Feb 22/Gold rebounds today to close up 90 cents to $1330.95/silver however is down one cent/Gold EFP issuance: 9751/silver EFP issuance: 1199 contracts/Nippon life is stopping purchasing equities in Japan/Chinese heads of companies receiving massive amount of margin calls/

 

 

GOLD: $1330.95 UP $0.90

Silver: $16.62 DOWN 1 cent

Closing access prices:

Gold $1332.50

silver: $16.63

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: $xxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

SECOND SHANGHAI GOLD FIX: $XXXX

NY GOLD PRICE AT THE EXACT SAME TIME: $xxx

discount of Shanghai 2nd fix/NY:$

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

LONDON FIRST GOLD FIX: 5:30 am est $1323.50

NY PRICING AT THE EXACT SAME TIME: $1323.45

LONDON SECOND GOLD FIX 10 AM: $1339.85

NY PRICING AT THE EXACT SAME TIME. $1340.30

For comex gold:

FEBRUARY/

NUMBER OF NOTICES FILED TODAY FOR FEBRUARY CONTRACT: 0 NOTICE(S) FOR nil OZ.

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

For silver:

FEBRUARY

0 NOTICE(S) FILED TODAY FOR

nil OZ/

Total number of notices filed so far this month: 386 for 1,930,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Bitcoin: BID $10,246/OFFER $10,311: DOWN $173(morning)

Bitcoin: BID/ $9,952/offer $10,022: DOWN $468  (CLOSING/5 PM)

 

end

Let us have a look at the data for today\

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In silver, the total open interest FELL BY A CONSIDERABLE SIZED 1683 contracts from 203,629  FALLING TO 201,946 DESPITE  YESTERDAY’S 15 CENT GAIN IN SILVER PRICING.  WE HAD CONSIDERABLE COMEX LIQUIDATION. HOWEVER, WE WERE AGAIN NOTIFIED THAT WE HAD ANOTHER FAIR SIZED NUMBER OF COMEX LONGS TRANSFERRING THEIR CONTRACTS TO LONDON THROUGH THE EFP ROUTE:  1088 EFP’S FOR MARCH AND AND 111 EFP’S FOR MAY AND ZERO FOR ALL  OTHER MONTHS  AND THUS TOTAL ISSUANCE OF 1199 CONTRACTS.  WITH THE TRANSFER OF 1199 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 1199 CONTRACTS TRANSLATES INTO 5.995 MILLION OZ DESPITE  WITH THE CONTINUAL DROP IN OPEN INTEREST IN SILVER AT THE COMEX.

ACCUMULATION FOR EFP’S/SILVER/J.P.MORGAN’S HOUSE OF BRIBES, / STARTING FROM FIRST DAY NOTICE/FOR MONTH OF FEBRUARY:

41,468 CONTRACTS (FOR 16 TRADING DAYS TOTAL 41,468 CONTRACTS OR 207.345 MILLION OZ: AVERAGE PER DAY: 2591 CONTRACTS OR 12.958 MILLION OZ/DAY)

TO GIVE YOU AN IDEA AS TO THE HUGE SUPPLY THIS MONTH IN SILVER:  SO FAR THIS MONTH:  207.345 MILLION PAPER OZ HAVE MORPHED OVER TO LONDON. THIS REPRESENTS AROUND 29.57% OF ANNUAL GLOBAL PRODUCTION

ACCUMULATION IN YEAR 2018 TO DATE SILVER EFP’S:  455.87 MILLION OZ.

ACCUMULATION FOR JAN 2018: 236.879 MILLION OZ

RESULT: A CONSIDERABLE SIZED LOSS IN OI SILVER COMEX DESPITE THE  15 CENT GAIN IN SILVER PRICE.  WE ALSO HAD A GOOD SIZED EFP ISSUANCE OF 1199 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 1199 EFP’S  FOR  MONTHS MARCH AND MAY WERE ISSUED FOR TODAY  FOR A DELIVERABLE FORWARD CONTRACT OVER IN LONDON WITH A FIAT BONUS.   WE LOST  484 OI CONTRACTS i.e. 1199 open interest contracts headed for London (EFP’s) TOGETHER WITH A DECREASE OF 1683  OI COMEX CONTRACTS. AND ALL OF THIS HAPPENED WITH THE RISE IN PRICE OF SILVER OF  15 CENTS AND A CLOSING PRICE OF $16.63 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 OVER 1 BILLION oz i.e. 1.0097 BILLION TO BE EXACT or 144% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT FEBRUARY MONTH/ THEY FILED: 0 NOTICE(S) FOR NIL OZ OF SILVER

In gold, the open interest  FELL BY A SMALL 3705 CONTRACTS DOWN TO 524,449 DESPITE THE TINY RISE IN PRICE OF GOLD WITH YESTERDAY’S TRADING ($0.90). HOWEVER, IN ANOTHER DEVELOPMENT, WE RECEIVED THE TOTAL NUMBER OF GOLD EFP’S ISSUED FOR THURSDAY AND IT TOTALED AN HUGE SIZED  9751 CONTRACTS OF WHICH  APRIL SAW THE ISSUANCE OF 9751 CONTRACTS AND  JUNE SAW THE ISSUANCE OF 0 CONTRACTS AND THEN ALL OTHER MONTHS ZERO.    The new OI for the gold complex rests at 524,449. 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 6046  CONTRACTS: 3705 OI CONTRACTS DECREASED AT THE COMEX AND A GOOD SIZED  9751 OI CONTRACTS WHICH NAVIGATED OVER TO LONDON.(6046 oi gain in CONTRACTS EQUATES TO 18.92TONNES)

YESTERDAY, WE HAD 13,134 EFP’S ISSUED.

ACCUMULATION OF EFP’S GOLD AT J.P. MORGAN’S HOUSE OF BRIBES: (EXCHANGE FOR PHYSICAL) FOR THE MONTH OF FEBRUARY STARTING WITH FIRST DAY NOTICE: 181,973 CONTRACTS OR 18,197,300  OZ OR 566.00 TONNES (16 TRADING DAYS AND THUS AVERAGING: 11,373EFP CONTRACTS PER TRADING DAY OR 1,137,300 OZ/ TRADING DAY)

TO GIVE YOU AN IDEA AS TO THE HUGE SIZE OF THESE EFP TRANSFERS :   SO FAR THIS MONTH IN 16 TRADING DAYS: IN  TONNES: 566.00 TONNES

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

THUS EFP TRANSFERS REPRESENTS 566.00/2200 x 100% TONNES =  25.72% OF GLOBAL ANNUAL PRODUCTION SO FAR IN FEBRUARY ALONE.

ACCUMULATION OF GOLD EFP’S YEAR 2018 TO DATE:  1199.40 TONNES

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

Result: A  GOOD SIZED DECREASE IN OI AT THE COMEX WITH THE TINY RISE IN PRICE IN GOLD TRADING YESTERDAY ($0.90).  HOWEVER, WE HAD ANOTHER GOOD SIZED NUMBER OF COMEX LONG TRANSFERRING TO LONDON THROUGH THE EFP ROUTE: 9751 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 9751 EFP CONTRACTS ISSUED, WE HAD A NET GAIN IN OPEN INTEREST OF 6046 contractON THE TWO EXCHANGES:

9751 CONTRACTS MOVE TO LONDON AND  3705 CONTRACTS DECREASED AT THE COMEX. (in tonnes, the GAIN in total oi equates to 23.02 TONNES).

we had: 0 notice(s) filed upon for NIL oz of gold.

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

GLD

WITH GOLD UP $0.90 /NO CHANGE IN GOLD INVENTORY AT THE GLD/

Inventory rests tonight: 827.79 tonnes.

SLV/

WITH SILVER DOWN 1 CENT TODAY: 

NO CHANGES IN SILVER INVENTORY AT THE SLV/

/INVENTORY RESTS AT 315.271 MILLION OZ/

end

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

1. Today, we had the open interest in silver FELL BY AN EXPECTED 1683  contracts from 203,629 DOWN TO 201,946 (AND now A LITTLE FURTHER FROM THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) DESPITE  THE FAIR SIZED RISE  IN PRICE OF SILVER  (15 CENTS WITH RESPECT TO  YESTERDAY’S TRADING).   OUR BANKERS USED THEIR EMERGENCY PROCEDURE TO ISSUE ANOTHER GOOD 1293 PRIVATE EFP’S FOR MARCH AND 28 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 LOSS AT THE COMEX OF  1683 CONTRACTS TO THE 1199 OI TRANSFERRED TO LONDON THROUGH EFP’S, WE OBTAIN A SMALL LOSS OF  484  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:  2.42 MILLION OZ!!!

RESULT: A FAIR SIZED DECREASE IN SILVER OI AT THE COMEX DESPITE THE  RISE OF 15 CENTS IN PRICE (WITH RESPECT TO YESTERDAY’S TRADING ). BUT WE ALSO HAD ANOTHER GOOD 1199 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

i)Late WEDNESDAY night/THURSDAY morning: Shanghai closed UP 69.40 POINTS OR 2.17% /Hang Sang CLOSED DOWN 466.21 POINTS OR 1.48% / The Nikkei closed DOWN 234.37 POINTS OR 1.07%/Australia’s all ordinaires CLOSED UP 0.17%/Chinese yuan (ONSHORE) closed DOWN at 6.3527/Oil DOWN to 61.28 dollars per barrel for WTI and 65.20 for Brent. Stocks in Europe OPENED DEEPLY IN THE RED EXCEPT SPAIN  .   ONSHORE YUAN CLOSED 6.3527 AGAINST THE DOLLAR AT 6.3527. OFFSHORE YUAN STILL CLOSED AGAINST  THE ONSHORE YUAN AT 6.3527//ONSHORE YUAN TRADING/OFFSHORE YUAN NOT TRADING

 

 

 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

 i)North Korea

b) REPORT ON JAPAN

This is a biggy!!: Nippon Life Insurance, Japan’s largest life insurer will now become a seller of stocks as they believe that the bubble will burst.  They also believe that the dollar is fall to below 105.   This should end the advance of stocks basically around the world. He also states that the bubble in their bond market will also burst

 

 

 

( zerohedge)

3 c CHINA

i)Quite a story.  Chinese companies have for several years have offered employees a deal: buy their company stock while at the same time guaranteeing any losses.  That worked fine as long as the stock market rose. The reason for this deal: to prevent the stock falling and forcing mammoth loan margins calls by the upper management.  Now Chinese companies have now been forced to halt trading in their company while they sort out the avalanche of margin calls they are receiving.

China returns today for trading

( zerohedge)

ii)China now crackdowns on anything that would resemble a selloff.  So what did they do;  they halted their own version of VIX

(courtesy zerohedge)

4. EUROPEAN AFFAIRS

ECB

 

The minutes of the ECB described a rather bullish tone for the Euro as it initially rose but then readers noticed sections where members were very concerned on the weakness of the USA dollar and also the thought that the USA was intentionally lowering its value.  This would bring currency wars and after noticing this, the Euro fell. However cooler heads prevailed and the Euro continued its advance subject to the bullish tone by the ECB governors.

 

( zerohedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

 Turkey
A very good commentary on the finances within Turkey and this country may be ground zero in the next global debt crisis due to its high external debt as well as internal debt
(courtesy James Richards)

6 .GLOBAL ISSUES

Israel
For Israel, this is a bombshell as former head of Israel’s Communications Ministry has now agree to turn state’s witness in the ongoing investigation of Prime Minister Netanyahu
( zerohedge)

7. OIL ISSUES

WTI and gasoline pop after the DOE confirms the API report yesterday of a surprise crude drawdown. Rig counts increase and USA production slowed a bit

( zerohedge)

8. EMERGING MARKET

I)SOUTH AFRICA

 

My goodness:  Ramaphosa is better than Zuma?  He is now contemplating confiscating land from white farmers and handing it over to blacks

 

( Simon Black/SovereignMan.com)

ii)VENEZUELA

After a successful release of his crypto based, oil backed Petro, Maduro now hints at a gold backed Petro Oro.  One small problem…he sold all of his gold.

