Nov 20/ANOTHER RAID ON GOLD AND SILVER AS PROMISED/MASSIVE AMOUNTS OF GOLD EFP’S ISSUES WHICH MEANS STHAT THERE IS NO GOLD TO BE DELIVERED UPON AT THE GOLD COMEX AND FOR THAT MATTER A HUGE AMOUNT OF SILVER EFT’S ISSUES: SAME STORY AS GOLD/TRUMP LABELS NORTH KOREA AS A TERRORIST STATE/SOUTH KOREA DETECTS ROCKET ENGINE TESTING IN NORTH KOREA/GOOD REASON FOR GOLD AND SILVER TO GO DOWN: THE ECB IS PLANNING ON ELIMINATING DEPOSIT INSURANCE/GERMANY IN CHAOS TONIGHT AS THEY CANNOT FORM A GOVERNMENT AND THEY NEED TO HAVE AN NEW ELECTION AND MOST LIKELY MERKEL WILL NOT SERVE/

GOLD: $1276.90  DOWN $19.70

Silver: $16.93 DOWN 45 cents

Closing access prices:

Gold $1276.90

silver: $16.93

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: $1296.26 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME: $1291.40

PREMIUM FIRST FIX: $4.86

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SECOND SHANGHAI GOLD FIX: $1294.99

NY GOLD PRICE AT THE EXACT SAME TIME: $1290.90

Premium of Shanghai 2nd fix/NY:$4.39

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

LONDON FIRST GOLD FIX: 5:30 am est $1292.35

NY PRICING AT THE EXACT SAME TIME: $1291.50

LONDON SECOND GOLD FIX 10 AM: $1286.20

NY PRICING AT THE EXACT SAME TIME. 1286.30

For comex gold:

NOVEMBER/

 NUMBER OF NOTICES FILED TODAY FOR NOVEMBER CONTRACT:  1 NOTICE(S) FOR 100 OZ.

TOTAL NOTICES SO FAR: 1052 FOR 105,200 OZ (3.372TONNES)

For silver:

NOVEMBER

3 NOTICE(S) FILED TODAY FOR

15,000 OZ/

Total number of notices filed so far this month: 884 for 4,420,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Bitcoin: BID $8100 OFFER /$8125 up $412.00 (MORNING)

BITCOIN : BID $8222 OFFER: $8247 // up $534 (CLOSING)

end

Let us have a look at the data for today

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In silver, the total open interest ROSE BY A HUGE 5,383 contracts from 199,711 UP TO 205,094 WITH RESPECT TO FRIDAY’S TRADING  WHICH SAW SILVER RISE  BY 24 CENTS AND BREAK THE HUGE $17.25 SILVER RESISTANCE.   WE HAD ZERO LONG COMEX LIQUIDATION AND FURTHER  WE WERE NOTIFIED THAT WE HAD QUITE A HUMONGOUS NUMBER OF COMEX LONGS TRANSFERRING THEIR CONTRACTS TO LONDON THROUGH THE EFP ROUTE : 1078 DECEMBER EFP’S WERE ISSUED ALONG WITH 0 EFP’S FOR MARCH FOR A TOTAL ISSUANCE OF 1078 CONTRACTS FOR MONDAY. (THE ISSUANCE FOR MARCH THAT WE HAVE SEEN THESE PAST FEW DAYS BOTHERS ME A LOT AS THIS IS SUPPOSE TO BE FOR EMERGENCY IN THE UPCOMING DELIVERY MONTH).  I GUESS WHAT THE CME IS STATING IS THAT THERE IS NO SILVER TO BE DELIVERED UPON AT THE COMEX AS THEY MUST EXPORT THEIR OBLIGATION TO LONDON. THURSDAY WITNESSED  927 EFP’S ISSUED FOR FRIDAY.

RESULT: A HUGE SIZED RISE IN OI COMEX WITH THE 24 CENT PRICE RISE.  ZERO  COMEX LONGS  EXITED OUT OF THE COMEX AND FROM THE CME DATA 1078 EFP’S  WERE ISSUED FOR MONDAY FOR A DELIVERABLE CONTRACT OVER IN LONDON WITH A FIAT BONUS. IN ESSENCE THE  DEMAND FOR SILVER PHYSICAL INTENSIFIES GREATLY

In ounces, the OI is still represented by just OVER 1 BILLION oz i.e. 1.025 BILLION TO BE EXACT or 146% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT OCT MONTH/ THEY FILED: 3 NOTICE(S) FOR 15,000 OZ OF SILVER

In gold, the open interest SURPRISINGLY ROSE BY A HUMONGOUS 28,707 CONTRACTS WITH THE FAIR SIZED RISE IN PRICE OF GOLD ($10.60) WITH RESPECT TO FRIDAY’S TRADING. WE HAD ZERO COMEX LONGS EXIT THE ARENA.  HOWEVER  THE TOTAL NUMBER OF GOLD EFP’S ISSUED ON FRIDAY FOR MONDAY  TOTALED AN UNBELIEVABLE: 12,711 CONTRACTS OF WHICH THE MONTH OF DECEMBER SAW 12,711 CONTRACTS AND FEB SAW THE ISSUANCE OF 0 CONTRACTS. ON THURSDAY, WE WITNESSED A TOTAL OF 4394 EFP’S ISSUED THURSDAY  FOR FRIDAY.  The new OI for the gold complex rests at 561,237. DEMAND FOR GOLD INTENSIFIES DESPITE THE CONSTANT RAIDS.  EVEN THOUGH THE BANKERS ISSUED THESE MONSTROUS EFPS, THE OBLIGATION STILL RESTS WITH THE BANKERS TO SUPPLY METAL BUT IT TRANSFERS TO A LONDON BANKER OBLIGATION AND NOT A NEW YORK COMEX OBLIGATION.  THE BANKERS AT THE COMEX  HAVE JUST STATED THAT THEY HAVE NO METAL!! THIS IS THE FRAUD: THEY CANNOT SUPPLY ANY METAL TO OUR COMEX LONGS BUT THEY ARE QUITE WILLING TO SUPPLY MASSIVE NOT BACKED SILVER (AND GOLD) PAPER KNOWING THAT THEY HAVE NO METAL TO SATISFY OUR LONGS. LONDON IS SEVERELY BACKWARD IN BOTH GOLD AND SILVER AND ON TOP OF THAT IT IS TAKING 6 TO 10 WEEKS TO OBTAIN PHYSICAL WHEN FORWARDS ARE DUE.

Result: A HUGE SIZED INCREASE IN OI DESPITE THE FAIR SIZED RISE IN PRICE IN GOLD ON FRIDAY ($10.60). WE  HAD A HUGE NUMBER OF COMEX LONG TRANSFERS TO LONDON THROUGH THE EFP ROUTE AS (12,711 EFP’S). THERE OBVIOUSLY DOES NOT SEEM TO BE ANY PHYSICAL AT THE COMEX AS WE ARE APPROACHING THE HUGE DELIVERY MONTH OF DECEMBER WHICH EXPLAINS THE HUGE ISSUANCE OF EFP’S. WE  HAD ZERO GOLD COMEX OI CONTRACTS LEAVE THE COMEX GOLD ARENA.

we had:  1  notice(s) filed upon for 100 oz of gold.

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

GLD:

No change in gold inventory at the GLD/

Inventory rests tonight: 843.39 tonnes.

SLV

TODAY WE HAD NO CHANGE IN SILVER INVENTORY AT THE SLV

INVENTORY RESTS AT 318.074 MILLION OZ

end

.

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

1. Today, we had the open interest in silver ROSE BY 5,383 contracts from 199,711 UP  TO 205,094 (AND now A LITTLE CLOSER TO THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) WITH THE CONSIDERABLE RISE IN SILVER PRICE (A GAIN OF 24 CENTS AND THE BREAKING OF THAT HUGE $17.25 RESISTANCE). OUR BANKERS  USED THEIR EMERGENCY PROCEDURE TO ISSUE 1078  PRIVATE EFP’S FOR DECEMBER(WE DO NOT GET A LOOK AT THESE CONTRACTS)  AND 0 EFP’S FOR MARCH FOR A TOTAL OF 1078 EFP CONTRACTS.  EFP’S GIVE OUR COMEX LONGS A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON. THIS IS QUITE EARLY FOR THESE EFP ISSUANCE..USUALLY WE WITNESS THIS ONE WEEK PRIOR TO FIRST DAY NOTICE AND THIS CONTINUES RIGHT UP UNTIL FDN.  WE ALSO HAD NO  AMOUNT OF SILVER COMEX LIQUIDATION.

RESULT: A HUGE SIZED INCREASE IN SILVER OI AT THE COMEX WITH THE 24 CENT GAIN IN PRICE (WITH RESPECT TO FRIDAY’S TRADING). WE  HAD ANOTHER 1078 EFP’S ISSUED ,TRANSFERRING OUR COMEX LONGS OVER TO LONDON TOGETHER WITH ZERO  SILVER COMEX LIQUIDATION.

(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 9.49 points or .28% /Hang Sang CLOSED UP 61.27 pts or 0.21% / The Nikkei closed DOWN 135.04 POINTS OR 0.60%/Australia’s all ordinaires CLOSED UP 0.17%/Chinese yuan (ONSHORE) closed UP at 6.6318/Oil UP to 56.44 dollars per barrel for WTI and 61.97 for Brent. Stocks in Europe OPENED GREEN ONSHORE YUAN CLOSED UP AGAINST THE DOLLAR AT 6.6318. OFFSHORE YUAN CLOSED WEAKER TO THE ONSHORE YUAN AT 6.6412 //ONSHORE YUAN STRONGER AGAINST THE DOLLAR/OFF SHORE WEAKER TO THE DOLLAR/. THE DOLLAR (INDEX) IS STRONGER AGAINST ALL MAJOR CURRENCIES. CHINA IS  VERY HAPPY TODAY.

 

 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)North Korea/South Korea

South Korea detects an””engine test” at the North Korean Nuclear facility

 

( zerohedge)

 

ii)TRUMP DECLARES NORTH KOREA A STATE SPONSOR OF TERROR

 

( ZEROHEDGE)

b) REPORT ON JAPAN

c) REPORT ON CHINA

i)Xi pledges to strengthen this relationship with Saudi Arabia. Xi has good relations with Iran as well.  If conflict breaks out who will they support?

 

( zerohedge)

 

4. EUROPEAN AFFAIRS

i)This is a ticking time bomb:  ECB is proposing an end to deposit protection:

( GoldCore)

ii)This is the worst case scenario possible as her Jamaica coalition collapses.  Therefore a second election is a must and that is something that German citizens will not like and they would send their wrath against Merkel.

The euro sinks badly, but gold holds.

( zerohedge)

 

iii)Bill Blain on what to expect next with respect to the latest German scenario..basically trouble ahead

( Bill Blain/England/Morning Porridge)

iv)With the ECB monetizing 100% of issuance who needs Government?

( zerohedge)

 

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)Saudi Arabia

the Saudi corruption probe widens as dozens of military officials have been arrested.  The move is obvious:  MbS wants to eliminate any threat of a military coup

( zerohedge)

ii)ISRAEL/SUNDAY MORNING

Israeli tanks fires on Syrian targets after Israel supposedly reports on violation of the 1974 ceasefire agreement
( zerohedge)
iii)Israel confirms official confirmation of covert ties with Saudi Arabia

(courtesy zerohedge)

iv)Will Israel navigate across the border into Lebanon?  so far I do not think Israel will risk a war

( zerohedge)

v)TURKEY/USA

You will recall that the USA had sanctions on Iran. However the Turkish leadership summoned this guy named Zarrab to accept Iranian oil for gold.  The USA is now taking this gold trader to court in the USA for violating USA sanctions and this will certainly implicate the Turkish leadership

down goes the lira and it’s 10 yr bonds which now yield 13%

( zerohedge)

6 .GLOBAL ISSUES

7. OIL ISSUES

Nebraska regulators approve the Keystone pipeline just days after a South Dakota leak.

This will no doubt be challenged in the court

(courtesy zerohedge)

 

8. EMERGING MARKET

9. PHYSICAL MARKETS

i)As promised, the crooks dumped $2 billion dollars of un backed paper gold to suppress its price

( zerohedge)

 

ii)Financial times editor Gillian Tett writes that the new futures market for Bitcoin will causes its price suppression in exactly the same form as gold/silver.  Chris Powell and zero hedge urges Tett to write about the gold suppression scheme instead of tackling bitcoin

( zerohedge/Gillian Tett/London’s Financial Times/Chris Powell/Gata)

 

iii)Bitcoin soars above $8,000 on the refusal of Mugabe to resign

( zerohedge)

 

10. USA stories which will influence the price of gold/silver

i)Global trading:

 

With the huge amount of negative news throughout last night, somehow the market “reconsidered” the data as the plunge protection team bought everything but gold and silver:

( zerohedge)

 

ii)Baltimore neighbourhood under lockdown as police have declared Martial law

( zerohedge)

iii)FBI Informant has a video of Russian agents with briefcases of bribe money and this money went to the Clinton’s and the Clinton Foundation

 

( zerohedge)

( zerohedge)

v)Stockman slams the USA recovery as a “nothing burger” as well as discuss that the new tax reform bill will accomplish nothing

( David Stockman/ContraCorner)

 

vi)Next on the list for Amazon to destroy is the health care/pharmacy field

 

( zerohedge)

 

 

END

 

 

On Friday night just before closing I stated:

 

“The way the gold/silver equity shares sold off this afternoon, generally that is the signal for our banker boys to orchestrate a aid on our previous metals on Monday. I receive the preliminary numbers late tonight or early tomorrow morning.  If they are extremely high for both metals that would be another indicator for a raid.”

 

as promised to you, another vicious raid by the crooks was orchestrated..

Let us head over to the comex:

The total gold comex open interest SURPRISINGLY ROSE BY  AN ASTOUNDING 28,707  CONTRACTS UP to an OI level of 559,838 DESPITE THE  FAIR SIZED RISE IN THE PRICE OF GOLD ($10.60 RISE WITH RESPECT TO YESTERDAY’S TRADING).  WE DID NOT HAVE ANY GOLD COMEX  LIQUIDATION. HOWEVER  WE DID HAVE A HUMONGOUS 12,711 COMEX LONGS EXIT THE COMEX ARENA THROUGH THE EFP ROUTE AS THEY RECEIVE  A DELIVERABLE LONDON FORWARD TOGETHER WITH A FIAT BONUS. THE CME REPORTS THAT 12,711 EFPS WERE ISSUED FOR DECEMBER AND 0 WERE ISSUED FOR MARCH. THE OBLIGATION STILL RESTS WITH THE BANKERS ON THESE TRANSFERS. DUE TO THE HUGE INCREASE IN OI, THE BANKERS FELT IT OBLIGATORY TO RAID THE COMEX TODAY TRYING TO GET OUR MATHEMATICAL LONGS TO FALL FROM THEIR RESPECTIVE TREE.

Result: a HUGE INCREASE IN OPEN INTEREST DESPITE THE FAIR SIZED RISE IN THE PRICE OF GOLD ($10.60.) A HUGE 12,711 EFP’S ISSUED FOR A FIAT BONUS AND A DELIVERABLE FORWARD GOLD CONTRACT IN LONDON. WE HAD NO  COMEX GOLD LIQUIDATION ON FRIDAY.

.

We have now entered the NON active contract month of NOVEMBER.HERE WE HAD A LOSS OF 30 CONTRACT(S) FALLING TO 10. We had 31 notices filed YESTERDAY so GAINED 1 contracts or 100 additional oz will stand for delivery AT THE COMEX in this non active month of November. HOWEVER THESE WERE TRANSFERRED TO LONDON FOR POSSIBLE DELIVERY.

The very big active December contract month saw it’s OI SURPRISINGLY GAIN 11,015 contracts UP to 268,091  EFPS.  January saw its open interest RISE by 91 contracts UP to 875. FEBRUARY saw a gain of 14,595 contacts up to 212,722. DEMAND FOR GOLD INTENSIFIES.

 

 

 

We had 1 notice(s) filed upon today for 100 oz

 

 

VOLUME FOR TODAY : 428,049 (PRELIMINARY)

CONFIRMED VOLUME FRIDAY: 434,888 contracts.  (comex volumes are intensifying)

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And now for the wild silver comex results.

Total silver OI ROSE  BY A HUGE 5,383 CONTRACTS FROM 199,711 UP TO 205,094 WITH FRIDAY’S FAIR SIZED 24 CENT GAIN IN PRICE AND THE PIERCING OF THAT HUGE RESISTANCE LEVEL OF $17.25 . WE  HAD 1078 PRIVATE EFP’S ISSUED FOR DECEMBER AND 0 EFP’S FOR MARCH BY OUR BANKERS TO COMEX LONGS WHO RECEIVED A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON. THIS IS QUITE EARLY FOR THE ISSUANCE. USUALLY WE WITNESS THIS EVENT ONE WEEK PRIOR TO FIRST DAY NOTICE AND IT CONTINUES RIGHT UP TO FDN.  WE HAD ZERO LONG SILVER COMEX LIQUIDATION.  THE TOTAL EFP’S ISSUED TODAY TO OUR COMEX LONGS TOTAL 1078 AND THUS DEMAND FOR SILVER INTENSIFIES AGAIN

IN ANOTHER STRANGE PHENOMENA, FOR SOME UNKNOWN REASON THE PRELIMINARY OI FOR SILVER IS LOWER THAN THE FINAL OI. I WISH SOMEONE OUT THERE CAN EXPLAIN THIS!!

The new front month of November saw its OI FALL by 2 contract(s) and thus it stands at 3. We had 5 notice(s) served YESTERDAY so we gained 3 contracts or an additional 15,000 oz will stand in this non active month of November. After November we have the big active delivery month of December and here the OI FELL by ONLY 3,629 contracts DOWN to 97,984, YET WE HAD 1078 EFP’S ISSUED WHICH MEANS A GOOD PERCENTAGE OF THE ROLLOVERS LANDED INTO EFP’S.  January saw A GAIN OF 213 contracts RISING TO 1245.

We had 3 notice(s) filed for 15,000 oz for the NOV. 2017 contract

 

 

INITIAL standings for NOVEMBER

 Nov 20/2017.

Gold Ounces
Withdrawals from Dealers Inventory in oz   nil oz
Withdrawals from Customer Inventory in oz  
 3697.25
 oz
SCOTIA
115 KILOBARS
Deposits to the Dealer Inventory in oz    nil oz
Deposits to the Customer Inventory, in oz 
104,107.926
oz
HSBC
No of oz served (contracts) today
 
1 notice(s)
100 OZ
No of oz to be served (notices)
9 contracts
(900 oz)
Total monthly oz gold served (contracts) so far this month
1052 notices
105,200 oz
3.272 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  1 kilobar trans

WE HAD nil DEALER DEPOSIT:
total dealer deposits: nil oz

We had nil dealer withdrawals:
total dealer withdrawals: nil oz

we had 1 customer deposit(s):

i) Into HSBC: 104,107.926 oz

total customer deposits 104.107.926  oz

We had 1 customer withdrawal(s)

i) out of Scotia:  3697.25 oz

Total customer withdrawals: 3697.25 oz ( 155 kilobars)

we had 1 adjustment(s)

i) Out of Scotia:  15,297.480 oz was adjusted out of the dealer and this landed into the customer account of Scotia

For NOVEMBER:
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 1 contract(s) of which 0 notices were stopped (received) by j.P. Morgan dealer and 1 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 NOVEMBER. contract month, we take the total number of notices filed so far for the month (1052) x 100 oz or 105,200 oz, to which we add the difference between the open interest for the front month of NOV. (10 contracts) minus the number of notices served upon today (1 x 100 oz per contract) equals 106,100 oz, the number of ounces standing in this NON active month of NOV

Thus the INITIAL standings for gold for the NOVEMBER contract month:

No of notices served (1052) x 100 oz or ounces + {(10)OI for the front month minus the number of notices served upon today (1) x 100 oz which equals 106,100 oz standing in this active delivery month of NOVEMBER (3.30 tonnes)

WE GAINED 1 ADDITIONAL CONTRACTS OR 100 OZ OF ADDITIONAL GOLD STANDING FOR METAL AT THE COMEX

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THE COMEX GOLD CONTRACT AT AROUND THE SAME TIME AS LAST YEAR:  (NOV 22) WE HAD 199,751 GOLD CONTRACTS STANDING AND THIS COMPARES TO 269,755 TODAY . THE DIFFERENCE IS HUGE

 

ON FIRST DAY NOTICE FOR DECEMBER,  THE INITIAL  GOLD STANDING:  39.038 TONNES STANDING

BY THE END OF THE MONTH:  FINAL: 29.791 TONNES STOOD FOR COMEX DELIVERY AS THE REMAINDER HAD TRANSFERRED OVER TO LONDON FORWARDS.

