GOLD: $1291.40 UP $8.90
Silver: $17.16 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: $1294.21 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $1285.95
PREMIUM FIRST FIX: $8.26 (premiums getting larger)
SECOND SHANGHAI GOLD FIX: $1304.05
NY GOLD PRICE AT THE EXACT SAME TIME: $1287.05
Premium of Shanghai 2nd fix/NY:$17.00 (PREMIUMS GETTING LARGER)
LONDON FIRST GOLD FIX: 5:30 am est $1289.60
NY PRICING AT THE EXACT SAME TIME: $1288.75
LONDON SECOND GOLD FIX 10 AM: $1291.40
NY PRICING AT THE EXACT SAME TIME. 1292.25 ???
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)
1 NOTICES FILED TODAY FOR
Total number of notices filed so far this month: 391 for 1,955,000 oz
Let us have a look at the data for today
In silver, the total open interest ROSE BY A STRONG 1688 contracts from 186,144 UP TO 187,832 WITH RESPECT TO YESTERDAY’S TRADING (UP 23 CENTS). THE CROOKS ARE HAVING AN AWFUL TIME TRYING TO COVER THEIR MASSIVE SILVER SHORTS. IT IS OBVIOUS THAT THE HUGE RISE IN PRICE YESTERDAY NEGATED ANY ATTEMPT TO COVER THAT SHORTFALL
RESULT: A GOOD SIZED RISE IN OI COMEX WITH THE 23 CENT PRICE RISE. OUR BANKERS FAILED AGAIN IN THEIR ATTEMPT TO COVER ANY OF THEIR MASSIVE SILVER SHORTFALL.
In ounces, the OI is still represented by just UNDER 1 BILLION oz i.e. 0.939 BILLION TO BE EXACT or 134% of annual global silver production (ex Russia & ex China).
FOR THE NEW FRONT OCT MONTH/ THEY FILED: 1 NOTICE(S) FOR 5,000 OZ OF SILVER.
In gold, the open interest SURPRISINGLY FELL BY 336 CONTRACTS DESPITE THE GOOD SIZED RISE in price of gold ($8.00 ) . The new OI for the gold complex rests at 513,815. IT SURE LOOKS LIKE OUR BANKER FRIENDS SEEM A LITTLE EDGY AS THEY WERE INTENT ON COVERING SOME OF THEIR HUGE GOLD SHORTFALL WHICH WILL EXPLAIN THE DROP IN OI DESPITE THE GAIN IN GOLDPRICE.
Result: A SMALL SIZED DECREASE IN OI WITH THE RISE IN PRICE IN GOLD ($8.00). WE PROBABLY HAD SOME GOLD SHORT COVERING BY THE BANKERS.
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 , NO CHANGES in gold inventory at the GLD/
Inventory rests tonight: 858.45 tonnes.
Today: NO changes in inventory:
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 A STRONG 1688 contracts from 186,144 UP TO 187,832(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. THE DATA SEEMS TO SUGGEST SOME GOLD SHORT COVERING BUT IN SILVER IT IS BECOMING IMPOSSIBLE FOR THE CROOKS TO COVER. AS SUCH THEY RETREATED TO HIGHER GROUND AND THEN THEY WILL TRY AGAIN.
RESULT: A GOOD SIZED INCREASE IN SILVER OI AT THE COMEX WITH THE RISE IN PRICE OF 23 CENTS WITH RESPECT TO YESTERDAY’S TRADING. OUR BANKER FRIENDS WERE UNSUCCESSFUL IN THEIR ATTEMPT TO COVER ANY OF OUR SILVER SHORTS
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 MONDAY night/TUESDAY morning: Shanghai closed up 8.61 points or .26% /Hang Sang CLOSED UP 164.24 pts or .58% / The Nikkei closed UP 132.80 POINTS OR .64/Australia’s all ordinaires CLOSED UP 0.03%/Chinese yuan (ONSHORE) closed WELL up at 6.5792/Oil UP to 50.23 dollars per barrel for WTI and 56.30 for Brent. Stocks in Europe OPENED RED EXCEPT FTSE . ONSHORE YUAN CLOSED UP AGAINST THE DOLLAR AT 6.5792. OFFSHORE YUAN CLOSED STRONGER TO THE ONSHORE YUAN AT 6.5704 AND BOTH YUANS ARE STRONGER AGAINST THE DOLLAR. CHINA IS EXTREMELY HAPPY TODAY.
3a)THAILAND/SOUTH KOREA/NORTH KOREA
South Korea ready to try out its new graphite “blackout bomb” which can paralyze North Korea’s antiquated power grid and yet cause no loss of life
( zero hedge)
b) REPORT ON JAPAN
( zero hedge)
c) REPORT ON CHINA
4. EUROPEAN AFFAIRS
iii)GREAT BRITAIN/NORTH KOREA
Britain draws up plans for war with North Korea;
( Mac Slavo/SHFTPlan.com)
5. RUSSIAN AND MIDDLE EASTERN AFFAIRS
Russia finally accuses the uSA of pretending to fight ISIS something that we have been telling you for years.
6 .GLOBAL ISSUES
7. OIL ISSUES
8. EMERGING MARKET
9. PHYSICAL MARKETS
i)An excellent commentary from Chris Powell who asks Steve Saville why he does not address obvious questions on rigging on the precious metals.
( Chris Powell/GATA)
ii)Jamie Dimon has called bitcoin a fraud so why are they quoting prices?( GATA/Bloomberg)
10. USA Stories
i)In line with what we have been telling you for the past several weeks: Trump’s tax plan has no chance of passing. Today the Corker feud and the Paul rejection has put the plan spiraling towards death.
ii)The feud between Corker and Trump intensifies with the NYTtimes releasing part of the phone recording
iii)An excellent commentary from James Rickards explaining why Janet Yellen has got her “inflation” numbers wrong. He explains the Fed’s preferred number PCE and also highlights why these numbers are not transitory
(a good read..courtesy James Rickards)
Let us head over to the comex:
The total gold comex open interest SURPRISINGLY FELL BY 336 CONTRACTS DOWN to an OI level of 513,815 DESPITE THE RISE IN THE PRICE OF GOLD ($8.00 RISE IN YESTERDAY’S TRADING). IT SEEMS THAT OUR BANKER FRIENDS TRIED TO COVER SOME OF THEIR HUGE GOLD SHORTFALL WITH LIMITED SUCCESS. 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 WE SHOULD EXPECT GOLD TO BE STRONG THIS WEEK WITH CHINA RETURNING TO ACTIVE DUTY PURCHASING OUR PRECIOUS METALS.
Result: a TINY SIZED open interest DECREASE WITH THE GOOD SIZED RISE IN THE PRICE OF GOLD ($8.00). BANKERS MILDLY SUCCESSFUL IN THEIR ATTEMPT TO COVER SOME OF THEIR GOLD SHORTFALL.
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.
NOW THAT WE ARE CLOSE TO THE 29TH CHINESE CONGRESS, THE BANKERS ARE TAKING NO CHANCES AS THEY START TO COVER THEIR GOLD/SILVER SHORTFALL.
We have now entered the active contract month of Oct and here we saw a GAIN of 3 contracts UP to 223 contracts. We had 0 notices filed yesterday so we GAINED 3 contracts or 300 oz will stand for delivery at the comex in this active delivery month of October and 0 EFP notices were given. The low number of notices early in the delivery cycle is evidence of a lack of physical gold.
The November contract saw A loss OF 70 contracts down to 1325.
The very big active December contract month saw it’s OI LOSS OF 1261 contracts DOWN to 402,022.
We had 0 notice(s) filed upon today for NIL oz
VOLUME FOR TODAY (PRELIMINARY) NOT AVAILABLE
CONFIRMED VOLUME YESTERDAY: 206,720
We had 1 notice(s) filed for 5,000 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)||391 contracts (1,955,000 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 10/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 858.45 TONNES
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 10/NO CHANGE IN INVENTORY AT THE SLV/INVENTORY RESTS AT 326.898 MILLION OZ/
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/
Indicative gold forward offer rate for a 6 month duration+ 1.40%
Bitcoin prices for THIS MORNING: Bid $4785.00 offer: $4806.00
Major gold/silver trading/commentaries for TUESDAY
London House Prices Are Falling – Time to Buckle Up
– London house prices fall in September: first time in eight years
– High-end London property fell by 3.2% in year
– House sales down by over a very large one-third
– Global Real Estate Bubble Index – see table
– Brexit, rising inflation and political uncertainty causing many buyers to back away from market
– U.K. housing stock worth record £6.8 trillion, almost 1.5 times value of LSE and more than the value of all the gold in world
– Homeowners and property investors should diversify and invest in gold
Editor Mark O’Byrne
In what might be a sign of things to come, London house prices have fallen for the first time in eight years.
London house sales have fallen by a third as years of frenzied bidding come to a shuddering halt.
The capital remains expensive. Housing still costs 10 times the average salary and only 50% of Londoners own their own homes, the EU average is 70%.
Currently the rest of the UK appears to be benefiting from the lack of affordability and stock in London. Buyers are moving further out of the capital in order to secure their footing on the housing ‘ladder’… no snakes here …
Last month U.K. house prices regained their fastest pace since February. A Halifax house price survey showed a 4% price rise in the three months to September compared with the same period last year.
Long-term, a fall in London prices may be an indicator that concerns over Brexit, inflation and political stability are beginning to affect the U.K property market.
This will be a hard landing for a country that is so convinced that putting all one’s eggs in the housing basket is the answer to securing and growing wealth.
‘Global Real Estate Bubble’
Last month, UBS Wealth Management published its Global Real Estate Bubble Index. London came sixth with a score of 1.77. The group concluded that London is still firmly in bubble-territory.
The research found that London house prices have climbed 15% in the last year and 45% since the financial crisis, when adjusted for inflation.
This suggests September’s fall in prices might be a signal that the top of the market is just behind us. This is no surprise when one considers both the known and unknown events on the horizon for the city.
Brexit is the most discussed threat. Foreign buyers are wary of what the future holds and there is anecdotal evidence that EU workers are being offered shorter contracts. Four years ago foreign buyers accounted for 82% of property purchases.
Brexit is the main stymie of political progress in the country.
Conferences, policy announcement and parliamentary discussions are dominated by how this may or may not play out. No-one knows what will happen, prompting many to feel uncomfortable with making major financial decisions.
This could go on for some time.
Meanwhile the Bank of England are tasked with sorting out the economy. They continue to encourage inflation and plan to raise interest rates. Thus devaluing the value of the pounds in our accounts and increasing the cost of borrowing.
It is not surprising, therefore, that it is not just in London that we are looking at the bursting of the property bubble.
Rest of the UK still climbing…according to some
London, often an indicator for things to come for the rest of the U.K., should be a beacon for the rest of the country’s housing market.
Halifax data shows in September house prices had their fastest annual rise since February. The year-on-year increase jumped a surprisingly large 4%.
Pundits believe this is an indicator that buyers are shrugging off threats of a rate hike by the Bank of England.
Others aren’t so sure. Nationwide’s own home price survey showed more subdued numbers (2%), suggesting there is a slowdown in house prices across the country, particularly in certain regions.
The pace of national price increases has slowed and is down from a peak of 10% in early 2016, to 4% today.
Halifax said future demand might be limited by ‘a squeeze on spending power from higher consumer price inflation and the high cost of property.’ However it does not think that future interest rate price rises would affect the market.
Despite concerns over inflation stretching affordability, mortgage approvals remain at an average pace of almost 67,000 a month, little changed from 2016.
The economist Samuel Tombs of Pantheon Macroeconomics told the Guardian that he thought Halifax was way off the mark.
“Other surveys show that the pipeline of demand is soft; Rics [the Royal Institution of Chartered Surveyors] has reported that new buyer inquiries have fallen in six of the last seven months. Real wages still have further to fall over the next six months and mortgage rates will rise soon in response to the increase in banks’ funding costs.”
Obsession with home ownership
Last week Prime Minister Teresa May referred to the ‘British Dream’. Judging by Twitter few understood what she meant.
If there is such a thing it has to be the desire to own the roof over your head and then sell it at a ridiculous profit.
In the UK this comes at a serious price, but one which few of us question. Often first-time buyers have to rely on family to help, then be comfortable with a 25-year mortgage and restrict their lifestyles well into middle-age.
Ten years later they have to do it all again as a baby’s on the way, house prices are climbing and they want to climb the proverbial ladder.
Failure to do this is seen as just that … a ‘failure’.
To not pursue home ownership in the UK and in Ireland is seen as pretty nuts and irresponsible.
The problem is that in the UK, renting is enough of an incentive to put yourself in such a dire financial situation. It is very different to continental Europe. In the UK and Ireland few leases are long-term and landlords hold the majority of rights. As a result you feel very insecure in your home.
Brits and Irish want to feel financially secure. Ironically they get this security by getting themselves into hundreds of thousands of pounds worth of debt. But the ‘wealth effect’ is so desired and so encouraged by economists, that this level of debt is both expected and accepted.
The British government has encouraged this. For them this is what capitalism is all about. Home ownership and buy-to-let mortgages. But it may run people and perhaps the economy into the ground.
Consider the number of people who subsidise their lives, savings and retirement with the ‘wealth’ they have locked up in their homes. In 2015 older homeowners borrowed £4.2m a day using equity release loans as pensions are no longer covering retirement costs.
