GOLD: $1290,95 DOWN $ 27,25 (COMEX TO COMEX CLOSINGS)
Silver: $16.29 DOWN 33 CENTS (COMEX TO COMEX CLOSINGS)
Closing access prices:
Gold $1291..90
silver: $16.28
For comex gold:
MAY/
NUMBER OF NOTICES FILED TODAY FOR MAY CONTRACT:3 NOTICE(S) FOR 300 OZ.
TOTAL NOTICES SO FAR 624 FOR 62400 OZ (1.9409 tonnes)
For silver:
MAY
35 NOTICE(S) FILED TODAY FOR
175,000 OZ/
Total number of notices filed so far this month: 5944 for 29,720,000 oz
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Bitcoin: BID $8361/OFFER $8461: DOWN $17(morning)
Bitcoin: BID/ $8451/offer $8551: DOWN $165 (CLOSING/5 PM)
end
First Shanghai gold fix comes at 10 pm est
The second Shanghai gold fix: 2:15 pm
First Shanghai gold fix gold: 10 pm est: 1320.29
NY price at the same time: 1313.70
PREMIUM TO NY SPOT: $6.59
ss
Second gold fix early this morning: 1317.96
USA gold at the exact same time: 1310.90
PREMIUM TO NY SPOT: $7.04
AGAIN, SHANGHAI REJECTS NEW YORK PRICING.
WE WILL NOT PROVIDE LONDON FIXES AS THEY ARE NOT ACCURATE AS TO WHAT IS GOING ON AT THE SAME TIME FRAME.
Let us have a look at the data for today
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In silver, the total OPEN INTEREST FELL BY A CONSIDERABLE 3046 CONTRACTS FROM 197,928 FALLING TO 195,298 WITH YESTERDAY’S 10 CENT LOSS IN SILVER PRICING. WE ARE NOW WITNESSING OUR USUAL AND CUSTOMARY COMEX LONG LIQUIDATION AS WE ENTERED INTO THE ACTIVE DELIVERY MONTH OF MAY AS LONGS PACK THEIR BAGS AND MIGRATE OVER TO LONDON. WE WERE NOTIFIED THAT WE HAD A FAIR SIZED NUMBER OF COMEX LONGS TRANSFERRING THEIR CONTRACTS TO LONDON THROUGH THE EFP : 1172 EFP’S FOR JULY AND ZERO FOR ALL OTHER MONTHS AND THEREFORE TOTAL ISSUANCE OF 1172 CONTRACTS. WITH THE TRANSFER OF 1172 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 2172 EFP CONTRACTS TRANSLATES INTO 5.86 MILLION OZ ACCOMPANYING:
1.THE 10 CENT FALL IN SILVER PRICE AT THE COMEX AND
2. THE STRONG AMOUNT OF SILVER OUNCES STANDING FOR MAY COMEX DELIVERY. (30.125 MILLION OZ)
ACCUMULATION FOR EFP’S/SILVER/J.P.MORGAN’S HOUSE OF BRIBES, / STARTING FROM FIRST DAY NOTICE/FOR MONTH OF APRIL: (FINAL)
20,167 CONTRACTS (FOR 11 TRADING DAYS TOTAL 20,167 CONTRACTS) OR 100.835 MILLION OZ: AVERAGE PER DAY: 1833 CONTRACTS OR 9.168 MILLION OZ/DAY
TO GIVE YOU AN IDEA AS TO THE HUGE SUPPLY THIS MONTH IN SILVER: SO FAR THIS MONTH: 100,835 MILLION PAPER OZ HAVE MORPHED OVER TO LONDON. THIS REPRESENTS AROUND 14.40% OF ANNUAL GLOBAL PRODUCTION (EX CHINA EX RUSSIA)
ACCUMULATION IN YEAR 2018 TO DATE SILVER EFP’S: 1,246.16 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
ACCUMULATION FOR APRIL 2018: 385.75 MILLION OZ
RESULT: WE HAD A CONSIDERABLE SIZED DECREASE IN COMEX OI SILVER COMEX OF 3046 WITH THE 10 CENT LOSS IN SILVER PRICE. WE HAVE NOW ENTERED THE NEW ACTIVE MONTH OF MAY. THE CME NOTIFIED US THAT IN FACT WE HAD AN FAIR SIZED EFP ISSUANCE OF 1172 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 (SEE COMEX DATA) . FROM THE CME DATA: 1172 EFP CONTRACTS FOR JULY, AND ZERO FOR ALL OVER MONTHS FOR A DELIVERABLE FORWARD CONTRACT OVER IN LONDON WITH A FIAT BONUS (TOTAL: 1172). TODAY WE LOST 1874 TOTAL OI CONTRACTS ON THE TWO EXCHANGES: i.e. 1172 OPEN INTEREST CONTRACTS HEADED FOR LONDON (EFP’s) TOGETHER WITH AN DECREASE OF 3046 OI COMEX CONTRACTS. AND ALL OF THIS HAPPENED WITH THE FALL IN PRICE OF SILVER OF 10 CENTS AND A CLOSING PRICE OF $16.61 WITH RESPECT TO YESTERDAY’S TRADING. YET WE STILL HAVE A STRONG AMOUNT OF SILVER STANDING AT THE COMEX FOR DELIVERY IN THIS ACTIVE MAY DELIVERY MONTH. IT SURE SEEMS THAT WE MUST HAVE HAD SOME BANKER SHORT COVERING ON BOTH EXCHANGES.
In ounces AT THE COMEX, the OI is still represented by UNDER 1 BILLION oz i.e. .976 MILLION OZ TO BE EXACT or 139% of annual global silver production (ex Russia & ex China).
FOR THE NEW FRONT MAY MONTH/ THEY FILED AT THE COMEX: 35 NOTICE(S) FOR 175,000 OZ OF SILVER
IN SILVER, WE HAVE NOW SET THE NEW RECORD OF OPEN INTEREST AT 243,411 AND AGAIN THIS HAS BEEN SET WITH A LOW PRICE OF $16.51 ON APRIL 9.2018.
ON THE DEMAND SIDE WE HAVE THE FOLLOWING:
- HUGE AMOUNTS OF SILVER STANDING FOR DELIVERY (MARCH: 27 MILLION OZ , APRIL: 2.485 MILLION OZ AND MAY: 30.125 MILLION OZ )
- HUGE RECORD OPEN INTEREST IN SILVER 243,411 CONTRACTS (OR 1.217 BILLION OZ/ SET APRIL 9/2018
- HUGE ANNUAL EFP’S ISSUANCE EQUAL TO 2.9 BILLION OZ OR 400% OF SILVER ANNUAL PRODUCTION/2017
- RECORD SETTING EFP ISSUANCE FOR ANY MONTH IN SILVER; APRIL/2018/ 385.75 MILLION OZ/ (FINAL)
AND YET, WITH THE EXTREMELY HIGH EFP ISSUANCE, WE HAVE A CONTINUAL LOW 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 J.P.MORGAN 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). IT ALSO LOOKS LIKE BANKER CAPITULATION IN SILVER AS THEY STRUGGLE TO REMOVE SOME OF THEIR HUGE OBLIGATIONS.
In gold, the open interest ROSE BY A STRONG 12,005 CONTRACTS UP TO 514,183 DESPITE THE LOSS IN THE GOLD PRICE/YESTERDAY’S TRADING (LOSS OF $2.35). WE ARE NOW IN THE NON ACTIVE DELIVERY MONTH OF MAY. THE CME RELEASED THE DATA FOR EFP ISSUANCE AND IT TOTALED A FAIR SIZED 4726 CONTRACTS : JUNE SAW THE ISSUANCE OF 4726 CONTRACTS , MAY SAW THE ISSUANCE OF 0 CONTRACTS AND AUGUST SAW THE ISSUANCE OF: 0 CONTRACTS WITH ALL OTHER MONTHS ZERO. The new OI for the gold complex rests at 514,183. 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. . EVEN THOUGH THE BANKERS ISSUED THESE MONSTROUS EFPS, THE OBLIGATION STILL RESTS WITH THE BANKERS TO SUPPLY METAL BUT IT TRANSFERS THE RISK TO A LONDON BANKER OBLIGATION AND NOT A NEW YORK COMEX OBLIGATION. LONGS RECEIVE A FIAT BONUS TOGETHER WITH A LONG LONDON FORWARD. THUS, BY THESE ACTIONS, THE BANKERS AT THE COMEX HAVE JUST STATED THAT THEY HAVE NO APPRECIABLE METAL!! THIS IS A MASSIVE FRAUD: THEY CANNOT SUPPLY ANY METAL TO OUR COMEX LONGS BUT THEY ARE QUITE WILLING TO SUPPLY MASSIVE NON BACKED GOLD (AND SILVER) PAPER KNOWING THAT THEY HAVE NO METAL TO SATISFY OUR LONGS. LONDON IS NOW SEVERELY BACKWARD IN BOTH GOLD AND SILVER AND WE ARE WITNESSING DELAYS IN ACTUAL DELIVERIES.
IN ESSENCE WE HAVE A HUMONGOUS SIZED OI GAIN IN TOTAL CONTRACTS ON THE TWO EXCHANGES: 12,005 OI CONTRACTS INCREASED AT THE COMEX AND AN FAIR SIZED 4726 EFP OI CONTRACTS WHICH NAVIGATED OVER TO LONDON.THUS TOTAL OI GAIN: 16,731 CONTRACTS OR 1,673,100 OZ = 52.04 TONNES. AND ALL OF THIS OCCURRED WITH A LOSS OF $2.35
YESTERDAY, WE HAD 2819 EFP’S ISSUED.
ACCUMULATION OF EFP’S GOLD AT J.P. MORGAN’S HOUSE OF BRIBES: (EXCHANGE FOR PHYSICAL) FOR THE MONTH OF MAY : 93,676 CONTRACTS OR 9,376,,000 OZ OR 291.63 TONNES (11 TRADING DAYS AND THUS AVERAGING: 8,516 EFP CONTRACTS PER TRADING DAY OR 851,600 OZ/ TRADING DAY),,
TO GIVE YOU AN IDEA AS TO THE HUGE SIZE OF THESE EFP TRANSFERS : THIS MONTH IN 10 TRADING DAYS IN TONNES: 291.63 TONNES
TOTAL ANNUAL GOLD PRODUCTION, 2017, THROUGHOUT THE WORLD EX CHINA EX RUSSIA: 2555 TONNES
THUS EFP TRANSFERS REPRESENTS 291.63/2550 x 100% TONNES = 11.43% OF GLOBAL ANNUAL PRODUCTION SO FAR IN APRIL ALONE.*** THE ACCUMULATION OF EFP CONTRACTS IS RISING PER MONTH.
ACCUMULATION OF GOLD EFP’S YEAR 2018 TO DATE: 3,049.31* TONNES *SURPASSED ANNUAL PROD’N
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 (22 TRADING DAYS)
ACCUMULATION OF GOLD EFP’S FOR APRIL 2018: 713.84 TONNES (21 TRADING DAYS)
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 HUMONGOUS SIZED INCREASE IN OI AT THE COMEX OF 12,005 DESPITE THE $2.35 FALL IN PRICE // GOLD TRADING YESTERDAY ($2.35 LOSS). WE ALSO HAD A SMALL SIZED NUMBER OF COMEX LONG TRANSFERRING TO LONDON THROUGH THE EFP ROUTE: 4726 CONTRACTS AS THESE HAVE ALREADY BEEN NEGOTIATED AND CONFIRMED. THERE OBVIOUSLY DOES NOT SEEM TO BE MUCH PHYSICAL GOLD AT THE COMEX. 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 4726 EFP CONTRACTS ISSUED, WE HAD A GIGANTIC SIZED NET GAIN OF 16,731 CONTRACTS IN TOTAL OPEN INTEREST ON THE TWO EXCHANGES:
4726 CONTRACTS MOVE TO LONDON AND 12,005 CONTRACTS DECREASED AT THE COMEX. (in tonnes, the GAIN in total oi equates to 52.79 TONNES). ..AND ALL OF THESE OCCURRED AT THE COMEX WITH A LOSS OF $2.35 IN TRADING.
we had: 3 notice(s) filed upon for 300 oz of gold at the comex.
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With respect to our two criminal funds, the GLD and the SLV:
GLD…
WITH GOLD DOWN $27.35 /THE CROOKS WITHDREW 10.00 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS TONIGHT AT 856.17 TONNES
Inventory rests tonight: 858.17 tonnes.
SLV/
WITH SILVER DOWN 10 CENTS A SMALL CHANGES IN THE SILVER INVENTORY AT THE SLV INVENTORY/ A WITHDRAWAL OF 848,000 OZ FROM THE SLV
/INVENTORY RESTS AT 319.591 MILLION OZ/
end
First, here is an outline of what will be discussed tonight:
1. Today, we had the open interest in SILVER FELL BY A CONSIDERABLE SIZED 3046 CONTRACTS from 197,928 UP TO 194,882 (AND, FURTHER FROM THE NEW COMEX RECORD SET /APRIL 9/2017 AT 243,411/SILVER PRICE AT THAT DAY: $16.53). THE PREVIOUS RECORD OTHER THAN WAS ESTABLISHED AT: 234,787, SET ON APRIL 21.2017 OVER ONE YEAR AGO. THE PRICE OF SILVER ON THAT DAY: $17.89. OUR CUSTOMARY MIGRATION OF COMEX LONGS MORPH INTO LONDON FORWARDS CONTINUES AS OUR BANKERS USED THEIR EMERGENCY PROCEDURE TO ISSUE: 0 EFP CONTRACTS FOR APRIL, 0 EFP CONTRACTS FOR MAY (WE DO NOT GET A LOOK AT THESE CONTRACTS AS IT IS PRIVATE BUT THE CFTC DOES AUDIT THEM), AND 1172 EFP’S FOR JULY AND ALL OTHER MONTHS ZERO. TOTAL EFP ISSUANCE: 1172 CONTRACTS. EFP’S GIVE OUR COMEX LONGS A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON. IF WE TAKE THE OI LOSS AT THE COMEX OF 3046 CONTRACTS TO THE 1172 OI TRANSFERRED TO LONDON THROUGH EFP’S, WE OBTAIN A LOSS OF 1458 OPEN INTEREST CONTRACTS. THUS IN OUNCES, THE LOSS ON THE TWO EXCHANGES: 9.37 MILLION OZ!!! AND THIS OCCURRED WITH A TINY 10 CENT LOSS IN PRICE . THE BANKERS ORCHESTRATED THEIR RAID THROUGHOUT LAST WEEK DESPERATELY TRYING TO PARE THEIR GIGANTIC OPEN INTEREST SHORT ON BOTH EXCHANGES BUT TO NO AVAIL. JUDGING BY THE RECORD NUMBER OF EFP ISSUANCE DURING LAST MONTH OF APRIL AT 385.75 MILLION OZ AND THE TOTAL OI GAIN ON THE TWO EXCHANGES, I DO NOT THINK THAT OUR BANKERS HAVE BEEN TOO SUCCESSFUL. THE CONSTANT RAIDS ARE NOW BEING CALLED UPON BY OUR BANKER FRIENDS ARE DONE IN AN ATTEMPT TO SHAKE AS MANY SILVER LEAVES FROM THE SILVER TREE AS POSSIBLE.
