JUNE 4/GOLD DOWN $2.50 TO $1293.20/SILVER HOLDS DOWN ONLY ONE CENT TO $16.42/THE CROOKS AT GLD RAID THE COOKIE JAR TO THE TUNE OF 10.61 TONNES OF GOLD/SLV RISES BY 522,000 OZ/ USA TRADE WAR WITH THE REST OF THE WORLD CONTINUES UNABATED/ITALY READY TO KICK OUT THE MIGRANTS/PLENTY OF ITALY STORIES FOR YOU TONIGHT/ONE SWAMP STORY.

 

GOLD: $1293.20 DOWN  $2.50 (COMEX TO COMEX CLOSINGS)

Silver: $16.42 DOWN  1 CENT (COMEX TO COMEX CLOSINGS)

Closing access prices:

Gold $1290.80

silver: $16.42

For comex gold:

JUNE/

NUMBER OF NOTICES FILED TODAY FOR JUNE CONTRACT:18 NOTICE(S) FOR 1800 OZ.

TOTAL NOTICES SO FAR 194 FOR 19400 OZ (0.6034 tonnes)

For silver:

JUNE

316 NOTICE(S) FILED TODAY FOR

1,580,000 OZ/

Total number of notices filed so far this month: 731 for 3,655,000 oz

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Bitcoin: BID $7504/OFFER $7608: UP $119(morning)

Bitcoin: BID/ $7475/offer $7575: UP $91  (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: 1299.39

NY price  at the same time: 1293.30

PREMIUM TO NY SPOT: $6.09

Second gold fix early this morning: 1300.72

USA gold at the exact same time:1291.70

PREMIUM TO NY SPOT:  $9.01

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 AN SMALL 707 CONTRACTS FROM  210,423  DOWN TO 209,716 ACCOMPANYING FRIDAY’S TINY 3 CENT FALL IN SILVER PRICING.    WE ARE NOW WITNESSING OUR USUAL AND CUSTOMARY COMEX LONG LIQUIDATION AS WE ENTERED INTO THE NON ACTIVE DELIVERY MONTH OF JUNE AS LONGS PACK THEIR BAGS AND MIGRATE OVER TO LONDON.  WE WERE  NOTIFIED THAT WE HAD A GOOD SIZED NUMBER OF COMEX LONGS TRANSFERRING THEIR CONTRACTS TO LONDON THROUGH THE EFP :  1096 EFP’S FOR JULY AND ZERO FOR ALL  OTHER MONTHS  AND THEREFORE TOTAL ISSUANCE OF 1096 CONTRACTS. WITH THE TRANSFER OF 1096 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 1096 EFP CONTRACTS TRANSLATES INTO 8.625 MILLION OZ  ACCOMPANYING:

1.THE 3 CENT FALL IN  SILVER PRICE  AT THE COMEX AND

2. THE STRONG AMOUNT OF SILVER OUNCES STANDING FOR JUNE COMEX DELIVERY. (3.665 MILLION OZ) DESPITE IT BEING A NON ACTIVE DELIVERY MONTH.

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

2821 CONTRACTS (FOR 2 TRADING DAYS TOTAL 2821 CONTRACTS) OR 14.105 MILLION OZ: (AVERAGE PER DAY: 1410 CONTRACTS OR 7.053 MILLION OZ/DAY)

TO GIVE YOU AN IDEA AS TO THE HUGE SUPPLY THIS MONTH IN SILVER:  SO FAR THIS MONTH:  14.105 MILLION PAPER OZ HAVE MORPHED OVER TO LONDON. THIS REPRESENTS AROUND 2.01% OF ANNUAL GLOBAL PRODUCTION (EX CHINA EX RUSSIA)

ACCUMULATION IN YEAR 2018 TO DATE SILVER EFP’S:            1,328.4      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

ACCUMULATION FOR MAY 2018:                                            210.05       MILLION OZ

RESULT: WE HAD A SMALL SIZED DECREASE IN COMEX OI SILVER COMEX OF 707 WITH THE 3 CENT FALL IN SILVER PRICE.  WE HAVE NOW ENTERED THE NEW NON ACTIVE MONTH OF JUNE.   THE CME NOTIFIED US THAT IN FACT WE HAD AN GOOD SIZED EFP ISSUANCE OF 1096 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:  1096 EFP CONTRACTS FOR JULY, AND ZERO FOR ALL OVER MONTHS   FOR  A DELIVERABLE FORWARD CONTRACT OVER IN LONDON WITH A FIAT BONUS (TOTAL: 1096). TODAY WE GAINED A FAIR 389 TOTAL OI CONTRACTS  ON THE TWO EXCHANGES: i.e.1096 OPEN INTEREST CONTRACTS HEADED FOR LONDON  (EFP’s) TOGETHER WITH AN DECREASE OF 707  OI COMEX CONTRACTS. AND ALL OF THIS HAPPENED WITH THE 3 CENT FALL IN PRICE OF SILVER  AND A CLOSING PRICE OF $16.43 WITH RESPECT TO FRIDAY’S TRADING. YET WE STILL HAVE A GIGANTIC AMOUNT OF SILVER STANDING AT THE COMEX FOR DELIVERY IN THIS NON  ACTIVE JUNE DELIVERY MONTH. IT SURE LOOKS LIKE A FAILED BANKER SHORT COVERING EXERCISE!!

In ounces AT THE COMEX, the OI is still represented by OVER 1 BILLION oz i.e. 1.048 MILLION OZ TO BE EXACT or 151% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT JUNE MONTH/ THEY FILED AT THE COMEX: 316 NOTICE(S) FOR 1,580,000 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:

  1. HUGE AMOUNTS OF SILVER STANDING FOR DELIVERY  (MARCH: 27 MILLION OZ , APRIL: 2.485 MILLION OZ AND MAY: 36.285 MILLION OZ /AND JUNE  (3.665 MILLION OZ SO FAR)
  2. HUGE RECORD OPEN INTEREST IN SILVER 243,411 CONTRACTS (OR 1.217 BILLION OZ/ SET APRIL 9/2018
  3. HUGE ANNUAL EFP’S ISSUANCE EQUAL TO 2.9 BILLION OZ OR 400% OF SILVER ANNUAL PRODUCTION/2017
  4. 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 FELL BY A CONSIDERABLE 4543 CONTRACTS DOWN TO 454,581 DESPITE THE LOSS IN THE GOLD PRICE/FRIDAY’S TRADING (LOSS OF $5.10).  WE ARE NOW IN THE  ACTIVE DELIVERY MONTH OF JUNE. NO DOUBT THE BOYS ARE CASHING IN THEIR COMEX LONGS TO BEGIN THE PROCESS TO MOVE INTO LONDON FORWARDS.  THE CME RELEASED THE DATA FOR EFP ISSUANCAND IT TOTALED A STRONG SIZED 9,684 CONTRACTS :   JUNE SAW THE ISSUANCE OF 0 CONTRACTS , AND AUGUST SAW THE ISSUANCE OF:  9684 CONTRACTS WITH ALL OTHER MONTHS ZERO.  The new OI for the gold complex rests at 454,581. 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 STRONG SIZED OI GAIN IN TOTAL CONTRACTS ON THE TWO EXCHANGES: 4543 OI CONTRACTS DECREASED AT THE COMEX AND AN STRONG SIZED 9684 EFP OI CONTRACTS WHICH NAVIGATED OVER TO LONDON.THUS  TOTAL OI GAIN: 5141 CONTRACTS OR 514,100 OZ = 15.99 TONNES. AND ALL OF THIS DEMAND OCCURRED WITH A LOSS OF $5.10

FRIDAY, WE HAD 7881  EFP’S ISSUED.

ACCUMULATION OF EFP’S GOLD AT J.P. MORGAN’S HOUSE OF BRIBES: (EXCHANGE FOR PHYSICAL) FOR THE MONTH OF MAY : 17,565 CONTRACTS OR 1,756,500  OZ OR 54.63 TONNES (2 TRADING DAYS AND THUS AVERAGING: 8783 EFP CONTRACTS PER TRADING DAY OR 878,300 OZ/ TRADING DAY),,

TO GIVE YOU AN IDEA AS TO THE HUGE SIZE OF THESE EFP TRANSFERS :  THIS MONTH IN 2 TRADING DAYS IN  TONNES: 54.63 TONNES

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

THUS EFP TRANSFERS REPRESENTS 54.63/2550 x 100% TONNES =  2.14% OF GLOBAL ANNUAL PRODUCTION SO FAR IN APRIL ALONE.***

ACCUMULATION OF GOLD EFP’S YEAR 2018 TO DATE:  3,506.83*  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)

ACCUMULATION OF GOLD EFP’S FOR MAY 2018:                     693.80 TONNES ( 22 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 CONSIDERABLE SIZED INCREASE IN OI AT THE COMEX OF 4543 WITH THE $5.10 LOSS  IN PRICE // GOLD TRADING FRIDAY ($5.10 FALL).  WE ALSO HAD AN STRONG SIZED NUMBER OF COMEX LONG TRANSFERRING TO LONDON THROUGH THE EFP ROUTE: 9,684 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 9684 EFP CONTRACTS ISSUED, WE HAD AN STRONG SIZED NET GAIN OF 5141 CONTRACTS IN TOTAL OPEN INTEREST  ON THE TWO EXCHANGES:

9684 CONTRACTS MOVE TO LONDON AND 4543 CONTRACTS INCREASED AT THE COMEX. (in tonnes, the GAIN in total oi equates to 15.99 TONNES). ..AND BELIEVE IT OR NOT BUT ALL OF THIS DEMAND OCCURRED AT THE COMEX WITH A LOSS OF $5.10 IN TRADING!!!.

we had: 18 notice(s) filed upon for 1800 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 $2.50  TODAY: / A MONSTROUS CHANGE IN GOLD INVENTORY AT THE GLD/ A WITHDRAWAL OF 10.61 TONNES WHICH NO DOUBT WAS USED IN THE RAID TODAY/  /

Inventory rests tonight: 836.42 tonnes.

SLV/

WITH SILVER DOWN 1 CENT TODAY A SMALL CHANGES IN THE SILVER INVENTORY AT  THE SLV INVENTORY/ A DEPOSIT OF 522,000 OZ

/INVENTORY RESTS AT 322.561 MILLION OZ/

COMPARE GOLD TO SILVER

end

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

1. Today, we had the open interest in SILVER FELL BY A SMALL SIZED 707CONTRACTS from  210,423 DOWN TO 209,716 (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:   (WE DO NOT GET A LOOK AT THESE CONTRACTS AS IT IS PRIVATE BUT THE CFTC DOES AUDIT THEM), 1725 EFP’S FOR JULY AND ALL OTHER MONTHS: ZERO. TOTAL EFP ISSUANCE: 1725 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 707 CONTRACTS TO THE 1096 OI TRANSFERRED TO LONDON THROUGH EFP’S,  WE OBTAIN A FAIR SIZED GAIN OF 389 OPEN INTEREST CONTRACTS.  THUS IN OUNCES, THE GAIN ON THE TWO EXCHANGES:  1.945 MILLION OZ!!! AND THIS GOOD SIZED DEMAND OCCURRED WITH A 3 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 APRIL AT 385.75 MILLION OZ AND THE CONTINUAL OI GAIN ON THE TWO EXCHANGES, THE CONSTANT RAIDS, (THAT ARE NOW BEING CALLED UPON BY OUR BANKER FRIENDS  IN AN ATTEMPT TO SHAKE AS MANY SILVER LEAVES FROM THE SILVER TREE AS POSSIBLE) AND JUDGING BY THE RESULTS FROM YESTERDAYS ACTION, THEY HAVE NOT BEEN AT ALL SUCCESSFUL.

RESULT: A SMALL SIZED DECREASE IN SILVER OI AT THE COMEX WITH THE 3 CENT LOSS  IN SILVER PRICING YESTERDAY. BUT WE ALSO HAD ANOTHER STRONG SIZED 1096 EFP’S ISSUED TRANSFERRING COMEX LONGS OVER TO LONDON. TOGETHER WITH THE STRONG  SIZED AMOUNT OF SILVER OUNCES STANDING FOR JUNE, 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 16.05 points or 0.52%   /Hang Sang CLOSED UP 505.07 points or 1.66%    / The Nikkei closed UP 304.59 POINTS OR 1.37% /Australia’s all ordinaires CLOSED UP .57%  /Chinese yuan (ONSHORE) closed UP at 6.4042/Oil DOWN to 65.38 dollars per barrel for WTI and 75.72 for Brent. Stocks in Europe OPENED ALL GREEN /.  ONSHORE YUAN CLOSED UP AT 6.4042 AGAINST THE DOLLAR. OFFSHORE YUAN CLOSED UP ON THE DOLLAR AT 6.3961/ONSHORE YUAN TRADING WEAKER AGAINST OFFSHORE YUAN/ONSHORE YUAN TRADING STRONGER AGAINST USA DOLLAR/OFFSHORE YUAN TRADING MUCH STRONGER 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

CHINA/USA

i)Mattis warns that there will be consequences as Beijing continues to weaponize the Spratly Islands in the South China Sea which is located in international waters

( zerohedge)

ii)The trade war with China is not on hold and Beijing warns Trump that all successful negotiations in the past few weeks will now be off the table if the USA imposes tariffs

(courtesy zerohedge]

4. EUROPEAN AFFAIRS

i)ITALY/SATURDAY

Italy want to reject austerity and grow its economy by creating inflation which will make its debt less severe.  The coalition of the two parties will no doubt fight Brussels to spend its way out of their mess and they can just walk from the Euro.  As JPMorgan points out below, the cost to Italy will be small

( Raul Meijer/Automatic Earth Blog)

A must read…
ii)JPMorgan has come to the conclusion that an Ital-exit will be in Rome’s benefit.  Why? Italy can chose not to pay it’s target 2 imbalances of 426 billion euros because it also has good current account surplus as well as a good net investment benefit.  Italians own more foreign assets vs foreign liabilities.  Thus an exit will lower the value of the new “lira” which would sent its exports skyrocketing
( zerohedge)
iii)SUNDAY/ITALYWAR ERUPTS BETWEEN THE ITALIAN GOVERNMENT AND SOROS WHOSE COMPANIES ARE FUNDING THE LANDING OF MIGRANTS.

