Feb 15/GOLD DOWN $2.45 TO $1352.95/SILVER DOWN 8 CENTS TO $16.84/HUGE EFP TRANSFER IN GOLD OF 22,672 CONTRACTS/SILVER EFP ISSUANCE: 1731 CONTRACTS/THE KEY USA/YEN CROSS PLUMMETS TO CLOSE TO 106.00/TWO BIG USA DATA POINTS TODAY; PPI IS SCORCHING HOT AND THAT MEANS INFLATION AROUND THE CORNER/INDUSTRIAL PRODUCTION FALTERS MEANING STAGFLATION MAY BE UPON US/MORE SWAMP STORIES FOR YOU TONIGHT/

 

 

GOLD: $1352.95 DOWN $2.45

Silver: $16.84 DOWN 8 cents

Closing access prices:

Gold $1353.50

silver: $16.88

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: $XXXX DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME: $XXXX

PREMIUM FIRST FIX: $3.78

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SECOND SHANGHAI GOLD FIX: $XXXX

NY GOLD PRICE AT THE EXACT SAME TIME: $1333.50

discount of Shanghai 2nd fix/NY:$1.20

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LONDON FIRST GOLD FIX: 5:30 am est $1353.70

NY PRICING AT THE EXACT SAME TIME: $1353.90

LONDON SECOND GOLD FIX 10 AM: $1352.45

NY PRICING AT THE EXACT SAME TIME. $1351.900

For comex gold:

FEBRUARY/

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

TOTAL NOTICES SO FAR:1784 FOR 178400 OZ (5.5489 TONNES),

For silver:

FEBRUARY

1 NOTICE(S) FILED TODAY FOR

5,000 OZ/

Total number of notices filed so far this month: 308 for 1,540,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Bitcoin: BID $9638/OFFER $9714: up $198(morning)

Bitcoin: BID/ $99029/offer $9999: up $492  (CLOSING/5 PM)

end

Let us have a look at the data for today\

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In silver, the total open interest ROSE BY A HUGE SIZED 3070 contracts from 194,056  RISING TO 197,126 WITH  YESTERDAY’S HUGE  35 CENT GAIN IN SILVER PRICING.  WE  HAD ZERO COMEX LIQUIDATION. HOWEVER, WE WERE AGAIN NOTIFIED THAT WE HAD ANOTHER GOOD SIZED NUMBER OF COMEX LONGS TRANSFERRING THEIR CONTRACTS TO LONDON THROUGH THE EFP ROUTE:  1731 EFP’S FOR MARCH AND AND 0 EFP’S FOR MAY AND ZERO FOR ALL  OTHER MONTHS  AND THUS TOTAL ISSUANCE OF 1731 CONTRACTS.  WITH THE TRANSFER OF 1731 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. ALSO KEEP IN MIND THAT THERE CAN BE A DELAY OF 24 HRS IN THE ISSUING OF EFP’S. THE 1731 CONTRACTS TRANSLATES INTO 8.915 MILLION OZ DESPITE  WITH THE CONTINUAL DROP IN OPEN INTEREST IN SILVER AT THE COMEX.

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

36,852 CONTRACTS (FOR 12 TRADING DAYS TOTAL 36,852 CONTRACTS OR 184.26 MILLION OZ: AVERAGE PER DAY: 3071 CONTRACTS OR 15.355 MILLION OZ/DAY)

TO GIVE YOU AN IDEA AS TO THE HUGE SUPPLY THIS MONTH IN SILVER:  SO FAR THIS MONTH:  184.26 MILLION PAPER OZ HAVE MORPHED OVER TO LONDON. THIS REPRESENTS AROUND 26/32% OF ANNUAL GLOBAL PRODUCTION

ACCUMULATION IN YEAR 2018 TO DATE SILVER EFP’S:  432.60 MILLION OZ.

ACCUMULATION FOR JAN 2018: 236.879 MILLION OZ

RESULT: A HUGE SIZED GAIN IN OI SILVER COMEX WITH THE HUGE  35 CENT GAIN IN SILVER PRICE.  WE ALSO HAD A GOOD SIZED EFP ISSUANCE OF 1731 CONTRACTS WHICH EXITED OUT OF THE SILVER COMEX AND TRANSFERRED THEIR OI TO LONDON AS FORWARDS. SPECULATORS CONTINUED THEIR INTEREST IN ATTACKING THE SILVER COMEX FOR PHYSICAL SILVER . FROM THE CME DATA 1731 EFP’S  FOR  MONTHS MARCH AND MAY WERE ISSUED FOR TODAY  FOR A DELIVERABLE FORWARD CONTRACT OVER IN LONDON WITH A FIAT BONUS.   WE GAINED  4801 OI CONTRACTS i.e. 1731 open interest contracts headed for London (EFP’s) TOGETHER WITH A INCREASE OF 3070  OI COMEX CONTRACTS. AND ALL OF THIS HAPPENED WITH THE HUGE RISE IN PRICE OF SILVER OF  35 CENTS AND A CLOSING PRICE OF $16.92 WITH RESPECT TO YESTERDAY’S TRADING. YET WE STILL HAVE A FAIR 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. 0.986 BILLION TO BE EXACT or 141% of annual global silver production (ex Russia & ex China).

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

In gold, the open interest  ROSE BY A HUMONGOUS 16,637 CONTRACTS UP TO 528,382 WITH THE GIGANTIC SIZED RISE IN PRICE OF GOLD WITH YESTERDAY’S TRADING ($27.40). HOWEVER, IN ANOTHER DEVELOPMENT, WE RECEIVED THE TOTAL NUMBER OF GOLD EFP’S ISSUED FOR TODAY AND IT TOTALED AN ATMOSPHERIC SIZED  22,672 CONTRACTS OF WHICH  APRIL SAW THE ISSUANCE OF 21,922 CONTRACTS AND  JUNE SAW THE ISSUANCE OF 750 CONTRACTS AND THEN ALL OTHER MONTHS ZERO.    The new OI for the gold complex rests at 528,382. ALSO REMEMBER THAT THERE WILL BE A DELAY IN THE ISSUANCE OF EFP’S.  THE BANKERS REMOVE LONG POSITIONS OF COMEX GOLD IMMEDIATELY.  THEN THEY ORCHESTRATE THEIR PRIVATE EFP DEAL WITH THE LONGS AND THAT COULD TAKE AN ADDITIONAL 48 HRS SO WE GENERALLY DO NOT GET A MATCH WITH RESPECT TO DEPARTING COMEX LONGS AND NEW EFP LONG TRANSFERS. 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 FEBRUARY COMEX. 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 TODAY DESPITE YESTERDAY’S TRADING IN GOLD,  WE HAVE A GAIN OF 39,309  CONTRACTS: 16,637 OI CONTRACTS INCREASED AT THE COMEX AND A GIGANTIC SIZED  22,672 OI CONTRACTS WHICH NAVIGATED OVER TO LONDON.(39,309 oi gain in CONTRACTS EQUATES TO 122.26 TONNES)

YESTERDAY, WE HAD 6481 EFP’S ISSUED.

ACCUMULATION OF EFP’S/ GOLD(EXCHANGE FOR PHYSICAL) FOR THE MONTH OF FEBRUARY STARTING WITH FIRST DAY NOTICE: 131,430 CONTRACTS OR 13,143,000  OZ OR 408.80 TONNES (12 TRADING DAYS AND THUS AVERAGING: 10,952 EFP CONTRACTS PER TRADING DAY OR 1,095,200 OZ/ TRADING DAY)

TO GIVE YOU AN IDEA AS TO THE HUGE SIZE OF THESE EFP TRANSFERS :   SO FAR THIS MONTH IN 12 TRADING DAYS: IN  TONNES: 408.80 TONNES

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

THUS EFP TRANSFERS REPRESENTS 408.80/2200 x 100% TONNES =  18.58% OF GLOBAL ANNUAL PRODUCTION SO FAR IN FEBRUARY ALONE.

ACCUMULATION OF GOLD EFP’S YEAR 2018 TO DATE:  1042.2 TONNES

ACCUMULATION OF GOLD EFP’S FOR JANUARY 2018: 653.22  TONNES

Result: A  HUGE SIZED INCREASE IN OI AT THE COMEX WITH THE HUGE SIZED GAIN IN PRICE IN GOLD TRADING YESTERDAY ($27.40). IT IS WITHOUT A DOUBT THAT MANY OF THE DEPARTED COMEX LONGS  RECEIVED THEIR PRIVATE EFP CONTRACT  FOR EITHER  APRIL OR JUNE. HOWEVER, WE HAD ANOTHER GOOD SIZED NUMBER OF COMEX LONG TRANSFERRING TO LONDON THROUGH THE EFP ROUTE: 22,672 CONTRACTS AS THESE HAVE ALREADY BEEN NEGOTIATED AND CONFIRMED.   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 22,672 EFP CONTRACTS ISSUED, WE HAD A NET GAIN IN OPEN INTEREST OF 39,309 contractON THE TWO EXCHANGES:

22,672 CONTRACTS MOVE TO LONDON AND  16,637 CONTRACTS INCREASED AT THE COMEX. (in tonnes, the GAIN in total oi equates to 122.26 TONNES).

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

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

GLD

WITH GOLD DOWN $2.45 TODAY, NO CHANGE IN GOLD INVENTORY AT THE GLD/

Inventory rests tonight: 823.66 tonnes.

SLV/ 

NO CHANGES IN SILVER INVENTORY AT THE SLV/ AGAIN WITH TODAY’S HUGE RISE IN SILVER PRICE:   NO CHANGE IN INVENTORY

/INVENTORY RESTS AT 314.045 MILLION OZ/

end

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

1. Today, we had the open interest in silver ROSE BY A HUGE 3070  contracts from 194,056 UP TO 197,126 (AND now A LITTLE FURTHER TO THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) DESPITE  THE HUGE SIZED FALL  IN PRICE OF SILVER  (35 CENTS WITH RESPECT TO  YESTERDAY’S TRADING).   OUR BANKERS USED THEIR EMERGENCY PROCEDURE TO ISSUE ANOTHER GOOD 1731 PRIVATE EFP’S FOR MARCH AND 0 EFP CONTRACTS OR MAY  (WE DO NOT GET A LOOK AT THESE CONTRACTS AS IT IS PRIVATE BUT THE CFTC DOES AUDIT THEM) AND 0 EFP’S FOR ALL OTHER MONTHS .  EFP’S GIVE OUR COMEX LONGS A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON. WE HAD SOME COMEX SILVER COMEX LIQUIDATION. IF WE TAKE THE  OI GAIN AT THE COMEX OF  3070 CONTRACTS TO THE 1731 OI TRANSFERRED TO LONDON THROUGH EFP’S, WE OBTAIN A GAIN OF  4801  OPEN INTEREST CONTRACTS .  WE STILL HAVE A GOOD AMOUNT OF SILVER OUNCES THAT ARE STANDING FOR METAL IN JANUARY (SEE BELOW). THE NET GAIN TODAY IN OZ ON THE TWO EXCHANGES:  24.00 MILLION OZ!!!

RESULT: A HUGE SIZED INCREASE IN SILVER OI AT THE COMEX WITH THE HUGE SIZED GAIN OF 35 CENTS IN PRICE (WITH RESPECT TO YESTERDAY’S TRADING ). BUT WE ALSO HAD ANOTHER GOOD 1731 EFP’S ISSUED TRANSFERRING COMEX LONGS OVER TO LONDON. TOGETHER WITH THE GOOD  SIZED AMOUNT OF SILVER OUNCES STANDING FOR FEBRUARY, 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

)Late WEDNESDAY night/THURSDAY morning: Shanghai closed /Hang Sang CLOSED UP 599.83 or 1.97% / The Nikkei closed UP 310.81 POINTS OR 1.47%/Australia’s all ordinaires CLOSED UP 1.16%/Chinese yuan (ONSHORE) closed UP at 6.3415/Oil DOWN to 60.58 dollars per barrel for WTI and 63.84 for Brent. Stocks in Europe OPENED DEEPLY IN THE GREEN  .   ONSHORE YUAN CLOSED UP AGAINST THE DOLLAR AT 6.3415. OFFSHORE YUAN CLOSED UP AGAINST  THE ONSHORE YUAN AT 6.2980//ONSHORE YUAN A LITTLE STRONGER AGAINST THE DOLLAR/OFF SHORE A LOT STRONGER TO THE DOLLAR/. THE DOLLAR (INDEX) IS A LOT WEAKER AGAINST ALL MAJOR CURRENCIES .  CHINA IS  HAPPY TODAY AS THEY BEGIN THEIR NEW YEAR ONE WEEK HOLIDAY TOMORROW

 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

 i)North Korea

b) REPORT ON JAPAN

Last night the Yen rose as Japanese machine orders crashed 11.9% month over month.  Before central bank intervention the USA/Yen came close to 106.50

( zerohedge)

3 c CHINA

4. EUROPEAN AFFAIRS

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

6 .GLOBAL ISSUES

Seems that Chinese buyers have stopped buying Canadian properties: Cdn existing home sales crash in January.

( zero hedge)

7. OIL ISSUES

8. EMERGING MARKET

9. PHYSICAL MARKETS

Agnico Eagle beats the street by 2 cents.  It also increases production guidance for both 2018 and 2019 and most importantly adds dramatically to its reserves to 20.6 million oz/

In times past, the most important part of the earnings report for major mining companies is not the income side of things but the reserves and the future production and costs.  The street (the bankers) focused on current income instead of what is coming in the future.

( Agnico Eagle)

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

i)Producer prices is generally considered a forerunner of inflation.  Today’s reading shows PPI rose far more than expected in January, rising a good 2.7% year over year.

( zerohedge)

ii)Two regional Fed manufacturing reports send conflicting signals:  The New York survey slid showing a slowdown but the Philly area survey rose.

However the key prices paid component which always leads to inflation rose in both surveys
( zerohedge)

ii b)Stagflation strikes with a vengeance as Industrial production sinks badly.  So with the latest data provided, we inflation surging but the economy faltering.

(courtesy zerohedge)

iii)Trump agrees with some Democrats supporting a 25 cent Federal gas tax to help pay for infrastructure

( zerohedge)

iv)We have been telling you quite often that Trump wants his wall and block family migration. He now threatens the bipartisan immigration deal as there is no wall in the agreement

(courtesy zerohedge)

v)Part ii/ The folly of Central Bankers Keynesian philosophy

(courtesy David Stockman/ContraCorner Part ii)

vi)

A good article on the suspension of the Debt ceiling and where the USA debt is heading with respect to March 1.2019 where it is intended to be reinstated. The pundits figure that by that date the debt ceiling will be 22 trillion USA dollars
(courtesy Dave Kranzler/IRD)

vii)SWAMP STORIES

a)My goodness!!  Adam Schiff now admits that the Democratic Memo contains “sources and methods”.  It is interesting that he scolded the Republicans not to release their memo because it contained “sources and methods”

( zerohedge)

b)This does not look good for Kushner:  both the IRS and the Dept of Justice subpoena investors in the Kushner companies.