(courtesy Molly Jane Zuckerman/CoinTelegraph.com

9. PHYSICAL MARKETS

Very interesting:  FDIC is suing  16 banks alleging LIBOR manipulation in the big bank in Puerto Rico, Doral Bank

( Reuters/GATA)

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

i)EARLY THIS MORNING/JAMES BULLARD CALMS THE MARKET:

( zerohedge)

ii)We now know what triggered the collapse of the Dow, the wipe out of XIV.  It was a small firm called Catalyst whose betting strategy went haywire

( zerohedge)

iii)SWAMP STORIES

a)Another former Trump adviser is to meet Mueller

( zero hedge)

b)What a riot!! Trump now is threatening to remove all California ICE officers from the law breaking sanctuary state
Trump states that they will be begging for them to come back if he initiates this
( zerohedge)

c)Mueller files new charges against Manafort:  tax and bank fraud charges( zerohedge)

 

Let us head over to the comex:

The total gold comex open interest FELL BY  3705 CONTRACTS DOWN to an OI level 524,449  DESPITE THE TINY RISE IN THE PRICE OF GOLD ($0.90 GAIN WITH RESPECT TO YESTERDAY’S TRADING).   WE HAD CONSIDERABLE 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 GOOD SIZED 9751 EFP’S ISSUED FOR APRIL  AND 0 EFP’s  FOR JUNE AND ZERO FOR ALL OTHER MONTHS:  TOTAL  9751 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: 6046 OI CONTRACTS IN THAT 9,751 LONGS WERE TRANSFERRED AS FORWARDS TO LONDON AND WE LOST 3705 COMEX CONTRACTS.

NET GAIN ON THE TWO EXCHANGES: 6046 contracts OR 604,600  OZ OR 18.805 TONNES.

Result: A  GOOD SIZED DECREASE IN COMEX OPEN INTEREST DESPITE THE SMALL GAIN IN YESTERDAY’S GOLD TRADING ($0.90.) WE HAD CONSIDERABLE COMEX GOLD LIQUIDATION.  TOTAL OPEN INTEREST GAIN ON THE TWO EXCHANGES: 6046 OI CONTRACTS..

We have now entered the active contract month of FEBRUARY where we LOST 24 contracts DOWN to 1107 contracts.  We had 0 notices filed upon yesterday, so we LOST 22 contracts or an additional 2200 oz will NOT stand in this active contract month of February AND NO DOUBT THAT THEY TRANSFERRED AS FORWARDS OVER TO LONDON.

March saw a LOSS of 365 contracts DOWN to 1496.  April saw a LOSS of 3463 contracts DOWN to 357,067.  MARCH BECOMES THE FRONT MONTH FOR GOLD

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

 

 PRELIMINARY COMEX VOLUME FOR TODAY: 208,638 contracts

CONFIRMED COMEX VOL. FOR YESTERDAY:  263,094 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 FELL  BY AN UNEXPECTED 1683  CONTRACTS FROM 203,629 DOWN TO 201,946 DESPITE YESTERDAY’S FAIR SIZED  15 CENT GAIN IN TRADING).   HOWEVER,WE WERE ALSO INFORMED THAT WE HAD ANOTHER GOOD SIZED 1088 EMERGENCY EFP’S FOR MARCH ISSUED BY OUR BANKERS (WITH 111 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: 1199.   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 SOME LONG COMEX SILVER LIQUIDATION AND A SMALL SIZED LOSS 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 LOST  484  SILVER OPEN INTEREST CONTRACTS:

1683 CONTRACT LOSS AT THE COMEX COMBINING WITH THE ADDITION OF 1199 OI CONTRACTS NAVIGATING OVER TO LONDON.

NET LOSS ON THE TWO EXCHANGES: 484 CONTRACTS 

We are now in the poor non active delivery month of FEBRUARY and here the front month LOST 76 contracts LOWERING TO  0 contracts.  We had 76 notices filed upon yesterday so we GAINED 0 contract or NIL ADDITIONAL oz will  stand for delivery at the comex

The March contract lost 9879 contracts DOWN to 53,370

April GAINED 32 contracts UP to 197 .

.

We had 0 notice(s) filed for NIL OZ for the FEBRUARY 2018 contract for silver

INITIAL standings for FEBRUARY

Feb 22/2018.

Gold Ounces
Withdrawals from Dealers Inventory in oz nil oz
Withdrawals from Customer Inventory in oz
 788.235 oz
HSBC
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz  nil

 

No of oz served (contracts) today
0 notice(s)
 NIL OZ
No of oz to be served (notices)
1107 contracts
(110,700 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:
Out of HSBC: 788.235 oz
total withdrawal: 788.235  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;   9,133,050.988 oz 284.07 tones

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

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To calculate the INITIAL total number of gold ounces standing for the 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. (1107 contracts) minus the number of notices served upon today (0 x 100 oz per contract) equals 289,100 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 + {(1107)OI for the front month minus the number of notices served upon today (0 x 100 oz )which equals 289,100 oz standing in this active delivery month of February (8.99 tonnes). THERE IS 12.52 TONNES OF REGISTERED GOLD AVAILABLE FOR DELIVERY SO FAR.

WE LOST 24 CONTRACTS OR AN ADDITIONAL 2400 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 70 NET TONNES HAS LEFT THE COMEX.

end

And now for silver

AND NOW THE DECEMBER DELIVERY MONTH

FEBRUARY FINAL standings

feb 22 2018
Silver Ounces
Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory
 467,363.140 oz
Brinks
HSBC
Scotia
Deposits to the Dealer Inventory
nil
oz
Deposits to the Customer Inventory
nil oz
No of oz served today (contracts)
0
CONTRACT(S
(NIL OZ)
No of oz to be served (notices)
0 contracts
(385,000 oz)
Total monthly oz silver served (contracts) 386 contracts

(1,930,000 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 0 inventory movement at the dealer side of things

 

total inventory movement dealer: nil oz

we had 0 inventory deposits into the customer account

 

total inventory deposits: nil oz

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

JPMorgan now has 136 million oz of  total silver inventory or 55% of all official comex silver.

JPMORGAN TOOK A BREAK TODAY IN NOT ADDING TO ITS OFFICIAL INVENTORY COUNT.

we had 3 withdrawals from the customer account;

iii) Out of Brinks:: 4993.150 oz

ii) Out of HSBC:: 211,427.160 oz

iii) out of Scotia: 250,942,230 oz

total withdrawals;  467,363.140  oz

we had 0 adjustments

 

total dealer silver:  45.329 million

total dealer + customer silver:  246.405 million oz

The total number of notices filed today for the FEBRUARY. contract month is represented by 76 contract(s) FOR 380,000 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 386 x 5,000 oz = 1,930,000 oz to which we add the difference between the open interest for the front month of FEB. (0) and the number of notices served upon today (0 x 5000 oz) equals the number of ounces standing.

.

Thus the INITIAL standings for silver for the FEB contract month: 386(notices served so far)x 5000 oz + OI for front month of FEBRUARY(0) -number of notices served upon today (0)x 5000 oz equals 1,930,000 oz of silver standing for the FEBRUARY contract month. 

WE GAINED 0 CONTRACT OR AN ADDITIONAL NIL OZ WILL  STAND AT THE COMEX

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

ESTIMATED VOLUME FOR TODAY: 109,780 CONTRACTS

CONFIRMED VOLUME FOR YESTERDAY: 131,218 CONTRACTS

YESTERDAY’S CONFIRMED VOLUME OF 131,218 CONTRACTS EQUATES TO  656 MILLION OZ OR 93.7% 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 FALLS TO -2.35% (FEB 21/2018)
2. Sprott gold fund (PHYS): premium to NAV RISES TO -0.47% to NAV (FEB 20/2018 )
Note: Sprott silver trust back into NEGATIVE territory at -2.35%-/Sprott physical gold trust is back into NEGATIVE/ territory at -0.47%/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 RISES TO -3.30%: NAV 13.68/TRADING 13.33//DISCOUNT 3.30.

END

And now the Gold inventory at the GLD/

FEB 22/WITH GOLD UP 90 CENTS AGAIN TODAY, WE HAD NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 827.79 TONNES

FEB 21/ WITH THE 90 CENT GAIN WE HAD ANOTHER DEPOSIT OF 3.15 TONNES OF GOLD INTO THE GLD INVENTORY/INVENTORY RESTS TONIGHT AT 827.79 TONNES

Feb 20/WITH GOLD DOWN BY $24.25, THE CROOKS DECIDED THAT THEY HAD BETTER RETURN (DEPOSIT) 3.34 TONNES OF GOLD INTO THE GLD/INVENTORY RESTS TONIGHT AT 824,64 TONNES

Feb 16/WITH GOLD UP BY 25 CENTS, THE CROOKS DECIDED AGAIN TO RAID THE COOKIE JAR BY WITHDRAWING 2.36 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 821.30 TONNES

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 22/2018/ Inventory rests tonight at 827,79 tonnes

*IN LAST 328 TRADING DAYS: 113.36 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 258 TRADING DAYS: A NET 43.95 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.

end

Now the SLV Inventory

fEB 22.2018/WITH SILVER DOWN  1 CENT TODAY, WE HAD NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 215.271 MILLION OZ/

FEB 21/WITH SILVER UP 15 CENTS TODAY, WE HAD A GOOD SIZED INVENTORY ADDITION OF 1.226 MILLION OZ/INVENTORY RESTS AT 215.271 MILLION OZ/

Feb 20/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 314.045 MILLION OZ

Feb 16/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 314.045 MILLION OZ/

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 22/2017:

Inventory 315.271 million oz

end

HUGE SCARCITY OF GOLD IN LONDON AS THE GOLD LENDING RATE SURPASSES 2.27%

6 Month MM GOLD LENDING RATE 1.86/ and libor 6 month duration 2.13

Indicative gold forward offer rate for a 6 month duration/calculation:

GLR+ 1.86%

libor 2.13

 

gofo: .27%

12 Month MM GOLD LENDING RATE
+ 2.27%

GOFO = LIBOR – GOLD LENDING RATE

GOFO =  2.41 – 2.27  = .140

GOLD IS NOW EXTREMELY SCARCE.

end

Major gold/silver trading /commentaries for THURSDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

 GoldCore

Russian Central Bank Buys Gold – 600,000 Ounces Or 18.7 Tons In January As Venezuela Launches ‘Petro Gold’

– Russian central bank buys gold – large 600,000 ounces or 18.7 tons of gold in January
– Russia increased its holdings to 1,857 tons, topping the People’s Bank of China’s ‘reported’ 1,843 tons
– Russia surpasses China as 6th largest holder of gold reserves – after U.S., Germany, IMF, Italy and France
– Turkish central bank added 205 tons “over 13 consecutive months” – Commerzbank
– Meanwhile, Russian ally Venezuela is launching a new gold-backed cryptocurrency next week

Russia has overtaken China as the fifth-biggest sovereign holder of gold, allowing it to diversify its foreign currency holdings amid a deepening rift with the US, Bloomberg News’ Eddie van der Walt reported overnight.

The Bank of Russia increased its holdings in January by almost 20 metric tons to 1,857 tons, topping the People’s Bank of China’s reported 1,843 tons. While Russia has increased its holdings every month since March 2015, China last reported buying gold in October 2016. The U.S. is still the largest owner of gold, with 8,134 tons, much of it stored in Fort Knox.

Russia’s central bank continues to add gold to reserves while the People’s Bank of China remains on hold, pointed out Commerzbank.

Analysts cited news that the Russian central bank bought 600,000 ounces, or 18.7 tons, of gold in January as it continued to diversify its reserves. Analysts cite IMF data showing that Turkey also bought large quantities of gold in January at 560,000 ounces or 17.4 tons.

“Thus the Turkish central bank has topped up its gold reserves by a total of 205 tonnes over 13 consecutive months,” Commerzbank added.

Kazakhstan continues to buy gold in small quantities, as it has been doing steadily for years.

This goes some way to plugging the gap left by the Chinese central bank. The PBOC, meanwhile, has not reported the purchase of gold for 15 months in a row.

Venezuelan President Nicolas Maduro said yesterday that his government was preparing to launch a new gold-backed cryptocurrency token next week as reported by Reuters.

Venezuela is preparing a new cryptocurrency called “petro gold” that will be backed by precious metals, Maduro said yesterday, a day after launching an oil-backed token.

“I don’t want to get ahead of things, but we have prepared a surprise, a gold-backed ‘petro,’ which will have the same parameters as the oil-backed ‘petro.’ This topic will be raised next week,” Maduro said.