RESULT: A CONSIDERABLE SIZED DECREASE IN SILVER OI AT THE COMEX WITH THE 10 CENT FALL IN SILVER PRICING FRIDAY. BUT WE ALSO HAD ANOTHER STRONG SIZED 1172 EFP’S ISSUED TRANSFERRING COMEX LONGS OVER TO LONDON. TOGETHER WITH THE STRONG SIZED AMOUNT OF SILVER OUNCES STANDING FOR APRIL, DEMAND FOR PHYSICAL SILVER CONTINUES TO INTENSIFY 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)MONDAY MORNING/SUNDAY NIGHT: Shanghai closed UP 10.77 points or 0 .34% /Hang Sang CLOSED UP 419,02 points or 1.35% / The Nikkei closed UP 107.18 POINTS OR 0.47% /Australia’s all ordinaires CLOSED UP .30% /Chinese yuan (ONSHORE) closed DOWN at 6.3379/Oil DOWN to 70.77 dollars per barrel for WTI and 77.34 for Brent. Stocks in Europe OPENED RED. ONSHORE YUAN CLOSED UP AT 6.3379 AGAINST THE DOLLAR. OFFSHORE YUAN CLOSED UP ON THE DOLLAR AT 6.3303/ONSHORE YUAN TRADING WEAKER AGAINST OFFSHORE YUAN/ONSHORE YUAN TRADING WEAKER AGAINST USA DOLLAR/OFFSHORE YUAN TRADING WEAKER AGAINST THE DOLLAR /CHINA RETALIATES WITH TARIFFS/ TRUMP RESPONDS TO NEW TARIFFS AND IT NOW LOOKS LIKE A FULL TRADE WAR IS BEGINNING/
/NORTH KOREA/SOUTH KOREA
i)North Korea/South Korea/USA
b) REPORT ON JAPAN
3 c CHINA
As expected, the USA and China are still very far apart on trade
( zero hedge)
4. EUROPEAN AFFAIRS
5. RUSSIAN AND MIDDLE EASTERN AFFAIRS
The Turkish lira crumbles to 6.4 to the dollar as its current account deficit rises to 16 billion dollars. Erdogan states not to worry as most likely he will take over central bank authority or lower rates, which in turn will cause the Lira to plummet some more.
(courtesy zerohedge)
ii)This will be very dangerous to Cyprus and Israel as Erdogan is threatening Cyprus’s gas exploration in the Mediterranean. Israel discovered a massive gas field off of Haifa and this extends into Cypriot waters. Turkey does not recognize Cyprus and they will attack
( Paraskova)
iii)Israel retaliates by kicking out the ambassador to Israel
( zerohedge)
6 .GLOBAL ISSUES
Mexico
Mexico’s central bank has been hit by cyber thieves and hundred of millions have been stolen
( zerohedge)
7. OIL ISSUES
Wall Street journal: Gas at $4.00 will wipe out 1/3 of the gain from the tax cuts. It will cause an abrupt stop to the USA economy
( Wall Street Journal)
8. EMERGING MARKET
9. PHYSICAL MARKETS
i)A must read as Jim Rickards explains the fraud/gold price manipulation and why China has been accumulating much of the west]’s gold. The reason the US is going along with this is due to the huge amount of USA bonds accumulated by China. Although Rickards does not mention this, it is now obvious that China had also decided to lend silver to the uSA to help in their manipulative scheme. You cannot whack gold unless you have a huge hoard of silver to be supplied into the system. The only nation with official silver reserves is China.
(courtesy Rickards/GATA)
iii)The huge rise in physical gold import is another sign of the death knell for the dollar( SRSRocco report/Steve St Angelo)
10. USA stories which will influence the price of gold/silver
iii)With the 10 yr bond yield rising above 3.05%, the emerging markets are imploding( zerohedge)
iii b)This afternoon trading
As the 10 yr USA bond rises above 3.05 as I promised you, the emerging markets will feel the pain. Yesterday it was the Argentine Peso that suffered but it is being supported today at 25.00 to the dollar. However the Turkish lira and South African rand collapsed
( zerohedge)
iv)the subprime auto loans default rates are now higher than during the financial crisis of 2008
( zerohedge)
v)In the TIC just released (for March data) surprisingly it was not China that dumped USA treasuries. It was Japan. Actually China and Russia added treasuries
(courtesy zerohedge)
Trading Volumes on the COMEX
PRELIMINARY COMEX VOLUME FOR TODAY: 473,181 contracts
CONFIRMED COMEX VOL. FOR YESTERDAY: 278,226 contracts
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And now for the wild silver comex results.
Total silver OI FELL BY A CONSIDERABLE SIZED 3046 CONTRACTS FROM 195,298 DOWN TO 194,882 (AND FURTHER FROM THE NEW RECORD OI FOR SILVER SET APRIL 9.2018/ 243,411 CONTRACTS) WITH THE 10 CENT FALL IN SILVER PRICING YESTERDAY. SINCE WE ARE NOW INTO THE ACTIVE DELIVERY MONTH OF MAY. WE WERE INFORMED THAT WE HAD A FAIR SIZED 1172 EFP CONTRACT ISSUANCE FOR JULY AND ZERO FOR ALL OTHER MONTHS. THESE EFPS WERE ISSUED TO COMEX LONGS WHO RECEIVED A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON. THE TOTAL EFP’S ISSUED: 1172. ON A NET BASIS WE LOST 1874 SILVER OPEN INTEREST CONTRACTS AS WE OBTAINED A 3046 CONTRACT LOSS AT THE COMEX COMBINING WITH THE ADDITION OF 1172 OI CONTRACTS NAVIGATING OVER TO LONDON.
NET LOSS ON THE TWO EXCHANGES: 1874 CONTRACTS
AMOUNT STANDING FOR SILVER AT THE COMEX
We are now in the active delivery month of MAY and here the front month LOST 54 contracts FALLING TO 116 contracts. We had 72 notices filed upon yesterday so we SURPRISINGLY AGAIN GAINED 18 contracts or 90,000 additional ounces will stand for delivery in this active delivery month of May AS SOMEBODY AGAIN WAS DESPERATE FOR PHYSICAL SILVER ON THIS SIDE OF THE POND..
June saw a GAIN of 0 contracts to stand at 784 The next big delivery month for silver is July and here the OI FELL by 3322 contracts DOWN to 135,920. The next active delivery month after July for silver is September and here the OI ROSE by 242 contracts UP to 25,303
We had 35 notice(s) filed for 175,000 OZ for the MAY 2018 contract for silver
INITIAL standings for MAY/GOLD
MAY 15/2018.
| Gold | Ounces |
| Withdrawals from Dealers Inventory in oz | nil oz |
| Withdrawals from Customer Inventory in oz |
198.395 OZ
Brinks
|
| Deposits to the Dealer Inventory in oz | NIL oz |
| Deposits to the Customer Inventory, in oz | nil OZ |
| No of oz served (contracts) today |
3 notice(s)
300 OZ
|
| No of oz to be served (notices) |
101 contracts
(10100 oz)
|
| Total monthly oz gold served (contracts) so far this month |
624 notices
62400 OZ
1.9409 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 |
For MAY:
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 3 contract(s) of which 0 notices were stopped (received) by j.P. Morgan dealer and 3 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 MAY. contract month, we take the total number of notices filed so far for the month (624) x 100 oz or 62400 oz, to which we add the difference between the open interest for the front month of MAY. (104 contracts) minus the number of notices served upon today (3 x 100 oz per contract) equals 72,500 oz, the number of ounces standing in this active month of APRIL (2.255 tonnes)
Thus the INITIAL standings for gold for the MAY contract month:
No of notices served (624 x 100 oz) + {(104)OI for the front month minus the number of notices served upon today (3 x 100 oz )which equals 72,500 oz standing in this active delivery month of MAY . THERE ARE 9.0356 TONNES OF REGISTERED GOLD AVAILABLE FOR DELIVERY SO FAR.
WE GAINED 300 OZ OF GOLD (3 CONTRACTS) STANDING IN THIS NON ACTIVE DELIVERY MONTH OF MAY AS SOMEBODY BADLY NEEDED PHYSICAL GOLD AT THIS SIDE OF THE POND..
IN THE LAST 18 MONTHS 73 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE APRIL DELIVERY MONTH
MAY INITIAL standings/SILVER
| Silver | Ounces |
| Withdrawals from Dealers Inventory | nil oz |
| Withdrawals from Customer Inventory |
973,200.587 oz
Brinks
CNT
|
| Deposits to the Dealer Inventory |
nil
oz
|
| Deposits to the Customer Inventory |
nil oz
|
| No of oz served today (contracts) |
35
CONTRACT(S)
(175,000 OZ)
|
| No of oz to be served (notices) |
81 contracts
(405,000 oz)
|
| Total monthly oz silver served (contracts) | 5944 contracts
(29,720,000 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
i
total dealer deposits: nil oz
we had 0 deposits into the customer account
i) Into JPMorgan: nil oz
*** JPMorgan for most of 2017 and in 2018 has adding to its inventory almost every single day.
JPMorgan now has 140 million oz of total silver inventory or 53.4% of all official comex silver. (140 million/263 million)
JPMorgan did not deposit into its warehouses (official) today.
ii) Into everybody else: 0
total customer deposits today: 0 oz
we had 2 withdrawals from the customer account;
i) out of Brinks: 970,195.458 oz
ii) Out of CNT: 3005.129 oz
total withdrawals; 973,200.587 oz
we had 0 adjustments
i
total dealer silver: 69.161 million
total dealer + customer silver: 267.547 million oz
The total number of notices filed today for the MAY. contract month is represented by 35 contract(s) FOR 175,000 oz. To calculate the number of silver ounces that will stand for delivery in MAY., we take the total number of notices filed for the month so far at 5944 x 5,000 oz = 29,720,000 oz to which we add the difference between the open interest for the front month of MAY. (116) and the number of notices served upon today (35 x 5000 oz) equals the number of ounces standing.
.
Thus the INITIAL standings for silver for the MAY contract month: 5944(notices served so far)x 5000 oz + OI for front month of MAY(116) -number of notices served upon today (35)x 5000 oz equals 30,125,000 oz of silver standing for the MAY contract month
WE GAINED 18 CONTRACTS OR AN ADDITIONAL 90,000 OZ WILL STAND AT THE COMEX AS SOMEBODY WAS IN URGENT NEED OF PHYSICAL SILVER ON THIS SIDE OF THE POND.
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ESTIMATED VOLUME FOR TODAY: 91,401 CONTRACTS
CONFIRMED VOLUME FOR YESTERDAY: 58,620 CONTRACTS
YESTERDAY’S CONFIRMED VOLUME OF 58620 CONTRACTS EQUATES TO 293 MILLION OZ OR 41.8% OF ANNUAL GLOBAL PRODUCTION OF SILVER
COMMODITY LAW SUGGESTS THAT OPEN INTEREST SHOULD NOT BE MORE THAN 3% OF ANNUAL GLOBAL PRODUCTION. THE CROOKS ARE SUPPLYING MASSIVE PAPER TRYING TO KEEP SILVER IN CHECK.
The record level of silver open interest is 234,787 contracts set on April 21./2017 with the price at that day at $18.42
The previous record was 224,540 contracts with the price at that time of $20.44
end
NPV for Sprott
1. Sprott silver fund (PSLV): NAV RISES TO -1.54% (MAY15/2018)
2. Sprott gold fund (PHYS): premium to NAV RISES TO -0.34% to NAV (MAY 15/2018 )
Note: Sprott silver trust back into NEGATIVE territory at -1.54%-/Sprott physical gold trust is back into NEGATIVE/ territory at -0.34%/Central fund of Canada’s is still in jail but being rescued by Sprott.
Sprott WINS hostile 3.1 billion bid to take over Central Fund of Canada
(courtesy Sprott/GATA)
3.SPROTT CEF.A FUND (FORMERLY CENTRAL FUND OF CANADA): NAV RISES TO -1.97%: NAV 13.37/TRADING 13.11//DISCOUNT 1.97.
END
And now the Gold inventory at the GLD/
MAY 15/WITH GOLD DOWN $27.35, THE CROOKS WITHDREW 10 TONNES OF GOLD FROM THE GLD WHICH WAS USED IN THE RAID TODAY/INVENTORY RESTS AT 856.17 TONNES
MAY 14/ WITH GOLD DOWN $2.35: A HUGE DEPOSIT OF 4.68 TONNES OF GOLD INTO THE GLD and then a withdrawal of 1.48 tonnes /INVENTORY RESTS AT 866.17
A net gain of 3.2 tonnes of gold.
MAY 11/WITH GOLD DOWN $1.75/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 862.96 TONNES/
MAY 10/WITH GOLD UP $9.60/A WITHDRAWAL OF 1.17 TONNES FROM THE GLD/INVENTORY RESTS AT 862.96 TONNES/SUCH CROOKS
MAY 9/WITH GOLD DOWN $0.55/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 864.13 TONNES
MAY 8/WITH GOLD DOWN $0.10/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 864.13 TONNES
MAY 7/WITH GOLD DOWN $0.55/ANOTHER WITHDRAWAL OF 1.47 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 864.13 TONNES
MAY 4/WITH GOLD UP $2.05/A WITHDRAWAL OF 1.13 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 865.60 TONNES
MAY 3/WITH GOLD UP $7.05/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 866.77 TONNES
MAY 2/WITH GOLD DOWN $1.15/ A HUGE WITHDRAWAL OF 4.43 TONNES FROM THE GLD/INVENTORY RESTS AT 866.77 TONNES
MAY 1/WITH GOLD DOWN $12.15/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 871.20 TONNES
APRIL 30/WITH GOLD DOWN $4.05/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 871.20 TONNES.
APRIL 27./WITH GOLD UP $5.90/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 871.20 TONNES/
APRIL 26/WITH GOLD DOWN $4.90/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 871.20 TONNES
APRIL 25/AFTER 9 CONSECUTIVE DAYS OF NO MOVEMENT OF GOLD INTO OUT OF THE GLD, WE HAD A HUGE DEPOSIT OF 5.31 TONNES OF GOLD INTO THE GLD/INVENTORY RESTS AT 871.20 TONNES.
APRIL 24./WITH GOLD UP $9.90, WE HAD NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 865.89 TONNES/
APRIL 23.2018/WITH GOLD DOWN $14.00/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 865.89 TONNES.
APRIL 20/WITH GOLD DOWN $10.20: NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 865.89 TONNES
APRIL 19/WITH GOLD DOWN $4.25: NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 865.89 TONNES/
APRIL 18/WITH GOLD UP $3.65: NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 865.89 TONNES
APRIL 17/WITH GOLD DOWN $1.00 NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 865.89 TONNES/
April 16/WITH GOLD UP$2.80/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 865.89 TONNES/
April 13/WITH GOLD UP $6.15, A HUGE DEPOSIT OF 5.90 TONNES INTO THE GLD INVENTORY/INVENTORY RESTS AT 865.89 TONNES
April 12/WITH GOLD DOWN $17.40/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 859.99 TONNES
April 11/WITH GOLD UP $13.85/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 859,99 TONNES
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
MAY 15/2018/ Inventory rests tonight at 856.17 tonnes
*IN LAST 382 TRADING DAYS: 84.84 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 332 TRADING DAYS: A NET 71.46 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.
end
Now the SLV Inventory/
MAY 15/WITH SILVER DOWN 33 CENTS, NO CHANGES AT THE SLV; THE CROOKS COULD NOT BORROW ANY SILVER BECAUSE THERE IS NONE: INVENTORY RESTS AT 319.591 MILLION OZ
MAY 14/WITH SILVER DOWN 10 CENTS/A SMALL CHANGES IN SILVER INVENTORY AT THE SLV/ A WITHDRAWAL OF 858,000 FROM THE SLV/INVENTORY RESTS AT 319.591 MILLION OZ/
MAY 11/WITH SILVER DOWN 2 CENTS/THE CROOKS WITHDREW A MONSTROUS 2.824 MILLION OZ FROM THE SLV INVENTORY/INVENTORY RESTS AT 320.439 MILLION OZ/
MAY 10/WITH SILVER UP 22 CENTS/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 323.263 MILLION OZ/
MAY 9/WITH SILVER UP 6 CENTS/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 323.263 MILLION OZ/
MAY 8/WITH SILVER DOWN 2 CENTS:NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 323.263 MILLION OZ.