( ZERO HEDGE)

iv)EU/USA/G7 meeting results

The G7 meeting did not go over well due to the tariffs initiated by the USA.  I think Trump is right.  He wants fairness.  If the uSA charges zero tariffs on European goods but the EU charges 25 to 50% on importing goods, that is not fair..he wants a perfectly balanced state of affaires

( zerohedge)

v)ITALY/MONDAY MORNING
Italy states that the good times are over for illegals.  He promises mass deportations
(courtesy zero hedge)

vi)A must read commentary from Carmen Reinhart as he claims (as do I) that the target 2 balances should be included in the official debt of the country. The true Italian Debt to GDP is 160% if you include those debit balances

( Reinhart/Project Syndicate)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)More and more nations are turning eastward:  Even though Qatar has USA bases situated in this tiny kingdom, they have decided to purchase S 400 defense systems from Russia.  Saudi Arabia declared that if they purchased that system they would threaten the kingdom with military action

( Ditz/Antiwar.com)

ii)Putin signs into law countermeasures against Western nations for “unfriendly actions”.  In other words they will initiate its own sanctions against the USA and allies

(courtesy zerohedge)

6 .GLOBAL ISSUES

GLOBAL TRADING

Is this a redux of the Bear Stearns affair where the market is fooling itself?

( Morgan Stanley/Sheets/zerohedge)

7. OIL ISSUES

8. EMERGING MARKET

BRAZIL

9. PHYSICAL MARKETS

i)A good look at the gold holdings of Turkey as it tries to offset the decline in the value of the Turkish lira
( Simon Constable/Middle East Eye)

ii)Russia is now set to double gold mining and then become the world’s no 2 producer behind China( zero hedge)

iii)Amazing Eastern nations are on the hunt for more gold.  Now a Chinese company is in talks to buy a large gold mine in Indonesia, the Martabe gold mine

(courtesy Wall Street Journal)

iv)The silver fraud spelled out:( Ted Butler)

v)I find this story hard to believe:  where did Venezuela come up with the money to pay Citibank 172 million dollars.  After it lost most of its gold, it finally had the sense to recover this swapped gold?

(courtesy Reuters/GATA)

vi)Finally manipulation in the precious metals market is getting to Parliaments:  First Alex Mooney, Rep. West Virginia asked questions on the manipulation of gold and silver and now Jeremy Lefroy in the British Parliament

(courtesy GATA/Rory Hall)

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

i)USA DATA

Factory orders slide badly by a huge .8% tumble…the worst result since 2012

(courtesy zerohedge)

ii)Here is a great commentary from zero hedge as they point out that the Trump auto tariffs instead of being net positive for USA jobs will in reality be a net negative by 157,000

( zerohedge)

iii)New Jersey spiraling out of control:

(courtesy zerohedge)

iv)Peter Schiff has got this one right:  Not only Deutsche bank has a problem with its huge debt but also the the USA banking system has a problem.  When interest rates rise, the USA banks’ portfolio of loans become non performing just like Italy. Then the dollar is smashed and after that nobody could be saved:
(courtesy Peter Schiff_

v)SWAMP STORIES

As we have indicated to you on several occasions, the genesis of this “Russian Collusion” started in the spring of 2016 probably around April.  New details seem to show this.

Also next texts seem to implicate the Obama White House getting involved in this right from the beginning and maybe directing this

( zerohedge)

Let us head over to the comex:

The total gold comex open interest FELL BY A CONSIDERABLE SIZED 4543  CONTRACTS DOWN to an OI level 454,581 WITH THE FALL IN THE PRICE OF GOLD ($5.10 LOSS/ FRIDAY’S TRADING).   FOR TWO YEARS STRAIGHT WE HAVE NOTICED THAT ONE WEEK PRIOR TO FIRST DAY NOTICE OF AN ACTIVE DELIVERY MONTH THE COMEX OPEN INTEREST CONTRACTS AND EFP’S NOTICES EXPONENTIALLY INCREASE.   THE CME REPORTS THAT THE BANKERS ISSUED A STRONG SIZED  COMEX TRANSFER THROUGH THE EFP ROUTE AS THESE LONGS RECEIVED A DELIVERABLE LONDON FORWARD TOGETHER WITH A FIAT BONUS., THAT IS 9,684 CONTRACTS WERE ISSUED: FOR  JUNE, 0 CONTRACTS ISSUED,  FOR AUGUST 9684 CONTRACTS AND ZERO FOR ALL OTHER MONTHS:

TOTAL  9684 CONTRACTS.

THE OBLIGATION STILL RESTS WITH THE BANKERS ON THESE TRANSFERS. ALSO REMEMBER THAT THERE IS NO DOUBT A HUGE DELAY IN THE ISSUANCE OF EFP’S AND IT PROBABLY TAKES AT LEAST  48 HRS AFTER LONGS GIVE UP THEIR COMEX CONTRACTS FOR THEM TO RECEIVE THEIR EFP’S AS THEY ARE NEGOTIATING THIS CONTRACT WITH THE BANKS FOR A FIAT BONUS PLUS THEIR TRANSFER TO A LONDON BASED FORWARD.

ON A NET BASIS IN OPEN INTEREST WE GAINED THE FOLLOWING TODAY ON OUR TWO EXCHANGES: 5143 OI CONTRACTS IN THAT 9,684 LONGS WERE TRANSFERRED AS FORWARDS TO LONDON AND WE LOST 4543 COMEX CONTRACTS.

NET GAIN ON THE TWO EXCHANGES: 5141 contracts OR 514,100  OZ OR 15.99 TONNES.

Result: A CONSIDERABLE SIZED DECREASE IN COMEX OPEN INTEREST WITH THE LOSS IN PRICE /YESTERDAY  (ENDING UP WITH AN LOSS IN PRICE OF $5.10).  THE  TOTAL OPEN INTEREST GAIN ON THE TWO EXCHANGES: AT A STRONG 5141 OI CONTRACTS..

We have now entered the active contract month of JUNE where we LOST 723 contracts and that leaves us with 6997 contracts  We had 101 notices filed upon yesterday so we lost 622 contracts or 62,200 additional oz will not stand for delivery at the comex and they morphed into London based forwards.

.JULY saw a GAIN of 75 contracts to stand at 1367.  The next big delivery month after June is August and here the OI FELL BY 4414 contracts DOWN to 328,989.

AFTER AUGUST, THE NEXT ACTIVE DELIVERY MONTH IS OCTOBER AND HERE THE OI ROSE BY 264 CONTRACTS UP TO 11,263 CONTRACTS.

We had 18 notice (s) filed upon today for 1800 oz at the comex  which is surprisingly extremely low for a very active and strong delivery month of June.

FOR COMPARISON:

FOR THE JUNE/2017 CONTRACT INITIALLY 19.95 TONNES STOOD FOR DELIVERY.  AT THE END OF JUNE/2017:  9.176 TONNES STOOD AND THE REST MORPHED INTO LONDON BASED FORWARDS.

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

Trading Volumes on the COMEX

PRELIMINARY COMEX VOLUME FOR TODAY: 305,418  contracts

CONFIRMED COMEX VOL. FOR YESTERDAY:  331,526   contracts

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And now for the wild silver comex results.

Total silver OI FELL BY A SMALL SIZED 707 CONTRACTS FROM 210,423 DOWN TO 209,716 (AND FURTHER FROM THE NEW RECORD OI FOR SILVER SET APRIL 9.2018/ 243,411 CONTRACTS)  DESPITE THE 3 CENT LOSS IN SILVER PRICING/ YESTERDAY. SINCE WE ARE NOW INTO THE NON  ACTIVE DELIVERY MONTH OF JUNE, WE WERE  INFORMED THAT WE HAD A GOOD SIZED 1096 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: 1096.  ON A NET BASIS WE GAINED 519 SILVER OPEN INTEREST CONTRACTS AS WE OBTAINED A 707 CONTRACT LOSS AT THE COMEX COMBINING WITH THE ADDITION OF 1096 OI CONTRACTS NAVIGATING OVER TO LONDON.

NET GAIN  ON THE TWO EXCHANGES:  389 CONTRACTS

AMOUNT STANDING FOR SILVER AT THE COMEX

We are now in the NON active delivery month of JUNE and here the front month FELL BY 54 contracts FALLING TO 318 contracts. We had 59 notices filed upon yesterday so we gained 5 contracts or an additional 25,000 oz will stand in this non active delivery month of June AS SOMEBODY IS IN URGENT NEED OF PHYSICAL ON THIS SIDE OF THE POND AND QUEUE JUMPING CONTINUES IN EARNEST

The next big active delivery month for silver is July and here the OI LOST 3017 contracts DOWN to 136,413.  The next delivery month is August and here we gained an 1 contract  to stand at 5. The next active delivery month after August for silver is September and here the OI ROSE by 1986 contracts UP to 38,635

We had 316 notice(s) filed for 1,580,000 OZ for the JUNE 2018 COMEX contract for silver which is extremely large!!

PLEASE NOTE THE FOLLOWING FOR COMPARISON PURPOSES:

ON MAY 31.2017 WE INITIALLY HAD 396 OPEN INTEREST STAND OR A LARGE 1.98 MILLION OZ 

STOOD FOR METAL.

AT THE CONCLUSION OF JUNE 2017:  4.92 MILLION OZ FINALLY STOOD AS QUEUE JUMPING STARTED IN EARNEST AND IN THE ENSUING YEAR, IT CONTINUED WITH RECKLESS ABANDON INCLUDING WHAT YOU ARE WITNESSING TODAY

INITIAL standings for JUNE/GOLD

JUNE 4/2018.

Gold Ounces
Withdrawals from Dealers Inventory in oz nil oz
Withdrawals from Customer Inventory in oz
2001.08 OZ
Scotia
Deposits to the Dealer Inventory in oz NIL oz
Deposits to the Customer Inventory, in oz   nil

OZ

No of oz served (contracts) today
18 notice(s)
 1800 OZ
No of oz to be served (notices)
6979 contracts
(697,700 oz)
Total monthly oz gold served (contracts) so far this month
194 notices
19400 OZ
0.6034 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
VERY UNUSUAL: gold comex comatose despite June being a huge delivery month.
 TODAY, WE HAVE  A TINY PULSE AT THE GOLD COMEX
we had 0 kilobar transaction/
We had 0 inventory movement at the dealer accounts
total inventory deposit into the dealer accounts:  NIL  oz
total inventory withdrawals out of dealer accounts; nil oz
we had 1 withdrawal out of the customer account:
i) out of Scotia:  2001.08 oz
total customer withdrawals:  2001.08 oz
we had 0 customer deposit
total customer deposits: nil oz
we had 0 adjustment(s)

For JUNE:

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  18 contract(s) of which 0 notices were stopped (received) by j.P. Morgan dealer and 8 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 JUNE. contract month, we take the total number of notices filed so far for the month (194) x 100 oz or 19400 oz, to which we add the difference between the open interest for the front month of JUNE. (6997 contracts) minus the number of notices served upon today (18 x 100 oz per contract) equals 717,300 oz, the number of ounces standing in this active month of JUNE (22.310 tonnes)

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

No of notices served (194 x 100 oz)  + {(6997)OI for the front month minus the number of notices served upon today (18 x 100 oz )which equals 717,300 oz standing in this  active delivery month of JUNE .

WE LOST 622 CONTRACTS OR AN ADDITIONAL 62,200 OZ PACKED THEIR BAGS AND HEADED OVER TO LONDON THROUGH THE EFP ROUTE.

THERE ARE ONLY 8.2689 TONNES OF REGISTERED GOLD AVAILABLE FOR DELIVERY  WHICH WILL MAKE JUNE AN EXTREMELY INTERESTING MONTH AS WE SEE HOW THIS PLAYS OUT!!!

total registered or dealer gold:  265,846.240 oz or 8.2689 tonnes
total registered and eligible (customer) gold;   9,015,161.593 oz 280.41 tones
THE COMEX IS AGAIN IN STRESS AS ONLY 8.2689 TONNES OF GOLD ARE LEFT TO SERVICE DELIVERIES. THERE IS HARDLY ANY GOLD AT THE COMEX TO SERVE UPON LONGS AND THUS THE REASON FOR THE EFP TRANSFER OVER TO LONDON.

IN THE LAST 18 MONTHS 74 NET TONNES HAS LEFT THE COMEX.

end

And now for silver

AND NOW THE APRIL DELIVERY MONTH

JUNE INITIAL standings/SILVER

JUNE 4/ 2018
Silver Ounces
Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory
 60,042.960 oz
scotia
Deposits to the Dealer Inventory
432,773.140
oz
CNT
Deposits to the Customer Inventory
 766,788.540
oz
CNT
No of oz served today (contracts)
316
CONTRACT(S)
(1,580,000 OZ)
No of oz to be served (notices)
2 contracts
(10,000 oz)
Total monthly oz silver served (contracts) 415 contracts

(3,655,000 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 1 inventory movement at the dealer side of things

i) Into CNT:  432,773,140 oz

total dealer deposits: 432,773.140 oz

we had 1 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 52.3% of all official comex silver. (140 million/268 million)

ii) into CNT: 766,788.540 oz

total customer deposits today: 766,788.54 oz

we had 1 withdrawals from the customer account;

i) Out of Scotia: 60,042.960 oz

total withdrawals;  60,042.906 oz

we had 1  adjustment/ used for delivery purposes

i) Out of CNT: 24,502.32 oz was adjusted out of the dealer and this landed into the customer account of CNT

total dealer silver:  67/078 million

total dealer + customer silver:  271.575 million oz

The total number of notices filed today for the JUNE. contract month is represented by 316 contract(s) FOR 1,580,000 oz. To calculate the number of silver ounces that will stand for delivery in JUNE., we take the total number of notices filed for the month so far at 731 x 5,000 oz = 3,655,000 oz to which we add the difference between the open interest for the front month of JUNE. (318) and the number of notices served upon today (316 x 5000 oz) equals the number of ounces standing.

.

Thus the INITIAL standings for silver for the JUNE contract month: 731(notices served so far)x 5000 oz + OI for front month of JUNE(318) -number of notices served upon today (316)x 5000 oz equals 3,665,000 oz of silver standing for the JUNE contract month

We gained 5 contracts or an additional 25,000 oz will stand in this non active delivery month of June as somebody was in urgent need of silver.

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ESTIMATED VOLUME FOR TODAY: 29,902 CONTRACTS

CONFIRMED VOLUME FOR YESTERDAY:79,174 CONTRACTS

YESTERDAY’S CONFIRMED VOLUME OF  79174 CONTRACTS EQUATES TO 395 MILLION OZ  OR 56.5% OF ANNUAL GLOBAL PRODUCTION OF SILVER

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

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

end

NPV for Sprott 

1. Sprott silver fund (PSLV): NAV FALLS TO -2.38% (JUNE 4/2018)
2. Sprott gold fund (PHYS): premium to NAV RISES TO -0.44% to NAV (JUNE 1/2018 )
Note: Sprott silver trust back into NEGATIVE territory at -2.38%-/Sprott physical gold trust is back into NEGATIVE/ territory at -0.44%/Central fund of Canada’s is still in jail but being rescued by Sprott.
Sprott WINS hostile 3.1 billion bid to take over Central Fund of Canada

(courtesy Sprott/GATA)

3.SPROTT CEF.A FUND (FORMERLY CENTRAL FUND OF CANADA): NAV FALLS TO -2.48%: NAV 13.42/TRADING 13.08//DISCOUNT 2.48.