We can only expect this to get worse given the looming pension crisis.
Pensioners will be royally scuppered if they find themselves in negative equity, with no pension to support them. Especially so given a considerable number of pension funds and investment bonds rely on UK property to generate income.
Government has a lot to answer for
The country is consistently coming under fire for a lack of housing supply and lack of affordability.
Earlier this week the government announced plans to extend its “Help to Buy” program to 135,000 buyers. The program offers interest-free loans to homebuyers. This will see an extra £6.7 billion pounds ($8.7 billion) of “stimulus” into the market.
Yet another example of leaders trying to unnecessarily stoke a market which results in increased inflation and higher debt levels for a country which is already one of the most indebted.
Currently the UK housing stock is worth nearly £7 trillion, more than the companies listed on the London Stock Exchange and more than the value of all the gold in the world.
The World Gold Council estimates that all the gold ever mined totaled 187,200 tonnes in 2017. At a price of US$1,250 per troy ounce, one tonne of gold has a value of approximately US$40.2 million.
Thus today, all the gold in the world is worth some $7.5 trillion dollars or £5.7 trillion pounds and less than the value of the UK housing stock.
The ridiculous valuation of the London property in particular is thanks to the government, banks and real estate businesses peddling the Greater Fool Theory.
The theory applies here as buyers bought property they thought was expensive but believed they would be able to sell it at a higher price, for significant profit to an ‘even greater fool’.
Falling house prices will make a fool out of everyone, whilst (no doubt) the government continue to make housing ‘affordable’.
Time to Buckle Up With Physical Gold
Housing in the UK is a single asset class but it accounts for two-thirds of the country’s wealth.
There is not a level in society whether government, businesses, banks or individuals that does not have skin in this game.
The figures and economic outlook suggest we need to start diversifying.
The government needs to stop being so irresponsible and no longer constantly peddle arguments for home ownership. However it is difficult politically to sell that story. Especially when all parties have realised the youth vote has major housing concerns and believes they have the right to own property.
Brexit is the main area of concern and no-one wishes to rock the property market any further. Instead homeowners need to consider how they can both protect themselves from falling prices and diversify their investments and wealth.
It is not prudent to have so much wealth caught up in one falling asset. Especially given that it is inevitable that London property will be affected by a number of issues on the horizon including rising interest rates, inflation and Brexit.
Gold is another real asset that millions of investors have placed their faith in over hundreds of years. Like housing, it is tangible. Unlike housing, it does not come with a massive debt burden and it benefits from rising inflation and uncertainties in both political and economic spheres.
News and Commentary
Gold Prices (LBMA AM)
10 Oct: USD 1,289.60, GBP 977.77 & EUR 1,094.61 per ounce
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)
10 Oct: USD 17.12, GBP 12.98 & EUR 14.53 per ounce
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
– Perth Mint Gold Coins Sales Double In September
– 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
An excellent commentary from Chris Powell who asks Steve Saville why he does not address obvious questions on rigging on the precious metals.
(courtesy Chris Powell/GATA)
The questions that deniers of monetary metals market rigging won’t answer
Submitted by cpowell on Mon, 2017-10-09 01:11. Section: Daily Dispatches
9:27p ET Sunday, October 8, 2017
Dear Friend of GATA and Gold:
Newsletter writer Steve Saville of The Speculative Investor, who long has denied that manipulation of the monetary metals markets means much, has seized on the recent essay by Keith Weiner of Monetary Metals as the conclusive refutation of silver market analyst Ted Butler’s longstanding complaint that JPMorganChase has been rigging the silver market.
Weiner’s analysis, headlined “Thoughtful Disagreement with Ted Butler” and posted here —
— argued that JPMorganChase is undertaking only ordinary arbitrage in the silver market, exploiting spreads between bid and ask prices
Saville, in commentary headlined “A Silver Price-Suppression Theory Gets Debunked” —
— cheers Weiner’s essay and goes on to remark: “Entering a debate with someone who is incapable of being swayed by evidence that invalidates his position is a waste of time and energy, so these days I devote no commentary space and minimal blog space to debunking the manipulation-centric gold and silver articles that regularly appear.”
But when has Saville himself ever addressed evidence of manipulation of the gold and silver markets? Of course if he declines to address the evidence, he too can’t be swayed by it.
The manipulation deniers never address the evidence.
Weiner’s technical analysis is no refutation of silver market manipulation, for even if JPMorganChase is just doing arbitrage in silver, a judgment on manipulation would require knowing for whom the investment house was doing the arbitrage.
JPMorganChase’s former chief of commodity operations, Blythe Masters, said on CNBC five years ago that the investment house had no position of its own in silver and was trading only for clients:
So might those clients include governments and central banks, entities with nearly infinite resources sufficient to nullify markets?
The question is compelling because filings with the U.S. Securities and Exchange Commission and Commodity Futures Trading Commission by CME Group, operator of the major futures exchanges in the United States, assert that governments and central banks are clients of the exchanges and that the exchanges give them special volume trading discounts for trading all futures contracts, not just financial futures contracts:
Do Weiner and Saville know that JPMorganChase is not trading silver futures for governments and central banks?
Do Weiner and Saville know that governments and central banks are not trading gold and gold derivatives surreptitiously?
If Weiner and Savillete think they know, they’re wrong, for the Bank for International Settlements admits that it operates as a broker in gold and gold derivatives for its member central banks:
Indeed, in 2005 the director of the BIS’ monetary and economic department, William R. White, told a conference at BIS headquarters in Basle, Switzerland, that a primary purpose of international central bank cooperation is “the provision of international credits and joint efforts to influence asset prices (especially gold and foreign exchange) in circumstances where this might be thought useful”:
The BIS even advertises that its services to its member central banks include surreptitious interventions in the gold market:
Anyone who wants to engage in honest argument about gold and silver market manipulation needs to address a few simple questions:
1) Are governments and central banks active in the monetary metals markets or not?
2) Are the documents asserting such activity genuine or forgeries?
3) If governments and central banks are active in the monetary metals markets, is it just for fun or is it for policy purposes?
4) If such activity by governments and central banks is for policy purposes, do those purposes involve the traditional objectives of defeating an independent world currency that competes with government currencies and interferes with government control of interest rates, objectives documented at length by GATA here?:
Of course if largely surreptitious intervention in the monetary metals markets by central banks and governments is ever acknowledged, technical analysis of those markets is meaningless, which may explain why technical analysts like Weiner and Saville avoid the crucial questions and just sneer at those who raise them.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Jamie Dimon has called bitcoin a fraud so why are they quoting prices?
Dimon called bitcoin a fraud but JPMorgan is quoting prices
Submitted by cpowell on Mon, 2017-10-09 02:05. Section: Daily Dispatches
By Matthew Levine
Friday, October 6, 2017
JPMorgan Chase & Co.’s chief executive, Jamie Dimon, famously panned bitcoin. But his bank’s clients apparently aren’t ready to dismiss it as a “fraud.”
The Wall Street firm’s widely followed morning markets note highlights the spot price for the cryptocurrency. There it sits, right below a rundown of commodities and above the 10-year Treasury yield — hardly fringe assets. …
… For the remainder of the report:
Russia is not set to block all exchanges offering to buy and sell cryptocurrencies. Bitcoin briefly underwent a flash crash but is now back above par trading at $4795 up 66 dollars.
Bitcoin Briefly Flash-Crashes On Russia ‘Ban’ Headlines
After weeks of uncertainty surrounding Russia’s plans for cryptocurrencies, local news outlet RBC reports overnight that Bank of Russia is working with the country’s general prosecutor to block all exchanges offering Russians the opportunity to buy and sell cryptocurrency.
As CoinTelegraph reports, first deputy of the central bank, Sergey Shvetsov, said during an international finance forum in Moscow:
“It’s obvious that when a pyramid (scheme) grows, interest in this pyramid hots up with the high rate of return.”
Echoing previous comments, Shvetsov added that the pyramid description is a result of “eyeing Bitcoin’s price dynamics over the past two years.”
The move is the most sweeping yet from Russian authorities regarding cryptocurrency access for citizens, and echoes the less coordinated bans of various industry resources common until last year. The debate as to how to handle cryptocurrency has raged throughout 2017 in Russia, with various high-profile entities giving conflicting views as to what the future will hold in terms of regulation.
This regulation is ostensibly due to go public by the end of the year.
In the meantime, not just private investors, but also the business sector faces “too high a risk” using cryptocurrency, Shvetsov said.
“We cannot stand apart. We cannot give direct and easy access to such dubious instruments for retail (investors),”
Financial instruments based on cryptocurrency are “impossible to support,” he continued, adding measures would be taken to “restrict” the ability of the Russian domestic market to interact with them.
The reaction was varied. As Coinivore notes, Bitcoin prices flash-crashed on CoinDesk…
Notably, this would be the third time that the country has issued some form of ban against Bitcoin and digital currency in the past several years.
Russia’s Central Bank just approved its first exchange “Voskhod,” so this is likely a temporary ban until regulations are set which will likely ban normal Russian citizens from investing into cryptocurrency due to high volatility.
However, Bitcoin is now higher on the day (bouncing back as it did from China’s ban), and as BitStamp data shows, not every exchange shows the flash-crash…
It seems the market for Bitcoin is quick to realize that the dcecentralized nature of the cryptocurrency framework means that whiole short-term demand from localized exchange closures may hobble prices, it does not affect the overall value of the independent currency (just as many have found out since China blocked exchanges).
We would not expect this to be the last nation to attempt to ‘ban’ Bitcoin. As Cybersecurity expert John McAfee warns, cryptocurrencies may encompass the sum of all fears for governments the world over.
With no centralized exchange to control or influence, national authorities around the world will find it increasingly difficult to determine a given citizen’s income and thus their income tax owed, undermining a critical source of government revenue.
Our income taxes are the greatest source of revenue, but if everybody’s using Bitcoin, the government doesn’t know what your income is. They can’t tax it, and if you choose to say I didn’t have anything, they cannot prove otherwise,” McAfee told CalvinAyre.com.
“It will eventually frighten every nation state, but it doesn’t matter what they do, there’s no way you can create a law or to legislate something that will stop Bitcoin or any cryptocurrency because technically, you cannot,” he added.
The often outspoken and eccentric McAfee did highlight the need for some regulation, however, preaching caution over the latest trend of government-sponsored Initial Coin Offerings (ICOs).
“China is right about one thing, the ICOs, the initial coin offerings, there are lots of scams, lots of people who are fraudulently taking money from other people, so that’s got to stop. But I don’t think governments can stop it. We as users and the bitcoin community have to be self-regulated,” McAfee said.
“The fear is in the fear of governments and central banks, like JPMorgan, which is America’s largest bank,” he said. “The CEO is so concerned that he acted like a madman and called Bitcoin a fraud, said someone is going to get killed eventually. It’s like, what are you talking about? It’s nonsense.”
“So banks and governments are the ones that have the fear. Well they should have some fear. They have taken control and power away from their citizens for hundreds of years. It’s time that we, as citizens, took that power back.”
Your early TUESDAY morning currency, Asian stock market results, important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight
2. Nikkei closed UP 132.80 POINTS OR .64% /USA: YEN FALLS TO 112,36
3. Europe stocks OPENED RED EXCEPT FTSE ( /USA dollar index FALLS TO 93.39/Euro UP to 1.1791
3b Japan 10 year bond yield: FALLS TO -+.055%/ 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:: 50.23 and Brent: 56.30
3f Gold UP/Yen UP
3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“HELICOPTER MONEY” OFF THE TABLE FOR NOW /REVERSE OPERATION TWIST ON THE BONDS: PURCHASE OF LONG BONDS AND SELLING THE SHORT END
Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.
3h Oil UP for WTI and UP or Brent this morning
3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO +.447%/Italian 10 yr bond yield UP to 2.130% /SPAIN 10 YR BOND YIELD UP TO 1.684%
3j Greek 10 year bond yield FALLS TO : 5.60???
3k Gold at $1291.90 silver at:17.20(8:15 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50
3l USA vs Russian rouble; (Russian rouble UP 44/100 in roubles/dollar) 57.85-
3m oil into the 50 dollar handle for WTI and 56 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 112.36 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION
30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning 0.9769 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1518 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 +0.447%
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)
European Stocks On Edge Ahead Of Catalan Independence Call, S&P Futures Rise
S&P futures are again modestly in the green as European shares hold steady ahead of a meeting of the Catalan regional parliament and a possible declaration of independence by Catalan leader Puigdemont, while Asian shares rise a the second day. The dollar declined for the 3rd day, its losses accelerating across the board amid growing concerns that Trump’s tax reform is once again dead following the Corker spat and a rejection from Paul Ryan, with the move gaining traction after China set the yuan’s fixing stronger for the first time in seven days. Monday’s sell-off in Turkish assets seemed to have little follow-through, with emerging-market currencies all trading higher and Treasuries steady. Traders are also waiting for minutes from the Federal Reserve’s last meeting, which may provide more details on the path of interest rates and balance sheet tapering.
“The weak dollar is a cue for investors that the U.S. Fed will not be aggressive in raising interest rates and this supports the outlook for a strong equities market,” said Cristina Ulang, head of research at First Metro Investment Corp. in Manila. “We will see a U.S. rate increase in December but it’s not going to be sharp since we aren’t seeing runaway U.S. economic growth.”