MAY 7/WITH SILVER FLAT: A BIG CHANGE IN SILVER INVENTORY AT THE SLV// A WITHDRAWAL OF 942,000 OZ OF SILVER FROM THE SLV INVENTORY/INVENTORY RESTS AT 323.263 MILLION OZ/
MAY4/WITH SILVER UP 5 CENTS/A BIG CHANGES IN SILVER INVENTORY AT THE SLV/ A DEPOSIT OF 1.224 MILLION OZ/INVENTORY RESTS AT 324.205 MILLION OZ/
MAY 2/WITH SILVER UP 24 CENTS/A HUGE CHANGE IN SILVER INVENTORY AT THE SLV// A DEPOSIT OF 6.082 MILLION OZ INTO THE SLV/INVENTORY RESTS AT 322.981 MILLION OZ/
MAY 1/WITH SILVER DOWN 24 CENTS/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 316.899 MILLION OZ/
APRIL 30/WITH SILVER DOWN 11 CENTS/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 316.899 MILLION OZ/
APRIL 27/WITH SILVER DOWN 5 CENTS/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 316.899 MILLION OZ/
APRIL 26/WITH SILVER DOWN 2 CENT/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 316,899 MILLION OZ/
APRIL 25./WITH SILVER DOWN 18 CENTS/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 316.899 MILLION OZ/
APRIL 24./WITH SILVER UP 8 CENTS/SOMETHING SPOOKED OUR CROOKS TO ADD SOME PAPER SILVER: A DEPOSIT OF 1.601 MILLION OZ/INVENTORY RESTS AT 316.899 MILLION OZ/
APRIL 23.2018/WITH SILVER DOWN 50 CENTS, ANOTHER HUGE WITHDRAWAL FROM THE SLV INVENTORY: A WITHDRAWAL OF 1.413 MILLION OZ/INVENTORY RESTS AT 315.298 MILLION OZ.
APRIL 20/WITH SILVER DOWN 11 CENTS: ANOTHER HUGE CHANGE IN SILVER INVENTORY: A WITHDRAWAL OF 1.13 MILLION OZ//SLV RESTS TONIGHT AT 316.711 MILLION OZ/
APRIL 19/WITH SILVER UP 3 CENTS TODAY: WE HAD A BIG CHANGE IN SILVER INVENTORY AT THE SLV: A WITHDRAWAL OF 2.355 MILLION OZ/ MAKES ABSOLUTELY NO SENSE!!/INVENTORY RESTS AT 317.841 MILLION OZ
APRIL 18/WITH SILVER UP 44 CENTS TODAY: NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 320.196 MILLION OZ
APRIL 17/WITH SILVER UP 10 CENTS TODAY/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 320.196 MILLION OZ
April 16/WITH SILVER UP 7 CENTS TODAY: NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 320.196 MILLION OZ/
April 13/WITH SILVER UP 17 CENTS TODAY: NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 320.196 MILLION OZ.
April 12/WITH SILVER DOWN 27 CENTS/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 320.196 MILLION OZ/
April 11/2018/WITH SILVER UP 16 CENTS: NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 320.196 MILLION OZ/
MAY 15/2018:
Inventory 319.591 million oz
end
6 Month MM GOFO 2.13/ and libor 6 month duration 2.50
Indicative gold forward offer rate for a 6 month duration/calculation:
G0FO+ 2.13%
libor 2.50 FOR 6 MONTHS/
GOLD LENDING RATE: .37%
XXXXXXXX
12 Month MM GOFO
+ 2.76%
LIBOR FOR 12 MONTH DURATION: 2.56
GOFO = LIBOR – GOLD LENDING RATE
GOLD LENDING RATE = +.20
end
Major gold/silver trading /commentaries for TUESDAY
GOLDCORE/BLOG/MARK O’BYRNE.
GOLD/SILVER
Gold Manipulation – A Comprehensive Guide By James Rickards
Gold Price Manipulation – A Comprehensive Guide By James Rickards
In his latest book, “The New Case for Gold,” fund manager, geopolitical analyst, and financial letter writer James G. Rickards may have summarized the international gold price suppression scheme better than anyone, including GATA itself.
Indeed, the book’s sub-chapter titled “Paper Manipulation” is so expert, specific, and compelling that your secretary/treasurer today asked Rickards and his publisher, Penguin Publishing Group, for permission to share it with you, though it is far longer than excerpts for which reprint permission is customarily granted.
Your secretary/ treasurer argued that the sub-chapter is really a historic document,containing information the world simply must have if it ever is to achieve free markets and a more democratic financial system.
https://read.amazon.com/kp/card?preview=inline&linkCode=kpd&ref_=k4w_oembed_3umHixgDfyhw2W&asin=B011IVP38I&tag=kpembed-20#amp=1Rickards and Penguin quickly and most generously granted the request and provided PDF copies of the subchapter’s 15 pages. A link to them is appended. (The pages are excerpted from “The New Case for Gold” by James Rickards, in agreement with Portfolio, an imprint of Penguin Publishing Group, a division of Penguin Random House LLC, and are copyright 2016 by James Rickards.)
Remarkably, the book is available through Amazon for less than $11 and your secretary/treasurer enthusiastically recommends it.
Here is your secretary / treasurer’s summary of Rickards’ outline of gold market manipulation:
— It can be done by what gold market observers like to call “banging the close” in the Comex futures market, where there is huge leverage in trading and little transparency for buyers and sellers.
— Big banks that are “authorized participants” in the gold exchange-traded fund GLD can use their exclusive access to the fund’s metal for market rigging.
— Gold from the U.S. gold reserve and the gold reserves of other countries may be leased, leveraged, or sold.
— Leasing of unallocated gold — that is, paper gold, gold credits, imaginary gold — by bullion banks allows them to sell the same gold as much as 10 times over to 10 different buyers.
— “A central bank,” Rickards writes, “can lease gold to one of the London Bullion Market Association banks, which include large players like Goldman Sachs, Citibank, JPMorgan Chase, and HSBC.
Gold leasing is often conducted through an unaccountable intermediary called the Bank for International Settlements. Historically, the BIS has been used as a major channel for manipulating the gold market and for conducting sales of gold between central banks and commercial banks.
… The BIS is the most nontransparent institution in the world. … The BIS is the ideal venue for central banks to manipulate the global financial markets, including gold, with complete nontransparency.”
— The United States and China share an interest in suppressing the gold price in the short term. The Federal Reserve, Rickards maintains, doesn’t so much mind an orderly rise in the gold price but fears sharp and sudden rises that could change inflationary expectations in the markets.
China wants the gold price suppressed while it accumulates metal for hedging its huge foreign exchange position in U.S. dollars.
The United States, Rickards writes, must accommodate China’s accumulation of gold lest China sell its U.S. Treasury bonds.
“This.” Rickards writes, “is an issue I have discussed with senior officials at the International Monetary Fund and the Federal Reserve, and they have confirmed my understanding that a global rebalancing of gold from the West to the East needs to proceed, albeit in an orderly way. … The United States is letting China manipulate the market so China can buy gold more cheaply. The Fed occasionally manipulates the market as well so that any price rise isn’t disorderly.”
— Rickards concedes that ordinary investors cannot beat central bank manipulation of the gold market in the short run but contends that central banks will fail in the long run.
Eventually, he writes, citing examples from history, “the manipulators run out of physical gold or a change in inflation expectations leads to price surges even governments cannot control.
There is an endgame. … Physical gold is also rapidly disappearing as more countries are buying it up. That puts a limit on the amount of paper gold transactions that can be implemented.”
— Rickards advises investors:
“It’s important to understand the dynamics behind gold pricing. You need to understand how the manipulation works, what the endgame is, and what the physical supply-demand picture looks like. Understanding these dynamics lets you see the endgame more clearly and supports the rationale for owning gold even when short-term price movements are adverse.”
The PDF copy of Rickards’ “Paper Manipulation” subchapter is posted at GATA’s internet site here:
http://www.gata.org/files/NewCaseForGoldExcerpt.pdf
Please read it carefully and send it to those market analysts who disparage complaints of gold market manipulation by governments and to mainstream financial news organizations that ignore the manipulation.
Invite those analysts and news organizations to specify where and how they think Rickards is mistaken. While you’re at it, invite them to dispute any of the documentation compiled at GATA’s internet site here:
http://www.gata.org/taxonomy/term/21
Of course you’re not likely to get any response but you just might wake somebody up or give him a guilty conscience.
And if you purchase a copy of “The New Case for Gold” you may gain confidence that eventually truth, justice, and what used to be the American way will prevail.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
end
News and Commentary
Gold crawls up on safe-haven support; dollar limits gains (Reuters.com)
Asian Stocks Decline With U.S. Yield Around 3% (Bloomberg.com)
Dow aims for 8-day win streak as trade worries fade (MarketWatch.com)
U.S. Stocks Mixed as Treasuries Slip, Oil Gains: Markets Wrap (Bloomberg.com)
Eisman of ‘The Big Short’ Fame Recommends Shorting Deutsche Bank (Bloomberg.com)
Source: Bloomberg
Gold Price Manipulation Best Summary – James Rickards (Gata.org)
Credit-Driven Train Crash (GoldSeek.com)
A Crypto Tycoon, Banking Heir and the Mysterious Fight for Gold (Bloomberg.com)
The property market is about to be swept up in a whirlwind (Telegraph.co.uk)
Keep buying gold as long as it’s above this key level (CNBC.com)
Listen on SoundCloud , Blubrry & iTunes. Watch on YouTube below
Gold Prices (LBMA AM)
14 May: USD 1,320.70, GBP 972.30 & EUR 1,101.86 per ounce
11 May: USD 1,324.80, GBP 978.23 & EUR 1,110.45 per ounce
10 May: USD 1,314.80, GBP 969.27 & EUR 1,106.80 per ounce
09 May: USD 1,306.85, GBP 965.11 & EUR 1,102.07 per ounce
08 May: USD 1,310.05, GBP 969.44 & EUR 1,101.88 per ounce
04 May: USD 1,309.35, GBP 965.78 & EUR 1,094.09 per ounce
03 May: USD 1,313.30, GBP 966.19 & EUR 1,094.64 per ounce
Silver Prices (LBMA)
14 May: USD 16.65, GBP 12.25 & EUR 13.89 per ounce
11 May: USD 16.76, GBP 12.35 & EUR 14.04 per ounce
10 May: USD 16.60, GBP 12.24 & EUR 13.97 per ounce
09 May: USD 16.44, GBP 12.12 & EUR 13.84 per ounce
08 May: USD 16.45, GBP 12.17 & EUR 13.85 per ounce
04 May: USD 16.42, GBP 12.10 & EUR 13.72 per ounce
03 May: USD 16.47, GBP 12.12 & EUR 13.74 per ounce
Recent Market Updates
– EU ‘Nightmare Scenario’ As Popular Anti-Euro and Anti-EU Government Takes Power In Italy
– “Oil price highest in 3 years, gold ready to follow”, by Daniel March
– Gold Mining Supply Globally Looks Set To Decline
– Gold Bullion Demand In Iran May Surge On Trump Sanctions
– “Money Is Gold — and Nothing Else”
– U.K. Home Prices Plunge 3.1% In April – Largest Monthly Drop Since Financial Crisis In 2011
– Weekly Gold Update – Gold In Dollars Lower Despite Poor US Jobs and Other Data
– Own Some Gold and Avoid Overvalued Assets
– Gold Demand Falls In Q1 Despite Robust Central Bank and Investment Demand and Surging Demand In Turkey and Iran
– Smart Money Diversifying Into Gold – One Billionaire Invests Half His Net Worth
– “Blood In The Streets” Of U.S. Gold Bullion Market As Sale Of Gold Coins Collapse
– Most Important Chart Of The Century For Investors?
– Gold Mining Shares Are Speculative Making Gold Bullion A Better Investment
Andrew Maguire’s Kinesis money which is a “bitcoin” but backed 100% by allocated gold and silver is set to go.
it think it would be a great idea to look at this!
please read at: https://kinesis.money/#/
(Andrew Maguire)
|
2:57 PM (1 hour ago) | ||
|
|||
Harvey
Here It is my friend! https://kinesis.money/#/ Please let everyone know.
Let catch up on Monday if you have time. We have billions in the hopper ready to be allocated on the 1st day of trading. The paper market days are over.
Warm regards
Andy
New struggle for Petropavlovsk could restore former executives
Submitted by cpowell on Mon, 2018-05-14 14:17. Section: Daily Dispatches
A Crypto Tycoon, Banking Heir and the Mysterious Fight for Gold
By Thomas Biesheuvel
Bloomberg News
Monday, May 14, 2018
The battle for some of Russia’s richest gold mines has an unusual cast of characters: the scion of one of Europe’s great banking families, a Kazakh tycoon with his own cryptocurrency, hedge fund D.E. Shaw, and mystery shareholders.
They’re all part of a new fight for control over Petropavlovsk Plc, a London-listed miner. For the second time in a year, the company is in the middle of a shareholder coup to throw out the board and revive its fortune
A decade ago, Petropavlovsk was worth $3 billion and was mentioned as a future member of the benchmark FTSE 100 Index, but sinking gold prices and management missteps reduced it to a penny stock. The company, started by Pavel Maslovskiy and banking heir Peter Hambro, still owns profitable mines and a new plant that’s about to start operating. …But to achieve a comeback, Petropavlovsk needs to fix a fissure in the company that has erupted this month.
On one side are a pair of mystery shareholders trying to oust the board and bring back old directors. On the other side are owners including D.E. Shaw that threw out the executives last year.
The two unidentified shareholders — CABS Platform Ltd. and Slevin Ltd. — are registered in Gibralter and Anguilla, respectively and own a 9.1 percent stake. It’s not publicly known who is behind these holding companies.
The ultimate kingmaker is likely to be Kazakh tycoon Kenes Rakishev, the biggest shareholder and son-in-law of a former Kazakh deputy prime minister. The executive, who holds investments in banks, mobile phones and infrastructure projects, bought a stake in Petropavlovsk in December. …
The key issue is likely to be whether Petropavlovsk’s co-founders will be allowed to return. Rakishev and the new shareholders have called for Maslovskiy to retake the CEO job, but it’s an open question whether Hambro will join him.
Hambro has been so closely associated with Petropavlovsk that until 2009 it was called Peter Hambro Mining Plc. He was chairman since founding the firm with Maslovskiy in the early 1990s, and both oversaw the company’s rise and fall.
Hambro was ousted last year by shareholders angry about the company’s missteps, and Maslovskiy resigned soon after. The group was led by Russian billionaire Viktor Vekselberg and supported by D.E. Shaw, M&G Investment Management Ltd. and Sothic Capital Management LLP.
That coalition has now crumbled. Vekselberg sold his stake to Rakishev, while M&G sold at least some of its holdings to Prosperity Capital. …
… For the remainder of the report:
https://www.bloomberg.com/news/articles/2018-05-14/a-crypto-tycoon-banki…
END
Repeat from above.
A must read as Jim Rickards explains the fraud/gold price manipulation and why China has been accumulating much of the west]’s gold. The reason the US is going along with this is due to the huge amount of USA bonds accumulated by China. Although Rickards does not mention this, it is now obvious that China had also decided to lend silver to the uSA to help in their manipulative scheme. You cannot whack gold unless you have a huge hoard of silver to be supplied into the system. The only nation with official silver reserves is China.
(courtesy Rickards/GATA)
Jim Rickards provides the best summary of gold price manipulation
Submitted by cpowell on Tue, 2018-05-15 01:01. Section: Documentation
9:17p ET Monday, May 14, 2018
Dear Friend of GATA and Gold:
In his latest book, “The New Case for Gold,” fund manager, geopolitical analyst, and financial letter writer James G. Rickards may have summarized the international gold price suppression scheme better than anyone, including GATA itself.
Indeed, the book’s subchapter titled “Paper Manipulation” is so expert, specific, and compelling that your secretary/treasurer today asked Rickards and his publisher, Penguin Publishing Group, for permission to share it with you, though it is far longer than excerpts for which reprint permission is customarily granted. Your secretary/treasurer argued that the subchapter is really a historic document, containing information the world simply must have if it ever is to achieve free markets and a more democratic financial system.
Rickards and Penguin quickly and most generously granted the request and provided PDF copies of the subchapter’s 15 pages. A link to them is appended. (The pages are excerpted from “The New Case for Gold” by James Rickards, in agreement with Portfolio, an imprint of Penguin Publishing Group, a division of Penguin Random House LLC, and are copyright 2016 by James Rickards.)