END

And now the Gold inventory at the GLD/

JUNE 4/WITH GOLD DOWN OLY $2.50, THE CROOKS UNLEASHED A MASSIVE WITHDRAWAL OF 10.61 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 836.42 TONNES

JUNE 1/WITH GOLD DOWN $5.10 TODAY, A HUGE 4.42 TONNES OF GOLD WAS WITHDRAWN FROM THE GLD AND THIS WAS USED IN THE RAID TODAY/INVENTORY RESTS AT 847.03 TONNES

MAY 31/WITH GOLD DOWN 1.60/NO CHANGE IN GOLD INVENTORY/INVENTORY REMAINS AT 851.45 TONNES

MAY 30/WITH GOLD UP $2.70: A HUGE DEPOSIT OF 2.95 TONNES INTO THE GLD/INVENTORY REMAINS AT 851.45 TONNES

MAY 29/2018/WITH GOLD DOWN $4.50/ NO CHANGES IN GLD INVENTORY/INVENTORY REMAINS AT 848.50 TONNES

May 25/WITH GOLD UP ON THE WEEK BUT DOWN 80 CENTS TODAY: WE HAD A HUGE 3.54 TONNES OF GOLD WITHDRAWAL FROM THE CROOKED GLD/

MAY 24/WITH GOLD UP $12.40/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 852.04

MAY 22/WITH GOLD UP $1.05/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 852.04 TONNES

MAY 21/WITH GOLD DOWN 50 CENTS/A HUGE CHANGE IN GOLD INVENTORY/A WITHDRAWAL OF 3.24 TONNES FORM GLD INVENTORY/INVENTORY RESTS AT 852.04 TONNES

MAY 18/WITH GOLD UP $1.80/A HUGE CHANGE IN GOLD INVENTORY AT THE GLD/ A DEPOSIT OF 9.11 TONNES INTO GLD INVENTORY/INVENTORY RESTS AT 865.28 TONNES/

GLD WAS ONE MASSIVE FRAUD

May 17/WITH GOLD DOWN $1.75/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 856.17 TONNES

MAY 16./WITH GOLD UP $1.05: NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 856.17 TONNES

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

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JUNE 4/2018/ Inventory rests tonight at 836.42 tonnes

*IN LAST 390 TRADING DAYS: 90.17 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 340 TRADING DAYS: A NET 66.13 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.

end

Now the SLV Inventory/

JUNE 4/WITH SILVER DOWN 1 CENTA SMALL CHANGE IN SILVER INVENTORY AT THE SLV: A DEPOSIT OF 522,000 OZ INTO THE SLV/.INVENTORY RISES AT 322.561 MILLION OZ/

JUNE 1/WITH SILVER DOWN 3 CENTS/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY REMAINS AT 322.039 MILLION OZ/

MAY 31/WITH SILVER DOWN 7 CENTS/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY REMAINS AT 322.039 MILLION OZ/

MAY 30/WITH SILVER UP 16 CENTS: A HUGE CHANGE IN SILVER INVENTORY AT THE SLV/ A DEPOSIT OF 2.071 MILLION OZ/INVENTORY RESTS AT 322.039 MILLION OZ/

MAY 29.2018/ NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 319.968 OZ

May 25/INVENTORY LOWERS TO 319.968 AS WE HAD A WITHDRAWAL OF 1.035 MILLION OZ

MAY 24/WITH SILVER UP 27 CENTS/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 321.003 MILLION OZ/

MAY 22/WITH SILVER UP 6 CENTS/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 321.003 MILLION OZ/

MAY 21/ WITH SILVER UP 5 CENTS/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 321.003 MILLION OZ/

MAY 18/WITH SILVER DOWN 5 CENTS  A SMALL CHANGE IN SILVER INVENTORY AT THE SLV/ A WITHDRAWAL OF 942,000 OZ/INVENTORY RESTS AT 321.003 MILLION OZ/

May 17/WITH GOLD UP 6 CENTS/A SMALL CHANGES IN SILVER INVENTORY AT THE SLV: A DEPOSIT OF 471,000 OZ//INVENTORY RESTS AT 321.945 MILLION OZ/

MAY 16./WITH SILVER UP 10 CENTS/A HUGE DEPOSIT OF 1.883 MILLION OZ OF SILVER INTO THE SLV/INVENTORY RESTS AT 321.474 MILLION OZ

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/

JUNE 4/2018:

Inventory 322.561 million oz

end

6 Month MM GOFO 2.11/ and libor 6 month duration 2.47

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

G0FO+ 2.11%

libor 2.47 FOR 6 MONTHS/

GOLD LENDING RATE: .36%

XXXXXXXX

12 Month MM GOFO
+ 2.72%

LIBOR FOR 12 MONTH DURATION: 2.47

GOFO = LIBOR – GOLD LENDING RATE

GOLD LENDING RATE  = +.25

end

end

Major gold/silver trading /commentaries for MONDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

off today

end

Andrew Maguire’s Kinesis money which is a “bitcoin” but backed 100% by allocated gold and silver is set to go.

it think it would be a great idea to look at this!

please read at:  https://kinesis.money/#/

(Andrew Maguire)

Andrew Maguire

2:57 PM (1 hour ago)
to me

Harvey

Here It is my friend!  https://kinesis.money/#/ Please let everyone know.

Let catch up on Monday if you have time. We have billions in the hopper ready to be allocated on the 1st day of trading. The paper market days are over.

Warm regards

Andy

 END
A good look at the gold holdings of Turkey as it tries to offset the decline in the value of the Turkish lira
(courtesy Simon Constable/Middle East Eye

As Good As Gold: Turkey Uses Bullion To Try To Stabilize Its Economy

Authored by Simon Constable via Middle East Eye,

Turkey’s economy has been in a tailspin with an inflationary currency, but the country is attempting to use something rare to help stabilise itself: gold.

In late 2011, Turkey started to allow commercial banks to use gold instead of the Turkish lira for their required deposits at the central bank. These deposits are known as reserve requirements and help ensure that the banks are capitalised.

Over the past six-or-so years, Turkey’s central bank has accumulated an additional 400 metric tonnes of gold. That’s a lot of yellow bricks – more than what Britain has – and the sizeable stash has the possibility to take the edge off the crisis.

To put the Turkish gold haul in perspective, there are 10 million ounces of gold – roughly 311 tonnes – at the Bank of England, according to the New York-based financial consulting firm CPM Group.

The burgeoning balance of bullion comes as the result of a change in banking rules made earlier this decade.

“I thought the Turkish thing was pure genius,” says Jeff Christian, founder of CPM Group.

“It was using gold in the way that you should use it.”

In the simplest terms, the tweak to the rules allows gold to be used as a financial asset by the banks. In addition, the new regulation helped flush out a lot of gold that was previously held privately.

“This change allowed the government to get hold of the under-the-mattress gold to help stabilise the banks and the underlying economy,” says Ivo Pezzuto, professor of global economics, entrepreneurship, and disruptive innovation at the International School of Management, Paris, France.

The result of the policy change has been that Turkey’s central bank has seen a huge jump in its apparent gold holdings.

There are now more than 18 million troy ounces of bullion deposited at Turkey’s central bank, up from less than four million before the rule change was introduced in 2011, according to the latest data from CPM Group. There are 32,150.7 troy ounces in a metric tonne.

Private gold deposits into Turkey’s central bank

Almost all of the increase came from commercial bank deposits of the metal at the central bank, rather than government purchases to bolster national reserves. 

The Turkish gold, which previously would have languished under the proverbial mattresses, or in private safety deposit boxes, now serves a more useful economic purpose in allowing the banks to make more lira-based loans.

It also helps the banks during times of high inflation.

With inflation running at a 40 percent annualised rate, the value of the gold grows as well when measured in terms of lira. In short, the commercial banks’ deposits of gold become worth more and more in terms of the local currency as inflation rages onward and upwards.

Although the purchasing power of the local currency dwindles with each passing day of double-digit inflation, the gold’s value does not. For instance, while one dollar fetched 4.10 lira a month ago, it will now buy 4.53 lira, meaning the lira has fallen in value. Whereas, gold prices in dollars have remained roughly static versus the beginning of the same period.

So what does this all mean? It means that managers at commercial banks don’t have to worry as much about continually sending more deposits to the central bank to maintain the required reserves.

The value of the gold naturally adjusts upwards, meaning if the bank is growing its loan book, it doesn’t need to worry as much about stashing more cash with the central bank. Put another way, it automatically can help stabilise the banks’ finances – at least in theory.

However, it is also worth remembering that the government does not own these additional gold reserves. They are the assets of the commercial banks and/or those of the investors who deposited their bullion with the financial institution.

That in turn means that private investors have the choice to get their gold returned to them. It’s basically the same as someone taking cash out of a deposit account. It is also true that everyone taking their cash out would likely cripple a bank.

Similarly, although not identical, it is true with the gold that the investors deposited. If everyone took out their gold then the banks would need to immediately send a slew of Turkish lira to the central bank, which is theoretically possible.

Turkey’s economic problems

However, Turkey’s implementation of gold deposits may not offset its economic problems in the long run.

Turkey has a credit problem, which Middle East Eye reported last September. The economy grew too rapidly and sparked high inflation.

Ballooning inflation has led to the dwindling value of the lira. One dollar would fetch 4.65 Turkish lira recently versus 3.52 lira on 1 June 2017, according to data from Bloomberg.

While the official rate of inflation was an annualised 10.85 percent in April, which seems relatively measured for the economy, it may not reflect reality.

A more realistic rate is likely 40 percent, according to estimates from Steve Hanke, professor of applied economics at Johns Hopkins University, and also an expert on inflation. He uses a technique known by economists as purchasing-power-parity, which looks at the actual cost of goods and services inside Turkey.

The plunging currency has come hand-in-glove with a scramble for the exits by investors who wish to save their capital from the wealth-withering surge in the cost of living. In other words, they have sold their lira-denominated investments in favour of US dollars and other major currencies that aren’t suffering from high inflation.

“Basically the problem is that inflation is very high and they don’t want to slow the economy in order to crush the inflation,” Pezzuto says.

Those two policies tend not to go hand in hand, so observers are anticipating more inflation for the time being.

end

Russia is now set to double gold mining and then become the world’s no 2 producer behind China

(courtesy zero hedge)

 

Russia Set To Double Gold Mining, Becoming World’s 2nd Biggest Gold Producer

While Moscow’s selling of US Treasurys over the past 6 years is hardly a surprise to anyone…

… Putin’s far more aggressive purchases of gold in recent years, with Russian reserves now in their 39th consecutive month of additions, have certainly raised a few eyebrows: almost as if Russia is doing everything it can to prepare for the moment when the US dollar is no longer a reserve currency.

What is perhaps even more surprising is that the pace of gold accumulation by the state is no longer satisfactory, and according to RT, major Russian gold mining companies are planning to double production; such an increase would make Russia the world’s second largest producer of the precious metal.

While Russia is currently the world’s third biggest gold miner after Australia and China, that could change in less than a decade, according to Mikhail Leskov, deputy CEO at the Moscow-based Institute of Geotechnology, as quoted by Vedomosti.

The boosting of mining output would also make Russia a gold export powerhouse. In 2017, Russia extracted 8.8 million ounces, accounting for 8.3% of total global production, according consultancy Metals Focus. The newly discovered gold deposits will reportedly allow miners to increase extraction by half in seven years, and by 2030, extraction is expected to grow by nearly eight million ounces.

Earlier this year, state exploration company Rosgeo said that a new discovery, holding some 900 tons of silver and gold, was found in the Republic of Bashkortostan. According to initial estimates, there are some 87 tons-worth of gold in the area. Silver deposits, meanwhile, are estimated at 787 tons.

The Russian gold mining industry has almost doubled its volume of extraction over the last two decades. Over the past decade, the country’s producers mined 2,189 tons of gold according to the Russian Union of Gold Producers.

There’s a number of major gold mining regions in Russia, including the most prospective in the world. Krasnoyarsk region in central Russia has two of major operations – Olimpiada and Blagodatnoye. Chukotka region in Russia’s Far East is home to one of the biggest Russian miners, the Dvoinoye and the Kupol operations.  The regions of Amur and Magadan are Russia’s fastest growing gold hubs while the Siberian city of Irkutsk is also one of the most prominent mining areas in the country.

In March, the region of Yakutsk made the front pages when a Russian AN-12 cargo plane lost over 3 tons of gold on takeoff.

end
Amazing Eastern nations are on the hunt for more gold.  Now a Chinese company is in talks to buy a large gold mine in Indonesia, the Martabe gold mine
(courtesy Wall Street Journal)

Chinese company in talks to buy large gold mine in Indonesia

 Section: 

By Julie Steinberg and P.R. Venkat
The Wall Street Journal
Friday, June 1, 2018

A Chinese mining-exploration company is in advanced discussions to acquire an Indonesian gold and silver mine for around $1.5 billion, according to people familiar with the matter.

Pengxin International Mining Co.’s deal for the Martabe gold mine, one of Indonesia’s largest, hasn’t been finalized, but a $1.5 billion price tag would represent a doubling in its value from two years ago.

Shares of Pengxin, which is listed in Shanghai, have been suspended from trading since mid-April pending a “major asset restructuring,” according to a regulatory filing. The Shanghai-based company disclosed on May 22 plans to take over a company that owns the Indonesian mine, without providing financial details. …

… For the remainder of the report:

https://www.wsj.com/articles/chinese-company-in-talks-to-buy-one-of-indo

END

The silver fraud spelled out:

(courtesy Ted Butler)

Ted Butler: Great frauds require darkness

 Section: 

4:39p ET Friday, June 1, 2018

Dear Friend of GATA and Gold:

“Great Frauds Require Darkness” is the headline of silver market analyst Ted Butler’s latest commentary about silver market manipulation, in which he notes that no one in government authority and no mainstream financial news organization dares to approach the issue. Butler’s commentary is posted at 24hGold here —

http://www.24hgold.com/english/news-gold-silver-great-frauds-require-dar…

— and at GoldSeek’s companion site, SilverSeek, here:

http://silverseek.com/commentary/great-frauds-require-darkness-17280

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

Great Frauds Require Darkness

Theodore Butler

|

May 31, 2018 – 10:57am

No doubt you’re aware of the massive fraud uncovered at Theranos, the high tech medical startup purported to be able to run any number of diagnostic tests from a single drop of blood. Theranos was a Silicon Valley upstart valued at $10 billion at its peak and headed by an attractive young woman modeled after the late Steve Jobs. Theranos’ diagnostic machines didn’t work as advertised and the whole fraud, said to be the largest since Enron, was uncovered by a sharp and determined reporter at the Wall Street Journal. The reporter, John Carreyrou, was instrumental in the fraud’s demise.

http://nymag.com/daily/intelligencer/2018/05/john-carreyrous-new-book-on-silicon-valley-bad-blood.html

The first rule of great frauds is that the real facts must remain in the dark; while the second rule is for insiders to fight against the facts being brought into the sunlight. These are also the rules that have enabled the COMEX silver manipulation to exist for as long as it has. Theranos was founded in 2003, so the fraud lasted nearly a decade and a half. The silver fraud has lasted for more than three decades, but then again, this fraud is more sophisticated with vested interests much stronger than the fraud at Theranos. Carreyrou’s first story on Theranos appeared in Oct 2015 and in practically one fell swoop, the real Theranos story was brought into the light. It’s much different with the fraud of the COMEX silver manipulation.