Asia stocks advanced as traders in Japan and South Korea returned from holidays, pushing the regional benchmark to a three-week high amid a broad weakness in the dollar. The MSCI Asia Pacific Index gained 0.7% to 164.49, its highest close since Sept. 20. The biggest boost came from Samsung Electronics which also helped South Korea’s Kospi advance 1.6%. In Japan, the Topix rose to its highest close in more than a decade, driven by a string of positive economic data both at home and abroad. The Asia-wide gauge has rallied 22 percent so far this year, on course for its best performance since 2009. It’s still trading at the biggest discount to the S&P 500 Index in 15 years in terms of price-to-book.
All eyes are on Europe however, and Spain in particular, where Catalan lawmakers will meet today to consider a declaration of independence that risks an ironclad backlash from Madrid. Attention will focus on the form of words used by Catalan President Carles Puigdemont, who is due to address the parliament in Barcelona at 6 p.m. The IBEX fell alongside most national gauges across Europe. The common currency gained for a third day. It is Spain’s biggest political crisis since an attempted military coup in 1981. Madrid’s IBEX stocks index drooped 0.5 percent early on and it is now down almost 9 percent since May, though a sharp rise in the euro has also taken a toll.
“We have not witnessed any relevant statement or signal by the separatists that would hint at a change of strategy ahead of today’s discussion in the Catalonian parliament,” economists at Barclays wrote.
“Consequently, at this point, it seems likely that Catalan President Carles Puigdemont remains on track to announce a unilateral declaration of independence as early as today.”
“Rather than a full universal declaration of independence, we may see a ‘symbolic statement’ from the Catalan government,” said Fabio Balboni, economist at HSBC Bank Plc. “Signs of disagreement are starting to emerge within the regional government, with more moderate members fearing the consequences of a further step towards independence, given the lack of support from the EU, and moves by some banks and firms to leave Catalonia.”
Despite the Spain jitters, The euro remained resilient, rising to a one-week high as data showed German exports had surged in August. Traders were also still upbeat on the currency after one of the European Central Bank’s German policymakers called for an end to its stimulus.
Elsewhere, Turkey’s lira recouped some of yesterdays losses even as the U.S. signaled the crisis between the two countries could drag on. Gold rose as the greenback weakened, and West Texas oil held gains near $50 a barrel before U.S. government data forecast to show crude inventories extended declines for a third week. Japan’s Topix index closed at the highest since July 2007 and Korean stocks staged a catch-up rally after a week-long holiday.
Turkey also got some help from a weaker dollar which was down for a third straight day. The dollar index, which tracks the greenback against six major rivals, dropped 0.2 percent to 93.533 and away from Friday’s almost 3-month peak. It gave the Turkish lira a breather having been sent sprawling to a nine-month low on Monday after the United States and Turkey scaled back visa services.
Meanwhile, Mexico’s peso hovered at its weakest in more than four months, ahead of the latest round of talks over the North American Free Trade Agreement (NAFTA) on Wednesday.
Over in Asia, the offshore Chinese yuan rate surged to its strongest levels in more than two-weeks. The central bank had also set a firmer-than-expected official rate, suggesting authorities are keen to keep the currency in check ahead of next week’s key national leadership meeting.
In commodities, Crude oil prices edged slightly higher, supported by OPEC comments signaling the possibility of continued action to restore market balance in the long-term. But gains were seen as limited as oil production platforms in the Gulf of Mexico started returning to service after the latest U.S. hurricane forced the shutdown of more than 90 percent of crude output in the area. Brent crude inched up 1 cent to $55.80 a barrel. U.S. crude added 2 cents to $49.60. Gold prices hit their highest in more than a week, though gains were capped as expectations of another U.S. interest rate hike this year limited appetite. Spot gold added 0.2 percent to $1,286.52 an ounce
Rate markets were largely unchanged, with the yield on 10-year Treasuries declined one basis point to 2.35 percent. Germany’s 10-year yield dipped one basis point to 0.44 percent, the lowest in two weeks. Britain’s 10-year yield was unchanged at 1.357 percent, the lowest in a week.
Traders are awaiting the start of the earnings season this week, with several major banks due to report, as well as Wednesday’s minutes from the Federal Reserve’s last meeting. Canadian stocks reopen after a holiday. Investors also await speeches by Fed Presidents and the minutes from the most recent Federal Reserve meeting due Wednesday. Economic data include NFIB small-business optimism. No major earnings scheduled.
- E-Mini futures on S&P 500, Dow and Nasdaq 100 each up 0.2%
- VIX Index down 1.7% at 10.15
- STOXX Europe 600 down 0.2% to 389.47
- MSCI Asia up 0.7% to 164.49
- MSCI Asia ex Japan up 0.7% to 542.58
- Nikkei up 0.6% to 20,823.51
- Topix up 0.5% to 1,695.14
- Hang Seng Index up 0.6% to 28,490.83
- Shanghai Composite up 0.3% to 3,382.99
- Sensex up 0.3% to 31,929.41
- Australia S&P/ASX 200 down 0.02% to 5,738.11
- Kospi up 1.6% to 2,433.81
- German 10Y yield fell 0.4 bps to 0.44%
- Euro up 0.4% to $1.1785
- Brent Futures up 0.4% to $56.01/bbl
- Italian 10Y yield fell 3.3 bps to 1.82%
- Spanish 10Y yield unchanged at 1.677%
- Gold spot up 0.4% to $1,289.21
- U.S. Dollar Index down 0.3% to 93.39
Top Overnight News
- Catalan President Carles Puigdemont is due to address regional lawmakers around noon New York time on the outcome of the Oct. 1 referendum that has been ruled illegal by the Spanish courts
- Minneapolis Fed President Neel Kashkari, a known dove and a candidate in running for the next Fed Chair, delivers opening remarks at a conference
- Allies of President Donald Trump say they fear his feud with Republican Senator Bob Corker risks unraveling the White House tax overhaul effort and that another major legislative failure could hobble the administration for the rest of his term
- The U.S. Ambassador to Turkey issued a video statement saying he “can’t predict” how long the latest crisis between the two countries will last
- Trump may travel to the demilitarized zone separating North and South Korea as part of his first visit to South Korea in Nov., Yonhap News reported, citing an unidentified military official; Trump is expected to send a “significant message” to North Korea during the trip, Yonhap said
- Spanish police are ready to arrest Catalan President Carles Puigdemont immediately if he declares independence in the regional parliament, two people familiar with the matter said; Puigdemont has called a press conference at 1pm in Barcelona
- New Zealand First Party leader to delay his public announcement about the result of talks to form a new government until Friday: NZ Herald
- German exports rose 3.1% m/m in August, beating an estimate 1.1% rise
- Banks in Europe have sold about 33 billion euros ($39 billion) of a new type of bank bond they’re calling “senior non-preferred”; the label allows underwriters to market the notes to managers of funds that can only hold senior debt, even though the securities can be forced by regulators to take losses in a crisis
- U.K. industrial output rose 1.6% y/y in Aug. vs est. 0.9%, while the trade deficit widened to GBP14.2B vs est. GBP11.2B
- Canadian Prime Minister Justin Trudeau will discuss international
security and trade during a meeting with President Donald Trump
- Canadian housing data: Median estimate forecasts a drop; still, momentum for a strong housing market will still be strong
Asia equity markets were mixed after a cautious tone in the US, although the KOSPI (+1.8%) surged as it took its turn to play catch up from a 10-day closure. ASX 200 (-0.3%) was indecisive with weakness in energy names offset by strength in gold miners, while Nikkei 225 (+0.5%) found support from a weaker currency following dovish comments from BoJ Governor Kuroda. Hang Seng (+0.6%) and Shanghai Comp. (-0.3%) were subdued with profit taking seen in the mainland after yesterday’s outperformance. Finally, 10yr JGBs were flat with demand dampened amid a positive risk tone in Japan and a reserved BoJ Rinban announcement for just JPY 605bln of JGBs. BoJ Governor Kuroda said Japan’s economy is expanding moderately and expects CPI to pick up pace towards 2% goal, while Kuroda added the BoJ is to expand the monetary base until inflation overshoots target.
Top Asian News
- Japan-Wide Scandal Erupts Over Steelmaker’s Falsified Data
- Bank Indonesia to Keep Inflation Focus Despite Aggressive Easing
- Japan Stocks to Watch: Fujitsu, Honda, Retailers, Rohm, Toyota
- Bank Indonesia to Keep Inflation Focus After Aggressive Cuts
- Chinese Firms List at Fastest Pace Since Market Opened in 1990
- PBOC Chief Quotes Phantom of the Opera in Push for Market Reform
All anticipation is on the upcoming speech from the Catalonian leader, expected at 12:00 London Time, where there overwhelming consensus is that he will officially announce the referendum result. The IBEX underperforms, yet largely in-line with the periphery European bourses, as the FTSE MIB trades close to 1% down close, with the nation clearly seeing the largest reaction to the ECB’s plan to rein in bad loans. Not the best results in terms of UK and German auctions, and the respective 10 year debt futures are acknowledging the signs of indigestion or simply tepid demand accordingly. Specifically, covers were relatively light and for the DMO the tail was lengthy, while the Buba retained around 20% of its inflation linker. Pre-issuance Eurex low holding in, for now, but Liffe setting a marginal new base and it could be a sell into dips market until or unless something changes to provide fresh leads.
Top European News
- Famous Brands Plunges Most in 14 Years on Gourmet Burgers Blow
- U.K. Utilities Heading for Price War to Protect Market Share
- What to Watch for If Catalan Leader Says ‘Independence’ Today
- Italy Industrial Output Rises Above Estimate, Boosting Outlook
- Mirabaud Says Brokerage Business Targets Break-Even This Year
In currencies, the highlight data of the day came from the UK, as sterling was initially propped up by the higher than expected Manufacturing data. Cable tested 1.32 following the data, however, clearly running into offers around this key level. UK Manufacturing Output MM (Aug) 0.4% vs. Exp. 0.2% (Prev. 0.5%, Rev. 0.4%) Manufacturing Output YY (Aug) 2.8% vs. Exp. 1.9% (Prev. 1.9%, Rev. 2.7%) Goods Trade Balance GBP (Aug) 14.24B vs. Exp. -11.20B (Prev. -11.58B, Rev. -12.83B) Goods Trade Bal. Non-EU (Aug) -5.83B vs. Exp. -3.60B (Prev. -3.84B, Rev. -5.34B). The Norwegian Krone took a hit in early European trade, as the nation’s CPI report missed across the board, albeit marginally so. EUR/NOK broke out the week’s early range and spiked through Friday’s highs.
In commodities, gold has continued to recover following the bounce seen ahead of 1260.00, drawing support from global uncertainty, alongside a softer USD. However, the increased expectations of another hike from the Fed, and the tightening likely to move into 2018, upside could be curved. Oil markets have also continued to recover from last week’s lows ahead of 49.00, which is evident of pending bids. WTI trades near session highs, looking to break back through 50.00/bbl, seemingly strengthened by comments from Barkindo stating that growth in US shale had slowed compared to the first half of 2017 and growth in global demand may show further upward revisions, giving the supply cut effort tailwind.
Looking at the day ahead, the only reading due in the US is the September NFIB small business optimism print. Onto other events, The Fed’s Kashkari is scheduled to speak at a regional economic conference. The IMF and World Bank annual meetings also start today and run through to Saturday.
US Event Calendar
- 6am: NFIB Small Business Optimism 103, est. 105, prior 105.3
- 10am: Fed’s Kashkari Speaks at Regional Economic Conference
- 8pm: Fed’s Kaplan Speaks at Stanford Institute
- Oct. 10-Oct. 15: Annual Meetings of the IMF and the World Bank
DB’s Jim Reid concludes the overnight wrap
Markets were given their own lullaby yesterday with the US on partial hols thus resulting in a quiet session. It was actually a landmark day though as it marked 10 years since the pre-GFC peak in the S&P 500. At periodic intervals throughout this year we’ve marked such 10 year crisis related anniversaries with a quick performance review of the major asset classes from our regular monthly’s performance review. We repeat this today for this latest anniversary with the graph and the 10yr performance table today.
To summarise in dollar terms, the S&P 500 (+102%) actually tops our list of 38 global assets even though this point 10 years ago was the local peak. This is followed by US HY (+85%) and 6 of the top 8 in dollar terms are credit assets. Gold (+74%) breaks up the top 8. 26 of the 38 assets are in positive total return territory since this point and 12 are in negative territory led by Greek equities (-85%), European Banks (-54%) with other major underperformers including Portuguese equities (-39%), Oil (-38%), FTSE-MIB (-34%), Bovespa (-33%), Russian Micex (-30%), Shanghai Comp (-18%) and the IBEX (-2%). So although US equities and credit markets have shrugged off the impact of the crisis and have prospered, deep scars still remain especially for the European periphery and some EM equities (all dollar adjusted).
Turning to Catalonia, Spanish markets slightly rebounded on Monday (IBEX +0.50%, 10y bonds -3bp) following increased pressure over the weekend on the Catalan authorities to avoid declaring independence. We should have more clarity today as Catalan President Puigdemont is expected to address the regional Parliament in Barcelona (Tuesday, 6pm local time). Back on Monday, Spanish newswire Efe reported Puigdemont plans to declare independence, but is also likely to insist Catalonia wishes to negotiate with the Spanish government with the help of external mediators. Elsewhere, as per Bloomberg, Catalan secessionists have tried to urge the Spanish opposition Socialists to form a coalition to oust Spanish PM Rajoy, which they have since refused. A member of the Socialists’ executive board (Carmen Calvo) said her party is focused on ensuring that the Spanish Constitution is observed.
