GOLD: $1275.00 DOWN $4.50
Silver: $16.34 DOWN 1 cents
Closing access prices:
Gold $1276.20
silver: $16.33
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: $1279.84 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $1274.30
PREMIUM FIRST FIX: $5.54
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SECOND SHANGHAI GOLD FIX: $1279.84
NY GOLD PRICE AT THE EXACT SAME TIME: $1274.30
Premium of Shanghai 2nd fix/NY:$7.69
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LONDON FIRST GOLD FIX: 5:30 am est $1279.10
NY PRICING AT THE EXACT SAME TIME: $1274.85????
LONDON SECOND GOLD FIX 10 AM: $1273.45
NY PRICING AT THE EXACT SAME TIME. 1275.20???
For comex gold:
DECEMBER/
NUMBER OF NOTICES FILED TODAY FOR DECBER CONTRACT: 76 NOTICE(S) FOR 7600 OZ.
TOTAL NOTICES SO FAR: 3012 FOR 301,200 OZ (9.368 TONNES)
For silver:
DECEMBER
213 NOTICE(S) FILED TODAY FOR
1,065,000 OZ/
Total number of notices filed so far this month: 4605 for 23,025,000 oz
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Bitcoin: BID $11,238/OFFER $11,289, up $483 (morning)
BITCOIN : BID $11,501 OFFER: $11,558 // UP $747 (CLOSING)
end
Let us have a look at the data for today
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In silver, the total open interest SURPRISINGLY ROSE BY A HUGE 3174 contracts from 187,033 RISING TO 191,302 DESPITE FRIDAY’S CONTINUAL DRUBBING OF SILVER WHICH SAW OUR METAL FALL ANOTHER 8 CENTS AND NOW WELL BELOW THE HUGE $17.25 SILVER RESISTANCE. WE HAD SURPRISINGLY NO REAL COMEX LIQUIDATION AS WE WERE AGAIN NOTIFIED THAT WE HAD ANOTHER LARGE NUMBER OF COMEX LONGS TRANSFERRING THEIR CONTRACTS TO LONDON THROUGH THE EFP ROUTE : 2881 EFP’S FOR MARCH (AND ZERO FOR DEC AND OTHER MONTHS) AND THUS TOTAL ISSUANCE OF 2881 CONTRACTS. I GUESS WHAT THE CME IS STATING IS THAT THERE IS NO SILVER (OR GOLD) TO BE DELIVERED UPON AT THE COMEX AS THEY MUST EXPORT THEIR OBLIGATION TO LONDON. FRIDAY WITNESSED 5387 EFP’S FOR SILVER ISSUED.
ACCUMULATION FOR EFP’S/SILVER/ STARTING FROM FIRST DAY NOTICE/FOR MONTH OF DECEMBER: 8268 CONTRACTS
RESULT: A HUGE SIZED RISE IN OI COMEX DESPITE THE CONTINUAL DRUBBING IN SILVER PRICE: FRIDAY IT FELL BY ANOTHER 8 CENTS. HOWEVER WE HAD ALL OF OUR COMEX LONGS WHICH EXITED OUT OF THE SILVER COMEX TRANSFERRED THEIR OI TO LONDON THROUGH THE EFP ROUTE: FROM THE CME DATA 2881 EFP’S WERE ISSUED TODAY FOR A DELIVERABLE CONTRACT OVER IN LONDON WITH A FIAT BONUS. IN ESSENCE THE DEMAND FOR SILVER PHYSICAL INTENSIFIES GREATLY. WE REALLY GAINED 6055 OI CONTRACTS i.e. 2881 open interest contracts headed for London (EFP’s) TOGETHER WITH A INCREASE OF 3,174 OI COMEX CONTRACTS. AND ALL OF THIS INCREASED DEMAND (INCREASE IN OPEN INTEREST) HAPPENED WITH THE FALL IN PRICE OF SILVER BY ANOTHER 8 CENTS ON FRIDAY CLOSING AT A LOW PRICE OF $16.35
In ounces AT THE COMEX, the OI is still represented by just UNDER 1 BILLION oz i.e. 0.956 BILLION TO BE EXACT or 137% of annual global silver production (ex Russia & ex China).
FOR THE NEW FRONT DECEMBER MONTH/ THEY FILED: 213 NOTICE(S) FOR 1,065,000 OZ OF SILVER
In gold, the open interest FELL BY A LARGE 10,652 CONTRACTS DOWN TO 474,857 DESPITE THE RISE IN PRICE OF GOLD ON FRIDAY ($5.65). HOWEVER, THE TOTAL NUMBER OF GOLD EFP’S ISSUED FOR MONDAY TOTALED ANOTHER 15,773 CONTRACTS OF WHICH THE MONTH OF DECEMBER SAW 0 CONTRACTS AND FEB SAW THE ISSUANCE OF 15,773 CONTRACTS. The new OI for the gold complex rests at 476,099. DEMAND FOR GOLD INTENSIFIES GREATLY AS WE WITNESS THE HUGE NUMBER OF EFP TRANSFERS TOGETHER WITH THE MASSIVE AMOUNT OF GOLD OUNCES STANDING FOR DECEMBER. 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 APPRECIABLE METAL!! THIS IS A MASSIVE FRAUD: THEY CANNOT SUPPLY ANY METAL TO OUR COMEX LONGS BUT THEY ARE QUITE WILLING TO SUPPLY MASSIVE NON 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 13 WEEKS TO OBTAIN PHYSICAL FROM THE POINT WHEN FORWARDS BECOME DUE. IN ESSENCE WE HAVE A NET GAIN OF 5121 OI CONTRACTS: 10,652 OI CONTRACTS LOST AT THE COMEX BUT 15,773 OI CONTRACTS NAVIGATED OVER TO LONDON. THE CME HAS BEEN VERY TARDY IN THEIR REPORTING OF EFP ISSUANCE. THEY ARE IMMEDIATELY REMOVING COMEX OPEN INTEREST NUMBERS BUT DELAYING RELEASE OF EFP’S FOR 24 HOURS OR GREATER AS NO DOUBT THEY ARE NEGOTIATING WITH THE LONGS FOR A FIAT BONUS.
FRIDAY, WE HAD 15,472 EFP’S ISSUED.
ACCUMULATION OF EFP’S/ GOLD(EXCHANGE FOR PHYSICAL) FOR THE MONTH OF DECEMBER STARTING WITH FIRST DAY NOTICE: 31,245 CONTRACTS
Result: A HUGE SIZED DECREASE IN OI WITH THE FAIR SIZED RISE IN PRICE IN GOLD YESTERDAY ($5.65). WE HAD AN LARGE NUMBER OF COMEX LONG TRANSFERRING TO LONDON THROUGH THE EFP ROUTE: 15,773. THERE OBVIOUSLY DOES NOT SEEM TO BE MUCH PHYSICAL GOLD AT THE COMEX AND YET WE REACHED THE HUGE DELIVERY MONTH OF DECEMBER. I GUESS IT EXPLAINS THE HUGE ISSUANCE OF EFP’S…THERE IS HARDLY ANY GOLD PRESENT AT THE GOLD COMEX FOR DELIVERY PURPOSES. IF YOU TAKE INTO ACCOUNT THE 15,773 EFP CONTRACTS ISSUED, WE HAD A NET GAIN OPEN INTEREST OF 5121 contracts:
15,773 CONTRACTS MOVE TO LONDON AND 10,652 CONTRACTS REMOVED FROM THE COMEX.
we had: 627 notice(s) filed upon for 62,700 oz of gold.
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With respect to our two criminal funds, the GLD and the SLV:
GLD:
Today, A HUGE CHANGE in gold inventory at the GLD/ A MASSIVE DEPOSIT OF 8.56 TONNES. SEEMS OUR CROOKS HAVE RUN OUT OF GOLD TO SEND DOWN TO CHINA.
Inventory rests tonight: 848.11 tonnes.
SLV
TODAY WE HAD NO CHANGES IN SILVER INVENTORY AT THE SLV:
INVENTORY RESTS AT 319.206 MILLION OZ
end
First, here is an outline of what will be discussed tonight:
1. Today, we had the open interest in silver SURPRISINGLY ROSE BY A HUGE 3174 contracts from 187,033 UP TO 190,207 (AND now A LITTLE CLOSER TO THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) DESPITE THE LOSS IN PRICE OF SILVER PRICE AND CONTINUAL BOMBARDMENT (A FALL OF 8 CENTS ). ON TOP OF THE RISE IN OI AT THE COMEX, OUR BANKERS USED THEIR EMERGENCY PROCEDURE TO ISSUE ANOTHER HUGE 2881 PRIVATE EFP’S FOR MARCH (WE DO NOT GET A LOOK AT THESE CONTRACTS AS IT IS PRIVATE BUT THE CFTC DOES AUDIT THEM). EFP’S GIVE OUR COMEX LONGS A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON. WE HAD ZERO COMEX SILVER COMEX LIQUIDATION. IF WE ADD THE OI GAIN AT THE COMEX (3174 CONTRACTS) TO THE 2881 OI TRANSFERRED TO LONDON THROUGH EFP’S WE OBTAIN A NET GAIN OF A MASSIVE 6055 OPEN INTEREST CONTRACTS, ON TOP OF THE HUGE AMOUNT OF SILVER OUNCES THAT ARE STANDING FOR METAL IN DECEMBER (SEE BELOW)
RESULT: A HUGE SIZED INCREASE IN SILVER OI AT THE COMEX DESPITE THE 8 CENT FALL IN PRICE (WITH RESPECT TO FRIDAY’S TRADING). BUT WE ALSO HAD ANOTHER 2881 EFP’S ISSUED TRANSFERRING COMEX LONGS OVER TO LONDON . TOGETHER WITH THE HUGE AMOUNT OF SILVER OUNCES STANDING FOR DECEMBER, DEMAND FOR PHYSICAL SILVER INTENSIFIES.
(report Harvey)
.
2.a) The Shanghai and London gold fix report
(Harvey)
2 b) Gold/silver trading overnight Europe, Goldcore
(Mark O’Byrne/zerohedge
and in NY: Bloomberg
3. ASIAN AFFAIRS
i)Late SUNDAY night/MONDAY morning: Shanghai closed DOWN 7.99 points or .24% /Hang Sang CLOSED UP 64.04 pts or 0.22% / The Nikkei closed DOWN 111.87 POINTS OR 0.49%/Australia’s all ordinaires CLOSED DOWN 0.08%/Chinese yuan (ONSHORE) closed DOWN at 6.6190/Oil DOWN to 57.71 dollars per barrel for WTI and 63.16 for Brent. Stocks in Europe OPENED ALL GREEN . ONSHORE YUAN CLOSED DOWN AGAINST THE DOLLAR AT 6.6190. OFFSHORE YUAN CLOSED DOWN AGAINST THE ONSHORE YUAN AT 6.6196 //ONSHORE YUAN WEAKER AGAINST THE DOLLAR/OFF SHORE WEAKER TO THE DOLLAR/. THE DOLLAR (INDEX) IS SLIGHTLY STRONGER AGAINST ALL MAJOR CURRENCIES. CHINA IS NOT HAPPY TODAY.(MARKETS GENERALLY WEAK)
3a)THAILAND/SOUTH KOREA/NORTH KOREA
i)North Korea/South Korea
Largest ever military drill as the uSA orders 16,000 troops, and 230 jets too simulate war with North Korea:
( zerohedge)
ii)Lindsay Graham urges evacuation of all Americans from South Kore4a
( zerohedge)
b) REPORT ON JAPAN
3 c CHINA
4. EUROPEAN AFFAIRS
i)England
The pound soars on a probable BREXIT border deal
(courtesy zerohedge)
ii)Not surprisingly, there is no deal between the EU and Britain
iii) Germany
Germany has had enough: they are offering migrants $3500.00 dollars to leave voluntarily. If they do not bite, then deportation
(courtesy hedge)
5. RUSSIAN AND MIDDLE EASTERN AFFAIRS
i)Friday night/Israel/Syria
Israel strikes at the site where the BBC reports that Iran is building a military base in Syria
( zerohedge)
ii)This will create a firestorm: Trump may recognize Jerusalem as Israel’s true capital and then move the USA embassy to it
iii)This may spark trouble: Yemen’s ex President Saleh a supporter of the Iranian backed Houthis suddenly switches sides and then his house is blown up, sparking rumours of his death( zerohedge)
iv)Not good: the Houthi rebels have now taken over the Yemen Capital city of Sanaa and reports of the killingof ex president Saleh is true: he is dead..
6 .GLOBAL ISSUES
7. OIL ISSUES
8. EMERGING MARKET
9. PHYSICAL MARKETS
i)Saturday: Bitcoin back above $11,000
( zerohedge)
iv)Seems that the Establishment is taking note of Bitcoin. Here is a list of countries that state that Bitocn is undermining governments and stabilizing economies:( zerohedge)
v)Futures trading to begin on Dec 10/ first CBOE and then one week later the CME
( zerohedge)
vi)Now it is England’s turn for plans on a regulatory crackdown on cryptocurrencies. At 6 pm: 10 760.00
(courtesy Bloomberg/GATA)
10. USA stories which will influence the price of gold/silver
i)In a major victory, the senate passes its sweeping tax bill of which nobody read.
( zerohedge)
ib) Winners and losers on the USA tax reform bill:
(courtesy zerohedge)
ii)There is certainly no collusion between Trump and his team with respect to the Russians trying to sway the election. This was nothing but a witch hunt
( zerohedge)
iii)Weekend tweet storm from Trump:
( zero hedge)
iv)Nunes is preparing contempt charges against assistant AG Rod Rosenstein and FBI assistant director McCabe in the stonewalling in handing over documents to the committee and also their stonewalling over the removal of FBI lead investigator, Szozok, who was heavily biased for Hillary as he was investigating her in her email scandal.
this is becoming a huge deep swamp..
(courtesy zerohedge)
v)the real truth behind the tax reform bill. Generally only the wealthy people and wealth corporations will be the net benefit and their newfound gain will enable them to buy back more of their stock
( zerohedge)
vi)Nancy and Chuck will meet the President on Dec 7 one day before a government shutdown if they do not get their funding for 2018 orchestrated.
( zerohedge)
vii)USA factory orders slide in October:
( zerohedge)
Let us head over to the comex:
The total gold comex open interest SURPRISINGLY FELL BY AN UNEXPECTED 10,652 CONTRACTS DOWN to an OI level of 474,857 DESPITE THE GOOD SIZED RISE IN THE PRICE OF GOLD ($5.65 GAIN WITH RESPECT TO FRIDAY’S TRADING). IN ACTUAL FACT WE DID NOT HAVE ANY GOLD LIQUIDATION. WE HAD ANOTHER LARGE COMEX TRANSFER THROUGH THE EFP ROUTE AS THESE LONGS RECEIVED A DELIVERABLE LONDON FORWARD TOGETHER WITH A FIAT BONUS. THE CME REPORTS THAT 0 EFPS WERE ISSUED FOR DECEMBER AND 15,773 EFP’S WERE ISSUED FOR FEBRUARY FOR A TOTAL OF 15,773 CONTRACTS. THE OBLIGATION STILL RESTS WITH THE BANKERS ON THESE TRANSFERS. THE CONSTANT BANKER RAIDS CONTINUE AS THEY TRY TO GET OUR “MATHEMATICAL PAPER LONGS” IN GOLD TO LIQUIDATE THEIR POSITIONS AT THE COMEX. SO FAR IT HAS NOT SUCCEEDED (AS THEY MORPH INTO LONDON FORWARDS) AND THUS THE ABORTED RAID WE WITNESSED ON FRIDAY . THE CME HAS BEEN VERY TARDY IN THEIR REPORTING OF EFP’S CONTRACTS AFTER A COMEX OI MORPHS INTO AN EFP WHICH WAS THE REASON FOR MY 2ND LETTER TO THE CFTC.
ON A NET BASIS IN OPEN INTEREST WE GAINED TODAY: 5121 OI CONTRACTS IN THAT 15,773 LONGS WERE TRANSFERRED AS LONGS TO LONDON AS A FORWARD AND WE LOST 10,652 COMEX CONTRACTS. NET GAIN: 5121 contracts.
Result: a LARGER THAN EXPECTED DECREASE IN COMEX OPEN INTEREST DESPITE THE GAIN IN THE PRICE OF GOLD ON FRIDAY ($5.65.) WE HAD NO REAL GOLD LIQUIDATION. TOTAL OPEN INTEREST GAIN ON THE TWO EXCHANGES: 5121 OI CONTRACTS…
We have now entered the active contract month of DECEMBER. The open interest for the front month of December saw it’s open interest decline by 976 contracts down to 7372. We had 627 notices filed upon yesterday so we lost 349 COMEX contracts or an additional 34,900 oz will not stand for delivery in this active delivery month of December but they did migrate over to London as a forward for February…the reason for the move is that there is not any gold for them at the comex.
January saw its open interest GAIN OF 27 contracts UP to 2120. FEBRUARY saw a loss of 10,736 contacts down to 366,359. (VERY STRANGE WHY SO MANY LEFT THE FEB COMEX CONTRACT MONTH AND IT WAS THESE GUYS WHO AGAIN MORPHED INTO THE LONDON FORWARDS)
We had 76 notice(s) filed upon today for 7600 oz
PRELIMINARY VOLUME TODAY ESTIMATED; 142,288
FINAL NUMBERS CONFIRMED FOR FRIDAY: 451,964
comex gold volumes are increasing dramatically
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And now for the wild silver comex results.
Total silver OI SURPRISINGLY ROSE BY A LARGE 3,174 CONTRACTS FROM 187,033 UP TO 190,207 DESPITE FRIDAY’S 8 CENT LOSS IN PRICE (AND CONTINUAL RAIDING OF OUR PRECIOUS METALS). HOWEVER WE DID HAVE ANOTHER STRONG 2881 EMERGENCY EFP’S FOR MARCH ISSUED BY OUR BANKERS (ZERO FOR DECEMBER) TO COMEX LONGS WHO RECEIVED A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON.THE TOTAL EFP’S ISSUED: 2881. IT SURE LOOKS LIKE THE SILVER BOYS HAVE STARTED TO MIGRATE TO LONDON FROM THE START OF DELIVERY MONTH AND CONTINUING RIGHT THROUGH UNTIL FIRST DAY NOTICE JUST LIKE WE ARE WITNESSING TODAY. USUALLY WE NOTED THAT CONTRACTION IN OI OCCURRED ONLY DURING THE LAST WEEK OF AN UPCOMING ACTIVE DELIVERY MONTH. THIS PROCESS HAS JUST BEGUN IN EARNEST IN SILVER STARTING IN SEPTEMBER. HOWEVER, IN GOLD, WE HAVE BEEN WITNESSING THIS FOR THE PAST 2 YEARS. WITHOUT A DOUBT WE HAD NO REAL LONG SILVER LIQUIDATION AS DEMAND FOR PHYSICAL SILVER REMAINS STRONG ESPECIALLY AS WE WITNESS A HUGE AMOUNT OF SILVER OUNCES STANDING FOR METAL IN DECEMBER AS WELL AS THAT MASSIVE MIGRATION OF EFPS OVER TO LONDON. IT SEEMS THAT ALL OF OUR LOST SILVER COMEX OI CONTRACTS HAVE MIGRATED OVER TO THE PHYSICAL HUB OF OUR PRECIOUS METALS, LONDON. ON A NET BASIS WE GAINED 6055 OPEN INTEREST CONTRACTS:
3174 CONTRACTS GAINED AT THE COMEX WITH THE ADDITION OF 2881 OI CONTRACTS NAVIGATING OVER TO LONDON.
We are now in the big active delivery month of December and here the OI fell by 281 contracts down to 1837. We had 398 notices filed upon yesterday so we GAINED 117 contracts or an additional 585,000 oz will stand in this active delivery month of December. AGAIN QUEUE JUMPING IS THE NORM IN SILVER SOMETHING THAT WE HAVE BEEN WITNESSING FROM MAY 2017 ONWARD.
The January contract month fell by 178 contracts down to 1217. February saw a drop of one OI contract down to 22. The March contract gained 3182 contracts up to 151,412.
We had 213 notice(s) filed initially for 1,065,000 oz for the DECEMBER. 2017 contract
INITIAL standings for DECEMBER
Dec 4/2017.
Gold | Ounces |
Withdrawals from Dealers Inventory in oz | nil oz |
Withdrawals from Customer Inventory in oz |
8037.500 oz
Scotia
25 kilobars
|
Deposits to the Dealer Inventory in oz | nil oz |
Deposits to the Customer Inventory, in oz |
1062.765
oz
Scotia
|
No of oz served (contracts) today |
76 notice(s)
7600 OZ
|
No of oz to be served (notices) |
7296 contracts
(729,600 oz)
|
Total monthly oz gold served (contracts) so far this month |
3012 notices
301200 oz
9.368 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 |
WE HAD nil DEALER DEPOSIT:
total dealer deposits: nil oz
We had nil dealer withdrawals:
total dealer withdrawals: nil oz
we had 1 customer deposit(s):
i) Into Scotia: 1,162.765 oz
total customer deposits 1162.765 oz
We had 1 customer withdrawal(s)
i) Out of Scotia: 8037.500 oz (25 kilobars)
Total customer withdrawals: 8037.500 oz
we had 0 adjustment(s)
*December is the biggest delivery month of the year for gold and the fact that no gold has entered the vaults these past three trading days speaks volumes that there is no appreciable gold at the comex to deliver upon our longs and thus the reason for the migration to London
For DECEMBER:
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 76 contract(s) of which 0 notices were stopped (received) by j.P. Morgan dealer and 43 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 DECEMBER. contract month, we take the total number of notices filed so far for the month (3012) x 100 oz or 301,200 oz, to which we add the difference between the open interest for the front month of DEC. (7372 contracts) minus the number of notices served upon today (76 x 100 oz per contract) equals 1,030,800 oz, the number of ounces standing in this active month of DECEMBER
Thus the INITIAL standings for gold for the DECEMBER contract month:
No of notices served (3012) x 100 oz or ounces + {(7372)OI for the front month minus the number of notices served upon today (76) x 100 oz which equals 1,030,800 oz standing in this active delivery month of DECEMBER (32.06 tonnes). INTERESTINGLY THERE IS ONLY 28 TONNES OF REGISTERED GOLD AVAILABLE FOR DELIVERY SO FAR.
WE LOST 349 COMEX CONTRACTS STANDING OR 34900 OZ BUT THESE CONTRACTS MORPHED INTO A FEB LONDON FORWARD.
.
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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.