( zerohedge)

c)I think most of expected this:  Bruce Ohr hid his wife’s Fusion GPS payments form ethic officials as Bruce Ohr refused to obtain a conflict of interest waiver

( Luke Rosiak/DailyCaller)

Let us head over to the comex:

The total gold comex open interest ROSE BY A GIGANTIC 16,637 CONTRACTS UP to an OI level 528,382  WITH THE HUGE SIZED RISE IN THE PRICE OF GOLD ($27.40 GAIN WITH RESPECT TO YESTERDAY’S TRADING).   WE HAD ZERO COMEX GOLD LIQUIDATION.  HOWEVER THE CME REPORTS THAT  THE BANKERS ISSUED ANOTHER STRONG COMEX TRANSFER THROUGH THE EFP ROUTE AS THESE LONGS RECEIVED A DELIVERABLE LONDON FORWARD TOGETHER WITH A FIAT BONUS. WE HAD AN ATMOSPHERIC SIZED 21922 EFP’S ISSUED FOR APRIL  AND 750 EFP’s  FOR JUNE AND ZERO FOR ALL OTHER MONTHS:  TOTAL  22,672 CONTRACTS. THE OBLIGATION STILL RESTS WITH THE BANKERS ON THESE TRANSFERS. ALSO REMEMBER THAT THERE IS NO DOUBT A HUGE DELAY IN THE ISSUANCE OF EFP’S AND IT PROBABLY TAKES AT LEAST  48 HRS AFTER LONGS GIVE UP THEIR COMEX CONTRACTS FOR THEM TO RECEIVE THEIR EFP’S AS THEY ARE NEGOTIATING THIS CONTRACT WITH THE BANKS FOR A FIAT BONUS PLUS THEIR TRANSFER TO A LONDON FORWARD… THE COMEX IS NOW AN ABSOLUTE FRAUD!!

ON A NET BASIS IN OPEN INTEREST WE GAINED TODAY: 39,309 OI CONTRACTS IN THAT 22,672 LONGS WERE TRANSFERRED AS FORWARDS TO LONDON AND WE GAINED 16,637 COMEX CONTRACTS.

NET GAIN ON THE TWO EXCHANGES: 39,309 contracts OR 3,930,900  OZ OR 122.26 TONNES.

Result: A  GIGANTIC SIZED INCREASE IN COMEX OPEN INTEREST WITH THE  HUGE SIZED GAIN IN YESTERDAY’S GOLD TRADING ($27.40.) WE HAD ZERO COMEX GOLD LIQUIDATION.  TOTAL OPEN INTEREST GAIN ON THE TWO EXCHANGES: 39,309 OI CONTRACTS..

We have now entered the active contract month of FEBRUARY where we lost 7 contracts to 1140 contracts.  We had 0 notices filed upon yesterday, so we LOST 7 contracts or an additional 700 oz will NOT  stand in this active contract month of February AND THEY JOINED OTHER EFP’S IN TRANSFERRING FOR A LONDON FORWARD.

March saw a GAIN of 183 contracts UP to 2299.  April saw a GAIN of 16,639 contracts UP to 368,487.  MARCH BECOMES THE FRONT MONTH FOR GOLD

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

 

 PRELIMINARY COMEX VOLUME FOR TODAY: 459,239 contracts

CONFIRMED COMEX VOL. FOR YESTERDAY:  214,289 CONTRACTS

comex gold volumes are RISING AGAIN

Here is a summary of the latest gold trading volumes at the Comex per year

certainly the introduction of EFP’s has certainly had an effect:

Trading Volumes on the COMEX

Meanwhile, gold-trading volumes on the COMEX have never been higher:

end

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And now for the wild silver comex results.

Total silver OI ROSE  BY A HUGE SIZED 3070  CONTRACTS FROM 194,056 UP TO  197,126 WITH YESTERDAY’S HUGE SIZED 35 CENT FALL IN TRADING).   HOWEVER,WE WERE ALSO INFORMED THAT WE HAD ANOTHER HUGE SIZED 1731 EMERGENCY EFP’S FOR MARCH ISSUED BY OUR BANKERS (WITH 143 EFP CONTRACTS FOR MAY AND ZERO FOR ALL OTHER MONTHS) TO COMEX LONGS WHO RECEIVED A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON: THE TOTAL EFP’S ISSUED: 1731.   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 AS WE HAVE JUST SEEN IN GOLD TODAY. THIS PROCESS HAS JUST BEGUN IN EARNEST IN SILVER STARTING IN SEPTEMBER 2017. HOWEVER, IN GOLD, WE HAVE BEEN WITNESSING THIS FOR THE PAST 2 YEARS. NICK LAIRD WAS KIND ENOUGH TO SUPPLY US THE TOTAL FOR 2017 GOLD EFP’S AND IT WAS 6600 TONNES FOR THE ENTIRE YEAR.  WE OBVIOUSLY HAD NO LONG COMEX SILVER LIQUIDATION BUT A HUGE SIZED GAIN IN TOTAL SILVER OI. 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.  ON A NET BASIS WE GAINED 4801  SILVER OPEN INTEREST CONTRACTS:

3070 CONTRACT GAIN AT THE COMEX COMBINING WITH THE ADDITION OF 1731 OI CONTRACTS NAVIGATING OVER TO LONDON.

NET GAIN TWO EXCHANGES: 4801 CONTRACTS 

We are now in the poor non active delivery month of FEBRUARY and here the front month GAINED 198 contracts UP TO  254 contracts.  We had 3 notices filed upon yesterday so we GAINED 195 contracts or 975,000 ADDITIONAL oz will stand for delivery at the comex

The March contract lost 969 contracts DOWN to 87,303

April GAINED 59 contracts UP to 155 .

.

We had 3 notice(s) filed for 15,000 OZ for the FEBRUARY 2018 contract for silver

INITIAL standings for FEBRUARY

Feb 15/2018.

Gold Ounces
Withdrawals from Dealers Inventory in oz nil oz
Withdrawals from Customer Inventory in oz
 190.24 oz
Delaware
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz
No of oz served (contracts) today
1 notice(s)
 100 OZ
No of oz to be served (notices)
1139 contracts
(113900 oz)
Total monthly oz gold served (contracts) so far this month
1784 notices
178400 oz
5.5489 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 0 kilobar transaction/
We had 0 inventory movement at the dealer accounts
total inventory deposit into the dealer accounts:  nil oz
we had 1 withdrawal out of the customer account:
i) out of Delaware:  190.24 oz
total withdrawal: 190/24  oz
we had 0 customer deposit
total customer deposits: nil  oz
we had 0 adjustments
total registered or dealer gold:  402,632,052 oz or 12.52 tonnes
total registered and eligible (customer) gold;   9,108,086.938 oz 283.30 tones

For FEBRUARY:
Today, 0 notice(s) were issued from JPMorgan dealer account and 1 notices were issued from their client or customer account. The total of all issuance by all participants equates to 1 contract(s) of which 1 notices were stopped (received) by j.P. Morgan dealer and 0 notice(s) was (were) stopped/ Received) by j.P.Morgan customer account.

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To calculate the INITIAL total number of gold ounces standing for the FEBRUARY. contract month, we take the total number of notices filed so far for the month (1784) x 100 oz or 178,300 oz, to which we add the difference between the open interest for the front month of FEB. (1140 contracts) minus the number of notices served upon today (1 x 100 oz per contract) equals 292,300 oz, the number of ounces standing in this active month of FEBRUARY

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

No of notices served (1784 x 100 oz or ounces + {(1140)OI for the front month minus the number of notices served upon today (1 x 100 oz )which equals 292,300 oz standing in this active delivery month of February (9.091 tonnes). THERE IS 12.52 TONNES OF REGISTERED GOLD AVAILABLE FOR DELIVERY SO FAR.

WE LOST 7 CONTRACTS OR AN ADDITIONAL 700 OZ WILL NOT STAND IN THIS ACTIVE DELIVERY MONTH OF FEBRUARY.

THE COMEX IS NOW UNDER STRESS AS THE REGISTERED GOLD FALLS BELOW 13 TONNES AS WELL AS HUGE NUMBER OF TONNES LEAVING THE CUSTOMER ACCOUNT

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XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

IN THE LAST 17 MONTHS 71 NET TONNES HAS LEFT THE COMEX.

end

And now for silver

AND NOW THE DECEMBER DELIVERY MONTH

FEBRUARY FINAL standings

feb 15 2018
Silver Ounces
Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory
 1,806,683.364 oz
CNT
Delaware
Scotia
Deposits to the Dealer Inventory
nil
oz
Deposits to the Customer Inventory
 1 573,745.260 oz
 JPM
Scotia
No of oz served today (contracts)
1
CONTRACT(S
(5,000 OZ)
No of oz to be served (notices)
253 contracts
(1,265,000 oz)
Total monthly oz silver served (contracts) 308 contracts

(1,540,000 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 zero inventory movement at the dealer side of things

total inventory movement dealer: nil oz

we had 2 inventory deposits into the customer account

i) into J.P.MORGAN:994,507.590 oz  ***

ii) Into Scotia: 579,237.620 oz

total inventory deposits: 1,573,745.260 oz

*** JPMorgan is continually adding to its inventory almost every single day.

JPMorgan now has 133 million oz of  total silver inventory or 53% of all official comex silver.

we had 3 withdrawals from the customer account;

i) Out of Scotia: 544,315.070

ii) Out of CNT: 748,808.164 oz

iii) Out of Delaware:: 512,619.730 oz

total withdrawals;  65,079.95  oz

we had 0 adjustment

total dealer silver:  43.827 million

total dealer + customer silver:  252.477 million oz

The total number of notices filed today for the FEBRUARY. contract month is represented by 1 contract(s) FOR 5,000 oz. To calculate the number of silver ounces that will stand for delivery in FEBRUARY., we take the total number of notices filed for the month so far at 308 x 5,000 oz = 1,540,000 oz to which we add the difference between the open interest for the front month of FEB. (56) and the number of notices served upon today (1 x 5000 oz) equals the number of ounces standing.

.

Thus the INITIAL standings for silver for the FEB contract month: 308(notices served so far)x 5000 oz + OI for front month of FEBRUARY(254) -number of notices served upon today (1)x 5000 oz equals 2,805,000 oz of silver standing for the FEBRUARY contract month. 

WE GAINED 195 CONTRACTS OR AN ADDITIONAL 975,000 OZ WILL  STAND AT THE COMEX. SOMEBODY WAS BADLY IN DEEP OF PHYSICAL SILVER AT THE COMEX

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ESTIMATED VOLUME FOR TODAY: 91,562 CONTRACTS

CONFIRMED VOLUME FOR YESTERDAY: 119,981 CONTRACTS

YESTERDAY’S CONFIRMED VOLUME OF 119,981 CONTRACTS EQUATES TO  600 MILLION OZ OR 85.6% 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 

1. Sprott silver fund (PSLV): NAV RISES TO -1.83% (FEB 14/2018)
2. Sprott gold fund (PHYS): premium to NAV RISES TO -0.34% to NAV (FEB 14/2018 )
Note: Sprott silver trust back into NEGATIVE territory at -1.83%-/Sprott physical gold trust is back into NEGATIVE/ territory at -0.34%/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)

3.SPROTT CEF.A FUND (FORMERLY CENTRAL FUND OF CANADA): NAV FALLS TO -3.75%: NAV 13.96/TRADING 13.44//DISCOUNT 4.41%

END

And now the Gold inventory at the GLD/

Feb 15/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 823.66 TONNES

Feb 14/AN ADDITIONAL OF 2.95 TONNES OF GOLD INTO GLD WITH THE HUGE GAIN OF 27.40 IN PRICE/INVENTORY RESTS AT 823.66 TONNES

Feb 13/WITH GOLD UP $3.40 WE HAD NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY REMAINS AT 820.71 TONNES

Feb 12/STRANGE!!WITH GOLD RISING BY 12.00 DOLLARS, THE CROOKS DECIDED AGAIN TO WITHDRAW 5.6 TONNES OF GOLD FOR EMERGENCY USE ELSEWHERE/INVENTORY RESTS AT 820.71 TONNES

Feb 9/AGAIN WITH HUGE TURMOIL ON THE MARKETS, THE CROOKS WITHDREW 2 TONNES OF GOLD FROM THE GLD INVENTORY/INVENTORY RESTS AT 826.31 TONNES

Feb 8/DESPITE THE GOOD GAIN IN PRICE FOR GOLD TODAY/THE CROOKS REMOVED .96 TONNES FROM THE GLD INVENTORY/INVENTORY RESTS AT 828.31 TONNES

FEB 7/AN UNBELIEVABLE 12.08 TONNES WAS REMOVED BY THE CROOKED BANKERS AND THIS GOLD WAS USED IN THE ASSAULT THESE PAST FEW DAYS/INVENTORY RESTS AT 829.27 TONNES

Feb 6/AGAIN VERY STRANGE: WITH TODAY’S TURMOIL, THE CROOKS DID NOT ADD ANY GOLD INVENTORY INTO THE GLD/INVENTORY REMAINS AT 841.35 TONNES

Feb 5  Strange,with all of today’s turmoil, the crooks at the GLD decided to add zero ounces into GLD inventory/inventory rests at 841.35 tonnes

Feb 2/no change in gold inventory at the GLD/Inventory rests at 841.35 tonnes

Feb 1/with gold up by $8.00/the crooks decided not to add any new physical gold metal into the GLD./inventory rests at 841.35 tonnes

Jan 31/with gold up $3.15 today, GLD shed another 5.32 tonnes of gold from its inventory/inventory rests at 841.35 tonnes

jan 30/with gold down by $4.85/GLD shed another 1.47 tonnes of gold from its inventory/inventory rests at 846.67 tonnes

JAN 29/with gold down $11.25, the GLD shed 1.18 tonnes of gold/inventory rests at 848.14 tonnes

jan 26/2018/no changes in gold inventory at the GLD/inventory rests at 849.32 tonnes

jan 25/no changes in gold inventory at the GLD/inventory rests at 849.32 tonnes

Jan 24/A HUGE DEPOSIT OF 2.65 TONNES OF GOLD INTO GLD/INVENTORY RESTS AT 849.32 TONNES

Jan 23/NO CHANGE IN GOLD INVENTORY DESPITE GOLD’S RISE/INVENTORY RESTS AT 846.67 TONNES

Jan 22/a huge deposit of 5.71 tonnes of gold despite a drop in price/inventory rests at 846.67 tonnes. In 3 trading days, the GLD has added 17.71 tonnes/the bankers are now in trouble!!