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Total dealer inventory 514,112.106 or 15.999 tonnes (dealer gold continues to disappear)
Total gold inventory (dealer and customer) = 8,826,580.395 or 274.54 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 14 MONTHS 80 NET TONNES HAS LEFT THE COMEX.

end

And now for silver

AND NOW THE NOVEMBER DELIVERY MONTH

NOVEMBER INITIAL standings

AND NOW THE NOVEMBER DELIVERY MONTH
 Nov 20/ 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
 25,083.870oz
Scotia
Deposits to the Dealer Inventory
 nil oz
Deposits to the Customer Inventory 
 299,903.780
oz
BRINKS
No of oz served today (contracts)
3 CONTRACT(S)
(15,000,OZ)
No of oz to be served (notices)
0 contract
(NIL oz)
Total monthly oz silver served (contracts) 885 contracts(4,420,000 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

 

today, we had 0 deposit(s) into the dealer account:

total dealer deposit: nil oz

we had nil dealer withdrawals:
total dealer withdrawals: nil oz

we had 1 customer withdrawal(s):

i) Out of Scotia: 25,083.870 oz

TOTAL CUSTOMER WITHDRAWAL  25,-83.870 oz

We had 1 Customer deposit(s):

 

i) Into Brinks:

 

299,903.780 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: nil oz

we had 0 adjustment(s)

The total number of notices filed today for the NOVEMBER. contract month is represented by 3 contracts FOR 15,000 oz. To calculate the number of silver ounces that will stand for delivery in NOVEMBER., we take the total number of notices filed for the month so far at 884 x 5,000 oz = 4,420,0000 oz to which we add the difference between the open interest for the front month of NOV. (3) and the number of notices served upon today (3 x 5000 oz) equals the number of ounces standing.

.

Thus the INITIAL standings for silver for the NOVEMBER contract month: 884 (notices served so far)x 5000 oz + OI for front month of NOVEMBER(3) -number of notices served upon today (3)x 5000 oz equals 4,420,000 oz of silver standing for the NOVEMBER contract month. This is EXCELLENT for this NON active delivery month of November.

We gained 3 contract(s) or an additional 15,000 oz will stand for metal in the non active delivery month of November.

AS I MENTIONED ABOVE, WE HAVE BEEN WITNESSING QUEUE JUMPING IN SILVER FROM MAY 1 2017 ONWARD. IT IS NOW COMFORTING TO SEE CONSIDERABLE QUEUE JUMPING OCCURRING CONTINUALLY IN GOLD FOR THE FIRST TIME SINCE RECORDED TIME AT THE GOLD COMEX!!(1974). QUEUE JUMPING CAN ONLY OCCUR ON PHYSICAL METAL SHORTAGE.

 

AT THIS TIME LAST YEAR WE HAD 56,352 NOTICES STANDING FOR DELIVERY FOR SILVER.  THIS YEAR WITH ONE EXTRA DAY: 97,551.  

 

ON FIRST DAY NOTICE FOR THE DECEMBER CONTRACT WE HAVE 15.282 MILLION OZ STAND.

THE FINAL STANDING: 19.900 MILLION OZ AS QUEUE JUMPING INTENSIFIED.

 

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ESTIMATED VOLUME FOR TODAY: 173,740  867 MILLION OZ OR  123% OF ANNUAL SILVER PRODUCTION
CONFIRMED VOLUME FOR YESTERDAY: 124,967 CONTRACTS

YESTERDAY’S CONFIRMED VOLUME OF 124,967 CONTRACTS EQUATES TO 773 MILLION OZ OR 110% OF ANNUAL GLOBAL PRODUCTION OF SILVER

THE COMMODITY LAW SUGGESTS THAT OPEN INTEREST SHOULD NOT BE MORE THAN 3% OF ANNUAL GLOBAL PRODUCTION.  THE CROOKS ARE SUPPLYING MASSIVE PAPER TRYING TO KEEP SILVER IN CHECK.

Total dealer silver: 43.817 million
Total number of dealer and customer silver: 231.687 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

1. Central Fund of Canada: traded at Negative 2.9 percent to NAV usa funds and Negative 2.8% to NAV for Cdn funds!!!!
Percentage of fund in gold 62.2%
Percentage of fund in silver:37.5%
cash .+.3%( Nov 20/2017)

 

2. Sprott silver fund (PSLV): NAV RISES TO -0.87% (Nov 20 /2017)
3. Sprott gold fund (PHYS): premium to NAV RISES TO -0.51% to NAV (Nov 20/2017 )
Note: Sprott silver trust back into NEGATIVE territory at -0.87%-/Sprott physical gold trust is back into NEGATIVE/ territory at -0.51%/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)

END

And now the Gold inventory at the GLD

NOV 20/no change in gold inventory at the GLD/Inventory rests at 843.39 tonnes

Nov 17/no change in gold inventory at the GLD/inventory rests at 843.39 tonnes

Nov 16./NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 843.39 TONNES

Nov 15./no change in gold inventory at the GLD/inventory rests at 843.09 tonnes

NOV 14/a small deposit of .300 tonnes into the GLD inventory/Inventory rests at 843.39 tonnes

Nov 13/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 843.09 TONNES

Nov 10/no change in gold inventory at the GLD/Inventory rests at 843.09 tonnes

Nov 9/no changes in inventory at the GLD/Inventory rests at 843.09 tonnes

NOV 8/ANOTHER HUGE WITHDRAWAL OF 1.18 TONNES OF GOLD FROM THE GLD DESPITE GOLD’S RISE TODAY. INVENTORY RESTS AT 843.09

Nov 7/a huge withdrawal of 1.48 tonnes of gold from the GLD/Inventory rests at 844.27 tonnes

NOV 6/ a tiny withdrawal of .29 tonnes to pay for fees etc/inventory rests at 845.75 tonnes

Nov 3/no change in gold inventory at the GLD/Inventory rests at 846.04 tonnes

NOV 2/STRANGE!!! WE HAD ANOTHER WITHDRAWAL OF 3.55 TONNES FROM THE GLD DESPITE GOLD’S RISE OF $6.60 YESTERDAY AND $1.55 TODAY/INVENTORY RESTS AT 846.04 TONNES

Nov 1/a withdrawal of 1.18 tonnes of gold from the GLD/Inventory rests at 849.59 tonnes

OCT 31/no change in gold inventory at the GLD/Inventory rests at 850.77 tonnes

Oct 30/STRANGE WITH GOLD UP THESE PAST TWO TRADING DAYS, THE GLD HAS A WITHDRAWAL OF 1.18 TONNES FROM ITS INVENTORY/INVENTORY RESTS AT 850.77 TONES

Oct 27/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 851.95 TONNES

Oct 26./A WITHDRAWAL OF 1.18 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 851.95 TONNES

Oct 25/NO CHANGE (SO FAR) IN GOLD INVENTORY/INVENTORY RESTS AT 853.13 TONNES

Oct 24./no change in gold inventory at the GLD/inventory rests at 853.13 tonnes

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

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Nov 20/2017/ Inventory rests tonight at 843.39 tonnes

*IN LAST 275 TRADING DAYS: 97.56 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 210 TRADING DAYS: A NET 59,72 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.
*FROM FEB 1/2017: A NET 28.61 TONNES HAVE BEEN ADDED.

end

Now the SLV Inventory

NOV 20/no change in silver inventory at the SLV/inventory rests at 318.074 million oz

Nov 17/no change in silver inventory at the SLV/inventory rests at 318.074 million oz/

Nov 16./NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 318.074 MILLION OZ/

Nov 15./no change in silver inventory at the SLV/inventory rests at 318.074 tones

NOV 14/no change in silver inventory at the SLV/Inventory rests at 318.074 tonnes

Nov 13/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 318.074 MILLION OZ

Nov 10/no change in silver inventory at the SLV/Inventory rests at 318.074 million oz/

Nov 9/no change in silver inventory at the SLV/inventory rests at 318.074 million oz.

NOV 8/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 318.074 MILLION OZ

Nov 7/a huge withdrawal of 944,000 oz from the SLV/inventory rests at 318.074 million oz/

NOV 6/no change in silver inventory at the SLV/Inventory rests at 319.018 million oz/

Nov 3/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS TONIGHT AT 319.018 MILLION OZ.

NOV 2/A TINY LOSS OF 137,000 OZ BUT THAT WAS TO PAY FOR FEES LIKE INSURANCE AND STORAGE/INVENTORY RESTS AT 319.018 MILLION OZ/

Nov 1/STRANGE! WITH SILVER’S HUGE 48 CENT GAIN WE HAD NO GAIN IN INVENTORY AT THE SLV/INVENTORY RESTS AT 319.155 MILLION OZ/

Oct 31/no change in silver inventory at the SLV/Inventory rests at 319.155 million oz

Oct 30/STRANGE!WITH SILVER UP THESE PAST TWO TRADING DAYS, WE HAD A HUGE WITHDRAWAL OF 1.133 MILLION OZ FROM THE SLV/INVENTORY RESTS AT 319.155 MILLION OZ/

Oct 27/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 320.288 MILLION OZ

Oct 26/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 320.288 MILLION OZ/

Oct 25/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 320.288 MILLION OZ

Oct 24/no change in inventory at the SLV/inventory rests at 320.288 million oz/

oCT 23./STRANGE!!WITH SILVER RISING TODAY WE HAD A HUGE WITHDRAWAL OF 1.039 MILLION OZ/inventory rests at 320.288 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

Nov 17/2017:

Inventory 318.074 million oz

end

6 Month MM GOFO
Indicative gold forward offer rate for a 6 month duration

+ 1.57%
12 Month MM GOFO
+ 1.78%
30 day trend

end

 

end

Major gold/silver trading/commentaries for MONDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

Money and Markets Infographic Shows Silver Most Undervalued Asset

Money and Markets Infographic Shows Silver Most Undervalued Asset

– Silver remains severely under owned and under valued asset
– Entire silver market worth tiny $100 billion shown in one tiny square
– “All of the World’s Money and Markets in One Visualization”

– Must see ‘Money and Markets’ infographic shows relative size of key markets: silver bullion, gold bullion, cryptocurrencies/ bitcoin, largest companies, 50 richest people, Fed balance sheet, currency, stocks, property, cash, debt & derivatives
– Small allocation by investors and world’s richest will see silver surge like bitcoin

Click to enlarge. Source: Visual Capitalist

by Visual Capitalist

Millions, billions, and trillions…

When we talk about the giant size of Apple, the fortune of Warren Buffett, or the massive amount of global debt accumulated – all of these things sound large, but they are actually extremely different in magnitude.

That’s why visualizing things spatially can give us a better perspective on money and markets.

HOW MUCH MONEY EXISTS?

This infographic was initially created to show how much money exists in its different forms. For example, to highlight how much physical cash there is in comparison to broader measures of money which include saving and checking account deposits.

Interestingly, what is considered “money” depends on who you are asking.

Are the abstractions created by Central Banks really money? What about gold, bitcoins, or other hard assets?

A NEW MEANING

However, since we first released this infographic in 2015, “All the World’s Money and Markets” has taken on a different meaning to us and many others. It’s a way of simplifying a complex universe of currencies, assets, and other financial instruments in a way that people can understand.

Numbers represented in the data visualization range from the size of the above-ground silver market ($17 billion) to the notional value of all derivatives ($1.2 quadrillion as a high-end estimate). In between those two extremes, we’ve added many other familiar measures, such as the GDP of California, the value of equities, the real estate market, along with different money supply metrics to give perspective.

The end result? A visually pleasing, but enlightening new way to understand the vast universe of global assets.

All of the World’s Money and Markets in One Visualization via Visual Capitalist


Related Content

Silver Very Undervalued from Historical Perpective of Ancient Greece

Silver Production Has “Huge Decline” In 2nd Largest Producer Peru

Silver Bullion Prices Set to Soar

News and Commentary

Gold holds near one-month peak despite firmer dollar (Reuters.com)

Euro Drops as German Talks Fail; Asian Stocks Slip (Bloomberg.com)

Fed readiness to raise rates next month and a wariness about next recession (MarketWatch.com)

Bitcoin Soars Past $8,000 as Technology Shift Concern Vanishes (Bloomberg.com)

Gold smugglers now prefer Europe over Gulf countries: Customs (IndiaTimes.com)

Source: Bloomberg

Prepare to bet against bitcoin as it becomes civilised – Tett (FT.com)

Gold Price Suppression – Zero Hedge invites Financial Times to heed GATA (ZeroHedge.com)

Gold Versus Bitcoin: The Pro-Gold Argument Takes Shape (GoldSeek.com)

Upsurge in big earthquakes predicted for 2018 as Earth rotation slows (ZeroHedge.com)

Arab League Holds Emergency Session: Iran And “Terrorist” Hezbollah Must Be Stopped (ZeroHedge.com)

Gold Prices (LBMA AM)

20 Nov: USD 1,292.35, GBP 974.82 & EUR 1,096.43 per ounce
17 Nov: USD 1,283.85, GBP 969.31 & EUR 1,088.19 per ounce
16 Nov: USD 1,277.70, GBP 969.01 & EUR 1,085.53 per ounce
15 Nov: USD 1,285.70, GBP 976.62 & EUR 1,086.29 per ounce
14 Nov: USD 1,273.70, GBP 972.47 & EUR 1,086.59 per ounce
13 Nov: USD 1,278.40, GBP 977.59 & EUR 1,097.89 per ounce
10 Nov: USD 1,284.45, GBP 976.44 & EUR 1,102.19 per ounce

Silver Prices (LBMA)

20 Nov: USD 17.15, GBP 12.94 & EUR 14.56 per ounce
17 Nov: USD 17.09, GBP 12.95 & EUR 14.49 per ounce
16 Nov: USD 17.04, GBP 12.92 & EUR 14.48 per ounce
15 Nov: USD 17.12, GBP 13.00 & EUR 14.45 per ounce
14 Nov: USD 16.94, GBP 12.92 & EUR 14.45 per ounce
13 Nov: USD 16.93, GBP 12.93 & EUR 14.53 per ounce
10 Nov: USD 17.00, GBP 12.92 & EUR 14.60 per ounce


Recent Market Updates

– Is New Fed Chief A “Swamp Critter Extraordinaire”?
– Deepening Crisis In Hyper-inflationary Venezuela and Zimbabwe
– UK Debt Crisis Is Here – Consumer Spending, Employment and Sterling Fall While Inflation Takes Off
– Protect Your Savings With Gold: ECB Propose End To Deposit Protection
– Internet Shutdowns Show Physical Gold Is Ultimate Protection
– Gold Coins and Bars Saw Demand Rise 17% to 222T in Q3
– Prepare For Interest Rate Rises And Global Debt Bubble Collapse
– Platinum Bullion ‘May Be One Of The Only Cheap Assets Out There’
– World’s Largest Gold Producer China Sees Production Fall 10%
– German Investors Now World’s Largest Gold Buyers
– Gold Price Reacts as Central Banks Start Major Change
– Why Switzerland Could Save the World and Protect Your Gold
– Invest In Gold To Defend Against Bail-ins

Gold trading today:

 

As promised, the crooks dumped $2 billion dollars of un backed paper gold to suppress its price

(courtesy zerohedge)

Gold Drops To Key Technical Support After $2 Billion Purge

After surging above its 50-day moving-average on Friday, it appears someone is keen for that key technical level not to hold as they dumped almost $2 billion notional in seconds this morning, testing down to the 50DMA (but holding for now).

15,000 contracts dumped in under two minutes… but for now the 50DMA is holding…

 

The Dollar Index has been flying around after the Merkel headlines over the weekend…

end

 

Financial times editor Gillian Tett writes that the new futures market for Bitcoin will causes its price suppression in exactly the same form as gold/silver.  Chris Powell and zero hedge urges Tett to write about the gold suppression scheme instead of tackling bitcoin

 

(courtesy zerohedge/Gillian Tett/London’s Financial Times/Chris Powell/Gata)

Zero Hedge invites Financial Times to heed GATA’s urging on gold suppression

 Section: 

12:56p ET Saturday, September 18, 2017

Dear Friend of GATA and Gold:

Last night Zero Hedge called attention to Friday’s column by Gillian Tett of the Financial Times, to which GATA also had called attention —

http://www.gata.org/node/17808

— in which Tett speculated, as many in the gold sector have done, that the futures market being planned in bitcoin by CME Group would tend to suppress the cryptocurrency’s price.

Of course the use of futures markets to suppress gold and commodity prices has been one of GATA’s themes for a long time, and a theme of the British economist Peter Warburton for even longer:

http://www.gata.org/node/8303

So Zero Hedge concluded its post last night by suggesting that Tett now pursue the gold price suppression angle, noting that GATA has been urging just that on the FT for quite a while.

Zero Hedge wrotes: “According to the Reserve Bank of India’s estimate, the ratio of ‘paper gold’ trading to physical gold trading is 92 to 1, meaning that the price of gold on the screens has almost nothing to do with the buying and selling of physical gold.

“This makes the gold market and, therefore, the gold price something of a mockery. As Zero Hedge has highlighted time after time, the gold price has frequently been subject to waterfall declines, as huge volumes of gold futures are dumped on the market with no regard for price. …

“Perhaps the FT journalist, Gillian Tett, could write an article on gold, instead of bitcoin, explaining how the price of the former — a widely viewed indicator of financial risk — is being suppressed by derivative trading. Indeed, Tett was present at a private dinner in Scott’s of Mayfair several years ago when the Gold Anti-Trust Action Committee gave a presentation on exactly the same process she expects to lower the bitcoin price.”

Zero Hedge’s commentary is headlined “Financial Times: Sell Bitcoin Because the Market Is about to Become ‘Civilized'” and it’s posted here:

http://www.zerohedge.com/news/2017-11-17/financial-times-sell-bitcoin-be…

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

 

END

 

Our monetary metals gold and silver are holding up rather well despite the constant raids

 

(courtesy Sprott/GATA)

Monetary metals holding up well despite raids, Sprott says

 Section: 

11:23a ET Sunday, November 19, 2017

Dear Friend of GATA and Gold:

Mining entrepreneur Eric Sprott, just back from Australia, was interviewed Friday by Craig Hemke for Sprott Money and reflected on last week’s activity in the monetary metals. Sprott says bitcoin is making currencies look weak even as gold and silver suffer short-selling in the futures markets, but the monetary metals are holding up well despite the raids against them.

Sprott adds that the U.S., U.K., and Canadian economies are far weaker than generally portrayed, with real wages stagnant and more inflation than government data admits. In these circumstances, Sprott says, increases in interest rates would not make much sense.

The interview is 10 minutes long and can be heard at the Sprott Money internet site here:

https://soundcloud.com/sprottmoney/sprott-money-news-weekly-wrap-up-1117…

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

END

 

You can now pay for goods in gold with this new gold based debit card

 

(Dunkley/London’s Financial Times/GATA)

Gold-based debit card Glintpay gets started

 Section: 

Glint App Brings Gold into the Digital Age

By Emma Dunkley
Financial Times, London
Sunday, November 19, 2017

The world’s oldest currency is being brought into the digital age with the launch of a debit card and app that will allow people to pay for goods in gold.

Fintech group Glint (http://glintpay.com) has teamed up with Lloyds Banking Group in the UK and MasterCard to create an app that enables people to load credit in various currencies, which can then be used to buy a portion of a physical gold bar. Customers use the app at the checkout to select whether to pay in a currency or gold, before transacting with their MasterCard.

… The development marks the first time people in the UK and overseas can own just a portion of a gold bar through an app, which can then be used in mobile and debit card-based payments. The app also allows people to send gold to peers in the form of a digital payment. …

Glint’s new service is riding the wave of alternative payments, such as bitcoin, as more people seek payment methods that can store value in a way that differs from traditional currencies.

Ben Davies, a co-founder of Glint, said: “We want to create a fairer form of money whereby we give you choice and control over how you protect your money in an era where central banks issue more currency, and so the value of your currency is falling.”

Glint is working with Lloyds in the UK as the deposit holder for customers storing money on their app. When a customer decides to buy gold through the app, this is used to purchase part of a gold bar that is physically allocated in vaults in Switzerland. …

… For the remainder of the report:

https://www.ft.com/content/cb177256-cd1b-11e7-9dbb-291a884dd8c6

END

Golden Catalysts

 An excellent commentary by James Rickards. As you all know, I refuse to use charts especially when manipulation is everywhere.  However long term charts can be interesting.  Take a look at the 10 yr gold chart.  It is now in a funnel and is about to break out
(courtesy James Rickards/Daily Reckoning)

Authored by James Rickards via The Daily Reckoning,

The physical fundamentals are stronger than ever for gold.

Russia and China continue to be huge buyers. China bans export of its 450 tons per year of physical production.

Gold refiners are working around the clock and cannot meet demand.

Gold refiners are also having difficulty finding gold to refine as mining output, official bullion sales and scrap inflows all remain weak.

Private bullion continues to migrate from bank vaults at UBS and Credit Suisse into nonbank vaults at Brinks and Loomis, thus reducing the floating supply available for bank unallocated gold sales.

In other words, the physical supply situation has been tight as a drum.

The problem, of course, is unlimited selling in “paper” gold markets such as the Comex gold futures and similar instruments.

One of the flash crashes this year was precipitated by the instantaneous sale of gold futures contracts equal in underlying amount to 60 tons of physical gold. The largest bullion banks in the world could not source 60 tons of physical gold if they had months to do it.

There’s just not that much gold available. But in the paper gold market, there’s no limit on size, so anything goes.

There’s no sense complaining about this situation. It is what it is, and it won’t be broken up anytime soon. The main source of comfort is knowing that fundamentals always win in the long run even if there are temporary reversals. What you need to do is be patient, stay the course and buy strategically when the drawdowns emerge.

Where do we go from here?

There are many compelling reasons why gold should outperform over the coming months.

