April 4/AN ABSOLUTE JOKE!!!!!!!!!!!!!!!!!

 

 

GOLD: $1333.40  UP $2.90  (COMEX TO COMEX CLOSINGS)

Silver: $16.30 DOWN 11 CENTS (COMEX TO COMEX CLOSINGS)

Closing access prices:

Gold $1333.30

silver: $16.32

For comex gold:

APRIL/

NUMBER OF NOTICES FILED TODAY FOR APRIL CONTRACT:8 NOTICE(S) FOR 800 OZ.

TOTAL NOTICES SO FAR 595 FOR 59500 OZ (1.8506 tonnes)

For silver:

APRIL

0 NOTICE(S) FILED TODAY FOR

nil OZ/

Total number of notices filed so far this month: 19 for 90,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Bitcoin: BID $7035/OFFER $7135: DOWN $331(morning)

Bitcoin: BID/ $6845/offer $6945: DOWN $570  (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 ROSE BY  4457 contracts from 229131  RISING TO 232,682  DESPITE YESTERDAY’S STRONG 26 CENT FALL IN SILVER PRICING OBVIOUSLY, WE HAD ZERO COMEX LIQUIDATION.  HOWEVER WE ALSO WITNESSED ZERO COMEX SHORT COVERING. WE WERE AGAIN NOTIFIED THAT WE HAD ANOTHER STRONG SIZED NUMBER OF COMEX LONGS TRANSFERRING THEIR CONTRACTS TO LONDON THROUGH THE EFP :   1220 EFP’S FOR MAY AND ZERO FOR ALL  OTHER MONTHS  AND THUS TOTAL ISSUANCE OF 5677 CONTRACTS.  WITH THE TRANSFER OF 1220 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 1220 CONTRACTS TRANSLATES INTO 6.10 MILLION OZ  ON TOP OF THE RISE IN OPEN INTEREST IN SILVER AT THE COMEX AND THE STRONG AMOUNT OF SILVER OUNCES STANDING FOR APRIL COMEX DELIVERY.

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

5032 CONTRACTS (FOR 3 TRADING DAYS TOTAL 5032 CONTRACTS) OR 25.16 MILLION OZ: AVERAGE PER DAY: 1677 CONTRACTS OR 8.386 MILLION OZ/DAY

TO GIVE YOU AN IDEA AS TO THE HUGE SUPPLY THIS MONTH IN SILVER:  SO FAR THIS MONTH:  25.16 MILLION PAPER OZ HAVE MORPHED OVER TO LONDON. THIS REPRESENTS AROUND 3.59% OF ANNUAL GLOBAL PRODUCTION

ACCUMULATION IN YEAR 2018 TO DATE SILVER EFP’S743.65 MILLION OZ.

ACCUMULATION FOR JAN 2018:                        236.879 MILLION OZ

ACCUMULATION FOR FEB 2018:                        244.95 MILLION OZ

ACCUMULATION FOR MARCH 2018:                236.67 MILLION OZ

RESULT: WE HAD A GIGANTIC SIZED GAIN IN COMEX OI SILVER COMEX OF 4457  DESPITE THE 26 CENT FALL IN SILVER PRICE.  HOWEVER, WE ALSO HAD ANOTHER STRONG SIZED EFP ISSUANCE OF 1220 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 1220  EFP’S  FOR THE  MONTH OF MAY WERE ISSUED FOR  A DELIVERABLE FORWARD CONTRACT OVER IN LONDON WITH A FIAT BONUS.   WE GAINED  5677 OI CONTRACTS ON THE TWO EXCHANGES: i.e. 1220 open interest contracts headed for London (EFP’s) TOGETHER WITH A INCREASE OF 4457  OI COMEX CONTRACTS. AND ALL OF THIS HAPPENED WITH THE FALL IN PRICE OF SILVER OF 26 CENTS AND A CLOSING PRICE OF $16.41 WITH RESPECT TO TUESDAY’S TRADING. YET WE STILL HAVE A GOOD AMOUNT OF SILVER STANDING AT THE COMEX FOR DELIVERY IN THIS NON ACTIVE APRIL DELIVERY  MONTH.

In ounces AT THE COMEX, the OI is still represented by just OVER 1 BILLION oz i.e. 1.1635 BILLION TO BE EXACT or 166% of annual global silver production (ex Russia & ex China).

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

IN SILVER, WE ARE NOW 2,000 CONTRACTS AWAY FROM RECORD LEVELS AND YET THE SILVER PRICE IS EXTREMELY LOW

ON THE DEMAND SIDE WE HAVE THE FOLLOWING:

  1. HUGE AMOUNTS OF SILVER STANDING FOR DELIVERY  (MARCH 27 MILLION OZ AND APRIL 1.8 MILLION OZ)
  2. HUGE OPEN INTEREST IN SILVER  232,600 CONTRACTS (OR 1.163 BILLION OZ/
  3. HUGE EFP’S ISSUANCE EQUAL TO 2.9 BILLION OZ OR 400% OF SILVER ANNUAL PRODUCTION

AND YET WE HAVE A CONTINUAL LOWER PRICE OF SILVER DESPITE THE ABOVE HUGE DEMAND.  TO ME THE ONLY ANSWER IS THAT WE HAVE SOVEREIGN  (CHINA) WHO IS ENDEAVOURING TO GOBBLE UP ALL AVAILABLE PHYSICAL SILVER NO MATTER WHERE, EXACTLY WHAT J.P.MORGAN IS DOING. AND IT IS MY BELIEF THAT JPMORGAN IS HOLDING ITS SILVER FOR ITS BENEFICIAL OWNER..THE USA GOVERNMENT WHO IN TURN IS HOLDING THAT SILVER FOR CHINA.(FOR A SILVER LOAN REPAYMENT)

In gold, the open interest  FELL BY   GOOD SIZED 8274 CONTRACTS DOWN TO 494,141 ACCOMPANYING THE STRONG SIZED FALL IN PRICE/YESTERDAY’S TRADING ( LOSS OF $9.30). AS WE ENTER THE ACTIVE DELIVERY MONTH OF APRIL. THE CME RELEASED THE DATA FOR EFP ISSUANCE AND IT TOTALED A RATHER LARGE SIZED 9691 CONTRACTS :   JUNE SAW THE ISSUANCE OF 9291 CONTRACTS AND SURPRISINGLY APRIL AT 400 CONTRACTS (SOMEBODY IN URGENT NEED OF GOLD) THEN ALL OTHER MONTHS ZERO.  The new OI for the gold complex rests at 493,141. ALSO REMEMBER THAT THERE WILL BE A DELAY IN THE ISSUANCE OF EFP’S.  THE BANKERS REMOVE LONG POSITIONS OF COMEX GOLD IMMEDIATELY.  THEN THEY ORCHESTRATE THEIR PRIVATE EFP DEAL WITH THE LONGS AND THAT COULD TAKE AN ADDITIONAL 48 HRS SO WE GENERALLY DO NOT GET A MATCH WITH RESPECT TO DEPARTING COMEX LONGS AND NEW EFP LONG TRANSFERS. DEMAND FOR GOLD INTENSIFIES GREATLY AS WE CONTINUE TO WITNESS A HUGE NUMBER OF EFP TRANSFERS TOGETHER WITH THE MASSIVE INCREASE IN GOLD COMEX OI  TOGETHER WITH  THE TOTAL AMOUNT OF GOLD OUNCES STANDING FOR FEBRUARY COMEX. EVEN THOUGH THE BANKERS ISSUED THESE MONSTROUS EFPS, THE OBLIGATION STILL RESTS WITH THE BANKERS TO SUPPLY METAL BUT IT TRANSFERS THE RISK TO A LONDON BANKER OBLIGATION AND NOT A NEW YORK COMEX OBLIGATION. LONGS RECEIVE A FIAT BONUS TOGETHER WITH A LONG LONDON FORWARD. THUS, BY THESE ACTIONS, THE BANKERS AT THE COMEX HAVE JUST STATED THAT THEY HAVE NO APPRECIABLE METAL!! THIS IS A MASSIVE FRAUD: THEY CANNOT SUPPLY ANY METAL TO OUR COMEX LONGS BUT THEY ARE QUITE WILLING TO SUPPLY MASSIVE NON BACKED GOLD (AND SILVER) PAPER KNOWING THAT THEY HAVE NO METAL TO SATISFY OUR LONGS. LONDON IS NOW SEVERELY BACKWARD IN BOTH GOLD AND SILVER  AND WE ARE WITNESSING DELAYS IN ACTUAL DELIVERIES. IN ESSENCE WE HAVE A GOOD  OI GAIN IN CONTRACTS ON THE TWO EXCHANGES: 8274 OI CONTRACTS DECREASED AT THE COMEX AND A GOOD  SIZED 9691 EFP OI CONTRACTS WHICH NAVIGATED OVER TO LONDON.THUS  TOTAL OI GAIN: 1417 CONTRACTS OR 141700 OZ =4.407 TONNES

YESTERDAY, WE HAD 3180 EFP’S ISSUED.

ACCUMULATION OF EFP’S GOLD AT J.P. MORGAN’S HOUSE OF BRIBES: (EXCHANGE FOR PHYSICAL) FOR THE MONTH OF APRIL : 27,640 CONTRACTS OR 27,64,000  OZ OR 85.972 TONNES (3 TRADING DAYS AND THUS AVERAGING: 9213 EFP CONTRACTS PER TRADING DAY OR 921,300 OZ/ TRADING DAY)

TO GIVE YOU AN IDEA AS TO THE HUGE SIZE OF THESE EFP TRANSFERS :   SO FAR THIS MONTH IN 2 TRADING DAYS IN  TONNES: 85.972 TONNES

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

THUS EFP TRANSFERS REPRESENTS 85.972/2550 x 100% TONNES =  3.337% OF GLOBAL ANNUAL PRODUCTION SO FAR IN MARCH ALONE.*** THE ACCUMULATION OF EFP CONTRACTS IS RISING PER MONTH.

ACCUMULATION OF GOLD EFP’S YEAR 2018 TO DATE 2130.44 TONNES

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

ACCUMULATION OF GOLD EFP’S FOR FEBRUARY 2018:         649.45 TONNES

ACCUMULATION OF GOLD EFP’S FOR MARCH 2018:                741.89 TONNES

WHAT IS ALARMING TO ME, ACCORDING TO OUR LONDON EXPERT ANDREW MAGUIRE IS THAT THESE EFP’S ARE BEING TRANSFERRED TO WHAT ARE CALLED SERIAL FORWARD CONTRACT OBLIGATIONS AND THESE CONTRACTS ARE LESS THAN 14 DAYS.  ANYTHING GREATER THAN 14 DAYS, THESE MUST BE RECORDED AND SENT TO THE COMPTROLLER, GREAT BRITAIN TO MONITOR RISK TO THE BANKING SYSTEM.  IF THIS IS INDEED TRUE, THEN THIS IS A MASSIVE CONSPIRACY TO DEFRAUD AS WE NOW WITNESS A MONSTROUS TOTAL EFP’S ISSUANCE AS IT HEADS INTO THE STRATOSPHERE

Result: A HUGE SIZED DECREASE IN OI AT THE COMEX WITH THE STRONG SIZED FALL IN PRICE IN GOLD TRADING YESTERDAY ($9.30 LOSS). WE HAD A VERY LARGE SIZED NUMBER OF COMEX LONG TRANSFERRING TO LONDON THROUGH THE EFP ROUTE: 9691 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 9691 EFP CONTRACTS ISSUED, WE HAD A GOOD NET GAIN IN OPEN INTEREST OF 1417 contracts ON THE TWO EXCHANGES:

9691 CONTRACTS MOVE TO LONDON AND 8274 CONTRACTS DECREASED AT THE COMEX. (in tonnes, the GAIN in total oi equates to 4.407 TONNES).

we had: 8 notice(s) filed upon for 800 oz of gold.

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

GLD

WITH GOLD UP  $2.90 :  WE HAD NO CHANGES IN GOLD TONNAGE AT THE GLD/

Inventory rests tonight: 852.31 tonnes.

SLV/

WITH SILVER DOWN 11 CENTS TODAY:  A SMALL  CHANGE/ A WITHDRAWAL OF 135,000 OZ TO PAY FOR FEES.

/INVENTORY RESTS AT 318.877 MILLION OZ/

end

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

1. Today, we had the open interest in silver ROSE BY A HUGE 4457  contracts from 229,131 UP TO 232,682 (AND now A LITTLE FURTHER FROM THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787.  THE PRICE OF SILVER ON THAT DAY: $17.89) DESPITE THE STRONG SIZED FALL IN PRICE OF SILVER (26 CENTS//  YESTERDAY’S TRADING).   OUR BANKERS USED THEIR EMERGENCY PROCEDURE TO ISSUE ANOTHER 1220 EFP CONTRACTS FOR MAY  (WE DO NOT GET A LOOK AT THESE CONTRACTS AS IT IS PRIVATE BUT THE CFTC DOES AUDIT THEM) AND 0 EFP’S FOR ALL OTHER MONTHS. EFP’S GIVE OUR COMEX LONGS A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON. WE HAD AGAIN ZERO COMEX SILVER COMEX LIQUIDATION. IF WE TAKE THE  OI GAIN AT THE COMEX OF 4457  CONTRACTS TO THE 1220 OI TRANSFERRED TO LONDON THROUGH EFP’S, WE OBTAIN A  GAIN OF 5677  OPEN INTEREST CONTRACTS.  WE STILL HAVE A GOOD AMOUNT OF SILVER OUNCES THAT ARE STANDING FOR METAL IN APRIL (SEE BELOW). THE NET GAIN TODAY IN OZ ON THE TWO EXCHANGES:  28.38 MILLION OZ!!!

RESULT: A HUGE SIZED INCREASE IN SILVER OI AT THE COMEX DESPITE THE GOOD SIZED FALL IN SILVER PRICING / YESTERDAY (26 CENTS) . BUT WE ALSO HAD ANOTHER VERY GOOD SIZED 1220 EFP’S ISSUED TRANSFERRING COMEX LONGS OVER TO LONDON. TOGETHER WITH THE STRONG  SIZED AMOUNT OF SILVER OUNCES STANDING FOR MARCH, DEMAND FOR PHYSICAL SILVER INTENSIFIES AS WE WITNESS SEVERE BACKWARDATION IN SILVER IN LONDON.

(report Harvey)

.

