GOLD: $1321.80 UP $9.65
Silver: $16.41 UP 21 CENTS
Closing access prices:
Gold $1332.50
silver: $16.58
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: $1323.95 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $1313.45
PREMIUM FIRST FIX: $10.50
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SECOND SHANGHAI GOLD FIX: $1323.55
NY GOLD PRICE AT THE EXACT SAME TIME: $1313.35
PREMIUM SECOND FIX /NY:$10.20
SHANGHAI REJECTS NY PRICING OF GOLD.
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ON APRIL 1 2018 I WILL NO LONGER PROVIDE THE LONDON FIXES AS THEY ARE MANIPULATED AND THEY WILL BE PROVIDED 36 HRS AFTER THE FACT AND THUS TOTALLY USELESS TO US!!
LONDON FIRST GOLD FIX: 5:30 am est $1316.35
NY PRICING AT THE EXACT SAME TIME: $1316.80
LONDON SECOND GOLD FIX 10 AM: $1321.35
NY PRICING AT THE EXACT SAME TIME. $1320.50
For comex gold:
MARCH/
NUMBER OF NOTICES FILED TODAY FOR MARCH CONTRACT:2 NOTICE(S) FOR 200 OZ.
TOTAL NOTICES SO FAR 30 FOR 3000 OZ
For silver:
MARCH
105 NOTICE(S) FILED TODAY FOR
525,000 OZ/
Total number of notices filed so far this month: 5291 for 26,455,000 oz
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Bitcoin: BID $9068/OFFER $9,137: UP $195(morning)
Bitcoin: BID/ $8867/offer $8937: DOWN $5 (CLOSING/5 PM)
end
Let us have a look at the data for today
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In silver, the total open interest ROSE BY A HUMONGOUS SIZED 4481 contracts from 211,635 RISING TO 216,042 DESPITE YESTERDAY’S 13 CENT FALL IN SILVER PRICING. WE OBVIOUSLY HAD ZERO COMEX LIQUIDATION. HOWEVER, WE WERE AGAIN NOTIFIED THAT WE HAD ANOTHER HUMONGOUS SIZED NUMBER OF COMEX LONGS TRANSFERRING THEIR CONTRACTS TO LONDON THROUGH THE EFP : 4974 EFP’S FOR MAY AND ZERO FOR ALL OTHER MONTHS AND THUS TOTAL ISSUANCE OF 4974 CONTRACTS. WITH THE TRANSFER OF 4974 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 24-48 HRS IN THE ISSUING OF EFP’S. THE 4974 CONTRACTS TRANSLATES INTO 24.87 MILLION OZ ON TOP OF THE RISE 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 MARCH:
35,971 CONTRACTS (FOR 15 TRADING DAYS TOTAL 35,971 CONTRACTS) OR 179.855 MILLION OZ: AVERAGE PER DAY: 2398 CONTRACTS OR 11.990 MILLION OZ/DAY
TO GIVE YOU AN IDEA AS TO THE HUGE SUPPLY THIS MONTH IN SILVER: SO FAR THIS MONTH: 179.855 MILLION PAPER OZ HAVE MORPHED OVER TO LONDON. THIS REPRESENTS AROUND 25.71% OF ANNUAL GLOBAL PRODUCTION
ACCUMULATION IN YEAR 2018 TO DATE SILVER EFP’S: 661.68 MILLION OZ.
ACCUMULATION FOR JAN 2018: 236.879 MILLION OZ
ACCUMULATION FOR MONTH OF FEBRUARY: 244.945 MILLION OZ
RESULT: WE HAD A HUMONGOUS SIZED GAIN IN COMEX OI SILVER COMEX OF 4481 DESPITE THE 13 CENT FALL IN SILVER PRICE. WE ALSO HAD A GOOD SIZED EFP ISSUANCE OF 4974 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 4974 EFP’S FOR THE MONTH OF MARCH WERE ISSUED FOR A DELIVERABLE FORWARD CONTRACT OVER IN LONDON WITH A FIAT BONUS. WE GAINED A MONSTROUS 9455 OI CONTRACTS i.e. 4974 open interest contracts headed for London (EFP’s) TOGETHER WITH A INCREASE OF 4481 OI COMEX CONTRACTS. AND ALL OF THIS HAPPENED WITH THE FALL IN PRICE OF SILVER OF 13 CENTS AND A CLOSING PRICE OF $16.30 WITH RESPECT TO YESTERDAY’S TRADING. YET WE STILL HAVE A HUGE AMOUNT OF SILVER STANDING AT THE COMEX THIS MONTH.
In ounces AT THE COMEX, the OI is still represented by just OVER 1 BILLION oz i.e. 1.080 BILLION TO BE EXACT or 154% of annual global silver production (ex Russia & ex China).
FOR THE NEW FRONT MARCH MONTH/ THEY FILED: 105 NOTICE(S) FOR 525,000 OZ OF SILVER
In gold, the open interest ROSE BY A STRONG SIZED 4823 CONTRACTS UP TO 545,499 DESPITE THE GOOD SIZED FALL IN PRICE YESTERDAY ( LOSS OF $5.75) HOWEVER FOR WEDNESDAY, THE CME RELEASED THE DATA FOR EFP ISSUANCE AND IT TOTALED AN HUGE SIZED 10,181 CONTRACTS : APRIL SAW THE ISSUANCE OF 6,181 CONTRACTS, JUNE SAW THE ISSUANCE OF 4000 CONTRACTS AND THEN ALL OTHER MONTHS ZERO. The new OI for the gold complex rests at 545,499. 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 AND WE ARE WITNESSING DELAYS IN ACTUAL DELIVERIES. IN ESSENCE WE HAVE A HUMONGOUS OI GAIN IN CONTRACTS: 4823 OI CONTRACTS INCREASED AT THE COMEX AND A HUGE SIZED 10,181 OI CONTRACTS WHICH NAVIGATED OVER TO LONDON.THUS TOTAL OI GAIN: 15,004 CONTRACTS OR 1,504,000 OZ =46.78 TONNES
YESTERDAY, WE HAD 12.906 EFP’S ISSUED.
ACCUMULATION OF EFP’S GOLD AT J.P. MORGAN’S HOUSE OF BRIBES: (EXCHANGE FOR PHYSICAL) FOR THE MONTH OF MARCH : 141,634 CONTRACTS OR 14,163,400 OZ OR 440.54 TONNES (15 TRADING DAYS AND THUS AVERAGING: 9442 EFP CONTRACTS PER TRADING DAY OR 944,200 OZ/ TRADING DAY)
TO GIVE YOU AN IDEA AS TO THE HUGE SIZE OF THESE EFP TRANSFERS : SO FAR THIS MONTH IN 14 TRADING DAYS IN TONNES: 440.54 TONNES
TOTAL ANNUAL GOLD PRODUCTION, 2017, THROUGHOUT THE WORLD EX CHINA EX RUSSIA: 2555 TONNES
THUS EFP TRANSFERS REPRESENTS 440.54/2550 x 100% TONNES = 17.37% OF GLOBAL ANNUAL PRODUCTION SO FAR IN MARCH ALONE.
ACCUMULATION OF GOLD EFP’S YEAR 2018 TO DATE: 1743.21 TONNES
ACCUMULATION OF GOLD EFP’S FOR JANUARY 2018: 653.22 TONNES
ACCUMULATION OF GOLD EFP’S FOR FEBRUARY: 649.45 TONNES
Result: A HUMONGOUS SIZED INCREASE IN OI AT THE COMEX DESPITE THE FALL IN PRICE IN GOLD TRADING YESTERDAY ($5.75 LOSS). HOWEVER, WE HAD ANOTHER HUGE SIZED NUMBER OF COMEX LONG TRANSFERRING TO LONDON THROUGH THE EFP ROUTE: 10,181 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 10,181 EFP CONTRACTS ISSUED, WE HAD A NET GAIN IN OPEN INTEREST OF 15,004 contracts ON THE TWO EXCHANGES:
10,181 CONTRACTS MOVE TO LONDON AND 4823 CONTRACTS INCREASED AT THE COMEX. (in tonnes, the GAIN in total oi equates to 46.78 TONNES).
we had: 2 notice(s) filed upon for 200 oz of gold.
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With respect to our two criminal funds, the GLD and the SLV:
GLD
WITH GOLD UP $9.65 : NO CHANGE IN GOLD INVENTORY AT THE GLD /
Inventory rests tonight: 850.54 tonnes.
SLV/
WITH SILVER UP 21 CENTS TODAY:
NO CHANGES IN SILVER INVENTORY AT THE SLV/
/INVENTORY RESTS AT 319.671 MILLION OZ/
end
First, here is an outline of what will be discussed tonight:
1. Today, we had the open interest in silver ROSE BY A HUMONGOUS 4481 contracts from 211,561 UP TO 216,042 (AND now A LITTLE CLOSER TO THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) DESPITE THE FALL IN PRICE OF SILVER (13 CENTS WITH RESPECT TO YESTERDAY’S TRADING). OUR BANKERS USED THEIR EMERGENCY PROCEDURE TO ISSUE ANOTHER 4974 EFP CONTRACTS FOR MARCH (WE DO NOT GET A LOOK AT THESE CONTRACTS AS IT IS PRIVATE BUT THE CFTC DOES AUDIT THEM) AND 0 EFP’S FOR ALL OTHER MONTHS. EFP’S GIVE OUR COMEX LONGS A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON. WE HAD SOME COMEX SILVER COMEX LIQUIDATION. IF WE TAKE THE OI GAIN AT THE COMEX OF 4481 CONTRACTS TO THE 4974 OI TRANSFERRED TO LONDON THROUGH EFP’S, WE OBTAIN A GAIN OF 9455 OPEN INTEREST CONTRACTS. WE STILL HAVE A STRONG AMOUNT OF SILVER OUNCES THAT ARE STANDING FOR METAL IN MARCH (SEE BELOW). THE NET GAIN TODAY IN OZ ON THE TWO EXCHANGES: 47.275 MILLION OZ!!!
RESULT: A HUMONGOUS SIZED INCREASE IN SILVER OI AT THE COMEX DESPITE THE FALL IN SILVER PRICING YESTERDAY (13 CENTS FALL IN PRICE) . BUT WE ALSO HAD ANOTHER HUMONGOUS SIZED 4974 EFP’S ISSUED TRANSFERRING COMEX LONGS OVER TO LONDON. TOGETHER WITH THE STRONG SIZED AMOUNT OF SILVER OUNCES STANDING FOR MARCH, DEMAND FOR PHYSICAL SILVER INTENSIFIES AS WE WITNESS SEVERE BACKWARDATION IN SILVER IN LONDON.
(report Harvey)
.
2.a) The Shanghai and London gold fix report
(Harvey)
2 b) Gold/silver trading overnight Europe, Goldcore
(Mark O’Byrne/zerohedge
and in NY: Bloomberg
3. ASIAN AFFAIRS
i)WEDNESDAY MORNING/TUESDAY NIGHT: Shanghai closed DOWN 9.69 POINTS OR 0.29% /Hang Sang CLOSED DOWN 135.41 POINTS OR 0.43% / The Nikkei closed HOLIDAY/Australia’s all ordinaires CLOSED UP 0.20%/Chinese yuan (ONSHORE) closed UP at 6.3295/Oil UP to 64.23 dollars per barrel for WTI and 68.09 for Brent. Stocks in Europe OPENED MIXED . ONSHORE YUAN CLOSED UP AT 6.3295 AGAINST THE DOLLAR. OFFSHORE YUAN CLOSED UP ON THE DOLLAR AT 6.3272 /ONSHORE YUAN TRADING WEAKER AGAINST OFFSHORE YUAN/ONSHORE YUAN TRADING STRONGER AGAINST USA DOLLAR/OFFSHORE YUAN TRADING MUCH STRONGER AGAINST THE DOLLAR . CHINA IS NOT VERY HAPPY TODAY (STRONGER CURRENCY BUT POOR CHINESE MARKETS/BUT NEW TRUMP TARIFFS INITIATED/WEAKER GLOBAL MARKETS
3a)THAILAND/SOUTH KOREA/NORTH KOREA
i)North Korea
My goodness; a German spy agency now admits that North Korea’s rockets can hit Europe
( zerohedge)
b) REPORT ON JAPAN
3 c CHINA
i)China is set to retaliate against USA tariffs but they are going to use the stick and carrot approach. They are set to allow some foreign investment into the country (the carrot). However if Trump continues with his strong 60 billion dollars worth of tariffs, then China will target the farm belt agricultural sector as well as hogs which are both huge USA exports into China
( zerohedge)
4. EUROPEAN AFFAIRS
Our good friends over at Deutsche Bank, the world’s largest derivative player is having its problems. Today they warned that the Euro strength and higher funding costs are weighing in on revenue on their securities this quarter
The credit default swaps on Deutsche bank skyrocketed…
( zerohedge)
5. RUSSIAN AND MIDDLE EASTERN AFFAIRS
6 .GLOBAL ISSUES
( zerohedge)
a must read..
( Gorka/Strategic Culture Foundation)
a must read…
( Mish Shedlock/Mishtalk)
7. OIL ISSUES
i)Oil and gasoline on a tear this morning after another surprise crude drawdown. Production is still at new record highs.
( zerohedge)
ii)A very important commentary from Irina today. China is going to initiate a larger storage fees for oil as 95 cents in total contrast to the 25 cents in the uSA. The Chinese do not want volatility which is trademark of the west. They want true markets and with the conversion into gold for their yuan, the sellers will be happy as well as the buyers.
8. EMERGING MARKET
9. PHYSICAL MARKETS
i)As we has been outlining to you on several occasions, Russia has been hoarding gold at the fastest pace in 12 years:
( RT/GATA)
ii)The following is a must read. The only difference between Ted and myself on this issue is the ownership of that silver. It is my belief that JPMorgan is holding this huge hoard of silver on behalf of the USA government who is holding it for sovereign China. You will recall that in 2003 the USA ran out of its 2 billion oz of physical silver (Manhattan Project) and they needed a huge source of silver. The only nation on earth with a huge physical official reserves was China. China went along with the lending/suppression scheme as they pocketed gold on the cheap. China it was rumoured to have between 400 million oz to 1 billion oz stored away. It is quite conceivable that China lent some of their official silver to acquire gold.
Butler talks about the July Banking Participation Report which was part of my testimony in Washington. My testimony is on the right side of my blog and I urge you all to hear it.
( Butler/Harvey, GATA)
iii)Ronan Manly discusses why central banks hold gold and it is their words as he surveyed them
( Ronan Manly/Bullionstar/GATA)
iv)Another great commentary from Chris Powell who answers Keith Weiner
( Chris Powell/.GATA)
10. USA stories which will influence the price of gold/silver
i)USA data release this morning
Mixed bag this morning: a little bounce from last month’s fall in existing home sales but Condo sales still slump
( zerohedge)
The following is extremely important. You will recall me telling you that the huge increases in Libor and its sister Libor-OIS is playing havoc with our banks. The chief culprit to the rise in Libor is the disappearance of USA dollars especially form Europe. Trump has given tax breaks so companies can repatriate their dollars back into the USA. The problem is that banks have levered those dollars hundreds times over and when you remove those dollars the banks are left with a bagful of derivatives with nothing backing them.
this is the reason we are witnessing a huge rise in Libor and that is causing Hibor to rise (Hong Kong Interactive bank) as well Australia
( zerohedge)
iii)The Omnibus 1.3 trillion spending bill is nearing compromise but still elusive
( zerohedge)
iv)This is fascinating: the uSA has developed technology to blast drones out of the sky with lasers
( zerohedge)
( zerohedge)
vi)SWAMP STORIES
Trading Volumes on the COMEX
PRELIMINARY COMEX VOLUME FOR TODAY:415,582 contracts
CONFIRMED COMEX VOL. FOR YESTERDAY: 336,063 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:
Meanwhile, gold-trading volumes on the COMEX have never been higher:
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And now for the wild silver comex results.
Total silver OI ROSE BY A HUMONGOUS SIZED 4481 CONTRACTS FROM 211,561 UP TO 216,042 DESPITE OUR 13 CENT LOSS IN YESTERDAY’S TRADING). ALSO,WE WERE ALSO INFORMED THAT WE HAD 4974 EMERGENCY EFP’S FOR MARCH ISSUED BY OUR BANKERS 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: 4974. 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 ZERO LONG COMEX SILVER LIQUIDATION AND WE ALSO HAVE A HUMONGOUS SIZED GAIN IN TOTAL SILVER OI FROM OUR TWO EXCHANGES. WE ARE ALSO WITNESSING A STRONG AMOUNT OF SILVER OUNCES STANDING FOR COMEX METAL IN THIS ACTIVE OF MARCH AS WELL AS THAT CONTINUAL MIGRATION OF EFPS OVER TO LONDON. ON A PERCENTAGE BASIS THERE ARE MORE EFP’S ISSUED FOR GOLD THAN SILVER. ON A NET BASIS WE GAINED 9455 SILVER OPEN INTEREST CONTRACTS AS WE OBTAINED A 4481 CONTRACT GAIN AT THE COMEX COMBINING WITH THE ADDITION OF 4974 OI CONTRACTS NAVIGATING OVER TO LONDON.