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Total dealer inventory 922,639.946 or 28.69 tonnes (dealer gold continues to disappear)
Total gold inventory (dealer and customer) = 8,906,485.958 or 277.02 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 77 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE DECEMBER DELIVERY MONTH
DECEMBER INITIAL standings
Silver | Ounces |
Withdrawals from Dealers Inventory | nil |
Withdrawals from Customer Inventory |
14,655.784 oz
Delaware
|
Deposits to the Dealer Inventory |
nil
oz
|
Deposits to the Customer Inventory |
2,193,944.900 oz
Brinks
HSBC
|
No of oz served today (contracts) |
213 CONTRACT(S)
(1,065,000OZ)
|
No of oz to be served (notices) |
1,624 contract
(8,120,000 oz)
|
Total monthly oz silver served (contracts) | 4605 contracts
(23,025,000 oz) |
Total accumulative withdrawal of silver from the Dealers inventory this month | NIL oz |
Total accumulative withdrawal of silver from the Customer inventory this month |
today, we had 0 deposit(s) into the dealer account:
total dealer deposit: nil oz
we had nil dealer withdrawals:
total dealer withdrawals: nil oz
we had 1 customer withdrawal(s):
ii) Out of Delaware: 14,655.784 oz
TOTAL CUSTOMER WITHDRAWAL 14,655.784 oz
We had 2 Customer deposit(s):
i) Into Brinks: 793,606.520 oz
ii) Into HSBC: 1,400,338.380 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: 2,193,944.900 oz
we had 2 adjustment(s)
i) Out of CNT:
850,758.53 oz was adjusted out of the customer and this landed into the dealer account of CNT
ii) Out of HSBC: 55,699.758 oz leaves the dealer account of HSBC and arrives at the customer account of the same bank
The total number of notices filed today for the DECEMBER. contract month is represented by 213 contract(s) FOR 1,065,000 oz. To calculate the number of silver ounces that will stand for delivery in DECEMBER., we take the total number of notices filed for the month so far at 4605 x 5,000 oz = 23,025,0000 oz to which we add the difference between the open interest for the front month of DEC. (1837) and the number of notices served upon today (76 x 5000 oz) equals the number of ounces standing.
.
Thus the INITIAL standings for silver for the DECEMBER contract month: 4605 (notices served so far)x 5000 oz + OI for front month of DECEMBER(1837) -number of notices served upon today (76)x 5000 oz equals 31,145,000 oz of silver standing for the DECEMBER contract month. This is EXCELLENT for this active delivery month of November.
WE GAINED AN ADDITIONAL 117 CONTRACTS OR 585,000 OZ WILL STAND AT THE COMEX
ON FIRST DAY NOTICE FOR THE DECEMBER 2016 CONTRACT WE HAD 15.282 MILLION OZ STAND.
THE FINAL STANDING: 19.900 MILLION OZ AS QUEUE JUMPING INTENSIFIED.
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ESTIMATED VOLUME FOR TODAY: 34,276
CONFIRMED VOLUME FOR YESTERDAY: 104,039 CONTRACTS
YESTERDAY’S CONFIRMED VOLUME OF 104,039 CONTRACTS EQUATES TO 520 MILLION OZ OR 74.2% OF ANNUAL GLOBAL PRODUCTION OF SILVER
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: 56.758 million
Total number of dealer and customer silver: 239.261 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 1.7 percent to NAV usa funds and Negative 1.7% to NAV for Cdn funds!!!!
Percentage of fund in gold 63.1%
Percentage of fund in silver:36.6%
cash .+.3%( Dec 4/2017)
2. Sprott silver fund (PSLV): NAV FALLS TO -0.51% (Dec 4 /2017)
3. Sprott gold fund (PHYS): premium to NAV FALLS TO -0.53% to NAV (Dec 4/2017 )
Note: Sprott silver trust back into NEGATIVE territory at -0.51%-/Sprott physical gold trust is back into NEGATIVE/ territory at -0.53%/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
Dec 4/A MASSIVE DEPOSIT OF 8.56 TONNES OF GOLD INTO THE GLD/THE BLEEDING OF GLD GOLD HAS STOPPED/INVENTORY RESTS TONIGHT AT 848.11 TONNES
Dec 1/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 839.55 TONNES
Nov 30/no change in gold inventory at the GLD. Inventory rests at 839.55 tonnes
Nov 29/a withdrawal of 2.66 tonnes at the GLD/Inventory rests at 839.55 tonnes
NOV 28/ no change in gold inventory at the GLD/inventory rests at 842.21 tonnes
Nov 27 Strange!! we gold up by $6.40 today, we had a good sized withdrawal of 1.18 tonnes from the GLD. Here is something that is also strange: we have had exactly 1.18 tonnes of gold withdrawn from the comex on 5 separate occasions in the past 30 days..explanation?
Nov 24/no change in gold inventory at the GLD/Inventory rests at 843.09 tonnes
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
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Dec 4/2017/ Inventory rests tonight at 848.11 tonnes
*IN LAST 285 TRADING DAYS: 92.84 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 220 TRADING DAYS: A NET 64.44 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.
*FROM FEB 1/2017: A NET 33.33 TONNES HAVE BEEN ADDED.
end
Now the SLV Inventory
Dec 4/NO CHANGE IN SILVER INVENTORY AT THE SLV
INVENTORY RESTS AT 319.207 MILLION OZ/
Dec 1/VERY STRANGE!! WITH SILVER IN THE DUMPSTER THESE PAST FEW DAYS, SLV ADDS 2.076 MILLION OZ/???
INVENTORY 319.207 MILLION OZ/
Nov 30/no changes in silver inventory despite the huge drop in price/inventory rests at 317.130 million oz
Nov 29/no changes in silver inventory at the SLV/Inventory rests at 317.130 million oz/strange!! at drop of 32 cents and no change in inventory?
Nov 28/no change in silver inventory at the SLV/Inventory rests at 317.130 million oz.
Nov 27/NO CHANGE IN SILVER INVENTORY DESPITE A ZERO GAIN IN PRICE /QUITE OPPOSITE TO GOLD WHICH SAW 1.18 TONNES OF GOLD WITHDRAWN DESPITE A RISE IN PRICE OF $6.40
Nov 24/A WITHDRAWAL OF 944,000 OZ OF SILVER FROM THE SLV//INVENTORY RESTS AT 317.130 MILLION OZ
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/
Dec 4/2017:
Inventory 319.207 million oz
end
6 Month MM GOFO
Indicative gold forward offer rate for a 6 month duration
+ 1.50%
12 Month MM GOFO
+ 1.80%
30 day trend
end
Major gold/silver trading/commentaries for MONDAY
GOLDCORE/BLOG/MARK O’BYRNE.
GOLD/SILVER
Goldcore:
Silver’s Positive Fundamentals Due To Strong Demand In Key Growth Industries
Silver’s Positive Fundamentals Due To Strong Demand In Key Growth Industries
– Increased efforts in green energy and advanced technology set to boosts silver’s demand
– Four-year supply deficit set to increase due to fewer mine openings and discoveries
– Bank manipulation may be why silver under performing
– TD Securities and the Bank of Montreal expect silver to be best performing precious metal in 2018
– Growing industrial demand combined with monetary safe haven makes silver an excellent diversifier
The beauty of silver is its dual role. It is both a monetary metal and an industrial metal. Because of this investors can look to a positive few years as the metal’s fundamentals will thrive due to strong demand in major growth areas.
Over 50% of silver’s annual demand comes from industry. This is set to continue to grow as high-growth industries such as self-driving cars, green energy and health care drive demand for the precious metal.
The majority of industries are looking at improving products with technology and boosting energy efficiency. Many solutions call for silver, a tricky solution given the ongoing supply deficit.
Along with silver’s growing importance in the world of manufacturing we should also remember its importance when it comes to its role as a monetary metal. Government and central bank policies will continue to increase budget deficits and drive inflation which is positive for both gold and silver.
The tables look set to turn for a precious metal that is able to serve us both in our portfolios and our day-to-day lives.
Go silver to go green
“To go green, to do all the things we want to do as the human race gets off oil and gas, we need a ton of silver,” Keith Neumeyer, CEO of First Majestic Silver Corp
Silver has enormous potential in the field of technology. It is the most electrically conductive known material other than gold. Unsurprisingly gold is far too expensive to use in the majority of areas where silver makes for a viable alternative. As we find more solutions to solve energy and technology issues we will inevitably require more and more silver. Right now there is no obvious substitute for it.
Consider the drive for technological solutions in increasing populous and economically developing areas. For example, even the poorest cities have high smart-phone concentrations. So much of a smart-phone’s workings are thanks to silver. This demand is not set to go anywhere but up. Silver is a very limited commodity, mined as a by-product more often than not. As the world goes crazy to stay online, demand for silver will also go crazy.
This isn’t just about staying connected but it is also about finding improvements. Consider silver’s anti-bacterial and reflective properties in everything from hospital paints to solar-windows.
Much of these ‘green’ technologies, such as solar-panels had costs that were so high that adoption was minimal. But, prices are dropping (by as much as 9% in some cases) which is driving up demand. This inevitably means more silver.
We are also becoming more safety conscious, increasingly keen to place our faith in technology over human-ability. Rear cameras, night vision, rear-object detection and lane departure warnings are each examples of new car-technology that relies on silver.
All of this increased demand is fantastic for the silver market and for the overall push towards more efficient technology, but it might not happen so easily. For the past four years there has been a supply deficit in the silver market. This is thanks to the reduction in opening of new mines and discovery of silver deposits.
The price is far too low given these difficulties as well as increasing political risk around silver mining. There will be a breaking point.
Gold-silver ratio signals a turn-around
Currently precious metal fans might be feeling down about silver. At present the gold-silver ratio is around 79. The 100-year average is 40. The industrial precious metal is arguably due a much needed catch-up given its serious underpricing.
In 2017 gold has outperformed silver most likely because of strong safe-haven demand. But, this may well reverse next year as ongoing improvement in the global economy boosts silver’s industrial demand.
Karen Jones, technical analyst at Commerzbank, recently explained how she expects the gold-silver ratio to improve significantly.
Jones’ analysis explained that the ratio has broken above a 2016-2017 downtrend and her first upside target is at 79.44.
“I don’t know if the gold-silver ratio will get back to its 2016 high, but I wouldn’t rule it out…79.44 represents a significant resistance point.”
Artificial prices?
There are major frustrations surrounding the price of silver. Many struggle with the fact that not only is the global economy seemingly improving but there is also demand for financial hedges, such as gold and silver. Yet the price of silver remains subdued when compared to the likes of gold and other major economic indicators:
This is most likely down to manipulation.
Since 2003, we have believed and written about how the silver and gold markets are manipulated and “fixed” by banks. Just under a year ago our beliefs were confirmed when we revealed that leading bullion banks were working to fix the silver market:
Now we have definitive proof and the smoking gun that the “silver market mafia” in the form of leading bullion banks – such as Deutsche Bank, UBS and HSBC – were coordinating the manipulation of the price of silver and suppressing prices as alleged by the Gold Anti Trust Action Commitee (GATA).
While this is a joke to the young, naive, greedy and overpaid traders, it is important to remember that this is not a victimless crime. These traders were allowed to this by the banks they work for, thereby defrauding retail silver investors and bullion buyers around the world.
Despite a major investigation into the bullion banks, we still see signs of manipulation today. Silver has the largest concentration of short positions compared to any other metal or commodity. It is the short positions held by JPMorgan and Scotiabank that are often cited as the root cause for the low silver price. At the end of the month JPMorgan and Scotiabank controlled approximately 53% of the 210 days’ worth of global silver production to cover short positions.
The bullion banks are super keen to keep the price of silver well below the 200-day moving average. Why? No more reason other than greed and profit. But this should not dissuade investors.
As we explained last year:
Manipulation is an opportunity for investors as it allows them to accumulate gold and silver at artificially depressed prices. The history of gold market rigging and manipulation is of short term success followed by ultimate failure and then much higher prices. This was seen after the failure of the “London Gold Pool” in the late 1960s and gold’s massive bull market in the 1970s.
The gold and silver beach balls have been pushed near the bottom of the ‘precious metals pool.’ The lower they are pushed in the short term, the higher it will surge in the medium and long term.
Buy silver to support industry and your portfolio
The silver price in recent years could be something investors don’t want to dwell on too much. There is a general feeling that things have been slow and disappointing.
Gold is considered to be a safe play in times such as these, hence silver isn’t keeping pace with it. This is also not helped by the fact that the market perceives silver to be exposed to economic weakness. But this won’t be forever. Inflation will begin to show itself in a less covert manner. As it does so more of the public will realize silver’s second role as a store of value and inflation hedge.
In the meantime the world needs silver in a number of different areas, for health, for energy and for technological advances. Should you believe the politicians both here and across the pond that the economy is improving, this is a further reason to hold silver as part of your portfolio. This makes it an excellent two-way hedge.
We have no idea where the silver price may go tomorrow, next year or in a decade. What we do now right now is that it is currently relatively cheap when considered against a backdrop of heightened geopolitical concerns, rising inflation and ever-prominent and increasing debt risks.
History tells us that silver has a key role to play as a safe haven in your portfolio and not just industry. Academic research backs up this idea.
In 2012 Belousova and Dorfleitner concluded that:
‘Adding silver or platinum to a portfolio [of stocks, sovereign bond and the money market instruments] during bull markets reduces volatility and enhances return.’
When looking at all four precious metals’ role as a safe haven between 1989 and 2013, against the S&P 500 and US 10 year bonds, Lucey and Li (2015) found that:
‘silver was a safe haven at times during which gold failed to be’, but also during far more quarters than both platinum and palladium.’
Related Reading
Is future regulation impeding silver manipulation?
Silver Bullion Manipulation By Banks Proven In Traders Chats
Gold and Silver Manipulation: Can It Be Empirically Verified?
Silver Price To Surge “Ninefold” on Global Industrial and Technological Demand
News and Commentary
Gold dips as dollar shines after U.S. Senate clears tax bill (Reuters.com)
Dollar, Yields Gain on Tax Cuts as Stocks Mixed (Bloomberg.com)
London copper shrugs off firmer dollar as China demand supports (Reuters.com)
Analysts bet on gold to move higher this week (GulfNews.com)
Trump attacks his own FBI in a series of tweets (CNBC.com)
UK plans crackdown on bitcoin (Telegraph.co.uk)
98,750,067,000,000 Reasons to Be Worried About 2018 (Bloomberg.com)
Michael Ballanger: The true meaning of bitcoin’s success (24HGold.com)
How Gold Would Fix Turkey’s Achilles’ Heel: The Lira (Forbes.com)
Mysterious Gold Dealer’s Testimony Puts Erdogan On Shaky Ground (ZeroHedge.com)
Gold Prices (LBMA AM)
04 Dec: USD 1,279.10, GBP 952.67 & EUR 1,079.43 per ounce
01 Dec: USD 1,277.25, GBP 946.57 & EUR 1,072.51 per ounce
30 Nov: USD 1,282.15, GBP 952.64 & EUR 1,084.06 per ounce
29 Nov: USD 1,294.85, GBP 965.70 & EUR 1,092.46 per ounce
28 Nov: USD 1,293.90, GBP 972.75 & EUR 1,088.95 per ounce
27 Nov: USD 1,294.70, GBP 969.73 & EUR 1,084.83 per ounce
24 Nov: USD 1,289.15, GBP 967.89 & EUR 1,086.37 per ounce
Silver Prices (LBMA)
04 Dec: USD 16.33, GBP 12.09 & EUR 13.77 per ounce
01 Dec: USD 16.42, GBP 12.16 & EUR 13.80 per ounce
30 Nov: USD 16.57, GBP 12.32 & EUR 14.00 per ounce
29 Nov: USD 16.90, GBP 12.60 & EUR 14.26 per ounce
28 Nov: USD 17.07, GBP 12.84 & EUR 14.36 per ounce
27 Nov: USD 17.10, GBP 12.81 & EUR 14.32 per ounce
24 Nov: USD 17.05, GBP 12.80 & EUR 14.38 per ounce
Recent Market Updates
– An Interview with GoldCore Founder, Mark O’Byrne
– Risk Of Online Accounts Seen As One of Largest Brokerages In World Halts Online Trading After “Glitch”
– Low Cost Gold In The Age Of QE, AI, Trump and War
– Own Gold Bullion To “Support National Security” – Russian Central Bank
– Bitcoin $10,000 – Huge Volatility of Cryptocurrencies and Risky Fiat Making Gold Attractive
– Financial Advice from Dr Wayne Dyer
– Buy Gold As Fed Shows Uncertainty And Concern Over Financial ‘Imbalances’
– Brexit Budget – Grim Outlook As UK Economy Downgraded
– Geopolitical Risk Highest “In Four Decades” – Gold Demand in Germany and Globally to Remain Robust
– 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
END
Saturday: Bitcoin back above $11,000
(courtesy zerohedge)
Bitcoin Tops $11,000 Again – Becomes World’s 6th Largest Currency In Circulation
After ‘crashing’ earlier in the week, Bitcoin soared in the last 24 hours following confirmation from the CFTC that it has approved regulated futures (and options) trading on CME, CBOE, and Cantor. This sent the price back above $11,000 and shifted the cryptocurrency to become the sixth most-circulated currency in the world.
Bitcoin had, by all accounts, a remarkably volatile week, losing $3 bln in market cap in just 90 minutes as the price slid from $11,400 to close to $9,000 (on some exchanges it flash-crashed to the low $8,000s). Nevertheless, within 36 hours, the cryptocurrency has rebounded to over $11,000.
image courtesy of CoinTelegraph
As CoinTelegraph reports,the CFTC news quickly rippled out across the industry and media, with a stream of delighted bullish statements gracing Twitter and other platforms.
“It’s an orgy” is how one strategist described the breaking news that US regulators have approved Bitcoin futures to start this month.
Digital Currency Group CEO Barry Silbert said on CNBC: “I think it is going to enable finally the approval of Bitcoin ETFs, and other digital currency ETFs, which is game-changing,” he added.
And Bitcoin prices jumped…
As did Ethereum…
At a value of Bitcoin at around $11,000 each, the total value of allBitcoins in circulation is around $180 billion, which as CoinTelegraph details means Bitcoin is now the sixth most circulated currency in the world, behind five super powers, and outranking the Pound, the Ruble, and the Won, according to the Bank for International Settlements.
While the number is substantial, should Bitcoin rise to $15,000, it will overtake the next highest circulating currency, the Rupee. The other four currencies outranking Bitcoin are the Yen, Yuan, Euro, and Dollar, all of which have dramatically greater levels of currency in circulation (the Dollar, for example, stands at $1.4 tln).
These numbers are, of course, somewhat skewed, because the value of notes in circulation is not reflective of the total value of a currency. Nevertheless, the numbers reveal the substantial power of Bitcoin in terms of currency interactions.
Bitcoin Hits New All Time High After Burst Of Asian Buying: Market Cap Nears $200 Billion
Whether it was the previously discussed unexpectedly bullish JPM report (which calculated that a mere $6bn in net capital inflows has pushed the crypto market cap to $330 billion), or just the latest unexplained burst of buying out of Asia with another weekend surge in volumes out of Japan and Korea, but last week’s bitcoin mini meltdown and bear market are now long forgotten, and overnight the world’s most popular cryptocurrency has soared again, up $750, or 7%, in the past 24 hours, last trading at a new all time high of $11,795, just $200 away from $12,000.
That means it is up nearly 40% from last week’s $8,500 flash crash. To those who bought at the lows, congratulations.
As a result of the latest burst higher, the market cap of bitcoin is now $196.5 Billion, and with Ethereum and the rest of the cryptocoin sector moving higher in sympathy, the market cap of all cryptocurrencies has hit a new all time high $350 billion.
Following Sunday’s move, Bitcoin’s YTD return has risen to a staggering 12x, while ethereum is up nearly 50-fold.
Bitcoin’s market cap is now the same as HSBC at $196 billion, and greater than that of Coca Cola, Cisco, Toyota, Comcast, Pepsi, Bank of China, and Boeing as it is fast approaching Citigroup at $200 billion.
While every push higher prompts renewed bubble warnings from skeptics, others such as the head of the Russian Blockchain and Cryptocurrency Association and Cryptocurrency Yury Pripachkin, have prdicted the cryptocurrency could hit $20,000 by the start of 2018. Compared to pioneering Bitcoin investor, Michael Novogratz, the Russian’s forecast seems tame: last week “Novo” said bitcoin will continue its relentless rally, hitting $40,000 by the end of next year, while ethereum will triple to $1,500 or more.
Reason For Bitcoin Sudden Plunge Revealed: UK Plans Regulatory Crackdown On Cryptocurrencies
Just after 430pm ET we showed that bitcoin, and the entire crypto space, tumbled, with Bitcoin plunging from session highs just under $12,000 to a low of $10,600 on what appeared at first sight to be no news.
However, in retrospect this appears to not have been the case, and as the Telegraph reported just around the time of the big drop, UK “ministers are launching a crackdown on the virtual currency Bitcoin amid growing concern it is being used to launder money and dodge tax.”
Taking a page out of the Chinese playbook, the UK Treasury has announced plans to regulate the Bitcoin that will force traders in so-called crypto-currencies to disclose their identities and report suspicious activity.
According to the Telegraph, while “until now, anybody buying and selling Bitcoins and other digital currencies have been able to do so anonymously, making it attractive to criminals and tax avoiders. But the Treasury has now said it intends to begin regulating the virtual currency, which has a total value of £145 billion, to bring it in line with rules on anti-money laundering and counter-terrorism financial legislation.”
John Mann, a member of the Treasury select committee, said he expected to hold an inquiry into the need for better regulation of Bitcoin and other alternative currencies in the new year.
He said: “These new forms of exchange are expanding rapidly and we’ve got to make sure we don’t get left behind – that’s particularly important in terms of money-laundering, terrorism or pure theft.
“I’m not convinced that the regulatory authorities are keeping up to speed. I would be surprised if the committee doesn’t have an inquiry next year. “It would be timely to have a proper look at what this means. It may be that we want speed up our use of these kinds of thing in this country, but that makes it all the more important that we don’t have a regulatory lag.”
The proposed changes come amid increasing fears that Bitcoin is being used by gangs to launder the proceeds of crime while also attracting currency speculators – with the value of the coin soaring in the past 12 months.
In other words, the same reason why the IRS is cracking down on Coinbase clients in the US is also why UK and European regulators are joining China in cracking down on capital flight.
While such legislation by the UK alone would hardly have a major impact on crypto pricing – after all the UK is a very minor player in a market that is dominated by Korea and Japan (as proxies for China), and to a growing extent, the US, the new rules will also be applied across the European Union, and “are expected to come into force by the end of the year or early in 2018, the minister in charge has said.”
As for the EU, the new regulations are expected to be included in amendments to current European Union wide legislation designed to prevent money laundering and terrorism financing.
In terms of actual changes, the Telegraph notes that cryptocurrency exchange platforms and wallet providers will be obliged to report suspicious transactions and carry out due diligence on customers. That means the identities of Bitcoin users will no longer remain anonymous.
Stephen Barclay, the Economic Secretary to the Treasury, revealed plans to change the legislation in a written parliamentary answer.
Mr Barclay said: “The UK government is currently negotiating amendments [to the anti-money-laundering directive] that will bring virtual currency exchange platforms and custodian wallet providers into Anti-Money Laundering and Counter-Terrorist Financing regulation, which will result in these firms’ activities being overseen by national competent authorities for these areas. “We expect these negotiations to conclude at EU level in late 2017/early 2018.”
