MARCH 22/DOW PLUNGES 724 POINTS/NASDAQ DOWN 179 POINTS/LIBOR UP FOR 32 CONSECUTIVE DAYS/LIBOR-OIS SPREAD AT 57 POINTS BLOWING WIDER INDICATING HUGE TROUBLE FINDING DOLLARS/ DEUTSCHE BANK STOCK PLUMMETS WHILE ITS CREDIT DEFAULT SWAPS RISE/GOLD RISES $5.90 TO $1327.70/SILVER DOWN 1 CENT/ GOLD EFP ISSUANCE OVER 15,500 CONTRACTS AND CLOSE TO 3500 EFP CONTRACTS FOR SILVER/ TRUMP FIRES CHIEF LAWYER AND WANTS TO HANDLE MUELLER HIS WAY/

 

 

GOLD: $1327.70  UP $5.90  (COMEX TO COMEX CLOSINGS)

Silver: $16.40 DOWN 1 CENT (COMEX TO COMEX CLOSINGS)

Closing access prices:

Gold $1329.20

silver: $16.40

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: $N/A DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME: $N/A

PREMIUM FIRST FIX: $N/A

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SECOND SHANGHAI GOLD FIX: $N/A

NY GOLD PRICE AT THE EXACT SAME TIME: $N/A

PREMIUM SECOND FIX /NY:$XX

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 $1328.35????

NY PRICING AT THE EXACT SAME TIME: $1331.30????

LONDON SECOND GOLD FIX 10 AM: $1329.15

NY PRICING AT THE EXACT SAME TIME. $1330.20

For comex gold:

MARCH/

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

TOTAL NOTICES SO FAR 31 FOR 3100 OZ

For silver:

MARCH

16 NOTICE(S) FILED TODAY FOR

80,000 OZ/

Total number of notices filed so far this month: 5307 for 26,535,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Bitcoin: BID $8649/OFFER $8,718: DOWN $209(morning)

Bitcoin: BID/ $8563/offer $8634: DOWN $293  (CLOSING/5 PM)

 

end

Let us have a look at the data for today

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In silver, the total open interest SURPRISINGLY FELL  BY A FAIR SIZED 1994 contracts from 216,042  FALLING TO 214,048  DESPITE YESTERDAY’S  21 CENT RISE IN SILVER PRICING WE OBVIOUSLY HAD SOME COMEX LIQUIDATION. HOWEVER, WE WERE AGAIN NOTIFIED THAT WE HAD ANOTHER STRONG SIZED NUMBER OF COMEX LONGS TRANSFERRING THEIR CONTRACTS TO LONDON THROUGH THE EFP : 3465 EFP’S FOR MAY AND ZERO FOR ALL  OTHER MONTHS  AND THUS TOTAL ISSUANCE OF 3465 CONTRACTS.  WITH THE TRANSFER OF 3465 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 3465 CONTRACTS TRANSLATES INTO 17.33 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:

39,436 CONTRACTS (FOR 16 TRADING DAYS TOTAL 39.436 CONTRACTS) OR 197.18 MILLION OZ: AVERAGE PER DAY: 2465 CONTRACTS OR 12.32 MILLION OZ/DAY

TO GIVE YOU AN IDEA AS TO THE HUGE SUPPLY THIS MONTH IN SILVER:  SO FAR THIS MONTH:  197.18 MILLION PAPER OZ HAVE MORPHED OVER TO LONDON. THIS REPRESENTS AROUND 28.17% OF ANNUAL GLOBAL PRODUCTION

ACCUMULATION IN YEAR 2018 TO DATE SILVER EFP’S:  679.01 MILLION OZ.

ACCUMULATION FOR JAN 2018: 236.879 MILLION OZ

ACCUMULATION FOR MONTH OF FEBRUARY: 244.945 MILLION OZ

RESULT: WE HAD A FAIR SIZED LOSS  IN COMEX OI SILVER COMEX OF 1994 DESPITE THE 21 CENT RISE IN SILVER PRICE.  HOWEVER, WE ALSO HAD A STRONG SIZED EFP ISSUANCE OF 3465 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 3465 EFP’S  FOR THE  MONTH OF MARCH WERE ISSUED FOR  A DELIVERABLE FORWARD CONTRACT OVER IN LONDON WITH A FIAT BONUS.   WE GAINED A GOOD  1471 OI CONTRACTS i.e. 3465 open interest contracts headed for London (EFP’s) TOGETHER WITH A DECREASE OF 1994  OI COMEX CONTRACTS. AND ALL OF THIS HAPPENED WITH THE RISE IN PRICE OF SILVER OF 21 CENTS AND A CLOSING PRICE OF $16.51 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. 1.070 BILLION TO BE EXACT or 153% 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 HUMONGOUS SIZED 13,358 CONTRACTS UP TO 558,857  WITH THE STRONG SIZED RISE IN PRICE  YESTERDAY ( GAIN OF $9.65) HOWEVER  FOR THURSDAY, THE CME RELEASED THE DATA FOR EFP ISSUANCE AND IT TOTALED AN HUGE SIZED  15,566 CONTRACTS :  APRIL SAW THE ISSUANCE OF 15,461 CONTRACTS, JUNE SAW THE ISSUANCE OF 105 CONTRACTS AND THEN ALL OTHER MONTHS ZERO.   The new OI for the gold complex rests at 558,857. 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 AN ATMOSPHERIC  OI GAIN IN CONTRACTS: 13.358 OI CONTRACTS INCREASED AT THE COMEX AND A HUGE SIZED 15,566 OI CONTRACTS WHICH NAVIGATED OVER TO LONDON.THUS  TOTAL OI GAIN: 28,924 CONTRACTS OR 2,892,400 OZ =89.96 TONNES

YESTERDAY, WE HAD 10,181 EFP’S ISSUED.

ACCUMULATION OF EFP’S GOLD AT J.P. MORGAN’S HOUSE OF BRIBES: (EXCHANGE FOR PHYSICAL) FOR THE MONTH OF MARCH : 157,200 CONTRACTS OR 15,720,000  OZ OR 488.95 TONNES (16 TRADING DAYS AND THUS AVERAGING: 9825 EFP CONTRACTS PER TRADING DAY OR 982,500 OZ/ TRADING DAY)

TO GIVE YOU AN IDEA AS TO THE HUGE SIZE OF THESE EFP TRANSFERS :   SO FAR THIS MONTH IN 16 TRADING DAYS IN  TONNES: 488.96 TONNES

TOTAL ANNUAL GOLD PRODUCTION, 2017, THROUGHOUT THE WORLD EX CHINA EX RUSSIA: 2555 TONNES

THUS EFP TRANSFERS REPRESENTS 488.96/2550 x 100% TONNES =  19.17% OF GLOBAL ANNUAL PRODUCTION SO FAR IN MARCH ALONE.

ACCUMULATION OF GOLD EFP’S YEAR 2018 TO DATE:  1791.63 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 WITH THE RISE IN PRICE IN GOLD TRADING YESTERDAY ($9.65 GAIN).  HOWEVER, WE HAD ANOTHER HUGE SIZED NUMBER OF COMEX LONG TRANSFERRING TO LONDON THROUGH THE EFP ROUTE: 15,566 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 15,566 EFP CONTRACTS ISSUED, WE HAD A NET GAIN IN OPEN INTEREST OF 31,003 contracts ON THE TWO EXCHANGES:

15,566 CONTRACTS MOVE TO LONDON AND 15,437 CONTRACTS INCREASED AT THE COMEX. (in tonnes, the GAIN in total oi equates to 89.97  TONNES).

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

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

GLD

WITH GOLD UP  $5.90 :  NO  CHANGE IN GOLD INVENTORY AT THE GLD /

Inventory rests tonight: 850.54 tonnes.

SLV/

WITH SILVER DOWN 1 CENT 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 FELL BY A FAIR 994  contracts from 216,552 DOWN TO 214,048 (AND now A LITTLE  CLOSER TO THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) DESPITE THE RISE IN PRICE OF SILVER (21 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 LOSS AT THE COMEX OF 1994  CONTRACTS TO THE 3465 OI TRANSFERRED TO LONDON THROUGH EFP’S, WE OBTAIN A GAIN OF 1471  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:  7.355 MILLION OZ!!!

RESULT: A FAIR SIZED  DECREASE IN SILVER OI AT THE COMEX DESPITE THE RISE IN SILVER PRICING  YESTERDAY (21 CENTS GAIN IN PRICE) . BUT WE ALSO HAD ANOTHER STRONG SIZED 3465 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)THURSDAY MORNING/WEDNESDAY NIGHT: Shanghai closed DOWN 17.47 POINTS OR 0.53% /Hang Sang CLOSED DOWN 343.47 POINTS OR 1.09% / The Nikkei closed UP 211.02/Australia’s all ordinaires CLOSED UP 0.99%/Chinese yuan (ONSHORE) closed DOWN at 6.3320/Oil UP to 64.94 dollars per barrel for WTI and 69.24 for Brent. Stocks in Europe OPENED DEEPLY IN THE RED   .   ONSHORE YUAN CLOSED UP AT 6.3295 AGAINST THE DOLLAR. OFFSHORE YUAN CLOSED DOWN ON THE DOLLAR AT 6.3320 /ONSHORE YUAN TRADING WEAKER AGAINST OFFSHORE YUAN/ONSHORE YUAN TRADING WEAKER AGAINST USA DOLLAR/OFFSHORE YUAN TRADING  STRONGER AGAINST THE DOLLAR . CHINA IS NOT VERY  HAPPY TODAY (WEAKER CURRENCY BUT POOR   CHINESE MARKETS/AND  NEW TRUMP TARIFFS  INITIATED/WEAKER GLOBAL MARKETS ) 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

 

b) REPORT ON JAPAN

AN EXCELLENT LOOK AT WHAT IS GOING ON INSIDE JAPAN FROM SIMON BLACK WHO LIVES THERE

( SIMON BLACK/SOVEREIGN MAN)

3 c CHINA

i)We have outlined to you how the new oil priced in yuan is going to replace the USA Petro- dollar scheme. Nick Giambruno of InternationalMan.com describes the mechanism beautifully

( Nick Giambruno/InternationalMan.com)

ii)it begins:  the Chinese trade war started at 12:30 pm est today

( zerohedge)

iii)China now braces for a trade war with the uSA.  They accuse the USA of repeated abusing of WTO rules

( zerohedge)

iv)This morning, the USA will file suit against China for trade law violations.  They also are looking at exemption Brazil, Argentina and the EU for the aluminum and steel tariffs.  It now seems that the USA target is and has always been China

( zerohedge)

v)This to going to anger China.  There is some good news in that the uSA will impose only duties of 25% on some products but they are also targeting the aerospace and information technology and associated machinery: basically high tech stuff.

(courtesy zerohedge)

vi)Late this evening:  China responds to Trump that he is not afraid of a trade war and he vows to fight to the end.I will bet you will see increase gold/silver shipped to China

(courtesy zerohedge)

4. EUROPEAN AFFAIRS

UK

i)Cable (Br Pound /USA dollar) spikes on a hawkish 7;2 split at the Bank of England.  However the rate rise will happen in May.However it fell back to par

( zerohedge)

ii)Libor-OIS spreads widen to 57 basis points, which is extremely high.  Libor has risen for 32 straight days indicating stress in the global banking system. the reason for the widen is due to scarcity of dollars especially over in Europe.  When Trump’s new tax reform allowed companies overseas to repatriate their dollars to the USA it created a huge derivative hole because banks used those dollars as a base and then exercised huge derivative trades on those dollars which have now disappeared.  Deutsche bank’s stock is plummeting  (and other banks as well)

Houston..we have a problem.

( zerohedge)

iii)EU/USA Russia
We have outlined to you on several occasions, the real reason for the USA ‘s dissatisfaction with Putin. It is the construction of the Nord  2 Stream pipeline which will send natural gas from Russia to Germany an onto the rest of Europe more cheaply than any other pipelines in existence.  This will provide Russia with much dominance in Europe and that is not in the USA’s interests:  thus they are now threatening sanctions for any European firm participating in the pipeline construction which in turn makes Europe more economical

go figure…

( zerohedge)

iv)UK Russia

Oh this is good:  The Russian ambassador now hints that the UK nerve poisoning was a false flag.

( zerohedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

Not good; Stratcom General warns that the uSA will be powerless against new hypersonic missile attacks from either China or Russia

( zerohedge)

6 .GLOBAL ISSUES

7. OIL ISSUES

8. EMERGING MARKET

 VENEZUELAThis is what we can expect to find when a country goes into hyperinflation. Believe it or not, Venezuela’s inflation is projected at 13,000% next year and  cash has disappeared.  Now we witness Elorza which will become Venezuela’s largest city to launch its own community currency..similar to what we witnessed in Argentina when provinces created their own currency for trade..

( zerohedge)

9. PHYSICAL MARKETS

i)Craig Hemke at Sprott discusses JPMorgan’s domination of silver futures and “ownership” of physical silver. Chris Powell also comments that JPMorgan is no doubt rigging silver as they have in their possession physical silver along with their massive short.  He also asserts what I believe:  that the JPMorgan is holding silver for the USA government who in turn is holding the metal for China having received it as a loan way back in 2002.

importance discussion…

( Craig Hemke/Sprott/GATA)

ii)here is a tour of Russia’s gold reserves:

( GATA)

iii)Usually Russia releases its official gold reserves on the 19th of the month but for some reason they delayed it by a few days. They have added more than usual:  today another 25 tonnes is added to its official reserves. Most of their official reserves is gold bought from their own mining operations.  Russia has increased its gold production last year was 307 tonnes or 25 tonnes/month and that is what they added to official reserves.

(courtesy Lawrie Williams/Sharp Pixley)

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

i)THIS MORNING’S EARLY TRADING:

(COURTESY ZEROHEDGE)

ii)Early morning data 
So much for the narrative that the global economies of the world including the USA is doing just fine:
it was crushed this morning as both the USA and European PMI’s plunged
( zerohedge)
iii)Congress is secretly forming a committee to bail out over 200 pension funds.  It will not help.  This is the reason that the stock markets are generally higher:  to get pension funds in the green.
( zerohedge)

iv)Supposedly Congress has reached a deal on their huge omnibus spending budget deal. Let us see if this comes to fruition( zerohedge)

v)Stockman describes the rate shock we will receive as the Fed rolls off 600 billion of bonds.  Yields must rise and that will break the stock market and the bond market

(courtesy David Stockman)

vi)SWAMP STORIES

a)Unbelievable!! There are reports that McCabe had ordered the FBI to investigate his boss Jeff Sessions on his testimony prior to becoming Attorney General

( zerohedge)

b)More and more California cities are now defying Sanctuary city laws and joining Trump.  The town of Los Alamitos is in total rebellion

( zerohedge)

c)The House Intel Committee formally votes to end the Russian probe and release their findings to the public

The Democrats of course reject this under their leader Craze Eyes Schiff.
( zerohedge)

d)Dowd resigns as Trump’s lead lawyer in the Mueller probe as he is increasing ignoring his legal advice. It looks like DiGenova, who is very aggressive will be the lead lawyer.( zerohedge)

Let us head over to the comex:

The total gold comex open interest ROSE BY AN HUMONGOUS SIZED 13,358 CONTRACTS UP to an OI level 558,857  WITH THE RISE IN THE PRICE OF GOLD ($9.65  GAIN/ YESTERDAY’S TRADING).    HOWEVER THE CME REPORTS THAT  THE BANKERS ISSUED A HUGE SIZED  COMEX TRANSFER THROUGH THE EFP ROUTE AS THESE LONGS RECEIVED A DELIVERABLE LONDON FORWARD TOGETHER WITH A FIAT BONUS. WE HAD A STRONG 15,461 EFP’S ISSUED FOR APRIL , AND 105 CONTRACTS FOR  JUNE AND ZERO FOR ALL OTHER MONTHS:  TOTAL  15,566 CONTRACTS.  THE OBLIGATION STILL RESTS WITH THE BANKERS ON THESE TRANSFERS. ALSO REMEMBER THAT THERE IS NO DOUBT A HUGE DELAY IN THE ISSUANCE OF EFP’S AND IT PROBABLY TAKES AT LEAST  48 HRS AFTER LONGS GIVE UP THEIR COMEX CONTRACTS FOR THEM TO RECEIVE THEIR EFP’S AS THEY ARE NEGOTIATING THIS CONTRACT WITH THE BANKS FOR A FIAT BONUS PLUS THEIR TRANSFER TO A LONDON FORWARD… THE COMEX IS NOW AN ABSOLUTE FRAUD!!

ON A NET BASIS IN OPEN INTEREST WE GAINED TODAY: 28,924 OI CONTRACTS IN THAT 15,566 LONGS WERE TRANSFERRED AS FORWARDS TO LONDON AND WE GAINED 13,358 COMEX CONTRACTS.

NET GAIN ON THE TWO EXCHANGES: 28,924 contracts OR 2,892,400  OZ OR 89.94 TONNES.

Result: A HUMONGOUS SIZED INCREASE IN COMEX OPEN INTEREST WITH THE  RISE IN PRICE ON YESTERDAY  (ENDING UP WITH A GAIN OF $9.65.)THE  TOTAL OPEN INTEREST GAIN ON THE TWO EXCHANGES: 28,894 OI CONTRACTS..

We have now entered the non active contract month of MARCH where we LOST 14 contracts LOWERING TO  481 contracts. We had 2 notices served upon yesterday, so LOST 12 contacts  or 1200 additional oz will NOT stand for delivery at the comex AND THESE MORPHED INTO LONDON BASED FORWARDS.

April saw a LOSS of 16,197 contracts DOWN to 198,405. May saw A GAIN of 110 contracts to stand at 659. The really big June contract month saw a GAIN of 23,265 contracts UP to 252,157 contracts.

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

Trading Volumes on the COMEX

PRELIMINARY COMEX VOLUME FOR TODAY:412,072  contracts

CONFIRMED COMEX VOL. FOR YESTERDAY: 556,264 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 FELL BY A FAIR SIZED 1994  CONTRACTS FROM 216,042 DOWN TO 214,048 DESPITE OUR 21 CENT GAIN IN YESTERDAY’S TRADING).   ALSO,WE WERE ALSO INFORMED THAT WE HAD 3465 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: 3465.   THE SILVER BOYS HAVE STARTED TO MIGRATE TO LONDON FROM THE START OF DELIVERY MONTH AND CONTINUING RIGHT THROUGH UNTIL FIRST DAY NOTICE JUST LIKE WE ARE WITNESSING TODAY. USUALLY WE NOTED THAT CONTRACTION IN OI OCCURRED ONLY DURING THE LAST WEEK OF AN UPCOMING ACTIVE DELIVERY MONTH AS WE HAVE JUST SEEN IN GOLD TODAY. THIS PROCESS HAS JUST BEGUN IN EARNEST IN SILVER STARTING IN SEPTEMBER 2017. HOWEVER, IN GOLD, WE HAVE BEEN WITNESSING THIS FOR THE PAST 2 YEARS. NICK LAIRD WAS KIND ENOUGH TO SUPPLY US THE TOTAL FOR 2017 GOLD EFP’S AND IT WAS 6600 TONNES FOR THE ENTIRE YEAR.  WE OBVIOUSLY HAD SOME LONG COMEX SILVER LIQUIDATION AND WE ALSO HAVE A GOOD 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 1975 SILVER OPEN INTEREST CONTRACTS AS  WE OBTAINED A 1994 CONTRACT LOSS AT THE COMEX COMBINING WITH THE ADDITION OF 3465 OI CONTRACTS NAVIGATING OVER TO LONDON.