Over to Brexit, the UK government has published White papers or contingency plans for leaving EU without a new Brexit deal. In the papers, the UK will set up its own customs regime where it will set its own tariffs, quotas and classification of goods, broadly in line with WTO requirements. However, the FT noted that British officials admit these contingency plans are at early stages and the government has not really invested in staff and systems to build a new customs system yet. Following up, PM May spoke yesterday, noting “it is our responsibility as a government to prepare for every eventuality” and that these white papers “support that work”, which sets out “steps to minimise disruptions for businesses and travellers”. Further, she noted that re the Brexit talks the “ball is in their court”. However, the EU commission spokesman responded “the ball is entirely in the UK court for the rest to happen”. In view of the stalemate, we note that the fifth round of Brexit talks are currently underway and will conclude this Thursday.
This morning in Asia, markets are trading marginally higher as we type. The Kospi is up +1.93% after markets reopened following a 10 day break. Elsewhere, the Nikkei (+0.34%) and ASX 200 (+0.06%) are up slightly, while the Hang Seng (-0.06%) and Shanghai Comp. (-0.25%) are slightly lower.
Turning to Turkey, the Lira/USD fell to a 6 month low (Lira -2.46%; equities -2.73%) yesterday after the US and then Turkey suspended Visa services for citizens seeking to visit the other country over the weekend. While the White House has remained silent, the U S ambassador to Turkey went onto YouTube to say “we hope (the situation) will not last long, but…we can’t predict how long it will take to resolve this matter”. Later on Monday, Turkey’s Erdogan spoke during a news conference, noting “the implementation of such decision (suspending Visa services) by the US ambassador is very saddening. Turkey is a state of law, not a tribal state”. As a reminder, Turkey represents c1% of the MSCI emerging market index, c23% of its government debt is held by foreigners (highest since Aug. 2015) and c37k US citizens travelled to Turkey in 2016.
Onto market performance yesterday now. US bourses softened on limited news flow and trading, with the S&P 500 (-0.18%), Dow (-0.06%) and Nasdaq (-0.16%) all slightly down on light volumes. Within the S&P, marginal gains in the energy and utilities sectors were more than offset by losses from healthcare and industrial names. Conversely, European markets were modestly higher, aided by a rebound in Spain’s IBEX (+0.50%) and a solid IP reading from Germany. Across the region, the Stoxx 600 and DAX both rose c0.2% while the FTSE dipped 0.20%. The VIX has halted its trend of 8th consecutive days of being below 10, rising 0.68 to 10.33, likely reflecting increased geopolitical tensions. The record stretch was 10 days in July this year.
Bond markets were slightly firmer, with core European 10y bond yields down modestly, with Bunds (-1.6bp), OATs (-1.7bp) and Gilts (-0.6bp) all rallying. Elsewhere, peripherals slightly outperformed with Spanish and Italian 10y yields both down 3.4bp. At the 2y part of the curve, changes were more modest, with Bunds (-0.4bp) and OATs (-0.3bp) slightly down while Gilts were unchanged. Most key currencies were little changed with the US dollar index down 0.13% while the Euro gained 0.09%. Notably, Sterling had a solid day (+0.58%), partly due to a positive data revision to the UK labour cost figure (likely a better measure of pay growth). The Office of National Statistics conceded an error in its 2Q growth in unit labour costs, as it should be 2.4% yoy rather than 1.6% as reported on Friday. In commodities, WTI oil rose 0.59%, following reports that Saudi Arabia plans to make further cut to its crude supplies in November. Elsewhere, precious metals (Gold +0.58%; Silver +0.79%) were slightly higher, while other base metals were mixed, but little changed (Copper -0.27%; Zinc -0.13%; Aluminium +0.99%).
Away from the markets, ECB Executive Board member Sabine Lautenschlaeger said “we should begin reducing our bond purchases next year” and exit QE as soon as possible, but noted that “it is important that we really move towards the exit – step by step, but steadily and in a clear direction”. On inflation, she noted “looking to the future, we can be confident that inflation will return to our objective”.
Staying in Europe, some words of caution from politicians and central bankers. The ECB policy maker Klass Knot said it feels “increasingly uncomfortable” to have low volatility in markets while there are risks in the global economy. Elsewhere, in his departing interview with the FT as Germany’s longest servicing finance minister, Schaeuble warned that investors are “concerned about the increased risks arising from the accumulation of more and more liquidity and the growth in public and private debt, “I myself am concerned about this, too”.
Over in Japan, with only 12 days till the election, the latest polls suggests the challenger – Tokyo governor Koike’s new Party of Hope may be losing steam. According to a small survey by Yomiuri newspaper over the weekend, 13% of respondents said they will vote for her party, down from 19% a week ago. Notably, support for Abe’s LDP is at 32% and 27% of respondents are still undecided. Staying in Asia, China’s long serving People’s Bank of China Governor Zhou Xiaochuan reiterated calls for further opening up of China’s financial sector, as per Bloomberg. He said “we could take bigger steps to increase the market access for financial institutions and the opening up of the financial market”. The interview is perhaps conveniently timed before the Chinese Community Party meets tomorrow for a final time before the big party congress later in the month (potentially 18th October).
The latest ECB CSPP numbers were out yesterday. The average daily run rate last week was €356mn (vs. €349mn average since the CSPP started). This is at the low end of the recent range but the CSPP/PSPP ratio is still notably above the pre-taper ratio. The current week saw the ratio at 12.9% and is above the 11.6% seen before the taper (vs. 16.6%, 14.8%, 19.2%, 13.6% in the last few weeks). So still strong evidence that the ECB is tapering PSPP more than CSPP. It’ll be interesting to see what happens after the expected additional taper likely to be announced in just over two weeks.
Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In Germany, August IP was materially above expectations at 2.6% mom (vs. 0.9% expected) and 4.7% yoy (vs. 2.9%). Notably this stronger month follows two consecutive months of decline, so annualised growth over the quarter is c3.4% saar for total production. Our German team needs a strong Sep. IP and retail sales to get to their expected 0.6% qoq increase in 3Q GDP, although positive sentiment indicators makes them optimistic that we are getting there. Elsewhere, the Eurozone’s October Sentix investor confidence index slightly beat at 29.7 (vs. 28.5 expected) to a new post-GFC high, while France’s business industry confidence was a tad softer at 104 (vs. 105 expected).
Looking at the day ahead, it’s a fairly busy day, particularly in Europe. The most significant releases in Europe include the August industrial production prints for France (1.5% yoy expected), Italy (2.9% yoy expected) and the UK (0.9% yoy expected) along with August trade data for Germany and the UK. The only reading due in the US is the September NFIB small business optimism print. Onto other events, The Fed’s Kashkari is scheduled to speak at a regional economic conference. The IMF and World Bank annual meetings also start today and run through to Saturday.
3. ASIAN AFFAIRS
i)Late MONDAY night/TUESDAY morning: Shanghai closed up 8.61 points or .26% /Hang Sang CLOSED UP 164.24 pts or .58% / The Nikkei closed UP 132.80 POINTS OR .64/Australia’s all ordinaires CLOSED UP 0.03%/Chinese yuan (ONSHORE) closed WELL up at 6.5792/Oil UP to 50.23 dollars per barrel for WTI and 56.30 for Brent. Stocks in Europe OPENED RED EXCEPT FTSE . ONSHORE YUAN CLOSED UP AGAINST THE DOLLAR AT 6.5792. OFFSHORE YUAN CLOSED STRONGER TO THE ONSHORE YUAN AT 6.5704 AND BOTH YUANS ARE STRONGER AGAINST THE DOLLAR. CHINA IS EXTREMELY HAPPY TODAY.
3a)THAILAND/SOUTH KOREA/NORTH KOREA
South Korea ready to try out its new graphite “blackout bomb” which can paralyze North Korea’s antiquated power grid and yet cause no loss of life
(courtesy zero hedge)
South Korea’s New “Blackout Bomb” Can Paralyze The North’s Power Grid
US and South Korean officials are nervously watching to see if North Korea follows through with its threats to carry out another nuclear test – or to fire a rumored long-range missile capable of accurately striking the west coast of the US into the Pacific – in celebration of the Oct. 10 anniversary of the Communist Party’s creation. Meanwhile, the Telegraph reports that South Korea has developed a new weapon to hobble the North’s infrastructure should an armed conflict erupt on the peninsula. Given that it’s almost daybreak in North Korea, such a test could happen as soon as Monday night, Eastern Time.
The weapon is a graphite bomb – otherwise known as a “blackout bomb” – which South Korean officials say will be capable of shutting down North Korea’s entire power grid. Blackout bombs were first used by the US in Iraq in the 1990 Gulf War and work by releasing a cloud of extremely fine, chemically treated carbon filaments over electrical components. The filaments are so fine that they act like a cloud, but cause short circuits in electrical equipment.
As News.com.au points out, North Korea tends to celebrate the Oct. 10 holiday with military parades and aggressive rhetoric. But this year’s festivities could include new provocative weapons tests.
“The Kim regime usually uses these sorts of occasions to demonstrate some show of strength — in this current climate a missile test is a likely result,” says Dr Genevieve Hohnen, lecturer in politics and international relations at Edith Cowan University.
The Telegraph reports that the South developed the bomb to minimize civilian casualties in the North should a conflict erupt. In a statement to Yonhap, a military official said the South Korean army could assemble a blackout bomb at any time. The weapon was reportedly developed by South Korea’s Agency for Defense Development.
“All technologies for the development of a graphite bomb led by the ADD have been secured. It is in the stage where we can build the bombs anytime,” a military official told Yonhap.
The bomb is often referred to as a “soft bomb” because it only affects targeted electrical power systems.
As the Telegraph explains, the blackout bomb was developed as part of South Korea’s “three pillars” plan for retaliating against the North if it believes a nuclear strike is imminent. Escalating tensions with the North have inspired the South to move its target date for completion forward by three years. The plan was initially slated to be complete by the mid-2020s.
The first two parts of the plan involve detecting – and then intercepting – North Korea missiles. The second part – aptly named the “massive punishment and retaliation plan” involves launching attacks against the country’s leadership, including a plan to assassinate Kim Jong Un.
South Korea is bringing forward the deployment of its “three pillars” of national defence by as much as three years as a result of the growing threat posed by Pyongyang’s nuclear and missile development programmes.
The three-pronged strategy was originally scheduled to be in place by the mid-2020s, but North Korea’s increasingly aggressive and unpredictable behaviour has forced Seoul to revise that timeline.
The Kill Chain programme is designed to detect, identify and intercept incoming missiles in the shortest possible time and operates in conjunction with the Korea Air and Missile Defence system for lower-tier defence against inbound missiles.
The final component of the strategy is the Korea Massive Punishment & Retaliation plan, under which Seoul will launch attacks against leadership targets in North Korea if it detects signs that the regime is planning to use nuclear weapons.
South Korea believes North Korea’s energy grid is outdated and vulnerable, and thus would be incredibly susceptible to a “blackout bomb” attack. Blackout bombs were first used by the US against Iraq in the Gulf War of 1990, when they knocked out about 85 percent of Iraq’s electricity. They were also used by NATO against Serbia in 1999, when it damaged around 70 percent of the country’s electrical supply.
* * *
President Donald Trump fired off his latest threatening tweet about North Korea earlier today, reiterating his view that 25 years of US appeasement and billions of dollars in humanitarian aid for the North clearly have not worked. He ended the tweet with yet another vague hint that the US could soon resort to a military strike.
Though the US has rejected North Korea’s claims that Trump’s rhetoric has amounted to a declaration of war, how much longer can the US credibly claim that “all options are on the table” if North Korea continues to provoke the international community with its missile and nuclear tests?
North Korea Hackers Steal War Plans, Kim Jong-Un Assassination Details
While tensions with North Korea have receded in recent weeks, and especially following the latest uneventful weekend, when markets were on edge that Kim could try another missile test launch to celebrate the country’s national holiday, this could reverse following news from the BBC that North Korea hackers have reportedly stolen a large cache of military documents from South Korea, including a plan to assassinate North Korea’s leader Kim Jong-un.
According to South Korean lawmaker Rhee Cheol-hee – a member of South Korea’s ruling party who sits on its parliament’s defence committee – the compromised documents, which were stolen from the country’s defense ministry, include wartime contingency plans created by the US and South Korea, and also include reports to the allies’ senior commanders. Plans for the South’s special forces are also said to have been accessed, along with information on significant power plants and military facilities in the South.
Rhee also said some 235 gigabytes of military documents had been stolen from the Defence Integrated Data Centre, and that 80% of them have yet to be identified.
Just like in the case of Equifax, the breach itself took place long ago, with South Korea waiting over a year to disclose the full details of the the hack which took place in September last year. In May, South Korea said a large amount of data had been stolen and that North Korea may have instigated the cyber attack – but gave no details of what was taken. The South Korean defence ministry has so far refused to comment about the allegation, while North Korea denied the claim.