2.a) The Shanghai and London gold fix report

(Harvey)

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY: Bloomberg

3. ASIAN AFFAIRS

i)WEDNESDAY MORNING/TUESDAY NIGHT: Shanghai closed DOWN 5.52 POINTS OR 0.18% /Hang Sang CLOSED DOWN 661.41 POINTS OR 2.19%  / The Nikkei closed UP 27.26 POINTS OR .13%/Australia’s all ordinaires CLOSED UP .08% /Chinese yuan (ONSHORE) closed DOWN at 6.3077/Oil DOWN to 62.36 dollars per barrel for WTI and 66.86 for Brent. Stocks in Europe OPENED DEEPLY IN THE RED   .   ONSHORE YUAN CLOSED DOWN AT 6.3077 AGAINST THE DOLLAR. OFFSHORE YUAN CLOSED DOWN ON THE DOLLAR AT 6.3094 /ONSHORE YUAN TRADING STRONGER AGAINST OFFSHORE YUAN/ONSHORE YUAN TRADING WEAKER AGAINST USA DOLLAR/OFFSHORE YUAN TRADING  WEAKER AGAINST THE DOLLAR . CHINA IS NOT  VERY HAPPY TODAY POOR  CHINESE MARKETS/CHINA RETALIATES WITH TARIFFS/LOOKS LIKE A FULL TRADE WAR IS BEGINNING/

3a)THAILAND/SOUTH KOREA/NORTH KOREA

 

i)North Korea/South Korea

b) REPORT ON JAPAN

3 c CHINA

i)This will develop into a full scale trade war as the USA just released their list targeting 1300 products.  This has the makings of a full scale trade war which will inevitably cause all markets to crash. We now await China’s response!!

( zerohedge)

ii)China responds with a vengeance!! They are striking back with a strong 25% tariffs on 50 billion dollars worth of USA imports.

( zerohedge)

iii)Your most important read this year…why China’s soybean tariffs will change everything.  The USA exports a huge 12 billion USA dollars of soybeans to the Chinese who use the beans for their feedstock (pigs) as their plantings will only suffice for human consumption.  China consumes 60% of all soybean global production. This will hurt not only the USA exporters but also the Chinese as it will drive up inflation and global costs for livestock and just about everything. The risk to the globe is runaway inflation.

( zerohedge)

iv)Trump’s dilemma: the stock market or a trade war..he picked a trade war as “this is a long term thing…”

( zerohedge)

4. EUROPEAN AFFAIRS

Strange:  the UK foreign office now denies it is claiming Russian is responsible for the nerve agent poisoning as it deletes tweets on the subject

( zerohedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

6 .GLOBAL ISSUES

i)Bill Blain explains why we should be worried as investors seem not to realize the risk element.  In the 90’s very few bought bonds lower than AAA.  Now over 1.5 trillion dollars worth of BBB bonds are held in search of yield in a declining yield field

a must read..

(courtesy Bill Blain/Mint Partners)

ii)Mac Slavo comments that the “deep state” is unafraid to crash markets on Trump’s watch.  This is according to Peter Schiff

(courtesy Mac Slavo/SHFTPlan.com)

iii)Your list of winners and loser and we have mostly losers from the trade war:

(courtesy zerohedge

iv)Canada and Mexico get a little break as the White House caves in on a small NAFTA demand

( zerohedge)

7. OIL ISSUES

Oil prices and gasoline rebound after a surprise crude draw

( zerohedge)

8. EMERGING MARKET

9. PHYSICAL MARKETS

i)Essential reading: Chris Powell’s correct interpretation of why London is backward in gold

( Chris Powell/Bron Suchecki)

ii)Craig Hemke at Sprott outlines that gold is no longer pairing with the Japanese yen but pairs only with the dollar or the Euro.  Supply and demand no longer enter the equation for gold pricing and the movement of gold/silver is determined by the high frequency trading.

( Craig Hemke/Sprott)

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

i)Trading this morning

Dow opens down 400 points:

( zerohedge)

ii)One complete joke!! stocks stage a comeback after the bozo, Larry Kudlow urged the market not to overreact

( zerohedge)

iii)Market data this morning

Expectations was for an ugly USA service sector slump but the numbers were not as bad.  However this soft data report signals tariff turmoil straight ahead;

( zerohedge)

iv)Trump had dinner with the Co CEO of Oracle who is Amazon’s competitor in the cloud based computing contracts which are huge.  Amazon makes all of its money on the cloud services and this funds his distribution business.  Trump is angry that Amazon pays little taxes and uses the USPS despite the fact that the  USA mail has lost money every single year.  The markets will tank on this and on the Chinese implementation of tariffs on soybeans.

( zerohedge)

v)The Amazon effect:  mall vacancies are now at a 6 year high.

( zerohedge)

vi)We have pointed out to you that the primary reason for the continual rise in Lobor -OIS or stress in the banking sector was due to the repatriation of dollars from Europe back into the USA. Matt King states that there is another likely candidate for the rise:  the Fed’s roll off on bonds which this month commences with the roll off of 30 billion usa.  No question:  both are contributing to the rise.

(courtesy zerohedge)

vii)SWAMP STORIES

a)A new ploy by Mueller as he tells Trump’s lawyers that the President is not a criminal target but remains a “subject”.  His goal is to get him for an interview and then possibly charged for perjury

( zerohedge)

Let us head over to the comex:

The total gold comex open interest FELL BY GOOD SIZED 8274 CONTRACTS DOWN to an OI level 493,141  WITH THE LARGE SIZED FALL IN THE PRICE OF GOLD ($9.30  LOSS/ YESTERDAY’S TRADING) FOR TWO YEARS STRAIGHT WE HAVE NOTICED THAT ONE WEEK PRIOR TO FIRST DAY NOTICE OF AN ACTIVE DELIVERY MONTH THE COMEX OPEN INTEREST CONTRACTS AND EFP’S NOTICES EXPONENTIALLY INCREASE.   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 9291 FOR  JUNE, A SURPRISING 400 EFP CONTRACTS FOR APRIL (SOMEONE BADLY NEEDED PHYSICAL GOLD) AND ZERO FOR ALL OTHER MONTHS:  TOTAL  9691 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 THE FOLLOWING TODAY ON OUR TWO EXCHANGES: 1417 OI CONTRACTS IN THAT 9691 LONGS WERE TRANSFERRED AS FORWARDS TO LONDON AND WE LOST 8274 COMEX CONTRACTS.

NET GAIN ON THE TWO EXCHANGES: 1417 contracts OR 141,700  OZ OR 4.407 TONNES.

Result: A FAIR SIZED DECREASE IN COMEX OPEN INTEREST WITH THE STRONG SIZED FALL IN PRICE YESTERDAY  (ENDING UP WITH A LOSS OF $9.30)THE  TOTAL OPEN INTEREST GAIN ON THE TWO EXCHANGES: 1417 OI CONTRACTS..

We have now entered the  active contract month of APRIL where we LOST 202 contracts LOWERING TO  2001 contracts.  We had 36 notices served on first day notice, so we lost 166  contracts or an additional 16,600 oz will not stand for delivery in this active delivery month of April and these lost contracts will morph into EXCHANGE FOR PHYSICAL (EFP’S) ONCE THEY HAVE BEEN NEGOTIATED, WRITTEN UP AND SEALED. (i.e. London based forwards)

May saw A LOSS of 26 contracts to stand at 1321. The really big June contract month saw a LOSS of 8014 contracts DOWN to 370,219 contracts..  The next big delivery month after June is August and here the OI LOST 119 contracts DOWN to 52,256.

We had 8 notice(s) filed upon today for  800 oz

THERE IS NO QUESTION THAT THE COMEX DOES NOT HAVE ANY APPRECIABLE GOLD TO SATISFY UPON OUR LONGS.

Trading Volumes on the COMEX

PRELIMINARY COMEX VOLUME FOR TODAY:328875  contracts

CONFIRMED COMEX VOL. FOR YESTERDAY: 298,381 contracts

comex gold volumes are RISING AGAIN

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

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

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

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And now for the wild silver comex results.

Total silver OI ROSE BY A HUGE 4457  CONTRACTS FROM 228,225 UP TO 232,682 DESPITE OUR STRONG 26 CENT FALL IN SILVER PRICING/ YESTERDAY)  ALSO,WE WERE ALSO INFORMED THAT WE HAD A FAIR  1220 EMERGENCY EFP’S FOR MAY 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: 1220.   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  SURPRISINGLY HAD ZERO LONG COMEX SILVER LIQUIDATION BUT THAT WAS SHORT COVERING, AND WE ALSO HAVE A VERY 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  NON ACTIVE OF APRIL AS WELL AS THE 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 5677 SILVER OPEN INTEREST CONTRACTS AS WE OBTAINED A  4457 CONTRACT GAIN AT THE COMEX COMBINING WITH THE ADDITION OF 1220 OI CONTRACTS NAVIGATING OVER TO LONDON.

NET GAIN ON THE TWO EXCHANGES:5677 CONTRACTS 

AMOUNT STANDING FOR SILVER AT THE COMEX

We are now in the non active delivery month of April and here the front month LOST 0 contracts REMAINING AT 342 contracts.  We had 0 notices filed upon (CME correction last Thursday night) so in essence we lost 0 contracts or NIL additional ounces of silver will  stand for delivery in this non active delivery month of April.

The next big active delivery month for silver will be May and here the OI LOST 572 contracts DOWN to 149,180. June saw its THIRD gain of 1 contract to stand at 10.  The next big delivery month for silver is July and here the OI rose by 4867 contracts up to 47,894.

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

INITIAL standings for APRIL/GOLD

APRIL 4/2018.

Gold Ounces
Withdrawals from Dealers Inventory in oz nil oz
Withdrawals from Customer Inventory in oz
3215.000 oz
100 kilobars
Scotia
Deposits to the Dealer Inventory in oz NIL oz
Deposits to the Customer Inventory, in oz  nil OZ
No of oz served (contracts) today
8 notice(s)
 800 OZ
No of oz to be served (notices)
1993 contracts
(199300 oz)
Total monthly oz gold served (contracts) so far this month
595 notices
59500 OZ
1.8506 TONNES
Total accumulative withdrawals of gold from the Dealers inventory this month NIL oz
Total accumulative withdrawal of gold from the Customer inventory this month xxx oz
***
we had 1 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 1 withdrawals out of the customer account:
i) out of Scotia  3215 oz  (100 kilobars)
total withdrawal: 3215.000   oz
we had 0 customer deposit
total customer deposits: nil oz
we had 0 adjustment(s)

For APRIL:
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 8 contract(s) of which 14 notices were stopped (received) by j.P. Morgan dealer and 4 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 APRIL. contract month, we take the total number of notices filed so far for the month (595) x 100 oz or 59500 oz, to which we add the difference between the open interest for the front month of APRIL. (2001 contracts) minus the number of notices served upon today (8 x 100 oz per contract) equals 258,800 oz, the number of ounces standing in this active month of APRIL (8.049 tonnes)

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

No of notices served (595 x 100 oz or ounces + {(2001)OI for the front month minus the number of notices served upon today (8 x 100 oz )which equals 258,800 oz standing in this  active delivery month of APRIL . THERE IS 12.003 TONNES OF REGISTERED GOLD AVAILABLE FOR DELIVERY SO FAR.

WE LOST 166 COMEX OI CONTRACTS OR 16600 OZ OF GOLD WILL NOT STAND BUT  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;   9,062,198.720 oz 281.87 tones
THE COMEX IS AGAIN IN STRESS AS ONLY 12.003 TONNES OF GOLD ARE LEFT TO SERVICE DELIVERIES. THERE IS HARDLY ANY GOLD AT THE COMEX TO SERVE UPON LONGS AND THUS THE REASON FOR THE EFP TRANSFER OVER TO LONDON. THE COMEX HAS HAD NO ENTRIES OF GOLD ENTERING OR LEAVING IN 8 DAYS 

IN THE LAST 18 MONTHS 72 NET TONNES HAS LEFT THE COMEX.

end

And now for silver

AND NOW THE APRIL DELIVERY MONTH

APRIL INITIAL standings/SILVER

APRIL 4 2018
Silver Ounces
Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory
 nil
  oz
Deposits to the Dealer Inventory
nil
oz
Deposits to the Customer Inventory
638,049.590 oz
Delaware
HSBC
No of oz served today (contracts)
0
CONTRACT(S
NIL OZ)
No of oz to be served (notices)
342 contracts
(1,710,000 oz)
Total monthly oz silver served (contracts) 19 contracts

(95,000 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 2 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.

ii) Into Delaware: 34,882.690 ox

iii) Into HSBC: 603,166.900 oz

total deposits today:  638,049.590  oz

we had 0 withdrawals from the customer account;

total withdrawals;  nil   oz

we had 0 adjustment

total dealer silver:  58.8561 million

total dealer + customer silver:  262.106 million oz

The total number of notices filed today for the APRIL. contract month is represented by 0 contract(s) FOR NIL oz. To calculate the number of silver ounces that will stand for delivery in APRIL., we take the total number of notices filed for the month so far at 19 x 5,000 oz = 95,000 oz to which we add the difference between the open interest for the front month of April. (342) and the number of notices served upon today (0 x 5000 oz) equals the number of ounces standing.

.

Thus the INITIAL standings for silver for the APRIL contract month: 19(notices served so far)x 5000 oz + OI for front month of April(342) -number of notices served upon today (0)x 5000 oz equals 1,805,000 oz of silver standing for the April contract month

WE NEITHER GAINED NOR LOST ANY SILVER OUNCES STANDING IN THIS NON ACTIVE DELIVERY MONTH OF APRIL. 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

ESTIMATED VOLUME FOR TODAY: 106,114 CONTRACTS

CONFIRMED VOLUME FOR YESTERDAY: 106768 CONTRACTS

YESTERDAY’S CONFIRMED VOLUME OF 106,768 CONTRACTS EQUATES TO  533 MILLION OZ OR 76.2% OF ANNUAL GLOBAL PRODUCTION OF SILVER

COMMODITY LAW SUGGESTS THAT OPEN INTEREST SHOULD NOT BE MORE THAN 3% OF ANNUAL GLOBAL PRODUCTION. THE CROOKS ARE SUPPLYING MASSIVE PAPER TRYING TO KEEP SILVER IN CHECK.

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

end

NPV for Sprott 

1. Sprott silver fund (PSLV): NAV RISES TO -2.17% (APRIL 2/2018)
2. Sprott gold fund (PHYS): premium to NAV RISES TO -0.66% to NAV (APRIL 2/2018 )
Note: Sprott silver trust back into NEGATIVE territory at -2.17%-/Sprott physical gold trust is back into NEGATIVE/ territory at -0.66%/Central fund of Canada’s is still in jail but being rescued by Sprott.
Sprott WINS hostile 3.1 billion bid to take over Central Fund of Canada

(courtesy Sprott/GATA)

3.SPROTT CEF.A FUND (FORMERLY CENTRAL FUND OF CANADA): NAV FALLS TO -2.90%: NAV 13.67/TRADING 13.30//DISCOUNT 2.90.