NET GAIN ON THE TWO EXCHANGES: 1471 CONTRACTS 

AMOUNT STANDING FOR SILVER AT THE COMEX

We are now in the  active delivery month of MARCH and here the front month LOST 59 contracts FALLING TO 126 contracts. We had 105 contracts filed YESTERDAY, so we GAINED 46 contracts or an additional 230,000 OZ will  stand in this active delivery month of March

April LOST 4 contracts FALLING TO 431 .

The next big active delivery month for silver will be May and here the OI LOST 3517 contracts DOWN to 150,407

We had 16 notice(s) filed for 80,000 OZ for the MARCH 2018 contract for silver

INITIAL standings for MARCH/GOLD

MARCH 22/2018.

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
1 notice(s)
 100 OZ
No of oz to be served (notices)
480 contracts
(48000 oz)
Total monthly oz gold served (contracts) so far this month
31 notices
3100 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
we had 0 kilobar transaction/
We had 0 inventory movement at the dealer accounts
total inventory deposit into the dealer accounts:  NIL  oz
total inventory withdrawals out of dealer accounts; nil oz
we had 0 withdrawals out of the customer account:
total withdrawal: nil   oz
we had 0 customer deposit
total customer deposits: nil oz
we had 0 adjustment(s)

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 1 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 (31) x 100 oz or 0 oz, to which we add the difference between the open interest for the front month of FEB. (481 contracts) minus the number of notices served upon today (1 x 100 oz per contract) equals 51,100 oz, the number of ounces standing in this nonactive month of MARCH (1.5894 tonnes)

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

No of notices served (31 x 100 oz or ounces + {(481)OI for the front month minus the number of notices served upon today (1 x 100 oz )which equals 51,100 oz standing in this  nonactive delivery month of March . THERE IS 10.556 TONNES OF REGISTERED GOLD AVAILABLE FOR DELIVERY SO FAR.

WE LOST 12 CONTRACTS OR AN ADDITIONAL 1200 OZ WILL NOT STAND FOR DELIVERY IN THIS NON ACTIVE DELIVERY MONTH OF MARCH AND THESE GUYS MORPHED INTO LONDON BASED FORWARDS.

total registered or dealer gold:  385,923.014 oz or 12.003 tonnes
total registered and eligible (customer) gold;   9,060,591.220 oz 281.82 tones
THE COMEX IS AGAIN IN STRESS AS ONLY 12.003 TONNES OF GOLD ARE LEFT TO SERVICE DELIVERIES

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

March 22 2018
Silver Ounces
Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory
  oz
nil
Deposits to the Dealer Inventory
nil
oz
Deposits to the Customer Inventory
 nil oz
No of oz served today (contracts)
16
CONTRACT(S
(80,000 OZ)
No of oz to be served (notices)
110 contracts
(550,000 oz)
Total monthly oz silver served (contracts) 5307 contracts

(26,535,000 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 0 deposits into the customer account

i) Into JPMorgan: nil 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:  nil  oz

we had 0 withdrawals from the customer account;

total withdrawals; nil  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 16 contract(s) FOR 80,000 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 5307 x 5,000 oz = 26,535,000 oz to which we add the difference between the open interest for the front month of Mar. (126) and the number of notices served upon today (16 x 5000 oz) equals the number of ounces standing.

.

Thus the INITIAL standings for silver for the March contract month: 52307(notices served so far)x 5000 oz + OI for front month of March(126) -number of notices served upon today (16)x 5000 oz equals 27,085,000 oz of silver standing for the March contract month. 

We GAINED an additional 46 contracts or 230,000 additional silver oz will  stand for delivery at the comex

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

ESTIMATED VOLUME FOR TODAY: 78,753 CONTRACTS

CONFIRMED VOLUME FOR YESTERDAY: 122,746CONTRACTS

YESTERDAY’S CONFIRMED VOLUME OF 122,746 CONTRACTS EQUATES TO  613 MILLION OZ OR 87.67% 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 -2.83% (MARCH 22/2018)
2. Sprott gold fund (PHYS): premium to NAV FALLS TO -0.65% to NAV (March 22/2018 )
Note: Sprott silver trust back into NEGATIVE territory at -2.83%-/Sprott physical gold trust is back into NEGATIVE/ territory at -0.65%/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 -2.89%: NAV 13.67/TRADING 13.25//DISCOUNT 2.89.

END

And now the Gold inventory at the GLD/

MARCH 22.WITH GOLD UP $5.90, NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 850.54 TONNES/

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

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

MARCH 22/2018/ Inventory rests tonight at 850.54 tonnes

*IN LAST 347 TRADING DAYS: 90.50 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 277 TRADING DAYS: A NET 65.80 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.

end

Now the SLV Inventory/

MARCH 22/WITH SILVER DOWN ONE CENT, NO CHANGE IN SLV INVENTORY/INVENTORY RESTS AT 319.671 MILLION OZ/

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/

MARCH 22/2018: NO CHANGE IN SILVER INVENTORY

Inventory 319.671 million oz

end

6 Month MM GOFO 2.05/ and libor 6 month duration 2.43

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

G0FO+ 2.05%

libor 2.43 FOR 6 MONTHS/

GOLD LENDING RATE: .38%

XXXXXXXX

12 Month MM GOFO
+ 2.48%

LIBOR FOR 12 MONTH DURATION: 2.68

GOFO = LIBOR – GOLD LENDING RATE

GOLD LENDING RATE  = +.20

end

Major gold/silver trading /commentaries for THURSDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

 

Gold +1.8%, Silver +2.5% As Fed Increases Rates And Trade War Looms

March 22

– Gold gained 1.8% and silver 2.5% to $1,333/oz and $16.60/oz yesterday
– Gold climbs as Fed increases interest rates by 0.25% – now 1.5% to 1.75% range
– Dovish Fed Chair Powell plans fewer than expected rate hikes in 2018

– Markets disappointed at lack of hawkish comments from new Fed Chair
– Dollar LIBOR rises to highest level since November 2008 – $200 trillion worth of dollar-denominated financial products including mortgages based off LIBOR

– Trade wars look set to escalate and Trump expected to announce tariffs on Chinese imports today

Editor: Mark O’Byrne


Gold in USD – 1 Week (GoldCore)

Gold gained 1.7% and silver 2.5% to $1,333/oz and $16.60/oz respectively yesterday after the Federal Reserve announced a 25 basis point increase in rates to the slightly higher range of 1.5% to 1.75%. Gold and silver consolidated on those gains overnight in Asia and this morning in European trading, as markets digested the Federal Reserve’s post-announcement comments.

The first Federal Reserve meeting chaired by Jerome Powell offered little in the way of surprise. A hawkish tone was expected from new Chair Powell, however his statement was slightly more dovish despite what he claimed was a strengthened economic outlook and confidence that tax cuts and government spending will provide an much needed boost.


Source: @JohnFeeney10

The Fed confirmed that there would be just three rate hikes this year, as stated in the December 2017 minutes. Currently the interest rate remains 50bp below LIBOR which continues to climb, widening the spread between itself and OIS.

Should this continue to worsen the impact could be greater on the economy and wealth, than Fed set interest rates. On this basis, the Powell and co. may well decide on additional rate hikes on top of the two expected this year and those forecast for 2019 and 2020.

Yesterday CME Group reported that speculative betting on future Fed rate rises in June are 84.4% likely (up from 58.5% a month ago) and September’s meeting 52.2% (jumping from 37.3% a month ago).


Data shows rising interest rates is positive for gold as seen in 1970s and again from 2003 to 2007. Source: New York Federal Reserve for Fed Funds Rate, LBMA.org.uk for Gold (PM fix)

Gold to find further support in trade wars

Later today President Trump will almost certainly announce tariffs on Chinese imports. The White House is said to be considering between $30bn-$60bn in tariffs and measures that would restrict investment. Yesterday the country’s top trade negotiator, Robert Lighthizer, told Congress the US will put “maximum pressure on China and minimum pressure on US consumers”.

Any changes to current trade arrangements will no doubt increase tension between the super powers. Many expect retaliation from Beijing (to any US measures) prompting a trade war and there is also the real of currency wars returning with a vengeance.

Elsewhere, EU leaders will today consider how best to respond to Trump’s decision to place tariffs on aluminium and steel imports, another move likely to trigger a trade war.

Recent Fed meetings and interest rate announcements have coincided with short term lows in the gold price and a good entry point for those looking to accumulate on the dip (see chart above).

We expect the same on this occasion and we should again test resistance at $1,360/oz in the coming weeks. Growing uncertainty and deepening risks will provide further support for gold and should see higher gold prices.

-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)

Andrew Maguire

2:57 PM (1 hour ago)
to me

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

Craig Hemke at Sprott discusses JPMorgan’s domination of silver futures and “ownership” of physical silver. Chris Powell also comments that JPMorgan is no doubt rigging silver as they have in their possession physical silver along with their massive short.  He also asserts what I believe:  that the JPMorgan is holding silver for the USA government who in turn is holding the metal for China having received it as a loan way back in 2002.

importance discussion…

(courtesy Craig Hemke/Sprott/GATA)

Craig Hemke at Sprott Money: Morgan’s domination of silver futures

 Section: 

10:30p ICT Wednesday, March 21, 2018

Dear Friend of GATA and Gold:

Writing for Sprott Money, Craig Hemke of the TF Metals Report today examines JPMorganChase’s huge position in physical silver and Comex silver futures, a position so large that it appears to violate ordinary commodity position limits imposed by the U.S. Commodity Futures Trading Commission. Hemke’s analysis is headlined “JPMorgan’s Domination of Silver Futures” and it’s posted at Sprott Money here:

https://www.sprottmoney.com/Blog/jpmorgans-domination-of-comex-silver-cr…

Your secretary/treasurer would elaborate on Hemke’s analysis. For six years ago, just after JPMorganChase began accumulating silver — perhaps doing so, as silver market rigging foe Ted Butler has written, to offset the short position the bank had assumed with its acquisition of Bear Stearns — JPMorganChase proclaimed that it had no positions of its own in the monetary metals, just client positions.

See:

https://www.youtube.com/watch?v=gc9Me4qFZYo

https://www.benzinga.com/media/cnbc/12/04/2478161/jp-morgan-commodities-…

https://www.ft.com/content/efc5618a-7e66-11e1-b20a-00144feab49a

https://www.zerohedge.com/news/blythe-masters-blogosphere-silver-manipul…

Of course back then nobody asked the bank to identify its “clients” in monetary metals trading. Given the strategic sensitivity of the monetary metals, it is a fair assumption that the bank’s clients in the metals are governments, and to rig a market a government or its broker probably would maintain both long and short positions.Further, it seems unlikely that any U.S. investment bank enjoying a privileged position as a primary dealer in U.S. government securities, as JPMorganChase does, would do anything in strategic markets without the government’s approval.

Of course it’s also possible that JPMorganChase is running monetary metals positions for other governments, like China’s, with the approval of the U.S. government.

This would answer the question posed the other day by Keith Weiner of Monetary Metals in his commentary “Standing Ready to Lease Gold”:

http://news.goldseek.com/GoldSeek/1521468000.php

Weiner wrote: “If the mechanism of alleged gold price suppression is central bank leasing, then that leaves silver lacking an explanation. Central banks have no silver. The price of silver has fallen to 1/80th of the price of gold, which needs to be explained. If gold is suppressed, and silver is not, then how do we explain why silver is cheap relative to gold?”

But as the British economist Peter Warburton noted in 2001 —

http://www.gata.org/node/8303

— with enough money in derivatives the price of anything traded in a futures market can be suppressed. If Weiner really wants to pursue an explanation for silver’s awful chart, he might start by looking in JPMorganChase’s silver vault and derivatives book.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org

END

here is a tour of Russia’s gold reserves:

(courtesy GATA)

An exclusive tour of Russia’s gold reserve

 Section: 

10:05a ICT Thursday, March 22, 2018

Dear Friend of GATA and Gold:

Brandon White of bullion dealer BMG Group in Ontario calls attention to a recent report in the major Russian newspaper Komsomolskaya Pravda by two journalists who were given an exclusive tour of the vault containing Russia’s gold reserve.

White has provided a translation that may be better than an ordinary internet translation, and it is appended. But the translation is interrupted by captions for the photographs accompanying the story, which you’ll want to see and which can’t be reproduced here. The article, in Russia, of course, and the photos are posted together at the Komsomolskaya Pravda internet site here:

https://www.kp.ru/putevoditel/lichnye-finansy/zolotoj-zapas-rossii/

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org

This Is How Our Nest Egg Gold Is Stored for a Rainy Day

The correspondents of KP, Evgeny Belyakov and Vladimir Velengurin, are the first journalists in the country to get to visit the main gold vaults of the Russian central bank.

Text by Eugene Belyakov
Photos by Vladimir Velengurin
Komsomolskaya Pravda, Moscow
January 2018

https://www.kp.ru/putevoditel/lichnye-finansy/zolotoj-zapas-rossii/

The sensations were strange. I was in the same room with hundreds of tons of gold. In Money it is almost a trillion rubles. To accumulate such an amount, the average sportsman would have to work several million years. My legs shake only from the realization of one highly relevant fact: this kind of wealth has led to innumerable wars and fallen empires.

A ton of gold-per square meter. “Well, do you think they would notice if we stole just one bar?” asked my colleague and photojournalist Vladimir Velengurinym upon arrival at the vault. Admission to the central bank’s vault is strictly limited. The central bank made an exception for KP.

We imagined the storage system differently. I imagined Scrooge McDuck’s storage, where you can dive. Well, or at least juggle coins and ingots. Volodya imagined it as a mountain of ingots, exposed and stacked in giant pyramids for picturesque effect. Everything turned out to be much more banal. Lattice containers, tampered and folded one on another, stand equal rows along the whole premise. The scale is impressive. The appearance — not very.

Now the volume of gold in the international reserves of the central bank exceeds 1,800 tons. Russia is the sixth-place gold holder on the world index. Ten years ago the share of gold in our international reserves was 3 percent. But in recent years the central bank has started to increase its reserves — now the share has risen to 17 percent.

The gold reserve is a security cushion for the country. In case of crisis or shortage of foreign exchange reserves, gold can always be sold or deposited. It is still in demand in world markets, though earlier its value in this regard was much higher.
Gold played the role of world currency. It was a world trade settlement tool. In addition, the amount of gold in the country’s reserves determined the value of the national currency. Each banknote was initially provided with some quantity of this metal. That is, the country could print more money only if the reserves added more gold. This kept the currency from inflating. Until 1944 all countries kept their reserves only in gold.

Now the value of gold as a nation’s reserve is less than it used to be. The U.S. dollar plays a major role in global trade settlement. Most countries hold most of their international reserves in dollars. Although there are nuances: In developed countries the share of gold in reserves is 60-70 percent. But they do not have as much savings as in developing countries.

However, gold is still used as a protective tool. In crisis it is possible to sell it for money.

Dictionary time: “Monetary gold” is the central bank’s and the Russian government’s standard for gold bars and coins and must be made with a metal purity of not less than 995/1000.

International reserves have the same standard for gold as a currency reserve. The country’s money is now stored not only in precious metals and world currencies, but also in other financial instruments. For example, the structure of Russian reserve assets have a reserve position in the International Monetary Fund using Special Drawing Rights (SDR). In fact, in Russian, the SDR literally translates as “pseudo-value.” The SDR was invented by the IMF as a universal tender. The IMF’s SDRs are not widely disseminated as they remain used only between the IMF member central banks.

In theory, the structure of reserves should take into account the structure of export and import operations of the country.

… History of Russian gold stocks

— The gold reserve of the Empire in the beginning of 1914 was 1,312 tons. Back then Russia was among the three largest gold squirrels, along with the United States and France.

— 10 years after the revolution the gold reserve of the Soviet Union depleted to 150 tons. This was the result of the First World War and spending of the new Soviet power.

— After Joseph Stalin came to power, the gold reserve of the Soviet Union began to grow rapidly. By 1941 it reached 2,800 tons. (This is the historical maximum.)

— In 1991 the legacy of the Union of New Russia was only 290 tons of gold. The accumulation had to start almost from scratch.

It’s interesting how the gold bars are poured.

KP photojournalist Vladimir Velengurin visited the Novosibirsk refinery, where the nation’s gold is refined. Novosibirsk is in Siberia and is farther from any ocean than all but one of the world’s cities.

One bar is worth 30 million rubles

I never thought that gold was so heavy. The bar is small but it is not easy to raise it. He pulls 12-13 kilograms. So you can safely swing the biceps. I’m sure some rich guys do. Why else would they have so much money?

Ingots are neatly stacked in lattice containers (20 pieces each). Each of them sealed.

In whose hands is all the gold of the world?

It is difficult to estimate the amount of gold available on the planet. The approximate calculation is 190,000. More than half of that is in private ownership of the public (mostly in the form of jewelry). Still, about 33,500 tons are official reserves in the vaults of the countries of the world. The rest is used for investment purposes by large companies and foundations or is applied in dentistry, electronics, and other industries.

The sign of “evil” means “gold refined.” On the ingot is a trademark of the manufacturer, where you can find the place of production of a particular ingot, year of manufacture, sample, and weight of the ingot.

Ingots have a sample purity from 99.95 to 99.995. It means that the gold content there is from 99.95 to 99.995 percent respectively. The remainder is impurities.

Each ingot has a document of its quality. In addition to gold in the ingot there are also impurities of other metals. For example, iron, platinum, palladium, rhodium, lead, silver, copper, nickel, and others. But that part of the bar tends towards zero.

The market value of gold is constantly changing. The price is quoted on the stock exchange. On average at the time of publication one standard bar costs 30 million rubles. The whole box weighs about 250 kilogram, worth 600 million rubles.

The biggest win in the history of Russian lotteries is 506 million rubles. (In the middle of November this year the winner of the Russian lottery became a resident of the Voronezh region.)

A question to consider is this: Is gold too expensive?

There is a popular opinion that gold is always expensive. This is proclaimed by many high-profile analysts. If you look at the price dynamics, it’s nothing like that. In some periods gold experiences long-term growth, and in other periods there is stagnation for decades. Therefore, it is impossible to predict how gold will behave in the coming years. It would be possible to interview 10 analysts on this topic, but probably only half of them would guess correctly.

For example, in 2011-2012 the demand for gold was at its climax. The price per troy ounce (31.1 grams) reached $1,900 and experts competed among themselves predicting a higher price. The most notable seems to be the chief executive officer of Euro Pacific Capital, Peter Schiff. He predicted that an ounce of the metal would soon rise to $5,000 and added that “that won’t be the limit.” He advised all private investors to buy gold.

