OCT 23/GOLD AND SILVER REBOUND ON EITHER TRUMP’S CLOSE TO PICKING A FED NOMINEE OR MOST LIKELY REACTING TO IMMINENT THREAT COMING FROM NORTH KOREA/TROUBLE IN SPAIN AS ARTICLE 155 IS INVOKED AND THE CATALANS RESPOND TO CREATE HAVOC/GENERAL ELECTRIC AGAIN CRASHES AS A SIGN OF POOR GLOBAL GROWTH/VENEZUELA MOST PROBABLY WILL DEFAULT IN THE NEXT FEW WEEKS AS INCOME IS FALTERING FROM ITS OIL OPERATIONS/

 

GOLD: $1279.65 UP $0.30

Silver: $17.05 UP 2 cents

Closing access prices:

Gold $1282.20

silver: $17.08

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: $1290.33 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME:  $1275.55

PREMIUM FIRST FIX:  $14.78(premiums getting larger)

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SECOND SHANGHAI GOLD FIX: $1290.33

NY GOLD PRICE AT THE EXACT SAME TIME: $1276.55

Premium of Shanghai 2nd fix/NY:$13.78 PREMIUMS GETTING LARGER)  

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LONDON FIRST GOLD FIX:  5:30 am est  $1275.25

NY PRICING AT THE EXACT SAME TIME: $1275.85

LONDON SECOND GOLD FIX  10 AM: $1274.90

NY PRICING AT THE EXACT SAME TIME. 1274.75

For comex gold:

OCTOBER/

NOTICES FILINGS TODAY FOR OCT CONTRACT MONTH: 4 NOTICE(S) FOR  400  OZ.

TOTAL NOTICES SO FAR: 2443 FOR 244,300 OZ  (7.599TONNES)

For silver:

OCTOBER

 5 NOTICES FILED TODAY FOR

25,000  OZ/

Total number of notices filed so far this month: 784 for 3,920,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Bitcoin:  $5659 bid /$5678 offer DOWN $278.00  (MORNING)

BITCOIN CLOSING;$5904 BID:5924. OFFER  DOWN $29.00

end

Let us have a look at the data for today

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest FELL BY ONLY 722 contracts from  193 ,086 DOWN TO 192,364 WITH RESPECT TO FRIDAY’S TRADING (DOWN  22 CENTS).  THE CROOKS ARE STILL HAVING AN AWFUL TIME TRYING TO COVER THEIR MASSIVE SILVER SHORTS. 

RESULT: A SMALL SIZED FALL IN OI COMEX  WITH THE  22 CENT PRICE FALL.  OUR BANKERS COULD NOT COVER MUCH OF THEIR HUGE SHORTFALL

 In ounces, the OI is still represented by just UNDER 1 BILLION oz i.e.  0.966 BILLION TO BE EXACT or 138% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT OCT MONTH/ THEY FILED: 14 NOTICE(S) FOR 70,000  OZ OF SILVER.

In gold, the open interest SURPRISINGLY FELL  BY ONLY  722 CONTRACTS DESPITE THE  CONSIDERABLE FALL IN PRICE OF GOLD ($9.05) .  The new OI for the gold complex rests at 529,313. OUR BANKER FRIENDS  COULD NOT COVER ANY OF THEIR GOLD SHORTS AS THEIR RAID FAILED MISERABLY IN THE ATTEMPT TO COVER ON FRIDAY..SO THEY INITIATED ANOTHER RAID THIS MORNING AND THAT ENDED IN FAILURE.

 

Result: A SMALL SIZED  DECREASE IN OI WITH CONSIEREABLE FALL IN PRICE IN GOLD ($9.05). WE HAD MINIMAL BANKER GOLD SHORT COVERING AS THE BANKERS FAILED MISERABLY TO LOOSEN ANY GOLD LEAVES FROM THE GOLD TREE ON FRIDAY..SO THEY INITIATED ANOTHER RAID THIS MORNING WHICH ENDED IN FAILURE..

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

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD:   

Tonight , NO CHANGES  in gold inventory at the GLD/

Inventory rests tonight: 853.13 tonnes.

SLV

Today:   STRANGE!! WITH SILVER CLOSING HIGHER WE HAD A WITHDRAWAL OF 1,039,000 OZ FROM THE SLV

INVENTORY RESTS AT 320.288 MILLION OZ

end

.

First, here is an outline of what will be discussed tonight:

1. Today, we had the open interest in silver SURPRISINGLY FELL  BY ONLY 722 contracts from 193,098  DOWN TO 192,364(AND now A LITTLE FURTHER FROM THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) .  OUR BANKERS WERE AGAIN UNSUCCESSFUL IN THEIR ATTEMPT TO COVER MUCH OF THEIR SILVER SHORTS.

RESULT:  A SMALL DECREASE IN SILVER OI  AT THE COMEX WITH THE  GOOD SIZED FALL IN PRICE OF 22 CENTS (WITH RESPECT TO FRIDAY’S TRADING). OUR BANKER FRIENDS WERE UNSUCCESSFUL IN THEIR ATTEMPT TO COVER MUCH OF OUR SILVER SHORTS

(report Harvey)

.

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

3. ASIAN AFFAIRS

i)Late SUNDAY night/MONDAY morning: Shanghai closed UP 2.05 points or .06% /Hang Sang CLOSED DOWN 181.36 pts or 0.64% / The Nikkei closed UP 239.01 POINTS OR .04/Australia’s all ordinaires CLOSED UP 0.19%/Chinese yuan (ONSHORE) closed DOWN  at 6.6403/Oil UP to 52.13 dollars per barrel for WTI and 57.77 for Brent. Stocks in Europe OPENED IN THE GREEN EXCEPT SPAIN  .  ONSHORE YUAN CLOSED DOWN AGAINST THE DOLLAR AT 6.6403. OFFSHORE YUAN CLOSED STRONGER TO THE ONSHORE YUAN AT 6.6501 AND //ONSHORE YUAN  WEAKER AGAINST THE DOLLAR/OFF SHORE WEAKER TO THE DOLLAR/. THE DOLLAR (INDEX) IS STRONGER AGAINST ALL MAJOR CURRENCIES. CHINA IS NOT HAPPY TODAY.

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)North Korea/USA

b) REPORT ON JAPAN

i)Abe wins big which causes the USA/Yen to rise (yen fall).  Japanese stocks rise but gold falls despite the fact that more easing is the prime objective of Abe

( zerohedge)

ii)The Bank of Japan entered the market last week and bough Kobe bonds very few wanted to risk purchasing them

( zerohedge)

iii)Zero hedge reported the gold and silver rose on news that Trump will select a new Fed Governor shortly without naming anyone.  I do not think the market reacted to that story.. However gold and silver generally react to the following:

( zerohedge)

c) REPORT ON CHINA

4. EUROPEAN AFFAIRS

 
i)SPAINArticle 155 is invoked and that is treated as a coup by the Catalans. Rajoy refuses also to enter into any dialogue with them

( zerohedge)

ii)The following commentary explains in detail how  Madrid will take control over Catalonia:

( zerohedge)

iii)And  now the Catalan response:  they plan a human shield with mega civil disobedience to block the takeover

( zerohedge)

iv)A summary as to what to expect on Thursday when the ECB finally begins to taper it’s QE

(courtesy zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)Iraq/Iran/USA

Tillerson demands that Iran’s militias must leave Iraq as the fight against ISIS is coming to an end.  Fat chance that that will happen;

( zerohedge)

ii)Sunday night: Turkish Lira/TURKEY/USA

More tensions between Turkey and the USA as the diplomatic spats between them continues.  This is very worrisome as Turkey can release its 3 million Muslim migrants in a nanosecond to Greece. Another dagger into the heart of USA hegemony

( zerohedge)

iii)RUSSIA/PHILIPPINES

This is not good:  Russian ships delivery military equipment to staunch ally the Philippines.  Slowly but surely many nations are facing Eastern nations.  Another nail in the coffin of American hegemony.

( zerohedge)

6 .GLOBAL ISSUES

 

GE/GLOBAL GROWTH

GE IS SUCH A GOOD BELLWETHER FOR GLOBAL GROWTH.  IF THEY ARE CRASHING YOU CAN BET THE FARM THAT THE ENTIRE GLOBE IS FACING GROWTH PROBLEMS

(COURTESY ZEROHEDGE)

7. OIL ISSUES

OIL ISSUES/VENEZUELA 
a VERY IMPORTANT READ…VENEZUELA FINALLY LOOKS LIKE THEY ARE GOING TO DEFAULT. BECAUSE OF LACK OF MONEY THEY DO NOT HAVE THE CHEMICALS TO HELP THEM AGAINST INCREASINGLY POOR QUALITY OF OIL.  THEIR EXPORTS HAVE SUNK FROM 800,000 BARRELS PER DAY DOWN TO 250,000 AND THUS THEY LACK THE NECESSARY REVENUE.  SANCTIONS BY THE USA HAS ALSO HURT THEM BADLY. THE REASON I BRING THIS TO YOUR ATTENTION IS THE HUGE NUMBER OF CREDIT DEFAULT SWAPS UNDERWRITTEN BY OUR MAJOR BANKERS AND ON A DEFAULT THEY WILL HAVE TO PAY THE HOLDERS OF LONG SWAPS.
A MUST READ..
(COURTESY NICK CUNNINGHAM/OIL PRICE.COM

8. EMERGING MARKET

9.   PHYSICAL MARKETS

i)The CFTC states they they fight regulate bitcoin and that caused the biggest drop in a month

(courtesy zerohedge)

ii)A good history lesson offered to us by Hugo Salinas Price as he discusses how unbacked fiat money leads to a corrupt society.

( Hugo Salinas Price/GATA)

iii)Mining companies are having trouble dealing with countries who want to share in the riches they find. Barrick gold now gives Tanzania stakes in their mines in Tanzania worth around 300 million dollars to end disputes

( GATA/Reuters)

iv)We have highlighted to you over the years, the huge abuse that bankers orchestrated with respect to copper.  Today a huge base metal firm has now sued for $850 million.

( Bloomberg/GATA)

v)Why Gary North is totally wrong with respect to gold and central banks

( zero hedge)

vi)Another believer that Bitcoin is a fraud

( zerohedge)

vii)Russia adds another 34 tonnes to its official reserves:

( Lawrie Williams/Sharp’s Pixley)

10. USA Stories

i)Two important facts today:

  1. the USA for the first time has put nuclear bombers on a 24 hour alert
  2.  Trump recalled up to 1,000 retired air force pilots due to a shortage in that department

( zerohedge)

i b) They then denied the first part of the story that US nuclear bombers are on a 24 hour alert

(courtesy zerohedge)

ii)This is fascinating:  Mueller is now probing the Democrat lobbying firm, the Podesta Group with respect to Russian voting influence.  With the latest Mueller involvement in the FBI covering up the Uranium One scandal,  we can only wonder how this will turn out as it seems that the Democrats were using Russian influence far greater than the Republicans.

( zerohedge)

Let us head over to the comex:

The total gold comex open interest SURPRISINGLY FELL BY  ONLY 342 CONTRACTS DOWN to an OI level of 529,313 WITH THE FALL IN THE PRICE OF GOLD ($9.05 DROP IN FRIDAY’S TRADING).   OUR BANKER FRIENDS HAD MINIMAL SUCCESS IN THEIR ATTEMPT  TO COVER  THEIR HUGE GOLD SHORTFALL . WITH THEIR FAILURE ON FRIDAY, OUR ESTEEMED BANKERS REGROUPED AND LAUNCHED ANOTHER RAID THIS MORNING WHICH ENDED IN ANOTHER FAILURE.

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.

Result: a  SMALL SIZED open interest DECREASE  DESPITE THE  FALL IN THE PRICE OF GOLD ($9.05.)  .THERE WAS MINIMAL SHORT COVERING FRIDAY WITH THE BANKERS SLIGHTLY ADDING TO THEIR HUGE SHORTFALL. THEIR FAILURE ON FRIDAY NO DOUBT INITIATED ANOTHER RAID THIS MORNING WHICH AGAIN FAILED.

 

We have now entered the active contract month of Oct and here we saw a GAIN of 144 contracts UP TO 686 contracts.  We had 4 notices filed yesterday so we GAINED 148 contracts or an additional 14,800 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. We have just witnessed another queue jumping in the gold comex which is another indicator of physical shortage. TO SEE THIS IN BOTH GOLD AND SILVER MUST BE HEARTENING TO US!!

The November contract saw A GAIN OF 24 contracts UP to 899.

The very big active December contract month saw it’s OI loss OF 1921 contracts DOWN to 398,173

.

We had 0 notice(s) filed upon today for  NIL oz

 VOLUME FOR TODAY (PRELIMINARY) 268,942

CONFIRMED VOLUME FRIDAY: 332,713

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And now for the wild silver comex results.  Total silver OI FELL BY A TINY 722 CONTRACTS FROM 193,086 DOWN TO 192,364 DESPITE FRIDAY’S 22 CENT FALL IN PRICE. WE  HAD MINIMAL BANKER SHORT COVERING AS THE CROOKS TRIED AND FAILED IN THEIR ATTEMPT TO  LOOSEN ANY SILVER LONGS FROM THE SILVER TREE ON FRIDAY. OUR BANKER FRIENDS REGROUPED AND LAUNCHED ANOTHER RAID THIS MORNING.
We have now entered the non active contract month of October and here the OI GAINED 9 contacts UP TO 233.  We had 5 notices filed on yesterday so we gained 14 contracts or AN ADDITIONAL 70,000 oz will stand for delivery and 0 EFP’s were issued.   November saw a LOSS of 13 contract(s) and thus FALLING TO  351 After November, the NEXT big active contract month is December and here the OI LOST 1272 contracts DOWN to 143,585 contracts.

We had 14 notice(s) filed for  70,000 oz for the OCT. 2017 contract

INITIAL standings for OCTOBER

 Oct.23/2017.

Gold Ounces
Withdrawals from Dealers Inventory in oz   nil oz
Withdrawals from Customer Inventory in oz  
nil oz
Deposits to the Dealer Inventory in oz    nil oz
Deposits to the Customer Inventory, in oz 
 nil oz
No of oz served (contracts) today
 
0 notice(s)
NILOZ
No of oz to be served (notices)
686 contracts
(68,600 oz)
Total monthly oz gold served (contracts) so far this month
2443 notices
244,300 oz
7.5987 tonnes
Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL oz
Total accumulative withdrawal of gold from the Customer inventory this month     xxx oz
Today we HAD  xx kilobar transaction(s)/ 
 WE HAD nil DEALER DEPOSIT:
total dealer deposits: nil oz
We had nil dealer withdrawals:
total dealer withdrawals:  nil oz
we had nil customer deposit(s):
total customer deposits;nil oz
We had nil customer withdrawal(s)
total customer withdrawals; nil  oz
 we had nil adjustment(s)
For OCT:

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.

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To calculate the INITIAL total number of gold ounces standing for the OCTOBER. contract month, we take the total number of notices filed so far for the month (2443) x 100 oz or 244,300 oz, to which we add the difference between the open interest for the front month of OCT. (686 contracts) minus the number of notices served upon today (0 x 100 oz per contract equals 312,900  oz, the number of ounces standing in this active month of OCT.
 
Thus the INITIAL standings for gold for the OCTOBER contract month:
No of notices served  (2443) x 100 oz  or ounces + {(686)OI for the front month  minus the number of  notices served upon today (0) x 100 oz which equals 312,900 oz standing in this  active delivery month of OCTOBER  (9.732tonnes)
.
FOR OCTOBER THIS IS A GREAT SHOWING FOR PHYSICAL DELIVERY.
WE GAINED 148 CONTRACTS OR AN ADDITIONAL 14,800 OZ WILL  STAND FOR DELIVERY
 IT WAS OBVIOUS THAT  THERE WAS HARDLY ANY  PHYSICAL GOLD TO DELIVER UPON LONGS IN SEPTEMBER AND THIS CONTINUES ON IN OCTOBER.   THE CROOKS USE THE EFP’S TO TRANSFER THEIR OBLIGATION TO ANOTHER EXCHANGE. THIS IS WHY ANOTHER 5400 EFP’S WERE ISSUED FOR OCTOBER GOLD ON FIRST DAY NOTICE AND IT ALSO EXPLAINS THE LACK OF DELIVERY NOTICES IN THE EARLY PART OF THIS DELIVERY ACTIVE MONTH. QUEUE JUMPING IS ANOTHER INDICATOR OF PHYSICAL SCARCITY AND THIS EVENT HAPPENED AGAIN THIS MORNING.
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Total dealer inventory 601,432.522 or 18.707 tonnes  (dealer gold continues to disappear)
Total gold inventory (dealer and customer) = 8,511,328.736 or 264.73 tonnes 
 
I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold!

The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.
 
IN THE LAST 13 MONTHS  88 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE OCTOBER DELIVERY MONTH
OCTOBER INITIAL standings
 Oct 23/ 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
 60,100.47 oz
Scotia
Deposits to the Dealer Inventory
 nil oz
Deposits to the Customer Inventory 
 561,999.575
HSBC
oz
No of oz served today (contracts)
14CONTRACT(S)
(70,000,OZ)
No of oz to be served (notices)
219contracts
(1,095,000 oz)
Total monthly oz silver served (contracts) 798contracts

(3,990,000 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
today, we had  nil deposit(s) into the dealer account:
total dealer deposit: nil   oz
we had nil dealer withdrawals:
total dealer withdrawals: nikl oz
we had  1 customer withdrawal(s):
i) Out of Scotia:  60,100.47 oz
TOTAL CUSTOMER WITHDRAWALS: 60,100.57  oz
We had 1 Customer deposit(s):
 i) Into HSBC:  561,999.575 oz
***deposits into JPMorgan have stopped  again
In the month of March and February, JPMorgan stopped (received) almost all of the comex silver contracts.
why is JPMorgan bringing in so much silver??? why is this not criminal in that they are also the massive short in silver
total customer deposits: 561,999.575  oz
 
 we had 0 adjustment(s)
The total number of notices filed today for the OCTOBER. contract month is represented by 14 contracts FOR 70,000 oz. To calculate the number of silver ounces that will stand for delivery in OCTOBER., we take the total number of notices filed for the month so far at 798x 5,000 oz  = 3,990,0000 oz to which we add the difference between the open interest for the front month of OCT. (233) and the number of notices served upon today (14x 5000 oz) equals the number of ounces standing.
 

 

.
 