Deteriorating relations between the U.S. and Russia will only accelerate Russia’s efforts to diversify its reserves away from dollar assets (which can be frozen by the U.S. on a moment’s notice) to gold assets, which are immune to asset freezes and seizures.

The countdown to war with North Korea is underway, as I’ve explained repeatedly in these pages. A U.S. attack on the North Korean nuclear and missile weapons programs is likely by mid-2018.

Finally, we have to deal with our friends at the Fed. Good jobs numbers have given life to the view that the Fed will raise interest rates next month. The standard answer is that rate hikes make the dollar stronger and are a head wind for the dollar price of gold.

But I remain skeptical about a December hike. As I explained above, the market is looking in the wrong places for clues to Fed policy. Jobs reports are irrelevant; that was “mission accomplished” for the Fed years ago.

The key data are disinflation numbers. That’s what has the Fed concerned, and that’s why the Fed might pause again in December as it did last September.

We’ll have a better idea when PCE core inflation comes out Nov. 30.

Of course, the Fed’s main inflation metric has been moving in the wrong direction since January. The readings on the core PCE deflator year over year (the Fed’s preferred metric) were:

January 1.9%

February 1.9%

March 1.6%

April 1.6%

May 1.5%

June 1.5%

July 2017: 1.4%

August 2017: 1.3%

September 2017: 1.3%

Again, the October data will not be available until Nov. 30.

The Fed’s target rate for this metric is 2%. It will take a sustained increase over several months for the Fed to conclude that inflation is back on track to meet the Fed’s goal.

There’s obviously no chance of this happening before the Fed’s December meeting.

A weak dollar is the Fed’s only chance for more inflation. The way to get a weak dollar is to delay rate hikes indefinitely, and that’s what I believe the Fed will do.

And a weak dollar means a higher dollar price for gold.

Current levels look like the last stop before $1,300 per ounce. After that, a price surge is likely as buyers jump on the bandwagon, and then it’s up, up and away.

Why do I say that?

There’s an old saying that “a picture is worth a thousand words.” This chart is a good example of why that’s true:

Gold Breakout Chart

Gold analyst Eddie Van Der Walt produced this 10-year chart for the dollar price of gold showing that gold prices have been converging into a narrow tunnel between two price trends – one trending higher and one lower – for the past six years.

This pattern has been especially pronounced since 2015. You can see gold has traded up and down in a range between $1,050 and $1,380 per ounce. The upper trend line and the lower trend line converge into a funnel.

Since gold will not remain in that funnel much longer (because it converges to a fixed price) gold will likely “break out” to the upside or downside, typically with a huge move that disrupts the pattern.

At the extreme, this could imply a gold price on its way to $1,800 or $800 per ounce. Which will it be?

The evidence overwhelmingly supports the thesis that gold will break out to the upside. Central banks are determined to get more inflation and will flip to easing policies if that’s what it takes.

Geopolitical risks are piling up from North Korea, to Saudi Arabia, to the South China Sea and beyond.

The failure of the Trump agenda has put the stock market on edge and a substantial market correction may be in the cards. Acute shortages of physical gold have also set the stage for a delivery failure or a short squeeze.

Any one of these developments is enough to send gold soaring in response to a panic or as part of a flight to quality. The only force that could take gold lower is deflation, and that is the one thing central banks will never allow. The above chart is one of the most powerful bullish indicators I’ve ever seen.

Get ready for an explosion to the upside in the dollar price of gold. Make sure you have your physical gold and gold mining shares before the breakout begins.

end

 

Bitcoin soars above $8,000 on the refusal of Mugabe to resign

 

(courtesy zerohedge)

Bitcoin Soars To Record High Above $8000 After Mugabe Speech

With Bitcoin trading at $13,499 on Golix, the chaotic environment in Zimbabwe has spread to the global price of the cryptocurrency driving it beyond $8000 for the first time in history as President Mugabe fails to resign in a national address following the nation’s coup.

It appears many Zimbabweans have found an alternate way to store/transfer wealth away from Mugabe’s prying (and confiscatory) eyes.

In September we noted the hyperbitcoinization occurring in Zimbabwe. In October, Zimbabwe demand started to impact the global price of the cryptocurrency, and two weeks ago we noted the doubling of the price of Bitcoin in Zimbabwe as uncertainty about the nation’s stability sent citizens into a decentralized currency that was out of Mugabe’s reach.

image courtesy of CoinTelegraph

Now, after the ‘successful’ military coup but failure of Mugabe to resign – as expected – Bitcoin is trading at over $13,499 on Zimbabwe exchange Golix – a premium of over 80% over the USD exchange price as demand surged.

As CoinTelegraph reports, the Zimbabwean army assaulted Harare on November 14 following a week of confrontation with the administration of President Robert Mugabe. According to the army, the move was aimed at preventing an expected violent and deadly civil war in the country. Mugabe has been the country’s head since 1980.

Due to the political crisis, the demand for Bitcoin in the country has skyrocketed to new highs because of a shortage of hard currency. The situation was exacerbated by the lack of national currency in Zimbabwe. In 2009, the country’s government adopted several fiat currencies like the US dollar and South African rand as a legal tender after hyperinflation turned the local dollar virtually worthless.

According to Golix, it has processed over $1 million worth of transactions in the past 30 days, a sharp increase from its turnover of $100,000 for the entire year of 2016.

According to Golix co-owner Taurai Chinyamakobvu, the prices for Bitcoin are determined by supply and demand. The sellers of the digital currency are paid in US dollars that are deposited electronically. The money, however, can only be converted into hard cash at a sizeable discount on the black market.

On November 15, an “electronic” dollar can purchase around eight South African rands, compared with the market exchange rate of 14.32 rands.

image courtesy of CoinTelegraph

According to a local trader, bitcoin isn’t just being bought by individuals, but by businesses with bills to pay.

Bitcoin, as every bitcoiner would expect, is helping people in the country survive times of economic uncertainty, as Zimbabwe has been embroiled in a crisis for years.

*  *  *

As CoinTelegraph noted previously, Zimbabwe is beginning to act like an interesting case study for what happens when a country begins to collapse around its monetary system – it is also being witnessed in Venezuela.

Moving money out of Zimbabwe is starting to become impossible, and as people try and flee monetarily out of the crumbling state, they are finding refuge in Bitcoin.

Soon, banks in Zimbabwe have stated that Visa debit cards would no longer be usable for international payments without prior arrangements and pre-funding with hard currency.

“You will be required to make prior limit arrangements with the bank,” Stanbic said in a message to depositors last week.

Econet Wireless has also stopped foreign payments on its MasterCard linked EcoCash mobile money debit card.

Bitcoin as a refuge

Because of the decentralized nature of Bitcoin, there is no impact on it from this political upheaval, in fact, it is only benefiting from it. The Bitcoin premium of almost 100 percent is not because of the political issues, rather the high demand surrounding worry of collapse.

Bitcoin again shows its potential and power when the banking system again shows its potential for mass collapse and hysteria.

end

Wow@@!!  only 39% think that Bitcoin price is in a bubble

(courtesy zero hedge)

As Bitcoin Tops $8,200, Only 39% Of Survey Respondents Say It’s A Bubble

Having first surged above $8000 overnight amid Zimbabwe’s chaos, it appears uncertainty in the core of Europe has driven further demand for cryptocurrencu protection, sending Bitcoin to a new record high of $8247 – up 50% from the ‘Bitcoin Cash’ crash weekend lows.

image courtesy of CoinTelegraph

As CoinTelegraph reports, the latest milestone for Bitcoin, which came following news the first Bitcoin-to-Litecoin Lightning Network ‘atomic swap’ successfully debuted, caps its comeback after Bitcoin Cash volatility.

BTC currently has a market cap of almost $134 bln against a cross-crypto combined cap of just under $240 bln, both numbers representing new records.

 

Bitcoin’s dominance has also recovered over the past few days to top 56 percent of the market after struggling to maintain supremacy as BCH caused considerable fluctuations.

 

BCH itself has come down off previous highs to languish around $1,200 – around 50 percent of its best prices. Staunch proponents of the Bitcoin fork as the ‘real Bitcoin’ are currently locked in a forking battle of their own as two strands of BCH emerged last week.

 

The product of a “malicious fork,” Bitcoin Clashic now represents the original Bitcoin Cash or developers describe it, “Satoshi’s true vision.”

As major supporter Roger Ver’s Bitcoin.com continues to point new users towards BCH, however, the Bitcoin community is coming out in increasing support of naive newcomers potentially unaware that BCH is not in fact Bitcoin.

 

Welcome to Bitcoin, newcomers! Here’s your FAQ:

Q: Who should I trust?
A: Nobody.

Q: When should I sell?
A: Never.

Q: Is Bitcoin dying because ____?
A: No.

Q: What have I gotten myself into?
A: Nobody knows.

Q: How do I learn more?
A: https://lopp.net/bitcoin.html 

For once the rest of the crypto space is not being sold to fund Bitcoin buys…

“The inflation in this thing is massive,” Luke Hickmore, a senior investment manager at Aberdeen Standard Investments in London, said in an interview with Bloomberg TV.

 

“When will it collapse? Who knows. It will cause a lot of pain.”

But there are some traders who are noting the worrying divergence between price action and volume in the latest surge

“I find it remarkable and somewhat frightening how, no matter how much Bitcoin is pummelled by sellers, it simply bounces back even stronger,” said Lukman Otunuga, an analyst at currency brokerage ForexTime Ltd.

 

“Will bitcoin hit $10,000 before year end? This is the question every investor is asking.”

A recent survey by Nicholas Colas at DataTrek Reserach, done in conjunction with Triad Securities Corp…

The results of our bitcoin survey are in! We got over 300 responses, and there are three key takeaways from the data.

First, less than half of respondents (39%) think bitcoin is a bubble.

 

Second, there are still plenty of fence sitters, with more individuals who have considered a purchase than already invested.

 

Lastly, the median estimate for where bitcoin will end the year is below where it trades today ($7,800). Apparently Santa Claus rallies haven’t reached the crypto currency world just yet.

Here is a summary of the results and our comments:

Question: Where will bitcoin close the year (2017)?

  • Average response: $7,381
  • Median response: $7,800
  • Standard Deviation of Responses: $2,555

Our comments: As expected, we had a wide range of responses here.Overall, the wisdom of this particular crowd says bitcoin may be range-bound through the end of the year. Still, with a standard deviation of $2,500, it could top $10,000 or drop close to $5,000 and still be within one sigma of the distribution.

Question: Where is bitcoin going?

  • This is a bubble – it must crash: 39.4%
  • Continue to rise at a much slower pace: 27.1%
  • Value doubles in the next 6 months or sooner: 16.4%
  • Don’t know/no opinion: 17.0%

Our comments: we were surprised the bubble response was less than 40% given widespread commentary in that direction and the age/experience of the respondents. By age, at least, our survey takers has seen their fair share of bubbles. We were ready to see +70% responses indicate bitcoin’s price is unsustainable. Less than 40% is, well, remarkable.

“Have you ever bought bitcoin or other crypto currencies?”

  • Yes, but only in the last 6 months: 14.5%
  • Yes, and I have been involved for +6 months: 16.7%
  • No, never: 30.9%
  • No, but I have considered it: 36.3%
  • No, and I am unfamiliar with bitcoin/cryptos: 1.6%

Our comments: there are still plenty of fence sitters here, with those who have considered purchasing (36%) outnumbering those that have bought (31%). The big question is if they are waiting for a pullback, or further gains?

“Would you ever see bitcoin as a safe haven similar to gold?”

  • Yes: 40.7%
  • No: 42.9%
  • Don’t know, no opinion: 16.4%

Our comments: this may be the most surprising finding of the survey. Even with widely reported wallet hacks and other systematic challenges, 41% of respondents think bitcoin can become something akin to gold as an investment safe haven.

Do you see bitcoin as a hedge against monetary policy?

  • Yes: 39.1%
  • No: 43.2%
  • Don’t know/no opinion: 17.7%

Our comments: almost as surprising as the gold question, these responses show a sizeable minority believe bitcoin’s algorithm-driven limited supply can act as a non-correlated buffer against central bank policy.

Have you ever participated in an Initial Coin Offering or looked at such opportunities?

  • Yes, and I have invested: 7.9%
  • No, but I have considered investing: 29.0%
  • No, and I won’t without more regulation: 14.8%
  • No, and I have not looked at these offerings: 48.3%

Our comments: over a third of respondents have looked at or invested in ICOs. Not bad for a fund raising approach that is just a few years old. And over half might consider ICOs if/when the regulatory framework improves.

If you look at ICOs, how do you assess these opportunities?

  • The three most popular answers, in order: Founders/Key Employees, Total Addressable Market, and Sector Addressed
  • Less popular: Token type, Deal Pricing and Time to Market

Our comments: no surprise here, with ICO investors looking at exactly the same issues as venture capitalists.

What is your level of confidence in current bitcoin custodial offerings?

  • High: 9.1%
  • Medium: 29.7%
  • Low: 25.9%
  • Don’t know/no opinion: 30.0%
  • I prefer traditional custodians: 5.4%

Our comments: this is a critical issue for institutional investors. In order for crypto currencies to achieve true “Asset class” status, investor confidence in custodial solutions has to improve.

What is your level of confidence in crypto asset liquidity?

  • High: 7.9%
  • Medium: 39.7%
  • Low: 31.2%
  • Don’t know/no opinion: 21.1%

Our comments: same thoughts here as the previous point. While respondents may feel marginally better about crypto liquidity, over half rate their confidence here as low or they just don’t know enough to judge.

Our final thoughts on the data presented:

  • Institutional investors are taking bitcoin/cryptos seriously. If you’ve ever run an in-depth survey, you know getting 300 responses is difficult. The fact that we got even more shows there is tremendous interest in bitcoin and crypto currencies.
  • Initial Coin Offerings are getting real attention as well. Investors already understand the due diligence process here – it is the same as venture-stage investing. Custody and liquidity across the crypto space do need to improve, however.
  • A sizeable minority of respondents (39 – 40%) see bitcoin as a potential analog to physical gold, both as a safe haven and a hedge against mistakes in central bank monetary policy. Until blockchain technology becomes more widespread, that is probably the best way to consider buyers’ motivation for bitcoin.
Bill Holter’s latest interview:

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 UP AT 6.6318/shanghai bourse CLOSED UP AT 9.49 POINTS .28% / HANG SANG CLOSED UP 61.27 POINTS OR 0.21%
2. Nikkei closed DOWN 135.04 POINTS OR 0.60% /USA: YEN RISES TO 112.21

3. Europe stocks OPENED GREEN  /USA dollar index RISES TO 93.78/Euro FALLS TO 1.1779

3b Japan 10 year bond yield: RISES TO . +.038/ GOVERNMENT INTERVENTION !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 112.21/ 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:: 56.24  and Brent: 61.97

3f Gold DOWN/Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO +.360%/Italian 10 yr bond yield UP to 1.829% /SPAIN 10 YR BOND YIELD UP TO 1.548%

3j Greek 10 year bond yield RISES TO : 5.263???

3k Gold at $1291.95 silver at:17.19: 6 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50

3l USA vs Russian rouble; (Russian rouble DOWN 40/100 in roubles/dollar) 59.43

3m oil into the 56 dollar handle for WTI and 61 handle for Brent/

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation. 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 REVALUATION NORTHBOUND

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 112.21 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 0.9909 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1674 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 +0.360%

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 2.339% early this morning. Thirty year rate at 2.777% /

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

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

What German Political Turmoil? Global Markets BTFD, Don’t Look Back

US index futures are unchanged, having recovered virtually all overnight session losses alongside the EURUSD following Merkel’s failure to form a government, while European shares rise despite Angela Merkel’s failure to form a new government. In the span of just hours, the goalseeked “hot take” consensus was that Germany’s collapsed coalition talks aren’t expected be a deal breaker for European equities due to the “strength of the German economy.”

As we pointed out earlier, the euro reversed losses as the London session unwound a sell-off in Asian time exacerbated by thin liquidity, while early strength in bunds was also faded. According to Citi, there were 3 possible reasons for the brief dip and subsequent strong rebound: 1. Merkel’s failure was already discounted; 2. The market was positioned short ahead of the announcement; 3. There is too little clarity to trade.

The Bloomberg Dollar Spot Index shed gains and stood little changed as the pound found a steady bid amid optimism that the U.K. is willing to move toward EU demands on a Brexit divorce bill.

The Stoxx Europe 600 Index rose as Germany’s DAX rebounded from a seven-week low; the Stoxx 600 rose 0.3% while Germany’s benchmark DAX Index climbed 0.2%; DAX futures earlier were down nearly -1%, on concerns surrounding the failed coalition talks in the country. Among European stocks, Automakers and health-care shares outperform after Volkswagen raised sales forecasts, while insurers are worst decliners on the European gauge. European equity traders and analysts say that the political uncertainty in Germany will likely not serve as a trigger for a broader market correction.

Still, some were concerned: You can imagine this will be bearish for the euro, at least in the tactical near-term, while the market comes to grips with what’s going on and will take a look at what her options are,” Kay Van-Petersen, global macro strategist at Saxo Capital Market, said in an interview with Bloomberg Television. “I’m fairly confident though that she’ll be able to come up with a different coalition at some point over the next few weeks.”

Asia began the week subdued following the losses on Wall St. last Friday and with focus on political uncertainty after Trump campaigners were subpoenaed and German coalition talks broke down. Japanese sentiment was dampened by a firmer JPY and a miss on trade data. Hang Seng (+0.3%) and Shanghai Comp. (+0.3%) were initially negative with underperformance in the mainland as Shenzhen stocks resumed Friday’s sell off and amid reports that China tightened asset management rules to curb risky lending. However, prices then recovered heading into the close as markets took a closer look at plans to curb shadow banking. Finally, 10yr JGBs were uneventful with prices flat, as demand from the dampened risk appetite in the region was counterbalanced by the absence of a BoJ Rinban announcement.

The recent pause in the relentless global rally which only cost central banks $2 trillion in liquidity in 2017 comes as investors gauge whether there are sufficient drivers to continue the march to historic highs. Solid earnings are offset by record valuations in virtually all markets, meanwhile red warning signs are being issued by the flattening U.S. yield curve: on Friday, the 2s10s again hit the tightest level in a decade, adding to concern about the pace of future economic growth.

On the domestic agenda where recent euphoria was boosted by the momentum of GOP tax reform, over the weekend, Treasury Secretary Steven Mnuchin said he can’t guarantee Congress would preserve tax cuts (let Congress pass them first before worrying about preserving them), while Senator Susan Collins said the Senate tax plan passed by Committee needs work.

In international geopolitics, German coalition talks broke down after FDP pulled out of discussions with German Chancellor Merkel’s conservatives due to unrealistic differences. S&P affirmed Switzerland at AAA; Outlook Stable and affirmed Netherlands at AAA; Outlook Stable. UK Chancellor Hammond stated that UK is on the brink of serious progress in Brexit discussions, while he also stated the UK will finally begin to see a reduction in public debt and that they will seek to curb health service measures in a balanced way. Reports further suggested that Hammond has put PM May under pressure to promise more money for the Brexit “divorce bill” by suggesting an improved offer will be made to Brussels within three weeks; an offer that the Times believe will be unveiled today.

The dollar was steady, while West Texas oil held above $56 a barrel. Meanwhile, pound and gilts traders will focus on a potential downgrade to the U.K. growth outlook this week and the government’s efforts toward agreeing a Brexit divorce bill. Sterling was boosted on Monday by reports that the U.K. was preparing to make an enhanced divorce bill offer to the EU ahead of crucial talks starting next month.

South Korea spy agency says North Korea can conduct nuke test at anytime, although there is no sign of an imminent test according to reports in Yonhap, reports also suggest that the North conducted engine tests.

This week may see lower than normal volumes due to the Thanksgiving holiday in the U.S. Minutes from the Reserve Bank of Australia’s November meeting are due Tuesday, while those from the European Central Bank’s October meeting due out on Thursday could show dissent in the discussion about tapering. Federal Reserve Chair Janet Yellen gives a talk at New York University. Later in the week, reports on sales of previously owned homes and durable goods orders for October are due in the U.S. The minutes from the Fed’s latest policy meeting are out on Wednesday. Market participants will gauge Fed officials’ eagerness to boost the benchmark interest rate in December, which is widely expected by the market. On Wednesday, the U.K. announces its budget Wednesday; that could see a significant economic downgrade amid a continued impasse in its negotiations with the EU on Brexit.