Jan 19/no change in gold inventory at the GLD/Inventory rests at 840.76 tonnes

Jan 18/SHOCKINGLY A HUGE DEPOSIT OF 11.80 TONNES WITH GOLD DOWN ALMOST $12.00/INVENTORY RESTS AT 840.76

Jan 17/no changes in gold inventory at the GLD/inventory rests at 828.96 tonnes

Jan 16/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 828.96 TONNES

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

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Feb 15/2018/ Inventory rests tonight at 823.66 tonnes

*IN LAST 326 TRADING DAYS: 117.49 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 256 TRADING DAYS: A NET 39.82 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.

end

Now the SLV Inventory

Feb 15/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 314.045 MILLION OZ/

Feb 14./NO CHANGE IN SILVER INVENTORY DESPITE THE HUGE RISE IN PRICE/INVENTORY RESTS AT 314.045 MILLION OZ

Feb 13./NO CHANGE IN SILVER INVENTORY TODAY/INVENTORY RESTS AT 314.045 MILLION OZ/

Feb 12/AGAIN, WITH TODAY’S HUGE RISE IN SILVER PRICE, IN TOTAL CONTRAST TO GOLD: NO CHANGE IN SILVER INVENTORY/INVENTORY RESTS AT 314.045 MILLION OZ/

Feb 9/AGAIN WITH TURMOIL ON THE MARKETS, STRANGELY IN TOTAL CONTRAST TO GOLD: NO CHANGE IN SILVER INVENTORY/INVENTORY RESTS AT 314.045 MILLION OZ/

Feb 8/DESPITE THE TURMOIL TODAY AND A PRICE RISE: NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 314.045 MILLION OZ/

FEB 7/no change in silver inventory at the SLV/Inventory rests at 314.045 million oz/

Feb 6/WITH ALL OF TODAY’S TURMOIL/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 314.045 MILLION OZ/

Feb 5/ we had HUGE change in silver inventory at the SLV/ A DEPOSIT OF 1.131 MILLION OZ INTO THE SLV/Inventory rests at 314.045 million oz/

Feb 2/we lost 982,000 oz from the SLV inventory /inventory rests at 312.914 million oz/

Feb 1/no change in silver inventory at the SLV/Inventory rests at 313.896 million oz/

Jan 31/ no change in inventory at the slv in total contrast to gold/inventory rests at 313.896 million oz/

Jan 30/no change in inventory/SLV inventory rests at 313.896 million oz/

Jan 29/no change in inventory/SLV inventory rests at 313.896 million oz/

Jan 26.2018/inventory rests at 313.896  million oz

Jan 25/with silver up today and yesterday, the SLV could only muster a gain of 848,000 oz

Inventory rests at 313.896 oz

jan 24/NO CHANGE IN SILVER INVENTORY DESPITE THE GOOD ADVANCE IN PRICE/INVENTORY RESTS AT 313.048 MILLION OZ/

Jan 23/ANOTHER HUGE WITHDRAWAL OF 1.131 MILLION OZ OF SILVER DESPITE THE TINY LOSS/THE CROOKS ARE USING THE INVENTORY TO RAID ON SILVER.

JAN 22.2018/with silver down by 5 cents/ the crooks at the SLV liquidate 1.321 million oz of silver/inventory rests at 314.179 million oz/

Jan 19/ no changes in silver inventory at the SLV/inventory rests at 315.500 million oz/

jan 18/A WITHDRAWAL OF 848,000 OZ OF SILVER FROM THE SLV/INVENTORY RESTS AT 315.500 MILLION OZ/

Jan 17/no changes in silver inventory at the SLV/inventory rests at 316.348 million oz/

Jan 16/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 316.348  MILLION OZ

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

Feb 14/2017:

Inventory 314.045 million oz

end

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

+ 1.70%
12 Month MM GOFO
+ 2.10%

end

Major gold/silver trading /commentaries for THURSDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

 GoldCore

Is The Gold Price Heading Higher? IG TV Interview GoldCore

Is The Gold Price Heading Higher? IG TV Interview GoldCore

Research Director at GoldCore, Mark O’Byrne talks to IG TV’s Victoria Scholar about the outlook for the gold price.

In this interview, Mark O’Byrne, research director at Goldcore, says the fact that the gold price did not spike during last week’s equity sell-off was to be expected.

He said even at the height of the global financial crisis, amid the collapse in the Wall Street behemoth Lehman Brothers, gold prices fell. O’Byrne says gold’s hedge abilities and safe haven attributes are seen more in the medium to long term. Also, he points out that there was a big move up in December in the gold price, so a period of correction was expected.

O’Byrne says periods of rising interest rates have historically coincided with bull markets for gold. He cites the 1970s, and the period between 2003 and 2007, when gold prices did very well.

In terms of key levels, O’Byrne says there is resistance around $1360 before we head to $1400. He says he is cautious in the short term but feeling constructive for 2018 overall, and says $1500 is quite likely by autumn, although it could end 2018  above $1400.

Watch Interview On IG TV Here

News and Commentary

Gold holds steady near 2-1/2-week high as dollar dips (Reuters.com)

Paulson Maintained SPDR Gold Stake as Dollar Boosted Metal (Bloomberg.com)

Gold rallies to highest settlement in nearly 3 weeks on hotter-than-expected CPI (MarketWatch.com)

Gold quickly reverses US CPI-led fall, jumps back closer to session tops (FXStreet.com)

Gold rebounds from U.S inflation data-driven losses as dollar wilts (Reuters.com)


Source: Bloomberg

Gold Shines as Traders Count Down to ‘Critical’ CPI, Dalio Buys (Bloomberg.com)

Dalio’s Bridgewater Boosts Holdings in Gold (Bloomberg.com)

These Are the World’s Most Miserable Economies (Bloomberg.com)

Williams: “It’s The Long-Term Insolvency Of The US Government That Markets Don’t Like” (ZeroHedge.com)

Bullish Fundamentals To Push Gold Above $3,000 by 2020 (Gold-Eagle.com)

Gold Prices (LBMA AM)

14 Feb: USD 1,330.75, GBP 959.74 & EUR 1,077.77 per ounce
13 Feb: USD 1,329.40, GBP 955.04 & EUR 1,077.61 per ounce
12 Feb: USD 1,321.70, GBP 955.19 & EUR 1,077.45 per ounce
09 Feb: USD 1,316.05, GBP 945.58 & EUR 1,072.84 per ounce
08 Feb: USD 1,311.05, GBP 944.87 & EUR 1,071.13 per ounce
07 Feb: USD 1,328.50, GBP 956.12 & EUR 1,075.95 per ounce
06 Feb: USD 1,344.65, GBP 962.50 & EUR 1,083.52 per ounce

Silver Prices (LBMA)

14 Feb: USD 16.58, GBP 11.97 & EUR 13.43 per ounce
13 Feb: USD 16.61, GBP 11.94 & EUR 13.46 per ounce
12 Feb: USD 16.43, GBP 11.86 & EUR 13.39 per ounce
09 Feb: USD 16.36, GBP 11.83 & EUR 13.37 per ounce
08 Feb: USD 16.35, GBP 11.70 & EUR 13.36 per ounce
07 Feb: USD 16.69, GBP 12.02 & EUR 13.52 per ounce
06 Feb: USD 16.81, GBP 12.07 & EUR 13.59 per ounce


Recent Market Updates

– Global Debt Crisis II Cometh
– Sovereign Wealth Funds Investing In Gold For “Long Term Returns” – PwC
– Bitcoin and Crypto Prices Being Manipulated Like Precious Metals?
– “This Is Where They Completely Lost Their Minds” – Hussman
– Brexit Risks Increase – London Property Market and Pound Vulnerable
– Peak Gold: Global Gold Supply Flat In 2017 As China Output Falls By 9%
– Crypto Currency Backlash Sees Flight From Cryptos and Bitcoin
– Gold Rises As Global Stocks Plunge and Bitcoin Crashes 70%
– Shrinkflation Intensifies – Stealth Inflation As Thousands of Food Products Shrink In Size, Not Price
– U.S. Debt Is “Extraordinarily High” and Are Stock And Bond Bubbles – Greenspan
– Gold Bullion Price Suppression To End? Bullion Bank Traders Arrested For Manipulating Market
– ATMs Hit By Malware “Jackpotting” Attacks That Dispense All Cash In Minutes
– London Property Market Tumbles As Glut of Luxury Apartments Grows To 3,000

Mark O’Byrne
Executive Director

END

I wrote the following early this morning at the onset of AEM trading on NY with AEM down around $1.12

Agnico Eagle beats the street by 2 cents.  It also increases production guidance for both 2018 and 2019 and most importantly adds dramatically to its reserves to 20.6 million oz/

In times past, the most important part of the earnings report for major mining companies is not the income side of things but the reserves and the future production and costs.  The street (the bankers) focused on current income instead of what is coming in the future.

The smart guys came in and pushed the stock to a positive gain

(courtesy Agnico Eagle)

Agnico Eagle Reports Fourth Quarter and Full Year 2017 Results – Record Annual Gold Output; Production Guidance Increased for 2018 and 2019; Reserves Increase Year-Over-Year

PR Newswire

Comment

Stock Symbol: AEM (NYSE and TSX)
(All amounts expressed in U.S. dollars (“$” or “US$”) unless otherwise noted)

TORONTOFeb. 14, 2018 /PRNewswire/ – Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM) (“Agnico Eagle” or the “Company”) today reported quarterly net income of $35.1 million, or net income of $0.15 per share for the fourth quarter of 2017.  This result includes mark-to-market adjustments and derivative losses of $1.0 million ($0.01 per share), non-recurring losses of $6.8 million ($0.03 per share) and non-cash foreign currency translation losses of $5.5 million ($0.02 per share).  Excluding these items would result in adjusted net income1 of $48.4 million ($0.21 per share) for the fourth quarter of 2017.  In the fourth quarter of 2016, the Company reported net income of $62.7 million or $0.28 per share.

Not included in the fourth quarter of 2017 adjusted net income above is non-cash stock option expense of $4.1 million ($0.02 per share).

Fourth quarter 2017 cash provided by operating activities was $166.9 million ($209.5 million before changes in non-cash components of working capital).  This compares to cash provided by operating activities of $120.6 million in the fourth quarter of 2016 ($120.3 million before changes in non-cash components of working capital).  The increase in cash provided by operating activities before changes in non-cash components of working capital during the current period, as compared to the prior period, was mainly due to higher gold sales (up 5%) and a higher realized gold price (up 7%).

“In 2017, we had another strong year of operating performance exceeding our production forecast and beating our cost guidance for the sixth consecutive year.  We set a new annual production record while recording the fewest number of lost time accidents, and we also increased our gold reserves”, said Sean Boyd, Agnico Eagle’s Chief Executive Officer.  “Furthermore, we continue to make excellent progress on our Nunavut development projects which has allowed us to advance the expected start-up of Meliadine and increase our production guidance for 2018 and 2019.  With projected production on track to reach approximately 2.0 million ounces with lower unit costs in 2020, the Company will be focusing on increasing its reserve base and advancing its development pipeline to enhance the production profile and grow free cash flow”, added Mr. Boyd.

____________________

1 Adjusted net income is a non-GAAP measure.  For a discussion regarding the Company’s use of non-GAAP measures, please see “Note Regarding Certain Measures of Performance”.

Fourth quarter and full year 2017 highlights include:

  • Gold production and costs better than forecast for sixth consecutive year – Payable production2in 2017 was 1,713,533 ounces of gold on production costs per ounce of gold of $621, with total cash costs per ounce3 of $558, compared to most recent guidance of 1,680,000 ounces of gold at total cash costs per ounce of $585. All-in sustaining costs per ounce4 (“AISC”) for 2017 were $804, compared to most recent guidance of $845 per ounce
  • Gold production forecasts increased for 2018 and 2019 as Meliadine start up advanced and Meadowbank extended into 2019; production guidance for 2020 is unchanged at 2.0 million ounces – The production forecast for 2018 is now 1.53 million ounces, compared to previous guidance of 1.5 million ounces. The midpoint of production guidance for 2019 is now 1.7 million ounces, compared to previous guidance of 1.6 million ounces. First production at Meliadine is now expected in the second quarter of 2019, which is approximately one quarter ahead of the initial schedule. The midpoint of production guidance for 2020 is 2.0 million ounces, which is unchanged from previous guidance
  • Transitioning to lower unit costs by 2020 as production ramps up – In 2018, total cash costs per ounce are forecast to be between $625 and $675 and AISC are forecast to be between $890and $940 per ounce. The increased unit costs over the 2017 period are largely due to lower expected gold production in 2018 than in 2017. As the Nunavut business transitions from the Meadowbank deposit to Amaruq and Meliadine, with much higher gold production expected in 2020, total cash costs per ounce are forecast to decline to between $600 and $650, while AISC are forecast to decline to between $825 and $875 per ounce
  • Gold Reserves continue to grow as average grade increases – 2017 mineral reserves, net of 2017 production, increased by 3.1% to 20.6 million ounces (257 million tonnes grading 2.49 grams per tonne (“g/t”) gold), while the gold reserve grade increased by approximately 7.7% from the previous year. A large portion of the increase comes from mineral resource conversion at Amaruq. Measured and indicated mineral resources declined by 2.6% and inferred mineral resources declined by 4.3%, however, grades of these mineral resources increased.
  • Kittila Shaft Approved for Construction – The Company’s Board of Directors has approved an expansion to add a 1,044 metre deep shaft and increase expected mill throughput by 25 percent to 2.0 million tonnes per annum (“mtpa”) at Kittila. The expansion will be phased in over four years at a capital cost of approximately 160 million euros and is expected to result in a 50,000 to 70,000 ounce annual increase in gold production at reduced operating costs beginning in 2021. The shaft is expected to provide access to the mineral resource areas below 1,150 metres which could further extend the mine life
  • A quarterly dividend of $0.11 per share has been declared



Your early THURSDAY 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 6.3444 /shanghai bourse CLOSED  / HANG SANG CLOSED UP 599.83 POINTS OR 1.97%
2. Nikkei closed UP 310,81 POINTS OR 1.47% /USA: YEN FALLS TO 106.76/DEADLY AS YEN CARRY TRADERS DISINTEGRATE

3. Europe stocks OPENED DEEPLY IN THE GREEN   /USA dollar index FALLS TO 88.81/Euro RISES TO 1.2469

3b Japan 10 year bond yield: RISES TO . +.067/ !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 106.76/ 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:: 60.58  and Brent: 63.58

3f Gold DOWN/Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO +.789%/Italian 10 yr bond yield UP to 2.078% /SPAIN 10 YR BOND YIELD UP TO 1.520%

3j Greek 10 year bond yield FALLS TO : 4.37?????????????????