Related Content

Russia Gold Rush Sees Record Reserves For Putin Era

Own Gold Bullion To “Support National Security” – Russian Central Bank

News and Commentary

Stocks Turn Lower, Dollar Rises After Fed Minutes (Bloomberg.com)

Venezuela’s Maduro Announces Another Cryptocurrency, Now Gold-Backed (SputnikNews.com)

Gold prices flat, U.S. interest rate outlook weighs (Reuters.com)

FDIC sues 16 banks alleging LIBOR manipulation in Doral Bank collapse (Reuters.com)

U.K. Economic Growth Revised Down as Consumers Hit by Inflation (Bloomberg.com)


Source: Bloomberg

Ireland – Worst Property Crisis in Western Europe Is Still Affecting Business (Bloomberg.com)

This Is Where The Next US Debt Crisis Is Hiding (ZeroHedge.com)

South Africa’s Brand New President Wants To Confiscate Land From White Farmers (ZeroHedge.com)

Meet the Italian government’s Orwellian new automated tax snitch (SovereignMan.com)

City should fear Corbyn much more than Brexit (CityAM.com)

Gold Prices (LBMA AM)

20 Feb: USD 1,337.40, GBP 955.97 & EUR 1,083.83 per ounce
19 Feb: USD 1,347.40, GBP 961.10 & EUR 1,085.47 per ounce
16 Feb: USD 1,358.60, GBP 964.61 & EUR 1,086.47 per ounce
15 Feb: USD 1,353.70, GBP 962.21 & EUR 1,084.45 per ounce
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

Silver Prices (LBMA)

20 Feb: USD 16.57, GBP 11.85 & EUR 13.42 per ounce
19 Feb: USD 16.72, GBP 11.92 & EUR 13.46 per ounce
16 Feb: USD 16.84, GBP 11.97 & EUR 13.49 per ounce
15 Feb: USD 16.83, GBP 11.98 & EUR 13.49 per ounce
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


Recent Market Updates

– Bitcoin or British Pound ‘Pretty Much Failed’ As Currency?
– Bank Bail-In Risk In European Countries Seen In 5 Key Charts
– US-China Trade War Escalates As Further Measures Are Taken
– Gold Up 3.8% In Week – If Closes Above $1,360/oz Will Be Biggest Weekly Gain In Nearly 2 Years
– Is The Gold Price Heading Higher? IG TV Interview GoldCore
– 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%

Call for Gold Sovereigns at Ultra Low 4% Premium For Storage in London or Insured Delivery

Mark O’Byrne

END

 

Very interesting:  FDIC is suing  16 banks alleging LIBOR manipulation in the big bank in Puerto Rico, Doral Bank

(courtesy Reuters/GATA)

 

FDIC sues 16 banks alleging LIBOR manipulation in Doral Bank collapse

 Section: 

From Reuters
Tuesday, February 20, 2018

A U.S. regulator on Tuesday filed a lawsuit against 16 U.S. and international banks alleging they had manipulated bbaLIBOR, which is a series of interest-rate benchmarks, leading to the collapse of Puerto Rico’s Doral Bank.

The Federal Deposit Insurance Corp., which brought the suit in its capacity as receiver for Doral Bank, alleged that the rate rigging harmed Doral by causing substantial losses with regard to its loan portfolio and derivative holdings.

The suit is the latest in a long line of lawsuits in the U.S. District Court in Manhattan targeting the alleged rigging by banks of one interest rate benchmark, market, or commodity or another. …

… For the remainder of the report:

https://www.reuters.com/article/us-usa-fdic-banks/us-fdic-sues-16-banks-.




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 6.3527  /shanghai bourse CLOSED UP 69.40 POINTS OR 2.17%  / HANG SANG CLOSED DOWN 466.21 POINTS OR 1.48%
2. Nikkei closed DOWN 234.37 POINTS OR 1.07% /USA: YEN FALLS TO 107.35/ STILL DEADLY AS YEN CARRY TRADERS DISINTEGRATE

3. Europe stocks OPENED DEEPLY IN THE RED EXCEPT SPAIN   /USA dollar index RISES TO 90.04/Euro RISES TO 1.2293

3b Japan 10 year bond yield: FALLS TO . +.056/ !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 107.48/ 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:: 61.28  and Brent: 65.20

3f Gold DOWN/Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO +.711%/Italian 10 yr bond yield DOWN to 2.050% /SPAIN 10 YR BOND YIELD DOWN TO 1.505%

3j Greek 10 year bond yield RISES TO : 4.378?????????????????

3k Gold at $1322.40 silver at:16.46     7 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50

3l USA vs Russian rouble; (Russian rouble DOWN 4/100 in roubles/dollar) 56.79

3m oil into the 61 dollar handle for WTI and 64 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 107.35 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 0.9379 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1522 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 +0.711%

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 2.9244% early this morning (THIS IS DEADLY TO ALL MARKETS). Thirty year rate at 3.2045% /BOTH VERY DEADLY

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

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

S&P Futures Rebound As Dollar Rally Ends, Yields Drop

Global stocks took another leg down during the early part of Thursday’s session, sliding to one-week lows in the wake of Wednesday’s unexpectedly market-moving FOMC minutes which confirmed the Fed was on track to raise interest rates several times this year, sending bond yields to new multi-year highs amid prospects for 4 rate hikes on deck (and according to Goldman, even 5 possible).

However, after sliding initially, S&P futures have since staged a rebound, rising as much as 20 points from session lows, and are currently back in the green, modestly above 2,700.

The rebound was helped by the end of the USD rally, as the dollar’s boost following the Fed minutes proved short-lived as the U.S. currency struggled to gain for a fifth day. Meanwhile, the euro was unfazed by a miss in German IFO data, finding support from broad dollar selling after the London open in a rather slow session. The dollar weakness sent EURUSD back to 1.23, while GBP underperforms after a disappointing GDP revision and the ongoing Brexit saga

In other key FX pairs, per BBG:

  • USD/JPY declines 0.4% as a slide in local stocks spurs demand for haven assets
  • EUR/USD edges up; premium to hedge political risks rising, with two-week smile flattening as demand for low-delta puts remains strong amid higher volatility in the front end
  • GBP/USD resumes its slide, trades 0.2% lower, after data showed that the U.K. economy expanded less than previously estimated in 4Q as consumers and businesses absorbed faster price increases

Three rate rises are now almost fully priced in for 2018, compared with two as recently as December, and some analysts are even contemplating the possibility of as many as five rate hikes in 2018.

And while 10Y TSY yields have traded rangebound within 2 bps of 2.93%, German bunds have unwound the sell-off seen post-FOMC Minutes, following disappointing German IFO data after Wednesday’s weaker-than-forecast European PMIs.  The “transatlantic spread” between German and U.S. 10-year borrowing costs widened to near a year high at 220 bps, reflecting the diverging monetary policy expectations between the two countries.

The 3% level on 10Y TSY yields is seen as a huge psychological milestone for bulls and bears alike. In the meantime though the yield, which hit four-year highs around 2.96 percent after the minutes, retreated to 2.93%. Two-year yields touched new nine-year peaks.

A break in the U.S. 10- year treasury above the psychological level of 3% may prove sufficiently attractive to spur demand among foreign investors. This would support the dollar against CEEMEA currencies, Rabobank EMFX strategist Piotr Matys writes in a note to clients.

The next hurdle for markets will be minutes from the European Central Bank’s last meeting at 1230 GMT, with investors keen to see if there was more talk of an eventual unwinding of stimulus. One school of thought says that shifting perceptions about the ECB’s policy outlook had a significant role to play in the surge in U.S. Treasury yields that began in September and picked up speed last month, roiling global stocks.

European equities followed Asia peers lower: the Stoxx Europe 600 Index slid as all the major national equity gauges in the region fell. In terms of sector specific moves, material names modestly lag their peers following price action in the complex as well as a disappointing earnings update from Anglo American (-4%) which has sent their shares near the bottom of the FSTE 100; with the index also hampered by lacklustre earnings from the likes of British American Tobacco (-4.6%), Barratt Developments (-4.0%) and BAE systems. However, losses for UK stocks have been capped by a well-received earnings report from Barclays (+5.1%) which allied with upside in AXA shares (+1.2%) post-earnings has also supported the financial sector.

Earlier in Asia most shares retreated, though China’s market bucked the trend as it reopened after a holiday. The Nikkei (-1.1%) and Hang Seng (-1.5%) saw losses of over 1%, while ASX 200 (+0.1%) saw initial 0.4% gains trimmed, with price action in Australia largely dictated by the slew of earnings.

“The market is pricing in the possibility of a tighter Fed over time,” Evan Brown, director at UBS Asset Management, who previously worked on the open market trading desk at the New York Fed, told Bloomberg TV in New York. On a day-to-day basis “you’re going to see volatility, you’re going to see equities get a little skittish when yields are rising, but as you look over the long term, fundamentals on the economy are very strong.”

However, for now Bloomberg notes that markets remain fragile as February is shaping up as one of the worst months for global equities in more than a year as concerns about a pick-up in inflation and expensive stock prices outweigh evidence of a buoyant U.S. economy. With recent data underpinning the view that inflation is no longer lagging, the OIS space shows traders pricing in just shy of three U.S. rate hikes over the next 12 months.

Elsewhere, gold retreated alongside most commodities.  WTI and Brent crude trade lower albeit off worst levels after falling victim to the firmer USD despite last night’s unexpected build in the API report. As a reminder, due to the President’s Day Holiday on Monday the weekly DoE report will be released today. In metals markets, gold prices have also been hampered by the firmer USD, however, the move to the downside has perhaps been contained due to the price action seen in EU stocks this morning. Elsewhere, steel prices were seen lower during Asia-Pac trade as Chinese participants slowly returned from holiday, with a bulk of the market not expected to fully return until next week.

Bulletin headline summary from RanSquawk

  • European equities (-1%) have kicked the session off on the back-foot as European participants digest the fall-out of yesterday’s FOMC minutes
  • The DXY has nailed 90.000 with the aid of hawkish FOMC minutes, but Usd/Jpy continues to buck the broader trend amidst the ongoing global stock market retracement
  • Looking ahead, highlights ECB minutes, US weekly jobs, DoEs and a slew of speakers

Market Snapshot

  • S&P 500 futures down 0.3% to 2,691.50
  • MSCI Asia Pacific down 0.8% to 175.69
  • MSCI Asia Pacific ex Japan down 1% to 575.54
  • Nikkei down 1.1% to 21,736.44
  • Topix down 0.9% to 1,746.17
  • Hang Seng Index down 1.5% to 30,965.68
  • Shanghai Composite up 2.2% to 3,268.56
  • Sensex unchanged at 33,846.31
  • Australia S&P/ASX 200 up 0.1% to 5,950.88
  • Kospi down 0.6% to 2,414.28
  • STOXX Europe 600 down 0.9% to 377.57
  • German 10Y yield fell 0.9 bps to 0.712%
  • Euro up 0.02% to $1.2286
  • Brent Futures down 0.6% to $65.00/bbl
  • Italian 10Y yield fell 2.0 bps to 1.78%
  • Spanish 10Y yield fell 1.2 bps to 1.501%
  • Brent Futures down 0.6% to $65.00/bbl
  • Gold spot down 0.1% to $1,322.89
  • U.S. Dollar Index up 0.07% to 90.06

Top Overnight News

  • Fed’s Quarles says the natural rate of interest is increasing in the U.S. and that the economy is in the best shape that it has been since the crisis
  • U.K. GDP growth in 2017 was revised down to 1.7% from 1.8%, the weakest since 2012, as price rises led to household budgets being squeezed leading to slowing growth in a number of consumer-facing industries
  • U.K. Prime Minister Theresa May will shut her most senior cabinet ministers away in a room until late Thursday night in an effort to force them to agree what kind of Brexit they want. But officials warn in private that the most divisive decisions may get kicked down the road
  • The U.S. Treasury Department sold $35 billion of five-year notes at a yield of 2.658 percent. Bid/cover ratio fell to 2.44 from 2.48, indicating weaker demand
  • U.S. central bankers sent a strong message Wednesday that an expansion with “substantial underlying economic momentum” could sustain more rate hikes; Treasuries sold off aggressively into the 3pm ET settlement as gains sparked by minutes of FOMC’s Jan. 31 meeting were quickly faded
  • Federal Reserve Bank of Minneapolis President Neel Kashkari said the central bank’s symmetric approach to its 2% inflation target means “the math says we should be able to tolerate 2.5 percent for five years,” after running at 1.5 percent for five years
  • Euro bulls are struggling to push the currency above $1.25 this year, just as the $1.20 level proved a blocking point in 2017
  • Do 10-year Treasury yields hit 3 percent and retreat, or does positioning signal a sharp move higher? Open interest on 10-year Treasury futures suggests 3 percent may not be the crucial level after all

Asian markets trading broadly in the red with exception of the Shanghai Comp (+2.2%) which outperforms are  participants plays catch up from their elongated break. The prospect of ‘further’ gradual rate hikes as noted in the most recent FOMC minutes boosted speculation that 4 rate hikes could be on the table particularly that these minutes were before the strong wage data in the most recent NFP and inflation data last week, which had subsequently pushed bond yields higher with the US 10yr yield hitting 2.95%, while equities slumped late in the US session. This transpired in Asia, with the Nikkei (-1.1%) and Hang Seng (-1.5%) seeing losses of over 1%, while ASX 200 (+0.1%) saw initial 0.4% gains trimmed, with price action in Australia largely dictated by the slew of earnings. In credit markets, the belly of the curve underperformed, with JGB 10yr yields tracking UST yields higher, while a firm 20yr JGB auction supported longer dated debt. Japan PM Abe Adviser Hamada says the BoJ should consider buying foreign bonds.  PBoC sets CNY mid-point at 6.3530 (Prev. 6.3428).

