Jan 12/Gold breaks out as bankers engage in both gold/silver short covering; gold rises $11.65 to $1334.45/silver advances 20 cents up to $17.15/at the comex we experienced a huge 11,170 gold EFP transfers to London/silver comex experienced 1,316 EFP transfer contracts to London/In the uSA a big miss in retail sales/More swamp stories for today/

 

 

GOLD: $1334.45 UP $11.65

Silver: $17.15 UP 20 cents

Closing access prices:

Gold $1338.85

silver: $17.26

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: $1333.53 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME: $1326.50

PREMIUM FIRST FIX: $7.03

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SECOND SHANGHAI GOLD FIX: $1340.21

NY GOLD PRICE AT THE EXACT SAME TIME: $1329.00

Premium of Shanghai 2nd fix/NY:$11.21

SHANGHAI REJECTS NY /LONDON PRICING OF GOLD

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LONDON FIRST GOLD FIX: 5:30 am est $1332.90

NY PRICING AT THE EXACT SAME TIME: $1331.10

LONDON SECOND GOLD FIX 10 AM: $1326.80

NY PRICING AT THE EXACT SAME TIME. $1327.00

For comex gold:

JANUARY/

NUMBER OF NOTICES FILED TODAY FOR JANUARY CONTRACT: 181 NOTICE(S) FOR 18100 OZ.

TOTAL NOTICES SO FAR: 437 FOR 43700 OZ (1.3592 TONNES),

For silver:

jANUARY

5 NOTICE(S) FILED TODAY FOR

25,000 OZ/

Total number of notices filed so far this month: 537 for 2,685,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Bitcoin: BID $14,021/OFFER $14,141 UP $807 (morning)

 Bitcoin: BID   13,837/OFFER  $13,957 UP  $624(CLOSING)

end

Let us have a look at the data for today

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In silver, the total open interest FELL BY A TINY 216 contracts from 196,660 FALLING TO 196,444 WITH YESTERDAY’S  6 CENT FALL IN SILVER PRICING.  WE HAD MINIMAL COMEX LIQUIDATION BUT WITHOUT A DOUBT WE WITNESSED ANOTHER FAILED MAJOR BANK SHORT- COVERING OPERATION. NOT ONLY THAT , WE WERE AGAIN NOTIFIED THAT WE HAD ANOTHER GOOD SIZED NUMBER OF COMEX LONGS TRANSFERRING THEIR CONTRACTS TO LONDON THROUGH THE EFP ROUTE: A GOOD 1034 EFP’S FOR MARCH (BUTALSO STRANGELY 282 EFP CONTRACTS FOR THE FRONT FEBRUARY MONTH)  AND THUS TOTAL ISSUANCE OF 1316 CONTRACTS. HOWEVER THE MOVEMENT ACROSS TO LONDON IS NOT AS SEVERE AS IN GOLD AS THERE SEEMS TO BE A MAJOR PLAYER TAKING ON THE BANKS AT THE COMEX. STILL, WITH THE TRANSFER OF 1316 CONTRACTS, 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. YESTERDAY WITNESSED  EFP’S FOR SILVER ISSUED. ALSO KEEP IN MIND THAT THERE CAN BE A DELAY OF 24 HRS IN THE ISSUING OF EFP’S. I BELIEVE THAT WE MUST HAVE HAD SOME MAJOR BANKER SHORT COVERING AGAIN TODAY.

ACCUMULATION FOR EFP’S/SILVER/ STARTING FROM FIRST DAY NOTICE/FOR MONTH OF JANUARY:

23,761 CONTRACTS (FOR 10 TRADING DAYS TOTAL 23,761 CONTRACTS OR 118.805 MILLION OZ: AVERAGE PER DAY: 2376 CONTRACTS OR 11.880 MILLION OZ/DAY)

 

TO GIVE YOU AN IDEA AS TO THE HUGE SUPPLY THIS MONTH IN SILVER:  SO FAR  118.805 MILLION PAPER OZ HAVE MORPHED OVER TO LONDON. THIS REPRESENTS AROUND 16.8% OF ANNUAL GLOBAL PRODUCTION SO FAR THIS MONTH.

RESULT: A TINY SIZED LOSS IN OI COMEX WITH THE TINY 6 CENT FALL IN SILVER PRICE WHICH USUALLY INDICATES ANOTHER FAILED BANKER SHORT-COVERING. WE ALSO HAD A FAIR SIZED EFP ISSUANCE OF 1316 CONTRACTS WHICH EXITED OUT OF THE SILVER COMEX AND TRANSFERRED THEIR OI TO LONDON AS FORWARDS.  FROM THE CME DATA 1316 EFP’S WERE ISSUED FOR TODAY (FOR MARCH EFP’S, THEY ISSUED 1034 CONTRACTS AND A STRANGE 282 EFP CONTRACTS FOR THE FRONT  FEB CONTRACT MONTH) FOR A DELIVERABLE FORWARD CONTRACT OVER IN LONDON WITH A FIAT BONUS. WE REALLY GAINED 1100 OI CONTRACTS i.e. 1316 open interest contracts headed for London (EFP’s) TOGETHER WITH A DECREASE OF 216  OI COMEX CONTRACTS. AND ALL OF THIS HAPPENED WITH THE TINY FALL IN PRICE OF SILVER OF 6 CENTS AND A CLOSING PRICE OF $16.95 WITH RESPECT TO YESTERDAY’S TRADING. YET WE STILL HAVE A GOOD AMOUNT OF SILVER STANDING AT THE COMEX.

In ounces AT THE COMEX, the OI is still represented by just UNDER 1 BILLION oz i.e. 0.9820 BILLION TO BE EXACT or 140% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT JANUARY MONTH/ THEY FILED: 5 NOTICE(S) FOR 25000 OZ OF SILVER

In gold, the open interest FELL BY 3379 CONTRACTS DOWN TO 564,056 DESPITE THE  RISE IN PRICE OF GOLD WITH YESTERDAY’S TRADING ($4.15). IT LOOKS LIKE OUR BANKERS STARTED TO COVER THEIR GOLD SHORTS IN A SIMILAR FASHION TO WHAT WE ARE WITNESSING IN SILVER. IN ANOTHER HUGE DEVELOPMENT, WE RECEIVED THE TOTAL NUMBER OF GOLD EFP’S ISSUED YESTERDAY FOR TODAY AND IT TOTALED A GOOD SIZED  11,170 CONTRACTS OF WHICH THE MONTH OF FEBRUARY SAW 8533 CONTRACTS , APRIL SAW THE ISSUANCE OF 2537 CONTRACTS WITH DECEMBER ADDING ANOTHER 100 CONTRACTS.  The new OI for the gold complex rests at 565,497. DEMAND FOR GOLD INTENSIFIES GREATLY AS WE CONTINUE TO WITNESS A HUGE NUMBER OF EFP TRANSFERS TOGETHER WITH THE MASSIVE INCREASE IN GOLD COMEX OI  TOGETHER WITH  THE TOTAL AMOUNT OF GOLD OUNCES STANDING FOR JANUARY. 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 (BIG RISE IN BOTH GOFO AND SIFO) AND WE ARE WITNESSING DELAYS IN ACTUAL DELIVERIES. IN ESSENCE WE HAVE ANOTHER GOOD GAIN OF 7791 OI CONTRACTS: 3379 OI CONTRACTS DECREASED AT THE COMEX AND A GOOD SIZED 11,170 OI CONTRACTS WHICH NAVIGATED OVER TO LONDON.

YESTERDAY, WE HAD 7571 EFP’S ISSUED.

ACCUMULATION OF EFP’S/ GOLD(EXCHANGE FOR PHYSICAL) FOR THE MONTH OF JANUARY STARTING WITH FIRST DAY NOTICE: 91,602 CONTRACTS OR 9.1602 MILLION OZ OR 284.91 TONNES (10 TRADING DAYS AND THUS AVERAGING: 9,160 EFP CONTRACTS PER TRADING DAY OR 916,020 OZ/DAY)

TO GIVE YOU AN IDEA AS TO THE HUGE SIZE OF THESE EFP TRANSFERS :   SO FAR THIS MONTH IN 10 TRADING DAYS: IN  TONNES: 284 TONNES

TOTAL ANNUAL GOLD PRODUCTION, 2017, THROUGHOUT THE WORLD EX CHINA EX RUSSIA: 2200 TONNES

THUS EFP TRANSFERS REPRESENTS 284/2200 TONNES =  12.90% OF GLOBAL ANNUAL PRODUCTION SO FAR IN JANUARY ALONE.

 

 

 

Result: A CONSIDERABLE SIZED DECREASE IN OI AT THE COMEX DESPITE THE  RISE IN PRICE IN GOLD TRADING ON YESTERDAY ($4.15). WE HAD ANOTHER FAIR SIZED NUMBER OF COMEX LONG TRANSFERRING TO LONDON THROUGH THE EFP ROUTE: 11,170. THERE OBVIOUSLY DOES NOT SEEM TO BE MUCH PHYSICAL GOLD AT THE COMEX AND YET WE ALSO OBSERVED A HUGE DELIVERY MONTH FOR THE 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 11,170 EFP CONTRACTS ISSUED, WE HAD A NET GAIN IN OPEN INTEREST OF 7,791 contracts:

11140 CONTRACTS MOVE TO LONDON AND  3379 CONTRACTS DECREASED AT THE COMEX. (in tonnes, the gain in total oi equates to 24.23 TONNES)

we had: 181 notice(s) filed upon for 18100 oz of gold.

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

GLD

With gold up again today, we had no changes in inventory from the GLD:

Inventory rests tonight: 828.96 tonnes.

SLV/ 

NO CHANGES IN SILVER INVENTORY AT THE SLV/

INVENTORY RESTS AT 316.348 MILLION OZ/

end

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

1. Today, we had the open interest in silver FELL BY A TINY 216 contracts from 196,660 DOWN TO 196,444 (AND now A LITTLE FURTHER FROM THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) DESPITE  THE FALL IN PRICE OF SILVER TO THE TUNE OF CENTS WITH  YESTERDAY’S TRADING.  WE HAD WITHOUT A DOUBT ANOTHER FAILED  SHORT COVERING FROM OUR BANKERS AS THEY HAVE CAPITULATED.HOWEVER THIS TIME THEY WERE JOINED BY GOLD. NOT ONLY THAT BUT OUR BANKERS USED THEIR EMERGENCY PROCEDURE TO ISSUE ANOTHER 834 PRIVATE EFP’S FOR MARCH (WE DO NOT GET A LOOK AT THESE CONTRACTS AS IT IS PRIVATE BUT THE CFTC DOES AUDIT THEM) AND 200 EFP’S FOR THE FRONT FEBRUARY MONTH AS SOMEBODY WAS IN URGENT NEED OF SILVER METAL.  EFP’S GIVE OUR COMEX LONGS A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON. WE HAD NO COMEX SILVER COMEX LIQUIDATION. BUT, IF WE TAKE THE  OI LOSS AT THE COMEX OF 216 CONTRACTS TO THE 1316 OI TRANSFERRED TO LONDON THROUGH EFP’S WE OBTAIN A GAIN OF 1100 OPEN INTEREST CONTRACTS IN CONJUNCTION WITH ANOTHER FAILED  BANKER SHORT COVERING. WE STILL HAVE A GOOD AMOUNT OF SILVER OUNCES THAT ARE STANDING FOR METAL IN JANUARY (SEE BELOW). THE NET GAIN TODAY IN OZ: 6.05 MILLION OZ!!!