Thus the INITIAL standings for silver for the OCTOBER contract month:  798 (notices served so far)x 5000 oz  + OI for front month of OCTOBER(233) -number of notices served upon today (14)x 5000 oz  equals  5,085,000 oz  of silver standing for the OCTOBER contract month. This is HUGE for this NON active delivery month. THE INCREASE IN TOTAL OZ STANDING FOR SILVER CONTINUES TO ADVANCE
 
WE GAINED 14  CONTRACTS OR  AN ADDITIONAL 70,000 OZ WILL  STAND FOR DELIVERY.
 ESTIMATED VOLUME FOR TODAY:   91,951
CONFIRMED VOLUME FOR FRIDAY:  105,395 CONTRACTS
FRIDAY’S CONFIRMED VOLUME OF 105,395 CONTRACTS EQUATES TO 537 MILLION OZ OR 75.2% OF ANNUAL GLOBAL PRODUCTION OF SILVER
 
 
Total dealer silver:  40.066 million (close to record low inventory  
Total number of dealer and customer silver:   222.377 million oz
The record level of silver open interest is 234,787 contracts set on April 21./2017  with the price at that day at  $18.42
The previous record was 224,540 contracts with the price at that time of $20.44
end

NPV for Sprott and Central Fund of Canada

will update later tonight

1. Central Fund of Canada: traded at Negative 1.6 percent to NAV usa funds and Negative 1.6% to NAV for Cdn funds!!!! 
Percentage of fund in gold 62.4%
Percentage of fund in silver:37.7%
cash .-0.1%( Oct23/2017) 
2. Sprott silver fund (PSLV): STOCK   RISES TO -0.55% (Oct 23/2017) 
3. Sprott gold fund (PHYS): premium to NAV RISES TO -0.58% to NAV  (Oct 23/2017 )
Note: Sprott silver trust back  into NEGATIVE territory at -0.55%-/Sprott physical gold trust is back into NEGATIVE/ territory at -0.58%/Central fund of Canada’s is still in jail  but being rescued by Sprott.

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

(courtesy Sprott/GATA)

Sprott Inc. to take control of rival gold holder Central Fund of Canada

by THE CANADIAN PRESS

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.

END

And now the Gold inventory at the GLD

OCT 23./NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY REMAINS AT 853.13 TONNES

OCT 20/NO CHANGE IN GOLD INVENTORY AT THE GLD/ INVENTORY REMAINS AT 853.13 TONNES

oCT 19/NO CHANGE/853.13 TONNES

Oct 18 /no change in gold inventory at the GLD/ inventory rests at 853.13 tonnes

Oct 17./no change in gold inventory at the GLD/inventory rests at 853.13 tonnes

Oct 16/A HUGE WITHDRAWAL OF  5.32 TONNES FROM THE GLD/INVENTORY RESTS AT 853.13 TONNES

0CT 13/ NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 858.45 TONNES

Oct 12/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 858.45 TONNES

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

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Oct 23/2017/ Inventory rests tonight at 853.13 tonnes
*IN LAST 256 TRADING DAYS: 87.82 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 191 TRADING DAYS: A NET  69,46 TONNES HAVE NOW BEEN ADDED INTO  GLD INVENTORY.
*FROM FEB 1/2017: A NET  38,35 TONNES HAVE BEEN ADDED.

end

Now the SLV Inventory

oCT 23./STRANGE!!WITH SILVER RISING TODAY WE HAD A HUGE WITHDRAWAL OF 1.039 MILLION OZ

OCT 20NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 321.327 MILLION OZ

oCT 19/INVENTORY LOWERS TO 321.327 MILLION OZ

Oct 18 no change in silver inventory at the SLV/inventory rest at 322.271 million oz

Oct 17/ A MONSTROUS WITHDRAWAL OF 3.494 MILLION OZ FROM THE SLV/INVENTORY RESTS AT 322.271 MILLION OZ

Oct 16/  NO CHANGES IN SILVER INVENTORY AT THE SLV.INVENTORY RESTS AT 325.765 MILLION OZ

oCT 13/ NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 325.765 MILLION OZ

Oct 12/THE LAST TWO DAYS WE LOST 1.113 MILLION OZ FROM THE SLV/INVENTORY RESTS AT 325.765 MILLION OZ

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/

Oct 20/2017:

Inventory 320.288 million oz
end
  • 6 Month MM GOFO

    Indicative gold forward offer rate for a 6 month duration

    + 1.40%
  • 12 Month MM GOFO
    + 1.61%
  • 30 day trend

end

 

Major gold/silver trading/commentaries for MONDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

Next Wall Street Crash Looms? Lessons On Anniversary Of 1987 Crash

by janskoyles October 23, 2017

– Next Wall Street Crash looms? Lessons on anniversary of crash
– 30 years since stock market  ‘Black Monday’ crash of 1987

– Dow Jones Industrial Average fell 22.6% on October 19, 1987
– S&P 500, FTSE and DAX fell 20%, 11% & 9% respectively
– Gold rose 24.5% in 1987 (see chart), acting as safe haven 
– Prior to crash, stocks hit successive record highs despite imbalances
– Imbalances that lead to 1987 crash are much worse today

Editor: Mark O’Byrne

Gold prices in USD in 1987 (LBMA AM)

Last week markets wobbled somewhat on the 30th anniversary of Black Monday with a 2017 version of an iffy day’s trading. The S&P 500 posted it’s biggest post-midnight drop on Friday, but went onto finish the day with yet another record close.

Prudent traders and investors are growing increasingly uncomfortable with the increasing “irrational exuberance” in markets. We are repeatedly seeing new record highs in U.S. stocks and yet trading volume and volatility remain suspiciously low.

Many are asking how long this situation can go on for? Especially given the significant macroeconomic risk in the form of a massively indebted U.S. and western world and heightened geo-political risk.

Black Monday reaction

The Black Monday of 1987 is firmly etched in markets’ histories. Few came away unscathed. It is generally remembered as something akin to a bloodbath that few wish to repeat.

But a repeat of that crash looks more and more likely by the day. None of the factors that pushed the markets to react in such a way are particular to 1987. They all exist today, arguably on a grander and more dangerous scale.

Is bigger better? How times change

There have been many articles and commentary pieces asking if Black Monday could happen again.

It’s worth giving a quick snapshot of how different our marketplace looks today, to how it did then.

  • Prior to the 1987 crash, the record number of shares to have traded hands in one day was 302 million. On October 19th 1987 it was 595 million. Today it is not uncommon for 1-1.5 billion shares to be traded on an average day.
  • The drop in the DJIA was a then record 508 points, today this would be equivalent to around a 2% drop.
  • On the day of the crash IBM was America’s largest company. The 1987 IBM is just 6% of the size of Apple.

The above tells us one thing – the market is bigger today. There is a greater volume, greater choice and greater opportunity for traders and investors.  there is also greater debt and leverage and the new phenomenon of ‘stock buy backs’.

So is bigger necessarily better, stronger or more resilient?

As a direct result of Black Monday regulators came together to put safeguards in place to prevent anything like it happening again. However, if you look at the main reasons put forward as to why Black Monday is burned in market history’s memory  then you will notice that there is little regulators can try to prevent.

You will also notice how the same problems exist today, just on a larger scale.

  • The US dollar weakness
  • Middle East troubles
  • Inflation taking off
  • Trade deficits

The following two reasons/causes are connected, although few will have picked up on this.

  • Human behaviour

Nobel prize winning economist Robert Shiller ran a survey in the week following the 1987 crash. He questioned over 3,000 individual and institutional investors about events surrounding the downturn. The most interesting information in his findings was regarding the narrative in the run up to the market collapse.

He believes his findings from 30 years ago point to why we are still at risk of it happening again. Shiller writes, ‘fundamentally… the market crash was a mass stampede set off through viral contagion.”

“…a powerful narrative of impending market decline was already embedded in many minds. Stock prices had dropped in the preceding week. And on the morning of Oct. 19, a graphic in The Wall Street Journal explicitly compared prices from 1922 through 1929 with those from 1980 through 1987…The declines that had already occurred in October 1987 looked a lot like those that had occurred just before the October 1929 stock market crash. That graphic in the leading financial paper, along with an article that accompanied it, raised the thought that today, yes, this very daycould be the beginning of the end for the stock market.”

It all came down to the fact that investors believed they could tell what other investors were thinking. Given the comparatively primitive communications 30 years ago, it is incredible how quickly contagion spread.

(Interesting but useless fact,  the Number One song in the US on 19th October 1987 was “Lost In Emotion” by Lisa Lisa and Cult Jam)

  • Computer trading 

Human behaviour is inextricably linked to the damage computer trading can do to a market. Shiller’s survey results suggest that it all came down to a fear of the technology. Fear – a very real and human emotion.

Portfolio insurance, a form of program trading, received a lot of the blame for the 1987 crash, especially by the Brady Commission. The Commission reported “initial decline ignited mechanical, price- insensitive selling by a number of institutions employing portfolio insurance strategies.”

For Nobel-winning Robert Shiller, ‘fear of portfolio insurance may have been more important than the program trading itself.’

Shiller argues that today, the further development of trading technology could exacerbate another stock market crash. ‘In one way, the situation has probably gotten worse: Technology has made viral rumor transmission much easier.’

Shiller’s not the only one who is worried about how today’s technology may lead us towards another market crash.

Kyle Bass and many others are rightly warning that algorithmic trading is now ‘running the marketplace’

For Bass, little has been done to solve the dangers of technology in trading. He argues that the algorithms of today mean we have a lot of investors unable to calculate their risk and manage it accordingly, ‘this is like portfolio insurance on steroids.’

Kyle Bass has further concerns – North Korea, China and End of QE

The respected fund manager Kyle Bass is not only concerned about the similarities of today with 30 years ago, but also with new factors that are pertinent to today’s globalised market.

Namely US’s deteriorating relationships with both China and North Korea and the unwinding of central bank stimulus.

He says:

“Our trade relationship with China is worsening. Our relationship with North Korea, whatever it is, continually worsens. We’ve got three people at the head of these countries, that are trying to make their countries great again. I think that’s a real risk geopolitically.”
And when it comes to central bank unwinding, it’s about short-term damage to equities and bonds. Despite their efforts, the G-4 central banks cannot keep a lid on volatility forever.

“But when you think about it financially, which is actually easier to calculate, the financial reason is the G-4 central banks going from a period of accommodation to a period of tightening, and that’s net of bond issuance.”

Perception of risk is key 

Whilst there are some slight concerns about risk in the market today, there is little being done in order to manage that risk. This is seen from the top (with central banks) but also with investors, both individual and institutional.

We can see this with the low VIX and volatility in the marketplace.

This is dangerous argues Christopher Cole:

“The danger is that the multi-trillion-dollar short volatility trade, in all its forms, will contribute to a violent feedback loop of higher volatility resulting in a hyper-crash.”

For Kyle Bass, just a small drop in the equity market ‘4 or 5 points’ could trigger a major crash as so few investors are ready for any kind of volatility.

Throughout time investors have been best prepared when they hold a diversified portfolio. A well diversified portfolio demonstrates an understanding of both known and unknown risks.

Had you held a 100% stock portfolio in 1987 then then you would have faced a 22.6% loss in one day and about 35% by the end of the year. Showing you had little understanding of the impossibilities that could become very real possibilities.

In contrast, had you held gold in your portfolio then you would have had one of the few portfolios that finished the year in the green.

Gold in the stock market crash of 1987

Gold surged 24.4% in 1987 thereby acting as a much needed hedge and safe haven.

As with any major market event we saw a rush to cash in the short term. Many investments were treated like cash machines. Gold included in the short term and it fell initially.

Investors looked to sell any asset they could generate cash from. Gold soared by over 4% to $491 early on 19th October 1987, but was down at $464.30 by the following day.

However, gold was one of the few assets in the green by the end of year. Welcoming in 1988 at $502.30 for a gain of 24.4% for the year of 1987. Once again showing its hedging and safe haven attributes.

We have since come to learn that this is classic Wall Street, hedge fund trading behaviour. When a crash happens there is a rush to liquidity. It is only in the aftermath that speculators and many investors begin to reconsider hedges and place their money in them.

It is likely that the rush to safe havens and hedges will happen sooner next time around. Given the role algorithm-based trading and the end of daily price limits in many futures markets, investors may feel the need to move quickly into financial insurance assets such as gold and silver.

Whether you bought gold on the way in or the way out of the financial crash of 1987, you would still be feeling good about your investment.

Even after the stock market crash and stocks becoming very undervalued, gold remains one of the top performing assets in the last 30 years, as demonstrated by the following Deutsche Bank table:

Don’t give yourself the benefit of hindsight

Is another market crash like Black Monday possible? When reflecting on the 1987 crash and his learnings, Dennis Gartman wrote the following:

I learned that markets can indeed be irrational; I learned that one has no choice but to expect the irrational and to prepare for it. I learned that amidst panic anything… absolutely ANYTHING… is possible and I learned to be prepared.

No matter how many rational arguments you have read regarding the potential of another market crash, the irrationality of markets should be your main takeaway.

Investors fail to accurately perceive risk because of both technology’s ability to shield them from it and the overconfidence and complacency that we see in all booming markets.

Inevitably parties must come to an end. How this one will come to an end is impossible to predict. All we can do is go on what we do know and what we have already seen.

Investors who did well during and after the 1987 financial crash are the ones who were diversified before the crash and who held onto quality assets. They were prepared and looked beyond the short-term panic. You did not need to have millions in 1987 in order to trade your way out of a bad situation. You just needed to know that safe havens will continue to act as hedges and offer investment protection and to have acted accordingly.

For those looking for a portfolio that is resilient in the face of irrational, uncertain markets, you can’t go far wrong with a diversified portfolio with a decent allocation to gold bullion bars and coins.

-END-

END

GOLD TRADING TODAY:

WHY GOLD ROSE ON THAT NEWS IS PUZZLING!!

(COURTESY ZERO HEDGE)

Gold Jumps As Trump Says “Very, Very Close” To Fed Chair Decision

The Dollar index dropped and gold jumped as President Trump told reporters during a meeting with the prime minister of Singapore that he was “very very close” to a decision on who would be the next chair(person) of The Fed

Jerome Powell continues to be the front-runner…

And gold is up…

Pushing the precious metal above its 100DMA…

(courtesy zerohedge)

The CFTC states they they fight regulate bitcoin and that caused the biggest drop in a month

(courtesy zeorhedge)

Bitcoin falls on reminder that CFTC might regulate it

 Section: 

Bitcoin Just Had Its Biggest Drop in a Month

By Constantine Courcoulas
Bloomberg News
Wednesday, October 18, 2017

Traders waiting for a pullback in bitcoin’s price to rebuild positions in the world’s largest cryptocurrency may have the U.S. Commodity Futures Trading Commission to thank.

In a primer on the asset class published Tuesday, the agency said virtual “tokens” used in initial coin offerings can come under CFTC oversight, a message that a market averse to scrutiny did not take well.

Bitcoin fell as much as 5.9 percent, its biggest loss in almost a month, to as low as $5,247.

The U.S. Securities and Exchange Commission has already said tokens from some ICOs can be securities under its oversight. “There is no inconsistency between the SEC’s analysis and the CFTC’s determination” from 2015 that virtual currencies are commodities, the CFTC said. …

… For the remainder of the report:

https://www.bloomberg.com/news/articles/2017-10-18/bitcoin-dips-most-in-…

END

A good history lesson offered to us by Hugo Salinas Price as he discusses how unbacked fiat money leads to a corrupt society.

(courtesy Hugo Salinas Price/GATA)

Hugo Salinas Price: How unbacked fiat money corrupts society

 Section: 

7:44p ET Wednesday, October 18, 2017

Dear Friend of GATA and Gold:

In commentary he laconically headlines “Anecdotes and Reminiscences,” Hugo Salinas Price of the Mexican Civic Association for Silver today uses episodes from his country’s history to illustrate the corrupting tendency of unbacked fiat money.

Salinas Price essentially supports the British economist Peter Warburton’s conclusion that a primary objective of central banking is to deprive people of any enduring standard of monetary measure (http://www.gata.org/node/8303) and your secretary/treasurer’s conclusion that another primary purpose of central banking is to prevent ordinary markets from happening at all (http://www.gata.org/node/6242).

Salinas Price’s commentary is posted at the association’s internet site here:

http://www.plata.com.mx/enUS/More/331?idioma=2

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org

END

Mining companies are having trouble dealing with countries who want to share in the riches they find. Barrick gold now gives Tanzania stakes in their mines in Tanzania worth around 300 million dollars to end disputes

(courtesy GATA/Reuters)

 

Barrick gives Tanzania stake in mines, $300 million to end dispute

 Section: 

From Reuters
via The New York Times
Thursday, October 19, 2017

DAR ES SALAAM, Tanzania — Barrick Gold will give Tanzania a 16 percent stake in three gold mines, a 50 percent share of revenue from those mines, and a one-off payment of $300 million to resolve a dispute that has hit its operations in the country, the two sides said.

The Canadian miner and the Tanzanian government have been in talks for months after the east African country banned the export of unprocessed minerals and enacted laws to raise state ownership of the nation’s mines.

The agreement announced today comes after the new laws and a crackdown on mining firms slowed fresh investment in what has long been seen as one of Africa’s brightest mining prospects.

President John Magufuli, nicknamed the Bulldozer, has said the government’s approach was aimed at ending what he called years of corrupt practices and tax evasion that have robbed the country of revenue. …

… For the remainder of the report:

https://www.nytimes.com/reuters/2017/10/19/business/19reuters-barrick-go…

END

We have highlighted to you over the years, the huge abuse that bankers orchestrated with respect to copper.  Today a huge base metal firm has now sued for $850 million.

(courtesy Bloomberg/GATA)

Barclays sued by fund for $850 million in metals market abuse

 Section: 

By Jack Farchy and Mark Burton
Bloomberg News
Thursday, October 19, 2017

Red Kite Management Ltd., the world’s largest metals hedge fund, is suing Barclays for alleged market abuse in the copper market that it claims cost the firm at least $850 million between 2010 and 2013.

The case pits a $2 billion hedge fund against a bank that has been hit by a number of scandals in previous years, including large fines for manipulating Libor, the benchmark for interest rates

Red Kite, whose co-founder is the former treasurer of the U.K. Conservative Party, alleges that Barclays allowed staff to share confidential information about its positions with the bank’s proprietary traders on the floor of the London Metal Exchange, according to court documents filed by the hedge fund in the U.K. High Court.

Barclays traders used the knowledge about Red Kite’s positions to profit by placing opposing trades, the fund said in court documents filed in October 2016 but only recently made public. Red Kite alleges the bank “sought to manipulate the LME by ‘ramping’ prices” to manipulate the closing price, a benchmark widely used by traders. …

… For the remainder of the report:

https://www.bloomberg.com/news/articles/2017-10-19/barclays-sued-by-fund…

END

Why Gary North is totally wrong with respect to gold and central banks

(courtesy zero hedge)

Why central banks disagree with Gary North about gold

 Section: 

1p ET Friday, October 20, 2017

Dear Friend of GATA and Gold:

In his essay this week, “The Case Against Gold as a Central Bank Asset” —

https://www.garynorth.com/public/17271.cfm

— the economic historian and libertarian financial writer Gary North argues that central banks should get rid of their gold reserves.

North writes: “What can the governments do with the gold? It’s useless to them. They don’t sell it. I wish they would sell all of it.”