Top Asian News

  • China’s VIX Stops Updating Amid Government Scrutiny of Options
  • Indonesia Sees Jump in 10-Year Bond Yield as ‘Temporary’
  • India Releases Plan to Strengthen State Telecom Cos; MTNL Surges
  • China Junk Bonds Show More Resilience on Local Investor Support
  • Sembcorp Marine Extends Loss by Most Since 2008 After Earns Miss

European equities (-1%) have kicked the session off on the back-foot as European participants digest the fall-out of yesterday’s more hawkish than anticipated FOMC minutes which saw rate-setters take a confident view on the growth and inflation outlook. In terms of sector specific moves, material names modestly lag their peers following price action in the complex as well as a disappointing earnings update from Anglo American (-4%) which has sent their shares near the bottom of the FSTE 100; with the index also hampered by lacklustre earnings from the likes of British American Tobacco (-4.6%), Barratt Developments (-4.0%) and BAE systems. However, losses for UK stocks have been capped by a well-received earnings report from Barclays (+5.1%) which allied with upside in AXA shares (+1.2%) post-earnings has also supported the financial sector.

Top European news

  • Neo-Fascist Beaten to a Pulp in Sicily: Italy Campaign Trail
  • HSBC Chairman Is Said to Prepare Board Reduction: Sky
  • Fosun Buys Controlling Stake in Lanvin
  • FCA Probing Barclays Bank’s Treatment of Clients in Default
  • German Business Confidence Slips as Companies Face Bottlenecks

In currencies, the DXY has nailed 90.000 with the aid of hawkish FOMC minutes, but Usd/Jpy continues to buck the broader trend amidst the ongoing global stock market retracement and heightened volatility. Flow-wise, heavy supply at and just ahead of 108.00 is still capping the pair, while 108.02 represents Fib resistance and the headline looks increasingly toppy given lower peaks since the recent 107.90 high. Hence, the broader Dollar and index is struggling to maintain gains and mount a challenge of the next upside technical objective at 90.886 despite reclaiming more lost ground vs other G10 rivals. Eur/Usd has lost grip of the 1.2300 handle and could see more downside on the back of a significantly weaker than expected German Ifo survey, especially as the technical picture also looks bearish below its 1.2319 Fib level and with little in the way of support until 1.2206. Cable is testing bids under 1.3900 amidst latest Brexit-related UK political accusations aimed at PM May, but holding above chart support seen around 1.3830. As per the single currency, Sterling may be prone to further losses in wake of a data miss as UK Q4 GDP was downgraded on zero business investment during the quarter (again likely as a result of Brexit). Elsewhere, Usd/majors fairly flat as the DXY hovers just above the 90.000 level.

In the commodities complex, WTI and Brent crude trade lower albeit off worst levels after falling victim to the firmer USD despite last night’s unexpected build in the API report. As a reminder, due to the President’s Day Holiday on Monday the weekly DoE report will be released today at the rescheduled time of 1600GMT. In metals markets, gold prices have also been hampered by the firmer USD, however, the move to the downside has perhaps been contained due to the price action seen in EU stocks this morning. Elsewhere, steel prices were seen lower during Asia-Pac trade as Chinese participants slowly returned from holiday, with a bulk of the market not expected to fully return until next week.

US Event Calendar

  • 8:30am: Initial Jobless Claims, est. 230,000, prior 230,000; Continuing Claims, est. 1.93m, prior 1.94m
  • 10am: Leading Index, est. 0.7%, prior 0.6%
  • 11am: Kansas City Fed Manf. Activity, est. 18, prior 16
  • 10am: Fed’s Dudley to Speak at New York Fed Briefing on Puerto Rico
  • 12:10pm: Fed’s Bostic Speaks at Banking Conference in Atlanta
  • 3:30pm: Fed’s Kaplan Speaks on Trade Panel in Vancouver

DB’s Jim Reid concludes the overnight wrap

The main thing that jumped yesterday was US yields after the FOMC minutes. Not long after the release yields were actually flat and the S&P 500 up around 1%. However then 10 yr US yields reacted and rose 6bps to 2.951% and the S&P 500 closed -0.55% – the lowest level in a week.

The minutes indicated that “a majority of participants noted that a stronger outlook for economic growth raised the likelihood that further gradual policy firming would be appropriate”. On the economy, it noted that “a number of participants indicated that they had marked up their forecasts for economic growth in the near term relative to …the December meeting” and that “several others suggested that the upside risks to the near-term outlook for economic activity may have increased.” On inflation,”almost all participants who commented agreed that a Phillips curve type inflation framework remained useful…”. Elsewhere, some participants said that they saw an appreciable risk that inflation would continue to fall short of the Fed’s objective, but overall inflation is expected to “move up” this year and stabilise around 2% over the medium term. On wage gains, “a number of participants judged that the continued tightening in labour markets was likely to translate into faster wage increases at some point”.

Notably, the relatively hawkish minutes was before the January wage growth and CPI / PPI prints, so it seems reasonable to assume that if the Fed was getting more confident in their growth and inflation outlook at their meeting,  the subsequent data releases would have only added to their views.

Staying in the US, the flash February PMIs were all above market, with the composite PMI at 55.9 (vs. 53.8 previous), services at 55.9 (vs. 53.7 expected) and manufacturing PMI at 55.9 (vs. 55.5 expected). Conversely, Europe’s flash PMIs were a fair bit below expectations but remain at solid levels. The Euro area’s composite PMI came in at 57.5 (vs. 58.4 expected), while the services PMI was 56.7 (vs. 57.6 expected) and manufacturing PMI at 58.5 (vs. 59.2 expected).

Across the region, Germany’s composite PMI was 57.4 (vs. 58.5 expected) and France’s composite PMI was 57.8 (vs. 59.2 expected), with both countries’ services and manufacturing PMI also lower than expectations.

Given the weaker European PMI numbers yesterday I made a point of speaking to our head Euro Economist Mark Wall last night about his views on them. He was relatively relaxed as his forecasts always assumed some moderation in growth which the PMIs would have to eventually acknowledge if he were to be correct. He said that the momentum in recent months was implying 0.9% qoq GDP growth compared to a DB forecast of 0.6% qoq in H1. Yesterday’s numbers narrows these upside risks in H1. In H2 he continues to see a loss of momentum as capacity bites, credit conditions get capped and competitiveness erodes, etc.

He does think the recent financial conditions shock was too fleeting to believe it was the obvious culprit for the weaker numbers though. Even at 0.6%, GDP growth is above trend and despite the weaker PMIs, Mark believes that capacity will continue to be absorbed and the economy tighten. In fact he cited the fact that PMI delivery times lengthened in February, implying a further acceleration in underlying PPI inflation over the next 6-9 months and potential upside risks to inflation in H2.

Turning to news on the Brexit transition period where the EU had previously suggested an end date of December 2020. However, according to a draft UK government legal proposal obtained by Bloomberg, it suggests the actual date may be up for some debate. The document indicated “the UK believes the period’s duration should be determined simply by how long it will take to prepare and implement the new processes….that will underpin the future partnership” and that “the UK agrees this points to…around two years, but wishes to discuss with the EU the assessment that supports its prosed end date”. Later on, the Chief of Staff for Brexit Secretary Mr Jackson noted the UK has not changed its transition plans, which is “around two years”. Elsewhere, the EC’s Juncker “still believes that (both sides) should be able to agree (on the withdrawal agreement) by October and agree on the final terms…”

Staying in the UK, the December unemployment rate edged up from its c42 year low and rose for the first time since July last year to 4.4% (vs. 4.3% expected), while the average weekly earnings growth was in line and steady mom at 2.5% yoy. Speaking in front of the Treasury Committee, the BOE’s Haldane noted “…the pick-up in wages is starting to take root” and that “intelligence from our agents suggests wage settlements this year were going to pick up, perhaps  with a number with a three in front of it….” Further, he added risks for the UK economy were “to the upside”.

Elsewhere, the BOE Governor Carney reiterated that cash rates need to rise in the “coming months” but it would be ‘gradual and limited” and refrained from providing guidance on potential timing. The implied Bloomberg odds of a May rate hike rose c4ppt to 61.5%.

This morning in Asia, markets are broadly lower with the Nikkei (-1.25%), Hang Seng (-0.98%) and Kospi (-0.58%) all down as we type. Elsewhere, UST 10y yield is down c1bp while the three key Chinese bourses are up 1.8%-2.1% after trading resumed following the New Year holidays.

Now recapping other market performance from yesterday. US bourses reversed earlier gains to close modestly lower (S&P -0.55%; Dow -0.67%; Nasdaq -0.22%). Within the S&P, all sectors fell with losses led by the real estate, energy and telco stocks. European markets were mixed but little changed as they closed well before the FOMC minutes were released. The Stoxx 600 edged up 0.16% while the FTSE rose 0.48% but the DAX dipped 0.14%. The VIX fell for the first time in three days to 20.02 (-2.8%).

Over in government bonds, core European 10y bond yields fell 1-3bp (Bunds & OATs -1.3bp; Gilts -3.1bp), with the latter partly impacted by the unemployment print. In the US, the treasury sold $35bn of five year notes at a yield of 2.658% with a bid-to-cover ratio of 2.44x (vs. 2.48x previous). Elsewhere, the UST 2y, 5y, 10y yields rose 4.7bp, 4.1bp and 6bp respectively. Turning to currencies, the US dollar index rose for the third trading day (+0.47%), while the Euro and Sterling fell 0.43% and 0.56% respectively. In commodities, WTI oil rose 0.39% to $61.79/ bbl while precious metals were little changed (Gold -0.34%; Silver +0.36%).

Away from the markets and onto three Fed speakers overnight. The Fed’s Kashkari said “Wall Street overreacts to everything….we can’t make policy based on market blips up and down”. On rates, he noted, “we debate each word change in the (FOMC) statement…a lot of debate goes into those…and I think (the word) “further” (in the last statement) was intended to say continuing the current path we’re on”. Elsewhere, the Fed’s Harker reiterated his views of two rate hikes in 2018 and unemployment falling to 3.6% by mid-2019 while the Fed’s Kaplan reaffirmed his call for “gradual and patient” tightening and expects an unemployment rate of 3.6% by year end. Notably, none of the three speakers are policy voters this year.

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the January existing home sales was below expectations at 5.38m (vs. 5.6m) and down 4.8% yoy. Notably, the number of homes available for sale fell 9.5% yoy, partly continuing the upward pressure on home prices where the median selling price was up 5.8% yoy. Elsewhere, the UK’s January public sector net borrowing was broadly in line at -£11.6bln (vs. – £11.4bln expected).

Looking at the day ahead, the February confidence indicators and the final January CPI report in France are due, followed by the Germany’s IFO survey for February and the second estimate of Q4 GDP in the UK. In the US, data releases include initial jobless claims, the January leading indicators index and the February Kansas City Fed manufacturing activity index print. Japan’s CPI report for January will be out in the late evening. Away from the data, the Fed’s Dudley and Bostic are due to speak.

3. ASIAN AFFAIRS

i)Late WEDNESDAY night/THURSDAY morning: Shanghai closed UP 69.40 POINTS OR 2.17% /Hang Sang CLOSED DOWN 466.21 POINTS OR 1.48% / The Nikkei closed DOWN 234.37 POINTS OR 1.07%/Australia’s all ordinaires CLOSED UP 0.17%/Chinese yuan (ONSHORE) closed DOWN at 6.3527/Oil DOWN to 61.28 dollars per barrel for WTI and 65.20 for Brent. Stocks in Europe OPENED DEEPLY IN THE RED EXCEPT SPAIN  .   ONSHORE YUAN CLOSED 6.3527 AGAINST THE DOLLAR AT 6.3527. OFFSHORE YUAN STILL CLOSED AGAINST  THE ONSHORE YUAN AT 6.3527//ONSHORE YUAN TRADING/OFFSHORE YUAN NOT TRADING

3 a NORTH KOREA/USA

/NORTH KOREA

end
 

3 b JAPAN AFFAIRS

 

This is a biggy!!: Nippon Life Insurance, Japan’s largest life insurer will now become a seller of stocks as they believe that the bubble will burst.  They also believe that the dollar is fall to below 105.   This should end the advance of stocks basically around the world. He also states that the bubble in their bond market will also burst

 

 

 

(courtesy zerohedge)

“Goldilocks Is Over”: Japan’s Largest Life Insurer Is Now Selling Rallies

While stocks are having second thoughts this morning as euphoria appears to have returned to markets for the time being, yesterday’s abrupt reversal in the S&P to the FOMC Minutes revealed that for many, the era of goldilocks may be ending ending. This morning, none other than Japan’s largest life insurer, Nippon Life Insurance, confirmed as much, saying that it will sell Japanese shares when they rise further, as the rally in risk assets driven by expectations of a “Goldilocks” scenario continuing is nearing an end, its chief investment officer told Reuters on Thursday.