END

And now the Gold inventory at the GLD/

April 4/WITH GOLD UP $2.90 WE HAD NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 852.31 TONNES

APRIL 3./WITH GOLD DOWN $9.30 WE HAD NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 852.31 TONNES

APRIL 2/WITH GOLD UP $19.50, WE HAD A BIG  CHANGES IN GOLD INVENTORY AT THE GLD A DEPOSIT OF 6.19 TONNES/INVENTORY RESTS AT 852.31 TONNES

MARCH 29/WITH GOLD DOWN $3.20 AND OPTIONS EXPIRY FINISHED, WE HAD NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS A 846.12 TONNES

March 28/WITH GOLD DOWN $16.70, ANOTHER RAID ORCHESTRATED, AGAIN NO SURPRISES AS WE WITNESS ANOTHER 1.18 TONNES OF GOLD REMOVED/INVENTORY RESTS AT 846.12 TONNES

MARCH 27/WITH GOLD DOWN $11.70 AND A RAID INITIATED, IT WAS NO SURPRISE TO SEE THAT A MASSIVE WITHDRAWAL OF 3.24 TONNES WAS USED IN THE ABOVE RAID/INVENTORY RESTS AT 847.30 TONNES

MARCH 26./WITH GOLD UP $4.60/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 850.54 TONNES

MARCH 23/WITH GOLD UP $23.30/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 850.54 TONNES

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

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

APRIL 4/2018/ Inventory rests tonight at 852.31 tonnes

*IN LAST 355 TRADING DAYS: 88.73 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 305 TRADING DAYS: A NET 67.57 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.

end

Now the SLV Inventory/

April 4/WITH SILVER DOWN 11 CENTS/A SMALL CHANGE IN SILVER INVENTORY AT THE SLV/ A WITHRAWAL OF 135,000 OZ AND THIS IS PROBABLY TO PAY FOR FEES/INVENTORY RESTS AT 318.877 MILLION OZ/

APRIL 3./WITH SILVER DOWN 16 CENTS/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 319.012 MILLION OZ/

APRIL 2/WITH SILVER UP 34 CENTS/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 319.012 MILLION OZ/

MARCH 29/WITH SILVER UP 6 CENTS, THE CROOKS DECIDED THAT THEY HAD BETTER ADD SOME 943,000 PAPER OZ TO THEIR INVENTORY/INVENTORY RESTS AT 319.012 MILLION OZ

March 28/WITH SILVER DOWN 27 CENTS/AGAIN NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 318.069 MILLION OZ

MARCH 27/WITH SILVER DOWN 14 CENTS/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 318.069 MILLION OZ/

WITH SILVER UP 11 CENTS/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 318.069 MILLION OZ/

MARCH 23/WITH SILVER UP 19 CENTS, A HAD A BIG WITHDRAWAL OF 1.602 MILLION OZ.INVENTORY RESTS AT 318.069 MILLION OZ/

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./

HAD ANOTHER HUGE ADDITION OF 1.315 MILLION OZ/INVENTORY RESTS AT 316.590 MILLION OZ/

APRIL 4/2018:  NO CHANGES IN SILVER INVENTORY: 

Inventory 318.877 million oz

end

6 Month MM GOFO 2.01/ and libor 6 month duration 2.45

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

G0FO+ 2.01%

libor 2.45 FOR 6 MONTHS/

GOLD LENDING RATE: .44%

XXXXXXXX

12 Month MM GOFO
+ 2.45%

LIBOR FOR 12 MONTH DURATION: 2.67

GOFO = LIBOR – GOLD LENDING RATE

GOLD LENDING RATE  = +.22

end

Major gold/silver trading /commentaries for WEDNESDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

Martin Luther King Jr. Anniversary: Reminds Us Of Costs Of War To Society and Financial System

Martin Luther King Jr. Anniversary: Reminds Us Of Costs Of War To Society and Financial System

– Civil rights leader Martin Luther King Jr. assassinated 50 years ago today
– An anti-war campaigner, protesting against the damage inflicted by military operations
– King was almost prophetic in his vision that wars would drive a bigger wedge between rich and poor
– Foresaw the damage that would come to US in terms of costs to society and the economy
– Fifty years on Western nations can learn from King’s words when it comes to considering costs of war
– War is financed by debt bringing significant financial burdens on investors, savers and future generations

Today is the fiftieth anniversary of the assassination of civil rights leader Martin Luther King. He not only fought for the rights of minorities but he spoke out against inequality and the damage done by war.

In the fifty years passed we have perhaps not had a year full of such political, emotional and economical upset as we have in the last twelve months or so.

In this time we have had a convergence of major political shifts, civil rights campaigns, saber-rattling between nuclear powers and the rise of populism. This is something that has arguably not been seen at this level for many years previous.

This convergence has lead to a world that seems fraught on many levels and on the precipice of change. What kind of change is up for debate by many sides. Sadly attempts at change can be followed by violence and war, from all parties. Whether it’s civil rights movements such as Black Lives Matter, gun control demonstrations or more global efforts such as Trump’s attempts to affect the Middle East in some way, North Korea’s desire to gain respect around the globe or Russia’s keenness to demonstrate its strength against the West – each may end in violence and military action.

Martin Luther King was known for many things – an equal rights campaigner, a economic campaigner and a peace campaigner. All qualities that are appreciated today as much as they were fifty years ago. He fought to highlight the dramatic costs to society and the economy when it came to war – whether civil or otherwise.

Listen on SoundCloud , Blubrry & iTunesWatch on YouTube below

Campaigner for peace and non-violent demonstration for change

King’s words resonate as strongly today as they did fifty years ago, less than a week before his death:

I want to say one other challenge that we face is simply that we must find an alternative to war and bloodshed. Anyone who feels, and there are still a lot of people who feel that way, that war can solve the social problems facing mankind is sleeping through a great revolution. President Kennedy said on one occasion, “Mankind must put an end to war or war will put an end to mankind.” The world must hear this. I pray to God that America will hear this before it is too late, because today we’re fighting a war. Martin Luther King, Jr., Remaining Awake Through a Great Revolution, 31 March 1968

King was openly critical of the US government and their military policies, referring to them as  “the greatest purveyor of violence in the world today.” He was prophetic in his declarations as to the damage military operations could do to the US at it pursued military activities both at home and abroad.

Exactly one year before his death, on April 4th 1967, King gave a speech in protest of the war in Vietnam. Of the US he said: “a nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual death.”

He warned of the widening gap between rich and poor at home whilst spending on military operations abroad increased disproportionately. This is more glaringly obvious today than it was fifty years ago. Western countries are entangled in military exercises around the world, with no means with which to pay for them. Countries on both sides of the field are driven further into debt, with far lasting consequences for their citizens.

The true cost of war

The 2017 Global Peace Index found that violence cost 12.6% of global GDP. This means that the economic impact of violence on the global economy in 2016 was $14.3 trillion in purchasing power parity (PPP) terms, the equivalent of $5.40 per person, per day.

This gives no indication to the direct financial cost of war. By way of example a report from Brown University’s Watson Institute for International and Public Affairs finds that finds that an average American taxpayer has spent $23,386 on post-9/11 wars. The report estimates that by the end of this year the overall U.S. spending on wars in Iraq, Syria and Afghanistan could reach $5.6 trillion.

This is just direct spend. Study author Neta Crawford explained that ‘future interest payments on borrowing for the wars will likely add more than $7.9 trillion to the [US] national debt…Thus, even if military spending plateaus, interest costs will far surpass total war costs unless Congress devises another plan to pay for the wars, for instance by selling war bonds or increasing taxes’

In the modern Western world wars are financed by borrowing. Borrowing is a debt on future generations and a cost to society from day one. It is the opportunity cost of money going towards domestic projects such as healthcare, education, social mobility and infrastructure.

The Watson Institute Cost of War project reminds us of the following:

  • The human and economic costs of these wars will continue for decades with some costs, such as the financial costs of US veterans’ care, not peaking until mid-century.
  • US government funding of reconstruction efforts in Iraq and Afghanistan has totaled over $170 billion. Most of those funds have gone towards arming security forces in both countries. Much of the money allocated to humanitarian relief and rebuilding civil society has been lost to fraud, waste, and abuse.
  • War spending created fewer jobs than similar spending investment in clean energy, public education, and health care.
  • Federal investment in military assets during the wars made for a lost opportunity to significantly boost capital improvements in core infrastructure such as roads and public transit.
  • War spending financed entirely by debt has contributed to higher interest rates charged to borrowers such as new homeowners.

The final point regarding interest rates is key for investors to pay attention. Whilst higher interest rates may seem like an excellent reason to hold interest-bearing assets, in truth the wider impact they can have on an heavily indebted economy can be devastating.

Listen on SoundCloud , Blubrry & iTunesWatch on YouTube below

Who will end up paying for the abandonment of King’s dream?

An indebted economy means an indebted people which inevitably leads to major financial upset. It wouldn’t come as a surprise to find ourselves in yet another situation where investors exposed to the financial system are being called upon (read: told) to support the economy and banking system. Hard-earned assets would not be safe should the government perceive a better use for them.

There are many side-effects of wartime, one of the most long-lasting is the financial impact on individuals’ savings. Nowadays ‘war’ does not just means guns and tanks, it can be trade wars or currency wars. Sadly, they’re not exclusive of one another.

Trade wars frequently turn to currency wars. These decimate the capital of companies and the wealth of people and nations. It can also result in stocks and shares losing value sharply and crashing. Governments in any kind of war can be ‘forced’ to devalue people’s savings and in the next crisis, bail-ins will likely see savers’ accounts plundered … all for the public good.

This is where gold bullion comes into its own. Throughout history it has acted as a safe haven during times of protectionism and economic war. This was seen most recently in the 1970s.

The world was already a very uncertain financial and economic place with a lot of clouds on the horizon. Trump’s reckless actions have made this outlook even more uncertain. This bodes well for the gold price in the coming months and years.

Safe haven gold bullion will come into its own as these real risks become manifest.

News and Commentary

Gold steady as China-U.S. trade tensions escalate (Reuters.com)

Stocks in Asia Trade Mixed; Treasuries Steady (Bloomberg.com)

BlackRock’s $1.3 Billion Gold Fund Feels Pain of Miners (Bloomberg.com)

Sberbank to increase gold sales to India and China in 2018 (Reuters.com)

The Gold Price Driver (GoldSeek.com)

And The Fastest Growing Bank Asset in 2017 Was… Subprime (ZeroHedge.com)

Why April Showers the Pound With Good Fortune (Bloomberg.com)

Trade Tensions Are Already Hitting Industrial-Metal Prices (Bloomberg.com)

MARKET MELTDOWN CONTINUES: Gold And Silver Prices Begin To Disconnect (GoldSeek.com)

Listen on SoundCloud , Blubrry & iTunesWatch on YouTube below

Gold Prices (LBMA AM)

03 Apr: USD 1,336.60, GBP 949.65 & EUR 1,085.99 per ounce
29 Mar: USD 1,323.90, GBP 941.69 & EUR 1,075.80 per ounce
28 Mar: USD 1,341.05, GBP 946.24 & EUR 1,082.23 per ounce
27 Mar: USD 1,350.65, GBP 954.64 & EUR 1,087.41 per ounce
26 Mar: USD 1,348.40, GBP 949.27 & EUR 1,086.95 per ounce
23 Mar: USD 1,342.35, GBP 952.80 & EUR 1,088.65 per ounce
22 Mar: USD 1,328.85, GBP 939.36 & EUR 1,078.10 per ounce

Silver Prices (LBMA)

03 Apr: USD 16.52, GBP 11.78 & EUR 13.44 per ounce
29 Mar: USD 16.28, GBP 11.58 & EUR 13.21 per ounce
28 Mar: USD 16.46, GBP 11.63 & EUR 13.28 per ounce
27 Mar: USD 16.64, GBP 11.79 & EUR 13.41 per ounce
26 Mar: USD 16.61, GBP 11.67 & EUR 13.39 per ounce
23 Mar: USD 16.53, GBP 11.70 & EUR 13.39 per ounce
22 Mar: USD 16.52, GBP 11.64 & EUR 13.41 per ounce


Recent Market Updates

– Brexit, Stagflation Pressures UK High Street
– Gold Is Money While Currencies Today Are “IOU Nothings”
– “Stars Are Slowly Aligning For Gold” – Frisby
– Uncle Sam Issuing $300 Billion In New Debt This Week Alone
– Eurozone Faces Many Threats Including Trade Wars and “Eurozone Time-Bomb” In Italy
– Silver Futures Report and JP Morgan Record Silver Bullion Holding Is Extremely Bullish
– London House Prices Falling Sharply – UK’s Much Needed Wake-Up Call
– Global Trade War Fears See Precious Metals Gain And Stocks Fall
– Gold +1.8%, Silver +2.5% As Fed Increases Rates And Trade War Looms
– Credit Concerns In U.S. Growing As LIBOR OIS Surges to 2009 High
– Four Charts: Debt, Defaults and Bankruptcies To See Higher Gold
– Crock Of Gold Hidden In Ireland? Happy Saint Patrick’s Day
– Buy Silver And Sell Gold Now

janskoyles

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

Essential reading: Chris Powell’s correct interpretation of why London is backward in gold

(courtesy Chris Powell/Bron Suchecki)

Intervention may best explain anomalies in the gold market

 Section: 

8:23p HKT Tuesday, April 3, 2018

Dear Friend of GATA and Gold:

In an essay at the Monetary Metals blog headlined “Backwardation, the Bank of England, and Falling Prices” –

https://monetary-metals.com/backwardation-the-bank-of-england-and-fallin…

— the firm’s vice president of operations, Bron Suchecki, offers an explanation of one of the anomalies of the gold market, backwardation (when prices for immediate or spot delivery are higher than prices for future delivery) happening while prices generally are falling. For backwardation usually indicates supply shortages, difficulty meeting demand.

Suchecki writes: “However, in the case of gold, the fact that the stock of gold above ground is equal to over 60 years’ worth of mine production means that gold is not a typical commodity and cannot really ever be in shortage.”

Of course Suchecki is right that gold, unlike other commodities, like oil and wheat, is hoarded rather than consumed. But what if unbacked paper claims equal to a thousand years of gold production have been issued and demands for delivery of those unbacked claims suddenly increase?

Of the smash of the gold price in April 2013, Suchecki writes: “The falling forward (basis) rate indicated that it was futures prices which were falling faster than spot, closing the gap, until futures fell below spot, giving us negative Monetary Metals GOFO. The driver for this behavior is the leverage inherent in futures contracts: Futures traders are under more pressure to liquidate positions, once they move against them, than those holding fully paid physical (spot) gold.”

But what if in April 2013 futures positions were not being liquidated by ordinary traders at all but, instead, governments and central banks were using their power of infinite money creation to dump many more unbacked paper claims on the gold market to frighten non-official-sector holders of gold into selling both their futures and physical positions, whereupon central banks could cover their short positions at a profit or at least knock down physical demand, thereby protecting their currencies and government bonds?

Central bank and government archives are full of official plans and speculation about selling gold to suppress prices or spook the market. Further, the records of the U.S. Securities and Exchange Commission and Commodity Futures Trading Commission and CME Group, operator of the major U.S. futures exchanges, show that in recent years central banks and governments have been secretly trading all commodity and financial futures contracts in the United States:

http://gata.org/node/14385

http://gata.org/node/14411

http://gata.org/node/17976

GATA long has argued these points:

1) Formulas and charts about monetary metals prices and indeed all commodity and financial futures prices are of limited value without knowledge of what central banks and governments are doing in the markets.

2) If central banks and governments, creators and allocators of infinite money, are secretly trading markets, there really are no markets at all, just interventions.

3) The gold market analysis business suffers an amazing lack of curiosity about what governments and central banks are doing in the market.

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

end

Craig Hemke at Sprott outlines that gold is no longer pairing with the Japanese yen but pairs only with the dollar or the Euro.  Supply and demand no longer enter the equation for gold pricing and the movement of gold/silver is determined by the high frequency trading.