NET GAIN ON THE TWO EXCHANGES: 9455 CONTRACTS
AMOUNT STANDING FOR SILVER AT THE COMEX
We are now in the active delivery month of MARCH and here the front month LOST 40 contracts FALLING TO 185 contracts. We had 27 contracts filed YESTERDAY, so we LOST 13 contracts or an additional 65,000 OZ will NOT stand in this active delivery month of March BUT THESE GUYS MORPHED INTO LONDON BASED FORWARDS.
April GAINED 18 contracts RISING TO 435 .
The next big active delivery month for silver will be May and here the OI GAINED 3396 contracts UP to 153,924
We had 105 notice(s) filed for 525,000 OZ for the MARCH 2018 contract for silver
INITIAL standings for MARCH/GOLD
MARCH 21/2018.
| Gold | Ounces |
| Withdrawals from Dealers Inventory in oz | nil oz |
| Withdrawals from Customer Inventory in oz |
nil oz
|
| Deposits to the Dealer Inventory in oz | NIL oz |
| Deposits to the Customer Inventory, in oz | nil OZ |
| No of oz served (contracts) today |
2 notice(s)
200 OZ
|
| No of oz to be served (notices) |
493 contracts
(49300 oz)
|
| Total monthly oz gold served (contracts) so far this month |
30 notices
3000 oz
|
| 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 |
For MARCH:
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 2 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 MARCH. contract month, we take the total number of notices filed so far for the month (30) x 100 oz or 0 oz, to which we add the difference between the open interest for the front month of FEB. (495 contracts) minus the number of notices served upon today (2 x 100 oz per contract) equals 52,300 oz, the number of ounces standing in this nonactive month of MARCH (1.6267 tonnes)
Thus the INITIAL standings for gold for the MARCH contract month:
No of notices served (30 x 100 oz or ounces + {(495)OI for the front month minus the number of notices served upon today (2 x 100 oz )which equals 52,300 oz standing in this nonactive delivery month of March . THERE IS 10.556 TONNES OF REGISTERED GOLD AVAILABLE FOR DELIVERY SO FAR.
WE GAINED 1 CONTRACT OR AN ADDITIONAL 100 OZ WILL STAND FOR DELIVERY IN THIS NON ACTIVE DELIVERY MONTH OF MARCH.
IN THE LAST 18 MONTHS 72 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE DECEMBER DELIVERY MONTH
MARCH INITIAL standings/SILVER
| Silver | Ounces |
| Withdrawals from Dealers Inventory | nil oz |
| Withdrawals from Customer Inventory |
843,956.840 oz
CNT
|
| Deposits to the Dealer Inventory |
nil
oz
|
| Deposits to the Customer Inventory |
1,204,968.800 oz
JPMorgan
|
| No of oz served today (contracts) |
105
CONTRACT(S
(525,000 OZ)
|
| No of oz to be served (notices) |
80 contracts
(400,000 oz)
|
| Total monthly oz silver served (contracts) | 5291 contracts
(26,455,000 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 dealer deposits: nil oz
we had 1 deposits into the customer account
i) Into JPMorgan: 1,204,968.800 oz
*** JPMorgan for most of 2017 and in 2018 has adding to its inventory almost every single day.
JPMorgan now has 137 million oz of total silver inventory or 53.6% of all official comex silver.
JPMorgan deposited zero into its warehouses (official) today.
total deposits today: 1,204,968.800 oz
we had 1 withdrawals from the customer account;
i) Out of CNT: 843,956.840 oz
total withdrawals; 843,956.840 oz
we had 0 adjustments
total dealer silver: 59.203 million
total dealer + customer silver: 257.812 million oz
The total number of notices filed today for the March. contract month is represented by 105 contract(s) FOR 525,000 oz. To calculate the number of silver ounces that will stand for delivery in March., we take the total number of notices filed for the month so far at 5291 x 5,000 oz = 26,455,000 oz to which we add the difference between the open interest for the front month of Mar. (185) and the number of notices served upon today (105 x 5000 oz) equals the number of ounces standing.
.
Thus the INITIAL standings for silver for the March contract month: 5291(notices served so far)x 5000 oz + OI for front month of March(185) -number of notices served upon today (105)x 5000 oz equals 26,855,000 oz of silver standing for the March contract month.
We LOST an additional 13 contracts or 65,000 additional silver oz will NOT stand for delivery at the comex BUT THESE GUYS MORPHED INTO LONDON BASED FORWARDS.
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ESTIMATED VOLUME FOR TODAY: 95,411 CONTRACTS
CONFIRMED VOLUME FOR YESTERDAY: 69,841 CONTRACTS
YESTERDAY’S CONFIRMED VOLUME OF 69,841 CONTRACTS EQUATES TO 349 MILLION OZ OR 49.8% 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 -2.46% (MARCH 21/2018)
2. Sprott gold fund (PHYS): premium to NAV FALLS TO -0.63% to NAV (March 21/2018 )
Note: Sprott silver trust back into NEGATIVE territory at -2.46%-/Sprott physical gold trust is back into NEGATIVE/ territory at -0.63%/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 -2.93%: NAV 13.75/TRADING 13.35//DISCOUNT 2.93.
END
And now the Gold inventory at the GLD/
MARCH 21/WITH GOLD UP $9.65 NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 850.54 TONNES
March 20/WITH GOLD DOWN $5.75, A SURPRISING HUMONGOUS DEPOSIT OF 10.32 TONNES OF GOLD INTO THE GLD/INVENTORY RESTS AT 850.64 TONNES/
SO FAR, FOR THE MONTH OF MARCH, THE GLD HAS ADDED 19.61 TONNES WITH A NET LOSS OF $17.45
March 19/WITH GOLD UP $5.25: ANOTHER HUGE DEPOSIT OF GOLD TO THE TUNE OF 2.07 TONNES/GOLD INVENTORY RESTS TONIGHT AT 840.22 TONNES
MARCH 16/WITH GOLD DOWN $5.65/OUR CROOKS DEPOSITED ANOTHER 4.42 TONNES INTO GLD INVENTORY/INVENTORY RESTS AT 838.15 TONNES
FOR THE WEEK: GOLD LOST $11.80, BUT GOLD INVENTORY ADVANCED:4.42 TONNES
MARCH 15/WITH GOLD DOWN $7.85, NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 833.73 TONNES
MARCH 14/WITH GOLD DOWN $1.55/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 833.73 TONNES
MARCH 13/WITH GOLD UP $6.25/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 833.73 TONNES
MARCH 12/WITH GOLD DOWN $3.00/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 833.73 TONNES
MARCH 9/WITH GOLD UP $2.25/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 833.73 TONNES
March 8/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 833.73 TONNES
GOLD DOWN 5.45 TODAY.
MARCH 7/WITH GOLD DOWN 8.00/A SLIGHT CHANGE IN GOLD INVENTORY AT THE GLD/A WITHDRAWAL OF .25 TONNES TO PAY FOR FEES//INVENTORY RESTS AT 833.73 TONNES
MARCH 6/WITH GOLD UP $15.60/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 833.98 TONNES
March 5/WITH GOLD DOWN $4.10/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 833.98 TONNES
MARCH 2/WITH GOLD UP $18.70/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 833.98 TONNES
March 1/WITH GOLD DOWN ANOTHER $12.30/A HUGE CHANGE IN GOLD INVENTORY/ A DEPOSIT OF 2.96 TONNES/INVENTORY RESTS AT 833.98 TONNES
FEB 28/WITH GOLD DOWN ANOTHER 70 CENTS/NO CHANGE IN GOLD INVENTORY/INVENTORY RESTS AT 831.03 TONNES/.
feb 27/WITH GOLD DOWN $13.80 WE HAD NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 831.03 TONNES
FEB 26/WITH GOLD UP $2.40/WE HAD ANOTHER INVENTORY GAIN/THIS TIME 1.77 TONNE ADDITION TO THE GLD INVENTORY/INVENTORY RESTS AT 831.03 TONNES/WE HAVE HAD 5 INCREASES IN THE PAST 6 TRADING GOLD SESSIONS/
FEB 23/WITH GOLD DOWN $1.15, WE HAD A GOOD INVENTORY GAIN OF 1.47 TONNES OF GOLD INTO THE GLD/INVENTORY RESTS AT 829.26 TONNES
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
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
MARCH 21/2018/ Inventory rests tonight at 850.54 tonnes
*IN LAST 346 TRADING DAYS: 90.50 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 276 TRADING DAYS: A NET 65.80 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.
end
Now the SLV Inventory/
March 21/WITH SILVER UP 21 CENTS/NO CHANGE IN SLV INVENTORY/INVENTORY RESTS AT 319.671 MILLION OZ/
March 20/WITH SILVER DOWN 13 CENTS/NO CHANGE IN SLV INVENTORY/INVENTORY RESTS AT 319.671 MILLION OZ/
March 19/WITH SILVER UP 5 CENTS, THE SLV ADDS A SMALL 659,000 OZ TO ITS INVENTORY/INVENTORY RESTS AT 319.671 MILLION OZ/
MARCH 16/WITH SILVER DOWN 15 CENTS/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 319.012 MILLION OZ.
FOR THE WEEK; SILVER IS DOWN 42 CENTS YET ADDS 943,000 OZ OF SILVER INTO THE SLV/
MARCH 15/WITH SILVER DOWN 11 CENTS/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 319.012 MILLION OZ/
MARCH 14/WITH SILVER DOWN 8 CENTS/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 319.012 MILLION OZ/
MARCH 13/WITH SILVER UP 10 CENTS/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 319.012 MILLION OZ/
MARCH 12/WITH SILVER DOWN 8 CENTS/A BIG CHANGES IN SILVER INVENTORY AT THE SLV/ A DEPOSIT OF 943,000 OZ/INVENTORY RESTS AT 319.012 MILLION OZ/
MARCH 9/WITH SILVER UP 21 CENTS, NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 318.069 MILLION OZ/
March 8/WITH SILVER DOWN 1 CENT TODAY: NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 318.069 MILLION OZ/
MARCH 7/WITH SILVER DOWN 27 CENTS/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 318.069 MILLION OZ/
MARCH 6/WITH SILVER UP 38 CENTS/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 318.069 MILLION OZ/
March 5/WITH SILVER DOWN 11 CENTS/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 318.069 MILLION OZ/
MARCH 2/WITH SILVER UP 23 CENTS: A HUGE 1.479 MILLION OZ WAS ADDED TO SILVER’S INVENTORY/INVENTORY RESTS AT 318.069 MILLION OZ/
March 1/WITH SILVER DOWN 11 CENTS TODAY/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 316.590 MILLION OZ./
FEB 28/WITH SILVER DOWN 5 CENTS TODAY/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 316.590 MILLION OZ/
feb 27/WITH SILVER DOWN 17 CENTS/NO CHANGE IN SILVER INVENTORY/INVENTORY RESTS AT 316.590 MILLION OZ
FEB 26/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 316.590 MILLION OZ/
FEB 23/WITH SILVER DOWN 10 CENTS TODAY, WE HAD ANOTHER HUGE ADDITION OF 1.315 MILLION OZ/INVENTORY RESTS AT 316.590 MILLION OZ/
fEB 22.2018/WITH SILVER DOWN 1 CENT TODAY, WE HAD NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 315.271 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 315.271 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/
MARCH 21/2018: NO CHANGE IN SILVER INVENTORY
Inventory 319.671 million oz
end
6 Month MM GOFO 1.99/ and libor 6 month duration 2.41
Indicative gold forward offer rate for a 6 month duration/calculation:
G0FO+ 1.99%
libor 2.41 FOR 6 MONTHS/
GOLD LENDING RATE: .42%
XXXXXXXX
12 Month MM GOFO
+ 2.41%
LIBOR FOR 12 MONTH DURATION: 2.65
GOFO = LIBOR – GOLD LENDING RATE
GOLD LENDING RATE = +.24
end
Major gold/silver trading /commentaries for WEDNESDAY
GOLDCORE/BLOG/MARK O’BYRNE.
GOLD/SILVER
Credit Concerns In U.S. Growing As LIBOR OIS Surges to 2009 High
March 21 2018
Key Metric LIBOR OIS Signals Major Credit Concerns
– Widening of the spread between LIBOR OIS (overnight index swap) rate raises concerns
– Spread jumped to 9 year widest spread, rising to 54.6bps, most since May 2009.
– Libor recently moved to over 2% for first time since 2008
– Wider spread usually associated with heightened credit concerns
Editor: Mark O’Byrne
Major credit concerns are back as one of the key U.S. metrics, the LIBOR-OIS spread has been climbing sharply and is now higher than levels seen during the height of the eurozone sovereign debt crisis of late 2011 and early 2012. Indeed, it has risen to levels last seen at the height of the blogal financial crisis in 2009.
The spread has doubled since January and in the last month it has widened by 15 basis points, putting it above 0.50%.
Usually this kind of divergence between the two rates is not seen without some kind of credit issue. Only now are investors beginning to ask how much wider it can go and what it says about financial markets.
LIBOR rising
The London Interbank Offered Rate (LIBOR) is the key benchmark interest rate for short-term loans around the world.It is the point of reference for the majority of leveraged loans, interest-rate swaps and, of course, some mortgages.
It is this rate which is primarily responsible for the widening of the spread.
LIBOR has been on the up since February 7th, reaching 2.25%, its highest level since 2008. Markets are concerned that this isn’t the highest we will see it go, as there may be more room for it to run.
LIBOR-OIS spread is a warning sign
At the moment much of the mainstream media and banks are passing of the increased rate as something caused by technicals. The most frequently cited explanation is the increase in T-bill issuance since the debt-ceiling was raised but additionally the recent US tax overhaul and Fed tightening is also being blamed.
However, these are the very obvious and somewhat easy explanations. As Zerohedge pointed out yesterday, there are six possible explanations for the increase in the spread, the latter three arguably the most realistic and concerning.
– an increase in short-term bond (T-bill) issuance
– rising outflow pressures on dollar deposits in the US owing to rising short-term rates
– repatriation to cope with US Tax Cuts and Jobs Act (TCJA) and new trade policies, and concerns on dollar liquidity outside the US
– risk premium for uncertainty of US monetary policy
– recently elevated credit spreads (CDS) of banks
– demand for funds in preparation for market stress
The reality, however, is that without a specific diagnosis what is causing the sharp surge wider, and thus without a predictive context of high much higher it could rise, and how it will impact the various unsecured funding linkages of the financial system, it remains anyone’s guess how much wider the Libor OIS spread can move before it leads to dire consequences for the financial system.
Usually a widening of the spread is accompanied by heightened credit concerns. There are now questions being asked as to how damaging this will be and this is bringing an increase in nervousness around risk assets.
At present the widening of the spread is not simply due to a reluctance by banks to lend to one- another, as has been the case with previous LIBOR increases. But, it is an indication of tightening financial conditions. This move will have an adverse affect on both funding and lending costs.
“What this means is that rates on more than $350 trillion of debt and derivatives contracts hitched to the U.S. benchmark are on the rise…Overleveraged entities will be in for a spot of trouble. We have a situation where half of the investment-grade bond market in the USA is BBB,” – Marketwatch quoted David Rosenberg, chief economist and strategist at Gluskin Sheff.
Consider the fact that the last time dollars cost this much for banks to borrow we didn’t know if the Eurozone was going to survive. Prior to that the global financial system was just coming back from a near-total collapse. Right now there are few signs of increasing stress in the interbank dollar lending markets, as there were a few years back but this doesn’t mean there isn’t stress elsewhere.
The rise above 50 basis points will serve as a key psychological level and it will be interesting to see how much further it strays. Despite the belief that the gap can’t widen much further this is wishful thinking. Not only could the spread widen further but general market sentiment could then sour if excess reserves of banks at the Fed start to fall.
LIBOR impact felt around the world
Earlier today Bloomberg outlined how LIBOR’s increase will be felt in funding markets around the world. Attention was drawn to the impact on Saudi Arabia, Hong Kong and Australia.
Libor’s rise is complicating Saudi Arabia’s efforts to stem the risk of capital flight as the Fed is poised to continue raising rates.
Rising Libor is also fueling uncertainty surrounding Hong Kong’s peg to the U.S. dollar.
The leap in Libor is also being felt in Australia’s financing markets.
It’s made overseas borrowing more expensive for the country’s banks, which could push up domestic issuance.
Both Zerohedge and Citi’s Matt King believe “the blow out in Libor OIS not only matters, but could have very direct – and dire – consequence on equities in the coming weeks.”
What does this mean for me?
LIBOR is most likely on most people’s radars thanks to the LIBOR scandal. Today, it should be on your radar because of what it’s increase and influence on financial markets means for the global banking and financial system.
In short, no one is making too many noises about the uptick in LIBOR and the widening spread between LIBOR and OIS. However, it will be on the radar of central banks, namely the Fed.
