Nov 22/GOLD RISES $10.40 TO $1292.40 AND SILVER RISES 13 CENTS/SILVER SEES COMEX SILVER OI RISE BY 1919 CONTRACTS AND ON TOP OF THAT ANOTHER 1231 EXCHANGE FOR PHYSICAL CONTRACTS MOVE FOR A LONDON FORWARD/FOMC MINUTES SHOW FED DOVISH IN HOW THEY ARE HANDLING THE ECONOMY/

GOLD: $1292.40  UP $10.40

Silver: $17.13 UP 13 cents

Closing access prices:

Gold $1292.60

silver: $17.15

SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME)

SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)

SHANGHAI FIRST GOLD FIX: $1290.11 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME: $1279.65

PREMIUM FIRST FIX: $10.46

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SECOND SHANGHAI GOLD FIX: $1291.12

NY GOLD PRICE AT THE EXACT SAME TIME: $1282.65

Premium of Shanghai 2nd fix/NY:$8.47

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LONDON FIRST GOLD FIX: 5:30 am est $1283.95

NY PRICING AT THE EXACT SAME TIME: $1282.85

LONDON SECOND GOLD FIX 10 AM: $1286.95

NY PRICING AT THE EXACT SAME TIME. 1288.00

For comex gold:

NOVEMBER/

 NUMBER OF NOTICES FILED TODAY FOR NOVEMBER CONTRACT:  0 NOTICE(S) FOR NIL OZ.

TOTAL NOTICES SO FAR: 1053 FOR 105,300 OZ (3.375 TONNES)

For silver:

NOVEMBER

1 NOTICE(S) FILED TODAY FOR

5000 OZ/

Total number of notices filed so far this month: 885 for 4,425,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Bitcoin: BID $8260 OFFER /$8287 up $173.00 (MORNING)

BITCOIN : BID $8175 OFFER: $8199 // UP $81 (CLOSING)

end

Let us have a look at the data for today

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In silver, the total open interest ROSE BY  1919 contracts from 197,483 UP TO 199,402 WITH RESPECT TO YESTERDAY’S TRADING  WHICH SAW SILVER RISE BY 7 CENTS AND STILL WELL BELOW THE HUGE $17.25 SILVER RESISTANCE.   WE HAD NO LONG COMEX LIQUIDATION.   WE WERE ALSO NOTIFIED THAT WE HAD  ANOTHER HUMONGOUS NUMBER OF COMEX LONGS TRANSFERRING THEIR CONTRACTS TO LONDON THROUGH THE EFP ROUTE : 1106 DECEMBER EFP’S WERE ISSUED ALONG WITH 125 EFP’S FOR MARCH FOR A TOTAL ISSUANCE OF 1231 CONTRACTS. (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. YESTERDAY WITNESSED  1078 EFP’S ISSUED.

RESULT: A MEDIUM SIZED RISE IN OI COMEX WITH THE 7 CENT PRICE RISE.  WE HAD NO COMEX LONGS  EXITED OUT OF THE SILVER COMEX .  HOWEVER FROM THE CME DATA 1231 EFP’S  WERE ISSUED FOR TUESDAY FOR A DELIVERABLE CONTRACT OVER IN LONDON WITH A FIAT BONUS. IN ESSENCE THE  DEMAND FOR SILVER PHYSICAL INTENSIFIES GREATLY. WE REALLY GAINED IN OI 3150 CONTRACTS i.e1231 open interest contracts headed for London (EFP’s) and another increase of 1919 contracts standing at the silver comex

In ounces, the OI is still represented by just UNDER 1 BILLION oz i.e. 0.997 BILLION TO BE EXACT or 142% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT OCT MONTH/ THEY FILED: 1 NOTICE(S) FOR 5,000 OZ OF SILVER

In gold, the open interest FELL  BY A GIGANTIC 18,949 CONTRACTS DESPITE THE FAIR SIZED RISE IN PRICE OF GOLD ($5.10) WITH RESPECT TO YESTERDAY’S TRADING. WE HAD CONSIDERABLE COMEX LONGS EXIT THE ARENA.  HOWEVER  THE TOTAL NUMBER OF GOLD EFP’S ISSUED YESTERDAY FOR TODAY  TOTALED  ANOTHER 8,101 CONTRACTS OF WHICH THE MONTH OF DECEMBER SAW 8036 CONTRACTS AND FEB SAW THE ISSUANCE OF 65 CONTRACTS. YESTERDAY, WE WITNESSED A TOTAL OF 21,428 EFP’S ISSUED FOR YESTERDAY.  The new OI for the gold complex rests at 531,612. 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 THE RISK  TO A LONDON BANKER OBLIGATION AND NOT A NEW YORK COMEX OBLIGATION. LONGS RECEIVE A FIAT BONUS TOGETHER WITH A LONG LONDON FORWARD.  THUS, BY THESE ACTIONS, THE BANKERS AT THE COMEX  HAVE JUST STATED THAT THEY HAVE NO METAL!! THIS IS A MASSIVE FRAUD: THEY CANNOT SUPPLY ANY METAL TO OUR COMEX LONGS BUT THEY ARE QUITE WILLING TO SUPPLY MASSIVE NOT BACKED GOLD (AND SILVER) PAPER KNOWING THAT THEY HAVE NO METAL TO SATISFY OUR LONGS. LONDON IS NOW SEVERELY BACKWARD IN BOTH GOLD AND SILVER AND ON TOP OF THAT IT IS TAKING A FURTHER 6 TO 10 WEEKS TO OBTAIN PHYSICAL FROM THE POINT WHEN FORWARDS BECOME DUE. IN ESSENCE WE HAD A NET LOSS OF 10,848 OI CONTRACTS: 18,949 OI CONTRACTS LEAVE THE COMEX  BUT 8101 OI CONTRACTS NAVIGATE OVER TO LONDON.

Result: A HUGE SIZED DECREASE IN OI  WITH THE FAIR SIZED RISE IN PRICE IN GOLD ON YESTERDAY ($5.10). WE  HAD AN LARGE  NUMBER OF COMEX LONG TRANSFERRING TO LONDON THROUGH THE EFP ROUTE: 8,101. THERE OBVIOUSLY DOES NOT SEEM TO BE ANY PHYSICAL GOLD AT THE COMEX AN YET WE ARE APPROACHING THE HUGE DELIVERY MONTH OF DECEMBER. I GUESS IT EXPLAINS THE HUGE ISSUANCE OF EFP’S…THERE IS NO GOLD PRESENT AT THE GOLD COMEX.  IF YOU TAKE INTO ACCOUNT THE 8101 EFP CONTRACTS ISSUED, WE HAD A NET LOSS OPEN INTEREST OF 10,8488101 CONTRACTS MOVE TO LONDON AND 18,949 LEAVE THE COMEX.

we had:  0  notice(s) filed upon for NIL 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 1919 contracts from 197,483 UP  TO 199,402 (AND now A LITTLE CLOSER TO THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) WITH THE RISE IN SILVER PRICE (A GAIN OF 7 CENTS ). HOWEVER, OUR BANKERS  USED THEIR EMERGENCY PROCEDURE TO ISSUE ANOTHER HUGE  1106  PRIVATE EFP’S FOR DECEMBER (WE DO NOT GET A LOOK AT THESE CONTRACTS)  AND 125 EFP’S FOR MARCH FOR A TOTAL OF 1231 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 ZERO SILVER COMEX LIQUIDATION. IF WE ADD THE OI GAIN AT THE COMEX (1919 CONTRACTS) i.e. THOSE STAYING WAITING FOR COMEX SILVER DELIVERY,  TO THE 1231 OI TRANSFERRED TO EFP’S AND THUS OVER TO LONDON FOR FORWARDS, WE OBTAIN A NET GAIN (DEMAND) OF 3150 OPEN INTEREST CONTRACTS,

RESULT: A FAIR SIZED INCREASE IN SILVER OI AT THE COMEX WITH THE 7 CENT RISE IN PRICE (WITH RESPECT TO YESTERDAY’S TRADING). NOT ONLY THAT BUT  WE ALSO  HAD ANOTHER 1231 EFP’S ISSUED.. TRANSFERRING OUR COMEX LONGS OVER TO LONDON .  YESTERDAY WE EXPERIENCED 2998 EFP’S ISSUED FOR TRANSFER TO LONDON.

 

(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

)Late TUESDAY night/WEDNESDAY morning: Shanghai closed UP 19.97 points or .59% /Hang Sang CLOSED UP 185.42 pts or 0.62% / The Nikkei closed UP 106.67 POINTS OR 0.48%/Australia’s all ordinaires CLOSED UP 0.39%/Chinese yuan (ONSHORE) closed UP at 6.6180/Oil UP to 57.81 dollars per barrel for WTI and 63.15 for Brent. Stocks in Europe OPENED GREENM EXCEPT GERMAN DAX ONSHORE YUAN CLOSED DOWN AGAINST THE DOLLAR AT 6.6180. OFFSHORE YUAN CLOSED AT VALUE TO THE ONSHORE YUAN AT 6.6179 //ONSHORE YUAN STRONGER AGAINST THE DOLLAR/OFF SHORE STRONGER TO THE DOLLAR/. THE DOLLAR (INDEX) IS WEAKER AGAINST ALL MAJOR CURRENCIES. CHINA IS VERY HAPPY TODAY.(MARKETS STRONG)

 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)North Korea/China

This is interesting: Air China cancels all flights to North Korea.  Now it only Air Koryo, North Korea’s only airline that is their lifeline to their chief benefactor

 

( zerohedge)

ii) NORTH KOREA,USA,CHINA

China is upset that the USA is targeting Chinese trading personnel doing business with North Korea

(courtesy zerohedge)

b) REPORT ON JAPAN

c) REPORT ON CHINA

As we have reported to you, the real growth in China is no more than 3%.  Michael Pettit states that China will reveal its true GDP level

 

( Michael Pettis/London’s Financial Times)

4. EUROPEAN AFFAIRS

i)Europe/ the globe

A good one today from Bill Blain of Mint Partners.  He is not concerned about the yield curve.  He is concerned that global inflation is rearing its ugly head

( Bill Blain/Mint Partners)

 

ii)Initially the Pound slides on slower GDP growth but then rallies for no apparent reason

( zerohedge)

 

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)LEBANON

( zerohedge)

6 .GLOBAL ISSUES

7. OIL ISSUES

i)If Russia says no to its extension on cuts, then oil will surely drop

( Irina Slav/OilPrice.com)

ii)Oil and gasoline fall a bit after the crude draw was light.  Also a new record high production level for crude

( zerohedge)

iii)USA rigs count surges the most in 5 months as production hits record highs( zerohedge)

8. EMERGING MARKET

 

9. PHYSICAL MARKETS

 i) gold trading after FOMC minutes
(zerohedge)

 

 

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

FOMC MEETING MINUTES
Basically the FOMC is still dovish and signal dovish inflation concerns.  Their big concern is huge bubbles forming in assets and if there is a reversal it could have a damaging effect on the economy
gold is the winner on the news
( zerohedge)

 

( zerohedge)

ii)Soft data University of Michigan Confidence falters in November as for the first time faith in the stock market drops

(courtesy zerohedge)

( zerohedge)

iv)Stockman Part I and II

Stockman highlights the folly in Trump’s new tax reform/and the USA economy and its growth

( David Stockman)

 

v)My goodness: Mueller now probing Kushner’s contacts with Israeli officials during the transition?

Israel is a good friend of the USA

( zerohedge)

vi)This is a good one:  The FBI is investigating a House Democrat, Bob Brady for paying his opponent to drop out of the election race

 

( Peter Hasson/Daily Caller)

Let us head over to the comex:

The total gold comex open interest SURPRISINGLY  FELL BY A GIGANTIC 18,949  CONTRACTS DOWN to an OI level of 531,612 DESPITE THE  FAIR SIZED RISE IN THE PRICE OF GOLD ($5.10 GAIN WITH RESPECT TO YESTERDAY’S TRADING).  WE EXPERIENCED CONSIDERABLE GOLD COMEX  LIQUIDATION. HOWEVER  WE DID HAVE ANOTHER LARGE COMEX EXIT THROUGH THE EFP ROUTE AS THESE LONGS RECEIVED  A DELIVERABLE LONDON FORWARD TOGETHER WITH A FIAT BONUS. THE CME REPORTS THAT 8036 EFPS WERE ISSUED FOR DECEMBER AND 65 WERE ISSUED FOR MARCH. THE OBLIGATION STILL RESTS WITH THE BANKERS ON THESE TRANSFERS.  THE CONSTANT BANKER RAIDS HAVE BEEN MILDLY SUCCESSFUL TO GET  OUR MATHEMATICAL PAPER LONGS IN GOLD TO LIQUIDATE THEIR POSITION. IT HAS FAILED MISERABLY IN SILVER.

ON A NET BASIS IN OPEN INTEREST WE LOST: 10,848 CONTRACTS IN THAT 8101 LONGS WERE TRANSFERRED AS LONGS TO LONDON AS A FORWARD AND WE LOST 18,949 COMEX CONTRACTS.  NET LOSS 10,848

Result: a HUGE DECREASE IN COMEX OPEN INTEREST WITH THE FAIR SIZED GAIN IN THE PRICE OF GOLD ($5.10.)  HOWEVER 8,101 EFP’S ISSUED FOR A FIAT BONUS AND A DELIVERABLE FORWARD GOLD CONTRACT IN LONDON. WE HAD CONSIDERABLE  COMEX GOLD LIQUIDATION YESTERDAY.

.

We have now entered the NON active contract month of NOVEMBER.HERE WE HAD A LOSS OF 1 CONTRACT(S) LOWERING TO  9. We had 1 notices filed YESTERDAY so GAINED 0 contracts or NIL additional oz will stand for delivery AT THE COMEX in this non active month of November.

The very big active December contract month saw it’s OI LOSS OF 37,916 contracts DOWN to 205,662.  January saw its open interest LOSS OF 2 contracts DOWN to 958. FEBRUARY saw a gain of 16,945 contacts up to 243,459. DEMAND FOR GOLD STILL STRONG

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

VOLUME FOR TODAY : N/A (PRELIMINARY)

CONFIRMED VOLUME YESTERDAY: 477,054 contracts.  (comex volumes are intensifying)

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And now for the wild silver comex results.