(courtesy Craig Hemke/Sprott)

Craig Hemke at Sprott Money: Gold price driver isn’t dollar/yen pairing anymore

 Section: 

8:14a HKT Wednesday, April 3, 2018

Dear Friend of GATA and Gold:

The driver of the gold price, the TF Metals Report’s Craig Hemke writes at Sprott Money today, no longer seems to be its correlation with the Japanese yen’s pairing with the U.S. dollar but rather with the dollar itself or the euro. In any case, Hemke asserts, the gold price long ago lost any correlation with physical supply and demand and now is determined largely by algorithm-based high-frequency trading.

Who is doing that HFT trading? Hemke doesn’t say. But if gold market analysts who deny that the market is comprehensively manipulated by central banks ever worked up the curiosity and initiative to visit the Federal Reserve Bank of New York or the Bank for International Settlements in Basle, Switzerland, during market hours and asked for a tour of the trading room, they might receive a powerful hint when the slammed door struck them in the face.

Hemke’s analysis is headlined “The Gold Price Driver” and it’s posted at Sprott Money here:

https://www.sprottmoney.com/Blog/the-gold-price-driver-craig-hemke-03-04…

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

end

John Embry at Kingworldnews claims correctly that the volatility is scaring central banks to death.

(courtesy John Embry/Kingworldnews)

(GATA) Stock market volatility scares central banks, Embry tells KWN

Submitted by cpowell on 02:40PM ET Wednesday, April 4, 2018. Section: Daily Dispatches

10:40p HKT Wednesday, April 4, 2018

Dear Friend of GATA and Gold:

Central banks are terrified by the new volatility in the U.S. stock market, Sprott Asset Management’s John Embry tells King World News today, as that sort of thing ordinarily signals a change in trend. Embry expects that the future holds either a depression or hyperinflation. His comments are excerpted at KWN here:

https://kingworldnews.com/look-who-just-said-he-hasnt- seen-anything-like-this-in-55-years/

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

 _____________________________________________________________________________________

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

 

i) Chinese yuan vs USA dollar/CLOSED DOWN 6.3077  /shanghai bourse CLOSED DOWN 5.52 POINTS OR 0.18%  / HANG SANG CLOSED DOWN 661.41 POINTS OR 2.19%
2. Nikkei closed UP 27.26 POINTS OR .13%/  /USA: YEN FALLS TO 106.15/  

3. Europe stocks OPENED DEEPLY IN THE RED     /USA dollar index FALLS TO 90.14/Euro RISES TO 1.2280

3b Japan 10 year bond yield: RISES TO . +.033/ !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 106.15/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

3d USA/Yen rate now well below the important 120 barrier this morning

3e WTI:: 62.36  and Brent: 66.86

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 DOWN for WTI and DOWN FOR Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO +.485%/Italian 10 yr bond yield DOWN to 1.744% /SPAIN 10 YR BOND YIELD DOWN TO 1.168%

3j Greek 10 year bond yield FALLS TO : 4.147?????????????????

3k Gold at $1343.60 silver at:16.48     7 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50

3l USA vs Russian rouble; (Russian rouble DOWN 26/100 in roubles/dollar) 57.86

3m oil into the 62 dollar handle for WTI and 66 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 106.15 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning 0.9587 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1773 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 FALLING to +0.485%

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 2.753% early this morning (THIS IS DEADLY TO ALL MARKETS). Thirty year rate at 2.997% /

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

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

Dow Plunges 600, Global Markets Tank After China Retaliates In All-Out Trade War

So much for yesterday’s Amazon bounce.

Just before 4AM EDT, a Bloomberg headline hit which has not only unleashed a furious global selling wave, sending the S&P lower by nearly 2% and the Dow 600 lower, but may have changed the course of history: that’s when China announced it was striking back  in the ever faster and more furious trade war between the US and China:

While we detailed the response earlier, for those who missed it, China announced it would launch reciprocal tariffs on 106 US products worth $50bln in bilateral trade, setting a new tariff rate of 25% on soybean, autos and chemicals. While the Chinese response was expected, the inclusion of soybeans was not, and will likely infuriate Navarro/Trump and lead to another round of US tariffs. China Ministry of Commerce also said it would adjust tariffs on ethylene glycol and diethylene glycol sold by firms including Dow Chemical (DOW), Ineos and BASF (BAS GY) among others.

And in an ominous warning that more is coming, China said that while its door to the US remains open for negotiations, if the US wants to keep fightingChina will hold onto the last, according to the Chinese Vice Commerce Minister.

The result was a freefall in both S&P futures, which were down nearly 50 points from Tuesday’s close…

… but also in the Dow Jones, which plunged as much as 600 points…

… and, of course, Emerging Markets, with the MSCI EM stock index heading for its lowest close in two months with EM currencies a sea of red across the board.

And speaking of sea of red, this is what global cash markets and futures look like right now.

And while we previously discussed China’s response, which for now includes a 25% tariffs on 106 items with a trade value of $50 billion, traders are already thinking about what happens next, should Trump proceed to a third round of measures. Commenting on this, Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis, said that “China will probably reduce its net purchases of U.S. Treasuries, as it has done from the beginning of the year, but more rapidly. This should push up longer-term yields in the U.S. but also widen spreads of investment grade U.S. credit.” There is also the FX angle: “There is a chance (although I doubt it will be immediate) that the PBOC engineers a staggered depreciation of the renminbi against the dollar.”

For now, however, keep an eye on the plunge in Boeing which is down 6% this morningand soybeansthe most important US food import into China…

… whose price is plunging this morning as a result of China’s unexpected announcement the commodity would make the list.

Amusingly, China picked a good time to retaliate, with its own markets closed for the rest of the week, even if industrial metals were hammered overnight as one would expect.

To be sure (as the charts above reveal) the return of trade wars front and center dominated traders’ attention, as global markets reacted in traditional risk-off fashion: the USD/JPY slumped, with 106 so far proving support; AUD was weaker across the board given correlation to China demand and commodities, while the yuan weakened into North American crossover.  The euro filled stops above $1.23 as short-term accounts were caught short.

Mining and tech sectors lead European equity markets lower, while risk-off assets such as USTs and bunds, rallied. The Treasury curve steepened and credit spreads edge wider.

Oil was trading at session lows in response to China’s retaliation; oil prices continued to slip further after yesterday’s APIs, which showed a surprise drawdown of 3.3mln for headline crude, but a build in the other product components. Gold climbed higher as risk-aversion spreads across the market and flows move into safe-havens. Base metals also suffered losses after more tariffs were imposed on steel and as trade war fear continues to dictate global sentiment with copper futures -2%, and soybeans, as noted previously, tumbled -5%

Market Snapshot

  • S&P 500 futures down 1.5% to 2,576.25
  • STOXX Europe 600 down 0.8% to 365.98
  • MSCI Asia Pac down 0.6% to 171.05
  • MSCI Asia Pac ex Japan down 1.2% to 556.76
  • Nikkei up 0.1% to 21,319.55
  • Topix up 0.1% to 1,706.13
  • Hang Seng Index down 2.2% to 29,518.69
  • Shanghai Composite down 0.2% to 3,131.11
  • Sensex down 1% to 33,044.75
  • Australia S&P/ASX 200 up 0.2% to 5,761.35
  • Kospi down 1.4% to 2,408.06
  • German 10Y yield fell 0.5 bps to 0.496%
  • Euro up 0.2% to $1.2300
  • Italian 10Y yield rose 0.7 bps to 1.539%
  • Spanish 10Y yield fell 0.6 bps to 1.184%
  • Brent futures down 1.8% to $66.93/bbl
  • Gold spot up 0.8% to $1,343.23
  • U.S. Dollar Index down 0.2% to 90.06

Top Overnight News

  • China said it would levy 25 percent tariffs on imports of 106 U.S. products including soybeans, automobiles, chemicals and aircraft, in a tit-for-tat response to proposed American duties on its high-tech goods
  • The Ministry of Commerce in Beijing said the charges will apply to around $50 billion of U.S. imports, a step that ratchets up tension in a brewing trade war between the world’s two largest trading nations
  • Chinese companies scrambled to assess the impact of proposed U.S. tariffs on 1,300 products after President Donald Trump’s scattergun approach hits a wide- ranging list of products
  • China’s State Administration of Foreign Exchange will give higher priority on preventing and curbing risks from foreign-exchange market and cross-border capital flows, according to a statement
  • Euro-area inflation accelerated last month, buttressing the arguments of policy makers keen to phase out unprecedented stimulus
  • The Bank of Japan’s record purchases of local stocks helped a market deserted by foreign investors. The BOJ spent 833 billion yen ($7.8 billion) on exchange-traded funds tracking the country’s shares last month, the biggest amount in data stretching back to late 2010
  • Four U.S. pipeline companies have reported their electronic systems for communicating with customers were shut down over the last few days, with three confirming it resulted from a cyberattack
  • Trump’s shrinking legal team has opened a gap in criminal law expertise that could expose him to legal risk if he agrees to be interviewed by Special Counsel Robert Mueller

Asia traded somewhat indecisive as the region failed to take full impetus from the rebound on Wall St, where all major indices recovered lost ground and reprieve for tech stocks pushed the Nasdaq back into the green YTD. ASX 200 (+0.1%) and Nikkei 225 (+0.1%) initially caught a tail wind from the momentum stateside and both opened higher, but then failed to hold on to the gains as trade concerns lingered after the US announced its proposed China tariff list. This was met by condemnation from China which is also said to be planning reciprocal tariffs of equal scale and strength. Conversely, Hang Seng (-2.2%) was choppy and Shanghai Comp. (+0.2%) shrugged-off the trade tensions and disappointing Caixin PMI data, to trade with a positive tone ahead of the extended weekend for the mainland and following reports of a USD 9.7bln bailout for Chinese conglomerate Anbang Insurance. Finally, 10yr JGBs were uneventful amid the indecisive risk tone in the region and as JGBs took a breather from yesterday’s gains which saw the 20yr yield drop to its lowest since late 2016. The BoJ were also present in the market under its bond buying program for 1yr-10yr JGBs, although it maintained the purchase amounts in line with the prior. Chinese Caixin Services PMI (Mar) 52.3 vs. Exp. 54.5 (Prev. 54.2). Chinese Caixin Composite PMI (Mar) 51.8

Top Asian News

  • Hong Kong Stocks Erase 2018 Gain as China Bites Back at U.S.
  • Meituan Is Said to Buy Bike Startup in $3.4 Billion Deal
  • China Injects $9.7 Billion Into Anbang After Fraud Alleged
  • Toshiba’s New CEO Says Chip Sale Will Proceed Even With Hurdles

Markets have been shaken up amid China’s most recent tit-for-tat tariff announcement on 106 US products. As a result, European equities have slipped firmly into the red (Eurostoxx 50 -1.3%). The tech sector opened softer following US President Trump proposing a tariff list on China consisting mostly of tech products. Industrials and materials have edged lower amid fears of a lag in global growth as trade disputes escalate. Energy and utilities are the only sectors in the green. Elsewhere, in terms of stocks specifics, WPP (-1.8%) is lower as CEO Martin Sorrell is under investigation for misconduct claims. Swiss Re (-3.4%) shares are lower following reports the company is in talks with Softbank over a minority stake of no more than 10%.

Top European News

  • U.K. Construction, Hit by March Snow, Shrinks Most Since 2016
  • Italian Unemployment Falls in Key Signal for Government Talks
  • Euro-Area Inflation Ticks Up as ECB Prepares to Unwind Stimulus
  • Putin’s Stealth Economic Weapon Loses Punch as Recovery Falters

In currencies, the Dollar index is clinging to 90.000+ levels amidst more US vs China import tariff measures and countermeasures as the trade war ratchets up a few more notches. JPY was one of the more volatile majors again, but this time on broader risk sentiment factors rather than BoJ policy statements and misperceptions. Usd/Jpy hit highs near 106.70 overnight, but is now retreating through modest bids at 106.40 to a circa 106.00 low as China backs up strong words with action via 25% taxes on 106 US products totalling Usd50 bn (ie equal and opposite to the US). EUR/CHF was firmer vs the retreating Greenback and revisiting recent peaks (around 1.2300+ and 0.9550 respectively) as aversion and safe-haven positioning resurfaces. EUR was largely unphased by the latest Eurozone CPI data with the headline printing in-line with expectations. Sterling was undermined by a much weaker than expected UK Construction PMI (47.0 vs. consensus 50.9), with cable down below 1.4050 vs almost 1.4100 at best and Eur/Gbp close to 0.8750 from near 0.8715. Loonie lost some NAFTA-related gains and the headline pair back over 1.2800 vs 1.2775 earlier, with the global trade rift threatening to undermine if not neutralise any positives from a tri-party agreement between Canada, the US and Mexico. USD/CNY was up sharply on the latest US-Chinese protectionism offensives to around 6.3000 vs the PBOC’s 6.2926 mid-point fix.

In commodities, oil is trading at session lows after China responded with extensive retaliatory measures against the US. Oil prices continue to slip further after yesterday’s APIs, which showed a surprise drawdown of 3.3mln for headline crude, but a build in the other product components. Looking at the metal complex, gold climbs higher as risk-aversion spreads across the market and flows move into safe-havens. Base metals also suffered losses after more tariffs were imposed on steel and as trade war fear continues to dictate global sentiment.

Looking at the day ahead, we’ll get the March ADP employment print, final PMI revisions for March (services and composite), ISM non-manufacturing for March, factory orders data for February and final durable and capital goods orders revisions for February. The Fed’s Bullard and Mester are also scheduled to speak.

US Event Calendar

  • 7am: MBA Mortgage Applications, prior 4.8%
  • 8:15am: ADP Employment Change, est. 210,000, prior 235,000
  • 9:45am: Markit US Services PMI, est. 54.2, prior 54.1; Composite PMI, prior 54.3
  • 9:45am: Fed’s Bullard Speaks on U.S. Economy and Monetary Policy
  • 10am: ISM Non-Manf. Composite, est. 59, prior 59.5
  • 10am: Factory Orders, est. 1.7%, prior -1.4%; Ex Trans, prior 0.4%
  • 10am: Durable Goods Orders, prior 3.1%; Durables Ex Transportation, prior 1.2%
  • 10am: Cap Goods Orders Nondef Ex Air, prior 1.8%; Cap Goods Ship Nondef Ex Air, prior 1.4%
  • 11am: Fed’s Mester Speaks on Diversity in Economics

DB’s Jim Reid concludes the overnight wrap

A few days of quiet evening markets and well behaved babies wouldn’t go amiss as tonight Liverpool are back in the Champions League quarter finals for the first time since 2009 and tomorrow sees the start of the Masters at Augusta – possibly the most perfect event to get televisually lost in. However the reality will  probably be that I’ll be scrambling to work out why the S&P 500 dived 2% into the close for the EMR and why the twins have decided to wake up in tandem and cry uncontrollably. Regardless of this I’m backing a Liverpool / Mcllroy / stronger average hourly earnings treble this week.