Admittedly, many individual investors have come to learn of the COMEX silver manipulation fraud over the years, but none have learned about it from a main stream media platform like the Wall Street Journal. Word of the COMEX silver fraud has largely been disseminated on the Internet. With Theranos, it came down to the very simple proposition of did their blood testing technology work? The equally simple answer was no. With silver, it’s nowhere near as simple. The ongoing price manipulation is far more complex.

With the COMEX silver fraud, all the leading legitimate participants and regulators have aligned themselves to prolong the fraud. Whereas the Securities and Exchange Commission wasted little time is finding Theranos to be a fraud, the CFTC has denied the COMEX silver fraud every step of the way for 30 years. It has totally clammed up on the matter for the past decade, despite more specific allegations of wrongdoing than ever before. It is the CFTC’s own data that indicate the consistent presence of a concentrated short position (by JPMorgan) over the past ten years in COMEX silver futures that is so dominant and controlling of price that the bank has never once taken a loss when shorting silver, only profits. JPMorgan has used the result of its price suppression – an artificial low price – to acquire the largest position of physical metal in history, some 700 million ounces and counting. That’s nearly seven times the amount of silver bought by the Hunt Brothers in 1980 or Berkshire Hathaway in 1998. Because the CFTC has denied the existence of a COMEX silver manipulation since 1986, it has painted itself into the corner no matter what the evidence may be. For the agency to now admit that silver has been manipulated in price would be tantamount to admitting it obstructed justice for decades. That’s not going to happen.

It’s not just the CFTC that has dug in its heels in ever moving against the COMEX silver manipulation. It’s also the CME Group, which owns and operates the COMEX, where the silver manipulation fraud is carried out. Were the CME to move against the silver manipulation, not only would it be depriving itself of many millions of dollars in trading revenue, it would be opening itself up to endless lawsuits for allowing the fraud to continue. The leading beneficiary of the COMEX silver manipulation, JPMorgan, has made billions of dollars in illicit trading profits since it became the leading short seller in COMEX silver futures on its takeover of Bear Stearns ten years ago and has used its suppression of prices to amass 700 million ounces of actual metal on the cheap. Does anyone think for a moment that JPM would admit to manipulating prices?

At Theranos, a relative handful of inside investors attempted to keep the fraud in the dark. With the COMEX silver fraud, the list of those keeping the real facts in the dark is a mile long. Pitted against the insiders intent on keeping the COMEX silver fraud in the dark are mining companies and silver investors, the vast majority of which don’t have a clue about the fraud. In this group are those who denied the silver manipulation early on and can’t face up to admitting they were wrong even as compelling new data proving fraud roll in. The surest proof of the COMEX silver manipulation fraud is the refusal of the insiders to openly discuss it. The CFTC refuses to answer or refute allegations, like JPMorgan never taking a loss in shorting COMEX silver and the fact that JPM has been the leading short seller while amassing more physical silver than any entity in history. And JPMorgan and the CME Group are so intent on keeping the real facts under wraps that both shrug off public allegations of criminal behavior that would normally bring charges of libel and slander were the allegations not true. Let me be clear, both JPMorgan and the CME Group are stone-cold crooks when it comes to silver.

Ted Butler

May 31, 2018

end

I find this story hard to believe:  where did Venezuela come up with the money to pay Citibank 172 million dollars.  After it lost most of its gold, it finally had the sense to recover this swapped gold?

(courtesy Reuters/GATA)

Venezuela pays Citi $172 million to recover swapped gold, Reuters says

 Section: 

By Corina Pons
Reuters
Friday, June 1, 2018

https://www.reuters.com/article/us-venezuela-economy/venezuela-central-b…

CARACAS, Venezuela — Venezuela’s central bank in April paid $172 million to U.S. bank Citigroup (C.N) to recover part of the gold it had put up as guarantee in a swap operation, according to two sources familiar with the situation.

Sanctions levied by U.S. President Donald Trump last year bar U.S. banks from carrying out financing operations with Venezuela, meaning such swaps cannot be renewed.

“Citibank got paid,” said a local finance industry source familiar with the negotiation who asked not to be identified.

The policy is to recover the gold,” added a second source consulted.

The move showed that, despite a broad default on billions of dollars in bonds, Venezuela is meeting some financial commitments, and the government of President Nicolas Maduro is able to transfer funds when it has reason to do so.

Citi declined to comment. The central bank did not respond to an email seeking comment.

The crisis-stricken OPEC nation has for years been carrying out gold swaps with Wall Street banks to boost the liquidity of its international reserves, which have dwindled to their lowest levels in decades as its socialist system implodes.

Gold swaps allow central banks to receive cash from financial institutions in exchange for lending gold during a specific period of time, and central banks can recover the gold if they repay the borrowed funds in time.

Venezuela between 2014 and 2016 used such operations to free up available hard currency because its reserves are dominated by gold holdings. Those swaps will progressively mature by 2021, the sources said.

An opposition legislator last year said Venezuela allowed a similar swap agreement with Deutsche Bank to lapse.

Neither Venezuelan authorities nor the banks involved have released details about the operations or totals of how many such arrangements remain outstanding.

Venezuela and state oil company PDVSA are in default on most of their $60 billion in outstanding bonds, with some $3.6 billion in backed up debt service.

Maduro has at times blamed the situation on U.S. financial sanctions and a conspiracy of global banks to block transfers of Venezuelan funds to foreign accounts.

But Venezuela has completed some payments.

Those include a coupon payment on PDVSA’s 2022 issue known as “hunger bonds” that was almost entirely bought by Goldman Sachs at a heavy discount in an operation highly criticized by Venezuela’s opposition leaders.

At the end of 2017 the central bank reported a 16 percent drop from the year before in the volume of gold reserves, without explaining the decline. The volume of gold dropped by 31 percent the year before.

As of January, Venezuelan gold reserves stood at around 150 tonnes, their lowest level in decades, according to International Monetary Fund data.

END

Bullion star’s JPKoning states that the monetary blockade of Iran will only increase purchases of physical gold

(courtesy Bullionstar/Konig)

J.P. Koning: Gold and the monetary blockade on Iran

 Section: 

10:13p ET Sunday, June 3, 2018

Dear Friend of GATA and Gold:

Writing at Bullion Star, market analyst John Paul Koning details the use of gold to evade the first round of U.S. economic sanctions against Iran and speculates that the second round, just imposed, may be much leakier. If so, gold demand will increase. Koning’s analysis is headlined “Gold and the Monetary Blockade on Iran” and it’s posted at Bullion Star here:

https://www.bullionstar.com/blogs/bullionstar/gold-and-the-monetary-bloc…

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

END

Finally manipulation in the precious metals market is getting to Parliaments:  First Alex Mooney, Rep. West Virginia asked questions on the manipulation of gold and silver and now Jeremy Lefroy in the British Parliament

(courtesy GATA/Rory Hall)

Member of UK Parliament inquires about gold and silver market rigging

 Section: 

10:18a ET Monday, June 4, 2018

Dear Friend of GATA and Gold:

A member of the British Parliament, Jeremy Lefroy, wrote last week to the country’s treasury department about manipulation of the gold and silver markets.

The exchange was publicized today by Rory Hall of the Daily Coin.

Lefroy wrote: “The manipulation of prices of commodities, which play a vital role both as intrinsic stores of value and as commodities used extensively in critical industrial applications (for instance, silver as an antibacterial), would be of the utmost concern. I would be grateful if you could advise what investigation HM Treasury has undertaken or proposes into such manipulation.”

In April U.S. Rep. Alex X. Mooney, R-West Virginia, put to the U.S. Treasury and Federal Reserve some very specific questions about U.S. government involvement in gold and silver market rigging:

http://www.gata.org/node/18210

Of course no one is holding his breath in anticipation of quick and honest answers from government officials on this highly sensitive subject, but the more such questions are posed, the more difficult market manipulation becomes.

The Daily Coin’s report about the inquiry in Britain is here:

https://thedailycoin.org/2018/06/04/silver-manipulation-coming-to-fore/

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



___________________________________________________________________

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

i) Chinese yuan vs USA dollar/CLOSED UP TO 6.4042  /shanghai bourse CLOSED UP 16.05 POINTS OR 0.52%     HANG SANG CLOSED UP 505.07  POINTS OR 1.66%
2. Nikkei closed UP 304.59 POINTS OR 1.37% /  /USA: YEN RISES TO 109.49/

3. Europe stocks OPENED GREEN  /     /USA dollar index FALLS TO 93.79/Euro RISES TO 1.1724

3b Japan 10 year bond yield: RISES TO . +.05/ !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 109.49/ 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:: 65.38  and Brent: 75.72

3f Gold UP/Yen DOWN

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

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

3h Oil DOWN 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 +.41%/Italian 10 yr bond yield DOWN to 2.55% /SPAIN 10 YR BOND YIELD DOWN TO 1.35%

3j Greek 10 year bond yield RISES TO : 4.48

3k Gold at $1294.75 silver at:16.45   7 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50

3l USA vs Russian rouble; (Russian rouble UP 23/100 in roubles/dollar) 61.59

3m oil into the 65 dollar handle for WTI and 75 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 109.49 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning 0.9842 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1539 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 +0.41%

The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”. Next step for Greece will be the recapitalization of the banks and that will be difficult.

4. USA 10 year treasury bond at 2.91% early this morning (THIS IS DEADLY TO ALL MARKETS). Thirty year rate at 3.05%

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

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

“Glass Half Full” Markets Jump, Ignoring

Renewed Global Trade War

Where previously the threat of renewed trade war between the US, also known as the “+1” in this weekend’s meeting of G6+1 nations, and EU, Canada, Mexico, and of course, China, would have been sufficient to pummel futures and stocks, today stocks are approaching life with a “glass half full” approach, and global markets and US equity futures are green across the board.

There were two key factors for today’s bout of optimism: i) the return of the US-North Korea summit on June 12 and ii) Friday’s strong (pre-tweeted) US payrolls report, which surprised to the upside and has put protectionist fears to the side, spurring Euro stocks and S&P futures to a gain after peers in Asia jumped. Treasuries slipped alongside the dollar, while the pound and euro rose.

Helping sentiment was the continued sharp drop in Italian yields, with both the Italian 2Y spread to German bunds..

… as well as the 10Y sliding to levels far below last week’s crisis highs.

“NFP was good” and it helped boost investors’ risk appetite in Asian trading, said Kapstream Capital money manager Raymond Lee in Sydney. “After markets and risk assets got constructive again, the yen sold off”

Europe’s Stoxx 600 Index jumped (0.5%) as every industry group traded in the green, with utility companies leading the way as markets continue to digest Friday’s NFP report and the rescheduling of the NK-US summit on June 12th, thus outweighing the lingering trade concerns which saw the US and China fail to reach an agreement over the weekend, albeit both parties stated that progress had been made. The IBEX (+1.2%) is the outperformer amid positivity on the domestic political front. The FTSE MIB is fluctuating between positive and negative as political uncertainty in the region is leading to volatile trade. Utilities are currently outperforming with Iberdrola leading the sector (+3.0%) after an upgrade at Goldman Sachs.

Earlier in the session, Asia equity markets started the week higher across the board with the MSCI Asia Pacific Index surging 1.3% even as China warned it will withdraw from commitments it made on trade if President Donald Trump carries out a separate threat to impose tariffs on the Asian country; instead traders found support in the abovementioned double-dose of optimism from strong jobs data and after US President Trump confirmed the summit with North Korea will go ahead as initially planned in Singapore on June 12th. ASX 200 (+0.5%) and Nikkei 225 (+1.4%) were both positive from the get-go with CYBG shares leading the advances in Australia after the Co. sweetened its merger bid for Virgin Money, while the Japanese benchmark was among the outperformers as it coat-tails on a weaker currency. Hang Seng (+1.3%) and Shanghai Comp. (+0.2%) also conformed to the broad upbeat sentiment following a net liquidity injection by the PBoC and amid reports that China widened the collateral for its Medium-term Lending Facility which will include qualified credit bonds.

In the US, S&P 500 futures are up roughly 10 points, and point to an extension of Friday’s advance. The 10-year Treasury yields traded above 2.90% even as the USD slid.

In macro and FX markets, safe-havens were under strain in which JPY took the brunt of the heightened risk appetite which saw USD/JPY and JPY-crosses extend Friday gains, with the yen and the dollar weakening against most major peers as demand for haven assets faded now that Italy and Spain are fixed again, if only for the next few hours, and Asian stocks rallied following Friday’s better-than-expected U.S. payrolls data. After rising 7 consecutive weeks, the Bloomberg Dollar Spot Index fell 0.4% to start the week.

The euro reversed its decline from Friday and retested the $1.17 handle boosted by unwinds versus the yen and the Swiss franc, as demand for haven assets wilted; the Aussie jumped on purchases against the yen and was later boosted further by stronger-than-expected local retail sales data, while Scandinavian currencies benefited from the improved risk sentiment. The Turkish lira advanced after a surge in inflation (CPI soared 12.15% from 10.85% last) spurred speculation the central bank will raise rates this week The Aussie jumped on purchases against the yen and was later further boosted by stronger than expected local retail sales data. AUD/JPY rallied 0.6% to 83.435 while EUR/JPY rose 0.3% to surpass Friday’s high of 128.14.

Still, as Bloomberg notes, with concerns about the euro area somewhat assuaged and emerging markets settling down after the recent sell-off, attention may yet turn back to trade. The G-7 meets in Quebec later this week, with the European Union and Canada threatening retaliatory measures unless Trump reverses course on new steel and aluminum levies. Trump will be present at this meeting.

“There is a lot of to-ing and fro-ing which so far hasn’t led to the imposition of some of these threatened tariffs, but I think the tit-for-tat and the possibility that this will start to gain unwanted momentum is very important to the markets,” John Wraith, head of U.K. macro rates strategy at UBS Group AG, told Bloomberg Television. “That said, it’s somewhat of a slow burner, it takes time to have an impact and issues like the situation on the Korean Peninsula and recently the Italian political situation, they have more immediate impact.”