“Whoever does this will get a huge profit,” Schiff said. Those who followed his advice suffered losses. So we will not give predictions.

A financial adviser once said to me: “You need to buy gold only in case of atomic warfare. Then it can be changed to bread. If you believe in a quick apocalypse, buy it. … Or for its beauty.”

There are several ways to invest your money in gold. Almost all of them involve additional commissions, overpayments, and inconveniences. Whether it is worth the cost is for you to decide.

Oh, hard work — hauling billions every day!

The team’s work is heavy. Carrying 13 kilograms of ingots is not easy. Plus, they have to follow a lot of instructions. Each action of the employee is strictly regulated.

Workers treat ingots very carefully. They are not allowed to damage the ingots. The gold in the vault should be in perfect condition.

The table for weighing is covered in green cloth, as on a billiard table. This protects the metal from scratches and other damage.

… Epilogue …

Storage workers call gold simply “metal” and all together (with banknotes and coins) — “values.” And after one hour in the vault you stop perceiving gold as something expensive and exotic. Your legs stop trembling and you lose the desire to possess it. Metal is metal. It sparkles but does not attract. Probably in a place similar to this arose the saying, “Happiness is not born in money.” For this reason it is a pity that access to the vault is strictly limited. We should encourage excursions to the vault for all our oligarchs.

END

Usually Russia releases its official gold reserves on the 19th of the month but for some reason they delayed it by a few days. They have added more than usual:  today another 25 tonnes is added to its official reserves. Most of their official reserves is gold bought from their own mining operations.  Russia has increased its gold production last year was 307 tonnes or 25 tonnes/month and that is what they added to official reserves.

(courtesy Lawrie Williams/Sharp Pixley)

LAWRIE WILLIAMS: Russia adds another 25 tonnes to its gold reserves

President Putin gets re-elected in a landslide and Russia continues to build its gold reserves adding another 800,000 ounces (24.88 tonnes) in February. It’s ‘déjà vu all over again’ in the words of the late Yogi Berra.

Putin is seen to be a believer in gold both as a key asset in the global monetary system and as a foreign reserve diversifier away from the U.S. dollar. The next step may well be to repatriate any Russian gold stored elsewhere in the world – we shall see. Russia no doubt feels that the U.S.-led West is ganging up on it following the latest allegations by the UK of Russian state involvement in what appears to have been an assassination attempt on a former double agent and his daughter using a Russian-developed nerve agent. Strong circumstantial evidence points to Russia, but so far there has been no definitive proof of state involvement.

Currently, Russia appears to be one of the few countries expanding its new mined gold output as global production peaks and maybe is beginning to turn down. According to the country’s Finance Ministry Russian gold production last year was 306.9 tonnes which would put it in second place among global gold mining nations. See: Russia may now be World No. 2 Gold Miner. One suspects that the major independent gold analysts like Metals Focus and GFMS, when they produce their annual gold publications next month, may put the production level a little lower and it will be interesting to see if they assess Russia as the global No.2 or 3 producer. It is vying with Australia for this position and the latter, which was No. 2 in 2016, is also seen to have been increasing its output last year but perhaps by not as much as Russia. (See: Peak gold maybe but Australian and Russian output still rising)

In terms of reported gold reserves to the IMF, Russia is already the world’s fifth biggest national holder of gold, moving ahead of China in January – but we don’t really believe the Chinese figure given that it has reported a zero increase in its gold reserves for 15 straight months now. We think it may be reverting to its old pattern of gold reserve reporting where it only reports increases at multi-year intervals claiming that some of its gold was being held in non-reportable accounts – see: Chinese CB officially adds zero to gold reserves in February

The latest Russian figure now brings the country’s gold reserve to around 1,882 tonnes, as compared with the official Chinese holding of 1,842.6 tonnes, still well short of the U.S., German, Italian and French totals, but closing the gap as neither the USA, or big European gold holders have changed their reported holdings for a number of years now. Interestingly, in terms of officially reported reserves Russia and China combined hold around 3,725 tonnes of gold – well in excess of world no.2 individual holder, Germany’s, 3,373.6 tonnes Gold truly is seen to be moving east!

But of course Russia is still adding to its gold reserves month in month out and China’s figure may well be significantly understated. It would not surprise us if that in reality China and Russia combined may even hold more gold than the reported U.S figure of 8,133.5 tonnes. It looks like the two nations may well see a future role for gold in the ever-changing world financial order which is largely being ignored by the West.

https://www.sharpspixley.com/articles/lawrie-williams- russia-adds-another-25-tonnes-to-its-gold- reserves_277916.html


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

 

i) Chinese yuan vs USA dollar/CLOSED DOWN 6.3320  /shanghai bourse CLOSED DOWN 17.47 POINTS OR 0.53%  / HANG SANG CLOSED DOWN 343.47 POINTS OR 1.09%
2. Nikkei closed UP 211.02 POINTS OR .99% /USA: YEN FALLS TO 105/58/  

3. Europe stocks OPENED RED     /USA dollar index FALLS TO 89.69/Euro FALLS TO 1.2324

3b Japan 10 year bond yield: FALLS TO . +.038/ !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 105/58/ 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:: 64.94  and Brent: 69.24

3f Gold UP/Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO +.554%/Italian 10 yr bond yield DOWN to 1.896% /SPAIN 10 YR BOND YIELD DOWN TO 1.305%

3j Greek 10 year bond yield RISES TO : 4.258?????????????????

3k Gold at $1329.65 silver at:16.53     7 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50

3l USA vs Russian rouble; (Russian rouble DOWN 9/100 in roubles/dollar) 56.95

3m oil into the 64 dollar handle for WTI and 69 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 105.58 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 0.9467 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1669 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 2.848% early this morning (THIS IS DEADLY TO ALL MARKETS). Thirty year rate at 3.0705% /

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

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

Futures Tumble, Stocks Slide Ahead Of Trump’s China Trade War; Facebook Selling Resumes

Yesterday, we showed that according to Wall Street, the biggest tail risk facing investors right now is a “trade war”…

… and that should trade tensions escalate, lower stock prices would be the immediate result (and that managers would sell stocks in advance).

Well so far this morning, they are being proven right (or simply selling), because a jittery overnight session for stock futures which saw the S&P close at session lows after yesterday’s Fed rate hike (due to the “snowstorm” according to a dead serious Marko Kolanovic), turned increasingly volatile just before dawn in New York, as investors prepared for today’s China trade war announcement from President Trump that could levy tariffs on more than 100 types of Chinese goods, and is due just after noon ET.

As a result, S&P futures slid for much of the session, dropping below 2,700 and hugging the key support level as we hit save (we wonder what weather phenomenon JPM will blame for today’s swoon).

“Investors are increasingly nervous about the escalation in the narrative towards a trade war between the U.S. and China, it makes markets quite volatile,” Stephane Ekolo, equity strategist at TFS Derivatives, told Bloomberg.

It wasn’t just US futures though, and it wasn’t just the imminent US trade war with China, as several other factors converged, leading to a sea of red in global stock markets, resulting from continued pressure on technology stocks led by Facebook, as well as a sharp deterioration in European PMI data, oh and of course asset valuations which remain at all time high; Nasdaq futures slide to below Monday’s low which was start of tech sector focus, while e-mini S&P futures testing 100-DMA.

The Fed did not help to boost sentiment, tightening financial conditions by raising its key rate another 25 basis points to 1.75 percent on Wednesday and flagged at least two more increases were likely this year. But it stopped short of pointing to the three that some economists had been predicting. China also nudged up its borrowing costs overnight, as Beijing braced for new tariffs from U.S. President Donald Trump on Chinese imports worth as much as $60 billion.

Not all Fed bulls were discouraged, though. “Over the balance of the year we do think they will move to four hikes,” said JP Morgan’s Seamus Mac Gorain, highlighting the impact of recent fiscal stimulus. “Trade tariffs are a risk, of course, but more open economies,” such as Mexico or the euro zone “could be more at risk than the U.S.”

European equities found some support through cash open before fading further, led by underperformance in the tech and bank sectors. The Stoxx Europe 600 Index dropped 0.9%, with 18 of 19 industry groups in the red. Technology, chemicals and lender shares are the worst sector decliners. Reckitt Benckiser rose 6.5% after the company ended discussions about buying a portion of Pfizer’s consumer health business.

Thursday’s European retreat worsened after latest PMI data showed the continent’s private-sector economy cooled in March as manufacturing growth contracted sharply. The Markit composite purchasing managers’ index dropped to 55.3 from 57.1, below the median estimate of 56.7, and a 14 month low.

  • EU Markit Manufacturing Flash PMI (Mar) 56.6 vs. Exp. 58.1 (Prev. 58.6)
  • EU Markit Comp Flash PMI (Mar) 55.3 vs. Exp. 56.7 (Prev. 57.1)
  • EU Markit Services Flash PMI (Mar) 55.0 vs. Exp. 56.0 (Prev. 56.2)

Meanwhile, economic confidence in Europe’s exporting powerhouse – Germany – continues to shrink as Europe is likely next on Trump’s deficit-shrinking, trade war radar. In today’s IFO Business Confidence reading, both current conditions and expectations continued to shrink.

“The threat of protectionism is dampening the mood in the German economy,” said Clemens Fuest, the chief of the Munich-based Ifo institute, which published the business sentiment data.

The MSCI Asia Pacific index rose for first time in five days although Chinese stocks declined sharply at the close after the PBOC matched the Fed’s rate hike, and raised interest rates on reverse repo operations and funding facilities by five basis points. The Shanghai Composite fell 0.5% while the ChiNext index dropped 0.7%. In Hong Kong, the Hang Seng Index fell 1.1% while the Hang Seng China Enterprises Index closes down 0.8%, wiping out 1.6% rise in morning. Tencent weighed on the Hang Seng Index, falling 5% – most since Feb. 6 – after posting results Wednesday evening; analysts lowered profit forecasts based on the company’s spending plans.

Meanwhile, Zuckerberg’s CNN appearance last night did little to calm the growing fears, and Facebook was down another -2.0% in pre-market.

In other overnight news, US House and Senate leaders agreed to USD 1.3TN spending bill which they hope to pass prior to the government shutdown deadline at midnight this Friday, although there were also reports that US House Freedom Caucus said it is against the omnibus spending measure. In Europe, the EU expects US President Trump to announce tariff waiver today according to sources.

The ECB released its economic bulletin, which showed that Indicators suggest strong growth momentum with possible better expansion in the near term, adding that developments support a gradual upward trend in wage growth. Also overnight, Riksbank’s Floden said sticking to the current interest rate path is the fastest way to get interest rates up adding that the latest inflation outcomes are clearly lower than expectations.

In FX, the British pound was the notable mover, surging to its highest in more than a month after British wage data published on Wednesday bolstered expectations the Bank of England would signal a May rate increase after its monetary policy meeting due in just over an hour.

Meanwhile, the dollar initially weakened further in follow-through from FOMC digestion and unchanged 2018 median dots; however the risk-off environment leads to slow grind higher against G-10, except for USD/JPY, which goes through Asian low. As Bloomberg adds, the dollar erased its decline, holding steady as President Trump readies to announce about $50 billion of tariffs against China over intellectual-property violations.  The pound maintains its bullish momentum, while the euro erases gains as PMI data out of Germany and France missed forecasts. Some highlights of key FX pairs below, from BBG:

  • The Bloomberg Dollar Spot Index was little changed, close to a one-month low, and most G-10 crosses traded in narrow ranges
  • The euro edged up toward 1.24 against the dollar before erasing gains; the pound rose amid speculation that the BOE will pave the way for an interest-rate increase in May while gilts rallied on profit taking
  • USD/JPY slipped amid Japan’s political uncertainty and concern about U.S. protectionism; the yen was also boosted by seasonal demand by Japanese operators ahead of the fiscal year-end book closing and a softer dollar after the Fed’s rate decision was considered less hawkish than what some traders expected
  • The Aussie reversed earlier gains and a test of the 100-DMA at 0.7778 after February jobs data missed estimates and with traders are also waiting on expected U.S. announcement levying $50 billion of tariffs against China

Meanwhile, Treasuries extended their gains from Wednesday, with gilts pushing higher ahead of the Bank of England decision, as global bond yields fell broadly. Borrowing costs on 30-year German debt hit their lowest level of the year. Two-year U.S. yields slipped to 2.304% from 9 1/2-year high of 2.366%. The 10-year yield fell below 2.85%, its biggest move in three weeks.

In commodities, crude drifted sideways near $65.30 while iron ore traded in China was 1.5% stronger. WTI (-0.8%) and Brent Crude (-0.6%) took a breather from yesterday’s post-DOE rally with both benchmarks hovering just below their highest level since early February amid rising concerns of US output threatening to disrupt the tightening market; WTI has recently given back the USD 65/bbl handle. Moving onto metals, despite a softer USD and general risk-aversion thus far, gold prices are seen modestly lower after spot gold hit highs of USD 1334.8/oz overnight. Elsewhere in base metals, copper climbed off its lowest level in three months, Dalian iron ore rose 0.9% after recouping recent losses, steel futures were seen lower overnight as demand concerns continue to hamper sentiment.

Economic data on Thursday include initial jobless claims, Markit PMI data. Nike, Micron and Accenture are among companies due to release results

Market Snapshot

  • S&P 500 futures down 0.8% to 2,696.25
  • STOXX Europe 600 down 0.4% to 373.59
  • MSCI Asia Pacific up 0.3% to 177.01
  • MSCI Asia Pacific ex Japan down 0.3% to 581.48
  • Nikkei up 1% to 21,591.99
  • Topix up 0.7% to 1,727.39
  • Hang Seng Index down 1.1% to 31,071.05
  • Shanghai Composite down 0.5% to 3,263.48
  • Sensex down 0.07% to 33,114.27
  • Australia S&P/ASX 200 down 0.2% to 5,937.15
  • Kospi up 0.4% to 2,496.02
  • German 10Y yield fell 2.4 bps to 0.568%
  • Euro up 0.2% to $1.2360
  • Brent Futures down 0.5% to $69.16/bbl
  • Italian 10Y yield rose 3.5 bps to 1.676%
  • Spanish 10Y yield fell 3.4 bps to 1.301%
  • Gold spot down 0.1% to $1,330.94
  • U.S. Dollar Index down 0.3% to 89.54

Top Overnight Headlines

  • U.S. will announce China tariffs today; to target more than 100 different types of Chinese goods totalling $50b, according to people familiar
  • EU expects that it will be exempted from U.S. import tariffs on steel and aluminum, according to people familiar
  • European Mar. P Composite PMIs: France 56.2 vs 57.0 est; Germany 55.4 vs 57.0 est; 55.3 vs 56.8 est.
  • Riksbank Deputy Governor Martin Floden says inflation data below Riksbank’s forecast, weaker krona than expected lately are “two developments that speak in different directions in terms of what should happen with monetary policy”
  • German Mar. IFO Business Climate: 114.7 vs 114.6 est; Expectations 104.4 est; Current Assessment 125.9 vs 125.6 est.
  • U.K. Feb. Retail Sales y/y 1.5% vs 1.4% est;ONS notes underlying three-month picture is one of falling sales, mainly due to strong declines across all sectors in December
  • PBOC hikes reverse repo rate by 5bps to 2.55% in reaction to Fed

Asian stocks traded mixed as the region digested the fallout from the FOMC. ASX 200 (-0.2%) and Nikkei 225 (+1.0%) were varied with commodity-related stocks underpinned by gains in crude and the metals complex due to a softer USD, while the KOSPI (+0.4%) also gained amid US tariff exemption hopes after US Trade Representative Lighthizer named South Korea as one of the countries likely to be exempted. Conversely, Hang Seng (-1.1%) and Shanghai Comp. (-0.5%) underperformed with the US set to announce tariffs on China later today and after both the HKMA and PBoC raised rates in response to the Fed. Finally, 10yr JGBs were higher by around 10ticks as they tracked the gains seen in T-notes which found relief from the unchanged 2018 Fed rate hike projections, while the BoJ were also in the market for JPY 710bln of JGBs in the belly to super-long end with its Rinban amounts kept unchanged.

The PBoC stated that the increase in reverse repo rates meets market expectations and is a normal response to the Fed rate hike, while the Hong Kong Monetary Authority also raised rates by 25bps to 2.00% in lockstep with the Fed.

Top Asian News

  • China’s Central Bank Raises Borrowing Costs After Fed Hikes
  • Philippines Keeps Key Rate at 3% as Seen by Most Economists
  • Tencent Among Top Decliners After Margins Warning: Asia Movers
  • UBS Sees India’s External Finances at Risk Despite High Reserves
  • Tesla to Supply Batteries for Solar Project in Australian State

European equities kicked the session off on the backfoot (Eurostoxx 50 -1.1%) with losses emanating largely from the fallout of yesterday’s FOMC release and proposed US tariff measures today on China which are set to be unveiled at 1630GMT. Equities then staged a mild recovery before once again taking another turn lower in what has been a choppy session of trade thus far since  the open. In terms of sector specifics, all ten sectors trade lower with some modest outperformance in energy names in-fitting with price action in the complex as WTI held onto the USD 65/bbl level (has since lost this level). Individual movers include Reckitt Benckiser (+5.5%) who have confirmed they have dropped out of the running for Pfzier’s consumer health business which has subsequently paved the way open for GSK (-1.0%) to make an approach.

Top European News

  • Rio Tinto to Sell Winchester South to Whitehaven for $200m
  • Ted Baker Sees Challenging Market Conditions After Bad Weather
  • StanChart Is Said to Start Sale Process for Private Equity Unit
  • Volatile Volatility Leaves Europe’s Investment Banks Whipsawed
  • Deutsche Bank Raised ‘A Lot of Money,’ Needs to Deploy It: CEO

In FX: USD: Initially a choppy reaction from the FOMC’s rate hike decision yesterday, however the greenback ultimately softened after members maintained 2018 rate path view of 3 rate hikes (1 member away from median projection at 4). Additionally, the central bank steepened the path of rate hikes for 2019-2020, however the council did soften language around activity. DXY trading above mid-89 with losses stemmed after finding support at the March lows of 89.40. Trade wars remain at the forefront of investors’ minds amid reports that Trump will announce China tariffs today (1230EDT) with the value said to be around USD 50bln (lower than the previously touted USD 60bln). Retaliation from China is likely, as evidenced by yesterday’s WSJ report. Subsequently, the increased uncertainty could take USD/JPY back down to the 2018 low (105.23) prompting a test of the 105 handle. Antipodeans (AUD,NZD): RBNZ kept interest rates unchanged at 1.75%, as expected. Market pricing for a rate hike is not seen until mid-19. As such, NZD saw a muted reaction upon release, the central bank struck a rather balanced tone after remaining upbeat over global growth, but highlighted downside risks to inflation. NZD currently trading in a tight 40pip with price action likely to be driven by risk. A firm break above 0.7260 could see the spot price back at 0.7350, however, trade war uncertainty may see gains tempered. Elsewhere, AUD has been pressured by the jobs report overnight with the headline employment change falling short of expectations (17.5 vs. Exp. 20k), while the unemployment rate saw an unexpected uptick.