A Treasury spokesman said last night: “We intend to update regulation to bring virtual currency exchange platforms into Anti-Money Laundering and Counter-Terrorist Financing regulation.”
That said, neither the UK, nor the EU will be the first to demand a crackdown on bitcoin anonymity. In fact, since China’s infamous block of cryptocurrency exchanges in September, bitcoin has risen nearly fourfold, seemingly undaunted by anything that regulators, central banks and sovereigns have thrown at it.
It remains to be seen if this time will be any different, although after sliding to a Sunday session low of $10,600 bitcoin has already cut its losses in half, and was trading at $11,280 at last check.
Michael Ballanger: The true meaning of bitcoin’s success
Submitted by cpowell on Sat, 2017-12-02 17:27. Section: Daily Dispatches
12:27p ET Saturday, December 2, 2017
Dear Friend of GATA and Gold:
Mining and market analyst Michael Ballanger argues today that the success of bitcoin signifies in large part recognition by the wealthy that government currencies are unreliable.
Ballanger writes: “Very large holders of American dollar wealth have decided that they want to have control of the currencies to which they transfer wealth, keeping it away from the interference and meddling of politicians and the global banking cartel. Whereas gold and silver, by way of physical possession, were once the stores of value within which wealth sought sanctuary, government intervention and manipulation by way of the derivative exchanges sent the members of this elite class of billionaires scurrying for the ultimate alternative to the precious metals, and herein lies the genesis of bitcoin.
“In my opinion, bitcoin represents the final chapter of the repudiation of fiat currencies by those of the super-wealth fraternity. They own all the prime real estate around the world; they own all the publicly traded behemoths listed on global stock exchanges; and they own every politician and every court of law. Ergo, there was only one glaring vulnerability to which the elite class were exposed: currency risk.”
Ballanger’s commentary is headlined “The True Meaning of Bitcoin’s Success” and it’s posted at 24hGold here:
http://www.24hgold.com/english/news-gold-silver-the-true-meaning-of-bitc…
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
END
Many brokers are lining up to offer bitcoin futures but others are remaining quiet as they have to decide is this a gold mine or is this a bubble??
(courtesy Bloomberg/GATA)
As brokers line up to offer bitcoin futures, others are quiet
Submitted by cpowell on Mon, 2017-12-04 12:18. Section: Daily Dispatches
By Brian Louis
Bloomberg News
Monday, December 4, 2017
U.S. brokerages have a decision to make. Will they offer futures contracts tied to bitcoin — the cryptocurrency viewed as a gold mine or bubble — to clients?
TD Ameritrade Holding Corp. and Ally Financial Inc.’s Ally Invest said they will offer the instruments to customers once they become available. Fidelity said it currently has no plans to do so. Other major firms declined to comment.
Bloomberg began asking firms about their intentions in the weeks before CME Group Inc. and CBOE Global Markets Inc. announced Friday that they’ve cleared hurdles to offer bitcoin futures. CME will start trading them Dec. 18, while CBOE hasn’t specified when it will begin. The Commodity Futures Trading Commission conferred with the exchanges as they set terms for the products, and the pair will work with the agency to keep tabs on the spot market for bitcoin. …
… For the remainder of the report:
https://www.bloomberg.com/news/articles/2017-12-04/as-brokers-line-up-to…
end
Seems that the Establishment is taking note of Bitcoin. Here is a list of countries that state that Bitocn is undermining governments and stabilizing economies:
(courtesy zerohedge)
Crypto Surge Sparks Establishment Panic: Bans, Crackdowns, & Fatwas As Bitcoin “Undermines Governments, Destabilizes Economies”
The last few months have seen increasing notice being paid to Bitcoin (and the broader cryptocurrency space) by those that control the status quo.
At first it was simple ‘negative’-speak – “you’d be a fool to buy Bitcoin”-esque comments spewed forth from the truly ignorant or intentionally-ignorant (this group included bank CEOs, asset managers, payments systems, and remittance services) but to no avail, those fools saw the value of their bitcoins surge… Like the Winklevoss twins…
Then – as the price soared and the market cap of Bitcoin topped that of General Electric and Goldman sachs – the world’s central bankers began to take notice… but in their standard manner, played down any risks, explaining that any systemic fragility “was contained” since cryptocurrencies were not big enough (this group included various Fed presidents, Bank of Canada, Bank of France, Bank of Japan, Bank of Korea, and so on all echoing similar phrases)… even though Bitcoin is now the 6th largest currency in circulation…
But this week has seen a new group of establishmentarians jump on to the offensive against anti-decentralization, de-control, pro-freedom cryptocurrencies – urging bans, crackdowns, fatwas, taxation, creating their own cryptocurrencies, demanding citizens sell, and outright confiscation (this group includes governments world wide and their mainstream media mouthpieces)…
India
India’s finance minister, Arun Jaitley, has clarified that the government does not recognize bitcoin as legal tender. According to the Economic Times, when asked about the government’s plans to regulate the cryptocurrency, Jaitley told reporters, “recommendations are being worked at.” He continued:
“The government’s position is clear, we don’t recognize this as legal currency as of now.”
Concerned over bitcoin’s anonymity and its potential illicit uses,justices issued a notice to the central bank and other agencies asking them to answer a petition on the matter, reports indicated.
Turkey
Turkey has claimed Bitcoin is in fact “not compatible” with Islamdue to its government being unable to control it.
In a statement from a meeting of the state Directorate of Religious Affairs (Diyanet), lawmakers said that Bitcoin’s “speculative” nature meant that buying and selling it was inappropriate for Muslims.
“Buying and selling virtual currencies is not compatible with religion at this time because of the fact that their valuation is open to speculation. They can be easily used in illegal activities like money laundering, and they are not under the state’s audit and surveillance,” Euronewstranslates the statement republished by local news outlet Enson Haber.
Diyanet added that the same principles of “unsuitability” in particular applied to Ethereum.
South Korea
Kim Dong-yeon, South Korea’s deputy prime minister and the minister of strategy and finance, revealed earlier this week that the government is investigating various methods to better regulate the local Bitcoin market and tax Bitcoin users accordingly.
While the South Korean government and its local financial authorities are actively discussing the possibility of enforcing a policy on Bitcoin taxation, at a press conference, Deputy Prime Minister Kim stated that the government does not intend to include any Bitcoin taxation policy in 2018’s amendment of the tax law.
Holland
A Dutch news paper urges its citizens to sell their bitcoins patriotically because cryptocurrencies can undermine government and destabilize the economy.
A bitcoin world can destabilize the real economy, a euro is also solidified trust.
First, the bitcoin undermines the government because a lot of transactions are about money laundering and tax avoidance. Another problem is that the profits of new bitcoins that come with it do not benefit the government (as with normal money creation), but are absorbed in heavily environmentally harmful computer power.
Central banks also have less influence on keeping the economy stable. In times of crisis, central banks can, through their influence on ordinary banks, ease credit conditions and encourage people to consume. The bank has no control over the bitcoin economy and an economic crisis can become deeper.
The investor has air in his hands when the bitcoin crashes, but also when the company turns out to produce baked air.
France
Putting money in an empty type of asset is “very, very worrying,” Robert Ophele, chairman of France’s market regulator. Bitcoin has no link to the real economy, Ophele says in a panel discussion at the Paris Europlace Financial Forum, warning that cryptocurrencies are a way to commit cybercrimes, allowing access to illicit goods and services.
If bitcoin was a currency, “it would be a bad one,” Ophel exclaimed, as it poses major challenge for central banks and regulators.
UK
The Telegraph reported just around the time of the big drop, UK “ministers are launching a crackdown on the virtual currency Bitcoin amid growing concern it is being used to launder money and dodge tax.”
Taking a page out of the Chinese playbook, the UK Treasury has announced plans to regulate the Bitcoin that will force traders in so-called crypto-currencies to disclose their identities and report suspicious activity.
According to the Telegraph, while “until now, anybody buying and selling Bitcoins and other digital currencies have been able to do so anonymously, making it attractive to criminals and tax avoiders. But the Treasury has now said it intends to begin regulating the virtual currency, which has a total value of £145 billion, to bring it in line with rules on anti-money laundering and counter-terrorism financial legislation.”
John Mann, a member of the Treasury select committee, said he expected to hold an inquiry into the need for better regulation of Bitcoin and other alternative currencies in the new year.
He said: “These new forms of exchange are expanding rapidly and we’ve got to make sure we don’t get left behind – that’s particularly important in terms of money-laundering, terrorism or pure theft.
“I’m not convinced that the regulatory authorities are keeping up to speed. I would be surprised if the committee doesn’t have an inquiry next year. “It would be timely to have a proper look at what this means. It may be that we want speed up our use of these kinds of thing in this country, but that makes it all the more important that we don’t have a regulatory lag.”
The proposed changes come amid increasing fears that Bitcoin is being used by gangs to launder the proceeds of crime while also attracting currency speculators – with the value of the coin soaring in the past 12 months.
In other words, the same reason why the IRS is cracking down on Coinbase clients in the US is also why UK and European regulators are joining China in cracking down on capital flight.
United States
The US Senate Judiciary Committee is currently tackling bill S.1241 that aims to criminalize the intentional concealment of ownership or control of a financial account. The bill also would amend the definition of ‘financial account’ and ‘financial institution’ to include digital currencies and digital exchanges, respectively. According to ranking committee member Senator Dianne Feinstein, the proposed bill is needed to modernize existing AML laws.
The bill would amend the definition of ‘financial institution,’ in Section 53412(a) of title 31, United States Code, to include:
“An issuer, redeemer, or cashier of prepaid access devices, digital currency, or any digital exchanger or tumbler of digital currency.”
If passed, the bill would likely have far-reaching effects for users of digital currencies both in the US and abroad.
Earlier reports also indicate that the White House is actively monitoring cryptocurrencies which could only mean more attempts to regulate the world’s first successful decentralized monetary system. With the growing involvement of Wall Street and the ever escalating media attention, it is not surprising that governments are stepping up their attempts to regulate digital currency.
image courtesy of CoinTelegraph
But as usual, any regulation-related-headline that the machines instantly sell, is bid back up, since it seems the algorithms have not figured out that there is no real way to ‘stop’ Bitcoin… which is exactly why the world’s elite are so desparate.
Several industry commentators have issued their opinions on the various proposed laws. Tone Vays claimed that he expects a confrontation between the Bitcoin team, including the holders and users, and the US government.
“It’s bad… I think it’s gonna end in a very confrontational way between Bitcoin – even Bitcoin holders and users – and the US Government.”
end
Futures trading to begin on Dec 10/ first CBOE and then one week later the CME
(courtesy zerohedge)
CBOE Bitcoin Futures Trading To Begin On Dec 10th – Not All Brokers Enthused
CBOE Global Markets said on Monday it would begin trading its bitcoin futures contracts, known as XBT futures, next Monday, and will offer free trading for the rest of the month to help draw in traders and create a market. Both the CBOE and its crosstown rival, CME Group, received permission last week from the CFTC to launch bitcoin derivatives as they go head-to-head in a battle to determine which exchange will come to dominate the market for bitcoin-linked derivatives, the Financial Times reported. CME Group, the world’s largest derivatives exchange, won’t launch its set of bitcoin derivatives until the following Monday.
Both exchanges are hoping that rising interest in the controversial cryptocurrency from Wall Street traders will in turn help drive demand for its new derivative products. A flood of interest has gripped the digital currency community as Bitcoin’s value has ballooned this year, at one point climbing 1,100%: Early on Monday, the digital currency rose to an all-time high just shy of $12,000 a coin – nearly six times its level from early April.
Many institutional investors have been eager to trade bitcoin, but are waiting for a more widely recognized, regulated market. Shares in both CME and CBOE have risen 9% since the end of October as they have firmed up their plans.
Ed Tilly, chief executive of CBOE, said there is “unprecedented” interest in bitcoin.
“We are committed to encouraging fairness and liquidity in the bitcoin market,” he said.
CME and CBOE are competing to dominate the market for bitcoin derivatives by offering different products. They also have different systems for pricing their products. CME is relying on a daily reference rate based on data from a aful of constituent exchanges. The rate is set daily at 4 pm ET Londont Time. CBOE’s contracts are based on a daily auction price from Gemini, the virtual currency exchange run by twins Cameron and Tyler Winklevoss. Investors may not own or control more than a net 5,000 contracts, long or short combined, and the market will only be open for less than six hours per day.
Both exchanges are insisting that deals will be settled in cash the day after contracts expire.
Some investors, particularly electronic market makers, have expressed an interest in the products. But they’ve also made their reservations public.
According to the Financial Times, DRW of Chicago, one of the world’s largest proprietary trading companies, has a subsidiary named Cumberland for buying and selling bitcoin.
“Although DRW and Cumberland haven’t been directly involved in the design of these contracts, our recommendation to any exchange that has asked is to list a physically-delivered bitcoin futures contract,”a spokesperson for DRW and Cumberland said.
“Products indexed to a spot exchange or related auction will be inherently flawed due to the constraints that currently exist on these spot exchanges.”
The market’s main regulator, the Commodity Futures Trading Commission, has had concerns that futures correlated to the highly volatile bitcoin price could create instability in clearing houses, the market buffers that act as counterparties to a trade and prevent any defaults from infecting the rest of the market. Though that didn’t stop the CFTC from granting its blessing to the two exchanges. CME will demand from investors an initial margin of 35% to back the trades in its clearing house, while traders using Cboe will need to pay 33% of the trade price upfront.
In a speech in London last week Brian Quintenz, the CFTC Commissioner, said the agency had the powers to raise the margin levels if it felt the amount held by a clearing house was inadequate.
“It is incumbent on market participants to conduct appropriate due diligence to determine whether these products, which have at times exhibited extreme volatility, are appropriate for them,” he noted. Now that the exchanges are offering bitcoin-related products, popular brokerages must now make a difficult choice: Will they offer futures contracts tied to bitcoin to clients to meet popular demand even though many in the financial services industry believe the digital currency has created a massive bubble.
TD Ameritrade Holding Corp. and Ally Financial Inc.’s Ally Invest said they will offer the derivative products to customers once they become available, according to Bloomberg. Fidelity said it currently has no plans to offer the bitcoin futures – which is ironic, since the company’s CEO allowed customers to link their Coinbase accounts to their Fidelity dashboards. Other major firms declined to comment.
Some market strategists believe the launch of derivatives products will help introduce a higher degree of “two-way volatility” into the bitcoin market.
“What’s exciting to us about it is it provides a two-sided market,” JJ Kinahan, chief market strategist at Omaha, Nebraska-based TD Ameritrade, said in an interview last month.
“With natural buyers and sellers, that helps to put a more reasonable volatility on the product.”
Brokerages say they plan to offer the bitcoin futures and options because of popular demand.
“Ally Invest customers have specifically expressed interest in the futures product the Chicago Mercantile Exchange is planning to launch that is based on bitcoin,” Rich Hagen, the brokerage’s president, said in an emailed statement Nov. 28. “If the CME does launch this product, Ally Invest plans to offer it to current and new futures customers immediately.”
According to Bloomberg, Bank of America Corp.’s Merrill Lynch and Morgan Stanley declined to comment on whether they will offer bitcoin futures, as did Charles Schwab Corp. and E-Trade Financial Corp.
end
Brandon White: Where does the Bank of Canada stand on gold as an asset?
Submitted by cpowell on Sat, 2017-12-02 17:46. Section: Daily Dispatches
12:45p ET Saturday, December 2, 2017
Dear Friend of GATA and Gold:
The investment world has gone mad, Brandon White of Bullion Management Group in Markham, Ontario, says in his weekly video, “This Week in Three Minutes,” noting extreme valuations in equity markets and bitcoin and the strange disappearance of market corrections.
White says he has asked the Bank of Canada and other Canadian financial institutions to explain their position on gold as a financial asset. He also announces a contest for a 1-pound silver commemorative coin.
White’s video is posted at the BMG internet site here:
http://bmg-group.com/this-week-in-3-minutes/
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
END
Your early MONDAY morning currency, Asian stock market results, important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight/9 AM EST
i) Chinese yuan vs USA dollar/CLOSED DOWN AT 6.6190 /shanghai bourse CLOSED DOWN AT 7.99 POINTS .24% / HANG SANG CLOSED UP 64.04 POINTS OR 0.22%
2. Nikkei closed DOWN 111.87 POINTS OR 0.49% /USA: YEN RISES TO 113.30
3. Europe stocks OPENED GREEN /USA dollar index RISES TO 93.16/Euro FALLS TO 1.1849
3b Japan 10 year bond yield: RISES TO . +.041/ GOVERNMENT INTERVENTION !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 112.33/ 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:: 57.71 and Brent: 63.06
3f Gold DOWN/Yen DOWN
3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“HELICOPTER MONEY” OFF THE TABLE FOR NOW /REVERSE OPERATION TWIST ON THE BONDS: PURCHASE OF LONG BONDS AND SELLING THE SHORT END
Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.
3h Oil DOWN for WTI and DOWN FOR Brent this morning
3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO +.339%/Italian 10 yr bond yield UP to 1.733% /SPAIN 10 YR BOND YIELD UP TO 1.423%
3j Greek 10 year bond yield FALLS TO : 5.42???
3k Gold at $1274.80 silver at:16.39: 6 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50
3l USA vs Russian rouble; (Russian rouble DOWN 1/100 in roubles/dollar) 58.90
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 SMALL SIZED DEVALUATION SOUTHBOUND
JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 113.00 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 0.9839 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1659 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 +0.339%
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 2.395% early this morning. Thirty year rate at 2.790% /
5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.
(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)
Tax Deal Sends US Futures Soaring To New All Time High; Dollar, Yields, Global Stocks Follow
The dollar jumped the most in two weeks, pushing Treasury yields as much as 6bps higher (before easing back) with US equity indexes primed for a another record-setting day after Senate Republicans approved a reduction in the corporate tax rate as part of a sweeping overhaul, giving a boost to President Donald Trump’s stimulus plans. The key market catalyst was the US Senate passing the tax reform bill through a vote of 51 vs 49 just before 2am on Saturday morning. This now pushes the bill to the next phase in which the House and Senate will have to reconcile their 2 bills, while the House is said to vote on Monday night for motion to go to conference on tax bill reconciliation.
“With this tax deal, markets could pick up speed into the end of the year. It looks like the ingredients for a year-end rally are there,” said Angelo Meda, head of equities at asset manager Banor SIM in Milan, predicting equity gains of 3 to 4 percent. Tax cut hopes have been a significant tailwind this year for U.S. stocks, although the move is expected to add to the country’s $20 trillion national debt and increase the chances of more aggressive near-term rate rises in the world’s largest economy. Those expectations pushed the dollar up as much as 0.4% against a basket of currencies while Treasury yields rose across the curve. Two-year yields matched Friday’s nine-year high, indicating that bonds are already anticipating the debt increase according to Reuters.
“This environment should question whether the market is being too conservative in only pricing 50 basis points of (U.S. Federal Reserve) tightening next year,” analysts at ING Bank told clients. “Loose fiscal and tight monetary policy should be sending the dollar firmer.”
Furthermore, source reports stated that majority of House Republicans back a short-term continuing resolution to keep the government open until December 22nd and that a vote is expected this Wednesday, which further helped bullish sentiment.
The bullish stock moves will be welcomed by many investors after news from Washington rocked markets on Friday. The evolving investigation into potential connections between Trump’s campaign and Russian meddling in the 2016 U.S. election remains a threat, but with global equities still hovering near all-time highs, traders may be seizing on the potential boost to growth in the world’s largest economy from tax cuts as reason to sustain the bull market, Bloomberg reported.
In geopolitical developments, US and South Korea began their largest ever air combat drills which will last for 5 days, while North Korea accused President Trump of “begging” for nuclear war with these drills. At the same time, National Security Adviser McMaster said President Trump will “take care of” the increasing nuclear threat from North Korea by taking unilateral action if necessary, while US Senator Graham urged Americans to evacuate from South Korea and stated that we’re moving close to military conflict.
However, as has often been the case, war rumbling out of N.Korea were roundly ignored with markets focusing on the historic corporate tax cut to 20%, which sent US equity future soaring, with futs on the Dow Jones surging over 200 points out of the gate and the S&P 0.6% higher this morning, European stocks opened higher, with French, German and British markets up 0.9 to 1.4%, anticipating a strong New York session – futures for the Dow Jones, S&P 500 and Nasdaq indexes rallied as much as 0.9 percent.
In Europe, the focus remained Britain, with 10-year UK government bond yields up around 6 basis points as Prime Minister Theresa May headed for a crunch meeting with European Union officials to break a deadlock in Brexit talks. EU officials have expressed optimism a deal on the main issues will be struck on Monday, even though members of May’s party have urged her to walk away unless there is progress. Hopes of a deal pushed sterling recently to six-month highs against its trading partners’ currencies but it slipped on Monday against the firmer dollar and was flat to the euro, giving up tentative early gains, only to rebound again sharply above 1.35 after MEP Lamberts said that European Commission’s Barnier sees a Brexit breakthrough as likely today. As a result, the FTSE 100 pares gain to 0.4% from as much as 1%; FTSE 250 pares advance to 0.5% from as much as 0.8% as pound climbs after a European Parliament member said chief Brexit negotiator Michel Barnier told lawmakers a breakthrough is likely Monday.
“If a green light is provided today for talks to move on to future relations, including a timely transition arrangement, it would open the door for further pound gains in the near-term,” MUFG analysts wrote, warning that the reverse was likely, should talks break down.
Not all markets shared the US tax euphoria, however. Asian stocks traded mixed and lacked the firm conviction seen across US equity futures. The passage by the Senate spurred a risk on tone at the open of electronic trade in which DJIA futures gained over 200 points and safe-havens were pressured. However, this momentum was somewhat lost on the ASX 200 (-0.1%) and Nikkei 225 (-0.5%) which were cautious ahead of a risk-packed week and as Asia markets also got their 1st opportunity to digest last week’s developments in the Flynn-Russia saga.
Japanese stocks dropped as investors reportedly ignored the tax deal and focused on the Trump-Russia probe instead, according to Bloomberg. The Topix dropped 0.5% to 1,786.87 as investors focused on an ongoing investigation into connections between Donald Trump’s presidential campaign and Russian meddling in the 2016 U.S. election. Electronics, telecommunication stocks were are biggest drags on Topix, while the Nikkei 225 slumped -0.5% to 22,707.16. “There are deep uncertainties over what’s going on with the Trump-Russian probe and how the U.S. market will react later tonight, so there are few investors who want to buy up Japanese stocks in this environment,” said Mitsushige Akino, an executive officer with Ichiyoshi Asset Management Co. in Tokyo. “Japanese stocks have come back to a high level, so some investors may want to lock in profits.”
The Hang Seng (+0.2%) finally outperformed, after two days of losses, amid declines in money market rates, while China’s Shanghai Comp. (-0.2%) was choppy on further news on regulatory reform and after the PBoC skipped its reverse repo open market operations for a 2nd consecutive day.