Nippon CIO, Hiroshi Ozeki also said that the insurer expects the dollar to soften further against the yen but it is ready to buy the U.S. currency when it falls below 105 yen.

Hiroshi Ozeki, chief investment officer

Agreeing with Nomura, which last week said  that investors will have another chance to buy lower, Ozeki said that although global shares have bounced back in the past week or so, Nippon Life expects risk assets will be pummeled again.

But his most notably observation was that the era of “Goldilocks” is on its last breath: the CIO said market expectations of a scenario that is neither too hot nor too cold are based on the assumption of three “moderations”: moderate economic growth, moderate inflation and a moderate rise in asset prices.

“When any of those three disappear, there will be market corrections,” he said. ”Since Abenomics began (in 2012), our stance on Japanese stocks has been to ‘buy-on-dips’.

“But with their valuations at lofty levels” he said “we are no longer increasing our stock portfolio.

Instead “As the end of Goldilocks markets approaches, we have to prepare ourself for tumbles in share prices,” he said.

Separately, FX traders who frontrun Japan’s insurance fund purchases will be happy to know that while Nippon Life expects the dollar could fall further against the yen, the insurer is now ready to buy dollars below 105 yen, Ozeki said as the greenback is “approaching levels in line with its fair value in purchasing power parity terms.”

Back to equity markets, Ozeki said that while the company does not expect a major market crash yet, he expects a real test for markets to come when the combined balance sheet of the world’s three biggest central banks – the Federal Reserve, the European Central Bank and the Bank of Japan – start to shrink.

Of course, as of this moment while the Fed started to trim its balance sheet, the ECB and the BOJ are still gobbling up bonds. But that is expected to change by early 2019 when all three central banks are expected to start withdrawing liquidity from the market.

Finally, Ozeki opined on what he believes is the biggest bubble: “everybody is trying to see if any bubbles are formed anywhere…I would think government bonds are the most expensive and what comes next will be a burst of the government bond bubble, even if not right away” he added.

Which, for his native Japan, where the 10Y yields below 0.1% only due to the constant intervention of the BOJ, will be a very big problem.

c) REPORT ON CHINA

Quite a story.  Chinese companies have for several years have offered employees a deal: buy their company stock while at the same time guaranteeing any losses.  That worked fine as long as the stock market rose. The reason for this deal: to prevent the stock falling and forcing mammoth loan margins calls by the upper management.  Now Chinese companies have now been forced to halt trading in their company while they sort out the avalanche of margin calls they are receiving.

China trading begins today.

(courtesy zerohedge)

Chinese Companies Forced To Halt Trading Amid Avalanche Of Stock Loan Margin Calls

Back in the summer of 2017, just when we thought there were no more surprises left in the arsenal of the world’s foremost incubator of “financial engineering” – i.e., China – we got a stark lesson in never underestimating Chinese market manipulating ingenuity. The reason, as readers may recall, is that last June we reported, that according to Caixin, over two dozen Chinese companies had offered their employees a deal: buy company shares while guaranteeing that any losses would be covered.

The reason was simple: company founders and major shareholders had found themselves engaging in partial cash outs by pledging large batches of their stock as loan collateral and pocketing (and spending) the loan proceeds immediately, a practice that according to Reuters’ estimates had quadrupled in China over the past two years, and which worked great as long as stocks were rising, but once they started falling – as Chinese equities did early last summer – those who had taken out stock-collateralized loans were subject to escalating margin calls, forcing them to liquidate. Or rather, liquidating would have been the honorable thing to do, what they did instead was the most unethical and illegal option: shareholders and management encouraged their own employees to bail them out by buying the stock while guaranteeing to cover the downside – pushing the stock price higher, boosting the value of the pledged underlying asset, and stopping the margin calls if only briefly.

As we also noted at the time, while employees were lied to believe they were getting an unbeatable deal – who can say no when your own employer guarantees you all the upside and no downside if you just buy the company stock – the reality is that participants in such scheme were merely locking in their fates with that of their soon to be insolvent employers, who desperately needed to raise the price of their stock to fend off terminal margin calls. Furthermore, as analysts noted at the time, the promise to take any losses wasn’t legally binding and depended on big shareholders’ “virtue” which in China does not exist.

Calling this process yet another bootstrapped ponzi scheme, we said that it unveiled a deeper threat facing China’s smaller publicly-traded companies:

If markets continue to slide, there could be a surge in margin calls on these loans, potentially triggering a vicious cycle of share selling, increasing the risk of broader financial instability. “If stock prices fall, but shareholders don’t have enough capital to replenish their collateral, the pledged shares would face forced selling,” said Meng Shen, director of Chanson & Co, a Beijing-based boutique investment bank.  “That would develop into a negative spiral; as the more you sell, the lower the stock price, which would then trigger more forced selling.”

Fast forward to today, and that’s pretty much where we are.

And while regulators have long since halted the practice of management being able to ask employees for a bailout, the problem with Chinese loans pledged against stock has only deteriorated, and as the FT reports“listed Chinese companies are being forced to halt trading as their owners attempt to unwind risky bets they have made pledging company stock for loans.

This is precisely the contingency that we said would happen if the broader Chinese market did not rebound sharply. Well, it did not, and in fact Chinese stocks – especially in recent weeks – have been some of the worst performers in the world. The result now is a brewing market crisis, as countless shareholders face self-reinforcing margin calls, which force liquidations, which send stocks lower, which prompt even more liquidations, which send stocks even lower, and so on.

The basis for this toxic loop first emerged in early 2017, when China tightened access to credit to address its mounting corporate debts; finding many of their traditional “shadow funding” pathways blocked, controlling shareholders in many smaller listed companies used their shares as collateral for credit. Then, following the market swoon late last spring, we got the first indication of just how bad the pledged loan problem could get in China, when the story described above took place.

It is now time for round 2, because just like last June, market jitters since the start of this month have pushed companies to warn their shareholders that they could face margin calls as share prices fall.

And since this time around, no simple “100% guaranteed” Ponzi schemes are available to bail shareholders out, companies are doing the only thing they can: halting trading to avoid further liquidations and even more margin calls.

That’s what happened to Shenzhen-listed Shenwu Environmental Technology, which is one of at least 20 groups in February that has stopped trading because of the risk of a margin call, where a share price decline triggers a demand to top up any money borrowed to buy the stock.

Some statistics from the FT:

China’s tighter controls over credit last year led to a wave of share pledges by listed groups: as of mid-December, shareholders in 317 Shanghai and Shenzhen-listed companies had pledged at least 40 per cent of their stock, compared with 224 companies a year earlier.

But why engage in such risky behavior as pledging shares? Mostly because as a result of Beijing’s crackdown on shadow banking, there are few other unregulated ways of extracting cash that do not involve actual selling.

The FT confirms as much, noting that “pledged shares for loans is one means that the companies have to access funding outside the traditional banking sector. Many others have borrowed from “shadow” lenders, often at high costs.”

“This is all part of the deleveraging campaign,” said Hong Hao, head of research in Bocom International in Hong Kong. “The owners of these companies have had to pledge shares just to get access to capital.”

In the case of the abovementioned Shenwu, the company announced that its controlling shareholder has pledged more than 40% of the group’s shares and was now in discussion with the margin lender.

* * *

Meanwhile, almost a year after we first warned that the practice of extensive stock pledging would have an unhappy ending, China’s securities regulator has finally started looking into the use of stock as collateral for loans, the Securities Times reported. In some cases, companies have simply noted in regulatory filings that the securities regulator is investigating the shareholders that have pledged the stock.

Making matters worse are two tangential issues:

  • Fisrt, many of the smaller listed companies in China – those where share pledging dominates – are facing a slowdown in growth, alongside that of China itself, which due to its aggressive deleveraging campaign will see its GDP decline to in 2018, a factor that has weighed on the performance of many of Shenzhen’s small-cap companies;
  • Second, whether due to liquidations – or their frontrunning – Shenzhen’s tech-focused ChiNext index has been falling gradually since 2015, but fell around 12% between January 25 and February 9. And as a result of the declining collateral value, the Loan To Value on the pledged loan keeps rising until it hits and/or surpasses 100%, at which point it’s game over.

“Some of these companies are heading toward dangerous territory,” a Shanghai-based analyst at a global bank told the FT, adding that it was not normal for companies to halt trading because they faced the risk of margin calls, and yet that’s precisely what is going on.

Still, some managed to find a silver lining: Bocom’s Hong said that the halting of trading to deal with problems could be a good sign. You see, he explained “in the past, shareholders facing margin calls would likely have been forced to sell off the stake without warning, he said. But China’s securities regulator has recently given companies permission to allow shareholders to work through problems with debtors instead of selling up to pay back loans.”

Which of course, is an odd definition of a “good sign”: because instead of facing reality, and selling, the entire market simply becomes hijacked by a handful of greedy executives. Meanwhile, the money of anyone who invested alongside them, well, as South Park put it best “it’s gone… it’s all gone.

end

 

China now crackdowns on anything that would resemble a selloff.  So what did they do;  they halted their own version of VIX

(courtesy zerohedge)

 

China Shuts Down Its VIX To Halt Market Turbulence

While most of the world saw regional equity markets covered in red overnight, China’s Shanghai Composite rebounded, rising 2.2% for two reasons: i) a delayed reaction to global equity prices after the country’s 5-day Lunar New Year holiday and ii) China’s latest crackdown on anything that can precipitate a selloff, like a high VIX for example.

And so, just like on August 24, 2015 when the US market crashed so hard in the pre-market, the VIX briefly “went offline” as input signals went haywire, China also decided to stop updating its local version of the VIX Index, taking its latest step to discourage speculation in equity-linked options after authorities tightened trading restrictions last week.

As Bloomberg first reported, China’s state-run Securities Index Co. didn’t publish a value for the SSE 50 ETF Volatility Index on its website Thursday. An employee who answered a Bloomberg phone call said the company stopped updating the measure to work on an upgrade, however according to “people familiar”, the move was designed to curb activity in the options market.

It’s unclear when the index will resume.

Just like the US VIX, the SSE 50 volatility index is the most widely-followed indicator of Chinese investor anxiety. Which is a problem because also just like the VIX, the index doubled in the span of a few days earlier this month. And the last thing Beijing wants is nervous investors thinking that other investors are nervous… and selling in a blind panic.

So what to do? Why shut it down of course, just like all global equity markets will be shut down once the real selling begins.

According to Bloomberg, the decision to stop publishing the index forms part of a broad effort by Chinese officials to contain market turbulence.

Other measures this month have included volume limits on active options traders and informal directives encouraging some major stockholders to purchase more shares. Chinese leaders have in the past faced criticism for meddling too much in markets, particularly during the nation’s 2015 equity crash.

The VIX blackout follows tighter curbs on options traders unveiled from Feb. 12, people familiar with the matter said last week, in part because they were alarmed by a gain of as much as 2,250 percent in the price of one bearish contract on the SSE 50 ETF (also known as the China 50 ETF). The fund is China’s only equity-linked product with options.

Demonstrating surprising wisdom, unlike the U.S., China has avoided approving derivatives and funds tied to its volatility gauge. And while it won’t have its own homegrown XIV collapse, China has more than enough potential candidates that will unleash the next crisis: just last night we reported that while China may not have inverse VIX ETFs, it has another, far more serious problem – pervasive stock loans, hundreds of which have seen margin calls in recent days, forcing dozens of companies to simply halt trading.

In fact, a pattern is emerging in China: any time there is a problem with any one asset, or any one indicator… why, just turn it off.

For now these “solutions” are working: volume in the SSE 50 ETF options was about 40% lower than the 20-day average on Thursday, according to data compiled by Bloomberg. What traders are more interested in is what happens when the volume hits 0% and nobody trades anymore, and – tied to that – what happens when China’s creeping admission that its capital markets are broken finally seeps through.