At present, the Fed claims to be on a path to tightening monetary policy. If lending conditions between banks and credit markets become a cause for concern then the US central bank may be forced to or have an excuse to step away from their plan. This would see a return to the easy money era which has barely managed to keep economies afloat.
As we have explained previously, central bankers are pretty much all out of monetary tools for when it comes to attempting to “fix” money markets and the economy again.
Investors should take note that LIBOR OIS spread is indicating that all is not ‘Goldilocks’ like in the U.S. credit markets and there are risks that the debt laden financial system may experience difficulties again.
-END-
Andrew Maguire’s Kinesis money which is a “bitcoin” but backed 100% by allocated gold and silver is set to go.
it think it would be a great idea to look at this!
please read at: https://kinesis.money/#/
(Andrew Maguire)
|
2:57 PM (1 hour ago) | ||
|
|||
Harvey
Here It is my friend! https://kinesis.money/#/ Please let everyone know.
Let catch up on Monday if you have time. We have billions in the hopper ready to be allocated on the 1st day of trading. The paper market days are over.
Warm regards
Andy
end.
* * *
END
As we has been outlining to you on several occasions, Russia has been hoarding gold at the fastest pace in 12 years:
(courtesy RT/GATA)
Russia Is Hoarding Gold At The Fastest Pace In 12 Years
De-dollarization is accelerating…
Russia is adding gold to its reserves at the fastest pace in 12 years …and dumping US Treasuries at the fastest pace since 2011.
The Central Bank of Russia (CBR) has been increasing its holdings of gold every month since March 2015.The country is currently the sixth-largest gold owner after the United States, Germany, Italy, France and China.
According to the CBR, gold reserves spiked to $455.2 billion between March 2 and 9 hitting a historic high not seen since September 2014.
“Our international reserves increased by $2.9 billion or 0.6 percent in a single week, mainly on the strength of positive re-evaluation,” said the regulator.
And in fact 2018 has seen the fastest increase in the value of Russia’s gold reserves since 2006…
In January, RT notes that Russia surpassed China, which reportedly held 1,843 tons of the precious metal at that time. Over the last 15 years, Moscow and Beijing have been aggressively accumulating gold reserves to reduce their dependence on the US dollar.
According to World Gold Council data, last year the CBR became a world leader in stockpiling gold.
The bank has more than doubled the pace of its gold purchases, statistics showed. It has been increasing Russia’s gold reserves to meet the goal set by President Vladimir Putin to make it less vulnerable to geopolitical risks. The Russian gold cache has increased by more than 500 percent since 2000.
And while the Russian central bank is buying gold with both hands and feet, it is dumping US Treasuries at the fastest pace for a January since 2011…
Is it any wonder that Washington is so pissed off at Putin?
END
The following is a must read. The only difference between Ted and myself on this issue is the ownership of that silver. It is my belief that JPMorgan is holding this huge hoard of silver on behalf of the USA government who is holding it for sovereign China. You will recall that in 2003 the USA ran out of its 2 billion oz of physical silver (Manhattan Project) and they needed a huge source of silver. The only nation on earth with a huge physical official reserves was China. China went along with the lending/suppression scheme as they pocketed gold on the cheap. China it was rumoured to have between 400 million oz to 1 billion oz stored away. It is quite conceivable that China lent some of their official silver to acquire gold.
Butler talks about the July Banking Participation Report which was part of my testimony in Washington. My testimony is on the right side of my blog and I urge you all to hear it.
(courtesy Butler/Harvey, GATA)
Ted Butler: Bear Stearns — a different opinion
Submitted by cpowell on Tue, 2018-03-20 16:42. Section: Daily Dispatches
11:40p ICT Tuesday, March 20, 2018
Dear Friend of GATA and Gold:
Silver market analyst Ted Butler, in commentary posted today at GoldSeek’s companion site, SilverSeek, and 24hGold, explains how he discerned that JPMorganChase inherited the silver short position of Bear Stearns when the latter bank collapsed in 2008. Butler’s commentary is headlined “Bear Stearns — a Different Opinion” and it’s posted here:
http://silverseek.com/commentary/bear-stearns-%E2%80%93-different-opinio…
And here:
http://www.24hgold.com/english/news-gold-silver-bear-stearns–a-differen…
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Comnittee Inc.
CPowell@GATA.org
END
Bear Stearns – A Different Opinion
|
March 20, 2018 – 9:30am
No doubt that the ten-year anniversary of the failure of the prominent investment bank, Bear Stearns, and its takeover by JPMorgan is cause for reflection. Bear Stearns was a force to be reckoned with and held a storied past on Wall Street and its fall was a seminal financial event. To that end, there have been any number of retrospective articles, most often offering the perspective of the major players involved and what the takeover meant to the acquirer, JPMorgan.
The general theme is that Bear Stearns failed because of mortgage securities gone bad and that JPMorgan, had it realized the enormous legal fees and fines it would be forced to pay as a result of the takeover, would not do so again. Like many, I was transfixed by the daily events that led up to that fateful weekend in 2008 when Bear’s failure and JPMorgan’s acquisition occurred. About the very last thing on my mind at the time was any direct connection with silver or gold. It would be months before I came to realize that JPMorgan’s takeover of Bear Stearns would be the most important development in the modern history of silver.
To this day, I have never seen any mainstream media article even mention silver and gold in connection with the takeover of Bear Stearns, and after ten years I wouldn’t expect that to change. Never mind that Bear Stearns failure coincided, to the day, with gold hitting all-time highs (over $1000) and silver hitting 30 year highs ($21). Even though it’s easy to calculate that Bear lost more than $2 billion in being short gold and silver from yearend 2007 to mid-March 2008, never is that fact mentioned in any mainstream account.
But in a turn of events quite personal, but supported by any number of verifiable facts, a completely different picture emerged to me. In fact, there were a series of events that would follow JPMorgan’s takeover of Bear Stearns in March 2008 that make it clear just how important the takeover was in the history of silver.
On May 14, 2008, barely two months after JPM’s takeover, the CFTC issued its second 16 page public letter in four years, denying there was any problem with a concentration on the short side of COMEX silver by large entities. Both public letters were in response to numerous complaints by readers received by the Commission about a silver price manipulation alleged in articles I had written. The public letters were widely trumpeted as proving there was no manipulation (mostly by those previously convinced there was no manipulation to begin with). Naturally, I was disappointed and disagreed with the agency’s findings, but at that point, I was still completely in the dark and unaware of any Bear Stearns connection.
http://www.cftc.gov/idc/groups/public/@newsroom/documents/file/silverfuturesmarketreport0508.pdf
All that changed a few months later when I happened to check on a report regularly issued by the CFTC in the form of the monthly Bank Participation Report of August 2008. The BPR was hardly followed by anyone at that time and, truth be told, in all the years I had reviewed this report, I never learned much from it (other than knowing that banks were generally on the short side of COMEX gold and silver futures). So when I first reviewed the Bank Participation Report of August 2008 (about two weeks after it had been published), I expected a rehash of what I had always experienced before, namely, a report that added little to my understanding of silver and gold. Instead, what I discovered would change my understanding of silver and gold tremendously.
Having first reviewed the report early in the evening, what I found was so confounding that I wouldn’t sleep at all that night, made worse by not being able to bounce my findings off anyone, given the late hour. What I found was a shockingly large increase in the short positions in COMEX silver and gold futures by one or two US banks from the July Bank Participation Report. I took the shockingly large increase at face value, namely that a big US bank (or banks) had sharply increased its gold and silver short positions over the prior month. Since this was at the heart of what I had been alleging for more than 20 years to that point, I concluded that the CFTC had a good bit of explaining to do.
http://silverseek.com/commentary/smoking-gun-17159
As a result of the article and the attention it received, the CFTC announced it had opened an investigation into an alleged silver market manipulation by its Enforcement Division in September 2008, even though it had concluded just months earlier in its second public letter in four years that no manipulation existed. The new investigation would last five years before it was closed in 2013 (no, I was never contacted in connection to that investigation).
http://www.cftc.gov/PressRoom/PressReleases/pr6709-13
As luck would have it, a number of readers were concerned enough about my allegations in the “The Smoking Gun” article that they took it on themselves to write to their elected officials who, in turn, wrote to the agency seeking comment on my findings. The CFTC responded to the various congressmen and senators that I had it all wrong, in that there was no big increase from July to August in the US bank category for short positions in COMEX silver and gold. Instead, the increase in the 2008 August Bank Participation Report represented the finalization of a merger earlier in the year of an investment bank by a commercial bank. Bingo! – Another Eureka moment.
Since Bear Stearns was classified at the time as an investment bank, not a commercial bank, it’s massive short positions in COMEX silver and gold were never included in the Bank Participation Report and I had no idea that it was the big short seller (same with AIG Trading which was the largest short seller before Bear Stearns). Of course, I knew there was an unusually large concentrated short position in COMEX silver for many years, but I could only guess at who the biggest short might be. But all that changed when JPMorgan took over Bear Stearns, although I would have to wait until the Bank Participation Report of August 2008 and the subsequent letters from the CFTC to various lawmakers confirmed it was JPMorgan who was now the big silver crook and manipulator.
The revelation that JPMorgan was the biggest COMEX silver and gold short changed everything. No longer would I have to confine my allegations of manipulation to some unnamed financial institutions, now I could point to JPMorgan as the big silver and gold market crook of crooks. Not only could I now provide the name of the biggest market crook, I could do so with complete immunity from blowback from JPMorgan, arguably the most powerful financial institution in the world (although I wasn’t so sure of no blowback at the time). I certainly didn’t waste any time in pointing the finger at JPMorgan in the fall of 2008 (a year before I started this subscription service) and I have continued to point the finger at these crooks for almost ten years non-stop.
The discovery, in September 2008, that JPMorgan was now the largest short seller in COMEX gold and silver made it clear that the CFTC lied in its previous public letters denying there was no problem with big shorts in the silver market. Two months before the CFTC said there was no problem for the second time publicly (in May 2008), the biggest short went under and needed to be taken over, most likely because its big silver and gold short positions moved drastically against it. No problem indeed.
So clear was the proof that JPMorgan was now the central precious metals manipulator that I took to looking at the market through the eyes of JPM. In doing so, I believe I have come to look at silver and gold in the most realistic manner possible. Without the CFTC’s letters to lawmakers confirming both Bear Stearns’ previous role and JPMorgan’s subsequent role in silver and gold, I’m not sure if anyone, including myself, would be aware of what JPMorgan has wrought over the past ten years. I suppose I would have picked up on JPMorgan’s massive accumulation of physical silver which started in early 2011 at some point absent the great revelations of 2008, but nowhere near as quickly as I did.
My version of what really occurred in the takeover of Bear Stearns by JPMorgan includes JPMorgan being subsequently caught off guard by the big run up in silver prices into April 2011, which I contend was as a result of a physical market tightened by investment buying and not by positioning in COMEX futures contracts. With JPMorgan caught short on COMEX contracts and facing severe potential damages, it set about to do two things; one, extricate itself from the silver run up by setting off a series of price smashes starting on May 1, 2011, designed to kill off physical investment buying (mostly in silver ETFs) and two, insuring it never faced a similar predicament by buying as much physical silver as possible as a means of covering its massive COMEX paper short position. That JPMorgan accomplished both of its objectives starting in April 2011 is now a matter of public record.
Only after JPMorgan bought enough physical silver by 2012 to 2013 to cover its COMEX paper short position, did it realize it didn’t have to stop accumulating metal as a defensive measure; but that it had the means, motive and opportunity to turn what was a highly defensive original motive into a highly offensive one in terms of an unprecedented pure money making opportunity. Why else would JPMorgan, perhaps the purest example of a profit making machine, go on to buy 700 million ounces of physical silver, if not to profit? Not that it may matter much when JPMorgan switched from defense to offense, but none of this would have probably occurred had JPMorgan not taken over Bear Stearns. That’s why I feel the takeover is the most important development in the modern history of silver.
Ted Butler
March 20, 2018
END
Ronan Manly discusses why central banks hold gold and it is their words as he surveyed them
( Ronan Manly/Bullionstar/GATA
Ronan Manly: Why central banks hold gold, in their own words
Submitted by cpowell on Wed, 2018-03-21 05:09. Section: Daily Dispatches
12:08p ICT Wednesday, March 21, 2018
Dear Friend of GATA and Gold:
Bullion Star’s Ronan Manly today reports the results of his survey of central banks as to their reasons for holding gold. For the most part they acknowledge it as a special reserve financial asset, being highly liquid, available in emergencies, lacking counterparty risk, and without much correlation with other reserve assets. Interestingly, two central banks heavily connected to interventions in the gold market, the European Central Bank and the Bank for International Settlements, were among the least responsive.
Manly’s report is headlined “Why the World’s Central Banks Hold Gold — In Their Own Words” and it’s posted at Bullion Star here:
https://www.bullionstar.com/blogs/ronan-manly/worlds-central-banks-hold-…
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
END
Another great commentary from Chris Powell who answers Keith Weiner
( Chris Powell/.GATA)
No, gold leased from central banks doesn’t always have to be returned
Submitted by cpowell on Wed, 2018-03-21 06:08. Section: Daily Dispatches
1:17p ICT Wednesday, March 21, 2018
Dear Friend of GATA and Gold:
One could spend a lifetime trying to correct the unsupported beliefs about the gold market expressed by Keith Weiner of Monetary Metals, but your secretary/treasurer has his own failings to correct, like his own omission yesterday, in “Does Weiner Really Know What Central Bankers Think Better Than They Themselves Do?” —
— of another telling detail refuting a major assertion by Weiner in his latest essay, “Standing Ready to Lease Gold”:
http://news.goldseek.com/GoldSeek/1521468000.php
Weiner argued that gold leasing by central banks has little effect on the gold price because leased gold has to be returned eventually: “A lease allows the lessee to put the physical commodity into the market to alleviate the shortage, and get it back later when the shortage has passed.”
In response your secretary/treasurer noted yesterday that a decade of gold leasing by central banks, the 1990s, was followed by a decade of gold selling by central banks, the 2000s. If the gold sold in the latter decade was the same gold as was leased in the former decade, the leased gold was not returned.
But documents refuting Weiner were not provided.
The first is a statement issued in February 2006 by the most notorious borrower of central bank gold, Barrick Gold, which touted the generous terms of its gold leasing contracts, which it called master trading agreements.
The Barrick statement said: “In most cases, under the terms of the MTAs, the period over which we are required to deliver gold is extended annually by one year, or kept ‘evergreen,’ regardless of the intended delivery dates, unless otherwise notified by the counterparty. This means that, with each year that passes, the termination date of most MTAs is extended into the future by one year”:
https://www.barrick.com/investors/news/news-details/2006/BarrickEarnsMil…
And in PDF format:
http://gata.org/files/BarrickReleaseLeasing-02-22-2006.pdf
That is, central banks really didn’t want their gold back at any particular time at all. They wanted to keep it circulating, preventing supply shortages that might increase the gold price.
In the second document, produced in 2003, Barrick was even more explicit. In its motion filed in U.S. District Court for the Eastern District of Louisiana in New Orleans, seeking to dismiss a lawsuit accusing it of manipulating the gold market, Barrick went so far as to claim to share the sovereign immunity of central banks against suit, because in leasing gold and selling it into the market, Barrick claimed to be helping to implement central bank policy:
The court denied Barrick’s motion and the mining company soon settled the lawsuit by promising to stop hedging its future gold production. Barrick went on to reduce its hedge book of borrowed gold.
GATA has produced many documents, including admissions by central bankers themselves, confirming an international central bank policy, largely surreptitious, of controlling the price of gold to protect government currencies and bonds and to control interest rates, a policy of manipulating markets deceptively:
http://www.gata.org/taxonomy/term/21
The effectiveness of various aspects of this policy may be questioned, but its general objective is plain, and to refute Weiner it is not necessary to understand fully every detail of the policy.
For Weiner’s primary assertion is as broad as it is unsupported: that central banks don’t care about gold, even as practically every week produces new proof that they care desperately.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
Your early WEDNESDAY morning currency, Asian stock market results, important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight/9 AM EST
i) Chinese yuan vs USA dollar/CLOSED UP 6.3295 /shanghai bourse CLOSED DOWN 9.69 POINTS OR 0.29% / HANG SANG CLOSED DOWN 135.41 POINTS OR 0.43%
2. Nikkei closed HOLIDAY /USA: YEN RISES TO 106.34/
3. Europe stocks OPENED MIXED /USA dollar index FALLS TO 90.15/Euro RISES TO 1.2277
3b Japan 10 year bond yield: FALLS TO . +.043/ !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 106.34/ 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:: 64.23 and Brent: 68.09
3f Gold UP/Yen DOWN
3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“HELICOPTER MONEY” OFF THE TABLE FOR NOW /REVERSE OPERATION TWIST ON THE BONDS: PURCHASE OF LONG BONDS AND SELLING THE SHORT END
Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.