RESULT: A SMALL SIZED DECREASE IN SILVER OI AT THE COMEX WITH THE TINY FALL OF 6 CENTS IN PRICE (WITH RESPECT TO YESTERDAY’S TRADING). BUT WE ALSO HAD ANOTHER 1316 EFP’S ISSUED TRANSFERRING COMEX LONGS OVER TO LONDON. TOGETHER WITH THE GOOD  SIZED AMOUNT OF SILVER OUNCES STANDING FOR JANUARY, DEMAND FOR PHYSICAL SILVER INTENSIFIES AS WE WITNESS MAJOR BANK SHORT COVERING ACCOMPANIED BY INCREASES IN GOFO AND SIFO RATES INDICATING SCARCITY.

(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 WEDNESDAY night/THURSDAY morning: Shanghai closed UP 3.51 points or 0.10% /Hang Sang CLOSED UP 46.67 pts or 0.15% / The Nikkei closed DOWN 77.77 POINTS OR 0.33%/Australia’s all ordinaires CLOSED DOWN 0.48%/Chinese yuan (ONSHORE) closed DOWN at 6.5080/Oil UP to 63.97 dollars per barrel for WTI and 69.42 for Brent. Stocks in Europe OPENED MOSTLY MIXED LEANING TO RED.   ONSHORE YUAN CLOSED DOWN AGAINST THE DOLLAR AT 6.5080. OFFSHORE YUAN CLOSED DOWN AGAINST  THE ONSHORE YUAN AT 6.5130 //ONSHORE YUAN  WEAKER AGAINST THE DOLLAR/OFF SHORE STRONGER TO THE DOLLAR/. THE DOLLAR (INDEX) IS  STRONGER AGAINST ALL MAJOR CURRENCIES. CHINA IS STILL  HAPPY TODAY.(GOOD MARKETS )

i

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)/South Korea

 

b) REPORT ON JAPAN

3 c CHINA

4. EUROPEAN AFFAIRS

i)GREECE

Greece is still in a mess as unpaid taxes make up a huge 55% of the country’s GDP. Greek tax authorities have seized pensions, salaries and assets of more than 180,000 taxpayers in 2017.  Greek banks also have a huge amount of non performing loans on their books and they are seeking a 90% haircut on those loans.

To show you how bad it is in Greece,  the citizens there are going on strike to be allowed to strike

( zero hedge)

ii)The Euro rises on a “grand coalition” deal in Germany

( zerohedge)

iii)TRUMP cancels his visit to London where he was suppose to open the new uSA embassy in southwest London.  According to Trump, the Obama administration sold the old embassy for “peanuts” and moved the new embassy to the outskirts of London.  He states:“Bad deal. Wanted me to cut ribbon-NO!”

( zerohedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

6 .GLOBAL ISSUES

7. OIL ISSUES

i)Peter’s assessment on the price of oil is that 60 dollars will not last long.  He believe equilibrium will be around 45$ WTI

 

( Peter Tertzakian/OilPrice.com)

ii)The rise in oil prices certainly had an effect on the huge surge in rig counts.

( zerohedge)

 

8. EMERGING MARKET

9. PHYSICAL MARKETS

i)Russia releases photos of its 1800 tonnes of gold stored in Moscow. No doubt we will probably see China doing the same and as well update the true number of oz stored in Beijing

( SilverDoctors)

ii)South Korea officially is planning to ban cryptocurrency trading which sent bitcoin initially plummeting and it threw all virtual coin markets into turmoil.

( Reuters)

iii)Goldman Sachs people know the truth, cryptocurrencies will go to their intrinsic value and that value is zeorh

( Goldman Sachs/Katz/Bloomberg/GATA)

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

i)This is big news: the two yr USA treasury spikes to over 2.% and the 10 yr is back to 2.59%

( zerohedge)

ii)This is surprising:

Retail sales a big miss/with retail sales growth of only .3% month /month.  The month before showed a strong 1.4% growth month/month.

( zerohedge)

iii)This is not good:  Wells Fargo just reported the worst mortgage application number since the financial crisis.  It is also noteworthy that USA citizens cannot obtain mortgages with interest rates as low as 1%  A rise to 2 to 3% will wipe out the domestic housing sector.
( zerohedge)

iv)Because of tax cuts and bond run offs, Goldman Sachs warns that Treasury issuance will double this year and next to over 1 trillion dollars

here is why..
(courtesy zerohedge)

v)SWAMP STORIES

Trump denies the “shithole” comment.  However it seems that the DACA agreement just fell apart

( zerohedge)

Let us head over to the comex:

The total gold comex open interest FELL BY CONSIDERABLE  3379 CONTRACTS DOWN to an OI level of 564,056 DESPITE THE RISE IN THE PRICE OF GOLD ($4.15 GAIN WITH RESPECT TO YESTERDAY’S TRADING).   WE HAD SOME COMEX GOLD LIQUIDATION  AND NO DOUBT WE WITNESSED SOME GOLD SHORT COVERING AT THE COMEX.   WE ALSO WITNESSED ANOTHER HUMONGOUS COMEX TRANSFER THROUGH THE EFP ROUTE. THESE LONGS RECEIVED A DELIVERABLE LONDON FORWARD TOGETHER WITH A FIAT BONUS. THE CME REPORTS THAT 8533 EFP’S WERE ISSUED FOR FEBRUARY , 2537 EFP’s  FOR APRIL, AND 100 FOR DECEMBER:  TOTAL  11,170 CONTRACTS. THE OBLIGATION STILL RESTS WITH THE BANKERS ON THESE TRANSFERS.

ON A NET BASIS IN OPEN INTEREST WE GAINED TODAY: 7791 OI CONTRACTS IN THAT 11,170 LONGS WERE TRANSFERRED AS FORWARDS TO LONDON AND WE LOST 3379 COMEX CONTRACTS. NET GAIN: 7791 contracts OR 779,100 OZ OR 24.23 TONNES

Result: A CONSIDERABLE  DECREASE IN COMEX OPEN INTEREST DESPITE THE RISE IN THE PRICE YESTERDAY’S GOLD TRADING ($4.15.) WE HAD SOME GOLD LIQUIDATION AT THE COMEX. HOWEVER WE,  NO DOUBT HAD BANKER SHORT COVERING AS THEY ANTICIPATED GOLD’S ADVANCE ON FRIDAY.. TOTAL OPEN INTEREST GAIN ON THE TWO EXCHANGES: 7791 OI CONTRACTS…

We have now entered the active contract month of JANUARY. The open interest for the front month of JANUARY saw it’s open interest RISE by 3 contracts UP to 220.  We had 0 notice served upon yesterday so we GAINED 3 contracts or 300 additional oz of gold will stand in this non active month AND QUEUE JUMPING RETURNS.

FEBRUARY saw a LOSS of 9166 contacts DOWN to 331,752.  March saw a gain of 134 contracts up to 701.  April saw a GAIN of 5896 contracts UP to 127,850.

We had 181 notice(s) filed upon today for 18100 oz

PRELIMINARY VOLUME TODAY ESTIMATED; 389,538

FINAL NUMBERS CONFIRMED FOR YESTERDAY: 297,666

comex gold volumes are RISING AGAIN

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And now for the wild silver comex results.

Total silver OI FELL BY A TINY 216  CONTRACTS FROM 196,660 UP TO 196,444 WITH YESTERDAY’S  TINY 6 CENT FALL.  AGAIN WE MUST HAVE HAD SOME FAILED BANKER SHORT COVERING. HOWEVER THIS TIME SILVER SHORT COVERING WAS JOINED BY GOLD SHORT COVERING.  NOT ONLY THAT, WE HAD ANOTHER GOOD SIZED 1034 EMERGENCY EFP’S FOR MARCH ISSUED BY OUR BANKERS (AND A STRANGE 282 CONTRACTS FOR THE FRONT MONTH OF FEBRUARY ) TO COMEX LONGS WHO RECEIVED A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON: THE TOTAL EFP’S ISSUED: 1316. 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. WE HAD MINIMAL LONG COMEX SILVER LIQUIDATION BUT A RISE IN TOTAL SILVER OI AS IT SEEMS THAT WE ARE WITNESSING SOME MAJOR FAILED BANKER SHORT-COVERING. WE ARE ALSO WITNESSING A FAIR AMOUNT OF SILVER OUNCES STANDING FOR COMEX METAL IN THIS NON ACTIVE JANUARY AS WELL AS THAT CONTINUAL MIGRATION OF EFPS OVER TO LONDON. ON A PERCENTAGE BASIS THERE ARE MORE EFP’S ISSUED FOR GOLD THAN SILVER AS IT SEEMS THAT A MAJOR PLAYER WISHES TO TAKE ON THE CROOKED COMEX SHORTS. ON A NET BASIS WE GAINED 1100 OPEN INTEREST CONTRACTS:

216 CONTRACT LOSS AT THE COMEX COMBINING WITH THE ADDITION OF 1316 OI CONTRACTS NAVIGATING OVER TO LONDON.

NET GAIN: 1100 CONTRACTS

We are now in the poor non active delivery month of January and here the OI GAINED  28 contracts RISING TO 71.  We had 0 notices served upon yesterday, so we GAINED 28 contracts or an additional 140,000 oz will stand for delivery AT THE COMEX AT QUEUE JUMPING INTENSIFIES

February saw a GAIN OF 200 OI contracts RISING TO 1381. The March contract LOST 2429 contracts DOWN to 145,364.

We had 181 notice(s) filed for NIL 18100 for the January 2018 contract for silver

INITIAL standings for JANUARY

Jan 12/2018.

Gold Ounces
Withdrawals from Dealers Inventory in oz nil oz
Withdrawals from Customer Inventory in oz
2850.948 oz
Delaware
Deposits to the Dealer Inventory in oz 18,148.55 oz

brinks

Deposits to the Customer Inventory, in oz
6226.698 oz
JPMorgan
No of oz served (contracts) today
181 notice(s)
18100 OZ
No of oz to be served (notices)
39 contracts
(3900 oz)
Total monthly oz gold served (contracts) so far this month
437 notices
43700 oz
1.3592 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 zero kilobar transaction/
We had 1 inventory movement at the dealer accounts
i) Into Brinks:  18,148.55 oz
total inventory movement into the dealer accounts:  18,148.55 oz
we had one withdrawal into the customer account:
Out of Delaware:  2850.948 oz
total withdrawal: 2050.948 oz
we had 1 customer deposit
i) Into jPMorgan:  6,226.698 oz
total deposits:  6,226.698 oz
we had 0 adjustments
total registered or dealer gold:  586,601.473 oz or 18.245 tonnes
total registered and eligible (customer) gold;   9,228,969.526 oz 287.05 tones

For JANUARY:
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 181 contract(s) of which 127 notices were stopped (received) by j.P. Morgan dealer and 26 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 JANUARY. contract month, we take the total number of notices filed so far for the month (437) x 100 oz or 43700 oz, to which we add the difference between the open interest for the front month of JAN. (220 contracts) minus the number of notices served upon today (181 x 100 oz per contract) equals 47,600 oz, the number of ounces standing in this active month of JANUARY

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

No of notices served (437 x 100 oz or ounces + {(220)OI for the front month minus the number of notices served upon today (181 x 100 oz which equals 47,600 oz standing in this active delivery month of JANUARY (1.4805 tonnes). THERE IS 18.245 TONNES OF REGISTERED GOLD AVAILABLE FOR DELIVERY SO FAR.