On my return from holidays I spent yesterday trying to work out where next for markets. On reflection I would say there are five things negatively impacting markets at the moment. 2 were very predictable, one less so and 2 have come more from left-field. Higher US inflation and tighter monetary policy/less QE were very predictable at the start of the year. The speed of the loss of momentum in growth has been less easy to predict though. The two curve balls are the sudden move towards tariffs/protectionism, and the tech sector woes although the former was always the direction of travel but the scale and speed of Mr Trump’s actions would have been difficult to predict at the start of the year. The problem going forward is that the first two are going to continue to be an issue this year. The growth outlook is more uncertain than it was but we think it likely holds up and the recent loss of momentum stabilises soon. However the final two will remain curveballs. If you can second guess how far and fast Mr Trump pushes protectionism then please let me know. As for the tech sector, again much depends of how far the authorities want to increase regulation and maybe taxes. It feels like it’s on the up but it’s very difficult to analyse. Overall we continue to believe the low vol world is over (as we felt in our 2018 Outlook) but where the higher vol regime settles is probably down to whether global growth holds up from here.

Last night saw a recovery in US markets (S&P 500 +1.26%) as one of the five factors above – namely tech – seemingly got a reprieve as Bloomberg reported that the White House isn’t planning to follow through on Mr Trump’s attacks on Twitter on Amazon. Staying with tech, Tesla’s shares rallied +6.0% after the company said it did not need to raise capital this year and announced better than expected Model 3 production numbers. This all helped the S&P rise back above its 200 day moving average (that it breached on Monday for the first time since the Brexit vote) with all sectors up and gains led by the energy, health care and financials sectors. The Dow (+1.65%) and Nasdaq (+1.04%) also recovered around half of Monday’s losses, while the VIX fell 10.7% to 21.10. In Europe, bourses pared back losses and the Stoxx 600 (-0.49%), DAX (-0.78%) and FTSE (-0.37%) ended modestly down.

Overnight the US trade representative office (USTR) has proposed imposing 25% tariffs on c$50bn worth of Chinese made imports. The list of 1,300 products include high tech items that “benefit from Chinese industrial policies, including (the) Made in China 2025 (strategy)” such as semi-conductors as well as products ranging from TV sets, motor vehicles, dishwashers and even flamethrowers! Looking ahead, there is a 60 day consultation period where the public can provide feedback and the government will hold hearings on the tariffs on 15th May. On the other side, the Chinese Ministry of Commerce indicated “China plans to bring relevant US practice to the dispute settlement body of the WTO and is ready to take counter measures on US products with the same intensity and scale that will be published in the coming days”.

This morning in Asia, markets are trading little changed in part awaiting to see whether trade tensions escalate from here. The Nikkei (+0.14%) and Shanghai Comp. (+0.80%) are up while the Hang Seng (-0.08%) and Kospi (-1.24%) are modestly down as we type. Datawise, China’s March Caixin composite PMI (51.8 vs. 53.3 previous) and Japan’s Nikkei composite PMI (51.3 vs. 52.2 previous) both slowed from the prior month.

Now recapping other markets performance from yesterday. In government bonds, core European 10y bonds yields were slightly higher (Bunds +0.5bp; Gilts +0.9bp) while UST 10y rose 4.5bp to 2.776% partly driven by the risk on tone in equities and tech shares. In FX, the US dollar index and Sterling gained 0.16% and 0.09% respectively while the Euro fell -0.26%. Elsewhere, WTI oil was up 0.79% to $63.51/bbl while precious metals weakened and partly reversed Monday’s gains (Gold -0.64%; Silver -1.06%).

Moving on, with the March monthly manufacturing PMI/ISM data now in, we have updated our usual charts showing the data regressed against the YoY change in equity markets over the last 20 years. Previously, equity markets looked very cheap relative to the very elevated level of PMIs across the globe. Something had to give. However while the data has softened from recent highs, the plunge in equity markets in recent weeks means that this argument still holds true. This is particularly true in Europe where the data suggests that the current level of the Stoxx is about 21% cheap. Indeed the equity PMI implied level for the Stoxx is 50.0 compared to the actual reading of 56.6. The export-heavy DAX, which has fallen sharply in recent weeks, is 28% cheap while the CAC is 11% cheap and IBEX 23% cheap. The FTSE MIB, however, is just 2% cheap with the index largely outperforming other bourses in recent weeks, and Italy’s PMI seeing a pullback in the last two months. That said, when we again re-benchmark to take into account currency moves the gaps are less exaggerated given the 15% appreciation in the Euro over the last 12 months. Indeed the Stoxx is just 6% cheap when we do this, while the DAX and IBEX are 15% and 10%  cheap. The CAC and FTSE MIB are actually 5% and 14% expensive, respectively.

Meanwhile, for the US the S&P 500 is up 9% over the last twelve months however the ISM implied level (given it remains elevated) is 24% implying a performance gap of 15%. For the UK the FTSE 100 is similar (14% cheap) however when we again dollar adjust the data the gap shrinks to being just 4% cheap. Finally in Asia the Nikkei is 2% cheap in local currency terms and 5% expensive in dollar terms, while China’s Shanghai Comp is 18% and 11% cheap, respectively. See the tables and charts in the PDF for more info. We’ve included both local currency and dollar adjusted numbers. As we always say we use this as a rough guide to valuations and try to concentrate on the general cheapness/expensiveness of global markets rather than individual ones where distortions can occur, especially for indices where the constituents are more/less exposed to their domestic markets.

Now turning to the various Fed speak yesterday. The Fed’s Brainard reiterated that US fiscal stimulus and other economic tailwinds creates a backdrop that “warrant continual gradual increases in rates”. She added that while these stimulus “should boost the economy” when we are close to full employment, but “it’s hard to know with precision how the economy is likely to respond”. On asset valuations, she noted “valuations in a broad set of markets appear elevated… even after taking into account recent movements”. Elsewhere, the Fed’s Kashkari reiterated his dovish views and noted “we’re probably pretty close to the neutral (rates) right now” and that while US tax cuts have clearly lifted enthusiasm among businesses but it’s still unclear if the cuts are “actually going to lead to more investments”. Finally, the San Francisco Fed president John Williams has been confirmed to replace William Dudley as the next head of the NY Fed. Following on, our US economists have taken a closer look at the degree of slack in the US labour market. Their analysis reinforces their previous assessment that there is little, if any, remaining slack in the labour market. This conclusion is based on two findings: i) most groups within the marginally attached workers (those that want a job but not currently in the labour force) are either near pre-crisis levels or are not particularly sensitive to the business cycle and ii) data on labour market flows indicate that the probability of this group entering the labour force has fallen to near record low levels. Hence, they continue to expect the unemployment rate to fall to 3.4% this year and to 3.2% by end-2019, which would be the lowest level since 1953. Refer to their note for  more details.

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the March total vehicle sales were above market at 17.4m (vs. 16.9m expected) and the highest for YTD CY18. In Europe, the final reading on the Euro area’s March manufacturing PMI was confirmed at 56.6, which is -2pt mom and -4pt from the 20 year high in last December. Across the region, Germany was revised down by -0.2pt to 58.2 while  France was revised up by 0.1pt to 53.7. For flash manufacturing PMIs, Italy was below market at 55.1 (55.5) while the UK was above expectations at 55.1 (vs. 54.7), although the new orders measures expanded the least since June. Elsewhere, Germany’s February retail sales was below expectations at -0.7% mom (vs. 0.7%) and fell for the third consecutive month, thus lowering annual growth to 1.3% yoy.

Looking at the day ahead, the most significant release is likely to be the March CPI report for the Euro area, while February unemployment data is also due. In the afternoon in the US we’ll get the March ADP employment change print, final PMI revisions for March (services and composite), ISM non-manufacturing for March, factory orders data for February and final durable and capital goods orders revisions for February. The Fed’s Bullard and Mester are also scheduled to speak.

end

3. ASIAN AFFAIRS

i)WEDNESDAY MORNING/TUESDAY NIGHT: Shanghai closed DOWN 5.52 POINTS OR 0.18% /Hang Sang CLOSED DOWN 661.41 POINTS OR 2.19%  / The Nikkei closed UP 27.26 POINTS OR .13%/Australia’s all ordinaires CLOSED UP .08% /Chinese yuan (ONSHORE) closed DOWN at 6.3077/Oil DOWN to 62.36 dollars per barrel for WTI and 66.86 for Brent. Stocks in Europe OPENED DEEPLY IN THE RED   .   ONSHORE YUAN CLOSED DOWN AT 6.3077 AGAINST THE DOLLAR. OFFSHORE YUAN CLOSED DOWN ON THE DOLLAR AT 6.3094 /ONSHORE YUAN TRADING STRONGER AGAINST OFFSHORE YUAN/ONSHORE YUAN TRADING WEAKER AGAINST USA DOLLAR/OFFSHORE YUAN TRADING  WEAKER AGAINST THE DOLLAR . CHINA IS NOT  VERY HAPPY TODAY POOR  CHINESE MARKETS/CHINA RETALIATES WITH TARIFFS/LOOKS LIKE A FULL TRADE WAR IS BEGINNING/

3 a NORTH KOREA/USA

North Korea/South Korea

 

3 b JAPAN AFFAIRS

c) REPORT ON CHINA

This will develop into a full scale trade war as the USA just released their list targeting 1300 products.  This has the makings of a full scale trade war which will inevitably cause all markets to crash. We now await China’s response!!

(courtesy zerohedge)

Trade War Round 2: US Releases China Tariff List Targeting 1,300 Products

Assuring that a second retaliation by China in the escalating trade war is just a matter of days if not hours, moments ago the US Trade Representative released a list of Chinese product subject to 25% tariffs as part of Trump’s Section 301 crackdown on Beijing Intellectual Property abuses, focusing on high tech products.

The list covers about 1,300 tariff lines, or 44 pages, the USTR said, referring to a system of codes used to categorize products. It added that the value of the list is approximately $50 billion in terms of estimated annual trade value for calendar year 2018, a level which is “appropriate both in light of the estimated harm to the U.S. economy, and to obtain elimination of China’s harmful acts, policies, and practices.”

Some example of are shown below:

The list of products included in the USTR list, lines up with technologies China identified in its “Made in China 2025” strategy, White House trade adviser Peter Navarro told Bloomberg Television on March 28.

“China, in my view, brazenly has released this China 2025 plan that basically told the rest of the world, ‘We’re going to dominate every single emerging industry of the future, and therefore your economies aren’t going to have a future,”’ Navarro said. “It’s artificial intelligence, robotics, quantum computing.”

As a reminder, “Made in China 2025” was announced in 2015, and highlighted 10 sectors for support on the way to China becoming an advanced manufacturing power: Information technology, high-end machinery and robotics, aerospace, marine equipment and ships, advanced rail transport, new-energy vehicles, electric power, agricultural machinery, new materials, and bio-medical. China alsohas a separate development strategy for artificial intelligence, published in 2017.

While both investors and businesses have been awaiting details of Trump’s plan to place tariffs on $50 billion in Chinese goods, nobody was looking forward to the list more than China itself. As we reported this morning, China’s US Ambassador said that Beijing is preparing aggressive counter-measures of the “same proportion, scale and intensity” once the Trump administration imposes further tariffs on Chinese goods.

USTR Robert Lighthizer had until April 6 to publish a list of proposed products. There’s now a 60-day period when the public can provide feedback and the government holds hearings on the tariffs.

Back on March 22, Trump said that the tariffs were aimed at penalizing Beijing for what the U.S. alleges to be theft of American companies’ intellectual property.

While China already imposed tariffs in response to Trump’s actions on metal imports (under Section 232), it has repeatedly threatened additional retaliation if Trump unveils the list of Section 301 tariffs, something the Administration did on Tuesday afternoon.

U.S. retailers have voiced concerns tariffs (and an escalating trade war) may eat into consumer products such as shoes and clothing, hitting companies including Walmart Inc. and Target Corp.

On Monday, various PMI indices suggested that fears of tariffs are leading to a drop in confidence about the economy, and early inflationary pressures as producers begin to stockpile core products.

The full list of products that fall under the purview of Section 301 tariffs is below (link).

end

China responds with a vengeance!! They are striking back with a strong 25% tariffs on 50 billion dollars worth of USA imports.

(courtesy zerohedge)

All-Out Trade War: China Strikes Back With 25% Tariffs On $50BN Of US Imports

Beijing wasted no time in striking back at Washington’s latest round of tariffs on Chinese imports by announcing a new list of US products that would be subject to punitive action, as the world’s two largest economies edge ever closer towards an all-out trade war.

China’s State Council said on Wednesday it planned to impose additional tariffs of 25% on 106 US products imported into the country, including soybeans, airplanes, cars, and chemicals, CCTV reported. The Ministry of Commerce said the import value of the goods on the list in 2017 was $50 billion. The effective date will depend on when the U.S. action takes effect.

Beijing’s retaliation came just hours after the United States Trade Representative Office released details of hundreds of Chinese imports worth about $50 billion that it planned to hit with 25% tariffs, with the emphasis on industrial and hi-tech goods.

“China’s response was tougher than what the market was expecting – investors didn’t foresee the country levying additional tariffs on sensitive and important products such as soybeans and airplanes,” said Gao Qi, Singapore-based strategist at Scotiabank. “Investors believe a trade war will hurt both countries and their economies eventually.”

As reported last night, the US list covers 1,300 items, including high-definition colour video monitors, electromagnets used in MRI machines, aerospace products, and machinery used to make processed textiles, printed products and food.  Beijing responded immediately to the US announcement saying it would “take corresponding measures of equal scale and strength against US products in accordance with Chinese law”.

USTR developed the tariff targets using a computer algorithm designed to choose products that would inflict maximum pain on Chinese exporters, but limit the damage to U.S. consumers. A USTR official said the list got an initial scrub by removing products identified as likely to cause disruptions to the U.S. economy and those that needed to be excluded for legal reasons.

“The remaining products were ranked according to the likely impact on U.S. consumers, based on available trade data involving alternative country sources for each product,” the official, who spoke on condition of anonymity, told Reuters.

USTR did include some key consumer products from China, including flat-panel television sets and motor vehicles, both electric and gasoline-powered with engines of 3 liters or less. A Reuters analysis that compared listed products with 2017 Census Bureau import data showed $3.9 billion in flat-panel television imports, and $1.4 billion in vehicle imports from China.

Among vehicles likely to be hit with tariffs is General Motors Co’s Buick Envision sport-utility vehicle, which is assembled in China and sold in the United States. Volvo, owned by China’s Geely Motors, also exports Chinese-built vehicles to the United States.

* * *

As Reuters notes, unlike Washington’s list, which was filled with many obscure industrial items and “in process” goods – from light-emitting diodes to chemicals and machine parts – China’s list strikes at signature U.S. exports.

China’s foreign ministry spokesman Geng Shuang said China had shown sincerity in wanting to resolve the trade dispute through negotiations.

“But the best opportunities for resolving the issues through dialogue and negotiations have been repeatedly missed by the U.S. side,” he told a regular briefing on Wednesday.

We regret that soybeans are on the list. We have done everything to prevent this from happening, but we are still calling for a resolution,” said Zhang Xiaoping, China director of the U.S. Soybean Export Council told Reuters.

To be sure, the unexpected inclusion of soybeans on the list of Chinese tariffs – a sign that Beijing has no intention at diplomatically ratcheting up the heat – sent the price of soybeans tumbling as much as 5.3%, the biggest drop since July 2016. Wheat, corn, cotton were also down.