Remarkably, the book is available through Amazon for less than $11 and your secretary/treasurer enthusiastically recommends it:
https://www.amazon.com/New-Case-Gold-James-Rickards/dp/1101980761/ref=sr…
Here is your secretary/treasurer’s summary of Rickards’ outline of gold market manipulation:
— It can be done by what gold market observers like to call “banging the close” in the Comex futures market, where there is huge leverage in trading and little transparency for buyers and sellers.
— Big banks that are “authorized participants” in the gold exchange-traded fund GLD can use their exclusive access to the fund’s metal for market rigging.
— Gold from the U.S. gold reserve and the gold reserves of other countries may be leased, leveraged, or sold.
— Leasing of unallocated gold — that is, paper gold, gold credits, imaginary gold — by bullion banks allows them to sell the same gold as much as 10 times over to 10 different buyers.
— “A central bank,” Rickards writes, “can lease gold to one of the London Bullion Market Association banks, which include large players like Goldman Sachs, Citibank, JPMorgan Chase, and HSBC. Gold leasing is often conducted through an unaccountable intermediary called the Bank for International Settlements. Historically, the BIS has been used as a major channel for manipulating the gold market and for conducting sales of gold between central banks and commercial banks. … The BIS is the most nontransparent institution in the world. … The BIS is the ideal venue for central banks to manipulate the global financial markets, including gold, with complete nontransparency.”
— The United States and China share an interest in suppressing the gold price in the short term. The Federal Reserve, Rickards maintains, doesn’t so much mind an orderly rise in the gold price but fears sharp and sudden rises that could change inflationary expectations in the markets. China wants the gold price suppressed while it accumulates metal for hedging its huge foreign exchange position in U.S. dollars. The United States, Rickards writes, must accommodate China’s accumulation of gold lest China sell its U.S. Treasury bonds. “This.” Rickards writes, “is an issue I have discussed with senior officials at the International Monetary Fund and the Federal Reserve, and they have confirmed my understanding that a global rebalancing of gold from the West to the East needs to proceed, albeit in an orderly way. … The United States is letting China manipulate the market so China can buy gold more cheaply. The Fed occasionally manipulates the market as well so that any price rise isn’t disorderly.”
— Rickards concedes that ordinary investors cannot beat central bank manipulation of the gold market in the short run but contends that central banks will fail in the long run. Eventually, he writes, citing examples from history, “the manipulators run out of physical gold or a change in inflation expectations leads to price surges even governments cannot control. There is an endgame. … Physical gold is also rapidly disappearing as more countries are buying it up. That puts a limit on the amount of paper gold transactions that can be implemented.”
— Rickards advises investors: “It’s important to understand the dynamics behind gold pricing. You need to understand how the manipulation works, what the endgame is, and what the physical supply-demand picture looks like. Understanding these dynamics lets you see the endgame more clearly and supports the rationale for owning gold even when short-term price movements are adverse.”
The PDF copy of Rickards’ “Paper Manipulation” subchapter is posted at GATA’s internet site here:
http://www.gata.org/files/NewCaseForGoldExcerpt.pdf
Please read it carefully and send it to those market analysts who disparage complaints of gold market manipulation by governments and to mainstream financial news organizations that ignore the manipulation. Invite those analysts and news organizations to specify where and how they think Rickards is mistaken. While you’re at it, invite them to dispute any of the documentation compiled at GATA’s internet site here:
http://www.gata.org/taxonomy/term/21
Of course you’re not likely to get any response but you just might wake somebody up or give him a guilty conscience. And if you purchase a copy of “The New Case for Gold” you may gain confidence that eventually truth, justice, and what used to be the American way will prevail.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
END
The huge rise in physical gold import is another sign of the death knell for the dollar
(courtesy SRSRocco report/Steve St Angelo)
Turkish Gold Imports Triple As The Central Bank Diversifies Out Of Dollars
by SRSrocco on
Turkish gold imports surged due to a sharp increase in investment demand as well as renewed Central bank purchases. While the Chinese and Russian governments have been adding gold to their official reserves over the past several years, Turkey added 86 metric tons to its official holdings in the last seven months of 2017.
According to the 2018 World Gold Survey, Turkish official gold holdings reached a new record high of 565 metric tons (mt) last year as the government decided to replace a significant amount of its Dollar reserves with gold. And, this continued even in the first quarter of 2018. Information from the World Gold Council’s Demand Trend reported that Turkey added another 30 mt of gold to its official reserves in Q1 2018.
If we look at the chart below, we can see just how much gold Turkey imported in 2017 versus 2016:
Turkish gold imports more than tripled from 106 mt in 2016 to 361 mt in 2017. Again, the large increase in Turkish gold imports was due to a 60% increase in investment demand and the 86 mt purchase by the Central bank. With the addition of the 30 mt of Central bank gold purchases in Q1 2018, official Turkish holdings are now nearly 600 mt.
Of the total 366 mt of Central bank gold purchases in 2017, Russia (224 mt) accounted for 61% of the amount while Turkey (86 mt) acquired 23% and Kazakhstan (43 mt) at 12%. The remaining 4% was split amongst Columbia, Mongolia, Indonesia, Jordan, and Thailand (Source: GFMS 2108 World Gold Survey):
What is quite interesting about the increase in Turkish gold demand and imports is how it compares to the United States. In 2017, Turkey imported 361 mt of gold versus 255 mt for the United States. Thus, Turkey, whose population is one-quarter of the United States, imported 100+ mt more gold. Of course, most of the U.S. gold imports are refined and then exported to Switzerland, United Kingdom, China and various other Asian and Middle Eastern countries.
Furthermore, as U.S. gold investment plunged by 55% in 2017, Turkish demand for gold bullion surged by 60%, mainly due to an increase in official coin purchases. According to the 2018 World Gold Survey, Turkish official coin sales jumped to 38 mt versus 22 mt in 2016. Thus, the Turkish population consumed more than three times the 13 mt of U.S. official gold coin sales last year.
Now, if we look a the major foreign holders of U.S. Treasury securities, Turkey has been liquidating its Dollar holdings by $16 billion since its peak in October 2017:
You will also notice that Russia has also been liquidating U.S. Treasuries by approximately $11 billion since its peak in November 2017. However, Russia wasn’t selling U.S. treasuries to purchase gold; rather they were diversifying out of Dollars and into IMF Bonds (Source: Russia says it will sell some U.S. Treasuries, buy IMF bonds). As Russia sells U.S. Treasuries to purchase IMF Bonds, it also added another 42 mt of gold to its reserves in Q1 2018.
While there are countless reasons why Russia is adding gold to its official holdings, the most important reason is quite simply, because IT CAN. The majority of countries are running massive trade and balance account deficits and cannot purchase gold. Russia is one of the few countries that export a great deal more oil than it uses domestically which is part of the reason it enjoyed a $115 billion trade surplus last year (Source: Russia: Trade Balance – Statista)
Yes, the U.S. Govt could print money to purchase gold, but it’s not quite that simple. First, there are no western central banks buying gold. They just can’t. Most of the Central Bank sold into the market has come from the IMF and western central banks. Second, for a western central bank to start purchasing gold, it would be seen as a huge RED FLAG to western fiat currencies.
Lastly, gold is a barometer for the U.S. Dollar. If the U.S. Government started printing money to buy gold, just think about how that would not only impact the price but market sentiment. Western central banks will continue to liquidate gold until the financial markets and the fiat monetary system disintegrate.
When we start to see more countries like Turkey adding to their gold reserves, it’s a clear sign that all is not well in the global financial markets.
end
Your early TUESDAY 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 6.3609 /shanghai bourse CLOSED UP 18.09 POINTS OR 0 .57% / HANG SANG CLOSED DOWN 389.05 POINTS OR 1.23%
2. Nikkei closed DOWN 47.84 POINTS OR 0.21% / /USA: YEN RISES TO 109.92/
3. Europe stocks OPENED RED/MIXED /USA dollar index RISES TO 92.89/Euro RISES TO 1.1889
3b Japan 10 year bond yield: RISES TO . +.06/ !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 109.51/ 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:: 71.60 and Brent: 79.03
3f Gold DOWN/Yen DOWN
3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“HELICOPTER MONEY” OFF THE TABLE FOR NOW /REVERSE OPERATION TWIST ON THE BONDS: PURCHASE OF LONG BONDS AND SELLING THE SHORT END
Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.
3h Oil UP for WTI and UP FOR Brent this morning
3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO +.632%/Italian 10 yr bond yield UP to 1.93% /SPAIN 10 YR BOND YIELD UP TO 1.34%
3j Greek 10 year bond yield RISES TO : 4.07?????????????????
3k Gold at $1306.50 silver at:16.36 7 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50
3l USA vs Russian rouble; (Russian rouble DOWN 11/100 in roubles/dollar) 61.98
3m oil into the 71 dollar handle for WTI and 79 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 109.92 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 1.0024 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1908 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.
3p BRITAIN VOTES AFFIRMATIVE BREXIT/LOWER PARLIAMENT APPROVES BREXIT COMMENCEMENT/ARTICLE 50 COMMENCES MARCH 29/2017
3r the 10 Year German bund now POSITIVE territory with the 10 year RISING to +0.632%
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 3.02% early this morning (THIS IS DEADLY TO ALL MARKETS). Thirty year rate at 3.15%
5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.
(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)
Pain Trade Returns: Dollar Spikes, Yields Rise Above
3% As Stocks, Emerging Markets Slide
The pain trade has returned with a bang this morning as both 10Y Treasury yields and the dollar are grinding higher, the former back above 3.00%…
… the latter at the highest level since last Wednesday as oil continued to advance and soak up liquidity…
… in the process slamming near record Treasury and USD shorts – hence “pain trade” – while leaving a risk-off flavor to markets on Tuesday, with European stocks struggling for traction following declines across Asia, which saw a disappointing set of data out of China overnight , while US futures were roughly 0.2% lower around 7am ET.
European bourses opened on the backfoot but since then are trading mixed (Eurostoxx 50 flat) with the Italy’s FTSE MIB (+0.3%) outperforming its peers with traders watching out for any potential breakthroughs in forming a government. The Stoxx Europe 600 Index slipped a second day despite the weaker euro, before paring the drop to trade little changed amid mixed national gauges. Bonds across Europe remained under pressure, extending Monday’s decline on the back of hawkish comments from an ECB official.
In the latest economic disappointment out of Europe, Germany reported a sluggish start to the year with Q1 GDP printing at 0.3%, below the 0.4% expected, and down from 0.6% in Q4, with trade losing momentum and domestic demand not strong enough to fill the void. This was the weakest econ performance since Q3 2016.
Earlier equity benchmarks fell in South Korea and Australia, and were flat in Japan. Stocks rose in Shanghai and dropped in Hong Kong after data showed China’s industrial production momentum holding up but investment and spending slowing.
For those who missed it, here is the key China April data again:
- Chinese Industrial Production Y/Y 7.0% vs. Exp. 6.4% (Prev. 6.0%); YTD (Apr) 6.9% vs. Exp. 6.7% (Prev. 6.8%). (Newswires)
- Chinese Retail Sales Y/Y 9.4% vs. Exp. 10.0% (Prev. 10.1%); YTD (Apr) 9.7% vs. Exp. 9.8% (Prev. 9.8%)
- Chinese Fixed Assets Ex-Rural YTD 7.0% vs. Exp. 7.4% (Prev. 7.5%)
In FX trading, the dollar resumed its sharp ascent as 10-year Treasury yield rose above 3% before the release of U.S. retail-sales data; the greenback advanced against more than half of its Group-of-10 peers, while the euro stayed weak after disappointing German growth data. Of note, an index of emerging-market currencies declined the most in two weeks, led by a retreat in the rand, lira and forint. More concerning is that not one of 24 EM currencies tracked by Bloomberg advanced, as a result, the MSCI index of EM FX fell 0.5%.
“A strong U.S. dollar supported by high U.S. Treasury yields with the 10-year once again rising above the psychological level of 3% should curb capital inflows to risky assets,” Rabobank strategists warned, echoing what we said yesterday.
Looking at US TSYs and the yield curve, Fed officials have got the flattening yield curve on their radar screen, but policy makers have different ways of looking at the situation with some worrying about further rate hikes causing it to invert, while others view it as a normal part of monetary policy normalization. “Yield curve flattening in the U.S. tells you that investors are not convinced of the sustainability of this economic upturn – any sign of a less than impressive recovery in consumer spending in 2Q would undoubtedly reinforce those doubts and hurt the U.S. dollar,” according to Derek Halpenny, European head of global markets research at MUFG.
In the latest geopolitical developments, President Trump and Canadian PM Trudeau discussed via phone call the possibility of a quick NAFTA agreement, in which US President Trump urged for a prompt NAFTA agreement.
Looking at Brexit, UK PM May admitted that the current options regarding UK customs plan are unworkable. This has subsequently increased fears among Eurosceptics that further delays will mean an extension of the 21-month transition period with a Conservative meeting yesterday leading to a clash between PM May and backbencher Rees-Mogg. Further reports suggested that extending the transition arrangement with the EU could be the only way to find a solution to the Irish border issue.
In overnight central bank news, Fed nominee Clarida said he fully supports Fed dual mandate and will seek to maintain financial resilience, while he added he will take a balanced approach on reaching Fed targets. Elsewhere, Riksbank’s Jochnik said that with inflation stable around 2% it is important to begin lifting rates. Underlying inflation remains weak. He added there is no goal for the SEK, but the recent strengthening has been good. Meanwhie, BoJ Governor Kuroda says there are no plans to move the 10yr yield target for the time being as inflation is still at a distance from 2% target, discussions are being had at board level on side-effects of easy policy, but the removal of the time-frame isn’t linked to the debate on impact of easy policy on bank profits.
Economic data on Tuesday include retail sales and NAHB Housing Market index. Home Depot and Hydro One are among companies due to release results.
Bulletin Headline Summary From RanSquawk
- US Treasury 10-year yield above 3%, dollar stands firmer against its peers
- Sterling off lows as UK real earnings move back into positive territory
- Looking ahead, highlights include US retail sales, Fed’s Williams and Kaplan
Market Snapshot
- S&P 500 futures down 0.2% to 2,726.00
- STOXX Europe 600 down 0.03% to 392.06
- MXAP down 0.8% to 175.23
- MXAPJ down 1% to 570.96
- Nikkei down 0.2% to 22,818.02
- Topix down 0.04% to 1,805.15
- Hang Seng Index down 1.2% to 31,152.03
- Shanghai Composite up 0.6% to 3,192.12
- Sensex up 0.2% to 35,641.55
- Australia S&P/ASX 200 down 0.6% to 6,097.82
- Kospi down 0.7% to 2,458.54
- German 10Y yield rose 1.0 bps to 0.621%
- Euro down 0.04% to $1.1922
- Brent Futures up 0.5% to $78.61/bbl
- Italian 10Y yield rose 5.6 bps to 1.672%
- Spanish 10Y yield fell 2.5 bps to 1.307%
- Brent Futures up 0.6% to $78.66/bbl
- Gold spot down 0.2% to $1,310.45
- U.S. Dollar Index up 0.2% to 92.75
Top Overnight News from Bloomberg
- Italy’s populists are struggling to nail down the final details of their plans to form the next government and tensions are beginning to mount. “Either we get started or we say goodbye to each other,” League leader Matteo Salvini said after talks with President Sergio Mattarella on Monday
- China’s economic momentum broadly held up in April with industrial production exceeding forecasts, though slowing investment signaled a moderation in the coming months. China says trade dispute impacts haven’t yet shown up in economy
- Growth slowed across the euro-area economy at the start of the year, with Germany seeing its pace of expansion cut in half amid weaker trade. The 0.3% rise in output in Europe’s largest economy was softer than forecast, and the Dutch and Portuguese economies also cooled more than expected
- Britons got their first real-pay increase in more than a year in the first quarter as wage growth overtook the rate of inflation. Average weekly earnings excluding bonuses rose 2.9% from a year earlier, the fastest pace since August 2015, while inflation averaged 2.7% in the same period
- The Turkish lira and bonds declined to new record lows after President Recep Tayyip Erdogan said he plans to take more responsibility for monetary policy if he wins an election next month, spooking investors who worry about his distaste of high interest rates
- Following President Donald Trump’s inauguration of the U.S. embassy in Jerusalem, Hamas vowed to keep protesters storming the Gaza border on Tuesday, a day after 59 Palestinians were killed in confrontations with Israeli troops, the bloodiest toll in the territory since a 2014 war
- U.S. regulators planning to drop Volcker Rule assumption that positions held by banks for less than 60 days are speculative and therefore banned, according to people familiar
- Fed vice chair nominee Clarida favors ’balanced approach’ to policy
- U.K Mar. Avg. Weekly Earnings 2.6% vs 2.6% est; Earnings ex-bonus 2.9% vs 2.9% est.