3h Oil UP for WTI and UP FOR Brent this morning
3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO +.599%/Italian 10 yr bond yield DOWN to 1.919% /SPAIN 10 YR BOND YIELD UP TO 1.317%
3j Greek 10 year bond yield RISES TO : 4.218?????????????????
3k Gold at $1315.350 silver at:16.25 7 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50
3l USA vs Russian rouble; (Russian rouble DOWN 3/100 in roubles/dollar) 57.80
3m oil into the 62 dollar handle for WTI and 66 handle for Brent/
3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation. This can spell financial disaster for the rest of the world/
JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 106.34 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 0.9535 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1706 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 +0.599%
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 2.8997% early this morning (THIS IS DEADLY TO ALL MARKETS). Thirty year rate at 3.1317% /
5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.
(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)
Global Markets On Edge, Dollar Slides Ahead Of FOMC Amid Ongoing Facebook Rout
Global shares traded in the red, and the dollar slumped before a hike in US interest rates, while awaiting key guidance on how many more to expect for this year. S&P futures were little changed, while markets in Europe and Asia dropped; Japan’s Nikkei was closed for holiday.
MSCI’s all-country equity index flatlined and is now 6 percent off record highs hit at the end of January, pressured by fears of a global trade war ignited by President Trump and the possibility that the Fed could end up raising interest rates more than three times this year. Markets are also on edge because of the selloff in U.S. tech shares, which has wiped almost $50 billion off the value of Facebook this week amid uproar over the alleged misuse of users’ data. The Facebook losses have filtered through other tech shares in the United States and overseas, with shares in Twitter falling more than 10%.
The losses are likely to have hit investors hard, with Bank of America Merrill Lynch’s monthly survey showing global funds heavily positioned in tech shares just before the rout began.
“There are tensions between potential bad news and good news in the market. The bad news is the problem facing the tech sector, which has been the leading light of U.S. and Asian equity markets for over a year,” said Andrew Milligan, head of global strategy at Aberdeen Standard Investments. “The good news is we must recall why the Fed is tightening policy. It’s because of the underlying strength of the U.S. and global economy.”
Europe slumped in early trading after Asian shares dropped into the close and copper sagged again. Adding to Europe’s uncertainty was the report in La Repubblica that Italian ex-premier Silvio Berlusconi is open to possible center-right coalition pact with anti-establishment Five Star Movement which is spooking markets. The Stoxx 600 fell 0.2%, led lower by travel and leisure sector with airlines hurt by a surge in oil prices: the SXTP was down 0.7%, with Air France-KLM down 2%, easyJet down 1.7%, Lufthansa down 1.2%.
Earlier, Asia stocks followed the US example where the major indices rebounded from the recent tech sell-off. ASX 200 (+0.2%) and KOSPI (+0.1%) were marginally positive as Australia’s energy sector tracked the outperformance seen in its US counterparts, although gains were contained approaching today’s FOMC and with Japan closed for Vernal Equinox national holiday. Elsewhere, Hang Seng (+1.1%) and Shanghai Comp. (+0.4%) led the region as focus turned to earnings with the top performers in Hong Kong spurred by recent financial results. However, as China closed local market slumped, with the China’s ChiNext Index of small caps and tech stocks sliding 1.9% Wednesday afternoon, wiping out earlier 0.7% gain. PC makers, pharmaceutcial stocks led the losses. Insurers surged in morning session but tumbled before close following a bearish S&P report on a crackdown.
As previewed overnight, today’s highlight will be the FOMC decision, where there market implied odds of a rate hike are above 90%. Analysts are split over whether the Fed will raise policy tightening expectations until more price pressures are clearly evident, especially given outside risks to the economy such as a possible global trade war.
“A prudent institution would probably give more weight to the facts, at least for the moment,” Roberto Perli, a former Fed economist who is now a partner at Cornerstone Macro, wrote in a note predicting the Fed would stick with three projected rate increases for this year.
With futures markets anticipating another increase in June, Powell’s Fed could leave its rate outlook unchanged until then to see how the economy absorbs the $1.8 trillion in stimulus expected from the Trump administration tax cuts and planned spending.
“We might have significant changes in communication compared with what we’ve seen under (previous chair Janet) Yellen,” said Chris Scicluna, head of economic research at Daiwa Capital Markets. “The economic situation post tax cuts also justifies a significant shift upwards in the dot plot,” he added, referring to fears the Fed’s de facto policy forecast chart could signal four rate rises rather than three, due to the economic boost delivered by Trump’s tax reforms.
The dollar extends its slide and now stands lower on a weekly basis as traders seem less confident that the Fed will signal four rate hikes this year and may not sound as hawkish as previously thought. As Bloomberg notes, leveraged names were seen trimming their long-dollar as Powell could adopt a more balanced stance. The greenback fell against all of its peers apart from the kiwi after Tuesday’s rally when U.S. benchmark yields gained for a fourth session.
The Bloomberg Dollar Spot Index slipped 0.3%, the most in two weeks; the Fed is expected to raise rates by 25bps on Wednesday, according to median estimate in a Bloomberg survey.
Traders will also focus on whether policy makers change their wording about the near-term economic risks are “roughly” balanced, as well as on any commentary about protectionism and the long-term federal funds rate. Strategists see it as a close call whether U.S. policy makers will add a fourth dot to the rate-hike path at the Federal Open Market Committee review.
Volumes in the currency market were low in anticipation of Powell’s first post-decision press conference and as Japan was closed for a holiday. The pound was boosted by wage data, while the euro approached the $1.23 handle once more.
A summary of notable overnight FX moves from BBG:
- EUR/USD rises toward the 55-DMA at 1.2293 amid broad dollar weakness, with volumes staying low after London open while Tokyo holiday kept Asia volumes contained
- GBP/USD climbs as much as 0.6% to 1.4075 as data showed U.K. wages rising at their fastest pace since the end of 2016; EUR/GBP reverses its advance and drops 0.2% to 0.8725, the lowest since Feb. 1
- USD/JPY edges lower after testing the 21-DMA at 106.50 and with Japanese markets closed; large option strikes due to expire in New York and before the Fed decision include $3.22b at 106 and $1.25b at 107
- The Mexican peso and the Canadian dollar advance against the greenback following the Globe and Mail report that Trump administration dropped a demand that all vehicles made in Canada and Mexico for export to the U.S. contain at least 50% U.S. content
In other global news, Treasury Secretary Mnuchin said he has had very direct talks with China and that dialogue will continue, while he added that the general G20 view is to see China open its markets. China Vice Commerce Minister said the nation will actively take steps to safeguard interests of its domestic industries following US trade investigations.
South Korean President Moon suggested that a 3-way summit between US, South Korea and North Korea is possible, while there were separate reports that South Korea offered to hold a high-level meeting with North Korea on March 29th.
In the UK, Trade Secretary Fox said that a FTA is not the UK’s only approach to relationships and that the government will also look at incremental steps to improve trade. Separately, three of the nine members of the The Times’s BoE shadow monetary policy committee called for an immediate quarter-point increase. Two said they would raise rates in May and two others added that the Bank should lay the groundwork for rises this year.
Market Snapshot
- S&P 500 futures down 0.05% to 2,722.25
- STOXX Europe 600 down 0.2% to 375.47
- MSCI Asia Pacific down 0.07% to 176.60
- MSCI Asia Pacific Ex Japan down 0.2% to 583.63
- Nikkei down 0.5% to 21,380.97
- Topix down 0.2% to 1,716.29
- Hang Seng Index down 0.4% to 31,414.52
- Shanghai Composite down 0.3% to 3,280.95
- Sensex up 0.5% to 33,162.61
- Australia S&P/ASX 200 up 0.2% to 5,950.27
- Kospi down 0.02% to 2,484.97
- German 10Y yield rose 0.7 bps to 0.592%
- Euro up 0.4% to $1.2286
- Brent Futures up 0.2% to $67.58/bbl
- Italian 10Y yield fell 6.7 bps to 1.641%
- Spanish 10Y yield rose 1.0 bps to 1.318%
- Gold spot up 0.5% to $1,317.29
- U.S. Dollar Index down 0.3% to 90.14
Top Overnight News from BBG
- Trump administration has dropped demands that all vehicles made in Canada and Mexico for export to the U.S. contain at least 50% U.S. content, Globe & Mail reports, citing people familiar
- Federal offices in Washington area closed all day due to weather
- U.K. Jan. Avg. Weekly Earnings 2.8% vs 2.6% est (prev. revised to 2.7% from 2.5%); Unemployment Rate 4.3% vs 4.4% est.
- Italian ex- premier Silvio Berlusconi open to possible center-right coalition pact with anti-establishment Five Star Movement, according to newspaper La Repubblica, raising the chance of populist parties taking power
- API inventories according to people familiar w/data: Crude -2.7m, Cushing +1.6m, Gasoline -1.1m, Distillates -1.9m
- A newspaper affiliated with China’s ruling Communist Party urged “strong restrictive measures” against alleged U.S. soybean dumping, underscoring concern that trade disputes pressed by President Donald Trump could extend into other sectors
- EU President Donald Tusk sought to play down the impact of potential U.S. tariffs on steel and aluminum imports as Europe braces for more conflict with President Donald Trump
Asian stocks took impetus from Wall St. where the major indices rebounded from the recent tech sell-off. ASX 200 (+0.2%) and KOSPI (+0.1%) were marginally positive as Australia’s energy sector tracked the outperformance seen in its US counterparts, although gains were contained approaching today’s FOMC and with Japan closed for Vernal Equinox national holiday. Elsewhere, Hang Seng (+1.1%) and Shanghai Comp. (+0.4%) led the region as focus turned to earnings with the top performers in Hong Kong spurred by recent financial results.
Top Asian News
- Chinese Insurance Stocks Slide After S&P Report on Crackdown
- Hong Kong Exchange’s Big Bet on China Is Suddenly Under Threat
- Tencent Profit Beats Estimates as WeChat Games Drive Growth
- Volvo Owner’s Chinese Unit Sees Overseas Deals Fueling Growth
European equities opened with a lack of firm direction, before edging lower (Eurostoxx 50 -0.3%) ahead of the FOMC meeting. The utilities sector is boosted following upgrades of Italy’s A2A (+2.3%) and Germany’s E.ON (+1.9%) by Kepler Chevreux. The FTSE 100 is weighed on by a firmer sterling. Simultaneously, UK retailers are taking a hit amid signs of consumer spending downturn; Moss Bros (-19.8%) crashing after the issue of a profit warning. Carpetright (-0.3%) has taken a loan from a significant shareholder to cover short-term capital requirements, Kingfisher (-6.8%) amongst the laggards following the Co. reporting a fall in earnings and expressing concerns on the outlook for the retail sector, warning that the UK market is tough. On the flip side, LSE (+0.9%) is at the top of the FTSE 100 amid talks that the 21-month Brexit transition deal agreed this week could prompt Intercontinental Exchange (ICE) of the US to make another bid approach.
Top European News
- BofA’s Pullback on Margin Loans Followed Sweeping Internal Probe
- Deutsche Telekom to Buy Hellenic Telecom Stake for EU284m
- BMW’s Muted Forecast in Step With Daimler Amid E-Car Stretch
- Telenor to Sell Central, East Europe Units for $3.4 Billion
In FX markets, CAD and MXN were the biggest overnight movers with the currencies lifted on news that the US dropped the contentious auto-content proposal in NAFTA discussions last week. Elsewhere, the rest of currency markets were uneventful ahead of the upcoming Fed decision and dot-plot projections, in which EUR/USD faintly nursed losses and hovered near 1.2250 where there are large option expiries for today’s New York cut. Furthermore, GBP/USD just about held on the 1.4000 handle after the prior day’s losses which were triggered by the CPI miss, while USD/JPY was relatively unchanged amid the absence of market participants in Japan.
In commodities, crude prices held on to the gains from yesterday’s rally in which prices rose above USD 63/bbl and also briefly tested USD 64/bbl to the upside. The advances were attributed to ongoing Saudi-Iran tensions and further Venezuelan output declines, while the latest API inventory report was also supportive with headline crude stockpiles at a surprise drawdown. Elsewhere, gold found mild support as the USD pared back some of the strength heading into the FOMC decision later, while copper traded sideways and failed to benefit from the improvement in risk appetite. OPEC are said to be discussing a change of measures for success for the OPEC cut deal and that the Vienna meeting looked at a change to its inventory target.
Looking at the day ahead, the big highlight is of course the FOMC meeting outcome at 6pm GMT. Shortly after that Fed Chair Powell will also deliver his first post-meeting press conference as Chair. Away from that it’s another fairly quiet day for data with January/February employment data and February public sector net borrowing data due in the UK, while in the US the Q4 current account balance and February existing home sales data will be released.
US Event Calendar
- 7am: MBA Mortgage Applications, prior 0.9%
- 8:30am: Current Account Balance, est. $125.0b deficit, prior $100.6b deficit
- 10am: Existing Home Sales, est. 5.4m, prior 5.38m; MoM, est. 0.37%, prior -3.2%
- 2pm: FOMC Rate Decision
DB’s Craig Nicol concludes the overnight wrap
With markets really struggling to build up any sort of momentum at the moment, today’s Fed meeting should be seen as a welcome distraction. The meeting takes on a little bit more focus as it’s of course Fed Chair Powell’s debut in the hot seat. So there will be plenty of eyes on what he has to say and what changes in style or messaging he might signal. Indeed, with a 25bp hike as good as certain today our US economists believe that Powell’s performance, along with the answers to whether or not the Committee still sees risks as “roughly balanced” and if the median dots move up, are the three key questions that investors should be looking out for.
As a reminder, our colleagues expect the Committee to sound a bit more upbeat (though not yet worried) about inflation developments, and while consumer spending indicators have softened a bit recently, their message about economic activity can remain little changed. They also expect FOMC participants to likely raise their growth forecasts and reduce unemployment forecasts. With regards to the hotly anticipated dots, the team believe that it makes sense to raise the path of rates sooner rather than later. On this basis, they expect the median forecast to move up to four rate hikes this year, from three, although caveat that it could be a close call. Perhaps of more significance for the market though, they expect the entire path of rate hikes to shift up modestly including the terminal rate forecast to 3.3% in 2020 from 3.1% in December. With regards to Powell, the team expect his message to centre on the signs of an overheating economy, and that the Fed’s current tightening action is clearly in order, which would signal that another rate hike is on the way in June.
Markets are going into today’s Fed meeting coming off the back of a difficult week and a half. Yesterday the S&P 500 (+0.15%), Nasdaq (+0.27%) and Dow (+0.47%) held their heads above water although were routinely tested with the tech sector again seemingly at the centre of things. Monday’s main culprit – Facebook – fell another -2.56% yesterday (although bounced well off the intraday lows) and is down -9.15% in the last two days. That story seemed to kick up another gear yesterday with the news that the social network company is being probed by the US Federal Trade Commission over the possible violation of a 2011 consent decree, while company officials have also supposedly agreed to brief members of the House Judiciary Committee, possibly as soon as today. The VIX actually edged down less than 1pt yesterday to 18.20. European bourses were broadly higher with the Stoxx 600 (+0.51%), DAX (+0.74%) and FTSE (+0.26%) all up, partly aided by the lower Euro (-0.75%) and energy stocks as WTI Oil rose to the highest in nearly 3 weeks (+2.27%).
Bond markets have been a bit more contained by comparison in recent days which is probably as much to do with anticipation over today’s Fed meeting. 10y Treasuries finished 4.1bps higher yesterday at 2.897% and continue to be stuck in this 2.80-2.90% range where they’ve been for most of the last month. 10y Bunds were also +1.5bps yesterday although there was a notable outperformance in the periphery despite no obvious drivers with Italy (-6.7bp), Spain (-3.1bp) and Portugal (-1.6bp) all down.
Overnight, the WSJ has reported that the Trump administration will release a punitive package on Thursday aimed at China that includes tariffs on imports worth at least $30bn as well as proposing investment restrictions on Chinese firms in the US. Notably the measures will have a grace period and the final details are still evolving. Elsewhere, Reuters has reported that the European Commission ill propose new tax rules today that will make large digital companies with material revenue in Europe pay a 3% tax on their turnover, largely consistent with reports over the weekend. This morning in Asia, markets are broadly firmer thanks to the rise for the Oil complex with the Hang Seng (+1.14%), ASX 200 (+0.26%) and Kospi (+0.16%) all up. It’s worth noting markets in Japan are closed for a public holiday.
Meanwhile, with China’s NPC now wrapped up our China Chief Economist Zhiwei Zhang concluded with his thoughts in a note yesterday. Zhiwei highlights that the market will be surprised by policy changes from China in 2018, in part as the government will focus more on sustainability than stability. Overall, he believes that growth will likely slow, infrastructure and property cycles may cool off and adversely affect commodity demand, while the government favours the new economy such as the services sector and consumption. Elsewhere, macro policies may lead to short term pain but conducive to growth in the long term.