The reason for the plunge in soy prices is that China buys about a third of the entire U.S. crop, using it largely to feed 400 million or so pigs. Argentina and Brazil are the other suppliers, but analysts warn that’s not enough to meet the entire Chinese demand.

Paradoxically, by limiting soybean imports, China risks unleashing food inflation and roiling social stability on the mainland, by far the single most important variable for any Chinese administration.

There was some good news: many consumer electronics products such as cellphones made by Apple and laptops made by Dell were excluded, as were footwear and clothing, drawing a sigh of relief from retailers who had feared higher costs for American consumers. A U.S. industry source said the list was somewhat unexpected in that it largely exempts major consumer grade technology products, one of China’s major export categories to the United States. “The tech industry will feel like overall it dodged a bullet,” the source said, but added that traditional industrial goods manufacturers, along with pharmaceuticals and medical device firms could suffer.

In any case, the speed with which the trade war between Washington and Beijing is escalating up – the Chinese government took less than 11 hours to respond with its own measures – led to a furious selloff in global stock markets and commodities: U.S. stock futures plunged over 1.5%, the Dow tumbled over 450 points and the dollar briefly extending early losses. China’s yuan skidded in offshore trade. Boeing was among the biggest losers, tumbling 6% premarket, after China’s announcement, as the Dow-heavy aerospace giant had been mentioned as one of the biggest casualties from an all out trade war.

end

Your most important read this year…why China’s soybean tariffs will change everything.  The USA exports a huge 12 billion USA dollars of soybeans to the Chinese who use the beans for their feedstock (pigs) as their plantings will only suffice for human consumption.  China consumes 60% of all soybean global production. This will hurt not only the USA exporters but also the Chinese as it will drive up inflation and global costs for livestock and just about everything. The risk to the globe is runaway inflation.

(courtesy zerohedge)

Why China’s Soybean Tariff Changed Everything

While markets are being somewhat drama queen-ish this morning, China’s trade war retaliation was telegraphed well in advance, and as we reported nearly two weeks ago, “China About To Launch “Tens Of Billions” More In Tariffs.” As such it should not have come as a surprise that China did just that overnight, when it announced 25% tariffs on $50 billion in 106 US imports.

What was a surprise, was the unexpected announcement that China would also include US soybean exports in the list of items impacted by tariffs, something which we noted earlier opens up the door to a new, third round of tariffs by the US, which would assure that a “nuclear” trade war has indeed broken out.

zerohedge@zerohedge

China’s response was expected, but inclusion of soybeans was not. It will infuriate Navarro/Trump and lead to 3rd round of escalating tariffs

It is the presence of soybeans in the tariff list that has startled China watchers and analysts, such as Capital Economics’ Julian Evans-Pritchard, who writes that “China’s rapid and aggressive response to the proposed US tariffs has raised the stakes for both sides.”

What makes the inclusion of soybeans so surprising?

Perhaps nothing more than the fact that while China is seeking to hurt US exporters, it will also substantially and materially impair its own domestic producers and supply chains, will struggle to replace U.S. soybean supplies “inflicting severe financial pain on domestic companies, analysts and executives at feedmakers said” according to Reuters, and potentially risk sparking runaway food inflation as surging feedstock prices send pork prices through the roof.

To be sure, from a trade war perspective the inclusion of soybeans makes perfect sense: for China, the world’s top importer of the oilseed in the world, soybeans are considered one of the most powerful weapons in Beijing’s trade arsenal because a drop in exports to China would hurt Iowa and other farm states that backed U.S. President Donald Trump. As the chart below shows, soybeans were the biggest U.S. agricultural export to China last year at a value of $12 billion.

Incidentally, for those who wish to trade, either buy or sell, the biggest corporate suppliers of soybean to China, here is a list of the top sellers, courtesy of Bloomberg:

  1. Bunge
  2. Marubeni
  3. Cofco
  4. Cargill
  5. Dreyfus

China’s ravenous appetite for soybeans – the country’s purchases hit a record last year and China eats up about 60% of globally traded soybeans – is because it needs to feed the world’s largest livestock industry including 400 million pigs,which in turn provides food for the world’s biggest human population. Factories crush the oilseed to make meal – a key ingredient in animal feed.

And here the problem emerges, and why China’s action has taken so many by surprise: “There simply aren’t enough soybeans in the world outside of the U.S. to meet China’s needs,” said Mark Williams, chief Asia economist at Capital Economics. “As for reducing dependence on imports, there are a few options, but none is a magic bullet that could hurt U.S. farmers without generating costs at home.”

There certainly isn’t enough production at home: China grows only about 14 million tonnes of soybeans, mainly to make food for human consumption, making it especially reliant on foreign imports, and thus, the US.

In short, by crippling US soybean imports, China may have shot itself in the leg.

First, some statistics: Brazil supplied half of China’s imports last year while the United States shipped around 33 million tonnes, about a third of the total. It is replacing those U.S. tonnes that will be no easy feat, if not impossible: crops in Argentina, the world’s No. 3 producer, have been hit by a drought, cutting exports from there to less than 7 million tonnes in the 2017/18 season, its smallest in a decade, according to the U.S. Department of Agriculture. Outside of Brazil, the United States and Argentina, about 17 million tonnes of soybeans comes from a handful of countries.

To be sure, China has some emergency options, but the danger with all is that they could unleash a wave of inflation in a repeat of the events of 2011.  Among China’s “Plan B” options include tapping the government’s emergency strategic reserves and rejigging the ingredients that go into feed, analysts, experts, traders and buyers at feed mills say. “Some people say they could just drain their state reserves. That’s a possibility, (but) nobody knows how many tonnes are in it,” said U.S. Soybean Export Council Asia Director Paul Burke.

According to Reuters, some feedmakers are already quietly drawing up contingency plans, such as finding substitute ingredients with feed mills reportedly adding more corn, distillers’ dried grains (DDGS), a byproduct of ethanol production, or rapeseed and cottonseed meal to their feed. But the risk is that adjusting component weighings could impact the overall food system, as maintaining protein levels is complicated. The maximum amount of DDGS in feed is around 20% and toxic ingredients found in rapeseed mean it can only make up 5 percent of pig feed, and it usually isn’t put in sow or piglet food.

But an even bigger risk is inflation.

As U.S. soybeans become more expensive, importers will have to source from other countries, most notably Brazil and Argentina, which will immediately yank their own soybean prices as their biggest competitor has dropped out of the market. In fact, the threat of action has already pushed Brazilian export prices to all-time highs and fueled gains in domestic soybean and soymeal futures prices.

“I don’t want China to escalate the trade tension,” said a feedmaker’s purchasing manager, worried about higher prices and a lack of alternative feed sources with comparable protein content to soymeal. “Sales from Brazil would normally end around September and it’s usually U.S. beans between October to March. Where do we get beans from during that time if we only buy from Brazil?

Well, you get it from whoever is willing to sell, which they will: for a price. And as costs for hog farmers rise, that risks increasing the price of pork, a component of China’s consumer price index. And should food inflation rise too high, rumblings of social instability will re-emerge, as we saw back in 2011, and which prompted the Chinese government to rapidly tighten financial conditions in the process unleashing financial chaos around the globe and – according to some – the next leg of Europe’s sovereign debt crisis.

Which means that the inclusion of soybeans in China’s tariff list has changed everything: on one hand it shows that China is dead serious in its retaliation and hopes of hurting Trump supporting farmers; on the other it may have started the countdown on its own spike in pernicious, food inflation, the outcome of which could be social chaos and instability, an outcome which Xi will hardly be excited about but which will be music to Trump’s ears as both superpower leaders dig in for what appears to be a period of extended trade trench warfare.

end

Trump’s dilemma: the stock market or a trade war..he picked a trade war as “this is a long term thing…”

(courtesy zerohedge)

What Will Trump Pick: Plunging Stocks Or Trade War? We Now Know The Answer

One of the long-running debates on Wall Street has been when faced with two choices, a plunging stock market or a full-blown, (perhaps) popularity boosting trade war with China, which one would Trump choose. After all, for much of the first year of his administration, Trump took delight in pointing out the daily surge in the S&P, which he was all too quick to take credit for, which prompted many to ask what happens when stocks plunge, and will Trump wash his hands from the red tape.

This morning we finally got the answer, thanks to CNBC’s Eamon Javers who moments ago tweeted that a “White House official said the the WH recognizes that Trump’s actions are hitting the stock market, but this is “a longer term thing,” and the president has to follow through on a key campaign promise. The White House feels that China simply has to be held to account.”

Eamon Javers@EamonJavers

I asked a White House official last night if the US was prepared for further Chinese retaliation for American trade action and if we should then expect further reaction by the US. The official said “all of it is under discussion.”

Eamon Javers@EamonJavers

The White House official said the the WH recognizes that Trump’s actions are hitting the stock market, but this is “a longer term thing,” and the president has to follow through on a key campaign promise. The White House feels that China simply has to be held to account.

Which means that Marko Kolanovic was wrong once again. Recall that in mid-March the JPM quant said that there is no way Trump would launch a “significant trade war” as that would risk “destabilizing markets” and Trump would “open a path” to his own impeachment:

A significant trade war started by this administration would destabilize global equity markets. Should this happen ahead of the November election, it would impair the administration’s ‘market scorecard’ and likely lead to an election loss. Lost elections open a path to impeachment, and other complications. The game is also non-zero sum, as one can both use tough rhetoric and at the same time do little disruptive action (e.g., players as we defined them can ‘have their cake and eat it’). Setting up a diagram (similar to the well-known ‘prisoners’ dilemma’) points clearly that there will be strong rhetoric, but weak or no action that would destabilize equities.

Clearly, that’s not what Trump had in mind, and now it’s time for algos – and reputable Wall Street analysts – to start pricing to what he did.

And speaking of China’s retaliation, Javers tweets that he “asked a White House official last night if the US was prepared for further Chinese retaliation for American trade action and if we should then expect further reaction by the US. The official said “all of it is under discussion.”

Eamon Javers@EamonJavers

I asked a White House official last night if the US was prepared for further Chinese retaliation for American trade action and if we should then expect further reaction by the US. The official said “all of it is under discussion.”

Meanwhile, the real question is whether Trump and Navarro now unveil a new, third round of tariffs against China. If and when they do, all bets will be off.

* * *

Javers also touched on something else: what happens to the biggest risk factor of, well, yesterday, namely that other ongoing feud between Trump and Bezos. Here is Javers: “A White House official tells me it is “almost certain” there are no specific policy actions coming from the White House against Amazon. But the president is “not a fan of Jeff Bezos.””

Eamon Javers@EamonJavers

A White House official tells me it is “almost certain” there are no specific policy actions coming from the White House against Amazon. But the president is “not a fan of Jeff Bezos.”

Then again, it is Trump, and he may unexpectedly tweet about Bezos and/or Amazon at any moment, unleashing even more “risk off” especially in the aftermath of his dinner last night with the co-CEO of Oracle who is now almost assured of winning the Pentagon contract that was meant to go to Amazon.

end

4. EUROPEAN AFFAIRS

Strange:  the UK foreign office now denies it is claiming Russian is responsible for the nerve agent poisoning as it deletes tweets on the subject

(courtesy zerohedge)

8. EMERGING MARKET

end

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

Euro/USA 1.2280 UP .0002/ 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 DEEPLY IN THE RED   

USA/JAPAN YEN 106.15 DOWN  0.293 (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 1.4031 DOWN .0037  (Brexit March 29/ 2017/ARTICLE 50 SIGNED/BREXIT FEES WILL BE CAPPED

USA/CAN 1.2825 UP .0020 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/(TRUMP INITIATES LUMBER TARIFFS ON CANADA/CANADA HAS A HUGE HOUSEHOLD DEBT/GDP PROBLEM)

Early THIS WEDNESDAY morning in Europe, the Euro ROSE by 2 basis points, trading now ABOVE the important 1.08 level RISING to 1.2280; / Last night Shanghai composite CLOSED DOWN 5.52  OR 0.18%  Hang Sang CLOSED DOWN 661.41 OR 2.19 %    /AUSTRALIA CLOSED UP .08% / EUROPEAN BOURSES  OPENED DEEPLY IN THE RED

The NIKKEI: this WEDNESDAY morning CLOSED UP 27.26 POINTS OR 0.13%

Trading from Europe and Asia

1/EUROPE OPENED DEEPLY IN THE RED

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 661.41 POINTS OR 2.19% SHANGHAI CLOSED DOWN 5.52 OR 0.18%   /

Australia BOURSE CLOSED UP .08% 

Nikkei (Japan) CLOSED UP 27.26 POINTS OR 0.13%

INDIA’S SENSEX  IN THE RED 

Gold very early morning trading: 1342.75

silver:$16.45

Early WEDNESDAY morning USA 10 year bond yield: 2.753% !!! DOWN 2  IN POINTS from TUESDAY night in basis points and it is trading WELL ABOVE resistance at 2.27-2.32%. (POLICY FED ERROR)/ 

The 30 yr bond yield 2.997 DOWN 1  IN BASIS POINTS from TUESDAY night. (POLICY FED ERROR)/

USA dollar index early  WEDNESDAY morning: 90.14 DOWN 7  CENT(S) from TUESDAY’s close.

This ends early morning numbers WEDNESDAY MORNING

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And now your closing WEDNESDAY NUMBERS \4: 00 PM

Portuguese 10 year bond yield: 1.623% DOWN  2  in basis point(s) yield from TUESDAY/

JAPANESE BOND YIELD: +.0.033% UP 3/10    in basis points yield from TUESDAY/JAPAN losing control of its yield curve/

SPANISH 10 YR BOND YIELD: 1.166% DOWN 3  IN basis point yield from TUESDAY/

ITALIAN 10 YR BOND YIELD: 1.742  DOWN 5  POINTS in basis point yield from TUESDAY/

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

GERMAN 10 YR BOND YIELD:FALLS TO +.500%   IN BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR WEDNESDAY

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

Euro/USA 1.2291 UP .0013 (Euro UP 13 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 106.58 UP 0.143 Yen DOWN 14 basis points/

Great Britain/USA 1.4073 UP .0005( POUND UP 5 BASIS POINTS)

USA/Canada 1.2804 DOWN  .0003 Canadian dollar UP 3 Basis points AS OIL ROSE TO $63.16

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This afternoon, the Euro was UP 13 to trade at 1.2291

The Yen ROSE to 106.58 for a LOSS of 14 Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE

The POUND ROSE BY 5 basis points, trading at 1.4073/

The Canadian dollar ROSE by 3 basis points to 1.2804/ WITH WTI OIL RISING TO : $63.16

The USA/Yuan closed AT 6.3033
the 10 yr Japanese bond yield closed at +.033%  UP 3/10   IN BASIS POINTS / yield/
Your closing 10 yr USA bond yield UP 1 IN basis points from TUESDAY at 2.781% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 3.016  UP 1    in basis points on the day /

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

Your closing USA dollar index,90.06 UP 14 CENT(S) ON THE DAY/1.00 PM/

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

London: CLOSED UP 3.55 POINTS OR .05%
German Dax :CLOSED DOWN 44.55 POINTS OR .37%
Paris Cac CLOSED DOWN 10.32 POINTS OR .20%
Spain IBEX CLOSED DOWN 36.20 POINTS OR .38%

Italian MIB: CLOSED UP 67.55 POINTS OR .30%

The Dow closed UP 231.56 POINTS OR 0.96%

NASDAQ WAS UP 100.83 Points OR 1.45% 4.00 PM EST

WTI Oil price; 63.16 4:00 pm;

Brent Oil: 67.53 4:00 EST

USA /RUSSIAN ROUBLE CROSS: 57.56 DOWN 4/100 ROUBLES/DOLLAR (ROUBLE HIGHER BY 4 BASIS PTS)

TODAY THE GERMAN YIELD FALLS TO +.500% 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:$63.54

BRENT: $68.19

USA 10 YR BOND YIELD: 2.801%   THIS RAPID DECENT IN YIELD IS ALSO VERY DANGEROUS/RECESSION COMING

USA 30 YR BOND YIELD: 3.036%/

EURO/USA DOLLAR CROSS: 1.2277 DOWN .0001  (DOWN 1 BASIS POINTS)

USA/JAPANESE YEN:106.83 UP 0.396/ YEN DOWN 81 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: 90.15 down  5 cent(s)/dangerous as the lower the dollar the higher the inflation.