In total, world stocks rose just 0.18% though they stayed off recent record highs, following Asia’s shaky start. Emerging equities rose 0.5 percent.
In currencies, the USD Index is ‘firmly’ back above the 93.000 level that had been largely capping Greenback recoveries before full Senate approval of the Republican tax reforms. 93.500 forms the next obvious upside target and also coincides with chart resistance, while nearest support in the event of another pull-back comes in around 92.500 and just below. The dollar extended its Asian session gains as London stepped in and stops were filled, yet pared its advance as leveraged names looked to fade rallies;
GBP has just spiked back over 1.35 vs. the USD following media reports that EU Brexit negotiator Barnier told MEPs that a breakthrough is likely. Elsewhere, JPY and CHF have given up the most ground vs the recovering Dollar (perhaps understandably), with USD/JPY briefly back through 113.00 and USD/CHF up towards 0.9850 before both pairs eased back.
Emerging currencies were mostly weaker against the dollar, with Turkish markets hit by data showing inflation at almost 13 percent, the highest since 2003.
On commodities, Brent crude futures slipped 0.7 percent, pressured by signs of increasing supply from U.S. shale producers. Copper prices firmed, after data last week showed China’s economy in good shape.
On the US calendar today, data includes factory orders and durable-goods orders.
Market Snapshot
- S&P 500 futures up 0.6% to 2,659.90
- MSCI Asia down 0.02% to 169.89
- MSCI Asia ex Japan up 0.4% to 554.69
- Nikkei down 0.5% to 22,707.16
- Topix down 0.5% to 1,786.87
- Hang Seng Index up 0.2% to 29,138.28
- Shanghai Composite down 0.2% to 3,309.62
- Sensex up 0.09% to 32,864.10
- Australia S&P/ASX 200 down 0.07% to 5,985.59
- Kospi up 1.1% to 2,501.67
- STOXX Europe 600 up 0.8% to 386.96
- German 10Y yield rose 3.7 bps to 0.342%
- Euro down 0.3% to $1.1858
- Italian 10Y yield fell 3.2 bps to 1.451%
- Spanish 10Y yield fell 0.6 bps to 1.411%
- Brent futures down 0.8% to $63.24/bbl
- Gold spot down 0.5% to $1,274.10
- U.S. Dollar Index up 0.4% to 93.21
Top Overnight News
- Donald Trump emerged newly emboldened from one of the most tumultuous weeks of his presidency, reveling in the prospect of his first major legislative victory while brushing off a federal probe that’s closing in on key members of his inner circle
- Senate Republicans narrowly passed tax bill that would slash corporate
tax rate and provide temporary tax-rate cuts for most Americans - The tax bill passed by Republicans in the U.S. Senate over the weekend may boost profits for industries from banking to retail to fossil fuels. It also could put the squeeze on hospitals and renewable energy firms
- House GOP announces 2-week plan to avoid government shutdown on Dec. 8
- Trump rejected reports that he’s looking to oust Secretary of State Rex
Tillerson, saying that despite some disagreements “we work well
together” - CVS Health Corp. will buy Aetna Inc. for about $67.5 billion, creating a health-care giant that will have a hand in everything from insurance to the corner drugstore
- Prysmian SpA agreed to buy U.S. rival General Cable Corp. in a $3 billion deal that strengthens its position as the world’s largest maker of industrial cables and extends a wave of consolidation in the market
- OPEC and its allies outside the group will maintain their cuts in oil output until global production meets demand, Saudi Arabia’s Energy Minister Khalid Al-Falih said
- Richmond Fed has chosen Thomas Barkin, a senior executive at global consulting firm McKinsey & Co. as the next president to replace Lacker, according to people familiar; will be a voter in 2018
- Brexit: Barnier told European MEPs that a breakthrough is likely today, according to MEP Lamberts
- Kuroda says BOJ will continue with yield curve control policy; has not created problems for financial stability
- A Senate investigation into connections between Donald Trump’s campaign and Russian meddling in the 2016 U.S. election suggests a potential case of obstruction of justice is developing against the president, Senator Dianne Feinstein said
- Brexit talks risk being torpedoed by the issue of the European Court of Justice as U.K. PM May heads to Brussels on Monday. With a deal on the Irish border still pending, the role of the ECJ in enforcing the rights of citizens emerged as the greatest obstacle on Sunday, according to the British official and a person familiar with the EU side.
- The chairman of France’s market regulator Robert Ophele sided firmly against Bitcoin, denouncing the cryptocurrency as a “dangerous illusion” and a tool for criminals
- 2Q18 is shaping up to be a potentially sensitive time for the yen, when new, or newly reappointed leaders at the Bank of Japan could opt to telegraph a tweak in monetary policy, according to Evercore ISI analysts
Asia stock markets traded mixed and lacked the firm conviction seen across US equity futures which were buoyed after the Senate voted to pass the tax bill. The passage by the Senate spurred a risk on tone at the open of electronic trade in which DJIA futures gained over 200 points and safe-havens were pressured. However, this momentum was somewhat lost on the ASX 200 (-0.1%) and Nikkei 225 (-0.4%) which were cautious ahead of a risk-packed week and as Asia markets also got their 1st opportunity to digest last week’s developments in the Flynn-Russia saga. Hang Seng (+0.2%) outperformed amid declines in money market rates, while Shanghai Comp. (-0.2%) was choppy on further news on regulatory reform and after the PBoC skipped open market operations for a 2nd consecutive day. Finally, 10yr JGBs were lower alongside pressure in Tnotes which gapped down following the Senate tax breakthrough, while the BoJ was also absent in the market with no Rinban announcement for today. PBoC skipped open market operations again due to high liquidity, for a net daily drain of CNY 90bln. (Newswires) PBoC set CNY mid-point at 6.6105 (Prev. 6.6067)
Top Asian News from Bloomberg
- HNA’s Units Are on a Borrowing Spree, Swallowing High Rates
- Billionaire Wang Jianlin to Buy Control of Hong Kong Unit
- China Is Said to Plan Extending Electric Vehicle Tax Rebate
- Modi Adviser Says RBI Misguided on Inflation and Should Cut Rate
- Trouble Ahead for Australia’s Turnbull Amid Leadership Woes
- Japan Investors Shy Away From Aussie as Yield Spread Shrinks
- China Stock Rally May Run Out of Steam Next Year, Bocom Says
- Kuroda Vows to Stay Course After Speculation Over Tightening
- Iron Ore Surges Toward Bull Market as China Supercharges Steel
European equities (Eurostoxx 50 +0.9%) have kicked the week off firmly on the front-foot in the wake of the news that the US Senate passed the tax reform bill through a vote of 51 vs 49 over the weekend. This now pushes the bill to the next phase in which the House and Senate will have to reconcile their 2 bill. However, some of the initial gains were modestly trimmed given that it is more of US-centric issue with developments in Brussels today more likely to be of greater direct importance for the Eurozone and the UK. In terms of sector specifics, financial names have benefitted with the movements seen in yields this morning with material names also firmer, in-fitting with price movements seen during Asia-Pac trade.
In Euro fixed income, Bunds and Gilts have held in ahead of support residing just ahead of the nearest downside round numbers at 163.00 and 124.00 respectively, encouraged by the failure of EU cash indices to extend gains after initial mark-ups made on the back of another Trump tax bill hurdle being passed over the weekend. The core Eurex debt future has recovered some poise to trade around 163.22 from 163.11 at worst (so far), with 163.05-03 (rising trend-line/Friday’s pm session base) not seriously tested. However, there is some distance to recover if dip buyers are looking for a gap to be filled on the upside at 163.54. Gilts may be capped on the just released firmer than consensus UK Construction PMI that makes it 2 out of 2 beats thus far, but remain some 10 ticks above the 124.05 base for the moment.
Top European News from Bloomberg
- Podemos Ally May Hold the Key to Catalonia After Election
- Danish Banks Set to Win FX Volatility Concessions, Minister Says
- Tryg of Denmark Agrees to Take Over Alka for $1.3 Billion
- Warsaw Vows to Go It Alone as Big-Bourse Mergers Lose Steam
In FX, the USD Index is ‘firmly’ back above the 93.000 level that had been largely capping Greenback recoveries before full Senate approval of the Republican tax reforms. 93.500 forms the next obvious upside target and also coincides with chart resistance, while nearest support in the event of another pull-back comes in around 92.500 and just below. GBP is back below 1.35 vs. the USD despite reports stated that the UK and EU are on the brink of a Brexit divorce deal with the Irish border issue still seemingly unresolved ahead of PM May’s trip to Brussels today. Elsewhere, JPY and CHF have given up the most ground vs the recovering Dollar (perhaps understandably), with USD/JPY briefly back through 113.00 and USD/CHF up towards 0.9850 before both pairs eased back.
In commodities, WTI and Brent crude futures trade lower with WTI back below USD 58/bbl in a mild pull-back as markets digest the fallout of last week’s OPEC announcement. In terms of energy related newsflow, the Saudi energy minister Al Falih said he thinks OPEC will not alter course in the second half of 2018, with the cartel not looking to flood the oil market. In metals markets, gold was pressured from the onset during Asia-Pac trade with the safe-haven weighed after the Senate’s tax reform passage spurred risk appetite. Elsewhere, copper prices benefitted from the positive risk tone and amid gains in Chinese commodity prices in which Dalian iron ore rose over 6% shortly after the open.
US Event Calendar:
- 10am: Factory Orders, est. -0.4%, prior 1.4%; Factory Orders Ex Trans, prior 0.7%;
- 10am: Durable Goods Orders, est. -1.0%, prior -1.2%; Durables Ex Transportation, prior 0.4%
- 10am: Cap Goods Orders Nondef Ex Air, prior -0.5%; Cap Goods Ship Nondef Ex Air, prior 0.4%
DB’s Jim Reid concludes the overnight wrap
The Santa rally may have some legs back today. Indeed it’s likely to be a firmer open in Europe this morning than the slump seen around Friday’s close. In the last half hour of European trading ABC News reported that Mr Trump’s former top aide Michael Flynn was prepared to testify that the President had instructed him to make contact with Russian officials when he was a candidate for the White House. This would have conflicted with the President’s version of events when the sacking of Flynn took place. European markets fell over 1% into the close after being broadly flat beforehand with US markets spiking down further with the S&P 500 dropping 45 points in 30 minutes. However as news filtered through that the Republicans were increasingly likely to have enough votes in the Senate to pass the tax bill, the S&P 500 steadily recovered 37 of those points into the US close and ended ‘only’ -0.20% lower. Adding to this, after the bell, ABC suggested that the story was wrong and that the President directed Flynn to contact Russia after the election result and to discuss topics that included cooperation against ISIS. So a very different story.
To add to the more bullish news, in the early hours of Saturday morning the Senate passed the tax reform bill with 51-49 votes, with one GOP Senator, Mr Corker, absenting. The bill still need to be reconciled with the House’s version, where there are material differences such as i) the rate and timing of corporate tax cuts and ii) whether some individual tax cuts will expire after 2026. So the final output is subject to revisions but it feels like the prospect of some form of tax reform appears likely – potentially by year end. Elsewhere, President Trump seems open to negotiated changes on the final bill, noting that the corporate tax rate “could be 22% when it comes out”, rather than 20%, which can save cUS$200bln over the next 10 years for the budget.
This morning in Asia, markets are trading a little mixed. The Nikkei (-0.45%) and ASX 200 (-0.07%) are down slightly, while the Hang Seng (+0.43%), China’s CSI 300 (+0.47%) and Kospi (+0.75%) are all up as we type. Across the pond, the US dollar index is up c0.3% and the UST 10y yield is up c4bp this morning, partly reflecting the passage of the Senate bill back on Saturday morning.
Back to politics and today marks the start of an important week for Brexit negotiations. Today UK PM May is due to travel to Brussels to meet with the EC’s Juncker and EU’s Barnier to seek the outline of a deal ahead of the EU summit next week. The EC College of Commissioners will also make a recommendation on whether or not enough progress has been made on Brexit talks on Wednesday, while the UK’s Davis will update the Brexit Parliamentary Committee on the same day. So lots of headlines likely this week. If that wasn’t enough on politics, Friday marks the deadline for US Congress to pass a spending measure and avoid a partial Government shutdown. Although House Republicans have announced a plan for a two week extension of federal funding that would avoid the shutdown on 8 December. Senate Majority leader McConnell was relatively upbeat, noting “there is not going to be government shutdown” and that “it’s just not going to happen”.
Elsewhere we also need to keep an eye on Germany and specifically the coalition talks with the Social Democratic Party. They are due to hold a convention in Berlin on Thursday, including a likely vote on endorsing coalition talks. In terms of data, the big release this week is the US employment report for November on Friday. The current market consensus is for a 199k (DB 175k) reading for payrolls, no change in the 4.1% (DB 4.2%) unemployment rate and a +0.3% (DB +0.3%) mom average hourly earnings print. Other notable data releases include the remaining October services and composite PMIs tomorrow in Asia, Europe and the US. The same day sees the US ISM non-manufacturing release with the ADP employment report on Wednesday and China trade data on Friday. For the day-by-day full week ahead see the end of today’s edition and remember “Next week… This Week” with all of this and an easy to read cut-out and keep of all upcoming events.
Staying in the US, our economists have slightly changed their rates expectations for the next two years. They still expect a rate hike in December 17, but are now swapping their expectations for 2018 and 2019. They now see four rate hikes in 2018 instead of three, followed by three hikes in 2019 rather than four. Hence, the end point on rates by 2019 is unchanged at 3.1%. The main reasons for the change include: increased prospects of tax reforms, momentum on recent inflation readings (3 months annualised core PCE at c1.9%) and Powell’s testimony which confirmed his willingness to raise rates as needed to achieve the Fed’s targets. Refer to the link for more details.
Now briefly recapping other markets performance on Friday. Government bonds rallied on the aforementioned political developments, with core 10y bond yields down 5-10bp (UST -4.9bp; Bunds -6.2bp; Gilts -9.8bp) while peripherals underperformed with yields ranging from +1 to -3bp. As we saw above Treasuries have reversed 4bps this morning so expect other reversals at the open in Europe. Turning to currencies, the US dollar index weakened 0.17% while Euro and Sterling also fell 0.07% and 0.35% respectively. In commodities, WTI oil was up 1.67% after OPEC members confirmed production cuts to the end of 2018. Elsewhere, precious metals strengthened (Gold +0.44%; Silver +0.02%) and other base metals also advanced modestly (Copper +0.62%; Aluminium +1.16%). Note both Zinc and Iron ore jumped c2.9% on Friday, with the latter up c20% since 31 October with prices continuing to benefit from steel production cuts in China. Away from markets, the Fed’s Bullard has maintained his dovish stance. He cautioned “there is a material risk of yield curve inversion…if the FOMC continues on its present course of increases in the policy rates” and that “given below target inflation, it’s unnecessary to push normalisation to such an extent that the yield curve inverts”. Elsewhere, the Fed’s Mester noted “long rates are going up given where we’re in the economy and where we see the economy is going” and the other reason short rates are going up is “(current) financial conditions are accommodative”.
Finally, our chief Strategist Binky Chadha believes the biggest beneficiary of a cut in the corporate tax rate in the equities space are high tax companies and the simple strategy is to be long them. He thinks a 15pp cut in the corporate tax rate would increase his 2018 S&P 500 EPS target by c12%.
Before we take a look at this week’s calendar, we wrap up with other data releases from Friday. In the US, the November ISM manufacturing was a touch softer than expectations at 58.2 (vs. 58.3 expected). In the details, the production index rose to 63.9 and the new orders index rose 0.6ppt to 64.0, while the employment index nudged down to a still elevated 59.7. The final reading of the November Markit manufacturing PMI was also a tad softer at 53.9 (vs. 54 expected). Elsewhere, October construction spending was above at 1.4% mom (vs. 0.5% expected), led by an increase in the non-residential sector. Finally, auto sales continue to normalise from post-storm highs, with November total vehicle sales at 17.35m (vs. 17.5m expected). Following the latest data, the Atlanta Fed’sGDPNow estimate of 4Q GDP growth is 3.5% saar.
In Europe, the final reading of the November manufacturing PMI was broadly in line. The Eurozone was 0.1 above expectations at 60.1. Across the countries, France was 0.2 above at 57.7, while Germany and Italy were both in line at 62.5 and 58.3 respectively. Elsewhere, the UK’s flash reading was above at 58.2 (vs. 56.5 expected) – the highest in almost four years. Finally, the final reading of Italy’s 3Q GDP was softer than expectations at 0.4% qoq (vs. 0.5%) and 1.7% yoy (vs. 1.8% expected)
3. ASIAN AFFAIRS
i)Late SUNDAY night/MONDAY morning: Shanghai closed DOWN 7.99 points or .24% /Hang Sang CLOSED UP 64.04 pts or 0.22% / The Nikkei closed DOWN 111.87 POINTS OR 0.49%/Australia’s all ordinaires CLOSED DOWN 0.08%/Chinese yuan (ONSHORE) closed DOWN at 6.6190/Oil DOWN to 57.71 dollars per barrel for WTI and 63.16 for Brent. Stocks in Europe OPENED ALL GREEN . ONSHORE YUAN CLOSED DOWN AGAINST THE DOLLAR AT 6.6190. OFFSHORE YUAN CLOSED DOWN AGAINST THE ONSHORE YUAN AT 6.6196 //ONSHORE YUAN WEAKER AGAINST THE DOLLAR/OFF SHORE WEAKER TO THE DOLLAR/. THE DOLLAR (INDEX) IS SLIGHTLY STRONGER AGAINST ALL MAJOR CURRENCIES. CHINA IS NOT HAPPY TODAY.(MARKETS GENERALLY WEAK)
3 a NORTH KOREA/USA
NORTH KOREA/South Korea
Largest ever military drill as the uSA orders 16,000 troops, and 230 jets too simulate war with North Korea:
(courtesy zerohedge)
In “Largest-Ever” Military Drill, US Orders 16,000 Troops, 230 Jets To Simulate War With North Korea
Just days after Pyongyang launched its most advanced ICBM, one which experts warned has the potential to hit a target anywhere on the territory of the United States, North Korea said the U.S. is “begging” for a nuclear war by planning the “largest-ever” joint aerial drill with South Korea just after concluding an exercise with nuclear-powered aircraft carriers, Bloomberg reported.
“Should the Korean peninsula and the world be embroiled in the crucible of nuclear war because of the reckless nuclear war mania of the U.S., the U.S. will have to accept full responsibility for it,” North Korea’s state-run KCNA said Saturday, citing a statement by the Ministry of Foreign Affairs.
The statement came after Yonhap News reported that six U.S. Raptor stealth fighters planes arrived in South Korea on Saturday for a joint air drill named “Vigilant Ace 18” scheduled for Dec. 4 to 8. The F-22s flew into South Korea together in a show of force. The stealth fighters, however, were just a small part of the upcoming show of force: according to local media, some 230 aircraft and up to 16,000 soldiers and airmen are taking part in the drill, which is one of the biggest ever of its kind.
As part of “Vigilant Ace”, US and South Korean forces will be rehearsing for a full-scale war with North Korea, with Yonhap noting that “allies plan to stage simulated attacks on mock North Korean nuclear and missile targets.”
Despite Pyongyang’s harsh rhetoric, US commanders have downplayed the drill – claiming it is “regular” and not a direct response to North Korea.
According to the WSJ, at least 230 US and Southg Korean warplanes will take part, alongside 12,000 US troops from the Air Force, Marines and Navy and airmen with another 4,000 expected to represent Seoul.” The drill, which lasts from December 4 until December 8, will see aircraft flying over eight airbases in across the Korean Peninsula.
US warplanes including fighters and bombers often blast over the Korean Peninsula
The stars of the drill will be the state-of-the-art F-35 Lightning IIs and F-22 Raptors leading the US’s wing. Both fighter jets outmatch anything in North Korea’s arsenal and could win most of the war against Kim by themselves.
F-35s can fly at speeds of 1,200mph and are capable of carrying nuclear bombs and bunker busters.
Meanwhile, the F-22 can hit speeds of up to 1,500 mph and are armed with Vulcan miniguns and Sidewinder missiles.
Commenting on the historic exercise, the US military said that “Vigilant Ace 18 highlights the longstanding military partnership, commitment and enduring friendship between two nations. It is designed to ensure peace and security on the Korean Peninsula, and reaffirms the U.S. commitment to stability in the Northeast Asia region.”
F-22s will be dispatched to take part in Vigilant Ace
In reality, it will likely provoke North Korea into yet another ICBM launch. To be sure, while the Kim regime traditionally rages over the drills on its border, claiming they are rehearsals for invasion, although it may well be right: US forces have been flooding into the Pacific this year with warships, warplanes, missiles and the army all on standby.
Vigilant Ace comes after Donald Trump warned he would “take care” of North Korea following the missile test.
Meanwhile, showing no signs of de-escalation, North Korea has tested dozens of missiles this year, and claimed its nukes can now hit the US. Kim is also feared to be readying the dreaded Juche Bird missile – a live nuke fired out into the heart of the Pacific.
end
Lindsay Graham urges evacuation of all Americans from South Kore4a
(courtesy zerohedge)
“We’re Getting Close To Military Conflict”: Sen. Graham Urges Evacuation Of Americans From South Korea
Neocon Senator Lindsay Graham was stoking the flame of what is looking like increasingly probable war with North Korea today, when he warned on national TV that rising tensions between the the US and Pyongyang means preparations for war need to be taken, and that dependents of U.S. military personnel in South Korea should be relocated after the latest North Korean missile test.
Speaking on CBS News’ “Face the Nation”, Sen. Graham said that “we’re getting close to a military conflict because North Korea’s marching toward marrying up the technology of an ICBM with a nuclear weapon on top that cannot only get to America but deliver the weapon. We’re running out of time.”
Graham then urged American dependants should no longer be sent to South Korea, and added that it’s time to start evacuating dependents out of North Korea’s southern neighbor: “South Korea should be an unaccompanied tour. It’s crazy to send spouses and children to South Korea, given the provocation of North Korea. So I want them to stop sending dependents. And I think it’s now time to start moving American dependents out of South Korea.”
On Saturday, North Korea said the U.S. is “begging” for a nuclear war by planning the “largest-ever” joint aerial drill with South Korea just weeks after concluding an exercise with three nuclear-powered aircraft carriers. “Should the Korean peninsula and the world be embroiled in the crucible of nuclear war because of the reckless nuclear war mania of the U.S., the U.S. will have to accept full responsibility for it,” North Korea’s state-run KCNA said Saturday, citing a statement by the Ministry of Foreign Affairs.
As reported earlier on Sunday, Pyongyang’s statement came after Yonhap News reported that six U.S. Raptor stealth fighters planes arrived in South Korea on Saturday for a joint air drill named “Vigilant Ace 18” scheduled for Dec. 4 to 8. The F-22s flew into South Korea together in a show of force. The stealth fighters, however, were just a small part of the upcoming show of force: according to local media, some 230 aircraft and up to 16,000 soldiers and airmen are taking part in the drill, which is one of the biggest ever of its kind. As part of “Vigilant Ace”, US and South Korean forces will be rehearsing for a full-scale war with North Korea, with Yonhap noting that “allies plan to stage simulated attacks on mock North Korean nuclear and missile targets.”