With regards to other big meeting in recent days, over at the G20, talks appear to have ended with no clear developments with the joint statement indicating that “we recognize the need for further dialogue and actions”. More significantly, the statement did little to dispel concerns around a potential trade war and rising protectionism.
Closer to home, Brexit headlines continue to trickle through despite Monday’s positive announcement. The newsflow was a little odd with Irish PM Leo Varadkar saying that he welcomed the headway made in Brexit negotiations, but Deputy PM Simon Coveney suggesting that there is an option to extend the Brexit transition period, although that wasn’t disclosed in Monday’s withdrawal text. It’s worth adding that yesterday DB’s Oliver Harvey shifted his view to tactically bullish Sterling in light of a Brexit muddle through being confirmed, Bank of England risks being tilted towards more hawkish repricing, seasonality and long positions being pared back.
Staying with the UK, yesterday’s CPI data for February was for the most part slightly softer than expected. Headline CPI rose +0.4% mom compared to expectations for +0.5%, with base effects meaning that the annual rate fell a tenth more than expected to +2.7% yoy from +3.0%. The more significant core print also retreated three-tenths to +2.4% yoy, putting it back to the lowest level since last July. RPI also eased from its previous print of +4.0% yoy to +3.6%. Whether or not that staves off some of the hawks from a rate hike remains to be seen but today’s wages data will perhaps be of more interest with expectations being for a slight increase in average weekly earnings to +2.6%.
In other news, we wanted to point readers’ attention to a report by our European economists yesterday looking ahead to the EU Summit this Thursday and Friday. They believe that there are three main market sensitive topics on the agenda: Brexit, EMU institutional reforms and trade. With Brexit now largely ticked off, focus will be on the latter two issues. Our economists note that Macron’s election and the emergence of a Grand Coalition in Germany with an SPD finance minister has raised expectations for what might be achieved in terms of EMU reform. The team expect a statement acknowledging progress but caveat that a lot of work is still likely needed to be done prior to hitting the June deadline. The team also note that trade is the unexpected element on the agenda this week with the EU now facing the dilemma of knowing how to respond to the US threat of tariffs. They expect a middle path to be taken. You can find more in the report by clicking here.
Quickly wrapping up the remaining economic data yesterday. Germany’s February PPI was lower than expected at -0.1% mom (vs. +0.1% expected) and +1.8% yoy (vs. +2.0% expected). The Euro area’s March consumer confidence index (+0.1 vs. 0.0 expected) and Germany’s March ZEW survey on current situations (90.7 vs. 90 expected) were both above market. However, the ZEW survey expectations index (5.1 vs. 13.0 expected) was well below expectations and fell to the lowest reading since the latter part of 2016, which could make for an interesting read-through in tomorrow’s PMIs.
Looking at the day ahead, the big highlight is of course the FOMC meeting outcome at 6pm GMT. Shortly after that Fed Chair Powell will also deliver his first post-meeting press conference as Chair. Away from that it’s another fairly quiet day for data with January/February employment data and February public sector net borrowing data due in the UK, while in the US the Q4 current account balance and February existing home sales data will be released.
end
3. ASIAN AFFAIRS
i)WEDNESDAY MORNING/TUESDAY NIGHT: Shanghai closed DOWN 9.69 POINTS OR 0.29% /Hang Sang CLOSED DOWN 135.41 POINTS OR 0.43% / The Nikkei closed HOLIDAY/Australia’s all ordinaires CLOSED UP 0.20%/Chinese yuan (ONSHORE) closed UP at 6.3295/Oil UP to 64.23 dollars per barrel for WTI and 68.09 for Brent. Stocks in Europe OPENED MIXED . ONSHORE YUAN CLOSED UP AT 6.3295 AGAINST THE DOLLAR. OFFSHORE YUAN CLOSED UP ON THE DOLLAR AT 6.3272 /ONSHORE YUAN TRADING WEAKER AGAINST OFFSHORE YUAN/ONSHORE YUAN TRADING STRONGER AGAINST USA DOLLAR/OFFSHORE YUAN TRADING MUCH STRONGER AGAINST THE DOLLAR . CHINA IS NOT VERY HAPPY TODAY (STRONGER CURRENCY BUT POOR CHINESE MARKETS/BUT NEW TRUMP TARIFFS INITIATED/WEAKER GLOBAL MARKETS )
3 a NORTH KOREA/USA
/NORTH KOREA/USA
My goodness; a German spy agency now admits that North Korea’s rockets can hit Europe
(courtesy zerohedge)
German Spy Agency Admits North Korean Rockets Can Hit Europe
Amid a relative detente in US-North Korea relations, Germany’s foreign intelligence agency told lawmakers that North Korean rockets tipped with a nuclear warhead now have the capacity to strike Germany and central Europe.
In a closed-door meeting, Deutsche Welle reports that BND Deputy Director Ole Diehl told members of parliament there is “certainty” that North Korea could now “reach Europe and Germany with its missiles,”according to the Bild am Sonntag newspaper, which first reported the briefing, citing participants.
Diehl also told lawmakers that the BND considers talks between North and South Korea a positive step.
There was no immediate comment from the BND in response to the media reports.
Meanwhile, negotiations were set to convene in Finland between a senior North Korean official and representatives of the United States and South Korea, according to the South Korean Yonhap news agency. Over the weekend, officials from the US, Japan and South Korea met in Seoul to discuss the complete denuclearization of the peninsula.
END
3 b JAPAN AFFAIRS
END
c) REPORT ON CHINA]
China is set to retaliate against USA tariffs but they are going to use the stick and carrot approach. They are set to allow some foreign investment into the country (the carrot). However if Trump continues with his strong 60 billion dollars worth of tariffs, then China will target the farm belt agricultural sector as well as hogs which are both huge USA exports into China
(courtesy zerohedge)
China Unveils How It Will Retaliate To US Tariffs, USDJPY Snaps
While it will hardly come as a surprise considering that trade wars always evolve in an escalating tit-for-tat manner, the WSJ reports that just hours ahead of Trump’s announcement of as much as $60 billion in tariffs targeting Beijing, China is preparing to hit back with its own countertariff aimed at President Donald Trump’s support base, including levies targeting U.S. agricultural exports from farmbelt states in retaliation to the mounting trade offensive from Washington.
At the same time, and in hopes of avoiding further escalation, Beijing is also reportedly weighing concessions, including easing restrictions on foreign investments in securities firms and insurance companies.
In taking a stick-and-carrot approach, President Xi Jinping is seeking to avoid escalating trade tensions with the Trump administration.
“Any Chinese response to new U.S. tariffs would be measured and proportional,” said a Chinese official involved in policy-making.
Should the carrot not work, China’s “stick” is said to target U.S. exports of soybeans, sorghum and live hogs.
And while we said that the news should not come as a surprise, it appears that to FX-trading algos, that’s precisely what the WSJ report was, as it sent both the USDJPY and AUDUSD sliding.
Earlier today, the WSJ confirmed previous reports that the White House is preparing to crack down on what it says are improper Chinese trade practices by making it significantly more difficult for Chinese firms to acquire advanced U.S. technology or invest in American companies, individuals involved in the planning said.
The administration plans to release on Thursday a package of proposed punitive measures aimed at China that include tariffs on imports worth at least $30 billion.
The tariffs won’t be imposed immediately, rather, U.S. industry will be given an opportunity to comment on which products should be subject to the duties. As part of the package, the White House will announce possible investment restrictions by Chinese firms in the U.S. and will direct the Treasury Department to outline rules governing investment from China.
Final details of the plan, including the amount of imports to be hit by tariffs, remain in flux, those involved with the discussions said. While the rough amount and rationale for the tariffs are expected to be disclosed on Thursday, the final decisions will come once U.S. industry has had its say, they said.
As a reminder, last week we laid out the most likely Chinese imports that will likely be targeted by Trump. To do this, Goldman looked at imports from China in 57 categories. The answer is shown in the table below.
These are the items that are most likely to see their prices spike as a result of the tariffs: Power tools and electrical appliances top the list, based on a substantial bilateral trade deficit, higher tariffs applied in China versus the US, and high share of imports going to final (in this case, consumer) use.
Sporting goods, toys, jewelry, and consumer electronics like TVs rank highly, for the same general reasons. However, in most of these categories, imports from China constitute a large share of total domestic sales of these products.
Expect price of the abovementioned imports – and sectors – to rise sharply in the coming months should trade war not be avoided in the last moment.
end
4. EUROPEAN AFFAIRS
Our good friends over at Deutsche Bank, the world’s largest derivative player is having its problems. Today they warned that the Euro strength and higher funding costs are weighing in on revenue on their securities this quarter
The credit default swaps on Deutsche bank skyrocketed…
(courtesy zerohedge)
Deutsche Bank Plunges To 16-Month Lows, Bank Credit Risk Spikes
Deutsche Bank shares are down 6%, at their lowest since Nov 2016 (near post-crisis lows), after warning that euro strength and higher funding costs will weigh on revenue in the securities unit this quarter (just a week after the lender voiced optimism about the outlook for the year).
Bloomberg reports that the company’s corporate and investment bank unit faces a 300 million-euro ($368 million) headwind from the currency effect and 150 million euros from higher funding costs, Chief Financial Officer James von Moltkesaid at an investor conference in London on Wednesday.
The reaction was a swift 5% plunge in the stock…
Heading back towards 2016 post-crisis lows…
Marcus Schenck, co-head of the corporate and investment bank, said at a separate event in London Wednesday that the lender still has some work to do convincing its shareholders it’s turnaround is on track.
“John has always made it very clear. Look, this is not a one-quarter journey. This is a several-year journey,” Schenck said. “We think we’re on the right path with that journey. But we definitely are a show-me case.”
We suggest “some work” is perhaps an understatement.
However, it’s not just Deutsche that has been showing signs of strain recently in the credit markets… Many of the major prime brokers are seeing CDS breaking out…
And more ominously, US financial credit risk is flashing red while bank stocks shrug it off (for now)…
This will not end well.
end
5. RUSSIAN AND MIDDLE EASTERN AFFAIRS
6 .GLOBAL ISSUES
This is good: Both the Canadian dollar and the Mexican Peso surge on a report from the Globe and Mail that the uSA is dropping its demand that exports of cars into the USA must have 50% USA content. That was the major sticking point as it would have given the uSA unfair advantage.
(courtesy zerohedge)
Loonie, Peso Surge On Report US Drops NAFTA Demand For Auto Imports
The Canadian Loonie and Mexican Peso jumped late on Tuesday after a report by the Globe and Mail that the U.S. government has dropped a demand that all vehicles made in Canada and Mexico for export to the United States contain at least 50% U.S. content.
President Donald Trump’s administration dropped the demand during the North American Free Trade Agreement negotiations in Washington last week, which included talks between Canada’s Foreign Minister Chrystia Freeland and U.S. Trade Representative Robert Lighthizer, the Canadian newspaper reported.
Autos have been one of the biggest sticking points in the talks, and Washington had originally demanded both the 50% U.S. content requirement and jacking up an existing requirement for North American content from 62.5% to 85% . Canada and Mexico flatly rejected the U.S. content demand, since it would give the United States a guaranteed economic advantage over its North American trading partners.
Canada’s ambassador to Washington, David MacNaughton, said on Tuesday that meetings over the past two weeks “have been more positive than I’ve seen them before.
“I can say in all honesty that there has been substantive progress made, certainly on the auto side,” he told a conference of the American Association of Port Authorities at a Washington hotel. “I am confident that we are going to move forward. I hope we can do so as quickly as possible.”
Freeland’s chief spokesman declined to comment on the report and said Canada and United States continued to work well together, while Canada’s Prime Minister Justin Trudeau said earlier this week that Trump appeared to be “enthusiastic” about coming to an agreement on NAFTA.
At the conclusion of the last formal round of negotiations, in Mexico City earlier this month, Mr. Lighthizer said he wanted an agreement in principle in four to six weeks. One source with knowledge of the talks said the three sides are rushing to reach a deal by the end of April, before Mexico’s presidential election campaign begins in earnest.
Prime Minister Justin Trudeau hinted earlier this week that talks were speeding up.
“We’re renegotiating NAFTA, we’ve seen from the President he’s enthusiastic about getting to a deal,” he said.
The United States backing off its harshest demand would make the path to a deal much easier. “If true, that would be a very strong indication that we’re in deal-making mode,” said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association of Canada.
The biggest beneficiary from the news were the two NAFTA currencies with both the Loonie and Peso surging in response; UBS said that while MXN is undervalued and also pinned by very high real policy rates, UBS isn’t currently long the currency, noting that “Political risks are a factor here,” he says. “We find much better value in rates than in the currency.”
Some have speculated that Trump is easing off on his NAFTA demands to double down on the far more important trade war with China to be unveiled this Friday, and where Trump hopes to build a united trade front of nations who have been similarly impacted by China’s trade surplus.
end
The real reason for the West’s attack on the new Nord Stream No 2 project which brings gas from Russia into Germany more cheaply than before. It by passes the Ukraine who badly needs the pipeline revenue of the other pipelines now in use.
a must read..
(courtesy Gorka/Strategic Culture Foundation)
Attack Against Nord Stream 2 Renewed with Vigor: Whose Interests Does It Meet?
Authored by Alex Gorka via The Strategic Culture Foundation,
Economics dictate national interests. Foreign policy is the tool used to advance it. Moscow has to fight back on all fronts, but the truth is that Washington does not care much about chemical attacks in Eastern Ghouta, the Salisbury poisoning, election meddling, or so many other fairy tales used to justify its anti-Russia policy. These are just pretexts to promote US economic interests abroad.
Gas exports to Europe present exciting opportunities but supplies from Russia are cheaper and more reliable. So the US needs to get rid of the obstacle in its way – the Nord Stream 2 (NS2) pipeline, which will carry natural gas from Russia to Germany.
Washington will do anything to achieve this cherished goal.
On March 15, a bipartisan group of 39 senators led by John Barrasso (R-WY) sent a letter to the Treasury Department. They oppose NS2 and are calling on the administration to bury it. Why? They don’t want Russia to be in a position to influence Europe, which would be “detrimental,” as they put it. Their preferred tool to implement this obstructionist policy is the use of sanctions. Thirty-nine out of 100 is a number no president can ignore. Powerful pressure is being put on the administration. Even before the senators wrote their letter, Kurt Volker, the US envoy to Ukraine, had claimed that NS2 was a purely political, not commercial, project. No doubt other steps to ratchet up the pressure will follow.
Their loyal friends in Europe chimed in almost simultaneously with the US lawmakers. Polish Foreign Minister Mateusz Morawiecki has proven himself to be a master at telling horror stories about the scariest things that might happen once the pipeline is up and running. On March 2, the speakers of parliament in Ukraine and Moldova signed a letter addressed to the chairs of the parliaments of the EU countries, warning about the repercussions. This is “a destabilizing factor” that will weaken Europe, they exclaim. Of course it is. Paying more for gas brought in on ships that can change course to head for a new destination if the price of gas elsewhere becomes more alluring will naturally make Europe stronger. Good reasoning!
On March 11, the leaders of the parliaments of Poland, Latvia, and Lithuania signed another open letter to the parliaments of the EU states to warn them against the construction of NS2.
It’s not a commercial project, they say, it’ll make you dependent on Russia. “Gazprom … is not a gas company but a platform for Russian coercion“, affirms Anders Fogh Rasmussen, a former head of NATO who now works as a consultant for Ukraine. Estonia has also joined the choir as one of the strongest critics of Nord Stream. The European Commission opposes the project too, but lacks the legal grounds to prevent private investment from flowing in.
Europe needs this commodity and Russia sells it. What makes this “not a commercial deal”? Dependence? From this perspective, any customer who makes a choice then becomes “dependent” on the vendor. Who is keeping them from getting gas from other sources? The sea lanes are all open, if they need to use them. Poland and Lithuania have already built terminals for liquefied gas. But it’s more expensive and the prices in the Asia Pacific region make that market more attractive. To woo US shale-gas exporters Europeans will have to pay more. Don’t they have the right to choose what suits them best?
As practice shows, writing letters is not enough.
There are “stubborn” leaders at the helms of some European states who dare to put their national interests first. Just think about it! If “America First” is fine as a slogan, then what’s wrong with an “Austria First” policy?One daring young man who is protecting the interests of his country is Austrian Chancellor Sebastian Kurz. He openly supports the Nord Stream 2 project. And he is not alone. Germany continues to back it despite the pressure. Chancellor Angela Merkel believes that the NS2 project “poses no danger to diversification.” The German-based think tank ewi Energy Research & Scenarios has estimated that the project “has a price decreasing and welfare enhancing effect in the EU-28 overall.”
But Washington could not care less about its allies, which is clear from its opposition to this project. Its interests are self-centered. The US is not only promoting its liquefied gas supplies in Europe but is also trying to make it easier to pay for its plan to keep Ukraine in its orbit to use as a springboard right on the Russian border. Nord Stream 2 will make the gas-transit route via Ukraine redundant, depriving that country of much of the €1.8 billion (nearly 2% of its GDP) it earns annually in transit fees. The blow to the Ukrainian economy would undercut the US and EU’s financial support for Kiev. In addition, the revenue from NS2 would mean profits for Russia, thus softening the impact of the West’s sanctions. The European countries that vehemently oppose NS2 also want the US military based on their soil. And even if that presence is already there, they want more of it.