WE GAINED 36 CONTRACTS OR AN ADDITIONAL 3600 OZ WILL STAND IN THIS NON ACTIVE DELIVERY MONTH OF JANUARY

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ON FIRST DAY NOTICE FOR JANUARY 2017, THE INITIAL GOLD STANDING: 3.904 TONNES STANDING

BY THE END OF THE MONTH: FINAL: 3.555 TONNES STOOD FOR COMEX DELIVERY AS THE REMAINDER HAD TRANSFERRED OVER TO LONDON FORWARDS.

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

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 68 NET TONNES HAS LEFT THE COMEX.

end

And now for silver

AND NOW THE DECEMBER DELIVERY MONTH

DECEMBER FINAL standings

Jan 12 2018
Silver Ounces
Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory
 225,996.175 oz
Brinks
HSBC
CNT
Delaware
Scotia
Deposits to the Dealer Inventory
nil
oz
Deposits to the Customer Inventory
 709,175.655 oz
CNT
HSBC
No of oz served today (contracts)
5
CONTRACT(S)
(25,000 OZ)
No of oz to be served (notices)
66 contract
(330,000 oz)
Total monthly oz silver served (contracts) 542 contracts

(2,710,000 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

we had no inventory movement at the dealer side of things

total inventory movement dealer: nil oz

we had two inventory deposits into the customer account

i) Into CNT: 600,310.900 oz

ii) Into HSBC: 108,864.755 oz

total inventory deposits: 709,175.655 oz

we had 5 withdrawals from the customer account;

i) out of Brinks; 16,234.570  oz

ii) Out of HSBC: ; 5171.400 oz

iii) Out of CNT: 40,050.09 oz

iv) Out of Delaware: 89,698.785 oz

v) Out of Scotia: 80,841.330 oz

total withdrawals; 225,996.175oz

we had 0 adjustments

 

total dealer silver:  45.456 million

total dealer + customer silver:  246.515 million oz

The total number of notices filed today for the JANUARY. contract month is represented by 5 contract(s) FOR 25,000 oz. To calculate the number of silver ounces that will stand for delivery in JANUARY., we take the total number of notices filed for the month so far at 542 x 5,000 oz = 2,710,000 oz to which we add the difference between the open interest for the front month of JAN. (71) and the number of notices served upon today (5 x 5000 oz) equals the number of ounces standing.

.

Thus the INITIAL standings for silver for the JANUARY contract month: 542(notices served so far)x 5000 oz + OI for front month of JANUARY(71) -number of notices served upon today (5)x 5000 oz equals 3,040,000 oz of silver standing for the JANUARY contract month. This is VERY GOOD for this NONACTIVE delivery month of JANUARY.  WE GAINED 28 CONTRACTS OR AN ADDITIONAL 140,000  OZ WILL  STAND FOR DELIVERY IN THIS NON ACTIVE DELIVERY MONTH OF JANUARY AND QUEUE JUMPING INTENSIFIES. 

ON FIRST DAY NOTICE FOR THE JANUARY 2017 CONTRACT WE HAD 3,790 MILLION OZ STAND.

THE FINAL STANDING: 3,730 MILLION OZ

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ESTIMATED VOLUME FOR TODAY: not provided yet

CONFIRMED VOLUME FOR FRIDAY: not provided yet CONTRACTS

YESTERDAY’S CONFIRMED VOLUME OF xxxxx CONTRACTS EQUATES TOxxxxxx MILLION OZ OR xxx% 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.

 

The record level of silver open interest is 234,787 contracts set on April 21./2017 with the price at that day at $18.42
The previous record was 224,540 contracts with the price at that time of $20.44

 

 

end

 

 

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 1.5 percent to NAV usa funds and Negative 1.7% to NAV for Cdn funds!!!!
Percentage of fund in gold 63.0%
Percentage of fund in silver:36.8%
cash .+.2%( Jan 12/2018)

2. Sprott silver fund (PSLV): NAV FALLS TO -0.97% (Jan 12/2018)
3. Sprott gold fund (PHYS): premium to NAV FALLS TO -0.53% to NAV (Jan 12/2018 )
Note: Sprott silver trust back into NEGATIVE territory at -0.97%-/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

Jan 12/no changes in inventory at the GLD despite the rise in gold price/inventory rests at 828.96 tonnes

Jan 11/ANOTHER IDENTICAL WITHDRAWAL OF 2.95 TONNES FROM THE GLD INVENTORY/INVENTORY RESTS AT 828.96 TONNES

Jan 10/with gold up today, a strange withdrawal of 2.95 tonnes/inventory rests at 831.91 tonnes

Jan 9/no changes in gold inventory at the GLD/Inventory rests at 834.88 tonnes

Jan 8/with gold falling by a tiny $1.40 and this being after 12 consecutive gains, today they announce another 1.44 tonnes of gold withdrawal from the GLD/

Jan 5/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 836.32 TONNES

Jan 4/2018/no change in gold inventory at the GLD/Inventory rests at 836.32 tonnes

Jan 3/a huge withdrawal of 1.18 tonnes of gold from the GLD/Inventory rests at 836.32 tonnes

Jan 2/2018/no changes in gold inventory at the GLD/inventory rests at 837.50 tonnes

Dec 29/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 837.50 TONNES

Dec 28/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 837.50 TONNES

Dec 27/NO CHANGES IN GOLD INVENTORY AT THE GLD/ INVENTORY RESTS AT 837.50 TONNES

Dec 26/no change in gold inventory at the GLD

Dec 22/ A DEPOSIT OF 1.48 TONNES OF GOLD INTO GLD INVENTORY/INVENTORY RESTS AT 837.50 TONNES

Dec 21′ NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 836.02 TONNES

Dec 20/DESPITE THE GOOD ADVANCE IN PRICE TODAY/THE CROOKS RAIDED THE COOKIE JAR TO THE TUNE OF 1.18 TONNES/INVENTORY RESTS AT 836.02 TONNES

Dec 19/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 837.20 TONNES

Dec 18 SHOCKINGLY AFTER TWO GOOD GOLD TRADING DAYS, THE CROOKS RAID THE COOKIE JAR BY THE SUM OF 7.09 TONNES/INVENTORY RESTS AT 837.20 TONNES

Dec 15/NO CHANGES IN GOLD INVENTORY/RESTS AT 844.29 TONNES.

Dec 14/a good sized gain of 1.48 tonnes of gold into the GLD/inventory rests at 844.29 tones

Dec 13/no changes in gold inventory at the GLD/inventory rests at 842.81 tonnes

Dec 12/SURPRISINGLY NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 842.81 TONNES

Dec 11/SURPRISINGLY NO CHANGES IN GOLD INVENTORY AT THE GLD DESPITE THE CONSTANT RAIDS ON GOLD/INVENTORY RESTS AT 842.81 TONNES

Dec 8/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 842.81 TONNES

Dec 7/A BIG WITHDRAWAL OF 2.66 TONNES FROM THE GLD/INVENTORY RESTS AT 842.81 TONNES

Dec 6/No changes in GOLD inventory at the GLD/Inventory rests at 845.47 tonnes

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Jan 12/2018/ Inventory rests tonight at 828.96 tonnes

*IN LAST 308 TRADING DAYS: 111.99 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 243 TRADING DAYS: A NET 45.32 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.

end

Now the SLV Inventory

Jan 12/no changes in silver inventory at the SLV/inventory rests at 316.348 million oz/

Jan 11/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 316.348 MILLION OZ/

Jan 10/with silver up again, we had a huge withdrawal of 1.227 million oz from the SLV/inventory rests at 316.348 million oz

Jan 9/a withdrawal of 848,000 oz from the SLV/Inventory rests at 317.575 million oz/

jan 8/no change in silver inventory at the SLV/Inventory rests at 318.423 million oz/

Jan 5/DESPITE NO CHANGE IN SILVER PRICING, WE HAD A HUGE WITHDRAWAL OF 2.026 MILLION OZ/INVENTORY RESTS AT 318.423 MILLION OZ.

Jan 4.2018/a slight withdrawal of 180,000 oz and this would be to pay for fees/inventory rests at 320.449 million oz/

Jan 3/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 320.629 MILLION OZ.

Jan 2/WITH SILVER UP DRAMATICALLY THESE PAST 4 TRADING DAYS, THE FOLLOWING MAKES NO SENSE: WE HAD A WITHDRAWAL OF 2.83 MILLION OZ FROM THE SLV

INVENTORY RESTS AT 320.629 MILLION OZ/

Dec 29/no changes in silver inventory at the SLV/inventory rests at 323.459 million oz/

Dec 28/DESPITE THE RISE IN SILVER AGAIN BY 13 CENTS, WE LOST ANOTHER 1,251,000 OZ OF SILVER FROM THE SILVER.

Dec 27/WITH SILVER UP AGAIN BY 17 CENTS, WE LOST ANOTHER 802,000 OZ OF SILVER INVENTORY/WHAT CROOKS/INVENTORY RESTS AT 324.780 MILLION OZ/

Dec 26/no change in silver inventory at the SLV./Inventory rests at 325.582

Dec 21/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 326.227 MILLION OZ/

Dec 20/INVENTORY REMAINS CONSTANT AT 326.337 MILLION OZ (COMPARE WITH GLD)

Dec 19/SILVER INVENTORY REMAINS CONSTANT AT 326.337 MILLION OZ

Dec 18.2017//SILVER INVENTORY CONTINUES TO REMAIN PAT./INVENTORY REMAINS AT 326.337 MILLION OZ/

INVENTORY RESTS AT 326.337 TONNES

Dec 15/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 326.337 MILLION OZ/

Dec 14/a small withdrawal of 377,000 oz and that usually means to pay for fees./inventory rests at 326.337 million oz/

Dec 13/no change in silver inventory at the SLV/Inventory rests at 326.714 million oz/

Dec 12/WOW!ANOTHER STRANGE ONE: SILVER HAS BEEN DOWN FOR 10 CONSECUTIVE DAYS, YET THE SLV ADDS ANOTHER 1.415 MILLION OZ TO ITS INVENTORY. IN THAT 10 DAY PERIOD, SLV ADDS 9.584 MILLION OZ/

INVENTORY RESTS AT 326.714 MILLION OZ

Dec 11/WOW!! ANOTHER STRANGE ONE: SILVER DESPITE BEING DOWN FOR 9 CONSECUTIVE TRADING DAYS ADDS ANOTHER 944,000 OZ TO ITS INVENTORY. FROM NOV 30 UNTIL TODAY SILVER HAS BEEN DOWN EVERY DAY. HOWEVER THE INVENTORY OF SILVER HAS RISEN 8.169 MILLION OZ.

Dec 8/A HUGE DEPOSIT OF 2.642 MILLION OZ/INVENTORY RESTS AT 324.355 MILLION OZ/

Dec 7/strange!! with the continual whacking of silver, no change in silver inventory at the SLV/Inventory rests at 321.713

Dec 6/no change in silver inventory at the SLV/Inventory remains at 21.713 million oz.

Jan 12/2017:

Inventory 316.348 million oz

end

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

+ 1.70%
12 Month MM GOFO
+ 1.99%
30 day trend

end

 

At 3:30 pm est we receive the COT report which is basically useless due to the introduction of huge amounts of EFP’s

But for completeness sake, I am including the data:

 

first gold

Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
289,161 85,873 69,270 150,099 370,370 508,530 525,513
Change from Prior Reporting Period
47,733 7,713 9,222 -5,005 37,666 51,950 54,601
Traders
179 90 85 45 54 263 194
 
Small Speculators  
Long Short Open Interest  
46,925 29,942 555,455  
2,774 123 54,724  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of Tuesday, January 9, 2018

you will now see the power of the EFP’s

Our large speculators

those large specs who have been long in gold added a monstrous 47,733 contracts to their long side

(and these guys will morph into London based forwards)

those large specs who have been short in gold added 7713 contracts to their short side

(and these guys are not happy campers today)

 

Our Commercials

those commercials who have been long in gold pitched 5005 contracts from their long side

those commercials who have been short in gold added a monstrous 37,666 contracts to their short side

(and this is just the comex/it does not include efp transfers)

Our Small Speculators.

those small specs who have been long in gold added 2774 contracts to their long side

those small specs who have been short in gold added 123 contracts to their short side.