Total silver OI SURPRISINGLY ROSE  BY 1991 CONTRACTS (WHEN COMPARED TO GOLD) FROM 197,483 UP TO 199,402 WITH YESTERDAY’S 7 CENT RISE IN PRICE. HOWEVER WE DID HAVE ANOTHER STRONG 1106 PRIVATE EFP’S ISSUED FOR DECEMBER AND 125 EFP’S FOR MARCH BY OUR BANKERS TO COMEX LONGS WHO RECEIVED A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON.THE TOTAL EFP’S ISSUED: 1231. 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 SURPRISINGLY NO LONG SILVER COMEX LIQUIDATION.  DEMAND FOR PHYSICAL SILVER INTENSIFIES AGAIN

The new front month of November saw its OI RISE by 1 contract(s) and thus it stands at 1. We had 0 notice(s) served YESTERDAY so we gained 1 contracts or an additional 5,000 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 9659 contracts DOWN to 65,705. YET WE HAD 1231 EFP’S ISSUED WHICH MEANS A GOOD   PERCENTAGE OF THE ROLLOVERS LANDED IN LONDON AS A TRANSFER OF OI FOR A FORWARD.  January saw A LOSS OF 16 contracts FALLING TO 1288.

We had 1 notice(s) filed for 5,000 oz for the NOV. 2017 contract

INITIAL standings for NOVEMBER

 Nov 22/2017.

Gold Ounces
Withdrawals from Dealers Inventory in oz   nil oz
Withdrawals from Customer Inventory in oz  
 nil
 oz
Deposits to the Dealer Inventory in oz    nil oz
Deposits to the Customer Inventory, in oz 
nil
oz
No of oz served (contracts) today
 
0 notice(s)
NIL OZ
No of oz to be served (notices)
9 contracts
(900 oz)
Total monthly oz gold served (contracts) so far this month
1053 notices
105,300 oz
3.275 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  0 kilobar trans

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

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

we had 0 customer deposit(s):

total customer deposits nil  oz

We had 0 customer withdrawal(s)

Total customer withdrawals: nil oz

we had 0 adjustment(s)

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 0 contract(s) of which 0 notices were stopped (received) by j.P. Morgan dealer and 0 notice(s) was (were) stopped/ Received) by j.P.Morgan customer account.

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To calculate the INITIAL total number of gold ounces standing for the NOVEMBER. contract month, we take the total number of notices filed so far for the month (1053) x 100 oz or 105,300 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 (0 x 100 oz per contract) equals 106,200 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 (1053) x 100 oz or ounces + {(9)OI for the front month minus the number of notices served upon today (0) x 100 oz which equals 106,200 oz standing in this active delivery month of NOVEMBER (3.303 tonnes)

WE GAINED 0 ADDITIONAL CONTRACTS OR NIL 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 205,662 TODAY .

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 22/ 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
 510,465.910oz
CNT
Scotia
Deposits to the Dealer Inventory
 nil oz
Deposits to the Customer Inventory 
 1,539.727.700 oz
CNT
HSBC
Malca
No of oz served today (contracts)
1 CONTRACT(S)
(5,000,OZ)
No of oz to be served (notices)
0 contract
(NIL oz)
Total monthly oz silver served (contracts) 885 contracts(4,425,000 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 2 customer withdrawal(s):

i) Out of Scotia: 350,731.510 oz

ii) Out of CNT: 159,734.400

TOTAL CUSTOMER WITHDRAWAL  510,465.910 oz

We had 3 Customer deposit(s):

i) Into CNT:

334,653.400 oz

ii) Into HSBC: 599,921.300 oz

iii) Into Malca:  605,153.0000 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: 600,685.34 oz

we had 1 adjustment(s)

i) out of Delaware: 127,890.436 oz leaves the  the customer account of Delaware as an accounting error

The total number of notices filed today for the NOVEMBER. contract month is represented by 1 contracts FOR 5,000 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 885 x 5,000 oz = 4,425,0000 oz to which we add the difference between the open interest for the front month of NOV. (1) and the number of notices served upon today (1 x 5000 oz) equals the number of ounces standing.

.

Thus the INITIAL standings for silver for the NOVEMBER contract month: 885 (notices served so far)x 5000 oz + OI for front month of NOVEMBER(1) -number of notices served upon today (1)x 5000 oz equals 4,4205000 oz of silver standing for the NOVEMBER contract month. This is EXCELLENT for this NON active delivery month of November.

We gained 1 contract(s) or an additional 5,000 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. THE TRANSFER OF EFP’S TO LONDON FURTHER INTENSIFIES THE DEMAND FOR PHYSICAL METAL!!

AT THIS TIME LAST YEAR WE HAD 56,352 NOTICES STANDING FOR DELIVERY FOR SILVER.  THIS YEAR  65,705 WITH THE SAME NUMBER OF TRADING DAYS LEFT.

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: N/A
CONFIRMED VOLUME FOR YESTERDAY: 112,863 CONTRACTS

YESTERDAY’S CONFIRMED VOLUME OF 112,863 CONTRACTS EQUATES TO 564 MILLION OZ OR 80.5% 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: 43.555 million
Total number of dealer and customer silver: 232.488 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 1.5 percent to NAV usa funds and Negative 1.4% to NAV for Cdn funds!!!!
Percentage of fund in gold 62.5%
Percentage of fund in silver:37.2%
cash .+.3%( Nov 22/2017)

2. Sprott silver fund (PSLV): NAV RISES TO -0.88% (Nov 22 /2017)
3. Sprott gold fund (PHYS): premium to NAV FALLS TO -0.73% to NAV (Nov 22/2017 )
Note: Sprott silver trust back into NEGATIVE territory at -0.88%-/Sprott physical gold trust is back into NEGATIVE/ territory at -0.73%/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 22/no change in gold inventory at the GLD/Inventory rests at 843.39 tonnes

Nov 21/no change in gold inventory at the GLD/inventory rests at 843.39 tonnes

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 22/2017/ Inventory rests tonight at 843.39 tonnes

*IN LAST 278 TRADING DAYS: 97.56 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 213 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 22/no change in silver inventory at the SLV/Inventory rests at 318.074 million oz.

Nov 21/no change in silver inventory at the SLV/inventory rests at 318.074 million oz/

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 22/2017:

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
+ 1.80%
30 day trend

end

Major gold/silver trading/commentaries for WEDNESDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

Geopolitical Risk Highest “In Four Decades” – Gold Demand in Germany and Globally to Remain Robust

– Geopolitical risk highest “in four decades” should push gold higher – Citi
– Elections, political and macroeconomic crises and war lead to gold investment
– Political uncertainty in Germany means “gold likely to remain in good demand as a safe haven” say Commerzbank
–  “There has rarely been such political uncertainty in Germany at any time in the country’s post-war history” – Commerzbank
– Reduce counter party risk: own safe haven allocated and segregated gold

Editor: Mark O’Byrne

The geopolitical case for gold investment has been emboldened due to heightened and ongoing geopolitical risk, according to Citi analysts.

In every continent, there appears to be major political upset and geopolitical risk against a background of growing economic uncertaintly and turmoil. Just this week we have seen the US declare North Korea’s leader a ‘sponsor’ of terrorism, Angela Merkel seemingly lose her political dominance in Germany and the EU and the Gulf countries ramp up fear mongering regarding Iran.

What does this mean for gold? Quite simply its role as a safe haven is now at its strongest point in four decades according to Citigroup.

Commerzbank concur and this week their analysis concluded that the political uncertainty in Germany means “gold is likely to remain in good demand as a safe haven.”

“There has rarely been such political uncertainty in Germany at any time in the country’s post-war history,” according to Commerzbank. Given the fragile state of the European Union and the monetary union this does not bode well for the EU or indeed the euro.

The geopolitical case for gold investment today is not just because of current geo-political risks including Germany, but because there is no let up on the horizon. It seems with each political, financial or humanitarian disaster more problems swiftly follow.

Investors are no longer considering the downside risks to gold investment to be as great as geo-political and macro risks pose to risk assets such as equities and bonds.

We have seen this in recent World Gold Council figures. Demand for physical gold bars and coins climbed by 17% in the last quarter. This, say Citi, is the new normal.

“Event-driven bids for gold seem to be occurring more frequently and may be the new normal… In short, even as the rates and forex channel dominate the outlook for gold pricing, the yellow metal is increasingly being used by investors as a policy and tail risk hedge.”

What are the geopolitical risks today?

If an extra-terrestrial being was carrying out a risk-assessment on landing on earth, they would be struggling with where to start. The fact is, you can’t assess risk reasonably right now as there are so many unknowns.

We seem to a have a planet that is blowing up both physically (see Nigeria and Yemen, to name a few), politically (EU, anyone?) and economically (personal debt, student debt, car debt, mortgage debt, corporate debt, pensions timebomb to name just a few).

Of course, we have had tough times before. What is concerning about today’s issues is that the emerging risks appear to be political, financial, economic and indeed environmental and all of them at the same time. This creates new, unappreciated risks for financial markets.

When problems are economic the talking heads and think-tanks like to roll out the models and theories they have so closely built for these very situations. This gives them (and the markets) the ill-founded confidence that they have the ability to predict the future and can therefore price in the risks.

Today the problems are as much political as economic. This is worrying for those who like a good financial model. You cannot predict how political tensions will carry-out. Just ask the many pollsters who messed up Brexit and the Trump election. Once you have serious political issues then you also have economic ones, unpredictable ones.

N.B. You also can’t predict economic outcomes as they relate as much to human behaviour as political ones do, but this fails to occur to the econometricians out there and that’s for another blog. 

The Citi analysts recognised ‘Elections and political votes, military attacks and macroeconomic crises’ as some of the key geopolitical events that would positively influence gold investment. Looking back over the last four decades they were able to conclude that prices rallied more frequently during these periods of uncertainty.

As a result Citigroup expects to see safe haven demand push prices above $1,400 an ounce “for sustained periods through 2020.”

Interestingly, a quick glance at the 2017 price chart might suggest that gold has been more susceptible towards monetary policy sentiment than geopolitical risk. So far this is likely to be because buyers like to believe that escalation in certain areas such as North Korea or the Middle East is unlikely to happen.

But whilst the gold price might not have been climbing against this uncertainty, the number of people holding onto gold has. Sales of coins and bars or ETF liquidations have not been increasing despite the boring price climb, and there has been little indication of people getting rid of their gold. Perhaps the tides are turning and the reality of what various uncertainties mean is beginning to take hold in investors’ strategies.

What is a safe haven?

Gold is frequently referred to as a safe haven. If (like me once) you imagine a safe haven to be somewhere with no signal, a good book and an invisibility cloak then you might be a bit confused. Gold is a financial safe haven that protects an investor from geopolitical risk and during uncertain and difficult economic times – financial crashes, recessions and depressions.

Investopedia define a safe haven as:

An investment that is expected to retain its value or even increase its value in times of market turbulence. Safe havens are sought after by investors to limit their exposure to losses in the event of market downturns. However, what are considered safe havens alter over time as market conditions change, and what appears to be a safe investment in one down market could be a disastrous investment in another down market.

This opinion is reflected in the gold buying activities of individual investors, institutional investors and governments alike. All have been increasing their physical gold purchases in recent months and years in order to line their portfolios with some serious financial insurance. The precious metal has repeatedly shown its mettle during times of currency crises, something which is very likely on the horizon.

“Gold will prove a haven from currency storms” is the conclusion of a wide-ranging analysis of the world monetary system by Official Monetary and Financial Institutions Forum, (OMFIF), the global monetary think-tank. The OMFIF report entitled, ‘Gold, the Renminbi, and the multi-currency reserve system,’ warns of “twin shocks” to the dollar and the euro and of a “coming dollar shock” and points out how gold would be a safe haven in a dollar crisis. Read more.

We will no doubt start to see the demand for a safe haven increase as investors become increasingly wary of the growing number of uncertainties that are around today and those on the horizon.

Whether this will affect the price as Citigroup expects, who knows but one would expect it to. Gold’s price and its value are tricky concepts. For most gold’s value is reflected in its anonymity and portability. Plus,  its very low or negative correlation with the majority of other asset classes and as an inflation hedge, makes it a valuable component in a portfolio.

Many studies have shown that precious metals are one of the few asset classes with a positive correlation coefficient with inflation. According to asset allocation experts, Ibbotson Associates, precious metals are the most positively correlated asset class to inflation. From a strategic point of view, Ibbotson determined that portfolios could reduce risks and improve returns with a 7-15% allocation to precious metals bullion. Read more.


At the moment however Citigroup believes we are looking at increased demand for gold thanks to geopolitical risk a series of black swan events, i.e. those we cannot foresee. This is something that gold is an excellent hedge against, as we discovered when doing an analysis of academic research into safe havens:

Gold is a good hedge against black-swan events and against tail risk. According to a study by Mercer, the so-called conditional value at risk can also be reduced drastically by adding just 5% of gold to a portfolio. This risk parameter (also called expected shortfall or expected tail loss) defines the deviation in case of an extreme event. Read more.

Gold investment is the old normal, geopolitical risk is the new normal

Our mission statement since 2003 has been to ‘Protect and Grow Our Clients Wealth’. For hundreds, indeed thousands of years people have held gold in order to protect and grow their wealth. 

At first this was because it was money, then it was because it no longer was money but a safe haven, store of value. Today for many people it is because something inside them tells them physical gold is a good thing to own as a diversification and a hedge.

Some try to tell us that allocated, physical gold coins and bars is something old-fashioned, almost provincial in its simplicity. something for those crazy preppers. However research shows us that is has an important role to play in protecting us against a variety of risks. Increasingly research tells us those risks are the ‘new normal’.

Much of the media will only consider this report with interest in regard to the price prediction, but in truth this is pretty irrelevant. Especially when considered against the reasons for gold’s expected price climb: turbulence, uncertainty and upset are going to become commonplace. Investors need to add the safe haven of physical gold to their portfolios.

Whilst the Citigroup analysis does consider what will happen to the price of gold in the coming years due to geopolitical risk, the truth is that is shouldn’t matter all that much. If an investor is looking to reduce the counterparty risk and protect their portfolio, it doesn’t matter what price is paid for the gold because over time it acts as hedge against currency devaluations.

This can only be the case if you choose to invest in allocated and segregated physical gold coins and bars. This allows you to own gold in your name, without counterparty risk. The whole financial and economic system is on a knife edge thanks to the exposure to counterparty risks on all sides. Investors would be wise to reduce their exposure and get used to the ‘new normal’.

