tweets from Trump. History is replete with “rational actors” grossly miscalculating, especially in crisis situations. It is possible that another North Korean nuclear test—especially if detonated in air or under water—an ICBM test, or a missile test that has the payload impact area too close to US bases in Guam for example, might see Washington react with force. This could include such options as attempting to shoot down the test missiles or possibly attacking North Korea’s missile testing, nuclear related sites, missile deployment areas or the Kim Regime itself. The North Korean leadership might perceive such an attack as an effort to remove the Kim family from power and, as a result, could retaliate with nuclear weapons as a last gasp reaction before annihilation. Therefore, it is worth reviewing the consequences if the “unthinkable” happened.
The following graphs show the results of Zagurek’s calculations for different-sized nuclear payloads:
Here’s a map of Seoul showing four possible blast areas from a 250 kt airbust detonation – 12+ psi, 5-12 psi, 2-5 psi, 1-2 psi…
And the four possible blast areas for Tokyo…
With Sarah Huckabee Sanders telling reporters that President Donald Trump’s ominous hints about a coming “storm” should be taken seriously, it’s possible that a breaking point could be approaching…
…then again, Trump is fond of bluffing. Meanwhile, Steve Bannon’s surprising admission that there is “no attractive military solutions” for dealing with North Korea that wouldn’t result in the deaths of hundreds of thousands of people in Seoul within 30 minutes due to conventional weapons fire continue to haunt the administration
b) REPORT ON JAPAN
Rajoy is now ready to trigger the “nuclear option” as hundred of thousands of citizens line the streets in support of Madrid against the Catalans
Spain’s Rajoy Ready To Trigger “Nuclear Option” As Hundreds Of Thousands Protest Against Independence In Barcelona
One week after the historic Catalan Independence Referendum vote reopened Europe’s populist Pandora Box of nationalist secession movements, tens of thousands of people took to the streets of Catalonia’s capital Barcelona on Sunday to express their opposition to any declaration of independence from Spain, which according to Reuters showed “how divided the region is on the issue.”
Last Sunday, more than 90% of the 2.3 million people who voted backed secession, according to Catalan officials. But that turnout represented only 43 percent of the region’s 5.3 million eligible voters as many opponents of independence stayed away. Now its the others’ turn to be heard.
The protesters rallied in central Barcelona, waving Spanish and Catalan flags and banners saying “Catalonia is Spain” and “Together we are stronger”, as politicians on both sides hardened their positions in the country’s worst political crisis for decades.
As is typically the case, estimates of the crowd size varied enormously, with the range given as between 350,000 up to a million.
According to Reuters, the demonstration in Barcelona was organized by the anti-independence group Catalan Civil Society under the slogan “Let’s recover our senses” to mobilize what it believes is a “silent majority” of citizens in Catalonia who oppose independence.
“The people who have come to demonstrate don’t feel Catalan so much as Spanish,” said 40-year-old engineer Raul Briones, wearing a Spanish national soccer team shirt. “We like how things have been up until now and want to go on like this.”
It was a second day of protests after tens of thousands of people gathered in 50 cities across Spain on Saturday, some defending Spain’s national unity and others dressed in white and calling for talks to defuse the crisis.
Meanwhile, in an interview with El Pais newspaper, Spanish Prime Minister Mariano Rajoy said he will consider taking the so-called “nuclear option“ – the dramatic measure of suspending Catalonia’s autonomous status – as Catalan leaders escalate threats to declare independence from the country, which could culminate with a parliamentary announcement as soon as Monday.
Asked if he was ready to trigger article 155, Rajoy told El Pais newspaper: “ I am not ruling out anything that the law says. What I have to do is do things at the right time, which is the most important thing right now. The ideal situation would be to not have to take drastic solutions, but for that to happen there would have to be rectifications.”
Until this weekend, Rajoy has remained vague on whether he would use article 155 of the constitution which enables him to sack the regional government and call a local election.
Reverting back to a hardline stance, the conservative prime minister ruled out using mediators to resolve the crisis – something Puigdemont has said he is open to – and said the issue would not force a snap national election. The Prime Minister also added the government would “prevent any declaration of independence from materializing in anything”. “Spain will continue being Spain,” he said.
Rajoy reiterated that until the regional government abandons its intention to proclaim independence, no talks can take place.
“As long as it does not go back to legality, I certainly will not negotiate,” Rajoy said, adding that while the Spanish government appreciates proposals to mediate between the national and Catalan governments, it will have to reject them. “I would like to say one thing about mediation: we do not need mediators. What we need is that whoever is breaking the law and whoever has put themselves above the law rectifies their position.”
Rajoy’s position is understandable: losing Catalonia – Spain’s wealthiest region – is unthinkable for the Spanish government. It would deprive Spain of about 16% of its people, a fifth of its economic output and more than a quarter of its exports. Catalonia is also the top destination for foreign tourists, attracting about a quarter of Spain’s total.
“We are going to stop independence from happening. On that, I can tell you with absolute frankness, that it will not happen. It is evident that we will take whatever decision that we are permitted to by law, in view of how things are unfolding,” Rajoy told El Pais. He also called on “moderate” Catalans to “come back” and move away from “extremists, radicals” as well as the Popular Unity Candidacy party (CUP) spearheading the movement. It is the first time he has reached out to the Catalan people since the referendum.
Rajoy also slammed the independence bid as part of a current wave of populism sweeping across Europe, pointing to the rise of far-right parties in France, Germany and the UK. “Another form of populism, without doubt, is this nationalist populism that we are experiencing, which violates the fundamental principles of the European Union, goes against the rule of law, against law enforcement, and so it is a problem also from Europe.
“And that’s why Europeans have stuck up for us and all the governments have supported the Spanish constitution and the upholding of the law.”
Actually, the reason why European have stuck with Spain, is because if Catalonia achieves independence it will unleash a waterfall sequence of copycat referendums, where other independence movements will pursue their own secession dreams.
It remains unclear just how the current Spain crisis is resolved: the past week in Catalonia has been nothing short of chaotic. Madrid responded to the vote with force, sending thousands of police to the region to shut down the vote. Catalan leader Carles Puigdemont has threatened to declare independence early next week, and hundreds of thousands of Catalan protesters marched in favor of splitting from Spain this week.
Below is a live feed from the Barcelona anti-independence protest:
Now Rajoy issued a veiled death threat against the Catalan leader if they declare independence
Spanish Government Issues Veiled Death Threat To Catalan Leader
In a quite shocking escalation of the rhetoric in Spain, a spokesman for the ruling People’s Party just issued a (barely) veiled death threat to the President of Catalonia.
“Let’s hope that nothing is declared tomorrow because perhaps the person who makes the decalartion will end up like the person who made the declaration 83 years ago.”