Bulletin Headline Summary from RanSquawk

  • German concerns short – lived with EUR paring back losses seen in the wake of coalition talks breaking down
  • Weekend press reports in the UK suggest that UK PM May could be on the cusp of  promising more money to the  EU in order settle the “Brexit Bill”
  • Looking ahead, highlights include potential comments from ECB’s Lautenschlaeger, Draghi, Constancio and BoE’s Ramsden

Market Snapshot

  • S&P 500 futures down 0.1% to 2,572.25
  • MSCI Asia down 0.07% to 170.29
  • MSCI Asia ex Japan up 0.09% to 559.78
  • Nikkei down 0.6% to 22,261.76
  • Topix down 0.2% to 1,759.65
  • Hang Seng Index up 0.2% to 29,260.31
  • Shanghai Composite up 0.3% to 3,392.40
  • Sensex up 0.2% to 33,396.87
  • Australia S&P/ASX 200 down 0.2% to 5,945.67
  • Kospi down 0.3% to 2,527.67
  • STOXX Europe 600 up 0.01% to 383.85
  • German 10Y yield rose 0.4 bps to 0.365%
  • Euro up 0.08% to $1.1799
  • Italian 10Y yield fell 0.2 bps to 1.57%
  • Spanish 10Y yield fell 0.8 bps to 1.547%
  • Brent Futures down 0.4% to $62.46/bbl
  • Gold spot down 0.03% to $1,292.09
  • U.S. Dollar Index down 0.05% to 93.61

Top Overnight news

  • German Chancellor Angela Merkel declared failure in her bid to form a new government, throwing the future of Europe’s longest- serving leader into doubt and potentially pointing toward new elections
  • Possibilities now include setting up a minority government headed by her Christian Democratic-led bloc or asking President Frank-Walter Steinmeier to order a national election just months after the last one in September
  • Special Counsel Robert Mueller directed the Justice Department to turn over a broad array of documents, ABC reports; Mueller’s investigators seek emails related to firing of FBI Director James Comey and the decision of Attorney General Jeff Sessions to recuse himself from the entire matter
  • U.S. Treasury Secretary Steven Mnuchin says he doesn’t know whether Congress would extend individual tax cuts that would expire after 2025 in current tax proposal; White House chief economist Kevin Hassett argues that the tax overhaul will boost productivity
  • Chile’s presidential election is heading for a hotly contested second round after billionaire Sebastian Pinera took a smaller-than-expected lead in Sunday’s vote
  • The value of Japan’s exports rose 14% y/y (forecast +15.7%) in Oct.; imports increased 18.9% (forecast +20.2%); the trade surplus was 285.4b yen, less than the forecast of 330 billion yen
  • After nine years, two presidential decisions, multiple lawsuits and
    environmental protests, TransCanada Corp. is about to learn whether it
    will receive the final state permit needed to build the Keystone XL oil
    pipeline
  • The Republican tax-overhaul effort is in for a marathon debate on the Senate floor at the end of this month, with dozens of doomed Democratic amendments. But the real action will be elsewhere, behind closed doors
  • Global investment banking revenues may decline 9 percent this quarter on low volatility and a selloff of high-yield debt, analysts at JPMorgan Chase & Co. said
  • Marvell Technology Group Ltd., a chipmaker looking to build itself a future outside of a declining area of the market, agreed to buy Cavium Inc. for about $6 billion
  • President Robert Mugabe shocked Zimbabwe on Sunday night with a televised address that failed to announce his highly anticipated resignation, a dramatic twist that means the 93-year-old may face immediate impeachment hearings
  • The U.K. could be about to improve its financial offer to the European Union ahead of a crucial meeting of the bloc’s leaders in December
  • HNA CEO Casts Doubts on SkyBridge Deal Completion, WSJ Says
  • Novomet Purchase by Halliburton Said to Be Delayed: Kommersant
  • U.S. Businesswoman Said to Bid for Weinstein Co.: WSJ
  • Some Chrysler Pacifica Owners Complain of Engine Issues: NYT
  • ProSieben Is ‘Obvious’ M&A Target, Possibly for NBC: Liberum
  • Cellcom in Talks With Partner Comm to Deploy Fiber Network
  • Eurocastle Reports NPL Transaction, Reschedules Results Release
  • Goldman CEO Sees Frankfurt, Paris As His Bank’s EU Hubs: Figaro

Asia began the week subdued following the losses on Wall St. last Friday and with focus on political uncertainty after Trump campaigners were subpoenaed and German coalition talks broke down. ASX 200 (-0.2%) and Nikkei 225 (-0.5%) were in the red although recent strength across commodities helped stem losses in Australia, while Japanese sentiment was dampened by a firmer JPY and a miss on trade data. Hang Seng (+0.3%) and Shanghai Comp. (+0.3%) were initially negative with underperformance in the mainland as Shenzhen stocks resumed Friday’s sell off and amid reports that China tightened asset management rules to curb risky lending. However, prices then recovered heading into the close. Finally, 10yr JGBs were  uneventful with prices flat, as demand from the dampened risk appetite in the region was counterbalanced by the absence of a BoJ Rinban announcement. PBoC injected CNY 70bln via 7-day reverse repos, CNY 20bln via 14-day reverse repos and CNY 10bln via 63-day reverse repos.  PBoC set CNY mid-point at 6.6271 (Prev. 6.6277). Chinese Property Prices (Oct) Y/Y 5.4% (Prev. 6.3%). Chinese Property Prices rose M/M in 50 out of 70 cities (Prev. 44) and rose Y/Y in 60 out of 70 cities (Prev. 67).  Japanese Exports (Oct) Y/Y 14.0% vs. Exp. 15.8% (Prev. 14.1%) Japanese Imports (Oct) Y/Y 18.9% vs. Exp. 20.2% (Prev. 12.0%)

Top Asian News

  • Soros’ Wang Said to Leave to Start Hedge Fund in Hong Kong
  • Thailand’s Economic Growth Beats Forecasts as Exports Rise
  • Barcelo Makes Offer for NH in Bid to Create Spanish Hotel Giant
  • Zarrab Case Aims to Implicate Turkish Leaders, Erdogan Aide Says
  • Alibaba Bets $2.9 Billion It Can Take on Wal-Mart in China
  • Asia Shares Fall as Investors Lock in Gain Amid U.S. Tax Wrangle
  • Toshiba’s Share Sale Plan Cheers Bond Market as Stocks Fall

European bourses have had a mixed start for the week, with the EuroStoxx 50 relatively flat amid the collapse of German government coalition talks, while on the corporate front, German Utilities RWE and Innogy are rising over divestiture speculation. Roche are among the best performing stocks this morning after the drugmaker announced a double dose of trial wins. No further political news or fundamental inputs to spark movement, but Bunds are back in the black and it looks like short term or intraday chart levels are impacting. Contacts were flagging 162.82 on the downside and that just held in to keep sellstops intact and the 10 year German bond has subsequently bounced towards 163.00 again. Back to the Government coalition impasse, the President will address the nation at 13.30GMT and could call another election given the failure of talks and Chancellor Merkel to form a new regime, but there is a train of thought that he might make a last ditch effort to get the parties back around the table. Meanwhile, Gilts continue to track moves elsewhere awaiting more concrete Brexit developments and Wednesday’s Budget, ticking back up to 124.65 from a 124.53 low. US Treasuries maintaining a firmer bias, and with the long bond outperforming yet again – so even more flattening.

Top European News

  • Merkel’s Attempt to Form a New German Government Collapses
  • German Liberals Would Support a Merkel Minority Government: Bild
  • Michael Spencer’s NEX Group Picks Amsterdam as Post- Brexit Base
  • Vestas Shares Fall; Goldman Sees Margin Pressure in 2018
  • Jana Novotna, Former Wimbledon Champion, Dies at 49
  • Akbank’s Rota Is Said to Become Bank Audi’s Turkey Unit CEO

In FX, the EUR roundtriped as Germany’s FDP walks out of talks to form a 4-party Jamaican coalition after a month of negotiations, citing irretrievable differences. Chancellor Merkel must now inform the President of the situation and the risk is a snap election and failure to secure a 4th term in office. EUR/USD slumped to a 1.1723 base before recovering, with bids touted at 1.1710, while EUR/GBP held key support at 0.8871 (21 DMA) despite filling bids at 0.8875 before rebounding towards 0.8900. GBP: A firmer tone independent of the EUR’s travails on latest reports suggesting material progress in Brexit negotiations in the offing, while UK Chancellor Hammond is apparently encouraging PM May to up her divorce settlement offer to the EU. Cable back up near 1.3250. Benefiting from broad risk-off sentiment, with USD/JPY briefly/marginally below 112.00, but now pivoting the big figure and likely to be eyeing a spread of option expiries in nearby proximity (300 mn at 111.90, 901 mn at 112.00, 2.3 bn at 112.30 and 1 bn from 112.50-60).

In commodities, price action WTI and Brent has been relatively tepid with investors turning their attention to the bi-annual OPEC meeting, in which it is expect that the cartel will extend production cuts to cover the whole of next year. On Friday, the latest Baker Hughes showed that rig counts were unchanged in week to November 17th. WTI slightly off best levels having run into resistance just ahead of USD 57.

US Event Calendar

  • 10am: Leading Index, est. 0.7%, prior -0.2%

DB’s Jim Reid concludes the overnight wrap

The most interesting thing to get your teeth stuck in to this week is likely to be the turkey on Thankgiving on Thursday. As such it’ll likely be a quietish week unless we see a renewed bout of the Wednesday to Wednesday sell-off of last week. Things calmed down from the lows during Wednesday’s session even if we closed out the week on Friday with a softer session for equities.

That said, things have already got to an interesting start as talks to form the next coalition German government have failed after a 12 hour negotiation session ended at around midnight last night, with the pro-market FDP walking out citing large differences with the environmentalist Green party. The head of the FDP Mr Lindner noted “it’s better not to govern than to govern badly”. If no compromise is eventually found, Germany may enter into unchartered territory, potentially involving a new election or even a minority led government. The Euro is  down c0.5% this morning.

This morning in Asia, markets are trading modestly lower. The Nikkei (-0.45%), Kospi (-0.01%) and Hang Seng (-0.07%) are weaker, while Chinese bourses have pared back bigger losses to be down c0.7% as we type, with the underperformance in part due to Chinese regulators announcing new measures to regulate asset management products from June 2019. The draft measures include: i) an end to short-term investment products with (implicit) guaranteed fixed rates of return and ii) uniform guidance for banks, trust, insurers and brokerages. Elsewhere, over the weekend, Reuters noted Chinese home prices rose in 50 of 70 cities in October (vs. 44 cities previous). The average price rise was stronger for the month at 0.3% mom (vs. 0.2% previous), but annual growth still slowed to 5.4% yoy (vs. 6.3% previous).

Back to the days ahead, in this holiday shortened week, the highlights will likely be the EU Foreign and European affairs ministers discussing Brexit today (with a Barnier briefing after), the UK budget on Wednesday (look out for looser fiscal policy), the flash European PMIs on Thursday and the first store sales numbers coming through on ‘Black Friday’ as we close out the week. These numbers are perhaps less relevant than they used to be as internet shopping increases but it’s always a focal point nonetheless.

Turning to US tax reforms, where a step change does not seem likely until the revised tax package goes to a full Senate chamber vote, potentially in the week after Thanksgiving (week from 27th Nov.). Before then, there was more rhetoric over the weekend. Republican Senator Collins said the tax package “needs work” and “want to see changes in that bill”, although she has not reached a conclusion on whether to vote for the current plans or not. One of the issues is the new provision to remove the individual mandate of the Obamacare care, which she noted was a “problem” and that “I don’t think that provision should be in the bill”. In response, Director of the Office of Management and budget Mr Mulvaney noted that the White House is “ok” in removing the mandate if it was an impediment to passing the Senate tax bill, although White House legislative Director Mr Short said “we like the fact that the Senate has included it”. As a reminder, the Republicans need >50 votes to pass the Senate bill and currently control 52 of the 100 seats in the Chamber.

Moving onto Brexit, there appears to be more signs that the UK may be willing to concede to an improved Brexit settlement offer to kick start the Brexit talks. The FT has reported that PM May could get cabinet approval today to as much as double her prior settlement offer of EUR$20bln. Elsewhere, Chancellor Hammond noted “we’ve always been clear it won’t be easy to work out that number, but whatever is due, we will pay” and that “we will make our proposals to the EU in time for the council (meeting in c3 weeks). I’m sure about that”. On the other side, the EC President Tusk was firm when he met with PM May last Friday, as he noted “I made it clear to PM May that this progress needs to happen at the beginning of December at the latest” and that “if there is no sufficient progress, I will not be in a position to propose new guidelines on transition (and trade talks)”. Elsewhere, in a preview to the UK budget this week, Chancellor Hammond has noted the government will announce a plan to increase house building by c40% to 300k new homes being built each year.

Now quickly recapping market performance on Friday. Ahead of the quieter Thanksgiving week, US bourses weakened. The S&P (-0.26%), Dow (-0.43%) and Nasdaq (-0.15%) all down modestly. Within the S&P, modest gains in the telco and discretionary consumer sectors were more than offset by losses from utilities and tech stocks. European markets also trended lower, with Stoxx 600 (-0.29%), DAX (-0.41%) and FTSE (-0.08%) all down slightly.

Over in government bonds, core yields were 1-3bp lower (UST 10y -3.2bp; Bunds -1.6bp; Gilts -1.4bp) while peripherals were little changed. Turning to currencies, the US dollar index weakened 0.29% while Sterling and the Euro gained 0.15% and 0.17% respectively. In commodities, WTI oil rose 2.56% following Saudi Arabia reaffirmed its willingness to extend oil cuts at the November 30 OPEC meeting. Elsewhere, precious metals gained c1% (Gold +1.08%; Silver +1.29%) and other base metals also advanced slightly (Copper +0.13%; Zinc 1.06%; Aluminium flat).

Now onto a fascinating story of our times namely Bitcoin. The crypto currency has not only recovered from recent losses, it has now moved to a fresh all-time high of cUS$8,007 a piece this morning. To put this in context, Bitcoin is up c23% over the last week and up 136% since its recent lows back in mid-September.  Going back further, it is up c8.4x YTD and up 679x from 5 years ago.

Away from the markets now and onto central bankers’ commentaries back on Friday. The ECB’s Draghi noted that “as the labour market tightens and uncertainty falls, the relationship between slack and wage growth should begin reasserting itself. But we have to remain patient.” Elsewhere, the ECB’s Weidmann echoed those sentiments, noting “domestic price pressure will gradually increase in keeping with a path towards our definition of price stability”.

Turning to Catalonia, the latest opinion poll by GAD3 suggests voter participation could be a record high of 82% for the upcoming regional election on 21st December but the pro-independence coalition may only win 66-69 of the seats, falling short of a clear majority which requires 68 seats.

Staying with polls, the latest Ifop poll suggest France President Macron’s popularity has improved 4ppt to 46% – the highest in four months, in part as Bloomberg noted voters are crediting their President with keeping some of his campaign promises.

Before we take a look at today’s calendar, we wrap up with other data releases from Friday. In the US, the November Kansas Fed manufacturing activity was below expectations at 16 (vs. 21), but is still reasonably solid. The Atlanta Fed’s GDPNow model estimate of 4Q GDP growth ended the week at 3.4% (+0.2pps following the strong IP data). The October housing starts were above expectations at 13.7% mom (vs. 5.6% expected), with increases seen in all major regions with the exception of the West. Housing permits were slightly lower at 1,250k (vs. 1,297k expected). Elsewhere, 3Q mortgage delinquencies rose from the post-GFC low in 2Q to 4.88% (vs. 4.24% previous), while foreclosure rate continues to trend down, now to a new post-GFC low of 1.23%.

In the Eurozone, the September current account surplus widened to 37.8bln (vs. 33.3bln previous). Elsewhere, Canada’s headline October inflation measure was in line at 0.1% mom and 1.4% yoy, while the core median reading was slightly lower at 1.7% yoy (vs. 1.8% previous).

 

3. ASIAN AFFAIRS

i)Late SUNDAY night/MONDAY morning: Shanghai closed UP 9.49 points or .28% /Hang Sang CLOSED UP 61.27 pts or 0.21% / The Nikkei closed DOWN 135.04 POINTS OR 0.60%/Australia’s all ordinaires CLOSED UP 0.17%/Chinese yuan (ONSHORE) closed UP at 6.6318/Oil UP to 56.44 dollars per barrel for WTI and 61.97 for Brent. Stocks in Europe OPENED GREEN ONSHORE YUAN CLOSED UP AGAINST THE DOLLAR AT 6.6318. OFFSHORE YUAN CLOSED WEAKER TO THE ONSHORE YUAN AT 6.6412 //ONSHORE YUAN STRONGER AGAINST THE DOLLAR/OFF SHORE WEAKER TO THE DOLLAR/. THE DOLLAR (INDEX) IS STRONGER AGAINST ALL MAJOR CURRENCIES. CHINA IS  VERY HAPPY TODAY.

3 a NORTH KOREA/USA

NORTH KOREA/SOUTH KOREA

 

South Korea detects an””engine test” at the North Korean Nuclear facility

 

(courtesy zerohedge)

 

South Detects “Engine Test” At North Korean Nuclear Facility

More than two months have passed since North Korea held one of its missile tests – the longest period of tranquility this year, although it may be ending soon: South Korea’s National Intelligence Service warned on Monday that it has detected suspicious activity at the North’s missile research facility – the latest sign that another test may occur by the end of the year. South Korean intelligence has on more than one occasion captured spy satellite images of the North Korean military transporting equipment from the North’s missile facility near Pyongyang. While security analysts speculated at the time that these movements could portend another missile test, none have materialized.

However, earlier today, Yonhap reported that South Korean intelligence believe the North recently carried out what’s called a missile engine test. Spy satellites spotted vehicles briskly moving toward the facilities, according to Yi Wan-young, a member of South Korea’s parliamentary intelligence committee, which was briefed by Seoul’s National Intelligence Service.  All of this suggests North Korea may conduct additional missile tests this year to help polish its long-range missile technology and ramp up the threat against the US. The South’s spy agency said it’s closely monitoring these developments.

As a reminder, the North hasn’t tested a missile since Sept. 15, when it launched a medium-range missile over the Northern Japanese island of Hokkaido. The North conducted its sixth and most recent nuclear test on Sept. 3.

Still, the North’s only nuclear test site appears to be undergoing needed repairs, and will likely remain unusable for the time being. While the third tunnel at the North’s Punggye-ri nuclear complex remains ready for another detonation “at any time”, construction has only recently resumed at a fourth tunnel, leaving it vulnerable to collapse if the North were to conduct another test. Some have speculated that the North is holding off on another nuclear test under pressure from Beijing.

Teams of Chinese and US scientists have warned that Punggye-ri is suffering from “tired mountain syndrome” – meaning another test could cause the mountain to cave in, releasing a deadly plume of radiation into the atmosphere. Last month, a tunnel collapse at the facility killed more than 200 North Korean laborers.

“The agency is closely following the developments because there is a possibility that North Korea could fire an array of ballistic missiles this year under the name of a satellite launch and peaceful development of space, but in fact to ratchet up its threats against the United States,” the lawmakers told reporters after a closed-door briefing by the spy agency.

Separately, for the first time in 20 years, Pyongyang is also carrying out a sweeping ideological scrutiny of the political unit of the military, one South Korean lawmaker said.  The probe was led by the ruling Workers’ Party’s Organisation and Guidance Department and orchestrated by Choe Ryong Hae, who once headed the General Political Bureau of the Korean People’s Army himself until he was replaced by Hwang Pyong So in May 2014. As a result, Hwang and Kim Won Hong, who Seoul’s unification ministry said was removed from office in mid-January as minister of the Stasi-like secret police called “bowibu”, had been punished, the lawmaker said. He did not elaborate.

Choe, who was subjected to political “reeducation” himself in the past, appears to be gaining more influence since he was promoted in October to the party’s powerful Central Military Commission. The National Intelligence Service indicated that Choe now heads the Organisation and Guidance Department, a secretive body that oversees appointments within North Korea’s leadership. “Under Choe’s command, the Organisation and Guidance Department is undertaking an inspection of the military politburo for the first time in 20 years, taking issue with their impure attitude toward the party leadership,” the lawmaker, Kim, said.

Also on Monday, South Korea approved a request by a South Korean to attend an event in the North marking the anniversary of the death of his mother who formerly led the Chondoist Chongu Party, a minor North Korean political party. The son, identified only by his surname Choi, will be the first South Korean to visit the North since liberal President Moon Jae-in took office in May. He is scheduled to arrive in Pyongyang via China on Wednesday and return on Saturday, according to Seoul’s unification ministry.

Finally, a senior Chinese diplomat wrapped up a four-day visit to North Korea on Monday without meeting Kim Jong Un. The diplomat has returned to Beijing, Xinhua reported.

Song Tao, head of the international department of the Chinese Communist Party, met senior officials from the Workers Party of Korea and “exchanged views on the Korean peninsula issue”, according to Xinhua. “The ruling parties of China and the Democratic People’s Republic of Korea on Monday pledged to strengthen inter-party exchanges and coordination, and push forward relations,” it added, using North Korea’s official name.

Song had been in Pyongyang to discuss the outcome of the recently concluded Chinese Communist Party Congress in Beijing. Meanwhile, a North Korean defector who was shot seven times while crossing the heavily fortified border separating the two countries has started breathing on his own, Yonhap reported, suggesting that he will most likely survive his injuries, leaving him free to start a new life in South Korea.

END

 

TRUMP DECLARES NORTH KOREA A STATE SPONSOR OF TERROR

 

(COURTESY ZEROHEDGE)

White House Declares North Korea A State Sponsor Of Terror

Following comments by the White House last week that the administration would soon bring more pressure on North Korea, President Donald Trump has confirmed as much to a crowd of reporters, adding that, as of today, that North Korea would once again be designated a terror sponsor.

Trump cited the killing of North Korean leader Kim Jong-Un’s estranged half brother in a Malaysian airport earlier this year, as well as the North’s horrific treatment of Ohio college student Otto Warmbier, as justifications for the sanctions.