- BOJ’s Kuroda: will not change 10y target under YCC for the time being due to weak inflation
- German GDP 1Q P GDP q/q 0.3% vs 0.4% est; Destatis note government final consumption expenditure decreased for the first time in just under five years
- China Apr. Retail Sales 9.4% vs 10.0% est; Industrial Output 7.0% vs 6.4% est; Fixed-asset Investment 7.0% vs 7.4% est
Asian equity markets were subdued with price relatively range-bound following the modest performance in US, where the major indices finished in the green but well off best levels and the DJIA met resistance just shy of the 25k level but still edged its longest run of gains since September. ASX 200 (-0.6%) was lacklustre with the telecoms sector dragged by weakness in Telstra shares while tech outperforms as Link Administration shares rally on reports the Co. is exploring options with Pexa in which it is the 2nd largest shareholder of. Nikkei 225 (-0.2%) traded lacklustre with focus for individual stocks on corporate earnings, while Shanghai Comp. (+0.6%) and Hang Seng (-1.2%) also lacked impetus despite a firm liquidity operation by the PBoC, with profit taking observed in Hong Kong following the recent streak and as varied tier-1 data from China added to the cautious tone after Industrial Production topped estimates but Retail Sales disappointed. Finally, 10yr JGBs were subdued following similar trade in T-notes which extended on the prior day’s losses as the US 10yr treasury yield rose back above 3.000%, while a mixed 30-yr JGB auction added to the subdued tone as it showed a decline in accepted prices. US & China are reportedly closing in on a deal which would give ZTE a reprieve from US sanctions, in exchange for Beijing removing tariffs on billions of US agricultural products, according to people familiar with the matter. In related news, there were also comments from US Ambassador to China Branstad that China and US remain at a far distance on trade and that President Trump wants a dramatic rise in farm exports to China.
Top Asian News
- China Data Shows a Hint of Slowdown While Factories Still Hum
- Cliffhanger in Bitter Contest for India’s Swing State Vote
- Tencent Shares Suddenly Lose $17 Billion One Day Before Earnings
- Tata Steel Gets Tribunal Nod for Biggest Acquisition Since Corus
- MUFG Sees Profit Falling More Than Analysts Estimate This Year
European bourses opened on the backfoot but since then are trading mixed (Eurostoxx 50 flat) with the Italy’s FTSE MIB (+0.3%) outperforming its peers with traders watching out for any potential breakthroughs in forming a government. Sectors are also mixed with financials leading the gains while telecom names lag amid downbeat earnings from Vodafone (-3.1%) and Eutelsat (-11.3%). Other individual movers in the wake of earnings include Thyssenkrupp (-4.3%), Iliad (-17.7%), Pandora (-11.7%), easyJet (+2.3%) and Commerzbank (+2.3%).
Top European News
- Italian Populists Head to Overtime Divided on Coalition Plan
- German Economy Expands 0.3% Q/Q in 1Q; Est. Expands 0.4% Q/Q
- Germany Blames Trade for Weakness Aggravating Euro-Area Slowdown
- Credit Agricole Caught in Fixed-Income Slump Like Rivals
- Eutelsat Plummets Most in Two Years After ‘Otherworldly’ Results
- Allianz’s Asset-Management Unit Sees Profit Soar on Inflows
In FX, the Dollar remains on a firmer footing overall after Monday’s late rally that came alongside a rebound in US Treasury yields and has culminated in the 10 year benchmark crossing the 3% threshold again. The index is back above 92.500 within a 92.815-60 range having arrested a relatively pronounced retracement just ahead of 92.200 yesterday. However, retail sales data and more Fed rhetoric could provide further direction and result in another tweak in 2018 rate expectations that have tipped towards 4 hikes for the first time, per CME pricing (and only just at 51%). JPY: Around 0.25% lower vs the Greenback and mildly underperforming other G10 peers, with Usd/Jpy touching 110.00 again following reports of importer demand during Asia-Pacific trade, but the big figure still proving a formidable barrier to overcome, with recent peaks only a fraction above and the 200 DMA not far away if stops are tripped. Marginally less dovish comments from BoJ Governor Kuroda have also helped to cap the pair. AUD: The next biggest loser or victim of the Usd revival among majors as the pair retreats to test 0.7500 where more big option expiry interests lie (some 2.6 bn over today and Wednesday). RBA minutes merely reiterating no reason to raise rates anytime soon given slow wage and inflation developments, while risks associated with Aud strength were also highlighted yet again. GBP: Choppy trade in the run up to UK labour data, with sellers front-running and Cable down to the low 1.3520 area before bouncing towards 1.3550 on an ultimately mixed jobs and earnings report.
In commodities, Brent is currently trading higher, nearing 3 ½ year highs. The widening spread between the two is stated to be due to geopolitical concerns, as well as an anticipated increase in US June shale production (+145k BPD), that is compounded by record crude production. This leaves the US market well-supplied as the world market is squeezed further by OPEC cuts. In the metals sector, gold is currently down for the day (-0.3%) at USD 1310.20. Copper has also fallen slightly on increasing stockpiles of the metal. Dalian Iron ore has hit one-month highs on the back of strong Chinese demand.
Looking at the day ahead, the preliminary Q1 GDP report in Germany is due (0.4% qoq expected), along with the Q1 GDP report for the Euro area (0.4% qoq; 2.5% yoy expected). In the UK, the March unemployment rate (4.2% expected) and average weekly earnings growth (2.6% expected) along with other employment data are due, while in France the final April CPI revisions are also due. March industrial production data for the Euro area is also due, as well as the May ZEW survey in Germany. In the US the big focus will be on the April retail sales report (0.5% expected for ex-auto), while May empire manufacturing, March business inventories and the May NAHB housing market index print are also due. Fed nominees Clarida and Bowman are due to appear for confirmation hearings while the Fed’s Kaplan and Williams are both scheduled to speak. UK PM Theresa May is also due to meet with her Brexit Cabinet while China Vice Premier Liu He is due to visit Washington and continue trade talks.
US Event Calendar
- 8:00am: Fed’s Kaplan discusses outlook for energy market, economy
- 8:30am: Empire Manufacturing, est. 15, prior 15.8
- 8:30am: Retail Sales Advance MoM, est. 0.3%, prior 0.6%; Retail Sales Ex Auto MoM, est. 0.5%, prior 0.2%
- Retail Sales Ex Auto and Gas, est. 0.4%, prior 0.3%; Retail Sales Control Group, est. 0.4%, prior 0.4%
- 10am: NAHB Housing Market Index, est. 69, prior 69
- 10am: Business Inventories, est. 0.1%, prior 0.6%
- 10am: Fed nominees Clarida and Bowman testify before Senate panel
- 1pm: Fed’s Williams to speak at Economic Club of Minnesota
- 4pm: Total Net TIC Flows, prior $44.7b; Net Long-term TIC Flows, prior $49.0b
DB’s Jim Reid concludes the overnight wrap
This morning we’ve already seen the latest Chinese data dump which was a bit mixed. The April retail sales (9.4% yoy vs. 10.0% expected) and fixed asset investment (7% yoy vs. 7.4%) were both lower than expectations, but industrial production rose 1ppt mom and was above consensus at 7% yoy (vs. 6.4% expected). Yesterday our Chinese economist wrote the third part of their series explaining why they had turned bullish on growth. See below in our DB macro updates section for the link.
The big event today is probably US retail sales but we also have second reading of European GDP, UK employment numbers, the latest UK Brexit cabinet meeting, and possible headlines from the Chinese VP travelling to Washington to continue trade talks. These will be previewed fully at the end.
This is definitely the peak data day of the week and bonds go into it having sold off a fair bit over the last 24 hours especially in Europe. Across the region, Bunds (+5.2bp) and Gilts (+2.8bp) both weakened while peripherals slightly underperformed with losses led by Spain (+6bp) and Italian BTPs (+5.7bp). Over in the US, the yield on the UST 2y rose for the 7 consecutive day (+1.2bp) to the highest since August 2008 while the UST 10y closed marginally above 3% again (3.003%). It wasn’t easy to pinpoint the reason for the fixed income weakness but hawkish ECB speak, rising Oil (WTI +0.25% to $71.14/bbl), and the halo impact of Mr Trump’s weekend scaling back on trade sanctions for China’s ZTE were all cited. On the ECB, Villeroy suggested that the ECB’s “well past” guidance on the first rate hike refers to “at least some quarters, but not years” post the end of QE and that “we’ll probably give additional guidance for the end of the year for the timing of the rate hike and the contingencies”. Not particularly new news but it did seem to impact markets.
Conversely, equities were relatively muted with lower trading volume and volatility yesterday. The S&P initially traded 0.5% higher but pared back gains to close marginally up for the fourth straight day (+0.09%). The move was weighed down by the real estate and utilities sectors as well as Xerox (-4%) after the company abandoned its merger with Fujifilm. Elsewhere, the Dow (+0.27%) and Nasdaq (+0.11%) also advanced while the VIX rose for the first time in eight days (+2.2% to 12.93). In Europe, key bourses such as the Stoxx 600 (-0.05%), DAX (-0.18%) and FTSE (-0.18%) retreated modestly, while Italy’s FTSE MIB edged up +0.26%.
Following on with Italian politics where we’re still waiting for more firm conclusions from the coalition talks. Yesterday, the 5SM and League Party told President Mattarella they need a bit more time for negotiations. The 5SM leader Di Maio noted “a few extra days” may be needed and confirmed that both parties agreed not to publicly name the candidates for the Premiership.
This morning in Asia, markets are broadly lower, with the Hang Seng (-0.90%), Kospi (-0.61%), Nikkei (-0.09% and Shanghai Comp. (-0.22%) all down as we type. Now recapping other markets from yesterday. The US dollar index edged up for the first time in four days (+0.05%), while the Euro dipped -0.13% and Sterling rose 0.1%. Elsewhere, the Argentina Peso dropped 7.7% to a fresh record low vs. the USD as Bloomberg cited unnamed sources that noted the Central bank has shifted its strategy in supporting the Peso, to now allowing the currency to fall within a certain limit. Further, an IMF spokesman noted that it will not set Peso targets as a condition for the credit line currently under negotiations with Argentina. Over in commodities, precious metals weakened (Gold -0.44%; Silver -0.86%) while other base metals broadly retreated (Copper -0.62%; Zinc -0.25%; Aluminium +0.44%).
Now turning to some of the trade headlines. Following President Trump’s conciliatory tweet on the Chinese telco. company ZTE on Sunday, the US Commerce Secretary Ross has confirmed that his department is considering whether “…there are alternative remedies….and that’s the area we’ll be exploring very, very promptly”. Elsewhere, the WSJ reported that the US and China may swap an end to sanctions on ZTE in return for the removal of Chinese tariffs on American farm products. Finally, on the overall views on trade between US and China, Mr Ross has warned that “gaps remain wide” with Beijing. So lots bubbling along ahead of this week’s trade talks.
Moving onto the two Fed speakers on rates and yield curve. The Fed’s Bullard reiterated that “we’re at some risk of an inverted yield curve later this year or early 2019” and that “it’s been the Fed, I think, that has flattened the curve more than worries by investors on the state of the economy”. On rates, he repeated that “….the Fed does not need to be so aggressive that we invert the yield curve”. Conversely, the Fed’s Mester noted the Fed should continue on its current, gradual path of monetary tightening and that the Fed may eventually need to raise rates above its neutral rate of about 3%. On inflation, she believes it will trend to the 2% target, but doesn’t expect it to rise sharply, in part as some of the pick-up reflects higher commodity prices and some of the recent strength are likely temporary, as low readings from last March drop out of the calculations.
Finally we highlight some of DB’s macroeconomic research from overnight. In the US, our colleagues Quinn Brody and Torsten Slok have published a preview of the mid-term congressional elections, including implications for the economy
and markets. They believe that investors should monitor polls and betting odds ahead of the November elections for different market scenarios. Volatility may rise regardless of the outcome, but, based on historical relationships, equities may be more likely to rise if Republicans manage to maintain control of Congress. In China, our team noted that April land sales remained strong, particularly in lower tier cities while property prices continued to rise. Overall, they believe this is positive for growth and investment. Their macro view remains unchanged: growth should sustain at 6.6% in 2018, with risks to the upside. In Europe, Peter Sidorov has reviewed the recent trends in private sector credit in the euro area to reverse engineer the rate of credit growth implied by the GDP forecasts. Their GDP forecast implies credit growth will rise to around 5% yoy by the end of 2019. With the euro area set to move from passive deleveraging to an outright releveraging mode by the end of 2018, his note also thinks about the sustainability of the euro area credit cycle.
There were limited data releases yesterday. In France, the April Bank of France industry sentiment index edged down 1pt mom to 102 (vs. 103 expected).
Looking at the day ahead, the preliminary Q1 GDP report in Germany is due (0.4% qoq expected), along with the Q1 GDP report for the Euro area (0.4% qoq; 2.5% yoy expected). In the UK, the March unemployment rate (4.2% expected) and average weekly earnings growth (2.6% expected) along with other employment data are due, while in France the final April CPI revisions are also due. March industrial production data for the Euro area is also due, as well as the May ZEW survey in Germany. In the US the big focus will be on the April retail sales report (0.5% expected for ex-auto), while May empire manufacturing, March business inventories and the May NAHB housing market index print are also due. Fed nominees Clarida and Bowman are due to appear for confirmation hearings while the Fed’s Kaplan and Williams are both scheduled to speak. UK PM Theresa May is also due to meet with her Brexit Cabinet while China Vice Premier Liu He is due to visit Washington and continue trade talks.
3. ASIAN AFFAIRS
i)TUESDAY MORNING/MONDAY NIGHT: Shanghai closed UP 18.09 points or 0 .57% /Hang Sang CLOSED DOWN 389.05 points or 1.23% / The Nikkei closed DOWN 47.84 POINTS OR 0.21% /Australia’s all ordinaires CLOSED DOWN .58% /Chinese yuan (ONSHORE) closed DOWN at 6.3609/Oil UP to 71.60 dollars per barrel for WTI and 79.03 for Brent. Stocks in Europe OPENED MIXED/RED. ONSHORE YUAN CLOSED DOWN AT 6.3609 AGAINST THE DOLLAR. OFFSHORE YUAN CLOSED DOWN ON THE DOLLAR AT 6.3544/ONSHORE YUAN TRADING WEAKER AGAINST OFFSHORE YUAN/ONSHORE YUAN TRADING WEAKER AGAINST USA DOLLAR/OFFSHORE YUAN TRADING WEAKER AGAINST THE DOLLAR /CHINA RETALIATES WITH TARIFFS/ TRUMP RESPONDS TO NEW TARIFFS AND IT NOW LOOKS LIKE A FULL TRADE WAR IS BEGINNING/
3 a NORTH KOREA/USA
North Korea/South Korea/usa
Not a smart thing to do: The North cancels meeting with the South over more “provocative” military drills
(courtesy zerohedge)
North Korea Cancels Meeting With South Over “Provocative” Military Drills
North Korea has abruptly canceled talks with South Korea that had been set for Wednesday – and is threatening to walk away from talks with the US – over joint US-South Korea military drills, according to Yonhap.