3k Gold at $1349.80 silver at:16.83     7 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50

3l USA vs Russian rouble; (Russian rouble UP 14/100 in roubles/dollar) 56.87

3m oil into the 60 dollar handle for WTI and 63 handle for Brent/

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation. This can spell financial disaster for the rest of the world/

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 106.76 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 0.9250 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1534 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 +0.789%

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 2.9333% early this morning (THIS IS DEADLY TO ALL MARKETS). Thirty year rate at 3.186% /BOTH VERY DEADLY

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

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

Global Stocks, S&P Futures Soar, Ignoring Yields Creeping Ever Closer To 3.00%

Global stocks, bond yields and commodities all jumped higher on Thursday while the dollar plunge continued, as investors suddenly seemed to forget the inflation fears blamed for a brutal market sell-off in recent weeks.

Last week’s volocaust is a fading, distant memory, and this morning global stocks – albeit without China which is on weekly holiday for the Lunar New Year – continue their relentless surge with the Dow set to open back over 25,000, even as yields rise and the 10Y is fast approaching 3.00%, thanks to a plunging dollar which fell for a firth day, keeping financial condition well lubricated. As a result, global stocks and futures are a sea of green this morning despite growing inflationary noise in the background.

Commenting on the overnight price action, one major bank said it can be briefly summarized as: bearish USD, bearish fixed income, bullish equities, bullish oil. As the trader notes, “We’ve definitely been here before – in fact, it was the consensus trade for 2018 until the recent market rout questioned the move.” Therefore there’s certainly a sense of déjà vu as the paradoxical moves in markets continue at least until inflation fears hit the next tipping point and launch the next equity market selloff.

In the meantime, one can scratch their heads: the bank adds that the bewildering nature of recent price action has become a somewhat familiar feature of markets lately.”

One needs just three charts to understand what is going on on most days: futures are up, as they are this morning…

… even if yields are sharply higher, which they also are as the 10Y rises above 2.93%

… as long as the dollar is tumbling, and financial conditions are looser.

As Reuters noteseconomists were struggling to explain the turnaround except for the argument that historically it’s not unusual for stocks and bond market borrowing costs to rise in tandem with a rapidly expanding economy.

Some just blamed the weather and time of year. They speculated that strong U.S. inflation data on Wednesday that many had predicted could reignite the rout was probably distorted. They also said the looming Chinese New Year may have caused Asian traders to square up.

Meanwhile, bond traders increased their expectations for the number of Federal Reserve interest-rate hikes to four by the end of next year after yesterday’s blistering CPI report. The inflation figures gave rise to debate among investors and traders on the breakdown in correlations to interest rates, as currency investors focused instead on the U.S.’s twin deficits.

“For me it’s a clear indication that inflation is not as big a threat as people made it out to be over the past couple of weeks,” said Lukas Daalder, chief investment officer at Robeco in Rotterdam. “The trend behind the market is still very strongly pointed upwards. 2017 was a very momentum-driven market, and if that’s still the case, which after yesterday it appears to be, then we will probably see new highs before too long.”

Volatility shrank back rapidly too. The VIX index fell all the way back to 18, less than half the 50-point peak touched last week.

* * *

Whatever the reason, the animal spirits were back. However, should the dollar and yields rise at the same time, run.

For now, China is off to enjoy the Lunar New Year and welcome the Year of the Dog, and there’s another celebration in EM FX as the ZAR continues to revel in the resignation of Zuma.

The Stoxx Europe 600 Index took its cue from a rally in the truncated Asian session, to advance for a second day – ignoring the growing, $22 billion Bridgewater short of European stocks – as traders assessed earnings from heavyweights including Nestle and Airbus while eyeing rising bond yields that may be approaching a critical level for the direction of equity markets.

As a result, the Stoxx 600 climbed 0.4%, heading for a weekly gain of ~2%. Airbus advanced 8.9% in the best performance among single stocks on the gauge after the planemaker struck an optimistic tone in its outlook for 2018, promising earnings growth of 20%. Nestle dropped 2.6% after it posted the weakest sales growth in more than 20 years.  Elsewhere, South African exposed Old Mutual (+3.8%) and Anglo American (+3.0%) lead the FTSE 100 as South Africa now eyes life-after Zuma with Ramaphosa now appointed as Preisdent. Miners occupy a bulk of the other outperformers in the UK amid movements in the commodity complex with Antofagasta (+2.9%) also lifted after winning approval for a USD 1.1bln revamp of its Los Pelambres copper mine.

In Asia, Australia’s ASX 200 (+1.2%) was positive with its biggest movers dictated by earnings releases and as commodity names were underpinned by strength in the complex. Elsewhere, Nikkei 225 (+1.5%) advanced and managed to ignore the latest plunge in the USDJPY, which took out downside stops after Finance Minister Taro Aso said the currency’s strength isn’t abrupt enough to require intervention– as well as a slump in machine orders, while Hang Seng (+1.6%) closed the session as the outperformer in a holiday-shortened session, before it joined mainland China for Lunar New Year celebrations.

In FX, it was all about the ongoing dollar weakness, which persisted pushing the Bloomberg Dollar Index down a fifth day.  The dollar tumbled though across the board, including to a 15-month low against the yen of 106.18 yen as worries about the U.S. government’s finances seemed to set again after a White House-led spending splurge and recent corporate tax cuts. That also marked a drop of 3.8 percent from its early February peak near 110.50 yen, while the euro and pound both climbed back above the $1.25 and $1.40 thresholds.

The story I hear most frequently from people is it’s the re-emergence of the twin deficits,” said RBC Capital Markets head of currency strategy Adam Cole, in London, of the dollar’s persistent weakness. “There seem to be concerns on the U.S. fiscal position and what that implies for the current account.”

The EUR/USD climbed a fifth day, approaching Jan. 25 high of 1.2537, which was the highest since Dec. 2014, while GBP/USD sustains advance over 1.40 on reports of the EU’s softening Brexit stance, set for fourth daily rise. As noted above, the USD/JPY slipped; the yen earlier touched its strongest level since Nov. 2016 versus the dollar on comments from the finance minister dismissing the need for intervention. The South African rand was the biggest gainer versus the dollar among its major peers on news of Jacob Zuma’s resignation; the rand appreciated to its strongest level since Feb. 2015.

Looking at the ongoing Brexit drama, UK PM May is reportedly facing a crisis related to the Brexit border deal, after Northern Ireland power sharing discussions were said to have collapsed. Separately the Telegraph reported that the EU will demand the right to raid financial services firms in Britain after Brexit and hand its regulators sweeping new powers, as Brussels moves to shackle the City of London with red tape after the UK leaves the bloc. Finally, in some good news, the BBC reported that EU diplomats have removed a so-called “punishment clause” from a draft text of the arrangement for the Brexit transition period, the BBC understands. However, it was later reported that the EU denied this was the case…

In the commodities complex, WTI and Brent crude futures trade in close proximity to recent highs seen in the wake of yesterday’ssmaller than expected build in the DoEs and comments from Saudi with prices also supported by the broad softness in the USD. Inmetals, gold prices have also benefitted from the softer USD, although gains are likely capped by the broad-based risk sentiment inthe market. Elsewhere, copper prices have hit their highest level in 10 days amid this morning’s risk environment, while priceaction was relatively limited during Asia-Pac trade given the closure of the Shanghai Futures Exchange for the Lunar New Year holiday.

Market Snapshot

  • S&P 500 futures up 0.8% to 2,718.50
  • STOXX Europe 600 up 0.8% to 377.54
  • MSCI Asia Pacific up 1.4% to 176.14
  • MSCI Asia Pacific ex Japan up 1.3% to 578.63
  • Nikkei up 1.5% to 21,464.98
  • Topix up 1% to 1,719.27
  • Hang Seng Index up 2% to 31,115.43
  • Shanghai Composite up 0.5% to 3,199.16
  • Sensex up 0.4% to 34,273.84
  • Australia S&P/ASX 200 up 1.2% to 5,908.99
  • Kospi up 1.1% to 2,421.83
  • German 10Y yield rose 2.4 bps to 0.781%
  • Euro up 0.3% to $1.2492
  • Italian 10Y yield fell 2.0 bps to 1.795%
  • Spanish 10Y yield rose 0.6 bps to 1.52%
  • Brent futures up 0.2% to $64.49/bbl
  • Gold spot up 0.3% to $1,354.33
  • U.S. Dollar Index down 0.4% to 88.76

Top Overnight News from Bloomberg

  • Cyril Ramaphosa faces a tough road ahead as South Africa’s new president after Jacob Zuma’s resignation late Wednesday ended nine years of his scandal-marred administration. Ramaphosa remains acting president until his expected election in parliament later Thursday
  • U.S. tax authorities have requested documents from lenders and investors in real estate projects managed by Jared Kushner’s family, according to a person familiar with the matter.
  • Japanese Finance Minister Aso said the yen’s recent move isn’t abrupt enough to warrant intervention causing the yen to climb
  • A report from Politico that the European Union is looking to ease Brexit transition conditions, helped support the pound
  • Merkel vows to ensure Germany maintains balanced budget
  • Japan’s Aso says yen strength isn’t abrupt enough now to intervene
  • Kuroda says BOJ will continue to take best policy for price target
  • Australia Jan jobs 16.0k vs 15.0k est; unempl. rate 5.5% vs 5.5% est
  • Singapore Jan exports -0.3% vs 4.2% est; y/y 13.0% vs 8.9% est

Asian stocks traded higher as the region received a tailwind from US where all major indices finished with firm gains and the DJIA posted its best 4-day performance in almost a decade. ASX 200 (+1.2%) was positive with its biggest movers dictated by earnings releases and as commodity names were underpinned by strength in the complex. Elsewhere, Nikkei 225 (+1.5%) advanced and managed to overlook a firmer JPY and slump in machine orders, while Hang Seng (+1.6%) closed the session as the outperformer in a holiday-shortened session, before it joined its mainland counterparts for Lunar New Year celebrations. Finally, 10yr JGBs were relatively flat with early mild pressure seen amid the uptick in riskier assets, although this was later counterbalanced amid the BoJ’s presence in the market for 1yr-10yr JGBs totalling over JPY 1tln.

Top Asian News

  • Philippine Central Bank Cuts Reserve Ratio by 1 Point to 19%
  • Abe Said to Be Likely to Nominate BOJ Governor on Friday
  • IDG-Backed China Online Credit-Checking Firm Is Said to Plan IPO
  • Cathay Pacific Supplier Topcast Aviation Is Said to Pursue Sale

European bourses trade higher across the board (Eurostoxx 50 +0.6%) in a continuation of the sentiment seen yesterday on Wall Street and overnight in Asia-Pac trade. On a sector basis, consumer staples underperform following lacklustre earnings from Swiss-titan Nestle (-2.2%), with the index heavyweight subsequently leading the SMI to lag its peers in the region. Elsewhere, South African exposed Old Mutual (+3.8%) and Anglo American (+3.0%) lead the FTSE 100 as South Africa now eyes life-after Zuma with Ramaphosa now appointed as Preisdent. Miners occupy a bulk of the other outperformers in the UK amid movements in the commodity complex with Antofagasta (+2.9%) also lifted after winning approval for a USD 1.1bln revamp of its Los Pelambres copper mine. Elsewhere, Standard Life (-4.9%) sits at the bottom of the FSTE 100 after Scottish Widows and Lloyds sent notices to co. to terminate investment management relations. Finally, earnings dominate the state of play in the CAC with Airbus (+9.3%), Schneider Electric (+3.6%) and CapGemini (+2.5%) all lifted by encouraging earnings.

Top European news

  • Dalio Causes Stir With $18 Billion Surge in European Short Bets
  • Austrian Bitcoin Scam May Affect Over 10,000 Users, Presse Says
  • In the Age of Brexit, Events Manager RELX Opts for London Base

In FX, Japan’s Finance Minister Aso has given the green light for Jpy bulls to charge on, and 106.00 vs the Usd is now within striking distance given little in the way of technical support until 105.85 vs the latest 106.20 low. Moreover, all other G10 rivals are eyeing recent peaks vs the Greenback with Cable just eclipsing the 1.4067 level posted after the BoE’s hawkish policy guidance shift on February 8th, while Eur/Usd almost challenged Fib resistance at 1.2518 ahead of the 1.2537 year to date high before slipping back below 1.2500. Usd/Chf is toppy around the bottom of a 0.9300-0.9230 range, while Nzd/Usd has rebounded above the 0.7400 handle and Aud/Usd is over 0.7950 despite mixed jobs data overnight and ahead of RBA Governor Lowe orates later today. Usd/Cad relatively steady albeit sharply down from Wednesday’s post-US CPI data spike highs and sub-1.2500 amidst ongoing NAFTA uncertainty and awaiting a speech from BoC Deputy Governor Schembri. All this leaves the Dollar Index below 89.00 again and vulnerable against a deeper set-back towards 2018 lows under 88.50, especially as the Usd continues to suffer broader losses with the likes of Usd/Zar sliding towards 11.6400 in wake of the resignation of Zuma as SA  President with immediate effect.

In the commodities complex, WTI and Brent crude futures trade in close proximity to recent highs seen in the wake of yesterday’s smaller than expected build in the DoEs and comments from Saudi with prices also supported by the broad softness in the USD. In metals, gold prices have also benefitted from the softer USD, although gains are likely capped by the broad-based risk sentiment in the market. Elsewhere, copper prices have hit their highest level in 10 days amid this morning’s risk environment, while price action was relatively limited during Asia-Pac trade given the closure of the Shanghai Futures Exchange for the Lunar New Year holiday.

Looking at the day ahead, the January PPI and IP, February empire manufacturing, February Philly Fed PMI, February NAHB housing market index and the latest weekly initial jobless claims readings are all due in the US. In Europe Q4 employment data in France and the December trade balance for the Euro area are due. The ECB’s Mersch and Praet are also slated to speak at an event in Paris.

US Event Calendar

  • 8:30am: Empire Manufacturing, est. 18, prior 17.7
  • 8:30am: Initial Jobless Claims, est. 228,000, prior 221,000; Continuing Claims, est. 1.93m, prior 1.92m
  • 8:30am: PPI Final Demand MoM, est. 0.4%, prior -0.1%; Ex Food and Energy MoM, est. 0.2%, prior -0.1%
  • 8:30am: PPI Final Demand YoY, est. 2.4%, prior 2.6%; Ex Food and Energy YoY, est. 2.0%, prior 2.3%
  • 8:30am: Philadelphia Fed Business Outlook, est. 21.6, prior 22.2
  • 9:15am: Industrial Production MoM, est. 0.2%, prior 0.9%; Manufacturing (SIC) Production, est. 0.25%, prior 0.1%
  • 10am: NAHB Housing Market Index, est. 72, prior 72
  • 4pm: Total Net TIC Flows, prior $33.8b; Net Long-term TIC Flows, prior $57.5b

DB’s Jim Reid concludes the overnight wrap

Happy Boxing Valentine’s Day. My wife went to bed at 7pm last night with the twins to desperately try to catch up on sleep while I watched a rampant Liverpool win 5-0 away from home in Europe on the telly, with Bloomberg TV on my iPad alongside me to catch up with the post CPI rally. A question for long time married readers though is when does romance come back into a marriage after having children?