 

and now silver.

Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
84,313 46,278 17,654 67,973 117,915
9,186 -6,099 -2,946 -2,507 10,243
Traders
100 46 39 42 39
Small Speculators Open Interest Total
Long Short 195,009 Long Short
25,069 13,162 169,940 181,847
-1,147 1,388 2,586 3,733 1,198
non reportable positions Positions as of: 158 112
Tuesday, January 9, 2018   © SilverSe

 

 

Our large speculators

those large specs that have been long in silver poured it on and added 9186 contracts to their long side

those large specs that have been short in silver covered a huge 6099 contracts from their short side

 

large specs go net long by 15200 contracts.

Our Commercials

those commercials that have been long in silver pitched 2507 contracts from their long side

those commercials that have been short in silver added a huge 10,243 contracts to their short side

and that does not included those efp transfers to London.

Our Small Speculators

those small specs that have been long in silver pitched 1265 contracts from their long side

those small specs that have been short in silver added 1356 contracts to their short side.

 

end

 

Major gold/silver trading /commentaries for FRIDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

Gold Prices Rise

END

 

Russia releases photos of its 1800 tonnes of gold stored in Moscow. No doubt we will probably see China doing the same and as well update the true number of oz stored in Beijing

(courtesy SilverDoctors)

Stunning Photos From Inside Russia’s “Fort Knox”

Via SilverDoctors.com,

It’s no secret that Russia has been stacking the shiny phyzz for years, and here’s a glimpse showing exactly how they stack…

https://www.zerohedge.com/sites/default/files/inline-images/20180111_russgold1.jpg

Source: English Russia

Photos from main gold storage of Central Bank of Russia.

https://www.zerohedge.com/sites/default/files/inline-images/20180111_russgold2.jpg

Almost 1800 tons of gold is stored here.

https://www.zerohedge.com/sites/default/files/inline-images/20180111_russgold3.jpg

Russia is number six in the world by gold storage.

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_russgold4.jpg

Today Russia’s gold is 17% of world’s gold.

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_russgold5.jpg

However ten years ago Russia had only 3% share of the total world gold storage.

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_russgold6.jpg

And this is how all this gold is being stored.

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_russgold7.jpg

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_russgold8.jpg

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_russgold9.jpg

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_russgold10.jpg

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_russgold11.jpg

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_russgold12.jpg

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_russgold13.jpg

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_russgold14.jpg

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_russgold15_0.jpg

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_russgold16.jpg

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_russgold17.jpg

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_russgold18.jpg

 

https://www.zerohedge.com/sites/default/files/inline-images/20180111_russgold19.jpg

What’s perhaps most interesting about these images is Russia’s willingness to release them now to the public.

One wonders how long before China shows its gold holdings too?

END

 

Goldman Sachs people know the truth, cryptocurrencies will go to their intrinsic value and that value is zeorh

(courtesy Goldman Sachs/Katz/Bloomberg/GATA)

 

Goldman says cryptocurrencies may succeed as money in some backward places

 Section: 

By Lily Katz
Bloomberg News
Wednesday, January 10, 2018

Bitcoin may seem like a solution in search of a problem in the United States, where transaction costs are already low and the dollar stable. But in developing countries, digital currencies could succeed as a real form of money, Goldman Sachs Group Inc. says.

Many currencies in sub-Saharan Africa have lost value due to high inflation and supply mismanagement. As a result, foreign money makes up more than 90 percent of deposits and loans in the Democratic Republic of the Congo, and Zimbabwe demonetized its currency in 2015. Bitcoin could also be useful in regions where governments impose strict rules on the use of traditional currencies from other countries.

“In recent decades the U.S. dollar has served its purpose relatively well,” Goldman Sachs strategists Zach Pandl and Charles Himmelberg wrote in a report today. But “in those countries and corners of the financial system where the traditional services of money are inadequately supplied, Bitcoin (and cryptocurrencies more generally) may offer viable alternatives.” …

… For the remainder of the report:

https://www.bloomberg.com/news/articles/2018-01-10/goldman-says-viabilit…

 

END

 

South Korea officially is planning to ban cryptocurrency trading which sent bitcoin initially plummeting and it threw all virtual coin markets into turmoil.
(courtesy Reuters)

South Korea plans to ban cryptocurrency trading, rattling markets

 Section: 

By Cynthia Kim and Dahee Kim
Reuters
Thursday, January 11. 2018

SEOUL — South Korea’s government said today it plans to ban cryptocurrency trading, sending bitcoin prices plummeting and throwing the virtual coin market into turmoil as the nation’s police and tax authorities raided local exchanges on alleged tax evasion.

The clampdown in South Korea, a crucial source of global demand for cryptocurrency, came as policymakers around the world struggled to regulate an asset whose value has skyrocketed over the last year.

Justice minister Park Sang-ki said the government was preparing a bill to ban trading of the virtual currency on domestic exchanges. …

… For the remainder of the report:

https://www.reuters.com/article/uk-southkorea-bitcoin/south-korea-plans-…



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

 

i) Chinese yuan vs USA dollar/CLOSED UP AT 6.4610 /shanghai bourse CLOSED UP AT 3.59 POINTS 0.10% / HANG SANG CLOSED UP 292.15 POINTS OR 0.94%
2. Nikkei closed DOWN 56.61 POINTS OR 0.24% /USA: YEN FALLS TO 111.15

3. Europe stocks OPENED GREEN   /USA dollar index FALLS TO 91.38/Euro RISES TO 1.2124

3b Japan 10 year bond yield: RISES TO . +.078/ GOVERNMENT INTERVENTION !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 111.15/ 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:: 63.42  and Brent: 69.09

3f Gold UP/Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO +.584%/Italian 10 yr bond yield UP to 2.007% /SPAIN 10 YR BOND YIELD UP TO 1.528%

3j Greek 10 year bond yield RISES TO : 3.905?????????????????

3k Gold at $1331.15 silver at:17.13: 6 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50

3l USA vs Russian rouble; (Russian rouble UP 7/100 in roubles/dollar) 56.98

3m oil into the 63 dollar handle for WTI and 69 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/

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 111.15 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 0.9710 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1774 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 +0.584%

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 2.549% early this morning. Thirty year rate at 2.880% /

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

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

World Stocks Hit New All Time High; Hong Kong Up For Record 14 Straight Days

World stocks hit a new all time high on Friday with U.S. equity futures rising for the 8th trading day out of 9 in 2018 – the Dow is just a little over 300 points away from 26,000 – alongside Asian shares while European stocks and oil are little changed. The euro surged to a three-year high as Germany was said to reach a “grand coalition” agreement, heaping more pressure on the dollar before inflation data.

European stocks advanced with U.S. equity futures as BlackRock Inc. kicked off a busy earnings season with profits that beat estimates.

MSCI’world stock index hit yet another record high and was on track to rise for its eighth of the nine business days so far this year — for a total increase of 3.5%. “This bull market is highly related to the fact we are facing good growth, low inflation and soft monetary policy normalization. If any of those were to be shaken that would be a big problem,” said Jeanne Asseraf Bitton, head of cross-asset research at Lyxor Asset Management.

The euro is set for its strongest close since December 2014, leading most G10 currencies higher against the dollar. The Stoxx Europe 600 Index climbed for the first day in three. Hong Kong’s equity index extended a record winning streak as data showed Chinese exports rose in December. Oil fell after a four-day rally, even as most commodities climbed, with gold heading for its highest close since September.

Reports that German policymakers are set to resolve a months-long political stalemate added to news yesterday that the European Central Bank is open to tweaking its policy guidance soon to align it with a strengthening economy. The euro’s overnight index swap rates have risen sharply this week as traders priced in a higher chance of a rate hike early next year.

asd

In response to the EUR strength, German 10-year bond yield hit a fresh five-month high of 0.539 percent after Chancellor Angela Merkel’s conservatives and the Social Democrats agreed a blueprint for formal coalition negotiations.

European stocks took their cue from a recovery in Asian trading, but were set to end the week on a dud note as a surging euro weighed on European exporters and kept gains on Germany’s DAX muted despite the breakthrough in coalition talks. As a result, the MSCI index of European stocks index eked out a 0.1% gain. While the Euro’s rise has reflected growing optimism over the bloc’s economic recovery, some have flagged it as a potential brake on stocks. Monica Defend, head of strategy at Amundi Asset Management, said the currency, for which she has a target of $1.22, was the biggest risk to European equities.

Rising European bond yields were also driven higher by minutes on Thursday of the ECB’s December meeting that showed it thinks it should revisit its communication stance in early 2018. Lyxor’s Bitton said Bund yields were already near to hitting her target for the first quarter. “Markets were a bit too complacent about bonds so they took some excuses to correct,” she told Reuters. “We were a little surprised that the market reacted so strongly to the ECB.” The minutes showed that with the euro zone seeing its best growth in a decade, ECB policymakers were considering a gradual shift in its stance to reduce the focus on bond purchases and raise the emphasis on interest rates.

Overnight a blowout china trade surplus, helped by booming global trade, helped Chinese exports to surge last year while import growth slowed to 4.5%. Exports growth for China slowed to 10.9% yoy in December from an increase of 11.5% yoy in November, in line with consensus. Imports growth dropped to 4.5% yoy from 17.6% yoy in November, well below consensus. In sequential terms, exports rose 0.5% mom sa non-annualized, down from a strong increase of 4.1% in November. Imports fell 3.7% mom sa non-annualized, decelerating from +1.8% in November. The trade surplus increased to US$54.7bn, the highest since February 2016, from US$39.0bn in November.

Chinese Trade Balance (CNY)(Dec) 362.0B vs. Exp. 235.2B (Prev. 263.6B).

  • Chinese Exports (CNY)(Dec) Y/Y 7.4% vs. Exp. 6.7% (Prev. 10.3%)
  • Chinese Imports (CNY)(Dec) Y/Y 0.9% vs. Exp. 11.8% (Prev. 15.6%)

Chinese Trade Balance (USD)(Dec) 54.69B vs. Exp. 37.00B (Prev. 40.21B).

  • Chinese Exports (USD)(Dec) Y/Y 10.9% vs. Exp. 10.8% (Prev. 12.3%)
  • Chinese Imports (USD)(Dec) Y/Y 4.5% vs. Exp. 15.1% (Prev. 17.7%)

asd

Some observations on China trade from Goldman:

The significant slowdown in imports growth should have been in a large part due to a notable moderation of volume growth. The moderation of year-on-year exports growth was primarily due to very weak sequential momentum in December, though a high base in December of the previous year also contributed somewhat. Exports prices might have decelerated sequentially in December, but exports volume growth should have also slowed, amid a slowing though still strong global demand, as suggested the GS Global Leading Indicator. The pace of appreciation in CNY against the USD has been faster since November (though less strong against the basket), and if the trend is extended, this could potentially weigh on exports growth in the coming months. The potential negative impacts on exports (and recent round of appreciation) might be part of reasons for reported suspension of CNY countercyclical factor, though more importantly we view this could signal a policy step further toward liberalization of the FX regime. And we maintain our view for a moderate CNY depreciation in the coming months, which could be supportive to exports growth. However, whether the support from exports can offset headwinds to activity growth from supply-side measures and prevent the growth from declining notably, remains uncertain. The official from the China Customs also mentioned potential pressure for exports growth in Q1 and possible moderation in exports growth for the whole year in the press conference. Against the backdrop of a less benign exports growth, we continue to expect policy to be broadly supportive for domestic demand, in order to keep stability of overall growth.