1. PP spokesman says Puigdemont might end up like Lluis Companys (in 1934) if he declares independence tomorrow…pic.twitter.com/II2HGUtUdH
3. Some people in Spain (here a senior Podemos figure) are interpreting it, though, as Casado suggesting Puigdemont would be shot. https://twitter.com/pnique/status/917367398344294400 …
1. PP spokesman says Puigdemont might end up like Lluis Companys (in 1934) if he declares independence tomorrow…pic.twitter.com/II2HGUtUdH
For those whose Spanish history is a little shaky, here’s a reminder:
Lluís Companys i Jover (21 June 1882 – 15 October 1940) was the President of Catalonia (Spain), from 1934 and during the Spanish Civil War.
He was a lawyer and leader of the Republican Left of Catalonia (ERC) political party. Exiled after the war, he was captured and handed over by the Nazi secret police, the Gestapo, to the Spanish State of Francisco Franco, who had him executed by firing squad in 1940.
Companys is the only incumbent democratically elected president in European history to have been executed.
Seems about as clear as it gets from Rajoy’s PP to Puigdemont – Call for Independence and Die!
That does not seem to be the reconciliatory tone the market has been hoping for.
And as TheSpainReport.com reports, Catalan separatists and others in Spain immediately reacted with fury to Mr. Casado’s ambiguous comments.
Republican Catalan Left (Esquerra, ERC) MP Joan Tardà tweeted: “Yes, Pablo Casado, we know how our President Companys ended up, shot by the army. Does it make you happy to remind our defenceless people of it?“.
Podemos leader Pablo Iglesias tweeted: “Casado says Puigdemont might end up like Companys, who was tortured and shot. Either he is ignorant or irresponsibly provocative“.
Iñigo Errejón (Podemos) called on Mr. Casado to “rectify immediately or resign. They are arsonists“.
Catalan President To Declare “Gradual Independence” On Tuesday
In the latest twist ahead of tomorrow’s much anticipated “next step” announcement to be made by the Catalan secessionists, which is still to be formalized, Spain’s EFE newswire reports that Catalonian President Carles Puigdemont has reportedly drafted a declaration of “gradual independence”, that will be “gradually effective” and which will plan to start a constituent process.
The declaration, which will cap what El Periodico dubbed “the most critical moment for Catalonia” will allegedly insist on Catalonia’s wish to negotiate with central government and the need for mediation, although in an indication that Puigdemont may be back tracking from his hard-line “binary” stance, EFE adds that the Declaration won’t lead to parliamentary vote, and as such may be non-binding.
The news is the latest development in a fast-paced day, in which as we reported earlier this morning, the ruling People’s Party issued a thinly veiled death threat to the President of Catalonia. “Let’s hope that nothing is declared tomorrow because perhaps the person who makes the decalartion will end up like the person who made the declaration 83 years ago.”
Additionally, perhaps as a Plan B, Catalan secessionists opened a second-front in their campaign against the government in Madrid, urging the opposition Socialists to forge a coalition to oust Spanish Prime Minister Mariano Rajoy, Bloomberg reported and added that while the Socialists have so far refused to sign up to the plan, the Catalan groups pushing it have already persuaded the populist Podemos party to back and accept a Socialist-only government.
Should the Socialists get on board, the alliance would have 172 seats in the 350-strong chamber and would look to add the Basque Nationalists to form a majority. Rajoy heads a minority administration with 134 deputies and can be toppled with a no-confidence motion.
Meanwhile, as reported overnight, Catalan secessionist leader Carles Puigdemont faced increased pressure on Monday to abandon plans to declare independence from Spain, with France and Germany expressing support for the country’s unity. The Madrid government, grappling with Spain’s biggest political crisis since an attempted military coup in 1981, said it would respond immediately to any such unilateral declaration.
A week after a vote on independence which the government did its utmost to thwart, the tension also took its toll on the business climate of Spain’s wealthiest region. Over the weekend and on Monday, another three Catalonia-based companies joined a business exodus from the region that has gathered steam since the Oct. 1 referendum.
Property group Inmobiliaria Colonial and infrastructure firm Abertis both decided to relocate their head offices to Madrid and telecoms firm Cellnex said it would do the same for as long as political uncertainty in Catalonia continued.
Publishing house Grupo Planeta said it would move its registered office from Barcelona to Madrid if the Catalan parliament unilaterally declared independence.
Spain’s finance minister said it was the Catalan government’s fault the companies were leaving.
Regional leader Carles Puigdemont is due to address the regional parliament on Tuesday afternoon and Madrid is worried it will vote for a unilateral declaration of independence.
Should Puigdemont declare unconditional independence, it is likely that Spain’s PM Rajoy will trigger Article 155, the so-called “nuclear option” to seize control over the semi-autonomous region, remove Catalonia’s government and call for new regional elections, likely leading to even more social conflict.
Opposition Socialist leader Pedro Sanchez said he would “support the response of the rule of law in the face of any attempt to break social harmony”, but stopped short of explicitly saying his party would back dissolving the regional parliament.
Barcelona Mayor Ada Colau advised Puigdemont against proclaiming independence on the basis of the referendum results and she urged Rajoy to rule out suspending Catalonia’s autonomy.
(courtesy zero hedge)
Dutch Central Bank Warns Of Market Calm Before The Storm:
With one foot out of the door of Germany’s finance ministry, the former head of the German economy, Wolfgang Schäuble, 75, delivered a fire and brimstone warning over the weekend, telling the FT in an interview that there was a danger of “new bubbles” forming due to the trillions of dollars that central banks have pumped into markets. Schäuble also warned of risks to stability in the eurozone, particularly those posed by bank balance sheets burdened by the post-crisis legacy of non-performing loans, something we warned about since 2012, and an issue which remains largely unresolved.
Taking a broad swipe at the current financial regime – which he helped design – Schauble warned that the world was in danger of “encouraging new bubbles to form”.
“Economists all over the world are concerned about the increased risks arising from the accumulation of more and more liquidity and the growth of public and private debt. I myself am concerned about this, too,” he said echoing the concern voiced just one day earlier by IMF head Christine Lagarde, who said the world was enjoying its best growth spurt since the start of the decade, but warned of “threats on the horizon” from “high levels of debt in many countries to rapid credit expansion in China, to excessive risk-taking in financial markets”.
And while Schauble’s dramatic warning was not surprising – prominent economists have a habit of telling the truth once their tenure is over, and once they start selling books warning about all the consequences of policies they helped adopt – one day later a more surprising, and just as urgent warning was delivered by the Dutch central bank, DNB, which on Monday said that ultra-loose monetary policy in the euro zone has run its course, and excessive risks seem to be building up in financial markets making the financial sector vulnerable to a sudden correction.
“It increasingly feels uncomfortable to have low volatility in the markets on the one hand while on the other hand there are risks in the global economy,” said Klaas Knot, the president of the Dutch Central Bank, at the presentation of DNB’s biannual financial stability report according to Bloomberg.
Putting the current unstable equilibrium in its temporal context, Knot said that the current “picture resembles that of the period before the financial crisis.”