Anyway yesterday was one of those days where having the most important data release ahead of time probably wouldn’t have helped you much. In fact it may have helped you lose money in risk. The well above expectations number for CPI was negative for bonds – as you would have expected – but equities rallied hard (S&P 500 +1.34%) after a large sell off in the minutes following the release (S&P futures slumped c.-1.8%). The price action yesterday perhaps tells us that the normalisation from last week’s vol shock is more powerful for markets for now than the data. However if this inflation trend holds (as has been and still is our expectation) we’re in for some real fun and games in markets in 2018 once the dust settles.

To be fair, weaker US retail sales (more details later) may have confused the story somewhat but it was all about inflation. For core, once we added in the extra decimal places the number came in at +0.349% putting clear air over the consensus estimate for just +0.2% and nearly rounding up to 0.4% MoM. In fact that was the largest monthly climb since March 2005 and kept the YoY steady at +1.8% (+1.7% expected). The three-month annualized rate also jumped to the highest since 2011 (+2.9%) and the six-month annualized rate also hit the highest since 2008 (+2.6%). The underlying components appeared to also affirm that inflation was relatively broad-based while there was a similar beat at the headline level (+0.5% mom vs. +0.3% expected).

Treasury yields marched higher with 10 year yields +7.3bp higher on the day to 2.903%, but c9bp up from just before the release. 2 and 30yr yields were up 6.1 and 5.1bps on the day. A reminder that yesterday we published a note (link) showing asset prices in the first and second half of the 1960s using our economists’ framework that there are big similarities between the inflection point on inflation in the 1960s and the current day.

In terms of US equities, sectors such as Banks (+2.55%), tech (+1.95%) and energy (+1.40%) led the rally. The VIX also swung c7pts intraday to close 5.7pts lower at 19.26. As we said earlier perhaps this current vol normalisation trend held sway yesterday but if inflation continues like this it feels impossible for us to imagine vol settling back down around 10 for a persistent period. We are likely to have some big trading days this year.

This morning in Asia, markets are extending on the positive US lead. The Nikkei (+1.21%) and Hang Seng (+1.97%) are up as we type, while the Chinese markets are now closed until the 21st for the lunar New Year holidays. After the bell in the US, Cisco’s share price jumped c7% after guiding to higher than expected sales for the current quarter and plans to boost its share buybacks by $25bn. Elsewhere, the YEN rose for the fourth straight day (+0.4%), partly helped by Japan’s Finance minister Aso prior comments where he noted “the current situation doesn’t warrant special intervention. The Yen isn’t rising or falling abruptly”.

Now recapping other markets performance from yesterday. European bourses initially traded lower post the US CPI print, but recovered throughout the day to be up c1%, partly aided by sound corporate results and supportive GDP prints. The Stoxx 600 (+1.07%), DAX (+1.17%) and FTSE (+0.64%) were all up and only the energy sector was in the red within the Stoxx. The VSTOXX fell 20% to 20.71. Over in government bonds, 10y Bunds and Gilts yields rose 0.7bp and 2.1bp respectively, while peripherals partly recovered from the prior day losses with yields down 1-6bp. Turning to currencies, the US dollar index weakened for the third consecutive day (-0.65%), while both the Euro and Sterling gained c0.8%. Elsewhere, the South African Rand was up 2.1% following President Zuma’s resignation. In commodities, WTI oil rebounded 2.38% to $60.60/bbl, in part as the latest EIA report showed US crude stockpiles rose less than expected last week. Precious metals gained c1.6% (Gold +1.59%; Silver +1.67%) and other LME base metals increased as the USD continues to fall (Copper +2.50%; Zinc +2.80%; Aluminium +1.80%).

Away from the markets, President Trump said he supports a 25c per gallon increase in federal gasoline and diesel taxes to help pay for upgrading roads, bridges and other public works. So perhaps there is more potential to fund his $1.5bln infrastructure plans, although Republican Senator Grassley noted the tax hike was unlikely to come up for a vote in the Senate and that “he’ll never get it by (Senator) McConnell”.

Staying in the US, our economists have been highlighting the upside risks to their growth outlook for some time. Given the recent passage of a bipartisan budget agreement provides for c$300 billion in additional discretionary spending  over the next two years, they have now raised their 2018 real GDP growth forecast (Q4/Q4) to 2.9% (+0.3ppt) and the 2019 forecast rises to 2.5% (+0.4ppt). Following on, stronger growth should put further downward pressure on the unemployment rate, which they now expect will trough at 3.2% in 2019, about 1.5ppt below NAIRU. On rates, their views are unchanged and they continue to expect four rate hikes this year and three next year. But recent developments have tilted the balance of risks to the upside.

Now turning to some of the Brexit headlines. Foreign secretary Boris Johnson seemed to support the status quo during the Brexit transition period by noting “things will remain as they are”. However, he does make a case for a clean break with the EU – leaving the single market and customs union and pursuing flexibility for the UK to choose which EU rules it wants to keep post Brexit. Elsewhere, he noted “Theresa” was the right PM for the UK to lead Brexit talks while also indicating “let’s not go there” in terms of a potential second referendum on Brexit. On the other side, the EC’s  Juncker’s response was quite colourful, he noted some in British politics “are against the truth, pretending that I’m a stupid, stubborn federalist…that I’m in favour of the EU superstate”, but “I’m strictly against (a superstate)….we aren’t the United States of America, we are the EU…”.

In Germany, Ms Merkel reiterated that the “black zero” fiscal prudence is the trademark of the CDU and “it will remain so in the future”. She noted that “if the SPD occupy the Finance Ministry in the future, our budget lawmakers will have to be even more careful that they don’t pile on new debt”.

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the core CPI for January was above market at 0.3% mom (vs. 0.2%) as discussed earlier. Price increases were well spread  across the core CPI, but part of the CPI gain was from a 1.7% monthly increase in apparel prices, the biggest increase since 1990. Notably, retail sales missed expectations. In the details, headline retail sales was -0.3% mom (vs. +0.2% expected). Ex auto and gas sales (-0.2% mom vs. +0.3%) and control group sales (0.0% mom vs. +0.4% expected) were also accompanied by downward revisions to December sales. The data certainly suggested a weaker looking consumption profile to the start the year and will likely cause the street to reassess growth forecasts the current quarter. Indeed the Atlanta Fed slashed their Q1 forecast to 3.25% from 4% but be slightly careful as their could have been some post hurricanes payback here. Elsewhere, December business inventories slightly beat at 0.4% mom (vs. 0.3% expected).

The Euro area’s 4Q GDP was in line at 0.6% qoq and 2.7% yoy. Across the countries, Germany’s 4Q GDP was also in line and solid at 0.6% qoq while Italy was slightly lower than expected at 0.3% qoq (vs. 0.4%). Elsewhere, the Euro area’s December IP was above market at 0.4% mom (vs. 0.1%), while Germany’s final reading of the January CPI was unrevised at 1.4% yoy. In Sweden the Riksbank left its policy rate at -0.5% and continued to forecast a gradual tightening from the second half of this year.

Looking at the day ahead, the January PPI and IP, February empire manufacturing, February Philly Fed PMI, February NAHB housing market index and the latest weekly initial jobless claims readings are all due in the US. In Europe Q4 employment data in France and the December trade balance for the Euro area are due. The ECB’s Mersch and Praet are also slated to speak at an event in Paris. Nestle will report earnings.

3. ASIAN AFFAIRS

i)Late WEDNESDAY night/THURSDAY morning: Shanghai closed /Hang Sang CLOSED UP 599.83 or 1.97% / The Nikkei closed UP 310.81 POINTS OR 1.47%/Australia’s all ordinaires CLOSED UP 1.16%/Chinese yuan (ONSHORE) closed UP at 6.3415/Oil DOWN to 60.58 dollars per barrel for WTI and 63.84 for Brent. Stocks in Europe OPENED DEEPLY IN THE GREEN  .   ONSHORE YUAN CLOSED UP AGAINST THE DOLLAR AT 6.3415. OFFSHORE YUAN CLOSED UP AGAINST  THE ONSHORE YUAN AT 6.2980//ONSHORE YUAN A LITTLE STRONGER AGAINST THE DOLLAR/OFF SHORE A LOT STRONGER TO THE DOLLAR/. THE DOLLAR (INDEX) IS A LOT WEAKER AGAINST ALL MAJOR CURRENCIES .  CHINA IS  HAPPY TODAY AS THEY BEGIN THEIR NEW YEAR ONE WEEK HOLIDAY TOMORROW

3 a NORTH KOREA/USA

/NORTH KOREA

end
 

3 b JAPAN AFFAIRS

Last night the Yen rose as Japanese machine orders crashed 11.9% month over month.  Before central bank intervention the USA/Yen came close to 106.50

(courtesy zerohedge)

USDJPY Extends Losses After Japanese Machine Orders Crash

It has not been a good week for Japan’s economic outlook as following last night’s dismal GDP print, tonight shows Japanese Machine Orders collapsed 11.9% MoM in December – the biggest crash since Japan raised the sales tax in May 2014…

Against expectations of a modest 2.0% drop (after November’s 5.7% rise, Machine Orders collapsed…

Foreign Orders cratered 13.2% led by manufacturers suffering a 13.3% MoM drop.

This drops Japanese Machine Orders back to practically unchanged since May 2013…

Now that’s stagnation!

As Goldman writes, December machinery orders fall sharply, reverse to lower end of range.

Private sector core machinery orders (excluding orders for ships and from electric power companies, core orders hereafter), a leading indicator of capex, declined sharply by 11.9% mom in December, erasing the increase in Oct-Nov (+10.9% in aggregate). Core orders have generally trended within a ¥800-¥900 bn monthly band since the end of 2014, and the ¥899.2 bn orders in November was at the upper end of this range. However, December orders of ¥792.6 bn reversed to the lower end of the range. The Cabinet Office revised its basic assessment, saying while orders were showing signs of improvement, they declined sharply in December.

Oct-Dec orders declined 0.1% qoq (Jul-Sep: +4.7%).

By demand sector, December manufacturing orders declined sharply by 13.3% mom (November: -0.2%). For Oct-Dec, manufacturing orders rose 4.0% qoq, the third straight quarterly increase. Meanwhile, core non-manufacturing orders (excluding orders for ships and from electric power companies) declined 7.3% mom in December (November: +9.8%), and also turned down again in Oct-Dec by 2.0% (Jul-Sep: +1.6%).

According to a survey of the order outlook for Jan-Mar, also announced on February 15, core orders are expected to recover slightly by 0.6% qoq. The outlook calls for manufacturing orders to decline 5.7%, the first downward correction in four quarters, while core non-manufacturing orders are expected to rise sharply by 7.4%.

External demand also corrects sharply in December: External machinery orders, a leading indicator of capital goods exports, declined sharply by 13.2% mom in December (November: +4.9%). Oct-Dec external machinery orders inched up 0.1% qoq (Jul-Sep: +9.2%). The Jan-Mar outlook calls for -5.5% qoq, which would represent the first decline in a year.

The reaction is another leg lower in USDJPY…

c) REPORT ON CHINA

end

4. EUROPEAN AFFAIRS

8. EMERGING MARKET

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

Euro/USA 1.2469 UP .0001/ REACTING TO MERKEL’S FAILED COALITION/ SPAIN VS CATALONIA/REACTING TO +GERMAN ELECTION WHERE ALT RIGHT PARTY ENTERS THE BUNDESTAG/ huge Deutsche bank problems + USA election:/TRUMP HEALTH CARE DEFEAT//ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/JAPAN TAPERING BOND PURCHASES /USA FALLING INTEREST RATES AGAIN/HOUSTON FLOODING/EUROPE BOURSES DEEPLY IN THE  GREEN  

USA/JAPAN YEN 106.76 UP  0.219 (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/DEADLY UNWINDING OF YEN CARRY TRADE

GBP/USA 1.4056 UP .0043 (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 1.2488 UP .0007 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/(TRUMP INITIATES LUMBER TARIFFS ON CANADA)

Early THIS THURSDAY morning in Europe, the Euro ROSE by 1 basis points, trading now ABOVE the important 1.08 level RISING to 1.2469; / Last night Shanghai composite CLOSED  Hang Sang CLOSED UP 599.83 POINTS OR 1.97%  /AUSTRALIA CLOSED UP 1.16% / EUROPEAN BOURSES DEEPLY IN THE GREEN  

The NIKKEI: this THURSDAY morning CLOSED UP 310.81 POINTS OR 1.47%

Trading from Europe and Asia:
1. Europe stocks OPENED DEEPLY IN THE GREEN 

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 599.83 POINTS OR 1.97% / SHANGHAI CLOSED   /

Australia BOURSE CLOSED UP 1.16% /

Nikkei (Japan)CLOSED DOWN 310.81 POINTS OR 1.47%

INDIA’S SENSEX  IN THE GREEN

Gold very early morning trading: 1349.50

silver:$16.83

Early THURSDAY morning USA 10 year bond yield: 2.9333% !!! UP 2 IN POINTS from WEDNESDAY night in basis points and it is trading WELL ABOVE resistance at 2.27-2.32%. (POLICY FED ERROR)/ VERY DEADLY

The 30 yr bond yield 3.1861 UP 1 IN BASIS POINTS from WEDNESDAY night. (POLICY FED ERROR)/DEADLY

USA dollar index early THURSDAY morning: 88.81 DOWN 31  CENT(S) from WEDNESDAY’s close.