Repeating a familiar line, North Korea’s Central News Agency said the “Max Thunder” drills involving South Korea and the US air force were a “rehearsal for an invasion” of the North and an unnecessary “provocation” amid warming inter-Korean ties.
The North has already made several gestures of sincerity, including releasing three US hostages and “closing” its ruined nuclear testing facility.
South and North Korea were expected to discuss “follow-up measures” after the two warring neighbors reached an historic agreement late last month. The talks were scheduled to take place on the southern side of Panmunjom, the village where the Korean War Armistice was signed, and where last month’s inter-Korean summit took place.
The North had said it would send a five-member delegation led by Ri Son-kwon, chairman of the Committee for the Peaceful Reunification of the Country, according to Yonhap.
The delegation was to include Kim Yun-hyok, vice railroad minister, and Won Kil-u, vice sports minister, and will be accompanied by more than 20 staff and journalists, the North Korean ministry said.
Meanwhile, South Korea’s five-member delegation was set to be led by Unification Minister Cho Myoung-gyon. Cho would’ve been accompanied by four other officials, including Kim Jeong-ryeol, vice transportation minister, Roh Tae-kang, vice cultural minister, and Ryu Kwang-soo, vice minister of Korea Forest Service.
The meeting would’ve marked the first time that officials from the two countries had met following last month’s summit, where South Korean President Moon Jae-in and Kim Jong Un signed an agreement vowing to cease military hostilities. They also agreed to allow families separated by the Korean War to reunite.
A historic summit between North Korea and the US is set to take place June 12 in Singapore.
END.
3 b JAPAN AFFAIRS
end
c) REPORT ON CHINA/HONG KONG
As expected, the USA and China are still very far apart on trade
(courtesy zero hedge)
US, China “Very Far Apart” On Trade, Ambassador Warns
Despite Trump apparently folding in the ongoing trade war with China by consenting to reingage Chinese telecom ZTE, the two sides remain far apart in the ongoing discussions how to shrink the US trade deficit (and Chinese surplus), and as US Ambassador to China Terry Branstad said on Tuesday, the US wants China to give a timetable on how it will open up its markets to US exports as the two countries are still “very far apart” on resolving trade frictions.
While a US delegation led by Treasury Secretary Steven Mnuchin presented China earlier this month with a list of demands to tackle allegations of intellectual property theft and other trade policies Washington considers unfair, it failed to achieve any success and the two countries failed to reach an agreement on the long list of US demands and decided to resume talks in Washington.
Branstad, who was present at the meeting, said the Chinese appeared to be “taken back” by the significance of the list, and said that “The Chinese have said ‘we want to see the specifics.’ We gave them all the specifics in terms of trade issues. So they can’t say they don’t know what we’re asking for.”
“We’re still very far apart,” Branstad said quoted by the SCMP, adding that China has not met pledges to open up its insurance and financial services area, as well as reduce car tariffs.
“There are many areas where China has promised to do but haven’t. We want to see a timetable. We want to see these things happen sooner than later,” he said at a conference in Tokyo.
Branstad also said US President Donald Trump would like to see a “dramatic increase” in food exports to China. “We’d like to see China being just as open as the United States,” he said.
As is well known, the Trump administration has drawn a hard line in trade talks with China, demanding a US$200 billion cut in the Chinese trade surplus with the United States, sharply lower tariffs and advanced technology subsidies. Trump has proposed tariffs on US$50 billion of Chinese goods under its “Section 301” probe. Those could go into effect in June following the completion of a 60-day consultation period, but activation plans have been kept vague.
Meanwhile, China warned that its own retaliatory tariffs on US goods, including soybeans and aircraft, will go into effect if the US duties are imposed.
Branstad said the United States could rescind the “Section 301” tariffs if China moved forward on opening up its agriculture and car markets.
“I think it could be adjusted,” he said. “It’s possible, depending upon how the trade talks go.” Increasing US exports of liquified natural gas could also be an area the two countries could agree on as trade talks resume in Washington this week, he said.
“The United States and China are the two biggest economies in the world. The more we can work things out, the better it’s going to be not just for US and China, but for the entire world economy,” he said.
On Tuesday morning, just as China’s Vice Premier Liu He arrives with a Chinese delegation in Washington Tuesday through Saturday to continue trade negotiations, Trump tweeted that “Trade negotiations are continuing with China. They have been making hundreds of billions of dollars a year from the U.S., for many years. Stay tuned!”
Donald J. Trump
✔@realDonaldTrump
Trade negotiations are continuing with China. They have been making hundreds of billions of dollars a year from the U.S., for many years. Stay tuned!
4. EUROPEAN AFFAIRS
5. RUSSIAN AND MIDDLE EASTERN AFFAIRS
TURKEY
The Turkish lira crumbles to 6.4 to the dollar as its current account deficit rises to 16 billion dollars. Erdogan states not to worry as most likely he will take over central bank authority or lower rates, which in turn will cause the Lira to plummet some more.
(courtesy zerohedge)
Turkish Lira Crumbles After Erdogan Says He Will “Take Responsibiliy For Monetary Policy”
In the latest distress signal from one of the most troubled corners of the emerging markets, this morning the Turkish Lira plunged to fresh all time lows against the dollar after Turkish President Recep Tayyip Erdogan said he intends to tighten his grip on the economy and will take more responsibility for monetary policy if he wins an election next month, which he will.
In an interview with Bloomberg, Erdogan brushed aside the apparent collapse of his economy in a stagflationary vortex, where double digit inflation is racing with daily TRY devaluation, and said that after the vote transforms Turkey into a full presidential system, he expects the central bank will have to heed his calls for lower interest rates… which is bizarre as the last thing investors in Turkey want right now is lower rates. For context, the central bank’s key rate is now 13.5%, compared with 10.9 percent consumer-price inflation.
“When the people fall into difficulties because of monetary policies, who are they going to hold accountable?” the cartoonish president told Bloomberg. “They’ll hold the president accountable. Since they’ll ask the president about it, we have to give off the image of a president who’s influential on monetary policies.”
In other words, in addition to having recently been granted quasi-despotic, “emergency” powers, Erdogan now wants to also take over the central bank.
Erdogan has routinely criticized the central bank for setting interest rates that he says have helped stoke rising prices, an argument that contradicts conventional economic theory. Central bank governor Murat Cetinkaya has said higher borrowing costs would help anchor the currency, a view in line with orthodoxy.
Bizarrely, expounding on his own unique brand of macroeconomics, Erdogan said that cutting rates would bring lower inflation because borrowing costs would decline. ???
“Of course our central bank is independent,” Erdogan said. “But the central bank can’t take this independence and set aside the signals given by the president, who’s the head of the executive. It will make its evaluations according to this, take its steps according to this. And I believe this will result in very beneficial steps in the future.”
Someone should perhaps explain to Erdogan just what “independent” means.
Immediately after Erdogan’s comments hit the tape The lira slid to its weakest level ever against the dollar after his remarks were published, losing 0.6 percent to 4.3942 at 7:32 a.m. Istanbul time.
Last month Erdogan called snap sham elections for June 24, in which a victory (which is guaranteed) would consolidate his one-man rule of a country he’s governed since 2003. A 2017 referendum saw the role of parliament weakened drastically and gave the president sweeping authority in the most radical constitutional overhaul since the republic was founded 95 years ago; next month’s election will seal Erdogan’s full conversion to despot.
“From the moment we move to a presidential governing system, our effectiveness there will be very different,” he said. “We’re going to do this so we can be held accountable for the responsibility we’ve taken.”
* * *
Erdogan is visiting London, where he is meeting with executives, bankers and investors even as a financial and economic crisis in Turkey grows. Erdogan will also meet U.K. Prime Minister Theresa May and Queen Elizabeth II later on Tuesday.
The outreach comes as Turkey’s relations with its NATO allies fray and its diplomatic focus shifts toward Russia and Iran. The country faces the unprecedented risk of sanctions from the U.S., a risk that Erdogan downplayed.
Asked if he was prepared for U.S. sanctions should he consummate the purchase of a missile defense system from Vladimir Putin’s government, Erdogan responded that he “can’t cut off our ties with Russia” adding that “If we’re allies with the U.S., we need solidarity, not sanctions.”
Meanwhile, the apparent collapse of the Turkish economy has shaken investor confidence, which is critical because Turkey’s current-account deficit demands steady inflows from abroad. The Q1 shortfall reported on Monday was more than $16 billion, almost double the same period last year.
* * *
Commenting on the interview, Ziad Daoud, chief Middle East economist for Bloomberg Economics said that sentiment has been the main reason behind the decline of the lira this year, and Mr Erdogan’s comments won’t improve that.
“Investors have been concerned about government intervention in monetary policy, which is compromising the independence of the central bank. The President’s latest remarks will indeed make some uncomfortable – unfortunately, unnerving investors is the last thing he needs to do if he wants to stabilize the lira.”
END
This will be very dangerous to Cyprus and Israel as Erdogan is threatening Cyprus’s gas exploration in the Mediterranean. Israel discovered a massive gas field off of Haifa and this extends into Cypriot waters. Turkey does not recognize Cyprus and they will attack
(courtesy Paraskova)
Erdogan: Cyprus Oil Drilling Is A Security Threat To East Mediterranean
Authored by Txvetana Paraskova via OilPrice.com,
The Eastern Mediterranean will face a security threat should Cyprus continue its unilateral operations of offshore oil and gas exploration in the region, Turkey’s President Recep Tayyip Erdogan said in a speech at think tank Chatham House in London on Monday.
Turkey, which recognizes the northern Turkish Cypriot government and doesn’t have diplomatic relations with the internationally recognized government of Cyprus, claims that part of the Cyprus offshore area is under the jurisdiction of Turkish Cypriots or Turkey.
Tensions in the area flared up earlier this year, after Turkish Navy vessels threatened in February to sink a drilling ship that oil major Eni had hired to explore for oil and gas offshore Cyprus—the divided island whose northern part is run by Turkish Cypriots and is recognized only by Turkey.
Weeks before that, Turkey’s Navy had blocked the drilling vessel that Eni had hired. Eni’s chief executive Claudio Descalzi had said that the row is a diplomatic one and out of the company’s control. Descalzi said that Eni would probably move the blocked drilling ship, but would not pull out of its project in Cyprus.
While the internationally recognized Republic of Cyprus said that its “goal is to fully explore Cyprus’s hydrocarbon potential,” Turkey claims that the drilling operations are ‘unilateral’ and claims that part of the exclusive economic zone of Cyprus is under Turkish jurisdiction.
Meanwhile, just last week, Turkish Energy and Natural Resources Minister Berat Albayrak said that Turkey would begin its first solo oil and gas deepwater drilling in the Mediterranean before the end of this summer.
Turkey has strongly opposed what it describes as “unilateral” drilling offshore the internationally recognized Republic of Cyprus, and Turkish Cypriots argue that the offshore oil and gas resources of the island should be exploited jointly to ensure equal rights for both parties.
END
Israel retaliates by kicking out the ambassador to Israel
(courtesy zerohedge)
Israel Retaliates By Kicking Out Consul After Ankara Expels Ambassador
In a tit-for-tat move, Israel has asked a Turkish consul to leave the country, according to the Israeli foreign ministry.
A ministry spokesman said the official was asked to return to Turkey “for consultations for a period of time,” according to RT.
The decision was also likely influenced by Turkish President Recep Tayyip Erdogan’s strident rhetoric. On Monday, he accused Israel of carrying out “genocide” against the Palestinians. He also referred to the country as a “terrorist state.”
In response, Israeli Prime Minister Benjamin Netanyahu accused the Turkish president of being “among Hamas’ biggest supporters…there is no doubt that he well understands terrorism and slaughter…I suggest that he not preach morality to us.”
Earlier in the day, Turkey had asked Israeli Ambassador Eitan Naeh to leave the country “for a while” in protest of the massacre of 60 Gazans who had gathered to protest the opening of the US embassy in Jerusalem on Monday.
Naeh was summoned to the foreign ministry on Tuesday and asked to “return to his country for a period of time,” according to an official who leaked the news to Israeli media. Turkey said on Monday it would recall its ambassadors from Tel Aviv and Washington.
Eitan Naeh
Naeh was appointed ambassador to Turkey in December 2016 after the two countries ended a six-year rupture in relations stemming from the deadly Gaza flotilla raid, which left eight Turkish nationals dead in international waters, killed by Israeli commandos.
Meanwhile, Turkish Prime Minister Binali Yildirim urged Islamic countries to review their ties with Israel and said Ankara was calling an extraordinary summit of the world’s main pan-Islamic body on Friday.
“Islamic countries should without fail review their relations with Israel,” Yildirim told his ruling party in parliament.
“The Islamic world should move as one, with one voice, against this massacre,” he added.
Turkey on Monday called for a meeting of the Organization of Islamic Cooperation on Friday. Erdogan currently holds the rotating chairmanship of the body. Deputy Prime Minister Bekir Bozdag said the meeting would take place in Istanbul.
To try and rally support for the meeting, Foreign Minister Mevlut Cavusoglu called a dozen of his counterparts from various majority Muslim countries.
6 .GLOBAL ISSUES
Mexico
Mexico’s central bank has been hit by cyber thieves and hundred of millions have been stolen
(courtesy zerohedge)
Hundreds Of Millions Stolen After Wave Of Transfer-Heists Rock Mexican Banks
Lorenza Martinez, director of the Payment System of the Bank of Mexico, informed Reuters in a telephone interview last week that more than five Mexican financial institutions have recently observed “unauthorized transfers,” resulting in hundreds of millions of pesos stolen.
Cybercriminals siphoned 400 million of pesos ($20.4 million) out of Mexican banks, including the second largest bank: Grupo Financiero Banorte, by generating “phantom orders that wired funds to fake accounts and promptly withdrew the money,” sources close to the government’s investigation told Reuters. Sources explained how cybercriminals “sent hundreds of false orders to move amounts ranging from tens of thousands to hundreds of thousands of pesos from banks including Banorte, to fake accounts in other banks.” Once the funds landed in the fraudulent accounts, accomplices would then go to local branch offices around the country and drain the accounts.
Daily newspaper El Financiero said that these cybercriminals stole around 160 million pesos ($8.2 million) from Banco del Bajio and approximately 150 million pesos ($7.7 million) from Banorte. The remaining amount was spread across smaller financial institutions.
Hackers would have stolen 400 million pesos after the cyber attack in April. (Source: El Financiero)
Inter-bank orders declined in late April, as well as the lack of transparency on the part of financial regulators, which has stoked concerns that Latin America’s second-biggest economy fell victim to cyber attacks that have been disrupting Central Banks and financial institutions around the world.
“The authorities claim that in this cyber attack the SPEI was not violated, but that the “hacking” was through the system that the banks have with suppliers to connect with the SPEI.
One involved in the investigations ensures that it is not yet known exactly how the criminals operated, so there is no exact data yet of the amount stolen, information considered, it will be difficult for it to be revealed by those affected or by the authorities of the financial sector.
Market participants consider that the accounts in which the money was dispersed are located within the country, since in international transfers there are more alerts within the same institutions,” said El Financiero.
Another source told Reuters that these cybercriminals might have had inside assistance to complete such transactions. “In terms of the security of the bank’s offices, I think that is part of the analysis that each bank is doing,” Martinez said.
He also added that the SPEI interbank transfer system was not compromised, but third-party software connected to the payment network might have been. SPEI is comparable to the SWIFT’s messaging services used by more than 11,000 financial institutions in more than 200 countries.
El Financiero indicates that three years ago, at least three financial institutions in Mexico were victims of severe cyber attacks.
“Three years ago at least three banks in Mexico were victims of a “hack”, since the criminals detected a “vulnerability” within a part of their computer systems.
After entering a code in their systems, they proceeded to register third parties, “sowed” accounts in SPEI and made transactions for amounts similar to accounts in other open banks with the same name as the account holder. The money was then withdrawn early in the window by those customers. On that occasion, the affectation did not exceed 50 million pesos.”