Taking a page out of Mark Faber playbook, the DNB labelled the threat of a sudden downturn in markets, brought on by a return of risk aversion, as an “acute” risk for the international financial sector, capable of starting a new financial crisis in weaker euro countries and beyond.
And, according to the Dutch central bank, only one thing could prevent a further build up of risks, eventually resulting in a crash: Knot reiterated a call to fellow board members at the European Central Bank to start phasing out monetary stimulus measures. The “time has come,” he said. “Economic growth has been above potential for months and the threat of deflation is gone.”
“The program has achieved what realistically could be expected from it,” Knot said about QE, adding that it supported growth, and reduced investment costs.
Of course, Knot is merely the latest to fall for the paradox of reflexivity, where he sees the product of central bank intervention as the object that was meant to be cured by said intervention – a process which has pushed yields on European junk bonds below the yield on the US 10Y Treasury, among other market distortions. In reality, if one were to reduce or eliminate the tens of trillions in liquidity injections by central banks, the world would find itself right back in the eye of a financial crisis hurricane, prompting central banks to unleash even more “unorthodox” measures, culminating eventually with central banks purchasing equities, as JPM’s Marko Kolanovic previewed last week.
Later this month, the ECB – rapidly running out of German bunds to monetize – is expected to decide on the fate of the central bank’s bond-buying programme, potentially announcing another taper of its current QE which purchases €60 billion in sovereign bonds per month.
Still, even Knot admits that whatever the ECB’s decision, any slow down or restriction in ECB intervention will have to be gradual, confirming that the ECB remains trapped by the market and any sharp, adverse reaction will promptly force the ECB to resume nationalizing the European capital markets.
“Interest rates will stay very low for a very long time, even if we decide to phase out our bond buying program at our next meeting. Nobody at the ECB is talking about raising interest rates yet.”
And, soon enough – once markets get reacquainted with gravity – nobody at the ECB will be talking about any normalization whatsoever.
So much for Germany’s open door policy on migrants: there will be net limits on refugees
Germany’s “Open Doors” Are Closing: Merkel Seeks New Limits On Refugees
After German Chancellor Angela Merkel admitted late last year that she had “lost control” of Germany’s refugee crisis after adopting an “open door” policy that fueled an unprecedented spike in crime, her weakened ruling coalition announced Monday that it would seek to impose new restrictions on the number of refugees admitted to the country.
Germany famously admitted nearly one million refugees from Syria, Libya, Afghanistan and other war zones in 2015, a five-fold increase over the previous year.
Migrants repaid Germany for its openness by committing 142,500 crimes during the first six months of 2016, including several high-profile sexual assaults.
And now it seems Merkel has hit a wall and folded…
Merkel announced the policy change on Monday during a joint news conference with Horst Seehofer, leader of the Bavarian Christian Social Union – the more conservative partner to Merkel’s Christian Democratic Union – following discussions in which the two parties sought compromises on a number of issues following poor results in the federal elections two weeks ago, according to CNN.
“We will continue our efforts to reduce, sustainably and permanently, the number of people who flee to Germany and Europe, so that a situation like that of 2015 will not and cannot be repeated,” reads a joint CSU/CDU position paper published Monday. “We guarantee that.”
Last month, the Trump administration took steps to cap the number of refugees admitted into the US at 45,000 annually – a dramatic reduction. However, Merkel’s conservative allies pledged that nobody would be turned back at the German border, according to WSJ, while adding that the German Parliament could suspend the cap in the event of an international crisis.
The bloc agreed to limit to 200,000 annually the number of people allowed to enter Germany for humanitarian reasons. The conservatives pledged at the same time that people wouldn’t be turned back at the German border, expressing their support for the right to seek asylum in Germany and for the Geneva refugee convention, which states that countries should give protection to those who flee war and expulsion, and those who are politically persecuted.
“We continue with our efforts to permanently reduce the number of people fleeing to Germany and Europe in order to prevent a repeat of the situation such as in 2015” when Germany took in 890,000 asylum seekers, Ms. Merkel said Monday, presenting the agreement to reporters.
She said the parties agreed on measures that will ensure that the total number of admissions won’t exceed 200,000 people a year. These include dealing with newcomers seeking asylum in Germany in centralized centers where their claims will be quickly decided. Rejected asylum seekers will then be rapidly deported back to their home countries. With this move, the parties hope to speed up asylum proceedings and increase the number of deportations.
The limit of allowing up to 200,000 migrants entering the country every year could be amended by the German Parliament if an international crisis warrants it, the compromise said.
The stunning capitulation follows an embarrassing showing by Merkel’s Christian Democrats during September’s federal elections. While the party again received the largest share of the vote, its support declined by more than 8% from the prior election in Merkel’s worst-ever performance. Meanwhile, the right-wing Alternative for Germany (AfD) party secured an unprecedented 13% of the vote, enough for it to earn representative in parliament – the first time a far-right party had been voted into Germany’s parliament since World War II.
To be sure, WSJ says the policy change is purely symbolic, adding that it would likely be scuttled by the time Merkel’s party successfully forms a governing coalition. Instead of representing meaningful change, the announcement is largely a sop to more moderate-leaning conservatives.
The deal appears to be, however, a largely symbolic concession to Ms. Merkel’s Bavaria allies that may change little in practice, partly because the right to asylum is enshrined in Germany’s constitution.
Such an upper limit will also likely be hard to push through in talks to forge a nationally yet untested coalition government with both potential partners, the pro-business Free Democrats and the Greens. Ms. Merkel on Saturday said she would seek a coalition with those parties and would let an extraordinary party convention vote on any coalition deal.
Indeed, Merkel’s Bavarian allies have been calling for an annual limit of 200,000 on refugees since Germany opened its borders in the fall of 2015. In passing the rule, Merkel is acknowledging that her center right party has moved too far to the center, and must now sharpen its conservative credentials.
Ultimately, whether the policy survives the complicated process of coalition building remains to be seen. But if nothing else, Merkel’s reluctant reversal validates countries like Poland and Hungary, which were threatened with EU fines over their steadfast refusals to take in refugees.
5. RUSSIA AND MIDDLE EASTERN AFFAIRS
Iran threatens the USA if new sanctions are passed
(courtesy zero hedge)
Iran Threatens America: If New Sanctions Pass, US Military “Would Be At Risk”
In the coming days, president Trump is expected to announce that he will decertify the Iran Nuclear Deal, a step that potentially could cause the historic Obama-era accord to unravel. Under the 2015 deal, Iran agreed to limit its disputed nuclear program in return for the easing of economic sanctions. Realizing the dire threat that such a move presents for its economy – not to mention Iranian oil exports – Iran has escalated the rhetoric, and overnight it warned the United States that U.S. regional military bases “would be at risk” if further sanctions were passed or if the US designated its Revolutionary Guards (IRGC) as a terrorist group.
On Friday the Financial Times reported that Donald Trump is expected to designate the Islamic Revolutionary Guard Corps (IRGC) as a terrorist group, as part of a new hardline strategy against the Islamic republic.