This ends early morning numbers THURSDAY MORNING

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And now your closing THURSDAY NUMBERS \1 PM

Portuguese 10 year bond yield: 2.063% DOWN 2  in basis point(s) yield from WEDNESDAY/

JAPANESE BOND YIELD: +.0.067% UP 1/5     in basis points yield from WEDNESDAY/JAPAN losing control of its yield curve/

SPANISH 10 YR BOND YIELD: 1.507% DOWN 1  IN basis point yield from WEDNESDAY/

ITALIAN 10 YR BOND YIELD: 2.065 DOWN 0 POINTS in basis point yield from WEDNESDAY/

the Italian 10 yr bond yield is trading 57 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.764%  UP 2  IN BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR THURSDAY

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

Euro/USA 1.2483 UP.0014 (Euro UP 14 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 106.39 DOWN 0.153 Yen UP 15 basis points/

Great Britain/USA 1.4059 UP .0044( POUND UP 44 BASIS POINTS)

USA/Canada 1.2517 UP  .0035 Canadian dollar DOWN 35 Basis points AS OIL ROSE TO $60.39

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This afternoon, the Euro was UP 14 to trade at 1.2483

The Yen ROSE to 106.39 for a GAIN of 15 Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE

The POUND ROSE BY 44 basis points, trading at 1.4059/

The Canadian dollar ROSE by 29 basis points to 1.2561/ WITH WTI OIL RISING TO : $59.35

The USA/Yuan closed AT 6.3415
the 10 yr Japanese bond yield closed at +.067% UP 1/5  BASIS POINTS / yield/
Your closing 10 yr USA bond yield DOWN 1 IN basis points from WEDNESDAY at 2.8891% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 3.134  DOWN 4  in basis points on the day /

THE RISE IN BOTH THE 10 YR AND THE 30 YR ARE VERY PROBLEMATIC FOR VALUATIONS

Your closing USA dollar index, 88.71 DOWN 41 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 THURSDAY: 1:00 PM EST

London: CLOSED UP 20.94 POINTS OR 0.29%
German Dax :CLOSED UP 7.01 POINTS OR 0.06%
Paris Cac CLOSED UP 57.26 POINTS OR 1.11%
Spain IBEX CLOSED UP 28.70 POINTS OR 0.30%

Italian MIB: CLOSED UP 61.89 POINTS OR 0.28%

The Dow closed UP 306.88 POINTS OR 1.23%

NASDAQ WAS UP 112.82 Points OR 1.58% 4.00 PM EST

WTI Oil price; 60.39 1:00 pm;

Brent Oil: 63.91 1:00 EST

USA /RUSSIAN ROUBLE CROSS: 56.52 DOWN 20/100 ROUBLES/DOLLAR (ROUBLE HIGHER BY 20 BASIS PTS)

TODAY THE GERMAN YIELD FALLS TO +.764% 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:$61.39

BRENT: $64.47  (oil propelled by lower dollar)

USA 10 YR BOND YIELD: 2.906%   THIS RAPID ASSENT IN YIELD IS VERY DANGEROUS/DERIVATIVES START TO BLOW UP/extremely dangerous/stays extremely high in yield/

USA 30 YR BOND YIELD: 3.162%/BROKE GUNDLACH’S KEY 3.00% AGAIN WHERE ALL VALUATIONS ON STOCKS BLOW UP/DEADLY

EURO/USA DOLLAR CROSS: 1.2496 up.0029  (UP 29 BASIS POINTS)

USA/JAPANESE YEN:106.11 DOWN 0.434/ YEN UP 44 BASIS POINTS/ very dangerous as yen carry traders are getting killed/yen continues to rise despite the NYSE rising.

USA DOLLAR INDEX: 88.62 DOWN 50 cent(s)/dangerous as the lower the dollar the higher the inflation.

The British pound at 5 pm: Great Britain Pound/USA: 1.4093 : UP 0.0078  (FROM YESTERDAY NIGHT UP 78 POINTS)

Canadian dollar: 1.2481 UP 1 BASIS pts

German 10 yr bond yield at 5 pm: +0.764%


VOLATILITY INDEX:  19.13  CLOSE  DOWN   0.13  down only .13 despite huge gain in NYSE

END

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

TRADING IN GRAPH FORM FOR THE DAY

Stocks Extend Fastest Bounce In 8 Years As Dollar Crash Continues

Seriously…

Stocks are up five days in a row… Nasdaq up 5.6% this week alone…

For context, this is the Nasdaq’s best 5-day rally since 2011!!!!

Small Caps got back to even for 2018 (trannies still red)…Nasdaq is up 5% YTD

Nasdaq Futures are up 10% off the lows…

As “Most Shorted” Stocks soared off the lows… This is the biggest short-squeeze since the election

The Dow tested back below its 50% retracement level but rebounded quickly to a new bounce high…(oh, and Gartman nailed it again)

The S&P closed above its 50DMA…

The Inverse VIX ETF fell today as stocks gained – the first time that has happened since the collapse…

VIX was chaotic around the open today…

Despite stock strength, VIX ended the day modestly higher and we do note a significant divergence

While prices for HY and IG debt have ‘stabilized’ they are not rallying as exuberantly as stocks… perhaps because they just got hit with the biggest ETF fund outflows ever…

And just in case you needed any more confirmation of how nuts the world has become, Emerging Market High-Yield Debt is now trading at a lower yield than US High-Yield Debt… (Harvey: strange)

Treasuries were notably mixed today with the long-end rallying and short-end higher in yield… On the week 30Y yields remain lower…

Which pushed the yield curve even flatter…

The Dollar Index bounced very briefly on BoJ headlines then tumbled back to its lowest close since Dec 2014 – down 5 days in a row…

Once Europe closed today, the dollar (lower) and gold and stocks (higher) were locked at the hip…

Once the dollar started sliding again this afternoon, commodities were all off to the races…

Cryptocurrencies continued their strong run this week…Bitcoin is up 20% on the week…

With Bitcoin seemingly tied at the hip to Nasdaq and VIX…

As a final reminder, markets are about to somewhat quieter (or at least less liquid) as most of Asia heads into the year of the dog and their celebrations.

END

Trading Midday: noon time

Stocks Slump Into Red, Erase Post-CPI Gains As Bond Yields Slide

Did the dead-cat-bounce just die?

This drop has erased all the post-CPI gains…

And pushed The Dow back below its 50% retracement level…

Bonds are bid as stocks sink…

And the dollar is stabilizing…

And WTI/RBOB prices are tumbling…

 end

Producer prices is generally considered a forerunner of inflation.  Today’s reading shows PPI rose far more than expected in January, rising a good 2.7% year over year.

(courtesy zerohedge)

Producer Prices Rise More Than Expected In January, Markets Shrug

Following yesterday’s hotter than expected Consumer price inflation (and rise in Core CPI)Producer prices confirmed the hotter-than-expected trend, rising 2.7% YoY (vs 2.4% exp). However, unlike CPI, PPI actually rose from December.

While YoY CPI did actually slow in January, YoY PPI actually re-accelerated

A major factor in the January increase in prices for final demand services was the index for hospital outpatient care,which rose 1.0 percent. The indexes for apparel, footwear, and accessories retailing; health, beauty, and optical goods retailing; residential real estate services (partial); long-distance motor carrying; and hospital inpatient care also moved higher. In contrast, margins for chemicals and allied products wholesaling declined 2.3 percent. Prices for wireless telecommunication services and airline passenger services also fell.

Nearly half of the January increase in the index for final demand goods is attributable to prices for gasoline, which climbed 7.1 percent. The indexes for residential electric power, iron and steel scrap, diesel fuel, jet fuel, and fresh and dry vegetables also moved higher. In contrast, prices for chicken eggs fell 38.9 percent. The indexes for residential natural gas and for power cranes, draglines, and shovels also declined.

Interestingly, Core inflation data did the opposite of headline – CPI rose and PPI slowed…

end
Two regional Fed manufacturing reports send conflicting signals:  The New York survey slid showing a slowdown but the Philly area survey rose.
However the key prices paid component which always leads to inflation rose in both surveys
(courtesy zerohedge)

Fed Warns Inflation Has Arrived: Philadelphia, New York Fed Prices Paid Soar

Just in case the economic data appeared to be coming in as too hot in recent days, today’s two key regional Fed manufacturing indicators sent conflicting signals, with the New York Fed survey sliding from 17.70 to 13.1, and missing expectations of 17.50, while the Philadelphia Fed rose from 22.2 to 25.8, beating exp. of a dip to 21.6

The commentary from both regional Feds was optimistic, although NY conceded a slowdown in January:

Business activity continued to expand in New York State, according to firms responding to the February 2018 Empire State Manufacturing Survey. The headline general business conditions index fell five points to 13.1, suggesting a somewhat slower pace of growth than in January.

The New York internals, however, were good, especially when it comes to labor: number of employees rose to 10.9 vs 3.8, while work hours rose to 4.6 vs 0.8. Meanwhile, inventory fell to 4.9 vs 13.8. Unlike current conditions, optimism rose with six-month general business conditions up to 50.5 vs 48.6. A potential bottleneck was noted in future delivery times at a record high in Feb, up from 10.9 to 15.3

The Philly Fed meanwhile was stronger across the board:

Results from the Manufacturing Business Outlook Survey suggest that the region’s manufacturing sector continues to expand in February. The indexes for general activity, new orders, and employment were all positive this month and increased from their readings last month. Price increases for inputs were more widespread this month, according to the respondents. The survey’s future indexes, reflecting expectations for the next six months, suggest continued optimism.

Here, too, the internals were strong:

  • New orders rose to 24.5 vs 10.1
  • Employment rose to 25.2 vs 16.8
  • Unfilled orders rose to 14.5 vs -1.8
  • Shipments fell to 15.5 vs 30.3
  • Delivery time fell to 4.5 vs 6.1

There were some declines:

  • Inventories fell to -0.9 vs 9.4
  • Prices received fell to 23.9 vs 25.1
  • Average workweek fell to 13.7 vs 16.7

But the biggest surprise for both regional Feds was the blistering surge in the Prices Paid index, the clearest indicator of input cost inflation, which in the New York Fed surged from 36.2, to 48.6, the highest in six years, while according to the Philly Fed, “cost pressures were more widespread this month among the reporting manufacturers: The prices paid index increased 12 points to 45.0, its highest reading since May 2011” or in nearly 7 years.

As a reminder, these surveys are among the closest reading of the economy the Fed has at its disposal when making rate hike decisions, so based on just today’s Prices Paid data, it may be time to guarantee at least 4 rates hikes in 2018.

end
Stagflation strikes with a vengeance as Industrial production sinks badly.  So with the latest data provided, we inflation surging but the economy faltering.
(courtesy zerohedge)

Stagflation Strikes: Industrial Production Sinks As Inflation Surges

After surging in the last few months, US industrial production slumped in January, dropping 0.1% MoM against expectations of a 0.3% rise.

Notably, December’s original 0.9% surge in industrial production was revised drastically lower to just 0.4%, making this 0.1% drop in January even more significant…

Manufacturing production was unchanged in January – dramatically below the 0.3% rise expected – as capacity utilization slowed for the first time since August.

This drop in production hits as inflation signals surge suggesting the stagflationary scenario is strengthening.

end

Trump agrees with some Democrats supporting a 25 cent Federal gas tax to help pay for infrastructure
(courtesy zerohedge)

Trump Surprises Democrats, Supports 25 Cent Federal Gas Tax Hike

President Trump surprised a group of lawmakers during a Wednesday meeting at the White House by repeatedly mentioning a 25-cent-per-gallon increase on federal gasoline and diesel tax in order to help pay for upgrading America’s crumbling infrastructure by addressing a serious shortfall in the Highway Trust Fund, which will become insolvent by 2021.

The tax increase was first pitched by the U.S. Chamber of Commerce in January, while the White House had originally been lukewarm towards the idea.

The federal gasoline and diesel tax has been at 18.4 and 24.4-cents-per-gallon respectively since 1993, with no adjustments for inflation. It currently generates approximately $35 billion per year, while the federal government spends around $50 billion annually on transportation projects.

Senator Tom Carper (D-DE), the top Democrat on the Senate Environment and Public Works Committee, seemed pleasantly surprised at Trump’s repeated mention of the tax as a solution to pay for upgrading American roads, bridges and other public works.

While there are a number of issues on which President Trump and I disagree, today, we agreed that things worth having are worth paying for,” Carper said in a statement. “The president even offered to help provide the leadership necessary so that we could do something that has proven difficult in the past.”

Rep. Peter DeFazio (D-OR) – the top Democrat on the House Transportation and Infrastructure Committee was also present at the meeting, in which he says President Trump told lawmakers he would be willing to increase federal spending beyond the White House’s $200 billion, 10-year proposal.

“The president made a living building things, and he realizes that to build things takes money, takes investment,” DeFazio said.

GOP Support?

Rep. Bill Shuster (R-PA), chairman of the House Transportation and Infrastructure Committee, is encouraging his GOP colleagues to support the increased gas tax as a way to keep the Highway Trust Fund solvent beyond 2021. The fund finances road, bridge and transit projects.

“He understands that we’ve got to figure out the funding levels and where the money’s coming from, make sure it’s not smoke and mirrors,” Shuster said of the president.

The Highway Trust Fund has been flirting with bankruptcy for the better part of a decade, while the Senate passed a bill in 2015  to boost highway spending without a solution to fund it. Lawmakers eventually passed a 6-year transportation measure which keep the trust fund solvent for another three years.

Republican leaders have already rejected the idea, however, along with various other entities tied to billionaire industrialists Charles and David Koch.

“Our organizations worked hard over the past year to support your efforts and the efforts of tax-cutters in Congress to provide American families much-needed and long-overdue tax relief,” reads a letter from executives of the Koch-affiliated Freedom Partners Chamber of Commerce and Americans for Prosperity. “But increasing the gas tax would effectively undermine recent tax cuts by clawing back hundreds of billions of dollars — roughly 25 percent of the total benefit from tax reform.”

“The American people are just beginning to feel the benefits of the recently passed tax cuts bill,” said Brent Gardner of Americans for Prosperity in a Wednesday statement. “Instead of undermining the relief taxpayers just received, the president and Congress should focus on smarter spending and breaking through the regulatory gridlock that delays projects and drives up costs.”

Republican Senator Chuck Grassley (R-IA) doesn’t think the gas tax has any chance of even coming up for a vote in the Senate. “He’ll never get it by McConnell,” said Grassley, referring to Senate Majority Leader Mitch McConnell.

Sen. John Barrasso (R-WY), Chairman of the Senate Environment and Public Works Committee opposes the gas tax hike on the grounds that collected funds wouldn’t all go towards repairing and restoring infrastructure.

“Today was the first of many conversations about the president’s infrastructure plan and how to fund it,” Barrasso said in a statement. “Ultimately, the final decision will be made by Congress as a whole.”

Industry Support

Several groups including the American Trucking Associations and the U.S. Chamber of Commerce support the gas tax as the easiest and most efficient way to generate money for projects.

“We support the president’s big and bold vision for strengthening American infrastructure,” Chris Spear, president and chief executive officer of the American Trucking Associations, said in a statement. “Because it is a user fee, the fuel tax is the most conservative, cost-effective and viable solution to making that vision a reality.”

One has to wonder – considering that Congress is unlikely to pass the proposed hike – if President Trump is simply buying a little political capital with Congressional Democrats.