“North Korea has supported acts of international terrorism, including assassinations on foreign soil,” Trump said.

“As we take this action today we think of Otto Warmbier and the many others affected by north korean opporession.”

During remarks at the start of a cabinet meeting at the White House, Trump said the Treasury Department will announce on Tuesday additional sanctions against North Korea, describing the moves as “a very large one.” The sanctions will be imposed over the next two weeks, Trump said.

Trump demanded that the North cease its nuclear program and stop aiding terror groups across the world.

Trump called the move a long overdue step and part of the U.S. “maximum pressure campaign” against the North...

 

United States designates North Korea as a state sponsor of terror.

Pres. Trump: “Should have happened a long time ago, should have happened years ago.”

 

North Korea was last on the U.S. list of state sponsors of terror in 2008, when the country was removed in a bid to salvage a deal to halt its nuclear development. Iran, Sudan and Syria are also designated by the U.S. as state sponsors of terror, the Associated Press pointed out.

The designation had been debated for months inside the administration, with some officials at the State Department arguing that the North did not meet the legal standard to be relisted as a state sponsor of terrorism.

Officials said there was no debate over whether the slaying of half brother Kim Jong Nam was a terrorist act. However, lawyers said there had to be more than one incident and there was disagreement over whether the treatment of Warmbier, who died of injuries suffered in North Korean custody, constituted terrorism.

While North Korea is being added to the list, last week, Deputy Secretary of State John J. Sullivan said the United States was willing to consider removing Sudan, which has been on the list since 1993.

 

 

 

 

3b) REPORT ON JAPAN

3c CHINA REPORT.

 

Xi pledges to strengthen this relationship with Saudi Arabia. Xi has good relations with Iran as well.  If conflict breaks out who will they support?

 

(courtesy zerohedge)

Xi Jinping Pledges To “Strengthen Relationship” Between Saudi Arabia And China

In what can only be described as a masterful play to entice Saudi Arabia to list shares of Aramco in Hong Kong (assuming the kingdom follows through with the listing, which is reportedly in jeopardy) Chinese state media reported Friday that Chinese President Xi Jinping pledged to strengthen the relationship between China and Saudi Arabia as the latter tries to reform its economy.

According to the South China Morning Post, Xi vowed to strengthen cooperation between the two states at a time when the Middle Eastern kingdom is facing a political shake-up at home, and heightened tensions with Lebanon and Iran. Xi’s vow of friendship came with the crucial qualifier that the relationship between the two countries wouldn’t be affected by shifting international circumstances.

No matter how the international and regional situation changed, China’s determination to deepen strategic cooperation with Saudi Arabia would not change, President Xi Jinping told Saudi King Salman in a telephone conversation, according to a report by China’s state broadcaster CCTV.

 

“China supports Saudi in its efforts to safeguard its sovereignty and achieve greater development,” Xi was quoted as saying.

Of course, that’s an implicit threat that China might come to KSA’s aide if the simmering hostilities between the kingdom and Iran explode out into a military conflict between the two regional rivalsHowever, the SCMP also stresses that China has a strong relationship with Iran as well.

Hong Kong is reportedly still in consideration to host the Aramco IPO.

And while China will presumably play the dual role of investor and adviser as the Kingdom seeks to diversify its economy into other industries besides energy, including technology and manufacturing, KSA has in returned promised to assist Xi’s “one belt, one road” economic reform program.

King Salman told Xi that Saudi Arabia was willing to become China’s “important partner” in the Gulf. The kingdom also intended to play a role in China’s “Belt and Road Initiative” and cooperate with Beijing in the energy and financial sectors, he said

Though Chinese media reports didn’t delve into too much detail about the recent purge orchestrated by Crown Prince Mohammed bin Salman, the call between the two leaders obviously follows an event two weeks for KSA, where its leaders reportedly pressured Lebanese Prime Minister Saad Hariri to resign. Hariri had to go, allegedly, because he was deemed too soft on Hezbollah, the shiite militant group that’s affiliated with Iran and is also an important powerbroker in Lebanon.

Two weeks ago, dozens of Saudi princes and officials were detained on corruption charges, a move that is believed to have helped Crown Prince Mohammed bin Salman to consolidate his power. And yesterday the Financial Times exposed the “corruption crackdown” for what is truly is: naked cash grab meant to refill KSA’s foreign currency reserves while allowing it the financial flexibility to help ensure the Aramco IPO is executed at the best possible price.

Lebanese President Michel Aoun this week accused Saudi authorities of “detaining” Hariri, but Riyadh said he was free to leave the kingdom “when he pleases”. Hariri was reportedly supposed to arrive in France on Friday.

Saudi Arabia was also seen as a protagonist in leading 11 other nations to sever diplomatic ties with Qatar earlier this year, a move meant to punish KSA’s tiny neighbor for having too close a relationship with Iran.

Despite Xi’s promise, China also maintains warm relations with Iran, meaning the likelihood that China would become involved in a military struggle against either Iran or Saudi is probably low.

According to the SCMP, China has bolstered its presence in the region by forging closer ties with both countries. Of course, Saudi has plenty to gain from closer relations with China, including expanding its foothold in the world’s largest import market for crude.

During King Salman’s first official trip to China in March, the two countries signed deals, including some in the oil sector, worth a combined US$65 billion, the SCMP noted.

However, if the feud between Saudi Arabia and Iran intensifies – and that looks likely – the threat of a geopolitical conflict will become impossible to ignore.

What then?

end

4. EUROPEAN AFFAIRS

 

This is a ticking time bomb:  ECB is proposing an end to deposit protection:

 

courtesy GoldCore)

ECB Proposes End To Deposit Protection

Submitted by GoldCore

It is the ‘opinion of the European Central Bank‘ that the deposit protection scheme is no longer necessary:

‘covered deposits and claims under investor compensation schemes should be replaced by limited discretionary exemptions to be granted by the competent authority in order to retain a degree of flexibility.’

To translate the legalese jargon of the ECB bureaucrats this could mean that the current €100,000 (£85,000) deposit level currently protected in the event of a bail-in may soon be no more. But worry not fellow savers, as the ECB is fully aware of the uproar this may cause so they have been kind enough to propose that:

“…during a transitional period, depositors should have access to an appropriate amount of their covered deposits to cover the cost of living within five working days of a request.”

So that’s a relief, you’ll only need to wait five days for some ‘competent authority’ to deem what is an ‘appropriate amount’ of your own money for you to have access to in order eat, pay bills and get to work.

The above has been taken from an ECB paper published on 8 November 2017 entitled ‘on revisions to the Union crisis management framework’.

It’s 58 pages long, the majority of which are proposed amendments to the Union crisis management framework and the current text of the Capital Requirements Directive (CRD).

It’s pretty boring reading but there are some key snippets which should be raising a few alarms. It is evidence that once again a central bank can keep manipulating situations well beyond the likes of monetary policy. It is also a lesson for savers to diversify their assets in order to reduce their exposure to counterparty risks.

Bail-ins, who are they for?

According to the May 2016 Financial Stability Review, the EU bail-in tool is ‘welcome’ as it:

…contributes to reducing the burden on taxpayers when resolving large, systemic financial institutions and mitigates some of the moral hazard incentives associated with too-big-to-fail institutions.

As we have discussed in the past, we’re confused by the apparent separation between ‘taxpayer’ and those who have put their hard-earned cash into the bank. After all, are they not taxpayers? This doesn’t matter, believes Matthew C.Klein in the FT who recently argued that “Bail-ins are theoretically preferable because they preserve market discipline without causing undue harm to innocent people.”

 

Ultimately bail-ins are so central banks can keep their merry game of easy money and irresponsibility going. They have been sanctioned because rather than fix and learn from the mess of the bailouts nearly a decade ago, they have just decided to find an even bigger band-aid to patch up the system.

‘Bailouts, by contrast, are unfair and inefficient. Governments tend to do them, however, out of misplaced concern about “preserving the system”. This stokes (justified) resentment that elites care about protecting their friends more than they care about helping regular people.’ – Matthew C. Klein

But what about the regular people who have placed their money in the bank, believing they’re safe from another financial crisis? Are they not ‘innocent’ and deserving of protection?

When Klein wrote his latest on bail-ins, it was just over a week before the release of this latest ECB paper. With fairness to Klein at the time of his writing depositors with less than €100,000 in the bank were protected under the terms of the ECB covered deposit rules.

This still seemed absurd to us who thought it questionable that anyone’s money in the bank could suddenly be sanctioned for use to prop up an ailing institution. We have regularly pointed out that just because there is currently a protected level at which deposits will not be pilfered, this could change at any minute.

The latest proposed amendments suggest this is about to happen.

 

Why change the bail-in rules?

The ECB’s 58-page amendment proposal is tough going but it is about halfway through when you come across the suggestion that ‘covered deposits’ no longer need to be protected. This is determined because the ECB is concerned about a run on the failing bank:

If the failure of a bank appears to be imminent, a substantial number of covered depositors might still withdraw their funds immediately in order to ensure uninterrupted access or because they have no faith in the guarantee scheme.

This could be particularly damning for big banks and cause a further crisis of confidence in the system:

Such a scenario is particularly likely for large banks, where the sheer amount of covered deposits might erode confidence in the capacity of the deposit guarantee scheme. In such a scenario, if the scope of the moratorium power does not include covered deposits, the moratorium might alert covered depositors of the strong possibility that the institution has a failing or likely to fail assessment.

Therefore, argue the ECB the current moratorium that protects deposits could be ‘counterproductive’. (For the banks, obviously, not for the people whose money it really is:

The moratorium would therefore be counterproductive, causing a bank run instead of preventing it. Such an outcome could be detrimental to the bank’s orderly resolution, which could ultimately cause severe harm to creditors and significantly strain the deposit guarantee scheme. In addition, such an exemption could lead to a worse treatment for depositor funded banks, as the exemption needs to be factored in when determining the seriousness of the liquidity situation of the bank. Finally, any potential technical impediments may require further assessment.

The ECB instead proposes that ‘certain safeguards’ be put in place to allow restricted access to deposits…for no more than five working days. But let’s see how long that lasts for.

Therefore, an exception for covered depositors from the application of the moratorium would cast serious doubts on the overall usefulness of the tool. Instead of mandating a general exemption, the BRRD should instead include certain safeguards to protect the rights of depositors, such as clear communication on when access will be regained and a restriction of the suspension to a maximum of five working days by avoiding a cumulative use by the competent authority and the resolution authority.

Even after a year of studying and reading bail-ins I am still horrified that something like this is deemed to be preferable and fairer to other solutions, namely fixing the banking system. The bureaucrats running the EU and ECB are still blind to the pain such proposals can cause and have caused.

Look to Italy for damage prevention

At the beginning of the month, we explained how the banking meltdown in Veneto Italy destroyed 200,000 savers and 40,000 businesses.

In that same article, we outlined how exposed Italians were to the banking system. Over €31 billion of sub-retail bonds have been sold to everyday savers, investors, and pensioners. It is these bonds that will be sucked into the sinkhole each time a bank goes under.

A 2015 IMF study found that the majority of Italy’s 15 largest banks a bank rescue would ‘imply bail-in of retail investors of subordinated debt’. Only two-thirds of potential bail-ins would affect senior bond-holders, i.e. those who are most likely to be institutional investors rather than pensioners with limited funds.

Why is this the case? As we have previously explained:

Bondholders are seen as creditors. The same type of creditor that EU rules state must take responsibility for a bank’s financial failure, rather than the taxpayer. This is a bail-in scenario.

 

In a bail-in scenario the type of junior bonds held by the retail investors in the street is the first to take the hit. When the world’s oldest bank Monte dei Paschi di Siena collapsed ordinary people (who also happen to be taxpayers) owned €5 billion ($5.5 billion) of subordinated debt. It vanished.

Despite the biggest bail-in in history occurring within the EU, few people have paid attention and protested against such measures. A bail-in is not unique to Italy, it is possible for all those living and banking within the EU.

Yet, so far there have been no protests. We’re not talking about protesting on the streets, we’re talking about protesting where it hurts – with your money.

As we have seen from the EU’s response to Brexit and Catalonia, officials could not give two hoots about the grievances of its citizens. So when it comes to banking there is little point in expressing disgust in the same way. Instead, investors must take stock and assess the best way for them to protect their savings from the tyranny of central bank policy.

To refresh your memory, the ECB is proposing that in the event of a bail-in it will give you an allowance from your own savings. An allowance it will control:

“…during a transitional period, depositors should have access to an appropriate amount of their covered deposits to cover the cost of living within five working days of a request.”

Savers should be looking for means in which they can keep their money within instant reach and their reach only. At this point physical, allocated and segregated gold and silver comes to mind. This gives you outright legal ownership. There are no counterparties who can claim it is legally theirs (unlike with cash in the bank) or legislation that rules they get first dibs on it. Gold and silver are the financial insurance against bail-ins, political mismanagement, and overreaching government bodies. As each year goes by it becomes more pertinent than ever to protect yourself from such risks.

end

 

This is the worst case scenario possible as her Jamaica coalition collapses.  Therefore a second election is a must and that is something that German citizens will not like and they would send their wrath against Merkel.

The euro sinks badly, but gold holds.

(courtesy zerohedge)

 

“Worst Case Scenario” Looms As Merkel’s “Jamaica Coalition” Collapses; EUR Sinks

We warned on Friday that German Chancellor Angela Merkel faced a ‘night of the long knives’ in her efforts to bring together the co-called ‘Jamaica’ coalition of four parties and after a desperate weekend of talks, Bloomberg reports Merkel’s efforts at forming a coalition have failed meaning a second election looms and sending the euro sliding.

As Bloomberg reports, talks on forming German Chancellor Angela Merkel’s next government collapsed, throwing the future of Europe’s longest-serving leader into doubt and potentially pointing the world’s fourth-biggest economy toward new elections.

After a 12-hour negotiating session that ended shortly before midnight Sunday, the Free Democratic Party walked out of the exploratory talks, saying the differences with the Green party were too great to bridge.

Merkel has sought for four weeks to enlist the two smaller parties for her fourth-term coalition.

“It’s better not to govern than to govern badly,” FDP head Christian Lindner told reporters in Berlin.

No further coalition talks were scheduled, he said. There was no immediate comment from Merkel.

EURUSD is down aropund 40 pips on the news…

As MINT Partners’ Bill Blain noted previously,Germans are not used to multiple elections – and a second vote early next year would be massive negative for Merkel herself – she may even have to stand down if coalition looks like falling. That could be massive shock.

As a result, the prospects for more volatile European peripheral markets, particularly Greece and Italy, are likely to be exacerbated, and we might well see some of the currency and European stock market froth blow away in coming days as the scale of the “German Problem” becomes clearer.

  • My worst case Germany scenario is a second election early next year, political uncertainty as Mutti Merkel finds herself squeezed out, and a scramble to build a new coalition government in her aftermath.
  • The best case scenario isn’t much better: that Merkel manages to forge a new coalition, but it will be a long drawn out affair and the resulting administration will be vulnerable, weak and fraxious.

These sound like German problems, but they mean the “leader of Europe” is likely to be entirely inward focused in coming months/years.. at a time when the European union will be facing a host of new issues regarding closer union, banking union and reform of the ESM, bailout and QE policies. There will also be new potential crisis points – Italian elections next year, Greece bailout, renewed immigration crisis or a blow-up with Trump. And these are just the known unknowns.

This has profound implications for the so-called French/German axis as it slides towards Paris. We are not going to see a new German government “waste time” on issues like closer EU union, European Banking Union, or critical finance issues like reforming ESM or new approaches on QE and Bailout funds. Forget Wiedemann for ECB president, it’s more likely to another Frenchman (Trichet II) – I’m sure its already underway. In short.. Germany negotiations could get very fraxious while Europe is dragged down in its wake. I doubt the markets have discounted it yet.

end

Bill Blain on what to expect next with respect to the latest German scenario..basically trouble ahead

(courtesy Bill Blain/England)

“Merkel Will Have To Go”: Bill Blain On What’s Next For The Germans

“When you turn an election into a three-ring circus, there is the possibility the dancing bear will win..”

After Sunday night’s shocking failure by Merkel to from a government (triggered by the Free Democrats walking out due to irreconcilable differences on refugee policy, energy policy and tax policy) the FT was quick to conclude that “Merkel faces worst political crisis of her career.” And while Merkel is certainly in hot water, a more appropriate question is what’s next for Germany.

According to UBS – which has a clear interested in preserving the calm – there are four possible scenarios:

First, Chancellor Merkel could try to re-engage with the FDP and bring it back to the table and start coalition talks. Second, the CDU/CSU could try to approach the SPD to form a grand coalition, which would have an absolute majority. However, the SPD has repeatedly mentioned (again last night) that it is not willing to go for this option and prefers to be in opposition. If these two options do not work (which would be the first time in post-war Germany), either a minority government (Chancellor Merkel dismissed this option on election night) or new elections could follow. The procedure for new elections, however, involves several steps, as outlined below.

The current (grand coalition) government remains in place until a new government is formed, i.e. until parliament votes on a candidate for chancellorship proposed by the Federal President (for which there is no time limit). If no workable coalition can be found, the way towards new elections involves many steps as reported in the press. The Federal President Steinmeier must propose a candidate for chancellorship (normally, this is the candidate put forth by a majority coalition, but he is free to choose others) and parliament would vote on this candidate. If the Federal President’s candidate does not obtain an absolute majority (which has never happened before in post-war Germany), parliament has 14 days to propose and vote on a candidate in a second round. If in this second round of voting no candidate obtains an absolute majority, there is a third round of voting where a candidate can be voted as chancellor with only a relative majority. If a candidate is voted with only a relative majority, the Federal President can either appoint the candidate as chancellor (implying a minority government) or dissolve parliament. In the latter case, new elections have to take place 60 days after parliament has been dissolved. At this stage, however, it is unclear whether new elections would
produce a significantly different result compared to the last election.

To be sure, UBS’ view is that no matter how bleak Merke’s “crisis” looks like, the fallout will likely be limited, to wit:

“even though the EUR dipped on the breakdown of the Jamaica talks, the broader market reaction has been contained. With Merkel’s acting government remaining in place, big political decisions on Brexit and EU issues anytime soon appear more difficult, including at the December Euro summit. If the grand coalition no longer remains an option, this could, in our view, lead to some risk-off pressure, the negative fallout for periphery markets (and a wider risk-off) should be contained.”

Perhaps: for UBS’ “calm and collected” outcome, the ECB may be forced to become more actively engaged in micromanaging risk again, something few have discussed yet.

Which is why for a more practical and unbiased take we turn to Mint’s Bill Blain, who back in September correctly predicted just this eventuality, when everyone else said the odds are negligible. Here is Bill Blain with his take on “What’s next for the Germans.”

Ha. Macron must be creasing himself with laughter… I bet he struggled to keep a straight face as he commiserated with the (soon to depart?) Angela… Funny how the good news is all French these days…

 

And in Harare/Berlin an elderly befuddled leader doesn’t know if they are coming or going.

 

Despite triggering of Gotterdammerung, market reaction to the German electoral talks collapse is curiously muted – the Euro taken a minor spanking, and stock markets a tad-let lower.

 

I’m not really surprised at the lack of fireworks. Markets have become blasé about political noise – understanding how easy it is to over-react. It’s going to be a short holiday week, its year-end and folk are protecting what they’ve made this year. As one heads westwards, interest or cares in German politics diminishes pretty quickly? It’s just something that happens – Isn’t it?

 

Er.. actually…. what’s going on in Berlin is pretty important stuff. Or, at least it should be…

 

I’m trying to get my head round what happened and what cracked – it’s important to understand the collapse to work out what happens next… Last week chums in Berlin assured me it was a just a matter of time before Muti Merkel signed a new coalition deal. Over the weekend it all came apart.

 

It would seem the Greens and the Liberals just didn’t fancy the compromises and potential electoral suicide pact that underlies being Merkel’s stooges.

 

Back in September I warned the coalition process was likely to be far more difficult and fraxious than the market expected. I even said the chances of an outright failure to agree were as high as 50% – check out Porridge Extra Sept 25th. I was told I was a know nothing idiot (not disputing it!). But, I didn’t expect crisis this soon. My worst case was a second election triggered early next year – and Merkel squeezed out.

 

I’m going to spend some time talking around contacts and putting together some new scenarios, but I’m struggling to find much upside.

 

I suspect Merkel will have to go. The outlook is for a complete re-jig in German politics; out with the old, and in with something new(er)New coalition discussions or an election will be equally drawn out. A new administration could be vulnerable, weak and uncertain as the “leader of Europe” is entirely inward focused in coming months/years.

 

Don’t underestimate the sentiment effects on Europe. Who is going to lead the agenda re closer union, banking union and reform of the ESM, bailout and QE policies? And what about dealing with Putin, Italian elections next year, the inevitable Greece bailout blow up, renewed immigration crisis, Brexit, a blow-up with Trump, and a Frenchman to replace Draghi at the helm of the ECB looking increasingly nailed-on.

 

And I reckon the young emperor in Paris, Macron, is going to be disappointed – if he see this as his chance to re-establish French leadership at the core of Europe, he may be well disappointed. If Berlin doesn’t care.. who’s interested?