Mr Trump is expected to announce new measures against Iran, including the prospect of additional targeted sanctions, the designation of the Revolutionary Guard Corps as a terrorist organisation and the adoption of a tougher stance on Iranian proxies in Syria, Iraq and Yemen, according to a person briefed on the matter.
“It’s an integrated Iran strategy focused on neutralising and rolling back Iran’s malign activities regionally and globally,” the person said.
Iran was not happy: “The Americans should know that the Trump government’s stupid behavior with the nuclear deal will be used by the Islamic Republic as an opportunity to move ahead with its missile, regional and conventional defense program,” Guards’ commander Mohammad Ali Jafari said, quoted by Reuters. He then explicitly threatened US presence in the region, warning that “if America’s new law for sanctions is passed, this country will have to move their regional bases outside the 2,000 km range of Iran’s missiles.”
Jafari also said that additional sanctions would end the chances for future dialogue with the United States, and issued a stark warning to American troops.
“If the news is correct about the stupidity of the American government in considering the Revolutionary Guards a terrorist group, then the Revolutionary Guards will consider the American army to be like Islamic State all around the world particularly in the Middle East,” Jafari said according to a IRGC statement.
Iran’s Revolutionary Guards is the nations’ most powerful security force. The Quds Force – the IRGC’s foreign espionage and paramilitary wing – and individuals and entities associated with the IRGC are on the US list of foreign terrorist organizations, but the organization as a whole is not, at least not yet.
Members of the IRGC march during a military parade in Tehran September 22, 2007.
IRGC commanders have framed their military involvement in Iraq and Syria, where they are fighting to support the government of President Bashar al-Assad, as a fight against Islamic State. For the duration of the campaign against the Islamic State, Iran has seen the Sunni Muslim militants of ISIS as an existential threat to the mostly Shi’ite Islamic Republic. Dozens of members of the Guards, including senior commanders, have been killed in Syria and Iraq.
As a reminder, on June 7, Islamic State claimed an attack on Tehran’s parliament and the mausoleum of Ayatollah Ruhollah Khomeini, killing 18 people in one of the nation’s highest profile terrorist attacks in recent years. The Guards fired missiles at Islamic State bases in Syria on June 18 in response.
Last Thursday, Trump again accused Tehran of violating the “spirit” of the landmark nuclear agreement, the Joint Comprehensive Plan of Action (JCPOA), limiting Iran’s nuclear program for fifteen years in exchange for easing pre-existing sanctions. He also included the Islamic Republic in a list of “challenges we should’ve taken care of a long time ago,” which features North Korea, Afghanistan, and IS.
Trump has until October 15 to recertify the deal. If he chooses not to – which now appears the most likely outcome – then it will go to Congress, which will have 60 days to decide whether to re-impose sanctions on Tehran, effectively putting an end to the agreement. Trump has called the agreement the “worst deal ever negotiated,” and pledged to “dismantle” it.
Iran has repeatedly warned against violating and pulling out of the deal, as it would be harmful primarily to Washington’s own interests and jeopardize the security of the whole region. At a ceremony at Tehran University marking the start of the academic year, Iran president Rouhani said that “in the nuclear negotiations and agreement we reached issues and benefits that are not reversible. No one can turn that back, not Mr. Trump or anyone else.”
Rouhani also said on Saturday that if the United States violated the deal then it would hurt its own reputation in the international community.
“If America carries out any violations today, the whole world will condemn America. They will not condemn Iran,” Rouhani said, according to state media. “Then they will say why did you trust America and sign an agreement with them.”
“Even if 10 other Trumps are created in the world, these are not reversible.”
The EU has also voiced concerns over removing the nuclear agreement, which “serves the interests of all parties,” according to EU foreign policy chief Federica Mogherini. She also stressed that the achievement in striking the long-negotiated agreement belongs to the international community, not just the US.
Meanwhile, on Sunday the IRGC navy was carrying out a military exercise on Sunday in the Gulf, an area of tension with the U.S. navy in recent months. More than 110 vessels were involved in the exercise, including some that have rocket and missile capabilities, Reuters quoted a Guards commander as saying.
the uSA suspends all non immigrant visa services due to the arrest of the USA embassy employee in Istanbul
US Suspends All Non-Immigrant Visa Services In Turkey
On Friday, we reported that in a move that looks suspiciously like retaliation, Turkish police on Wednesday arrested a local employee of the US embassy in Istanbul and charged him with espionage and trying to overthrow the government. The arrest stemmed from the man’s alleged support for Erdogan’s scapegoat for “fill-in-the-blank“, US-based Cleric Fettulah Gulen, who was blamed for 2016’s fake coup attempt and pretty much everything else that’s wrong in Turkey.
Predictably, the US government slammed the crackdown, with embassy officials telling the WSJ that “these allegations are wholly without merit” adding that “baseless, anonymous allegations against our employees undermine and devalue this longstanding partnership.”
And, in a move that suspiciously looks like retaliation to Turkey’s earlier retaliation, on Sunday afternoon the U.S. Embassy in Turkey said in statement on its official twitter account that “recent events have forced the United States Government to reassess the commitment of the Government of Turkey to the security of U.S. Mission facilities and personnel” and as a result “in order to minimize the number of visitors to our Embassy and Consulates while this assessment proceeds, effective immediately we have suspended all non-immigrant visa services at all U.S. diplomatic facilities in Turkey. ”
Until this latest, and most severe deterioration in relations, the American embassy had repeatedly railed against unsubstantiated claims made against Washington in the pro-Erdogan press, including of a US hand in the failed coup which the United States has always denied.
Just like in the Kremlin, Turkish officials had expressed hope of a new page in Ankara-Washington relations under US President Donald Trump. But ties strained after members of Erdogan’s security detail were indicted by US authorities after beating up protesters during an official visit by Erdogan earlier this year. Meanwhile American pastor Andrew Brunson, who ran a church in the western city of Izmir, has been held by Turkish authorities since October 2016 on charges of being a member of Gulen’s group. Erdogan suggested last month that Turkey could release him in exchange for Gulen but Washington showed little interest in the proposal.
The US embassy said that the United States will “continue to engage” with Ankara to ensure its employees and US citizens are accorded “due legal process
The Turkish lira crashes 4% following the visa suspension drama:
Turkish Lira Crashes 4%, Biggest Drop Since “Failed Coup” Following Visa Suspension Drama
With tensions between Turkey and the US escalating dramatically and unexpectedly in the past few days, when first Turkish police on Wednesday arrested a local employee of the US embassy in Istanbul and charged him with espionage and an attempt to overthrow the government, which was following on Sunday afternoon by the US embassy in Turkey announcing that “effective immediately” it has
“suspended all non-immigrant visa services at all U.S. diplomatic facilities in Turkey”…
… only to see a identical Turkish tit to the US tat, when the Turkish embassy in Washington tweeted that it too suspended non-immigrant visa services for U.S. Citizens, echoing almost verbatim the US statement, to wit, “Recent events have forced Turkish Government to reassess the commitment of the Government of the United States to the security of Turkish Mission facilities and personnel. In order to minimize the number of visitors to our Embassy and Consulates while this assessment proceeds, effective immediately we have suspended all non-immigrant visa service at all Turkish diplomatic facilities in the U.S.”