4. EUROPEAN AFFAIRS

 

ECB

 

The minutes of the ECB described a rather bullish tone for the Euro as it initially rose but then readers noticed sections where members were very concerned on the weakness of the USA dollar and also the thought that the USA was intentionally lowering its value.  This would bring currency wars and after noticing this, the Euro fell. However cooler heads prevailed and the Euro continued its advance subject to the bullish tone by the ECB governors.

 

(courtesy zerohedge)

 

 

8. EMERGING MARKET

 

SOUTH AFRICA

 

My goodness:  Ramaphosa is better than Zuma?  He is now contemplating confiscating land from white farmers and handing it over to blacks

 

(courtesy Simon Black/SovereignMan.com)

.

South Africa’s Brand New President Wants To Confiscate Land From White Farmers

Authored by Simon Black via SovereignMan.com,

If you’ve been following much international news, you’ve probably heard that, after literally years of scandal, abuse, and incompetence, South Africa’s president Jacob Zuma was finally forced to resign last week.

This is a big deal for South Africa.

The country has been suffering for nearly a decade under Zuma’s corruption.

And people are certainly hoping that the new President, Cyril Ramaphosa, will represent a positive, new chapter for South Africa.

Yesterday Ramaphosa addressed the nation’s parliament in Cape Town and made clear that his priority is to heal the divisions and injustice of the past, going all the way back to the original European colonists in the 1600s taking land from the indigenous tribes.

Ramaphosa called this “original sin”, and stated that he wants to see “the return of the land to the people from whom it was taken… to heal the divisions of the past.”

How does he plan on doing that?

Confiscation. Specifically– confiscation without compensation.

The expropriation of land without compensation is envisaged as one of the measuresthat we will use to accelerate redistribution of land to black South Africans.

Ramaphosa minced no words: he’s talking about taking land from white farmers and giving it to black South Africans.

Astonishingly, he followed up that statement by saying, “We will handle it in a way that is not going to damage our economy. . .”

Wow, what a relief. For a minute it sounded like South Africa wants to do what Zimbabwe did several years ago.

Oh wait a minute.

That’s exactly what Zimbabwe did.

Seeking to correct similar colonial and Apartheid-era injustices in his country, Zimbabwe’s president Robert Mugabe initiated a land redistribution program in 1999-2000.

Thousands of white-owned farms were confiscated by the government, and the farmers were forced out.

Bear in mind that Zimbabwe used to be known as the breadbasket of southern Africa. Zimbabwe’s world-class farmers were major food exporters to the rest of the region.

But within a few years of Mugabe’s land distribution, food production plummeted.

Without its professional, experienced farmers, the nation went from being an agricultural export powerhouse to having to rely on handouts from the United Nations’ World Food Programme.

Hyperinflation and a multi-decade depression followed.

If there’s an economic model in the world that you DON’T want to follow, it’s Zimbabwe.

And you’d think that the politicians in neighboring South Africa would know that.

They had a front-row seat to the effects of Mugabe’s land redistribution, not to mention they had to absorb millions of starving Zimbabwean refugees who came across their borders.

Yet this is precisely the policy that they want to adopt.

However you might feel about social justice, it seems pretty clear that copying Zimbabwe is a pretty stupid idea… and will only end up hurting the people they claim to be helping.

Yet the president claims that they want to initiate a land redistribution program that won’t impact the economy or South Africa’s food security.

Yeah sure. And I want to be the starting quarterback of the Dallas Cowboys next season.

But sadly you won’t see Simon Black throwing any touchdown passes anytime soon.

That’s because we have to live in a world with certain realities and limitations.

One of those realities is that land distribution, even if you believe the intentions to be noble, never works.

And of course, the most important reality is that anyone who willfully chooses to copy Zimbabwe’s economic model deserves to suffer the consequences of their stupidity.

[You can watch his remarks yourself here: the fun starts around 30:45]

 

And to continue learning how to ensure you thrive no matter what happens next in the world, I encourage you to download our free Perfect Plan B Guide.

 

end

VENEZUELA

After a successful release of his crypto based, oil backed Petro, Maduro now hints at a gold backed Petro Oro.  One small problem…he sold all of his gold.

(courtesy Molly Jane Zuckerman/CoinTelegraph.com

 

After Releasing Oil-Backed Petro, Venezuelan President Hints At Gold-Backed ‘Petro Oro’

Authored by Molly Jane Zuckerman via CoinTelegraph.com,

After the ‘successful’ launch of the Venezuelan government-backed cryptocurrency the Petro on Feb. 20, President Nicolas Maduro has already hinted at second government cryptocurrency soon to be released, according to government-sponsored news outlet TelSsur.

image courtesy of CoinTelegraph

This time, the government-backed cryptocurrency will be backed not by oil, but by gold.

image courtesy of CoinTelegraph

During a Patria Para Todos [Fatherland For All] party event at the National Theater in Caracas, Maduro announced,

“The petro is a cryptocurrency unique in the world that is supported by oil, and I have a surprise that I will launch next week, the Petro Oro [gold], backed by gold, even more powerful.”

Since the petro’s Initial Coin Offering (ICO) opened on Feb. 20, $735 mln has allegedly been raised, according to Maduro’s Twitter. No official numbers for the ICO had been released by press time.

A grandes problemas, ¡grandes soluciones! Desde el primer minuto el juego arrancó bien, y arrancamos ganando: 4.777 millones de yuanes o 735 millones de dólares es el resultado inicial de las operaciones de intención de compra del Petro.

Some Venezuelans on Twitter have used the hashtag, “#AlFuturoConElPetro,” [the future with the petro], to support the release of the coin. User José David Cabello R wrote,

“#AlFuturoConElPetro against any meddling, against the economic war, against the blockade. For the peace and Venezuela.”

contra cualquier injerencia, contra la guerra económica, contra el bloqueo. Por la Paz y Venezuela

Before the launch, foreign investors from Brazil, Poland, Denmark, Honduras, and Norway had reportedly said they were open to receiving the petro, which is backed by one barrel of oil per coin, for goods and services.

Venezuela is currently facing hyperinflation of more than 4,000 percent in the last year, with the national currency, the Bolivar, having lost around 96 percent of its value.

The president’s decision to launch a cryptocurrency was at odds with the views of the country’s opposition-backed parliament on crypto, which declared the petro an illegal currency on Jan. 9.

Critics in parliament see the petro as a way for Maduro to avoid the financial sanctions imposed by the West on Venezuela.

END

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

Euro/USA 1.2293 UP .0013/ REACTING TO MERKEL’S FAILED COALITION/ SPAIN VS CATALONIA/REACTING TO +GERMAN ELECTION WHERE ALT RIGHT PARTY ENTERS THE BUNDESTAG/ huge Deutsche bank problems + USA election:/TRUMP HEALTH CARE DEFEAT//ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/JAPAN TAPERING BOND PURCHASES /USA FALLING INTEREST RATES AGAIN/HOUSTON FLOODING/EUROPE BOURSES MOSTLY IN THE  RED (EXCEPT SPAIN)  

USA/JAPAN YEN 107.35 DOWN  0.228 (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 1.3844 DOWN .0025(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 1.2686 DOWN .0013 (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 13 basis points, trading now ABOVE the important 1.08 level RISING to 1.2293; / Last night Shanghai composite CLOSED UP 69.40  OR 2.17%   Hang Sang CLOSED DOWN 466.21 POINTS OR 1.48%  /AUSTRALIA CLOSED UP 0.17% / EUROPEAN BOURSES DEEPLY IN THE RED  EXCEPT SPAIN 

The NIKKEI: this THURSDAY morning CLOSED DOWN 234.37 POINTS OR 1.07%

Trading from Europe and Asia:
1. Europe stocks OPENED MOSTLY IN THE  RED (EXCEPT SPAIN)

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 466.21 POINTS OR 1.48%  / SHANGHAI CLOSED UP 69.40 OR 2.17%   /

Australia BOURSE CLOSED UP 0.17% /

Nikkei (Japan)CLOSED DOWN 234.37 POINTS OR 1.07%

INDIA’S SENSEX  IN THE RED

Gold very early morning trading: 1323.40

silver:$16.48

Early THURSDAY morning USA 10 year bond yield: 2.9244% !!! DOWN 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 3.2045 DOWN 2 IN BASIS POINTS from WEDNESDAY night. (POLICY FED ERROR)/DEADLY

USA dollar index early THURSDAY morning: 90.04 UP 4  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: 2.027% UP 3  in basis point(s) yield from WEDNESDAY/

JAPANESE BOND YIELD: +.0.056% DOWN 0    in basis points yield from WEDNESDAY/JAPAN losing control of its yield curve/

SPANISH 10 YR BOND YIELD: 1.519% UP 1/2  IN basis point yield from WEDNESDAY/

ITALIAN 10 YR BOND YIELD: 2.075 UP 3 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: +.706%  DOWN 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 1.2332 UP.0053 (Euro UP 53 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 106.80 DOWN 0.778 Yen UP 78 basis points/

Great Britain/USA 1.3958 UP .0046( POUND UP 46 BASIS POINTS)

USA/Canada 1.2707 UP  .0009 Canadian dollar DOWN 9 Basis points AS OIL ROSE TO $62.27

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This afternoon, the Euro was UP 53 to trade at 1.2332

The Yen ROSE to 106.80 for a GAIN of 78 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 46 basis points, trading at 1.3958/

The Canadian dollar FELL by 9 basis points to 1.2797/ WITH WTI OIL RISING TO : $62.27

The USA/Yuan closed AT 6.3577
the 10 yr Japanese bond yield closed at +.056%  DOWN 0  BASIS POINTS / yield/
Your closing 10 yr USA bond yield UP 2 IN basis points from WEDNESDAY at 2.9116% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 3.1995  UP 3  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, 89.74 DOWN 24 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 DOWN 29.18 POINTS OR 0.40%
German Dax :CLOSED DOWN 8.55 POINTS OR 0.01%
Paris Cac CLOSED UP 7.06 POINTS OR 0.13%
Spain IBEX CLOSED UP 53.20 POINTS OR 0.54%

Italian MIB: CLOSED  DOWN 189.50 POINTS OR 0.84%

The Dow closed UP 164.70 POINTS OR 0.66%

NASDAQ WAS DOWN 8.14 Points OR 0.11% 4.00 PM EST

WTI Oil price; 62.91 1:00 pm;

Brent Oil: 66.27 1:00 EST

USA /RUSSIAN ROUBLE CROSS: 56.52 DOWN 22/100 ROUBLES/DOLLAR (ROUBLE HIGHER BY 22 BASIS PTS)

TODAY THE GERMAN YIELD FALLS TO +.706% 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:$62.67

BRENT: $66.28

USA 10 YR BOND YIELD: 2.921%   THIS RAPID ASSENT IN YIELD IS VERY DANGEROUS/DERIVATIVES START TO BLOW UP/ dangerous/stays extremely high in yield/

USA 30 YR BOND YIELD: 3.208%/BROKE GUNDLACH’S KEY 3.00% AGAIN WHERE ALL VALUATIONS ON STOCKS BLOW UP/ VERY DEADLY

EURO/USA DOLLAR CROSS: 1.2327 UP.0047  (UP 47 BASIS POINTS)

USA/JAPANESE YEN:106.73 DOWN 0.840/ YEN UP 84 BASIS POINTS/ very dangerous as yen carry traders are getting killed/yen continues to rise despite the NYSE rising.

USA DOLLAR INDEX: 89.76 DOWN 23 cent(s)/dangerous as the lower the dollar the higher the inflation.

The British pound at 5 pm: Great Britain Pound/USA: 1.3954 : UP 0.0044  (FROM YESTERDAY NIGHT UP 44 POINTS)

Canadian dollar: 1.2717 UP 15 BASIS pts

German 10 yr bond yield at 5 pm: +0.706%


VOLATILITY INDEX:  18.90  CLOSED  DOWN   1.12  

END

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

TRADING IN GRAPH FORM FOR THE DAY

Dollar Dumps As Nasdaq Suffers Longest Losing Streak In 15 Months

A thought…

Citi summed the last few days up well… and ominously…

Bear markets open on the highs and close on the lows. This is particularly the case when derivative products need to rebalance in a relatively narrow window near the end of the day

And what happened again?

 

And its happening across all the major equity indices…

Nasdaq just suffered a 4-day losing streak – its longest since Nov 2016.

 

Pretty clear what the machines had in mind today – run The Dow up to hunt the pre-FOMC stops… but there was no momo..