For those who missed the latest trade developments, over the weekend US Commerce Secretary Ross travelled to Beijing for the 3rd round of trade talks with China which ended without a deal. However, there were comments by Ross that meetings were friendly and frank, while China commented that they have made concrete progress but warned any action by US to impose punitive tariffs would derail the negotiations. White House Economic Advisor Kudlow stated that Canadian PM Trudeau’s response to the US tariffs on steel and aluminium was an overreaction, while he added the tariffs may last a while or not which is subject to negotiations and that he views the issue as more of a family quarrel. Meanwhile,  Canada launched WTO and NAFTA cases on US metal tariffs.

In geopolitics, weekend reports suggested North Korea could have faked detonation of its nuclear test site last month, as it cited dust from explosions and journalists being 500 metres from the explosion which indicates small blasts. US officials reported that North Korea’s top three military officials have been replaced.  Syrian President Assad plans to visit North Korea to meet with Kim Jong Un.

Elsewhere, WTI crude edged lower, sliding below the 100DMA for the first time since September, amid speculation OPEC may phase out supply cuts at a time when American shale continues to surge. WTI (-0.7%) and Brent (-1.4%) prices have thus far failed to significantly rebound from the losses seen at the back end of last week after shedding more than 9.9% from the multi-year high levels, while the unofficial OPEC+ meeting during the weekend also continued to signal an unwillingness to ease restrictions. Prices were also subdued by the weekly Baker Hughes rig count showing an increase of 2 oil rig. Elsewhere, gold (+0.1%) is uneventful while shanghai copper hits highs of more than six weeks, underpinned by a marginally softer dollar and labour negotiations at the world’s largest copper mine. Dalian iron ore however fell almost 2% as it moved in tandem with steel prices amid the iron ore stockpiles at China’s port surging to record levels.

Economic data include orders for durable goods. Palo Alto Networks, Dell Technologies are among companies reporting earnings. ECB Governing Council member Ewald Nowotny, Bank of England policy maker Silvana Tenreyro speak.

As we first mused over the weekend, and UBS did this morning, Trump has so far not tweeted an advance preview of this morning’s durable goods number.

zerohedge@zerohedge

UBS: “US durable goods and capital spending data is due today. US President Trump has not tweeted anything about these numbers – that might be a signal that the data is bad, or it might be that the president was distracted and tweeting about other things”

Bulletin headline summary from RanSquawk

  • European equities are positive (Stoxx 600 +0.6%) as markets continue to digest Friday’s NFP report and the rescheduling of the NK-US summit on June 12th
  • US Commerce Secretary Ross travelled to Beijing the past weekend for the 3rd round of trade talks with China which ended without a deal
  • Looking ahead, highlights include US factory orders, ECB’s Nowotny and BoE’s Tenreyro

Market Snapshot

  • S&P 500 futures up 0.3% to 2,742.75
  • STOXX Europe 600 up 0.5% to 388.66
  • MXAP up 1.3% to 174.42
  • MXAPJ up 1.2% to 571.60
  • Nikkei up 1.4% to 22,475.94
  • Topix up 1.5% to 1,774.69
  • Hang Seng Index up 1.7% to 30,997.98
  • Shanghai Composite up 0.5% to 3,091.19
  • Sensex down 0.3% to 35,139.80
  • Australia S&P/ASX 200 up 0.6% to 6,025.55
  • Kospi up 0.4% to 2,447.76
  • German 10Y yield rose 0.5 bps to 0.391%
  • Euro up 0.4% to $1.1708
  • Brent Futures unchanged at $76.79/bbl
  • Italian 10Y yield fell 10.4 bps to 2.422%
  • Spanish 10Y yield fell 7.8 bps to 1.363%
  • Brent Futures unchanged at $76.79/bbl
  • Gold spot up 0.03% to $1,293.83
  • U.S. Dollar Index down 0.3% to 93.90

Top Overnight News from Bloomberg

  • President Trump is headed for a showdown with America’s allies at a G-7 summit this week in Quebec, with the EU and Canada threatening retaliatory measures unless he reverses course on new steel and aluminum levies
  • China is reaching out to Europe with pledges to improve market access for companies in a charm offensive that contrasts with Trump’s escalation of trade disputes worldwide
  • North Korea will get relief from international sanctions only when it has shown irreversible moves toward denuclearization, U.S. Secretary of Defense Mattis said ahead of a summit next week between President Trump and North Korean leader Kim Jong Un
  • Three days after being sworn in, Italy’s new populist government is preparing for one final hurdle before it sets about trying to overhaul EU rules and the established order: a confidence vote in both houses of parliament
  • China’s fast-growing dollar-bond market is facing a fresh test as investors that counted on a type of credit-protection pledge seldom seen elsewhere find out just what those promises actually mean
  • After a mid-May pause, the curve-flattening phenomenon that dominated the Treasuries market for months has roared back. The gap between yields on two- and 10-year notes shrank to as little as 40 basis points last week, the smallest since 2007, as traders rebuilt bets on Fed rate hikes
  • Gilts had a stellar month in May and could be headed for an encore in June. Last month’s rally came after investors pared bets for a rate increase by the BOE this year on concerns about a grimmer outlook for the economy
  • Japan’s life-insurance companies increased hedging of euro-denominated assets in the six months through March as the cost of doing so became cheaper
  • Companies looking to sell euro debt after a near-market shutdown may find that last week’s volatility has stoked growing assertiveness among once-acquiescent bond buyers
  • Brexit is back this week as lawmakers return from their recess. U.K. Prime Minister Theresa May has some important decisions to make on what kind of future customs relationship she will formally pitch to the European Union ahead of a key summit at the end of the month

Asian equity markets began the week higher across the board as the region got a double-dose of optimism from stronger than expected US NFP jobs data and after US President Trump confirmed the summit with North Korea will go ahead as initially planned in Singapore on June 12th. ASX 200 (+0.6%) and Nikkei 225 (+1.4%) were both positive from the get-go with CYBG shares leading the advances in Australia after the Co. sweetened its merger bid for Virgin Money, while the Japanese benchmark was among the outperformers as it coat-tails on a weaker currency. Hang Seng (+1.7%) and Shanghai Comp. (+0.5%) also conformed to the broad upbeat sentiment following a net liquidity injection by the PBoC and amid reports that China widened the collateral for its Medium-term Lending Facility which will include qualified credit bonds. Finally, 10yr JGBs were lacklustre amid a similar performance in T-notes and with demand subdued by risk appetite, while the BoJ’s Rinban announcement also failed to support as the central bank maintained its purchase amounts across the curve. PBoC injected CNY 20bln via 7-day and CNY 20bln via 28-day reverse repos for a net daily injection of CNY 20bln

Top Asian News

  • Japan’s Finance Minister to Forego One Year’s Pay Over Scandal
  • China Banks’ Waning Demand Suggests More Corporate Bond Defaults
  • Penny-Pinching Imbibers Fuel Higher Alcohol Drinks in Japan
  • China and Hong Kong Shares Advance as Property Developers Rally

European equities are positive (Stoxx 600 +0.6%) as markets continue to digest Friday’s NFP report and the rescheduling of the NK-US summit on June 12th, thus outweighing the lingering trade concerns which saw the US and China fail to reach an agreement over the weekend, albeit both parties stated that progress had been made. The IBEX (+1.8%) is the outperformer amid positivity on the domestic political front. The FTSE MIB is fluctuating between positive and negative as political uncertainty in the region is leading to volatile trade. Utilities are currently outperforming with Iberdrola leading the sector (+3.3%) after an upgrade at Goldman Sachs. M&A news is in focus, primarily with Accor’s interest in an Air France KLM (+7.0%) stake. Additionally Bayer announced a EUR 6bln cash call for the June 7thMonsanto acquisition. Finally, there were rumblings that Unicredit (+0.5%) and SocGen (+2.0%) were considering a merger; this was denied by SocGen, however.

Top European News

  • CYBG Ups Virgin Money Offer With Bigger Share in Merged Bank
  • Latvian Central Bank Nominates Swedbank’s Kazaks for Board
  • Intrum, Kingfisher, Getinge, Lagardere Short Sellers Active
  • Euro Calls and Puts in Limbo as Italy, NFP Offer Little Impetus

In FX, the dollar index is pivoting 94.000 having failed to derive any lasting benefit from Friday’s strong NFP release, as the key wage component continues to lag.  AUD was the clear G10 outperformer on several bullish/supportive factors, including overnight data in the form of retail sales, company profits and Q1 business inventories that all exceeded expectations. Coupled with broadly risk-on sentiment on the back of Friday’s upbeat US jobs report and geopolitical news (June 12 summit between US and NK back on track), which offset another US-China summit ending without anything tangible in terms of import tariff trade-offs, Aud/Usd has finally established a firmer foothold above 0.7600 and breached chart resistance through 0.7605-13 incorporating the 50 DMA (0.7610). Aud buyers are now testing 0.7643- 60 that encompasses a key Fib and a chart channel, but the bout of strength may not be greeted with enthusiasm by the RBA on Tuesday given recent policy statements highlighting the adverse impact of a strong currency on the growth, wage and inflation outlook. Note, the latest GDP update follows hot on the heels of the RBA policy meeting on Wednesday. JPY Usd/Jpy nearer the base of a 109.45-75 band, with offers seen above 109.90 according to market observers and big option expiries also keeping the headline pair in check (1.7 bn at the 110.00 strike vs 1.4 bn between 108.90-109.05). TRY Off worst levels prompted by Moody’s ratings downgrade alert for Turkey as a pick up in inflations underpins CBRT rate hike prospects for this Thursday. Usd/Try near the base of 4.6780-5940 trading parameters.

In commodities, WTI (flat%) and Brent (-0.2%) prices have thus far failed to significantly rebound from the losses seen at the back end of last week after shedding more than 9.9% from the multi-year high levels, while the unofficial OPEC+ meeting during the weekend also continued to signal an unwillingness to ease restrictions. Prices were also subdued by the weekly Baker Hughes rig count showing an increase of 2 oil rig. Elsewhere, gold (flat) is uneventful while shanghai copper hits highs of more than six weeks, underpinned by a marginally softer dollar and labour negotiations at the world’s largest copper mine. Dalian iron ore however fell almost 2% as it moved in tandem with steel prices amid the iron ore stockpiles at China’s port surging to record levels.

It’s a fairly quiet start to the week with final April factory, durable and capital goods orders in the US. The ECB’s Nowotny is due to speak in the afternoon at a conference in Vienna. EU Trade Commissioner Malmstrom is also due to participate in the UN Conference on Trade and Development in Geneva, while votes of confidence on the new Italian government is expected to happen early this week. Elsewhere, the ECB’s Nowotny and BOE’s Tenreyro are due to speak.

US Event Calendar

  • 10am: Factory Orders, est. -0.5%, prior 1.6%; Factory Orders Ex Trans, prior 0.3%
  • 10am: Durable Goods Orders, prior -1.7%; Durables Ex Transportation, prior 0.9%
  • 10am: Cap Goods Orders Nondef Ex Air, prior 1.0%; Cap Goods Ship Nondef Ex Air, prior 0.8%

DB’s Jim Reid concludes the overnight wrap

Wow. What a week we saw last week. My 33-month old Maisie has just learnt the word boring and now says it all the time. So at the moment I’d guess she’d be the only person on the planet to have found last week’s wild ride in BTPs dull. To recap Italian 2 and 10 year bonds rose 54.8bp (to 1.01%) and 21.3bps (to 2.64%) over the week, but the 2y traded in a range of 0.25% to 2.76% from intra-day lows to highs last week. To cut a long story short the market was at its lows when it thought that fresh elections were likely. The concern being that the populists would use the President’s refusal to sign off on proposed finance minister Savona as a lightening rod for even more support and perhaps a firming of extreme views on Euro membership. However we rallied back as all sides got back round the negotiating table and an alternate FM nominee found. As such it feels like we go back to this being more of a slow  burning clash between the new government and the EU over immigration, Italy’s budget and the general direction of the Eurozone. The budget is set to be delivered on September 20th so whether the market can sustain perpetual interest in this story between now and then probably depends on how strong the rhetoric of the new administration is.

Staying with Italy, the new Interior Minister and League Party Leader Salvini travelled to Sicily over the weekend and told his supporters that “Italy and Sicily cannot be Europe’s refugee camp” and illegal immigrants to “pack their bags”. Meanwhile, the 5Star Leader Di Maio has told reporters from Ansa that one of his first measures will be a guaranteed income for poorer Italians, while he also indicated that the prior administrations’ 2015 labour reforms – “the Jobs Act must be reviewed” without elaborating more. Elsewhere, the latest Ipsos poll suggests more balanced support between the two populist parties, with support for the League Party growing to 28.5% vs. 17.4% of votes received in  the March 4 election, while support for 5Star fell to 30.1% from 32.7%.

Moving along, one of the most interesting side stories last week was the flight to quality into bunds in a week where German HICP inflation printed at 2.2% yoy vs 1.8% expectations. Clearly if Italy implodes over the next few months the move is fair enough. However if it doesn’t, this could go down as a once in a generation opportunity to short bunds. If you think this is hyperbole, a reminder that we published a quick note (see link ) last week showing that the gap between German yields and inflation was getting back to the highest on record with data stretching back to the 1950s. So maybe we should have said ‘once in 3 generations’.

Turning now to the US / China trade talks over the weekend, which didn’t seem to go that smoothly. After the talks, China’s Xinhua agency warned “if the US introduces trade sanctions including raising tariffs, all the economic and trade achievements negotiated by the two parties will be void”. On the other side, Commerce Secretary Ross said “our meetings so far have been friendly and frank, and covered some useful topics about specific export items” without elaborating more. DB’s Zhiwei Zhang and team believes if the US decides to impose tariff on the US$50bn Chinese exports on June 15, they think China will retaliate with tariffs on US exports of similar value. Overall, this would be a clear escalation of the trade war with significant impact on the Chinese and global economy. China would likely have to loosen fiscal policy and boost investment growth, halt the deleveraging process, and potentially loosen control over the property sector as well. In their view, such policy measures would help to keep the economy stable in the short term, but worsen macro risks in the longer term.

Following on with trade, the G7 meetings over the weekend also didn’t seem to reach tangible agreements. The G7  Finance Ministers did request that US Treasury Secretary Mnuchin communicate their “unanimous concern and disappointment” regarding the US imposing steels tariffs on its allies, with the Canadian Finance Minister Morneau indicating “decisive action” is needed at a Leaders’ summit this week in Quebec. Meanwhile Germany’s Economy Minister Altmaier said the EU will present retaliatory tariffs on the US within the next two weeks, while French Finance Minister Le Maire left the door open for more talks as he noted “we want to avoid a trade war, but everything is ready” and “we still have a few days to avoid an escalation”. So lots bubbling along.