 

Perhaps not – Yoorp is a long-game.

end

Merkel admits that new elections are the only way.  Surprisingly gold falls instead of rising on that news

(courtesy zerohedge)

Gold, Euro Slump As Merkel Admits “New Elections Are The Better Way”

EURUSD is testing overnight lows (and gold is tumbling) after German Chancellor Angela Merkel said she would prefer to go ahead with new federal elections rather than try to form a minority government.

 

Seeking her fourth term, Bloomberg reports that Merkel is “skeptical” about a minority government as it may not bring about necessary stability and is open to another so-called grand coalition with the Social Democratic party, she said in an interview with ARD television.

In the absence of an agreement to secure a majority in Germany’s Bundestag, “I’m certain that new elections are the better way,” she said.

And FX markets reacted…

 

end

With the ECB monetizing 100% of issuance who needs Government?

 

(courtesy zerohedge)

In Dramatic Rebound, Euro, DAX Recover All Losses; “Is Strong Government Overrated?” SocGen Asks

Having tumbled 80 pips to a one week low in kneejerk response to the late Sunday news that Angela Merkel had failed to form a government following the collapse of the “Jamaica Coalition” talks – when the Free Democratic Party walked out, saying the differences with the Green party were too great to bridge – both the Euro and European stocks have staged an impressive rebound, and the entire gap lower in the FX pair has now been, well, pared.

Alongside the rebound in the EURSD, the German DAX, which earlier fell as much as 0.5% at the open (and whose futures at one point overnight looked set for a 1% drop), trims early losses and briefly even turns positive, on what some have speculated was another round of central bank intervention.

As Bloomberg notes, while analysts contemplated possible scenarios of Merkel setting up a minority government headed by her Christian Democratic-led bloc or asking President Frank-Walter Steinmeier to order a fresh national election, “leveraged and interbank names were quick to fade the euro’s dip that stretched as much as 0.6% to 1.1722.

In other words, the CTA momentum chasers came, saw, and BTFD.

As a result, the euro briefly moved above 1.1800 to touch day high of 1.1812 as short- term names were stopped on the move above 1.1780, traders in London and Europe told Bloomberg. Meanwhile, BBG adds, option gauges – volatility term structure, smile, butterflies – pointed to a non-lasting effect of the German news, with market focus turning to speeches by ECB policy makers including Draghi, Constancio and Nowotny.

And while every analyst – who had previously been wrong about the direction in the EURUSD over 2017, had hot takes to explain why Germany is fine even if Merkel is forced to hold a new government elections, something that has never happened before – the common response boiled down to one argument: the German economy us strong enough to offset political uncertainty after government talks collapse.

In other words, when you have a central bank monetizing more than 100% of all net issuance, who needs a government. While rhetorical, this question is quite relevant, and none other than SocGen’s FX strategist Kit Juckes asked it this morning, in a slightly different version when he wondered if one even needs a government in the “new normal.” Below we excerpt from his note:

Is strong and stable government over-rated? 

 

After the collapse of German collation negotiations, the euro is 0.1% lower against the dollar, and 0.4% lower against this morning’s best currency, the Kiwi. That is not a dramatic reaction, but it is consistent with insouciance in European bond markets, where neither swap spreads nor peripheral yield spreads have reacted significantly yet. A break higher in EUR/USD may still require the large net long position in CFTC data to shrink, and the trend in relative yields to start moving back in the euro’s favour. It might just be that a political vacuum is no worse for Germany and the euro than it has been for, say, the Netherlands or Belgium. After all, the current UK Government’s slogan is ‘strong and stable’….

 

There are, I suppose, four plausible outcomes in Germany:

 

The first is that the Jamaica coalition is revived, which seems unlikely.

 

The second is that the CDU/SPD coalition is revived but that seemed to be what the electorate were unhappy with at the election.

 

The other two, fresh elections or the CDU ruling as a minority government, are untried in the modern era.

 

The only real enthusiasts for new elections are the AFD, who might build on their strong showing last time around.

 

Maybe what markets are saying overall is that minority  government or further coalition talks are fine, as long as the economy is growing. As for the FX conclusion, the EUR/USD 1.1480-1.1880 range is holding. If we can get positioning right and relative yield trends moving in the euro’s favour, we can break higher.

 

 

UK Cabinet Poised To Increase Brexit Divorce Payment By Another 20 Billion Euros

Theresa’s May’s government is poised to concede an improved Brexit settlement offer to gain EU approval to move the negotiations on to the next stage.

May reportedly has the backing of senior ministers ahead of a critical cabinet meeting on Monday afternoon. The list of senior ministers is thought to include chancellor, Philip Hammond, Brexit secretary, David Davis, environment secretary, Michael Gove and weakened foreign secretary, Boris Johnson, who famously said in July that the EU could “go whistle” over a divorce settlement. Hammond said at the weekend “we’ve always been clear it won’t be easy to work out that number, but whatever is due, we will pay”. Press reports suggest that the UK will formally offer about 40 billion Euros, versus the previous 20 billion. The news caused Sterling to rise more than half a percent to a two and a half week high of 1.3272, its strongest level since 2 November 2017. According to Bloomberg.

The U.K. could be about to improve its financial offer to the European Union ahead of a crucial meeting of the bloc’s leaders in December. Members of Prime Minister Theresa May’s divided cabinet will consider Britain’s divorce from the EU at a meeting Monday afternoon of the Brexit sub-committee that could be key to unlocking the most controversial matter in the negotiations — money. Britain is “on the brink of making some serious movement forward” and starting to break the “logjam,” Chancellor of the Exchequer Philip Hammond told the BBC on Sunday. While Hammond is among the most pro-European members of cabinet, his suggestion follows Brexit Secretary David Davis’s hint from Berlin on Friday that more details on a financial settlement would be presented within weeks. With businesses clamoring for clarity and the departure just 16 months away, pressure is mounting to break the impasse.

The impact of a 40 billion Euros settlement offer is hard to judge as it likely to fall short of the EU’s demands, while it might enrage a substantial proportion of the British public. Bloomberg continues.

The EU is pushing for Britain to pay at least 60 billion euros ($71 billion) to cover budgetary commitments and future liabilities such as pensions for EU civil servants. So far, May has said she will make 20 billion euros of budget payments after Brexit, and is going through the other items line by line. The Times said that while the government wouldn’t put a figure on it, it was likely to add another 20 billion euros to what it’s already agreed to. There’s a risk that might not be enough to unblock talks. It’s also unlikely to go down well domestically. “If we start saying that we’re going to give 40 to 50 billion to the EU, I think the public will go bananas, absolutely spare,” Robert Halfon, a Conservative lawmaker and former minister, said late Sunday in a BBC radio interview. “That is going to be very difficult if it is going to be that sum, amount of money.” Halfon has a point: one of the main messages of the pro-Brexit wing in last year’s referendum was that it would put an end to sending large sums of money to the EU, and polling shows the British public are adverse to paying a large exit bill. A YouGov poll in September found that even a bill of 20 billion pounds was unpalatable to 63 percent of voters surveyed.

Time is running out for the financial settlement to be agreed if it is to be approved at the next EU Council meeting in mid-December. After meeting Prime Minister May on Friday, EC President Tusk indicated that early December was the deadline. As Bloomberg explains.

“We are waiting for a substantial offer from the British,” Dutch Foreign Minister Halbe Zijlstra said on Monday.

 

“It has to be concrete and on the table instead of in the press”

 

Time is pressing on Britain to come up with an improved offer after EU President Donald Tusk said early December would be “the latest” for additional concessions on the bill if talks are to advance beyond the divorce and on to future trading arrangements after a mid-December summit. “We will make our proposals to the European Union in time for the council. I am sure about that,” Hammond said in an interview with the BBC on Sunday. Asked if time was running out for the U.K. to make an improved offer on its exit payment, he replied that “the council is in three weeks, so, yes.”

With the deadline approaching, the posturing by both sides is ratcheting up and an agreement – or otherwise – will probably go down to the wire.

The process has been complicated along the way by what sometimes looks like a game of brinkmanship. In an interview with the BBC, Davis insisted that Britain has “made all the running” and that now “I want them to compromise,” meaning the EU. Tusk responded by saying he found that position laughable: “I really appreciate Mr. Davis’s English sense of humor.”

Another point is that success or failure could well be decided at the highest political levels and relatively last minute. In Berlin on Friday, Davis said “we’ll make some decisions, political decisions, later on.” The stalemate in Brexit talks is dragging on as EU leaders refuse to discuss a future trade deal with the U.K. until sufficient progress is made on money, guaranteeing rights of citizens, and the Irish border.

Ahead of today’s cabinet meeting, an MP from May’s party warned her not to “play Santa Claus” to the EU. As the BBC reports.

The UK government cannot afford to “play Santa Claus” to EU bosses by handing over billions of pounds, a Conservative MP says. Nigel Evans accused the EU of demanding “ransom money” from Theresa May to move Brexit negotiations forwards. He was speaking ahead of a meeting between Mrs May and senior ministers to try to make progress on the stalled talks.

This was May leaving church with her husband in a red coat on Sunday.

It’s been clear that EU bureaucrats were determined to extract the maximum possible settlement to punish the UK for leaving. However, the sudden weakening in Merkel’s position, after her failure to negotiate a new coalition government, might shake Brussels’ hardline approach enough to get a compromise deal over the finishing line.

We never fully bought into the “Merkel is May’s ally” narrative, but time will tell.

5. RUSSIA AND MIDDLE EASTERN AFFAIRS

 

Saudi Arabia

the Saudi corruption probe widens as dozens of military officials have been arrested.  The move is obvious:  MbS wants to eliminate any threat of a military coup

 

(courtesy zerohedge)

 

 

 

end

(courtesy zerohedge)

6 .GLOBAL ISSUES

 

Zimbabwe

 

Zimbabwe’s ruling party has officially ousted Mugabe.  However he is still President if he refuses to leave.  He will then be impeached:

(courtesy zerohedge)

Hyperinflation as its finest moment:  check on Zimbabwe now:

 

(courtesy Koning/Bullionstar)

 

Hyperinflation in Zimbabwe – It’s back, but maybe not for long

Submitted by BullionStar.com

When a nation adopts a foreign currency it will typically face significant hurdles when it tries to rid itself of that currency, or de-dollarize. But Zimbabwe’s autocratic ruler Robert Mugabe has appeared to have done the impossible. After dollarizing ten years ago, over the course of the last year or two he and his cronies have managed to throw off the U.S. dollar and re-introduce a Zimbabwean replacement.

We can see evidence of this new currency in Zimbabwe’s stock market. Below I’ve charted the country’s main equity index, the Zimbabwe Industrial Index, going back to 2011. What an incredible rise over the last year, right? Beware; these returns have nothing to do with real economic growth. Zimbabwean equities have switched from being claim on an a stream of cash flows denominated in U.S. dollars to a stream denominated in Zimbabwe’s new currency. Because investors expect inflation of the new currency to drive up future cash flows, they have responded by bidding stock prices up. In real terms (i.e. U.S. dollar terms), stock prices are probably flat–and may have even declined.

Dollarization and de-dollarization

Let’s back up a bit. For those countries that mismanage their currency, the penalty box has typically been some form of dollarization. The citizens of a nation grow so tired of the hyperinflating currency that they opt for an alternative, whether that is euros, dollars, or some other medium of exchange.

Dollarization is usually only partial, the mismanaged currency continuing to circulate–albeit to a lesser extent–in conjunction with a stable alternative. Zimbabwe is unique in being one of the few countries to fully dollarize. By late 2008 the hyperinflation of the Zimbabwe dollar had become such a burden that Zimbabweans–without the permission of the Mugabe regime–threw their local currency notes into the gutters and adopted the U.S. dollar as their sole medium of exchange and unit of account.

Do you prefer to own 200 trillion dollars or do you prefer to own gold?

In 2016-17, the reverse has happened. Before I go into how the new Zimbabwean currency was introduced, it should be emphasized how difficult it is to replace an existing currency with a new one. Currency usage is locked in place by tradition and broad acceptance. Even when a national currency is doing very poorly, any single individual will be loath to be the first to desert it for a more stable alternative. Money is only useful when many people are using it, and since any new money lacks a base of users, it faces the paradox that it cannot ever get jumpstarted. In the case of modern Zimbabwe, the communal benefits of using the U.S. dollar as the “language of trade” are significant, so any alternative should have faced a huge hurdle in gaining acceptance.

The birth of Zimbabwe’s new currency

That the new Zimbabwean currency managed to make it past this hurdle is a testament to the powerful combination of subterfuge, brute force, and good old Gresham’s law that overpowered the staying power of the U.S. dollar. What follows are the steps that led to this switch.

After the 2008 dollarization rendered it useless, the Reserve Bank of Zimbabwe (RBZ) sneakily got back into the money printing game in 2012 or 2013. Creating a new national currency from scratch would have been politically impossible; the population was still furious with its leaders’ previous monetary mistakes. So instead the central bank began issuing a U.S. look-alike. Domestic banks had the option–and later were required–to open U.S. dollar accounts at the RBZ. These accounts weren’t available to the public but could be used between banks to settle domestic payments flows. At first, the RBZ’s U.S. dollar deposits were as good as the real thing. Banks could easily convert them into U.S. paper currency.

As time passed, Robert Mugabe’s government drew down on the RBZ’s resources in order to fund a massive spending campaign. This depletion of the RBZ’s hard currency reserves eventually forced it to renege on its promise to commercial banks to redeem in dollars. Regular Zimbabweans only got their first sign of trouble in early 2016. Since commercial banks could no longer rely on the RBZ to convert its U.S. deposits into real U.S. cash, the banks had no choice but to pass their inability to get cash on to their customers. The ability of the public to withdraw cash from U.S. dollar accounts was steadily cut back until they could only take out $50 per day, leading to massive lineups at banks across the nation. With the convertibility promise having been betrayed, dollars held in the banking system ceased to be equivalent to U.S. dollars. They began to trade at a 5-20% discount to genuine U.S. cash in the black market.

In November 2016 the RBZ introduced the bond note, its first issue of paper money since the old Zimbabwe dollar had expired worthless in 2008. (For more details, read my post on the topic here). As in the case of the accounts at the central bank, bond notes were supposed to be redeemable on demand into U.S. dollars. But this redemption promise proved to be a sham–and bond notes quickly began to trade at a discount to U.S. paper money.

Gresham’s law makes an appearance in Zimbabwe

Having duped the population into accepting RBZ-issued dollar notes and deposits, the government proceeded to declare its new currency legal tender. This meant that any creditor who had lent out U.S. dollars was obligated by law to accept payment in bond notes at par. At the same time, the authorities required retailers to treat all payments media as equivalents–they could neither discount the inferior currency nor accept the superior currency at a premium, the penalty being seven years in jail.

Which gets us to Gresham’s law. A rule going back to medieval times, Gresham’s law tells us that when a government dictates the exchange rate between different types of money, the ‘good’, or undervalued money will be chased out by the ‘bad’, or overvalued money.

To see how Gresham’s law has played out in Zimbabwe, consider a Zimbabwean street hawker who prior to 2016 had been selling oranges for $1 per bag. The new Zimbabwean currency is introduced. Because this new currency is inferior to the U.S. dollar, the street hawker continues to charge $1 per bag for those paying with genuine dollars but requires everyone paying with new currency to pay an extra 50 cents, or $1.50. With this new dual-pricing scheme, some customers will continue to pay with U.S. dollars, others will pay with bond notes. Both types of money circulate together.

In 2008, on the first day of issuance, a 100 trillion dollar note reportedly could buy 3 eggs in Zimbabwe but only 1 egg the day after

When the government announces that all currencies must be treated as equals, the street hawker can no longer charge an extra 50 cents to those paying with Zimbabwean currency. To meet the letter of the law, he sets his price at a flat $1.50 per bag of oranges, irrespective of the type of currency used. However, this undervalues the U.S. dollar. After all, $1.50 in U.S. cash should be capable of buying a bag-and-half of oranges, not just one bag. The result is that none of the street hawker’s customers will ever pay with U.S. dollars, preferring to hoard them and proffer Zimbabwean currency as payment instead.

This parable of the street seller has occurred all over Zimbabwe over the last twelve months. Thanks to the government’s edict that all currencies be treated as equals, U.S. dollars have been driven entirely from circulation. No one wants to use them because they are undervalued. As a result, bank money and bond notes have become the main media of exchange in Zimbabwe. Zimbabwe has dedollarized.

Hyperinflation 2.0

Prices are on the rise. I used the stock market as an illustration of this in my introduction. Consumer goods have been slower to adjust, but earlier this month Equity Axis–a local financial research firm–reported that the prices of basic goods have gone up by between 50- 100% over the past eight weeks. On the streets, illegal currency traders will buy $1 worth of bank money for just 54 cents in genuine cash, according to recent reports.

Comparing the price of bitcoin in Zimbabwe against its international price also gives some clues into how far the new currency has tumbled. Last week bitcoin traded at $13,185 on the Golix, a Zimbabwean bitcoin exchange, but only $7190 on U.S. exchanges. We need to take the price of $13,185 with a grain of salt, because Golix is a very illiquid exchange. In any case, the ratio between the two bitcoin prices implies that a Zimbabwean bank dollar is only worth 54 cents in genuine U.S. dollars ($13185/7190), confirming the unofficial street price in the previous paragraph. Put differently, in just one year Zimbabwe’s new currency has lost almost half its value.

Economist Steve Hanke, who helps maintain the Hanke-Krus World Inflation Table, has used interlisted stocks on the Harare and London stock exchanges to infer that Zimbabwe’s inflation rate has soared to 77%. (I described this technique in more detail here). When inflation exceeds 50% per month and lasts for at least thirty consecutive days it qualifies as hyperinflation, which means that Zimbabwe’s current currency collapse will be added to the Hanke-Krus table.

Going forward…

Given that Mugabe and his cronies have already shown a penchant for destroying currencies, as long as they are in power it seems unlikely that the current inflation will stop. As I was writing this post, however, the situation in Zimbabwe has dramatically changed. On November 14, the army announced that it had placed Mugabe under house arrest. We don’t know if he will be permanently removed from power or if the situation is just a temporary one. If a new government can be established, and the international community mobilized to support it, it is possible that the collapse in the new currency will be halted, perhaps even reversing back to par. For instance, a large enough IMF loan might allow the RBZ to uphold its original promise to convert bond notes and deposits into genuine dollars on a 1:1 basis.

The market may already be pricing in an improvement in the odds of the Zimbabwean currency being stabilized. Over the two days the Zimbabwe Industrial Index has plunged by over 100 points or 20%, as the chart at top illustrates. This correction may be partly due to operating uncertainties faced by listed firms given the lack of visibility surrounding future leadership. But the largest chunk of the decline is surely a pure monetary phenomenon. Since all stock prices are quoted in Zimbabwean money, a massive increase in the purchasing power of money will cause stock prices to fall.

Many outside the country have no doubt been anxiously watching Zimbabwe’s monetary experiment, especially in Europe. In the same way that Zimbabwe was part of the U.S. dollar-zone, most European nations are part of the Eurozone, in some cases reluctantly so. Zimbabwe offers these nations a blueprint for quickly exiting the monetary union. That may be one reason why the President of the European Central Bank, Mario Draghi, was so quick to shoot down Estonia’s recently mooted state-backed cryptocurrency, the Estcoin. By nipping it off at the bud, he ensured he wouldn’t have a home-grown bond note problem.

This blog post is the first in a series of guest posts on BullionStar’s Blog  by the renowned blogger JP Koning who will be writing about monetary economics, central banking and gold .

JP Koning

7.OIL ISSUES

 

Nebraska regulators approve the Keystone pipeline just days after a South Dakota leak.