But of course central banks and governments do sell gold. They “lease” it too, insofar as they at least put gold credits into the marketplace. They buy and sell gold derivatives. They buy gold back when they can do so without spiking the price.

They do this to control the monetary metal and — at least in the sphere of influence of the United States — to try to drive it out of the world financial system. They aim to maintain the superiority of the U.S. dollar or the International Monetary Fund’s Special Drawing Rights, a contrivance that long has been largely under the U.S. government’s control.

Central banks and governments own gold in part because, as Federal Reserve Chairman Alan Greenspan told Congress in 1999: “Gold still represents the ultimate form of payment in the world. Fiat money in extremis is accepted by nobody. Gold is always accepted.”

Occasionally central banks, governments, and their officials or former officials admit their interest and objectives with gold in documents in their archives or memoirs. GATA has compiled and summarized many of these admissions here:

http://www.gata.org/node/14839

Few of these admissions are more candid than the one published in the 2003 annual report of the Reserve Bank of Australia —

http://www.rba.gov.au/publications/annual-reports/rba/2003/pdf/2003-repo… —

and —

http://www.gata.org/files/ReserveBankOfAustralia-AnnualReport2003.pdf

— which says:

“Foreign currency reserve assets and gold are held primarily to support intervention in the foreign exchange market. In investing these assets, priority is therefore given to liquidity and security, in order to ensure that the assets are always available for their intended policy purposes.”

These days the RBA is much more subtle about gold. The central bank’s most recent annual report —

https://www.rba.gov.au/publications/annual-reports/rba/2017/pdf/2017-rep…

— says instead:

“Australia’s official reserve assets include foreign currency assets, gold, Special Drawing Rights (SDRs — an international reserve asset created by the IMF) and Australia’s reserve position in the IMF. At 30 June 2017 these assets totaled $84.1 billion. All components of official reserve assets are owned and managed by the Reserve Bank with the exception of Australia’s reserve position in the IMF, which is an asset of the Australian government.

“Official reserve assets are held by the Reserve Bank to facilitate various policy operations, including in the foreign exchange market. …”

Among the most smoking guns of official admissions that central banks and governments hold gold to facilitate their surreptitious rigging of the currency markets is the secret March 1999 report of the IMF’s staff to the organization’s board:

http://www.gata.org/node/12016

What can central banks and governments do with their gold?

They can control the currency markets with it — that’s what — and by controlling the currency markets they control the value of all capital, labor, goods, and services in the world. That is, by controlling the currency markets by controlling gold, they control the world itself.

GATA doesn’t like this any more than any libertarian does. But contrary to North’s suggestion, it is no mystery. We could use his help in acknowledging and exposing it.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org

END

Another believer that Bitcoin is a fraud

(courtesy zerohedge)

Bitcoin Tumbles After Saudi Prince Calls Crypto – “Enron In The Making”

Another day, another elite with a petrodollar ax to grind denigrates crytpocurrencies.

This morning’s prognosticator was Saudi Arabian Prince Alwaleed bin Talal Al Saud who told CNBC…

“I just don’t believe in this bitcoin thing. I think it’s just going to implode one day. I think this is Enron in the making.”

“It just doesn’t make sense. This thing is not regulated, it’s not under control, it’s not under the supervision” of any central bank.

And while Bitcoin had been sliding, it accelerated on the prince’s comments…

However, we do note that Bitcoin is already bouncing back up from 5610 lows to 5740, as perhaps the prince is highlighting ‘features’ not ‘bugs’ in the virtual currency.

end

Russia adds another 34 tonnes to its official reserves:

(courtesy Lawrie Williams/Sharp’s Pixley)

LAWRIE WILLIAMS: Russian gold reserves: Another 34 tonnes added in September

It’s that time of the month again when the Russian Central Bank announces it latest gold reserve figure. Russia has been by far the biggest buyer of gold in recent years – at least in terms of officially reported gold holdings to the IMF – and for the past two years has added around 200 tonnes a year to its holdings, so the latest figures are watched by analysts to see if the same will happen again this year.

The latest reported figure out of The Bank of Russia is that it added 1.1 million ounces (34.2 tonnes) of gold to its reserves in September, bringing the total year to date to 163 tonnes, well on track to hit the 200 tonnes figure for its gold purchases again this year. Indeed it looks as though Russia could be stepping up its gold acquisitions to exceed the 200 tonne figure for the full year, with three months still to go. However Russian month by month purchases do vary quite considerably including the occasional zero month (See the below chart from Nick Laird’s http://www.goldchartsruswebsite) so although it only needs to add a further 37 tonnes over Q4 to reach the 200 tonne figure, it could yet be aiming again just for this kind of level of full year purchases.

The latest figure puts the nation’s total gold reserve at 1,779 tonnes – still in sixth place among national gold holdings according to the IMF data. This only puts it around 64 tonnes less than fifth-placed China’s reported figure (although we believe this to be substantially understated – See: The fiction in Chinese gold reserves and media import coverage and CHINA – Still no official increase in gold reserves), and on track to exceed the Chinese total by the year end, or early next year assuming China continues to report zero gold reserve increases to the IMF.

Vladimir Putin’s Russia is the world’s third largest gold producer and vying for second place with Australia with both seemingly still increasing their respective gold output levels in the current year. Last year Russia, according to the analysts from Metals Focus, produced around 274 tonnes of gold (See: World Top 20 Gold: Countries, Companies and Mines) so its central bank appears to be buying up around 70% of its national production.

Adding the gold to its reserves is another way of reducing Russian dependence on the U.S. dollar – a policy exacerbated by U.S. threats to cut the country off from the Western financial system. With oil and gas being key exports recent bilateral deals between Russia and China for the latter to buy much of its huge oil and gas imports from Russia paying for this in yuan (ultimately redeemable in gold), together with the construction of cross-border pipelines, are also key elements in future global financial change involving Russia and China, both of which appear to believe that gold has a hugely significant role to play in global finance in the years ahead.

21 Oct 2017

-END-


Your early MONDAY morning currency, Asian stock market results,  important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight/9 AM EST

 
 i) Chinese yuan vs USA dollar/CLOSED DOWN AT 6.6403/shanghai bourse CLOSED UP AT 2.05 POINTS .06%   / HANG SANG CLOSED DOWN 181.36 POINTS OR 0.64% 

2. Nikkei closed UP 239.01 POINTS OR 1.11%     /USA: YEN RISES TO 113.88

3. Europe stocks OPENED IN THE GREEN/EXCEPT SPAIN ( /USA dollar index RISES TO  93.96/Euro DOWN to 1.1742

3b Japan 10 year bond yield: FALLS  TO  -+.069/ 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::  52.13 and Brent: 57.77

3f Gold DOWN/Yen DOWN

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

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

3h Oil UP for WTI and U[ or Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO  +.439%/Italian 10 yr bond yield UP to 2.034%  /SPAIN 10 YR BOND YIELD DOWN TO 1.638%  

3j Greek 10 year bond yield RISES TO  : 5.576???  

3k Gold at $1275.65 silver at:16.96:  6 am est)   SILVER NEXT RESISTANCE LEVEL AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN 17/100 in  roubles/dollar) 57.48

3m oil into the 52 dollar handle for WTI and 57 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 SMALL SIZED DEVALUATION SOUTHBOUND 

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 113.88 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  0.9866 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1585 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  +0.439%

The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”.  Next step for Greece will be the recapitalization of the banks and that will be difficult.

4. USA 10 year treasury bond at 2.384% early this morning. Thirty year rate  at 2.899% /

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

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

World Stocks At All Time Highs After Nikkei’s Record Winning Streak; Euro Slides With Spain On Edge

 

In an otherwise quiet session, Sunday’s convincing election victory for Japanese Prime Minister Shinzo Abe’s ruling coalition, which gave it another constitution-changing supermajority, pushed the Nikkei to the highest level since 1996, after a record 15 consecutive days of gains – the longest winning streak on record – and sent world stocks to new all-time highs on Monday.

Over the weekend, Japan’s Abe was re-elected and his coalition reinvigorated by an increased share of the vote. Common “hot takes” are that this means: further stimulus for Japan; Governor Kuroda is now more likely to serve another term at the BoJ; and therefore a weaker JPY. On the flip side, just as many argue that this is simply an extension of the status quo – USDJPY is little changed so far, after rising briefly above 114.

That said, it appears that the BOJ’s relentless buying of anything that isn’t nailed down has started to trickle down: corporate Japan is having its best year for earnings since 2000, with the country getting the most EPS upgrades since 2010.

Meanwhile, in Europe an escalation of Spain’s constitutional crisis weighed on the country’s banks. S&P index futures are modestly green, and set for another record high in the cash index, while stocks in Asia and Europe were mixed after an early push higher, on concerns over the outcome of the Catalonia independence crackdown.

Still, it could be worse: “At this moment you’ve not got contagion from Spain to the broader European market. It’s seen as a national and localized issue,” said Pierre Bose, head of European equities strategy at Credit Suisse.

Among the other key developments over the weekend, Spanish PM Rajoy invoked article 155, in which he plans to dissolve Catalonia government and curb its authority, while he also seeking to call elections within 6-months. Voters in Italy’s Lombardi and Veneto regions overwhelmingly voted for more autonomy from Rome.  UK Brexit Sec Davis said on Friday that the UK doesn’t want a ‘no deal’ outcome on Brexit, but added that the UK will be ready if it occurs.  Markets are bracing for the European Central Bank to signal baby steps away from its ultra-easy monetary policy stance this week and for the U.S. Federal Reserve to hike rates in December.

“Now there’s a renewed mandate for quantitative easing, which means a weaker yen and stronger Japanese government bond prices. It also has a significant spillover for other developed markets,” said Peter Chatwell, head of euro rates strategy at Mizuho.

In macro, the dollar strengthened while 10-year Treasury yields hovered near 2.40% on optimism Trump is close to pulling off a tax overhaul and may announce the next Fed chief as soon as this week. The Bloomberg dollar index DXY extended gains from Friday when it closed above its 100-DMA for first time since March. Late last week, Trump said he’s considering Stanford University economist Taylor – the most hawkish candidate – and Governor Powell for top job at the Fed, while indicating Chair Yellen remains in the running.

The U.S. dollar is finding fresh yield support on optimism over a deal to cut corporate taxes and the perception that John Taylor remains a strong contender for Fed chair,” Sean Callow, an FX strategist at Westpac told Bloomberg. “The 2.40 percent level remains critical for the 10-year Treasury note, so the dollar is not yet off to the races.”

The USD/JPY rose to a fresh 3-month high after Japan’s ruling coalition retained its two-thirds lower house majority in Sunday’s election, ensuring continuity of BOJ’s loose monetary policies; it traded above 114 in the early part of the session, before sellers stepped in to fill the gap. Meanwhile the euro weakened a second day as investors waited for the next big development in Spain, where Catalan separatists are planning their response after Prime Minister Mariano Rajoy moved to stamp his authority on the region.

Major Asia-Pac indices were mixed although Japan stocks rose again by 1%, after the blowout win by PM Abe’s ruling bloc at the snap election. Nikkei 225 (+1.1%) led the region after the ruling coalition gained a supermajority at Sunday’s election, which keeps Abenomics firmly in place and paves the way for possible constitutional changes. Japan’s Topix index also climbed 0.8%, cementing a rally to the highest since mid 2007. Australia’s ASX 200 (-0.2%) failed to hold onto initial gains and a mixed tone was observed in Chinese markets, in which the Shanghai Composite (flat) ignored a significant liquidity operation by the PBoC; there were strong gains in consumer and healthcare firms although trading volumes remained thin as investors awaited policy cues from a party congress and fresh data showed growth in new home prices slowed to a crawl in September. The Hang Seng (-0.7%) underperformed on technical selling after it met resistance around 28,500.

Stoxx 600 rose 0.4%, powered by the slumping Euroe even as the IBEX 15 once again lagged peers in early European trading, led lower by banking stocks after Spain moved to take full control of Catalonia over the
weekend, while Catalan officials state that they will not follow orders from Madrid and meet Monday to prepare their reply to Rajoy. Elsewhere, major EU bourses have been
oscillating between gains and losses amid quiet newsflow. The biggest losers are Spanish banks, with  BBVA down 1.8%, Sabadell down 1.4%, Bankia down 1.2%, CaixaBank down 1.1%. As Bloomberg notes, Sabadell is down 9% since Catalan referendum on Oct. 1, CaixaBank down 10%, IBEX down 2.1%; Stoxx 600 is up 0.5% over same period.

Concerns about Spain weighed on rates, with the yield on 10-year Treasuries was unchanged at 2.38 percent, after rising to 2.40%, the highest in more than 15 weeks. Germany’s 10-year yield fell two basis points to 0.44 percent, the biggest fall in a week.

London copper traded steady after Chinese authorities reaffirmed that the country’s economy was on track to achieve the official growth target, while a firmer dollar nudged gold down 0.4 percent to $1,275.60 an ounce. Oil prices edged ahead on supply concerns in the Middle East and as the U.S. market showed further signs of tightening while demand in Asia keeps rising. West Texas Intermediate crude declined 0.1 percent to $51.79 a barrel. Gold decreased 0.4 percent to $1,275.31 an ounce, the weakest in more than two weeks.

This week is heavy on potential investor catalysts, from the election in Japan to the boiling Catalonia crisis and very different moves toward autonomy in parts of Italy. Away from politics central banks loom large, with a pivotal European Central Bank meeting due and the possible unveiling of President Donald Trump’s pick for Fed chair. Traders will also be watching U.S. growth data and Trump’s efforts to overhaul America’s tax code. U.K. Prime Minister Theresa May is likely to make a statement to Parliament on Monday on the progress of Brexit talks following the latest European Union summit. The U.S. economy probably expanded at about a 2.5 percent annualized pace in the third quarter, restrained in part by the effects of two hurricanes, economists forecast the government to report on Friday. The European Central Bank holds a policy meeting on Thursday at which it’s expected to announce its stimulus plan for 2018.

It’s the biggest week for earnings, with Amazon.com Inc., Alphabet Inc., Microsoft Corp., Facebook Inc., and Twitter Inc. set to report among tech names; we also get General Motors Co., Ford Motor Co., Volkswagen AG and Boeing Co. headline cars and planes. Fast food giant McDonald’s Corp., Coca-Cola Co. and brewer Heineken NV join European banks including UBS Group AG, Deutsche Bank AG and Barclays Plc. Today, the key names set to report are Kimberly-Clark, Halliburton, State Street Corp, Franklin Financial Services, NBT Bancorp, Majesco. So far in the earnings season, about 17% of S&P 500 companies have reported results. Of them, 76% have posted better-than-expected profits, vs 73% in the third quarter of 2016. In absolute terms, earnings are up 6%, vs analyst forecast for 2.6% growth in profits.

Market Snapshot

  • S&P 500 futures down 0.02% to 2,573.50
  • STOXX Europe 600 up 0.07% to 390.40
  • MSCI Asia up 0.09% to 167.01
  • MSCI Asia ex Japan down 0.2% to 549.58
  • Nikkei up 1.1% to 21,696.65
  • Topix up 0.8% to 1,745.25
  • Hang Seng Index down 0.6% to 28,305.88
  • Shanghai Composite up 0.06% to 3,380.70
  • Sensex up 0.03% to 32,398.63
  • Australia S&P/ASX 200 down 0.2% to 5,893.96
  • Kospi up 0.02% to 2,490.05
  • German 10Y yield fell 1.6 bps to 0.436%
  • Euro down 0.3% to $1.1746
  • Brent Futures unchanged at $57.75/bbl
  • Gold spot down 0.4% to $1,275.42
  • U.S. Dollar Index up 0.2% to 93.92
  • Italian 10Y yield rose 1.3 bps to 1.774%
  • Spanish 10Y yield fell 2.1 bps to 1.642%

Top Overnight News

  • A day after his election victory, PM Abe pledged to seek a broad consensus on revising Japan’s 70-year-old pacifist constitution and reiterated there was no fixed schedule for change
  • President Trump is close to pulling off a tax overhaul and may soon select the next Fed chief
  • U.K.’s PM May seemed disheartened, discouraged during a dinner with EU Commission President Jean-Claude Juncker in Brussels last week; she “begged for help,” telling Juncker of the risk she took when giving up hard Brexit plan and asked for a two-year transition period, Frankfurter Allgemeine Sonntagszeitung reports
  • May’s battle to get her Brexit legislation through Parliament hit a new roadblock as the Labour Party threatened to unite with Tory rebels, eclipsing the small victory she brought home from a summit of European leaders
  • Catalan separatists meet Monday to craft their reply to Prime Minister Rajoy after he announced a barrage of measures to stamp his authority on the rebel region
  • Leaders of two regions in Italy’s wealthy north claimed victory in referendums Sunday to demand more autonomy from the state, in a ballot that could strengthen the anti-immigrant Northern League party ahead of national elections early next year
  • Hedge funds are finding betting on West Texas Intermediate crude more attractive again, with total positioning on the U.S. benchmark increasing to the highest in almost a year
  • Catalan separatists meet Monday to craft their reply to Prime Minister Rajoy after he announced a barrage of measures to stamp his authority on the rebel region
  • The U.S. has been disappointed this year at China’s lack of progress in pursuing market-oriented reforms, said a senior administration official, ratcheting up the pressure on the world’s second-largest economy ahead of Trump’s visit there next month.
  • U.S. President Donald Trump Says Facebook Was on Clinton’s Side
  • Apple Sourced 100% IPhone and IPad Chip Orders to TSMC

The major Asian indices were mixed after the momentum from last Friday’s fresh record levels in the S&P 500, DJIA and Nasdaq Comp gradually dissipated, although Japan remained buoyant after the firm win by PM Abe’s ruling bloc at the snap election. Nikkei 225 (+1.2%) led the region after the ruling coalition gained a supermajority at Sunday’s election, which keeps Abenomics firmly in place and paves the way for possible constitutional changes. In Australia, the ASX 200 (-0.2%) failed to hold onto initial gains and a mixed tone was observed in Chinese markets, in which the Shanghai Comp. (Unch) ignored a significant liquidity operation by the PBoC, while the Hang Seng (-0.7%) underperformed on technical selling after it met resistance around 28,500. Finally, 10yr JGBs were flat with demand dampened amid the heightened risk appetite in Japan and an absence of a BoJ Rinban announcement. Japanese PM Abe’s LDP led ruling coalition won a supermajority at Sunday’s election, as unofficial results showed the ruling bloc is set to win 312 of the 465 seats or over two-thirds of seats in the lower house. Chinese China House Prices YY (Sep) 6.3% (Prev. 8.3%); PBoC injected CNY 110bln via 7-day reverse repos and CNY 90bln via 28-day reverse repos. PBoC set CNY mid-point at 6.6205 (Prev. 6.6092)

Top Asia News

  • Abe Placed to Lead Japan Through 2021 After Big Election Win
  • China Vows No Return for Shuttered Steelmakers as Curbs Hit Home
  • Deripaska’s En+ Group Targets $8.5 Billion Valuation in IPO
  • Toshiba Sees 110 Billion Yen Loss on Tax Impact of Chip Sale
  • Noble Group Warns of Loss Topping $1 Billion as Vitol Buys Unit

In Europe, the IBEX is once again lagging peers in early European trading, after Spain moved to take full control of Catalonia over the weekend, while Catalan officials state that they will not follow orders from Madrid. Elsewhere, major EU  bourses have been oscillating between gains and losses with newsflow on the quieter side. The 10 year German benchmark had been initially firmer amid the latest Spanish-Catalan developments and reports that 2 Italian regions are also keen on gaining more autonomy. Political instability in the region is also underpinning French OATs, as core bonds benefit from a degree of safe-haven positioning and spreads to the periphery re-widen. However, the prime focus and market driver this week will be Thursday’s ECB policy meeting and the much hyped/eagerly awaited QE tapering announcement. Although much of the early morning gains have been pared given the slight move higher in equities.