According to South Korea’s Yonhap news agency reports that Seoul has been subject to a barrage of cyber attacks by its communist neighbour in recent years, with many targeting government websites and facilities. According to long-running media reports, which have yet to be confirmed with hard evidence however, the isolated, backward state is believed to have specially-trained hackers based overseas, including in China.
One thing that’s certain, is that tews that Pyongyang is “likely to have accessed the Seoul-Washington plans for all-out war” in the Koreas will do nothing to soothe tensions between the US and North Korea. The two nations have been at verbal loggerheads over the North’s nuclear activities, with the US pressing for a halt to missile tests and Pyongyang vowing to continue them.
Meanwhile, away from cyber war, Pyongyang has been far more aggressive in the realm of unconventional warfare, and the North recently claimed to have successfully tested a miniaturised hydrogen bomb, which could be loaded onto a long-range missile. In a speech at the UN in September, US President Donald Trump threatened to destroy North Korea if it menaced the US or its allies, and said its leader “is on a suicide mission”.
Kim responded with a rare televized statement, vowing to “tame the mentally deranged US dotard with fire”. Trump’s latest comment took the form of a cryptic tweet at the weekend, where he warned that “only one thing will work” in dealing with North Korea, after years of talks had proved fruitless. He did not elaborate further.
b) REPORT ON JAPAN
(courtesy zero hedge)
Spanish Police Set To Arrest Catalan Leader “Immediately” If He Declares Independence
Spain’s D-Day is here: the country’s biggest political crisis since an attempted military coup in 1981 is about to get a resolution – one way or another – and as Bloomberg reports, Spanish police are ready to arrest Catalan President Carles Puigdemont “immediately” if he declares independence in the regional parliament, according to two people familiar with the government’s plans.
In what may be a preview of a possible upcoming civil war should today’s event be handled incorrectly, Bloomberg writes that while a final decision on whether to act has not yet been taken, Spain’s National Police force has elite officers deployed in Catalonia who are prepared to join a raid if Catalan police try to shield Puigdemont. If Puigdemont makes a statement that falls short of immediate independence, the government in Madrid may stay its hand. Puigdemont has called a press conference for 1 p.m. in Barcelona.
The National Police and the Civil Guard “have sufficient officers in place to overcome any resistance they might meet” Bloomberg’s sources note. A government press officer declined to comment other than to say that any such decision would have to be ordered by a judge.
Also today, Puigdemont is due to address the regional legislature at 6 p.m on Tuesday with many of his supporters looking for him to announce a new republic to follow through on the makeshift referendum held on Oct. 1. With his core supporters demanding he make good on the illegal vote for independence and officials in Madrid urging Rajoy to finally crack down on the separatist campaign, Puigdemont’s rebellion may be running out of road.
Already armed police have cordoned off the Catalan parliament, hours before the much anticipated independence speech:
Meanwhile, Spain’s Prime Minister Mariano Rajoy has held a firm line, refusing to negotiate with the Catalan separatists and insisting all along that he’ll use only proportionate force in relation to the separatist government in Barcelona. Even so, prosecutors have been exploring charges of sedition against other separatist leaders including Jordi Sanchez, head of the biggest pro-independence campaign group. Sedition carries a jail term of up to 15 years.
Rajoy has vowed to use all the legal means at his disposal to prevent Catalonia seceding after Puigdemont’s government defied a series of Constitutional Court rulings to go ahead with the referendum. Catalan police ignored orders to seize ballot boxes ahead of the vote. The Spanish government has stationed thousands of National Police in cruise ships in the Port of Barcelona.
So far local asset markets are taking today’s events in stride, with Spain’s IBEX stock index down just 1% as of noon in Madrid, while 10-year bond yields rose 2 bps.
Courtesy of Bloomberg, here is a flowchart laying out the various possible events in Spain over the next 24 hours.
Finally, from The Spain Report, some more details ahead of Puigdemont’s much anticipated 6pm speech:
This evening at 6 p.m., Carles Puigdemont will appear before the regional parliament to discuss “the general political situation” in Catalonia. Most of the country expects that to translate as some kind of declaration of independence from Spain.
The precise wording of that statement, and to what extent it will be interpreted as a genuine declaration of independence by courts, prosecutors, the central government and Catalan separatists themselves, is unknown this Tuesday morning.
The size and reach of the Spanish state’s response to any declaration of independence is also unknown: the options range from criminal charges of sedition or rebellion, through the suspension of home rule in Catalonia for an unspecified period of time and even to articles of the Spanish Constitution that allow for the declaration of a state of alarm or exception.
Given the policing shortcomings of the past 10 days, any move to arrest Mr. Puigdemont and members of his regional government would be fraught with potential difficulties.
The Catalan Police, the Mossos, have closed parliament park, the Parc de la Ciutadella, in central Barcelona, erected metal barriers around the parliament building and parked several dozen police vans outside.
The Catalan National Assembly (ANC), Omnium Cultural and local separatist groups are busy organising untold thousands of supporters to travel to the park and the area outside the High Court, in the adjacent road.
With a proven ability to mobilise several hundred thousand people, Spaniards will find out this evening if those policing efforts are enough hold back the protestors or if, in the end, they overflow into the park and surround parliament. Messaging shifted slightly overnight from “defend parliament” to “peacefully support” Catalan institutions.
Police—regional or national—were unable (national) or unwilling (regional) to stop most people who wanted to from voting on October 1, and did not stop separatist protestors from shutting down Catalan roads during a day of “total stoppage” last Tuesday.
On September 20, snap protests called by the ANC and Omnium led to the investigation of sedition because court officials and judicial police were blocked inside a building for several hours and Civil Guard SUVs vandalised.
The Spanish Home Office refused to comment on any National Police and Civil Guard provisions for the day, citing operational security requirements.
Strange announcement: Puigdemont “asks for a mandate to declare independence” as well as suspending the consequences of the vote for weeks in order to negotiate with Madrid…then Madrid reads the wrong tea leaves..
Catalan Leader Asks For Mandate To Declare Independence, Suspends Consequences Of Vote “For Weeks”
Summary (via Bloomberg): It sounds like Catalan President Puigdemont is trying to catch Spanish Prime Minister Mariano Rajoy at his own game. Rajoy has always said he won’t talk as long as the Catalan government is acting outside the Spanish Constitution’s framework. Puigdemont is basically saying — fine let’s do that — but if doesn’t go our way we’ll resume with our plans.
* * *
Following a brief intro, thanking supporters, proclaiming this a ‘Spain’ issue, and outlining the referendum’s success, Puigdemont turned more angry, slamming the “humiliation, aggression, and Catalanophobia” of Madrid, suggesting that Spaniards are victims of propaganda, and proclaiming that “many Catalans believe that the only way to guarantee survival is for Catalonia to become a State.”
“We’re not crazy, delinquents or doing a coup,” Puigdemont says.
Then he paused…saying Catalonia has won the right to independence.
“I assume my mandate to convert Catalonia in an independent State.”
And then ads that he calls for weeks of dialog, suspending the independence referendum result.
As Bloomberg notes, Puigdemont has just laid a deal on the table for Madrid. He’s proposing suspending the illegal process that the central government has complained so much about while they talk.
Is Madrid going to consider this blackmail or is Prime Minister Mariano Rajoy going to take into account that Catalan Puigdemont has backed off from declaring independence?
All eyes on Rajoy, but also on the streets of Catalonia. There may be some disappointment among supporters of independence. Remember crowds from both sides were gathering earlier.
Markets are reacting positively with Spain ETF higher…
EURCHF is on the rise…
Alberto Gallo summed it all up perfectly…
* * *
Live Feed (due to start at 1pm ET):
Spain Responds: Considers Puigdemont Speech Declaration Of Independence, “Expected To Apply Article 155”
It has been a hectic day for Spain where moments ago separatist Catalonia appeared to step back from the brink of officially declaring independence – with potentially dire consequences – even as Puigdemont asked for a mandate to delare indpendence for Catalonia but proposed to suspend the result of the referendum vote “for weeks”, in an attempt to achieve dialogue with the Spanish government “to arrive at an agreed solution to advance with the demands of the people of Catalonia.”
“With the results of October 1, Catalonia has won the right to be an independent state,” Puigdemont said. “If everyone acts responsibly, the conflict can be resolved with calm.”
As Bloomberg summarized the speech, “it sounds like Catalan President Puigdemont is trying to catch Spanish Prime Minister Mariano Rajoy at his own game. Rajoy has always said he won’t talk as long as the Catalan government is acting outside the Spanish Constitution’s framework. Puigdemont is basically saying — fine let’s do that — but if doesn’t go our way we’ll resume with our plans.”
The question then was how the Spanish central government would respond, which it did when it appears to have purposefully misinterpreted Puigdemont speech, declaring that “Catalonia has declared deferred independence” and, as El Pais reports, “Central government sources say they consider Puigdemont’s speech to be a declaration of independence” with a press officer for the Rajoy cabinet telling Bloomberg that “it’s not acceptable to make an implicit declaration of independence and then explicitly leave it hanging.” adding that Puigdemont “has taken his irresponsibility to the absolute extreme by ignoring the laws, citizens.”
As a result, “the Rajoy government will take measures, and is expected to apply Article 155 of the Constitution.”
That, as readers are aware by now, is the so-called “nuclear option”, one which would entail Spain seizing control of the separatist province, potentially leading to even more violence and even more demands for independence.
GREAT BRITAIN/NORTH KOREA
Britain draws up plans for war with North Korea;
(courtesy Mac Slavo/SHFTPlan.com)
Britain Draws Up Plans For War With North Korea
While the United States remains distracted and divided, Great Britain draws up plans for an upcoming war with North Korea.
Tossing major issues aside, Americans have all but forgotten that the world stands on the precipice of World War 3.
While the left is focusing on implementing more gun control and the right is worried about what athletes do during the national anthem, Britain is drawing up plans for a massive war with the rogue nation of North Korea. Britain is preparing for war in the event that the communist regime conducts another successful missile test and the United States responds with a strike.
North Korea is being closely watched right now, especially since the recent ratcheting up of tensions. Amid fears it could launch another long-range missile test on Tuesday to mark the anniversary of the founding of its ruling party, some countries refuse to take the threat lightly. And bellicose rhetoric from Donald Trump has heightened tensions in the region in recent months, prompting British officials to draw up military plans for a response to a break out of hostilities it was reported.
According to the Daily Mail, part of the wartime preparations include the deployment of the Navy’s newest aircraft carrier, HMS Queen Elizabeth, before it has undergone flight trials.
“We have plenty of ships to send… the Type-45 destroyers, the Type-23 frigates. Britain’s new aircraft carrier could be pressed into service early if things turn south,” a senior Whitehall source told the newspaper.
Details of Britain’s secret operation plan have emerged after Donald Trump warned that “only one thing will work” when it comes to dealing with North Korea’s antics.
The tyrannical fascist in power in North Korea, Kim Jong-Un, has continued nuclear and rocket tests despite widespread condemnation and sanctions.
HMS Queen Elizabeth, which arrived at its home in Portsmouth in August after extensive sea trials, is not due to enter service until 2020. But the possible move to deploy it ahead of schedule drew comparisons with the start of the Falklands War.
“In the Falklands, we had to react to an event and HMS Illustrious was accelerated to respond,” a Navy source told the Mail.
“This was a reaction to protect British territory, however. In this case [North Korea], the UK would be part of a united global coalition. We would see what support we could give.”
Sir Michael Fallon, the Defence Secretary, said last week that the UK should increase its military spending in the face of growing threats from states such as North Korea. Last month, Sir Michael told the BBC that Britain was at risk from Pyongyang’’s long-range nuclear missile programme.
“The US is fully entitled to defend its own territory, to defend its bases and to look after its people, but this involves us, London is closer to North Korea and its missiles than Los Angeles,” he said.
5. RUSSIA AND MIDDLE EASTERN AFFAIRS
Russia finally accuses the uSA of pretending to fight ISIS something that we have been telling you for years.
Russia Accuses U.S. Of “Pretending To Fight ISIS”
Russia has once again accused the US-led coalition in Iraq and Syria of facilitating the entry of Islamic State terrorists into Syria in order to hinder the advance of the Syrian Army and its allies. On Tuesday Russia’s defense ministry accused the US of merely “pretending” to fight ISIS in a way designed to put maximum pressure on Syrian and Russian front line defenses in Syria’s east. Russian military spokesman Major-General Igor Konashenkov said, “Everyone sees that the U.S.-led coalition is pretending to fight Islamic State, above all inIraq, but continuing to allegedly fight Islamic State in Syria actively for some reason.”
The accusation comes a little over two weeks after Russia released aerial images allegedly showing ISIS, the SDF (US-backed “Syrian Democratic Forces”), and US special forces working side-by-side on the battlefield against Syrian and Russian forces in Deir Ezzor, Syria. While the previous charges implied some level of close coordination between US-backed forces and ISIS in the region, the new claims point to coalition air power intentionally facilitating and utilizing ISIS movements to its advantage: “The actions of the Pentagon and the coalition demand an explanation. Is their change of tack a desire to complicate as much as they can the Syrian army’s operation, backed by the Russian air force, to take back Syrian territory to the east of the Euphrates?” asked Konashenkov. He continued with, “Or is it an artful move to drive Islamic State terrorists out of Iraq by forcing them into Syria and into the path of the Russian air force’s pinpoint bombing?”