The massive drill, and the latest verbal escalation, takes place after North Korea carried out its latest missile test last week, in which the reclusive country launched its third ICBM test, and the first of what North Korea is calling its Hwasong-15 missile. According to expets, the new missile may be able to travel a distance of more than 8,000 miles – enough to strike anywhere in United States.
Prior to Graham’s warning, national security adviser H.R. McMaster said Saturday that the chances of war with North Korea are “increasing every day.” Speaking at the Reagan National Defense Forum in California, McMsater said: “I think it’s increasing every day, which means that we are in a race, really, we are in a race to be able to solve this problem.”
b) REPORT ON JAPAN
c) REPORT ON CHINA
4. EUROPEAN AFFAIRS
The pound soars on a probable BREXIT border deal
(courtesy zerohedge)
Cable Soars After UK, Ireland Agree On Brexit Border Deal
As several sellside desks have summarized, today will be a binary one for GBP: either deal or no deal. And following an early swoon in cable after speculation rose that a deal would be elusive, the pound soared above 1.35 following a report that EU chief brexit negotiator Barnier told MEPs that a breakthrough is likely today. This was confirmed moments ago by the FT which said that “Britain is heading for a breakthrough on Brexit talks after reaching a compromise with Ireland on the border between the Republic and Northern Ireland, the issue that threatened to derail the negotiations.”
The draft refers to maintaining “regulatory alignment” between Northern Ireland and the Republic after Brexit — a form of words that, according to a senior official involved in the talks, appears to meet Dublin’s deep concerns about a possible hard border on the island and has not raised objections in London. The wording is more comfortable for Britain than previous draft formulations that insisted on “no regulatory divergence”.
The BBC confirmed as much after its political editor Laure Kuenssberg said that “May and Juncker about to appear together – with a deal seeming to be on the table.”
The Irish issue is critical because as Citi’s trading desk explained, the sticking point in today’s crucial Brexit talks is likely to be Ireland/Northern Ireland. As the bank explained, the problem is obvious: With a difficult recent history, the Good Friday Agreement (GFA) and intense diplomacy on both sides has led to an open border for goods and people for years. Evidently, this open border policy is at odds with one of the major Brexit drivers – leaving the customs union and putting a halt to absolute freedom of movement within the EU. Northern Ireland is part of the United Kingdom – this is an extremely important political/ideological point – it is therefore impossible to have open borders between Ireland/Northern Ireland and not have open borders with the rest of the UK. That is the dilemma that the UK and the EU must find a solution to.
This situation is exacerbated by the fact that May’s razor thin majority is only held together with the support of the DUP (Democratic Unionist Party), who are the biggest pro-Union faction in Northern Ireland. They are fiercely protective of the integrity of Northern Ireland within the UK and will strongly resist any attempts to push North Ireland closer together with the South. They have the ability the pull the rug out from beneath May at any point.
Furthermore, EC president Donald Tusk said late last week that the EU would not agree any deal that Ireland did not support, in effect giving a veto over the talks to Leo Varadkar, Irish prime minister, who convened an emergency cabinet meeting on Brexit on Monday morning.
Now, however, this key hurdle appears to have been overcome, leading to optimism that progress toward a full Brexit will be consummated.
The alleged deal comes just minutes before Theresa May was set to enter a crucial lunch with Jean-Claude Juncker, where Ireland has remained the main obstacle to a deal on Brexit divorce terms.
The report sent cable surging, which earlier in the session had been trading lower over the aforementioned Brexit doubts. But the reported breakthrough pushed sterling 0.7% higher, to $1.3524, sending it into positive territory for the day.
As the FT adds, Britain and the EU have also made progress on the other two big divorce issues — the Brexit bill and citizen rights — as they seek to make sufficient in the talks to allow a second phase of negotiations — on a transition and a future EU-UK relationship to go ahead.
The compromise proposed by EU negotiators refers to the need for continued “alignment” with single market rules that support co-operation between Northern Ireland and the Republic, according to a person familiar with the text.
Mrs May’s position has been complicated by her reliance on the votes from Northern Ireland’s Democratic Unionist party for a parliamentary majority in Westminster.
Downing Street said that Mrs May would not agree to any Brexit deal that put barriers between Northern Ireland and the rest of the UK.
Still, it remains to be seen what shape this deal will take and what exactly it means – it still seems illogical that one part of the UK might be remaining within the customs area and free travel zone – there must be more to come. Either way, it is certain that May and her cabinet will have involved the DUP along the way – they cannot afford to lose their support. GBP has been creeping up on this news a little cautiously, having jumped on earlier optimistic headlines.
The bottom line, as Citi summarizes, is that “sufficient progress” looks to be in the bag now given the border deal and improved divorce offer. And now we await confirmation from Juncker and May.
end
Those expecting a deal between England and the EU will be disappointed
(courtesy zerohedge)
Watch Live: May And Juncker Make Joint Statement, But “No Deal Today”
With the Irish border issue reportedly resolved, and the Brexit process suddenly progressing unexpectedly smoothly, Theresa May and Jean-Claude Juncker are set to make a joint statement momentarily, however for those expecting a formal announcement of a deal, don’t hold your breath because as a BBC correspondent just announced:
- NO DEAL TODAY FROM BREXIT TALKS: BBC
The news sent the pound tumbling:
“No-One Knows What’s Going On Now”: Britain, EU Fail To Reach Brexit Deal
There was a burst of hope this morning that after many repeated false starts, Theresa May and JC Juncker would finally announce a Brexit deal on Monday. Alas it was not meant to be and after a brief conference between the two leaders, we learned that despite progress, a Brexit deal “was not possible today.”
According to the BBC’s Laura Kuenssberg, “it was the DUP call that sunk today’s chances of a deal – Foster held her press conf, 20 mins later May leaves talks with Juncker to call her, goes back into the room and the deal is off.”
However it was another BBC reporter, Katya Adler, that had the best summary of today’s events: “No-one knows what’s going on now, one EU diplomat told me”
What we do know is that despite the lack of a deal, hope remains and speaking after talks between the UK and the European Commission’s negotiators, Jean-Claude Juncker said: “Despite our best effort and a significant effort, it was not possible to reach a complete agreement today” adding that “this is not a failure, this is the start of the very next round.”
Juncker added that “we now have a common understanding on most relevant issues, with just two or three open for discussion. This will require further consultation, further negotiation and further discussion,” and that “we were narrowing our positions to a huge extent today thanks to the British prime minister, thanks to the willingness of the European Commission to have a fair deal with Britain.”
In her first public press statement in Brussels alongside Juncker since the start of Brexit talks nine months ago, May chimed in: “I am confident we will conclude this positively” adding that “on a couple of issues, some issues remain which will require further negotiation and consultations. We will reconvene before the end of this week.”
As reported earlier, talks had come unstuck over the Northern Irish border in recent weeks. Earlier in the day after government sources in Dublin said London had agreed to keep Northern Ireland “aligned” to EU regulations to avoid a “hard border” with the Irish Republic. Word of that sent the pound higher on hopes of rapid trade talks but according to Reuters, provoked an angry response from May’s allies in Northern Ireland, demanding equal treatment with the rest of the United Kingdom.
Underlining the conundrums of Brexit, the idea of Northern Ireland remaining closely linked to the EU single market prompted speculation that, to avoid new barriers between Belfast and London, the British mainland would have to follow suit.
The leaders of Scotland and London, which voted against Brexit, demanded they be allowed the same EU relationship as Northern Ireland. Yet May has ruled out such differentiated treatment or staying in a customs union or the single market.
* * *
So where do we stand after today’s chaos? Well, Juncker said that he is “very confident” the Brexit negotiations will achieve a breakthrough this week: “I’m very confident that we’ll reach an agreement in the course of this week,” the Commission president told reporters after his meeting with May.
“We now have a common understanding on most relevant issues, with just two or three open for discussion,” Juncker concluded.
The markets have taken Juncker’s optimism in stride: after sliding to day lows following news of the no deal, cable has recovered half the loss, and was last trading around 1.347.
end
Germany has had enough: they are offering migrants $3500.00 dollars to leave voluntarily. If they do not bite, then deportation
(courtesy hedge)
Germany Offers Migrants $3,500, Housing, & Healthcare To Leave Voluntarily
Authored by Jacob Bojesson via The Daily Caller,
Germany is offering rejected asylum seekers money to voluntarily return home as the government gets ready to deport Syrian migrants next summer.
The country’s interior ministry announced a scheme Saturday to give families up to 3,000 euros ($3,560) if they agree to leave.
The program – titled “Your Country, Your Future, Now! – will run through the end of February.
“If you decide by the end of February for a voluntary return, you will get in addition to first aid, a housing aid for the first twelve months in your country of origin,” Interior Minister Thomas de Maiziere told newspaper Bild am Sonntag.
People who return before their asylum application has been processed are already offered 1,200 euros ($1,424) from a separate scheme.
Representatives from Chancellor Angela Merkel’s Christian Democratic Union (CDU) and its sister party, the Christian Social Union, will discuss deportations of Syrian migrants in coming weeks.
Newspaper Die Zeit reports that parts of Syria could be re-evaluated as safe by next summer, that would make it easier to carry out deportations.
5. RUSSIA AND MIDDLE EASTERN AFFAIRS
Friday night/Israel/Syria
Israel strikes at the site where the BBC reports that Iran is building a military base in Syria
(courtesy zerohedge)
How A Dubious BBC Report Gave Israel The “Green Light” For Last Night’s Attack On Syria
Syrian state television has confirmed that Israel attacked a military base outside of Damascus overnight on Friday, which Israeli media reports involved both surface-to-surface missiles and airstrikes, while Syria says its air defense systems were engaged and intercepted two missiles. Like other recent strikes inside Syria, the Israeli jets reportedly fired from over Lebanese airspace, in order to avoid both Syrian anti-aircraft missile systems and provoking a Russian response. Though the extent of the damage or casualties is not yet known, Syrian media has confirmed material damage to the base, and other reports indicate mass power outages in some of parts of Damascus occurred immediately after the attack, which SANA says happened at 12:30am local time.
It appears the base is likely the same one featured in a November BBC report which showed satellite images detailing the purported construction and renovation of an “Iranian military base” near El-Kiswah, which lies 14 km (8 miles) south of Damascus. As we’ve noted before, the BBC report was dubiously sourced to “a Western intelligence source” and the story was quickly utilized by Israeli leaders to ratchet up rhetoric in preparing its case before the international community for further attacks on the supposed Iranian targets. Israel has long justified its attacks inside Syria by claiming to be acting against Hezbollah and Iranian facilities and arms depots.
Image source: SANA
Indeed, BBC itself used ambiguous language in saying the satellite images “seem to show” construction activity at the site referenced by the intelligence source between January and October this year. However, the images don’t actually show much at all related to an Iranian military presence, but merely a series of two dozen large low-rise buildings – likely for housing soldiers and vehicles, which would be expected of any state army or sovereign nation.
Furthermore, the very title of the November piece – “Iran building permanent military base in Syria – claim” – underscores the complete lack of evidence for such a claim, which the BBC notes in the article is “impossible to independently verify.”
Yet in reporting last night’s Israeli strike on Syria, the BBC uncritically referenced its own prior unconfirmed “claim” to paint a picture that Israel is actually taking action against Iran and Hezbollah: “Israel has hit weapons sites before, in a bid to prevent arms being transferred to Syria’s Lebanese ally Hezbollah. Arms convoys in particular have been singled out by the Israeli air force.”
And the BBC followed this with:
Last month the BBC revealed a claim that Iran was building a permanent military base near the town. A series of satellite images showed construction at the location of the alleged base, which was made known to the BBC by a western intelligence source.
Israeli Prime Minister Benjamin Netanyahu has previously warned that Israel would not allow Iran to establish any military presence in Syria.
So it appears the BBC is playing war propagandist for Israel, instead of including any level of critical inquiry regarding Israel’s unprovoked act of aggression against its neighbor. In short, the BBC spread what it acknowledged to be a mere “claim” based solely on an unnamed “Western intelligence source”. Then Israel used that claim to attack Syria, after which the BBC in circular fashion justified the attack based on its own original dubious “claim”.
Israeli media and politicians are currently using BBC published satellite images as “proof” that Israel attacked an “Iranian base” in Syria last night. Image source: BBC
Meanwhile, just about every major Israeli newspaper in today’s reporting is prominently featuring the prior BBC report as justification for the latest attack on Syria. The Times of Israel provides one such example among many when it says:
The alleged Israeli attack came three weeks after the BBC reported that Iran was building a permanent military base in Syria just south of Damascus. The British broadcaster commissioned a series of satellite pictures that showed widespread construction at the site.
Or see this op-ed in the Jerusalem Post today which references the BBC report as a watershed moment:
The attack raises several questions. Why wait so long to strike the Iranian base? What did “western intelligence sources” hope to accomplish by publishing information on the Iranian base? Why were the Iranians at the site given time to leave by their base becoming so public? The month’s activity appear to be part of a complex game being waged by Iran to entrench itself in Syria and Israel’s attempts to warn the Iranians off. Whatever was taking place at El-Kiswah had plenty of time to be wrapped up and moved if the Iranians were concerned about it being struck. If the reports about Israel’s threats to target sites between 40-60km from the Golan are accurate then it would indicate that the warnings have been manifested.
And nearly every major Israeli media source is also republishing the BBC satellite images as part of their reporting on the overnight strikes.
As we’ve long pointed out, anytime that Israel carries out acts of aggression against Syria, it can just blame Iran or Hezbollah and escape international criticism or condemnation. International media and Western governments have already demonstrated a penchant for towing the Israeli line whenever Iran can be conceivably blamed as a culprit – evidence or no evidence – this as Prime Minister Benjamin Netanyahu has made it official Israeli policy to oppose Iranian presence in Syria.
Yet what key facts do the BBC and others leave out?
On Tuesday Israel’s own Defense Minister Avigdor Lieberman said that there are no Iranian military forces in Syria, but instead merely stuck to acknowledging “Iranian experts and advisers”. In comments to Israel’s Ynet news, Lieberman admitted, “It is true that there are a number of Iranian experts and advisers, but there is no Iranian military force on Syrian land.”
Clearly, Defense Minister Lieberman’s statement flies in the face of claims made by Netanyahu in his speech before the UN General Assembly this year when Netanyahu said, “We will act to prevent Iran from establishing permanent military bases in Syria for its air, sea and ground forces. We will act to prevent Iran from producing deadly weapons in Syria… And we will act to prevent Iran from opening new terror fronts against Israel along our northern border.”
In other words, Israel’s top military chief very publicly contradicted both Netanyahu’s and the BBC’s claims of Iranian military bases on Syrian soil, yet the BBC neglected to mention such essential information. Thus, it appears that the mainstream media is preparing us for war… but sadly, this is nothing new.
Trump May Recognize Jerusalem As Israel’s Capital Next Week
On Friday a senior US official told Reuters that US President Donald Trump may deliver a speech next Wednesday recognizing Jerusalem as Israel’s capital.
Some Middle East experts speculate that such a move will be a major blow to the US relations with Arab countries and the Israeli-Palestinian peace process. No US president or any western leader have ever recognized Israel’s control over all of Jerusalem.
However, a spokesperson with the White House National Security Council denied these claims and told Reuters that the White House has “nothing to announce”.
Israel flag with a view of old city Jerusalem and the Western wall. Image via South Front.
President Trump had promised during his presidential campaign in 2016 that he will recognize Jerusalem as the capital of Israel. Many experts doubted Trump’s promises back then and didn’t believe that a US president could take such a dangerous step. However many recent reports have claimed that the US president is close to announcing this historical decision.
Trump said on October 8 that he wanted to give a shot at achieving peace between Israel and the Palestinians before moving the US embassy from Tel Aviv to Jerusalem. Since then, no real effort has been made by the US to push the Israeli-Palestinian peace process forward.
“I want to give that a shot before I even think about moving the embassy to Jerusalem … If we can make peace between the Palestinians and Israel, I think it’ll lead to ultimately peace in the Middle East, which has to happen” Trump said during an interview on October 8 according to Reuters.
Saeb Erekat, a member of the Palestinian Parliament described the possible US recognition of Jerusalem as Israel’s capital as “playing with fire”, according to Al-Jazeera. “Any American recognition of Jerusalem as the capital of Israel will bring about the end of the Jerusalem issue. This issue is weighty and dealing with it is playing with fire.” Erekat’s full statement said.
Hamas also stated that the move would lead to an “escalation” of the “Jerusalem intifada.” Indeed, the Palestinian side will likely halt all negotiations if Trump fulfills his promise to Israel, and a new uprising in the Western Bank and a military escalation in Gaza Strip is also a possible outcome.
end
This may spark trouble: Yemen’s ex President Saleh a supporter of the Iranian backed Houthis suddenly switches sides and then his house is blown up, sparking rumours of his death
(courtesy zerohedge)
Yemen Houthis Blow Up Ex-President Saleh’s House, Sparking Rumors Of His Death
Fighters from Yemen’s Houthi rebel movement have blown up the house of ex-President Ali Abdullah Saleh in the centre of the capital Sanaa, residents reported, as Saleh’s current whereabouts remained unknown, Reuters reported. The attack came a day after Saleh said he was ready for a “new page” in ties with the Saudi-led coalition.
Yemen’s former President Ali Abdullah Saleh
Saleh’s loyalists had lost ground on the sixth day of heavy urban combat with the Iran-aligned Houthis, his former allies in nearly three years of war with a Saudi-led military coalition. On Monday, the Houthis made gains against forces supporting the former president. According to witness reports in local media, there was intense fighting overnight, with explosions rocking the city into Monday morning.
The alliance between the Houthi rebels and former Saleh recently seemed to be on the verge of a split, after on Sunday, the former leader of the war-torn country formally renounced his alliance with the Houthis, pulling a “Hariri.” Saleh pledged to step up his fight with the Iranian-backed group, having re-aligned his forces with Saudi Arabia. In an earlier televised speech, Saleh said that he made the decision to cease fighting in the country, having asked Riyadh to stop attacks on Yemen in exchange for his support.
“I call upon the brothers in neighboring states and the alliance to stop their aggression, lift the siege, open the airports and allow food aid and the saving of the wounded and we will turn a new page by virtue of our neighborliness,” he said.
Until Sunday’s unexpected reversal, Saleh and the Houthis had been fighting against the Saudi-backed forces of ousted President Abdrabbuh Mansur Hadi since 2015.
The address came as forces loyal to Saleh were engaged in battle with the troops of Ansar Allah, or the Houthi rebels, in the capital Sanaa.
Fighting erupted between the Iranian-allied Shiite rebels and forces loyal to Ali Abdullah Saleh last week, unravelling their fragile alliance, formed in the face of the internationally-recognized government and Saudi-led coalition. More than 100 people, mostly Houthis, were killed in clashes between Houthis and forces loyal to ex-President Saleh on Saturday, Sky News Arabia reported, citing military and medical sources.
The recent fighting was the most serious since the Houthis and Mr Saleh’s General People’s Congress made common cause against the Saudi-led coalition. The coalition joined the Yemen war in 2015 to try to restore the internationally-recognised government of President Abd-Rabbu Mansour Hadi to power.
Suze van Meegen, Sanaa-based protection and advocacy adviser for the Norwegian Refugee Council, said earlier the violence left aid workers trapped inside their homes and was “completely paralysing humanitarian operations”. “No one is safe in Sanaa at the moment. I can hear heavy shelling outside now and know it is too imprecise and too pervasive to guarantee that any of us are safe,” she said.
Residents said the night was shattered by the sounds of gunfire and children screaming.
“It’s like horror movies,” said Bushra, a local woman who asked that her last name not be published for fear of retribution. “I have lived through many wars but nothing like this.”
Witnesses said the bodies of slain civilians and fighters littered the streets, as no ambulances were able to reach the area.
The known toll from three hospitals reached at least 125 killed and 238 wounded in the past six days, the International Committee of the Red Cross said.
Yemen’s war has killed more than 10,000 people, displaced more than two million people, caused a cholera outbreak infecting nearly one million people and led the country to experience ‘the largest famine the world has seen for decades’.
* * *
Following news of the explosion, the radio station of Yemen’s Houthi-run interior ministry said on Monday the militia’s former war ally turned adversary, ex-president Ali Abdullah Saleh, had been killed as fighting racked the capital Sanaa though there was no independent confirmation. Iranian media also reported that Saleh has been killed by Houthi fighters. Both Iranian state Press TV and private Tasnim News Agency reported the alleged death of the former Yemeni leader. The deposed leader was reportedly killed while on his way to the city of Maarib in Yemen, according to the agency. The Yemeni interior minister also announced the “official” death of Saleh:
Unverified footage circulated by Yemeni social media users appeared to a show corpse resembling Saleh. Armed militiamen unfurled a blanket containing the corpse and shouted, “praised God!” and “hey Ali Affash!”, another last name for Saleh.
The radio station said the official Houthi TV station would soon broadcast footage of Saleh’s dead body.
However, Saleh’s party rejected reports of his death. Saleh’s party denied to Reuters that their leader had been killed and said he was still leading forces in heavy fighting in Sanaa that has killed at least 125 people and wounded 238 in six days, according to the International Committee of the Red Cross. His whereabouts were unknown and he has made no public appearances since the reports of his death surfaced.
end
Not good: the Houthi rebels have now taken over the Yemen Capital city of Sanaa and reports of the killingof ex president Saleh is true: he is dead..
Houthi Rebels Take Over Yemen Capital After Killing Ex-President Saleh
After years of fighting, the capital of Yemen, Sanaa, has reportedly fallen under control of Houthi rebel fighters, according to media citing the Interior Ministry. The Iran-backed group has allegedly retaken the city after killing former President Ali Abdullah Saleh, whose death was just confirmed by a party official.
Al Arabiya quoted a source in Saleh’s General Peoples Congress as saying he was killed by sniper bullets. A Houthi video distributed on social media showed what appeared to be Saleh’s body, clad in grey clothes and being carried out on a red blanket. The side of his head bore a deep wound.
As reported earlier, on Monday Houthi forces blew up Saleh’s house in Sanaa and came under aerial attack by Saudi-led coalition warplanes for a second day, residents said.
Saleh, who unexpectedly renounced his alliance with the Houthis on Sunday and seemed to pull a “Hariri”, siding with Saudi Arabia, was killed while trying to flee the capital, according to the Houthi-controlled ministry. It said their former ally “was creating chaos by working with militias of aggression” in the country, and “helping extremist militants.”
The ministry accused its former ally and leader of betrayal and inciting even more violence in Yemen, and said the Houthi forces have “ended the crisis” and now control “all positions” of opposing militias. There have also been reports that the eldest son of the ex-president Ahmad Saleh, regarded as his likely successor, has been arrested. Heavy fighting has been ongoing in Sanaa in recent days, with the Saudi-led coalition launching strikes on Houthi positions and having bombed Sanaa’s airport. The strikes come amid reports of extreme bloodshed in Yemen’s capital after ex-president Saleh pulled out of an alliance with the Houthi rebels.