Related content

Gold Coins and Bars Saw Demand Rise 17% to 222T in Q3

Gold Is A Safe Haven Asset

Gold Is A Safe Haven Asset- Latest Research Shows

News and Commentary

PRECIOUS-Gold rises as dollar dips ahead of Fed minutes (Reuters.com)

Gold regains some lost ground as dollar struggles (MarketWatch.com)

Stocks rally on boost from strong global growth, earnings (Reuters.com)

Global stocks rally on growth, earnings outlook; bonds slip (Reuters.com)

Uber Paid Hackers to Delete Stolen Data on 57 Million People (Bloomberg.com)


Source: Bloomberg

COMMERZBANK : Political uncertainty in Germany means “gold likely to remain in good demand as a safe haven” (ScrapRegister.com)

Russian Gold Reserves Rise To Record – Now 1,800 tonnes (SmaulGld.com)

Markets Are Trapped in “Zombie-like” State (DailyReckoning.com)

Monetary Metals Holding Up Well Despite Raids – Sprott (SoundCloud.com)

Bond Bubble, Crazy Swiss and the Bonfire of the Absurdities – Mauldin (MauldInEconomics.com)

Can Bitcoin Survive An Apocalypse? (Bloomberg.com)

Gold Prices (LBMA AM)

22 Nov: USD 1,283.95, GBP 969.25 & EUR 1,092.51 per ounce
21 Nov: USD 1,280.00, GBP 967.04 & EUR 1,090.69 per ounce
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

Silver Prices (LBMA)

22 Nov: USD 16.97, GBP 12.81 & EUR 14.44 per ounce
21 Nov: USD 17.00, GBP 12.85 & EUR 14.50 per ounce
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


Recent Market Updates

– Gold Versus Bitcoin: The Pro-Gold Argument Takes Shape
– Money and Markets Infographic Shows Silver Most Undervalued Asset
– 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

Gold trading today:  see below

 

 

end

Both India and China (Mainland and Hong Kong) import an impressive 92 tonnes from Switzerland.  Also remember that China obtains its metal from various countries like England.  These imports are sovereign purchases but for the citizens itself.

 

(courtesy Lawrie Williams/Sharp’s Pixley)

 

LAWRIE WILLIAMS: Big Surge in Swiss gold exports to India and China

There has been much talk in the media of late of very slack gold demand from the world’s two leading importers of the metal. India and China. But the latest export figures for the yellow metal out of Switzerland for October would seem to counter this as both have seen a strong recovery from the admittedly weak September figures.

In the latest figures released by the Swiss customs administration, India came out top of the list for October gold exports, taking 38 tonnes, closely followed by mainland China with 34.6 tonnes. Hong Kong came in in third place with 19.5 tonnes, once again demonstrating that the former British Crown Colony is no longer the principal conduit for Chinese gold imports. However if one adds the Hong Kong imports to those of mainland China the latest Swiss figures do show that gold exports to Greater China from the world’s largest re-refiner and exporter of gold were an impressive 54.1 tonnes. These figures compare with the previous month’s of 17.2 tonnes to China, 11.6 tonnes to India and 11.1 tonnes to Hong Kong. By the looks of things gold demand in China and India is alive and well as the mid-year anomalies fall out of the system.

Below is the country-by country bar chart for Swiss gold exports from Nick Laird’s http://www.goldchartsrus.com website:

Analysis of the chart again shows the substantial flows of gold from Switzerland to the Middle and Far East – 83.3% of the Swiss exports are to this region. What is of particular significance in this percentage is that in Asia and the Middle East the gold tends to land in firmer hands and doesn’t tend to find its way back on to the markets on gold price fluctuations as it may do in the West. This is perhaps the principal reason that the long term future for the gold price is, in our view, extremely positive. When the tide turns for gold investment in the West, as it almost certainly will, there will be a shortage of physical metal and this will drive the price up beyond the capability of paper gold trades to suppress it. There does seem to be a certain momentum building in the gold price, but those who would suppress it have been dumping large amounts of notional gold on the futures market. This cannot go on indefinitely and sooner or later the physical price will have to take off upwards, but as to when this tipping point will occur still remains hugely uncertain.

22 Nov 2017

end


Your early WEDNESDAY 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 6.6180/shanghai bourse CLOSED UP AT 19.97 POINTS .59% / HANG SANG CLOSED UP 185.42 POINTS OR 0.62%
2. Nikkei closed UP 106.67 POINTS OR 0.48% /USA: YEN RISES TO 112.09

3. Europe stocks OPENED GREEN EXCEPT GERMAN DAX /USA dollar index FALLS TO 93.87/Euro FALLS TO 1.1739

3b Japan 10 year bond yield: FALLS TO . +.025/ GOVERNMENT INTERVENTION !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 112.09/ 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:: 57.81  and Brent: 63.15

3f Gold UP/Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO +.360%/Italian 10 yr bond yield UP to 1.778% /SPAIN 10 YR BOND YIELD DOWN TO 1.467%

3j Greek 10 year bond yield RISES TO : 5.35???

3k Gold at $1285.00 silver at:16.99: 6 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50

3l USA vs Russian rouble; (Russian rouble UP 39/100 in roubles/dollar) 58.47

3m oil into the 57 dollar handle for WTI and 63 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 GOOD SIZED REVALUATION NORTHBOUND

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 112.09 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 0.9888 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1609 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT/LOWER PARLIAMENT APPROVES BREXIT COMMENCEMENT/ARTICLE 50 COMMENCES MARCH 29/2017

3r the 10 Year German bund now POSITIVE territory with the 10 year RISING to +0.360%

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 2.366% 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)

Asian Stocks Smash Records; Dollar Slides As Crude Surges To July 2015 Highs

 

Global shares hit another record high on Wednesday, propelled higher by what increasingly more call (ir)rational exuberance, and investors’ unflagging enthusiasm for tech stocks. That said, S&P futures are unchanged the morning before Thanksgiving (at least before the market open ramp), as are European stocks (Stoxx 600 is flat), despite the euphoria in the Asian session which saw the MSCI Asia Pac index hit a new all time high…

… as oil jumped, rising as much as $1.15 to $57.98/bbl, the highest since July 2015, following yesterday’s API report which showed crude stocks fell another 6.4mmbbls and a Keystone pipeline outage shaprly tightened the market, while the dollar fell after Janet Yellen warned against raising rates too fast and the euro gained amid new moves to end Germany’s political impasse.

Emerging markets too were on a roll, lifted by a weaker dollar and inflows into Asian assets, with little sign of spillover from Turkey where the lira plumbed a new record low.

As SocGen previews today’s action, “the US has durable goods orders, U-Mich consumer sentiment, jobless claims and FOMC Minutes out today, but none of these matters as much as Thanksgiving preparations.” In other words, expect a much slower trading day, with the key event – the Fed minutes – delivered at 2pm to trading desks staffed by the sub-30 year old team.

So as we prepare for even more all time highs amid the stock euphoria, the bond market has been showing fixed-income traders are more concerned that the U.S. economy may slow, with the 2s10s flattening further below 60 bps. Outgoing Fed chair Yellen warned Tuesday that tightening too quickly risked stranding inflation below the Fed’s 2 percent target, with investors awaiting the release of minutes from the last FOMC meeting for more clues about the policy path. As a result, the Bloomberg Dollar Spot Index dropped 0.2%, hitting a one-month as cautious Yellen and curve flattening underpin selling momentum.

As we noted earlier, Asian stocks hit new all time highs, with Hong Kong’s Hang Seng jumping 1%, and rising above 30,000 for the first time in 10 years, as Hong Kong-listed Tencent leapt past Facebook this week to become the world’s fifth-most valuable company.

The mood was slightly less buoyant on European shares which opened flat to marginally firmer. Britain’s benchmark rose 0.2 percent just before finance minister Philip Hammond presents a crucial budget to a country facing faltering economic growth. After yesterday’s jump, European stocks struggled to follow the global rally that drove global benchmarks to record highs. The Stoxx Europe 600 Index tracked sideways amid mixed fortunes for regional bourses. Earlier, we noted that the MSCI Asia Pacific Index climbed above its 2007 peak, with shares up from Tokyo to Sydney, and the major American equity indexes reached all-time highs. Australia’s S&P/ASX 200 Index rose 0.4%; South Korea’s Kospi index added 0.4%; . The Hang Seng Index jumped 0.8% as Chinese financial shares climbed. The Shanghai Composite Index gained 0.6% . The MSCI Asia Pacific Index advanced 0.6 percent. The MSCI Emerging Market Index extended a rally that took it to the highest in more than six years.

The only fly in the Asian ointment was that China’s government bonds extended declines, with the benchmark 10-year yield rising 4 basis points to 4.03% to head for the highest close since 2014. How much longer before China finds itself in a funding squeeze and the recent euphoria crashes?

“The earnings picture is dominant and that’s of course what has, and will continue, to move markets,” Bob Doll, chief equity strategist at Nuveen Asset Management, told Bloomberg TV. “Icing on the cake is the tax bill and that does boost earnings but a lot of people are already baking that into their assumption.”

While there was little of note in global bond or equity markets, the biggest overnight story is the on-going strength of oil prices, jumping to more than 2 year highs as a result of the latest API inventory numbers and the Transcanada pipeline interruption, which helped NOK and CAD within G10 currencies.  Haven currencies also outperform on potential hedging amid a global stocks and oil rally; euro gains to stay below pivotal 55-DMA resistance amid chances that a German grand coalition may be achieved.

WTI is, for a change, in the driving seat,” says Ole Hansen, head of commodity strategy at Saxo Bank. “The spread is tightening and if we have a prolonged disruption then that will play its part in bringing down inventories further in the US.”

On the US political front, US Senator Murkowski who is seen as a key moderate swing vote, is said to support repealing of ObamaCare’s individual mandate. Earlier, Janet Yellen said the Fed must keep an open view and not be trapped by forecasts and said so far so good in terms of reducing the balance sheet. Yellen also commented that she is uncertain whether low inflation is transitory and is keeping an open view that it could be long-lasting.

In Europe, Angela Merkel’s party is betting on a revived alliance with the Social Democrats to dodge the risk of new elections after coalition talks with two other parties broke down, Bloomberg reported although other news sources were skeptical. The goal is to avoid new elections and appeal to the need for German stability at a critical time for the country and the European Union “amid nationalist pressures and challenges posed by Brexit.”

The yield curve in Germany, the euro zone’s benchmark government bond issuer, flattened to its lowest in more than two months, catching up with the U.S. curve. According to Bloomberg, there was heavy bear flattening seen in early trade, with the 5Y sector underperforming with focus on Coeure’s speech yesterday which suggested moving forward guidance away from QE and onto rate hikes. USTs were dragged lower in tandem, however U.S. curve is marginally steeper.

Morgan Stanley analysts said flattening curves were not cause for concern just yet. “Those looking at U.S. yield curve flatness as a potential bearish risk factor may be reminded that during the last 30 years, it has taken at least a year after the initial inversion before the recession set in,” they told clients.

While most currencies did little overnight, the Turkish lira plunged to fresh record low. Fears are growing for Turkey where expectations are growing of emergency central bank action to counter the lira’s slide to record lows. Will the next emerging market crisis start in Turkey, and if so when?

Commodity markets too are benefited from the improved global growth outlook, with copper futures rising to two-week highs CMCU3. Oil prices too jumped, with Brent crude up almost $1 a barrel due to cuts in piped Canadian crude and expectations of a prolonged OPEC-led production cut.

Bulletin headline Summary from RanSquawk

  • European stocks are relatively directionless with the EuroStoxx 50 trading flat in what has been a light session of macro newsflow thus far
  • Fixed income markets feel the squeeze in Europe amid a rapid turnaround with the front end of the curve giving way first
  • Looking ahead, highlights include the UK budget, US durables, weekly jobs, DoEs, FOMC minutes and Baker Hughes

Market Snapshot

  • S&P 500 futures little changed at 2,597.70
  • Stoxx Europe 600 little changed at 387.97
  • MSCI Asia up 0.6% to 172.62
  • MSCI Asia ex Japan up 0.5% to 568.44
  • Nikkei up 0.5% to 22,523.15
  • Topix up 0.3% to 1,777.08
  • Hang Seng Index up 0.6% to 30,003.49
  • Shanghai Composite up 0.6% to 3,430.46
  • Sensex up 0.3% to 33,563.33
  • Australia S&P/ASX 200 up 0.4% to 5,986.41
  • Kospi up 0.4% to 2,540.51
  • German 10Y yield rose 1bp to 0.36%
  • Euro up 0.2% to $1.1763
  • Italian 10Y yield fell 3bps to 1.51%
  • Spanish 10Y yield rose 1bp to 1.49%
  • Brent futures up 0.7% to $63.03/bbl
  • Gold spot up 0.3% to $1,284.35
  • U.S. Dollar Index down 0.2% to 93.78

Top Overnight News

  • Fed officials have penciled in a gradual path for raising interest rates, but minutes of their last meeting may show increasing concern that the U.S. labor market is overheating
  • Yellen however cautioned against raising interest rates too quickly and said it was dangerous to allow inflation to drift lower
  • German Chancellor Angela Merkel’s party is betting on a revived alliance with the Social Democrats to dodge the risk of new elections, according to people familiar with discussions in Berlin
  • Uber Concealed Hack That Exposed 57 Million People’s Data
  • For the U.K. government, which has already been weakened by infighting over Brexit and the hasty departure of two cabinet ministers, a badly-received Budget could put Chancellor of the Exchequer Philip Hammond’s political future in doubt; Hammond is constrained by reduced growth forecasts while he has been tasked to wow voters disillusioned by years of austerity
    Russian President Vladimir Putin meets his Turkish and Iranian counterparts, Recep Tayyip Erdogan and Hassan Rouhani respectively, in Sochi for summit talks on Syria
  • Tax bill update: bill contains future tax traps for multinationals
  • German Chancellor Angela Merkel’s party is betting on an alliance with the Social Democrats even as she publicly stated she’s open to another election
  • Fed Debate Over Rate-Hike Pace in Focus Amid Strong Job Market
  • Disney Animation Legend Lasseter Takes Leave Over Misconduct
  • Nippon Paint Derails Akzo Bid for Axalta in Surprise Counter
  • MiFID Myth Is That Rules Will Benefit Savers, Money Managers Say

Asia equity markets were higher across the board as the regional bourses received a lift from their US counterparts, where tech outperformed and all major indices posted fresh record levels. ASX 200 (+0.4%) was led by energy names as crude prices extended on post-API gains after the latest inventory report showed the largest drawdown in 3 months, while Nikkei 225  (+0.5%) shrugged off a firmer currency and jumped aboard the tech-rally ahead of tomorrow’s market closure. Elsewhere, the Taiex (+0.4%) posted a 27-year high, while Hang Seng (+0.6%) rose to its highest in a decade above the 30,000 level after the PBoC upped its liquidity operations again, with blue-chip energy names also underpinned. Finally, 10yr JGBs  shrugged off the positive risk tone across the region and traded higher with mild support seen amid the BoJ’s presence in the market for nearly JPY 1tln of JGBs ranging from 1yr-10yr maturities. PBoC Governor Zhou said China should allow markets to play a decisive role in financial resource allocation, while he added they will reduce FX intervention and push ahead on CNY internationalization. PBoC injected CNY 100bln via 7-day reverse repos, CNY 80bln via 14-day reverse repos & CNY 10bln via 63-day reverse repos. PBoC set CNY mid-point at 6.6290 (Prev. 6.6356). Sources state that although the BoJ sees no immediate need to withdraw stimulus, officials are now more vocal on increasing costs of prolonged ultra-loose policy which could be a hint that the next move would be to cut back stimulus rather than widen it.