Europe is split over a lot of issues, but in the EU, NATO, and the Council of Europe there is a pro-American camp ready to dance to the US tune. And Poland and the Baltic States are happy campers. Whatever happens, they’ll snap to attention, click their heels, salute, and do as they’re told by Washington. As a result, their taxpayers will pay for US weapons although less costly and more efficient systems could be acquired elsewhere. And it is the ordinary people who’ll have to shell out for US shale gas shipped by sea instead of the much cheaper supplies coming from Russia. It’s just as simple as that. European taxpayers will have to pay for this “America First” policy unless the governments of such European states as Germany and Austria stand tall and refuse to bow to pressure.
END
A terrific commentary on what to expect on the upcoming trade wars.
a must read…
(courtesy Mish Shedlock/Mishtalk)
Two Days To Trade Wars: Can Stupidity Be Avoided?
Authored by Mike Shedlock via MishTalk,
US steel and aluminum tariffs start Friday. Germany’s economy minister is in D.C. But Trump has stringent demands.
No one wins trade wars. The notion is ludicrous.
I have more on the “meaning of win” in a moment. But first let’s consider the Eurointelligence view.
This is not a trade war the EU can ever win, as Wolfgang Munchau points out in his FT column. If the EU were to put up a big fight over this, with a long list of sanctions on Friday, the US would immediately respond with a tariff on car imports. It would be the equivalent of the Fool’s Mate in chess, Munchau argues. Donald Trump is right in his assertion that trade wars are easy to win – if your opponent is sufficiently desperate and addicted to the export of manufactured goods, like Germany is. When we said that a current account surplus of 8% (or probably higher) is not sustainable, it was not meant as a statement of right or wrong. Unsustainable means that it will end at some point – through either adjustment or force.
Spiegel magazine had a story over the weekend that there is a glimmer of hope. It was one of those short Spiegel news stories, something they picked up from a single source, but not quite worthy of a full-length article. The story says the US will make three specific demands as a pre-condition for exempting the EU from the steel and aluminium tariffs. The first is that the EU caps steel output at 2017 levels. The story did not reveal the metric, whether in volume or value. The second is that the EU take anti-dumping measures against China, and agrees to cooperate with the US in questions of international trade policy. And, to top it all, the Europeans will have to deliver proof that they are on the way to meeting their Nato commitments on defence spending. The latter is an impossible demand to meet since no such proof can exist. The German grand coalition, for example, is making no efforts to increase defense spending. The priority of the new finance minister, Olaf Scholz, is to maintain the fiscal surplus.
OK, Where’s the Win?
Eurointelligence never explained how this magical “win” occurs.
Instead, Eurointelligence linked to a report by Brad Setser: Forming an Alliance With U.S. Allies Against Bad Chinese Trade Practices Won’t Be Enough to Bring the Trade Deficit Down.
There are growing calls for a global coalition of U.S. allies to pressure China to change some of its most egregious commercial practices.
That makes some sense [Mish – actually it makes zero sense – explained later], even if it is much easier said than done. It is relatively simply to get agreement that China should change many of its policies. But China doesn’t typically respond to peer pressure alone. It is relatively hard to get agreement on what to do if China doesn’t change voluntarily.
After a useless diversion into complaints about China, Setser admits this interesting tidbit:
China’s current account surplus is well below that of the Eurozone. Or that of Japan. [Mish – It’s simply high with the US].
Even at 2.5 percent of China’s GDP, it is smaller, relative to China’s GDP than the current account surpluses of the United States’ security allies.
U.S. allies generally have much tighter fiscal policies than China. That’s a big reason why they run larger current account surpluses than China. [Mish – Not really – the reason is that Nixon closed the gold window and this is the logical result.]
Korea and Taiwan (and neutral Switzerland) also put their finger on the foreign exchange market when needed to keep their currencies weak (Korea rather egregiously in January).
As a result, the combined current account surplus of U.S. allies in Europe and Asia is close to $800 billion—well over China’s roughly $200 billion. That sum would be a bit bigger if you added in the surplus of democratic but formally non-aligned European countries like Sweden and Switzerland.
A China that behaved better commercially would no doubt help many companies. And if China lowered barriers to actual imports, overall trade with China might expand. But better commercial practices on their own aren’t enough to assure a smaller Chinese trade surplus. [Mish – On that I strongly agree with Setser]
So long as Asia and Europe’s aggregate surplus remains high, someone in the world will still need to run a large external deficit, and odds are that will still be the United States. [Mish – Once again this is a mathematical necessity!]
In Dollar Terms
See the Problem?
The US has its biggest trade deficit with China, but globally the imbalance is with Germany and Japan.
Placing tariffs in Chinese steel will so nothing but make the US more uncompetitive on exports.
Averting a Trade War
To stave off the trade war, assuming Trump sticks to his guns, the EU needs to do these three things.
- EU caps steel output at 2017 levels.
- EU takes anti-dumping measures against China, and agrees to cooperate with the US in questions of international trade policy.
- EU must deliver proof that they are on the way to meeting their Nato commitments on defence spending.
If not, we have a trade war.
Easy to Win
Wolfgang Munchau say In a Trade War Germany is the Weakest Link and “If your target is Germany, then yes, a trade war is easy to win.”
Munchau bases his opinion on the idea that the EU, Germany in particular, is very dependent on exporting cars at a time when Germany’s diesel technology is on the verge of being worthless.
Brexit poses an additional threat as Germany is a huge net exporter to the UK.
Here’s Munchau’ conclusion: “This trade war is indeed easy to win. It is going to be the equivalent of the fool’s mate in chess: the game could all be over in two moves.”
Meaning of Win
What does it mean to “win” a trade war?
Donald Boudreaux at the Cafe Hayek explains in his post: An Oxymoron to Beat All Oxymorons.
No two human activities are as opposite one another as are trade and war. Trade is voluntary; war is coercive. Trade is peaceful; war is violent. Trade enriches; war impoverishes.
Trade is a mutually advantageous exchange of property rights; war is a bilateral destruction and confiscation of property rights – destruction and confiscation that never are mutually advantageous and that too often, in the end, are advantageous to no one.
When trading, each party improves his welfare only by attending to, and enhancing, the welfare of others; when warring, each party improves his welfare only by attacking, and diminishing, the welfare of others. Those who trade with each other have an interest in each other’s well-being; those who war against each other have an interest in each other’s annihilation. Trade enhances life; war ends life.
What are called “trade wars” are indeed wars, but they involve only war and no trade. Every so-called “trade war” is each government making war on its own citizens, coercing them not to trade as they would otherwise peacefully trade.
The term “trade war” makes no more sense than do the terms “good evil” or “peaceful violence.” We should stop using it. We must find a better term to describe governments’ waging war upon those of their own citizens who dare to trade with others.
Curious Way to Win
As Munchau, Trump, and Peter Navarro (Trump’s trade guru) see things, it is remarkably easy for Trump to win.
In reality, the only way to win is to not play the game at all.
Please reflect on this: Shall we play a game?
Oil and gasoline on a tear this morning after another surprise crude drawdown. Production is still at new record highs.
(courtesy zerohedge)
WTI/RBOB Extend Gains After ‘Surprise’ Crude Draw; Production New Record High
WTI/RBOB extended yesterday’s gains this morning, after bullish API data, and continued higher after DOE data confirmed the surprise crude build and decent sized product draws. Production rose to a new record high.
A “tidal wave” of bullish news – including falling oil stockpiles following winter and after seasonal refinery maintenance, possible U.S. sanctions on Iran and Venezuela, as well as sustained OPEC-led output curbs – is seen hitting the market in the not-so-distant future, Bloomberg reports that FGE said in a note.
Bloomberg Intelligence Energy Analyst Fernando Valle noted that domestic demand for refined petroleum products has been well above expectations for 2018, confounding fears of macroeconomic headwinds. Inventories should continue to decline, supporting higher crack spreads ahead of the peak summer season.
API
- Crude -2.739mm (+3.25mm exp)
- Cushing +1.644mm (-200k exp)
- Gasoline -1.063mm
- Distillates -1.926mm
DOE
- Crude -2.62mm (+3.25mm exp)
- Cushing +905k (-200k exp) – biggest build since Oct 2017
- Gasoline -1.69mm (-2.5mm exp)
- Distillates -2.02mm (-2.3mm exp)
Cushing stocks rose 905k barrels – the biggest weekly rise since Oct 17 but crude’s surprise build (confirming API) and product draws were seen as bullish…
Cushing stockpiles are more than 46% below the average as crude extends a secular move to export facilities, but Cushing stocks are starting to find a bottom.
Of course, all eyes remain on production as US shale dominates Saudi hopes and prayers, and it rose once again to a new record high (up 26k b/d to 10.407mm b/d)
The specter of conflict involving giant producers is jolting prices, which have traded in a tight range since February, and last night’s positive API data helped, and along with DOE’s inventoiry draws sent prices higher once again…
“The possibility of new sanctions on Iran has been the main issue in recent days,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt told Bloomberg. “Oil sanctions against Iran would have a greater impact in an undersupplied market than in an oversupplied one.”
Will China’s New Oil Futures Flop?
Authored by Irina Slav via OilPrice.com,
This week will see a historic event: on March 26, trading will begin in yuan-denominated crude oil futures contracts on the Shanghai International Energy Exchange. The futures launch is historic because it will be the first time that foreign traders will have access to a Chinese commodity market. It is also historic because the yuan oil futures have been in the making for years, but have been delayed time and again.
Many investors are eagerly awaiting the chance to tap China’s booming commodity markets, but Beijing is going about the launch with extra caution after in 1993 its first attempt at oil futures flopped within a year because of uncontrollable price volatility.
China last year became the world’s top oil importer, and this year it will likely keep the crown. The time is as ripe as it will ever be for the launch of the futures, and China is now trying to make sure that volatility will not be excessive. This, however, could compromise the success of the futures.
The approach Beijing has chosen is through increasing the cost of oil storage to discourage pure-play speculators from flooding in the market and unleashing price volatility that could spell doom for the brand-new contracts. Bloomberg reports that these will be set at about US$0.95 per barrel per month. This compares with US$0.05-0.07 per barrel per month for storage capacity at Louisiana’s Offshore Oil Port. The international storage cost averages US$0.25-0.50 per barrel per month.
Such high storage costs will almost certainly discourage speculators such as prop traders and hedge funds from tapping the new yuan-denominated contract, all the more so in light of the fact that the nearest-term contract to be launch on March 26 is for delivery in September.
Yet these high costs, which could exceed US$1 per barrel per month when you add financing costs, could discourage even legitimate investors.
“High storage costs could prevent the necessary arbitrage between cash and futures markets, which further significantly reduces the price discovery function of the contract.
“Without a good price discovery function, no futures contracts can eventually be successful,” J.P. Morgan research director Jian Yang told Bloomberg.
It is obviously a question of priorities. China wants these futures because of the vibrant oil trade going on in the world’s largest importer of the commodity. What it doesn’t want is excessive volatility, which has become the mark of Chinese commodity markets in recent years as trading becomes a national sport for the Chinese.
Already a trading band of 5 percent on either side has been set for the oil futures, with 10 percent on either side for the first trading day. Margin has been set at 7 percent. There is no doubt that regulators are ready to step in without delay should the new market start to exhibit any signs of a bubble. All seems set for the launch.
It looks like the authorities have done what they can to cap the volatility potential, but only time will tell if the bigger goal could be achieved: displacing the dollar as the one and only petrocurrency in the world, part of Beijing’s strategy of advancing the country’s global influence by making the yuan an international currency.
8. EMERGING MARKET
END
Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings WEDNESDAY morning 7:00 am
Euro/USA 1.2277 UP .0029/ 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 MIXED
USA/JAPAN YEN 106.34 UP 0.370 (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 1.4063 UP .0059 (Brexit March 29/ 2017/ARTICLE 50 SIGNED/BREXIT FEES WILL BE CAPPED
USA/CAN 1.3011 DOWN .0062 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/(TRUMP INITIATES LUMBER TARIFFS ON CANADA/CANADA HAS A HUGE HOUSEHOLD DEBT/GDP PROBLEM)
Early THIS WEDNESDAY morning in Europe, the Euro ROSE by 29 basis points, trading now ABOVE the important 1.08 level RISING to 1.2277; / Last night Shanghai composite CLOSED DOWN 9.69 OR 0.29% / Hang Sang CLOSED DOWN 135.41 POINTS OR 0.43% /AUSTRALIA CLOSED UP 0.20% / EUROPEAN BOURSES MIXED
The NIKKEI: this WEDNESDAY morning CLOSED HOLIDAY
Trading from Europe and Asia:
1. Europe stocks OPENED STEADY BUT MIXED
2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 135.41 POINTS OR 0.43% / SHANGHAI CLOSED DOWN 19.69 OR 0.29% /
Australia BOURSE CLOSED UP 0.20% /
Nikkei (Japan)CLOSED HOLIDAY
INDIA’S SENSEX IN THE GREEN
Gold very early morning trading: 1315.15
silver:$16.25
Early WEDNESDAY morning USA 10 year bond yield: 2.8977% !!! UP 1/2 IN POINTS from TUESDAY night in basis points and it is trading WELL ABOVE resistance at 2.27-2.32%. (POLICY FED ERROR)/
The 30 yr bond yield 3.1251 UP 1/2 IN BASIS POINTS from TUESDAY night. (POLICY FED ERROR)/
USA dollar index early WEDNESDAY morning: 90.15 DOWN 21 CENT(S) from TUESDAY’s close.
This ends early morning numbers WEDNESDAY MORNING
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And now your closing WENESDAY NUMBERS \1 PM
Portuguese 10 year bond yield: 1.760% UP 3 in basis point(s) yield from TUESDAY/
JAPANESE BOND YIELD: +.0.043% UP 0 in basis points yield from TUESDAY/JAPAN losing control of its yield curve/
SPANISH 10 YR BOND YIELD: 1.335% UP 3 IN basis point yield from TUESDAY/
ITALIAN 10 YR BOND YIELD: 1.932 UP 3 POINTS in basis point yield from TUESDAY/
the Italian 10 yr bond yield is trading 60 points HIGHER than Spain.
GERMAN 10 YR BOND YIELD: RISES TO +.591% IN BASIS POINTS ON THE DAY
END
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IMPORTANT CURRENCY CLOSES FOR WEDNESDAY
Closing currency crosses for WEDNESDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/1:00 PM
Euro/USA 1.2265 UP .0017 (Euro UP 17 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/
USA/Japan: 106.31 UP 0.348 Yen DOWN 35 basis points/
Great Britain/USA 1.40690 UP .0065( POUND UP 65 BASIS POINTS)
USA/Canada 1.2962 DOWN .01132 Canadian dollar UP 113 Basis points AS OIL ROSE TO $65.19
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This afternoon, the Euro was UP 17 to trade at 1.2265
The Yen FELL to 106.31 for a LOSS of 35 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 65 basis points, trading at 1.4069/
The Canadian dollar ROSE by 113 basis points to 1.2962/ WITH WTI OIL RISING TO : $65.19
The USA/Yuan closed AT 6.3232
the 10 yr Japanese bond yield closed at +.043% DOWN 3/10 IN BASIS POINTS / yield/
Your closing 10 yr USA bond yield UP 1./2 IN basis points from TUESDAY at 2.8996% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 3.1251 UP 1/2 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,90.18 DOWN 18 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 WEDNESDAY: 1:00 PM EST
London: CLOSED DOWN 22.73 POINTS OR 0.32%
German Dax :CLOSED DOWN 1.54 POINTS OR 0.01%
Paris Cac CLOSED DOWN 14.57 POINTS OR 0.28%
Spain IBEX CLOSED DOWN 50.50 POINTS OR 0.52%
Italian MIB: CLOSED UP 10.52 POINTS OR 0.05%
The Dow closed DOWN 44.96 POINTS OR 0.19%
NASDAQ WAS DOWN 19.02 Points OR 0.26% 4.00 PM EST
WTI Oil price; 65.19 1:00 pm;
Brent Oil: 69.15 1:00 EST
USA /RUSSIAN ROUBLE CROSS: 57.26 DOWN 31/100 ROUBLES/DOLLAR (ROUBLE HIGHER BY 31 BASIS PTS)
TODAY THE GERMAN YIELD RISES TO +.591% 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:$65.43
BRENT: $69.71
USA 10 YR BOND YIELD: 2.8812% THIS RAPID ASSENT IN YIELD IS VERY DANGEROUS/DERIVATIVES START TO BLOW UP/
USA 30 YR BOND YIELD: 3.1088%/
EURO/USA DOLLAR CROSS: 1.2343 UP .0094 (UP 94 BASIS POINTS)
USA/JAPANESE YEN:105.96 UP 0.012/ YEN UP 1 BASIS POINTS/ very dangerous as yen carry traders are getting killed/yen continues to rise despite the NYSE rising. however gold is now breaking away from yen influence.