Houthi spokesman Mohammed Abdul Salam claimed significant gains in the battle for Sanaa on Monday.
“With the aid and approval of God, the security forces backed up by wide popular support were able last night to cleanse the areas in which the militias of treason and betrayal were deployed,” he said in a statement.
The Saudi-led air campaign has killed hundreds of civilians but has failed to secure the coalition any major gains in the nearly three-year-old campaign to restore Yemen’s internationally recognized president, Abd-Rabbu Mansour Hadi, to power.
Saleh’s death marks a major turning point in the war, one giving the Houthi rebels a much needed boost in the long-running proxy war. In 2015, a Sunni-Arab coalition led by Riyadh launched a military campaign against the Shiite Houthi rebels to prevent them from controlling Yemen. The Saudi-led operation has been a major contributor to the humanitarian disaster currently plaguing the war-torn nation. Some 20 million Yemenis, including 11 million children, are in need of urgent aid, according to the World Health Organization. The UN believes that the civilian death toll from the conflict could exceed 10,000.
end
6 .GLOBAL ISSUES
7.OIL ISSUES
8. EMERGING MARKET
Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings MONDAY morning 7:00 am
Euro/USA 1.1849 DOWN .0040/ 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 ALL GREEN
USA/JAPAN YEN 113.00 UP 0.941(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 1.3505 UP .0033 (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 1.2679 DOWN .0002(CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/(TRUMP INITIATES LUMBER TARIFFS ON CANADA)
Early THIS MONDAY morning in Europe, the Euro FELL by 40 basis points, trading now ABOVE the important 1.08 level RISING to 1.1894; / Last night the Shanghai composite CLOSED DOWN 7.99 POINTS OR .24% / Hang Sang CLOSED UP 64.04 POINTS OR 0.22% /AUSTRALIA CLOSED DOWN 0.08% / EUROPEAN BOURSES OPENED ALL GREEN
The NIKKEI: this MONDAY morning CLOSED DOWN 111.87 POINTS OR 0.49%
Trading from Europe and Asia:
1. Europe stocks OPENED ALL IN THE GREEN
2/ CHINESE BOURSES / : Hang Sang CLOSED UP 64.04 POINTS OR 0.22% / SHANGHAI CLOSED DOWN 7.99 POINTS OR .24% /Australia BOURSE CLOSED DOWN 0.08% /Nikkei (Japan)CLOSED DOWN 111.87 POINTS OR 0.49%
INDIA’S SENSEX IN THE GREEN
Gold very early morning trading: 1273.40
silver:$16.33
Early MONDAY morning USA 10 year bond yield: 2.395% !!! UP 2 IN POINTS from FRIDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. (POLICY FED ERROR)
The 30 yr bond yield 2.790 UP 4 IN BASIS POINTS from FRIDAY night. (POLICY FED ERROR)
USA dollar index early MONDAY morning: 93.16 UP 28 CENT(S) from FRIDAY’s close.
This ends early morning numbers MONDAY MORNING
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And now your closing MONDAY NUMBERS \1 PM
Portuguese 10 year bond yield: 1.901% UP 2 in basis point(s) yield from FRIDAY
JAPANESE BOND YIELD: +.041% UP 1/2 in basis point yield from FRIDAY/JAPAN losing control of its yield curve/
SPANISH 10 YR BOND YIELD: 1.414% DOWN 1/3 IN basis point yield from FRIDAY
ITALIAN 10 YR BOND YIELD: 1.716 DOWN 0 POINTS in basis point yield from FRIDAY
the Italian 10 yr bond yield is trading 31 points HIGHER than Spain.
GERMAN 10 YR BOND YIELD: +.344% DOWN 2 IN BASIS POINTS ON THE DAY
END
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IMPORTANT CURRENCY CLOSES FOR MONDAY
Closing currency crosses for MONDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/1:00 PM
Euro/USA 1.1849 DOWN.0039 (Euro DOWN 39 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/
USA/Japan: 112.82 UP 0.763(Yen DOWN 63 basis points/
Great Britain/USA 1.3458 DOWN 0.0014( POUND DOWN 14 BASIS POINTS)
USA/Canada 1.2701 UP .0018 Canadian dollar DOWN 18 Basis points AS OIL FELL TO $57,73
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This afternoon, the Euro was DOWN 39 to trade at 1.1849
The Yen fell to 112.82 for a LOSS of 76 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 FELL BY 14 basis points, trading at 1.3458/
The Canadian dollar FELL by 18 basis points to 1.2701/ WITH WTI OIL FALLING TO : $57.73
The USA/Yuan closed AT 6.6198
the 10 yr Japanese bond yield closed at +.041% UP 1/2 IN BASIS POINTS / yield/
Your closing 10 yr USA bond yield UP 5 IN basis points from FRIDAY at 2.390% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 2.785 UP 4 in basis points on the day /
Your closing USA dollar index, 93.24 UP 35 CENT(S) ON THE DAY/1.00 PM/BREAKS RESISTANCE OF 92.00
Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for MONDAY: 1:00 PM EST
London: CLOSED UP 38.48 POINTS OR 0.53%
German Dax :CLOSED UP 197.06 POINTS OR 1.53%
Paris Cac CLOSED UP 72.40 POINTS OR 1.36%
Spain IBEX CLOSED UP 123.60 POINTS OR 1.23%
Italian MIB: CLOSED DOWN 256.01 POINTS OR 1.16%
The Dow closed UP 58.46 POINTS OR 0.24%
NASDAQ WAS closed DOWN 72.22 Points OR 1.05% 4.00 PM EST
WTI Oil price; 57.73 1:00 pm;
Brent Oil: 62.91 1:00 EST
USA /RUSSIAN ROUBLE CROSS: 58.82 DOWN 7/100 ROUBLES/DOLLAR (ROUBLE HIGHER BY 7 BASIS PTS)
TODAY THE GERMAN YIELD FALLS TO +.344% 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:$54.44
BRENT: $62.40
USA 10 YR BOND YIELD: 2.372% (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)
USA 30 YR BOND YIELD: 2.762%
EURO/USA DOLLAR CROSS: 1.1862 DOWN .0027
USA/JAPANESE YEN:112.44 UP 0.392
USA DOLLAR INDEX: 93.12 UP 23 cent(s)/
The British pound at 5 pm: Great Britain Pound/USA: 1.3472 : UP 1 POINTS FROM LAST NIGHT
Canadian dollar: 1.2681 UP 2 BASIS pts
German 10 yr bond yield at 5 pm: +0.344%
END
And now your more important USA stories which will influence the price of gold/silver
TRADING IN GRAPH FORM FOR THE DAY
Tech Wreck Erases ‘Ross Rout’ Rebound As Government Shutdown Fears Grow
The Top?
Bonds & bullion remain bid post the Ross Rout as Nasdaq sinks…
And while stocks were exuberant overnight, only Trannies remain positive from the start of the Ross Rout… with Nasdaq getting monkey-hammered… (biggest reversal in the S&P 500 since Feb 2016)
Equity momentum is getting smacked as investors rotate into Value…
Today’s 4% divergence between Momo and Value is the biggest since the election…
Did President Trump jinx it?
11 of the last 12 days have seen shorts squeezed (but note today’s opening squeze rolled over notably)…
Big day for banks again…
Amid Freedom Caucus emergency meetings and ‘Chuck-and-Nancy’ meeting Trump, anxiety about the government shutdown deadline is starting to be seen in the T-Bill market…
But the rotation from low- to high-taxation companies is accelerating wildly…
Which slammed tech stocks everywhere.
The S&P has outperformed Nasdaq for six straight days – this is the biggest divergence between their performance since May 2009…
Treasury yields ended higher on the day with notable underperformance once again at the front-end…
Flattening the yield curve once again to new 10 year cycle lows…
The Dollar Index trod water today after knee-jerking higher at the open last night…
Commodities were lower aross the baord with Crude leading the way lower…
And as stocks sank today, Bitcoin was bid back towards record highs…
END
Trading today:
Microsoft Plunges Most In 18 Months As Tech Wreck Escalates
Microsoft is down almost 4% – the biggest drop since June 2016 – filling the gap from earnings as the entire tech space is coming under serious pressure in this low-high tax rotation.
No, there is no MSFT-specific news or catalyst…
FANGs, Semis, and the broad tech sector are in trouble…
As the low-to-high tax company rotation continues…
In a major victory, the senate passes its sweeping tax bill of which nobody read.
(courtesy zerohedge)
In Major Victory For Trump, Senate Passes “Sweeping” Tax Bill Which Nobody Read: Here’s What’s In It
Shortly before 2am on Saturday, the Senate passed “the most sweeping rewrite of the U.S. tax code in three decades, slashing the corporate tax rate and providing temporary tax-rate cuts for most Americans” handing Republicans a badly needed legislative and political victory. Senators voted across party lines in a 51-49 vote, ending days of debate and “hand wringing” as leadership worked frantically behind the scenes to win over holdouts and get the proposal in line with the chamber’s rules.
Tennessee Senator Bob Corker, who had cited concerns over the bill’s effects on federal deficits, was the only Republican dissenter. Corker, who is retiring after 2018, said in a statement ahead of the vote that he “wanted to get to yes” on the tax plan. “But at the end of the day, I am not able to cast aside my fiscal concerns and vote for legislation that I believe, based on the information I currently have, could deepen the debt burden on future generations,” he said.
Corker’s dissent however was not enough to halt passage, and shortly thereafter Vice President Mike Pence presided over the final passage vote. GOP senators, who stayed on the Senate floor until the vote closed after midnight, broke out into applause after Pence announced the bill had passed.
“This is a great day for the country,” Majority Leader Mitch McConnell (R-Ky.) said during a 2 a.m. press conference after the vote. “We have an opportunity now to make America more competitive, to keep jobs from being shipped off shore and to provide substantial relief for the middle class.”
The bill would lower tax rates for individuals through 2025 and permanently cut the corporate tax rate from 35% to 20% (more details below). The bill’s tax cuts for individuals are temporary in order to comply with budget rules that the measure can’t add to the deficit after 10 years. The bill would also repeal ObamaCare’s individual mandate, a priority for President Trump and many Republicans.
* * *
The vote brings the GOP close to delivering a much-needed policy win for their party and President Donald Trump. After the vote, Trump said on Twitter that he looks forward to signing a final bill before Christmas. The president expressed gratitude to McConnell and Finance Committee Chairman Orrin Hatch for steering the measure through the Senate. “We are one step closer to delivering MASSIVE tax cuts for working families across America,” Trump wrote on Twitter.
On Saturday morning, Trump followed up his praise to the Senate GOP, tweeting the “Biggest Tax Bill and Tax Cuts in history just passed in the Senate. Now these great Republicans will be going for final passage. Thank you to House and Senate Republicans for your hard work and commitment!”
* * *
Amid the republican jubilation over the passage of a bill which is heavily weighted to benefit corporations and pass-throughs, and will encourage all self-employed businesses to become LLCs, there was just one problem: nobody actually read the 479-page bill.
As Montana Senator Jon Tester wrote late on Friday:
NY Governor Andrew Cuomo showed what the “handwritten notes on the page” looked like:
Commenting on this, Senate Democrat Charles Schumer noted that a set of last-minute revisions to the bill changed it in ways that had yet to be analyzed by the Joint Committee on Taxation, Congress’s official scorekeeper for the effects of tax legislation. “Is this really how Republicans are going to rewrite the tax code? Scrawled like something on the back of a napkin?”However, McConnell said the bill, the first text of which was introduced on Nov. 20, went “through the regular order.” He dismissed complaints like Schumer’s. “You complain about process when you’re losing,” McConnell said.
Bottom line: the chaotic process was similar to how Obamacare was passed on Christmas Eve in 2009: in fact maybe a slight improvement: at least this time Congress didn’t have to “pass the bill to find out what is in it.” And it’s not like anyone reads these bills anyway.
So what happens next?
Before it goes to Trump, lawmakers will have to reconcile differences between the Senate bill and one the House passed last month, a process that will begin Monday. Although both versions share common topline elements, negotiations on individual provisions inserted to win votes, particularly in the Senate, may be protracted and difficult. The final product will end up being a central issue in the 2018 elections that will determine control of Congress.
“We’re going to take this message to the American people a year from now,” Senate Majority Leader Mitch McConnell said after the vote.
* * *
Among the major overhauls, both the House and Senate measures would cut the corporate tax rate to 20% from 35% – though the Senate version would set that lower rate in 2019, a year later than the House bill would. Also, the Senate bill, unlike the House version, would provide only temporary tax relief to individuals, ending tax cuts for them in 2026. Both bills are expected to add more than $1.4 trillion to the federal deficit over 10 years, before accounting for any economic growth. Bloomberg reported that last minute revisions to help shore up GOP support added about $32.5bn to the measure’s 10-year cost, according to a one-page analysis from the Congressional Budget Office.
The House and Senate bills also align on the contentious issue of individual deductions for state and local taxes: They’d eliminate all but a deduction for property taxes, which would be capped at $10,000. They differ on the home mortgage-interest deduction; the House bill would restrict that break to loans of $500,000 or less with regard to new purchases of homes. The Senate legislation would leave the current $1 million cap in place.
According to Bloomberg, the bills also differ on the tax rates they’d apply to multinational companies’ accumulated offshore earnings. The House bill would tax those profits at 14 percent for earnings held as cash and 7 percent for less-liquid assets. The revised Senate bill contains a lengthy section that has no direct mention of the rates, but a person familiar with the Senate plan said they’d be 14.5 percent for cash and 7.5 percent for less-liquid assets.
The Senate also approved a 23% tax deduction on business income earned from partnerships, limited liabilities and other so-called pass-through businesses. The House version would create a 25% tax rate for such business income, with restrictions on which businesses could qualify. Small businesses would get extra relief under the House legislation as well.
The House bill would also eliminate the estate tax, while the Senate version would limit the tax to fewer multimillion-dollar estates, but leave it in place. And after 2025, the limits would lift. Under current law, the estate tax applies a 40% levy to estates worth more than $5.49 million for individuals and $10.98 million for married couples. The Senate bill would temporarily double the exemption thresholds. The House bill would double the exemption thresholds, and then repeal the tax entirely in 2025.
As discussed previously, the House bill would consolidate the current seven individual tax brackets to four, leaving the top tax rate at 39.6%. The Senate bill would have seven brackets – with lower rates, and a top rate of 38.5 percent. As Bloomberg notes, “studies have shown that many of the tax bill’s benefits would go to the highest earners – and some middle-class taxpayers might actually pay more – a finding that could impact the House-Senate talks.”
Most importantly, perhaps, the Senate bill includes a repeal of Obamacare’s mandate that most Americans have health insurance or pay a penalty. The House bill does not.
Here is a side-by-side comparison of the two plans thanks to the WSJ:
Also while we have yet to get confirmation, below is a list of last minute changes and revisions that made it into the final bill per Reuters:
- PASS-THROUGHS: Senators Ron Johnson and Steve Daines announced their support for the tax bill after securing agreement on a bigger tax break for the owners of pass-through enterprises, including small businesses, S-corporations, partnerships and sole-proprietorships. An original 17.4 percent deduction would rise to 23 percent.
- FULL EXPENSING: Senator Jeff Flake, who was a holdout over deficit concerns, agreed to vote “yes” after Republican leaders agreed to change a provision allowing the full expensing of business capital investments to sunset after five years. Flake worried that Congress would be unable to eliminate the benefit cold turkey, allowing it to bleed red ink for years to come. But the Arizona Republican says the change would instead phase out full expensing over three years beginning in year six.
- RETIREMENT SAVINGS: Senator Susan Collins said she persuaded Republican leaders to retain catch-up contributions to retirement accounts for church, charity, school and public employees.
- MEDICAL EXPENSES: Collins also said she was able to include language to reduce the threshold for deducting unreimbursed medical expenses for two years to 7.5 percent of household income from 10 percent.
- STATE AND LOCAL PROPERTY TAXES: Collins has proposed an amendment that would retain a federal deduction for up to $10,000 in state and local property taxes.
- INDIVIDUAL ALTERNATIVE MINIMUM TAX: Rescinding a proposed repeal of the AMT and instead increase exemption levels and phase-out thresholds is also on the table.
- CORPORATE ALTERNATIVE MINIMUM TAX: So is rescinding a proposed repeal of the corporate AMT.
- REPATRIATION: Another change could be to increase tax rates on U.S. corporate profits held overseas to 14 percent for liquid assets and 7 percent for illiquid holdings, up from 10 percent and 5 percent, respectively
Attention now shifts to a House-Senate conference committee – a specially appointed, temporary panel that will be charged with hashing out the differences in the bills and preparing a final version for both chambers to consider. Party leaders will select a small group of lawmakers, likely from the House and Senate tax-writing panels in each chamber, who would then be approved by each chamber. That work could start as early as Monday, with many high-stakes issues to be worked through. The deadline of Dec. 31 is an artificial one, though – aimed partly at securing a victory well in advance of the 2018 congressional elections. Republicans would have until the end of 2018 before they lose their ability to clear final passage in the Senate without a filibuster.
end
Winners and losers on the USA tax reform bill:
(courtesy zerohedge)
Summers Warns “1000s Will Die” But Who Are The Real Winners & Losers From Trump’s Tax Reform?
While many in the ‘resistance‘ have vociferously denounced the Senate tax reform bill in the last 48 hours, former Treasury Secretary Larry Summers took the proverbial biscuit by warning that “thousands will die as a consequence of this new tax bill.”
The Congressional Budget Office estimated that the tax bill could reduce insurance coverage by 13m people, which to be conservative we can round down to 10m people.
Recognising all the uncertainties – for example, the fact that the group becoming uninsured as a result of the individual mandate repeal is likely to be healthier than the group Sommers et al (2014) study in Massachusetts – if we treat the 176-830 range as implying that it is safe to assume that 1,000 more uninsured means one death, the conclusion would follow that the tax bill will result in 10,000 extra deaths per year.
After serious backlash from his over the top comments, Summers took to CNBC to defend it:
“I think this bill is very dangerous,” he said on CNBC’s “Squawk Box” program.
“When people lose health insurance, they’re less likely to get preventive care, they’re more likely to defer health care they need, and ultimately they’re more likely to die.”
But was met with some skepticism. Summers debated the issue on air with Ken Langone, the Home Depot founder and benefactor of the NYU Langone Medical Center. Langone said he doubts that Summer’s fears will come to fruition, citing quality of care and increased life expectancy.
“Frankly, this argument that people are going to die is a little bit more emotional than I think the issue calls for,” Langone said.
https://player.cnbc.com/p/gZWlPC/cnbc_global?playertype=synd&byGuid=3000675967&size=530_298
So Summers’ (and Steyer’s) are convinced this is bill means armageddon for America, but Bloomberg’s Jonathan Levin , Andrew Pollack , and Drew Armstrong take a slightly less emotional and more analytic approach at who the real winners and losers may be from the GOP tax reform bill.
The tax bill passed by Republicans in the U.S. Senate over the weekend may boost profits for industries from banking to retail to fossil fuels. It also could put the squeeze on hospitals and renewable energy firms.
While the plan is still subject to revision, the centerpiece of the existing legislation is a reduction in the corporate income tax rate to 20 percent from the current 35 percent, along with a provision that allows some companies to bring back hundreds of billions of dollars in foreign profits at a lower rate than they otherwise would’ve paid.
The Senate bill preserves the alternative minimum tax for corporations after originally proposing to eliminate it. With the regular corporate rate now set to drop to 20 percent — the same as the corporate AMT — it’s unclear if companies would be able to use research and development credits to lower their tax bills.
The bill, which underwent a raft of last-minute changes late Friday and early Saturday before passage, may still see more alterations as Senate and House leaders begin work to reconcile their two versions. President Donald Trump also weighed in Saturday, unexpectedly saying the corporate tax rate in the package could reach 22 percent.
Here’s how sectors may fare under the legislation as it stands:
Asset Managers
Stocks of U.S.-based asset managers rose to a record last week on optimism about the tax overhaul. Among the top gainers were Federated Investors Inc., Bank of New York Mellon Corp., Franklin Resources Inc., Waddell & Reed Financial Inc. and Eaton Vance Corp.
That’s in part because asset managers typically pay tax rates of 30 percent to 35 percent, according to data compiled by Bloomberg. It’s higher than many other industries because the firms generally qualify for few deductions, Gabelli & Co.’s Macrae Sykes said last week.
Assets managers also benefit from rising equity markets, as higher prices increase the value of the holdings they manage and improve the performance of their funds.
Asset managers with foreign earnings could see particular benefits from the Senate bill, according to Rory Callagy, a senior vice president with Moody’s Investors Service.
As a group, they’d also gain from the bill’s tax cuts for individuals — as well as changes to the alternative minimum tax and restrictions on the estate tax. Those provisions would give individual investors “more of their income and inherited wealth” to put into mutual funds and exchange-traded funds, “helping managers grow assets and related fees,” Callagy wrote.
Banks
Lenders including JPMorgan Chase & Co. and Citigroup Inc. have rallied on news of the bills’ progress in Congress. “Banks would be one of the clearest beneficiaries of this tax reform bill,” Isaac Boltansky, an analyst at Compass Point Research & Trading in Washington, said in an email early Saturday after the Senate amended the bill.
If Republican promises of faster economic growth are realized, banks will benefit with corresponding loan portfolio expansion, Boltansky said. Moreover, as corporations that pay relatively high effective tax rates themselves — with fewer available deductions — banks also stand to benefit a great deal from the reduced overall rate.
Banks would pay slightly higher rates than other types of companies under a new tax on certain payments to overseas affiliates. However, they’d benefit from a last minute change to another aspect of the so-called base erosion anti-abuse tax, or BEAT, which stipulated that payments involving derivatives wouldn’t count toward triggering the levy.
Another provision would eliminate the deduction for Federal Deposit Insurance Corp. premiums by banks with consolidated assets above $10 billion.
Pharmaceuticals
Drug and biotechnology companies would be among those benefiting from paying a reduced tax rate on repatriated earnings.
The money isn’t likely to go to workers, though. Senior executives from Pfizer Inc. and Amgen Inc. have said they’ll use a lower tax rate and cash inflow to return money to shareholders through buybacks and dividends. The new tax regime could also set off a mergers-and-acquisitions boom, as flush war chests give large drugmakers the means to snap up assets they’ve had their eyes on.
Hospitals/Insurers
The Senate bill’s repeal of Obamacare’s individual mandate won’t help health insurers and hospitals, which are already working to cope with the Trump administration’s efforts to undermine the law. Ending the individual mandate — a requirement that all Americans carry health insurance coverage or pay a fine — is likely to raise the number of uninsured.
For health insurers, that means the only people who will buy coverage are those that need it most — typically sicker, more costly patients. In response, many have already started to raise the premiums they charge, or to pull back from some of the law’s markets.