… the market got nervous, and in early – and illiquid – FX trading, the TRY has tumbled to as low as 3.8533 per dollar, a level last seen in January, a drop of as much as 4%, the biggest slide since the fake attempted coup attempt in the summer of 2016.
This is the currency seventh consecutive decline, after dropping 0.8% Friday amid concern Fed tightening would hurt EM currencies, and should it persist may finally have an adverse impact on other EM currencies, not to mention various other local Turkish asset classes when markets reopen in a few hours.
The rhetoric escalates as Turkey issues a warrant for a second USA consulate worker as the plunge in the Lira accelerates. We may have an emerging market contagion
Turkey Issues Arrest Warrant For Second US Consulate Worker, Lira Plunge Accelerates
One day after an escalating diplomatic spat, in which both the US and Turkey halted the issuance of non-immigrant visas to each other’s citizens following last week’s arrest by Turkey of a US consulate worker, on Monday Turkey issued another detention warrant for a second US consulate employee, Ahaber newspaper reports.
The market reaction to the rising diplomatic tensions has been dramatic, sending the Turkish lira crashing the most since the July 2016 failed “coup” attempt on Turkey’s president Erdogan, while local stocks and bonds tumbled in sympathy, the local Borsa Istanbul 100 index sliding, and now in correction territory having dropped more than 10% from its late August peak. The news of the second arrest have led to some further weakness in the Lira this morning, which crashed to a record low against a basket of currencies including the euro and the dollar.
Turkish NTV broadcaster reported that the consulate worker is still being sought by security officials, while his wife and child are being questioned by Turkish police. The reason for the arrest warrant has not yet been revealed. The warrant follows the arrest of Metin Topuz, who as we reported last week, was a Turkish citizen who worked at the US general consulate in Istanbul. He is alleged to have ties to exiled Turkish cleric Fethullah Gulen, whom Ankara blames for a failed coup attempt last summer and literally everything else that is wrong with Turkey.
The US Embassy in Turkey said that it was “deeply” disturbed over the “baseless, anonymous allegations” undermining “this longstanding partnership” between NATO allies. In its turn, Ankara said that the employee of the US Consulate General in Istanbul arrested by Turkish authorities had no diplomatic immunity.
A court has ruled that Topuz will remain in custody while his alleged links to Gulen are investigated. it was Topuz’s arrest that was the last straw, and prompted the US to suspend most visas for Turkish citizens. Hours laster, Ankara reciprocated in a tit-for-tat move.
That said, Ankara has yet to confirm the media reports. The Turkish justice minister said earlier he had no information about a new warrant being issued.
Media speculations of another arrest warrant comes amid the deterioration of relations between NATO allies over the arrest of a US consulate employee in Istanbul over alleged links to Islamic cleric Gulen, accused by Ankara of being behind the failed coup attempt in 2016. On Sunday, the US said it has suspended visa services in Turkey in all its diplomatic facilities in the country to “reassess Turkey’s commitment to security” of the US mission. Shortly after, Ankara responded with tit-for-tat measures and suspended visa services in the US, while the following day the Turkish Foreign Ministry summoned the undersecretary of the US embassy over the issue.
Moscow Warns It May “Restrict” U.S. Media Operations In Russia
With relations between the US and Russia souring to the point where media outlets such as RT and Sputnik appear on the path to being effectively banned, the Russian foreign ministry said that it is within Russia’s rights to restrict the operations of U.S. media organizations in Russia in retaliation for what Moscow calls U.S. pressure on a Kremlin-backed TV station.
According to Reuters, Russian officials have accused Washington of putting unwarranted pressure on the U.S. operations of RT, a Kremlin-funded broadcaster accused by some in Washington of interfering in domestic U.S. politics, which it denies. Foreign ministry spokeswoman Maria Zakharova said the full weight of the U.S. authorities was being brought to bear against RT’s operations in the United States, and that Moscow had the right to respond.
“We have never used Russian law in relation to foreign correspondents as a lever of pressure, or censorship, or some kind of political influence, never,” Zakharova said in an interview with Russia’s NTV broadcaster. “But this is a particular case…”
She cited a 1991 Russian law which, she said, stated that if a Russian media outlet is subject to restrictions in a foreign country, then Moscow has the right to impose proportionate restrictions on media outlets from that country operating inside Russia. “Correspondingly, everything that Russian journalists and the RT station are subject to on U.S. soil, after we qualified it as restriction of their activities, we can apply similar measures to American journalists, American media here, on Russian territory,” Zakharova said.
She did not identify any specific U.S. media outlets that would be targeted. She said it made no difference from the Russian government’s point of view if those outlets were backed by the U.S. state, or privately-funded.
Late last month, Russia’s state communications regulator accused U.S. TV channel CNN International of violating its license to broadcast in Russia and said it had summoned the broadcaster’s representatives in connection with the matter. The watchdog did not publicly disclose the nature of the violation. The head of the regulator said it was a technical matter and denied that politics was involved.
Meanwhile, both Russia Today, and Russian officials have denied any attempt to interfere in U.S. politics. They say that political forces in the United States are whipping up hysteria about Russia’s influence to discredit President Donald Trump.
6 .GLOBAL ISSUES
7. OIL ISSUES
8. EMERGING MARKET
Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings MON
DAY morning 7:00 am
Euro/USA 1.1737 UP .0020/ 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 112.69 UP 0.302(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 1.3157 UP .0091 (Brexit March 29/ 2017/ARTICLE 50 SIGNED
THERESA MAY FORMS A NEW GOVERNMENT/STARTS BREXIT TALKS
USA/CAN 1.2547 UP .0047 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/(TRUMP INITIATES LUMBER TARIFFS ON CANADA)
Early THIS MONDAY morning in Europe, the Euro ROSE by 20 basis points, trading now ABOVE the important 1.08 level RISING to 1.1737; / Last night the Shanghai composite CLOSED UP 25.43 POINTS OR .76% / Hang Sang CLOSED DOWN 131.45 OR .46% /AUSTRALIA CLOSED UP 0.48% / EUROPEAN BOURSES OPENED ALL GREEN EXCEPT UK FTSE
The NIKKEI: this MONDAY morning CLOSED
Trading from Europe and Asia:
1. Europe stocks OPENED IN THE GREEN EXCEPT FTSE
2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 131.45 POINTS OR .46% / SHANGHAI CLOSED UP 25.43 POINTS OR .48% /Australia BOURSE CLOSED UP 0.48% /Nikkei (Japan)CLOSED / INDIA’S SENSEX IN THE GREEN
Gold very early morning trading: 1281.00
Early MONDAY morning USA 10 year bond yield: 2.359% !!! UP 2 IN POINTS from FRIDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. (POLICY FED ERROR)
The 30 yr bond yield 2.893, UP 0 IN BASIS POINTS from FRIDAY night. (POLICY FED ERROR)
USA dollar index early MONDAY morning: 93.72 DOWN 8 CENT(S) from FRIDAY’s close.