Konashenkov further stated Syrian troops were in the midst of a fierce campaign to oust Islamic State fighters from the city of al-Mayadin, southeast of Deir Ezzor, but that IS was daily reinforcing its ranks there with “foreign mercenaries” pouring in from Iraq. The implications are that the US coalition is engineering this outcome.
Indeed, it’s no secret that throughout the course of the over 6-year long war in Syria, the international powers operating from neighboring countries have allowed border areas to remain remarkably porous, which facilitated record breaking numbers of jihadists entering Syria from dozens of countries. As the US State Department’s own 2014 CountryReport on Terrorism confirms, the rate of foreign terrorist entry into Syria over the past years has been unprecedented among any conflict in history: “The rate of foreign terrorist fighter travel to Syria – totaling more than 16,000 foreign terrorist fighters from more than 90 countries as of late December – exceeded the rate of foreign terrorist fighters who traveled to Afghanistan and Pakistan, Iraq, Yemen, or Somalia at any point in the last 20 years.”
Though Russian claims will be dismissed as outlandish by some, the latest accusations against the US are consistent with both the historical record and even US internal intelligence reports regarding the rise of the Islamic State, which early in the war envisioned a Sunni “Islamic State” in Syria’s east which could “isolate the Syrian regime” and pressure its regional ally Iran.
One of the more shocking admissions of this strategy came in 2016, when then Secretary of State John Kerry was caught on audio telling a Syrian opposition gathering, which met on the sidelines of a UN General Assembly meeting, that Obama hoped to use ISIS as leverage against Assad. According to Kerry on the leaked audio (25:50):
“And we know that this was growing, we were watching, we saw that Daesh was growing in strength, and we thought Assad was threatened”… “(We) thought, however, we could probably manage that Assad might then negotiate. But instead of negotiating he got Putin to support him.”
If the US coalition is indeed allowing ISIS in Iraq to “escape” into eastern Syria, it constitutes a clear continuation of the Obama era policy of “watching” and “managing” Daesh in order to put pressure on Assad and Iran. Former British spy, diplomat, and current Beirut-based Middle East analyst Alastaire Crooke has called this the “wedge concept” of ISIS origins. In previous commentary on the 2012 Defense Intelligence Agency (DIA) memo which first outlined the wedge concept, Crooke explained:
In short, the DIA assessment indicates that the “wedge” concept was being given new life by the desire to pressure Assad in the wake of the 2011 insurgency launched against the Syrian state. “Supporting powers” effectively wanted to inject hydraulic fracturing fluid into eastern Syria (radical Salafists) in order to fracture the bridge between Iran and its Arab allies, even at the cost of this “fracking” opening fissures right down inside Iraq to Ramadi. (Intelligence assessments purpose is to provide “a view” — not to describe or prescribe policy. But it is clear that the DIA reports’ “warnings” were widely circulated and would have been meshed into the policy consideration.)
Crooke further explained that this policy path could not be easily walked back once committed to, as the latest developments in Deir Ezzor appear to demonstrate. While US presence in Syria is now ostensibly based on anti-terror and anti-ISIS operations, the following dynamics are still in play:
But this “view” has exactly come about. It is fact. One might conclude then that in the policy debate, the notion of isolating Hezbollah from Iran, and of weakening and pressurizing President Assad, simply trumped the common sense judgement that when you pump highly toxic and dangerous fracturing substances into geological formations, you can never entirely know or control the consequences. And once you go down this road, it is not easy to “walk it back,” as it were: the toxicity is already suffused through the rocks. So, when the GCC demanded a “price” for any Iran deal (i.e. massing “fracking” forces close to Aleppo), the pass had been already partially been sold by the U.S. by 2012, when it did not object to what the “supporting powers” wanted .
Just prior to Russia’s latest charges against the US, Hezbollah leader Hassan Nasrallah also said on Sunday that American forces were actively hindering the fight against ISIS: “The American air force in some areas prevents the Syrian army and its allies from advancing in areas controlled by Islamic State,” he said in a televised speech. And added further, “The Americans are working to hinder the battle against Islamic State.”
According to veteran Middle East journalist Elijah Magnier, who is reporting from the ground, the US is looking the other way while ISIS pours across the Iraq-Syria border:
Turkey in Idlib under Russian Air Force cover and Syrian and Iraqi fo…http://lrai.li/fzvhhmj @AlraiMediaGrouphttps://elijahjm.wordpress.com/2017/10/10/turkey-in-idlib-under-russian-air-force-cover-and-syrian-and-iraqi-forces-will-meet-at-their-respective-borders/ … …
In every single #ISIS new attack, #SAA forces heading towards al-Qaim will have2 stop & clean the breach behind themhttps://twitter.com/ejmalrai/status/917640765861433345 …
It doesn’t mean there is a deal between #ISIS & #USA, but ISIS is allowed 2cross & attack Syrian troops means a lothttps://twitter.com/ejmalrai/status/917640466736275456 …
At minimum it should be clear by now to any objective observer that the US is not fundamentally motivated in its race for Deir Ezzor province by defeat of ISIS terrorism, but in truth by control of the eastern province’s oil fields. Whatever oil fields the SDF can gain control of in the wake of Islamic State’s retreat will then used as powerful bargaining leverage in negotiating a post-ISIS Syria. The Kurdish and Arab SDF coalition which is advised by US special forces, for example, recently captured Tabiyeh and al-Isba oil and gas fields northeast of Deir Ezzor city.
Though the US endgame is the ultimate million dollar question in all of this, it appears at least for now that this endgame has something to do with the Pentagon forcing itself into a place of affecting the Syrian war’s outcome and final apportionment of power: the best case scenario being permanent US bases under a Syrian Kurdish federated zone with favored access to Syrian oil doled out by Kurdish partners.
And it appears that the US coalition is now using ISIS as a geopolitical chess piece (not for the first time) to effect this outcome
Let us see if Saudi Arabia announces oil priced in yuan and then completely turn towards Russia for muscle support
(courtesy Pepe Escobar)
special thanks to Robert H for sending this to us
The House of Saud bows to the House of Putin
Saudi Arabia pivots to Russia, the new sheriff in town
What a difference a year – an eternity in geopolitics – makes. No one could see this coming; the ideological matrix of all strands of Salafi-jihadi terror – which Russia fights no holds barred, from ISIS/Daesh to the Caucasus Emirate – beating a path to the Kremlin and about to embrace Russia as a strategic ally.
The House of Saud was horrified by Russia’s successful campaign to prevent regime change in Syria. Moscow was solidifying its alliance with Tehran. Hawks in the Obama administration were imposing on Saudi Arabia a strategy of keeping oil prices down to hurt the Russian economy.
Now, losing all its battles from Syria to Yemen, losing regional influence to both Iran and Turkey, indebted, vulnerable and paranoid, the House of Saud has also to confront the ghost of a possible coup in Riyadh against Crown Prince Mohammad bin Salman, a.k.a. MBS, as Asia Times reported. Under so much pressure, who’re you gonna call?
The ultimate ghostbuster; Russian President Vladimir Putin.
Essentially, the House of Saud is obsessed by three main vectors; low oil prices; Iran and Shi’ism; and what to make of US foreign policy under Trump. Let’s take them one by one.
I want my S-400s
As much as a Moscow-Washington reset remains doomed, even with the implosion of Russia-Gate, House of Saud advisers must have known that the Kremlin won’t ditch its strategic relationship with Iran – one of the key nodes of Eurasia integration.
Moscow will keep aligned with Iran across “Syraq”; that’s part of the “4+1” (Russia-Syria-Iran-Iraq, plus Hezbollah) alliance in the Levant/Mesopotamia, an incontrovertible (and winning) fact on the ground. And that does not preclude Russia’s increasingly cozy relationships across the Arab world – as with Egypt, Jordan, the UAE and Libya.
What concerns Moscow, deeply, is Saudi (formal or informal) financing of Salafi-jihadi outfits inside Russia. So a high-level line of communication between Moscow and Riyadh works towards dissipating any misunderstandings regarding, for instance, jihadism in Tatarstan and Chechnya.
Moscow does not buy the much-spun (in the West) Iranian “aggressive behavior” in the Middle East. As a key negotiator of the Joint Comprehensive Plan of Action (JCPOA), Russia very well knows that Iran’s ballistic missile program is actually the key target of Trump’s imminent decertification of the Iran deal.
These missiles actually represent dissuasion against any possible US attack, “leading from behind” or not. The Islamic Revolutionary Guards Corp (IRGC) in Tehran has made it quite clear the ballistic missile program does not fall into the JCPOA, and will remain active.
Enter the memorandum of understanding (MOU) between the Saudis and Rosoboronexport (Russia’s state body for exporting military hardware) signed in Moscow for the purchase of the S-400 missile system; the Kornet-EM system; the TOS-1A; the AGS-30; and last but not least the new Kalashnikov AK-103.
The S-400 success story is unequivocal. Iran bought it. Turkey bought it. Now Saudi Arabia buys it – even after splurging a fortune in US weapons during Trump’s by now infamous “sword dance” visit to Riyadh.
So no wonder, after the S-400 news, the US State Department like clockwork approved the possible – that’s the operative word – $15 billion sale of 44 THAAD launchers and 360 missiles to Saudi Arabia, a very good business for Lockheed Martin and Raytheon.
The Pentagon’s defense security cooperation agency said, “this sale furthers US national security and foreign policy interests, and supports the long-term security of Saudi Arabia and the Gulf region in the face of Iranian and other regional threats.” Cynics already envisage a battle of Iranian S-400s and Saudi THAADs “moderated” by Saudi S-400s.
We are the new OPEC
King Salman may have boarded the Saudi Arabian Airlines flight, but the real architect of the pivot to Russia is MBS. Oil in Saudi Arabia accounts for 87% of budget revenues, 42% of GDP, and 90% of exports. MBS is betting all his cards on the Vision 2030 program to “modernize” the Saudi economy, and he knows very well it will be impossible to pull off if oil prices are low.
At the Russia Energy Week forum in Moscow, Saudi Arabia’s Energy Minister Khalid Al-Falih said the Aramco IPO – a key driver of funds to Vision 2030 – will happen in the second half of 2018, contradicting Saudi officials who earlier stated the IPO was once again postponed to 2019. And no one can tell whether it will take place in the NYSE or not.
Meanwhile, the priority remains the OPEC / non-OPEC deal (with Russia at the forefront) to “stabilize” oil prices, clinched in November 2016 to cut production. President Putin tentatively agreed the deal could be extended beyond March 2018, something to be discussed in detail at the next OPEC meeting in Vienna in late November.
The deal may certainly be seen as a purely strategic/economic measure to stabilize the oil market – with no geopolitical overtones. And yet OPEC is geared to become a brand new animal – with Russia and Saudi Arabia de facto deciding where the global oil markets go, and then telling the other OPEC players. It’s open to question what Iran, Algeria, Nigeria, Venezuela, among others, will have to say about this. The barely disguised aim is to bring oil prices up to a band of $60-75 a barrel by the middle of next year. Certainly a good deal for the Aramco IPO.
There were a rash of other deals clinched in Moscow – such as Aramco and the Russian Direct Investment Fund (RDIF) $1 billion fund for oil-services projects in Russia, plus another $1 billion for a technology fund.
This synergy implies Saudi Arabia investing in top Russian energy assets and Russia, for instance, supplying gas to the Saudi petrochemical industry and reducing drilling/production costs. Certainly a good deal for Vision 2030.
The new sheriff in town
To say that the Saudi pivot to Russia is rattling nerves across the Beltway is an understatement. The CIA is not exactly fond of MBS. 9/11-related puzzles are bound to resurface.
What’s also clear is that the House of Saud has realized it cannot be left to watching camels as the great Eurasia integration caravan picks up speed. Russia has pipelines crisscrossing most of Eurasia. China is building rail lines connecting all of Eurasia. And we haven’t even touched specific Saudi-Chinese projects part of the Belt and Road Initiative (BRI).
Those were the days of King Abdulaziz and FDR aboard the USS Quincy in the Suez Canal forging a strategic partnership; the days of Washington leading Saudi Arabia to increase oil production, drive down prices and weaken the USSR; the days of the Afghan jihad. Now there’s no US dependence on House of Saud oil anymore. And jihadist blowback is the name of the security game.
It may be too early to identify the Saudi pivot to Russia as the shift of the century. It is though a certified game-changer. Moscow is about to become the new sheriff in town, in virtually any town across Southwest Asia. And it’s getting there on its own terms, without resorting to a Colt dialectic. MBS wants energy/defense cooperation? He gets it. MBS wants less Russian cooperation with Iran? He doesn’t get it. OPEC aims at higher oil prices? Done. And what about the S-400s? Free – sort of – for all.