Top European News

  • Catalan Separatists Plot Response to Spain’s Shock and Awe
  • Italy Real Estate Stocks Rise on Report of Budget Measures
  • Spire Rejects Bid From Holder Mediclinic for Rest of Shares
  • U.K. Car Dealers Skid on Pendragon’s Consumer Confidence Warning
  • Linde Drops Tender Threshold, Extends Deadline for Praxair Deal

In FX, the greenback remains undecisive, as the anticipation of the announcement of the new Fed Chair continues to loom over markets, with reports stating that Powell, Taylor and Yellen are all still in the frame. The DXY trades below 94.00, struggling to find any real direction, with its major pairs seeing the same subdued, range-bound trade. The headline news over the weekend was Japanese PM Abe winning the supermajority, as flows flooded into the Asian stock market, with risk flow causing some selling in JPY. USD/JPY gapped higher, briefly spiking through 114.00. GBP grinded higher throughout the Asian session, however did later run into resistance at around 1.3228 (last Thursday’s high) In turn, GBP tripped through 1.32 to move to a low of 1.3164. Risks continue to remain to the downside with the outcome of Brexit still very much unknown.

In commodities, WTI and Brent crude futures slightly firmer with prices aided by another drop in the Baker Hughes rig count, showing a 3rd straight weekly loss. Gold decreased 0.4 percent to $1,275.31 an ounce, the weakest in more than two weeks.

It is a fairly light start to the week for data with mostly second tier releases including China property prices data for September, Eurozone consumer confidence for October and UK CBI business optimism and total orders data for October. Perhaps the most significant event will be a likely statement from UK PM Theresa May to Parliament on the progress of Brexit talks following the EU summit.

US Event Calendar

  • 8:30am: Chicago Fed Nat Activity Index, est. -0.1, prior -0.3

DB’s Jim Reid concludes the overnight wrap

The main event of the week is undoubtedly Thursday’s ECB
blockbuster meeting where DB currently expect a cut in purchase at the start
of 2018 from EU60bn per month to EU30bn and for this to be confirmed for
9 months. The consensus seems to have migrated lower towards EU25-30bn
over the last month and from a 6 to a 9 month extension. However with
reinvestments expected to be EU15bn per month on average next year, this could
yet lead to a number at the lower end of expectations if the ECB focus on this.
Our rates strategists think an explicit mention of gross purchases from the ECB
could be quite hawkish as it would acknowledge the reinvestment issue that
would naturally keep policy looser if they recycled all proceeds.

Another hawkish signal could be mention of an explicit end date for purchases
but this is not expected at the moment. Nevertheless our strategists think the
current market pricing of the first rate hike being pushed back to early 2020 is
too far. They think it’s more likely to be between Q2 and Q3 2019. Elsewhere for
credit investors it’s unlikely they’ll explicitly mention the specifics of the CSPP/
PSPP split but we think there’s a good chance that when the data comes through
in early 2018 it will show no or limited CSPP tapering relatively to PSPP.

The one thing about highlighting this as a blockbuster meeting is how much is
already priced in? We’ve had a number of credible yet unconfirmed press stories of late detailing quite specific behind closed doors ECB discussions. So a lot has
been flagged and we may have to have a deviation from the above (e.g. an end
date to purchases or rolling in reinvestments to the tapered amount) to make
a big impact.

Also in terms of the impact on rates, the US seems to be a bigger swing factor of
late. Bond yields seemed to have gone up and down like a yo-yo since Warsh’s
name was first seriously mentioned with regards to being Fed Chief c.3 weeks
ago. The range has been less than 20bps for 10 years over this period but Warsh
and averagely hourly earnings sent them first higher, before CPI then sent them
lower before serious mention of Taylor last week and the passing of a budget at
the Senate late on Thursday night sent them back towards the top of the recent
range as we ended last week. Indeed Friday saw core 10y bond yields from
around the globe jump by 5-7bps (UST: +6.6bp; Bunds +5.7bp; Gilts +5.3bp)
while changes at the 2y part of the curve were more modest at c2-5bp (UST:
+4.6bp; Bunds +1.5bp; Gilts +2.2bp). 10yr USTs have consolidated for now and
kicked off the week fairly flat in the Asian session.

Turning to the weekend news now. In Spain, tensions have increased. At a press
conference on Saturday, Spanish PM Rajoy formally invoked the Constitutional
power from Article 155 and outlined a range of measures to retake control of
the region, including: i) seeking to dismiss Catalan President Puigdemont and
his cabinet, ii) dissolving the Catalan parliament with plans to call new regional
elections within 6 months, and iii) assume control of the regional police force and
publicly funded media outlets. PM Rajoy noted “no government in no democratic
country can accept that the law is ignored”. In response, Puidgemont said “the
Catalan institutions and the Catalan people can’t accept this attack” and El
Confidencial reported that Party leaders in the Catalan Parliament are scheduled
to meet today to discuss next steps, with suggestions that Puidgement is
considering a formal declaration of independence with calls for an election this
week. On the other side, the proposed measures by PM Rajoy requires approval
from the Spanish Senate, which is expected to meet this Thursday afternoon
with voting on the final measures on Friday (10am local time).

For those who missed it, DB’s European economists considered to what extent
tensions around the situation in Catalonia could weigh on Spanish growth
and confidence. While their conclusions were fairly benign absent a serious
escalation, they find it prudent to consider the relevant risk channels and
vulnerabilities were the current situation to weigh on Spanish growth or investor
confidence.

Over in Japan’s general election, according to NHK tallies on Monday morning,
PM Abe and his coalition partner have achieved a two third majority win by
securing at least 312 of the 465 seats. The win by PM Abe is broadly in line
with polls in the lead up to the election and could lead to a continuation of
accommodative monetary policy along with potential changes towards higher
sales tax and the approval of gambling resorts. This morning in Asia, markets
are trading a bit mixed, with the Nikkei leading the gains, up 0.93%, but the ASX
200 (-0.01%), Kospi (-0.03%) and Hang Seng (-0.65%) are down slightly as we
type with the HK market impacted by weakness in property developer stocks as
recent data showed home prices fell last month in cities including Beijing (-0.6%
mom) and Shanghai. Elsewhere, the JPYUSD has weakened 0.19%.

Across the pond, President Trump has signalled Ms Yellen is still in the race
for the next Fed Chair, noting “most people are saying it’s down to two (Taylor
& Powell). I also met with Janet Yellen…I really like her a lot”, so “I have three
people that I’m looking at” and “I will make my decision very shortly”. Earlier
on Friday, Bloomberg reported VP Mike Pence and Treasury Secretary Munchin
were advocating Taylor and Powell to Mr Trump. Elsewhere, Ms Yellen defended
the use of QE noting “the US economy is much stronger today than it would have
been without the unconventional monetary policy tools deployed by the Fed…”

We should get the announcement by the end of next week on the Fed Chair
appointment. Back to this week, the other main highlights are the first look at
Q3 GDP for the UK (Wednesday) and US (Friday), while the flash global PMIs
for October tomorrow will also be closely watched as ever. Brexit will never be
too far from the spotlight while in China the CPC wraps up and in Germany the
Bundestag will convene for the inaugural session following the election. Earnings
season ramps with 186 S&P 500 companies due to report, including some of the
tech heavyweights, and 107 Stoxx 600 companies. For the full week ahead and
easy to read cutout of all events see our new “Next Week… This Week” document
published every Friday. The week ahead at the end has the main text from it.

Quickly recapping markets performance from last Friday. US bourses
strengthened to new record highs with the S&P (+0.51%), Dow (+0.71%) and
Nasdaq (+0.36%) all up modestly. Within the S&P, gains were led by financials
(+1.16%) and industrials, with only real estate and consumers staples stocks
mildly in the red. The latter was impacted by Procter & Gamble which fell 3.65%
post result. European markets were broadly higher, but little changed with Stoxx
600 (+0.26%), DAX (+0.01%) and FTSE (flat) up slightly.
Turning to currencies, the US dollar index gained 0.47% following the approval
of the US FY18 budget resolution, while the Euro fell 0.57% but Sterling gained
0.24%. In commodities, WTI oil rose 0.64%, while precious metals (Gold -0.75%;
Silver -1.3%) and other base metals trended slightly lower (Copper -0.53%; Zinc
-0.43%; Aluminium -0.46%).

Turning to currencies, the US dollar index gained 0.47% following the approval
of the US FY18 budget resolution, while the Euro fell 0.57% but Sterling gained
0.24%. In commodities, WTI oil rose 0.64%, while precious metals (Gold -0.75%;
Silver -1.3%) and other base metals trended slightly lower (Copper -0.53%; Zinc
-0.43%; Aluminium -0.46%).

Away from the markets and onto the US tax reforms where Republicans were
reasonably upbeat on the various weekend talk shows. The Director of White
House’s office of Management and Budget (Mick Mulvaney) said approving
the tax bill “by December is realistic” and that economic growth “…ought to
be growing about 3% a year”. Elsewhere, Senate Majority leader McConnell
signalled the tax cuts may not add to the federal budget deficit, noting “….that’s a
rather conservative estimate of how much growth you’ll get out of this pro-growth
tax reform”, although refrained from discussing the details of the tax plan as “it’s
going to be hashed out in the open.” Looking ahead, the tax writing committee
plans to release draft legislations by early November for further debate.

Back onto Brexit, ahead of PM May’s statement on the progress of Brexit. UK’s
shadow Foreign Secretary Thornberry noted on Sunday that a no-deal Brexit “is
a serious threat to Britain”. That said, UK’s International trade secretary Fox
was more circumspect, noting that “if we have no deal and we trade on current
WTO terms”, which is similar to how the EU trades with the rest of the world on
most cases, then “it’s not exactly a nightmare scenario”, although conceded
that “I would prefer to have a deal, because it would bring greater certainty”.
Elsewhere, Communities Secretary Javid signalled more fiscal spending may
be possible, noting “we can sensibly borrow more to invest in the infrastructure that leads to more housing” and that while deficit is important, “investing for
the future, taking advantage of low interest rates, can be the right thing if done
sensibly….”. It seems to us the momentum is pointing towards more fiscal policy
across the world at the moment.

Onto macro data from last Friday which was relatively sparse. In the US, the
September existing home sales was slightly above consensus at 5.39m (vs.
5.3m expected) along with the monthly budget statement at $8bln (vs. $6bln
expected). Note that our US economists’ bottom-up tally of 3Q inflation-adjusted
output points to less of a drag on the economy from hurricane-related disruptions
than originally anticipated. Hence, they have revised up their 3Q real GDP
growth forecast by 70bp to 2.7% versus consensus of 2.5%. In Canada, the
September CPI was slightly lower than expected at 0.2% mom (vs. 0.3% expected)
and 1.6% yoy (vs. 1.7% expected).

In Germany, September PPI was higher than expected at 0.3% mom (vs. 0.1%
expected) and 3.1% yoy (vs. 2.9% expected). Elsewhere, the Eurozone’s August
current account balance was $33.3bln, slightly higher than last month after it
was revised higher by c6bln to $31.5bln. In the UK, September public and private
sector net borrowing were both modestly lower than expected at 5.3bln (vs.
5.7bln expected) and at 5.9bln (vs. 6.5bln expected) respectively, however, after
adjusting for prior downward revisions of c1bn, this month’s underlying reading
was more in line with consensus.

It is a fairly light start to the week for data with mostly second tier
releases including China property prices data for September, Eurozone consumer
confidence for October and UK CBI business optimism and total orders data for
October. Perhaps the most significant event will be a likely statement from UK
PM Theresa May to Parliament on the progress of Brexit talks following the EU
summit.

end

3. ASIAN AFFAIRS

i)Late SUNDAY night/MONDAY morning: Shanghai closed UP 2.05 points or .06% /Hang Sang CLOSED DOWN 181.36 pts or 0.64% / The Nikkei closed UP 239.01 POINTS OR .04/Australia’s all ordinaires CLOSED UP 0.19%/Chinese yuan (ONSHORE) closed DOWN  at 6.6403/Oil UP to 52.13 dollars per barrel for WTI and 57.77 for Brent. Stocks in Europe OPENED IN THE GREEN EXCEPT SPAIN  .  ONSHORE YUAN CLOSED DOWN AGAINST THE DOLLAR AT 6.6403. OFFSHORE YUAN CLOSED STRONGER TO THE ONSHORE YUAN AT 6.6501 AND //ONSHORE YUAN  WEAKER AGAINST THE DOLLAR/OFF SHORE WEAKER TO THE DOLLAR/. THE DOLLAR (INDEX) IS STRONGER AGAINST ALL MAJOR CURRENCIES. CHINA IS NOT HAPPY TODAY.

3a)THAILAND/SOUTH KOREA/NORTH KOREA

NORTH KOREA/USA

b) REPORT ON JAPAN

Abe wins big which causes the USA/Yen to rise (yen fall).  Japanese stocks rise but gold falls despite the fact that more easing is the prime objective of Abe

(courtesy zerohedge)

USDJPY Inches Higher As Japanese Stocks Set For Longest Winning Streak In History

Yen is weaker and Japanese equity futures notably higher following a landslide election victory for Japan Prime Minister Shinzo Abe which theoretically ushers in yet more easy monetary policy.

USDJPY tried to run stos at 114.00 but failed (for now). However, NKY futures are up almost 1% in the pre-market…

If this equity rise holds it will mark the 15th consecutive gain for the Japanese market – breaking the 1961 record of 14 straight days to become the longest winning streak in Japanese stock market history…

Nikkei 225 is at its highest since Dec 1996…

Much has been made recently of the deoupling between USDJPY and the Nikkei 225…

However, this chart masks a closer relationship between USDJPY and the relative performance of Japanese and US equities…

So there really is no regime shift.

What are the drivers of this persistent negative correlation between the yen and Japanese equities and which flows supported this negative correlation this year?

JPMorgan presented before three fundamental explanations to justify the link between Japanese equities and the yen.

One typical explanation is that the yen, being a major funding currency for the world, should rise in a risk-off equity environment and vice versa. But this argument is not supported by the fact that there is much lower correlation between the yen and global equities. It is also not supported by the structural break in the correlation between Japanese equities and the yen shown in the chart above. The yen was the most prominent or sole funding currency before the financial crisisof 2007/08. After the financial crisis the yen was joined by the dollar and later by the euro as funding currencies. So if anything the negative correlation between equities and the yen should have been even more negative before the financial crisis. But the opposite happened. The negative correlation only intensified after the financial crisis.

A second explanation, with causality running from yen to Japanese equities, is that a weaker yen has a positive impact on corporate profits inducing equity investors to buyJapanese equities and vice versa.

A third explanation is that Abenomics was always thought of as a combined trade for overseas investors: buy Japanese equities and sell the yen. And reverse, i.e. sell Japanese equities and buythe yen, when Abenomics wanes.

But JPM notes both of these last two explanations have a problem: why does the yen not go up as foreign investors buyJapanese equities? In principle when foreign investors buy or sell Japanese equities currency-hedged there should be no currency impact. And when foreign investors buy or sell Japanese equities currency unhedged there should be in fact a positive correlation between the yen and Japanese equities. What are the circumstances then under which we have a negative correlation between Japanese equities and the yen?

We previously presented three flow circumstances:

1) If a foreign investor (buyer) purchases Japanese equities currency-hedged from another foreign investor (seller) who was long yen already (i.e. the seller owned these Japanese equities currency unhedged before), the net market impact would be an up movein Japanese equities and a down move in yen.

2) If a foreign investor (buyer) purchases Japanese equities currency-hedged from a Japanese investor (seller) and this Japanese investor uses the proceeds to purchase foreign equities currency-unhedged, the net impact would also be an up move in Japanese equities and a down move in yen.This flow appears to have taken place since mid-September. Foreign investors were buyers of Japanese equities, at the same time as Japanese investors sold domestic equities and as Japanese investors stepped up their purchases of foreign equities. But since September, the purchases of foreign equities by Japanese investors were smaller in magnitude relative to the purchases of Japanese equities by foreign investors. So the negative impact on theyen from the former flow was more muted relative to the positive impact on Japanese equities from the latter flow.

3) Another flow example is related to dynamic hedging by existing holders of Japanese equities, Existing foreign holders of Japanese equities could have unwound previous FX hedges in response to equity price declines in recent months, even if they did not sell any Japanese equities themselves. This is because equity investors tend to dynamically adjust their FX hedges to match the size of the hedges to the value of their equity holdings. So as the price of Japanese equities goes down in local currency terms, these foreign investors cut some of their previous FX hedges, pushing the yen up in the process. The opposite flow takes place in periods of Japanese equity appreciation: existing foreign holders of Japanese equities have to increase the size of their FX hedges to match the increased equity values, pushing the yen down in the process.

This dynamic hedging flow suggests that there should be an even stronger correlation between the performance of the yen and the absolute performance of Japanese equities in local currency terms, relative to the correlation between the yen and the relative performance of Japanese vs. US or global equities. But the two charts above show that the opposite happened this year. The correlation between the yen and the relative performance of Japanese vs. US equities has been stronger than the correlation between the performance of the yen and the absolute performance of Japanese equities. This suggests the above flow stemming from dynamic hedging by foreign investors of existing Japanese equity holdings, has likely weakened this year.

So from the above three flow circumstances, it is the second one that appears to offer the best explanation of what happened since September in the Japanese equity/yen space. 

So, following the recent buying, how overweight have foreign investors become in Japanese equities?

So in all, it appears that overweights in Japan have been focused mostly among leveraged overseas investors including CTAs, making Japanese equities vulnerable to an unwind of some of these positions in the near term. Non-leveraged institutional investors or retail investors are rather neutral.

To conclude, JPMorgan finds no reason to believe that the historical negative correlation between Japanese equities and the yen has broken down. The relationship between Japanese equities and the yen has been closely aligned this year if one looks at the relative rather than the absolute performance of Japanese equities.