In commodities, WTI (-0.8%) and Brent Crude (-0.6%) are taking a breather from yesterday’s post-DOE rally with both benchmarks hovering just below their highest level since early February amid rising concerns of US output threatening to disrupt the tightening market; WTI has recently given back the USD 65/bbl handle. Moving onto metals, despite a softer USD and general risk-aversion thus far, gold prices are seen modestly lower after spot gold hit highs of USD 1334.8/oz overnight. Elsewhere in base metals, copper climbed off its lowest level in three months, Dalian iron ore rose 0.9% after recouping recent losses, steel futures were seen lower overnight as demand concerns continue to hamper sentiment.

Looking at the day ahead, EU leaders will today meet in Brussels to sign off on Brexit guidelines (continuing through to Friday). Meanwhile it’s a busy day for data, highlighted by the release of those flash March PMIs in Europe and the US. The BoE monetary policy meeting outcome is the other big highlight. Other notable data releases include March confidence indicators in France, the January current account balance reading for the Euro area, Germany’s IFO survey
for March, UK retail sales for February and weekly initial jobless claims, January FHFA house price index, February leading index and March Kansas City Fed PMI in the US. Late in the evening we’ll also get the February CPI report in Japan.  ECB speak will also be a focus with Lautenschlaeger and Nouy due to speak at separate events. German Chancellor  Merkel is also due to deliver a speech in parliament likely outlining her policy goals.

US Event Calendar

  • 8:30am: Initial Jobless Claims, est. 225,000, prior 226,000; Continuing Claims, est. 1.87m, prior 1.88m
  • 9am: FHFA House Price Index MoM, est. 0.4%, prior 0.3%
  • 9:45am: Bloomberg Economic Expectations, prior 54.5; Consumer Comfort, prior 56.2
  • 9:45am: Markit US Manufacturing PMI, est. 55.5, prior 55.3
    • Markit US Services PMI, est. 56, prior 55.9
    • Markit US Composite PMI, prior 55.8
  • 10am: Leading Index, est. 0.5%, prior 1.0%
  • 11am: Kansas City Fed Manf. Activity, est. 17, prior 17

DB’s Jim Reid concludes the overnight wrap

Unsurprisingly, the big focus over the past 24 hours has been the Fed and to be honest, we’ve been left scratching our heads a little as how best to sum up the meeting. By the end of day the market was seemingly left feeling a little
bit underwhelmed given that Treasury yields closed well off their highs and the Greenback tumbled by the most in nearly two months. However, it feels like that was perhaps just reflective of what were elevated hawkish expectations going into it as the message for us was one that while economic data for now is not necessarily strong enough to justify a faster hiking cycle this year, the Fed does appear to be a lot more upbeat further down the line.

Indeed, that was reflected initially in the statement with the addition of the line “the economic outlook has strengthened in recent months”. The hotly anticipated dot plot projections revealed that the median for 2018 was left at a total of three rate hikes, however only just as it would have only taken one more voter below the median to have moved higher in order to shift the median to four. Further out, the median for 2019 is now at 2.9% which implies three rate hikes, an increase of one from December, while the 2020 median is now at 3.4% which is up from 3.1% in December.

Meanwhile the stronger outlook was reflected in the more optimistic median projections for growth, unemployment and inflation. Indeed, GDP has been revised up by two-tenths this year to 2.7% and by three-tenths in 2019 to 2.4% while unemployment was revised down one-tenth this year to 3.8% and down three-tenths next year to 3.6%. As for inflation, the median committee member still expects core inflation this year of 1.9% which was perhaps a small surprise given the data so far, however median readings for 2019 and 2020 were both lifted to 2.1% and a tenth more than previously expected. That’s interesting as it also implies that the Fed is willing to accept a slight overshoot which is something that Evans has emphasized with regards to the symmetry of the 2% target.

As for new Fed Chair Jerome Powell, well in golfing terms it felt like he struck it straight down the middle of the fairway. That’s to say that he largely gave away an impression of one of continuity under his new role as Chair, and an emphasis still on the Fed sticking with its gradual approach to tightening. In other words, he didn’t appear like he was willing to deviate off the well beaten path and into the rough. Indeed, his tone was fairly balanced while he sought to down play the importance of the median dot plots as well as adding “there is no sense in the data that we’re on the cusp of an acceleration in inflation”.

Overall, DB’s Peter Hooper noted that the FOMC statement and Powell’s inaugural press conference were close to his expectations, marking a shift in a hawkish direction relative to December, although perhaps slightly less so than he had anticipated given recent Fed rhetoric. More specifically, he thought Powell’s debut performance was strong and highlighted that the Committee is likely going to need to see evidence that wage and price inflation are picking up meaningfully before becoming concerned about significant overheating associated with the tightening labour market. For more details, refer to Peter’s note.

As for markets then, as we noted at the top US Treasuries ended the day lower in yield across the curve with the 2y, 10y and 30y down -4.0bps, -1.3bps and -1.1bps respectively. However, they were down anywhere from -3.6bps to  -5.1bps versus the intraday yield highs as the initial reaction was a spike higher, before that move was quickly reversed. Meanwhile the USD index closed -0.65% while equities also weakened and tumbled from their highs. The S&P 500 ended -0.18% after being up as much as +0.82% while there was similar price action for the Dow (-0.18%) and Nasdaq (-0.26%). In fairness early gains were helped by a rally for Oil (WTI +2.57%) while the ongoing alleged issues with users privacy at Facebook still seems unresolved so equity markets were certainly kept busy.

This morning, markets in Asia are a bit mixed with the Nikkei (+0.71%) and Kospi (+0.53%) up slightly while the Hang Seng (-0.49%), ASX 200 (-0.22%) and Shanghai Comp (-0.84%) are all down as we type. Treasuries have continued to firm with yields another basis point or so lower. News (Reuters) has emerged overnight that the US is a step closer to avoiding another government shutdown with the release of a $1.3tn spending draft bill to fund the government through September with more funds for border security, infrastructure and the military. The lower House may vote on the bill today, then followed by the Senate. Elsewhere, China’s PBOC has raised the rates it charges on reverse repo agreements by 5bps following the Fed’s rate hike, with the PBOC noting that the move is “in line with market expectations and a normal reaction the Fed’s rate hike”.

So, one central bank down and one to go with the Bank of England decision due out at 12pm GMT today. The consensus is for no change in policy while market pricing also assigns a low 16% probability of a hike. The bigger question is whether or not we see a more hawkish BoE centre in light of yesterday’s stronger than expected wages numbers. Indeed, pricing for a May hike is over 80% and our UK economists yesterday changed their view to a rate hike (from a hold) for two months’ time. Yesterday, weekly earnings were reported as rising one-tenth to +2.6% yoy in the three months to January, while the broader measure of earnings jumped to +2.8% yoy, beating consensus by two-tenths. In addition, yesterday we had the announcement that the NHS is lifting the pay cap on staff with a 6.5% salary increase agreed over three years.

Also on the cards today are the flash March PMIs from across the globe. This morning we’ve already had Japan’s manufacturing PMI which came in at 53.2 versus 54.1 last month. For Europe, the consensus expects a 0.3pt decline in the composite to 56.8 driven by a 0.5pt decline for the manufacturing print (to 58.1) and 0.2pt decline for the services reading to 56.0. Both Germany (-0.8pts to 59.8) and France (-0.4pts to 55.5) are expected to see declines in their manufacturing prints too. The US in the afternoon is expected to buck the trend with a 0.2pt increase expected at the manufacturing level.

Back to yesterday, unsurprisingly it was hard to keep the tariff debate fully out of the headlines. The WSJ reported that China is planning countermeasures against Trump’s tariffs with US agriculture exports on the list. Reuters headlines in the afternoon also suggested that the White House will today make its announcement over China intellectual-property violations with suggestions it will be around $50bn of tariffs, however more significant is that there may also be investment restrictions based on Lighthizer’s comments. So that will no doubt be a focus for markets today too.

With regards to the remaining data yesterday, in the US, the Q4 current account deficit was slightly wider than expected at -$128.2bln (vs. -$125bln expected) or 2.6% of GDP. February existing home sales rebounded +3.0% mom to 5.54m (vs. 5.40m expected) while the median sales price rose +5.9% yoy. The inventory of available properties fell -8.1% yoy to 1.59m, the lowest for February since 1999. In the UK, the January unemployment rate edged back down to its 43-year low of 4.3% (vs. 4.4% expected). Also in the UK, February public sector net borrowing (ex-banking groups) was £1.3bln (vs. £1.8bln expected), while the March CBI trends total orders index fell 6pts mom to +4 (vs. +8 expected) – the lowest since October.

Looking at the day ahead, EU leaders will today meet in Brussels to sign off on Brexit guidelines (continuing through to Friday). Meanwhile it’s a busy day for data, highlighted by the release of those flash March PMIs in Europe and the US. The BoE monetary policy meeting outcome is the other big highlight. Other notable data releases include March confidence indicators in France, the January current account balance reading for the Euro area, Germany’s IFO survey
for March, UK retail sales for February and weekly initial jobless claims, January FHFA house price index, February leading index and March Kansas City Fed PMI in the US. Late in the evening we’ll also get the February CPI report in Japan.  ECB speak will also be a focus with Lautenschlaeger and Nouy due to speak at separate events. German Chancellor  Merkel is also due to deliver a speech in parliament likely outlining her policy goals.

end

3. ASIAN AFFAIRS

i)THURSDAY MORNING/WEDNESDAY NIGHT: Shanghai closed DOWN 17.47 POINTS OR 0.53% /Hang Sang CLOSED DOWN 343.47 POINTS OR 1.09% / The Nikkei closed UP 211.02/Australia’s all ordinaires CLOSED UP 0.99%/Chinese yuan (ONSHORE) closed DOWN at 6.3320/Oil UP to 64.94 dollars per barrel for WTI and 69.24 for Brent. Stocks in Europe OPENED DEEPLY IN THE RED   .   ONSHORE YUAN CLOSED UP AT 6.3295 AGAINST THE DOLLAR. OFFSHORE YUAN CLOSED DOWN ON THE DOLLAR AT 6.3320 /ONSHORE YUAN TRADING WEAKER AGAINST OFFSHORE YUAN/ONSHORE YUAN TRADING WEAKER AGAINST USA DOLLAR/OFFSHORE YUAN TRADING  STRONGER AGAINST THE DOLLAR . CHINA IS NOT VERY  HAPPY TODAY (WEAKER CURRENCY BUT POOR   CHINESE MARKETS/AND  NEW TRUMP TARIFFS  INITIATED/WEAKER GLOBAL MARKETS ) 

3 a NORTH KOREA/USA

/NORTH KOREA/USA

 

3 b JAPAN AFFAIRS

AN EXCELLENT LOOK AT WHAT IS GOING ON INSIDE JAPAN FROM SIMON BLACK WHO LIVES THERE

(COURTESY SIMON BLACK/SOVEREIGN MAN)

Japan Is So Broke That Its Prisons Are Full Of 80+ Year Old ‘Felons’

Authored by Simon Black via SovereignMan.com,

‘Mrs. F.’ was 84 years old the first time she ever went to prison.

Her crime? Petty shoplifting. She stole rice, strawberries, and cold medicine.

She served her time. Got released. Then shoplifted again so that she’d go back to prison.

She’s now 89 years old serving out another 2 ½ year sentence, not too far away from where I am right now, at a women’s prison about 60 miles outside of Tokyo.

She’s not the only one.

One in five female prisoners in Japan is senior, almost all of whom have been convicted of petty crimes like shoplifting.

This is no accident. Elderly women in Japan are economically vulnerable. Half live below the poverty line. Many live by themselves and have no one to turn to for help.

So there’s a growing trend in Japan of elderly women deliberately committing petty crimes– hoping to get caught so that they’ll be sent to prison.

In prison, of course, they’re fed, clothed, housed, and even have their health care covered by the state.

It’s a pitiful, last resort form of welfare that’s likely going to become worse as Japan’s already elderly population continues to age.

It’s also a sad example of what happens when a nation’s economy goes bust after a dangerous, explosive, unsustainable boom.

Back in the 1970s and 1980s, Japan was indomitable.

This country had pulled itself out of the ashes of the atomic bomb in World War II and set itself on a path to dazzling economic growth.

Within a few decades, Japan had become one of the wealthiest nations in the world. And by the 1970s, they began flexing that economic might.

If you’re old enough you might remember the Japanese scare, especially in the early 1980s, as Japanese companies were buying up huge chunks of US real estate, businesses, etc.

Japan had all the money… and it seemed like they were going to conquer the world.

The Japanese stock market was soaring. Japanese property prices were, by far, the most expensive on the planet.

Then it all went bust in the late 80s.

It turned out that Japan’s massive economic boom had been fueled by years of unsustainable monetary policy– the central bank simply conjuring trillions of currency units out of thin air.

The country had been flooded with money. Bank balance sheets were stuffed full of trillions of yen and they began liberally loaning out– practically giving away– money to businesses and investors.

They were able to get away with it because Japan’s economy was healthier than the rest of the world’s.

The US was going through a series of deep recessions. Japan, meanwhile, was a production and export powerhouse.

So even though the Japanese central bank was printing unlimited quantities of paper money, the rest of the world readily accepted it.

Japanese financial markets soared, and large Japanese companies went on an international shopping spree, gobbling up prized assets– especially in the United States.

But by the late 1980s, the giant Japanese monetary bubble burst. Everything crashed. Stocks. Property. The economy itself.

Three decades later it has yet to recover.

We’ve talked about this before: Japan is a classic example that the good times NEVER last forever. (And it’s important to plan accordingly.)

Moreover, Japan teaches us that financial and economic downturns can last for DECADES.

A lot of people understand that stock markets and economies move in cycles– periods of boom and bust.

But there’s a common misconception that the ‘bust’ part of the cycle will be short-lived, maybe a few months, 1-2 years at most.

Japan shows that downturns can be more severe, and last longer, than anyone could possibly imagine.

Last, Japan is a monument to the serious social consequences that unfold when a long-term economic downturn strikes.

This sad story of poor, lonely, elderly women deliberately committing crimes so that they’ll be taken care of in prison is just one example.

On the other end of the age spectrum, younger people in Japan have stopped having children.

Due to the long-term economic downturn, Japan’s young adults don’t have the financial stability to get married and start families, and the birth rate has been declining as a result.

Last year, in fact, the number of babies born in Japan was the lowest number EVER in the 118-year history of their public records.

And this shrinking population has its own long-term consequences– a lower tax base, fewer workers paying into the pension system to support retirees, etc.

On top of it all, Japan’s long-term economic downturn has obliterated the finances of the government.

The Japanese government has to borrow appalling amounts of money in order to make ends meet each year.

The national debt here has become so large that it’s more than twice the size of the Japanese economy.

Plus it takes the government more than 20% of tax revenue each year just to pay INTEREST on its debt– and that’s at a time when rates are actually NEGATIVE.

This country is really amazing, I’ve always loved it here.

But Japan has been suffering for a long, long time, both socially and economically. The two go hand in hand.

That makes this place the most important case study in the world.

Because everything that Japan did back in the 70s and 80s to cause these long-term social and economic problems is EXACTLY what most of the West is doing now: printing money, keeping rates too low, inflating asset bubbles, going into debt, and acting like the good times will last forever.

It would be utterly foolish to believe that this time is different.

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

END

c) REPORT ON CHINA

We have outlined to you how the new oil priced in yuan is going to replace the USA Petro- dollar scheme.

Nick Giambruno of InternationalMan.com describes the mechanism beautifully

(courtesy Nick Giambruno/InternationalMan.com)

Is China Days Away From Killing The Petrodollar?

Authored by Nick Giambruno via InternationalMan.com,

Not long ago, there was a popular joke in China that went something like, “Who is Xi Jinping?”

The answer was, “The husband of Peng Liyuan,” the famous singer Xi is married to.

Today, Xi is China’s president. He leads 1.4 billion people. And he’ll likely be the most powerful person in the world soon.

As I mentioned last Wednesday, Trump’s new steel and aluminum tariffs are part of a larger, escalating battle between the US and China.

China is rapidly displacing the US as the dominant global power. This shift is inevitable. China’s economy will be twice as large as the US economy by 2030.

This leaves the US with limited options…

  1. It could kick back and let China displace it as the most powerful country in the world.
  2. It could start a military war with China.
  3. And it could push the current trade battle into an all-out economic war against China.

I think a full-blown economic war is the most likely. Under President Trump, it’s all but certain.

That said, the Trump administration seems to underestimate China’s position—in both the short and long term.

For decades, the US has been able to exclude virtually any country it wants from international trade. Right now, if one country wants to trade with another, it basically needs US permission first.

That’s because (for a short while longer) the US dollar is the world’s most important currency. The US Navy also dominates the world’s oceans, controlling most major shipping lanes.

But China is building a new international system. Eventually, it will let China and its trading partners totally bypass the US.

And, as I’ll explain shortly, a key piece is set to fall into place on March 26…

History’s Biggest Infrastructure Project

The New Silk Road is the centerpiece of China’s new plan.

In the coming months and years, it will include high-speed rail lines, modern highways, fiber optic cables, energy pipelines, seaports, and airports. It will link the Atlantic shores of Europe to the Pacific shores of Asia.

China expects to have its New Silk Road fully up and running by 2025.

This is history’s biggest infrastructure project. The whole point is to completely re-draw the world economic map. If it’s successful—and it most likely will be—China will dominate Eurasia.

President Xi announced the $1.4 trillion plan in late 2013. When it’s done, a train leaving Beijing will be able to reach London in only two days.

Keep in mind, the Chinese are careful long-term planners. When they make a strategic decision of this magnitude, they totally commit.

Take their road system, for example. Between 1996 and 2016 China built 2.6 million miles of road, including 70,000 miles of highway. In just 20 years, it built far more highway than the US has in its entire existence.

In other words, the Chinese get things done. They have the political might—along with the financial, technological, and physical resources—to make the New Silk Road happen. With iron-willed President Xi at the helm, I have no doubt they’ll pull it off.

Not long from now, the New Silk Road will help China unseat the US as the world’s dominant global power and totally upend the geopolitical paradigm.

But before that happens—within the next couple of weeks, actually—China is introducing a way for anyone who buys or sells oil to opt out of the US-dominated global monetary system.

Why the Dollar Is Different Than the Peso

Most investors know that oil is the largest and most strategic commodity market in the world. As you can see in the chart below, it dwarfs all other major commodity markets combined.

Every country needs oil. And, for a short while longer, they need US dollars to buy it. That’s a very compelling reason to hold large dollar reserves.

This is the essence of the petrodollar system, which has underpinned the US dollar’s role as the world’s reserve currency since the early 1970s.

Right now, if Italy wants to buy oil from Kuwait, it has to purchase US dollars on the foreign exchange market to pay for the oil first.