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 TUESDAY morning 7:00 am
Euro/USA 1.1791 UP .0050/ REACTING TO 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 112.36 DOWN 0.319(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 1.3191 UP .0050 (Brexit March 29/ 2017/ARTICLE 50 SIGNED
THERESA MAY FORMS A NEW GOVERNMENT/STARTS BREXIT TALKS
USA/CAN 1.2503 DOWN .0051 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/(TRUMP INITIATES LUMBER TARIFFS ON CANADA)
Early THIS TUESDAY morning in Europe, the Euro ROSE by 50 basis points, trading now ABOVE the important 1.08 level RISING to 1.1737; / Last night the Shanghai composite CLOSED UP 8.61 POINTS OR .26% / Hang Sang CLOSED UP 164.34 OR .46% /AUSTRALIA CLOSED UP 0.03% / EUROPEAN BOURSES OPENED ALL RED EXCEPT UK FTSE
The NIKKEI: this TUESDAY morning CLOSED UP 132.80 POINTS OR .64%
Trading from Europe and Asia:
1. Europe stocks OPENED IN THE RED EXCEPT FTSE
2/ CHINESE BOURSES / : Hang Sang CLOSED UP 164.24 POINTS OR .58% / SHANGHAI CLOSED UP 25.43 POINTS OR .48% /Australia BOURSE CLOSED UP 0.03% /Nikkei (Japan)CLOSED UP 132.80 POINTS OR .64% / INDIA’S SENSEX IN THE GREEN
Gold very early morning trading: 1291.90
Early TUESDAY morning USA 10 year bond yield: 2.352% !!! UP 0 IN POINTS from MONDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. (POLICY FED ERROR)
The 30 yr bond yield 2.891, UP 0 IN BASIS POINTS from MONDAY night. (POLICY FED ERROR)
USA dollar index early TUESDAY morning: 93.49 DOWN 29 CENT(S) from YESTERDAY’s close.
This ends early morning numbers TUESDAY MORNING
And now your closing TUESDAY NUMBERS
Portuguese 10 year bond yield: 2.392% DOWN 1 in basis point(s) yield from MONDAY
JAPANESE BOND YIELD: +.055% DOWN 1/10 in basis point yield from MONDAY/JAPAN losing control of its yield curve/
SPANISH 10 YR BOND YIELD: 1.695% UP 2 IN basis point yield from MONDAY
ITALIAN 10 YR BOND YIELD: 2.127 UP 1 POINTS in basis point yield from MONDAY
the Italian 10 yr bond yield is trading 44 points HIGHER than Spain.
GERMAN 10 YR BOND YIELD: +.442% DOWN 1/5 IN BASIS POINTS ON THE DAY
IMPORTANT CURRENCY CLOSES FOR TUESDAY
Closing currency crosses for TUESDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/1:00 PM
Euro/USA 1.1802 UP .0061 (Euro UP 61 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/
USA/Japan: 112.15 DOWN 0.517(Yen UP 52 basis points/
Great Britain/USA 1.3212 UP 0.0071( POUND UP 71 BASIS POINTS)
USA/Canada 1.2496 DOWN .0059 Canadian dollar UP 59 basis points AS OIL ROSE TO $51.02
This afternoon, the Euro was ROSE 61 basis points to trade at 1.1802
The Yen FELL to 112.15 for a GAIN of 52 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 71 basis points, trading at 1.3212/
The Canadian dollar ROSE by 59 basis points to 1.2545, WITH WTI OIL RISING TO : $51.02
Your closing 10 yr USA bond yield DOWN 2 IN basis points from MONDAY at 2.336% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 2.8713 DOWN 2 in basis points on the day /
Your closing USA dollar index, 93.27 DOWN 40 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 TUESDAY: 1:00 PM EST
London: CLOSED UP 30.28 POINTS OR 0.40%
German Dax :CLOSED DOWN 27.11 POINTS OR .21%
Paris Cac CLOSED DOWN 2.18 POINTS OR 0.04%
Spain IBEX CLOSED DOWN 93.70 POINTS OR 0.92%
Italian MIB: CLOSED DOWN 140.84 POINTS OR 0.63%
The Dow closed UP 69.61 OR 0.31%
NASDAQ WAS closed UP 7.52 POINTS OR 0.11% 4.00 PM EST
WTI Oil price; $51.02 1:00 pm;
Brent Oil: 56.87 1:00 EST
USA /RUSSIAN ROUBLE CROSS: 57.94 DOWN 38/100 ROUBLES/DOLLAR (ROUBLE HIGHER BY 38 BASIS PTS)
TODAY THE GERMAN YIELD FALLS TO +0.442% FOR THE 10 YR BOND 4.PM EST EST
This ends the stock indices, oil price, currency crosses and interest rate closes for today
Closing Price for Oil, 5 pm/and 10 year USA interest rate:
WTI CRUDE OIL PRICE 5:00 PM:$50.99
USA 10 YR BOND YIELD: 2.363% (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)
USA 30 YR BOND YIELD: 2.8952%
EURO/USA DOLLAR CROSS: 1.1807 UP .0065
USA/JAPANESE YEN:112.43 DOWN 0.241
USA DOLLAR INDEX: 93.26 DOWN 41 cent(s)/
The British pound at 5 pm: Great Britain Pound/USA: 1.3202 : UP 60 POINTS FROM LAST NIGHT
Canadian dollar: 1.2515 UP 40 BASIS pts
German 10 yr bond yield at 5 pm: +0.442%
And now your more important USA stories which will influence the price of gold/silver
TRADING IN GRAPH FORM FOR THE DAY
Bonds, Bitcoin, & Bullion Bid But Dow Bounces Back To Another Record High
The S&P (orange) managed to scramble back into the green on the week but Small Caps (dark red) and Nasdaq (green) remain red. Trannies (blue) knee-jerked higher (on airlines) at the open but faded all day… The Dow hit a new record high (thanks to WalMart and Boeing)
VIX was smashed at the last second to get the S&P green for the week…
As a reminder – last week’s unrelenting meltup happened with China closed…
After ramping all last week, FANG stocks sank for the 2nd day in a row (with China back – are you seeing a theme yet?)….
Airline stocks jumped again today…
Spanish stocks (ETF) bounced after Puigdemont declared a deferred independence…
Treasuries – open after yesterday’s Columbus Day close – leaked lower in yields…NOTE the bid at the European open and at US open but then selling pressure once Europe closed…
Notably, overnight saw something very unusual in corporate bond land.
With spreads at post-crisis lows…
TRACE said that there were no client and/or affiliate trades of $5m or more in IG long bonds in the hours prior to the NY open. tt is the first time in recent memory that this has been the case. Of course, this follows Columbus Day in the states (bond market closed), and may be related to the market being closed in Japan on Monday for Health and Sports Day. China holidays had ended Sunday.
Did Central Banks kill the US corporate bond market too? Certainly seems that way!
The Dollar Index dropped for the 2nd day in a row (again now that China is back from Golden Week)…
EURUSD rallied overnight into the Catalan leader’s speech, but rolled over on his ‘deferred independence’…
Dollar weakness helped push Gold higher…
And Bictoin soared back above $4900!!
WTI/RBOB rallied onthe day ahead of tonoight’s API data.,..
And finally… “you are here”
In line with what we have been telling you for the past several weeks: Trump’s tax plan has no chance of passing. Today the Corker feud and the Paul rejection has put the plan spiraling towards death.
Trump Tax Plan On Verge Of Disaster Amid Corker Feud, Paul Rejection
Now that President Trump’s simmering feud with Tennessee Senator Bob Corker has exploded into the open, it appears that Republicans’ odds of passing tax reform before the White House’s self-imposed year-end deadline are growing slimmer by the day, and according to Cowen analyst Chris Krueger, “tax reform is dead, full stop.“
And with the administration increasingly staking its credibly on the process, Politico is reporting that White House Legislative Director Marc Short has – on the order’s of the president – embarked on what’s probably a fool’s errand: coaxing Kentucky Sen. Rand Paul – one of the most vocal opponents of the administration’s agenda – to vote “yes” on the bill.
The Republican bill hasn’t yet been written, but Paul has already lashed out at the administration’s nine-page tax-reform proposal for appearing to offset tax cuts for corporations and the rich by raising taxes on the middle class. Indeed, as discussed previously, a review of the preliminary proposal by the nonpartisan Tax Policy Center suggested that middle-class taxpayers could wind up paying more if certain deductions, such as eliminating the deduction for state and local taxes, are eliminated.
Paul said in an interview that he’s undecided on both the budget and the tax plan blueprint but unleashed a torrent of criticism at the tax proposal nonetheless.
“The danger for this bill right now is the pay-for may be a middle-class tax hike. And if that’s that, it’s going to be a real problem,” Paul said. “If you lower the taxes on the rich and lower the taxes on the poor and then say, ‘Oh it’s going to be revenue neutral,’ we’ve got to raise somebody’s taxes to pay for it.”
To be sure, the administration has reportedly backed away from eliminating the SALT deduction following an outpouring of criticism from both Republicans and Democrats. Still, Politico reports that Paul – who like Corker is wary of blowing out the budget deficit – is starting off in the “no” column and planning to vote against the Republican budget which has already passed the House and is working its way through the Senate.
The Kentucky Republican’s outspoken opposition to a leadership-backed Obamacare repeal-and-replace bill and the backup Graham-Cassidy plan helped demolish the GOP’s health care agenda. And now Republicans are worried that the contrarian Paul is going to do the same on tax reform by coming out early and vocally against their work, according to two allies of Senate Majority Leader Mitch McConnell (R-Ky.).
“You have to assume he’s going to be a no on everything,” one of them griped.
The Senate will consider the budget teeing up tax reform in mid-October, and Paul is privately sending signals he’ll vote against it, just as he did on the budget setting up Obamacare repeal in January when he was the lone Republican senator to do so.
Paul’s opposition to the administration’s agenda has frustrated President Trump, who reportedly likes and respects the Kentucky senator and has made winning his vote a priority for Short and the rest of the administration’s legislative team, though Mitch McConnell has reportedly told the president to expect a “no” vote from Paul.
The president seems personally stung, two officials said, when Paul votes against Trump’s nominees and health care plans, because Trump likes him and thinks “he should be on the team,” in the words of one administration official.
McConnell has told Trump that he shouldn’t expect Paul to support the tax bill but Trump won’t accept that, according to a person familiar with their conversations.So Short spoke personally with Paul this week about tax reform and agreed to try to work with Paul to get to him to “yes.” It’s not clear if the White House can give Paul what he wants, but the two men agreed to try.
“Senator Rand Paul will continue to advocate for a tax cut for all. He is not trying to dictate exact policy. There is a wide variety of scenarios that he would support, but raising taxes on the middle class should be a non-starter,” said Sergio Gor, a spokesman for Paul. “Too many individuals in congressional leadership are more worried about bullet points on a white paper instead of delivering on a promise to actually cut taxes for the American people.”
Including Paul, Politico has identified at least four Republican senators who might oppose tax reform – one more than would be needed to kill the bill. The GOP leadership can only afford to lose two votes, assuming all 46 Democrats and the two independents who caucus with the Dems vote against.
Paul’s legislative eccentricities have been magnified by the GOP’s narrow majority even as the party controls all of Washington. Just three GOP senators can stop tax reform, just as they did on health care. And there’s already worry among Republicans that McCain, Sen. Susan Collins (R-Maine), Sen. Bob Corker (R-Tenn.) and a handful of other senators could vote against the nascent tax plan.
Of course, equity strategists have for months postulated that tax reform is the only piece of legislation that matters when it comes to justifying record-high valuations in the US stock market. But in some corners of Wall Street, skeptics are making a compelling case for why the legislation is doomed. Yesterday, Cowen analyst Chris Krueger pointed out that with Bob Corker sounding like he might oppose the Republican tax agenda purely out of spite (while also using it as an opportunity to burnish his credentials as a deficit hawk), and John McCain already talking about a “bipartisan approach” (implying that he’s a hard no), the Republicans appear to have already reached the zero margin of error on the tax reform process, meaning one more no vote could sink the whole thing.
For what it’s worth, Goldman Sachs over the weekend assigned tax reform a 60% chance of passing after a budget bill sailed through the House last week, while a Senate bill was approved by the influential Senate Budget Committee.
As the Washington Examiner explains, passing a budget is the first step in the tax reform process because it unlocks reconciliation, allowing legislation to pass with only 51 votes in the Senate. But Republicans shouldn’t hold their breath: the budget has yet to run the gauntlet in the Senate, a venue that has already earned its reputation as an elephant graveyard for Trump-era legislation.
And a “no” vote from Paul could very well scuttle tax reform before the bill is even written.
For now the market appears to be quickly discounting the probability of meaningful tax reform (though at the index surface, some might argue otherwise)…
White House Slams Corker, Escalating ‘Surreal” Feud As NYT Releases Part Of Phone Recording
The “surreal” feud between president Donald Trump and Senator Bob Corker – as defined yesterday by Cowen analyst Chris Krueger – escalated on Tuesday, when the White House said the outgoing GOP senator was partially responsible for the Obama administration’s nuclear deal with Iran but refused to say whether the retiring Corker should resign immediately. “Senator Corker worked with Nancy Pelosi and the Obama administration to pave the way for that and rolled out the red carpet for the Iran deal,” White House press secretary Sarah Huckabee Sanders said during today’s briefing.
As The Hill adds, reporters pressed Sanders on the claim, noting that Corker originally opposed the deal and that he led a bipartisan effort on Capitol Hill to have the deal reviewed by Congress, against Obama’s wishes.
“He worked with them on the legislation that rolled that out,” Sanders responded. “That’s what helped I think put things in motion. He may have voted against the deal ultimately, but he not only allowed the deal to happen, he gave it credibility. I stand by my statement.”