Top Asian News

  • Hedge Funds Are Demanding China Buyers Pay More in M&A Deals
  • Indian Steel Tycoon Is Said to Hire StanChart Banker to Lead M&A
  • Yuan Interbank Rates Jump in Hong Kong Amid Year-End Demand
  • Hong Kong’s Hang Seng Index Rises Above 30,000 to Decade- High
  • Anbang Is Said to Be Required to Cut Bank Stakes Under New Rules
  • Gulf Energy Prices $733 Million Thailand IPO at Top End of Range

European stocks are relatively directionless with the EuroStoxx 50 trading flat. Newsflow has also been on the lighter side ahead of the UK Autumn Budget. Among the biggest movers is Thomas Cook, slipping some 13% after its earnings report. Although, profit figures had come in-line or ahead of analyst estimates, focus was on the tighter margins and aggressive  discounts, signalling potential warnings over heightened competition. On a sector basis, basic materials and oil names are faring better, with the latter bolstered by the rise in oil prices, in which WTI is now at fresh 2-yr highs. More colour and analysis around the rapid turnaround in bonds courtesy of market contacts, as we hear that the front end caved first. Dec 2 year contracts breached the pre-October ECB QE tapering low at 112.2400 (low now 112.200), while 5 year Bobls have been underperforming since the off on spreads and some positioning after Coeure hinted at more forward guidance before September 2018 to flag the end of bond buying. There is also talk about 10s vs 30s flattening trades, and block sales of Bunds in 10k lot clips, one at the 162.67 low, but set more than 10 ticks higher, and the other vs an option strategy (162.50/160.50 put spread against 163.50 calls). Some consolidation off the lows in Eurex contracts in wake of a strong 30 year German auction, with the retention at the lower end of norms, albeit not a big offering to place.

Top European News

  • Germany Heaps Pressure on SPD to Bow to Call for New Merkel Pact
  • Riksbank Takes On Housing Correction Fears, Sees Krona Gains
  • Poland’s ‘Wait-and-Sleep’ Stance on Rates Alarms Zubelewicz
  • Oil Dealmakers Seek Boost in U.K. From North Sea Tax Change
  • Denmark’s Nationalists Suffer Surprising Blow in Local Elections

In currencies, the DXY dollar Index is back below 94.000 yet again on broad USD losses ahead of Thanksgiving, with comments from outgoing Fed Chair Yellen weighing as she expresses serious doubts about inflation reaching target due to factors that may not be transitory. The DXY is holding around 93.770, but in danger of revisiting recent multi-week lows under  93.500 if the Greenback succumbs to more selling pressure in holiday-thinned volumes. The EUR/USD has trimmed its early gains after initially rebounding strongly from sub-1.1720 lows as residual offers from 1.1780-1.1800 continue to obstruct re-tests of the highs above 1.1800. Option expiries could exert more direction influence as Thanksgiving approaches and nearest strikes to watch in decent size are at 1.1750-75 (1.2 bn) then 1.1800-30 (2.4 bn). Cable also firmer and just under 0.8900, with potential for volatility around the Frankfurt fix (385 mn expiry at the figure too). Yen was initially the firmest of the G10 vs the Dollar, with the pair chopping and changing above 112.00 (1.4bln expiry), and a market contact also noting selling in the GBP/JPY cross through 148.50 (program offers reportedly) and key chart support at 147.50.

In commodities, brent and WTI crude futures are firmer this morning, with sentiment bolstered by the sizeable drawdown in last night’s API crude report (largest drawdown in 3-months). As such, WTI rose to a fresh 2-yr high, however did fail to push through USD 58. Elsewhere, gold prices are modestly higher amid the support from the softer greenback. US API weekly crude stocks (Nov 17) -6.356M (Prev. 6.513M).

Looking at the day ahead, we will get the FOMC minutes from the latest monetary policy meeting, while in the UK the big focus will be Chancellor of the Exchequer Philip Hammond’s Budget statement in Parliament. The most significant release of note is the flash October durable and capital goods orders data in the US. The latest weekly initial jobless claims data is also due along with the final November University of Michigan consumer sentiment reading.

US Event Calendar

  • 7am: MBA Mortgage Applications, prior 3.1%
  • 8:30am: Initial Jobless Claims, est. 240,000, prior 249,000; Continuing Claims, est. 1.88m, prior 1.86m
  • 8:30am: Durable Goods Orders, est. 0.3%, prior 2.0%; Durables Ex Transportation, est. 0.5%, prior 0.7%
    • Cap Goods Orders Nondef Ex Air, est. 0.5%, prior 1.7%; Cap Goods Ship Nondef Ex Air, est. 0.3%, prior 0.9%
  • 9:45am: Bloomberg Consumer Comfort, prior 52.1
  • 10am: U. of Mich. Sentiment, est. 98, prior 97.8; Current Conditions, prior 113.6; Expectations, prior 87.6
  • 2pm: FOMC Meeting Minutes

DB’s Jim Reid concludes the overnight wrap

The highlight today is likely to be the UK budget where I’ll find out how much more tax I’ll have to pay over the next 12 months and beyond. As our economists highlight, a stronger fiscal starting point over the last six months is likely to be wiped out by downward revisions to productivity from the OBR, leaving the chancellor slightly less space in meeting his fiscal mandate. Nevertheless, DB anticipate Hammond will spend at least some of what remains, in response to political pressure over austerity and in anticipation of slowing growth next year. See the full preview here.

In terms of markets, can I be the first to declare the start of this year’s Santa Clause rally? Yesterday saw the S&P 500 (+0.65%) cross 2600 for the first time ever, before closing at a fresh record high just below that mark. In fact the DOW (+0.69%) and Nasdaq (+1.06%) were also at record highs.

The one spoke in the wheel as far as I’m concerned is the continued flattening of the US yield curve. 2s10 closed at 58.4bps and below 60bps for the first time in a decade. We still get worried by a flat yield curve as we think it risks cutting off animal spirits. The flatter the yield, the less attractive longer-term investments/activity becomes. The opportunity cost of keeping money safe at the front end gets lower and the risk is economic participants/investors become more defensive. In more recent cycles (since the early 80s) we’ve needed it to invert
for it to be a precursor to a recession but virtually all recessions over the last 70 plus years have followed a flattening of the yield curve. In a low yield world markets may keep reaching for every last bit of carry as the curve flattens but the closer the yield curve gets to zero the more the risks build. Obviously the Fed have to be conscious of this in 2018. It’s difficult to plough through and raise rates if the back end doesn’t budge. Our base case is that it does as inflation increases but a risk is that long end rates get anchored at low levels by BoJ/ECB buying elsewhere and we could see an inverted curve if the Fed dots are accurate. So one to keep an eye on.

Staying with the Fed, our economists put out a piece last night suggesting that in recent weeks, many Fed officials have raised the possibility of re-considering the Fed’s current policy framework of targeting a 2% inflation rate. Today’s minutes could provide further indications that this is becoming a lively debate among Fed officials. Given the breadth and the increase in the intensity of this discussion, our guys think markets should take note and they go through the pros and cons of all the possible alternatives to the 2% inflation target.

In Germany, the political gridlock continues but behind the scenes there has been more initiatives to avoid a new election with sources (per Bloomberg) claiming a grand coalition between Merkel’s party with the Social democrats may still be possible even though SPD’s leaders have been publicly against this. The German President Steinmeier has also met with the FDP and Greens party, asking them to consider re-joining the coalition talks with Chancellor Merkel. Elsewhere, the longest serving Finance minister Mr Schaeuble has urged German political parties to work together and start building a government, while the FDP leader Mr Lindner has noted “the experiment of a four-party coalition is unfortunately finished”.

Across the pond, the US Senate Finance Committee has released the text of its draft tax bill yesterday, with Republican leaders expecting a full chamber vote on it, potentially as soon as next week on the 30th November.

This morning in Asia, markets are trading higher again, with the MSCI Asia Pac. index c0.7pts away from its 29 year high. The Nikkei (+0.72%), Kospi (+0.31%) and ASX 200 (+0.54%) are all up modestly, while the Hang Seng (+0.90%) jumped above 30,000 to a fresh decade high as we type.

Now recapping other markets performance from yesterday. As discussed earlier US bourses strengthened to record highs with little material new news flow, although trading volumes in the S&P were c15% below average. Within the S&P, all sectors excluding telco (-0.54%) were in the green, with gains led by tech (+1.19%) and heath care stocks. European markets were broadly higher, with the Stoxx 600 (+0.44%), DAX (+0.83%) and FTSE (+0.30%) all up modestly, while Spain’s IBEX fell 0.32%. The risk on bias was evident again with the VIX index down for the fourth consecutive day and now back below 10 (-8.64% to 9.73).

Sovereign bond markets were slightly firmer with core bond yields down 1-3bp (UST 10y & Bunds -1.2bp; Gilts -1.8bp; OATs -2.6bp) while peripherals modestly outperformed (down c3bp). In currencies, the US dollar index dipped 0.13% while both the Euro and Sterling rose 0.08%. The Turkish Lira pared losses to be down 0.7% vs. the greenback (c14% down since September) after its central bank took steps to strengthen the currency by providing funding from its late liquidity window which will raise the weighted average cost of funding by 25bp. In commodities, WTI oil rose 0.83% yesterday and is trading c1.7% higher this morning as API data show crude stockpiles continuing to decline. Precious metal rebounded slightly (Gold +0.31%; Silver +0.37%) while most other base metals advanced (Copper +1.39%; Zinc +2.23%) but aluminium fell 0.83%.

In Europe the ECB’s Coeure reiterated his expectations that interest rate guidance rather than QE bond purchase will “gain importance over time”, he noted “I expect the link (between inflation and QE) to change when the governing council is sufficiently confident that net asset purchases are less needed” to support inflation and that “I expect it will come at some point between now and September 2018”. Elsewhere, when asked if QE should end in September, he noted “for me, it’s the logical conclusion”, although he reiterated that he is part of the large majority of council members that believe a substantial degree of monetary accommodation is still needed.

In the UK, Brexit Secretary Davis pushed back on EU negotiator Barnier’s earlier claims for an unique solution on the Irish border, Mr Davis noted “we must start talking about our future (trade) relationships…the Northern Ireland border cannot be fully addressed if we’re not taking into account the shape of our future…with the EU”. We wait and see if a breakthrough occurs before the EU summit on 14th December but it’s increasingly seems likely that the UK will up its settlement offer soon.

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the October Chicago Fed national activity index was materially above expectations at 0.65 (vs. 0.20) – the highest since January 2012, with the strength likely aided by the post storm rebuild efforts. The existing home sales also beat at 5.48m (vs. 5.40m expected) – a four month high. Sales grew 2% mom, with modest growth seen across all four regions, although annual growth was still down 0.9% yoy.

In the UK, both the October underlying private sector net borrowing (8.0bln vs. 7.1bln expected) and public sector net borrowing (7.5bln vs. 6.5bln expected) was modestly higher than expectations. Elsewhere, the CBI’s Industrial trends survey posted a 19pt mom rebound in the new orders index to +17 in November – the strongest reading since 1988. The export orders index also rose to its highest level since 1995.

Looking at the day ahead, the big focus in the UK will be Chancellor of the Exchequer Philip Hammond’s Budget statement in Parliament, due at midday. In the evening we will also receive the FOMC minutes from the latest monetary policy meeting. Datawise, the most significant release of note is the flash October durable and capital goods orders data in the US. The latest weekly initial jobless claims data is also due along with the final November University of Michigan consumer sentiment reading.

3. ASIAN AFFAIRS

i)Late TUESDAY night/WEDNESDAY morning: Shanghai closed UP 19.97 points or .59% /Hang Sang CLOSED UP 185.42 pts or 0.62% / The Nikkei closed UP 106.67 POINTS OR 0.48%/Australia’s all ordinaires CLOSED UP 0.39%/Chinese yuan (ONSHORE) closed UP at 6.6180/Oil UP to 57.81 dollars per barrel for WTI and 63.15 for Brent. Stocks in Europe OPENED GREENM EXCEPT GERMAN DAX ONSHORE YUAN CLOSED DOWN AGAINST THE DOLLAR AT 6.6180. OFFSHORE YUAN CLOSED AT VALUE TO THE ONSHORE YUAN AT 6.6179 //ONSHORE YUAN STRONGER AGAINST THE DOLLAR/OFF SHORE STRONGER TO THE DOLLAR/. THE DOLLAR (INDEX) IS WEAKER AGAINST ALL MAJOR CURRENCIES. CHINA IS VERY HAPPY TODAY.(MARKETS STRONG)

3 a NORTH KOREA/USA

NORTH KOREA/CHINA

 

This is interesting: Air China cancels all flights to North Korea.  Now it only Air Koryo, North Korea’s only airline that is their lifeline to their chief benefactor

 

(courtesy zerohedge)

 

 

Isolation Escalates As Chinese Airline Ends Flights To North Korea

It’s barely been a day since President Donald Trump revealed that the US would once again label North Korea a state sponsor of terrorism and impose broad new sanctions against its government and senior officials, and already more bad news for the restive communist state has emerged. This time, the Associated Press is reporting that Air China, a state owned airline, is canceling flights to North Korea, leaving the North’s troubled Air Koryo as the only airline operating flights between North Korea and its primary economic benefactor.

Flights were “temporarily suspended due to unsatisfactory business operations,” said an employee of Air China’s press office who would give only his surname, Zhang, according to the AP. The suspension was blamed on falling demand for the routes. A foreign ministry spokesman, Lu Kang, said he hadn’t heard about Air China’s cancellation. He said such decisions would be made based on the “state of operation and the market.”