END
We have been telling you quite often that Trump wants his wall and block family migration. He now threatens the bipartisan immigration deal as there is no wall in the agreement
(courtesy zerohedge)

White House Threatens Veto Of ‘Bipartisan’ Immigration Deal

The Trump administration has threatened to veto a so-called ‘bipartisan’ immigration bill – offered from Chuck Schumer and Susan Collins – that was being primed for a vote as soon as this afternoon.

The bill reportedly does not meet President Trump’s demands and White House press secretary Sarah Huckabee Sanders said in a statement that:

“If the president were presented with an enrolled bill that includes the amendment, his advisors would recommend that he veto it.”

As The Hill reports, the bipartisan plan would shield 1.8 million young immigrants living illegally in the U.S., known as “Dreamers,” from deportation and provide $25 billion for border security measures – both elements of the White House’s immigration plan.

But the proposal does not go as far as the White House would like in curbing family-based immigration.

It would block Dreamers from sponsoring parents who knowingly brought them illegally into the country, but would not make broader changes to the family visa system demanded by Trump and his GOP allies in the House.

The White House said it “would undermine the safety and security of American families and impede economic growth for American workers” and result in “a flood of new illegal immigration in the coming months.”

Senate Minority Leader Chuck Schumer of New York called President Donald Trump “obstinate” and said the president “has stood in the way of every single proposal that has had a chance of becoming law.” A group of Democratic and Republican senators agreed on the proposal Wednesday after weeks of negotiations.

The president on Thursday endorsed a bill introduced by Senate Judiciary Committee Chairman Charles Grassley (R-Iowa) that closely mirrors the White House framework.

SWAMP STORIES

My goodness!!  Adam Schiff now admits that the Democratic Memo contains “sources and methods”.  It is interesting that he scolded the Republicans not to release their memo because it contained “sources and methods”

(courtesy zerohedge)

Adam Schiff Admits Democratic Memo Contains “Sources And Methods”

Remember just two weeks ago when, in a desperate attempt to stall or dismiss the release of Devin Nunes memo, Democratic Rep Adam Schiff scaremongered the fact that “we have crossed a deeply regrettable line” warning that he believed The GOP memo could reveal “sources and methods” and create the atmosphere for another domestic terrorism incident…

Well, it turns out that a) the GOP memo did not expose any “sources and methods”; and b) the Democrat rebuttal did!

As The Daily Caller’s Richard Pollock reportsWhite House problems with the Democrats’ “rebuttal memo” on the surveillance of Trump associates are genuine and the document could disclose “sources and methods,” California Rep. Adam Schiff, the ranking Democrat on the House Permanent Select Committee on Intelligence confirmed.

“We need to go through that and identify that which remains classified and would implicate sources and methods or investigative interests,” he said at a newsmaker’s breakfast meeting on Wednesday sponsored by the Christian Science Monitor.

His comments constituted a direct rebuke to his party’s top boss in the House of Representatives, Minority Leader Nancy Pelosi.

White House counsel Don McGahn said in a statement Friday that Trump was “inclined” but “unable” to declassify the Democrat’s 10-page memo because it “contains numerous properly classified and especially sensitive passages,”according to Politico.

Schiff’s conciliatory statement could embarrass Pelosi. 

In a stinging commentfollowing the McGahn statement, Pelosi said, “President Trump’s refusal to release Intelligence Committee Democrats’ memo is a stunningly brazen attempt to cover up the truth about the Trump-Russia scandal from the American people.”

Better get your stories straight… or focus on the Porter distraction, stat!

end
I think most of expected this:  Bruce Ohr hid his wife’s Fusion GPS payments form ethic officials as Bruce Ohr refused to obtain a conflict of interest waiver
(courtesy Luke Rosiak/DailyCaller)

DOJ Official Bruce Ohr Hid Wife’s Fusion GPS Payments From Ethics Officials

Authored by Luke Rosiak via The Daily Caller,

Bruce Ohr, the Department of Justice official who brought opposition research on President Donald Trump to the FBI, did not disclose that Fusion GPS, which performed that research at the Democratic National Committee’s behest, was paying his wife, and did not obtain a conflict of interest waiver from his superiors at the Justice Department, documents obtained by The Daily Caller News Foundation show.

The omission may explain why Ohr was demoted from his post as associate deputy attorney general after the relationship between Fusion GPS and his wife emerged and Fusion founder Glenn Simpson acknowledged meeting with Ohr. Willfully falsifying government ethics forms can carry a penalty of jail time, if convicted.

The Democratic National Committee (DNC) hired Fusion GPS to gather and disseminate damning info about Trump, and they in turn paid Nellie Ohr, a former CIA employee with expertise in Russia, for an unknown role related to the “dossier.” Bruce Ohr then brought the information to the FBI, kicking off a probe and a media firestorm.

The DOJ used it to obtain a warrant to wiretap a Trump adviser, but didn’t disclose to the judge that the DNC and former Secretary of State Hillary Clinton’s campaign had funded the research and that Ohr had a financial relationship with the firm that performed it — which could be, it turns out, because Ohr doesn’t appear to have told his supervisors. Some have suggested that the financial payments motivated Bruce Ohr to actively push the case.

For 2014 and 2015, Bruce Ohr disclosed on ethics forms that his wife was an “independent contractor” earning consulting fees. In 2016, she added a new employer who paid her a “salary,” but listed it vaguely as “cyberthreat analyst,” and did not say the name of the company.

The instructions require officials to “Provide the name of your spouse’s employer. In addition, if your spouse’s employer is a privately held business, provide the employer’s line of business.” As examples, it gives “Xylophone Technologies Corporation” and “DSLK Financial Techniques, Inc. (financial services).” The dollar amount does not need to be disclosed. “Report each source, whether a natural person or an organization or entity, that provided your spouse more than $1,000 of earned income during the reporting period,” they say.

The DOJ says, “Financial disclosure reports are used to identify potential or actual conflicts of interest. If the person charged with reviewing an employee’s report finds a conflict, he should impose a remedy immediately.” Its guidance says, “employees should always seek the advice of an ethics official when contemplating any action that may be covered by the rules.”

Paul Kamenar, a Washington, D.C., public policy lawyer experienced in executive branch ethics and disclosure laws, said, “Based on my reading of the regulations and disclosure guide accompanying the form, he failed to disclose the source of his wife’s income on line 4 by not including the ‘name of the employer.’”

“The law provides that whoever ‘knowingly and willfully’ fails to file information required to be filed on this report faces civil penalties up to $50,000 and possible criminal penalties up to one year in prison under the disclosure law and possibly up to five years in prison under 18 USC 1001,” he said. “Since he lists her income type as ‘salary’ as opposed to line 1 where he describes her other income as ‘consulting fees’ as an ‘independent contractor’ it’s clear that she was employed by a company that should have been identified by name,” he said.

“And even with respect to her ‘independent contractor’ listing, it appears incomplete by not describing what kind of services were provided. Both these omissions do not give the reviewing official sufficient information to determine whether there is a conflict,” Kamenar added.

Bruce Ohr spouse financial disclosure (DOJ)

Ohr also did not get a conflict of interest waiver from his supervisors, suggesting that he may not have explained to anyone the true source of the income and how it intersected with his official involvement in the case, nor did he have approval.

If a potential conflict is disclosed and explained to supervisors, a government agency can grant a conflict of interest waiver, known as a 208(b) waiver. In response to a records request, officials told TheDCNF, “There are no … waivers for this filer.”

Scott Amey, general counsel of the Project on Government Oversight, said “he couldn’t get a waiver for that, that would have required outright recusal.” Making it potentially even worse than failing to recuse, Ohr’s pressing the Trump case appears to be something he decided to do on his own, rather than something assigned to him.

Bruce Ohr was demoted from his DOJ position shortly after the company’s founder acknowledged in a Nov. 14, 2017, interview with the House Intelligence Committee that he had met with him. Fox News reported in December that Ohr had concealed his meetings with the firm from his supervisors.

The form says, “[F]alsification of information required to be filed by section 102 of the [Ethics in Government Act of 1978] may also subject you to criminal prosecution” as well as “civil monetary penalty and to disciplinary action by your employing agency.”

The lack of disclosure is the latest of several examples of people apparently trying to conceal the financial relationship that Fusion GPS, which was funded by the DNC, had with the family of the DOJ official.

In Fusion GPS founder Simpson’s November House interview, he conspicuously omitted his relationship with Nellie Ohr, painting Bruce Ohr as someone who he was connected to independently. Investigators said, “You’ve never heard from anyone in the U.S. Government in relation to those matters, either the FBI or the Department of Justice?”

“I was asked to provide some information … by a prosecutor named Bruce Ohr,” he said.

Investigators said, “Did Mr. Ohr reach out to you?”

“It was someone that Chris Steele knows … and I met Bruce too through organized crime conferences or something like that … Chris told me that he had been talking to Bruce … and that Bruce wanted more information, and suggested that I speak with Bruce,” Simpson said.

Simpson also said his firm was not affiliated with any Russian speakers, even though Nellie Ohr appears to speak the language.

In addition to meeting with Simpson, Ohr also met with Steele before the election.

In an earlier Aug. 22, 2017, interview with the Senate Judiciary Committee, Simpson didn’t mention either of the Ohrs by name. He said he had not met with any FBI officials about the matter, without noting his contact with the DOJ official.

Simpson suggested in court records on Dec. 12, 2017, that the only way government investigators could have found out about Nellie Ohr’s relationship with the company was through its bank records. “Bank records reflect that Fusion contracted with Nellie Ohr, a former government official expert in Russian matters, to help our company with its research and analysis of Mr. Trump. I am not aware of any other sources from which the committee or the media could have learned of this information,” he said.

Tom Fitton, president of Judicial Watch, a conservative legal group that has been critical of the department’s handling of the Trump investigation, said, “This document ought to trigger an immediate criminal investigation if one isn’t already ongoing.”

Kathleen Clark, an ethics expert and law professor at Washington University in St. Louis, said beyond the disclosure issue, as far as the legal definition of conflict of interest requiring a recusal, it could depend on whether Ohr’s actions would have had a “direct and predictable” effect on his wife’s income from Fusion GPS.

Kamenar said what is known as the frequently used “catch-all” provision clearly applies, saying “Circumstances… would cause a reasonable person with knowledge of the facts to question an employee’s impartiality” require recusal.

Amey said, “As a lawyer and a top Justice official, Ohr should know that he can’t participate in anything related to his wife’s work … Ohr should have been upfront about his wife’s employment and not touched anything related to Steele, the dossier, and Fusion GPS.” The DOJ’s judgment is only as good as the information volunteered to them by Ohr, he said, and because he didn’t list the name of his wife’s employer, they likely had no reason to suspect it might have impacted his work.

Walter Schaub, a former government ethics czar who is an expert on the forms and resigned after offering sharp criticisms of Trump, declined repeated requests to weigh in on Ohr.

Bruce Ohr did not return a request for comment, nor did the DOJ.

This does not look good for Kushner:  both the IRS and the Dept of Justice subpoena investors in the Kushner companies.
(courtesy zerohedge)

IRS, DOJ Subpoena Investors In Kushner Companies

The financial noose around Jared Kushner is once again tightening.

One month after the NYT reported that the records of Trump’s son-in-law at Deutsche Bank were subpoenaed, today Bloomberg reports that now the IRS is getting involved, and now US tax authorities have requested documents from lenders and investors in real estate projects managed by Kushner’s family.

The latest instance of following Kushner’s money involves gathering information from people who lent money and assembled investors for some Kushner Cos. real estate projects in New York and New Jersey, Bloomberg’s source said, with some deals dating as far back as 2010.

The Internal Revenue Service and the Justice Department issued the subpoenas within the past year, according to the person.

This particular tax inquiry appears unrelated to other investigations that have since burst into public view, and reportedly began before Special Counsel Robert Mueller was appointed in May to investigate Russian election meddling. In a separate action around that time, U.S. prosecutors in Brooklyn sought information from Kushner Cos. about its use of a foreign visa program.

In the tax investigation, it’s unclear whether authorities are looking at Kushner business associates or the company itself.

A lawyer for Kushner’s company, Charles J. Harder, said that “Kushner Cos. is not under investigation for any tax issues. It has had no contact with anyone at the IRS or Justice Department Tax Division. It has received no subpoenas or audit requests about its taxes. It is not in tax court on any audits. If there is an investigation about others’ taxes, it has nothing to do with Kushner Cos. or its businesses.”

Well, it has not received them yet: once the DOJ finds malfeasance on the lender side, the borrower’s details will be promptly requested too.

To be sure, if the IRS really wants dirt, it won’t be difficult to find: the Kushner Cos. was embroiled in a criminal tax case more than a decade ago. Jared Kushner’s father, Charles, pleaded guilty in 2004 to lying about political donations, cheating on his taxes and witness intimidation after arranging a videotape of a brother-in-law having sex with a prostitute.

Four years later, another top company executive was convicted of conspiracy and aiding the filing of false partnership tax returns. Prosecutors accused him of creating false returns by illegally claiming $6 million in deductions for charitable and political contributions, capital expenditures and gift and entertainment expenses. In all, seven people were convicted of tax charges in the scheme. Kushner Cos. wasn’t accused of wrongdoing.

The previously unreported IRS probe is in addition to a probe being conducted by the SEC and Brooklyn prosecutors who issued subpoenas to Kushner Cos. last May, seeking details on its use of the EB-5 program for foreign investors.

The EB-5 program offers foreigners green cards and permanent residence in exchange for investing $500,000 in certain U.S. businesses that create at least 10 jobs per investor. Kushner Cos. used the program to build a Trump-branded apartment building in Jersey City and sought to draw on it for another project there.

Furthermore, the Brooklyn prosecutors also requested documents from Deutsche Bank related to a retail property that the Kushners bought in 2015 for $296 million. Within a year, that property, formerly the New York Times headquarters, was appraised at $445 million, and the Kushners took out $370 million in loans, including $285 million from Deutsche Bank. The bank sold most of the debt to Wall Street investors. The focus of that inquiry isn’t clear.

 end
A good article on the suspension of the Debt ceiling and where the USA debt is heading with respect to March 1.2019 where it is intended to be reinstated. The pundits figure that by that date the debt ceiling will be 22 trillion USA dollars
(courtesy Dave Kranzler/IRD)

Why Even Pretend There’s A Debt Ceiling Limit?