The British pound at 5 pm: Great Britain Pound/USA: 1.4058: UP 0.0012  (FROM LAST NIGHT UP 12 POINTS)

Canadian dollar: 1.2806 UP 112 BASIS pts

German 10 yr bond yield at 5 pm: +0.500%


VOLATILITY INDEX:  20.22  CLOSED  DOWN 0.88

LIBOR 3 MONTH DURATION: 2.321%  ..LIBOR HAS INCREASED FOR 39 CONSECUTIVE DAYS. 

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

TRADING IN GRAPH FORM FOR THE DAY

Almost 1000 points off the lows on the heels of Larry Kudlow’s comments after China escalates the global trade war?

On dwindling volume…

The stench of The PPT was rife today…

Chinese stocks went out weak after the trade tariff headlines…

And US equity futures were monkeyhammered overnight and through the open. But some sickly-sweet words from Larry Kudlow was enough ignite some momentum and rap stocks all the way back to green… and back to the opening ledge on Monday… and then to last Thursday’s highs…

For some context, that is almost a 1000-point bounce in The Dow…

The cash markets all tracked each other perfectly…

zerohedge@zerohedge

S&P 500 EXTENDS GAIN ABOVE FRIDAY’S CLOSE, UP AS MUCH AS 1.15%

Seeing favorable market response, Trump next raises China tariffs to $100BN

All on one big mega short squeeze…

S&P bounced back above its 200DMA…

Nasdaq futures perfectly bounced off their 200DMA…

VIX crashed back below 20…

FANGMAN stocks were panic-bid – MSFT and AAPL green on week…

There was one stock that did not benefit from the panic dip buyers…

Bank stocks ripped into the green for the week…

But bank credit risk continues to break out…

More disappointing macro data today and stocks have finally caught down to that reality…

And the probability of a 4th rate hike in 2018 (so 3 more) has tumbled to less than 20%…

Treasury yields rose on the day and are higher on the week…

The Dollar Index continued its tight-range-bounce going nowhere fast action…

Late in the day, the Loonie and Peso ramped after a headline claiming Trump was softening on NAFTA demands…

Cryptos had an ugly day, dragging them all red on the week…

Gold ended unchanged (but off its $1350-plus highs), silver dropped when crude ramped and copper dumped on trade (then pumped)…

Bonus Chart: Traders are starting to bet on Fed rate-cuts in 2022 as Trade War anxiety ripples through sentiment. As Bloomberg notes, if you take the numbers literally, it seems investors now think there’s a chance that the tightening cycle could come to an end — in 2022.  The one-month U.S. overnight index swap rate five years forward has fallen below the three-year forward one-month rate, as the chart below, which gives us a rough proxy of the market’s projection of the Fed’s rate path going forward, shows.

That’s a significant change, at least qualitatively, from a month ago, when the forward curve was continuously upward-sloping out to 10 years.

Bonus Bonus Chart: Global Hedge Funds are unchanged in three years…

 

END

Trading this morning

Dow opens down 400 points:

(courtesy zerohedge)

Trump: “We Are Not In A Trade War With China; That War Was Lost Many Years Ago…”

With US stock futures plunging toward their Wednesday lows following China’s decision to strike back against the US by announcing 25% tariffs on on some $50 billion of US imports, including soybeans, airplanes, cars and chemicals, as the news revived fears of an escalating trade war.

But in a pair of tweets sent Wednesday, President Trump suggested that the market had it wrong. We aren’t about to start a trade war with the Chinese, the president said. Rather, we’ve been fighting a losing battle for years.

“We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the US. Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue!”

Donald J. Trump@realDonaldTrump

We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S. Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue!

And before that, the president lashed out at the US’s weak border laws for the fourth time in a week – after announcing last night that he would mobilize the military to protect the US’s southern border as a caravan of Central American immigrants draws closer.

“Our Border Laws are very weak while those of Mexico & Canada are very strong. Congress must change these Obama era, and other, laws NOW! The Democrats stand in our way – they want people to pour into our country unchecked….CRIME! We will be taking strong action today.”

Donald J. Trump@realDonaldTrump

Our Border Laws are very weak while those of Mexico & Canada are very strong. Congress must change these Obama era, and other, laws NOW! The Democrats stand in our way – they want people to pour into our country unchecked….CRIME! We will be taking strong action today.

During an appearance on CNBC shortly after Trump fired off his tweets, Commerce Secretary Wilbur Ross said he was “a little surprised” at the market’s reaction, saying China had already announced its tariff plans, and that the two sides were likely still headed for a negotiation.

end

One complete joke!! stocks stage a comeback after the bozo, Larry Kudlow urged the market not to overreact

(courtesy zerohedge)

Stocks Stage Impressive Comeback After Kudlow Urges Market Not To “Overreact”

Having dropped as much as -600 earlier this morning, the Dow has staged another impressive comeback and is up 400 points off the lows, and alongside the S&P, is just 1% down on the day, under 200 points in the red. While there has been no specific catalyst for the move (Bullard has been dovishly jawboning in the background urging no more rate hikes in 2018 as there is no wage growth), traders are attributing the move higher to comments by Trump’s National Economic Council director Larry Kudlow who said that “markets shouldn’t overreact to trade tensions.”

Specifically, Kudlow said that “stock markets shouldn’t over react to trade tensions between U.S. and China” because “proposals by both countries are a first step and haven’t been implemented” and as he also added, it is possible the tariffs will never come to pass.

FOX Business@FoxBusiness

.@larry_kudlow on market reaction to China’s tariff announcement: “Don’t overreact, we’ll see how this works out… At the end of this whole process, the end of the rainbow, there’s a pot of gold.”

Kudlow also said that Trump’s proposal to impose tariffs on Chinese goods is the first step in arriving at a fairer trade system, and that China – not Trump – should be blamed for tensions, something the WSJ agrees with.

“This is the business of government and the business of business,” Kudlow said channeling his best inner sophist and added that the U.S. has a case against China and he believes that the rest of the world agrees.

Following Kudlow’s comments, Citi notes that the bid for safe havens has begun to ease, with gold coming off the day’s highs and JPY pausing.

USDJPY seems to be turning away from the 106 handle as risk improves. The front end of the US yield curve has picked up a little, with the 2y now trading flat on the day although there is some bear flattening bias here. NZD is looking constructive, even if it’s puzzling while most G10 currencies are now trading in the green against USD.

Meanwhile, the USDMXN is lower on a new case of Nafta optimism after Kudlow said “don’t hold me to the timing, but we are moving in the direction of a Nafta deal… I think you are going to see some very positive timing on Nafta… the stock market’s going to love it.”

Whether that’s true or not is unclear, but for now stocks “love” the apparent detente by Kudlow, even though as we noted earlier the White House is now far more concerned with expanding the trade war with Beijing than where the S&P closes; meanwhile there is little to suggest that either Trump or Xi will relent.

And the biggest paradox, of course, is that if the market rallies, Trump will feel emboldened to pursue even more trade sanctions, escalating the trade war with China to unseen levels.

end

Market data this morning

Expectations was for an ugly USA service sector slump but the numbers were not as bad.  However this soft data report signals tariff turmoil straight ahead;

(courtesy zerohedge)

US Services Sector Slumps As ISM Signals Tariff Turmoil Ahead

Following mixed messages from ISM (down) and Markit (up) on March’s manufacturing surveys, the Services sector were in agreement that the US economy is slowing with Markit’s PMI slumping as new orders and output fall (but employment hit a 7-mo high) and ISM’s survey dropped for the second month in a row (to 58.8, missing expectations).

Expectations were for an ugly ISM print…

But it was not quite that bad…

As New Orders and output tumbled, employment upticked along with prices

ISM respondents seem unified on one topic – how bad tariffs are…

 “”The unbelievable amount of market volatility in construction-related materials that started with lumber continues with the tariffs on steel and aluminum

Accurate, long-term planning has become incredibly difficult, as distributors that historically held costs for at least 30 days are now, in some cases, committing to only seven days, as prices can change drastically in that time.” (Construction)

“Interest rate hike [and] tariffs are likely to impact cost and price of goods and services.” (Finance & Insurance)

The final seasonally adjusted IHS Markit U.S. Composite PMI™ Output Index dipped to 54.2 in March from 55.8 in February. Both the manufacturing and service sector recorded softer output growth than in February.

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

“Measured across both manufacturing and services sectors, US business activity growth slowed in March compared to February’s 27-month high, but remained encouragingly solid.

Strong inflows of new orders means growth looks set to accelerate into the second quarter. The past two months have seen the largest back-to-back increases in demand for almost three years.

The strongest jobs gain since December 2016 further underscored the bullish outlook, as firms stepped up their hiring to meet the recent upturn in demand.

Price pressures meanwhile eased slightly during the month, though remained elevated by standards of the past four years, linked in many cases to healthy demand boosting firms’ pricing power, as inflationary pressures in the manufacturing sector.

Expectations about future growth were mixed: while recent protectionist announcements appear to have helped bolster confidence in parts of the domestic manufacturing sector, service sector optimism came off the boil.”

Finally, Williamson notes that “the month rounds off a quarter in which the PMI surveys indicate that the economy grew at an annualised rate of approximately 2.5% (though official GDP data are likely to come in at least 0.5% weaker, due to seasonality issues).

So – prices up, production and new orders down… smells like stagflation once again.

end

We have pointed out to you that the primary reason for the continual rise in Lobor -OIS or stress in the banking sector was due to the repatriation of dollars from Europe back into the USA. Matt King states that there is another likely candidate for the rise:  the Fed’s roll off on bonds which this month commences with the roll off of 30 billion usa.  No question:  both are contributing to the rise.

(courtesy zerohedge)

Matt King: This Is The Real Reason Behind The Blow Out In Libor-OIS

Two weeks ago when discussing the ongoing blow out in Libor, which today again rose to 2.3246%, up 0.38% on the day, the highest since November 2008 and higher for the 39th consecutive day, the longest streak since November 2005, we said that contrary to the generally accepted theory that “all is well”, and that the move is purely technical as a result of a glut in T-Bill supply and cash repatriation, the real reason behind the Libor has to do with an overall dollar funding shortage and generally tighter financial conditions, which was also observed in the sharp move wider in bank CDS.

A key indication that this “less than benign” version of events is the right one, is that while the T-Bill glut is now over and there is little excess supply on the short end, Libor continues to rise.

Incidentally, those wondering where it is today, after blowing out to a post-crisis wide of 60bps, the L-OIS spread just hit new post-crisis highs, just shy of 60bps.

A second indication is that as we noted previously, Citi’s iconic credit manager, Matt King, agreed with the “Plan B” explanation, and as we discussed, said that the sharp move in both Libor and L-OIS is the function not of technicals, but a byproduct of Fed tightening, a much more structural – and precarious – explanation for what is really going on as it suggests that the Fed is stuck and any further tightening would result in financial contagion, and a potentially disastrous dollar short squeeze.

We bring this up because earlier today Matt King made a very rare TV appearance on CNBC, in which he once again explained to the numerous overnight Libor experts and macro tourists what is really the catalyst behind the Libor and LOIS move:

what we are seeing is relatively modest withdrawals from the central banks suddenly have broader consequences than the central banks have been anticipating, and that therefore does constitute a greater tightening as if we had two extra Fed hikes more than they were anticipating.

So far it is not systemic, yes we are not worried about banks falling over in the same way as 2008 or even 2012. At the same time, we would expect a broadening out of the stresses, or the tensions, beyond where they are at the moment. So far it’s just Libor-OIS it’s not cross-currency bases, and yet there are reasons to think that as the Fed drains excess reserves from the system, we will see that tension broaden out.”

This is a continuation of the point King made two weeks ago when the Citi credit strategist said that the level of reserves has been a direct determinant of stress in money markets – the cross-currency basis in particular, where a $200bn reduction in reserves has added about 10bp to the 5y €/$ basis, and where moves in the $/¥ basis have if anything been larger still. However, as Citi calculated over the next few months the level of excess reserves in the system is set to slide, dropping by around $300 BN over the next 3 months, which will pressure not only Libor-OIS but the various cross-ccy bases which have so far been untouched.

Matt King picks up on this topic this morning, and while skipping T-Bill issuance or tax repatriation as catalysts, says that the level of Fed excess reserves is to him “the most significant long-term driver: you are draining reserves which just increased to $30BN a month, and then you will increase to $40BN a month next quarter and that exerts a steady pressure here.

“So to date, the pressure yes was a shift in tax reform and how corporate treasurers are investing, but the trouble is that’s not going away, that’s a structural shift and we have this second structural shift from the Fed.”

King concludes with a discussion of a topic we first touched upon in February, namely the surging debt hedging costs as a result of the blow out in Libor-OIS, and how much more expensive it has become for foreigners to purchase US Treasurys and corporate debt on a hedged basis.

Commenting on the sharp rise in hedging costs, King says “that is a major concern to us” and explains why:

“80% of net buying in US credit over the last year came from foreigners and mutual funds. They’ve both just stopped for the last couple of months and everyone is hoping that they resume but that foreign bid – if you their Japanese investor – your hedged cost has gone from 2.50% to 2.75% and you know they will increase with each and every Fed hike and therefore suddenly US credit doesn’t look attractive and we’re not convinced you’re going to get a rebound there which is a big global negative.”

Indeed, because without foreign buyers at a time when the Fed is hiking rates and when the US is set to double its Treasury issuance and sell a net $1 trillion in debt this year, it is increasingly unclear how – absent QE – the Treasury will be able to do this without blowing out interest rates.

Matt King’s full clip is below.

https://player.cnbc.com/p/gZWlPC/cnbc_global?playertype=synd&byGuid=7000011172&size=530_298

Citi: Rise in Libor-OIS spread has further to go from CNBC

Trump had dinner with the Co CEO of Oracle who is Amazon’s competitor in the cloud based computing contracts which are huge.  Amazon makes all of its money on the cloud services and this funds his distribution business.  Trump is angry that Amazon pays little taxes and uses the USPS despite the fact that the  USA mail has lost money every single year.  The markets will tank on this and on the Chinese implementation of tariffs on soybeans.