China Customs said China trade outlook is upbeat for this year, but added it will be difficult for Chinese trade to maintain double digit growth.

The strong trade data, helped the onshore yuan strengthen as much as 0.42% to the highest intraday level since Sept. 8 at 6.4702 per U.S. dollar. The CNY rose 0.41% to 6.4714 as of 3:31pm in Shanghai; CNH reverses earlier loss to advance 0.18% to 6.4790 in Hong Kong.

Hong Kong investors were unfazed by signals local equities may be overbought as the benchmark gauge rose for a record 14th day. Tencent Holdings Ltd. and energy explorers led the advance on Friday. The Hang Seng Index closes 0.9% higher; gauge has added more than 7% since Dec. 20. The 14-day relative strength index has risen to 80, the highest since February last year and above the 70 level that signals to some traders an asset is overbought.

In geopolitics, South Korea and US are in discussions to develop ties with North Korea, according to Yonhap citing an envoy. US Treasury Secretary Mnuchin confirms US plans to reimpose sanctions on Iran, while a separate report states the White House plans to announce decision on Friday. North Korea’s propaganda outlet called for the total suspension of joint military drills between South Korea and the United States on Friday, according to Yonhap.

Elsewhere, an exchange-traded fund tracking Brazilian equities dropped in after-hours U.S. trading after S&P Global Ratings cut Brazil’s sovereign credit rating deeper into junk territory. Bitcoin steadied after four days of losses amid increasing scrutiny from regulators around the world.

The end of a turbulent week for bond markets also saw U.S. Treasury yields extending Thursday’s pullback after China disputed a media report that government officials had recommended it slow or halt its purchases of U.S. bonds. The 10-year Treasury yield stood at 2.5498 percent, settling down from Wednesday’s 10-month high of 2.597 percent when fears of a bond bear market gripped investors. “Our target for U.S. 10-year treasuries is 2.8 — and we might afford up to 3 percent — but going beyond that it’s becoming an alert signal,” said Amundi’s Defend.

Oil prices retreated from 2014 highs hit the previous day, but stayed near three-year highs on signs of tightening supply in the United States. Brent crude futures hovered at $69.28 a barrel after hitting $70.05 a barrel on Thursday, their highest level since November 2014, while U.S. West Texas Intermediate (WTI) crude futures stood at $63.49, down 0.3 percent on the day.

Bulletin Headline Summary from RanSquawk

  • EUR takes out 2017 highs and the 1.2100 level after German coalition talks appear to make a breakthrough
  • European equities trade with little in the way of firm direction as EUR gains cap upside for the DAX
  • Looking ahead, highlights include US CPI, retail sales and earnings from Wells Fargo, JP Morgan and Blackrock

Market Snapshot

  • S&P 500 futures up 0.2% to 2,775.50
  • STOXX Europe 600 up 0.16% to 397.90
  • MSCI Asia Pacific up 0.3% to 181.02
  • MSCI Asia Pacific ex Japan up 0.8% to 590.07
  • Nikkei down 0.2% to 23,653.82
  • Topix down 0.6% to 1,876.24
  • Hang Seng Index up 0.9% to 31,412.54
  • Shanghai Composite up 0.1% to 3,428.94
  • Sensex up 0.3% to 34,597.69
  • Australia S&P/ASX 200 up 0.04% to 6,070.05
  • Kospi up 0.3% to 2,496.42
  • German 10Y yield fell 0.3 bps to 0.578%
  • Euro up 0.8% to $1.2133
  • Italian 10Y yield rose 1.2 bps to 1.781%
  • Spanish 10Y yield fell 2.5 bps to 1.513%
  • Brent futures little changed at $69.21/bbl
  • Gold spot up 0.7% to $1,331.43
  • U.S. Dollar Index down 0.6% to 91.33

Top Overnight news from Bloomberg

  • Japanese investors sold U.S. sovereign bonds for a second straight month in November while continuing to buy German and French bonds
  • According to three-month options on 10-year Treasury futures, volatility remains near record lows, suggesting investors aren’t worried about big price moves in either direction. That contrasts with the jump in volatility seen during the “taper tantrum” of 2013
  • Fed’s Powell is being asked by Senate Banking Committee member Chris Van Hollen to give assurance he would shield the central bank from any White House effort to influence its oversight of Deutsche Bank AG, which has been drawn into investigations of Russian meddling in U.S. politics
  • Demand for Chinese products is holding up as growth in major trade partners remains intact, and a feared trade war between China and the U.S. has yet to materialize; the trade surplus swells to its largest since January 2016 as imports slump
  • China’s broadest gauge of new credit trailed projections and broad money growth posted the slowest pace on record, signaling that a campaign to cut financial risk is gaining traction
  • Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley are on a hiring drive in Frankfurt as global investment banks race to establish new headquarters inside the European Union in time for Brexit

Asia equity markets are mostly positive following record highs across all major US indices on optimism heading into earnings season and where energy outperformed with oil at 3yr highs. ASX 200 (Unch) was kept positive throughout the day by commodity-related stocks, but still closed flat due to losses in the largest weighted financials sector. In Japan, index-heavyweight Fast Retailing outperformed and hit its highest in over 2 years after strong quarterly results, although the Nikkei 225 (-0.2%) failed to benefit with the broader market negative on JPY strength. Elsewhere, Hang Seng (+0.9%) and was positive following better than expected Chinese Trade Surplus and Exports, as well as a more convincing liquidity effort by the PBoC. However, the Shanghai Comp (+0.1%) was less decisive as participants also digested disappointing Import numbers and the fact that open market operations still resulted to a net weekly drain. Finally, 10yr JGBs were marginally higher with support seen amid the dampened risk tone in Japan and amid slightly firmer demand in the 40yr JGB auction. The PBoC injected CNY 140bln via 7-day reverse repos and CNY 130bln via 14-day reverse repos. This resulted to a daily net injection of CNY 180bln, but also a weekly net drain of CNY 60bln vs. last week’s CNY 510bln net drain.

Top Asian News

  • Another HNA Stock Halted From Trading, Pending Announcement
  • Mubadala Is Said to Mull Options for $920 Million RHB Stake
  • India’s Top Court Judges Break Ranks With Chief Justice
  • Nomura Sees Strong Year in Japan M&A, Fueled by Equity Finance

European equities (Eurostoxx 600 0.2%) have been trading with little in the way of firm direction with any potential gains in the DAX (following German coalition talks) capped by EUR strength. In terms of sector specifics, energy names are  seen lower, in-fitting with the moves seen in WTI and Brent while consumer discretionary names are outperforming with Fiat (+2.7%) top of the FSTE MIB after unveiling plans to invest further in their Michigan plant and provide bonuses to US workers following US tax legislation. Other individual movers include Vivendi (-1.3%) seen lower after warning on guidance, whilst GKN (+24.7%) after rejecting Melrose’s latest takeover offer; nonetheless, sources suggest that Melrose will continue their pursuit of the Co. In European fixed income, the relative calm did not last long, for core EU debt at least, as Gilts succumbed to selling pressure and reversed to a fresh low at 123.69 (-16 ticks vs +9 ticks at best), while Bunds extended to the upside to register a new Eurex peak at 160.62 (+31 ticks vs -14 ticks at worst). FX markets and even faster/frantic trade were the catalyst or driver for moves in bonds with the 10 year German benchmark and even moreso periphery paper the beneficiaries of EUR strength and upbeat tone/fiscal pledges from the new German coalition Government. Off peaks and troughs now as price action abates somewhat, while USTs remain largely sidelined awaiting today’s key data

Top European News

  • Euro Surges to Three-Year High After German Coalition Accord
  • Puma Plunges as Gucci Owner Kering Moves to Shed Its Stake
  • For This Soccer Giant, a Losing Streak Threatens a Takeover Deal
  • Theresa May Facing Winter of Discontent With U.K. Health Crisis
  • Russia’s Oligarchs Brace for U.S. Report Listing Putin Friends

In FX markets, EUR has been extending gains in wake of hawkish December ECB minutes, with added boost coming from news of a breakthrough in Germany to form a grand coalition Government. EUR/USD showed little resistance this time at last year’s 1.2092 peak or the psychological 1.2100 level with layered macro bids propelling the pair to a circa 1.2135 high (best since December 2014). Tech studies show a bullish target 1.2169, but ultimately the charts signal 1.2350 and 1.2430 (200 MMA) as the next major objectives. On the flip-side, big 2.5bln option expiries at 1.2100 may exert a gravitational pull, but with the USD on the back foot perhaps not (DXY down near 91.30). Indeed, the Dollar is weaker across the board, with Cable tripping stops above 1.3600, USD/JPY eyeing bids at 111.00 and stops below, USD/CAD and USD/CHF both close to big figures or round numbers at 1.2500 and 0.9700 respectively. Antipodeans lagging a bit, but still bid vs the Greenback and only just off overnight peaks (AUD/USD and NZD/USD just below 0.7900 and 0.7275 respectively, with weaker Chinese imports within the latest trade balance perhaps dampening sentiment somewhat).

In commodities, in the energy complex, both WTI and Brent crude futures are seen lower despite the softer USD as Brent makes a pullback from the USD 70.00 level, leading some to question how much further scope there is for the ongoing rally in prices. Energy specific newsflow remains light, however, markets will be on the watch for any announcements today from the White House regarding sanction on Iran. In metals markets, both spot gold and silver have benefitted from the softer USD. Elsewhere, steel futures saw their largest daily decline in a month after three consecutive days of gains as demand faltered overnight. Finally, the latest Chinese trade data saw a 4.3% decline in copper imports for the month of December. US Commerce Secretary Ross says results of investigation into national security impact from steel imports have been submitted to President Trump who has 90 days to decide on any potential action.

Looking at the day ahead, Italy’s November IP and the final reading of France and Spain’s December CPI are due. Over in the US, there is the December CPI (core of 0.2% mom and 1.7% expected) and retail sales along with the November business inventories. Onto other events, the Bundesbank’s Weidmann and the Fed’s Rosengren will speak. Elsewhere, Wells Fargo, JP Morgan and Blackrock will release its results.

US Event Calendar

  • 8:30am: US CPI MoM, est. 0.1%, prior 0.4%; CPI Ex Food and Energy MoM, est. 0.2%, prior 0.1%
  • 8:30am: US CPI YoY, est. 2.1%, prior 2.2%; CPI Ex Food and Energy YoY, est. 1.7%, prior 1.7%
  • 8:30am: Retail Sales Advance MoM, est. 0.5%, prior 0.8%; Retail Sales Ex Auto MoM, est. 0.3%, prior 1.0%
  • 8:30am: Retail Sales Ex Auto and Gas, est. 0.4%, prior 0.8%; Retail Sales Control Group, est. 0.4%, prior 0.8%
  • 8:30am: Real Avg Weekly Earnings YoY, prior 0.83%; Real Avg Hourly Earning YoY, prior 0.2%
  • 10am: Business Inventories, est. 0.4%, prior -0.1%

DB’s Jim Reid concludes the overnight wrap

After a long period of calm, suddenly the market is getting startled by all manner of things. Indeed it’s been a pass the parcel week for reasons for the sell-off. The BoJ started things off on Tuesday, China added to it by a tweak to the way they managed the Yuan and then remarks about reducing their Treasury holdings (subsequently denied) turbo charged it and then just as things were reversing, along came a surprisingly hawkish set of ECB minutes as the baton got passed from Treasuries to European bonds as to the epicentre of the sell-off. If that wasn’t enough today we have US CPI which should be the focal monthly US release this year. DB are in line with consensus with +0.1% mom headline (+2.1% yoy) and +0.2% mom/+1.7% yoy (unchanged) core expected. As a reminder our economists think US inflation will pick up more meaningfully from Q2 onwards.