This ends early morning numbers MONDAY MORNING
And now your closing MONDAY NUMBERS
Portuguese 10 year bond yield: 2.405% DOWN 1 in basis point(s) yield from FRIDAY
JAPANESE BOND YIELD: +.056% UP 0 in basis point yield from FRIDAY/JAPAN losing control of its yield curve/
SPANISH 10 YR BOND YIELD: 1.677% DOWN 3 IN basis point yield from FRIDAY
ITALIAN 10 YR BOND YIELD: 2.114 DOWN 3 POINTS in basis point yield from FRIDAY
the Italian 10 yr bond yield is trading 44 points HIGHER than Spain.
GERMAN 10 YR BOND YIELD: +.444% DOWN 1 IN BASIS POINTS ON THE DAY
IMPORTANT CURRENCY CLOSES FOR MONDAY
Closing currency crosses for MONDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/400 PM
Euro/USA 1.1749 UP .0032 (Euro UP 32 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/
USA/Japan: 112.59 UP 0.204(Yen DOWN 21 basis points/
Great Britain/USA 1.3145 UP 0.0079( POUND UP 79 BASIS POINTS)
USA/Canada 1.2545 UP .0044 Canadian dollar DOWN 44 basis points AS OIL ROSE TO $49.53
This afternoon, the Euro was ROSE 32 basis points to trade at 1.1749
The Yen FELL to 112.59 for a LOSS of 20 Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE
The POUND ROSE BY 79 basis points, trading at 1.3145/
The Canadian dollar FELL by 44 basis points to 1.2545, WITH WTI OIL RISING TO : $49.53
Your closing 10 yr USA bond yield DOWN 1 IN basis points from FRIDAY at 2.359% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 2.893 UP 0 in basis points on the day /
Your closing USA dollar index, 93.66 DOWN 14 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 MONDAY: 1:00 PM EST
London: CLOSED DOWN 14.98 POINTS OR 0.20%
German Dax :CLOSED UP 20.46 POINTS OR .16%
Paris Cac CLOSED UP 5.93 POINTS OR 0.11%
Spain IBEX CLOSED UP 50.50 POINTS OR 0.50%
Italian MIB: CLOSED UP 84.44 POINTS OR 0.38%
The Dow closed DOWN 12.60 OR 0.06%
NASDAQ WAS closed DOWN 10.45 POINTS OR 0.16% 4.00 PM EST
WTI Oil price; $49.53 1:00 pm;
Brent Oil: 55.62 1:00 EST
USA /RUSSIAN ROUBLE CROSS: 58.36 UP 21/100 ROUBLES/DOLLAR (ROUBLE LOWER BY 45 BASIS PTS)
TODAY THE GERMAN YIELD RISES TO +0.444% 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:$49.53
USA 10 YR BOND YIELD: 2.359% (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)
USA 30 YR BOND YIELD: 2.893%
EURO/USA DOLLAR CROSS: 1.1749 UP .0032
USA/JAPANESE YEN:112.59 UP 0.204
USA DOLLAR INDEX: 93.66 DOWN 14 cent(s)/
The British pound at 5 pm: Great Britain Pound/USA: 1.3145 : UP 79 POINTS FROM LAST NIGHT
Canadian dollar: 1.2545 DOWN 44 BASIS pts
German 10 yr bond yield at 5 pm: +0.444%
And now your more important USA stories which will influence the price of gold/silver
TRADING IN GRAPH FORM FOR THE DAY
S&P Dips As Bitcoin Rips On 10th Anniversary Of Stock Market Peak
There’s a chance tax reform may not get done!!! Inconceivable!!
10 years ago today, The Fed minutes were released sparking a buying frenzy pushing The Dow above 14k to a new record high – supported by a dovish Fed and a convinced public that job growth was recovering and all would be well. It turns out that the peak for the market that was followed a greater-than-50% plunge in stocks.
That week, U.S. President George W. Bush said the figures signaled “a vibrant economy” but a poll of top Wall Street economists found more than half still think the Fed will trim rates again this month to help the economy get past a housing slump and a surge in mortgage defaults. U.S. employers added 110,000 jobs in September and August’s job losses were revised into a gain in a Labor Department report on Friday that lifted some worry about a recession in the near term.
Stocks drifted higher through the morning, flattened out in the early afternoon and then began to rise as investors digested the minutes from the Sept. 18 Fed meeting, released at around 2:00 p.m. ET.
“I think the market had a knee-jerk reaction to the idea that the Fed can cut rates more, if they need to,” said Steven Goldman, market analyst at Weeden & Co.
At the Sept. 18 meeting, central bankers cut interest rates for the first time in 4 years. The minutes showed that the decision to cut the fed funds rate by a half-percentage point cut was unanimous, with the central bank worried the housing implosion and credit market crunch could hit consumers and the broader economy.
Also important to stock investors: the minutes showed that the bankers were a bit more confident about a sustained inflation drop, provided that the dollar doesn’t keep falling.
Stock investors have been looking for evidence that the Fed will cut the fed funds rate by at least another quarter-percentage point, perhaps at the next policy meeting, which ends on Oct. 31.
The minutes seemed to provide that evidence because of the combination of the concern about the economy and the diminished concerns about inflation.
Goldman said that while the minutes didn’t particularly reveal anything new, investors were probably relieved to see the central bankers “confirming what people have been thinking anyway.”
So what would have happened if you bought 10 years ago…
Gold remains the winner since the prior market peak with stocks outpacing bonds and crude having been crushed.
Which is ironic as gold was today’s biggest winner (as China came back from its Golden Week holiday) as stocks, bonds, and the dollar trod water on Columbus Day...
Stock markets drifted lower in the last hour without RP algos to pull off bonds and levitate stocks… (Small Caps worst day in 6 weeks before the standard panic-bid into the close)
And note that VIX was notably bid…
Retailers, Financials, and Healthcare were the biggest losers…
Health-care stocks lead to the downside on a cascade of negative news for everything from medical devices, to managed care, to drug distribution. Reports over the weekend that Trump was seeking to loosen regulations in health insurance which could lead to lower premiums has sent most of the managed care names into negative territory.
One quick chart to highlight well-timed RRR cut from China right before the Golden Week Holiday that sparked a relentless surge in US stocks… and which now they are back, equities start selling off…
It seems the Trump-Corker feud is indeed having an effect on the odds of tax reform…
FANG Stocks rolled over once again after the standard opening gap rip…
Perhaps the funniest movement of the day was the dual dip and rip of AMZN and GOOGL when Amazon headlines hit saying it is “Considering a serious bid against YouTube”…
The bond market was closed but futures signal a modest bid for 30Y bonds (+1-2bps) with the short-end flat…
While the dollar index went nowhere on the day – drifting modestly lower…
USDJPY snapped below key support, dragging stocks in sync…
The Turkish Lira was chaotic (after tit-for-tat visa wars)…
And Cable pushed notably higher, dipping around May’s speech…
Gold and crude both bounced on the day…
While the dollar index went nowhere, Bitcoin surged back above $4800…
Bitcoin market cap popped back above PayPal…
As the rest of crypto space was dumped…
As @CEOCoinex noted, everyone is liquidating portfolios to purchase bitcoin so they can get the Free shares from the chain split. Watch for huge rebound after.