This creates a huge artificial market for US dollars.

In part, this is what separates the US dollar from a purely local currency, like the Mexican peso.

The dollar is just a middleman. But it’s used in countless transactions amounting to trillions of dollars that have nothing to do with US products or services.

Since the oil market is so enormous, it acts as a benchmark for international trade. If foreign countries are already using dollars for oil, it’s just easier to use dollars for other international trade, too.

In addition to nearly all oil sales, the US dollar is used for about 80% of all international transactions.

This gives the US unmatched geopolitical leverage. The US can sanction or exclude virtually any country from the US dollar-based financial system at the flip of a switch. By extension, it can also cut off any country from the vast majority of international trade.

The petrodollar system is why people and businesses everywhere in the world take US dollars. Other countries have had little choice about it, until now…

China’s “Golden Alternative”

China does not want to depend on its main adversary like this. It’s the world’s largest oil importer. And it doesn’t want to buy all that oil with US dollars.

That’s why China is introducing a new way to buy oil. For the first time, it will allow for the large-scale exchange of oil for gold.

I’m calling this new mechanism China’s “Golden Alternative” to the petrodollar. It goes live on March 26.

Ultimately, I think people will look back and see the Golden Alternative as the catalyst that killed the petrodollar.

Here’s how it will work…

The Shanghai International Energy Exchange is introducing a crude oil futures contract denominated in Chinese yuan. It will allow oil producers to sell their oil for yuan.

China knows most oil producers don’t want a large reserve of yuan. So producers will be able to efficiently convert it into physical gold through gold exchanges in Shanghai and Hong Kong.

As of March 26, countries around the world will have a genuine, viable way to opt out of the petrodollar system. Now is the time to position yourself to profit.

Gold Will Soar

With China’s Golden Alternative, a lot of oil money will flow into yuan and gold instead of dollars and Treasuries.

I think the price of gold is going to soar.

China imports an average of around 8.5 million barrels of oil per day. This figure is expected to grow at least 10% per year.

Right now, oil is hovering around $60 per barrel. That means China is spending around $510 million per day to import oil.

Gold is currently priced around $1,300 an ounce. That means every day China is importing oil worth over 390,000 ounces of gold.

If we assume that just half of Chinese oil imports will be purchased in gold soon, it translates into increased demand of well over 60 million ounces per year—or more than 55% of gold’s annual production.

Of course, China won’t be the only country using the Golden Alternative. Anyone will be able to.

The increased demand for gold is going to shock the market. That’s why I think the price of gold will soar.

As the petrodollar dies, gold will be remonetized… and China will be another step closer to displacing the US.

*  *  *

Editor’s Note: Owning physical gold’s not the only way to turn the coming chaos into huge profits. There are other practical steps you can take before the US-China conflict reaches its boiling point. Get the details in our guide to Surviving and Thriving During an Economic Collapse.

end

it begins:  the Chinese trade war started at 12:30 pm est today

(courtesy zerohedge)

China Trade War Begins at 12:30 EST Today

It’s official – barring a weather delay – the China trade war will commence  at 1230pm ET when President Trump will sign an executive order unleashing $50 billion worth of tariffs over Intellectual Property (IP) violations.

American officials have been raising their concerns about China’s IP practices since Bill Clinton was president, and Beijing has repeatedly failed to deliver on promises to reform, but now, as Bloomberg reports that the order will target more than 100 different types of Chinese goods, according to a person familiar with the matter, who spoke on the condition of anonymity.

The value of the tariffs was based on U.S. estimates of economic damage caused by intellectual-property theft by China, the person said.

“Tomorrow the president will announce the actions he has decided to take based on USTR’s 301 investigation into China’s state-led, market-distorting efforts to force, pressure, and steal U.S. technologies and intellectual property,” White House official Raj Shah said in an emailed statement on Wednesday.

This will be Trump’s first trade action directly aimed at China, which he has blamed for the hollowing out of the American manufacturing sector and the loss of U.S. jobs.

For decades, western companies have griped that Beijing is forcing them to hand over tech secrets and source code as a price of access to the Chinese market.

Now they have a White House prepared to act forcefully to stop it – starting tomorrow, Axios’ Jonathan Swan reports – but the fear is a costly tit-for-tat trade war.

But China is drawing up a reprisal list that includes soybeans, sorghum and live hogs, report the WSJ’s Lingling Wei, Yoko Kubota and Liza Lin.

Finally, as a reminder, China will begin trading its petroyuan futures contract next week (3/26) – so perhaps this action by Trump is a pre-emptive strike?

END
China now braces for a trade war with the uSA.  They accuse the USA of repeated abusing of WTO rules
(courtesy zerohedge)

China Braces For Trade War With US, Accuses Washington Of “Repeatedly Abusing” WTO Rules

The White House is preparing to unveil $50 billion worth of tariffs on more than 100 different types of Chinese goods Thursday at 12:30 pm ET – what President Trump has characterized as a response to China’s larcenous Intellectual Property practices (and, quite possibly, a preemptive strike as China prepares to launch its petroyuan contracts next week).

This is how UBS’ Chief US Economic Paul Donovan summarized what is coming:

US President Trump is expected to announce a tax increase for US consumers who have dared to purchase goods that have been partially made in China. There is likely to be a large US flag, suitably photogenic and smiling American workers and a dramatic signature. And selective tariffs, investment restrictions and visa limits.

US Trade Representative Lighthizer said that an “algorithm” was used to maximize the pain to China and minimize the pain to US consumers (this acknowledges that there is pain for US consumers). Trade data (presumably the algorithm input) is complex and often out of date. Saying the word “algorithm” in an authoritative voice does not magically reduce the risks.

The tariffs will be imposed under Section 301 of the 1974 US Trade Act and focus on Chinese high-tech goods. There will also be restrictions on Chinese investments in the US, said US Trade Representative Robert Lighthizer. China’s apparel industry may also be hit. For years, China has forced US companies to turn over valuable source code and other intellectual property as the price of gaining entry to one of the world’s “most lucrative developing markets.” But Trump and his protectionist allies have argued that this is a blatant violation of WTO rules.

China

Back in August, Trump ordered the Commerce Department to launch an investigation into Chinese trade practices under Section 301 – which was regularly invoked by the Reagan administration to punish Japanese exporters.

Meanwhile, as China prepares for a full-fledged “trade war” with Washington, the leaders of the world’s second-largest economy are seeking to shore up support for their position from other nations and world trade bodies. China has zeroed in on US export caps as one reason for the widening trade deficit between the world’s two largest economies.

Chinese Foreign Ministry spokeswoman Hua Chunying said it was unfair to criticize China’s trade practices if the United States won’t sell to China what it wants to buy, referring to US export controls on some high-tech products, per Reuters.

“How many soybeans should China buy that are equal to one Boeing aircraft? Or, if China buys a certain number of Boeing aircraft shReutersould the U.S. buy an equal number of C919s?” Hua said, mentioning China’s new self-developed passenger jet.

However, China still hopes it can hold constructive talks with the United States in a spirit of mutual respect to seek a win-win solution, she added.

US agricultural exports to China stood at $19.6 billion last year,with soybean shipments accounting for $12.4 billion.Chinese penalties on US soybeans will especially hurt Iowa, a state that backed Trump in the 2016 presidential elections and is home to US Ambassador to China Terry Branstad.

Boeing could also find itself in China’s crosshairs, particularly as the country’s aerospace program is seeking to develop the C919 as a domestic rival to Boeing’s jets.

Boeing, which has the biggest market share in China of any aerospace company, said last year it expects China to buy more than 7,000 Boeing jets worth some $1.1 trillion over the 20 years between now and 2036.

Chinese officials repeated threats that their retaliation would be swift.

“With regards to the Section 301 investigation, China has expressed its position on many occasions that we resolutely oppose this type of unilateral and protectionist action by the U.S.,” the Commerce Ministry said on Thursday.

“China will not sit idly by while legitimate rights and interests are hurt. We must take all necessary measures to firmly defend our rights and interests.”

Jacob Parker, Beijing-based vice president of China operations at the US-China Business Council, said the group wanted to know what action the US administration wants China to take to improve protection for intellectual property, and over forced technology transfer.

Parker said China needs to adopt a tougher deterrent against counterfeiting and IP theft, and do away with joint venture and business licensing requirements that can be used to mandate technology transfers to gain market access.

“It’s really important for them to lay that out so that we have a strategy going forward and it’s not just tariffs for tariffs’ sake.”

China celebrated a WTO decision, released Wednesday, declaring Obama-era anti-subsidy tariffs illegal under WTO rules as validation of its claims:.

“The Chinese side never wants to fight a trade war with anybody, but if we are forced to, we will not hide from it,” Foreign Ministry spokeswoman Hua Chunying warned on Wednesday. Beijing will “definitely take firm and necessary countermeasures to defend its legal rights,” she said, as quoted by China’s Global Times.

Meanwhile, the Commerce Ministry said in a statement that Vice-Minister Wang Shouwen had slammed Trump’s new wave of protectionism at an informal meeting of ministers from 50 World Trade Organization (WTO) member-states in India earlier this week.

“Trade restriction measures will not only hurt the global trade order but also cause serious damage to the multilateral trade system,” Wang said, urging all countries to “support the global multilateral trade system and defend the authority and effectiveness of WTO rules.”

The Commerce ministry welcomed Wednesday’s WTO ruling against Obama-era anti-subsidy tariffs on Chinese goods. The decision “proves that the US side has violated WTO rules, repeatedly abused trade remedy measures, which has seriously damaged the fair and just nature of the international trade environment and weakened the stability of the multilateral trading system,” the statement said.

China’s shift to a consumption-based economy has made it less dependent on exports – so the $50 billion tariffs imposed by the US likely won’t have much of an impact. But Moody’s Investors Service said the impact would be far greater if the US significantly expands tariffs and throws in broad-ranging protectionist measures.

If that comes to pass, China could retaliate against US companies, cancelling orders for Boeing planes and nixing a pending deal for Qualcomm to acquire NXP Semiconductors. It could also foil Tesla’s push to build a factory on the mainland.

But as China hopes an amicable solution might be worked out, the boost to Trump’s popularity since announcing the steel and aluminum tariffs (which are incredibly popular among ordinary working Americans, even as they’ve turned pundits and “experts” apoplectic with rage) has emboldened him to seek a more aggressive tack.

And now we wait for Trump’s official launch of trade war with China just after noon.

end

This morning, the USA will file suit against China for trade law violations.  They also are looking at exemption Brazil, Argentina and the EU for the aluminum and steel tariffs.  It now seems that the USA target is and has always been China

(courtesy zerohedge)

US To File WTO Suit Against China For Trade Law Violations

Update (10:30 am ET): US Trade Representative Robert Lighthizer said late Thursday morning that he sees Brazil, Argentina and the EU to be added to the list of exemptions to steel and aluminum tariffs.

* * *

Yesterday, a flurry of media reports pertaining to the size of anti-China tariffs, and the timing of their announcement, suggested that the Trump team was still working to iron out the details. But with less than five hours to go until Trump’s 12:30 ET announcement, the Wall Street Journal quietly reported Thursday morning that the US is also expected to announce a lawsuit against China at the World Trade Organization for trade law violations. The tariffs would be assessed separately without going to the WTO.

Trump

The aggressive move comes a day after the WTO said on Wednesday that the US “did not fully comply with a 2014 ruling against its anti-subsidy tariffs on a range of Chinese products.” Indeed, the WTO has ruled against the US and US companies several times in recent years. That was the perceived advantage of pursuing actions under Section 301 of the US Trade Act: It would allow the Trump administration to effectively circumvent the WTO.

The U.S. is also expected to announce it would sue China at the World Trade Organization for trade law violations. The tariffs would be assessed separately without going to the WTO.

Trump officials had earlier said that the tariffs would apply to about $30 billion in Chinese imports. An accompanying report on Chinese trade practices is expected to estimate that the harm to the U.S. from improper technology transfer to Chinese firms is $30 billion annually. Beijing improperly forces U.S. firms to transfer their technology to Chinese joint venture partners as a requirement to do business in that nation, the U.S. trade officials allege.

It’s not clear why the administration appears to have settled on a larger number. On Wednesday, U.S. Trade Representative Robert Lighthizer said the U.S. was using a computer algorithm it developed to decide which products to target. The U.S. is looking to restrict imports of goods that would harm Beijing, but cause relatively little harm to U.S. consumers and companies.

Trump has said that the tariffs would apply to a list of 100 products, primarily technology exports.

Meanwhile, reports surfaced Thursday that the US would be seeking a dialogue with the European Union about tariffs as Trump insists that the US would never again tolerate unfair trade practices.

For years, China has demanded US companies turn over invaluable source code and other intellectual property as a price of admission to the Chinese market. China has also vowed to retaliate.

Thursday’s announcement will be the culmination of an investigation that Trump ordered in August.

* * *

Commerce Secretary Wilbur Ross revealed Thursday morning that the US is “processing” between 100 and 200 applications for exemptions to the aluminum and steel tariffs recently adopted by the US. Already, Canada, Mexico and Australia have been granted exemptions.

At this rate, it looks like the US could grant exemptions to everybody but China. Which, of course, is the whole point: To harden the rest of the world against China as the US struggles to defend its hegemonic dominance of global markets against the challenger that poses the greatest threat.

end

This to going to anger China.  There is some good news in that the uSA will impose only duties of 25% on some products but they are also targeting the aerospace and information technology and associated machinery: basically high tech stuff.

(courtesy zerohedge)

US Trade Rep Lays Out Amount Of Tariffs, Which Chinese Industries Are Targeted

First the good news: as we reported moments ago, the “trade war – heavy” scenario envisioned by Deutsche Bank comes with 45% tariffs on all imports from China which would cause significant damage to China’s economy, and would prompt China to respond with drastic measures. This scenario could also “move the US economy into recession.” But according to a just released fact sheet from the US Trade Representative, this is not the baseline US proposal, at least not yet, and instead the US will impose “only” 25% duties on Chinese products.

Now the bad news: the same fact sheet notes that the industries targeted by the US will be: aerospace, information and communication technology and machinery, all high-tech (one can argue with technology stolen from the US), high-margin, mission-critical industries to China where the US is a critical customer. In fact, the strategic importance of maintaining legacy trade status for these sectors prompted Goldman Sachs one seek ago to not even include them in the list of most likely industries targeted by the US.

As such, it is likely that the starting salvo in trade wars will anger Beijing far more than if some of the more generic export sectors had been targeted. It also means that the severity of the proportional response will be high enough to potentially prompt the next step in the White House counter-retaliation in what is now an escalating tit-for-tat trade war as taught in all PoliSci 101 classes.

Readers can access the full USTR fact sheet below (or at this link), but here is the breakdown of the key Section 301 actions just enacted by the Trump administration, in its own words, including the size of the proposed tariffs and targeted industries:

SECTION 301 RESPONSES

  • In a Memorandum signed on March 22, 2018, the President has directed his Administration to take a range of actions responding to China’s acts, policies, and practices involving the unfair and harmful acquisition of U.S. technology.
    • WTO Case: At the direction of the President, USTR will confront China’s discriminatory technology licensing practices through a World Trade Organization (WTO) dispute.
    • 25 Percent Ad Valorem Duties: USTR will propose additional tariffs on certain products of China, with an annual trade value commensurate with the harm caused to the U.S. economy resulting from China’s unfair policies. The proposed product list subject to the tariffs will include aerospace, information and communication technology, and machinery.
    • Investment Restrictions: The President also has directed his Administration to respond to Chinese investment aimed at obtaining key U.S. technologies. Relevant departments and agencies will work with the Treasury Department to propose measures addressing China’s investment practices involving the acquisition of sensitive technologies.

And the full term sheet.

end

Late this evening:  China responds to Trump that he is not afraid of a trade war and he vows to fight to the end.

I will bet you will see increase gold/silver shipped to China

(courtesy zerohedge)

China Responds: “Not Afraid Of Trade War”, Vows To “Fight To The End”

Earlier today we laid out the various ways in which China can retaliate to today’s official start of trade warfare between Washington and Beijing (of which the “trade war heavy” scenario was especially troublesome), and said that at this point all there is to do is watch and wait as China unveils next steps.

It did just that when the Chinese Embassy in the US issued a statement in response to the “Section 301” investigation, in which it said that the US, “ignoring rational voices” has engaged in a “typical unilateral trade protectionist action” which “China is firmly opposes.”

The embassy then said that while China “does not want a trade war with anyone”, it is “not afraid of and will not recoil from a trade war.” Furthermore, Beijing is “confident and capable of facing any challenge.”

It then warns Trump that “if a trade war were initiated by the U.S.” which it just was a little after noon Eastern, “China would fight to the end to defend its own legitimate interests with all necessary measures.

Ultimately, China warns that “the actions undertaken by the U.S. are self-defeating. They will directly harm the interests of U.S. consumers, companies, and financial markets. They also jeopardize international trade order and world economic stability.

And in a plea that will fall on deaf ears in the White House, Beijing concludes by urging the U.S. “to cease and desist, make cautious decisions, and avoid placing China-U.S. trade relations in danger with the purpose of hurting others that eventually end up hurting itself.”

Translation: China will retaliate imminently, at which point – in typical tit-for-tat fashion – the US would respond in kind again, until the worst-case scenario envision by Deutsche Bank emerges.

The silver lining: this trade war will be used by the Fed to first delay and then call of the rate hike cycle entirely, in the process perversely validating Trump’s claim that trade wars are, drumroll, bullish.

Full statement below:

Statement of the Chinese Embassy in the United States regarding the “Section 301 Investigation”

The United States persisted in conducting the “301 investigation” and announced relevant trade measures, ignoring rational voices, and in disregard of the mutually-beneficial nature of China-U.S. trade relations and the consensus reached by the two countries of managing differences constructively through consultations. It is a typical unilateral trade protectionist action. China is strongly disappointed and firmly opposes such an action.

Bearing in mind the principles of mutual respect and win-win cooperation, China has demonstrated sincerity in making reasonable suggestions to the U.S., and has made great efforts to address the current trade imbalance between China and the U.S. China does not want a trade war with anyone. But China is not afraid of and will not recoil from a trade war. China is confident and capable of facing any challenge. If a trade war were initiated by the U.S., China would fight to the end to defend its own legitimate interests with all necessary measures.

The actions undertaken by the U.S. are self-defeating. They will directly harm the interests of U.S. consumers, companies, and financial markets. They also jeopardize international trade order and world economic stability.

We urge the U.S. to cease and desist, make cautious decisions, and avoid placing China-U.S. trade relations in danger with the purpose of hurting others that eventually end up hurting itself.

4. EUROPEAN AFFAIRS

Cable (Br Pound /USA dollar) spikes on a hawkish 7;2 split at the Bank of England.  However the rate rise will happen in May.However it fell back to par

(courtesy zerohedge)

Cable Spikes Then Dumps As Hawkish BOE Vote Reveals 2 Unexpected Dissenters

In a surprising announcement, the Bank of England kept its rates as expected at 0.50%,however instead of a unanimous 9-0 vote as had been expected, the vote was 7-2 with McCafferty and Saunders dissenting preferring to increase Bank Rate by 25 basis points now – citing slack being largely used up and accelerating wage growth, presenting risks to inflation in the medium term. The others, however, agreed that an “ongoing tightening of monetary policy over the forecast period would be appropriate”.