In a week of surprises is there one last sting in the tail though? Ahead of this, and the start of US bank earnings today, the minutes from the December ECB meeting showed that there was a “widely shared” view amongst ECB  officials that the Governing Council’s communication would need to evolve gradually, without a change in sequencing, if the economy continued to expand and inflation converged towards the Governing Council’s aim. The minutes also showed that “the language pertaining to various dimensions of the monetary policy stance and forward guidance could be revisited early in the coming year (2018)”. The key was “widely shared” view as this indicates that a desire to move policy on was more prevalent than just amongst one or two outlier council members. Our rates strategist Francis Yared noted that the “without a change in sequencing” implies that the first thing to go will be the QE part of forward guidance which means either removing the potential for increase “in size and/or duration” mention in the statement (low hanging fruit) or remove the possibility to extend beyond Sep-18 (more hawkish). Overall this makes the January 25th meeting a little more interesting now.

10 yr bunds which had troughed at 0.512% in the morning session, hit a high of 0.596% in the run up to the end of the session with a late rally leading to a close of 0.579% (+3.9bp). The highest level since the major leg of the rally that began at the start of 2016 is the 0.60% print seen very briefly in July last year. So we were nearly at 2 year highs yesterday. Bunds are finally succumbing to gravity. Elsewhere, Gilts and French OATs also rose 2.2bp and 4.9bp respectively, with similar increases at the 2y part of the curve.

However after Europe closed, a strong US 30 year auction led to decent rally in Treasuries and after hitting an earlier high of 2.5679%, 10 years closed at 2.538% (-2bp). They’re at up c1bp in Asia this morning.

In China, the December trade surplus was released this morning and was above market at $54.7bn (vs. $37bn) with imports lower than expected at 4.5% yoy (vs. 15.1%) but exports were broadly in line at 10.9% yoy. This morning in Asia, markets are a mixed. The Hang Seng (+0.48%) and Kospi (+0.25%) are both up modestly, while China’s CSI300 (-0.09%) and Nikkei (-0.31%) are down as we type.

Now recapping other markets performance from yesterday. US bourses rebounded to fresh highs, with the S&P (+0.70%), Dow (+0.81%) and Nasdaq (+0.81%) all closing higher. Within the S&P, gains were mainly led by energy and industrial stocks. European markets broadly weakened, with the Stoxx 600 (-0.34%), CAC (-0.29%) and DAX (-0.59%) all lower, but the FTSE rose 0.19%, led by mining and energy stocks.

Turning to currencies, the US dollar index fell 0.50% while the Euro jumped 0.70% following the hawkish ECB minutes and Sterling also gained 0.23%. Brent crude briefly broke through $70/bbl for the first time in three years, but pared
back gains to close marginally higher at $69.26/bbl. Elsewhere, precious metals strengthened (Gold +0.42%; Silver +0.06%) while other base metals were mixed but little changed (Aluminium -0.36%; Copper -0.82%; Zinc +0.32%).

Away from the markets and onto Fed speak now. The Fed’s Dudley noted three rate hikes in 2018 “doesn’t seem to be an unreasonable sort of starting point” but the final trajectory will depend on how the economy and inflation evolves. In view of the tax cuts and stronger economic momentum in the US, he has lifted his 2018 GDP growth forecast by c0.5ppt to 2.5%-2.75%, with the tax benefits accounting for about 2/3 of the upgrade. Looking further ahead, he noted that the “Fed may have to press harder on the brakes at some point over the next few years”, in part as if labour market tightens much further, it will be harder to slow the economy to a sustainable pace.

Staying in the US, in an interview with President Trump, the WSJ noted Mr Trump reiterated his stance of exiting from the NAFTA (North American Free Trade Agreement) if it can’t be reworked in his favour, although he is willing to be “a little bit flexible”. In terms of the Mexican border wall, he said “they (Mexico) can pay for it indirectly through NAFTA”. Elsewhere, Wal-Mart has raised the starting pay for its US workers by c10% to $11/hour, which is expected to cost the retailer c$300m. If other US firms follow through, it may just add to the inflation pressures the market has been largely waiting for.

Back in the UK, the former UK Independence party leader Nigel Farage tweeted “just maybe, we should have a second referendum (on Brexit)”, a view that is echoed by a Labour member of the House of Lords Andrew Adonis who noted “…I agree…bring it on”. That said, PM May has ruled out another vote as it would be a “betrayal” of the 52% voters who had previously voted for Brexit.

Finally, our FX team has recently raised their 2018 EURUSD forecast to 1.30. Yesterday, our European economists wrote a note considering the ramifications for the euro area and in particular ECB policy from a higher Euro. Assuming a gradual, linear appreciation to 1.30 at the end of 2018 and then remaining steady in 2019 and 2020, Our economists estimate that the ECB staff’s annual core HICP inflation forecast profile would face a downwards parallel  shift by 0.1-0.2pp over the period 2018 to 2020. That said, they view the FX-adjusted profile for core inflation as still consistent with their call that the ECB ends QE net purchases by the end of 2018. Core inflation would rise from c1.0% in 2018 to 1.6-1.7% in 2020. Refer to their note for more details.

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the core PPI (ex food and energy) was below expectations at -0.1% mom (vs. 0.2%) and 2.3% yoy (vs. 2.5% expected), with the miss mainly due to a decline in the price of volatile trade services. Notably, the healthcare services component was solid, up 0.37% mom, which is the largest increase since 2009. This lifted annual inflation for this component to 1.6% yoy and should be reflected in the PCE healthcare print later on. Elsewhere, the weekly initial jobless claims was above market (261k vs. 245k) while continuing claims was lower than expected (1,867k vs. 1,920k). The Eurozone’s November IP was higher than expected at 1.0% mom (vs. 0.8%) and 3.2% yoy (vs 3.1% expected), which backs up the solid PMIs recently.

Elsewhere, Italy’s November retail sales was also above market at 1.4% yoy (vs 1.2% expected), while the December Bank of France industrial sentiment rose to a fresh seven year high of 110 (vs. 107). In Germany, 2017 GDP growth  was softer than expected at 2.2% (vs. 2.3% expected) but still the strongest annual reading since 2011. Finally, in the BOE’s 4Q credit conditions survey, lenders reported no change in the supply of credit to corporates. The demand for refinancing of mortgages posted the biggest increase for almost a decade, but the supply of unsecured credit to households was reported to have tightened, with a further tightening expected in 1Q.

Looking at the day ahead, Italy’s November IP and the final reading of France and Spain’s December CPI are due. Over in the US, there is the December CPI (core of 0.2% mom and 1.7% expected) and retail sales along with the November business inventories. Onto other events, the Bundesbank’s Weidmann and the Fed’s Rosengren will speak. Elsewhere, Wells Fargo, JP Morgan and Blackrock will release its results.

 

 

 

 

 

 

3. ASIAN AFFAIRS

i)Late THURSDAY night/FRIDAY morning: Shanghai closed UP 3.59 points or 0.10% /Hang Sang CLOSED UP 292.15 pts or 0.94% / The Nikkei closed DOWN 56.61 POINTS OR 0.24%/Australia’s all ordinaires CLOSED UP 0.01%/Chinese yuan (ONSHORE) closed WELL UP at 6.4610/Oil UP to 63.42 dollars per barrel for WTI and 69.09 for Brent. Stocks in Europe OPENED GREEN.   ONSHORE YUAN CLOSED UP AGAINST THE DOLLAR AT 6.4610. OFFSHORE YUAN CLOSED DOWN AGAINST  THE ONSHORE YUAN AT 6.4692 //ONSHORE YUAN MUCH STRONGER AGAINST THE DOLLAR/OFF SHORE STRONGER TO THE DOLLAR/. THE DOLLAR (INDEX) IS  MUCH WEAKER AGAINST ALL MAJOR CURRENCIES. CHINA IS STILL  HAPPY TODAY.(GOOD MARKETS )

3 a NORTH KOREA/USA

/SOUTH KOREA

end

 

3 b JAPAN AFFAIRS

c) REPORT ON CHINA

 

 end

4. EUROPEAN AFFAIRS

6. GLOBAL ISSUES

 

end

7. OIL ISSUES

 

Peter’s assessment on the price of oil is that 60 dollars will not last long.  He believe equilibrium will be around 45$ WTI

 

(courtesy Peter Tertzakian/OilPrice.com)

 

 

8. EMERGING MARKET

 end

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

Euro/USA 1.2124 UP .0082/ 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/JAPAN TAPERING BOND PURCHASES /USA FALLING INTEREST RATES AGAIN/HOUSTON FLOODING/EUROPE BOURSES MOSTLY RED

USA/JAPAN YEN 111.13 DOWN  0.152 (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 1.3632 UP .0092 (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 1.2518 DOWN .0004 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/(TRUMP INITIATES LUMBER TARIFFS ON CANADA)

Early THIS FRIDAY morning in Europe, the Euro ROSE by 82 basis points, trading now ABOVE the important 1.08 level RISING to 1.2124; / Last night the Shanghai composite CLOSED UP 3.59 POINTS OR 0.10% / Hang Sang CLOSED UP 292.15 POINTS OR 0.94% /AUSTRALIA CLOSED UP 0.01% / EUROPEAN BOURSES ALL GREEN 

The NIKKEI: this FRIDAY morning CLOSED DOWN 56.61 POINTS OR 0.24%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 292.15 POINTS OR 0.94% / SHANGHAI CLOSED UP 3.59 POINTS OR 0.10% /Australia BOURSE CLOSED UP 0.01`% /

Nikkei (Japan)CLOSED DOWN 56.61 POINTS OR 0.24%

INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: 1330.90

silver:$17.12

Early FRIDAY morning USA 10 year bond yield: 2.549% !!! UP 1 IN POINTS from THURSDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. (POLICY FED ERROR)

The 30 yr bond yield 2.880 UP 2 IN BASIS POINTS from THURSDAY night. (POLICY FED ERROR)

USA dollar index early FRIDAY morning: 91.38 DOWN 48 CENT(S) from YESTERDAY’s close.