Beijing has supported UN sanctions on North Korean exports meant to pressure the government of leader Kim Jong Un to drop its pursuit of nuclear and missile technology, but China has argued against measures that would harm ordinary North Koreans.

Since mid-summer, the UN Security Council has passed two rounds of sanctions (with China’s approval) that impose strict limitations on exports of North Korean seafood, coal and other raw materials. And Trump said the Treasury will outline more restrictions to be imposed against the North and senior government officials in the coming weeks. Since Air China is state-owned, the cancellation of the routes received at least tacit government approval. But since the sanctions have choked off much of the North’s legitimate economy, it’s possible the routes were eliminated to prevent the airline from losing money, forcing the government to intervene with subsidies. Back in September, China kicked out North Korean businessmen and instructed its banks not to do business with North Koreans or North Korean-owned businesses.

To be sure, Airlines have been rolling back flights to North Korea for months.

Airlines have steadily reduced the frequency of flights to North Korea as mounting political tensions depressed the already small number of business travelers and tourists visiting the North.

 

Air China Ltd. announced in April it was cutting the frequency of flights to North Korea due to lack of demand. Some other Chinese carriers offered charter services to the North but those also have been canceled.

 

Zhang said the last Air China flight to Pyongyang was Monday and he didn’t know when service might resume.

 

The status of Air Koryo’s flights was unclear. Phone calls to the carrier’s Beijing office weren’t answered. The flight information website for the Beijing airport showed its Pyongyang flight on Tuesday took off as scheduled.

Lu, the foreign ministry spokesman, appealed for measures to ease the tense standoff.

 

“Given the highly complex and sensitive situation on the peninsula, we hope all relevant parties can do something conducive to alleviating the tension and pulling all sides concerned back to the track of negotiation and dialogue to settle the peninsular nuclear issue,” he said at a regular news briefing.

Whether it’s true or not, Trump has shown himself more than willing to take credit for any signs of a chill in relations between the North and China. For example, he boasted about having secured assurances from President Xi that China would continue to help isolated the North’s economy. Though many have speculated that Xi is just flattering his American rival, and that China has no intention of squeezing the North.

end

NORTH KOREA,USA,CHINA

China is upset that the USA is targeting Chinese trading personnel doing business with North Korea

(courtesy zerohedge)

3b) REPORT ON JAPAN

3c CHINA REPORT

 

As we have reported to you, the real growth in China is no more than 3%.  Michael Pettit states that China will reveal its true GDP level

 

(courtesy Michael Pettis/London’s Financial Times)

Michael Pettis: China’s Growth Miracle Has Run Out Of Steam

Authored by Michael Pettis, op-ed via The Financial Times,

Beijing must reveal the true level of GDP and wasted investment…

China’s 19th Communist party congress ended last month with an indication that Xi Jinping’s new administration plans to rein in debt by abandoning the country’s long-term economic targets and allowing gross domestic product growth to fall.

Typically, analysts assume that changes in reported GDP reflect movements in living standards and productive capacity. In China, however, this is not the case. Local governments are expected to boost spending by whatever amount is needed to meet the country’s targets, whether or not it is productive.

GDP growth is not the same as economic growth.

Consider two factories that cost the same to build and operate. If the first factory produces useful goods, and the second produces unwanted ones that pile up as inventory, only the first boosts the underlying economy. Both factories, however, will increase GDP in exactly the same way.

Most economies, however, have two mechanisms that force GDP data to conform to underlying economic performance.

First, hard budget constraints, which set spending limits, drive companies that systematically waste investment out of business before they can substantially distort the economy.

 

Second, there is a market-pricing factor in GDP accounting that when bad debts caused by wasted investment are written down, the value-added component of GDP and the overall level of reported growth are reduced.

In China, however, neither mechanism works. Bad debt is not written down and the government is not subject to hard budget constraints.It is the government sector that is mainly responsible for the investment misallocation that characterises so much recent Chinese growth.

The implications are obvious, even if most economists have been surprisingly reluctant to acknowledge them. Anyone who believes there has been a significant amount of wasted investment in China must accept that reported GDP growth overstates the real increase in wealth by the failure to recognise the associated bad debt. Were it correctly written down, by some estimates GDP growth would fall below 3 per cent.

Historical precedents suggest the potential magnitude of this overstatement.

Japan’s economy in the 1980s, for example, had distortions that resemble those of China today. Although not nearly as extreme, Japan too suffered from a very low consumption share of GDP and an overreliance on investment that, by the 1980s, had veered into substantial misallocation.

 

In the early 1990s, Japan’s reported GDP comprised 17 per cent of the overall global total, and few doubted that its soaring economy would become the world’s largest by the end of the century. Instead, once credit growth stabilised, Japan’s share of global GDP began to plummet, and has since fallen by nearly 60 per cent.

 

The same happened to the former USSR. It grew so quickly after the second world war that by the late-1960s it comprised 14 per cent of global GDP, similar to China today, and was widely expected to overtake the US. But two decades later, its share of global GDP had fallen by more than 70 per cent.

These cases may appear shocking, but, like China today, 1980s Japan and 1960s Russia lacked the mechanisms to account for wasted investment in reported GDP. At their peaks, growth for each country was seriously overstated by the failure to write down the waste, and understated once debt levels stabilised.

The implications are clear.

China’s growth miracle has already run out of steam. It is only by allowing debt to surge that the country is able to meet its GDP targets. This may be why President Xi has been eager to stress more meaningful goals, such as increasing household income. Whatever the reason, analysts should not read GDP growth as an indicator of China’s underlying economic performance.

Piling up unsold and unsaleable goods or building empty airports may boost GDP in an economy whose financial system does not recognise bad debt, but it does not measure its performance.

END

4. EUROPEAN AFFAIRS

 

Europe/ the globe

 

 

 

A good one today from Bill Blain of Mint Partners.  He is not concerned about the yield curve.  He is concerned that global inflation is rearing its ugly head

 

(courtesy Bill Blain/Mint Partners)

Blain: “Stop Worrying About The Yield Curve, Something Much Worse Is Around The Corner”

From Blain’s Morning Porridge, Submitted by Bill Blain of Mint Partners

Stop worrying about the US yield curve – its a distortion. Something much worse is around the corner….

A bit of a feeding frenzy in the new issue primary bond market as 21 deals hit the screen and went fairly well. With Thanksgiving tomorrow it’s likely the tail of the week will be very quiet, but our primary trading team reckon there is still plenty of momentum. We’re likely to see another two weeks of proper activity before the holiday slowdown. There are a large number of deals queued up and still to come to market.

I wonder if the Credit Markets will be as busy next year?

It rather depends. Regular readers will know I’m uber-bearish and expecting the big bond market crash coming sometime soon, but others point to the US yield curve as evidence of a slowdown and therefore favourable conditions for the bond binge to continue – what’s not to like for issuers looking for almost zero cost money?

Frankly, there is far too much guff and nonsense about the US yield curve… so, it’s time for me to scare you some more, and add some Blain mumbo-jumbo to the mix.

It’s pretty simple.

The flatter US curve is NOT sending a deep meaningful warning of looming recession. It’s hiding something much worse….

The short-end of the US curve reflects what the Fed has done in terms of hiking rates. But, the long end of the US Curve (10-30) is being driven by very different forces. It has flattened because of interest rate differentials between the ZIRP rest of world and the rate normalising US, but also on the fact external investors effectively drive US rates because they are the forced buyers! Ongoing QE distortions in Europe and Japan are still driving close to Zero domestic interest rates – forcing investors offshore. Global demand for duration partially explains why the US 10-30 curve appears to have flattened.

The transmission effects of $5 trillion QE in last three years is a massive allocation towards US assets – which explains why the 10-yr is sticking round 2.5% and the term perimum is negative. Remove these effects of global distortion and the US curve would look much steeper and cause far less fear, panic and mania than the yield curve doomsters perceive.

Relax.

The yield curve is not the thing to worry about..

I did read another yield curve view on Bloomberg: “The yield curve is inexorably flattening because duration is the hedge, not the risk, when it’s paired with a long equity component.”

Anticipating the imminent stock market meltdown with long duration bonds kind of makes some sort of sense – but I’m convinced that is going to be a massively expensive strategy.

Why? Because something much more wicked this way comes…..

That dark thing is inflation.

Over the last 10-years – since the Global Financial Crisis – we’ve seen the main drivers of inflation stagnate across the board. (I’ve argued many times if you want to see inflation then look at financial assets.) While prices and inflation signals have flat-lined, the inflation Central Bank feared they would create through QE has been incubating in massively inflated real assets – stocks and bonds.

My Macro Economist colleague Martin Malone reckons an inflation shock is now a 50% plus risk! He points out all the major inflation drivers are coming back on line.

  • Global inflationary expectations have risen dramatically this year
  • Inflation data – which was deflationary 5 years ago, then flat, has now accelerated towards more normal levels
  • The safe asset long-term rate – in effect government bonds – are beginning to normalise
  • Output gaps are increasing and positive around the globe
  • Real Asset Prices – particularly housing and real estate rose dramatically over last 3 years
  • Risk Assets – like bond and stocks remain hugely inflated
  • Oil and commodities prices are rising
  • Jobs are being created around the world, and increasing number of countries now looking at supply side fiscal policy means wage inflation looks inevitable! The Philips Curve returns!

Malone has quantified all the inflation drivers and added them up. He reckons in inflation drivers haven’t been this high since 2007! (If you want the numbers – let me know!)

Ask anyone on the street about inflation and they’ll tell you it’s very real. Wages have stagnated for 10-years, but prices are clearly rising. And look at UK housing – up 50% over 5-years!

One further driver of inflation may be China. (Yep, I know – it’s too easy.. If in doubt about markets, blame China.) For years I’ve been arguing the real risk in China isn’t creating enough jobs to keep the populace happy – it’s actually been about a revolution caused by the increasingly perilous state of the Chinese environment.

The leadership has now made the environment the number 1 priority – they get it and are acting accordingly. Pollution is the enemy. It’s not just coal fired power stations, but agriculture is a major source of river pollution – especially from Pigs. So piggeries have been “emptied” and hog prices are through the roof. As these supply side policies hit prices, the government is forced to raise wages. Wage inflation driven by rising food prices.

Go figure what happens elsewhere as China drives up protein and carb prices.

* * *

And… back to Germany… I am indebted to some German readers for pointing out my knowledge of the German constitution is not a sound as it should be (the word being “inadequate”!) It’s not Merkel who can call an election, but former SPD vice-chancellor and now BundesPresident Steinmeier who makes that call. He is vehemently opposed to a second election. As a result it’s likely we’ll see a drawn out process and votes before an election can be called, giving time to put together a new grand coalition in which either the SDP participates with a strong left-wards shift, or a weaker minority government is imposed which will further focus German policy internally rather than at Europe.

One theme suggested last night is the SDP offering to participate in a new Grand Coalition – but only if Merkel goes…  Time to hedge the Dax?

end

Initially the Pound slides on slower GDP growth but then rallies for no apparent reason

(courtesy zerohedge)

 

Pound Slides, Then Rebounds, After Hammond Reveals Sharp Cuts To UK GDP Forecast

Update: after the GBP initially dropped on the lower GDP forecasts, it has since rallied after Hammond finished speaking , in what Citi said was a “relief rally” as there were no “banana skins and government safe. Relief trade here.”

This was a risk event – while Budget Announcements are normally quite quiet affairs in FX, the government is so weak that this could have been a banana skin. Fortunately, that was a good budget in political terms, and exactly what May needed. Economically speaking, the downgrade in GDP forecasts will attract some attention, but they were broadly expected, and Hammond’s big spending on the national healthcare and on housing will probably grab the headlines tonight (the rabbit-out-of-the-hat moment was the abolition of stamp duty for first-time home buyers below GBP300k). There were also extra funds for Brexit preparations and a positive tone about the process. May’s government will be thankful, and Chancellor should be safe.

Earlier:

The pound dropped, sliding to session lows, after UK chancellor Philip Hammond revealed a sharp downgrade (more than expected) to Britain’s economic forecasts during the presentation of the UK Budget, underlining the government’s challenge in transforming its political prospects and boosting growth as the country prepares for Brexit.

  • U.K. FORECASTS 2017 GDP GROWTH 1.5% (VS 2% in March)
  • U.K. FORECASTS 2018 GDP GROWTH 1.4% (VS 1.6% in March)
  • U.K. FORECASTS 2019 GDP GROWTH 1.3% (VS 1.7% in March)
  • U.K. FORECASTS 2020 GDP GROWTH 1.3% (VS 1.9% in March)

Hammond said that the UK has missed productivity predictions, once again falling disappointingly short. And, somewhat ironically, one of the Hammond’s first comments was to remark that the UK economy is “confounding those who talk it down” and that “those who underestimated the UK, do so at their peril”, suggesting the economy is doing better than its critics said it would be.

As the FT adds, putting a brave face on official forecasts showing weaker growth, lower rises in productivity and worse public finances in the medium term, the chancellor said his Budget would create a “future that would be full of new opportunities”.

Hammond also announced that the UK has set aside an additional 3 billion pounds for Brexit over the next two years for Brexit preparations and stands ready to allocate further sums “if and when needed”.  The Chancellor said that the government would make progress on achieving a Brexit implementation agreement “a top priority in the weeks ahead”. The chancellor said he is setting.

Earlier, Downing Street said that foreign secretary Boris Johnson and environment secretary Michael Gove, two key pro-Brexit ministers, were among those who endorsed the Budget. The show of unity came ahead of the chancellor’s announcement of significant downgrades in the economic forecasts from the independent Office for Budget Responsibility.

Some other forecasts:

On the NHS:

  • HAMMOND ALLOCATES ADDED GBP10B FOR NHS OVER PARLIAMENT

On minimum wage/benefits:

  • HAMMOND: MIN. WAGE TO RISES 4.4% TO GBP7.83 FROM APRIL
  • HAMMOND: HIGHER RATE TAX THRESHOLD RISES TO GBP 46,350
  • HAMMOND: UNIVERSAL CREDIT MEASURES TO COST GBP1.5 BLN – to address concerns about the delivery of the benefit.