MPC vote by a majority of 7-2 to maintain at 0.5%

On the QE side, there were no surprises with the Committee voting unanimously to maintain the stock of sterling non-financial investment-grade corporate bond purchases and UK government bond purchases unchanged.

With today’s statement, the BOE set the stage for a second interest rate rise at its next meeting in May – which has been fully priced in by the market – saying that pay growth was picking up and inflation was likely to remain above its 2% target for too long.

A quick scan through the Monetary Policy Committee’s reveals that the BOE removed the line from the February release that “were the economy to evolve broadly in line with the February inflation report projections, monetary policy would need to be tightened somewhat earlier and by a somewhat greater extent over the forecast than anticipated at the time of the November report, in order to return inflation sustainably to target.”

The MPC also maintained the language that any rate rises to come “were likely to be at a gradual pace and to a limited extent”, which has previously assured financial markets not to expect more than 2 rate hikes in 2018.

Some other observations, courtesy of RanSquawk:

  • Brexit: Maintains view on Brexit that was stated in the February release by stating ‘Developments regarding the UK’s withdrawal from the EU – and in particular the reaction of households, businesses and asset prices to them – remain the most significant influence on, and source of uncertainty about, the economic outlook’. Although did acknowledge that since the previous meeting, a draft withdrawal agreement between the UK and EU had been agreed ahead of the EU council meeting on March 23rd.
  • Data: Overall has been broadly consistent with the MPC’s view set out in the QIR
  • Inflation: Inflation is expected to ease further in the short term but remain above the 2% target.
  • Growth: Prospects for global growth remain strong. Q4 GDP was revised lower to 0.4% with components suggesting less rotation towards net trade and business investment than anticipated in February, albeit could be subject to revision. Activity indicators suggest underlying Q1 2018 growth is similar to that of Q4 2017.
  • Wages: Pay growth continued to pick up. The firming of short-term measures of wage growth in recent quarters and a range of survey indicators suggests pay growth will rise further in response to the tightening labour market; providing increasing confidence that growth will pick-up at target consistent rates.
  • Slack: Maintains view on slack that was stated in the February release by stating that the steady absorption of slack has reduced the degree which it is appropriate for the MPC to accommodate an extended period of inflation above the target.

Commenting on the statement, Scotiabank economist Alan Clarke said “it looks like May is all but a done deal” adding that the “only thing that will make it slightly tricky is if I’m right on CPI next month,” says Clarke, who sees consumer price inflation slowing to 2.4% y/y. However, he adds, “higher wages sufficiently offset that.”

In immediate knee-jerk reaction, Cable spiked above 1.42 on the hawkish vote split, moving from 1.4160 to 1.4220; gains, however, were pared back with GBP then quickly sliding back to around 1.4150, below the pre-announcement level.

Gilts, meanwhile, fell in an immediate reaction, moving from 121-30 to 121-04, before making its way back to 121-30 again. 10y gilt yield pares drop to -3bps to 1.49%, with the 2y eventually stabilizing at 0.93% after falling as much as 5bps earlier in the day.

Ultimately, the statement means that the next hike is likely to take place in May, as previously expected, and thus no incremental information was revealed today. To be sure, after the BOE announcement, the MPC-dated Sonia shows odds of a 25bps May hike at 89%, little changed from before the meeting.

END

Libor-OIS spreads widen to 57 basis points, which is extremely high.  Libor has risen for 32 straight days indicating stress in the global banking system. the reason for the widen is due to scarcity of dollars especially over in Europe.  When Trump’s new tax reform allowed companies overseas to repatriate their dollars to the USA it created a huge derivative hole because banks used those dollars as a base and then exercised huge derivative trades on those dollars which have now disappeared.  Deutsche bank’s stock is plummeting  (and other banks as well)

Houston..we have a problem.

(courtesy zerohedge)

Funding Stress Contagion Spreads – European Banks Collapse To 11-Month Lows

Yesterday we exposed the globally contagious spread of funding market distress into the credit risk of major US banks, and today it has accelerated, spreading to Europe’s banks as their stocks crashed to the lowest in 11 months

Deutsche Bank is leading European banking’s collapse…

But this is a serious move for the broad EU financial system…

Credit risk is breaking out…

As Credit diverges extremely bearishly from stocks…

And it’s about to get even worse…

As three-month dollar Libor extended its streak to 32 straight increases, though the rise in the setting is the smallest since March 8. The crucial USD Libor-OIS spread rises to 56.8bp, widest level since May 2009 (as 3M Libor at 2.2856% is the highest since November 2008, vs 2.2711% prior session).

As we noted yesterday, 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
EU/USA Russia
We have outlined to you on several occasions, the real reason for the USA ‘s dissatisfaction with Putin. It is the construction of the Nord  2 Stream pipeline which will send natural gas from Russia to Germany an onto the rest of Europe more cheaply than any other pipelines in existence.  This will provide Russia with much dominance in Europe and that is not in the USA’s interests:  thus they are now threatening sanctions for any European firm participating in the pipeline construction which in turn makes Europe more economical

go figure…

(courtesy zerohedge)

8. EMERGING MARKET

This is what we can expect to find when a country goes into hyperinflation. Believe it or not, Venezuela’s inflation is projected at 13,000% next year and  cash has disappeared.  Now we witness Elorza which will become Venezuela’s largest city to launch its own community currency..similar to what we witnessed in Argentina when provinces created their own currency for trade..

(courtesy zerohedge)

“There’s No Cash To Spend” – Elorza Becomes Largest Venezuelan City To Launch “Community Currency”

With the IMF projecting an inflation rate of 13,000% next year, Venezuelans are abandoning the bolivar in droves as prices for necessities like bread and meat double every month.

After we reported back in December that a socialist collective in one Caracas neighborhood launched its own currency, the panal.

Here’s the Associated Press:

The panal, which means honeycomb in Spanish, can be spent in just a few stores. But residents of one neighborhood desperate for spending cash said they welcome the idea proposed by pro-government groups.

“There is no cash on the street,” said Liset Sanchez, a 36-year-old housewife who plans to use her freshly printed panals to buy rice for her family. “This currency is going to be a great help for us.”

Amid triple-digit inflation and a currency meltdown, there has been a run on cash in Venezuela.

Buying common items such as toilet paper, or paying a taxi driver, requires stacks of the official currency, called the bolivar.

Now, the local currency movement has claimed its biggest victory yet with the western Venezuelan city of Elorza, near the border with Colombia, launching its own currency featuring the face of a local independence leader, per Reuters.

A western Venezuelan city began to issue its own currency this week to alleviate the hyper-inflationary country’s cash crisis.

The “Elorza” currency, with bills featuring the face of local independence leader Jose Andres Elorza, will be valid in the city of Elorza, near Venezuela’s border with Colombia.

The bills are being sold in the municipality’s offices to ensure that thousands of tourists and residents can trade, said mayor Solfreddy Solorzano, a member of the ruling Socialist Party.

Venezuela’s national currency, the bolivar, has plummeted in recent years amid a crippling economic crisis. Prices are doubling nearly every month and basics such as food and medicine are nearly unavailable.

On top of that, there are shortages of cash itself making basic transactions impossible.

“People do not have bolivars to spend, so we created two denominations of notes,” Solorzano said, adding that some 2 billion bolivars’ worth of “Elorza” had been purchased — roughly $9,000 at the black market exchange rate.

Many in Venezuela earn the equivalent of just a dollar or two a month.

While the currency is still relatively limited in terms of circulation, it’s the latest sign that communities in economically devastated Venezuela are taking their economic fortune into their own hands. The idea of regional currencies was first proposed by former President Hugo Chavez. The Maduro regime has apparently adopted a policy of indifference.

The economic collapse was caused by falling oil prices and years of economic mismanagement that started when Maduro succeeded Chavez, who died of cancer in 2013. Maduro’s government blames US sanctions and a broader international conspiracy led by Washington for its problems.

Falcon

Henri Falcon

Meanwhile, with the country’s next election set for May 20, one of Maduro’s opponents, former state governor Henri Falcon, is promising voters a $25 monthly giveaway should he be elected, Reuters reported.

Delivering on such a promise would be, of course, impossible. Venezuela has less than $10 billion in foreign currency reserves. And strict capital controls and US Treasury Department sanctions make foreign currency difficult to come by.

But Falcon needs to promise voters something, because Maduro’s government has adopted a strategy of tying government benefits to individuals’ votes in the election. If you don’t vote socialist, you don’t get what paltry government benefits exist – including a food bag that many poor Venezuelans rely on.

In an equally far-fetched proposal, Falcon also suggested abandoning the bolivar entirely in favor of the dollar.

He also proposed a populist “solidarity card” which mimics a popular welfare benefit doled out by the Maduro regime.

Still, given Maduro’s hardball tactics – and the economic lifelines his country has received, and will likely continue to receive, from China and Russia – Falcon can make all the lofty promises he wants.

In a desperate bid to stave off insolvency, Maduro recently launched the Petro – billed as the first government-backed cryptocurrency. It’s backed by 5 billion barrels of oil.

In the end, the socialists will inevitably prevail.

END

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

Euro/USA 1.2324 DOWN .0022/ 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 ALL IN THE RED   

USA/JAPAN YEN 105.58 DOWN  0.357 (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 1.4156 UP .0014  (Brexit March 29/ 2017/ARTICLE 50 SIGNED/BREXIT FEES WILL BE CAPPED

USA/CAN 1.2859 DOWN .0038 (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 THURSDAY morning in Europe, the Euro FELL by 22 basis points, trading now ABOVE the important 1.08 level RISING to 1.2324; / Last night Shanghai composite CLOSED DOWN 17.47  OR 0.53% /   Hang Sang CLOSED DOWN 343.47 POINTS OR 1.09%  /AUSTRALIA CLOSED DOWN 0.16% / EUROPEAN BOURSES  ALL DEEPLY IN THE RED

The NIKKEI: this THURSDAY morning CLOSED UP 211.02 POINTS OR .99%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 343.47 POINTS OR 1.09%  / SHANGHAI CLOSED DOWN 17.47  OR 0.53%   /

Australia BOURSE CLOSED DOWN 0.16% /

Nikkei (Japan)CLOSED UP 211.02 POINTS OR .99%

INDIA’S SENSEX  IN THE GREEN 

Gold very early morning trading: 1330.20

silver:$16.54

Early THURSDAY morning USA 10 year bond yield: 2.848% !!! DOWN 4  IN POINTS from WEDNESDAY night in basis points and it is trading WELL ABOVE resistance at 2.27-2.32%. (POLICY FED ERROR)/ 

The 30 yr bond yield 3.0705 DOWN 5  IN BASIS POINTS from WEDNESDAY night. (POLICY FED ERROR)/

USA dollar index early  THURSDAY morning: 89.69 DOWN 9  CENT(S) from WEDNESDAY’s close.

This ends early morning numbers THURSDAY MORNING

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And now your closing THURSDAY NUMBERS \1 PM

Portuguese 10 year bond yield: 1.748% DOWN 1  in basis point(s) yield from WEDNESDAY/

JAPANESE BOND YIELD: +.0.038% DOWN 1/2    in basis points yield from WEDNESDAY/JAPAN losing control of its yield curve/

SPANISH 10 YR BOND YIELD: 1.288% DOWN 5  IN basis point yield from WEDNESDAY/

ITALIAN 10 YR BOND YIELD: 1.881 DOWN 3 POINTS in basis point yield from WEDNESDAY/

the Italian 10 yr bond yield is trading 59 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: FALLS TO +.524%   IN BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR THURSDAY

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

Euro/USA 1.2293 DOWN .0053 (Euro DOWN 53 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 105.39 DOWN 0.546 Yen UPP 55 basis points/

Great Britain/USA 1.4083 DOWN .0061( POUND DOWN 61 BASIS POINTS)

USA/Canada 1.2931 UP  .0033 Canadian dollar DOWN 33 Basis points AS OIL FELL TO $64.50

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This afternoon, the Euro was DOWN 53 to trade at 1.2293

The Yen ROSE to 105.39 for a GAIN of 54 Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE

The POUND FELL BY 61 basis points, trading at 1.4083/

The Canadian dollar FELL by 33 basis points to 1.2962/ WITH WTI OIL FALLING TO : $64.50

The USA/Yuan closed AT 6.3350
the 10 yr Japanese bond yield closed at +.038%  DOWN  5/10 IN BASIS POINTS / yield/
Your closing 10 yr USA bond yield DOWN 8  IN basis points from WEDNESDAY at 2.809% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 3.044  DOWN 6    in basis points on the day /

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

Your closing USA dollar index,89.84 UP 6 CENT(S) ON THE DAY/1.00 PM/

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

London: CLOSED DOWN 119.77 POINTS OR 1.70%
German Dax :CLOSED DOWN 284.71 POINTS OR 2.31%
Paris Cac CLOSED DOWN 117.69 POINTS OR 2.25%
Spain IBEX CLOSED DOWN 189.50 POINTS OR 1.97%

Italian MIB: CLOSED  DOWN 557/63 POINTS OR 2.44%

The Dow closed DOWN 724.42 POINTS OR 2.93%

NASDAQ WAS DOWN 178.61 Points OR 2.43% 4.00 PM EST

WTI Oil price; 64.50 1:00 pm;

Brent Oil: 69.04 1:00 EST

USA /RUSSIAN ROUBLE CROSS: 57.26 UP 37/100 ROUBLES/DOLLAR (ROUBLE LOWER BY 37 BASIS PTS)

TODAY THE GERMAN YIELD RISES TO +.524% FOR THE 10 YR BOND 1.00 PM EST EST

END

This ends the stock indices, oil price, currency crosses and interest rate closes for today 4:30 PM

Closing Price for Oil, 4:30 pm/and 10 year USA interest rate:

WTI CRUDE OIL PRICE 4:30 PM:$64.27

BRENT: $68.79

USA 10 YR BOND YIELD: 2.821%   THIS RAPID ASSENT IN YIELD IS VERY DANGEROUS/DERIVATIVES START TO BLOW UP/ 

USA 30 YR BOND YIELD: 3.061%/

EURO/USA DOLLAR CROSS: 1.2302 down .0044  (down 44 BASIS POINTS)

USA/JAPANESE YEN:105.28 DOWN 0.663/ YEN UP 66 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: 89.85 UP 7 cent(s)/dangerous as the lower the dollar the higher the inflation.

The British pound at 5 pm: Great Britain Pound/USA: 1.4098: DOWN 0.0044  (FROM LAST NIGHT DOWN 44 POINTS)

Canadian dollar: 1.2947 DOWN 50 BASIS pts

German 10 yr bond yield at 5 pm: +0.524%


VOLATILITY INDEX:  23.34  CLOSED  up   5.48

LIBOR 3 MONTH DURATION: 2.27%  ..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

Stocks Plunge As Trade Turmoil, Credit Crisis, & Tech Wreck Loom

Seemed appropriate…

All of a sudden, ‘stuff’ matters:

  • Powell hawkish
  • Trump lawyer resigns
  • Trump trade wars start
  • Funding market stress surges
  • Credit markets spike
  • Facebook new lows
  • Tech tax and regulation

The Dow dumped over 700 points on massive volume, broke below it 100DMA to its lowest since Feb 9th…and lowest close since February 8th’s crash lows…

Well that re-escalated quickly…

Chinese tech stocks tumbled…

European stocks were ugly (UK’s FTSE at lowest since 2016)… after the worst PMI in 14 months…

As funding market stress ripples through the credit markets (bank credit at 6-month wides) and on into the equity markets…

US and EU banks are tumbling…

And as the cost of funding soars so buybacks will diminish…

So US Stocks suffered heavily…

Futures show the various legs lower as trade war announcements overnight, European open, US open, trade war news, Mueller news, and credit crashing sent stocks lower…

VIX spiked back above 23 – its highest since March 2nd…

The Dow broke below its key triangle support and the Fib 38.2% retrace again today…

The S&P 500 broke and closed below its 100DMA…

Bloomberg notes that equities are more or less in free-fall mode now as the closing bell nears, with the S&P 500 tumbling 2.3% as I type. Whether you believe it’s trade tensions causing the drop or (like Bill Gross) think it’s fallout from Jay Powell’s press conference debut, the question is where will it stop? Chart guru Bill Maloney on the Squawkbox has these levels penciled in as possible areas of support: the first is 2,647, the March 2 low. Next up is the Feb. 5 low of 2,638. Below that is the 200-day moving average around 2,584. That is, of course, if the market respects technicals, which is no guarantee when trading gets like this…

The S&P, Dow, and Trannies are all back in the red year-to-date…

Bank Stocks were battered – so much for goldilocks…

Facebook’s bounce is over…

Steel stocks were clubbed like a baby seal…

U.S. investment grade meanwhile, closed yesterday at 106bps, which matches the widest this year. It’s wider again today, as you’d expect in a Treasury rally.

Breadth in the credit markets is as bad as it gets…

Treasury yields tumbled on the day – extending their drop post-Powell (all lower on the week now)…

10Y Yields tumbled to a 2.7x% handle intraday

Yesterday’s knee-jerk steepening in the yield curve has been erased…

The Dollar bounced back modestly after yesterday’s plunge…

The Mexican Peso dropped most in a month.

Trade turmoil sparked the biggest sell-off in Offshore Yuan since Feb (but it remains very rangebound)….

Cryptocurrencies slipped lower on the day but Bitcoin remains green on the week…

Commodities drifted broadly l;ower as the dollar strengthened…

WTI Crude broke out of its longer term triangle pattern…but as the dollar strengthened this afternoon, oil rolled over , back below $65…

Additionally, Dr.Copper is not happy at all about the global economy… breaking below its 200DMA

One wonders if all that exuberant Chinese commodity speculation is about to catch the economics PhD metal down to reality?

END

THIS MORNING’S EARLY TRADING:

(COURTESY ZEROHEDGE)

Dow Futs Plunge 600 Points From Powell Highs, Below Monday’s Lows

Well, that re-escalated quickly…

The Dow is down 600 points from its Powell highs…

And it’s not just The Dow…

And Facebook is tumbling further…

Bonds and Bullion are well bid as the dollar sinks…

 END
Early morning data 
So much for the narrative that the global economies of the world including the USA is doing just fine:
it was crushed this morning as both the USA and European PMI’s plunged
(courtesy zerohedge)

Global Synchronous Recovery’ Narrative Crushed As US, EU PMIs Plunge

Following the collapse of Europe’s Composite PMI (to 14-month lows), US Composite PMI slipped notably from one-year highs. So much for the ‘global synchronous recovery’ narrative.

Commenting on Europe’s flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

“While the first quarter average PMI reading remains relatively robust, indicative of GDP rising by 0.7-0.8%, the loss of momentum since the buoyant start to the year has been quite dramatic.