This morning in Asia, markets have shrugged off trade and G7 tensions and are trading higher following the positive US lead from Friday, with the Nikkei (+1.29%), Hang Seng (+1.24%), Kospi (+0.28%), and Shanghai Comp. (+0.25%) all up as we type. Meanwhile, the yield on UST 10y is up c1bp while futures on the S&P are marginally up.

Now recapping performance from Friday. The S&P rose +1.08% after the above market US employment report lifted optimism about the US economy, while the Stoxx 600 also firmed +1.01% following reduced political uncertainty in Italy and Spain. The Nasdaq (+1.51%) and Italian banks outperformed while the VIX fell 12.8% to close modestly higher for the week (13.46). In government bonds, core 10y bond yields climbed 4-5bp (UST & Bunds +4.4bp; Gilts +4.9bp) while Italian BTPs and Spanish bonds both rallied with yields down 6-11bp. Meanwhile, the US dollar index firmed for the first time in three days (+0.19%) while the Euro weakened -0.29%. Elsewhere, WTI oil extended losses to be $65.81/bbl (-1.8%; -3.1% for the week).

Over in Spain on Saturday, the Socialist Leader Mr Sanchez was sworn in as the new PM after he won a no confidence vote against the incumbent PM Rajoy. DB’s Marc de-Muizon believes a Sanchez-led government would be a pro-EU government with new elections unlikely to occur until later in 2019. Overall, Marc believes Sanchez will likely try to facilitate dialogue over the Catalan situation. However, he would have little ability to either push for reforms or cancel previous reforms. Meanwhile, on a fiscal basis, Sanchez will likely remain very close to what was defined by the latest budget passed by Rajoy (Link) Moving onto geopolitics and North Korea. Back on Friday, President Trump has confirmed his summit with NK’s Kim Jong Un is now back on, although the Secretary of Defense Mr Mattis has warned that “we can anticipate at best a bumpy road to the negotiations” while reaffirming that NK “will receive relief only when it demonstrates verifiable and irreversible steps to denuclearisation”.Meanwhile, Yonhap has reported that Kim has replaced three of his top military officials, which was later confirmed by unnamed US officials to Reuters. US officials believe there was some dissent in the military regarding Kim’s approach to the US.

Back to Italy, this morning Michal in my team published the report “Assessing Contagion from Italy to Corporate Credit” in which he analysed the intensity of contagion across various parts of the credit market, from vanilla bonds to AT1s to derivatives. He notes that while contagion to most of credit has been limited so far, the system remains vulnerable to any rise in perceived Eurozone break-up risks which should keep vol. and spreads elevated until there is more clarity about Italy’s politics and stance towards Europe.

Before we take a look at today’s calendar, we wrap up with other data releases from Friday. In the US, the macro data releases were broadly stronger than expectations. The May change in nonfarm payrolls was above market at  223k (vs. 190k expected) while the six-month average gain was also solid at 202k. In the details, employment in the service sector rose the most since February (+171k), while solid gains were also recorded in the manufacturing and construction sectors. The average hourly earnings growth beat at 2.7% yoy (vs. 2.6% expected), to just below the January high of 2.8%. Meanwhile, the May unemployment rate edged down 0.1ppt to 3.8% (vs. 3.9% expected), which now joins April 2000 as the lowest unemployment rate since 1969. Elsewhere, the May ISM manufacturing was also above expectations at 58.7 (vs. 58.2 expected) with the prices paid index now at the highest since April 2011 (79.5 vs. 78 expected). The final reading of May’s manufacturing PMI was also revised 0.2pt lower to 56.4. Following the above, the Atlanta Fed’s estimate of Q2 GDP growth has edged up a 0.1ppt to 4.8% saar, while the NY Fed’s estimate was revised up 0.3ppt this week to 3.3% saar.

In Europe, the final readings for the May manufacturing PMIs were broadly in line. The Euro zone’s PMI was confirmed at 55.5 while Germany was revised up 0.1pt to 56.9 and France down to 54.4 (vs. 55.1 expected). Meanwhile, for flash PMIs, Italy was slightly below expectations to an 18-month low of 52.7 (vs. 53 expected) while the UK’s print was above market and rose for the first time since last November (54.4 vs. 53.5 expected). The final reading for Italy’s 1Q GDP was confirmed at 1.4% yoy.

As for this week, it’s a classic quiet post-payroll week with the data highlights being the final European May PMIs (services and composite) also due on Tuesday including a first look at the non-core and UK.

What to look out for today: It’s a fairly quiet start to the week with the most significant data releases being the May construction PMI in the UK, along with the June Sentix investor confidence and April PPI report for the Euro area, and final April factory, durable and capital goods orders in the US. Away from that the ECB’s Nowotny is due to speak in the afternoon at a conference in Vienna. EU Trade Commissioner Malmstrom is also due to participate in the UN Conference on Trade and Development in Geneva, while votes of confidence on the new Italian government is expected to happen early this week. Elsewhere, the ECB’s Nowotny and BOE’s Tenreyro are due to speak.

END

3. ASIAN AFFAIRS

i)MONDAY MORNING/SUNDAY NIGHT: Shanghai closed UP 16.05 points or 0.52%   /Hang Sang CLOSED UP 505.07 points or 1.66%    / The Nikkei closed UP 304.59 POINTS OR 1.37% /Australia’s all ordinaires CLOSED UP .57%  /Chinese yuan (ONSHORE) closed UP at 6.4042/Oil DOWN to 65.38 dollars per barrel for WTI and 75.72 for Brent. Stocks in Europe OPENED ALL GREEN /.  ONSHORE YUAN CLOSED UP AT 6.4042 AGAINST THE DOLLAR. OFFSHORE YUAN CLOSED UP ON THE DOLLAR AT 6.3961/ONSHORE YUAN TRADING WEAKER AGAINST OFFSHORE YUAN/ONSHORE YUAN TRADING STRONGER AGAINST USA DOLLAR/OFFSHORE YUAN TRADING MUCH STRONGER 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

3 b JAPAN AFFAIRS

end

c) REPORT ON CHINA/HONG KONG

CHINA/USA

Mattis warns that there will be consequences as Beijing continues to weaponize the Spratly Islands in the South China Sea which is located in international waters

(courtesy zerohedge)

Mattis Warns Of “Consequences” If Beijing Continues

Weaponizing The South China Sea

The United States and China appear to be headed for a military collision in the Southeast Asia region, as Washington warns of a more powerful military response to the increased weaponization of the heavily disputed islands in the South China Sea.

Speaking at the IISS Shangri-La Dialogue, a civilian and military defense summit in Singapore, U.S. Secretary of Defense James Mattis blasted Beijing Saturday morning for the militarization of artificial islands in the South China Sea and warned there could be “much larger consequences” in the near term.

IISS Shangri-La Dialogue 2018 – James N. Mattis delivers opening plenary speech. (Source: IISS) 

“There are consequences that will continue to come home to roost if China does not find a way to work more collaboratively with nations that have interests in the disputed region,” Mattis said, while he addressed ministers and high-ranking delegates from over 50 countries. During the entirety of the speech, Mattis did not define what exactly those consequences would be.

The Wall Street Journal said Mattis’ warning to Beijing, was in direct response to a question from an audience member, which he responded by saying, “despite China’s claims to the contrary, the placement of these weapons systems is tied directly to military use for the purposes of intimidation and coercion,” adding that “China’s militarization of the Spratlys is also in direct contradiction to President Xi Jinping’s 2015 public assurances in the White House Rose Garden that they would not do this.

IISS Shangri-La Dialogue 2018 – James N. Mattis delivers opening plenary speech. (Source: IISS) 

Beijing’s deployment of anti-ship cruise missiles, radar-jamming equipment, and strategic bombers to the disputed islands have dramatically increased geopolitical tensions around the region. Mattis said such action forced Washington to rethink its “cooperative stance” and disinvite China from the biennial Rim of the Pacific military exercise, expected to start in June.

Mattis acknowledged that Beijing’s penalty for militarization in the disputed islands has been relatively small, considering the vast amounts of global shipping lanes that pass by the islands.

The defense secretary added, “I believe there are much larger consequences in the future when nations lose the rapport of their neighbors when they believe that piling mountainous debts on their neighbors and somehow removing the freedom of political action is the way to engage with them.”

U.S. Dept of Defense

@DeptofDefense

Mattis discusses US leadership and security challenges during the June 2. The Dialogue, held by the @IISS_org, is an inter-governmental security forum attended by defense ministers and delegates from more than 50 nations.

There is a reason to believe that Mattis is referring to China’s One Belt One Road Initiative where Beijing has used large amounts of debt to gain political leverage over developing countries for infrastructure projects.

“Eventually these things do not pay off, even if on the financial ledger sheet, or the power ledger sheet they appear to,” he said. “It’s a very shaky foundation when we believe that militarizing features are somehow going to endorse their standing in the world.”

James Mattis: US leadership and the challenges of Asia-Pacific security

The Trump administration recently replaced the term “Asia Pacific” with “a free and open Indo-Pacific.” It is a symbolic move that recognizing the growing importance of the Indian Ocean.

“Our Indo-Pacific strategy informs our relationship with China,” Mattis said. However, “China’s policy in the South China Sea stands in stark contrast to the openness of our strategy,” he continued.

Last Sunday, we reported that the U.S. Navy conducted its “freedom of navigation” patrols near the heavily disputed islands to demonstrate the right to sail through those international waters.

“We did not do freedom of navigation for America alone,” Mattis said.

“We do freedom of navigation, give freedom for all nations, large and small, that need to transit those waters for their own prosperity and they have every reason to do so,” he added.

Senior Col. Zhao Xiaozhou, of the People’s Liberation Army’s, hinted in a question to Mattis that the U.S. Navy’s recent freedom of navigation around the islands could be defined as militarization

“Mattis’ speech was negative,” Zhao said in an interview afterward.

“If China’s islands and reefs are continuously threatened by activities under the name of so-called freedom of navigation, China will eventually station troops on these reefs.”

China was the most spoken topic at the conference, even though President Trump and North Korean leader Kim Jong Un are scheduled to meet and greet on June 12.

Mattis failed to explain what exactly the next round of consequences would be, however, he did offer a reminder that an emerging market crisis is brewing in China. As for the military collision between Beijing and Washington, well, it could be very possible that China’s debt bomb explodes first – then war.

And President Trump appears surprised by the actions of his “close friend” Xi…

Donald J. Trump

@realDonaldTrump

Very surprised that China would be doing this? https://twitter.com/nytimes/status/1002760314734170113 

end

The trade war with China is not on hold and Beijing warns Trump that all successful negotiations in the past few weeks will now be off the table if the USA imposes tariffs

(courtesy zerohredge]

“This Is A Red Line”: Beijing Warns Trump Trade Deal Is Off If US Imposes Tariffs

In a scathing editorial warning Trump to back off on his latest tariff threat, on Sunday China said that any trade deals between the US and China, and any progress and commitments made so far in bilateral negotiations would be withdrawn if President Donald Trump follows through with this threat.

“If the U.S. rolls out trade measures including tariffs, all the agreements reached in the negotiations won’t take effect,” the state-run Xinhua News Agency reported this morning, citing a statement from the Chinese team that met with a U.S. delegation led by Commerce Secretary Wilbur Ross, which arrived in China overnight.

US trade delegation led by Commerce Secretary Wilbur Ross is in China to discuss bilateral trade relations, June 2-3

Separately, China has continued to express growing frustration with the tactics deployed by the White House, and an editorial in the nationalist, state-run tabloid Global Times said that “the U.S. can’t have its cake and eat it too,” adding that the U.S. “needs to choose between tariffs and exporting more to China.”

China’s anger is the result of Trump’s revival of the simmering trade war between the two superpowers after Trump last week unveiled a plan to slap tariffs on $50 billion of Chinese imports, casting into doubt ongoing trade discussion about how to reduce China’s $375 billion goods-trade surplus with the U.S.

As Bloomberg clarifies, the Xinhua report came out on Sunday after Ross met with Chinese Vice Premier Liu He for talks that Ross called “friendly and frank, and covered some useful topics about specific export items.” At the same time as negotiators focus on technical steps to reduce the U.S. deficit, Trump’s aggressive reversals have rattled Beijing as it raises concerns about the possibility that any agreement made could be simply torn up by the president.

“China is concerned over the U.S.’s unpredictability, especially after Trump turned an about-face on tariffs,” said Gai Xinzhe, an analyst at Bank of China’s finance institute in Beijing. “Trump needs to give out more goodwill in exchange for really productive negotiations. Bluff, threat, and willful moves might work in business bargaining, but they could backfire in talks among nations.”

Meanwhile, suggesting that all the progress achieved over the past two months in trade negotiations would be lost if Trump follows though with tariffs, a commentary by state-run China Radio International said that the government’s stance on canceling any agreements reached in the talks if Trump’s tariffs go into effect was a “red line.

Meanwhile, the negotiations continue. According to Bloomberg, the Ross-led U.S. delegation, which was in Beijing for two days, included energy and agriculture experts, reflecting the U.S. desire to increase exports of natural gas and food.

On the Chinese side, officials including Commerce Minister Zhong Shan, Central Bank Governor Yi Gang, Vice Agricultural Minister Han Jun, and Li Fanrong, vice minister of national energy administration, accompanied Liu in the talks, according to a media pool report.

During his visit, Ross has been looking to build on a vague joint statement released May 19, after negotiations in Washington. China pledged then to take steps to “substantially” reduce the U.S. trade deficit, including by buying more American farm goods and energy, though it didn’t commit to a dollar amount. However it now appears there was again no formal conclusion or announcement of “success” following this latest 2-day blitz.

Ross, meanwhile, finds himself torn, and under pressure from U.S. lawmakers to stay tough on Chinese telecom-equipment maker ZTE Corp even as Trump has said he is willing to forego sanctions against the company in exchange for a large fine and management changes, as well as China’s greenlighting the NXP-Qualcomm deal. Republican Senator Marco Rubio and other lawmakers from both parties have questioned Trump’s leniency toward ZTE, arguing the company represents a security risk.

As Bloomberg adds, the stakes remain high for the global economy, and any collapse in trade talks could lead to a sharp slowdown in the global economy which is “cruising at its fastest pace of growth in seven years.” But the International Monetary Fund has warned that a trade war could threaten the recovery, and policy makers are contending with a growing list of geopolitical risks, from a political crisis in Italy to the rocky progress of peace talks with North Korea.

The best summary of recent negotiations, however, comes from Goldman’s chief economist Jan Hatzius who overnight writes that less than two weeks after Trump Administration officials declared that the “trade war is on hold,” policy has shifted substantially. Following trade announcements over the last few days, the trade war does not appear to be “on hold” but simply “on.”