FANG stocks faded today and AAPL is unch on the week…

China is back from its New Year celebration (China stocks gained – playing catch up), and The Dollar dropped for the first since they left…

 

Zooming in, it’s clear the machines were testing yesterday’s post-FOMC Minutes plunge lows…

 

European stocks suffered a death cross today as European Economic crashed into the red…

This week the Euro Area Economic Surprise Index (ESI) turned negative for the first time since September 2016. Negative surprises in soft data (e.g. PMIs) have contributed to most of the decline which ended the longest positive streak for the index.

High yield bonds continue to slide…

 

And HY Spreads are starting to blow out again relative to VIX…

 

Treasuries were bid today with the belly outperforming the tails…

 

10Y Yields drifted lower…

On a side note, while the world is watching 10Y Yields, 30Y yields are in a very interesting region of congestion…

 

Commodities were all higher as the dollar dropped…

 

The Energy complex ripped higher today (on DOE data) after some early weakness…

 

Crypto tumbled again today…leaving Bitcoin unchanged for the month…

 

As Bitcoin broke below $10k, catching down to Nasdaq…

 

Oh, and if you’re wodndering what started this morning’s panic-buying… simple…

Jim Bullard’s extensive experience in the real business world includes stints at St. Cloud State University, Indiana University & the Fed. pic.twitter.com/pNG8wKHCnl

END

 

EARLY THIS MORNING/JAMES BULLARD CALMS THE MARKET:

(courtesy zerohedge)

Bullard Calms Markets: “Everything Needs To Be Perfect” For Fed 4 Rate Hikes

Yesterday, what many strategists had believed would be a quiet release of minutes from the Fed’s Jan. 31 meeting was, in reality, anything but. Once the market had deemed that the Fed had released another batch of neutral “goldilocks” minutes, the Dow powered higher, climbing 300 points before, upon closer reading, investors abruptly changed their minds and decided that four interest-rate hikes in 2018 (with Goldman even saying 5 are possible) – one more than the central bank had anticipated in December – was the most likely scenario. This sent stocks spiraling lower during the last 90 minutes of trading, forcing another close in the red.

So perhaps it’s unsurprising, given the events of yesterday, that St. Louis Fed President (and FOMC non-voter in 2018) James Bullard appeared on CNBC’s Squawk Box this morning to try and talk the market back from the ledge. Bullard is one of the most – if not the most – dovish regional Fed presidents, and is best known for casually hinting that QE4 is just around the corner any time stocks suffer a sharp selloff.

Granted he could not do that this time, but he did push as far as he could, and futures traders, desperate for good news after Goldman Sachs anticipated last night that the Fed could even hike rates five times this year, bid the market higher after the regional Fed president said that “everything would need to go perfectly” for the central bank to hike rates four times this year.

Bullard

Bullard

Bullard told CNBC that the central bank needs to be careful raising interest rates this year, lest a policy mistake choke off economic growth and trigger the beginning of the next (long overdue) downturn. He cautioned that the Fed must continue to take its cues from the economy, which, despite the inflation furor triggered by signs of rising wages earlier this month, is still exhibiting only minimal price gains.

The Fed should shift from “reactive” to “proactive” only if inflation reaches or surpasses its 2% target with further price gains expected. The inflation story still has “a way to go”, Bullard added.

Market-implied expectations for the number of rate-hikes in 2018 surged to new cycle highs (2.82 hikes) shortly before yesterday’s minutes were released.

To Bullard’s credit, the Fed still is completely clueless why wages aren’t rising faster, as the excerpt from yesterday’s minutes revealed:

During their discussion of labor market conditions, participants expressed a range of views about recent wage developments. While some participants heard more reports of wage pressures from their business contacts over the intermeeting period, participants generally noted few signs of a broad-based pickup in wage growth in available data. With regard to how firms might use part of their tax savings to boost compensation, a few participants suggested that such a boost could be in the form of onetime bonuses or variable pay rather than a permanent increase in wage structures. It was noted that the pace of wage gains might not increase appreciably if productivity growth remains low. That said, a number of participants judged that the continued tightening in labor markets was likely to translate into faster wage increases at some point.

And judging by all US equity futures turning green after Bullard’s appearance, it appears that mission was again accomplished.

END

We now know what triggered the collapse of the Dow, the wipe out of XIV.  It was a small firm called Catalyst whose betting strategy went haywire

(courtesy zerohedge)

Was This ‘Macro’ Hedge Fund The Catalyst For The Crash… Again?

Almost exactly a year agowe solved what at the time was a mysterious meltup in stocks (S&P rose over 6% from mid-Jan while bonds and the dollar did practically nothing). It was the slow-at-first-then-all-of-a-sudden collapse of a little-known, multi-billion-dollar futures fund whose apparent specialty was ‘picking up nickels in front of steam-rollers’ by selling upside-ratio-call-spreads.

We explained at the time that the firm was basically buying at the money options and funding those purchases by selling even more out of the money options (this is a simplified view of the fund strategy but close enough for examining whether it could have impacted markets).

The strategy is (notably simplified) a bet that pays off if the market drifts higher amid calm volatility (and ends above the lower strike and below the upper strike).

If, however, the market should rally aggressively beyond the upper strike, the initially-long position begins to ‘turn short’ and requires significant hedging/unwinds to maintain any semblance of control.

As we noted at the time – it appears that is what happened in Feb 2017:

The trade was going well, until the S&P rose above 2,300.

At that point the “convexity seemingly ‘kicked-in’ as witnessed by market participants, the short-gamma ‘take’ since has been nothing short of astonishing.

Charlie McElligott (now of Nomura) said at the time:

I’m worried that this stock ‘melt-up’ move is extraordinarily mechanical right now – almost entirely the aforementioned forced-covering, not high conviction induced-buying – and may be sending a “false signal” which is potentially dragging-in new buying on the breakout to new highs.

While the concern at the time was whether it was possible that a single small fund could bring down the mighty US equity markets; as Peter Tchir noted at the time,in all likelihood this particular fund is just a relatively public example of a more widespread strategy – a strategy that was getting hit across the board.

I am more willing to believe the argument that this fund was just one of many funds trading this strategy and that everyone employing this strategy was hit by the same combination of factors and that this widespread unwind was driving the market.

I want to believe that view, because the alternative, that liquidity has devolved to the point that a relatively small and formerly obscure fund can drive the entire market for days on end is quite scary as both a trader and investor.

But one glimpse at the fund’s performance and ‘coincidental panic-buys’ in stocks suggests that Catalyst – the fund’s name – was indeed the catalyst for those odd melt-ups (or at least was the most evident symptom of a strategy that had become dominant in markets).

Fast forward a year and look at what happened in January…

Another sudden unexplained stock market meltup – talking heads explained it all away as ‘normal’: earnings, tax reform, infrastructure, goldilocks, etc., etc., but just as we saw a year ago – stocks and VIX decoupled completely as that ratio-call-spread went short and forced-buying sent stock prices higher (and vol higher as the sold upside calls were bought back).

And right as the equity market was melting up in January – grabbing every headline with its irrational record-beating ramp – so a managed futures fund was starting to suffer (as its panic’d gamma squeeze sent its NAV notably lower, despite its initially bullish options position).

It won’t last right. It can’t. Someone will do something. But it did and it appears that Catalyst finally threw in the towel their month-end statement arrived (and likely with it some margin calls). That liquidation event just happens to have coincided with someone needing to buy vol at any cost (to exit their position), crashing XIV – triggering its termination event, and taking the Dow down 1600 points (twice).

So is Catalyst (or its strategy being so broadly-followed as to become ‘the market’) the culprit again? We shall see, but we are sure the denials will be first.

end

SWAMP STORIES

Another former Trump adviser is to meet Mueller

(courtesy zero hedge)

Another Former Trump Adviser To Meet Mueller Today

One of President Trump’s earliest campaign staffers who was fired in August 2015 is expected to meet with Special Counsel Robert Mueller’s team in Washington DC on Thursday, according to ABC News.

Sam Nunberg, who was fired over racially charged Facebook posts and later sued by Trump for $10 million over a breach of confidentiality agreement, will be accompanied by defense attorney Patrick Brackley. Nunberg received an invitation to meet with the Special Counsel following the publication of Michael Wolff’s book “Fire and Fury: Inside the Trump White House,” in which the former staffer is reported to have called President Trump an “idiot,” in a conversation with former Trump strategist Steve Bannon. 

The book quotes the former Trump aide describing everything from his allegiance with ex-strategist Steve Bannon to Trump’s decision to run for president and attempts to explain the Constitution to the rookie political candidate. –Politico

“I got as far as the Fourth Amendment before his finger is pulling down on his lip and his eyes are rolling back in his head,” wrote Wolff of Nunberg’s account.

Despite being fired from the campaign, Nunberg has remained a close Bannon ally and a loyal supporter of President Trump. Last December, he called for the President to fire White House attorney Ty Cobb over what he described as an unrealistic expectation over when the Russia investigation will end.

“In my humble opinion and many others believe that Cobb is not very competent and he’s not an asset to the president,” Nunberg told Politico.

Trump sued Nunberg in May 2016, alleging he was involved with leaking the details of a verbal altercation between former Trump campaign manager Corey Lewandowski and White House communications director Hope Hicks.

Nunberg fired back, calling the allegations baseless, and retaliation for his subsequent suport for Trump challenger Ted Cruz during the GOP primary.

“The Trump Campaign is attempting to bring a frivolous and retaliatory arbitration proceeding against me essentially to punish me and shut me up,” Nunberg stated at the time.

Three months later, Trump and Nunberg settled the lawsuit “amicably,” according to CNN.

 END
What a riot!! Trump now is threatening to remove all California ICE officers from the law breaking sanctuary state
Trump states that they will be begging for them to come back if he initiates this
(courtesy zerohedge)

“It’s A Disgrace” – Trump Threatens To Remove Calfornia ICE Officers From Law-Breaking Sanctuary State

Law-abiding California citizens may well face a real-life “purge” if President Trump’s disgust with the Sanctuary State’s liberal leaders is acted upon.

The Hill reports that President Trump said Thursday that he was thinking of pulling federal immigration enforcement officers from California over the state’s sanctuary policies.

“Frankly it’s a disgrace, the sanctuary city situation,” Trump said at a high-level White House meeting on school safety, according to pool reports.

Trump discussed the idea of pulling ICE out of California, but said “in two months they would be begging for us to come back,” according to Mark Knoller of CBS News.

“And you know what? I’m thinking about doing it,” Trump added.

Acting ICE Director Thomas Homan in January warned California should “hold on tight” for more ICE operations in the state.

But on Wednesday, Homan said the agency doesn’t conduct raids, but rather “targeted enforcement operations.”

“We don’t go into neighborhoods, knock on a bunch of doors looking for people different than us. Every person we arrest, we know exactly who we’re going to arrest, we know exactly where we’re going to arrest them,” Homan said on Fox News.

The Hill also noted that Trump complimented Attorney General Jeff Sessions – a frequent target of the president’s criticism over his recusal on the Russia investigation – on his handling of gang violence.

“You’re doing a great job on the gangs,” said Trump.

Of course, there is at least one California resident who will welcome the removal if ICE… Nancy Pelosi’s grandson?

Pelosi said in a Wednesday floor speech that her grandson wished for his birthday that he had “brown skin” and “brown eyes” like his Hispanic friend Antonio…

“He’s Irish, English, whatever, whatever, and Italian,” Pelosi said of her grandson. “And when he had his sixth birthday, he had a very close friend whose name is Antonio, he’s from Guatemala, and he has beautiful tan skin and beautiful brown eyes and the rest.”

“This was such a proud day for me because when my grandson blew out the candles on his cake, they said, ‘did you make a wish?’” Pelosi recalled. “He said, ‘I wish I had brown skin and brown eyes like Antonio.’”

“So beautiful, so beautiful. The beauty is in the mix — the face of the future for our country is all American and that has many versions,” Pelosi concluded.

END

 

Mueller files new charges against Manafort:  tax and bank fraud charges

(courtesy zerohedge)

 

Mueller Files New Tax And Bank Fraud Charges Against Manafort

Special Counsel Robert Mueller announced late Thursday that a Virginia grand jury has approved a slate of new charges against former Trump campaign executive Paul Manafort and Manafort’s former deputy, Rick Gates – a move that has been widely anticipated for weeks.

The two men are now facing 32 charges – that’s 20 more than the original 12-count indictment.

In October, Manafort and Rick Gates were indicted for laundering millions of dollars earned while purportedly acting as unregistered agents of the Ukrainian government. In the superseding indictment filed on Thursday in federal court in Washington, they face new charges of tax evasion and bank fraud, as Bloomberg pointed out.