USA DOLLAR INDEX: 89.64 DOWN 73 cent(s)/dangerous as the lower the dollar the higher the inflation.
The British pound at 5 pm: Great Britain Pound/USA: 1.4143: UP 0.01395 (FROM LAST NIGHT UP 140 POINTS)
Canadian dollar: 1.2899 UP 175 BASIS pts
German 10 yr bond yield at 5 pm: +0.591%
VOLATILITY INDEX: 1780 CLOSED down 0.40
LIBOR 3 MONTH DURATION: 2.25% ..DANGEROUS LIBOR RISING EVERY DAY
END
And now your more important USA stories which will influence the price of gold/silver
TRADING IN GRAPH FORM FOR THE DAY
Gold Spikes As Hawkish Powell Sends Dollar, Bond Yields, & Stocks Lower
And it’s gone…
The biggest post-Powell winner was gold…
Stocks drifted higher ahead of The Fed, but Powell’s initial hawkish tone sent stocks lower – into the red for the day initially – but the machines quickly bid the dip… However, that did not hold…
Bloomberg’s Andrew Cinko points out a potentially bearish signal for the S&P 500: this week it has broken out of the “quintessential no man’s land” triangle pattern. Today’s Fed decision gave more clarity on this pattern. This breakout could be a false alarm or could be the start of a more lasting downturn.
“Until/unless 2,745 can be regained on at least consecutive hourly closes, preferably a daily close, trends remain bearish” and it’s right to expect further selling post the Fed meeting, Newton Advisors wrote today in a note.
Facebook bounced on the day but it was purely technical ramp to run stops at 200-day moving average…
The initial reaction from the FOMC statement was to sell the dollar and bonds but ince the press conference started, bonds were bid and the dollar sank further…
Treasuries roundtripped dramatically after Powell started speaking… Despite The Fed hiking the rates trajectory over the next two years, 2Y yields dropped notably (steepening the 2s30s curve)…
With 10Y yields ending lower on the day…
The dollar’s Powell-plunge took it back to its lowest since Feb 26th… and he was hawkish!
All commodities were higher on the day with crude soaring above $65 (after bullish inventories data) and a weaker dollar…
But, as The Dollar sank, gold surge back above $1335 (above its 50DMA)…
WTI jumped to 6-week highs…
Cryptos were mixed on the day with no big news catalyst, but Bitcoin remains up 5% from Friday’s close…
END
USA data release this morning
Mixed bag this morning: a little bounce from last month’s fall in existing home sales but Condo sales still slump
(courtesy zerohedge)
Existing Home Sales Bounce In February But Condo Sales Slump
After two straight months of ugliness in all housing data, existing home sales in February bounced modestly, now up 1.1% year-over-year as median home prices jumped 5.9% year-over-year.
Existing home sales rose 3.0% MoM (vs +0.4% exp and -3.2% prior) to a 5.54mm SAAR.
Single-family home sales increased 4.2 percent last month to an annual rate of 4.96 million. Purchases of condominium and co-op units declined 6.5 percent to a 580,000 pace (down 4.9% YoY – the worst since Sept 2014)
However, the inventory of available properties plunged 8.1% YoY to 1.59mm, the lowest for February in data going back to 1999.
While purchases rose 11.4%MoM in The West, The NorthEast saw a 12.3% MoM plunge in sales (blamed on weather)
“There’s no letup in home-price growth, another testament to the solid, strong housing demand in the marketplace,” Lawrence Yun, NAR’s chief economist, said in a conference call with reporters.
“If prices were weakening that may be signaling a possible turning point but we are not really seeing that.” Inventory conditions remain “very tight,” he said.
However, it’s not been a pretty start to 2018 for US housing data as the Hurricane/Flood bump fades…
end
Trading noon time:
The following is extremely important. You will recall me telling you that the huge increases in Libor and its sister Libor-OIS is playing havoc with our banks. The chief culprit to the rise in Libor is the disappearance of USA dollars especially form Europe. Trump has given tax breaks so companies can repatriate their dollars back into the USA. The problem is that banks have levered those dollars hundreds times over and when you remove those dollars the banks are left with a bagful of derivatives with nothing backing them.
this is the reason we are witnessing a huge rise in Libor and that is causing Hibor to rise (Hong Kong Interactive bank) as well Australia
Two commentaries on this subject
(courtesy zerohedge)
Bank Credit Risk Flashes Red As Libor-OIS Spike Spooks Global Funding Markets
The last few days have seen the credit risk of the world’s largest prime brokers (and SIFIs) cracking wider, breaking above key technical levels and trendlines, to their widest (most risky) level in six months.
And on average, the big financial firms are at six-month wides, breaking downtrends and critical technical resistance…
This is happening as US financial stocks rebound hopefully (despite a collapsing yield curve), completely ignoring the fact that the market is pricing their business risk in the credit markets dramatically deteriorating...
And it is becoming very clear that the blowout in Libor-OIS that we have been detailing…is starting to spread contagiously into bank credit risk as short-term funding stress sparks a lagged response…
The move will not come as a surprise to regular readers, as we have been covering it extensively since late 2017:
- Why US Tax Reform Will Put Even More Pressure On Dollar Funding Markets
- Libor-OIS Blowing Out On Rising Repatriation Concerns, Collapsing Front-End Funding
- Libor-OIS Contagion: As Spread Blows Out, It Starts To “Infect” Other Markets
- Libor-OIS Blows Out As Libor Rises Above 2% For The First Time In 10 Years
However, while the overall move wider was expected, the speed of the blow out has taken most analysts by surprise, and the result has been a scramble to explain not only the reasons behind the move, but its sharp severity.
While this is a simplification of the various catalysts behind the spike in Libor-OIS, here is a quick summary of what is going on – the expansion of Libor-OIS and basis swaps have been impacted by a complex array of factors, which include:
- an increase in short-term bond (T-bill) issuance
- rising outflow pressures on dollar deposits in the US owing to rising short-term rates
- repatriation to cope with US Tax Cuts and Jobs Act (TCJA) and new trade policies, and concerns on dollar liquidity outside the US
- risk premium for uncertainty of US monetary policy
- recently elevated credit spreads (CDS) of banks
- demand for funds in preparation for market stress
In recent posts (see above) we have taken a detailed look at each of these components, of which 1 thru 3 are the most widely accepted, while bullets at 4 through 6 are within the realm of increasingly troubling speculation, and suggest that not all is well with the market, in fact quite the contrary.
This is not going to end well.
But it’s not just affecting US markets. As Bloomberg reports,the surge in Libor is impacting funding markets worldwide.
From Riyadh to Sydney, short-term funding markets worldwide are starting to feel the effects of soaring U.S. dollar Libor rates.
Mideast Ripple
Libor’s rise is complicating Saudi Arabia’s efforts to stem the risk of capital flight as the Fed is poised to continue raising rates.
Asia Impact
Rising Libor is also fueling uncertainty surrounding Hong Kong’s peg to the U.S. dollar. The benchmark is 117 basis points above Hong Kong’s interbank offered rate, or Hibor, the widest gap since 2008.
The increase has pushed the local currency to the weak end of its band versus the dollar, spurring speculation the Hong Kong Monetary Authority will step in.
Down Under Too
The leap in Libor is also being felt in Australia’s financing markets. It’s made overseas borrowing more expensive for the country’s banks, which could push up domestic issuance, TD strategist Prashant Newnaha said in a note last week.
As a result, short-term funding costs for Australian banks are set for their biggest monthly increase since 2010.
* * *
The key is whether rising Libor rates will fuel a funding crisis – something we have been worrying about all year (as we detailed above with the blowout in the Libor-OIS spread)…
“We usually don’t see this kind of divergence in rates without some sort of credit issue,” said Margaret Kerins, head of fixed-income strategy at BMO Capital Markets Corp., referring to Libor’s rise versus OIS.
“At what point does all this become damaging and how far does it go? That is the issue.”
It appears to be damaging now..
“There has been sort of the perfect storm of factors tightening financial conditions,” said Russ Certo, head of rates at Brean Capital in New York.
“Banks do have tremendous liquidity still, but it’s at a higher price.”
But, but, but… “fortress balance sheets”?
end
Morgan Stanley: “Soaring Libor Is The Story Of The Year, Not The Fed”
We’ve been saying it for over a month: the most important, if widely underappreciated, factor for risk assets has been the surge in Libor and the blow out in the Libor-OIS spread, or short-term funding costs, which impacts everything from bank lending costs to the marginal cost of trillions in floating rate debt.
Yesterday, Citi’s Matt King confirmed as much in a lengthy note explaining why the blowing out Libor, and Libor-OIS spread, are sending increasingly ominous signals:
LIBOR is still the reference point for the majority of leveraged loans, interest-rate swaps and some mortgages. In addition to that direct effect, higher money market rates and weakness in risk assets are the two conditions most likely to contribute towards mutual fund outflows. If those in turn created a further sell-off in markets, the negative impact on the economy through wealth effects could be greater even than the direct effect from interest rates. (Harvey: wealth effect lower due to rates which gives rise to lower valuations on assets)
Now, another bank has joined the growing chorus of warnings over the soaring Libor and Libor-OIS.
Jonathan Garner, Morgan Stanley’s Chief Strategist for Asia and Emerging Markets , told Bloomberg that the rising Libor rates is a bigger concern right now than a more hawkish Federal Reserve, and in fact, is “the story of the year.”
As we have documented nearly daily, most recently yesterday, Libor has been rising since Feb. 7 for 31 consecutive sessions, reaching 2.2711% this morning, the highest since 2008. Meanwhile, its gap over risk-free rates, known as the Libor-OIS spread, has more than doubled since the end of January to 55.6 basis points, a level unseen since 2009.
“That’s a key reason why markets have struggled. The acceleration in the private borrowing market is the story of the year, not the Fed,” Garner told BloombergQuint in an interview.
What I think is really interesting is that in the private, LIBOR markets, the USD Libor has already moved far more aggressively than Fed Funds, so if you look at 6M USD Libor, it’s actually reached 2.375% whereas the Fed is likely to raise Fed Funds by a quarter of a point to 1.75%, so we’ve actually already for the interest rate that really determines corporate costs are experiencing a very significant increase in interest rates. So unless the Fed is in some ways super dovish, I think we’re already looking at a significant tightening of monetary policy in the US and in addition China is tightening monetary policy at the same time and this joint tightening is a key reason why we are so cautious on markets.
To those who say that all that matters today is whether the Fed is hawkish or dovish, and whether it suggests 3 or 4 hikes for 2018, Garner counters that “it’s not actually the Fed that’s in the driver’s seat in relation to corporate costs of funding. The Dollar Libor markets, which is actually where corporates borrow, have already moved to 2.375% for 6 month money and that’s a key reason why markets have struggled, because the acceleration and the tightening up of private markets is the story of the year, not the Fed.”
What does that mean for global markets?
Our thesis for the year was a rougher ride and we had a number of things we’re concerned about, the reduction in the Fed’s balance sheet and actually the fiscal easing in the US is probably one of the reasons why private money markets are getting so tight. There’s some evidence that the Treasury Bill issuance is actually crowding out private borrowers to some extent and at the same time we have exceptionally high valuations for non-financials part of global equities, and overly optimistic earnings expectations.
Garner concludes by echoing what Morgan Stanley’s chief economist, Mike Wilson, said on Monday: “this sets us up for a market which we are pretty sure reached its highs for the year in the euphoria of the third week of January and the rest of the year is quite simply going to be a tough market.”
It could get much worse: not only does Libor tend to be a 3-month leading indicator to the dollar, which as Citi showed yesterday would mean a surge in the USD, sending shockwaves across global risk markets…
… but just as concerning is that the global funding shortage indicated by the soaring Libor-OIS is finally hitting financial credit risk, and as we showed earlier today the IG OAS is once again moving wider…
… while bank CDS have spiked to 6 month wides.
But the worst aspect of this sharp tightening in financial conditions is that virtually nobody has a coherent explanation what is causing it, or what the outcome will be: “We usually don’t see this kind of divergence in rates without some sort of credit issue,” said Margaret Kerins, head of fixed-income strategy at BMO Capital Markets Corp., referring to the surge in Libor-OIS. “At what point does all this become damaging and how far does it go? That is the issue.”
We conclude with a quote from Brean Capital’s Russ Certo: “There has been sort of the perfect storm of factors tightening financial conditions.”
end
FOMC results 2 pm
Rather dovish!
(courtesy zerohedge)
Powell Pops His Cherry: Raises By 25bps, Signals 2 More Hikes In 2018 But Raises Rate Trajectory For 2019
Stocks and bond yields are higher ahead of today’s historic first-non-economist-run FOMC meeting as anxious eyes were focused on how hawkish or dovish Powell’s fully-priced-in rate-hike would be.
Headlines:
- *FED RAISES RATES QUARTER POINT, SIGNALS TWO MORE HIKES IN 2018
- *FED ESTIMATES SHOW STEEPER PATH FOR RATE INCREASES IN 2019-20
- *FED SAYS `ECONOMIC OUTLOOK HAS STRENGTHENED IN RECENT MONTHS’
The Fed’s language seemed to downgrade the economic outlook...
“economic activity has been rising at a moderate rate”
They replaced “solid rate” with “moderate rate”
And they shifted from “Gains in employment, household spending, and business fixed investment have been solid,” to “Recent data suggest that growth rates of household spending and business fixed investment have moderated from their strong fourth-quarter readings.”
The Key Issues heading in were as follows…
- Will there be 3 or 4 hikes for 2018 and whether 2019 will shift to a more hawkish 3 (all derived from the dot plot)?
- Will economic projections be upgraded? (Likely mostly GDP and the unemployment rate, not inflation.)
- Does The Fed hint at faster pace of tightening in outer years? (or are we already near the terminal rate)
And the answers…
- Fed will hike 3 times in 2018 – as most had expected – but raises number of hikes in 2019 to 3 from 2.
The reason for that is while 4 FOMC members were needed to raises their the median dot, only three did so, and there were 13 of 15 fed dots at 3 or more 2018 hikes vs 10 of 16 in dec.
- Fed sees median 2018 gdp growth est. rises to 2.7% vs 2.5% dec. est.
- Fed sees unemployment at 3.8% in 4q 2018 vs 3.9% dec. est.
- But, somewhat dovishly, the Fed kept its median core pce inflation unchanged at 1.9% for 2018
Here are the economic projections:
3 hikes (total including today) for 2018…2018 2.125% (range 1.625% to 2.625%); prior 2.125%
- 3 hikes for 2019 (up from 2) – 2019 2.875% (range 1.625% to 3.875%); prior 2.688%
- 2 hikes for 2020 (up from 1) – 2020 3.375% (range 1.625% to 4.875%); prior 3.063%
- Longer Run 2.875% (range 2.250% to 3.500%); prior 2.75%
Comparing the December to March dots shows that someone went hog wild with their 2020 dot projections:
With regard the economic projections, Bloomberg reminds readers that when Fed officials last published forecasts, after their December meeting, they still didn’t have the full details on the contours of the tax legislation that would be passed later in the month. They also didn’t know about the bigger-than-expected spending package that came in February.
The Wind at Their Backs (at least for now): Evolution of 2018 Consensus Forecasts for CPI, GDP & Fed Funds Target
Commenting on the statement, Renaissance Macro’s Neil Dutta notes that the Fed came out largely neutral, which is “not really hawkish”
“next year, the median FOMC official sees a slight overshoot on inflation (+0.1ppt) another 0.3ppt drop in the unemployment rate and just one more rate hike. That’s somewhat less than you’d expect in a standard Taylor Rule type model. That is not really hawkish, in my view. Buy stocks. Buy front end.”
* * *
Bear in mind that expectations for Q1 GDP have been tumbling…
There remains a hawkish tilt to The Fed (if historical tendencies are to be believed)…
And notably, Bloomberg reports that most economists believe the risks are rising for higher-than-expected growth and inflation. About three-fourths of respondents said those risks now pointed to the upside, up from 63 percent in December.
* * *
Since The Fed last hiked rates in December, financial conditions are actually tighter (thanks to February’s chaos). This is the first post-rate-hike tightening in financial conditions since The Fed started hiking in Dec 2015…
And as financial conditions tightened, gold has been the leading asset-class (as the dollar sank)…
Since The Fed hiked rates 30Y Yields are up 35bps and the rest of the curve is up 55-60bps as the yield curve has flattened dramatically…
And shifting to The Fed’s so-called normalization of its balance sheet… it seems like it keep adding to the balance sheet when stocks drop?
Ahead of the statement, the market is pricing in 3.1 rate-hikes in 2018…
In fact, the probability of 4 rate-hikes this year has surged in the last week to 33.5% – its highest yet…
Finally we note, as UBS ‘warns’…
“For the first time since the US Fed’s independence, the rate setting committee will be presided over by someone who is not an economist – but a lawyer.