The White House over the weekend has now revealed that in order for the dreamers to stay in the USA he wants money for the wall. The democrats are saying no!
White House Reveals What It Wants In Exchange For Keeping “Dreamers”
On Sunday night, the White House revealed that it is seeking more funds from Congress to fund Trump’s wall along the U.S.-Mexico border, more resources to hire thousands more immigration officers, cutting the number of new legal immigrants and generally demanding a steep price for legislation under consideration to help so-called Dreamers. According to the WSJ, “the White House documents, sent to congressional leaders in both parties on Sunday, amount to a lengthy wish list of longstanding conservative immigration goals.” While White House officials told reporters that they want these to be included in any immigration deal, they stopped short of saying the White House will insist on them.
As The Hill adds, Trump’s new “immigration principles and policies” call for a crackdown on border security, more resources to catch individuals residing in the country illegally, as well as a merit-based system that limits chain migration to spouses and children.
Claiming that in order to properly protect the nation’s borders, the White House said Congress must also approve of the construction of a border wall to deter human trafficking, drug trafficking and other cartels. “Success of border walls are undeniable from the perspective of their operators,” U.S. Customs and Border Protection Acting Deputy Commissioner Ronald Vitiello said Sunday. The plan also takes a hardline stance against unaccompanied minors who enter the country.
Trump also went after sanctuary cities, calling on Congress to cut funding from certain grants and agreements to punish the “states and localities that refuse to cooperate with Federal authorities.” Additionally, the administration is advocating for a “refugee ceiling” that caps how many are let into the country to an unspecified “appropriate level.”
“[T]he refugee ceiling needs to be realigned with American priorities,” according to a press release that points to the nation’s historically high average of resettling refugees compared to “the rest of the world combined.”
The plan also suggests measures that allow for a swift deportation process once ICE or other authorities detect and catch those residing in the country illegally.
But the most notable feature was the return of demands for a border wall. The Trump White House had previously called for border security measures as part of a Dreamer deal but had agreed to take the wall off the table. Now the administration is again insisting on it.
“These findings outline reforms that must be included as part of any legislation addressing the status of Deferred Action for Childhood Arrivals (DACA) recipients,” President Trump said in a statement following the announcement of the proposal on Sunday. “Without these reforms, illegal immigration and chain migration, which severely and unfairly burden American workers and taxpayers, will continue without end.”
The just released proposed plan is meant to guide the administration’s discussions with Congress to replace Deferred Action for Childhood Arrivals (DACA), an Obama-era program that shielded nearly 800,000 so-called “Dreamers” from deportation and also allowed them to secure work permits. The administration said many agencies weighed in to give policy recommendations in order to improve the immigration system including the Department of Justice, Department of Homeland Security, ICE, and U.S. Customs and Border Control.
The principles also lay out changes to the legal immigration system that Mr. Trump has already endorsed, including large cuts to green cards issued for family members and shifting existing employment-based green cards to a skills-based system.
It is no surprise that Democrats are opposed to most of these ideas outright and don’t support others unless they are part of a comprehensive package that includes a path to citizenship for almost all of the estimated 11 million people living in the U.S. illegally. They will certainly throw up Trump’s renewed attempt to push through “the wall.”
“The administration can’t be serious about compromise or helping the Dreamers if they begin with a list that is anathema to the Dreamers, to the immigrant community and to the vast majority of Americans,” Senate Minority Leader Chuck Schumer (D., N.Y.) and House Minority Leader Nancy Pelosi (D., Calif.) said in a joint statement Sunday.
This may be a problem because suddenly it appears that all the goodwill that Trump had built up with the Democrats last month, when in exchange for avoiding a government shutdown he caved on his DACA executive order, may have vaporized:
Last month, Mr. Trump met with the pair for dinner and, afterward, it seemed that a deal to legalize Dreamers might be at hand. All three of them suggested that they had agreed to pair protections for the young migrants with border security provisions that didn’t include the controversial proposal for a wall along the U.S. border with Mexico.
But immediately after that, many congressional Republicans said they would seek to extract more significant enforcement provisions as part of any deal. And on Sunday, a White House official said that the only agreement was that dealing with Dreamers was a priority and that they would try to come to a resolution as quickly as possible.
As the WSJ adds, many of the proposals outlined are included in legislation that has passed the GOP-controlled House but wasn’t considered in the Senate, in part because they likely don’t have support from the 60 senators that would be needed to pass them.
As for the Dreamers, there was some additional confusion, because a White House official said that the administration wasn’t interested in providing these people with a path to citizenship, as the Dream Act provides. But last week, two administration officials told a Senate committee young people should have the opportunity for citizenship.
Finally, should this proposal indeed sour the tentative ceasefire that had emerged between Trump and the Democrats last month, suddenly not only is tax reform before year end looking impossible shaky, but if Trump has just made the DACA legislation impossible, then not only is the threat of a government shutdown again back on the table, but it may be time to start worrying about the next debt ceiling hike which is due exactly two months from today.
War of words over the weekend between Bob Corker and the President. The senator claims that Trump’s actions could threaten World War iii
(courtesy zero hedge)
Republican Senator Says That Trump’s Actions Threaten World War 3
With what The New York Times called “almost cathartic satisfaction,”Senator Bob Corker took his feud with the president from Twitter to mainstream media, proclaiming during a 25-minute confessional thatTrump was treating his office like “a reality show,” with reckless threats toward other countries that could set the nation “on the path to World War III.”
After a brief reposte following the day’s Twitter-fight in which President Trump accused him of lacking “guts” and he compared the White House to an “adult day care center,” Corker went running to the New York Times to spill his guts, saying that he believes Trump is out of control, and dangerous:
Trump is treating the presidency like “a reality show”and acts “like he’s doing ‘The Apprentice’ or something.”
“He concerns me. He would have to concern anyone who cares about our nation.”
Then, desperate to refute Trump’s claims that he had begged for an endorsement for 2018 and backed out when he didn’t receive one, he claimed Trump actually pushed him to run, saying:
“I don’t know why the president tweets out things that are not true. You know he does it, everyone knows he does it, but he does.”
Corker had plenty more to spill (as Axios notes)…
On how fellow GOP senators feel: “Look, except for a few people, the vast majority of our caucus understands what we’re dealing with here… of course they understand the volatility that we’re dealing with and the tremendous amount of work that it takes by people around him to keep him in the middle of the road.”