Adding fuel to the fire, Sanders criticized Corker throughout the press conference. Asked if Corker should resign, as former Trump chief strategist Stephen Bannon suggested previously, Sanders responded “I think that’s a decision for Sen. Corker and the people of Tennessee.”
The feud between the President and the Senator resumed this morning, when Trump on Tuesday claimed The New York Times set up Sen. Bob Corker (R-Tenn.) to look like a fool — by recording an interview.
“The Failing @nytimes set Liddle’ Bob Corker up by recording his conversation,” Trump tweeted. “Was made to sound a fool, and that’s what I am dealing with!”
As a reminder, in the interview Corker ripped Trump suggesting the president was unstable and that his threats to other countries risked putting the U.S. “on the path to World War III.”
Trump’s tweet prompted the NYT to respond.
NEW: Audio of Corker telling us “I hope you are” taping our interview >>https://www.nytimes.com/2017/10/10/reader-center/trump-claims-we-tricked-bob-corker-heres-the-truth.html …https://twitter.com/realdonaldtrump/status/917734186848579584 …
Trump Claims We Tricked Bob Corker. Here’s the Truth.
“I know they’re recording it,” Mr. Corker said, referring to two of his aides who were listening on other lines, “and I hope you are, too.”
In an article on Tuesday, the NYT’s Jonathan Martin clarified that “far from being set up, Mr. Corker asked that I tape our conversation. “I know they’re recording it, and I hope you are, too.”
President Trump claimed on Twitter today that The Times “set Liddle’ Bob Corker up by recording his conversation.” Mr. Trump was referring to our interview Sunday with Mr. Corker, the Tennessee Republican and chairman of the Senate Foreign Relations Committee, in which he said Mr. Trump was recklessly tempting “World War III,” treating the presidency “like he’s doing ‘The Apprentice’ or something” and required constant supervision by his own staff.
As the reporter who conducted the 25-minute telephone interview with Mr. Corker, I thought I would offer more insight about what actually transpired.
Far from being set up, Mr. Corker asked that I tape our conversation.
“I know they’re recording it, and I hope you are, too,” he said as two of his aides listened in on other lines, one of them also taping the interview.
As with most on-the-record discussions with an elected official, I was recording our conversation to ensure accuracy.
And after Mr. Corker got off the phone, his two aides made sure I had recorded the call. Like the senator, they wanted to ensure his extraordinary charges were precisely captured.
As Mr. Corker noted in our interview, his comments were only the latest, and sharpest, critique he had made of Mr. Trump this year.
Trump’s accusation escalates his feud with Corker, a onetime ally and an influential member of the upper chamber. The president responded last weekend by claiming Corker had begged him for his endorsement but that he had declined. Corker shot back, saying the White House had become “an adult day care center.”
Far from merely a verbal spat, the rising antagonism between the two politicians could endanger Trump’s effort to pass an overhaul of the tax code. As reported yesterday, Trump can only afford to lose two GOP senators, and Corker told the Times that he would not support a plan that blows a hole in the federal budget.
Corker also chairs the Senate Foreign Relations Committee and could have a major say over the future of the Iran nuclear deal, which the president is expected to decertify in the coming days.
(a good read..courtesy James Rickards)
Rickards Warns “The Market’s Got It Wrong”
Janet Yellen’s mantra is, “It’s transitory!”
That’s Yellen’s typical response to a long litany of data that shows the U.S. is in the grip of a powerful disinflationary trend that may lead to outright deflation – a central banker’s worst nightmare.
The Fed has a publicly announced 2% inflation goal, which they consider to be price stability. In fact, 2% inflation cuts the purchasing power of the dollar by 75% in the course of an average lifetime. The Fed would tell you to ignore that.
Why 2% inflation is considered “price stability” is a subject for another day. For now, let’s just accept the Fed’s definition and see how the Fed responds from a policy perspective.
The Fed carves out food and energy prices from inflation. That gets to something called “core” inflation.
The Fed’s preferred metric is calculated monthly by the U.S. Commerce Department as the personal consumption expenditure (PCE) deflator. The Fed’s preferred interval is monthly data compared to the same month one year earlier, or “year-over-year,” YOY.
With a 2% target for PCE core YOY, what’s the actual time series of data? Here it is:
- December 2016: 1.9%
- January 2017: 1.9%
- February 2017: 1.9%
- March 2017: 1.6%
- April 2017: 1.6%
- May 2017: 1.5%
- June 2017: 1.5%
- July 2017: 1.4%
- August 2017: 1.3%
An objective analyst would give the Fed credit for coming close to their target in late 2016. This is precisely why the Fed embarked on a path of rate hikes. The Fed raised interest rates in December 2016, March 2017 and June 2017.
The chart below is taken from a presentation given by Janet Yellen on September 26, 2017. The black horizontal line is the Fed’s 2% inflation target. The blue line represents actual PCE inflation; the red line represents PCE “core” inflation with food and energy prices removed, (the Fed’s preferred method). The downward trajectory of the red line should be disturbing to the Fed, but is routinely dismissed as “transitory.”
What happened next?
To answer that question, bear in mind that monetary policy works with a lag. That insight is one of Milton Friedman’s few economic contributions that has stood the test of time.
The Fed has been tightening in fits and starts since Bernanke’s “taper talk” in May 2013. This has resulted a consistent pattern in which Fed tightening slows the economy, then the Fed flips to ease, and the economy picks up steam, which leads to another round of tightening, and another slowdown.
Wash, rinse, repeat.
The Fed’s late 2016, early 2017 tightening cycle has now come home to roost. In the latest nine-month time series, shown above in the table and chart, inflation was flat or down in every month, and dropped a total of 0.6%.
That’s huge. The Fed’s range for this purpose is 0% to 2%. The floor is 0% because the Fed must avoid deflation. The ceiling is 2% because that’s the Fed’s announced target. A 0.6% drop covers 30% of the target range. It’s a quite significant move, and all in the wrong direction.
What’s Yellen’s reaction to this in-your-face data? In effect, she says. “It’s transitory!”
First Yellen blamed a price war among cell phone service providers. Then she blamed the strong dollar, which tends to lower import prices (with a strong dollar you get more for your money abroad so unit costs decline).
Then she blamed health care costs because they’re government administered and not responsive to Fed monetary policy. Then she blamed hurricane damage from Harvey, Irma and Maria.
It’s always something.
Why are Yellen and her colleagues in denial about the persistence of disinflation? Why are they insisting that an obvious trend is merely “transitory?”
The first analytic flaw is Yellen’s belief in the Phillips Curve. This model presents an inverse relationship between unemployment and inflation. As unemployment goes down, labor scarcity leads to wage increases above growth potential. This leads to inflation.
The Fed assumes that because of low unemployment today, inflation must be right around the corner.
The only problem with the Phillips Curve is that it does not exist. It has no empirical support. In the late 1970s and early 1980s we had high unemployment and high inflation. Today we have low unemployment and low inflation. Both results are the exact opposite of what the Phillips Curve would predict.
Yellen also believes that monetary ease, acting with a lag, feeds inflation. Therefore it is necessary to tighten policy before inflation arrives in order to avoid getting behind the curve.
Monetary policy does act with a lag, but it does not directly cause inflation. It may add fuel to a fire, but it’s not the catalyst. The Fed has created $3.5 trillion of new money since 2008, yet there has been no appreciable amount of inflation for nine years.
The cause of inflation is not money supply but psychology. It is expressed as velocity — the speed at which money is turned over through lending and spending. Velocity depends on behavioral psychology, or what Keynes called “animal spirits,” regardless of the amount of money around.
Yellen sees inflation under every rock despite the lack of empirical evidence. In fact, the evidence as revealed in the time series of PCE data above points toward disinflation and deflation.
Reality is catching up with the Fed.
They will respond by taking a “pause” on an interest rate hike in December. This is the opposite of current market expectations.
What about the prospects for disinflation and Fed easing?
The most important development is recent strength in the U.S. dollar. This has the effect of lowering import prices, which feeds into the U.S. manufacturing supply chain. Cheaper imports also put a lid on the ability of competing U.S. producers to raise their own prices.
Second, the September employment report came out last Friday. A Reuters survey of economists had expected the economy to add 90,000 jobs in September.
How many did it really add?
Zero. Less than zero, actually. The economy shed 33,000 jobs. This was the first time in seven years that the U.S. economy lost jobs.
This may be due to the hurricanes, but coming on top of the weak inflation data that came out recently, it will certainly give the Fed more than enough reason to hit the “pause” button on a December rate hike.
Finally, Yellen’s term as Chair expires at the end of January 2018, just a few months away. It appears she will not be reappointed by Trump. The current favorite to replace her is Kevin Warsh, as I told readers my earlier this year.
The December 2017 FOMC meeting will be Yellen’s last. She does not want her legacy to be that of the Fed Chair who caused a recession by tightening into weakness. That would repeat the classic Fed blunder of 1937.
Yellen’s legacy is secure because she was able to begin rate hikes and balance sheet normalization, both of which reversed the easy money policies of Ben Bernanke. She will rest on those laurels and not take a risky rate decision on her way out the door.
Eventually the markets will figure this out. Right now markets are giving a nearly 90% chance of a rate hike in December based on CME Fed Funds futures. That rate will drop significantly by December 13 when the FOMC meets again with a press conference. (There’s another meeting on November 1, but no one expects any policy changes then).
As market probabilities catch up with reality, the dollar will sink, the euro and gold will rally, and interest rates will resume their long downward slide.
Devastation in Northern California as fires rip through Sonoma County and Napa County (wine country)
Curfew Enforced As Looters Ransack Homes In Sonoma County; Death Toll In NorCal Fires Climbs To 11
As Santa Rosa residents scramble to flee the path of no fewer than 15 major wildfires raging across eight Northern California counties, police in the Sonoma county seat have instituted a sunrise-to-sunset curfew as they crack down on unscrupulous looters who’ve been raiding abandoned homes.
State officials said that 11 people have been confirmed dead. And in a sign that the toll could rise substantially, emergency responders in Sonoma County say they’ve fielded 100 calls from residents reporting missing family members. Meanwhile, more than 100 people were being treated at Napa- and Sonoma-area hospitals for fire-related injuries or health issues, including burns, smoke inhalation and shortness of breath.
Amy Hollyfield, a reporter with a local ABC News affiliate, said she’s spoken with several area residents who say their homes were broken into and robbed after nearby flames forced them to evacuate.
Some individuals are even voluntarily guarding their neighborhoods from looters. The LA Times reports that one off duty detective in Santa Rosa has been waiting on his lawn with his sheriff’s badge hanging around his neck.
Troy Newton first helped warn his neighbors to flee after spotting a “red snake of fire” near his middle class neighborhood.
After sundown Monday, Newton was lying on his side on the lawn outside his home, his sheriff’s badge dangling from a lanyard around his neck.
By then, he’d taken on a new responsibility: guarding his evacuated neighborhood from looters and vandals.
“After 25 years as a cop, I know that there are going to be people coming in here to rob our homes,” he said. “So I’m gonna sit right here until morning.”
In a sign that wine production in the state is facing serious disruptions, Napa Valley Vintners association says most wineries as employees have evacuated and power outages have caused widespread blackouts.
To be sure, fires haven’t been confined to the northern part of the state. The Anaheim Hills fire in Southern California has scorched between 5,000 to 6,000 acres.
But, so far, Santa Rosa has emerged as the worst-hit city as whole neighborhoods have burned to ground, leaving behind a post-apocalyptic scene.
Destroyed landmark buildings in the city included the Fountaingrove Inn, a 124-room hotel; a nearby event center, the Fountaingrove Round Barn; and classrooms at the Luther Burbank Center for the Arts, The (Santa Rosa) Press Democrat reported. One of Santa Rosa’s fire stations was also lost in the fire, according to a post on the Mountain View Fire Department’s Facebook account, according to CNN.
One disturbing video depicted the charred remains of the city’s Hidden Valley neighborhood.
More than 20,000 people have been evacuated across Northern California because of the fire. More than 1,500 buildings have been destroyed, and the state’s famous wine country may never be the same. Gov. Jerry Brown placed Napa, Sonoma and Mendocino counties under a state of emergency early yesterday.
And already, heartbreaking stories about fire-related casualties have begun to emerge.
A Napa couple who died in their home in the Atlas Peak fire had recently celebrated 75 years of marriage, KTVU-TV reported late Monday.
Their granddaughter Ruby Gibney told the station that their home “was quickly ravaged by the fire, and they were unable to get out in time and tragically died.” The couple were identified by the station as Sara and Charles “Peach” Rippey. They were 99 and 100 years old, respectively. The Atlas fire, which is blazing across Napa, has claimed more than 50 structures, including homes and barns, according to Napa County Fire Chief Barry Biermann said during a news conference.
Most of the Northern California fires ignited Sunday night, driven by winds of more than 50 mph and dry conditions,Director Ken Pimlott of the California Department of Forestry and Fire Protection said Monday. The high winds led to “extreme rates of spread and volatile burning conditions,” according to Cal Fire.
CNN reports that winds have decreased throughout the area – 6 to 13 mph was forecast around Santa Rosa – helping to slow the fires ferocious pace and allowing firefighters to contain some of the blazes. “Winds and the fire weather threat will decrease Tuesday in the north, but a threat will remain in Southern California,” according to the National Weather Service on Tuesday. Months of little rainfall also helped create the dry conditions that have allowed fires to spread across 60,000 acres.
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