“At least some of the slowing may be ascribed to bad weather in some northern regions and, perhaps more importantly, ‘growing pains’ resulting from the strength of the recent growth spurt. Supply chain delays and raw material shortages were often reported to have stymied production in manufacturing (delays in German supply chains are currently more widespread than at any time in the survey’s 22-year history), and both manufacturing and services sectors also saw activity being curtailed by growing incidences of skill shortages. Backlogs of work continue to rise as a result of these growth constraints.

“However, other factors are clearly at play. The fact that export order book growth has more than halved since the end of last year suggests the stronger euro is taking an increasing toll on export performance. Survey responses also highlighted how political uncertainty also appears to have intensified, dampening demand.

The data therefore suggest that eurozone growth peaked around the turn of the year and the region is settling into a slower, but still robust pace of expansion. Price pressures have meanwhile also eased slightly, in part linked to cheaper imports arising from the euro’s recent strength, but remain elevated.”

In the US the picture was a little more mixed as the Services sector plunged but manufacturing jumped to a 3 year high (even as manufacturing output hit a 4 month low)…

Commenting on the US flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

“The flash PMI surveys indicate that the economy likely continued to expand at a robust pace in March, rounding off a solid opening quarter of the year. The surveys are running at a level consistent with annualised first quarter GDP growth approaching 2.5% (though we note that official GDP estimates may once again understate growth in the opening quarter of the year).

“The survey’s employment index is meanwhile at its highest for nearly three years and indicative of another strong payroll rise in the order of 240,000 in March.

“The improved hiring trend reflects buoyant optimism regarding future growth. Companies’ expectations for output in the year ahead remained elevated, dipping slightly in services but surging to a three-year high in manufacturing.

Inflationary pressures meanwhile remain a key theme of the surveys, especially in manufacturing, reflecting increased raw material prices, notably for metals. The survey found average prices charged for goods and services are rising at one of the strongest rates seen since 2014. Furthermore, with factory costs showing the largest jump for seven years amid growing shortages of key inputs, inflationary pressures appear to be on the rise.”

Stagflation anyone?

end

Late this afternoon;

investment grade credit crashes sending the equities lower.  There is huge stress in the markets as banks do not want to lend to one another.  The higher cost of credit certainly curtails as  stock buybacks as it is just too expensive.

Investment Grade Credit Crashes As Dow Dumps 500 Points

It would appear – by the 500 point drop in The Dow – that equity markets, and their Polyanna-ish commentators, can no longer ignore the collapse in investment-grade credit markets.

IG credit risk is now at its widest in six months and IG CDX is even worse… (NOTE that HY remains elevated but not as much as IG).

As funding tightness and interbank market stress spreads into corporate credit markets…

And all of this stress is hitting stocks – as The Dow tests the lows of the day.

… for one simple reason: the more IG blows out, and the wider the spread, the fewer corporate buybacks in the future as corporate Treasurers and CFO reassess how increasingly expensive it is to repurchase their own stock.

end
Congress is secretly forming a committee to bail out over 200 pension funds.  It will not help.  This is the reason that the stock markets are generally higher:  to get pension funds in the green.
(courtesy zerohedge)

Congress Just Quietly Formed A Committee To Bail-Out 200 Pension Funds

Authored by Simon Black via SovereignMan.com,

The US pension system has gotten so bad, Congress is actually planning for its failure.

As the government was working on the recent, new budget deal and subsequent boost in government spending, Congress quietly snuck in a provision that forms a committee which would use federal funds to bail out as many as 200 “multi-employer” pension plans – where employers and labor unions jointly provide retirement benefits to employees.

As is often the case, this rescue “plan” is too little too late. The US pension system is beyond repair. And if you’re depending on pension income to carry you through retirement, it’s time to consider a Plan B.

Before explaining how dire the situation actually is, let’s take a step back…

Pensions are simply giant pools of capital used to pay out retirement benefits to workers.

Typically, employers and employees contribute a percentage of the employees’ salary to a pension throughout his or her career. Then, upon retirement, the pension is supposed to pay a fixed, monthly amount to the retiree.

There are both government and corporate pension plans.

Boston College estimates the nation’s 1,400 multiemployer plans (corporate) are facing a $553 billion shortfall. And around one-quarter of those are in the “red zone,” meaning they’ll likely go broke in the next decade or so.

But Congress’ committee, assuming it works, wouldn’t even rescue the red zone plans, much less the remaining 1,200.

And it doesn’t even begin to address the real problem – the $7 trillion funding gap faced by the government’s own pensions.

Congress is stepping in because the Pension Benefit Guaranty Corporation (PBGC) – the pension equivalent to the Federal Deposit Insurance Corporation (FDIC) – is completely insolvent.

Like the FDIC, the PBGC is an insurance program funded by premiums paid by its participating members (pensions). Its entire income is made up of premiums collected and the investment income it earns on those premiums.

So, as the markets crash, not only will the PBGC’s portfolio get slaughtered… so will those of the pensions it guarantees (which will then require more funds). And as these pensions fail, the PBGC will collect less in premiums. It’s a vicious circle.

But things are plenty bad already.

The PBGC, which only covers corporate pensions, had a $76 billion deficit in 2017. It has total assets of $108 billion on its books compared to potential loss exposure of more than $250 billion.

By its own estimation, its fund to cover multiemployer pensions (which makes up $65 billion of the deficit) will be insolvent by 2025.

Pensions are in such bad shape today for the simple reason that investment returns are too low. And pensions can’t cover their future obligations.

Pension fund managers invest in assets like stocks, bonds and real estate in hopes of generating a safe return.

Most funds require a 7%-8% return in order to meet their future liabilities.

But with interest rates near record lows, these funds are having to take on more risk in order to meet their minimum return requirements. They’ve reduced their bond allocations and started buying more stocks, private equity and other riskier assets.

Some funds, like Hawaii’s pension fund, went even further and dabbled in the incredibly risky strategy of selling put options. By selling a put, you collect a small premium if markets stay calm or rise. But you’re exposed to unlimited losses if markets crash – like they did when the Dow fell 2,400 points in a week last month.

At the end of last year, equities made up nearly 54% of public pension fund portfolios. The $209 billion New York State Common Retirement Fund has over 58% of its assets in stocks. Kentucky’s $20 billion pension for teachers is 62% in stocks.

These giant funds, which are supposed to pay for public and private employees in retirement, are piling into stocks at record high valuations. And when the volatility hits, it will be devastating.

Consider that America’s largest pension fund, The California Public Employees’ Retirement System (CalPERS), lost 5% of its assets ($18.5 billion) in just 10 trading days leading up to February 9.

Pension funds should never experience that kind of volatility. But the current macro environment is forcing them to make dumb decisions in hopes of generating a minimum return.

Luckily, if you’re a smaller investor, you still have plenty of solid investment options available – even if you’re investing with tens of millions of dollars.

I’ve told our Sovereign Man: Confidential readers about an asset-backed loan earning 13% a year. And they’ve already safely earned millions of dollars in interest.

You can also invest in super-safe stocks trading below their net cash, like Sovereign Man’s Chief Investment Strategist, Tim Staermose, does in his service, The 4th Pillar.

But these strategies get more difficult if you have hundreds of billions of dollars.

So these pension funds are forced to buy stocks and real estate at all-time highs. It stretches valuations and creates huge risk.

Still, pension fund allocations to equities are near all-time highs.

So, ask yourself, what will happen to your retirement if the stock market falls just 20%? What about 50%?

There’s zero chance these funds will be able to pay out retirement benefits. They’re taking huge risks at all-time highs and they have zero downside protection (the PGBC is broke).

It’s smart to consider some other options like a self-directed IRA, solo 401(k) or a SEP IRA – which allow you significant latitude in making better, safer and stronger investments.

Plus, they allow you to put more money away toward retirement before tax. And there’s no downside to that.

You’ve got make long-term plans for retirement. The pension system is broken. So the time to take action is now.

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

END

Supposedly Congress has reached a deal on their huge omnibus spending budget deal

Let us see if this comes to fruition

(courtesy zerohedge)

Congress Reportedly Reaches Budget Deal, Averting Weekend Shutdown

After a third day of Republican and Democratic leaders emphatically insisting to any reporter who would listen that their long-promised $1.3 trillion “omnibus” budget deal would be ready by Monday night (then Tuesday night, then some time Wednesday) it appears that a compromise has finally been attained.

The Washington Post  is reporting that the (tentative) deal does quite give President Trump everything he wanted on immigration (actually Republicans agreed to some major concessions on that front) but it does withhold funding for a tunnel connecting New York City and New Jersey – something that Trump had lobbied for out of what appeared to be pure spite for the inhabitants of his home town (and its suburbs), which have largely turned against him.

Trump

The deal appeared in jeopardy for a brief moment Wednesday afternoon when it leaked that Trump was reportedly considering withdrawing his support for the bill. But after a midday meeting with Paul Ryan, the White House confirmed that POTUS had changed his mind.

The text of the bill should be available early Thursday, lawmakers said.

WaPo’s story captures the excitement surrounding a deal – with lawmakers counting on Ryan to flip Trump back to a yes.

Top congressional lawmakers huddled in Ryan’s office in the morning. Leaving the meeting, Senate Minority Leader Charles E. Schumer (D-N.Y.) and House Minority Leader Nancy Pelosi (D-Calif.) both said a deal was close.

“We’re feeling very good about this,” Schumer said. “We’ve accomplished many, many, many of our goals. When it’s unveiled, you will see.”

Later in the day, with no bill introduced, House Majority Whip Steve Scalise (R-La.) played down any drama over Trump’s support: “Last I heard is the president supports this package,” he said. A Ryan spokeswoman issued a statement saying Trump “is supportive of the bill” following their meeting.

It is unclear how soon Congress might vote on the bill. The chairman of a House Appropriations subcommittee said Wednesday that the House would vote Thursday, though the vote could move to Friday.

It’s also worth reminding readers that, during the Trump era, it’s not done until the president signs.

When it came to border wall funding, Republicans caved and – just as Trump was prepared to do during his first post-election 60 Minutes interview – accepted a fence.

According to the three officials, who spoke on the condition of anonymity to describe sensitive negotiations, the spending deal also includes $1.6 billion in funding for construction of a wall along the U.S.-Mexico border — routing taxpayer funding to a key Trump priority. But the number is far short of the $25 billion the administration sought. Democrats also won tight restrictions on how that money can be spent, two officials said.

During a press conference Wednesday night, Paul Ryan assured his audience that there would be “many, many structures” along the border, raising the bar for Washington euphemisms.

Trump’s victory on the tunnel could potentially lead to commuters in a region that accounts for one-fifth of US GDP being permanently stranded from their work.

The Trump administration appears to have succeeded in blocking efforts to direct $900 million in planned seed funding to the $30 billion Gateway project to improve passenger rail service to and from Manhattan, including a new tunnel under the Hudson River.

The project has been a key priority for lawmakers of both parties, including Schumer and House Appropriations Committee Chairman Rodney Frelinghuysen (R-N.J.). But according to several officials familiar with his thinking, Trump was determined not to hand Schumer a win while Democrats stood in the way of his administration’s priorities, and he issued a veto threat. A Democratic aide said the project could still benefit from hundreds of millions of dollars in Transportation Department funding, though in some cases it would have to compete with other projects.

The deal will also include a compromise on guns.

One late-breaking deal surrounds gun laws: Democrats agreed to add bipartisan legislation to improve the National Instant Criminal Background Check System (NICS) for gun buyers and Republicans agreed to add language making clear that federal funds can be spent on research into gun violence — clarifying a long-standing restriction that has been interpreted as preventing such research.

Whether the deal is officially finalized is still far from certain. There are many factors that could derail it. A Freedom Caucus rebellion or another bout of cold feet from Trump are two possibilities that come to mind.

 END

The bill passes:  256 – 167 and now onto the Senate

(courtesy zerohedge)

House Passes $1.3 Trillion Omnibus Spending Package 256-167

Update: The omnibus bill has passed. The final vote count was 256-167…

The Senate now has until midnight Friday to pass it.

* * *

House Republicans confirmed to CNN on Thursday that they will begin voting on the 2,000 page omnibus spending bill at 12:30 pm. The voting should be concluded by 1 pm.

House Republican and Democratic leaders say they have enough votes to pass the bill.

With House Freedom Caucus Leader Mark Meadows opposing the bill after tentatively embracing the deal last night, Republican leaders struck a last-minute deal with Democrats to win their support for a procedural vote that would allow them to proceed to the final vote.

Steny Hoyer, the No. 2 Democrat in the House, managed to squeeze some notable concessions from Republicans at the last minute. Chief among them: A “queen of the Hill” rule on immigration, meaning that GOP leaders would agree to bring up several immigration measures and the one that gets the most votes would prevail.

OMB Director Mick Mulvaney told reporters Trump will sign the omnibus bill – assuming it does, in fact, pass.

As we pointed out last night when the tentative deal was reached, the bill includes notable concessions from Republicans on their border-security package, which allocates funding for a border fence, but not the wall Trump had envisioned. This bothered Trump, prompting him to nearly withdraw his support.

The White House also held a pre-vote press conference explaining why the vote is actually a victory for Republicans despite lacking a comprehensive immigration deal…

end
Stockman describes the rate shock we will receive as the Fed rolls off 600 billion of bonds.  Yields must rise and that will break the stock market and the bond market
(courtesy David Stockman)

Stockman: Why Deficits Didn’t Matter During The Age Of Monetization, 1987-2017 (But Do Now!)

For the past 30 years fiscal deficits have been a big financial nothingburger because the Fed and other central banks gutted their sting. So doing, they drastically and dangerously falsified the market for government finance by weaning politicians of the one element that kept modern Big Government fiscally contained.

We are referring to the historical fear among politicians that fiscal deficits cause “crowding out” of private investment and rising interest rates. Indeed, that  proposition was universally understood during your editor’s sojourn in the Imperial City between 1970 and 1985 as a staffer, Congressman and budget director.

As it has turned out, however, there was implicitly a crucial qualifier. To wit, it was naturally assumed that fiscal deficits would be financed in honest capital markets, and that yields in the bond pits were free market prices which cleared the balance between the supply of private long-term savings and the demand for term debt.

The very notion that it could be otherwise—-that the central banking branch of governments could swoop into capital markets to scoop up and sequester in their trillions the debt emissions of the fiscal branches— was scarcely imaginable among anyone reasonably educated and minimally informed.

After all, had Lyndon Johnson, Tricky Dick, Jimmy Carter or even Ronald Reagan suggested that the Federal Reserve buy government debt at rates which exceeded annual issuance by the US Treasury, as was the case during the peak years of QE, they would have been severely attacked—if not subjected to impeachment—-for advocating rank financial fraud.

Nor is that mere conjecture. For instance, after his “guns and butter” deficits had breached an unheard of 3% of GDP (outside of world war), LBJ essentially concluded he had no choice except to commit political hara-kiri by forcing a 10% surtax through the Congress in the 1968 election year.

Likewise, upon inheriting the Oval Office in August 1974, Jerry Ford  famously attempted to curtail excessive fiscal stimulus with a “WIN” tax, and Jimmy Carter never let his deficits get above 2.5% of  GDP—-even though he had a big spending domestic agenda.

But the most dispositive case of all was that of Ronald Reagan. Notwithstanding his reputation as the scourge of taxes, the Gipper signed three consecutive tax increase bills in 1982, 1983 and 1984 after the deficit exploded to 6% of GDP owing to the original Reagan tax cut and huge defense build-up.

Nor were those increases window dressing. On a combined basis, they rolled back fully 40% of the 1981 tax bill and amounted to 2.7% of GDP or $500 billion per year in today’s economy; and they were enacted with little resistance by deficit-fearing politicians from both parties on Capitol Hill.

Even as late as 1986, the fear of “crowding out” was fully operative in the Imperial City. In fact, Ronald Reagan’s signature tax bill—the reform act of 1986—-was strictly deficit neutral.

Although it lowered the top tax rate to just 28%—including wages, salaries, dividends and capital gains—it was paid for 100 cents on the dollar with a massive reduction in loopholes and passive tax shelters; and that was done at the insistence of a strong bipartisan coalition on Capitol Hill that had to fend off the lobbyist hordes of Gucci Gulch to get it done.

Moreover, the Congressional guardians of the old time fiscal religion were fully vindicated the very next year when the residual Reagan deficits—which still weighed in at 4.4% of GDP in 1986—-began to cause severe “crowding out” effects. By then, the US economy’s post-recession resurgence had gathered a considerable head of steam as it approached the zone of full employment.

Accordingly, during the first 10 months of 1987 interest rates on government bonds soared by 40% and were heading back toward double digits. As it happened, the “yield shock” pictured below triggered the stock market crash of October 1987, which over a four week period took the S&P down by 30%.

The US economy, in fact, was on the road to a severe recessionary relapse—meaning that the Reagan economic legacy would have been far different.

Rather than an alleged triumph of tax-cutting, it would have ended-up in fiscal calamity—with the Gipper ignominiously shuffling out of town in the middle of an economic crisis every bit as bad as the one he inherited.

What happened, of course, is that the new Fed Chairman, who was a partisan Republican and eager seeker of power and praise, saved the day. By opening up the monetary spigots at the Fed, he averted the very credit crunch that Ronald Reagan’s giant fiscal deficits would have otherwise generated.

With the passage of time and relentless revisionism, in fact, the fiscal “near-miss” of the Reagan era was falsely transformed into a triumph of tax-cutting and bastardized supply side economics.

The picture below depicts what actually happened. That is, the last outbreak of crowding out and soaring bond yields ended up being airbrushed out of history.

Instead, then and there Greenspan commenced the age of monetary central planning. During the next 30 years, fiscal deficits were massively monetized and politicians steadily lost their fear of them.

At length, both ends of the Acela Corridor came to discount their salience entirely. By 2001, Dick Cheney pronounced the “all clear”, speciously insisting that Ronald Reagan proved deficits don’t matter.

Worse still, Wall Street came to embrace them rather than be petrified by them as it was upon the unveiling of the Reagan fiscal program in the spring of 1981.

Thereafter, in the eyes of Wall Street budget deficits became just another tool in Washington’s kit of “whatever it takes”. That is, anything that could fuel even the appearance of short-term economic growth was embraced unthinkingly because “growth” of any shape, form or quality became the predicate for endless increases in the stock market averages.

fredgraph-13

To be sure, the age of monetization did not explicitly embrace central bank financing of government deficits as a good thing or even the main objective.

Instead, the whole regime was cloaked in the garb of macro-economic management. The latter encompassed flattening or even abolishing the business cycle to the point of an endless Great Moderation; and the conceit that 12 members of the FOMC had the capacity to make capitalism work better than capitalists in their millions.

Still, it was as much a giant fraud as would have been evident had the macro-economic cover story not been invented. That is, if the massive expansion of the Fed’s balance sheet after August 1987—-from $200 billionwhen Greenspan took office to $4.5 trillion at the peak of Bernanke’s money printing madness—had been justified as an expedient way to fund Big Government without the inconvenience of raising taxes or crowding out private borrowers in the capital markets.