“Manafort and Gates generated tens of millions of dollars in income as a result of their Ukraine work,” the new indictment said. “From approximately 2006 through the present, Manafort and Gates engaged in a scheme to hide income from United States authorities, while enjoying the use of the money.”

The charges were likely approved earlier this month, and have been under seal until today. The new indictment claims Paul Manafort laundered more than $30 million in income, with Gates’ assistance, and disguised more than $10 million in income from Cypriot entities by disguising them as loans. It also claims Manafort obtained millions of dollars in financing through “false and fraudulent” representations.

Mueller

Thanks to legal wrangling over Manafort’s $10 million bail package, observers were given a hint of the charges late last week. NBC News reported yesterday that at least some of the bank fraud charges hinge on whether Manafort promised Stephen Calk, a Chicago Banker and president of the Federal Savings Bank, a position on Trump’s Council of Economic Advisers in August 2016. Manafort received three loans in total from Calk’s bank. Manafort borrowed nearly $18 million from the bank in 2016 and 2017.

Here’s NBC:

Special counsel Robert Mueller’s team is now investigating whether there was a quid pro quo agreement between Manafort and Calk. Manafort left the Trump campaign in August 2016 after the millions he had earned working for a pro-Russian political party in Ukraine drew media scrutiny. Calk did not receive a job in President Donald Trump’s cabinet.

The sources say the three loans were questioned by other officials at the bank, and one source said that at least one of the bank employees who felt pressured into approving the deals is cooperating with investigators.

In court filings Friday related to Manafort’s bail, federal prosecutors said they have “substantial evidence” that a loan made from the bank to Manafort using the Virginia and Hamptons properties as collateral was secured through false representations made by Manafort, including misstatements of income.

This isn’t the only bad news for Manafort: A judge rejected a motion by Manafort’s legal team to modify the terms of his bail agreement.

According to the Hill, US District Court Judge Amy Berman Jackson wrote in court documents that Manafort’s proposal to pledge his property in Alexandria, Va., as part of his $10 million bond was “unsatisfactory,” as the property is already pledged as collateral for a loan on one of Manafort’s other properties. Manafort must prove he is current with his mortgage payments on another property located on New York’s Fifth Avenue in order for it to be pledged as part of his bond.

The charges were first filed under seal Wednesday afternoon.

Rumors have circulated that Gates is preparing to cooperate with the government and testify against Manafort, his former boss. Gates’ legal team is scheduled to hold a sealed court hearing in Washington on Friday on a request by Gates’ lawyers to withdraw from the case – a sign that Gates might be preparing to turn against his old boss, according to CNBC.

Though the Daily Beast is now reporting that Gates has fired his lawyer.

The new charges, which carry potentially lengthy prison sentences, could increase the pressure on both men to cooperate in the probe.

Read the superseding indictment below:

 

2 22 18 US Status Report by Anonymous JJ6eerL on Scribd

end

 

Let us close out today with this terrific offering courtesy of David Stockman of ContraCorner

(courtesy David Stockman/ContraCorner)

David Stockman: “This Time Is Completely Different…But Not In A Good Way”

Authored by David Stockman via Contra Corner blog,

If you don’t think the stock market is a giant accident waiting to happen, just consider the two most crucial developments—-soaring stocks and soaring deficits— since November 7, 2016.

First, on the lunacy side of the equation, the S&P 500 was up 35% at its 2873 peak on January 26, and now the dip-buyers, chart-readers and robo-machines are trying mightily to retest that level after the short-lived 10% correction at the turn of the month.

But here’s the thing. The pre-Trump market at 2130 on the S&P 500 was already trading at a nosebleed 22.4XLTM earnings of $94.55 as of Q4 2016. Consistent with the pig-through-the-python profits mini-cycle of the last four years, which flows from the parallel commodity/industrial/trade cycle, LTM earnings for Q4 2017 have now come in at $106.84 per share.

Down on Wall Street they are calling this gain a 13% Y/Y earnings rebound that justifies rising stock prices, and even buying the dip at current levels. To the contrary, we think the whole earnings growth narrative is nothing more than mullet bait; it snatches a one-year delta from the underlying trend and macro-context and thereby generates an utterly misleading conclusion.

The truth is, S&P 500 earnings are now back to where they were 39 months ago when they posted at $105.96for the September 2014 LTM period. We’d call an $0.88 gain over more than three years a rounding error, not a sign of resurgent profits.

We’d also call the implied LTM multiple of 26.9X at the recent 2873 top just plain crazy. That’s because the current business expansion at 104 months is over and done for all practical purposes: The post-1950 average is just 61 months and the historic record is 119 months under the far more propitious circumstances of the 1990s.

In that cyclical context, the historic record leaves little doubt about the foolishness of pricing the stock market at peak PE multiples during the final innings of the business cycle.

For instance, in September 2007, the S&P 500 stood at 1530, where it was valued at 19.4X LTM earnings. At that point the business cycle was 70 months old, and the Great Recession technically incepted 3 months later in December 2007.

The foolishness of the so-called “goldilocks market” in the fall of 2007, therefore, is not hard to dispute: Within 18 months, recessionary earnings had collapsed by 90% and the S&P 500 had lost 55% of its pre-recession peak value.

The story at the March 2000 dotcom peak is even more telling. At that point, the longest business expansion in history was in month #109, and the S&P 500 was trading at 29.4X LTM earnings. During the next two years, of course, earnings fell by 50% and the S&P index dropped by 47%.

Moreover, there is a further dimension of the cyclical trend story that is even more crucial. Back at the peak of the dotcom cycle in 2000, the 10-year peak-to-peak earnings growth rate had been 9.5% per annum—-providing at least a modicum of justification for current stock prices.

Likewise, at the June 2007 peak, the 7-year peak-to-peak earnings growth rate had been 6.8%. By contrast, the 1o-year peak-to-peak growth rate during the current cycle computes to just 2.3% per annum.

In other words, we are now at nearly the same cycle duration as in March 2000 (month #104 vs. #109) and at the almost the same insane PE multiple (26.9X  vs. 29.4X), but these current unsustainable valuations are coming off a dramatically weaker performance trend. In fact, the current 10-year earnings growth rate of 2.3% is just one-fourth of that recorded during the tech boom of the 1990s.

So it would be fair to say that the Trump Trade is already way over its skis, and that’s before we consider the “Trump” element of the equation. That is to say, the self-proclaimed King of Debt has now panicked Imperial Washington into an utterly lunatic fiscal binge at the very tail end of the business cycle, which will result in a 6% of GDP or higher borrowing rate.

That represents the exact opposite of the relatively benign conditions which prevailed when the market was last at these valuation extremes exactly 18 year ago.
^SPX Chart

In fact, as shown in the chart below the Federal budget was generating a 2.3% of GDP surplus during Q1 2000, and the public debt at 57% of GDP had actually declined considerably from 64% in the mid-1990s.

In other words, Washington had used the great (but unsustainable) tech boom to get its fiscal house in a semblance of order. By contrast, the most polite way to characterize policy during the so-called expansion of the Bernanke-Yellen era is that Washington looked a gift horse in the mouth and then blew its head off.

The 10% of GDP deficits during the Great Recession caused the public debt to swell from 63% of GDP in Q4 2007 to 83% by the bottom in mid-2009. But as the blue line in the chart makes clear, a combination of the tepid GDP and associated revenue rebound and profligate spending policy meant that the deficit made a lower low at negative 3.0% of GDP before heading south once again.

Stated differently, compared to a 3% of GDP surplus at the 2000 peak and a 1.1% of GDP deficit in 2007, Washington kept running rivers of red ink through the entire nine-year expansion—with deficits now soaring before the next recession has technically even commenced.

Thus, not shown in the chart below is the fact that the deficit during this year (FY 2018) will hit $1 trillion and5% of GDP and $1.2 trillion and just under 6% of GDP in the year ahead (FY 2019). Moreover, the signature of the King of Debt and a desperate Congressional GOP is all over those baleful prospects.

To wit, the inherited deficit for FY 2019 was $700 billion or 3.5% of GDP and reflected the permanent deep deficit policy adopted by bipartisan consensus after the debt ceiling crisis of 2011. That ill-advised policy alone meant that through the entire expansion cycle the public debt ratio continued to rise—unlike in the two prior cycles shown below—thereby reaching 103% of GDP.

But another $300 billion (including additional interest) has now been added to the annual red ink by the asinine Trump/GOP tax cuts; and on top of that has come a further $200 billion owing to the bipartisan spending spree for defense, domestic appropriations, border control, disaster relief and ObamaCare premium bailouts that have already been enacted or are pending near term action.

Accordingly, the public debt will likely reach $22.5 trillion and 110% of GDP by the end of FY 2019, and, as we have shown repeatedly, it is off to the races from there. Even without another recession through the end of FY 2028—-which implies the absurdity of a 20-year rececssion free span—the projected cumulative ten-year deficit now totals $15 trillion, which would take the public debt to $35 trillion and 140% of GDP  by the end of the period.

In this context, what we meant by the “gift horse” is quite simple: That beneficent financial creature temporarily resided in the Eccles Building and by virtue of $3.5 trillion of bond buying after the crisis, it permitted the fiscal eruption displayed in the orange line above to be absorbed with minimal short-term fall-out on both main street and Wall Street.

That is, there was no “crowding out” of business and household spending because the Big Fat Thumb of the Fed and other central banks kept interest rates drastically suppressed; and Wall Street was in clover, too, owing to rock-bottom cap rates (i.e. nosebleed PEs) and the massive outbreak of financial engineering in the corporate C-suite financed by a record explosion of cheap corporate debt.

Alas, the end of the Bubble Finance road is nigh because the gift h0rse has been put out to pasture. Based on today’s Fed minutes, there can be no doubt that the delusional Keynesians who occupy the FOMC will remain resolutely on the path of interest rate normalization and balance sheet shrinkage (QT). They are determined to have dry powder when the next recession comes knocking on the door of the Eccles Building, yet fail to see that the current “full-employment” economy is not all that.

In tomorrow’s post we will elaborate on the striking implications of the chart below. It shows the true state of the US economy and why the current narrative about resurgent growth is just another false positive.

To wit, the gross output of the US economy has grown by just 2.4% per annum since the pre-crisis peak in Q4 2007, and manufacturing output by only 0.84% per annum. And these figures are in nominal dollars!

More importantly, the cyclical undulations under those punk trends have been almost entirely a function of the global commodity/industrial/trade cycle. Yet the latter is once again turning south now that the coronation of Mr. Xi is complete and the Red Ponzi is again attempting to tame its $40 trillion credit monster.

So what comes next is not reflation and booming profits as reflected in the current Wall Street hockey sticks, but the” yield shock” which is now baked into the cake. With the other major central banks exiting QE or moving toward the sidelines, there is nothing to stop the law of supply and demand from having its way with bond prices in the quarters ahead.

After all, in the US alone there will be $1.8 trillion to be absorbed in the bond pits during FY 2019, reflecting $1.2 trillion of new US Treasury issuance and $600 billion of existing bonds to be dumped by the Fed.

As we demonstrated last week, even a 10-year benchmark UST at a 3.75% yield—-which after today’s mini-shock is well within sight—- will cost the S&P 500 around $40 per share in higher pre-tax interest payments. Not only is that not “priced-in” to the Wall Street hockey sticks, but neither is its correlate.

To wit, the C-suites of corporate America are going to be having a real bad hair day when the carry cost of all the debt they have issued to fund stock buybacks and other financial engineering plays begins to bite them in the rear. Not only will that mean earnings’ disappointments, but it is also likely to shut-down the real buy-the-dips engine that lays beneath Wall Street’s nine-year bubble.

That, of course, is debt-financed stock buybacks. As shown below, debt issuance has matched buybacks on on a dollar for dollar basis since 2009. Thanks to the King of Debt and the complete fiscal betrayal of the Congressional GOP, however, that’s about to change. Big time.

There is no need to speculate about what happens when the artificial prop of stock buybacks is yanked out from under today’s bubblicious markets. The crony capitalist fools who have been running GE as a stock buyback machine for more than three decades, have now left nothing to the imagination.

So this time is very different than the last time that end-of-the-cycle PE multiples hit the high 20s. Back n the year 2000, the Fed had a $500 billion balance sheet and plenty of headroom to temporarily monetize the public debt with nearly reckless abandon. And there was also a 2.3% of GDP fiscal surplus, which minimized UST pressures on the bond pits.

Not now. Not with a $4.4 trillion Fed balance sheet going into an unprecedented shrinkage phase and the public debt heading for $35 trillion.

Self-evidently, a monetary/fiscal collision of biblical proportions is now rumbling down the pike. That’s what makes this time so very different and in such a very not good way.

I will  see you FRIDAY night

HARVEY

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