More recently, since September, the purchases of foreign equities by Japanese investors were smaller in magnitude relative to the purchases of Japanese equities by foreign investors. So the negative impact on the yen from the former flow was more muted relative to the positive impact on Japanese equities from the latter flow. Going forward, overseas leveraged investors present the main vulnerability for Japanese equities, in our view

Zero hedge reported the gold and silver rose on news that Trump will select a new Fed Governor shortly without naming anyone.  I do not think the market reacted to that story.. However gold and silver generally react to the following:

(courtesy zerohedge)

Japan Sounds Alarm On “Unprecedented, Critical And Imminent” Threat From North Korea

Following the landslide victory by Prime Minister Abe in Japan’s Sunday elections, which left his ruling coalition with a super majority allowing him to change Japan’s constitution, Abe wasted no time in signalling a push towards his long-held goal of revising Japan’s post-war, pacifist constitution, however as Reuters reported earlier, Abe would “need to convince a divided public to succeed.” Parties in favor of amending the U.S.-drafted charter won nearly 80% of the seats in Sunday’s lower house election, leaving the small, new Constitutional Democratic Party of Japan (CDPJ) as the biggest group opposed to Abe’s proposed changes. Still, Abe claimed he wanted to get other parties on board, including Tokyo Governor Yuriko Koike’s new conservative Party of Hope, and was not insisting on a target of changing the constitution by 2020 that he floated this year.

Yet, despite Abe’s soothing vision, just one day after the election Japan was already setting the groundwork for creating the strawman that would be needed to get public support largely behind Abe’s militant venture.

As a result, Japan’s defense minister said on Monday that North Korea’s nuclear and ballistic missile capabilities have grown to an unprecedented, critical and imminent” level, requiring “different responses” to the threat.

The minister, Itsunori Odonera, was quoted by AP as saying that this rising threat compels his country to endorse the U.S. view that “all options” must be considered, which President Donald Trump says includes possible military action. And since this pivot would require a revised constitution, the next step is already in play.

Odonera’s comments came at the outset of a so-called trilateral meeting in the Philippines (where over the weekend Russia was “delivering” weapons to the Duterte regime, as reported overnight) with U.S. Defense Secretary Jim Mattis and South Korea’s defense minister, Song Young-moo. Each made statements about North Korea before a group of reporters and news cameras, but none took questions according to AP.

Mattis was in the Philippines to attend portions of a two-day meeting of defense ministers from the 10 Association of Southeast Asian Nations. He used the occasion to hold a three-way meeting with his counterparts from Japan and South Korea. He is scheduled later in the week to travel to Seoul to attend annual consultative talks with the South Korean government, which is expected to focus mostly on North Korea.

Elevating the North Korea bogeyman to unprecedented levels, and assuring that “no crisis will go to waste”, Odonera said North Korea’s most recent underground nuclear test could have been a hydrogen bomb, which is vastly more powerful than an atomic bomb.

“The country has steadfastly improved it nuclear and missiles capability,” said Onodera. He added: “The threat posed by North Korea has grown to the unprecedented, critical and imminent level.”

“Therefore, we have to take calibrated and different responses to meet that level of threat,” he said, without elaborating on what “different” responses Japan favors.

Trump has said he will resolve the North Korea problem alone if necessary, to prevent the North from gaining the capability to attack the United States with a nuclear-armed missile.

As usual, the far cooler Mattis – who clearly does not have a constitution-revising agenda – was much more reserved in his remarks than Onodera, although he did slam Pyongyang for defying U.N. Security Council resolutions against its nuclear and ballistic missile programs. But the U.S. defense secretary did not mention any potential military action. Mattis instead emphasized a unified U.S.-Japan-South Korea position in pressuring the North to give up its nuclear program.

“North Korea’s provocations threaten regional and global security,” he said.

Meanwhile, South Korea’s defense minister, Song, said that North Korea’s behavior is “becoming worse and worse.” In brief remarks to reporters, earlier on Monday Song was asked about the risk of war against North Korea.

“I want to emphasize that war is not as easy as the journalists make it sound in the press and the media,” he said. “As defense ministers who are in charge of national defense and other high tech weapons such as ballistic missiles, we understand the very weight of engaging in a war and as such we will make all the efforts necessary to resolve the issue in a diplomatic and economic way as possible.”

He added: “However, if we are attacked then we will have to take firm actions.”

Most importantly, however, is that it has been a month since North Korea has engaged in any provocative actions, and contrary to expectations that it would launch a ballistic missile in early and mid October, so far Pyongyang has – despite launching the occasional verbal grande at Trump – kept a low profile. Which considering it is now in Japan’s best interest to have a provocative neighbor who will greenlight the desired constitutional changes, will likely change in the near future.

 end

The Bank of Japan entered the market last week and bough Kobe bonds very few wanted to risk purchasing them

(courtesy zerohedge)

Bank Of Japan Is Buying Bonds From Scandal-Hit Kobe Steel

Last week, the simmering scandal involving Japan’s third largest steel producer exploded, when following reports that Kobe Steel had falsified data about the quality of its steel, aluminum, copper, iron powder and other products it sold to customers across virtually every single industry, Japan’s Nikkei also reported that some Kobe Steel plants in Japan had been falsifying product quality data for decades, well beyond the roughly 10-year time frame given by the lying steelmaker. Worse, not only did the company, having already been caught, lie to shareholders and rule-abiding employees how long this illegal behavior had been going on, but – in a glaring example of corporate idiocy – had effectively enshrined and codified its fraudulent ways, as the cheating procedures eventually became institutionalized in what was a fraud manual, allowing the practice to continue as managers came and went.

As all this was taking place, not only did the stock price of Kobe Steel plunge, but its bonds tumbled sending its default probability sharply higher.

It now turns out that the rout would have been far worse, had it not been a direct intervention by the BOJ itself, which appears to have stepped in and bought Kobe bonds to arrest the plunge.

Posing a rhetorical question, “to buy or not to buy”, the Nikkei reports that “the Bank of Japan appears to have chosen the former in considering whether to include debt issued by scandal-hit Kobe Steel in its bond-buying operations.

Here, it may come as a surprise to some that as part of its ultra-loose monetary easing policy, the Japanese central bank also holds roughly 3.2 trillion yen ($28.4 billion) in corporate debt, similar to the ECB’s CSPP program. The BOJ maintains that balance through purchasing operations held roughly once a month. This past Thursday’s operation was the bank’s first since Kobe Steel’s data tampering came to light earlier in October.

While the BOJ has previously avoided bonds from companies rocked by scandal, according to an official at a Japanese asset management company, this seems to no longer be the case. Whereas such avoidance has occurred even if the security otherwise meets credit ratings and other requirements set by the bank, when it comes to Kobe bonds, Kuroda decided to make an explicit exception.

And like the ECB, which provides only token transparency when it comes to its corporate bond purchases, the BOJ is likewise opaque about its open market operations. Investors who want to sell corporate bonds in a BOJ operation often do so via brokerages. These investors do not know whether the central bank bought the debt until results of the operation surface later that evening. And, as the Nikkei reports, it was learned later Thursday – to the relief of investors – that the bank purchased around 20 billion yen to 30 billion yen worth of corporate bonds, a major insurance provider estimated. About 170 billion yen worth of Kobe Steel bonds are circulating in the market, more than 40 billion yen of which fulfills BOJ requirements.

Since the BOJ does not break down the purchases by issuer, whether the central bank bought Kobe Steel bonds can be inferred by the average interest rate of corporate bonds accepted. A clue that the BOJ had indeed purchased Kobe steel bonds – the metric jumped from the prior operation in September, suggesting the steelmaker’s bonds likely were included in the purchases. Since only one company saw a dramatic spike in its bond yields – and default probability – it can be safely concluded that the BOJ did in fact purchase bonds from the distressed corporation.

Of course, having purchased Kobe Steel bonds means that the central bank has once again greenlighted an unprecedented moral hazard, encouraging bond traders to buy bonds issued by a company which according to some may be facing bankruptcy in the not too distant future. Indeed, even the Nikkei writes that the Bank of Japan finds itself in an awkward position:

“If it did buy Kobe Steel bonds, investors who normally would steer clear of such a company may purchase the asset anyway in anticipation of selling it to the BOJ. But if the bank blacklists Kobe Steel, investors might see the bonds as an even bigger risk.”

An even better question: should Kobe Steel file for bankruptcy, and its debt be equitized in the form of post-reorg equity, just how will the BOJ act when, after buying billions in Kobe bonds, it finds itself a major equity stakeholder in the restructured company? While we don’t know the answer, it will certainly be a closely followed case study in central bank “activism”, because after the next downturn, all eyes will be on the ECB which over the past 16 months has purchased over €110 billion in European corporate bonds with increasingly lower credit ratings. After the next European recession, many of these issuers will be bankrupt, leaving the ECB as one of the major equity stakeholders in an unknown number of upcoming restructuring processes, where it will ultimately end up owning post-reorg equity.

Or perhaps neither the BOJ nor ECB will allow any of the corporate names in its bond portfolio to default, bidding up bonds without relent, and resulting in the most bizarre zombie company world of all: one where bankrupt companies see their bonds trading at (or above) par, unable to file for bankruptcy – just like Greece – as the alternative would be the “new normal” financial equivalent of “crossing the streams.”

3. CHINA REPORT

SPAIN

Article 155 is invoked and that is treated as a coup by the Catalans. Rajoy refuses also to enter into any dialogue with them

(courtesy zerohedge)

“It’s A Coup”: Catalan President Slams “Worst Attack” By Spain “Since Franco Dictatorship”

Update: The defiant Catalan leader, Carles Puigdemont, addressed Catalans, Spaniards, and the rest of Europe on TV saying that the Spanish states’ imposition of Article 155 means “liquidation of our self-government and cancellation of the democratic will of Catalans”.  In other words, he made it quite clear that the region’s leaders would not accept direct rule imposed on the region by the Spanish government, as a political crisis that has rattled the economy and raised fears of prolonged unrest showed no signs of easing.

Puigdemont said Rajoy had set out to “humiliate” Catalonia in an “attack on democracy” and said removing powers from Catalonia was the “worst attack against the institutions and the people of Catalonia since the military dictatorship of Francisco Franco”.

After taking party in peaceful demonstration, Puigdemont expressed his rejection of Madrid’s move, but stopped short of saying he would make good his threat to push ahead with the independence bid before direct rule takes effect.

“I ask the (Catalan) parliament to meet in a plenary session during which we, the representatives of the citizens’ sovereignty, will be able to decide over this attempt to liquidate our government and our democracy, and act in consequence,” Puigdemont said in a televised address.

Puigdemont also said Spain “closed the doors at a request for talks, and should set a date to discuss the attack” and “Catalan institutions cannot accept attack by Spain.”

In a striking accusation, the Catalan president said that “Catalan institutions dealt a coup by Spanish state.” Puigdemont then switched to English to appeal to Europeans, says democracy also at risk in Europe: “Catalonia is an ancient European nation”. He also announced a session in Catalan parliament to debate “the attempt to liquidate our self-government”.

Puigdemont concluded by saying “Long live Catalonia” to which a silently listening crowd suddenly burst back into cheers and chanting.

However, as noted, Puigdemont did not specifically declare independence, but said Catalonia will not accept Madrid’s plan to curb region’s powers, leaving one tiny, final loophole.

The Senate vote that would give Madrid full control of Catalonia’s finances, police and public media and curb the powers of the regional parliament for up to six months is scheduled for next Friday. That could give the independence movement room to maneuver.

The regional parliament’s speaker, Carme Forcadell, said she would not accept Madrid’s move and accused Rajoy of a “coup.” “Prime Minister Rajoy wants the parliament of Catalonia to stop being a democratic parliament, and we will not allow this to happen,” Forcadell said in a televised speech.

In the latest can kicking yet, the Catalan assembly is expected to decide on Monday whether to hold a session to formally proclaim the republic of the region. Catalan media have said Puigdemont could dissolve the regional parliament and call elections by next Friday. Under Catalan law, those elections would take place within two months.

That would enable Puigdemont to go the polls earlier than envisaged by Rajoy, who spoke of a six-month timetable, and to exploit the anti-Madrid sentiment running high in the region.

According to Reuters, pro-independence groups have previously mustered more than 1 million people onto the streets in protest at Madrid’s refusal to negotiate a solution.
*  *  *

As we detailed earlier, with Spain officially pulling the trigger on Article 155, and activating the Spanish Constitutional “nuclear option” this morning, when PM Rajoy said he would seize control of the Catalan government, fire everyone and force new elections in six months, attention has shifted to the Catalan response. And as we waited for the official statement by Catalan separatist president Carles Puigdemont, expected at 9pm local time, we found him taking to the streets, where he led hundreds of thousands of independence supporters in protest around Barcelona on Saturday, shouting “freedom” and “independence” following the stunning news from Madrid earlier on Saturday.

The protest in the center of the Catalan capital had initially been called to push for the release of the leaders of two hugely influential grassroots independence organisations, accused of sedition and jailed pending further investigation. But it took on an even angrier tone after Prime Minister Mariano Rajoy announced his government would move to dismiss the region’s separatist government, take control of its ministries and call fresh elections in Catalonia.

According to municipal police, over 450,000 people rallied on Barcelona’s expansive Paseo de Gracia boulevard, spilling over on to nearby streets, many holding Catalonia’s yellow, red and blue Estelada separatist flag.

Catalan regional vice-president Oriol Junqueras and Catalan regional president 
Carles Puigdemont attend a demonstration on October 21, 2017 in Barcelona

Protesters greeted Puigdemont’s arrival at the rally with shouts of “President, President.” The rest of his executive was also there.

For at least some locals, the time to split from Spain has come: “It’s time to declare independence,” said Jordi Balta, a 28-year-old stationery shop employee quoted by AFP, adding there was no longer any room for dialogue.

Others disgree: “The Catalans are completely disconnected from Spanish institutions, and particularly anything to do with the Spanish state,” said Ramon Millol, a 45-year-old mechanic.

Meritxell Agut, a 22-year-old bank worker, said she was “completely outraged and really sad.” “They can destroy the government, they can destroy everything they want but we’ll keep on fighting.”

Catalonia is roughly split down the middle on independence, but residents cherish the autonomy of the wealthy, northeastern region, which saw its powers taken away under the dictatorship of General Francisco Franco. Which is why, as many have warned, Madrid’s move could anger even those against independence.

Barcelona’s Mayor Ada Colau, who opposes the independence drive, tweeted: “Rajoy has suspended the self-government of Catalonia for which so many people fought. A serious attack on the rights and freedoms of everyone.”

Meanwhile, the anger keeps rising: as a police helicopter hovered above, protesters booed and gave it the finger. “I wish they would just go,” said Balta, looking up at the sky.

The Spanish government’s proposed measures still have to be approved by the Senate. But the upper house is majority-controlled by Rajoy’s ruling Popular Party and he has secured the support of other major parties, meaning they will almost certainly go through.

Puigdemont is expected to make a statement at 9 p.m. For Catalonia, and Spain, it will – literally – mean the difference between independence and remaining part of Spain. It could also mean the difference between peace and a violent crackdown by Madrid on what it has seen since day one as an illegal independence process. For the Catalan leader, the stakes are huge:  El Pais reported Puigdemont faces a charge of sedition, punishable by up to 30 years in prison, if he formally declares independence or tries to change the Spanish constitution

END

The following commentary explains in detail how  Madrid will take control over Catalonia:

(courtesy zerohedge)

Spain Won’t Arrest Separatist Leaders, Blames “Fake News” For Catalan Crisis

Following Catalan President Puigdemont’s address yesterday accusing Madrid of “the worst attack since Franco,” the Spanish government has urged Catalonians to accept direct control from Madrid and ignore seditious instructions from the pro-independence leaders.

Spanish Foreign Minister Alfonso Dastis responded on Sunday with the call to obey Madrid.

“We are going to establish the authorities who are going to rule the day-to-day affairs of Catalonia according to the Catalan laws and norms … I hope everyone will disregard whatever instructions they will be planning to give because they will not have the legal authority to do that.

However, Dastis sought to calm nerves in the region, saying Madrid would not conduct arrests among the pro-independence leadership, though two prominent secessionists were detained on court order this month on allegations of sedition.

“All the government is trying to do, and reluctantly, is to reinstate the legal order, to restore the constitution but also the Catalan rules and proceed from there,” Dastis told BBC TV.

“We are not going to arrest anyone.”

Of course, Dastis could not help himself but fall back on the establishment’s ‘excuse du jour’ for anything that does not fit with the maintenance of the status quo… “There has been a lot of alternative facts and fake news”

So just how will Madrid take control of Catalonia?

Below are details of the powers the Spanish government plans to assume for a maximum six months before regional elections are held as set out in a proposal to the upper house Senate. As Reuters reports, the measures were formulated under a constitutional provision never before invoked in Spain’s 40 years of democracy.

DIRECT RULE

Prime Minister Mariano Rajoy is asking for authorization to sack the regional government including president Carles Puigdemont and his deputy Oriol Junqueras, high-profile figures in the independence drive who organized a popular vote on secession on Oct. 1 in defiance of Madrid.

Central government ministries will take over the regional administration until calling fresh elections within six months of direct rule coming into force.

On Saturday, Rajoy said he wanted to convene a vote “as soon as we get back to institutional normality”.

The Catalan parliament will retain a representative role, but the government will operate under the supervision of bodies chosen or created for the purpose by Madrid.

POLICE

The new administrators will take control of the Mossos d‘Esquadra regional police force, which has become embroiled in the controversy over the independence bid after allegedly failing to act to stop the referendum or protect national police who were drafted in to provide extra security.

The Mossos, whose chief is under investigation on suspicion of sedition, will have to act on direct orders from their new bosses. If deemed necessary, Mossos officers may be replaced by national police.

FINANCES

The Economy Ministry has already increased its control over regional finances, to block the use of state funds to organize the secession bid, and started paying directly for essential services. Under the new proposal, Madrid keeps financial control.

PUBLIC MEDIA

Widely-watched Catalan public television TV3 will come under central control. Madrid’s proposal to the Senate says this will ensure the information transmitted is “true, objective and balanced, in line with political, social and cultural pluralism, and territorial balance”.

FORMAL APPROVAL

The Senate, where Rajoy’s People’s Party has a majority, will vote on the proposal on Oct. 27. The opposition Socialist and Ciudadanos parties are backing Rajoy.

After the measures are approved, they can be activated immediately or put on hold to be implemented in the future. Puigdemont could call an election himself before the government’s plan comes into action, in which case direct rule would likely not be implemented.

Which would leave Catalan governed by ministers of a party that got just 8.5% of the vote at the last election…

Rajoy is announcing direct rule in . Whole @catalangovto be chucked out of office. Forced elections within six months.

 will be governed from Madrid by ministers of a party that got 8.5% of the vote at last Catalan elections. pic.twitter.com/W6avedq3ZS

View image on Twitter

And what are the Catalan Separatists next moves?