On Trump undermining Tillerson: “A lot of people think that there is some kind of ‘good cop, bad cop’ act underway, but that’s just not true.”
On Trump’s tweets harming U.S. foreign policy: “I know he has hurt, in several instances, he’s hurt us as it relates to negotiations that were underway by tweeting things out.“
Interetingly The New York Times itself seemed unimpressed by Corker’s rant, noting:
“In a 25-minute conversation, Mr. Corker, speaking carefully and purposefully, seemed to almost find cathartic satisfaction by portraying Mr. Trump in terms that most senior Republicans use only in private.”
We suspect this is far from over – with or without Trump’s kindergarten cop Kelly to manage him.
Perhaps most concerning (for markets as much as anything else) is that Corker has many friends in the Senate and we suspect this feud will do nothing to help Trump pass any reform.
After “Surreal” Feud Between Trump And Corker, “Tax Reform Is Dead. Full Stop”: Cowen
While Wall Street appears to have ignored the latest political spat within the Republican party over the weekend, in which Donald Trump lashed out at outgoing Senator Bob Corker, while the latter compared the White House to “daycare for adults”, and later warned Trump may launch World War III, this particular feud involving the president may last longer than just the usual 24-hour news cycle, and could have dire consequences for the market, which in recent days has repriced a more than 60% probability (according to Goldman) that Trump’s tax reform will pass.
Well, according to Cowen analyst Chris Krueger, not so fast.
In a note released this morning, Krueger writes that “tax euphoria may break this week, with the Senate budget back to zero-margin on vote as President Trump, Sen. Bob Corker feud.” And without a budget, “tax is dead. Full stop,” Krueger writes.
Cowen now sees the margin for passing a budget in the Senate as more challenging than in the House, plus “radically different” documents will have to be merged and passed again.
Passing FY 2018 Senate budget has “some eerie parallels” to health care, as no Democrats will vote for the budget; Sen. Rand Paul is expected to vote no because it doesn’t cut spending fast enough; Sen. John McCain also sounds like a no as it doesn’t repeal sequester, which disproportionately hits the Pentagon.
That means GOP can only afford one more defection, with Corker, a deficit hawk, engaging in “one of the more surreal public correspondence exchanges in recent memory” days after saying Secretary of State Rex Tillerson, Defense Secretary Jim Mattis and White House Chief of Staff John Kelly help keep U.S. from chaos.
“Either Trump realizes that Corker can sink the remainder of the Trump/GOP legislative effort and is upset by that reality, or he didn’t/doesn’t know and just made it a reality. Either way, we see ZERO upside for the budget process/tax reform in this Twitter tantrum with the policy downside limit-down”
Maybe not: because in the premarket on Monday, bank stocks sensitive to potential tax cuts, are once again rising, suggesting all is well: JPMorgan up 0.3%, BofA +0.3%, Morgan Stanley +0.8%. Or perhaps this is just one more example of a market that is now so bored with incremental news flow which has zero impact on risk assets, that it is simply yet another “shock which no longer shocks.” Then again, as so many Wall Street analysts have warned, it is only a matter of time before one shock does finally shock the S&P, unleashing the spire of shocks, built of over years and years of non-resolution, and merely swept away under the rug with trillions in central bank liquidity injections.
Stated simpler, if indeed Trump tax reform is dead – again – a sharp market turnaround may be imminent.
Looks like the wine industry is going to be affected:
Wildfires engulf NAPA, Sonoma and 6 other counties
Wildfires Engulf Napa, Sonoma And 6 Other California Counties; More Than 20,000 Forced To Flee
Wine country is burning.
Thousands of residents of Napa Valley, Sonoma and six other counties have been forced from their homes – and thousands more are preparing to flee – as 14 wildfires tear through Northern California, resisting fire fighters’ efforts to contain them.
California’s fire chief says at least 1,500 homes and commercial buildings have been destroyed – and officials said that estimate was probably conservative. While no deaths have been confirmed, fire officials say numerous residents have been injured and a number of people are also missing. California Department of Forestry and Fire Protection Director Ken Pimlott say an estimated 20,000 people have been evacuated.
Gov. Jerry Brown has declared a state of emergency for Sonoma, Napa and Yuba counties, revealing that FEMA had approved emergency grants to help the state combat the fires. More than 20,000 people have been forced to evacuate, state officials said.
As the LA Times reported, fire-friendly weather conditions converged prior to the outbreak of fires, which originated primarily in Sonoma and Napa.
The Santa Ana winds – strong, extremely dry down-slope winds that occur mainly in the fall and originate inland in desert regions – were one factor in helping the fires spread. Warm temperatures also create the dry conditions that have helped the blazes spread like…well…wildfire.
“This is really serious, it’s moving fast. The heat, the lack of humidity and the winds are all driving a very dangerous situation and making it worse,” the governor said at a morning press conference. “It’s not under control by any means. But we’re on it in the best way we know how.”
In Santa Rosa, the capital of Sonoma county, whole neighborhoods have been evacuated and 200 patients have been moved from area hospitals, the Associated Press reported.
Smoke plumes from the fires showed up on the NWS radar…
…and were also detected by satellite imaging…
Video taken by journalists shows farms, homes and vineyards engulfed in flames.
Smoke wafted down to the Bay Area, but the Marin County Fire Department confirmed that there were no fires in that part of the state.
Further south in Anaheim Hills, a 25-acre brush fire broke out Monday, forcing some residents to evacuate, NBC reported.
Firefighters said they were concerned about embers drifting on strong winds into nearby neighborhoods. Thick smoke billowed over the freeways and the communities of Yorba Linda and Anaheim Hills.
October is historically one of the most dangerous months of the year when it comes to wildfires in California. Four of the state’s five most-destructive fire occurred in October, including the 1991 Oakland Hill firestorms that resulted in 25 fatalities and burned 2,900 buildings.
The Lake and Mendocino County Sheriffs ordered evacuations. The sheriff in Butte County said there were two fires in the area and ordered mandatory evacuations in several neighborhoods.
Belia Ramos, the chairwoman of the Napa County board of supervisors, said the county was trying to contain three main fires, one of which is threatening more than 10,00 acres in Northern Napa County, another that is threatening between 8,000 to 12,000 acres, and a third that has affected some 2,00 acres.
The fires were moving swiftly and in unpredictable paths through densely populated areas.
California struggled with wildfires during the summer, including a blaze late last month that forced 1,000 people in Southern California to evacuate.
Both AT&T and Verizon confirmed that their customers may be currently experiencing outages.
“A power and connectivity issue is causing a service interruption in parts of Napa, Sonoma and Mendocino Counties,” Verizon Wireless Pacific market public relations manager Heidi Flato said.
“Our engineers are aware of this issue and are working with our vendor partners to resolve this issue quickly.”
PG&E is also reporting power outages, mostly in the Sonoma area, due to the fire, according to SFGate
I will see you TUESDAY night.
AFTER TUESDAY NIGHT, MY COMMENTARIES WILL BE DELIVERED AT ODD HOURS /