Business rates:

  • HAMMOND SAYS WILL BRING FORWARD PLANNED SWITCH FROM #RPI TO #CPI INDEXATION OF #BUSINESS #RATES TO 2018. SAYS WILL SAVE BUSINESSES £2.3 BN OVER 5 YEARS

On Scotland:

  • Money coming for Scotland, courtesy of lobbying from Scottish Tory MPs – he’s announced refunds on VAT for Scottish emergency services
  • HAMMOND: TRANSFERABLE TAX HISTORY FOR N.SEA OIL TO START 2018

On Housing:

  • HAMMOND: U.K. COMMITS GBP44 BLN FOR HOUSING OVER 5 YEARS
  • HAMMOND: TARGETS 300,000 NEW HOMES/YR ON AVG BY MID-2020S
  • HAMMOND: NO STAMP DUTY FOR FIRST-TME BUYERS UP YO GBP300,000 (rabbit-out-of-the-hat)

In immediate reaction to the projection cuts, cable tumbled to session lows, however it has since recovered roughly half of the loss.

5. RUSSIA AND MIDDLE EASTERN AFFAIRS

(courtesy zerohedge)

6 .GLOBAL ISSUES

Zimbabwe

Zimbabwe stock market plummets by 35% as the nation awaits its new leader

 

(courtesy zerohedge)

7.OIL ISSUES

 

If Russia says no to its extension on cuts, then oil will surely drop

 

(courtesy Irina Slav/OilPrice.com)

8. EMERGING MARKET

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

Euro/USA 1.1739 DOWN .0001/ 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 EXCEPT GERMAN DAX 

USA/JAPAN YEN 112.09 DOWN 0.240(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 1.3240 down .0007 (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 1.2755 DOWN .0018(CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/(TRUMP INITIATES LUMBER TARIFFS ON CANADA)

Early THIS WEDNESDAY morning in Europe, the Euro FELL by 1 basis points, trading now ABOVE the important 1.08 level FALLING to 1.1738; / Last night the Shanghai composite CLOSED UP 19.97 POINTS OR .59% / Hang Sang CLOSED UP 185.42 POINTS OR 0.62% /AUSTRALIA CLOSED UP 0.39% / EUROPEAN BOURSES OPENED ALL GREEN EXCEPT GERMAN DAX 

The NIKKEI: this WEDNESDAY morning CLOSED UP 106.67 POINTS OR 0.48%

Trading from Europe and Asia:
1. Europe stocks OPENED GREEN EXCEPT GERMAN DAX

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 185.42 POINTS OR 0.62% / SHANGHAI CLOSED UP 19.97 POINTS OR .59% /Australia BOURSE CLOSED UP 0.39% /Nikkei (Japan)CLOSED UP 106.67 POINTS OR 0.48%

INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: 1284.15

silver:$16.98

Early TUESDAY morning USA 10 year bond yield: 2.366% !!! UP 1 IN POINTS from TUESDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. (POLICY FED ERROR)

The 30 yr bond yield 2.7778 UP 2 IN BASIS POINTS from TUESDAY night. (POLICY FED ERROR)

USA dollar index early WEDNESDAY morning: 93.87 DOWN 9 CENT(S) from YESTERDAY’s close.

This ends early morning numbers WEDNESDAY MORNING

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And now your closing WEDNESDAY NUMBERS \1 PM

Portuguese 10 year bond yield: 1.905% DOWN 1 in basis point(s) yield from TUESDAY

JAPANESE BOND YIELD: +.025% DOWN 1  in basis point yield from TUESDAY/JAPAN losing control of its yield curve/

SPANISH 10 YR BOND YIELD: 1.452% DOWN 3 IN basis point yield from TUESDAY

ITALIAN 10 YR BOND YIELD: 1.765 DOWN 1 POINTS in basis point yield from TUESDAY

the Italian 10 yr bond yield is trading 32 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.349% DOWN down 0 IN BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR WEDNESDAY

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

Euro/USA 1.1799 UP.0048 (Euro UP 48 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 111.59 DOWN 0.745(Yen UP 75 basis points/

Great Britain/USA 1.3291 UP 0.044( POUND UP 44 BASIS POINTS)

USA/Canada 1.2738 DOWN  .0034 Canadian dollar UP 34 Basis points AS OIL ROSE TO $57.99

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This afternoon, the Euro was UP 48 to trade at 1.1789

The Yen ROSE to 111.59 for a GAIN of 75 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 44 basis points, trading at 1.3291/

The Canadian dollar ROSE by 34 basis points to 1.2738 WITH WTI OIL RISING TO : $57.99

The USA/Yuan closed AT 6.6100
the 10 yr Japanese bond yield closed at +.025% DOWN 1  IN BASIS POINTS / yield/
Your closing 10 yr USA bond yield DOWN 2 IN basis points from TUESDAY at 2.334% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 2.750 DOWN 2 in basis points on the day /

Your closing USA dollar index, 93,51 DOWN 44 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 WEDNESDAY: 1:00 PM EST

London: CLOSED UP 7.68 POINTS OR 0.10%
German Dax :CLOSED DOWN 152.50 POINTS OR 1.16%
Paris Cac CLOSED DOWN 13.39 POINTS OR 0.25%
Spain IBEX CLOSED DOWN 20.50 POINTS OR 0.21%

Italian MIB: CLOSED DOWN 11.20 POINTS OR 0.05%

The Dow closed DOWN 64.85 POINTS OR .27%

NASDAQ WAS closed UP 4.89 Points OR 0.07% 4.00 PM EST

WTI Oil price; 57.99 1:00 pm;

Brent Oil: 62.90 1:00 EST

USA /RUSSIAN ROUBLE CROSS: 58.60 DOWN 55/100 ROUBLES/DOLLAR (ROUBLE HIGHER BY 55 BASIS PTS)

TODAY THE GERMAN YIELD FALLS TO +.349% 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:$56.92

BRENT: $62.51

USA 10 YR BOND YIELD: 2.322% (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.7430%

EURO/USA DOLLAR CROSS: 1.1819 up .0078

USA/JAPANESE YEN:111.23 down 1.101

USA DOLLAR INDEX: 93.26 down 69 cent(s)/

The British pound at 5 pm: Great Britain Pound/USA: 1.3318 : UP 72 POINTS FROM LAST NIGHT

Canadian dollar: 1.2702 up 70 BASIS pts

German 10 yr bond yield at 5 pm: +0.349%

END

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

TRADING IN GRAPH FORM FOR THE DAY

Dollar Dives To 6-Week Lows As Fed Fears Market ‘Partying Like Its 1999’

1999-like parties are breaking out everywhere across financial markets…

First things first, US Financials Conditions are partying like its way easier than 1999…

 

The Philly Semiconductor index is partying like its 1999…

 

But what happens next? Meltup time?

 

S&P 500 Valuations are partying like its 1999…

The spread between German and US bond yields is partying like its 1999…

 

And the US Treasury curve is partying like its 1999…

*  *  *

The Fed Minutes spooked markets a bit today – USD down, gold, stocks, and bonds unch

 

On the day, The Dow & S&P were joined late on by Small Caps in the red (but the Dow was worst, Trannies were best)

 

VIX ended modestly higher but still below 10…

 

Another day, another short-squeeze…

 

This is now the biggest short squeeze since the election…

 

And before we leave stockland, remember CHF-Solutions…

 

High yield bond prices ralied once again – almost back to their 200DMA…

 

Treasuries rallies across the curve today (but for a change the short-end outperformed the long-end – 2Y -4.5bps vs 30Y -1.5bps)

 

Quite a significant reversal today in yields after bond weakness overnight suddenly reversed this morning and then extended after the dovish FOMC…

 

Stocks and bonds remain notably decoupled this week…

 

The Dollar Index extended its losses after FOMC Minutes. Today is the worst day for the dollar index since Sept 7th…

 

However, stocks remain decoupled from FX carry…

 

Bitcoin rallied once again today but failed to make a new record high…

NOTE the interest patterm starting to develop intraday

 

WTI rallied, bouncing back from disappointing inventory data and RBOB leaked lower…

 

Gold and Silver gained as the dollar drooped – Gold and silver  surged back above its 50- and 100DMA

 

FOMC MEETING MINUTES
Basically the FOMC is still dovish and signal dovish inflation concerns.  Their big concern is huge bubbles forming in assets and if there is a reversal it could have a damaging effect on the economy
gold is the winner on the news
(courtesy zerohedge)

FOMC Signals Dovish Inflation Concerns, Warns “Sharp Reversal” In Markets Could Damage Economy

With a dumping dollar and collapsing yield curve since November’s FOMC, all eyes are on the Minutes for any signals of The Fed hawkishly ignoring inflation concerns but instead a few Fed officials opposed near-term hikes (on the basis of weak inflation). Furthermore, several Fed officials warned of the potential for bubbles, “in light of elevated asset valuations and low financial market volatility, several participants expressed concerns about a potential buildup of financial imbalances.”

Bloomberg’s Brendan Murray highlights the key aspects of The Fed Minutes

Consistent with their expectation that a gradual removal of monetary policy accommodation would be appropriate, many participants thought that another increase in the target range for the federal funds rate was likely to be warranted in the near term if incoming information left the medium-term outlook broadly unchanged. Nearly all participants reaffirmed the view that a gradual approach to increasing the target range was likely to promote the Committee’s objectives of maximum employment and price stability.

 

A few other participants thought that additional policy firming should be deferred until incoming information confirmed that inflation was clearly on a path toward the Committee’s symmetric 2 percent objective.

 

Several participants indicated that their decision about whether to increase the target range in the near term would depend importantly on whether the upcoming economic data boosted their confidence that inflation was headed toward the Committee’s objective. A few participants cautioned that further increases in the target range for the federal funds rate while inflation remained persistently below 2 percent could unduly depress inflation expectations or lead the public to question the Committee’s commitment to its longer-run inflation objective.

 

In light of elevated asset valuations and low financial market volatility, several participants expressed concerns about a potential buildup of financial imbalances. They worried that a sharp reversal in asset prices could have damaging effects on the economy.

 

Several participants expressed concern that the persistently weak inflation data could lead to a decline in longer-term inflation expectations or may have done so already; they pointed to low market-based measures of inflation compensation, declines in some survey measures of inflation expectations, or evidence from statistical models suggesting that the underlying trend in inflation had fallen in recent years.

 

With core inflation readings continuing to surprise on the downside, however, many participants observed that there was some likelihood that inflation might remain below 2 percent for longer than they currently expected, and they discussed possible reasons for the recent shortfall. Many participants judged that the economy was operating at or above full employment and anticipated that the labor market would tighten somewhat further in the near term, as GDP was expected to grow at a pace exceeding that of potential output.

 

Overall, wage increases were generally seen as modest. A couple of participants expressed the view that, when the rate of labor productivity growth was taken into account, the pace of recent wage gains was consistent with an economy operating near full employment.

 

Several participants reported that business contacts appeared to be more confident about the economic outlook and thus more inclined to undertake capital expansion plans. In that context, it was noted that the expansion in business fixed investment could be given additional impetus if legislation involving tax reductions was enacted; a few participants judged that the prospects for significant tax cuts had risen recently.

 

With the balance sheet normalization program under way and with the balance sheet not anticipated to be used to adjust the stance of monetary policy in response to incoming information in the years ahead, members generally agreed that the statement following this meeting needed to contain only a brief reference to the program and that subsequent statements might not need to mention the program.

Of course, within the next few months many of these Fed heads wil be gone – so who knows what that means.

This being the Fed, some FOMC members were quick to point out that the asset bubble is getting bigger, and when it bursts, there will be deflationary hell to pay :

In light of elevated asset valuations and low financial market volatility, several participants expressed concerns about a potential buildup of financial imbalances. They worried that a sharp reversal in asset prices could have damaging effects on the economy.

Meanwhile, according to the staff, which clearly can read a Dow Jones chart, “asset valuation pressures across markets were judged to have increased slightly, on balance, since the previous assessment in July and to have remained elevated; leverage in the nonfinancial sector stayed moderate.”

What is bizarre is the Fed’s perpetually flawed assumption that financial leverage is somehow low: “in the financial sector, leverage and vulnerabilities from maturity and liquidity transformation continued to be low.” It isn’t: not only is vol vega all time high, but hedge fund leverage has never been higher as Goldman showed earlier today.

Finally, the most amusing part of the minutes was the Fed’s confusion why the market not longer believe it has any intentions to – you know – tighten:

A few participants mentioned the limited reaction in financial markets to the announcement and initial implementation of the Committee’s plan for gradually reducing the Federal Reserve’s securities holdings. It was noted that, consistent with that limited response, market participants had characterized the Committee’s communications regarding the balance sheet normalization program as clear and effective.

“clear and effective.”

*  *  *

Since the Nov 1st Fed meeting, gold is the biggest winner as the dollar index has been in freefall…

 

And the yield curve has collapsed…

 

Which is odd given that market expectations for rate-hikes has continued to rise… now expecting almost 2.5 hikes in the next 12 months…

 

As a reminder, The Fed is normalizing the balance sheet – and as Yellen said last night – “so far so good”… So far The Fed (since the end of September) has shrunk the balance sheet by 0.17%… or 7.3Billion of a 4.5 trillion balance sheet

 

And finally – financial conditions have never been easier…

*  *  *

 

(courtesy zerohedge)

Core Capital Goods Orders Plunge Most In 13 Months

After rebounding from its July jolt, Durable Goods New Orders dramaticaly missed expectations in October (dropping 1.2% vs expectations of a 0.3% rise). Perhaps even more concerning is the drop in Core Capital Goods Orders (-0.5% MoM vs expectations of a 0.5% rise) – the biggest drop in 13 months.

The June/July swing (Boeing orders) and storm bounce has gone and October’s preliminary print suggests a slowdown…

Aircraft orders tumbled:

  • Nondefense aircraft orders -18.6%
  • Defense aircraft orders -11.3%

Removing the impact of aircraft orders and defense spending, we have a problem in the real economy…

 

Is this as good as it gets?

 

But then again – what does the real economy matter anyway?

(courtesy zerohedge)

UMich Consumer Confidence Slides In November As Faith In Stocks Falters

Having hit the highest level since Jan 2004 in October, November’s final print shows the University of Michigan Consumer Sentiment index fell from 100.7 to 98.5, as both hope and current conditions slipped.

Expewctations for inflation dipped. Consumers saw inflation rate in the next year at 2.5 percent after 2.4 percent the prior month. Inflation rate over next five to 10 years seen at 2.4 percent, lowest since May, after 2.5 percent in October

“Increased certainty about future income and job prospects has become a key factor that has supported discretionary purchases,” Richard Curtin, director of the University of Michigan consumer survey, said in a statement.