This will no doubt be challenged in the court

(courtesy zerohedge)

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 1.1779 DOWN .00005/ REACTING TO MERKEL’S FAILED COALITION/ 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 GREEN 

USA/JAPAN YEN 112.21 UP 0.153(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 1.3234 UP .0036 (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 1.2783 UP .0027(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 5 basis points, trading now ABOVE the important 1.08 level RISING to 1.1779; / Last night the Shanghai composite CLOSED UP 9.49 POINTS OR .38% / Hang Sang CLOSED UP 61,27 POINTS OR 0.21% /AUSTRALIA CLOSED UP 0.17% / EUROPEAN BOURSES OPENED ALL GREEN 

The NIKKEI: this MONDAY morning CLOSED DOWN 135.04 POINTS OR 0.60%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 61.27 POINTS OR 0.21% / SHANGHAI CLOSED UP 9.49 POINTS OR .28% /Australia BOURSE CLOSED UP 0.17% /Nikkei (Japan)CLOSED DOWN 135.04 POINTS OR 0.60%

INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: 1291.85

silver:$17.19

Early MONDAY morning USA 10 year bond yield: 2.339% !!! DOWN 1 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 2.777 DOWN 1 IN BASIS POINTS from FRIDAY night. (POLICY FED ERROR)

USA dollar index early MONDAY morning: 93.78 UP 12 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: 1.951% DOWN 3 in basis point(s) yield from FRIDAY

JAPANESE BOND YIELD: +.033% DOWN 3/10  in basis point yield from FRIDAY/JAPAN losing control of its yield curve/

SPANISH 10 YR BOND YIELD: 1.515% DOWN 4 IN basis point yield from FRIDAY

ITALIAN 10 YR BOND YIELD: 1.809 DOWN 3 POINTS in basis point yield from FRIDAY

the Italian 10 yr bond yield is trading 30 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.363% DOWN 0 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 1.1737 DOWN.0047 (Euro DOWN 47 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 112.53 UP 0.482(Yen DOWN 48 basis points/

Great Britain/USA 1.3237 UP 0.0034( POUND UP 34 BASIS POINTS)

USA/Canada 1.2796  .0039 Canadian dollar DOWN 39 Basis points AS OIL FELL TO $55.95

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This afternoon, the Euro was DOWN 47 to trade at 1.1737

The Yen FELL to 112.53 for a LOSS of 48 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 1.3237/

The Canadian dollar FELL by 39 basis points to 1.2796 WITH WTI OIL FALLING TO : $55.95

The USA/Yuan closed AT 6.6370
the 10 yr Japanese bond yield closed at +.033% DOWN 3/10  IN BASIS POINTS / yield/
Your closing 10 yr USA bond yield UP 3 IN basis points from FRIDAY at 2.368% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 2.8090 UP 3 in basis points on the day /

Your closing USA dollar index, 94.00 UP 43 CENT(S) ON THE DAY/1.00 PM/BREAKS RESISTANCE OF 92.00

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

London: CLOSED UP 8.78 POINTS OR 0.12%
German Dax :CLOSED UP 64.93 POINTS OR 0.50%
Paris Cac CLOSED UP 21.78 POINTS OR 0.40%
Spain IBEX CLOSED UP 15.10 POINTS OR 0.15%

Italian MIB: CLOSED UP 96.30 POINTS OR 0.44%

The Dow closed UP 72.09 POINTS OR .31%

NASDAQ WAS closed UP 7.92 Points OR 0.12% 4.00 PM EST

WTI Oil price; 55.95 1:00 pm;

Brent Oil: 61.98 1:00 EST

USA /RUSSIAN ROUBLE CROSS: 59.45 DOWN 43/100 ROUBLES/DOLLAR (ROUBLE HIGHER BY 43 BASIS PTS)

TODAY THE GERMAN YIELD RISES TO +.363% FOR THE 10 YR BOND 1.00 PM EST EST

END

This ends the stock indices, oil price, currency crosses and interest rate closes for today 4:30 PM

Closing Price for Oil, 4:30 pm/and 10 year USA interest rate:

WTI CRUDE OIL PRICE 4:30 PM:$56.09

BRENT: $62.13

USA 10 YR BOND YIELD: 2.3666% (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.780%

EURO/USA DOLLAR CROSS: 1.1731 down .0053

USA/JAPANESE YEN:112.63 up 0.575

USA DOLLAR INDEX: 94.07 up 41 cent(s)/

The British pound at 5 pm: Great Britain Pound/USA: 1.3230 : UP 27 POINTS FROM LAST NIGHT

Canadian dollar: 1.2819 DOWN  63 BASIS pts

German 10 yr bond yield at 5 pm: +0.363%

END

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

TRADING IN GRAPH FORM FOR THE DAY

German Government Crisis Sends Stocks Soaring, Gold Down Most In 4 Months

Following Friday’s best day in 6 months, gold tumbled most in 4 months today as the German Government crisis sent investors fleeing any source of safe haven!!??

Sell bonds, sell gold, sell protection…

Seriously…

Before we get to the farce in US equities, let’s look at German stocks…

 

Which is odd because EURUSD actually dumped it all back (after its own machine-driven ramp back to unch)…

 

Oh, yeah and don’t forget Chinese stocks’ miraculous lift!?

As Bloomberg’s Vince Cignarella noted, strong earnings and solid global growth prospects continue to lift stocks while falling Treasuries and higher yields drove dollar gains; investors ignoring the Trump administration’s plan for fresh sanctions on North Korea and the failure of Angela Merkel to put together a coalition government in Germany. U.S. President Donald Trump said Monday he will designate North Korea a state sponsor of terrorism, subjecting the regime to additional sanctions. The EUR fell as coalition talks in Germany ended; German Chancellor Angela Merkel said she would prefer to go ahead with new federal elections rather than try to form a minority government. Gold and the VIX fell, punctuating the market’s disregard for global events.

Which brings us to US equity futures… (odd divergence between Dow and Nasdaq as cash markets opened)…

 

Small Caps were the day’s best-performer… with a total meltup squeeze into the close…

 

This is the biggest 3-day short-squeeze since February…

NOTE what happened in the subsequent days the last time.

 

Once again we have The Bank of Japan and the algos to thank for this non-stop bid…

 

AT&T and TWX slid after anti-trust headlines…

 

HYG rallied very modestly today early on then sold into and beyond the EU close – notably underperforming stocks…

 

And credit risk worsened from the open while VIX was crushed…

 

Treasuries were initially bid (down 2bps) after Merkel’s headlines but then as everything rebounded, bonds sold off (but the long-end outperformed)…

 

The UST weakness sent the spread to Bunds back above 200bps…

 

But the curve just keeps collapsing!!!

 

Just hammered…

 

The Dollar Index echoed the chaos in EURUSD today as the initial surge was met with machines selling all the way down to unchanged… which sparked a rebound…

 

WTI/RBOB both fell on the day..

 

Gold swung fron best day in 5 months to worst day in 4 months, breaking back below the 50- and 100-day moving-averages…

 

Bitcoin soared to new record highs above $8000 this weekend…

 

Sending Bitcoin’s market cap above Nvidia’s…

 

Finally, gold is still clinging to green post-Saudi chaos…

END

 

Global trading:

 

With the huge amount of negative news throughout last night, somehow the market “reconsidered” the data as the plunge protection team bought everything but gold and silver:

(courtesy zerohedge)

 

“None Of The Problems Are Solved” Despite Global ‘Plunge Protection’ Overnight

When many American traders went to bed last night, China was tumbling, the euro was in trouble, and US equity futures were notching lower. Then, as former fund manager Richard Breslow scoffs, it appears the world “reconsidered” and everything rallied to erase any sign of discontent or uncertainty by the time everyone woke up…

Via Bloomberg,

Apparently, the word of the day is “reconsider.”

Across a whole host of assets, we got somewhat violent moves early in the 24-hour trading cycle that managed to unwind themselves over the course of the day.

I kept being told that the euro, Chinese equities, U.S. equity futures, gold, bond yields, Eurostoxx 50, and so on, all reversed their opening, sometimes gap, moves after the market reconsidered what it all meant.

Of course, that’s being a bit too kind. It would be more accurate to say things turned around when traders actually considered things for the first time. But this all matters more than just a collection of knee-jerk reactions that have come to naught as another trading region came in.

 

North America isn’t being asked to break the tie and decide who was right. They are being told that they can afford to ignore the news that propelled things in the first place. After all, we’re right back where we started. No harm, no foul. That would be a mistake, as once again we keep muddling-up short-term and long-term information as if they should be discounted by the same rate and assuming we should trade without benefit of context.

 

 

Chinese equities opened lower leaving gaps from last Friday’s close.

 

 

Big swings: the Shenzhen dropped a quick 2.1% before staging a relentless rally throughout the day to finish up by 0.9%. No leap on the close, just a steady rally.

 

 

The commentary at the lows was as dire as the dismissive tone was at the close.

 

The PBOC proposed additional regulations to curb the run-away shadow banking industry. What was described in the morning as policies that would cause a flood of outflows from various short-term investments were later described as likely to attract foreign inflows. Wait, we’re not collapsing through the last lines of support any more? What a gift — buy!

 

The message from this is that, once again, the PBOC is delivering on what they have warned about and promised to address. Perhaps instead of trying to deconstruct the “real” Chinese intentions based on outmoded epigrams, we should start to listen to what they’re actually saying. And accept that regulation isn’t bad by definition. Sometimes a healthier Main Street can actually be good for equities–the old-fashioned way. But it would be folly to decide these new regulations must not be all important because of the day’s price action.

 

European shares and the euro were hit early on the German coalition talks collapse.

 

 

What began as “markets are being roiled” quickly turned to markets “shrugged it off.” Hardly. They recovered on the very fortuitously timed announcement that Volkswagen was going to spend an additional EU25B over the next five years on its core brand. That’s hard and good news. May even help out with Germany’s hopelessly flat Phillips curve.

 

 

But don’t think, Chancellor Merkel on her back foot isn’t something with negative possibilities that make it foolish to dismiss. Just hard to enumerate the immediate implications.

As Breslow concludes, the mirage of markets’ ignorance does not mean anything is solved.

Some of the other realities to keep factoring into your analysis and avoid being lulled into ignoring include:

  • Brexit wasn’t solved because today’s headline was upbeat, it’s serial noise;
  • you’ve no way of handicapping Nafta as each debating point is aired;
  • no one has a firm handle on the Middle-East;
  • and U.S. tax reform may end up just stoking the debate of whether a bad deal is better than no deal.

Don’t ever let someone tell you the really big news is the ones you can afford to ignore

And it appears we’re gonna need more ‘help’…

end

 

Baltimore neighbourhood under lockdown as police have declared Martial law

 

(courtesy zerohedge)

 

Entire Baltimore Neighborhood Under Lockdown: “Police Declared Martial Law”

Five days ago, Det. Sean Suiter, a married father of five and an 18-year veteran with the Baltimore Police, was patrolling the streets of West Baltimore around 5pm last Wednesday when he saw suspicious activity. Suiter approached a man and was shot point blank in the head, in a summary execution. He was rushed to the hospital in critical condition where he later died of his injuries.

In response, Baltimore Police reacted with ‘fire and fury’ turning the neighborhood where Suiter was shot into an “open-air prison”, shutting down city streets and enabling checkpoints for citizens while officers in tactical gear went door to door, according to Baltimore Brew. Residents were prohibited from entering their own neighborhood unless they showed proper identification, these extreme measures have been in place for 4-5 days.

“They’ve been to my house three times asking, ‘Did you hear anything? Do you know anything,’” said Edward Stanley, a local resident, who had to show a yellow slip before entering the neighborhood.

Baltimore Brew said, the neighborhood was tuned into “open-air prison”, as the complete lockdown was in attempt to collect evidence and search for the shooter.

Police initially said they needed to cordon off the area to try to capture the shooter. Police have said Suiter was in the 900 block of Bennett Place, investigating a previous homicide, when he was shot on Wednesday. So far, no arrests have been announced in the case. This morning, homicide detective Mike Newton told The Brew that the lockdown was necessary to collect evidence.

One community group took pictures of a checkpoint in West Baltimore.

15 @BaltimorePolice vehicles on Schroeder alone and dozens more on surrounding blocks. All the officers are just sitting in their cars.

Another twitter account describes how ‘the police declared marital law’, as one police officer with an assault rifle guards a corner.

So we not gonna talk about how the police declared martial law by themselves in west Baltimore…… Bet

And apparently police been standing on corners like this the last two days pic.twitter.com/y9Qrd2TSRe

View image on Twitter

Citizens describe how their day lives have been disrupted as West Baltimore remains under police control, as per Baltimore Brew:

Two women walking down Franklin Street to get to their cars, parked blocks away because of the lockdown, complained that they had been harassed by officers.

 

“They know I live here. They’ve seen me come and go. But this one had to pat me down. He [the officer] went like this to my jacket, grabbing it,” said Shelly, 25, who asked that her last name not be used.

 

“They wanted to know where I had been. Why do I have to tell him that? It’s just me in my flip-flops trying to go to my own home.”

 

“We haven’t been able to get our mail for four days,” said the woman with her, Samantha, 50, who also asked not be identified. “Is the city going to pay the late fees on my bills?”

 

“It’s so sad what happened to the officer and I hope they catch whoever did it,” another woman said. “But this is really overboard. I’ve never seen anything like it.”

The ACLU of Maryland released a statement yesterday, who are “troubled by reports that some persons entering or leaving the area have been subject to pat down searches, and that non-residents have been barred from entering the area”.

“While the search for a killer is, of course, a high priority for the police, the limits on lawful police behavior do not disappear even when engaged in that pursuit.  And at least one federal appellate court has said that a similar police cordon and checkpoint system was unconstitutional.

 

“The residents of Baltimore, and, in particular, the residents of the affected community, deserve a clear explanation from the City as to why this unprecedented action has been taken, what rules are being enforced, and why it is lawful.  The need to secure a crime scene from contamination to preserve evidence does not, on its face, explain the wide area to which access has been restricted for days after the incident.”

 

On-the-ground information is scarce to those outside the cordon because access to residents, including by the media, has also been restricted. For that reason, we encourage anyone who has this kind of information to contact us at curtis@aclu-md.org.

WBALTV11 visited one checkpoint in West Baltimore:

As calls to  grow, Baltimore Police announce they’ll release the Harlem Park crime scene Monday.@ACLU_MDis questioning the legality of the 4 day long police cordon.

The reward info about Detective Suiter’s killer is $215k, a suspect has not been named. pic.twitter.com/LdugZ0zTT4

West Franklin Street is back open to traffic.

Police plan to release the West Baltimore crime scene Monday morning pic.twitter.com/AgyDlqjWQH

According to one citizen, ‘this is the 3rd time in less than 3 years that West Baltimore has been occupied by police’…

This is the 3rd time in less than 3 years that West Baltimore has been occupied by police:

1) April 27 – May 1 in 2015 after the funeral of Freddie Gray
2) June 27, 2016 at a street celebration of the life of rapper Lor Scoota
3) Nov. 16-???? in 2017 after Det. Suiter was killed

Baltimore Brew concludes by saying the Baltimore Police will “clear the crime scene” on Monday, so in a few hours.

Perhaps in a preview of things to come, the 4-5 day siege of West Baltimore by Police has been described by one resident as ‘Martial Law’. Readers concerned about social tensions in the US are urged to monitor events in Baltimore, which better than Chicago or Detroit now demonstrates just how the United States is marching straight into a new, Orwellian era.

end

FBI Informant has a video of Russian agents with briefcases of bribe money and this money went to the Clinton’s and the Clinton Foundation

 

(courtesy zerohedge)

 

 

FBI Informant Has Video Of Russian Agents With Briefcases Of Bribe Money In Clinton-Uranium Scandal

Submitted by iBankCoin.com

An undercover FBI informant in the Russian nuclear industry who was made to sign an “illegal NDA” by former AG Loretta Lynch, claims to have video evidence showing Russian agents with briefcases full of bribe money related to the controversial Uranium One deal – according to The Hill investigative journalist John Solomon and Circa‘s Sara Carter.

The informant, whose identity was revealed by Reuters as William D. Campbell, will testify before congress next week after the NDA which carried the threat of prison time was lifted. Campbell, originally misidentifed by Reuters as a lobbyist is actually a nuclear industry consultant who is currently battling cancer.

As previously reported, Campbell was deeply embedded in the Russian nuclear industry where he gathered extensive evidence of a racketeering scheme involving bribes and kickbacks.

The Russians were compromising American contractors in the nuclear industry with kickbacks and extortion threats, all of which raised legitimate national security concerns. And none of that evidence got aired before the Obama administration made those decisions,” a person who worked on the case told The Hill, speaking on condition of anonymity for fear of retribution by U.S. or Russian officials. –The Hill

Campbell’s attorney, former Regan Justice Department official Victoria Toensing, previously told Fox Business host Lou Dobbs “He can tell what all the Russians were talking about during the time that all these bribery payments were made.”

Sara Carter and John Solomon sat down with Fox News host Sean Hannity to discuss:

Sarah Carter: He’s very sick and he’s been battling cancer and going chemo. He is in a battle for not only his life, but in a battle against what he perceives as people within the US government that don’t want this story to come out.  But there’s so much information that he is willing to share with the public to set the record straight, and believe me we’re gonna get it out there. He is going to have his say. His voice will be heard.

 

Hannity: He knew about the bribery, kickbacks, extortion of Putin’s agents in the US?

 

Sara Carter: Yes, and he will be able to lay that all out for everyone, and he will do that for Congress. John and I have been working on this for months and months and months. He came to the [Obama] DOJ with this information.

 

John Solomon: He is going to be an extraordinary fact witness because he gathered so much information. There are videotapes where the Russians are opening up briefcases full of cash. These are the people we then gave uranium to, that we then gave nuclear fuel contracts to.

 

Hannity: This is happening before they sign off on Uranium One? They knew about bribery extortion kickbacks money laundering before? They knew this was Putin and they did it anyway!

 

John Solomon: Yes. The Russians really thought they had played America on this one.

Watch:

(courtesy zerohedge)

Another US Navy Warship Crashes

Over the summer there were two accidental collisions involving the 7th fleet, and a total of 4 similar incidents this year… until today as yet another US Navy warship collided with a Japanese tug boat during exercises.

SputnikNews.com reports the incident occurred off the east coast of Japan. The boat was on its way to the port in Yokosuka, where the US Navy is stationed.

A Japanese tug boat has accidently damaged a US missile destroyer in Sagami Bay.

“No one was injured on either vessel and Benfold sustained minimal damage, including scrapes on its side, pending a full damage assessment,” a press release of the US Navy said.

According to the report, the US Navy carried out towing exercises when the boat experienced technical problems and crashed into the side of the USS Benfold.

An investigation of the incident is underway

end

Stockman slams the USA recovery as a “nothing burger” as well as discuss that the new tax reform bill will accomplish nothing

(courtesy David Stockman/ContraCorner)

Stockman Slams “The Awesome Recovery” Narrative

Authored by David Stockman via Contra Corner blog,

One of the great philosophers of recent times was surely Sgt. Easterhaus of “Hill Street Blues”. As he assigned his men to their daily rounds in the crime infested streets of the Big Apple he always ended the precinct’s morning call with his signature admonition:

“Let’s be carful out there.”

That wisdom has been long lost on both ends of the Acela Corridor. In the face of blatant dangers and even existential threats, their denizens whistle past the graveyard with alacrity. So doing, they turn a blind eye on virtually all that contradicts the awesome recovery narrative, the indispensable nation conceit and the Washington can Make America Great Again (MAGA) delusion, among countless other fantasies.

For example, the GOP should be literally petrified by an horrid fiscal scenario for the coming decade that entails Social Security going bust, another $12 trillion of current policy deficits and a prospective $33 trillion public debt by 2027. And even that presupposes a macro-economic miracle in the interim: Namely, a 207 month stretch from 2009 to 2027 without a recession—–a feat which is twice the longest expansion in recorded history

Image result for images of three monkeys of see no evil, hear no evil, speak no evil

Instead, they have passed a FY 2018 budget resolution which implicitly embraces all of the above fiscal mayhem, and then adds upwards of $2 trillion (so far and counting interest) of incremental deficits to fund an ill-designed tax cut that is inherently an economic dud and political time bomb.

As to the former, the GOP is lost in ritual incantation and foggy Reagan-era nostalgia. Unlike the giant Reagan tax cut of 1981, the pending bills do not cut marginal tax rates measurably—or even the individual income tax burden in any meaningful sense.

In fact, if you set aside the so-called pass-thru rate for unincorporated businesses (see below), the entire 10-year tax cut on the individual side amounts to just $480 billion. In the scheme of things, that’s a tiny number; it represents only 2.2% of the $22 trillion CBO baseline for individual income tax collections over the next decade; and it also is equal to just 0.2% of the projected nominal GDP over the period.

By way of comparison, the Reagan tax cut amounted to 6.2% of GDP when fully effective; and the net cut for individuals taxpayers alone averaged 2.7% of GDP over a decade. In today’s economy, that would amount to a tax cut of $6.5 trillion during 2018-2027 or 14X more than the $450 billion net figure estimated by the Joint Committee on Taxation.

To be sure, the abused citizens of America are more than entitled to even this tiny tax cut and much more. That is, if their elected representatives were willing to cut spending by an equal amount or even raise alternative, more benign sources of revenue (i.e. a VAT on consumers vs. the current levy on producer and worker incomes). But unless a rapidly aging society wishes to bury itself in unsupportable public debt, it simply can’t afford deficit-financed tax cuts for either the principle or the politics of the thing.

Moreover, to pretend that the tax concoction fashioned by Congressman Brady—- with a pack of Gucci Gulch jackals nipping at his heels— will actually generate enough growth and jobs to largely pay for itself is to make a mockery of Sgt. Easterhaus’ admonition. Rather than an exercise in fiscal carefulness, it is the height of recklessness to assume that much enhanced domestic growth, employment and Treasury receipts will result from any part of the $2.8 trillion cut for the rich and corporations that is at the heart of the GOP tax bill.

Actually, it’s the heart and then some. With recent modifications (including dropping of the $150 billion corporate excise tax intended to prevent companies from hiding domestic profits via over-invoicing of imports from their own affiliates), the net revenue loss of the Brady bill is calculated at about $1.7 trillion.

That means, of course, that fully 165% of the net tax cut goes to: (1) 5,500 dead rich people’s heirs per year ($172 billion for estate tax repeal); (2) 4.3 million very wealthy loophole users ($700 billion for the minimum tax repeal); and (3) the top 1% and 10% of households who own 60% and 85% of business equities, respectively, who will get most of the $1.95 trillion of business rate cuts.

In this context, we cannot stress more insistently that Art Laffer’s famous napkin does not apply to business tax cuts in today’s world of globalized trade and labor rates and artificially cheap central bank enabled debt and capital.

That’s because the business income taxes are born by owners, not workers. The wage rates and incomes of the latter are determined in a saturated global labor market where the China Price for Goods and the India Price for internet based services sets wages on the margin.

At the same time, owners are not deterred from making investments by the proverbial “high after-tax cost of capital”. That’s because it isn’t.