4. EUROPEAN AFFAIRS

ITALY/SATURDAY

Italy want to reject austerity and grow its economy by creating inflation which will make its debt less severe.  The coalition of the two parties will no doubt fight Brussels to spend its way out of their mess and they can just walk from the Euro.  As JPMorgan points out below, the cost to Italy will be small

(courtesy Raul Meijer/Automatic Earth Blog)

This Is Italy. This Is Not Sparta.

Authored by Raul Ilargi Meijer via The Automatic Earth blog,

“European Stocks Surge Celebrating New Spanish, Italian Governments”, says a Zero Hedge headline. “Markets Breathe Easier As Italy Government Sworn In”, proclaims Reuters. And I’m thinking: these markets are crazy, and none of this will last more than a few days. Or hours.

The new Italian government is not the end of a problem, it’s the beginning of many of them.

And Italy is far from the only problem. The new Spanish government will be headed by Socialist leader Pedro Sanchez, who manoeuvered well to oust sitting PM Rajoy, but he also recently saw the worst election result in his party’s history. Not exactly solid ground. Moreover, he needed the support of Catalan factions, and will have to reverse much of Rajoy’s actions on the Catalunya issue, including probably the release from prison of those responsible for the independence referendum.

Nor is Spain exactly economically sound. Still, it’s not in as bad a shape as Turkey and Argentina. A JPMorgan graph published at Zero Hedge says a lot, along with the commentary on it:

The chart below, courtesy of Cembalest, shows each country’s current account (x-axis), the recent change in its external borrowing (y-axis) and the return on a blended portfolio of its equity and fixed income markets (the larger the red bubble, the worse the returns have been). This outcome looks sensible given weaker Argentine and Turkish fundamentals. And while Cembalest admits that the rising dollar and rising US rates will be a challenge for the broader EM space, most will probably not face balance of payments crises similar to what is taking place in Turkey and Argentina, of which the latter is already getting an IMF bailout and the former, well… it’s only a matter of time.

And now Erdogan has apparently upped the ante once more yesterday. Last week he called on the Turkish population to change their dollars and euros into lira’s, last night he ‘suggested’ they bring in their money from abroad (to profit from ‘beneficial tax rules’). Such things have, by and large, one effect only: the opposite of what he intends. He just makes his people more nervous than they already were.

It’s June 1, and the Turkish elections are June 24. Will Erdogan be able to keep things quiet enough in the markets? It’s doubtful. He has reportedly already claimed that the US and Israel are waging an economic war on Turkey. And for once he may be right. A few weeks ago Erdogan called on all member states of the Organisation of Islamic Cooperation to boycott all Israeli products (and presumably America products too).

On April 30, the IMF warned that the Turkish economy is showing “clear signs of overheating”. On May 1, Standard & Poor’s downgraded the Turkish economy to double-B-minus. Economic war? Feels a bit more like a political war. Erdogan has three weeks left to win that election. Don’t expect things to quieten down before then. But as the graph above shows, Turkey itself is the problem here first and foremost.

Expect Erdogan to say interest rates -usury- are immoral in Muslim countries. Expect much more pressure from the west on him. Erdogan has also been busy establishing Turkish ‘enclaves’ in Syria’s Afrin territory (where he chased out the original population) and in the Turkish-occupied northern part of Cyprus (where he added 100s of 1000s of Turks).

No, the West wouldn’t mourn if the man were defeated in the vote. They can add a lot more pressure in three weeks, and they will. Will it suffice? Hard to tell.

Back to Italy. Where the optimism come from, I can’t fathom. The M5S-Lega coalition has never made a secret of its program and/or intentions. Just because pronounced eurosceptic Paolo Savona was shifted from Finance to EU minister doesn’t a summer make. New Finance minster Tria may be less outspoken than Savona, but he’s no europhile, and together the two men can be a woeful pain in Europe’s behind. This is Italy. This is not Sparta.

The essence of the M5S-Lega program is painfully simple: they reject austerity as the basics of economic policy. And austerity is all that Europe’s policy has been based on for the past decade at least. That spells collision course. And there is zero indication that the new coalition is willing to give an inch on this. Tsipras may have in Greece, but Italy’s sheer size means it has a lot more clout.

To begin with, the program wants to do away with the Eurozone’s 3% deficit rule. It speaks of a 15-20% flat tax, and a €780 basic income. These two measures would cost between €109 billion and €126 billion, or 6 to 7% of Italian GDP. As Italy’s public debt stand at €2.4 trillion, 132% of GDP.

“The government’s actions will target a programme of public debt reduction not through revenue based on taxes and austerity, policies that have not achieved their goal, but rather through increased GDP by the revival of internal demand,” the program says. Yes, that is the opposite of austerity.

The parties want a roll-back of previously announced pension measures to a situation where the sum of a person’s age and years of social security contributions reach 100. If someone has worked, and contributed to social security for 40 years, they will be able to retire at 60, not at 67 as the present plans demand.

In an additional plan that will make them very popular at home amongst the corrupt political class, the parties want to slash the number of parliamentarians to 400 MPs (from 630) and 200 senators (from 318). They would be banned from changing political parties during the legislature.

And then there are the mini-Bots, a parallel currency system very reminiscent of what Yanis Varoufakis proposed for Greece. Basically, they would allow the government to pay some of its domestic obligations (suppliers etc.) in the form of IOUs, which could then in turn be used to pay taxes and -other- government services. They would leave what is domestic, domestic.

There’s a lot of talk about this being a first step towards leaving the euro, but why should that be so? The main ‘threat’ lies in the potential independence from Brussels it may provide a country with. But it’s a closed system: you can’t pay with mini-Bots for trade or other international obligations.

Italy, like an increasing number of Eurozone nations, is looking for a way to get its head out of the Brussels/Berlin noose that’s threatening to suffocate it. If the EU doesn’t react to this, and soon, and in a positive manner it will blow itself up. Yes, if Italy started to let its debt balloon, the European Commission could reprimand it and issue fines. But the Commission wouldn’t dare do that. This is Italy. This is not Sparta.

Risk is ballooning.

end
A must read…
JPMorgan has come to the conclusion that an Ital-exit will be in Rome’s benefit.  Why? Italy can chose not to pay it’s target 2 imbalances of 426 billion euros because it also has good current account surplus as well as a good net investment benefit.  Italians own more foreign assets vs foreign liabilities.  Thus an exit will lower the value of the new “lira” which would sent its exports skyrocketing
(courtesy zerohedge)

JPMorgan’s Stunning Conclusion: An Italian Exit

May Be Rome’s Best Option

With Europe having a near heart attack last week, as Italian bond yields exploded amid deja vu fears that the new populist government would press the “Quitaly” button and threaten the EU with exiting the Eurozone in order to get budget spending concessions from Brussels, the discussion about Europe’s record Target2 imbalances quietly resurfaced after years of dormancy. And with €426BN, Italy has the highest Target2 deficit with the Eurosystem (Spain is a close second with €377BN) any discussion about an Italian euro exit raises concerns about costs.

After all, as JPMorgan reminds us, it was only a year ago, in January 2017,  that in a letter to European Parliament MPs, ECB President Draghi made the stunning admission that a country can leave the Eurozone but only if it settles its bill first,  or as Draghi said if a country were to leave the Eurosystem, its national central bank’s claims on  or liabilities to the ECB would need to be settled in full.”

By linking the Eurozone exit cost to Target2 balances, where Germany is on the other end with a receivable balance of nearly €1 trillion, Draghi “reminded” populist politicians in Europe that a euro exit or divorce would be difficult and even more costly relative to the past because of the continued rise in Target2 balances following the ECB’s QE program.

As the chart below shows, and as we and the BIS have discussed previously, due to QE induced cross border flows since 2015, Target2 balances have exploded since the launch of the ECB’s QE (and third Greek bailout in 2015), and surpassed the previous extremes from the depths of the euro debt crisis in the summer of 2012.

Here, it is worth noting that as the BIS explained last year, the Target2 balance deterioration since 2015 is different in nature than that seen during 2010-2012, it is not a merely technical consequence of QE but a reflection of investors’ preferences. At the time, during the 2010-2012 euro debt crisis period, the Target2 balance deterioration was driven by a loss of access to funding markets, inducing banks in peripheral countries to replace private sources of funding with central bank liquidity. However, since 2015 the rise in Target2 balances is more the result of the cross-border flows induced by investors’ response to QE. As JPM explains, “for example when the Bank of Italy, via its QE program, buys bonds from a German bank or a UK bank with an account in Germany, this flow causes a rise in Bank of Italy’s Target2 deficit and an increase in Bundesbank’s surplus. Or when the Bank of Italy buys bonds from a domestic investor but this domestic investor uses the proceeds to buy a foreign asset, then the Bank of Italy also builds up its liability with the Eurosystem. In both cases, the liquidity created by the Bank of Italy’s QE program does not stay within Italy, but leaks out to Germany or other jurisdictions.

Additionally, according to the ECB, the vast majority of bonds purchased by national central banks under the QE were sold by counterparties that are not resident in the same country as the purchasing national central bank, and roughly half of the purchases were from counterparties located outside the euro area, most of which mainly access the Target2 payments system via the Deutsche Bundesbank. In other words, due to investors’ preferences, the excess liquidity created by the ECB’s QE program since 2015 did not stay in peripheral countries, but leaked out to creditor nations such as Germany, which got flooded with even more liquidity.

Incidentally, this is precisely the opposite of what Mario Draghi described to policymakers and the general public was the stated intention of the ECB’s QE, which was meant to boost the periphery, not the core, as it was already benefiting thanks to the Euro’s fixed rate, effectively subsidizing core European exporters at the expense of peripheral nations desperate for external, or currency, devaluation.

In any case, the different nature of the Target2 balance deterioration since 2015 does not change that the fact that Target2 liabilities still represent a cost for a country exiting the euro, assuming of course that country intends to satisfy its unwritten contractual obligations.

In other words, Target 2 balances represent national central banks’ claims on or liabilities to the ECB that, according to Draghi, would need to be settled in full, and thus represented leverage that the Eurozone had over any potential quitters.

But, as JPM notes, this is where the controversy arises, because what if a departing country – most likely about to default on its external liabilities and already set to redenominate its currency – reneges on its Target2 liability? After all, not only are those intra-Eurosystem Target2 claims and liabilities uncollateralized, but any exiting country would have little to lose by burning all bridges with Europe when it gives up on using the “common currency.”

In this case, a euro exit by a debtor country would represent more of a cost to creditor countries such as Germany rather than to the exiting country itself. And, as shown in the chart above, Germany sure has a lot of implicit accumulated costs, roughly €1 trillion to be precise, as a result of preserving a currency union that allowed German exporters to benefit from a euro dragged lower by the periphery, relative to where the Deutsche Mark would be trading today.

But here the analysis gets slightly more complex, as Target2 does not provide the full picture of potential costs (or benefits, assuming a scorched earth approach).

As JPMorgan writes, the Target2 liabilities of a debtor country give only a partial picture of the cost to creditor  nations from that debtor country exiting. This is because Target2 balances represent only one component of the Net International Investment Position of a country, i.e. the difference between a country’s total external financial assets vs. liabilities.  The broader metric that one must use, is of the Net International Investment Position for euro area countries and is shown in the chart below. It shows that contrary to the Target2 imbalance, Italy leaving the euro would inflict a lot less damage to creditor nations than Spain leaving the euro.

This is because Spain’s net international investment liabilities stood at close to €1tr as of the end of last year, almost three times as large as its Target2 liabilities.In contrast Italy’s net international investment liabilities were much smaller and stood at only €115bn at the end of last year, around a quarter of its €426bn Target2 liabilities. This, as JPM explains, is because Italy has accumulated over the years more external assets than Spain and should thus be overall more able to repay its external liabilities.

In other words, while gross external liabilities are similar in Italy and Spain, from a net external liability point of view, an Italian euro exit should be a lot less threatening to creditor nations than a Spanish euro exit. That said, the assets and liabilities are not necessarily owned and owed by the same parties, meaning that one cannot ignore the nearly €3tr of gross liabilities of Italian residents to foreign residents.

Ironically, the surprisingly low net international investment liabilities of Italy are the result of the persistent current account surpluses the country has been running since the euro debt crisis of 2012, and smaller current account deficits compared to Spain before the crisis. The flipside is that the current account surplus – in theory – also makes it easier for a country like Italy to exit the euro relative to a current account deficit country.This is because the higher the current account deficit of a debtor country, the higher the cost of an exit for this country as the current account deficit would have to be closed abruptly following an exit. Similarly, the higher the current account surplus of a creditor country, the higher the cost of an exit, due to a potentially higher currency appreciation. On this metric Italy sits roughly in the middle as shown below.

Most importantly, this means that as a result of Italy’s decent current account surplus, from a narrow current account adjustment point of view, its own cost of a euro exit should be relatively small.

And it’s not only Italy. What is remarkable in the chart above is that, with the exception of Greece, all peripheral countries were running current account balances last year, a huge change from the large current account deficits of 2009-2010 before the emergence of the euro debt crisis. This is also shown in the next chart, which depicts this significant adjustment in the savings position of peripheral countries which effectively converged to that of core countries.

Besides Target2 and the current account, another important reflection of the improvement in the savings position of peripheral countries has been what JPMorgan calls the “domestication” of their government debt. On one hand, this represented by the sharp decline in foreign banks’ exposure to Italian debt.

The offset, of course, is that as foreign banks dumped their Italian exposure, one particular hedge fund stepped up and bought it all: the European Central Bank, and in doing so, it presented Rome with even more leverage over the ECB, which ironically is headed by an Italian.

1

Furthermore, the next chart shows that the domestication of Euro area government bond markets has been even more acute for peripheral banks, whose share of non-domestic non-MFI bonds has been hovering close to 15% in recent years vs. a peak of close to 40% in 2006.

Here, JPMorgan points out one curious implication from these government bond market ownership trends, which is often overlooked: debt relief via Private Sector Involvement (PSI) becomes a less attractive option for an indebted peripheral country when most of the bonds are held domestically.  In other words, it is less practical to default on your sovereign debt if you are screwing far fewer foreign creditors, and most impairing your own population.

As JPMorgan puts it, “this narrows the options that a country has in terms of adjusting its economy within a monetary union.

Here some big picture observations: within a monetary union, where currency depreciation and debt monetization are not possible – unless of course, there is divorce with said union – a country has effectively two options: default and internal devaluation.

Greece, for example,  has tried both: default via the Private Sector Involvement of 2012 and internal devaluation – i.e., collapsing wages, rising current account – via the Troika’s ongoing adjustment program.

And here things get interesting, because according to JPM calculations, the various Greek defaults, also known technically as Private Sector Involvements, provided a net debt relief to Greece of around €67bn or 33% of GDP (even though Greek debt/GDP still remains stratospheric and, as the IMF will remind on regular occasions, is unsustainable.