In 1923, the German Reichsbank was presided over by someone who was not an economist – but a lawyer”
end
And now onto the press conference: as Powell baffles them with bulls*^&t.
banks rise, bullion rises, bond yields jump but the dollar falls:
Banks, Bullion, & Bond Yields Jump As Hawkish Fed Sends Dollar Lower
Baffle ’em with bullshit is working…
The Fed hawkishly raised its rate-hike trajectory, raised GDP growth expectations, left the inflation outlook alone, but talked down the economic outlook in its statement – Powell has some ‘splaining to do.
The Dollar index is lower (hawkish Fed statement) and bond yields only marginally higher…
The yield curve steepened…(Harvey; helps banks)
Banks are surging along with gold and The Dow…
And all the major equity indices love it…
Real Rates Spike To Highest Since Sept 2013 ‘Taper Tantrum’ Highs
While the dollar index has rebounded back to almost unchanged, Treasury yields, and most critically real-yields, are spiking. 10Y real yields have jumped above the critical 80bps level… (taking out early Feb highs today post-Fed)
To their highest since the peak of 2013’s post-taper-tantrum swing…
Remember, a month ago, Morgan Stanley was warning that the run-up in real yields was a more negative signal for stocks than higher nominal yields. We’re not there yet, but a breakout above the 80bps level — on the back of fourth-hike rhetoric today — would be bad news for U.S. equities
end
Powell provides a garbage explanation as to why the 2018 inflation forecast was unchagede
(courtesy zero hedge)
Powell Explains Why The 2018 Inflation Forecast Was Unchanged
One of the big dovish surprises, just like in the December FOMC meeting, was that even as the Fed raised its economic outlook by increasing its GDP and employment projections, it kept its PCE inflation projection flat for 2018 vs December, upgrading it only for 2019 and 2020 by 0.1% to 2.1%
And, predictably, this was the first question asked. Powell’s response was modestly elusive saying Inflation remains below 2% long-run objective and that the shortfall partly reflects unusual price declines, in other words he expects it to rise as one-time factors drop out of the calculation.
Powell also confirmed the Fed’s “symmetric” inflation target and repeated the Fed’s core view that transitory factors – such as cell phone plans which will no longer have a Y/Y impact next month – explain inflation:
“In coming months as those earlier declines drop out of the calculation, inflation should move up closer to 2 percent and stabilize around that level over the medium term. Various forces will continue to affect inflation, at times it may be above 2 percent, just as at times it may be below. Our inflation objective is symmetric in the sense that we are trying to prevent persistent deviations from 2 percent in either direction.”
Powell also warned against hiking too slowly or too fast, noting that the outcome in either case could be adverse, and in the former case would lead to aggressive tightening down the line.
The Fed chair also said that he wouldn’t say he “tolerated an undershoot of the inflation goal” and that the Fed will always be seeking 2% inflation.
And to nudge the dovish case, he noted that there is “no sense in the data” that inflation is about to run away.
Ironically, as he said that equities were sliding and are now red.
end
The Onnibus 1.3 trillion spending bill is nearing compromise but still elusive
(courtesy zerohedge)
Congress Reportedly Nearing Compromise On $1.3 Trillion Omnibus Spending Bill
After GOP leaders announced that they would hold a House vote on their $1.3 trillion omnibus spending bill on Monday, before postponing it to Tuesday (and then postponing it against to Thursday), Bloomberg is reporting that lawmakers remain deadlocked on several major issues that they’d hoped to resolve with what would be the first long-term spending bill of the Trump era.
However, one encouraging breakthrough was reported early Wednesday morning when a source close to the leadership told CNBC that Democrats and Republicans had reached an agreement on several key issues, including $1.6 billion in border security spending, as well as funding for opioid abuse treatment, a tunnel under the Hudson River connecting New York City and New Jersey, and nearly $400 million for electronic voting security measures.
While aides said a deal is near, the two parties have reached tentative “agreements” in the past, only to see them unravel, sometimes in the middle of a vote
Lawmakers are still fighting over DACA, provisions reinstating federal cost-sharing payments to insurance companies and other key issues. It’s also unclear whether the President supports the border security package and funding for the NYC tunnel, something he vehemently opposes.
A continuing resolution passed in February (the fifth of the Trump era) expires at the end of the day Friday. And given the delays, it’s looking like the vote won’t happen until late Friday evening, at the earliest – giving the Senate little time to react.
Given that Congressional leaders of both parties have swatted away questions about another shutdown, it’s possible that lawmakers would agree on another bare-bones stopgap bill if a breakthrough on the omnibus bill remains elusive.
Lawmakers may be required to work through the weekend to prevent federal agencies from shutting down in earnest when offices reopen on Monday – meaning they may need to delay the beginning of a two-week break.
“We’re going to do it this week,” Senate Majority Leader Mitch McConnell said Tuesday. “And as long as that takes, that’s the time we’ll put in to get there.”
During the most recent budget debate, the government technically shut down at 12:01 am Eastern Time on Saturday – the second shutdown in three weeks. After that, Congressional leaders struck a deal to fund the government through March 23, while also setting up an agreement in principle for a two-year budget.
Lawmakers are already hinting that this budget battle will also end in a stalemate.
“What will it take to get this done? Exhaustion,” said Pennsylvania Republican Charlie Dent, a member of the House Appropriations Committee.
CNBC points out that a Nor’easter headed up the East Coast could complicate negotiations as roads and government services shut down. The National Weather Service has issued a winter storm watch for the Washington region until Wednesday night. Already, federal offices have closed due to the weather.
Mark Meadows, the leader of the conservative Freedom Caucus, told reporters that the time-line budget items had already been agreed to – something he described as “the hard part.”
“I’m not in favor of those numbers, because it grows the size of government by 13 percent,” he said. “But those numbers have been agreed to.”
A deal over preserving DACA, a top Democratic priority, remains elusive. President Trump recently tweeted again that Democrats “do not want to help DACA.”
The Democrats do not want to help DACA. Would be so easy to make a deal!
The omnibus bill, if passed and signed into law, would fund the federal government through the beginning of the next fiscal year.
end
The following is hugely positive for gold: the current account for the 4th quarter came in at a deficit of 128.2 billion vs 125.0 billion last yr. Q# 3 current account deficit was revised up another .9 billion dollars to 101.5 billion dollars
(courtesy USA government statistics)
US economic news:
08:30 Q4 US Current Account Balance ($128.2B) vs. consensus ($125.0B)
Q3 was revised to ($101.5B) from ($100.6B)
* * * * *
This is fascinating: the uSA has developed technology to blast drones out of the sky with lasers
(courtesy zerohedge)
Soldiers In Europe Are Laser-Blasting Drones Out Of The Sky
One of the United States Army’s main priorities is the development of a transportable war machine to counter short-range aerial defense threats, such as unmanned aerial vehicles (UAV).
For about fifteen years, the Army’s inventory of military machines to defend against low-altitude and medium-altitude threats have diminished, warned Barry Pike, the Army’s program executive officer for missiles and space. Last month, he addressed more than 100 at the Association of the Army’s ‘Hot Topics’ forum on air and missile defense in Arlington, Virginia.
According to the Army News Service, the Pentagon has enjoyed decades of air superiority over all potential adversaries; however, that is rapidly changing with the worldwide proliferation of drones. Over the years, Army officials have failed to develop and deploy new high-tech weaponry for short-range aerial threats, thus creating a massive gap in short-range defenses.
It is a race against time for the Army to plug the gap in short-range defenses…
Richard P. DeFatta, director, Future Warfare Center, U.S. Army Space and Missile Defense Command spilled the beans at last month’s forum on air and missile defense and told the audience that Army soldiers are conducting field training exercises with the first-ever practical laser weapon system in Europe.
As reported by Army Recognition, a select group of U.S. soldiers from the Field Artillery Squadron, 2nd Cavalry Regiment are actively testing the high-tech laser weapon, called the Mobile High Energy Laser (MEHEL) mounted on the M1126 Stryker armoured personnel carrier. The Stryker-mounted MEHEL is designed for short-range aerial threats, such as weaponized drones.
U.S. Soldiers from the Field Artillery Squadron, 2nd Cavalry Regiment are now equipped with newly developed laser weapon MEHEL mounted on 8×8 Stryker armoured vehicle. The Stryker with MEHEL 2.0 was presented for the first time on General Dynamics Land Systems booth during the AUSA exhibition in Washington D.C. in October 2016 equipped with a 5kW beam director.
The 5 kW laser project is part of the Mobile Experimental High Energy Laser. It represents an advance over a previous laser tested in 2016, and will lead into more powerful, longer ranging anti-drone, anti-missile laser systems. The Stryker-mounted MEHEL has proven to be extremely efficient in eliminating enemy drone targets, and its use in Europe will help the U.S. Army to assess emerging concepts, technologies and interoperability.
The MEHEL laser weapon is mounted on a Stryker (Picture source U.S. Army)
The Army has not released any additional information on the MEHEL trials in Europe, although, Army Recognition specifies the location of the test is in Grafenwoehr, Germany.
During a visit at the Grafenwoehr Training Area, Germany, March 6, 2018 by Maj. Gen. Wilson A. Shoffner, Fires Center of Excellence and Fort Sill commanding general, as well as Command Sgt. Maj. Carl Fagan, the senior enlisted advisor for Fires Center of Excellence and Fort Sill, U.S soldiers of the the Field Artillery Squadron, 2nd Cavalry Regiment have showcase their knowledge and their ability to operate the new weapon.
U.S. army artillery soldiers were eager to demonstrate all they have learned, and couldn’t contain their enthusiasm regarding the unique opportunity and extreme potential of the new weapon system.
Army Styker MEHEL laser test in Europe (source Task & Purpose)
MEHEL is a 5kW laser system mounted on a Stryker-armored fighting vehicle chassis and serves as the primary vehicle for research and development. The Army acknowledges that high-energy lasers are a “low-cost, effective complement to kinetic energy to address rocket, artillery, and mortar, or RAM, threats; unmanned aircraft systems and cruise missiles,” said Army Recognition.
U.S. Army demonstrates MEHEL laser weapon on Stryker 8×8 armoured combat vehicle
“The MEHEL is now participating in the Joint Warfighting Assessment 2018 in Europe, which will help the Army to assess emerging concepts and technologies, and interoperability,” said Cecil A. Longino Jr., deputy director of the public affairs office for the Army Space and Missile Defense Command.
So it seems, the Army’s Stryker-mounted MEHEL system, designed to laser-blast Russian drones out of the sky, just took a major leap towards combat. Once the high-energy weapon passes its trials in Germany, there are indications that dozens of Strykers across Europe could be outfitted with this new high tech weaponry and then rapidly deployed to the Russian border. As the world concentrates on the nerve agent attack on former Russian double-agent in the United Kingdom, it is becoming increasingly obvious war is coming…
END
Austin serial bomber dead as he was discovered..he blew himself up when confronted
(courtesy zerohedge)
Austin Serial Bomber Dead: Blows Himself Up After Shootout With Police
Update: President Donald Trump has tweeted his congratulations to law enforcement and all involved in stopping the bomber.
AUSTIN BOMBING SUSPECT IS DEAD. Great job by law enforcement and all concerned!
* * *
The Austin serial bomber suspected of delivering six homemade bombs to locations around Austin this month, killing two people, has died after blowing himself up. Less than an hour after CBS Austin released photographs of the suspect at a Fed-X facility, media reported of an officer-involved shooting on I-35 in Round Rock.
Police have identified the dead suspected bomber as a 24-year-old white male, according to the Associated Press.
BREAKING: APD sources tell us that the #AustinBombings suspect is dead after this officer-involved shooting in Round Rock http://bit.ly/2u6W6O5 https://twitter.com/cbsaustin/status/976371773989011457 …
Austin bombing suspect dead, I-35 shut down
Sources with APD confirm to CBS Austin that the Austin bombing suspect is believed to be dead in an incident involving officers along I-35 in Round Rock. Police were closing in on the suspect when…
cbsaustin.com
As CBS Austin reported, police were closing in on the suspect when he killed himself by detonating some sort of explosive device in his car, according to CBS Austin’s source. People in the area reported hearing the explosion, the New York Times reported.
According to KVUE, the FBI and police tracked the bomber to a hotel in the Round Rock area using cell phone technology, security video, store receipts before ‘engaging him’ around 3 am on Wednesday. Then, as officers pursued the suspect a device was detonated, before a volley of gunfire.
CBS Austin reported that police pursued the bomber until he drove his car into a ditch off I-35. As officers approached, the bomber detonated a bomb in his car, killing himself and injuring an officer. CBS added that an 11-year veteran SWAT officer fired on the suspect. He has since been placed on administrative leave.
Austin Police Chief Brian Manley says the incident that led to the suspect’s death will be investigated by the Austin Police Monitor and the Texas Rangers.
The confrontation came just hours after CBS published CCTV showing images from a surveillance video from the FedEx Office store on Brodie Lane in South Austin which helped investigators zero in on the suspect.
According to the Daily Mail, the images show a man – possibly wearing a wig and gloves – delivering two packages around 7.30pm on Sunday. One of the packages subsequently exploded on a conveyor belt at a FedEx sorting facility outside of San Antonio in Schertz.
The other was intercepted at a facility near Austin airport and was later confirmed to contain a bomb.
BREAKING: ATF is with @Austin_Police and @FBISanAntonio on I-35 at the scene of the individual suspected in the #packagebombmurders
Authorities believe the same person is connected to the two packages that surfaced Tuesday is also responsible for the four other explosions that began on March 2nd, killing two people and injuring six.
Austin Police Department tweeted that they were working on an officer-involved shooting near the highway, but gave no further details.
HAPPENING NOW: this is I35 S in Round Rock near Old Settlers Blvd shut down after officer involved shooting FBI on scene @cbsaustin
I-35 is closed while a massive presence of law enforcement – including Austin Police, FBI and ATF investigators – processes the scene, which involved officers firing at the suspect. Several helicopters were seen hovering overhead.
While reports surfaced last night that police had discovered surveillance footage of what could be the bombing suspect, CNN added that police had been tracking the man for between 24-36 hours.
Police warn that, though the bomber is dead, there might be more bombs out there. Police don’t know what the bomber has been up to over the past 24 hours, and have warned the community to be vigilant.
The bomber’s motive is still unclear
California Town Defies Jerry Brown, Opts Out Of “Sanctuary State” Law
A suburban Southern California town has rebelled against California’s so-called “sanctuary” law (SB-54) designed to protect illegal immigrants from deportation by limiting cooperation between local law enforcement and federal immigration authorities.
The Los Alamitos City Council voted 4-1 after over two hours of heated testimony from local residents on both sides of the issue.
Los Alamitos leaders on Monday approved an ordinance that exempts their Orange County municipality from Senate Bill 54, a law that took effect Jan. 1 and restricts local law enforcement’s cooperation with federal immigration authorities. It marks a rare effort by a city to challenge the sanctuary movement, which has wide support among elected officials in left-leaning California. –LA Times
Mayor Troy Edgar joined council members Richard Murphy and Shelly Hasselbrink in support of the new local law – noting that California’s sanctuary law puts them at odds with the U.S. constitution, while councilman Mark Chirco voted against it – suggesting it would lead to litigation.
“I cannot see how passing this ordinance would be good for our city,” Chirco said.
“We disagree with Sacramento on a lot of things. Are we not going to follow state law every time we disagree with them?” he added. “I don’t think that would be prudent.”
One local Latino resident slammed California’s sanctuary state law – suggesting it would lead to the gutting of the middle class, ushering in communism.
Following the vote, a standing-room-only crowd of approximately 160 people out of a population of 12,000 erupted in cheers, with some chanting “USA” – however on pro-illegals contingency began chanting “The people united, will never be divided.”
The Los Alamitos City Council votes 4-1 to pass an ordinance exempting the city from the CA Values Act, or sanctuary state law. The story at 11pm.
Among those who attended the meeting was Moti Cohen, a Garden Grove resident whose wife grew up in Los Alamitos, and who supports the anti-sanctuary measure.
Cohen, an immigrant from Israel, said he came to the U.S. legally and that everyone else should, too. He arrived 27 years ago with a tourist visa and became a legal resident after marrying his U.S. citizen wife.
“The law is the law and has to be enforced all over the country,” he said. “The country is a law-and-order country and you have to come here legally.” –LA Times
A large overflow crowd watched the proceedings from a monitor outside.
At one point, someone shouted “Great American patriot!” at Councilman Warran Kusumoto, who introduced the legislation. Someone else screamed “America first!”
Those disappointed by the vote called the decision xenophobic and heartbreaking.
“There’s been a real shift to a national, xenophobic acceptability in our society that is heartbreaking,” said Rabbi Jonathan Klein, executive director of the Clergy & Laity United for Economic Justice group. “We’re in an era of open bigotry.”
Or – perhaps we’re in an era of at least one city in the blue state of California which prefers to follow federal law.
HARVEY
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