Catalonia’s separatists were weighing their options Sunday, according to AFP, after Spain took drastic steps to stop the region from breaking away by dissolving its separatist government and forcing new elections.

Catalan leader Carles Puigdemont and his regional executive — who sparked Spain’s worst political crisis in decades by holding a banned independence referendum on October 1 — will be stripped of their jobs and their ministries taken over under measures announced Saturday by Prime Minister Mariano Rajoy.

“Yesterday there was a fully-fledged coup against Catalan institutions,” said Catalan government spokesman Jordi Turull.

“What happens now, with everyone in agreement and unity, is that we will announce what we will do and how,” he told Catalunya Radio.

Ahead of a meeting of Catalan parties Monday to organise a crucial session of the regional parliament to debate next steps, Turull insisted on RAC1 radio that elections were “not on the table”.

Political analysts warn that Madrid faces a serious struggle in practical terms to impose control over the region.

Potential scenarios include Catalan police and civil servants refusing to obey orders from central authorities.

“What is going to happen if they don’t abide by it?” said Xavier Arbos Marin, a constitutional law professor at the University of Barcelona, raising the prospect of the government trying to “take them out by force”.

He said there is fierce debate among experts over whether the government’s actions are even legal.

Independence supporters may also seek to scupper the plans through civil disobedience, such as surrounding regional ministries to thwart officials sent by Madrid.

“If police try to enter one of the Catalan institutions, there will be peaceful resistance,” said Ruben Wagensberg, spokesman for new activist group En Pie de Paz.

For now, the game of chicken continues with each side waiting for the other to act first but rest assured, says Spanish Foreign Mnister Dastis, if Catalonians just quietly accept the tyrannical rule of Madrid then…

“everything will be fine, there will be law and order, peaceful life and normal coexistence which is what we’re after.”

end

And  now the Catalan response:  they plan a human shield with mega civil disobedience to block the takeover

(courtesy zerohedge)

Catalan Separatists Plan Human Shield, “Civil Disobedience” To Block Spanish Takeover

If Spain hoped that Catalonia would willingly and cheerfully hand over control over the separatist region to Madrid after Rajoy announced on Saturday that the Spanish government will fire Catalan leaders and force new elections in 6 months, he may be disappointed. According to Bloomberg, Catalan separatists are “mobilizing a human shield” to block efforts by Spanish authorities to take control of the breakaway region as both sides prepare to escalate the political conflict beyond what may soon be a point of no return.

The dramatic Catalan action is in response to Rajoy’s shocing announcement on Saturday, when he disclosed plans to clear out the entire separatist administration in Barcelona and take control of key institutions including public media and the regional police force, the Mossos d’Esquadra. Spain’s chief prosecutor said that if Puigdemont declares independence he would face as much as 30 years in jail and signaled that he could be arrested immediately.

“We are calling for a peaceful and democratic defense of the institutions,” Lluis Corominas, the leader of the main separatist group in the Catalan Parliament, said at a press conference in Barcelona.

According to two sources quoted by Bloomberg, groups of Catalan separatists will concentrate their activists around the regional government’s headquarters in Barcelona’s Gothic quarter and the nearby parliament building. “They expect Spanish police to use force to try to shut down the administration and will put their bodies on the line” the sources added.

Following weeks of escalating tensions between Madrid and Barcelona, this is shaping up as a critical week for political brinkmanship:

the Catalan leadership was left to plot its next move following Prime Minister Mariano Rajoy’s declaration of unprecedented measures to reassert his authority. The rebels in Barcelona are running out of options while Madrid attempts to bring an end to the country’s most dramatic political crisis for four decades.

The showdown may come at the end of the week. Regional President Carles Puigdemont, who accused Rajoy of a “coup d’etat,” is set to be ousted by the Spanish government and his allies are signaling he could declare independence. The legislature in Barcelona, which is controlled by separatist parties, will convene on Thursday and Friday just as Rajoy is expected to win approval from the Senate for his crackdown.

Separately, Reuters reported that Catalonia said on Monday it was confident all officials including police would defy attempts by Madrid to enforce direct rule on the region: the leaders of the secessionist campaign said a disputed referendum on Oct. 1 gave them the mandate to claim independence from the rest of Spain.

“It’s not that we will refuse (orders). It is not a personal decision. It is a seven million-person decision,” Catalonia’s foreign affairs chief Raul Romeva told BBC radio.

Romeva was asked whether he believed all institutions, including the police, would follow orders from Catalan institutions rather than from the Spanish government. “And from that perspective, I have no doubt that all civil servants in Catalonia will keep following the instructions provided by the elected and legitimate institutions that we have right now in place (in Catalonia),” he responded.

Spain’s Deputy Prime Minister said Puigdemont would be out of a job once direct rule was enforced and Madrid would install its own representative. The Spanish government has said it would call a regional election within six months. “They are president of the regional government and senior figures in that government because of the constitution,” said Soraya Saenz de Santamaria during a radio interview. “They are not entrusted with that role by any divine authority,” she also said.

Civil disobedience was also backed by far-left party CUP, a key support for Catalonia’s pro-independence minority government in the regional parliament, which called Madrid’s actions an aggression against all Catalans.

“An aggression which will be met with massive civil disobedience,” the CUP said in a statement.

Several hundred Catalan municipalities said they were against direct rule from Madrid and asked the Catalan parliament to vote on a motion rejecting it.

Meanwhile, Catalan president Carles Puigdemont called the Catalan parliament to meet this week to agree on a response to Madrid, something many observers said could pave the way for a formal declaration of independence.  The assembly will meet on Thursday to agree a response to direct rule.

Several influential Catalan newspapers called on Puidgemont on Sunday to resolve the crisis by calling a snap election before direct rule becomes effective. However, Catalan government spokesman Jordi Turull said this was not an option. It is not clear whether a vote in the region would help resolve the crisis.

As Reuters adds, an opinion poll published by the El Periodico newspaper on Sunday showed a snap election would probably have results similar to the last ballot, in 2015, when a coalition of pro-independence parties formed a minority government.

end

A summary as to what to expect on Thursday when the ECB finally begins to taper it’s QE

(courtesy zero hedge)

What The ECB Will Announce This Week: A Summary Of All QE Tapering Scenarios

The main risk event in the coming week, in addition to a barrage of corporate earnings, will be the ECB’s long-awaited announcement of what the central bank’s QE tapering will look like. Conveniently, thanks to a trial balloon released on October 12, we already know the general parameters of this phasing out of monetization: ECB officials are considering cutting their monthly bond buying by at least half, from €60BN to €30BN, starting in January and keeping their program active for at least nine months, with some potential reference to a lengthening of the maturity of purchases.

According to a Bloomberg survey, the ECB will likely keep buying for about nine months to take the program to just over €2.5 trillion, respondents said before the ECB’s Oct. 26 decisionThat’s consistent with what some officials see as the limit in the market under current rules. ECB President Mario Draghi is predicted to announce his first interest-rate increase in early 2019.

According to Bloomberg, “such an outcome for quantitative easing would soothe the concerns of policy makers who want a definite signal that the program will end, while giving succor to those who want to keep stimulus flowing as long as the inflation outlook remains lackluster. It doesn’t resolve the question of what happens in a year if consumer-price growth still isn’t on track to the ECB’s goal.”

.

“There has been no dissenting voice at the ECB ahead of the meeting on the need to scale down net purchases,” said Maxime Sbaihi, an economist at Bloomberg in London. “So the question is less ‘if’ they will taper than the details of ‘how’ they will do it.”

Why not taper more? Simple: Mario Draghi is terrified of starting another bond (or stock) tantrum, if investors are spooked that the ECB is withdrawing too much support: “The Governing Council seems concerned that a more aggressive tapering plan could harm financial conditions, especially by letting the euro appreciate even more,” said Kristian Toedtmann, an economist at DekaBank in Frankfurt.

Meanwhile, the major sticking point among ECB governors appears to be whether to commit to an end-date for QE. Draghi has expressed confidence that the region’s economic recovery will eventually help him and his peers to deliver on their mandate. Yet inflation was 1.5% in September and ECB’s own forecast doesn’t see it returning to the goal of below but close to 2% before the end of 2019.

“It seems that the hawks want a definitive end-date while the doves want it open-ended,” Alan McQuaid, an economist at an economist at Merrion Capital in Dublin. “I think we will get a compromise, with the ECB saying that it intends to end its QE scheme in September 2018, but if things take a dramatic turn for the worse on the economic or inflation front in the meantime, it will extend its scheme further until things have stabilized.”

Which is why many model QE as lasting beyond the 9 month horizon, and running through the end of March 2019.

In terms of market consensus, the following Barclays chart visualizes the most likely outcome, showing monthly QE declining by 50% in January through October, when it tapers by another 50% until March 2019, coupled with a modest increase in the ECB’s deposit rate around the end of 2018.

But, as Bank of America asks, what if things don’t turn out that way?In the table below, the bank’s rates analyst Erjon Satko attempts to respond to the many questions the bank has gotten regarding possible market reactions to different decisions in terms of QE size/length but also to changes in the three technical aspects that matter in our view: the rates forward guidance, the maturity of QE purchases and the split between safe and risky assets (periphery, private assets).

Here are BofA’s observations on the various scenarios:

  • In the €40bn/6m, we assume the ECB would leave the door open to a further extension, ruling out a cliff end (from €40bn to 0). That scenario, as well as the €30bn/12m would ultimately represent a large total QE amount. We thus assume that flexibility will be engineered with technical changes that should imply greater support for risky assets (this would be bullish the periphery and could also fuel a steepening in long-end swaps).
  • In the €20bn/12m and even more so the €20bn/9m, the first market reaction should be bearish as the quantum of monthly Bund purchases is lower than expected. However, as previously discussed, we think the behavior of the periphery and risky assets in general will then guide term premium in Bunds. Hence the “then see periphery” in Table 1.
  • Purchases skewed towards risky assets: For example, if the ECB hints to more limited tapering of private asset purchases relative to PSPP, or if it increases the share of EU supras, implying greater potential for deviations from capital keys, in favor of Italy and France.
  • Extension of the maturity of purchases: the ECB could suggest that reinvestments will happen at a longer maturity than recent net purchases, or it could make more significant comments to signal longer overall purchases. As discussed last week, on way for the ECB to make this concrete could be that it drops the 30y maturity limit on eligible bonds

Yet despite the ECB’s tapering trial balloon, one surprising market reaction has been the recent decline in Bund yields together with the BTP spread tightening which according to BofA has “taken many by surprise, especially in light of the ever-decreasing expectations of QE support next year.” In fact, while market expectations for 2018 ECB QE have been edging lower from €60bn/month to €40bn/month and now to €20-30bn/m, current valuations fail to give evidence of major concerns ahead of the tapering announcement. Of course, that may change once Draghi’s media jawboning becomes fact; alternatively this may simply be more evidence of what Citi’s Matt King provocative claimed this past summer, namely that the “market” has become so distorted by QE, it has lost the ability to discount the future.

* * *

In modeling market reaction scenarios to the ECB’s October 26 announcement, nobody anticipates a major market shock. In fact, some – such as Citi – expect various permutations of the QE tapering to be actually seen as dovish for the market. As we discussed last Saturday, Citi’s EONIA-signaling driven model seeks to predict the near-term market impact (around one-week) across the euro swap and Bund curve for a range of QE scenarios.

Below are its key findings:

  • For 10yr Bunds, yields fall around 25bp in the most dovish scenario (€40bn x 12mth) and rise around 24bp in the most hawkish scenario (€20bn x 6mth). Figure 1 above summarizes the full set of results for Bunds.
  • The most market neutral scenarios, according to the model, are €20bn x 12mth, €30bn x 9mth and €40bn x 6mth.
  • This is broadly consistent with the Reuters poll (taken 11-14 September) which suggested the consensus amongst economists was for €40bn (range €30- 50bn) over 6mths (range 3-12mths).
  • Cross-checking the model output (based on policy signals) with the total size of APP extension shows a clear relationship (Figure 2). The model therefore assumes that there is less of a role for the ‘intensity’ of purchases.
  • The market neutral size for APP upsizing appears to be around +€250bn
  • The Citi house view is for an extension in the form of an ‘envelope’ (without specifying a monthly purchase rate) of €150bn (with upside risk of €210bn). That could lead to a near-term sell-off of around 15-20bp.
  • The scenarios presented assume deliverability. But, the most dovish options undoubtedly would be more challenging to implement (see below) given scarcity constraints. In terms of likelihood, we would put less weight on these scenarios which skews the risk towards a bearish reaction on 26 October.

Finally how should one trade the ECB announcement? Here Barclays’ confusion reflects the (confused) trader’s mindset best: “we do not see compelling risk-reward in pre-positioning in EUR ahead of the ECB announcement, given shifting expectations and difficult in gauging how the market is pricing the parameter changes.

Translation: stop trying to pretend you know how the market will react to the ECB, and just wait for the announcement. Here’s hoping you are faster to react to the news than the HFTs…. and mind the direction of the initial kneejerk reaction, which is usually just the algos taking out all the stops.

END

I doubt that there will be any conclusive talks on Brexit until  the financial settlement is agreed upon and Europe deserves nothing

(courtesy zero hedge)

Theresa May “Ambitious And Constructive” On Brexit Talks, Mocked By Corbyn In Parliament

In a statement to the UK Parliament today following last week’s EU summit, Prime Minister, Theresa May, stated that she was “ambitious and constructive” about the progress of Brexit negotiations. May talked up (again) progress made on safeguarding citizens’ rights so that EU nationals can remain in the UK and vice-versa. She also reiterated that significant progress has been made on Northern Ireland and that it’s been agreed that there will be no fiscal infrastructure at the border.

She had little to say about the critical issue of financial settlement – merely that Britain will honour its commitments for the remainder of the EU budget plan (2021) as she outlined in her Florence speech. She said that progress is being made as both sides go through these commitments “line-by-line.” May stated that the EU has agreed to make preparations to move on to the discussions about trade and the UK/EU future relationship and that this wouldn’t have been possible without the “momentum” that resulted from the Florence speech.

However, with the financial settlement remaining a stumbling block to progress, May was vulnerable to a renewed attack, which was duly delivered by opposition leader, Jeremy Corbyn.

Corbyn stated that he had a “worrying sense of Groundhog Day with every update” from the Prime Minister. After the Florence speech, he reminded May that she had talked about “momentum” in the negotiations and an agreement on citizen’s rights was “within touching distance”, both phrases which she repeated today. He lambasted the Prime Minister for still not having a clear idea when trade negotiations will begin and accused her keeping parliament in the dark as to precisely what she has agreed with the EU. He asked if she would confirm whether privately she said to the EU that the UK “would pay more than indicated in the Florence speech?”

Leaks from last week’s EU summit suggested that May might be prepared to pay more than 40 billion euros. The EU is believed to want 60 billion euros. Not surprisingly, May denied that more money had been offered and stated that she had a “degree of confidence” that sufficient progress will have been made so that discussions about trade can begin by December 2017.

There has been much discussion about the possibility of a “no-deal” Brexit in the UK media in recent days. Some members of May’s party, increasingly frustrated by EU negotiating tactics, would prefer the Prime Minister to walk away from negotiations. Labour Party Brexit spokesman, Keir Starmer told the Sunday Times that his party is reaching out to rebel MPs in the Conservative Government to force the Prime Minister into subjecting any final deal on Brexit to a parliamentary Vote. Starmer is also demanding five other changes to the so-called Great Repeal Bill – European Union (Withdrawal) Bill – including the addition of a two-year implementation period.

The wide variety of opinion in the Conservative Party about a “no deal” Brexit provided Jeremy Corbyn with ammunition to mock the differing views held by senior members of Theresa May’s Cabinet.Corbyn mocked the Government for Home Secretary’s (Amber Rudd) comment that “no deal was unthinkable”, the Brexit Secretary’s (David Davies) comment that “no deal was an option” and the Secretary for International Trade’s (Liam Fox) comment that “no deal was not Armageddon.” If no deal was “not Armageddon” wasn’t the Government setting the bar “a bit too low? asked Corbyn.”

Corbyn and other MPs emphasised that businesses wanted clarity on Brexit as quickly as possible and preferred a transition period. As Bloomberg reports

U.K. Prime Minister Theresa May repeatedly dodged questions Monday as to whether she will seek a swift agreement on the Brexit transition period that businesses are crying out for, rather than bundling it into the overall deal. Businesses are stepping up their calls for an urgent agreement with the European Union that would allow them to trade as usual for two years after Brexit.

But May’s spokesman said that the transition deal would be part of a wider agreement, which isn’t expected to be finalized until shortly before Brexit day in March 2019.

‘Everybody has always been clear that we are looking to wrap all this up in one single go; everything will be agreed at the same time,’ the spokesman, James Slack, told reporters in London. ‘The point of an implementation period is it’s a bridge to where you’re headed, so you need to know where you’re headed to finalize that implementation period’. Asked by several lawmakers in the House of Commons a few hours later whether that was her position, she avoided the question, saying only that she was confident the UK would get a good deal.

One of May’s statements that caused mild amusement on our part was her assertion that both sides have approached the Brexit negotiations “with a professional and constructive spirit”.

One could argue that this contrasts rather too obviously with the confidential briefing about May’s dinner with EU President, Jean-Claude Juncker last week, that is thought to have come from Juncker’s office. According to Reuters

It was the second time in six months that a correspondent for Germany’s Frankfurter Allgemeine Zeitung who is respected for his access to Juncker’s team has published an account of the EU chief executive’s reactions after a dinner meeting with the British prime minister on Britain’s EU withdrawal.

May was accused of being “disheartened”, “discouraged” and “begging for help.”

The BBC reported her ex-adviser Nick Timothy accused EU official Martin Selmayr of being the source of the account in a German paper claiming Mrs May was politically weak and had ‘begged for help’ at a dinner. He claimed it showed ‘some in Brussels want no deal or a punitive one’.

Mr Selmayr denied involvement…The apparent leak of what happened in the dinner follows a similar incident in April, when Mrs May accused some in the EU of ‘meddling’ in the general election campaign after details of a dinner between her and Mr Juncker in Downing Street appeared in the German press. Downing Street said it had no comment on the latest reports and pointed out that both sides were of the view that the recent get-together had been ‘constructive and friendly’.

And Foreign Secretary Boris Johnson said that although the tone of last week’s summit was ‘more positive’ than he expected, he wanted the EU to ‘get on’ with talks on trade.”

5. RUSSIA AND MIDDLE EASTERN AFFAIRS

Iraq/Iran/USA

Tillerson demands that Iran’s militias must leave Iraq as the fight against ISIS is coming to an end.  Fat chance that that will happen;

(courtesy zerohedge)

Tillerson Demands Iran “Militias” Leave Iraq As Fighting Against ISIS “Comes To A Close”

One week after we reported that the head of Iran’s elite Revolutionary Guard (which two weeks ago was designated by the US as a terrorist organization), Qassem Soleimani, was observed in Erbil last Sunday where he met with Kurdistan regional president Barzani to “discuss” the growing crisis – the latest indication of Iran’s surging influence in the region – and just days before Iraq sent in troops assisted by Iranian militia into Iraq’s Kurdish region, which promptly regained control over the oil-rich Kirkuk region, on Sunday Secretary of State Rex Tillerson said that Iranian “militias” need to leave Iraq as the fight against Islamic State militants was coming to an end.