This ends early morning numbers FRIDAY MORNING

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And now your closing FRIDAY NUMBERS \1 PM

Portuguese 10 year bond yield: 1.794% DOWN 3  in basis point(s) yield from THURSDAY/

JAPANESE BOND YIELD: +.078% UP 3/5   in basis points yield from THURSDAY/JAPAN losing control of its yield curve/

SPANISH 10 YR BOND YIELD: 1.501% DOWN 4  IN basis point yield from THURSDAY/

ITALIAN 10 YR BOND YIELD: 1.983 DOWN 7  POINTS in basis point yield from THURSDAY/

the Italian 10 yr bond yield is trading 52 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.581%  UP 8 IN BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR FRIDAY

Closing currency crosses for FRIDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/4:00 PM

Euro/USA 1.2133 UP.0090 (Euro UP 90 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 111.22 DOWN 0.056 Yen UP 6 basis points/

Great Britain/USA 1.3688 UP .0147( POUND UP 147 BASIS POINTS)

USA/Canada 1.2513 DOWN  .0009 Canadian dollar UP 9 Basis points AS OIL ROSE TO $63.70

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was UP 90 to trade at 1.2133

The Yen ROSE to 111.22 for a GAIN of 6 Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE

The POUND ROSE BY 147 basis points, trading at 1.3688/

The Canadian dollar ROSE by 9 basis points to 1.2513/ WITH WTI OIL RISING TO : $63.70

The USA/Yuan closed AT 6.4690
the 10 yr Japanese bond yield closed at +.078% UP 3/5  BASIS POINTS / yield/
Your closing 10 yr USA bond yield UP 1 IN basis points from THURSDAY at 2.565% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 2.8713 DOWN  3  in basis points on the day /

Your closing USA dollar index, 91.30 DOWN 55 CENT(S) ON THE DAY/1.00 PM/

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

London: CLOSED UP 15.70 POINTS OR 0.19%
German Dax :CLOSED UP 42.13 POINTS OR 0.32%
Paris Cac CLOSED UP 28.51 POINTS OR 0.52%
Spain IBEX CLOSED UP 27.20 POINTS OR 0.26%

Italian MIB: CLOSED UP 124.57 POINTS OR 0.53%

The Dow closed UP 228.46 POINTS OR 0.89%

NASDAQ WAS  UP 48.29 Points OR 0.68% 4.00 PM EST

WTI Oil price; 63.70 1:00 pm;

Brent Oil: 69.28 1:00 EST

USA /RUSSIAN ROUBLE CROSS: 56.61 UP 14/100 ROUBLES/DOLLAR (ROUBLE LOWER BY 14 BASIS PTS)

TODAY THE GERMAN YIELD RISES TO +.581% 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:$64/43

BRENT: $69.80

USA 10 YR BOND YIELD: 2.548%   THE RAPID ASSENT IN YIELD IS VERY DANGEROUS/ANYTHING OVER 2.70% AND THE ENTIRE DERIVATIVES BLOW UP

USA 30 YR BOND YIELD: 2.853%

EURO/USA DOLLAR CROSS: 1.2195 UP .0153  OR 153 BASIS POINTS

USA/JAPANESE YEN:111.01 down 0.273/ UP 27 BASIS POINTS

USA DOLLAR INDEX: 90.94 DOWN 91 cent(s)/

The British pound at 5 pm: Great Britain Pound/USA: 1.3738 : UP 197 POINTS FROM LAST NIGHT

Canadian dollar: 1.2466 UP 57 BASIS pts

German 10 yr bond yield at 5 pm: +0.581%

END

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

TRADING IN GRAPH FORM FOR THE DAY

Stocks Surge To Best Start In 30 Years; Bitcoin, Bonds & Dollar Battered

Just “buy” – everyone else is… what could go wrong?

 

It’s been an interesting year so far… equities are unstoppable, the dollar is tanking, gold is soaring, and bonds are tumbling…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180112_eod1.png

 

This is easy… US Equities have ‘suffered’ only one down day in 2018 so far (in fact Trannies haven’t seen one down day)…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180112_eod24.png

BTFD!!

 

https://www.zerohedge.com/sites/default/files/inline-images/20180112_eod25_1.png

Putting this move in context:

  • Trannies best start to a year since 1983
  • S&P best start since 1987
  • Dow best start since 1997
  • Nasdaq best start since 2004

 

“Never gonna let you down”

https://www.zerohedge.com/sites/default/files/inline-images/20180112_eod12.png

The Dow is up 1060 points in 2018 – 5 names account for more than half those gains (BA, CAT, IBM, MMM, and UTX added 555 points!)

 

https://www.zerohedge.com/sites/default/files/inline-images/20180112_eod22.png

VIX traded back above 10 today again, rising with stocks, and VIX has entirely decoupled from stocks…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180112_eod23.png

 

Banks had a good week (despite dismal earnings) but Wells ended red…

https://www.zerohedge.com/sites/default/files/inline-images/20180112_eod21.png

 

Facebook took the shine off Nasdaq a little today, tumbling after Zuck’s censorship comments…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180112_eod18.png

But thanks to panic-buying in NFLX and AMZN, FANG Stocks exploded higher off-the-lows today…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180112_eod19.png

 

And while stocks are surging, Treasuries are tumbling – suffering the biggest total return loss since 2006… (worst 2 week drop in 3 months)…

https://www.zerohedge.com/sites/default/files/inline-images/20180112_eod2.png

Yields ended the week higher across the curve, but look at the strength in the long-end the last 3 days…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180112_eod13.png

After steepening dramatically after the China headlines, the yield curve collapsed back flatter to end the week unchanged…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180112_eod15.png

2Y Yields topped 2.00% for the first time since Sept 2008…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180112_eod16.png

 

2Y Yields are now 18bps higher than the dividend yield of the S&P 500…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180112_eod17.png

High yield bonds had the worst week in the last 6, decoupling from stocks…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180112_eod20.png

 

The dollar plunged most since March 2017 today to the lowest in 4 months... (5th week down in a row)

https://www.zerohedge.com/sites/default/files/inline-images/20180112_eod10.png

 

One wonders if this is the short-term low?

 

https://www.zerohedge.com/sites/default/files/inline-images/20180112_eod11.png

 

Cryptos have had a volatile start to the year with Bitcoin, Ripple, and Litecoin all holding around unch while Ethereum is up 65%…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180112_eod3.png

This week saw Ripple crash 30%, and Bitcoin dropped around 19% – the worst week since Jan 2015

 

https://www.zerohedge.com/sites/default/files/inline-images/20180112_eod4.png

 

The last few years have seen Bitcoin show seasonal tendency to drop into mid-to-late January before picking up into the summer…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180112_eod5.png

In commodity land, copper ended the week lower but Crude and PMs surged today as the dollar collapsed…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180112_eod9.png

 

Gold surged today – its best day since August – and is up 5 straight weeks…Gold futures hit $1340 for the first time since September 14th…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180112_eod7.png

Normalized for vol, gold has decoupled higher relative to bitcoin…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180112_eod14.png

 

WTI Crude bounced back above $64 today as the dollar plunged…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180112_eod8.png

 

And Spot Palladium surged to a new record high…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180112_eod6.png

 

Bonus Chart: All-In Bitches!!!

end

 

This is big news: the two yr USA treasury spikes to over 2.% and the 10 yr is back to 2.59%

(courtesy zerohedge)

Treasury Yields Spike After ‘Hot’ CPI – 2Y Tops 2.00% For First Time Since Lehman

For the first time since Lehman (Sept 2008), 2-year Treasury yields topped 2.00% following a hotter-than-expected CPI print.

 

https://www.zerohedge.com/sites/default/files/inline-images/20180112_cpi3.png

 

Additionally, 10Y Yields have spiked back to China-headline-highs…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180112_cpi2.png

Notably the yield curve is modestly flatter…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180112_cpi5.png

 

The Dollar is rallying on the data (but is very noisy), though still lower on the day after selling in Europe…

 

https://www.zerohedge.com/sites/default/files/inline-images/20180112_cpi4.png

end
This is surprising:

Retail sales a big miss/with retail sales growth of only .3% month /month.  The month before showed a strong 1.4% growth month/month.

(courtesy zerohedge)

Retail Sales Miss December Expectations For 4th Straight Year

For the fourth year in a row December retail sales numbers (control group) missed expectations. After the shocking 1.4% MoM surge in sales in November, December retail sales growth slowed to just 0.3% MoM.

However, despite the miss, this is the 6th straight month of retail sales growth MoM:

https://www.zerohedge.com/sites/default/files/inline-images/20180112_ret1.png

The spike in YoY retail sales appears to be rolling over:

https://www.zerohedge.com/sites/default/files/inline-images/20180112_ret2.png

Pretty much every sector saw gains, but still the data missed:

https://www.zerohedge.com/sites/default/files/inline-images/20180112_ret3.png

Which is odd considering that the US consumer is now fully tapped out, with personal savings at 10 year lows…

… while credit card borrowings just hit an all time high.

asd

If US retailers can’t beat expectations now (with the exception of non-store, i.e., online, retailers of course) when can they?

end

 

The core consumer prices came in hotter than expected with a print of 1.8%. However what the fed is seeking is wage increases.

(courtesy zerohege)

Core Consumer Prices Rise Faster Than Expected As Rents Accelerate

Following deflationary prints in import prices and producer prices, core consumer prices came in modestly hotter than expected. Core CPI printed +1.8% YoY – highest since April 2017 – as shelter costs re-acclerate.

 

https://www.zerohedge.com/sites/default/files/inline-images/20180112_cpi1.png

Headline SPI rose just 0.1% MoM (as expected) but notable slower than the 0.4% MoM rise in November.

The index for all items less food and energy increased 0.3 percent in December, its largest increase since January 2017.

The recent (silver lining) trend in lower shelter cost growth ended with a modest rise MoM and YoY in both Shelter and Rent inflation…

https://www.zerohedge.com/sites/default/files/inline-images/20180112_cpi.png

Along with the shelter index, the indexes for medical care, used cars and trucks, new vehicles, and motor vehicle insurance were among those that increased in December.

The indexes for apparel, airline fares, and tobacco all declined over the month.

end
This is not good:  Wells Fargo just reported the worst mortgage application number since the financial crisis.  It is also noteworthy that USA citizens cannot obtain mortgages with interest rates as low as 1%  A rise to 2 to 3% will wipe out the domestic housing sector.
(courtesy zerohedge)

Wells Just Reported The Worst Mortgage Number Since The Financial Crisis

When we reported Wells Fargo’s Q3 earnings back in October, we drew readers’ attention to one specific line of business, the one we dubbed the bank’s “bread and butter“, namely mortgage lending, and which as we then reported was “the biggest alarm” because “as a result of rising rates, Wells’ residential mortgage applications and pipelines both tumbled, specifically in Q3 Wells’ mortgage applications plunged by $10bn from the prior quarter to $73bn, while the mortgage origination pipeline plunged to just $29 billion”, and just shy of the post-crisis lows recorded in late 2013.

Fast forward one quarter when what was already a grim situation for Warren Buffett’s favorite bank, just got as bad as it has been since the financial crisis for America’s largest mortgage lender, because buried deep in its presentation accompanying otherwise unremarkable Q1 results (EPS small beat, revenue small miss), Wells just reported that its ‘bread and butter’ is virtually gone, and in Q1 the amount in the all-important Wells Fargo Mortgage Application pipeline plunged by a whopping 23% to just $23 billion, and at the lowest level since the financial crisis.

And while Wells’ mortgage applications, a less forward looking indicator, was not quite as dire, it too was just shy of fresh post crisis lows at only $63 billion, just barely above the post-crisis low hit one year ago.

asd

The lagging mortgage originations number, which usually trails the pipeline by 3-4 quarters, was nearly as bad, plunging 39% sequentially from $72 billion to only $44 billion, “due to higher rates and seasonality.” Since this number lags the mortgage applications, we expect it to post fresh post-crisis lows in the coming quarter.

asd

Adding insult to injury, as one would expect with the yield curve flattening to 10 year lows recently, Wells’ Net Interest margin – the source of its interest income – declined to a one year low, missing expectations once again. This is what Wells said: “NIM of 2.84%, down 2 bps LQ as the negative adjustment related to leveraged leases, and growth in average deposits, were partially offset by lower average long-term debt and a modest net benefit from all other growth, repricing and variable item.” And visually:

sdf

And finally, there was the chart showing the bank’s consumer loan trends: these reveal that aside for credit cards, the broad decline in credit demand continues.

sdf

What these number disturbingly reveal, is that the average US consumer can not afford to take out mortgages at a time when rates rise by as little as 1% or so from all time lows. It also means that if the Fed is truly intent in engineering a parallel shift in the curve of 2-3%, the US can kiss its domestic housing market goodbye.

end
Because of tax cuts and bond run offs, Goldman Sachs warns that Treasury issuance will double this year and next to over 1 trillion dollars
here is why..
(courtesy zerohedge)

Here Comes The Debt Tsunami: Goldman Warns Treasury Issuance To More Than Double In 2019

During yesterday’s surprisingly candid remarks by Bill Dudley, the second most important person in the Federal Reserve – the organization that is responsible for the third consecutive and largest ever yet asset bubble in history – said that one risk he was increasingly worried about was, drumroll, elevated asset prices. Because, supposedly, the Fed has little to input in how asset prices came to be where they are…

Just as ominous was Dudley’s admission that the second risk he was concerned about is “the long-term fiscal position of the United States” i.e. US debt. Specifically, Dudley said that the Trump tax cut “will increase the nation’s longer-term fiscal burden, which is already facing other pressures, such as higher debt service costs and entitlement spending as the baby-boom generation retires.