February 15, 2018Financial Markets, Gold, Market Manipulation, Precious Metals, U.S. Economybudget deficit, debt ceiling, Treasury debt

The current “debt ceiling” has been suspended until March 2019. The current amount of Treasury debt outstanding is $20.681 trillion. It has been estimated that the amount of Treasury outstanding by March 2019 will be as high as $22 trillion. U.S. Government has, for all intents and purposes, operated without a constraint on debt issuance since 2013:

Beginning in 2013, Congress has taken to temporarily suspending the debt limit, rather than raising it directly. The debt limit has now been suspended on five occasions, most recently as part of the Bipartisan Budget Act of 2018, which suspends the debt limit through March 1, 2019. When that suspension expires, the debt limit will be reinstated at a new, higher level. – Bipartisan Policy Center

Note that the estimate of $22 trillion in Treasury debt outstanding by March 2019 is just an estimate from the Committee for a Responsible Federal Budget. But the suspension of the debt ceiling gives the Government carte blanche to spend as much as it wants without restraint. In theory, the amount of Treasury debt could me much higher than $22 trillion by March 2019.

Furthermore, based on the track record of Congress and the President since 2013, the debt ceiling will likely be waived once again. Why even bother playing this game? The Treasury debt doubled under Bush II from $5.7 trillion to $11.2 trillion. Under Obama the debt outstanding nearly doubled again. If this pattern simply repeats, the debt will double again under Trump or under Trump + Trump’s successor after four years.

But it will likely more than double. The cost of interest on the Treasury debt in 2017 was $458 billion. This was 11.5% of the Government’s total expenditures in FY 2017. Already in the first four quarters of FY 2018, the Government has spent $174.8 billion in interest expense – a run-rate of $524.4 billio – 12.8% of the Government’s FY 2018 budget . By the end of FY 2018, the total interest expense will be even higher because the amount of debt outstanding will be have increased over the year by at least $1 trillion and probably more.

The question, then, is why even bother with the debt ceiling? What’s the point of pretending? The debt ceiling was meant to act as a “brake” on the Government’s fiscal recklessness. But now it’s so easy to suspend the ceiling it makes no sense to waste time going through the formality of suspending it. The U.S. is on debt-driven suicide path anyway.

Money that is borrowed behaves exactly like money created (printed) until the borrowed money is repaid and the debt is extinguished. But the Federal Government, for all intents and purposes has not repaid a dime of the amount borrowed for many decades. In effect, in addition to the money that has been printed by the Fed, there is another $20.6 trillion of money that has been created by debt issuance and spent just like actual currency printed.

At some point, this de facto dollar devaluation is going to exert brutal and inexorable downward pressure on the value of the US dollar. Furthermore, at some point, the U.S.’ biggest creditors – like China – are going to say “no mas” to participating in Treasury debt issuance. That’s when the real fun will begin, especially for those long gold and silver.

http://investmentresearchdynamics.com/why-even-pretend- theres-a-debt-ceiling-limit/

***

Part ii/ The folly of Central Bankers Keynesian philosophy
(courtesy David Stockman/ContraCorner Part ii)

Swan Song Of The Central Bankers, Part 2: Yellen’s “My Girl”

Authored by David Stockman via Contra Corner blog,

If you wonder why things are going to get a lot worse before they get better—just consider the following tidbit from this week’s political gleanings. It essentially cements the case that Washington is heading straight into a bond market conflagration that will wreak havoc on the Wall Street end of the Acela Corridor.

It seems that the secret force inside the White House for Janet Yellen’s reappointment last year, and source of Trump’s favorable nods in her direction on several occasions, was none other than the scourge of the Yellen-loving Washington/Wall Street ruling class, Steve Bannon.

That’s right. In another new insider account of the Trump White House, we learn that:

…….the former White House chief strategist and nationalist standard-bearer revealed that he urged Trump to reappoint former Fed Chairwoman Janet Yellen….The former chief strategist had expressed concerns that a more hawkish Fed chairman could hinder economic growth.

“The Breitbart posse is in love with Janet Yellen. If we get behind her, that is the signal of signals — the realignment of American politics, ” Bannon told the book’s author, Bloomberg’s Joshua Green, in September, several months before he stepped down from the conservative media outlet. “Yellen’s my girl.”

As it happened, of course, Bannon got his walking papers. But Trump did end up with his “girl”, albeit attired in Jerome Powell’s trousers and tie.

Still, the implications are staggering: The cult of central banking has now thoroughly buffaloed politicians from one end of the ideological spectrum to the other. Apparently, even the most intellectualized voice of anti-establishment populism of recent times does not know that “low interest rates” are not a gift for the state to properly give; and most certainly not the key to sustainable long-term growth.

Indeed, if there were one single thing a Republican government could do to stop the nation’s slide toward economic stasis, it would be to liberate the delicate mainspring of capitalism—-the money and capital markets—-from the suffocating and deforming rule of central bankers. The latter have destroyed honest price discovery, yet free market pricing of credit, carry, capital and risk is the sine qua none of vibrant capitalism and broad societal prosperity.

To be sure, the mainstream GOP lost track of that cardinal truth decades ago during the reign of Richard Nixon. Tricky Dick famously slammed shut the US gold window at Camp David in August 1971, thereby defaulting on the US obligation to keep the dollar convertible at $35 per ounce and the world currency system anchored to the ultimate monetary asset.

But the subsequent drift to fiat currency, dirty floats and the massive, worldwide expansion of central bank credit wasn’t really Nixon’s doing—-even if it did, in the first instance, conveniently liberate the Fed to gun the US economy into Nixon’s short-lived landslide of 1972.

In truth, however, the evil genius behind the catastrophic error of Camp David was Milton Friedman, and his errand boy in Nixon’s cabinet, George Schultz. The two were apostles of the free market when it came to commodities, wages, rents, goods, services and most anything else including gambling, prostitution and drugs.But not money.

Friedman had been dead wrong about the Fed’s culpability for the Great Depression of 1930-1933, and from that error he erected a theory of state control of money that eventually evolved into today’s baleful regime of Keynesian central banking.

To be sure, Friedman had an austere view of the job of central bankers that was akin to the Maytag repairman commercial of the era. They were to mostly sit around the Eccles Building reading book reviews and playing scrabble, while occasionally nudging the monetary deals to keep M1 growing at precisely 3.00% per annum. Get that modest job done right and you would have ebullient capitalist prosperity forever, world without end.

The problem with this Friedmanite monetary postulate was two-fold: It was wrong in theory and impossible in practice!

Thus, there is no possible fixed rule of monetary growth. As demographics, technology, enterprise and social mores change, among others, only the market can discern their impact on the optimum quantity and velocity of money.

Likewise, in response to banking innovation the parameters of any given monetary aggregate can change substantially, making consistent measurement impossible. That happened, in fact, when overnight sweep accounts proliferated in the mid-1990s, thereby causing the level of “demand deposits” to drop by 50% or more and the growth rate of Friedman’s M1 to be thrown into a cocked hat.

Worse still, there was no chance that politicians on both end of Pennsylvania Avenue could possibly identify, nominate and confirm for service on the Federal Reserve Board the kind of monetary eunuchs Friedman’s theory implied. Inexorably, therefore, the Fed became populated not with 3.00% M1 purists, but with bankers, academics and lifetime government apparatchik with an ax to grind.

Arthur Burns was the first Fed chairman out of the gate after Camp David, and after obsequiously submitting to Nixon’s demands for a booming election year economy in 1972, he spent the rest of his term attempting to repair his reputation—-sending the US economy through violent cycles of boom and boost during the mid-1970s.

Then came William Miller, erstwhile manufacturer of gears, pumps, helicopters and golf carts, who thought inflation was caused by high oil prices, not the prodigious expansion of central bank credit over which he presided. Fortunately, however, Paul Volcker knew better, mercilessly crushed the roaring commodity and wage inflation with 20% interest rates and earned the undying enmity of GOP pols, who tricked the Gipper into getting rid of him at the first opportunity (August 1987).

Ironically, Ronald Reagan was a monetary antediluvian who really did believe in the gold standard. But, unfortunately, had neglected to read the fine print addendum to Alan Greenspan’s resume. That was the place where he claimed to be a life-long hard money man whose goldbug views had never waivered from the days of Ayn Rand’s salons, but had merely “evolved”.

As he told your editor at the time, he saw no reason why the FOMC couldn’t be a next best substitute for the gold standard itself. Incidentally, at this same time in the summer of 1987, he also offered to sell his well-known economic consulting firm, Townsend-Greenspan, to your editor.

As it happened, the due diligence didn’t pan out. It seems that Townsend-Greenspan persistently lost money selling macroeconomic forecasts to corporate America, which were generally wrong.

Alas, the money-making side of the firm was a prodigious flow of speech honorariums—a talent that didn’t attach to the business unit on offer, and which was destined to become the essence of the Maestro of central banking.

Needless to say, Greenspan’s talent for financial bloviation was every bit as efficacious in the Imperial City as it had been during his decades hustling the Fortune 100. At length, he transformed Friedman’s Maytag repairmen into a monetary politburo, and the Fed into an all-powerful vehicle of monetary central planning.

In truth, there had never really been a dimes worth of difference between “saltwater” Keynesians of the Samuelson-Heller-Tobin generation and the “freshwater” monetarists of the Friedman school. At the core, they both believed that capitalism tended toward business cycle instability, and that unchecked this instability would eventually plunge the economy into a deathly depressionary spiral.

In truth, capitalism makes errors and proficiently and timely corrects them. There is no cycling toward the drain or death wish toward depression. Moreover, as we demonstrated at length in The Great Deformation,the 1930’s was a consequence of the monetary policy aberrations of the Great War and the Roaring Twenties, not the alleged cyclical instability of capitalism.

In any event, the only original difference back in the day (1955-1987) was that first generation Keynesians thought activist counter-cyclical fiscal policy would cure this endemic maladay, while Friedman thought rule-bound monetary policy would do the trick.

In this context, Greenspan became the great synthesizer and evangelist, too.

He essentially tossed Friedman’s 3% rule on the scrap heap in a fog of technical mumbo jumbo about the immeasurability of the monetary aggregates—-even as took up the old fashioned mantle of Humphrey-Hawkins full employment as the essential mission of the Fed. And then he sold the whole package to the hapless GOP establishment.

Henceforth, rather than being narrowly focussed on relative price stability and financial discipline as had been the Fed under the post-war greats—-William McChesney Martin and Paul Volcker—the central bank’s remit became plenary. Even the level of the stock market and the paper net worth of  American society became fair game for its focus and intervention—–matters which were unthinkable even when Nixon’s posse struck down the old monetary order at Camp David.

The final inflection point came after the first Greenspan bubble crashed in the great dotcom meltdown of April 2000 and after. By all rights, the US economy should have taken its lumps after the unsustainable debt and financial asset fueled binges of the 1990’s.

But Greenspan was now in full-Humphrey-Hawkins modality, determined to use the crude tools of money market price-pegging and Fed balance sheet expansion to prevent a macroeconomic correction (aka recession). At length, he lowered the funds rate for 30 straight months, pushing it from 6.5% in November 2000 to an unheard of 1.0% by June 2003.

Thereafter, logically and inexorably, came the great mortgage bubble, rampant housing price inflation, the Wall Street securitization and derivatives orgy and the Great Financial Crisis that flowed therefrom. By the time the dust had settled on Greenspan’s exit in January 2006, the balance sheet of the Fed had grown from $200 billionto nearly $700 billion during his 19-year tenure.

By contrast, by the lights of Friedman’s fixed rule it should have been only $350 billion (3% per year); and under a regime of sound money it probably would not have grown at all.

As we will address further in Part 3, the rise of the Asian mercantile exporters after 1980 meant that the US needed to pursue secular deflation of costs, prices and wages in order to remain competitive with the newly mobilized labor forces from the rice paddies of East Asia, not inflate its general price level by nearly 50% as it did during Greenspan’s tenure. And the former is exactly what would have happened under a sound money regime, such as the classic gold standard.

More importantly, not only did Greenspan implant an out-and-out Keynesian policy regime in the Eccles Building, but he also transplanted it into the mainstream Republican party itself. After all, you can’t find a more by the books Keynesian than Ben Bernanke. Yet Greenspan ushered Bubbles Ben into the George W. Bush White House from his perch at the Fed to become the President’s chief economic advisor.

From there it was a short-leap to the Chairmanship of the Fed, and his hair-on-fire money-pumping campaign when the market again tried to correct the Fed’s rampant housing and credit bubbles in September 2008.

Fittingly, Bernanke’s PhD had been supervised at MIT by Stanley Fischer, the leading second generation Keynesian economist of the modern era; and the topic had been the Fed’s error, according to Milton Friedman, of not flooding the market with liquidity and buying up all the government bonds in sight during 1930-1932!

In that context, Janet Yellen, the 1970 PhD student of James Tobin, fit into the Fed’s top chair like a hand-in-glove. It was now a completely Keynesian/statist institution, and while she didn’t get a second term, she might as well have.

During his ceremonial swearing-in yesterday, here is what the Yellen in trousers and tie had to say:

When I joined the Board of Governors in 2012, unemployment was 8.2 percent. Many millions of Americans were still suffering from the ravages of the crisis. Since then, monetary policy has continued to support a full recovery in labor markets and a return to our inflation target; we have made great progress in moving much closer to those statutory objectives. In addition, the financial system is incomparably stronger and safer, with much higher capital and liquidity, better risk management, and other improvements.

Much credit for these results should go to Chairman Bernanke and Chair Yellen. I am grateful for their leadership and for their example and advice as colleagues. But there is more to the story than successful leadership. The success of our institution is really the result of the way all of us carry out our responsibilities. We approach every issue through a rigorous evaluation of the facts, theory, empirical analysis and relevant research.

Nothing could be farther from the truth. The foundation of the US economy has been battered and bruised by 30 years of central bank suffocation. And, as we will elaborate upon in Part 3, there is no better evidence than the utter collapse of the net national savings rate.

The latter measures it all: To wit, it’s the sum of household, corporate and government net savings or dissavings. Compared to an average of 11% of national income during the heyday of US economic prosperity between 1954 and 1970, it has been in steady decline—which accelerated sharply after the era of Bubble Finance incepted in 1987.

At present, the net national savings rate is barely 2%, but with the ill-timed explosion of Trumpian/GOP fiscal deficits, it is destined toward the zero bound and through to the negative side.

So there is this: An economy that does not generate net national savings can’t grow or even remain stable over the longer run. You can’t borrow from the rest of the world forever.

And that get’s us to the great stinking skunk in the woodpile. The same Keynesians at the Fed who presided over the fiasco depicted in the chart below, have now determined to embark on a crushing regime of QT (quantitative tightening) in order to reload their dry powder and insure their hold on plenary financial power when the US economy next hits the skids.

We think they are way too late. That’s why there will be financial mayhem in the years ahead.

However, by appointing Jerome Powell, Donald Trump, the bet noire of the ruling Keynesian-statist establishment, will end up bringing down the financial house of cards Washington has built over the last three decades.

At least that much the Donald will surely accomplish before he is finally shown the way to his one-way trip on the Dick Nixon Memorial Helicopter.

If we are lucky, both eventualities will materialize some time soon.

end

I will  see you FRIDAY night

HARVEY

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