 

“The data indicate that neither changes in fiscal nor monetary policies have yet had any noticeable impact on consumer expectations.”

The data signal consumer spending will rise 2.7 percent in 2018, adjusted for inflation, as well as “the best runup to the holiday shopping season in a decade,” the report said.

Finally we note that faith in the stock market faltered modestly…

(courtesy zerohedge)

A Look At Which Students Are Most Likely To Default On Their Student Debt

Since the early 2000’s the amount of student debt outstanding has grown exponentially, along with annual tuitions, and now stands at nearly $1.5 trillion.  Moreover, and not terribly surprisingly, defaults on that growing mountain of student debt have also surged as graduating students quickly discover that they just dropped $200,000 on a near-zero ROIC investment.

Student Debt

But while a lot of attention is given to the growing default rates on this particular future economic disaster in the making, less time is spent trying to understand which students are most susceptible to default.  That said, the following series of charts from the Federal Reserve Bank of New York help to shed some light on that particular topic.

To our complete ‘shock’, students attending the nation’s predatory for-profit colleges, with their aggressive lending programs, are almost twice as likely to default on their student loans than those attending non-profit schools. 

Student indebtedness has grown substantially, increasing by 170 percent between 2006 and 2016. In addition, the fraction of students who default on those loans has grown considerably. Of students who left college in 2010 and 2011, 28 percent defaulted on their student loans within five years, compared with 19 percent of those who left school in 2005 and 2006. Since defaulting on student loans can have serious consequences for credit scores and, by extension, the ability to purchase a home and take out other loans, it’s critical to understand how college and family characteristics correspond to default rates.

 

Interestingly, though the difference in default rates between two- and four-year private college students is not large (less than 5 percentage points at age thirty-three), this is not the case for public college students. Default rates for community college (two-year public college) students are nearly 25 percentage points higher than those for their counterparts in four-year public colleges. The chart below also shows that while for-profit students have the highest default rates, the default rates of community college students are not too different from those of for-profit students (36 percent versus 42 percent for two-year and 39 percent for four-year for-profit students, respectively, at age thirty?three).

Meanwhile, in another total shocker, “Arts/Humanities” graduates were seen to be way more likely to default than engineering majors

In analysis not reported here, we find that Arts majors have the highest overall default rates, while STEM majors default at the lowest rates. Both Business and Vocational majors default at higher rates than STEM majors, but at rates closer in magnitude to STEM majors than to Arts majors. Next, we separate students not only by major, but also by school selectivity; the chart below presents patterns at age thirty-three. We find that students attending nonselective colleges have higher default rates no matter what they study. Arts majors have the highest default rates regardless of college selectivity, but major matters much more among students at nonselective colleges: the gap in default rates between the best performing major and worst performing major is much smaller (3 percentage points by age thirty-three) among students at selective colleges than among students at nonselective colleges (8 percentage points by age thirty?three).

…and dropouts are nearly 3x more likely to default than students who finish their degrees.

Finally, students who can depend on mom and dad to take over student loan payments when they get ‘triggered’ by their boss and decide to quit are less likely to fall behind on payments than students who lack that safety net.

In the chart below, we group debt holders by our family background measure, as well as by college type. We find that within each college type, students from less-advantaged backgrounds have higher default rates than their peers from a more-advantaged background. There is a nearly 30 percentage point difference in default rates between the group with the highest default rates (private for-profit students from less advantaged backgrounds) and the group with the lowest default rates (private not-for-profit students from more advantaged backgrounds). However, public college students from more advantaged backgrounds default at nearly the same rate as private not-for-profit students from less advantaged backgrounds (about 20 percent by age thirty-three). As before, at every age, for-profit students have the highest default rates, and students from less advantaged backgrounds attending for-profit colleges default at an even higher rate.

Of course, while the NY Fed didn’t address the topic, somehow we suspect that default rates are also highly correlated with the percentage of student debt spent on binge drinking spring break trips to Cancun…just a hunch.

END

Stockman Part I

 

Stockman highlights the folly in Trump’s new tax reform

(courtesy David Stockman)

Stockman On America’s Fiscal Sundown, Part 1

Authored by David Stockman via Contra Corner blog,

The Senate Finance Committee tax bill is not supply side and it’s not even a tax cut; it’s a gimmick-ridden policy mongrel that smells to high heaven of political desperation and cynicism.

Contrary to the Donald’s delusional promise that the American people will get some tax cut sugar plums for Christmas, we are reasonably confident that this misbegotten exercise in reverse-robin hood economics won’t reach his desk. But whether it passes in some diluted form or not, we are entirely sure that what the American people are actually getting is a giant lump of fiscal coal—-courtesy of the craven capitulation of McConnell & Co to the K-Street lobbies and Wall Street.

And we do mean craven in the very fullest sense of beltway mendacity. Come to think of it, we have witnessed few exercises in raw partisan brinksmanship that were as meretricious and fiscally irresponsible as the current GOP campaign to pass a tax bill—any tax bill— merely for the sake of posting a legislative victory.

And that assessment comes after scrolling all the way back to 1970, when your editor got a $50 loan from his mother in order to buy an airline ticket from Boston (where we were hiding out from the Vietnam War at Harvard Divinity School) to Washington DC (to interview for a job on Capitol Hill). As it happened, we got the job, paid back the loan and have since then witnessed 47 years of Warfare State and Welfare State aggrandizement up close and personal.

But what is now happening in the Imperial City is a true turning point for the worst. The last vestige of fiscal rectitude is now being deep-sixed by the GOP’s vestigial budget hawks in the name of pure partisan advantage.

To be sure, the partisan juggernaut that resulted in Obamacare in 2010 was every bit as craven and fiscally deleterious. It accommodated every element of the nation’s bloated health care cartels—hospitals, doctors, pharma, HMOs and insurance companies—-with sweetheart reimbursement schemes in return for their acquiescence to the bill’s passage and the fulfillment of what had been a 60-year Dem quest for quasi-socialized health care.

Yet at least the Democrats did attempt to finance the trillions in new tax credits and Medicaid costs generated by ObamaCare with some revenue raisers such as the medical device and insurance company taxes and the added levies on upper income earners and investment returns.

Back in the day, in fact, this kind of “tax and spend” welfare statism is exactly what the Democrats stood for. And it was also the party’s political Achilles Heel because it enabled the GOP to periodically arouse the electorate on the dangers of “big government” and thereby obtain a resurgence in Washington’s corridors of political power.

But after the break from the old-time fiscal religion of balanced budgets during the so-called Reagan Revolution in 1981, the GOP has slowly morphed into the “borrow and spend” party.

Indeed, as the historically ordained party of fiscal rectitude, the GOP’s apostasy has enabled two-party complicity in a mindless regime of fiscal kick-the-can since the turn of the century. That lapse, in turn, acutely aggravated an already perilous fiscal equation owing to the baby boom retirement wave and the Fed induced slowdown in the trend rate of economic growth (see below).

In this context, it should be noted that the Senate bill is a farce insofar as it claims to be a middle class tax cut and growth stimulant—since it actually accomplishes neither.

On a honestly reckoned basis (counting debt service and eliminating budget gimmicks), however, it would add $2.2 trillion of new debt over the next decade on top of the $12 trillion already built-in under current policy. Accordingly, the Senate version of Trumpite “tax reform” would accelerate the public debt toward $35 trillion by 2027 or 140% of GDP.

Yet all of this added red ink would be “wasted” on cuts for 150 million individual taxpayers that are written in disappearing ink (i.e. they lapse after 2025) and on misbegotten corporate rate cuts that will do virtually nothing for economic growth. Indeed, contrary to the old Washington saw about “wasting a good crisis” the Senate bill involves something more like creating a good crisis and wasting it, too.

In the first place, you don’t really even need a tax table to see that the overwhelming share of individual taxpayers get shafted—-aside from 4.2 million very wealthy filers who would benefit from the alternative minimum tax repeal and a few ten thousand high income business owners who will get a 17% deduction for eligible business income ( a version of the House’s pass-thru rate of 25%).

By 2025 the combined cut from these two provisions amounts to $155 billion per year; and despite sun-setting the following year in keeping with the general fiscal scam of the Senate bill, it’s unequivocally big bucks of tax relief for households at the tippy-top of the economic ladder while it lasts.

By contrast, there are no net goodies at all even while the provisions do last for the remaining 145 million individual filers. (All individual tax provisions expire at the end of 2025 in order to propagate the myth that the bill does not add to the long-term deficit and thereby complies with the so-called Byrd Rule for reconciliation and the 51-vote majority).

In fact, the overall deal is a crap shoot. According to the Joint Committee on Taxation, when fully effective in 2025, the Senate bill will lower rates in the seven brackets by $165 billion per year and provide further relief of $102 billion owing to doubling the standard deduction (to $25,000 for joint returns) and $78 billion for doubling the child credit to $2,000 per eligible dependent. So that’s $345 billion per year of “cuts”.

At the same time, repeal of the existing $4,050 personal exemption, complete repeal of the SALT deduction and other loophole closers would raise tax collections by $355 billion in 2025. In a word, aggregate households other than business owners and alternative minimum tax payers, come out $10 billion in the hole—and that’s in the best year (2025) before it all expires!

Surely, this is the farce of the century; after the estimated 350 amendments slated for consideration on the Senate floor, it will undoubtedly be subject to the full measure of the ridicule and legislative scorn and redo it deserves.

By the same token, the $1.4 trillion ten-year cost of cutting the corporate rate to 20% and eliminating the corporate minimum tax is permanent. That is the source of all the Wall Street excitement about the bill, but also the reason why the GOP claims that it will stimulate a tsunami of economic growth are so completely groundless.

In a word, the corporate tax is paid by shareholders, not workers; America’s big businesses have located production and jobs off-shore (as opposed to merely their tax books and small HQ operations) to access cheaper labor costs and to be nearer to supply chains and end markets, not due to the 35% statutory rate (which few US-based internationals pay); and owing to decades of central bank financial repression and the falsification of financial asset prices, debt and equity capital has never been cheaper.

Accordingly, the $1.4 trillion corporate rate cut will not go into more jobs, more domestic investment or higher wages; it will overwhelmingly be returned to shareholders in the form of stock buybacks, higher dividends and leveraged recaps. That is, it will go to the 1% and the 10% who own most of the publicly traded equities in the US.

We will examine the GOP’s phony “growth” and “dynamic scoring” story in greater depth in part 2. But the larger point here is straight forward: Why try to fool the middle class with a temporary tax cut?

That is, an unsustainable budgetary maneuver that is hostage to a growing fiscal crisis. Yet the GOP is wholly unwilling to confront the latter by reeling in a runaway Warfare State and $3 trillion per year of entitlements and other mandatory spending programs.

Worse still, why aggravate the central bank driven financial engineering spree in the C-suites via a deficit-financed increase in after-tax corporate cash flows that will yield little return in extra growth and revenue?

Neither of these actions would be justifiable under even ordinary circumstances. But in light of the double whammy of the aging baby boom and faltering economic growth induced by monetary central planning, these measures are especially egregious.

As we frequently point out, real final sales are a far better measure of economic growth than GDP because this metric excludes inventory fluctuations, which can distort the data at key turning points in the business cycle.

Moreover, it is self-evident that the business cycle has not been abolished by the Fed or anyone else. What counts, therefore, is the sustained growth rate over longer time frames during which the business cycle boom and bust periods are averaged together.

On that basis, the U.S. economy has hit the skids very badly—with the trend growth of final sales now at just one-third of its historic average.

Here’s a news flash for the GOP. The above 36-year trend of stark deterioration in U.S. economic growth didn’t happen because Federal taxes were rising relative to their historic moorings. As a matter of fact, Ronald Reagan inherited a budget with taxes at about20% of GDP and under current law for FY 2018, the Federal tax take will amount to just 17.7%.

In Part 2 we will discuss the actual anti-growth skunk in the woodpile—which is the Bubble Finance policies of the Fed and the manner in which they have turned the C-suites of corporate American into anti-growth financial engineering operations. But for the moment the idea that the 1.2% real growth trend, which has been in place over the past decade, can somehow be tripled as claimed by White House needs to be recognized for what it is: pie-in-the-sky arm-waving that can’t possibly result from the above described Senate tax bill.

Image result for images of government receipts share of GDP in us

Indeed, what the GOP is failing to reckon with in its misplaced confidence that the U.S. growth machine can be revved up at the wave of a tax plan is a hard stop economic reality lurking just around the corner. Namely, that we are now in a late stage business cycle expansion that is due for a recession.

Thus, when the Donald recently enthused that “I happen to be one that thinks we can go much higher than three percent. There’s no reason why we shouldn’t. (Applause.)”, we are quite sure that no one has ever shown him the chart below.

To wit, to have even a prayer of 3.0% real GDP growth over the next decade—to say nothing of “much higher” levels—the U.S. economy would have to go 207 months without a cyclical downturn. That’s never happened in recorded history; it’s 2X the longest expansion on record and nearly 3X the average expansion since 1950.

The best way to visualize that crucial point about the cyclically adjusted long-term growth rate—that is, averaging the boom and bust years together—is via the contrafactual. The blue line in the graph below projects nominal GDP through 2027 based on the actual growth rate over 2006-2016—a period which averages in a full cycle of boom, bust and recovery.

By the terminal year for current budgeting purposes (2027), nominal GDP—which is what actually drives the Federal revenues and the deficit—would clock in at about $25.7 trillion. That compares to $19 trillion at present and amounts to a cut-and-paste replication of the last decade.

By contrast, if you were to overlay upon this actual 10-year trend a real GDP growth rate of 3.0% , which the White House and many Capitol Hill Republicans suggest is a “no sweat” proposition, you get the gray line. That’s the annual sum of the 2% inflation rate, which the Fed is bound and determine to achieve one way or another, and the 3.0% real growth predicate.

The bottom line is $30 trillion of extra GDP over the coming decade or nearly 23% more than would be generated by the actual growth rate (blue line) during the last decade.

(Note: the data in the box is unfortunately upside down. The 2006-2016 actual trend should be on the top line and the Trump forecast on the bottom).

Needless to say, there is no set of imaginable tax policies that can generate $30 trillion more of cumulative GDP over the next decade than would occur based on the actual expansion of the last decade. Moreover, that is especially not going to happen in the face of monetary policy normalization at the Fed and other central banks around the world, and even more especially not after the house of cards in the Red Ponzi eventually barfs all over the world economy.