Hospitals have less flexibility. Any increase in the uninsured means a decrease in the number of paying customers. Sick people still show up at the emergency room for care, though, and hospitals often have to write off their unpaid bills.
Private Equity
Because of their use of leverage to juice returns, private equity firms are primarily watching proposals to limit the amount of interest expense they can deduct from portfolio companies’ taxable income.
House Republicans’ bill would cap the deduction at 30 percent of a company’s earnings before interest, taxes, depreciation and amortization. The cap in the Senate bill is stingier at 30 percent of earnings before interest and taxes — a much lower measure than Ebitda. The firms can currently saddle their companies with debt and deduct the full interest cost.
Dealmakers are also watching a potential change in how their personal earnings are taxed. Currently, their cut of profits on private equity investments made using client capital is treated as a long-term capital gain — and taxed at a lower rate than ordinary income — if the investment is held for at least a year. Both the House and Senate bills would lengthen the one-year standard applied to such earnings, known as carried interest, to three years.
Real Estate
For commercial real estate developers and owners, the Senate version brings few significant changes. The biggest revision would create a new tax break for many — a 23 percent deduction on business income, subject to certain restrictions.
The deduction would be available to businesses organized as so-called pass-throughs — including partnerships, limited liability companies and S corporations. Pass-throughs don’t pay taxes themselves but pass income to their owners, who — under current law — pay taxes at their individual income-tax rates.
Many commercial real estate developers and owners have their businesses set up as such. The House would provide a pass-through tax rate via a different mechanism — the disparity will be one of the key differences that lawmakers will have to work out.
Technology
The technology industry also stands to benefit from the provision allowing cash stockpiled overseas to be returned home at a lower tax rate.
U.S. companies have $3.1 trillion in overseas earnings, according to a Goldman Sachs & Co. estimate. The largest stockpile belongs to Apple Inc. at $252.3 billion — 94 percent of its total cash. Microsoft Corp., Cisco Systems Inc., Alphabet Inc. and Oracle Corp. round out the top five, data compiled by Bloomberg show.
Dean Garfield, chief executive officer of the Information Technology Industry Council, which represents almost every major tech company, applauded Senate passage of the bill, saying it “moves us closer” to “a more competitive economy.’
Telecoms
Telecommunications companies, which need to regularly upgrade their networks, will bewinners if provisions that increase the deductibility of capital investments stay in the final versions of the bill. AT&T Inc. Chief Executive Officer Randall Stephenson said his company will invest $1 billion more in U.S. infrastructure in 2018 if Trump signs off on tax reform.
The reduction in corporate income tax combined with enhanced deductions for capital expenditures over the next five years will allow AT&T to invest more in fiber optic cable to U.S. homes and businesses, he said.
Industrials
Industrial firms are likely to see the overall package as a positive because of what it would mean for overseas earnings that they’ve left stockpiled offshore.
Both the Senate and House bills have provisions that encourage companies to repatriate past international profits at attractive tax rates. They would then be able to invest more in U.S. operations and pursue growth opportunities and acquisitions. Critics point out that when companies have been given incentives to repatriate earnings in the past, they used the bulk of them on returning cash to shareholders.
Fossil Fuels
Lowering the corporate tax rate and changes to cost-recovery provisions will help spur investment and create jobs, according to the American Petroleum Institute, the industry’s main lobbying group.
The Senate plan would also open a portion of Alaska’s Arctic National Wildlife Refuge to oil and natural gas drilling — a move that lawmakers estimate could yield $1 billion in revenue over the next decade. A final tax plan may also increase sales from the Strategic Petroleum Reserve to help boost short-term revenues.
Environmental groups have questioned the revenue figures and industry interest in drilling in ANWR. Moreover, not every fossil-fuel producer is pleased with the legislation. Robert Murray, CEO of coal company Murray Energy Corp. and a staunch supporter of the president, attacked the bill as a “mockery of tax reform” because it fails to repeal the corporate alternative minimum tax.
“This legislation is much worse than the status quo,” Murray said in a statement Saturday. “Our company will see a significant tax increase resulting primarily from the loss of the business interest expense deduction.”
Renewables
The proposed tax bill threatens a critical but esoteric source of wind and solar finance: tax equity. In tax-equity deals, renewable-energy developers sell portions of their projects’ tax credits to corporations — often banks and some insurance companies — that can apply the credits to their own tax bills. That market is expected to total $12 billion this year, according to Bloomberg New Energy Finance.
Most tax-equity investors are multinational companies and the issue now is that the Senate version includes a provision that imposes a minimum tax on these companies’ foreign transactions. If they have to pay a minimum tax, they may no longer have any need for the credits acquired through tax-equity deals.
“It literally will grind our industry to a halt,” said John Marciano, co-head of project finance at Akin Gump Strauss Hauer & Feld LLP. “Developers would be fighting for the few remaining investors.”
Retail
Retailers expect the tax overhaul to boost demand for their goods and services.Most chains rely on middle- and low-income shoppers for the bulk of their sales, and they say aspects of the legislation on the personal side — like doubling the standard deduction — will give such individuals more discretionary income.
The advantage would be temporary under the Senate bill; its individual tax cuts would expire in 2026.
After successfully lobbying to kill a House plan for a border-adjusted tax that would apply to imports, retailers have fully supported the overhaul. They tend to pay effective tax rates that are higher than industries with significant overseas operations, such as energy and pharmaceuticals, so almost any reduction in the corporate rate is seen by retailers as a boon.
Agriculture
Agricultural groups have been split about the legislation, with the National Farmers Union, the second-biggest such group in the U.S., opposing the Senate bill. While it includes provisions that farmers support, such as depreciation of equipment, some are worried it will eventually result in cuts to insurance and food programs that support the sector.
Deficit-boosting tax legislation may mean less money for other programs. A Congressional Budget Office report released last month concluded that tax legislation would trigger automatic spending cuts of as much as $136 billion in the current fiscal year.
There is certainly no collusion between Trump and his team with respect to the Russians trying to sway the election. This was nothing but a witch hunt
(courtesy zerohedge)
Trump On Flynn’s Plea: “I’m Not Worried At All; What Has Been Shown Is No Collusion”
After cancelling a press briefing Friday afternoon following Gen. Flynn’s decision to plead guilty to lying to the FBI during Special Counsel Robert Mueller’s probe into collusion between the Trump campaign and the Russians, President Trump has spoken out about the situation for the first time.
“No, I’m not” worried about what Michael Flynn will tell investigators Trump told reporters. “What has been shown is no collusion. There’s been absolutely no collusion so we’re very happy.”
Flynn has agreed to cooperate with Mueller’s investigation into Russian election hacking and alleged collusion between Trump campaign officials and Moscow, a probe which Trump has called a “witch hunt”.
“We’ll see what happens,” Trump told reporters of the investigation on Saturday.
On Friday, it was reported that Flynn was ready to testify against Trump, specifically regarding an incident in which Trump, as president-elect, instructed Flynn to contact the Russians. However, in a historic case of “broken telephone” and what many described as an “epic mistake”, ABC News issued a late Friday correction, technically a retraction, clarifying that Flynn is prepared to testify that Trump ordered him to make contact with the Russians during the transition – not during the campaign, as was previously reported. This is in no way a criminal act – instead, reaching out to foreign governments is standard practice during a transition.
Commenting on charges against Flynn, White House lawyer Ty Cobb said that the general’s guilty plea doesn’t implicate anyone else.
Following the plea, The Sydney Morning Herald reported that the results of the investigation – no matter how far it could go – will not trigger Trump’s impeachment, even as ABC News reported that Flynn is allegedly ready to testify that the US president “directed him to make a contact with the Russians,” with no official confirmation following.
end
Weekend tweet storm from Trump:
(courtesy zero hedge)
Trump Twitter Meltdown: President Goes To War With FBI, Urges Suing ABC For “Bad Reporting”
This weekend may set a new record for number of Trump tweets and retweets. Starting with his congratulations on the Senate’s passage of Tax Reform, Trump has interacted no less than 17 times with his social platform, although things seemed to accelerate following his Saturday noon tweet in which Trump responded to Flynn’s plea agreement in which the president said that “I had to fire General Flynn because he lied to the Vice President and the FBI. He has pled guilty to those lies. It is a shame because his actions during the transition were lawful. There was nothing to hide!”
The odd wording of that tweet – that he knew Flynn had lied to the FBI at the time of his firing – prompted many to speculate that it was prima facie admission of obstruction and interference – something Mueller is tasked with proving – and led to the unprecedented comment by Trump’s personal lawyer, John Dowd, who said he drafted the president’s Saturday morning. Dowd told ABC News he wrote those words and had done so in a “sloppy” manner. A second source familiar with the matter corroborated his account.
The reason for Dowd’s comment is that Trump’s tweet seemed to “add a potentially explosive new dimension” to the ongoing investigation, because as ABC notes, if what Trump, or his lawyer, said is true, why then would Trump ask the FBI director to go easy on Flynn, as former FBI Director James Comey later testified? The message set off renewed talk of potential evidence of obstruction of justice.
As ABC further adds this morning, Dowd’s acknowledgment of involvement in the tweet means it is not clear whether the president did in fact know Flynn had lied to the FBI at the time of firing him — though one source familiar with the president’s thinking said Trump did not know. Administration officials have declined to comment on that matter, as well.
The unusual clarification by Dowd –-revealing that someone other than Trump himself had authored a tweet from his official account – could also be an attempt to tamp down on potential legal exposure from the message.
The president did not respond to shouted questions Saturday evening about Flynn’s firing as he returned home from campaign fundraisers in New York City.
While we expect Trump’s Saturday tweet to once again shape the news cycle for the next several days, at least until the inevitable and “distracting” war with North Korea finally begins, even as the debate rages what tweets does Trump personally publish and which are drafted by his lawyers, in what appears to have been an attempt to distract from the “confession” fallout, Trump went on a veritable twitter rampage on Saturday night, which has since continued into Sunday morning.
Late on Saturday, Trump launched a new attack on Hillary and the Justice Department over Hillary’s mishandling of emails, writing, “So General Flynn lies to the FBI and his life is destroyed, while Crooked Hillary Clinton, on that now famous FBI holiday “interrogation” with no swearing in and no recording, lies many times…and nothing happens to her? Rigged system, or just a double standard?” He then continued: “Many people in our Country are asking what the “Justice” Department is going to do about the fact that totally Crooked Hillary, AFTER receiving a subpoena from the United States Congress, deleted and “acid washed” 33,000 Emails? No justice!”
He then proceeded with the previously discussed slam of ABC News’ Brian Ross, congratulating the network for “suspending Brian Ross for his horrendously inaccurate and dishonest report on the Russia, Russia, Russia Witch Hunt. More Networks and “papers” should do the same with their Fake News!”
And while that concluded the Saturday night tweetstorm, Trump was back this morning and angrier than ever, when he discovered the story about the “tainted” FBI agent, Peter Strzok, who as we reported yesterday, was said to have been “removed” from the Mueller probe (and who previously was tasked with investigating the Clinton email server), after anti-Trump text messages were discovered in his communications to a fellow FBI officer, with whom he had an extramarital affair.
Trump started by retweeting IBD’s Paul Sperry, who recapped the situation as follows:
BREAKING: top FBI investigator for Mueller–PETER STRZOK–busted sending political text messages bashing Trump & praising Hillary during the 2016 campaign. STRZOK actually LED the Hillary email probe & recommended clearing her; then was tapped to SUPERVISE the Trump Russia probe!
Wray needs to clean house. Now we know the politicization even worse than McCabe’s ties to McAuliffe/Clinton. It also infected his top investigator PETER STRZOK, who sent texts bashing Trump & praising Hillary during campaign. Strzok led Hillary probe & supervised Trump probe!
In response, Trump then lashed out at the FBI in general, and Comey in particular, with a barrage of of tweets, the most comprehensive of which was “Report: “ANTI-TRUMP FBI AGENT LED CLINTON EMAIL PROBE” Now it all starts to make sense!”
preceded by “Tainted (no, very dishonest?) FBI “agent’s role in Clinton probe under review.” Led Clinton Email probe. @foxandfriends Clinton money going to wife of another FBI agent in charge.”…
Ultimately, Trump slammed of both the agency and its former head “After years of Comey, with the phony and dishonest Clinton investigation (and more), running the FBI, its reputation is in Tatters – worst in History! But fear not, we will bring it back to greatness.”
And speaking of Comey, it was before 6 am when Trump, seeming concerned about the implications of the Dowd tweet snafu, tweeted “I never asked Comey to stop investigating Flynn. Just more Fake News covering another Comey lie!”
The BBC’s Paul Danager perhaps summarized the ongoing fracture in the realtionship between Trump and the FBI: “Not since Nixon has a US President been this at war with the FBI. It’s destructive for both arms of government.”
It still remains to be seen who will win this war.
Trump wasn’t done, however, and shortly after his last tweet on the FBI, he shifted attention to last week’s “Kate’s Law” ruling in San Francisco, tweeting “Such a total miscarriage of Justice in San Francisco!“…
… before reverting once again to the ABC reporting snafu, urging “People who lost money when the Stock Market went down 350 points based on the False and Dishonest reporting of Brian Ross of @ABC News (he has been suspended), should consider hiring a lawyer and suing ABC for the damages this bad reporting has caused – many millions of dollars!”
And since Gen. Kelly has clearly given up any hope of controlling Trump’s twitter account, we can only expect more, perhaps self-destructive, tweets to come out as Trump’s tweetstorm appears to be nowhere near over.
end
Nunes is preparing contempt charges against assistant AG Rod Rosenstein and FBI assistant director McCabe in the stonewalling in handing over documents to the committee and also their stonewalling over the removal of FBI lead investigator,Szozok, who was heavily biased for Hillary as he was investigating her in her email scandal.
this is becoming a huge deep swamp..
(courtesy zerohedge)
Republicans Prepare For War With FBI, DOJ: To File Contempt Action Over Anti-Trump Bias
Five weeks ago, House Speaker Paul Ryan accused the DOJ and FBI of “stonewalling” the House Intelligence Committee’s wide-ranging subpoena for all pertinent information about how the largely unsubstantiated “Trump dossier” played into the DOJ’s decision to launch the infamous Trump collusion investigation. At the time, the speaker said the agency was preparing to turn over the information requested by the committee, but despite his assurances, the promised documents never materialized.
Then yesterday, thanks to a series of coordinated media leaks, Nunes learned – at the same time as the broader public – about the reassignment of Peter Strzok, a senior Mueller aide who had played a critical role in the DOJ’s original collusion investigation. And before that, Strzok helped lead the FBI’s probe into Hillary Clinton’s mishandling of classified information.
As it turns out, the agent had been reassigned for expressing anti-Trump sentiments in a series of text messages to FBI attorney Lisa Page while the two were having an affair. The bureau, it appears, had willfully tried to conceal this fact from Nunes and his committee.
Upon being blindsided with this information and publicly embarassed, the Intel committee chairman was understandably less than pleased. So in a statement issued Sunday, Nunes announced a serious escalation: His committee, he said, is preparing to hold Andrew McCabe and assistant AG Rod Rosenstein in contempt for the DOJ’s failure to comply with Nunes’s subpoena.
Strzok was reassigned in July, shortly before Nunes issued the request for the bureau to turn over all documents relating to the Trump dossier. In a transparent attempt to save face, the bureau contacted Nnes shortly after the Strzok news broke on Saturday to say they were ready to comply with the subpoena. But Nunes rightly repudiated this offer, saying it was too little, too late. He laid out his argument for preparing the order of contempt in a statement released Sunday offering details of the committee’s unsuccessful push to convince the FBI to turn over the documents it had requested.
Here’s a timeline of Nunes’ contact with the Department of Justice courtesy of the Washington Examiner:
- On Oct. 11, Nunes met with deputy attorney general Rod Rosenstein. In that meeting, Nunes specifically discussed the committee’s request for information about Strzok.
- In an Oct. 31 committee staff meeting with the FBI, bureau officials refused a request for information about Strzok.
- On Nov. 20, the committee again requested an interview with Strzok. (Three days earlier, on November 17, Strzok met with the Senate Intelligence Committee.)
- On Nov. 29, Nunes again spoke to Rosenstein, and again discussed Strzok.
- On Dec. 1, the committee again requested to speak with Strzok.
Republicans, including President Trump, pointed to the news as evidence that the entire probe into Russian meddling had been politically motivated.
Unsurprisingly, both the FBI and House Democrats have been silent on the issue, according to Bloomberg:
A Justice Department spokesman, Sarah Isgur Flores, couldn’t be immediately reached for comment by telephone or text. There was no immediate response Sunday from a spokesman for the committee’s top Democrat, Representative Adam Schiff of California.
In his statement, included in full below, Nunes accused the FBI and the Department of Justice of willfully refusing to comply with an Aug. 24 committee subpoena in part by refusing the committee’s request “for an explanation of Peter Strzok’s dismissal from the Mueller probe.” Nunes is giving the FBI until end of business day tomorrow to fully comply with the committee’s requests, or face a contempt order before the end of the month.
Washington, D.C. – House Permanent Select Committee on Intelligence Chairman Devin Nunes issued the following statement today amid press reports that Peter Strzok, the top FBI official assigned to Special Counsel Robert Mueller’s probe of collusion between Russia and Trump officials, had been removed from the probe after exchanging anti-Trump and pro-Hillary Clinton text messages with his mistress, who was an FBI lawyer working for Deputy Director Andrew McCabe:
“The FBI and Department of Justice have failed to sufficiently cooperate with the Committee’s August 24 subpoena, and have specifically refused repeated demands from the House Intelligence Committee for an explanation of Pete Strzok’s dismissal from the Mueller probe. In light of today’s press reports, we now know why Strzok was dismissed, why the FBI and DOJ refused to provide us this explanation, and at least one reason why they previously refused to make Deputy Director McCabe available to the Committee for an interview.
“By hiding from Congress, and from the American people, documented political bias by a key FBI head investigator for both the Russia collusion probe and the Clinton email investigation, the FBI and DOJ engaged in a willful attempt to thwart Congress’ constitutional oversight responsibility. This is part of a months-long pattern by the DOJ and FBI of stonewalling and obstructing this Committee’s oversight work, particularly oversight of their use of the Steele dossier. At this point, these agencies should be investigating themselves.
“The DOJ has now expressed—on a Saturday, just hours after the press reports on Strzok’s dismissal appeared—a sudden willingness to comply with some of the Committee’s long-standing demands. This attempted 11th-hour accommodation is neither credible nor believable, and in fact is yet another example of the DOJ’s disingenuousness and obstruction.Therefore, I have instructed House Intelligence Committee staff to begin drawing up a contempt of Congress resolution for DOJ Deputy Attorney General Rod Rosenstein and FBI Director Christopher Wray. Unless all our outstanding demands are fully met by close of business on Monday, December 4, 2017, the committee will have the opportunity to move this resolution before the end of the month.”
In the statement, Nunes pointed to “a months-long pattern by the DOJ and FBI of stonewalling and obstructing this Committee’s oversight work,” including also withholding subpoenaed information about their use of an opposition research dossier that targeted Trump in the 2016 election.
In targeting McCabe and Rosenstein, Nunes explained that Attorney General Jeff Sessions was being excused from any contempt action by the committee because the AG had recused himself from the investigation into Russia meddling.
In addition to the threat of contempt, Strzok is also facing an internal review for his role in the investigation into Clinton’s handling of classified information on her private email server. It has already been revealed that then-FBI Director James Comey drafted his letter excusing Clinton before she had even been interviewed. The Office of the Inspector General probe into Strzok will examine his role in a number of “politically sensitive” cases this year, according to Fox News.
At the FBI, senior managers are facing a serious dilemma: It’s probable that the information pertaining to Strzok is only some of what the bureau has tried to keep from Nunes and the committee. Now, the FBI is facing a dilemma: Either rush to comply without having the time to screen all the documents that have been supplied to the committee, or continue to resist, and face a Congressional subpoeana. Either way, we’re certain this isn’t the last of the story.
end
Is Trump also preparing for an “obstruction of Justice charge” or a flimsy Logan act violation
(courtesy zerohedge)
Is President Trump’s Legal Team Preparing For An Imminent “Obstruction Of Justice” Charge?
President Trump set off a new wave of mainstream media outrage over the weekend when he publicly admitted that he was aware that Flynn had lied to the FBI and Vice President when he made the decision to fire him. Not surprisingly, the Left has used the admission to once again suggest that Trump obstructed justice by firing Comey for simply pursuing charges against someone who Trump himself already knew to be guilty.
Of course, we know from Comey’s own testimony that he was fired by Trump for repeatedly refusing to announce publicly that the President was not under investigation, a courtesy that he provided Hillary numerous times during the campaign.
Be that as it may, comments from Trump’s legal team this morning to Axios seem to imply that the White House may be preparing a preemptive defense for an obstruction of justice charge…
Why it matters: Trump’s legal team is clearly setting the stage to say the president cannot be charged with any of the core crimes discussed in the Russia probe: collusion and obstruction. Presumably, you wouldn’t preemptively make these arguments unless you felt there was a chance charges are coming.
The “President cannot obstruct justice because he is the chief law enforcement officer under [the Constitution’s Article II] and has every right to express his view of any case,” Dowd claims.
Dowd: “The tweet did not admit obstruction. That is an ignorant and arrogant assertion.”
…a defense which Harvard Law professor Alan Dershowitz has offered at least a hundred times over the past year with the latest coming this morning on Fox News.
“You cannot charge a president with obstruction of justice for exercising his constitutional power to fire Comey and his constitutional authority to tell the Justice Department who to investigate, who not to investigate. That’s what Thomas Jefferson did, that’s what Lincoln did, that’s what Roosevelt did. We have precedents that clearly establish that.”
Not surprisingly, other left-leaning lawyers (you know, because the application of law was always intended to be political) tend to disagree with Trump’s legal team and the famed Harvard law professor.
One top D.C. lawyer told me that obstruction is usually an ancillary charge rather than a principal one, such as aquid pro quo between the Trump campaign and Russians.
But Dems will fight the Dowd theory. Bob Bauer, an NYU law professor and former White House counsel to President Obama, told me: “It is certainly possible for a president to obstruct justice. The case for immunity has its adherents, but they based their position largely on the consideration that a president subject to prosecution would be unable to perform the duties of the office, a result that they see as constitutionally intolerable.”
Remember: The Articles of Impeachment against Nixon began by saying he “obstructed, and impeded the administration of justice.”
Of course, if the FBI truly is concerned about people in positions of power admitting to obstructing justice via twitter then perhaps they should take a look at James Comey’s latest tweets which could easily be interpreted as the former FBI director admitting some political bias and a personal vendetta against the current administration…
Schumer, Pelosi Will Meet With Trump To Negotiate Government Funding One Day Before Shutdown
After last week’s snub, when Nanci Pelosi and Chuck Schumer pulled out of a meeting scheduled with Trump when the president tweeted that he was sitting down with “Chuck and Nancy” but that he didn’t “see a deal”, it appears that there has been no bad blood between the president and the top Democrats, because on Monday afternoon Chuck and Nancy said they would head to the White House on Thursday for end-of-the-year negotiations and avoiding a government shutdown this week.