“Certainly Iranian militias that are in Iraq, now that the fighting against (the Islamic State group) is coming to a close, those militias need to go home,” Tillerson said during a press conference in Riyadh, where the U.S. diplomat is holding talks with top Gulf officials. “All foreign fighters need to go home,” he added hopefully, quoted by NRT.

Tillerson’s Gulf visit came as part of concerted efforts to curb Iran’s rapidly expanding influence in the region, including boosting the clout of Sunni-ruled Saudi Arabia in Shiite-majority Iraq, where Iran backs Shia militias fighting in the north – part of a wider regional battle for influence that extends from Syria to Yemen – even as there was scant hope of a breakthrough in attempts to reconcile Saudi Arabia and Qatar.

In further attempts to limit Iranian influence, Tillerson called on European governments to join a U.S.-led sanctions regime against Iran’s Revolutionary Guard Corps, saying that countries doing business with the Islamic Republic’s force do so at their own risk.  The Revolutionary Guards “foment instability in the region and create destruction in the region,” Tillerson told reporters in Riyadh on Sunday quoted by Bloomberg, after talks with King Salman of Saudi Arabia and other top officials. European countries and companies that do business with the IRGC “really do so at great risk,” he said.

Rex Tillerson is received by Saudi King Salman prior to their meeting in Riyadh

Saudi Arabia and other Sunni Gulf states are engaged in their own efforts to roll back Shiite-led Iran’s expanding sway in the region, including in Iraq, where Shiite parties have dominated politics since the U.S. toppled the Sunni-dominated regime of Saddam Hussein in 2003. In a reference to Shiite militias in Iraq, Tillerson said “those fighters need to go home – any foreign fighters need to go home” adding that “we are facing in our region serious challenges in the form of extremism, terrorism as well as attempts to destabilize our countries,” Saudi King Salman said at the event. “These attempts require our full attention.”
* * *

Tilleron’s visit takes place just one week after President Donald Trump refused to certify the Iran nuclear deal, leaving its fate to the US Congress, and laid out an aggressive new strategy against Tehran in a bellicose speech. As well as talks with senior Saudi officials in Riyadh including King Salman, Tillerson attended a landmark meeting between Saudi Arabia and Iraq aimed at upgrading strategic ties between the Arab neighbours.

“This event highlights the strength and breadth as well as the great potential of the relations between your countries,” Tillerson said at the first meeting of the joint Saudi-Iraqi coordination council in Riyadh.

Following years of tensions with Riyadh, Iraqi Prime Minister Haider al-Abadi hailed the meeting as an “important step toward enhancing relations”, while King Salman warned of the dangers of “extremism, terrorism, as well as attempts to destabilise our countries.” As part of his Saudi visit, Tillerson is also seeking more money for reconstruction in Iraq, after U.S.-backed forces ousted Islamic State from its key strongholds in the country.

Meanwhile, the question of growing Iranian influence – which has been underscored by strong diplomatic relations with Russia and Turkey  – has also been at the heart of the diplomatic conflict between Saudi Arabia and Qatar, with Tillerson headed to Doha later Sunday for talks on defusing the crisis between two key US allies, which however looks unlikely. After initially appearing to support the effort to isolate Qatar, Trump called for mediation and recently predicted a rapid end to the crisis. But before he arrived at Riyadh’s King Salman air base on Saturday, Tillerson indicated there had been little progress.

“I do not have a lot of expectations for it being resolved anytime soon,” he said in an interview with Bloomberg. “There seems to be a real unwillingness on the part of some of the parties to want to engage.”

Aside from the Gulf dispute and Iran, the conflict in Yemen and counter-terrorism will also figure in his talks, the State Department said. On the Gulf crisis, the goal will be to try to persuade the two sides to at least open a dialogue. Simon Henderson, a veteran of the region now at the Washington Institute of Near East Policy, said the disputing parties do not want to lose face.

“Tillerson will say: ‘Come on kids, grow up and wind down your absurd demands. And let’s work on a compromise on your basic differences’,” he said.

Kuwait has tried to serve as a mediator, with US support, but the parties have yet to sit down face-to-face.

During his trip, Tillerson will also visit Pakistan, India and Switzerland: in New Delhi Tillerson will try to build what he said in a recent speech could be a 100-year “strategic partnership” with India. Tillerson will stop in Islamabad to try to sooth Pakistani fears about this Indian outreach, but also pressure the government to crack down harder on Islamist militant groups.

end

Sunday night: Turkish Lira

More tensions between Turkey and the USA as the diplomatic spats between them continues.  This is very worrisome as Turkey can release its 3 million Muslim migrants in a nanosecond to Greece. Another dagger into the heart of USA hegemony

(courtesy zerohedge)

Turkish Lira Tumbles As Erdogan Re-Escalates US Tensions

In early trading, the Turkish Lira is slumping (having tagged pre-US-Visa highs) as President Tayyip Erdogan showed no retreat from a diplomatic row with the United States, castigating Washington for what he called an “undemocratic” indictment against his security detail.

As Reuters reports, his comments may further dash hopes of a quick resolution to an on-going diplomatic crisis between the NATO allies. Both Ankara and Washington have cut back issuing visas to each other’s citizens as ties have worsened.

“They say the United States is the cradle of democracy. This can’t be true. This can’t be democracy,” Erdogan said in a speech in Istanbul.

“If arrest warrants are issued against my bodyguards in absentia … in the United States, where I went upon invitation, excuse me but I will not say this is a civilized country.”

And the reaction (in admittedly thin markets) is clear…

RUSSIA/PHILIPPINES

This is not good:  Russian ships delivery military equipment to staunch ally the Philippines.  Slowly but surely many nations are facing Eastern nations.  Another nail in the coffin of American hegemony.

(courtesy zerohedge)

Russian Ships Deliver Military Equipment To The Philippines

In the latest confirmation that President Rodrigo Duterte’s threat to diversify the country’s military ties away from the United States and toward China and Russia was not hollow, AP reports that three Russian navy ships arrived in the Philippines on Friday and two others are coming, to deliver donated military equipment in the country’s third naval visit under Duterte, who as discussed previously, has launched a historic pivot in the country’s geopolitical posture away from the US and toward regional Superpowers.


Admiral Panteleyev, a Russian anti-sub ship, prepares to dock in Manila

Three Russian antisubmarine ships docked in Manila on October 20 in time for Russian Defense Minister Sergei Shoigu’s upcoming visit to the country, said Rear Admiral E. Mikhailov, the task force commander.


Russian Navy crew member cleans the guns of the Admiral Vinogradov, 

a Russian anti-submarine ship, in Manila, Philippines, on Friday, Oct. 20, 2017

Two other vessels arrived on October 21 at the port of Subic Bay, northwest of Manila to unload donated military equipment, the Philippine Navy said in a statement.

Next week, Shoigu will be attending a meeting of 10 Southeast Asian defense ministers with counterparts from other countries, including the United States and China.

“I am assuring you that we will do our best to make this port call a significant contribution to the strengthening of friendly ties and cooperation between our two nations in the interest of security and stability in the region,” Mikhailov said.


Rear Admiral Eduard MIkhailov receives a garland of flowers from a member of the Philippine Navy

Russian news agency TASS reported that the Russian Navy will allow local residents of Manila to take tours of the large antisubmarine vessel Admiral Panteleyev during its stay in Manila

end

6 .GLOBAL ISSUES

GE/GLOBAL GROWTH

GE IS SUCH A GOOD BELLWETHER FOR GLOBAL GROWTH.  IF THEY ARE CRASHING YOU CAN BET THE FARM THAT THE ENTIRE GLOBE IS FACING GROWTH PROBLEMS

(COURTESY ZEROHEDGE)

GE Is Crashing… Again

After Friday’s farcical face-ripping ramp back to recent highs (from a 10% plunge pre-market) after dismal earnings and outlook, it appears ‘investors’ took the weekend to actually read the report and transcripts…

Someone turn the bloody machines back on!!

Bloomberg reports that General Electric’s weak third-quarter results and outlook prompted multiple rating downgrades on Monday, with most analysts warning of an impending dividend cut. However, bullish analysts note that there doesn’t seem to be much more that bears can “fixate on from here.”

RBC (Deane Dray)

  • GE’s intra-day stock recovery on Oct. 20 could be the “first sign of a cathartic bottoming, supported by the draconian 2017 guidance cut and brutal assessment/frankness from the new CEO”
  • Expects a dividend cut announcement before Nov. 13
  • Outperform, PT $25 from $27

MORGAN STANLEY (Nigel Coe)

  • Investors need to trade carefully into Nov. 13 strategy reset, given higher probability of a dividend cut to ~70c
  • While new CEO John Flannery is the right man for the mission on hand, the scale of the challenges that he and his new team face are greater than earlier imagined
  • Cut to underweight from equal-weight, PT $22 from $25

UBS (Christopher Belfiore)

  • Downgrades on disappointing 3Q, expectation reset and dividend at risk
  • Says recognizes execution risk as GE works through its strategy, but sees a lot of the negative sentiment now in the stock; says GE should trade in line with the market
  • Cut to neutral from buy, PT $24 from $31

COWEN (Gautam Khanna)

  • Sees a likely, sizable dividend cut and down 2018 EPS, with limited bounceback prospects in 2019
  • Says it is very likely that Power profits will decline sharply in 2018, and perhaps again in 2019
  • Market perform, PT $22 from $24

MELIUS RESEARCH (Scott Davis)

  • “Not sure there is much more the bears can fixate on from here”
  • Says the EPS reset was worse than what most expected; however, short of a recession or collapse in oil prices, it is hard to picture anything more
  • Says the dividend won’t be cut as GE will focus on growing FCF and earning into it
  • Buy-Accumulate; PT $35

WILLIAM BLAIR (Nicholas Heymann)

  • Says GE puts its corporate transformation into overdrive; 2017, and not 2018, is now going to be GE’s trough year for adjusted EPS, with solid initial improvement expected in 2018
  • Outperform

SUNTRUST (Michael Ciarmoli)

  • GE’s notable strength in military aftermarket activity could be a source of upside surprise this quarter for suppliers with exposure
  • Names with aftermarket exposure within SunTrust’s coverage include AAR, Barnes Group, HEICO, KLX and TransDigm

.

7.OIL ISSUES

OIL ISSUES/VENEZUELA 
a VERY IMPORTANT READ…VENEZUELA FINALLY LOOKS LIKE THEY ARE GOING TO DEFAULT. BECAUSE OF LACK OF MONEY THEY DO NOT HAVE THE CHEMICALS TO HELP THEM AGAINST INCREASINGLY POOR QUALITY OF OIL.  THEIR EXPORTS HAVE SUNK FROM 800,000 BARRELS PER DAY DOWN TO 250,000 AND THUS THEY LACK THE NECESSARY REVENUE.  SANCTIONS BY THE USA HAS ALSO HURT THEM BADLY. THE REASON I BRING THIS TO YOUR ATTENTION IS THE HUGE NUMBER OF CREDIT DEFAULT SWAPS UNDERWRITTEN BY OUR MAJOR BANKERS AND ON A DEFAULT THEY WILL HAVE TO PAY THE HOLDERS OF LONG SWAPS.
A MUST READ..
(COURTESY NICK CUNNINGHAM/OIL PRICE.COM

Oil Quality Issues Could Bankrupt Venezuela

Authored by Nick Cunningham via OilPrice.com,

The next few weeks for Venezuela will be crucial, as it could struggle to meet a huge stack of debt payments. Reports that the nation’s oil production is experiencing deteriorating quality raises a new cause for concern for the crumbling South American nation.

Venezuela’s state-owned oil company PDVSA is reportedly shipping crude oil with growing quality issues. Reuters reported that its oil shipments are “soiled with high levels of water, salt or metals that can cause problems for refineries”. It’s a troubling situation for an oil company already suffering from a steep drop in output.

The quality problem is very much related to the country’s economic crisis. Without cash, PDVSA is struggling to obtain the proper chemicals to treat its oil, or pay for equipment and upkeep to maintain quality. As a result, PDVSA has had to shut down operations, or throttle back on production. “We’re refitting chemical injection points, recouping pumps and storage tanks,” one PDVSA worker told Reuters. “But without chemicals, we can’t do anything.”

The oil company has been shipping crude that is apparently causing problems for refiners around the world. According to Reuters, that has led to complaints and even cancellations of purchases. Phillips 66, a U.S. refiner, cancelled at least eight cargoes in the first half of the year due to inferior quality. It also demanded discounts for other shipments. Refiners in India and China have also lodged complaints.

The sales cancellation poses a serious financial threat to a company and country already wallowing in a horrific economic crisis. For example, the cancelled shipments were carrying oil representing $200 million in value, according to Reuters estimates. PDVSA is the only lifeline for the Venezuelan state, so reports that the one source of revenue keeping the country somewhat afloat is not only declining but is now exhibiting declining quality is alarming.

Output is falling, cash is drying up and oil workers have fled the country because of food shortages and violence.

The problem for PDVSA is compounded by the fact that a few months ago the Trump administration slapped sanctions on new financial arrangements with the oil company, prohibiting PDVSA from engaging with U.S. banks to restructure debt. The measures also add a new level of red tape for U.S. refiners who do business with PDVSA. Because of the new pressure from Washington, refiners are starting to look elsewhere for their crude. PBF Energy, the fifth largest U.S. refiner and regular PDVSA customer, has reportedly halted direct purchases from the Venezuelan oil company.

Deteriorating quality, falling production and U.S. sanctions have led to a sharp decline in shipments from Venezuela to the U.S. refiners. For much of this year, weekly U.S. imports of Venezuelan oil bounced around between 600,000 and 800,000 bpd, sometimes going even higher. But trading volumes began to plummet about a month ago. For the week ending on October 13, U.S. purchases of Venezuelan oil dropped to just 255,000 bpd, the lowest weekly total in EIA data stretching back to 2010.

(Click to enlarge)

The timing of this could not be worse: Venezuela has some painful debt payments due in the next few weeks. The government is undoubtedly scrambling to find a solution. President Nicolas Maduro said in early October that debt to Russia’s Rosneft might need to be restructured. Last year, the government engineered a restructuring plan with creditors to avoid default, stretching out payments over the next few years.

Earlier this month, however, Venezuela missed several payments totaling $349 million. There is a 30-day grace period before the country is technically in default, and payment delays have grown increasingly common in the past year or so. To date, against all odds, Venezuela has not defaulted.

But a bigger test comes in about a week: between October 27 and November 2, Venezuela has to make a whopping $2 billion in payments to bondholders, and there’s a lot of uncertainty around whether or not it can make those payments.And over the next three weeks, Venezuela and PDVSA owe a combined $4.4 billion. Analysts believe the central bank has a little over $9 billion in reserves, but much of that is in illiquid assets like gold.

“It seems they’re saving every penny for these two big payments,” Russ Dallen, managing partner at Caracas Capital, told the WSJ.

8. EMERGING MARKET

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

Euro/USA   1.1742 DOWN.0032/ 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  ALL GREEN except Spain   

USA/JAPAN YEN 113.88 UP 0.435(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 1.3167 DOWN .0008 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED

THERESA MAY FORMS A NEW GOVERNMENT/STARTS BREXIT TALKS/MAY IN TROUBLE WITH HER OWN PARTY/

USA/CAN 1.2631 UP .0099(CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/(TRUMP INITIATES LUMBER TARIFFS ON CANADA)

Early THIS MONDAY morning in Europe, the Euro FELL by 32 basis points, trading now ABOVE the important 1.08 level  FALLING to 1.1742; / Last night the Shanghai composite CLOSED UP 2.05 POINTS OR .06%      / Hang Sang  CLOSED DOWN 181.36 PTS OR 0.64%   /AUSTRALIA  CLOSED DOWN 0.19% / EUROPEAN BOURSES OPENED GREEN EXCEPT SPAIN 

The NIKKEI: this MONDAY morning CLOSED UP 239.01 POINTS OR 1.11% 

Trading from Europe and Asia:
1. Europe stocks  OPENED GREEN \EXCEPT SPAIN

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 181.36 POINTS OR 0.64%  / SHANGHAI CLOSED UP 2.05 POINTS OR .06%    /Australia BOURSE CLOSED DOWN 0.19% /Nikkei (Japan)CLOSED UP 239.01 POINTS OR 1.11%    / INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: 1275.90

silver:$16.98

Early MONDAY morning USA 10 year bond yield:  2.384% !!! UP 0 IN POINTS from FRIDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. (POLICY FED ERROR)

The 30 yr bond yield  2.899 UP 1 IN BASIS POINTS  from FRIDAY night. (POLICY FED ERROR)

USA dollar index early MONDAY morning: 93.96 UP 26 CENT(S) from YESTERDAY’s close. 