El Financiero provides information with Bloomberg data showing Cybercrime is on the rise.
However, the location of where the cyber attack originated from is still unknown, it would not shock us if Mexican drug cartels are now diversifying their operations into cybercriminal units attacking Mexican financial institutions.
Wall Street journal: Gas at $4.00 will wipe out 1/3 of the gain from the tax cuts. It will cause an abrupt stop to the USA economy
(courtesy Wall Street Journal)
WSJ Sounds The Alarm: “There’s No Getting Over” Gas At $4 A Gallon
Consumers, who are already being squeezed by rising interest rates (even as the return on their cash deposits remains anchored near zero), are facing another potential constraint on their already limited purchasing power. And that constraint is rising gasoline prices, which, as we pointed out last month, could erode the stimulative impact of President Trump’s tax plan as rising prices sop up what little money the middle class is saving.
As prices rise and banks scramble to update their forecasts, the Wall Street Journal has become the latest publication to sound the alarm over what is, in our view, one of the biggest threats facing the US economy in the ninth year of its post-crisis expansion.
In its story warning about $3 a gallon oil (of course, we’re already seeing $4 a gallon in parts of California and other high-tax states), WSJ cited Morgan Stanley’s latest projection that rising gas prices could wipe out about a third of the annual take-home pay generated by the tax cuts.
Rising fuel costs can also feed inflation and pressure interest rates. Even though the Federal Reserve typically looks past volatile energy prices in the short term, higher energy costs help shape consumer confidence. And with the central bank poised to be more active this year, rising energy costs pose an additional risk to the economy.
Morgan Stanley estimates that if gas averages $2.96 this year, it would take an annualized $38 billion from spending elsewhere, an upward revision from the bank’s $20 billion estimate in January. That would wipe out about a third of the additional take-home pay coming from tax cuts this year, the analysts said.
…
Patrick DeHaan, petroleum analyst at GasBuddy”Three dollars is like a small fence. You can get through it, you can get over it,” said Patrick DeHaan, petroleum analyst at GasBuddy, a fuel-tracking app. “But $4 is like the electric fence in Jurassic Park. There’s no getting over that.”
Of course, MS’s take appears downright pollyannaish when compared with a Brookings Center report that we highlighted last month.
The left-of-center think tank, which of course has every reason to hope that the next recession will materialize on President Trump’s watch, projected that consumers would soon spend about half of the money saved from tax cuts on fuel costs.
And in a report published in April, Deutsche Bank illustrated how rising fuel costs will disproportionately squeeze the most vulnerable among us – a cohort of consumers who already shoulder an outsize share of the country’s household debt.
The FT put it another way…
As the chart above shows, middle-income families – aka the engine of consumption – will be the hardest hit by rising gas prices.
Indeed, small business owners in California, where gas prices are the fifth highest in the nation thanks to taxes and stringent emissions standards, say they’ve seen their energy bills shoot higher in the past few months. Car salesmen say consumers are asking more questions about mileage, according to WSJ.
Robert Lozano, a car salesman in Los Angeles where some gas prices are already above $4, said the dealership’s gas bill has climbed from about $9,000 to about $12,000 a month recently.
Customers are inquiring more about electric vehicles, he said.
“It’s more in the consumer’s mind as to what the most efficient vehicle is.”
With oil already at $70 a barrel, early indicators imply that the summer driving season could see an unusually large spike in demand for gas…
…As the number of Americans intending to take vacations in the next six months climbs to its highest level in decades.
Heightened vacation intentions suggest the number of vehicle miles driven will also climb (because people tend to travel greater distances when they go on vacation). As the chart below shows, fluctuations in miles driven – a close proxy for gas demand – are quickly reflected in prices at the pump.
While the US’s increasing prominence in the oil-export market could soften some of the economic blow as the energy business booms, other large business from airlines to shipping companies would feel the pinch at a time when costs are already rising.
But some economists say the growing importance of energy to the U.S. economy could blunt some of the impact from rising oil prices.
The country has become a more prominent supplier of crude oil and fuel. Domestic production has reached record weekly levels of 10.7 million barrels per day and a lot of it is being exported.
[…]
“People don’t understand how we could double crude oil production” and see higher gas prices, said Tom Kloza, global head of energy analysis at the Oil Price Information Service. “The answer lies in the balance of payment. We are an exporting power right now.”
[…]
Airlines and shipping companies will also be paying more for jet fuel and diesel – costs that may be passed along to consumers. Even companies such as Whirlpool Corp. have noted that higher oil prices have boosted the cost of materials.
Refiner Valero Energy Corp. said it wouldn’t expect consumer demand to drop off until oil prices are at $80 to $100.
But demand is only one factor driving up oil prices. Supply issues have also weighed on oil traders’ minds. Traders pushed oil prices higher as the US pulled out of the Iran deal as some worried that it could impact global supplies (though, as we’ve pointed out, there are plenty of other buyers waiting to step in and buy Iranian crude). Even if the Iranian crude trade isn’t impacted by sanctions, plummeting production capacity in Venezuela could ultimately have a bigger impact on global supply.
Conflicts in other oil producing regions could also impact supplies, pushing prices higher.
Last week, Bank of America became the first Wall Street bank to call $100/bbl for Brent crude (at the time, it was trading around $77/bbl) in 2019. That could send prices to highs not seen since 2008. Other banks have been scrambling to raise their forecasts as well.
With the Fed changing its language in its latest policy statement to reflect rising inflation expectations, rising oil prices could also inspire the Fed to hike interest rates more quickly for fear that the economy might overheat. That could result in four – or perhaps five – rate hikes this year.
The resulting effect would be like economic kudzu strangling the buying power of consumers and possibly forcing a long-overdue debt reckoning as millennials, who are already drowning in debt, are forced to put off home ownership and family formation until they’re in their late 30s or even their 40s.
8. EMERGING MARKET
ARGENTINA
Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings TUESDAY morning 7:00 am
Euro/USA 1.1889 DOWN .0043/ REACTING TO MERKEL’S FAILED COALITION/ SPAIN VS CATALONIA/REACTING TO +GERMAN ELECTION WHERE ALT RIGHT PARTY ENTERS THE BUNDESTAG/ huge Deutsche bank problems + USA election:/TRUMP HEALTH CARE DEFEAT//ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/JAPAN TAPERING BOND PURCHASES /USA FALLING INTEREST RATES AGAIN/HOUSTON FLOODING/EUROPE BOURSES MIXED
USA/JAPAN YEN 109,92 UP 0.194(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/
GBP/USA 1.3523 DOWN 0.0023 (Brexit March 29/ 2017/ARTICLE 50 SIGNED/BREXIT FEES WILL BE CAPPED
USA/CAN 1.2830 UP .0028 (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 TUESDAY morning in Europe, the Euro FELL by 43 basis points, trading now ABOVE the important 1.08 level RISING to 1.1889; / Last night Shanghai composite CLOSED UP 18.09 POINTS OR 0.57% / Hang Sang CLOSED DOWN 289.05 POINTS OR 1.23% /AUSTRALIA CLOSED DOWN 58% / EUROPEAN BOURSES MIXED/ RED
The NIKKEI: this TUESDAY morning CLOSED DOWN 47.84 OR 0.21%
Trading from Europe and Asia
1/EUROPE OPENED MIXED/RED
2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 389.05 POINTS OR 1.23% / SHANGHAI CLOSED UP 18.09 POINTS OR 0.57% /
Australia BOURSE CLOSED DOWN .58%
Nikkei (Japan) CLOSED UP 47.84 POINTS OR 0.21%
INDIA’S SENSEX IN THE RED
Gold very early morning trading: 1307.00
silver:$16.39
Early TUESDAY morning USA 10 year bond yield: 3.02% !!! UP 2 IN POINTS from MONDAY night in basis points and it is trading WELL ABOVE resistance at 2.27-2.32%. (POLICY FED ERROR)/
The 30 yr bond yield 3.15 UP 2 IN BASIS POINTS from MONDAY night. (POLICY FED ERROR)/
USA dollar index early MONDAY morning: 92.89 UP 30 CENT(S) from FRIDAY’s close.
This ends early morning numbers TUESDAY MORNING
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And now your closing TUESDAY NUMBERS \1: 00 PM
Portuguese 10 year bond yield: 1.741% UP 3 in basis point(s) yield from MONDAY/
JAPANESE BOND YIELD: +.0.6% UP 7/10 in basis points yield from MONDAY/JAPAN losing control of its yield curve/
SPANISH 10 YR BOND YIELD: 1.359% UP 3 IN basis point yield from MONDAY/
ITALIAN 10 YR BOND YIELD: 1.954 UP 3 POINTS in basis point yield from MONDAY/
the Italian 10 yr bond yield is trading 60 points HIGHER than Spain.
GERMAN 10 YR BOND YIELD:RISES TO +.645% IN BASIS POINTS ON THE DAY
END
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IMPORTANT CURRENCY CLOSES FOR TUESDAY
Closing currency crosses for TUESDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/1:00 PM
Euro/USA 1.1869 DOWN .0061(Euro DOWN 61 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/
USA/Japan: 110.24 UP 0.503 Yen DOWN 50 basis points/
Great Britain/USA 1.3516 DOWN .0045( POUND DWON 45 BASIS POINTS)
USA/Canada 1.2861 UP .0061 Canadian dollar DOWN 61 Basis points AS OIL FELL TO $70.70
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This afternoon, the Euro was DOWN 61 to trade at 1.1869
The Yen FELL to 110.24 for a LOSS of 50 Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE
The POUND FELL BY 45 basis points, trading at 1.3516/
The Canadian dollar FELL by 61 basis points to 1.2861/ WITH WTI OIL FALLING TO : $70.70
The USA/Yuan closed AT 6.3775
the 10 yr Japanese bond yield closed at +.060% UP 7/10 IN BASIS POINTS / yield/
Your closing 10 yr USA bond yield UP 8 IN basis points from MONDAY at 3.065% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 3.1974 UP 8 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, 93.13 UP 55 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 TUESDAY: 1:00 PM EST
London: CLOSED UP 12.00 POINTS OR 0.16%
German Dax :CLOSED DOWN 7.67 POINTS OR 0.06%
Paris Cac CLOSED UP 12.48 POINTS OR .23%
Spain IBEX CLOSED DOWN 50.20 POINTS OR 0.49%
Italian MIB: CLOSED UP 75.70 POINTS OR 0,31%
The Dow closed DOWN 193.00 POINTS OR 0.78%
NASDAQ closed DOWN 59.49 Points OR 0.81.% 4.00 PM EST
WTI Oil price; 70,70 1:00 pm;
Brent Oil: 78.78 1:00 EST
USA /RUSSIAN ROUBLE CROSS: 62.37 UP 50/100 ROUBLES/DOLLAR (ROUBLE LOWER BY 50 BASIS PTS)
TODAY THE GERMAN YIELD RISES TO +.645% 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:$71.13
BRENT: $77.97
USA 10 YR BOND YIELD: 3.07% THIS RAPID RISE IN YIELD IS ALSO VERY DANGEROUS/RECESSION COMING/DERIVATIVES FRY!!
USA 30 YR BOND YIELD: 3.20%/DEADLY
EURO/USA DOLLAR CROSS: 1.1841 DOWN .0090 (DOWN 90 BASIS POINTS)
USA/JAPANESE YEN:110.32 UP 0.590 YEN DOWN 59 BASIS POINTS/ .
USA DOLLAR INDEX: 93.23 UP 65 cent(s)/dangerous as the lower the dollar the higher the inflation.
The British pound at 5 pm: Great Britain Pound/USA: 1.3509 down 0.0052 (FROM YESTERDAY NIGHT down 52 POINTS)
Canadian dollar: 1.2868 DOWN 67 BASIS pts
German 10 yr bond yield at 5 pm: +0.645%
VOLATILITY INDEX: 14.63 CLOSED UP 1.70
LIBOR 3 MONTH DURATION: 2.330% .
And now your more important USA stories which will influence the price of gold/silver
TRADING IN GRAPH FORM FOR THE DAY
end
EARLY MORNING DATA
Retail sales in April slowed dramatically form March’s rise to just .3% month over month vs March’s .8 month/month.
this will be a huge damper to 2nd quarter GDP
(courtesy zerohedge)
Retail Sales Growth Slows As Fuel Costs Rise
Following March’s surprising surge in Retail Sales – after 3 months of declines – April saw spending growth slow notably to just +0.3% from a revised-higher March 0.8% gain.
February’s initial decline was also revised to a rise…
Core retail sales (ex autos and gas) also slowed and missed expectations suggesting some spillover from higher gas prices…
Under the hood saw every sector see gains in spending aside from Electronics and Appliance Stores, Health and Personal Care, Sporting Goods, and Food Sevice and Drinking Places. Perhaps all feeling the pinch from higher gas prices.
Most notably, the Control Group – which adjusts out food, autos, gas, and building materials – saw YoY growth slow dramatically…
China’s economic momentum appeared to slow from March’s data as while Industrial Production handsomely beat expectations, Retail Sales were below the lowest estimate and Fixed Asset Investment was the weakest since Dec 1999…
- Industrial output rose 7.0 percent in April from a year earlier, versus a projected 6.4 percent in a Bloomberg survey and 6 percent in March – highest since June 2017
- Retail sales expanded 9.4 percent from a year earlier, versus a forecast 10 percent – equal lowest since Feb 06
- Fixed-asset investment rose 7.0 percent year-on-year in the first four months, compared with an estimated 7.4 percent – lowest since Dec 1999.
While the reports are supposedly among the first official readings unaffected by the Lunar New Year holiday – which skewed year-on-year comparisons for the first three months – we note that the economic surprise index for China shows the same seasonal pattern play out every year…
While offshore yuan was unaffected, US equity futures took a leg lower as the China data hit, though the moves are modest for now…
“Policy makers will likely become less concerned about slowing activity and monetary growth,” Goldman Sachs Group Inc. economists wrote in a recent note.
“We expect the government to maintain its recent policy stance because inflation is likely to remain subdued and, more importantly, uncertainties related to trade remain high.”
And as a reminder, Morgan Stanley economists recently write that the link between China’s credit impulse and the global economy “has now been broken” and justifies his answer as follows:
China’s tightening has not had a material impact on the growth cycle either in China or globally, even though its credit impulse began to weaken about 24 months ago. As deleveraging and adjustment headwinds recede, the recoveries in domestic demand in both DMs and EMs have emerged as additional global growth engines.
Ahya uses the following chart to prove his thesis…
END
Dangerous as the 10 yr yield spikes to 3.05% and that sets the mood for trading today.
(courtesy zerohedge)
Futures Tumble As 10Y Treasury Yields Spike Near 7 Year Highs
As retail sales data printed, 10Y treasury yields spiked to their highest since 2014 (3.0465%) which seemed to spark a notable drop in US equity futures ahead of the open…
10Y Yield is within a fraction of a tick of the 1/2/14 high yield of 3.0516%…
which would take us back to July 2011…
30Y Yields are heading back into their resistance zone…
The Dollar Index is soaring – back at highest since 12/27/17 (and the yield curve steepening)…
And that seemed to trigger equity futures selling…
VIX mini-flash-crashed as retail sales printed but as stocks sink, VIX is back above 13…
But, but, but… aren’t rates rising for the right reason?
END
With the 10 yr bond yield rising above 3.05%, the emerging markets are imploding
(courtesy zerohedge)
Trader: “Emerging Markets Aren’t Heavy… They’re Setting Up To Implode”
Despite yesterday’s slow drift lower off the early gains, The Dow’s 8th win a row and the “best May since 2005” was heralded as proof that all the world’s problems are behind us and it’s plain-sailing from here to new record highs.
However, as former FX trader and fund manager Richard Breslow warned “I keep visualizing oblivious fun-seekers in danger of getting way out over their skis.”