Even at the current statutory 35% tax rate (which few pay), the absolute cost of equity and debt capital is cheaper than ever before in modern history.

In fact, the after-tax cost of equity to scorched earth investment juggernauts like Amazon is virtually zero, while the cheap debt-fueled boom in conventional plant, equipment, mining, shipping and distribution assets over the last two decades has stocked the planet with sufficient capacity for decades to come.

In short, if you lower the business tax rates to 20% and 25% for corporations and pass-thrus, respectively, you will get more dividends, more stock buybacks and other returns to shareholders. Those distributions, in turn, will go to the very wealthy and to pension funds/non-profits. The latter will pay no taxes on these distributions while the former will pay 15%-20% at current law rates of o%, 15% and 20% on capital gains and dividends, which the Brady bill does not change.

In short, maybe the $2.8 trillion of tax cuts for business and the wealthy will generate a few hundred billion of reflows over the decade. And even that will not be attributable to the “incentive effect” of the Laffer Curve at all; it’s just tax collection mechanics at work as between the personal and business taxing systems.

By the same token, the Sgt. Easterhaus principle is also being ash-canned by the GOP on the politics side of the tax bill, as well. In fact, Republicans have been chanting the “tax cut” incantation for so many decades that they apparently can’t see the obvious. Namely, that among the middle quintile of households (about 30 million filers between $55,000 and $93,000 of AGI) the ballyhooed “tax cut” will actually be a crap shoot.

When fully effective, roughly two-thirds of filers (20 million units) would realize a $1,070 per year tax cut, while another 31% (roughly 9.5 million filers) would experience a $1,150 tax increase!

That’s a whole lot of rolling dice—-depending upon family size, sources of income and previous use of itemized deductions. Yet for the heart of the middle class as a whole—-30 million filers in the aforementioned income brackets—the statistical average tax cut would amount to $6.15 per week.

That’s right. Two Starbucks cappuccinos and a banana!

So we’d call the GOP’s noisy advertising of a big tax cut for the middle class reckless, not careful. Indeed, the Dems will spend hundreds of millions during the 2018 election season on testimonials and tax tables which prove the GOP’s claim is a pure con job.

They will also prove the opposite— that the overwhelming share of this unaffordable tax cut is going to the top of the economic ladder. After all, the income tax has morphed into a Rich Man’s Levy over the last three decades. So if you cut income taxes—-the benefits inherently and mechanically go to the few who actually pay.

Thus, in the most recent year (2015), 150.5 million Americans filed for income taxes, but just 6.8 million filers (4.5% of the total) accounted for 35% of all AGI ($3.6 trillion) and 59% of taxes paid ($858 billion).

By contrast, the bottom 64 million filers reported only $928 billion of AGI, and paid just 2.2%  ($20 billion) in taxesThat is, owing to the standard deduction, personal exemptions and various credits the bottom 44% of taxpayers accounted for only 1.4% of personal income tax collections.

Even when you widen the bracket to the bottom 123 million tax filers (82%), you get $4.3 trillion of AGI and just $284 billion of taxes paid. In other words, the bottom four-fifths of filers pay only 6.6% of their AGI in tribute to Uncle Sam. They may not be getting their money’s worth from the Washington puzzle palaces, but you can’t get blood from a turnip, either.

In short, Flyover America desperately needs tax relief for the 160 million workers who actually do pay up to 15.5% of their wages in employer/employee payroll tax deductions. Yet by ignoring the $1.1 trillion per year payroll tax entirely and recklessly and risibly claiming that its income and corporate tax cut bill materially aids the middle class, the GOP is only setting itself up for a thundering political backlash.

Nothing makes this clearer than some recent (accurate) calculations by a left-wing outfit called the Institute for Policy Studies that boil down to the proposition that “It Takes A Baseball Team”.

That is, the top 25 US persons (like the full MLB roster) on the Forbes 400 list now report about $1 trillion in collective net worth. That happens to match the net worth of the bottom 180 million (56%) Americans.

Needless to say, that egregious disproportion does not represent free market capitalism at work; it’s the deformed fruit of Bubble Finance and the vast inflation of financial assets that the Fed and other central banks have enabled over the past three decades.

In terms of the Sgt. Easterhaus metaphor, monetary central planning has planted some exceedingly dangerous political time bombs in the precincts, neighborhoods, towns and cities of Flyover America. Accordingly, if the GOP succeeds in passing some version of its current tax bill, it may be what finally brings the Dems back into power on an out-and-out platform of socialist healthcare (single payor) and tax redistributionism with malice aforethought.

Even as the GOP recklessly plunges forward with gag rules and its sight unseen legislative steamroller (echoes of ObamaCare in 2010), it will never be able to hide what is buried in the bill’s tax tables. Namely, an average tax cut for the top 1%—even after accounting for elimination of upwards of $1.3 trillion of itemized deductions—-that would amount to $1,000 per week.

Moreover, for the top o.1% (150,000 filers), the Dem campaign ads will show a cut of $5,300 per week; and for a subset of 100,000 of the top 0.1% filers, the GOP’s tax cut would amount to $11,300 per week .

That’s right. Each and every one of the very ultra rich would get a tax break equivalent to that which would accrue to every 2,000 middle bracket filers under the Brady bill.

As Sgt. Easterhaus might have said: They have been warned!

Meanwhile, at the other end of the Acela Corridor, the good precinct sergeant gets no respect, either. Indeed, gambling in today’s hideously over-valued and unstable casino is exactly the opposite of being careful; it’s certain to lead to severe—even fatal—financial injuries on the beat.

In this context, we have been saying right along that the essential evil of monetary central planning is that it systematically falsifies asset prices and corrupts all financial information. That includes what passes for analysis by the Cool Aid drinkers in the casino.

But when we ran across this gem from one Steve Chiavarone yesterday we had to double check because we thought perhaps we were inadvertently reading The Onion.

But, no, he’s actually a paid in full (and then some) portfolio manager at the $360 billion Federated Investors group who appeared on CNBC, and then got reported by Dow-Jones’ MarketWatch just in case you had the sound turned off during his appearance on bubblevision.

So here’s how the bull market will remain “alive for another decade.” According to Chiavarone, millenials who don’t have two nickels to rub together will make it happen. No sweat.

“Millennials are entering the workforce, but their wages are going to be under pressure their whole career,” he explained to CNBC’s “Trading Nation” on Friday. “They won’t make enough money to pay down their debt, fund their life and fund retirement where there is no pension. So, they’re going to need equities.”

Then again, aspiration and capability are not exactly the same thing. In fact, the frequent yawning difference between the two puts us in mind of the Donald’s characterization of his primary opponent as Little Marco Rubio. The latter never stops talking about himself as the very embodiment of the American Dream come true—-so for all we know perhaps Marco did aspire to be an NBA star.

But when he famously couldn’t reach his water bottle from atop a stool during his nationwide TV rebuttal of an Obama SOTU speech a few years back, it was evident that NBA stardom wasn’t ever meant to be.

Nor during the coming decade of stagnant wages and rising interest rates is it any more obvious how millennials will beg, borrow or steal their way to massive purchases of equities. That is, how they will finance what will actually be an avalanche of stock sales by 80 million fading baby boomers who will need the proceeds to pay their nursing home bills.

But never mind. MarketWatch caught the full measure of  what shines on the inside of Mr. Chiavarone’s financial beer goggles:

 The risk is not being in this market,” says Chiavarone, who helps run the Federated Global Allocation Fund. The firm’s current price target is for 2,750 on the S&P by the end of next year and 3,000 for 2019.

 

“We are probably frankly low on both of them,” he said. “Tax reform could push up the markets.” That’s not to say there won’t be some pain along the way, specifically the potential for a recession in 2020 and 2021, according to Chiavarone.

 

What’s an investor to do in that case? “Buy the recession,” he said.

Indeed, it doesn’t come any stupider than the market blather that is constantly published on MarketWatch. Today it also informs us that not only have US earnings been galloping forward in recent quarters, but its actually a global trend:

However, this is hardly a U.S.-only story. Corporate earnings have been improving globally, and some of the fastest growth has come from international companies, as seen in the following chart from BlackRock, which looks at U.S. growth against the globe, excluding the U.S.

The chart below is supposed to be the evidence, but we are still scratching our heads looking for the point. It seems that global corporate earnings ex-US based companies have surged…..all the way back to where they were in 2011!

You can’t make this stuff up. Did these geniuses notice that China just went full retard in credit expansion to insure that the coronation of Mr. Xi was the greatest since, apparently, the Ming Dynasty invited the civilized world (not Europe) to the coronation of its fourth emperor in 1424?

In fact, the 19th Party Congress is now over, and the Red Suzerains of Beijing are back to the impossible task of reining in the massive malinvestment, housing, debt and construction bubbles which have turned China’s economy into a $40 trillion powder keg. So right on cue it reported a sharp cooling of its red hot pre-coronation economy last night.

Thus, value-added industrial output, a rough proxy for GDP, expanded by just 6.2% in October compared to double digit increases a few months back.

Likewise, fixed-asset investment climbed 7.3% in the January-October period from a year earlier. Notably, that’s way down from high double digit rates during most of the century, and, in fact, is the slowest pace since December 1999.

Needless to say, the latter data point amounts to a clanging clarion. At the end of the day, the ballyhooed Chinese growth miracle is really a story of construction and debt-fueled asset investment gone wild. And that party is now over.

So whatever Sgt. Easterhaus actually meant during the seven seasons of “Hill Street Blues” which always started with his famous admonition, we are quite sure that today it would not have meant buying the dips in a casino that is rife with unprecedented danger.

Finally, when it comes to real danger we think the most precarious spot along the Acela Corridor is about one mile from Union Station. We are speaking, of course, of the Oval Office and the Donald’s questionable tenure therein.

Even as he meandered around Asia double-talking about trade and basking in the royal reception put on by his duplicitous hosts in Tokyo, Seoul and most especially Beijing, the Donald did manage to hit a fantastic bull-eye stateside.

Indeed, his takedown of the three stooges—Brennan, Clapper and Comey—–of the Deep State’s spy apparatus will be one for the ages. Not since Jimmy Carter has a president even vaguely admonished the intelligence agencies, but as it his wont, the Donald held nothing back—naming names and drop-kicking backsides good and hard:

“And then you hear it’s 17 agencies. Well, it’s three. And one is Brennan and one is whatever. I mean, give me a break. They’re political hacks. So you look at it — I mean, you have Brennan, you have Clapper, and you have Comey. Comey is proven now to be a liar and he’s proven to be a leaker,” Trump told the reporters on Air Force One…..   

Yes, the next day he backed away in what appeared to be a pro forma nod to be his own courage-challenged appointees.

We don’t think so, however.

Image result for picture of brennan, comey and clapper in prison uniforms

The truth is, the Deep State is already in the precinct house. And Sgt. Easterhaus is talking to the wall.

 

end

 

Next on the list for Amazon to destroy is the health care/pharmacy field

 

(courtesy zerohedge)

 

“Alexa, This Is Going To Hurt”: These Companies Will Be Destroyed By Amazon Next

From Morgan Stanley overnight:

 

The reason the S&P healthcare sector is lower on the day…

… with distribution names getting hammered, is because in a report published overnight, Morgan Stanley analysts predicted that the sector, and severeal specific names, are most in danger of being targets of Amazon’s unstoppable monopoly juggernaut, soon to be scheduled for Bezosian eradication.

As MS explains, it has identified “attractive subsectors and profit pools that Amazon could drain to fund disruption.” MS assumes a 5% hit to prices when Amazon enters a sector, estimate the EPS impact on healthcare companies, and look at what the stocks are pricing in after the recent sell-off.

Healthcare distribution, encompassing medical, dental and drug distributors, drug retailers, and pharmacy benefit managers (PBMs), has the best fit with the Amazon playbook. Amazon’s expertise in logistics and B2B positions it to distribute commoditized products (supplies) to consumers/purchasers (e.g., hospitals, dental offices) potentially to be bundled with Amazon Web Services (AWS). They already target Medical Supplies distribution within Amazon Business, posing approximately 20% of earnings risk from more competitive price dynamics for select stocks.

 

Three strategic reasons for Amazon to enter retail pharmacy, using Whole Foods as a launch pad: to (1) drive Prime subscriptions via 55+ pharmacy customers, (2) improve returns on its Whole Foods investment, and (3) expand Prime Now. With the highest profits and lowest barriers to entry, retail plays to AMZN strengths. Price transparency and lower copays could reduce profits by ~10%, and lead companies to rethink strategies to stay competitive, as we have already begun to see with the rumored CVS/AET deal. While some investors believe Amazon will partner with or acquire a PBM, we are skeptical given such move would limit market opportunity.

The chart below shows the helthcare segments most at risk of “disruption”, or market share loss to Amazon market, versus the gross profit opportunity for Amazon.

The bank gives the following explanation:

The market has been inundated with mixed headlines attempting to decipher Amazon’s healthcare plans. Overlaying sectors’ gross profit pools – a focus of Amazon’s strategy – onto their risk scores, Retail Pharmacy emerges as a field of opportunity that we explore in depth. We are mindful of Jeff Bezos’s strategic view that “your margin is my opportunity.” He will enter a profitable business and run it close to break even, reinvesting dollars back into the product/service they are building/launching to become a truly disruptive force within the ecosystem. ( Exhibit 1 ) Nevertheless, Amazon has been tight lipped about its intentions and we cannot predict their timing, though we ultimately think they will go down this path.

As Bloomberg adds, “the S&P Healthcare Distributors index is holding at a critical support level; should Amazon enter the business, the industry’s shares could be under both technical and fundamental pressure. Other sub-sectors are also under pressure, including services and facilities such as hospitals.”  Of all names, Cardinal Health (see below) is leading the decliners even though there’s widespread debate about whether Amazon would try to tackle the drug distribution business.

Digging down into the subsectors, MS sees the following industries as most at risk from Amazon “disruption”:

The details:

Medical supply and Life Sciences distribution are less rich targets but look like low-hanging fruit for Amazon’s B2B and logistics strengths on basic goods. Cardinal with 10%-12% of profits geared to selling commoditized medical supplies is most at risk. We estimate a hypothetical 5% price cut across its book could lower profits by 22% due to the deleveraging effect. For McKesson, a 5% price cut toward the applicable portion of its medical-surgical business could lower profits by 9%. Our base case valuation assumes only a 3% cut in calendar 2019. AmerisourceBergen doesn’t distribute medical supplies and remains immune in the near-term. Over the longer-term, if Amazon were to disrupt drug pricing within the drug supply chain, we estimate it could have a 4%-5% impact on the distributors’ earnings.

 

Drug retailers have the most opportunities to adjust their business models and lower cost structures to defend against Amazon. Within the drug supply chain, the threat of Amazon’s entry into drug retail is accelerating vertical integration, and is cited as a driver behind the rumored CVS/Aetna merger. In our view, the combination would diversify profits away from the supply chain, help create a narrow preferred network, and act as a first step in repurposing the retail footprint to create a new healthcare-retail delivery model. If drug retailers don’t change  this model, we estimate ~10% risk to profits. CVS has also announced free same-day delivery in New York City, proactively preparing for a potential Prime Now entry, in our view.

 

The PBM and Manufacturing models in near-to-medium-term seem most resilient; however, longer-term cracks could weigh on the 20-30% of PBM operating profits tied to rebates. Meanwhile, hurdles in manufacturing are high, but may offer pockets of private label opportunity in the most commoditized products. Specialty Drugs appear well insulated.

Finally, MS’ detailed breakdown identifies several names, as well as sector backdrops and other inputs all driven by Amazon’s implied strategy, that now influence corporate valuation.

Amazon’s entry into healthcare will likely take time  (building out grocery was a 10 year endeavor) and we fully acknowledge that sub-sectors with solid fundamentals, that can deliver earnings power and growth, can outperform even with the Amazon threat in the background. This phenomenon occurred in food delivery after Amazon announced its entrance into New York. Grubhub (GRUB) dropped 12%, losing ~$250 million in market cap on the initial news, but quickly recovered those losses over the next two weeks. That said, with limited organic growth levers, we see more risk to select healthcare sub-sectors.

end

 

Yellen confirms she will step down in February as soon as the new Fed Chair is sworn in

 

(courtesy zerohedge)

Yellen Confirms She Will Step Down When New Fed Chair Sworn In

Federal Reserve Chair Janet Yellen says she will step down once her successor is sworn into the office, resolving a key question as to whether she would stay on in a diminished role.

Yellen could technically stay on as a governor even after stepping down as the institution’s leader, because her term as governor does not end until January 31, 2024.

Her decision to leave will give Trump an additional spot to fill on the Fed’s seven-person Board of Governors in Washington, which already has three openings.

Yellen resignation letter – notably proclaiming everything is awesome…

Economy “is close to achieving the Federal Reserve’s statutory objectives of maximum employment and price stability,”Yellen says in letter.

 

“I am gratified that the financial system is much stronger than a decade ago, better able to withstand future bouts of instability and continue supporting the economic aspirations of American families and business.”

 

Yellen confident Fed Chair nominee Jerome Powell is “deeply committed to that mission and I will do my utmost to ensure a smooth transition.”

Official Federal Reserve Statement:

Janet L. Yellen submitted her resignation Monday as a Member of the Board of Governors of the Federal Reserve System, effective upon the swearing in of her successor as Chair.

Dr. Yellen, 71, was appointed to the Board by President Obama for an unexpired term ending January 31, 2024. Her term as Chair expires on February 3, 2018. She also serves as Chair of the Federal Open Market Committee, the System’s principal monetary policymaking body.

Prior to her appointment as Chair, Dr. Yellen served as Vice Chair of the Board of Governors, from October 2010 to February 2014, and as President of the Federal Reserve Bank of San Francisco, from June 2004 to October 2010. She was initially appointed to the Board by President Clinton in August 1994 and served until February 1997, when she resigned to serve as Chair of the President’s Council of Economic Advisers, until August 1999.

Dr. Yellen is Professor Emerita at the University of California at Berkeley, where she has been a member of the faculty since 1980. She was born in Brooklyn, New York, in August 1946 and received her undergraduate degree in economics from Brown University in 1967 and her Ph.D. in economics from Yale University in 1971. Dr. Yellen is married and has an adult son.

And now for your humour story of the day:  Russian oligarch Roman Abramovich and a friend of Vladimir Putin is docking his yacht just down the road from Trump’s Mar a Lago:
(courtesy zerohedge)

Russian Oligarch Docks World’s Largest Yacht Just Down The Road From Mar-A-Lago

Last week, special counsel Robert Muller and his team subpoenaed the Trump campaign asking campaign officials to handover Russian-related documents. The subpoena was first reported by the WSJ on Thursday, which the source said, the campaign has already turned over 20,000 documents, and was not clear why the subpoena was issued. Mueller and his team of investigators are probing for any collusion between President Trump and ‘the Russians’ during the 2016 presidential election.

Then hours later, President Trump’s son-in-law Jared Kushner was thrust back into the spotlight of the Mueller probe, with the Senate Judiciary Committee claiming that he did not hand over all of the relevant documents needed as part of the investigation.

All of which sets the background for what appears like yet another terrible ‘optic’ for the Trump administration.

In a hilarious development, just days before Trump is set to arrive at his Florida resort, dubbed the “winter White House,” for the Thanksgiving holiday, Putin’s ally and friend, Roman Abramovich, net worth of $9.5 billion, arrived at the Palm Beach Port , in the world’s largest yacht.

Abramovich owns London’s Chelsea Football Club and is the largest shareholder of Russia’s second largest steel company.

The Eclipse, a 162.5m (length) by 22.4m (beam) monster yacht is valued at $400 million to $500 million, comes equipped with a pool, helipad, submarine and room for a crew of 92, according to my Palm Beach Post.

Down the street from the moored Russian mega yacht is Trump’s Mar-a-Lago.

According to The Hill, the FAA issued the “VIP Movement Notification” stating on Nov. 21 until Nov 26 indicating that the likelihood of President Trump being at the ‘winter White House’ is of a high probability.

First daughter Ivanka Trump and her husband, Jared Kushner, have met with Abramovich and his wife before.

 

Bloomberg reported that Kushner disclosed his past meetings with Abramovich on his security clearance paperwork. The two have met multiple times at social events, and Ivanka Trump has been friends with Abramovich’s wife for a decade.

 

A source told the publication that Kushner and Abramovich have never met with each other one-on-one.

But for Abramovich and his world’s largest private mega yacht, the timing of his arrival to Palm Beach is impeccable for collusion-hopefuls…

Crew docked the ‘Eclipse’ at 1:15pm on Friday, taking the slip normally used for cruise ships. Latitude / Longitude of the moored vessel resides at 26.7703609° / -80.0524902°.

Local residents appear to astonished by the size of the yacht – that it demanded a ‘selfie’…

Another view of the yacht approaching Palm Beach Port…

WOW! The 533-foot  coming thru the Palm Beach Inlet yesterday, heading to @PortofPalmBeach;
This  is valued between $400-500M and is said to be the second largest private  in the world.
Photo by Yosh of @simplelife_photography1: Kudos! 

Video from earlier this year gives you a perspective of the yacht’s size.

The one question we ask: Who will be cutting the Turkey? Is it Roman Abramovich or President Trump?

 

I WILL SEE YOU ON TUESDAY NIGHT

HARVEY

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