So “something for nothing” was always the essence of the post-1987 Keynesian central banking regime. Yet since the resulting massive suppression of interest rates and falsification of financial asset prices was purportedly being done for the greater good of higher GDP and employment, the politicians were astute enough not to look a gift horse in the mouth.

The Republicans most of the time, and the Dems when the GOP was in power, continued to occasionally genuflect to the fiscal verities. But as time passed, the chorus increasingly lapsed into mere ritual incantation.

As the Greenspan version of monetary central planning got its sea-legs in the 1990s, however, the Fed’s monetization campaign turned even more insidious. That’s because monetary central planning soon spread from the Eccles building to the far corners of the global economy.

As we have frequently documented, the mercantilist and statist regimes of East Asia and the petro-states in particular could not abide the flood of dollar liabilities the Fed was pumping into the global financial system. So in order to keep their exchange rates from soaring and crippling their export industries, they massively intervened in the FX markets, buying dollars with local currency and sequestering these greenbacks in their pliant central bank vaults as they did.

At length, the world’s central banks (and their affiliates) acquired trillions of UST and GSE  liabilities, as well as like and similar holdings of other so-called FX reserves.

But in a world of floating exchange rates and no settlement of current account imbalances with universally agreed to monetary assets (i.e. gold) these balance sheet build-ups had nothing to do with the management of monetary reserves in the pre-1971 manner. Instead, the graph below represents a massive central bank bond buying spree that amounted to nothing less than an unprecedented Age of Monetization.

12-08-16_chart09

Accordingly, the central banks have had their Big Fat Thumb on the supply and demand scales in the money and capital markets so forcefully and so persistently that the reaction function of politicians has been decisively and destructively anesthetized.

Like money managers scrambling into harm’s way of risk in their desperate search for yield, democratic politicians have lost all knowledge of and regard for the “crowding out” effect that historically kept their forebears on a reasonably straight and narrow fiscal path during peacetime.

The key to understanding the “yield shock” coming down the pike, therefore, is to recognize the profound truth that what was taken for granted prior to 1987 by players on both ends of the Acela Corridor is not even recognized in either venue—let alone comprehended—-in 2018

So as the Fed pivots to quantitative tightening (QT) for the first time in decades—-and at a scale that has never before been imagined because the Fed’s balance sheet had never previously approached anything like a quintupling in just six years—-the level of complacency on Wall Street and in Washington is staggering.

As we will show in Part 3, the age of monetization is now over and done. The Fed’s balance sheet shrinkage campaign is now on an auto-pilot, and is far more important than its meaningless dickering with its so-called funds rate.

Accordingly, its bond dumping campaign will reach $600 billion per year by October, and ultimately cause upwards of a $2 trillion downsizing of it balance sheet

Moreover, our Keynesian monetary planners in the Eccles Building will not desist from their bond dumping program until it is too late.

That is, until after the “yield shock” gathers unstoppable momentum and brings the stock market crashing down, and the kind of C-suite triggered labor and asset liquidation campaign that now passes for what used to be called recessions.

At length, the Fed’s balance sheet shrinkage campaign will surely elicit a road to Damascus experience on Wall Street. Like in the story of Saul of Tarsus, the scales which have accumulated over its eyes during the last decades of massive debt monetization by the Fed and other central banks are about ready to fall away.

Then, look out below. The fact is, a Fiscal Doomsday machine has now enveloped Washington in the form of a resurgent Warfare State, the demographically driven Welfare State, the fiscal madness of the current Trumpite/GOP ruling party and the outbreak of outright political warfare between the hinterlands and the Deep State.

Accordingly, there is not a snowball’s chance in the hot place that the mother of all yield shocks can be avoided.

After being AWOL for three decades during the central bank Age of Monetization, “crowding out” is coming back with a vengeance.

end

SWAMP STORIES

Unbelievable!! There are reports that McCabe had ordered the FBI to investigate his boss Jeff Sessions on his testimony prior to becoming Attorney General

(courtesy zerohedge)

Andrew McCabe Ordered FBI To Investigate Jeff Sessions

It’s barely been a week since former FBI Deputy Director Andrew McCabe was unceremoniously fired (he was due to retire with full pension two days later), and already leaks about McCabe’s efforts to discredit his political opponents in the Department of Justice are beginning to surface…

To wit, ABC News reported Wednesday that McCabe authorized an FBI investigation of his boss, Attorney General Jeff Sessions, over what Democrats have described as the AG’s “lack of candor” during his confirmation hearing and his subsequent public testimony.

The federal criminal investigation was authorized “nearly a year” ago. McCabe’s previously unreported decision took an extremely unusual step: Placing the AG in the crosshairs of the FBI, an agency Sessions is supposed to supervise.

Sessions was reportedly unaware of the investigation – and remained unaware when he fired McCabe on Friday. According to ABC’s sources, only McCabe, Mueller, Rod Rosenstein – the deputy AG who appointed Robert Mueller to be special counsel – and a handful of top Democrats and Republicans were aware of the investigation. McCabe authorized the probe after receiving a letter from Democratic Senators Al Franken and Jim Leahy urging the DOJ to examine whether Sessions made false statements to lawmakers.

McCabe

The probe ended shortly after Sessions met with Mueller in the fall. No charges were filed.

During his confirmation hearing early last year, Sessions said he hadn’t met with any Russians and was unaware of any contacts between Russians and members of the Trump campaign. It was later reported that Sessions had met Russian ambassador Sergei Lavrov during a campaign event at Trump Tower. Much later, Mueller revealed that campaign advisor George Papadopoulos pleaded guilty to misleading investigators about contacts he had with Russian emissaries, with whom he was trying to orchestrate a meeting between Trump and Putin. Papadopoulos told Mueller that he informed Trump and Sessions about his efforts at a March meeting, which Sessions later said he did not recall.

“The Special Counsel’s office has informed me that after interviewing the attorney general and conducting additional investigation, the attorney general is not under investigation for false statements or perjury in his confirmation hearing testimony and related written submissions to Congress,” attorney Chuck Cooper told ABC News on Wednesday.

It’s unclear how actively federal authorities pursued the matter in the months before Sessions’ interview with Mueller’s investigators. It’s also unclear whether the special counsel may still be pursuing other matters related to Sessions and statements he has made to Congress – or others – since his confirmation.

McCabe was fired after the DOJ’s inspector general concluded that McCabe misled investigators about authorizing two agents to speak with reporters back in October 2016 about the bureau’s investigation into Hillary Clinton to try and rebut reports that it had gone easy on Trump’s rival.

When he was questioned later about that decision, McCabe “lacked candor – including under oath – on multiple occasions,” Sessions said in a statement announcing McCabe’s firing.

Of course, McCabe has denied this. And we wonder if he’d deny similar questions about the source of today’s leak?

“The FBI expects every employee to adhere to the highest standards of honesty, integrity, and accountability,” Sessions said. “As the [FBI’s ethics office] stated, ‘all FBI employees know that lacking candor under oath results in dismissal and that our integrity is our brand.'”

McCabe vehemently denies misleading investigators, saying in his own statement that he is “being singled out and treated this way because of the role I played, the actions I took, and the events I witnessed in the aftermath of the firing of James Comey.”

The report is notable in that it’s the first time that a senior Trump official still serving in his administration has been confirmed to be the target of a criminal investigation into perjury. Mueller has already proven more than willing to pursue perjury charges, and has secured guilty pleas for perjury from both former National Security Advisor Michael Flynn and Papdopoulos.

It begs the question: What other senior administration officials have been targeted by Mueller? And are any of those investigations still on going? Earlier, it was reported that Mueller was investigating the Trump camp’s relationship with Cambridge Analytica, the designated pariah du jour…

* * *

Interestingly, McCabe apparently made the same miscalculation as his longtime boss and friend James Comey: Namely, that launching an investigation against his superior (as Comey did when he oversaw the beginnings of what eventually became the Mueller investigation) would help insulate him…and just like with Comey, it didn’t.

Just like Comey, McCabe apparently thought that running bogus investigations against his superior, complete with leaks, would make him bulletproof. https://twitter.com/JustinFishelABC/status/976550121868550144 

END

More and more California cities are now defying Sanctuary city laws and joining Trump.  The town of Los Alamitos is in total rebellion

(courtesy zerohedge)

More California Cities Seek To Defy Sanctuary City Laws Los Alamitos Rebellion

Several California cities are planning to defy Jerry Brown’s “Sanctuary City” laws, following Monday’s decision by the quiet Orange County town of Los Alamitos to disregard several state-wide statutes preventing, among other things, cooperation between local law enforcement and federal immigration authorities.

As reported previously, Los Alamitos’ city leadership passed an ordinance 4-1 on Monday, and instructed the city attorney to file an amicus brief in the DOJ lawsuit against California’s Immigrant Worker Protection Act (HB-450), the California Values Act (SB-54), and the Inspection and Review of Facilities Housing Federal Detainees Law (AB-103).

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.

Following the Monday decision, the Orange County Register reports that several other cities – and in fact the entire county itself, may be on the verge of enacting similar laws to defy the state’s Sanctuary Laws.

The County of Orange and several cities in Southern California soon might join Los Alamitos in its bid to opt out of a controversial state law that limits cooperation with federal immigration officials.

Officials with the county as well as leaders in Aliso Viejo and Buena Park said Tuesday they plan to push for various versions of the anti-sanctuary ordinance approved in Los Alamitos late Monday by a 4-1 vote of that city council.

Immigration advocates said Los Alamitos and cities and counties that follow its opt-out ordinance will be violating state law and at risk of litigation.

But Los Alamitos’ anti-sanctuary push also received wide attention in conservative media, and gained support from those who don’t agree with California’s protective stance on all immigrants, regardless of legal status.

Of note, while California’s Bay Area and Los Angeles are notably quite liberal, there are conservative enclaves all over the state according to the California Secretary of State (via the Sacramento Bee).

Voters affiliated with conservative parties outnumber voters affiliated with liberal parties in about 70 of the state’s 200 largest cities and counties.Yorba Linda and Newport Beach are the state’s most conservative cities, with conservative-affiliated voters outnumbering liberal-affiliated voters by a 2-to-1 margin.

Californians affiliated with conservative parties – Republicans, Libertarians and American Independents – today comprise about 25% of the state’s registered voters, according to new data from the California Secretary of State.

State voters affiliated with liberal parties – Democrats, Greens and Peace and Freedom party members – make up about 45% of the electorate. Californians with no party preference comprise 25% of voters and third-party voters make up the other 5%.

 END
The House Intel Committee formally votes to end the Russian probe and release their findings to the public
The Democrats of course reject this under their leader Craze Eyes Schiff.
(courtesy zerohedge)

House Intel Committee Votes To Release Russia Probe Report

In a vote that was widely expected since the House Intelligence Committee announced it had concluded its probe into Russia’s purported collusion and election meddling, finding that the Intelligence Community’s allegations about Russia’s role were overblown.

On Thursday, the committee voted along party lines to formally end the investigation and released a report saying they found no evidence of collusion between Trump and associates of the Kremlin, Politico reported.

House

The GOP-authored report must be reviewed by the intelligence community to redact classified information before the public can read it.

It is expected to be made public during the coming weeks. Democrats on the committee objected to the report being issued and have vowed to release a report of their own.

* * *

After a 14-month probe, Mike Conaway, the probe’s nominal overseer, announced earlier this month that the committee would close its probe with a finding of no collusion.

Unsurprisingly, the Democrats on the committee – led by Schiff, who never missed an opportunity to grandstand about the “lies and corruption” supposedly endemic to the Trump administration – are expected to disagree with the report.

There are two more Congressional committee investigations, each pursuing evidence into Trump and his associates’ relationships with Russian entities.

end

Dowd resigns as Trump’s lead lawyer in the Mueller probe as he is increasing ignoring his legal advice. It looks like DiGenova, who is very aggressive will be the lead lawyer.

(courtesy zerohedge)

Dowd Resigns As Trump’s Lead Lawyer In Mueller Probe: “He’s Increasingly Ignoring Advice”

In a major development for Mueller’s probe of Trump collusion with Russia collusion with Cambridge Analytics and/or obstruction of justice or whatever else is the scandal du jour, the NYT reported that on Thursday morning, Trump’s lead lawyer for the special counsel investigation, John Dowd, resigned on Thursday, just days after the president called for an end to the inquiry.

Moments later, Dowd confirmed his departure to NBC News: “I love the president and wish him well,” Dowd told NBC News.

As the NYT adds, Dowd, who took over the president’s legal team last summer, had considered leaving several times in recent months and ultimately concluded that Mr. Trump was increasingly ignoring his advice.

Mr. Trump has insisted he should sit for an interview with the special counsel’s office, even though Mr. Dowd believed it was a bad idea.

Dowd’s resignation comes days after Trump hired Joseph diGenova, a longtime Washington lawyer who has pushed the theory that the FBI and Justice Department framed Trump in their push to remove him from office. As we reported on Monday, DiGenova wasn’t expected to take a lead role, but he is expected to be a “more aggressive player on the president’s legal team”, joining in the middle of negotiations with the special counsel over the parameters of a possible interview with the president.

Of note, diGenova’s wife is former Reagan Justice Department official and former chief counsel of the Senate Intelligence Committee, Victoria Toensing – who happens to represent FBI whistleblower William D. Campbell.

a

It now appears that diGenova will be Trump’s main lawyer on the Mueller probe.

As a reminder, Trump also recently hired Charles Harder, the lawyer who represented Hulk Hogan in his successful defamation lawsuit against Gawker, to assist longtime attorney Michael Cohen in moving a lawsuit against former adult film star Stephanie Clifford – aka Stormy Daniels – into a federal court.

END

I think this is a “oh my gosh” moment:  Trump is prepared to go to war with Mueller

(courtesy zerohedge)

“Now I’m F—ing Doing It My Way”: Trump Prepares For War With Mueller

Hours after the resignation of John Dowd, President Trump’s lead attorney handling the special counsel investigation, Trump said he “would like to” testify in Robert Mueller’s ongoing probe – a move panned by some, including Fox’s Judge Napolitano, as a bad move.

The President’s 180 comes after the White House legal team had reportedly been considering ways that President Trump might be able to testify – including giving written answers – with Trump’s attorneys reportedly having been split on the terms of such a deal, reported the Wall Street Journal earlier this month.

But that’s not Trump’s style… After bringing on former federal prosecutor Joe diGenova on Monday – a former Special Counsel himself who went after both the Teamsters and former NY Governor Elliot Spitzer, Trump is reportedly taking the gloves off according to Vanity Fair‘s Gabriel Sherman.

Earlier this month, Mueller crossed one of Trump’s stated “red lines” when he subpoenaed Trump Organization business records. According to four Republicans in regular contact with the White House, the move spurred Trump to lose patience with his team of feuding lawyers. “Trump hit the roof,” one source said. Today, Trump’s personal lawyer John Dowd resigned under pressure from Trump.

diGenova – who said in January that the Obama administration engaged in a “brazen plot to exonerate Hillary Clinton” and “frame an incoming president with a false Russian conspiracy,” is married to Victoria Toensing– who, as we’ve mentioned, is a former Reagan Justice Department official and former chief counsel of the Senate Intelligence Committee.

“She’s a killer,” one Republican who knows the couple told Sherman.

Toensing also happens to represent FBI whistleblower William D. Campbell – who claims to have gathered evidence of a Russian “uranium dominance strategy” which included millions of dollars routed to a Clinton charity. Campbell testified before three Congressional committees in February.

The Campbell connection makes it all the more interesting since Trump is reportedly considering adding Toensing to his legal team. In other words, Trump would be teaming up with two veteran bulldog D.C. attorneys – one of whom ostensiblyhas evidence in the Uranium One scandal. As Sherman points out in Vanity Fair, “The hiring of Toensing would be a sign that Trump wants to flip the script and investigate his investigators. Appearing on Fox News, Toensing has called for a second special prosecutor to investigate Mueller, the logic being that he was F.B.I. director at the time that the Uranium One acquisition was approved.

Following Mueller’s subpoena of the Trump organization, Trump has been fuming. Last weekend, Trump encouraged John Dowd to call for an end to the Russia probe, according to Sherman. “On Sunday, Trump blasted Mueller as partisan, tweeting: “Why does the Mueller team have 13 hardened Democrats, some big Crooked Hillary supporters, and Zero Republicans?””

And with the hire of Joe diGenova – it’s obvious that Trump is bringing out the big gunsfor a direct confrontation with Mueller, after souring on his legal team’s more diplomatic strategy:

Trump’s new offensive is a sign that he’s unilaterally abandoning the go-along, get-along strategy advocated by Dowd and Ty Cobb, the White House lawyer overseeing the response to Mueller. Cobb’s standing with Trump has been falling for months, after Cobb made the now-infamous prediction that the Russia probe would be over by Thanksgiving 2017. Dowd assured Trump that he had a “great relationship with Mueller” and could manage him, according to sources. That obviously hasn’t happened. “Trump just wants something to change and nothing was changing,” the outside adviser said. The genial and mustachioed Cobb has always been somewhat of an odd fit for Trump, whose mental picture of a lawyer is Roy Cohn, his early mentor. Sources said Trump reluctantly conceded to allow Cobb to play good cop. “Trump is looking at this saying, I did it your way for months, now I’m fucking doing it my way,” a former West Wing official said. (The White House did not respond to a request for comment.) –Vanity Fair

diGenova was reportedly recommended to Trump by Dave Bossie and Jeanine Piro – both of whom are outside advisors to Trump. That said, Fox News Senior Judicial Analyst Judge Napolitano thinks Dowd’s resignation and the decision to put Trump in front of Mueller’s team would be a “disaster” for the President.

Dowd resignation – Not good news for the President

“It’s very, very easy to trip somebody up when you have all the documents, you have all the testimony, you have all the prior witnesses and you’re asking somebody questions that you know the answers to and that they don’t,” Napolitano said on “America’s Newsroom” in late February.

Of Dowd’s resignation, Judge Napolitano said:

.@Judgenap on John Dowd’s resignation: “This is the most important member of the [legal] team who viewed every document that was surrendered to Bob Mueller.”

Sherman also reports that Trump is considering bringing back controversial attorney Marc Kasowitz onto his defense team.

“They’re talking a lot,” one Republican briefed on the conversations said. (Kasowitz did not respond to a request for comment.) Bringing back Kasowitz would be a sign of how rattled Trump is by the looming prospect of being interviewed by Mueller. Last July, Trump sidelined Kasowitz after it was revealed he struggled with alcoholism and told a stranger to “watch your back, bitch” in an e-mail. (Kasowitz has denied reports of alcohol abuse.) Sources also said Kasowitz’s return would be a signal that Trump is willing to put his own survival ahead of his family. –VF

Kasowitz had reportedly told Trump that Jared Kushner needed to leave the White House.

With the departure of John Dowd and the addition of diGenova and Toensing – combined with Trump’s desire to testify in the Mueller probe, this could go either really well for President Trump – or it could be his downfall. Either way, it promises to entertain.

END

I will  see you  FRIDAY night

HARVEY

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