And judging by today’s price action – they were…
Stocks down, gold down, bonds down, the dollar is spiking along with VIX…
But, as Bloomberg reports, there are a lot more problems looming…
Emerging markets aren’t heavy, they’re setting up to implode…
Ten-year Treasury yields aren’t struggling with what to do around this distracting 3% level. They’ve broken back above the, this time, really “psychologically” critical barrier and are coiling for a now inevitable move higher. Do not pass go, do not collect your coupon payment.
The dollar is no longer trying to hold on to recent gains, it’s going to run everything else over. And equities are preparing for a renewed bout of illness from geopolitical risk and trade wars. The price action notwithstanding.
All or none of this could come to pass. But it is a collection of trades du jour that one needs to make sure can hang together. And whether their purveyors will be willing to stick with them, even without instant gratification, remains to be seen. It isn’t the green or red on your screens that should inform your mood. It’s actually meant to work the other way around.
The first thing I’d ask is how much is positions versus view. Both matter, but the former has taken on a significance that can have a lasting, even if not ultimately dispositive, effect on asset prices. Washouts used to take hours or maybe days to be cleared. Now they can last weeks. Or seconds. Made all the worse by the enormous and often blind accumulation of yield grabs.
How many “investors” in Turkish lira or Argentine pesos really had any business carrying this risk? Is today’s caning of the lira from President Erdogan’s latest, and not groundbreaking, comments or because the much rumored “surprise” rate hike wasn’t forthcoming? This is not meant to argue Turkey isn’t in an economic mess. But you can’t actually make an informed decision without knowing the back story.
Contagion across the asset class can have as much to do with portfolio damage control as any real causal relationship.I shudder when I think of all the inquiries about getting into frontier markets. Last week we were still being told that emerging market economies are in great shape to withstand higher global rates. Not true, but never mind. Today, there is “underlying vulnerability” galore.
But why just pick on EM? European government bonds have spent the last two days behaving exactly the same way. So many people relying on Super Mario to buy their inventory. And then along came Francois Villeroy. And yet, peripheral spreads remain bid.
In equities, that asset we all love to hate, a big leap is being made from a risk-off sentiment to the fact that they trade pretty well. Aren’t they supposed to do something bad before being sent to the penalty box? Frankly, I’d rather sell the S&P 500 on a break below 2700 than here. Especially, because the canaries are getting a bit long in the tooth. I’ll tell you what: watch the Shanghai Composite against resistance at 3200 if you want an early warning sign.
As for the dollar, just remember that we’re back to square one on the year. It neither went to zero nor has it flown. Look at it right now and forget what happened during a very trying first part of the year. It too could be back here from stale positions that no longer were working.
Maybe we’re getting closer to a point where not everyone will have the same positions and we can get back to having fun.
end
This afternoon
As the 10 yr USA bond rises above 3.05 as I promised you, the emerging markets will feel the pain. Yesterday it was the Argentine Peso that suffered but it is being supported today at 25.00 to the dollar. However the Turkish lira and South African rand collapsed
(courtesy zerohedge)
Emerging Market FX Suffers “Death Cross” As Lira, Rand Collapse
It’s a sea of red across Emerging Market FX today with the JPMorgan EM FX index suffering death cross as it tumbles to fresh 16-month lows…
And while all eyes recently have been on the Argentine Peso…it isbeing massively supported by BCRA today as they promised up to $5bn of peso buying at 25.00.
It is the Rand and the Lira that are getting crushed today…
The Lira is tumbling to new record lows as Erdogan threatens to take control of monetary policy…
And South Africa’s Rand is tumbling as it tries to market a new eurobond sale…
end
the subprime auto loans default rates are now higher than during the financial crisis of 2008
(courtesy zerohedge)
Subprime Auto Loan Default Rates Are Now Higher Than During The Financial Crisis
One month ago, when discussing the most recent trends in the US subprime auto loan space, we revealed how despite a virtual halt in direct loans by depositor banks to subprime clients following the financial crisis, the US banking sector now has over a third of a trillion dollars in indirect subprime exposure, in the form of loans to nonbanks financial firms which in the past decade have become the most aggressive lenders to America’s sub-620 FICO population.
As we further explained, the banks’ total indirect exposure to subprime loans – not just auto loans, but also subprime mortgages, and subprime consumer loans – could be pieced together through public filings, and according to FDIC reports, bank loans to nonbanks subprime lenders soared this decade, with the following 5 names standing out:
- Wells Fargo: $81 billion, up from $13.4 billion in 2010
- Citigroup: $30 billion, up from $4.1 billion in 2010
- Bank of America: $30 billion, up from $2.8 billion in 2010
- JP Morgan: $28 billion, up from $10.4 billion in 2010
- Goldman Sachs: $22 billion
- Morgan Stanley: $16 billion
Visually:
But while the supply side of the subprime equation is clearly firing on all cylinders – as only the next crash/crisis will stop desperate yield chasers – things on the demand side are going from bad to worse, and according to the latest Fitch Autoloan delinquency data, consumers are defaulting on subprime auto loans at a higher rate than during the 2008-2009 financial crisis.
The highly seasonal rate for subprime auto loans more than 60 days past due reached the highest in 22 years – since 1996 – at 5.8%, according to March data; this is well over 2% higher than the comparable March default rate in the low 3%s hit during the peak of the financial crisis a decade ago.
The more recent April data, showed a delinquency rate of 4.3%, higher than the 4.1% last year, and the second highest April on record. Keep in mind, April is the “best” month of the year from a seasonal perspective as that is when the bulk of tax refunds hit, which are then promptly used to repay outstanding bills – it’s all downhill from there… or rather uphill as the chart shows ever higher default rates.
And while delinquencies have been rising, the number of auto loans and leases to subprime borrowers has continued to shrink, falling 10% Y/Y according to Equifax. However, as we showed at the top, it’s not due to supply constraints at the nonbank subprime lenders, the slide in subprime loan volume is all on the demand side: auto-lease origination by subprime customers tumbled by 13.5%.
Meanwhile, as Bloomberg reports, the volume of bond sales backed by these loans are likely to remain the same because banks and credit unions don’t turn most of their loans into securities: “ABS is a fraction of the total auto credit market, which is mainly funded on balance sheets,” Wells Fargo analyst John McElravey told Bloomberg in an interview. “If the pullback from subprime is more from the balance-sheet lenders, banks, then maybe securitization keeps moving along.”
Not maybe: definitely. As the following chart show, the percentage of subprime securitization of all auto ABS as a share of total loans has not only surpassed th pre-crisis peak, it is at a new all time high.
Call it the latest “new (ab)normal” paradox: the underlying auto subprime loan market is shrinking fast, and yet the market for subprime auto ABS securitizations has never been stronger.
Subprime-auto asset-backed security sales are on pace with last year at about $9.5 billion compared to $9.6 billion a year ago, according to data compiled by Bloomberg. With new transactions from Santander, GM Financial, Flagship, and Credit Acceptance expected to hit the market this week, volume may exceed 2017’s total of about $25 billion.
And while it is safe to say it will all end in tears – again – as it did a decade ago, with the next recession the catalyst, the shape of the next crash will be very different. As we explained last month, this subprime bond market is vastly different from what it was even a few years ago, let alone during the last crisis as an influx of generally riskier, smaller lenders flooded into it in the post-crisis years, bankrolled by private-equity money and funded by big bank loans, pursued the riskiest borrowers in order to stay competitive.
“Neither banks nor credit unions have done ‘deep subprime’ lending,” Gunnar Blix, deputy chief economist at Equifax told Bloomberg. “That’s mainly done by smaller dealer-finance and independent finance companies” who rely almost solely on ABS for funding. According to Bloomberg, only about 10% of $437 billion of outstanding subprime auto loans have been securitized into ABS, according to Wells Fargo, which means that underwriters are generally massively exposed to the subprime auto loan crunch that is already playing out before our eyes, and which will be magnified exponentially in the next recession.
* * *
The latest subprime delinquency data seemed confusing, almost a misprint to Hylton Heard, Senior Director at Fitch Ratings who said that “it’s interesting that [smaller deep subprime] issuers continue to drive delinquencies on the index in an unemployment environment of around 4%, low oil prices, low interest rates — even though they are rising — and a positive economic story overall.” In other words, there is no logical explanation why in a economy as strong as this one, subprime delinquencies should be soaring.
Unless, of course the real, unvarnished, and non-seasonally adjusted economy is nowhere near as strong as the government’s “data” suggests.
Making matters worse, rising interest rates have made interest payment increasingly unserviceable for those subprime borrowers who are currently contractually locked up – hence the surge in delinquency rates – or those consumers with a FICO score below 620 who are contemplating taking out a new loan to buy a car, and suddenly find they could no longer afford it, an ominous development we first described one month ago in “Subprime Auto Bubble Bursts As “Buyers Are Suddenly Missing From Showrooms.”
And even if the subprime bubble hasn’t burst just yet, every incremental 0.25% increase in rates assures it is only a matter of time. For once, St. Louis Fed president James Bullard was not wrong when he warned this morning that he sees Fed policy as the reason behind the flattening of the yield curve, saying that “it’s been the Fed, I think, that has flattened the curve more than worries by investors on the state of the global economy.”
“My personal opinion is the Fed does not need to be so aggressive that we invert the yield curve” he noted, adding that “I do think we’re at some risk of an inverted yield curve later this year or early in 2019,” and “if that happens I think it would be a negative signal for the U.S. economy.”
If he’s correct, it begs the question: why is the Fed seeking to crash the economy and, by implication, the market?
We’ll close with a quote from the last Comptroller of the Currency, Thomas Curry, who during an October 2015 speech said that “what is happening in [the subprime auto lending] space today reminds me of what happened in mortgage-backed securities in the run up to the crisis.”It’s only gotten worse since then.
end
In the TIC just released (for March data) surprisingly it was not China that dumped USA treasuries. It was Japan. Actually China and Russia added treasuries
(courtesy zerohedge)
It’s Not China That’s Liquidating US Treasuries
Recent fears, warranted or not about the potential for retaliatory liquidation by China of its US Treasury holdings appear to have been once again vastly exaggerated because according to the latest TIC data released, America’s trade-war nemesis added $11 billion in TSYs in March, following the addition of $8.5 billion in March, and nearly $100 billion higher over the past year.
But while China is still buying – for now, given the lagged data – one other notable nation is selling… significantly.
The second largest foreign US creditor, Japan, has been liquidating aggressively in recent months and in March, Japan sold $16 billion in TSYs (the most of any nation in February), bringing its total to just $1,043.5BN, the lowest total in 7 years, since late 2016.
And while last month we already knew that Japan was dumping US paper, a new seller emerged this month: hedge funds, i.e. the so-called “Cayman Island” entity, which in March sold just shy of $10 billion in Treasurys.
Meanwhile, and perhaps most unexpected, at a time when US-Russia relations are the worst they have been in decades, Russia actually added $2.3BN in US paper.
All this Treasury buying (and selling) was during the chaotic swings of the March among concerns that China would stop buying or even buy US paper: recall TIC data is 2 months delayed. But April will likely be the big tell as that was during the peak of the escalating trade war tensions, when Trump and Xi were going at it head to head.
Furthermore, as we showed over the weekend, the far more recent Fed Custody holdings data released by the Fed last week showed that the selling by foreign central banks started in earnest in March and continued well into May, so expect next month’s data to be especially turbulent.
Meanwhile, the good news for all these buyers of US debt is that thanks to Trump’s budget, there’s plenty more where that came from.
Looking at the broader universe of all US International capital transactions, in March, foreign public and private entities sold a total of $4.9BN in Treasurys while buying $25.2N in Agencies; they also added a modest $22.4 BN in corporate bonds.
But the biggest surprise – or perhaps not considering what happened to stocks in March – is that after buying a near-record $62.5BN in January and another $57.9BN in US equities in February, in March, foreigners hit the brakes on further US stock purchases, and actually sold a whopping $24.2BN in stocks, the biggest monthly sale going back to September 2015.
SWAMP STORIES
Trump threatens the leakers
(courtesy zerohedge)
Trump Threatens “Traitor” White House Leakers: “We Will Find Out Who You Are”
Ever since President Trump took office, he has had to contend with leaky staff. From transcripts of his call with Mexican President Peña Nieto, to little leaks such as Trump ignoring the advice of national security advisors not to congratulate Russian President Vladimir Putin on his election win, to the seemingly monthly rumors of interpersonal feuds, imminent firings and upcoming plans – the Trump White House has been a veritable leak factory.
In response, President Trump has come out with a serious warning for White House leakers after a callous comment about John McCain’s brain cancer made by communications staffer Kelly Sadler was leaked to the media last week.
Donald J. Trump
✔@realDonaldTrump
After McCain urged the Senate to reject Gina Haspel’s nomination for CIA director, calling her refusal to acknowledge torture’s immorality “disqualifying,” Sadler reportedly said “[i]t doesn’t matter, he’s dying anyway.“
After the controversy over the Sadler comment, White House Press secretary Sarah Huckabee Sanders held a meeting with the communications team about leaks, which promptly leaked to Axios.
Sources in the room on Friday told me senior leaders on the press team spent more time focused on the fact that Sadler’s now-infamous comment had leaked, than that it was said in the first place.
In an emotional speech in the Roosevelt Room, Sanders lambasted the press and communications team for the leak:
- Kelly Sadler’s comment was inappropriate, she said, according to a staffer in the room, but that didn’t justify leaking it to the press.
- Sanders told the team that Thursday should have been a great day for the White House, especially with the historic photos of Trump welcoming the hostages released from North Korea.
- But instead, that was overcome by saturation cable TV coverage about Sadler’s comment. In Thursday’s meeting of the White House communications and press team, Sadler said “It doesn’t matter, he’s dying anyway,” in reference to McCain’s decision to oppose Trump’s CIA nominee Gina Haspel. The Hill first reported the private remarks. Since then, everyone from McCain’s family to members of Congress to former Vice President Joe Biden has condemned the remark. –Axios
Former White House chief of staff, Karl Rove, blasted the leakers on Monday, telling FOX Business’ Maria Bartiromo “I’ve never seen a White House leak as much against itself as this one and these are people putting their own personal agendas above those of the country and the president that they serve,” adding “Frankly it’s ridiculous, it’s despicable, it’s reprehensible and it does not help anyone.”
Maria Bartiromo
✔@MariaBartiromo
Never seen a White House leak as much against itself as this one: Rove https://goo.gl/aU3UNs @MorningsMaria @KarlRove @FoxBusiness
On Sunday, Axios published an exposé on White House leakers entitled White House Leakers Leak About Leaking,” in which they go into the mind of your typical “traitor and coward” as Trump now calls them.
The big picture: The leaks come in all shapes and sizes: small leaks, real-time leaks, weaponized leaks, historical leaks. Sensitive Oval Office conversations have leaked, and so have talks in cabinet meetings and the Situation Room. You name it, they leak it.
- My colleague Mike Allen, who has spent nearly 20 years covering the White House, says we learn more about what’s going on inside the Trump White House in a week than we did in a year of the George W. Bush presidency.
- This White House leaks so much that meetings called to bemoan leaks begin with acknowledgement the bemoaning will be leaked, which is promptly leaked…by several leakers in a smallish room. –Axios
According to the report, leakers have a wide variety of reasons for doing what they do. Via Axios:
- “To be honest, it probably falls into a couple of categories,” one current White House official tells me. “The first is personal vendettas. And two is to make sure there’s an accurate record of what’s really going on in the White House.”
- “To cover my tracks, I usually pay attention to other staffers’ idioms and use that in my background quotes. That throws the scent off me,” the current White House official added.
- “The most common substantive leaks are the result of someone losing an internal policy debate,” a current senior administration official told me. “By leaking the decision, the loser gets one last chance to kill it with blowback from the public, Congress or even the President.”
- “Otherwise,” the official added, “you have to realize that working here is kind of like being in a never-ending ‘Mexican Standoff.‘ Everyone has guns (leaks) pointed at each other and it’s only a matter of time before someone shoots. There’s rarely a peaceful conclusion so you might as well shoot first.”
One key reason was ignored: cold hard cash, which is why doubt any of the leakers will be dissuaded by Trump’s tough talk.
END
HARVEY
harveyorganblog.com 