“We’re glad the White House has reached out and asked for a second meeting. We hope the President will go into this meeting with an open mind, rather than deciding that an agreement can’t be reached beforehand,” the two Democratic leaders said in a joint statement. They added that they “are hopeful the President will be open to an agreement to address the urgent needs of the American people and keep government open.”
In addition to the Democrats, top Republicans Mitch McConnell and Paul Ryan, who attended last week’s meeting with Trump alone, are expected to be at Thursday’s powwow.
The meeting is scheduled for one day before the Dec. 8 deadline to fund the government, which means that any potential complications could result in an abrupt – if temporary – government shutdown.
As reported previously, House GOP leadership is pushing forward with a plan to pass a two-week short-term spending bill as soon as Wednesday, the same as Senate GOP leadership which is also backing the two-week stopgap strategy.
Democrats have yet to take a position on passing a two-week “clean” continuing resolution. Since their votes will be needed to avoid a shutdown, Democrats will hold the leverage: in addition to a short-term deal, Schumer and Pelosi noted they also need to reach a budget agreement, as well as fund the Children’s Health Insurance Program (CHIP), pass more disaster relief aid and address a key Obama-era immigration program.
As part of their demands, the duo said that the funding deal must boost spending for military and domestic priorities equally, and also calls for bipartisan agreement on Dreamers along with border security measures.
This may be a problem, and another problem will the Freedom Caucus which as Politico’s Jake Sherman reports, is getting itchy and “holding meeting before votes tonight as they opposed to gop leadership govt funding strategy.”
(courtesy zerohedge)
US Factory Orders Slide In October
Following the dismally weak preliminary durable goods orders drop (-1.2% MoM) as aircraft orders tumbled, October Factory Orders declined but were better-than-expected (-0.1% vs -0.4% exp) after an upwardly revised September (up from +1.4% to +1.7% MoM).
Overall Durable Goods orders werre also revised higher from their preliminary prints. Most notably, core capital goods orders were revised from a 0.5% MoM slump to a 0.3% gain.
the real truth behind the tax reform bill. Generally only the wealthy people and wealth corporations will be the net benefit and their newfound gain will enable them to buy back more of their stock
(courtesy zerohedge)
Stockman: Debt, Taxes, Growth, And The GOP Con Job
Authored by David Stockman via Contra Corner blog,
During more than four decades in Washington and on Wall Street it is quite possible that we never picked up any useful skills. But along the way we did unavoidably acquire what amounts to a survival tool in those fair precincts – namely, a nose for the con job.
And what a doozy we have going now as a desperate mob of Capitol Hill Republicans attempts to enact something—anything— that can be vaguely labeled tax reform/tax cut. And for a reason that lies only slightly below the surface.
In a word, they are scared to death that the political train wreck in the Oval Office will put them out of business for years to come. So they are attempting to erect a shield of legislative accomplishment that can be sold in 2018 as the work of the GOP Congress, not the unhinged tweet-storm in the White House.
To be sure, some element of political calculus always lies behind legislation. For instance, the Dems didn’t pass the Wagner Act in 1935, the Voting Rights Act of 1965 or the Affordable Care Act of 2010 as an exercise in pure civic virtue—-these measures targeted huge constituencies with tens of millions of votes at stake.
Still, threadbare theories and untoward effects are just that; they can’t be redeemed by the risible claim that this legislative Rube Goldberg Contraption is being jammed through sight unseen (in ACA redux fashion) for the benefit of the rank and file Republican voters—and most especially not for the dispossessed independents and Dems of Flyover America who voted for Trump out of protest against the failing status quo.
To the contrary. The GOP tax bill is of the lobbies, by the PACs and for the money. Period.
There is no higher purpose or even nugget of conservative economic principle to it. The battle cry of “pro-growth tax cuts” is just a warmed over 35 year-old mantra from the Reagan era that does not remotely reflect the actual content of the bill or disguise what it really is: Namely, a cowardly infliction of more than $2 trillion of debt on future American taxpayers in order to fund tax relief today for the GOP’s K-Street and Wall Street paymasters.
On a net basis, in fact, fully 97% of the $1.412 trillion revenue loss in the Senate Committee bill over the next decade is attributable to the $1.369 trillion cost of cutting the corporate rate from 35% to 20% (and repeal of the related AMT). All the rest of the massive bill is just a monumental zero-sum pot stirring operation.
For instance, the new $2000 child credit will cost $584 billion over the decade (nearly $700 billion with the Rubio amendment to give rebates to taxpayers who don’t owe anything!).
But that is offset by the $1.22 trillion gain from repealing the current $4,050 personal exemption; the $134 billion gain from short-sheeting the indexing mechanism that protects taxpayers from inflationary bracket creep; and the $978 billion gain from eliminating the SALT (state and local taxes) deduction along with some other minor loopholes such as interest on home equity lines, non-disaster casualty losses and tax preparation expenses.
Then again, going in the other direction the bill will cost $737 billion owing to doubling the standard deduction to $24,000 per household and will further deplete Uncle Sam’s revenue collections by $1.17 trillion via rejiggering the current seven rate brackets.
But when all the zigging and zagging is done on the personal income tax side, what you get over 2018-2027 is a $1.20 trillion net reduction in personal income taxes.
But $83 billion of that goes to the estates of 5,500 dead people per year owing to doubling the estate deduction to $20 million per couple; and another $769 billion goes to about 5 million wealthy taxpayers (3.5% of filers) who are assessed the Alternative Minimum Tax (AMT) .
The latter is designed to catch taxpayers with unusually heavy use of tax deductions, exemptions and deferrals such as depreciation on personal property and real estate.
In the one year for which the Donald’s tax returns that have been leaked, for example, he paid $38 million in Federal income tax. But $31 million of that was snagged by the AMT owing to his obvious heavy use of deductions for depreciation and local taxes on property and real estate income.
We happen to agree that the AMT is a tax code monstrosity that should be repealed forthwith—having been afflicted by it ourselves. But we are also quite certain that it has nothing to do with supply-side incentives and economic growth and jobs.
No one who pays the AMT is going to work any harder or invest any more capital on account of its long overdue repeal. In fact, they actually will hire fewer people and pay lower wages and salaries—-that is, AMT payers will fire the legions of tax attorneys, accountants and consultants they employ to cope with it.
So aside from dead people and rich people, what you have left is a tiny$352 billion tax cut for the balance of 145 million tax filers over the entire next decade.
That computes to just 1.7% of CBO’s baseline revenue estimate of $21.1 trillion for the individual income tax (excluding AMT) collections over 2018-2027; and even that is written in disappearing ink, as the entire individual income tax section of the bill sunsets after 2025—save for the $32 billion per year tax increase owing to short-sheeting the inflation index.
But as they say on late night TV: Wait—there’s more!
To wit, fully 102% of this tiny $352 billion cut (i.e. more than all of it) is accounted for by the Senate’s small business “pass-thru” provisions, which allows 17% of eligible business income to be deducted at a cost of $362 billion over the period.
Again, we have no objection to cutting taxes on the unincorporated small businesses and entrepreneurs who create most of the nation’s new jobs. The fact remains, however, that the overwhelming share of the benefit from this provision will not go to the enterprising homemaker who hit the jackpot selling especially tasty cupcakes over the internet—nor any of the other earnest small business people being featured in the K-Street ads pumping the bill on TV.
In fact, more than half of “pass thru” business income is earned by the top 1%. And given that they would ordinarily be in the Senate bill’s new 38.5% bracket, they will get upwards of 80% of the estimated $362 billion of tax savings from this new deduction.
So there you have it. When you peel the onion back just a few layers on the individual side what you get is a giant pool of approximately 145 million taxpayers (excluding the top 1% and AMT payers) who in the aggregate will get tax relief of zip, zero, nichts and nada, too!
To be sure, there will be a lot of random careening shots within the total pool of individual income taxpayers. The Tax Policy Center’s distributional analysis, for instance, shows that in 2025 (the year before sunset), taxpayers in the middle quintile (incomes of $53,000 to $92,000) will get an average “cut” totaling the grand sum of $16.92 per week—-or enough to go to Starbucks every other day for a cappuccino and banana.
But inside that pool of about 30 million tax filers, 85% will actually get a cut of $24 per week, while the other 15% will experience a tax increase of $23 per week. Still, for the pool as a whole—-which is the heart of the middle class—-the total cut will amount to a mere 1.2% gain in after-tax income.
Technically, you might call that a “tax cut” because it does involve a tiny minus sign. But it is also undoubtedly the smallest, not the biggest, individual tax cut in history; and given the facts essayed above, it will not move the needle one single bit when it comes to the issue of growth, jobs and revenue reflows.
Stated differently, save for the business income tax cuts for corporate and pass-thru entities the Senate bill’s Laffer Curve is as flat as the restaurant table it was purportedly drawn on: You positively do not get an incentive effect from NOT cutting taxes!
So that gets us to the bill’s $1.7 trillion of business rate cuts—of which nearly 80% is due to cutting the corporate rate to 20%.
On the tax policy point, we wish to be very clear. The corporate income tax is a dysfunctional, obsolete relic that generates comparative meager Federal revenues ($324 billion or 9% of the $3.69 trillion revenue base in 2018)—-even as it fosters monumental and costly tax avoidance shenanigans in corporate America and heavy, costly but futile enforcement efforts at the IRS.
So call it a $3.9 trillion tax policy blight and nuisance over the next decade that should indeed be fixed. But a nation heading into a demographic twilight era with $31 trillion of public debt already built in by 2027, and saddled with a sputtering economy to boot, cannot prudently fix a nuisance by massive borrowing to get rid of it.
The right thing to do would be to cut Uncle Sam’s $53 trillion spending baseline over the next decade by the 7.5% that would be need to offset the revenue loss from repealing the corporate income tax; or better still, replacing it with a VAT or other consumption tax—- since trillions of spending cuts will be needed anyway to prevent the structural deficit from exploding later in the next decade.
In short, eliminating some or all of the corporate income tax with a “payfor” w0uld be a constructive endeavor. But borrowing $1.37 trillionto cut the rate to 20% under the nation’s current dire fiscal circumstances is an act of sheer madness; and to pretend that it will pay for itself in whole or part is one of the greatest con jobs every perpetrated in the Imperial City.
The fact is, in today’s central bank falsified financial system, corporate executives and other decision makers do not operate on anything which resembles the Laffer Curve, wherein a lower rate of tax ostensibly incentivizes a higher rate of output and the revenue flow-back therefrom.
The overwhelming reason for that proposition is that the central banks have made debt and equity capital dirt cheap and almost infinitely abundant. For instance, the average after-tax cost of debt capital carried by the big US corporations today is 2% or even less, and the earnings yield on equity capital for the S&P 500 is hardly 4%.
In all of modern history, there has never been lower return on capital barriers to business investment and output expansion.
Indeed, if the corporate income tax were responsible for recent tepid economic growth, as GOP politicians loudly declaim, then the chart below couldn’t exist. The path of the red line (3-year rolling GDP growth) and the blue line (effective corporate tax rate) are plain and simply a smoking gun.
In a word, the effective corporate tax rate, which is what companies actually pay after all of their tax planning and avoidance maneuvers, has dropped from 50% during the Korean War era to hardly 22% today; and aside from recession caused fluctuations, the trend (dotted blue line) has been steady downward for more than a half century.
And so has the dotted red line—-the trend rate of GDP growth. And that parallel path is fundamental to the GOP tax con job.
If there is no evidence that the corporate tax has accounted for the sinking trend of economic growth—especially since the late 1980s—-then it cannot logically be expected that a reduction of the statutory rate will generate the opposite; and as we show tommorrow, it would take a tsunami of extra growth to pay for the corporate rate reduction.
That’s especially the case because all of the propaganda in favor of the big corporate tax cut is essentially a Keynesian argument based on enhanced after-tax cash flow to corporate treasuries, not the marginal rate incentive effect from supply side theory.
For instance, IBM most recently reported an effective tax rate of 11%, which is a far cry from the statutory rate. We have no idea what it would do with its winnings from the Senate bill, if any (we suspect it would buyback more stock on top of the $100 billion it has purchased in the last decade).
But clearly its calculus would start from 11%, not 35%. Not a single decision-maker in Armonk has thought about the statutory tax rate for decades, let alone made an investment decision based upon it.
The problem on that score is that as the GOP tax writers struggled with a limited $1.5 trillion deficit envelope they perforce needed to broaden the business tax base in order to reduce the net cost of the rate cuts.
On the pass-thru side, for example, the Senate bill effectively lowers the rate on qualifying business income to 31% via the 17% deduction. But the $362 billion cost is partially offset by a $137 billion 10-year increase in revenue due to a new provision that would drastically curtail the ability of essentially the same taxpayers to deduct active losses in excess of $500,000.
So the net tax cut on pass-thru businesses is actually just $225 billion.
Likewise, the corporate rate cut costing $1.36 trillion is offset by base broadeners and loophole closers totaling $690 billion over the period. Foremost among these is a limit on interest deductions to 30% of adjusted taxable income, which alone is estimated to raise $308 billionover 10-years.
So on an after-tax cash flow basis, the viewpoint of advocates, the net tax cut on corporate income would amount to $682 billion or just half of the pure rate cut (and AMT) provisions in the Senate Committee bill. And for all US businesses— including pass-thrus—-the net tax savings over the decade is $907 billion.
To be sure, we don’t think that’s chopped liver, but it’s actually a big number that must be compared to a far bigger one. To wit, the CBO baseline for total domestic business pretax profits (corporate and pass-thru) is $18.2 trillion over the period.
Accordingly, the net gain in after tax cash flow embedded in the Senate bill amounts to just 5% of profits. Even if American businesses were starved for capital—-which is hardly the case—such a modest release of pre-tax earnings is hardly going to incite a tsunami of investment, output, jobs, wages and tax revenues.
In fact, however, we think the overwhelming share of this 5% gain in after-tax cash flow will go to owners and shareholders in the form of dividends, stock buybacks and other forms of capital return, including LBOs.
There is absolutely nothing wrong, of course, with business owners and equity investors getting bigger returns and more money in their bank accounts. That is, so long as Uncle Sam doesn’t borrow the money to make it happen—-exactly as does the Senate tax bill.
In this context, we offer two charts which we think nail the case that nearly all of the net $900 billion of business cuts will end up flowing to the top 1% and 10% who own most of the business equity in the US.
On the one hand, US business has been borrowing in the bond markets like there is no tomorrow. It appears that total corporate issuance this year will hit nearly $1.8 trillion, which is triple the turn of the century level, and nearly 165% of the pre-crisis borrowing peak in 2007.
There flat-out is no scarcity of capital or economic barrier to corporate investment in the US.
At the same time, net investment in real plant, equipment and technology is still 35% lower than it was at the turn of the century. Funding has exploded, but investment in real productive assets—after allowing for current year depreciation on the existing stock— has effectively imploded.
There is no mystery, however, as to where all the borrowed cash went—to say nothing of the trillions of internally generated business cash flow. To wit, it went into $15 trillion of financial engineering—stock buybacks, M&A deals, unearned dividends and LBOs—-over the last decade.
We have demonstrated ad nauseum that the Fed’s Bubble Finance regime has turned the C-suites of corporate America into financial engineering joints and stock market speculation arenas. The data for stock buybacks alone is dispositive.
Recall that in honest free market capitalism the purpose of equity markets first and foremost is to raise new capital; and the purpose of trading on the secondary market is to create liquidity for existing stocks and to provide a forum for honest price discovery.
The chart below belies that presumption completely. Wall Street runs a continuous movable feast of equity liquidation, not new capital raising.
US corporations have been incentivized by essentially one-way, central bank supported casinos— which masquerade as stock markets—-to convert their cash flows and balance sheets into massive stock purchases.
Give US companies an additional $900 billion over the next decade and the main result will simply be even longer blue bars in the chart above.
Nevertheless, tax bill advocates keep arguing that notwithstanding the overwhelming evidence above, that US business would invest more at home if the business income tax rate were lowered relative to those abroad. That is to say, capital has never been cheaper at home, but purportedly it is even cheaper on an after-tax basis abroad.
That’s exactly what 100 prominent conservative economists recently argued in the flowing missive:
In today’s globalized economy, capital is mobile in its pursuit of lower tax jurisdictions. Yet, in that worldwide race for job-creating investment, America is not economically competitive. Here’s why: Left virtually untouched for the last 31 years, our chart-topping corporate tax rate is the highest in the industrialized world and a full fifteen percentage points above the OECD average. As a result of forfeiting our competitive edge, we forfeited 4,700 companies from 2004 to 2016 to cheaper shores abroad. As a result of sitting idly by while the rest of the world took steps to lower their corporate rates, we lowered our own workers’ wages by thousands of dollars a year.
We will complete our debunking of the GOP tax con tomorrow, but for the moment consider the case of the world’s single greatest company—-Apple Inc. It starkly illustrates why the above claim that 4,700 companies have moved production abroad owing to high tax rates is just plain nonsense.
For purposes of simplification, Apple has a product sourcing department and a tax planning department. The former has moved production and jobs abroad for economic reasons that will not change owing to the GOP tax bill; and the latter department has moved the company’s tax books to low rate havens in Ireland and elsewhere for, well, tax avoidance reasons.
Since Apple’s effective tax rate owing to the aggressive and creative work of its tax planning department is already about 20%, the new GOP tax regime will have little effect except to extract a one-time 5% levy from the $185 billion of notional cash that Apple has stashed in off-shore tax books (actually most of the actual cash is in New York and other US based banks). The whole thing is a pure paper chase.
On the other hand, Apple’s sourcing department contracted-out virtually all of its massive gadget production to Foxconn, which produces exclusively in China and employs upwards of 1.1 million workers. And the reason for that is labor rates which are perhaps 10%of the fully loaded cost (including payroll taxes and fringe benefits) of producing iPhones and iPads in California, Arizona or Wisconsin.
Needless to say, the Senate will not change this massive labor cost gap, either. Apple will only bring jobs back to the US if some state government is foolish enough to pay them a giant subsidy to close the gap.
In short, US companies have off-shored their tax books because they can. Thanks to favorable tax rulings over the years this has been made all the easier by blatant but legal sheltering devices—-such as having an Irish subsidiary own the technology patents and charge the US tax entity a stiff royalty for using them.
But as we will show tomorrow, Apple is no outlier. The overwhelming share of production and jobs which have been off-shored—such as IBM’s 130,000 workers in India—have happened for economic reasons which far outweigh any impact of the statutory tax rate.
At the end of the day, the GOP tax bill boils down to borrowing more than $1 trillion from the American public in order to pay higher dividends to wealthy private stockholders.
And that’s a real con job.
US Demand for Electricity Falls Further: What Does it Mean?
Layoffs at GE Power, for example.
by Wolf Richter •
The weekend started Friday night with layoff news from GE’s power division, in two locations.
First, there was Greenville County, South Carolina, where GE Power is one of the largest employers with 3,400 workers.
“Based on the current challenges in the power industry and a significant decline in orders, GE Power continues to transform our new, combined business to better meet the needs of our customers,” GE’s statement said in flawless corporate speak: “As we have said, we are working to reduce costs and simplify our structure to better align our product solutions, and these steps will include layoffs.”
GE Power has not disclosed the number of workers that are part of this layoff. The facilities make large gas turbines and turbine generator sets used by power plants. The plant also makes wind turbines.
Then there was GE Power’s facility in Schenectady, New York, which announced the layoff of an undisclosed number of employees, blaming “a significant decline in orders.”
GE Power has a problem: Electricity consumption in the US peaked in 2007 and has declined since, despite population growth of about 24 million people over the 10 years and despite economic growth.
The chart below, based on data from the Department of Energy’s EIA, shows annual electricity generation from 2001 through 2016. Note the growth in generation through 2007, the plunge during the Financial Crisis, the recovery, and the uneven decline since:
This trend continues in 2017. On Friday, the EIA released its Electric Power Monthly, with power generation data through September 2017. Over these nine months, electricity generation has fallen by 2.6% compared to the same period a year ago. Part of the year-over-year drop in August and September was due to the damaged electric grid in the areas affected by Hurricanes Harvey and Irma.
There are a number of reasons for the decline in demand for electricity, including more efficient heating and air conditioning systems, more efficient residential and commercial buildings, the switch to more efficient lights such as LEDs, the offshoring of power-intensive industries that started decades ago, the rise of rooftop solar, etc.
So the pie is shrinking for utilities. There is now no longer any doubt. But there is another interesting aspect to this phenomenon: How that shrinking pie is getting divvied up among the various sectors of electricity generation.
The most glaring aspect is the battle between natural gas and coal. And coal has been losing this battle for a decade for two reasons:
One, technical innovation. The Combined-Cycle Gas Turbine (CCGT) arrived in the 1990s. GE Power – yes, the one mentioned above – has been on the forefront with this technology. The gas turbine operates like a jet engine but drives a generator instead of fan blades. The hot exhaust gases then create high-pressure steam to drive a steam turbine connected to another generator. Thermal efficiencies reach 62% and beyond. Coal-fired power plants only use steam turbines, and thermal efficiencies average 33% globally.
Two, fracking. Starting in 2009, the surge in natural gas production from fracking created what people have called a “glut” in the US. The price collapsed to ludicrously low levels and has remained low, sending some natural gas drillers into bankruptcy.
Over the years, that combination — a highly efficient generating technology and the ludicrously low price of natural gas — has dethroned “King Coal,” cutting its share of power generation from 53% in 2000 to 30% in 2016, and sent a number of coal miners into bankruptcy.
The other winners beyond natural gas are wind and utility-scale solar. In 2000, they generated a minuscule amount of electricity. By 2016, they produced 6.5% more power than hydro.
This chart shows the major sectors of the power-generation portfolio of the US in gigawatt hours generated annually: note the dynamic between coal (black line) and natural gas (red line). While nuclear (yellow line) and hydro (blue line) have remained relatively stable, wind and solar combined (green line) have surged:
Regardless of how the pie is getting divvied up, the utilities have a problem: They’re operating in an industry with long-term declining demand. And these are the good times. In the second and third quarter, the economy grew by 3.0% and 3.3% annualized. Yet power generation fell in both quarters. And the utilities know what happens to demand for electricity when the business cycle turns.
This explains why utilities are so gung-ho about electric vehicles. They represent potential new demand for electricity that could pull power generators out of their quagmire. If utilities see that demand might be increasing enough to justify adding significant generating capacity to their systems, it could even spur new orders for GE Power and other equipment manufacturers. But getting to that level of critical mass in EVs is years down the road. For now, the quagmire of declining electricity demand remains.
Well that about does it for today
…
I will see you TUESDAY night
HARVEY
Thanks, for your website.
Would you know of any link to refer for a calendar similar to:
http://www.cmegroup.com/trading/metals/precious/gold_product_calendar_futures.html
for OTC and LBMA futures/options dates (times of day?)?
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SO what happens to the EFPès or will another shcme be born
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