As we have frequently argued, the actual problem is much more the composition of taxes in the U.S., not the absolute level. While lower taxes and smaller government are always preferable, the lesson of the last 35 years is that cutting nominal tax rates but not spending levels only results in an explosion of public debt. It also means, implicitly, that future and unborn taxpayers will bear the burden eventually.

In that context, we must insist once again that what is hammering jobs and take home pay in Flyover America is high and rising payroll taxes, not the corporate income tax. The fact is, very few U.S. corporations pay the statutory 35% rate, and the ones which do are essentially domestic operations like retailers, restaurant chains, wholesale distribution and warehousing operations etc. that have no jobs to bring back home anyway.

In fact, the effective corporate tax rate in the U.S. is about 20%, not 35% and has been declining for decades.

In part 2, we will demonstrate why any corporate rate reduction that is actually legislated—and we continue to doubt any tax bill at all can be enacted—will have virtually no impact on jobs. Under current Fed policy and the financial engineering it induces in the corporate C-suites, virtually all the tax savings will be flushed back into the casino as stock buybacks, LBOs and increased dividend payouts.

 

Part ii

David Stockman Exposes “The Illusion Of Growth”

Authored by David Stockman via The Daily Reckoning,

The Wall Street Journal published a superb example of hopium recently in a sunny-side-up story entitled “U. S. Manufacturing Rides Rising Tide, Buoyed by Global Growth, Optimism.”

Indeed, this lazy cheerleading excuse for journalism captured the sum and substance of why the punters keep buying the dips despite troubles gathering all around.

That is, as the tax bill falters, the crusade to remove the Donald from office gathers strength, the Fed moves into balance sheet normalization and instability breaks out all over the world from the Persian Gulf to the Korean peninsula.

You would think the title says it all, but the WSJ was not nearly done. It cited a 156,000 pick-up in manufacturing employment since last November, rising energy and commodity prices as evidence of a booming global economy and double digit growth in business investment earlier this year, among other things.

American manufacturing has picked up pace over the last 12 months thanks to steady global economic growth, a rise in energy and other commodity prices, and increased business confidence.

Although progress isn’t being felt by all industries, makers of items ranging from bulldozers to semiconductors to food products are on the upswing as various measures of spending, sentiment and employment have climbed, while stock markets have hit record highs.

Yet every one of the trends cited in the WSJ article are less than a year-old. They coincide with the Great Coronation Boom in the Red Ponzi ( the run-up to Xi Jinping’s ascension to total power at the 19th Party Congress); represent only a minor up-tick from the 2014-2015 global deflation; and in the context of the current feeble recovery from the 2008 crisis represent nothing at all to write home about.

Indeed, I am confident that as the Red Ponzi goes into a stabilization and credit containment mode, as is already evident from the October economic data (fudged as it is), that the slight lift to global activity engendered by the latest China credit impulse will quickly fade. And with it the entire trading meme reflected in that WSJ puff piece.

But short of that yet to unfold but predictable global mini-cycle, the actual data on U.S. manufacturing output trends through September reveal nothing to smile about.

In fact, overall U.S. manufacturing production is still down 4.3% from its pre-crisis high back in December 2007, and was no higher last month than it was three years ago in November 2014.

Of course, global commodity prices did perk up during the last 18 months. Not only did they rebound off the bottom in normal cyclical fashion, but the hands of China’s central bank were more than a little evident.

When they unleashed the latest credit tsunami in early 2016, the hordes of Chinese speculators dutifully bought up all the iron ore, copper, steel, diesel fuel etc that was to be had and which could be readily financed in cash and futures markets alike.

Presently, they will be selling, too, as the post-coronation signals coming out of Beijing become unmistakably clear.

Nor is the above even the half of it. If you look at output of U.S. consumer goods, which is much less attached to the global commodity/industrial cycle, the rising tide of manufacturing output is nowhere to be seen.

In fact, consumer goods production has flat-lined for the last two years, and is still below where it was at the pre-crisis peak.

The same is true of manufacturing employment. There is no “rising tide.” Thus, between October 2007 and the April 2010 bottom, the U.S. lost 2.3 million manufacturing jobs — representing a loss of 76,000 high paying jobs per month.

By contrast, during the three years since October 2014, the U.S. has recovered about one-tenth of that loss — with manufacturing jobs expanding at a rate of  just 6,000 per month. That is to say, the WSJ was essentially trumpeting statistical noise.

We are now 120 months from the pre-crisis peak in November 2007. Yet the compound annual growth rate of manufacturing is just 0.08%. Which is to say, nothing.

By contrast, every prior peak-to-peak recovery pales that tiny beep of white noise into insignificance. Thus, between July 1981 and the July 1990 peaks, industrial production expanded at 2.18% a year during the so-called Reagan boom.

Likewise, during the Greenspan tech boom of the 1990s, the compound annual growth rate (CAGR) for industrial production was 4.02%. Even during the highly artificial and unsustainable Greenspan housing boom between December 2000 and November 2007, the index rose at a rate of 1.31% per year.

So Thursday’s industrial production number for October actually signaled that the U.S. industrial economy remains dead in the water. It is floundering in a manner that is off the historical charts — and not in a good way.

But stocks keep marching higher.

In short, financial information has been totally corrupted by the distortions of monetary central planning. Accordingly, when the third and greatest financial bubble of the 21st century collapses — and it is coming soon — it will also arrive as a great surprise.

As I keep insisting, monetary central planning systematically falsifies asset prices and corrupts the flow of financial information.

That’s why bubbles seemingly inflate endlessly and massively, and also why financial crashes and economic corrections appear to come out of the blue without warning.

Back in the winter of 1999-2000, for example, we were allegedly in the midst of a “new age economy.” The revolution in technology then underway, it was claimed, meant all historic valuation benchmarks — like P/E multiples, cash flow and book values — were irrelevant to stock prices.

Likewise, in the fall of 2007 there was nary a cloud in the economic skies. That’s because the Great Moderation led by the geniuses at the Fed had purportedly engendered a “goldilocks” economy destined to expand indefinitely.

Within months of the dotcom epiphanies, however, the highflying NASDAQ 100 crashed — eventually hitting bottom 83%below its new age heights. And 15 months after the S&P 500 reached its goldilocks peak of 1570 in October 2007 it staggered around in smoldering ruins at 670 — down 57% from its housing bubble high.

Today, the so-called stock market now consists entirely of what amounts to day traders and HST (high speed trading) machines. There is no “price discovery” in the classic sense of divining the true economic and political fundamentals. The casino has become entirely a ward of the central banks.

Needless to say, we are again on the precipice of a crash and correction that no one sees coming, but this one has an added twist.

Namely, three strikes and you are out!

What I mean, of course, is that the Fed and other central banks are out of dry powder. They are now stranded near the zero bound with bloated balance sheets that have actually reached hideous girth relative to current GDP and all historical experience — meaning they will have almost no capacity to reflate the next busted bubble, as they quickly did in 2001 and 2009.

Do yourself a favor and get out of the casino now.

end

 

My goodness: Mueller now probing Kushner’s contacts with Israeli officials during the transition?

Israel is a good friend of the USA

(courtesy zerohedge)

Special Counsel Mueller Now Probing Kushner’s Contacts With Israeli Officials During Transition, WSJ

In a startling illustration of just how expansive Mueller’s investigation of the Trump administration has become, the Wall Street Journal now reports that the Special Counsel’s team is looking into meetings that Jared Kushner may have conducted with Israeli officials in the days leading up to an important U.N. vote on the construction of settlements in disputed territories on December 23, 2016. 

Robert Mueller’s investigators are asking questions about Jared Kushner’s interactions with foreign leaders during the presidential transition, including his involvement in a dispute at the United Nations in December, in a sign of the expansive nature of the special counsel’s probe of Russia’s meddling in the election, according to people familiar with the matter.

 

The investigators have asked witnesses questions about the involvement of Mr. Kushner, President Donald Trump’s son-in-law and a senior White House adviser, in a controversy over a U.N. resolution passed Dec. 23 that condemned Israel’s construction of settlements in disputed territories, these people said.

 

Israeli officials had asked the incoming Trump administration to intervene to help block it. Mr. Trump posted a Facebook message the day before the U.N. vote—after he had been elected but before he had assumed office—saying the resolution put the Israelis in a difficult position and should be vetoed. Mr. Trump also held a phone conversation with Egyptian President Abdel Fattah Al Sisi, whose government had written a draft of the resolution. Egypt proceeded to call for the vote to be delayed, but the resolution passed the following day, with the Obama administration declining to block it.

 

Investigators have also asked witnesses about Mr. Kushner’s role in arranging meetings or communication with foreign leaders during the transition, the people said. The special counsel’s mandate gives Mr. Mueller a broad directive to examine any matters arising from the Russia investigation.

Kushner

These revelations raise new questions over whether Special Counsel Mueller may attempt to use the 1799 Logan Act to apply pressure on Kushner.

A 1799 law called the Logan Act also bars Americans from communicating with a foreign government to influence the government’s actions related to a dispute with the U.S., but no one has ever been successfully prosecuted under the law.

 

In a statement that Mr. Kushner gave to congressional committees in July, he wrote that at his father-in-law’s request, he served as the main point of contact for foreign countries at a time when it was clear Mr. Trump would be the Republican nominee.

Of course, Kushner is under investigation for a litany of other allegations of wrongdoing ranging from his meeting with a Russian lawyer to inaccuracies on his financial disclosure forms to his role in Comey’s dismissal.  Why do we get the sneaking suspicion that Mueller isn’t going to stop pursuing new angles on Kushner until something sticks?

END

This is a good one:  The FBI is investigating a House Democrat, Bob Brady for paying his opponent to drop out of the election race

 

(courtesy Peter Hasson/Daily Caller)

FBI Investigating House Democrat For Paying His Opponent To Drop Out Of Race

Authored by Peter Hasson via The Daily Caller,

The FBI is investigating Pennsylvania Democratic Rep. Bob Brady for conspiracy, false statements and campaign in relation to payments his campaign allegedly made to 2012 primary opponent Jimmie Moore in order to persuade him to drop out of the race, court documents reviewed by The Daily Caller show.

FBI special agent Jonathan R. Szeliga filed a search warrant request on November 1 in the U.S. District Court of the Eastern District of Pennsylvania for all emails associated with Brady’s campaign email, BobCongress@Aol.com

Szeliga asserted he had “probable cause to believe that Kenneth Smukler, Robert Brady, Donald ‘D.A.’ Jones, Jimmie Moore, and Carolyn Cavaness and others known and unknown have committed violations” including charges of conspiracy, false statements, producing false records, causing false campaign contribution reports and violating limits on campaign contributions and expenditures.

U.S. Magistrate Judge Carol Sandra Moore Wells signed the search warrant the same day, court records show. The search warrant was unsealed by the court last week, court documents show.

Seamus Hughes, deputy director of George Washington University’s Program on Extremism, first broke the news on Twitter.

Federal prosecutors announced charges last month against two of Brady’s political consultants, Kenneth Smukler and Donald Jones, in relation to the campaign finance probe

END

 

Let us close out tonight’s commentary with this offering and it is a good one from Greg Hunter interviewing author Danielle DiMartino Booth

Fed Fears New Record High Credit Bubble – Danielle DiMartino Booth

By Greg Hunter On November 22, 2017 In Market Analysis

By Greg Hunter’s USAWatchdog.com

Former Federal Reserve insider Danielle DiMartino Booth says the record high stock and bond prices make the Fed nervous because it’s fearful of popping this record high credit bubble. DiMartino Booth says, “The Fed’s biggest fear is they know darn well this much credit has built up in the background, and the ramifications of the un-wind for what has happened since the great financial crisis is even greater than what happened in 2008 and 2009. It’s global and pretty viral. So, the Fed has good reason to be fearful of what’s going to happen when the baby boomer generation and the pension funds in this country take a third body blow since 2000, and that’s why they are so very, very intimidated by the financial markets and so fearful of a correction.”

Why will the Fed not allow even a small correction in the markets? DiMartino Booth says, “Look back to last year when Deutsche Bank took the markets to DEFCON 1. Maybe you were paying attention and maybe you weren’t, but it certainly got the German government’s attention. They said the checkbook is open, and we will do whatever we need to do because we can’t quantify what will happen when a major bank gets into a distressed situation. I think what central banks worldwide fear is that there has been such a magnificent re-blowing of the credit bubble since 2007 and 2008 that they can’t tell you where the contagion is going to be. So, they have this great fear of a 2% or 3% or 10 % (correction) and do not know what the daisy chain is going to look like and where the contagion is going to land. It could be the Chinese bond market. It could be Italian insolvent banks or it might be Deutsche Bank, or whether it might be small or midsize U.S. commercial lenders. They can’t tell you where the systemic risk lies, and that’s where their fear is. This credit bubble is of their making.”

In short, the Fed does not know what is going to happen, and according to DiMartino Booth, nobody does. DiMartino Booth contends, “I don’t think any of us know what the implications are for a $50 trillion debt build since the great financial crisis (of 2008). It is impossible to say. We have never dealt with anything of this magnitude.”

On Bitcoin’s rapid rise in value, DiMartino Booth warns, “To me, Bitcoin is a reflection of panic. It’s a reflection of people trying to get money into a safe place knowing the major governments of the developed world have got their printing presses running 24/7. It is a reflection of anxiety in fiat currencies and the fact it’s not practical to go back to a gold standard. What scares me about Bitcoin is the central bankers are studying it to figure out how the blockchain works. . . .They are going to be controlling our spending with blockchain technology that is being perfected in the crypto currency universe.”

On gold and silver, DiMartino Booth says, “2017 is the record for quantitative easing (money printing) globally. We have never, not even in the darkest days of the financial crisis, central banks have never injected as much money as they have into the markets. . . . I am not a gold bug, but we do know that in times of corrections that there is no place to hide in traditional asset classes that you can get at your Merrill Lynch brokerage. Gold and silver in the precious metals complex are the only places to hide and get true diversification and safety.”

Join Greg Hunter as he goes One-on-One with Danielle DiMartino Booth, the author of the popular book “Fed Up.”

Video Link

https://usawatchdog.com/fed-fears-new-record-high- credit-bubble-danielle-dimartino-booth/

-END-

 

 

I WILL NOT PROVIDE A COMMENTARY TOMORROW

BUT i WILL RESUME FRIDAY NIGHT.

I WOULD LIKE TO WISH ALL OUR AMERICAN FRIENDS OUT THERE A VERY HAPPY AND SAFE THANKSGIVING HOLIDAY/WEEKEND

HARVEY

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