(courtesy zerohedge)

Trump Having Dinner With Co-CEO From Amazon Competitor Oracle

Bloomberg may have launched today’s last hour marketwide buying panic, when it reported that there have been no ongoing talks in the White House about action on Amazon, and it may be Bloomberg that now sinks futures, because in a report that at least partially refutes what it said earlier, according to Bloomberg, tonight President Trump will have dinner with Oracle co-CEO, Safra Catz, whose company is competing with Amazon.com Inc. for a multibillion-dollar Pentagon contract.

Joining them will be Trump supporter and venture capitalist, Peter Thiel, according to Bloomberg’s sources.

Oracle Corp. co-chief executive Safra Catz

While Trump has aggressively attacked Amazon in both tweets and before the press since March 29, sending its market value by as much as $55 billion before Tuesday’s last hour ramp, he has not mentioned the competition to provide cloud computing services to the Defense Department.

That is now changing.

According to Strategas analyst Dan Clifton, “Of all the stories we read [on Wednesday], however, we saw very little attention paid to the one area where Trump could actually hurt Amazon – cloud computing contracts,” Clifton wrote. “Tech companies have been fuming at the possibility of Amazon being the sole company awarded a multi-year cloud services contract at DoD. Congress was forced to intervene in the recent omnibus.”

Clifton adds that, “We believe other tech companies are largely funding [negative ads] to bring attention to the fact that Amazon is about to receive a windfall from the Trump Administration and one that will allow it to squeeze out the other tech companies.”

Indeed, as Yahoo News recently noted, “while regulating Amazon from an anti-trust position by arguing that its retail business is uncompetitive may appear to be outside the current political appetite from DC lawmakers, there is an area of Amazon’s business that Trump could directly, and negatively, impact with haste — Department of Defense contracts.”

The president now appears to be doing just that.

The Pentagon intends to award a single company the multi-year contract, plans that have drawn criticism from lawmakers as well as Amazon competitors including Microsoft Corp., International Business Machines Corp. and industry groups that include Oracle. They’re worried the move will favor Amazon, which is dominant in the cloud services market.

After tonight’s dinner, and if Catz plays her cards right, they won’t have to worry any more.

Meanwhile, billions are at stake:

The Washington Business Journal reported that the omnibus spending bill signed by Trump earlier this month contained a provision which requires the DoD to explain why awarding a contract that could run in excess of $10 billion to a single vendor is the best way to execute this plan.

Previously, in 2013, Amazon Web Services won a $600 million contract from the CIA. While the current contract is likely far greater, it suddenly appears much less likely that Bezos will be the winner.

According to Yahoo, Amazon’s cloud business pulled in $17.5 billion in revenue in 2017 and earned the company $4.33 billion in profit, more than the $4.1 billion the company made as a whole. And if Amazon’s tech rivals get Trump’s attention on a potential multi-billion dollar Defense award seemingly destined for Amazon, the President could have an opening to hit his favorite target in its most profitable business unit

END

The Amazon effect:  mall vacancies are now at a 6 year high.

(courtesy zerohedge)

Mall Vacancies At Six-Year High As Local Economies Stumble On Retail Slump

Retail vacancies at regional shopping malls have reached a six-year high – jumping to 8.4% in Q1 2018, the highest level since Q4 2012, according to real-estate data firm Reis Inc. which studies 77 metropolitan areas.

Furthermore, local neighborhood and community shopping centers in 41 of the 77 areas tracked by Reis experienced an increase in vacancies during the 12 months ending March 31.

The numbers show that bricks-and-mortar malls and shopping centers continue to be hurt by shifting consumer spending patterns, particularly the increasing use of online retail. Numerous department stores and other retailers that traditionally have been mainstays of shopping areas have been contracting or have failed.

Reis reported that retailers occupied 453,000 more square feet of shopping center space at the end of the first quarter than the fourth quarter of 2017, but that amount of “absorption” was the lowest for any quarter in more than five years. The completion of 712,000 square feet of new shopping center space also was “much lower” than average, Reis said. –Wall St. Journal

“The first quarter tends to see the lowest activity,” the Reis report said. “However, this was an unusually slow quarter for retail leasing and construction.”

The death of brick-and-mortar and its impact on jobs across the country comes as no surprise to anyone paying attention to the evolution of e-commerce and the convenience of various payment methods.

[insert: ecommercegrowth.png , preferences.png]

Last September, Toys “R” Us Inc., the largest US “brick and mortar” toys retailer, filed for bankruptcy. In March, it moved to liquidate its inventory, close stores nationwide, and finally shut down Toys R Us and Babies R Us websites – leaving shoppers with a thank-you note.

And while everyone likes to point their finger at Amazon – the retail apocalypse can’t be tied to just one catalyst. Massive excess capacity, perpetually over-leveraged capital structures and a constant lack of capital investment have doubtless contributed to the decline.

In 2017, mall-based apparel retailers and department stores alone account for nearly half of the 6,955 store closures

Meanwhile, given the number of real estate delinquencies sprinkled around the country, the store closure counts above will undoubtedly only continue to grow.

Of course, the wave of retail failures is a direct hit to an industry that is the largest employer of young Americans and those at the low end of the income spectrum with retail employment drastically lagging overall private job growth.

President Trump renewed his long-standing attack on Amazon last week – tweeting “They pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!”

Donald J. Trump@realDonaldTrump

I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!

That said, Amazon has previously pointed out that it collects tax on its own inventory in all 45 states that require such a tax.

As we reported earlier, Trump is “obsessed with Amazon,” a source told Axios. “Obsessed”, and added that Trump has allegedly talked about changing Amazon’s tax treatment because he’s worried about mom-and-pop retailers being put out of business. Another Axios source said that POTUS has “wondered aloud if there may be any way to go after Amazon with antitrust or competition law.”

Trump’s deep-seated antipathy toward Amazon surfaces when discussing tax policy and antitrust cases. The president would love to clip CEO Jeff Bezos’ wings. But he doesn’t have a plan to make that happen. –Axios

According to Vanity Fair, Trump wants the Post Office to increase Amazon’s shipping costs.

When Trump previously discussed the idea inside the White Hose, Gary Cohn had explained that Amazon is a benefit to the Postal Service, which has seen mail volume plummet in the age of e-mail. “Trump doesn’t have Gary Cohn breathing down his neck saying you can’t do the Post Office shit,” a Republican close to the White House said. “He really wants the Post Office deal renegotiated. He thinks Amazon’s getting a huge fucking deal on shipping.” –Vanity Fair

Of the areas tracked by Reis which have been hit the hardest by the retail apocalypse, Indianapolis and Tacoma, WA had the highest year-over-year vacancy increases.

Syracuse and Cleveland had the largest decrease in retail mall vacancies, falling one percentage point to 12% at the end of the first quarter. Cleveland came in second, dropping 0.7 percentage point to 14.6%: both of these suggest a risign tide of service unemployment.

Jobs in the retail sector are the most prolific in America, employing 4.3 million workers as salespeople and 3.3 million workers as cashiers. (sourceThe current store closures mean the end of employment for tens of thousands of workers.

All in all, the collapse of the retail industry could, at some point, put the livelihoods of more than 7 million people in jeopardy. Perhaps “doomsaying” economists (such as, gasp, Peter Schiff) are correct when they warn that another Great Depression is upon us, but with the fake stock markets near all time highs, everyone is too distracted to notice.

end

SWAMP STORIES

A new ploy by Mueller as he tells Trump’s lawyers that the President is not a criminal target but remains a “subject”.  His goal is to get him for an interview and then possibly charged for perjury

(courtesy zerohedge)

Mueller Tells Trump’s Lawyers President Not A Criminal Target But Remains Under Investigation

After a busy news day in which Trump tripled-down on his feud with Amazon, met with the leaders of the Baltic states and threatened to scrap NAFTA and foreign aid to Central America if Mexico doesn’t stop a caravan of migrants from reaching the US border, the Washington Post has published the most notable update about the Mueller probe in recent history.

Citing three people familiar with the investigation, the paper reports that Mueller told Trump’s legal team last month that the president isn’t a criminal target in the Russia probe at this point.

Mueller

However, Mueller also informed Trump’s lawyers that he is preparing a report about the president’s conduct while in office, and that report will include details about Trump’s purported obstruction of justice. Of course, the prosecutor didn’t hesitate to use this report as leverage to try and convince the Trump legal team to assent to an unrestricted interview between Trump and Mueller.

Mueller has described Trump as a “subject” of the investigation – a term that has also been used to described his son-in-law Jared Kushner’s involvement.

Some of Trump’s legal advisors have taken this as a positive sign, but others have warned that Trump’s status could easily be moved from “subject” to a criminal indictment.

Mueller’s description of the president’s status has sparked friction within Trump’s inner circle as his advisers have debated his legal standing. The president and some of his allies seized on the special counsel’s words as an assurance that Trump’s risk of criminal jeopardy is low. Other advisers, however, noted that subjects of investigations can easily become indicted targets — and expressed concern that the special prosecutor was baiting Trump into an interview that could put the president in greater legal peril.

Typically special counsel probes end with a private report to the attorney general or deputy attorney general (in this case, the latter). That report can then be made public at their discretion – but, according to WaPo, it appears as if Rod Rosenstein has already made up his mind that some record of the investigation must be released to the public.

Mueller’s team has also told Trump’s legal team – which has endured an unprecedented shakeup in recent weeks – that the DOJ intends to issue the report in stages, with the first stage dealing with obstruction, and the next detailing what Trump knew about his campaign advisors contacts with Russian officials.

Mueller’s investigators have indicated to the president’s legal team that they are considering writing reports on their findings in stages — with the first report focused on the obstruction issue, according to two people briefed on the discussions.

Under special counsel regulations, Mueller is required to report his conclusions confidentially to Deputy Attorney General Rod J. Rosenstein, who has the authority to decide whether to release the information publicly.

“They’ve said they want to write a report on this — to answer the public’s questions — and they need the president’s interview as the last step,” one person familiar with the discussions said of Mueller’s team.

Trump’s attorneys expect the president would also face questions about what he knew about any contacts by his associates with Russians officials and emissaries in 2016, several White House advisers said. The president’s allies believe a second report detailing the special counsel’s findings on Russia’s interference would be issued later.

The president has privately expressed relief at the description of his legal status, which has increased his determination to agree to a special counsel interview, the people said. He has repeatedly told allies that he is not a target of the probe and believes an interview will help him put the matter behind him, friends said.

However, legal experts said Mueller’s description of Trump as a subject of a grand jury probe does not mean he is in the clear.

Under Justice Department guidelines, a subject of an investigation is a person whose conduct falls within the scope of a grand jury’s investigation. A target is a person for which there is substantial evidence linking him or her to a crime.

A subject could become a target with his or her own testimony, legal experts warn.

“If I were the president, I would be very reluctant to think I’m off the hook,” said Keith Whittington, a professor of politics at Princeton University and impeachment expert.

Trump has repeatedly said he’d be happy to sit down with Mueller, but his legal team has been working to limit the scope of his testimony to written answers or agreeing to exclude certain topics.

It’s also widely believed that Trump’s legal team has been split on whether Trump should testify, with Dowd reportedly leaving because the president ignored his advice. Even if Trump refuses to meet with Mueller, it’s unlikely he’d decide to subpoena the president or pursue him further. Such an act would instigate a legal battle that could escalate to the Supreme Court, where Mueller risks an embarrassing defeat.

So, why risk it? It’d be easier to put the president’s mind at ease while exerting some pressure on his legal team, hoping the mixture convinces them all that Trump – the “walking perjury trap,” according to one source – assents to the interview.

end

Let us close with this good interview of Michael Pento

Fed Panic Stricken About Inflation – Michael Pento

By Greg Hunter On April 4, 2018 In Market Analysis

By Greg Hunter’s USAWatchdog.com

Money manager and financial writer Michael Pento says the federal government is “burning the furniture to heat the house.” Pento contends, “If you are burning the furniture in your house to heat your house, guess what, you are not too far away from freezing to death. The government is now selling its assets to try to make the fiscal situation look better. We have so much red ink in the government today. Our debt to GDP ratio is now way above 100%. The budget deficits are way over $1 trillion and going much higher. The government is forced now to sell assets to try to make it look better. . . . They’re so desperate for money that they are draining the Strategic Petroleum Reserve. They are selling 100 million barrels and draining the Reserve down 45%. . . . That comes to $6 billion. We are so desperate for money from any place.”

So, what does the Federal Reserve think about the U.S. economy? Pento says, “The Fed is worried about intractable inflation. They are panic stricken. . . . What you have to understand, and these people will never understand it at the Federal Reserve, is that inflation is about a market psychology about the purchasing power of its currency. When the market loses faith in a currency’s purchasing power, you get inflation, and it could go hyperinflation. That’s coming down the road I believe. It’s not coming because people are becoming prosperous and working and finding employment.”

Pento says the biggest unreported story is the skyrocketing interest rate of LIBOR. What’s that? Pento explains, “LIBOR, and people don’t understand or talk about it, is the London Inter-Bank Offered Rate. This rate has gone from 0.3% at the end of 2015 to 2.3% today. The London Inter-Bank Offered Rate is the rate that is applied to $370 trillion of loans and derivatives. I did not say “B” billion or “M” million, I said “T”. $370 trillion worth of derivatives and loans, from credit cards, to student loans, to auto loans are priced off of LIBOR. . . . That is the biggest reason why the stock market is rolling over because the cost of borrowing money . . . is going up very, very sharply. . . . All of this is going to hit a crescendo in October of 2018.”

Pento says gold prices will naturally be going up. Pento explains, “Why do I think gold is going to prosper? Gold prospers most when two conditions occur. One, the dollar rolls over compared to other fiat currencies. I think that’s going to happen. Even more so the case, I believe real interest rates are going to fall. Real interest rates are going to fall along with nominal rates come October. There is going to be a watershed epiphany on the part of the Fed that they can no longer raise rates.”

Join Greg Hunter as he goes One-on-One with money manager Michael Pento of PentoPort.com.

Video Link

https://usawatchdog.com/fed-panic-stricken-about- inflation-michael-pento/

end

I will  see you  THURSDAY night

HARVEY

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4 comments

  1. Pat Ruvolo · · Reply

    Well Harvey, if this is true then it seems like a conspiracy to rig a commodity market.If this is so, then we should all get together and file a multi-billion dollar lawsuit. I have not problem tossing in 100 bucks a month, as would another 2000 people who follow you. We could hire the best attorney in New York for 250k per month.

    Liked by 1 person

  2. Pat Ruvolo · · Reply

    In addition, the defendants need to be the CME and LMBA and not the banks.

    Liked by 1 person

  3. Larry THE SHITHEAD BOZO Kudlow is a cocaine addict & everyone knows about it.

    Liked by 1 person

  4. Pat Ruvolo · · Reply

    Harvey if you are actually accurate, I suggest you get hold of me.I know an unreal attorney in L.A.that might take such a case.

    Liked by 1 person

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