Oddly there was no mention of which administration doubled US debt from $10 trillion to $20 trillion in under a decade, and which organization enabled this to happen by keeping rates at record low levels, while crushing savers, and bailing out habitual gamblers.

In any case, now that the narrative has shifted, and Donald Trump will be scapegoated not only for the upcoming “tremendous” market crash – something he has made especially easy by taking credit for every single uptick in the S&P – but also for the inevitable fiscal collapse of the United States, it is time to provide the backing for this particular strawman, and to do that, this morning Dudley’s former employer, Goldman Sachs released a report in which the bank’s chief economist said the he is updating his Treasury issuance forecast to account for recent revised deficit projections. As a result, US marketable borrowings will more than double from below $500 billion in 2018 to over $1 trillion in 2019 as the debt tsunami finally get going.

To build up the strawman, Goldman explains that US borrowing needs will rise for three reasons:

  • First, recently enacted tax reform legislation is estimated to raise the deficit by more than $200bn, on average, each of the next four years, and Congress looks likely approve substantial new spending as well.
  • Second, Fed portfolio runoff will increase the amount of debt the Treasury must issue to the public.
  • Third, the Treasury’s cash balance is likely to rise by around $200bn once a longer-term debt limit suspension is enacted, which will also necessitate additional borrowing.

Goldman expects that the “substantial increase” in borrowing needs will be announced by the Treasury when it lays out its plans at the February quarterly refunding.

What Goldman has left unsaid is what happens to interest rates at a time when on one hand US debt supply is set to double and on the other the Fed is set to continue shrinking its balance sheets, the ECB and BOJ are set to accelerate (and begin) tapering their own QEs and when global inflation is expected to keep rising.

What is also unsaid is just who will be the marginal buyer of this debt tsunami when central banks increasingly shift away from debt monetization.

What is certainly unsaid is what “market event”, a la Lehman 2008, will be used to unleash QE4 in order to bring the Fed back into the deficit funding business once it becomes all too obvious that borrowing spree the US is about to set off on is unfeasible absent a central bank monetizing the new supply and keeping rates low.

We look forward to the answer being revealed in the not too distant future.

For now, however, here is Goldman’s explanation why US debt supply is set to soar by more than 100%.

Raising Our Treasury Issuance Estimates

Ahead of the February quarterly refunding, we are updating our Treasury issuance estimates. We expect net issuance of marketable Treasury securities to roughly double in FY2018 over the FY2017 level, for three reasons:

  1. We expect the budget deficit to rise. We project a deficit of $750bn (3.7% of GDP) in FY2018 and $1050bn (5%) in FY2019, compared with $666bn (3.5%) in FY2017 (line 1 of the table in Exhibit 1). The main factor behind the increase in the deficit we expect is the recently enacted tax legislation, which more than offsets the fiscal effects of an improving economy. We also expect Congress to approve additional spending. Two installments of disaster relief funding have already been approved and a third is likely to pass soon; in the next month or two, Congress is also likely to approve a roughly $100bn increase in the caps on regular appropriations, which should lead to a similar increase in spending spread over the next few years.
  2. The Treasury’s cash balance shrank in FY2017 but is likely to increase in FY2018 because of the debt limit. Over the last few years the Treasury has aimed for a cash balance of $350bn to $400bn when the debt limit is not a factor but reduced the balance to $150bn to $200bn for most of FY2017 as a result of constraints imposed by the debt limit. We expect Congress to suspend the debt limit once again by March, probably through mid-2019. Once the debt limit has been suspended for a longer period, we expect the cash balance to rise to around $350bn. This will require nearly $200bn in additional borrowing in FY2018 in particular (line 8 of the table in Exhibit 1).
  3. Fed balance sheet runoff leaves more for the market to absorb. We estimate that $378bn in Treasuries held on the Fed’s balance sheet mature in FY2018 and $412bn will mature in FY2019 (line 2b of the table in Exhibit 1). In light of the FOMC’s policy to reinvest maturing securities only if principal payments exceed gradually rising caps, we expect balance sheet runoff to add $179bn to the Treasury’s marketable borrowing in FY2018, and $286bn in FY2019.

asd

As a result of these factors, we expect net marketable borrowing to increase from $488bn in FY2017 to $1030bn in FY2018, and we expect a similar level of net borrowing in FY2019 (line 13a in Exhibit 1). The increase in financing needs is likely to be addressed through increases in bill and coupon issuance. The most recent quarterly refunding statement, released in November, indicated that the Treasury will increase bill supply and announce a gradual increase in coupon and FRN auction sizes at the February refunding. The Treasury also indicated that it is likely to fulfill its upcoming issuance needs in a manner that keeps the weighted average maturity (WAM) of its outstanding debt roughly stable. This comment came as a surprise to many fixed income investors. The Treasury has extended WAM for roughly a decade, and many investors assumed it would continue to do so at least modestly and perhaps even more materially if Treasury Secretary Mnuchin followed through on his comments earlier this year in favor of ultra-long issuance.

asd

Exhibit 2 shows our estimates of net bill issuance plus gross issuance by security through 2021. In the current fiscal  year, we expect that net bill issuance will be used to close the majority of the new issuance that will be necessary over the FY2017 level. This is in large part due to the fact that the Treasury has kept coupon auction sizes unchanged since the start of the fiscal year in October 2017. However, once coupon auction sizes are increased, which we expect to be announced at the February refunding, bills will make up a slightly smaller share of new issuance. In FY2019, for example, we expect the increase in net bill issuance over FY2017 to close about 1/3 of the financing gap (i.e., the difference between the new money that would be raised using current auction amounts and the projected financing need), in line with the TBAC recommendations. Most of the remaining gap would be made up through additional issuance of 2-year, 3-year, and 5-year notes. We expect the Treasury to take the initial steps in this direction next month when it makes its quarterly refunding announcement.

Finally, in light of the unspoken message, which for anyone confused is that interest rates are about to spike, here is the only quote that matters from future Fed Chair Jay Powell, who made the following prophetic observation during the October 2012 Fed meeting.

I think we are actually at a point of encouraging risk-taking, and that should give us pause. Investors really do understand now that we will be there to prevent serious losses. It is not that it is easy for them to make money but that they have every incentive to take more risk, and they are doing so. Meanwhile, we look like we are blowing a fixed-income duration bubble right across the credit spectrum that will result in big losses when rates come up down the road. You can almost say that that is our strategy.

You almost can, because “down the road” is finally here, and rates are about to come up. As for those “big losses” from record duration, don’t worry – by the time someone has to deal with the fallout, they will be someone else’s problem…

end

SWAMP STORIES

 

Trump denies the “shithole” comment.  However it seems that the DACA agreement just fell apart
(courtesy zerohedge)

Trump Denies “Shithole” Comment: “Never Said Anything Derogatory About Haitians”

After reports that Trump referred to “shithole” African nations in a meeting (that was not denied by The White House), the president has tweeted this morning that “this was not the language used.”

The language used by me at the DACA meeting was tough, but this was not the language used. What was really tough was the outlandish proposal made – a big setback for DACA!

he then following up by claiming he “never said anything derogatory about Haitians other than Haiti is, obviously, a very poor and troubled country. Never said “take them out.” Made up by Dems. I have a wonderful relationship with Haitians. Probably should record future meetings – unfortunately, no trust!”

Never said anything derogatory about Haitians other than Haiti is, obviously, a very poor and troubled country. Never said “take them out.” Made up by Dems. I have a wonderful relationship with Haitians. Probably should record future meetings – unfortunately, no trust!

His tweet, denying the “shithole” comment follows an earlier series of tweets that slammed the proposed DACA proposal, and sought to explain his thinking about a bipartisan immigration plan that was presented on Thursday which would allow too many people in from “high crime” countries. He said that’s one of the key reasons why a bipartisan plan presented on Thursday is a nonstarter.

The so-called bipartisan DACA deal presented yesterday to myself and a group of Republican Senators and Congressmen was a big step backwards. Wall was not properly funded, Chain & Lottery were made worse and USA would be forced to take large numbers of people from high crime…..

….countries which are doing badly. I want a merit based system of immigration and people who will help take our country to the next level. I want safety and security for our people. I want to stop the massive inflow of drugs. I want to fund our military, not do a Dem defund….

….Because of the Democrats not being interested in life and safety, DACA has now taken a big step backwards. The Dems will threaten “shutdown,” but what they are really doing is shutting down our military, at a time we need it most. Get smart, MAKE AMERICA GREAT AGAIN!

On Thursday evening, reports broke that Trump had criticized the Gang of Six senators’ plan to reinstate TPS programs for El Salvador, Haiti, and some African nations.

“Why are we having all these people from shithole countries come here?” Trump said in the White House meeting with a group of senators, including Sen. Dick Durbin, D-Ill., and Sen. Lindsey Graham, R-S.C.

Meanwhile, the comment sparked outrage among Democrats who did not hesitate to publicly slam Trump for what many said was a racist comment.

It would appear, unlike all the chattering yesterday, that this ‘bipartisan’ deal is far from ‘done’.

https://www.zerohedge.com/sites/default/files/inline-images/20180112_shithole.png

end
Let us close out the week with this week’s wrap up courtesy of Greg Hunter of USAWatchdog:

China Debt Threat, Iran No Deal, Economic Update

By Greg Hunter On January 12, 2018 In Weekly News Wrap-Ups

By Greg Hunter’s USAWatchdog.com (WNW 317 1.12.18)

China threatened to stop buying U.S. Treasury debt. The main stream media is ignoring this story, but former Assistant Treasury Secretary Dr. Paul Craig Roberts once said, “If China started to sell U.S. debt, it would be the end of America.” It’s a very big deal, and China is sending a very big message to the Trump Administration.

Treasury Secretary Steve Mnuchin said more sanctions are coming for Iran. It looks like the so-called nuclear deal (which was never signed by Iran) is not going to continue under the Trump Administration. Iran is warning of trouble if Trump walks away from the nuclear agreement that was negotiated by the Obama Administration.

Walmart is raising its minimum wage to $11 an hour from $9 an hour. The company is also giving out bonuses up to $1,000 for employees. The company says it’s doing this because of the recently passed Trump tax plan. On the other side of the economic coin, Walmart has abruptly closed 63 Sam’s Club stores, laying off thousands of workers. Meanwhile, Sears and other stores are closing locations. Many on Wall Street are saying there is a correction coming for the stock market, even though America has seen improvements to the overall economy.

Join Greg Hunter as he talks about these stories and more in the Weekly News Wrap-Up.

Video Link

https://usawatchdog.com/china-debt-threat-iran- no-deal-economic-update/

 end

I will  see you MONDAY night

HARVEY

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