This ends early morning numbers  MONDAY MORNING

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And now your closing MONDAY NUMBERS  \1 PM

Portuguese 10 year bond yield: 2.288% down 2 in basis point(s) yield from FRIDAY 

JAPANESE BOND YIELD: +.069%  DOWN 7/10  in   basis point yield from FRIDAY/JAPAN losing control of its yield curve/

SPANISH 10 YR BOND YIELD: 1.627% DOWN 4 IN basis point yield from FRIDAY 

ITALIAN 10 YR BOND YIELD: 2.005 DOWN 4 POINTS  in basis point yield from FRIDAY 

the Italian 10 yr bond yield is trading 37 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.432% DOWN 2 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR MONDAY 

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

Euro/USA 1.1761 down 13 (Euro down 13 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 113.63 up 0.187(Yen down 19  basis points/ 

Great Britain/USA 1.3198 up  0.0023( POUND up 23 BASIS POINTS)

USA/Canada 1.2652 UP.0121 Canadian dollar DOWN 121 basis points AS OIL ROSE TO $51.90

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This afternoon, the Euro was DOWN 13 to trade at 1.1761

The Yen FELL to 113.63for a LOSS of 18  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 34 basis points, trading at 1.3184/ 

The Canadian dollar FELL by 138 basis points to 1.2619  WITH WTI OIL RISING TO :  $51.47

The USA/Yuan closed AT 6.640
the 10 yr Japanese bond yield closed at +.069% DOWN 7/10 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 4  IN basis points from FRIDAY at 2.3640% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.8790 DOWN 4 in basis points on the day /

Your closing USA dollar index, 93.81  UP 10 CENT(S)  ON THE DAY/5.00 PM/BREAKS RESISTANCE OF 92.00 

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

London:  CLOSED UP  1.22 POINTS OR 0.02%
German Dax :CLOSED UP 11.86 POINTS OR .09%
Paris Cac  CLOSED UP 14.46 POINTS OR 0.37% 
Spain IBEX CLOSED DOWN 61.30 POINTS OR 0.60%

Italian MIB: CLOSED UP 32.31 POINTS OR 0.14% 

The Dow closed DOWN 54.67 POINTS OR .71%

NASDAQ WAS closed DOWN 42.22 PTS OR .64%  4.00 PM EST

WTI Oil price;   51.90   3:00 pm; 

Brent Oil: 57.39  1:00 EST

USA /RUSSIAN ROUBLE CROSS:  57.52 UP 3/100 ROUBLES/DOLLAR (ROUBLE LOWER BY 3 BASIS PTS)

TODAY THE GERMAN YIELD FALLS TO  +.432%  FOR THE 10 YR BOND  5.00 PM EST EST

END

This ends the stock indices, oil price, currency crosses and interest rate closes for today

Closing Price for Oil, 5 pm/and 10 year USA interest rate:

WTI CRUDE OIL PRICE 5:00 PM:$51.31

BRENT: $57.31

USA 10 YR BOND YIELD: 2.366%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.883% 

EURO/USA DOLLAR CROSS:  1.1747 DOWN .0027

USA/JAPANESE YEN:113.43   DOWN  0.022

USA DOLLAR INDEX: 93.85 UP 15 cent(s)/

The British pound at 5 pm: Great Britain Pound/USA: 1.3191 : UP 17 POINTS FROM LAST NIGHT  

Canadian dollar: 1.2643 DOWN 112 BASIS pts 

German 10 yr bond yield at 5 pm: +0.432%

END

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

TRADING IN GRAPH FORM FOR THE DAY

The US Stock Market Just Did Something It Has Never Done Before

It has now been 242 days since the US equity market dipped by 3% or more… That has never, ever, happened before

Rick Astley said it best…“never gonna let you down… or desert you”

Ironic then that stocks had their worst day in 6 weeks.

GE schizophrenia shows the utter farce that this so-called ‘market’ has become…

Nasdaq gave up all Friday’s Budget-Resolution, tax-reform-hope gains…

NOTE they tried to ramp stocks in the last 20 mins but that failed – this is not something we have seen recently…NOT OFF THE LOWS…

S&P VIX jumped by the most since Sept 5th – back above its 50- and 100-DMA…

Risk and price remain decoupled…

It ain’t over yet…

FANG Stocks dropped near 3-week lows…

Financials are starting to catch down to the yield curve’s reality…

Treasury yields dipped today…

But 10Y tested up towards 2.40% before fading back…

The Dollar Index extended Friday’s gains, closing at its highest since July 14th (even though it faded into the close)…

Cable was strongest after May’s speech but Yen surged in the last hour…

Bitcoin tumbled from new record highs early on following Saudi Prince comments but was bid into the close of the US equity market…

Despite dollar strength, commodities were higher, led by copper…

Gold futures spiked around 12ET on the back of a $2.4 billion notional volume surge… back above its 100DMA…

WTF Bonus Chart: South Korean stocks are at record highs (why not!!) but South Korean sovereign credit risk is at its worst in 20 months…

(courtesy zerohedge)

END

Two important facts today:

  1. the USA for the first time has put nuclear bombers on a 24 hour alert
  2.  Trump recalled up to 1,000 retired air force pilots due to a shortage in that department

(courtesy zerohedge)

For The First Time In 26 Years, US To Put Nuclear Bombers On 24 Hour Alert

The unexpected decision by President Trump to amend an emergency Sept 11 order signed by George W Bush, allowing the Air Force to recall up to 1,000 retired air force pilots to address what the Pentagon has decribed as “an acute shortage of pilots” caught us by surprise. After all, this was the first time we have heard of this particular labor shortage – perhaps there was more to this executive order than meets the eye. Indeed, a just released report may help explain the reasoning behind this presidential decision.

According to Defense One, the US Air Force is preparing to put nuclear-armed bombers back on 24-hour ready alert, a status not seen since the Cold War ended in 1991.

 That means the long-dormant concrete pads at the ends of Barksdale Air Force Base’s 11,000-foot runway — dubbed the “Christmas tree” for their angular markings — could once again find several B-52s parked on them, laden with nuclear weapons and set to take off at a moment’s notice.

“This is yet one more step in ensuring that we’re prepared,” Gen. David Goldfein, Air Force chief of staff, told the publication in an interview during his six-day tour of Barksdale and other U.S. Air Force bases that support the nuclear mission. “I look at it more as not planning for any specific event, but more for the reality of the global situation we find ourselves in and how we ensure we’re prepared going forward.”

Quoted by Defense One, Goldfein and other senior defense officials stressed that the alert order had not been given, but that preparations were under way in anticipation that it might come. That decision would be made by Gen. John Hyten, the commander of U.S. Strategic Command, or Gen. Lori Robinson, the head of U.S. Northern Command. STRATCOM is in charge of the military’s nuclear forces and NORTHCOM is in charge of defending North America.

Putting the B-52s back on alert is just one of many decisions facing the Air Force as the U.S. military responds to a changing geopolitical environment that includes North Korea’s rapidly advancing nuclear arsenal, President Trump’s confrontational approach to Pyongyang, and Russia’s increasingly potent and active armed forces.

Goldfein, who is the Air Force’s top officer and a member of the Joint Chiefs of Staff, is asking his force to think about new ways that nuclear weapons could be used for deterrence, or even combat.

Quoted by Def One, he said that “the world is a dangerous place and we’ve got folks that are talking openly about use of nuclear weapons. It’s no longer a bipolar world where it’s just us and the Soviet Union. We’ve got other players out there who have nuclear capability. It’s never been more important to make sure that we get this mission right.” During his trip across the country last week, Goldfein encouraged airmen to think beyond Cold War uses for ICBMs, bombers and nuclear cruise missiles.

“I’ve challenged…Air Force Global Strike Command to help lead the dialog, help with this discussion about ‘What does conventional conflict look like with a nuclear element?’ and ‘Do we respond as a global force if that were to occur?’ and ‘What are the options?’” he said. “How do we think about it — how do we think about deterrence in that environment?”

Asked if placing B-52s back on alert — as they were for decades — would help with deterrence, Goldfein said it’s hard to say.

“Really it depends on who, what kind of behavior are we talking about, and whether they’re paying attention to our readiness status,” he said.

Meanwhile, various improvements have already been made to prepare Barksdale — home to the 2d Bomb Wing and Air Force Global Strike Command, which oversees the service’s nuclear forces — to return B-52s to an alert posture. Near the alert pads, an old concrete building — where B-52 crews during the Cold War would sleep, ready to run to their aircraft and take off at a moment’s notice — is being renovated.

Inside, beds are being installed for more than 100 crew members, more than enough room for the crews that would man bombers positioned on the nine alert pads outside. There’s a recreation room, with a pool table, TVs and a shuffleboard table. Large paintings of the patches for each squadron at Barksdale adorn the walls of a large stairway.

One painting — a symbol of the Cold War — depicts a silhouette of a B-52 with the words “Peace The Old Fashioned Way,” written underneath. At the bottom of the stairwell, there is a Strategic Air Command logo, yet another reminder of the Cold War days when American B-52s sat at the ready on the runway outside.

Those long-empty B-52 parking spaces will soon get visits by two nuclear command planes, the E-4B Nightwatch and E-6B Mercury, both which will occasionally sit alert there. During a nuclear war, the planes would become the flying command posts of the defense secretary and STRATCOM commander, respectively. If a strike order is given by the president, the planes would be used to transmit launch codes to bombers, ICBMs and submarines. At least one of the four nuclear-hardened E-4Bs — formally called the National Airborne Operations Center, but commonly known as the Doomsday Plane — is always on 24-hour alert.

Barksdale and other bases with nuclear bombers are preparing to build storage facilities for a new nuclear cruise missile that is under development. During his trip, Goldfein received updates on the preliminary work for a proposed replacement for the 400-plus Minuteman III intercontinental ballistic missiles, and the new long-range cruise missile.

“Our job is options,” Goldfein told Defense One’s Marcus Weisgerber. “We provide best military advice and options for the commander and chief and the secretary of defense. Should the STRATCOM commander require or the NORTHCOM commander require us to [be on] a higher state of readiness to defend the homeland, then we have to have a place to put those forces.”

And now that the US is preparing for immediate nuclear war readiness, all it needs is a provocation, one which a world which has never been more on edge over a stray tweet, may have little difficulty in finding.

END

They then denied the first part of the story that US nuclear bombers are on a 24 hour alert

(courtesy zerohedge)

Air Force Denies That US Nuclear Bombers Are Being Put Back On 24-Hour Alert

Tyler Durden's picture

There were many unanswered questions following last night’s story from Defense One, according to which the US Air Force would put nuclear bombers on high, 24-hour alert for the first time since the end of the cold war in 1991. There may be even more questions on Monday, when the Air Force denied the report and said it was not preparing to put its B-52 nuclear bombers on 24-hour alert, adding that a “misunderstanding” might have led to a report claiming those preparations are underway.

According to Ann Stefanek, the chief of Air Force media operations at the Pentagon, updates to facilities, exercises, and training related to the B-52 Stratofortress aircraft at Barksdale Air Force Base in Louisiana are done routinely to ensure the service is prepared.

“We are not planning or preparing to put B-52s back on alert,” Stefanek said.

Sunday’s report in Defense One said the Air Force was preparing to put the long-range strategic bombers at Barksdale on around-the-clock alert for the first time since 1991. The report also pointed out that the alert order had not been given, and that officials were preparing for such an order if it comes.

Gen. David Goldfein, the Air Force chief of staff, was quoted as saying the service was taking “one more step” to ensure it is prepared.

“I look at it more as not planning for any specific event, but more for the reality of the global situation we find ourselves in and how we ensure we’re prepared going forward,” Goldfein told Defense One.

It remains unclear just where the alleged “misunderstanding” took place in the breakdown of communication between Goldfein, Defense One, and today’s damage control by the USAF.

This is fascinating:  Mueller is now probing the Democrat lobbying firm, the Podesta Group with respect to Russian voting influence.  With the latest Mueller involvement in the FBI covering up the Uranium One scandal,  we can only wonder how this will turn out as it seems that the Democrats were using Russian influence far greater than the Republicans.

(courtesy zerohedge)

Mueller Probe Targets Democrat Lobbying Firm Podesta Group

Authored by ZeroPointNow, originally published on iBankCoin

Tony Podesta and his lobbying firm the Podesta Group are under federal investigation by FBI Special Counsel Robert Mueller in connection with the Russia investigation, three sources told NBC News.

The firm, co-founded by Hillary Clinton’s campaign manager John Podesta, was subpoenaed in late August along with three other public relations firms who worked with former Trump campaign manager Paul Manafort during a 2012-2014 lobbying effort for a pro-Ukraine think tank – the European Centre for a Modern Ukraine (ECMU) – tied to former Ukrainian president Viktor Yanukovych.

Yanukovych fled from Ukraine to Russia after he was unseated in a 2014 coup.

Two of the subpoenaed firms include Paul Manafort’s Mercury, LLC and the Podesta Group, founded by John and Tony Podesta and operated by the latter.

Manafort’s firm earned $17 million between 2012 – 2014 consulting for Yanukovych’s centrist, pro-Russia ‘Party of Regions.’ During the same period, Manafort oversaw a lobbying campaign for the pro-Russia “Centre for a Modern Ukraine,” a Brussels based think tank linked to Yanukovych which was pushing for Ukraine’s entry into the European Union.

The Podesta group, operating under Manafort, earned over $1.2 million as part of that effort.

In a statement to NBC, a spokesman for the Podesta Group said the firm “is cooperating fully with the Special Counsel’s office and has taken every possible step to provide documentation that confirms timely compliance. In all of our client engagements, the Podesta Group conducts due diligence and consults with appropriate legal experts to ensure compliance with disclosure regulations at all times — and we did so in this case.”

White House Special Access

Visitor logs reveal that Tony Podesta visited the White House at least 114 times during the Obama administration according to White House visitor logs, and was said to have had ‘special access‘ to the administration through his brother, John Podesta, while lobbying for various pro-Kremlin interests.

During a 2015 interview with CNN’s Fareed Zakaria, former president Obama admitted that his administration ‘brokered a deal‘ for the 2014 coup in Ukraine – all while John Podesta was a West Wing advisor and Tony Podesta lobbied for an organization which opposed the coup.

Podesta Group and Russia

While Robert Mueller’s investigation is primarily focused on the Trump campaign – having conducted a surprise raid on Paul Manafort’s home in July, it will be interesting to see if the Special Counsel chooses to delve into the bevy of documented ties between the the Podesta brothers and Russia.

For example, Russia’s Kremlin-owned Sberbank paid the Podesta group $170,000 over a 6 month period to lobby against 2014 economic sanctions by the Obama administration:

Podesta’s efforts were a key part of under-the-radar lobbying during the 2016 U.S. presidential campaign led mainly by veteran Democratic strategists to remove sanctions against Sberbank and VTB Capital, Russia’s second largest bank.

The two Russian banks spent more than $700,000 in 2016 on Washington lobbyists as they sought to end the U.S. sanctions, according to Senate lobbying disclosure forms and documents filed with the Department of Justice.

The Podesta Group charged Sberbank $20,000 per month, plus expenses, on a contract from March through September 2016. –Daily Caller

In March of this year it was revealed that the Podesta group forgot to register as a “Foreign Agent” for their work with Sberbank.

Uranium One

The Podesta group also earned $180,000 lobbying for Russian-owned mining company Uranium One during the same period that the Clinton Foundation was receiving millions from UrAsia / U1 interests.

Last week, two bombshell reports published by The Hill revealed that the FBI – headed by Robert Mueller at the time – discovered that “Russian nuclear officials had routed millions of dollars to the U.S. designed to benefit former President Bill Clinton’s charitable foundation during the time Secretary of State Hillary Clinton served on a government body that provided a favorable decision to Moscow” – a deal which would grant the Kremlin control over 20 percent of America’s uranium supply, as detailed by author Peter Schweitzer’s book Clinton Cash and the New York Times in 2015.

After Russia took control of the Uranium rights, the Podesta Group received $180,000 to lobby for Uranium One during the same period that the Clinton Foundation was receiving millions from U1 interests, and after Russia took majority ownership in the “20 percent” deal (source – you have to add up the years).

the Podesta Group received $180,000 to lobby for Uranium One during the same period that the Clinton Foundation was receiving millions from U1 interests, and after Russia took majority ownership in the “20 percent” deal (source – you have to add up the years).

Joule Unlimited

While NBC reports that Hillary Clinton’s campaign manager and presumed Secretary of State John Podesta is not currently affiliated with the Podesta group and not part of Mueller’s investigation, it should be noted that he sat on the board of Massachusetts energy company Joule Unlimited, along with senior Russian official Anatoly Chubais and Russian oligarch Ruben Vardanyan – who was appointed by Vladimir Putin to the Russian economic council.

Two months after Podesta joined the board, Joule managed to raise $35 million from Putin’s Kremlin-backed investment fund Rusnano.

Not only did John Podesta fail to properly disclose this relationship before joining the Clinton Campaign, he transferred 75,000 shares of Joule to his daughter through a shell company using her address.

Despite the Russian assistance, the Daily Caller reports that Joule Unlimited folded shortly after Hillary Clinton lost the 2016 election.

In an interview with Fox Business News’ Maria Bartaromo, Podesta denied that he failed to disclose his ties, emphatically stating “Maria, that’s not true. I fully disclosed and was completely compliant,” adding “I didn’t have any stock in any Russian company!” in reference to Massachusetts based Joule Unlimited – with its two Russian dignitaries on the board board and a $35 million loan from a Russian investment fund founded by Vladimir Putin.

* * *

For more, see “FBI Probes Firm Belonging To Brother Of Clinton Campaign Chair For Ukraine Corruption Ties

END

FINALLY MAINSTREAM MEDIA IS REPORTING ON THE HUGE URANIUM/CLINTON SCANDAL

(COURTESY NEWSBUSTERS/)

AND SPECIAL THANKS TO ROBERT H. FOR SENDING THIS TO US

https://www.newsbusters.org/blogs/nb/nicholas-fondacaro/2017/10/22/abc-nbc-maintain-clinton-uranium-blackout-cbs-finds-it-5-days

ABC, NBC Maintain Clinton-Uranium Blackout, CBS Finds It 5 Days Late

During Sunday’s Face the Nation, Moderator John Dickerson became the first member of the Big Three Networks (ABC, CBS, and NBC) to crack the broadcast TV blackout of the Hillary Clinton-Uranium scandal. But his mention of the story came five days after The Hill first exposed how the FBI was investigating Russian bribery of public officials to purchase the radioactive substance. And segment brought their total coverage time of the scandal to a whopping 69 seconds.

Dickerson brought up the Clinton-Uranium scandal during an interview with Oklahoma Republican Senator James Lankford. After prefacing that the Senate Intelligence Committee, which Lankford sits on, could choose to review the FBI’s findings or investigate the accusations themselves, he asked the Senator:

You’re looking into the Russian influence in the election, there have been reports this week about Russian efforts to try to influence the Obama administration and try to influence perhaps Hillary Clinton through donations to the Clinton Foundation with respect to the purchase of uranium. Is that something that the intelligence committee should look at, that you’re interested in looking at?

Senator Lankford was quite candid in his response to Dickerson, explaining: “So, we have the report that we have now, but that is an unsettled issue that something that the FBI has pursued for now a decade to try to determine what influence was done.”

“As you know there are several Russians that have been arrested for this, or have been charged on these crimes of trying to be able to influence the purchase of — in the deal on uranium with the Obama administration through the Clinton Foundation,” he added.

The Senator was adamant about the scandal being “unanswered” and described it as “unfinished business,” but noted that it may not be his committee handling it. “But that is unfinished business, quite frankly the Judiciary Committee will probably be the lead investigative team on that one from the Senate,” he said. “But we still wait to see the final reports from the FBI on it to be able to get the actual details on that one as well.”

Since both ABC and NBC failed to report the Uranium bribery plot and the Clintons’ connections on Sunday (as well as during the previous five days), it was surprising to see Dickerson be the one to bring it up and not a guest. It will be interesting to see if it was the start of a tread or just an outright lie

end

This is interesting from Wolf Richter..

Oops….

How much has the Fed actually reduced its balances sheet?
Total assets on Oct 4: $4.460 trillion
Total assets on Oct 11: $4.459 trillion
Total assets on Oct 18: $4.470 trillion
You read correctly: Since October 4, the balance sheet gained $10 billion, all of it in the week ending October 18.

The Fed is supposed to unload $10 billion in October. But curiously, so far, it has done the opposite.

https://wolfstreet.com/2017/10/20/is-the-fed-getting- cold-feet-about-the-qe-unwind/

-END-

Well that about does it for tonight

I will see you TUESDAY night

HARVEY

 

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