Applying the same haircut and PSI assumptions (i.e. only general government bonds are subjected to haircuts), the net debt relief to Italy from haircuts on non-domestic holders would be only €267bn or 15% of GDP. In other words, such a cost/benefit analysis of an effective default debt haircut suggests that a Greek-style PSI would be rather unattractive for Italy. Of course, one could imagine a wider restructuring than the Greek PSI, e.g. by including loans and regional or local government debt, but surely such an option would be more difficult to negotiate or keep voluntary and would present greater legal challenges. There are, of course, other far more structural challenges, namely that it is virtually impossible that what worked for Greece, will never work for Italy, where the associated numbers are orders of magnitude higher.

So with little to gain from a default, as indicated in the above analysis, Italy is left with just one adjustment option: internal devaluation. Unfortunately, as JPM calculates, this internal devaluation is not tracking well in the case of Italy. This can be seen in the chart below, which shows the changes in unit labor costs, current account balances
and unemployment rates since 2009.

It also shows that Greece and Ireland have made the biggest adjustment so far, i.e. biggest decline in unit labour costs and current account deficits, while Italy has instead seen a rise in unit labour costs since 2009. In other words, ten years since the Lehman crisis and six years since the euro debt crisis and Italy’s labour cost adjustment has not even begun, and if it does, it is safe to say that Rome faces a political crisis the likes of which it has not seen in a long time.

Putting this all together, the lack of any internal devaluation so far and the unattractiveness of a Greek style PSI leave limited options to Italy to adjust within the monetary union.

This, coupled with Italy’s massive Target2 imbalance which becomes an instant asset the moment the country decides to exit the Eurozoneand never repay itmuch to the chagrin of Mario Draghi, together with a decent current account surplus – one which would only soar should Italy revert to the lira supercharging the country’s exports, which as explained above reduces the own cost of exiting the euro from a narrow current account adjustment point of view, will likely continue to make the country vulnerable to populist pressures to exit the monetary union.

That is the gloomy, if stunning, JPMorgan conclusion, although as a hedge, the bank also notes that the road to Quitaly, as the Greek fiasco in 2015 showed all too clearly, would be anything but easy and neither Brussles nor the ECB would go down without a fight. JPMorgan also notes that the above take also ignores other potential costs from an exit highlighted by the market reaction this week, such as the possibility that it could trigger a broader crisis and, if the Greek script is repeated, capital controls.

Then again, if Italy ever got to the point where lines of panicked depositors form outside Italian banks a la Greek summer of 2015, one can wave goodbye to the euro and the European experiment

end

SUNDAY/ITALY

WAR ERUPTS BETWEEN THE ITALIAN GOVERNMENT AND SOROS WHOSE COMPANIES ARE FUNDING THE LANDING OF MIGRANTS.

(COURTESY ZERO HEDGE)

War Erupts Between Italy’s Government And Soros: “You Profited From The Death Of Hundreds Of People”

A feud has broken out between liberal billionaire activist and fervent Clinton supporter, George Soros, and Italy’s anti-immigrant League party, which on Friday formed a  populist movement in coalition with the 5-Star party, and whose leader Matteo Salvini stepped into his new job as Deputy Prime Minister and Minister of the Interior on Friday, pledging to deport hundreds of thousands of illegal immigrants.

Salvini’s League and the 5-Star Movement struck a deal Thursday on a coalition government which will work towards “putting Italians first” (and potentially making life for Europe a living hell with the ongoing threat of Quitaly, which according to JPMorgan may be Rome’s best outcome), ending five days of market volatility and political chaos.

In response, George Soros flipped out, openly suggesting that Salvini might be financed by Vladimir Putin, saying he is “very worried about Russia’s influence on Europe in general and on the new Italian government.”

Stefano Feltri

@StefanoFeltri

+++ George Soros : “gli italiani hanno diritto a sapere se Salvini è finanziato da Putin, io sono molto preoccupato per influenze russe “+++

I do not know if Salvini was funded by Moscow, but the public has a right to know” said Soros.

Soros translated: Any government who puts their citizens ahead of migrants is now a Putin puppet.

The League’s economics policy chief, Claudio Borghi hit back against Soros, stating (translated):

Soros worried by the Italian government? Then it means that we are going in the right direction… We understand that those who have speculated for years on the skin of immigrants, financing NGOs and smugglers to invade Italy.

The wind has changed for [Soros] and for all those who have profited from the deaths of hundreds of people.

Claudio Borghi A.

@borghi_claudio

BORGHI – LEGA: REPLICA A SOROS: “ IL VENTO È CAMBIATO, SE NE FACCIANO UNA RAGIONE COLORO CHE HANNO GUADAGNATO SULLA MORTE DELLE PERSONE “ http://www.agenziagiornalisticaopinione.it/?p=102936

borghi – Lega: replica a Soros: “ Il vento è cambiato, se ne facciano una ragione Coloro che hanno…

Governo: Borghi, vento cambiato. Soros se ne faccia una ragione “Soros preoccupato dal governo italiano? Allora significa che stiamo andando nella giusta direzione. Noi eravamo preoccupati quando in…

agenziagiornalisticaopinione.it

Soros also admits in Italy’s Corriere della Sera newspaper that the League’s growing influence is a reflection on “Europe’s flawed migration policies that imposed an unfair burden on Italy.” His solution? Instead of resettling the migrants, the EU needs to pay Italy.

“It follows from the voluntary principle that the problem … cannot be addressed by forced resettlement, but only by the EU financially compensating Italy for the migrants that land there,” wrote Soros, who also warned “There is a strong inclination in Europe to use the occasion [of the new government] to teach Italy a lesson … If the EU follows this line, it will dig its own grave by provoking a negative response from the Italian electorate, which would then re-elect Movimento 5 Stelle and Lega Nord with an increased majority.”

Italy is far from the first European nation to reject Soros’s open border ideology.

Most markedly, Hungary’s prime minister, Viktor Orbán, based his successful re-election campaign this year on attacking a supposed “Soros plan” to flood Hungary with Muslim migrants. In his opinion piece, Soros rubbishes the accusation as “false and ridiculous”.

He said: “Forcibly relocating [migrants] to other countries is neither possible nor desirable. Other countries, particularly Poland and Hungary, would strenuously resist … I have always advocated that the allocation of refugees within Europe should be entirely voluntary.” -The Guardian

Poland and the Czech Republic have also notably resisted Soros’s policies.

Ironically, the globalist establishment’s stiff resistance against Salvini and Europe’s populist wave (which on Sunday, swept across Slovenia where the anti-immigration SDS party soundly won the local elections) continues to backfire, and as Bloomberg reports, public support for the League strengthened as polls showed Salvini’s party narrowing the lead of its ally, the Five Star Movement, to less than 2%.

Support for the anti-immigrant League grew to 28.5 percent, compared with 17.4 percent of votes received in March 4 general elections, according to an Ipsos poll published Saturday in Italian newspaper Corriere della Sera. Luigi Di Maio’s anti-establishment Five Star saw its support fall slightly to 30.1 percent from 32.7 percent of ballots on March 4, according to the poll.

And with Italy set to send back hundreds of thousands of immigrants to neighboring liberal European countries, we can only wonder how an “enlightened” and “progressive” Europe will get along with their new migrant residents  the next time the global economy coughs up a hairball and people start to pay closer attention to where their tax dollars are going.

end

EU/USA/G7 meeting results

The G7 meeting did not go over well due to the tariffs initiated by the USA.  I think Trump is right.  He wants fairness.  If the uSA charges zero tariffs on European goods but the EU charges 25 to 50% on importing goods, that is not fair..he wants a perfectly balanced state of affaires

(courtesy zerohedge)

8. EMERGING MARKET

BRAZIL

end

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

Euro/USA 1.1724 UP .0067/ 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:///ITALIAN CHAOS /AND NOW ECB TAPERING BOND PURCHASES/JAPAN TAPERING BOND PURCHASES /USA RISING INTEREST RATES /FLOODING/EUROPE BOURSES GREEN 

USA/JAPAN YEN 109.49   UP 0.0060  (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 1.3385 UP  0.0060  (Brexit March 29/ 2017/ARTICLE 50 SIGNED/BREXIT FEES WILL BE CAPPED

USA/CAN 1.2923  DOWN .0025 (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 MONDAY morning in Europe, the Euro ROSE by 67 basis points, trading now ABOVE the important 1.08 level RISING to 1.1709; / Last night Shanghai composite CLOSED UP 16,05 POINTS OR 0.52%  /Hang Sang CLOSED UP 505.07 POINTS OR 1.66% /AUSTRALIA CLOSED UP .57% / EUROPEAN BOURSES  ALL GREEN /

The NIKKEI: this MONDAY morning CLOSED UP 304.59 OR 1.37%

Trading from Europe and Asia

1/EUROPE OPENED ALL GREEN 

2/ CHINESE BOURSES / :Hang Sang CLOSED UP 505.07 POINTS OR 1.66%  / SHANGHAI CLOSED UP 16,05 POINTS OR 0.52%  /

Australia BOURSE CLOSED UP .57%

Nikkei (Japan) CLOSED UP 304.59 POINTS OR 1.37%

INDIA’S SENSEX  IN THE GREEN

Gold very early morning trading: 1295.40

silver:$16.45

Early MONDAY morning USA 10 year bond yield: 2.91% !!! UP 1 IN POINTS from FRIDAY night in basis points and it is trading WELL ABOVE resistance at 2.27-2.32%. (POLICY FED ERROR)/

The 30 yr bond yield 3.05 UP 1  IN BASIS POINTS from FRIDAY night. (POLICY FED ERROR)/

USA dollar index early  MONDAY morning: 93.79 DOWN 36  CENT(S) from FRIDAY’s close.

This ends early morning numbers MONDAY MORNING

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And now your closing MONDAY NUMBERS \1: 00 PM

Portuguese 10 year bond yield: 1.762% DOWN 12  in basis point(s) yield from FRIDAY/

JAPANESE BOND YIELD: +.051%  UP 3/10   in basis points yield from FRIDAY/JAPAN losing control of its yield curve/

SPANISH 10 YR BOND YIELD: 1.330% DOWN 22  IN basis point yield from FRIDAY/

ITALIAN 10 YR BOND YIELD: 2.5380  DOWN 15  POINTS in basis point yield from FRIDAY/

the Italian 10 yr bond yield is trading 121 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: RISES TO +.418%   IN BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR MONDAY

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

Euro/USA 1.1696 UP .0021(Euro DOWN 39 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 109.68 UP 0.181 Yen DOWN 18 basis points/

Great Britain/USA 1.3313 DOWN .0012( POUND DOWN 12 BASIS POINTS)

USA/Canada 1.2924 UP  .0023 Canadian dollar UP 23 Basis points AS OIL FELL TO $65.07

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This afternoon, the Euro was UP 39 to trade at 1.1696

The Yen FELL to 109.68 for a LOSS of 18 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 LOST 12 basis points, trading at 1.3313/

The Canadian dollar GAINED 23 basis points to 1.2924/ WITH WTI OIL FALLING TO : $65.07

The USA/Yuan closed AT 6.4080
the 10 yr Japanese bond yield closed at +.051%  UP 3/10  IN BASIS POINTS / yield/
Your closing 10 yr USA bond yield UP 2   IN basis points from FRIDAY at 2.918 % //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 3.064  UP 2  in basis points on the day /

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

Your closing USA dollar index, 94.04  DOWN 11 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 MONDAY: 1:00 PM PM

London: CLOSED UP 39.52 POINTS OR 0.51%
German Dax :CLOSED UP 46.48 OR 0.37%
Paris Cac CLOSED UP 7.38 POINTS OR 0.14%
Spain IBEX CLOSED UP 117.90 POINTS OR 1.22%

Italian MIB: CLOSED DOWN 99.60 POINTS OR 0,45%

The Dow closed UP 178.48 POINTS OR 0.72%

NASDAQ closed UP  52.13 OR .69%4.00 PM EST

WTI Oil price; 65.07  1:00 pm;

Brent Oil: 75.64 1:00 EST

USA /RUSSIAN ROUBLE CROSS: 62.03 DOWN 11/100 ROUBLES/DOLLAR (ROUBLE HIGHER BY 11 BASIS PTS)

TODAY THE GERMAN YIELD RISES TO +.418% FOR THE 10 YR BOND 1.00 PM EST EST

END

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

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

WTI CRUDE OIL PRICE 4:30 PM:$64.87

BRENT: $75.39

USA 10 YR BOND YIELD: 2.94% the dropping yields signify markets are in turmoil

USA 30 YR BOND YIELD: 3.08%/

EURO/USA DOLLAR CROSS: 1.1698 UP .0031  (UP 31 BASIS POINTS)

USA/JAPANESE YEN:109.78 up 0.286 YEN down 29 BASIS POINTS/ .

USA DOLLAR INDEX: 94.04 DOWN 11 cent(s)/dangerous as the HIGHER dollar IS DESTROYING THE EMERGING MARKETS.

The British pound at 5 pm: Great Britain Pound/USA: 1.3312 DOWN 0.0013  (FROM FRIDAY NIGHT DOWN 13  POINTS)

Canadian dollar: 1.2929 UP 18 BASIS pts

German 10 yr bond yield at 5 pm: +418%


VOLATILITY INDEX:  12.74  CLOSED  down 0.72

LIBOR 3 MONTH DURATION: 2.317%  .

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

TRADING IN GRAPH FORM FOR THE DAY

Tech Stocks Soar To Record High As US Macro

Tumbles To 8-Month Low

So this happened…

Which made us think of this…

So much for all those naysayers fearing the impact of a global trade war… US equities love trade tariffs!!

Record highs for Nasdaq… Dow (blue) outperformed, outpacing Nasdaq on the day, as Boeing added most (wait, isn’t Boeing supposed to suffer from a trade war?),Trannies were disappointed by Energy weakness…

NOTE – stocks pretty much went nowhere after the open.

VIX tumbled back to a 12 handle…

FANG stocks are roaring higher to a new record high today: the last two days have been the biggest jump since the rip higher off the mid-Feb lows…NOTE – the FANG stock opened at the lows of the day and closed at the highs for the last two days.

Tech stocks continue their march higher relative to financials… this won’t end well…

The ratio of tech to financials has only been higher from Feb 2000 to March 2000.

Growth continues to surge (despite the collapse in the yield curve)…

And while bond yields have bounced they remain notably decoupled from stocks…

European HY spreads have compressed, but remain wide of US HY for now…

Treasury yields rose today, basically erasing last week’s moves to unchanged from the Friday before Memorial Day…

The yield curve ended very modestly flatter on the day but 2s30s did briefly dip to a new cycle low at 55bps… (and 2s10s just 41bps)

Don’t get too excited about today’s extension in 10Y Yields – it looks like a run-stop on very low volume…

The Dollar Index ended the day modestly lower but after ramping back during the US session from overnight weakness…USD remains in a very narrow range…

Cryptocurrencies faded today after a strong weekend…

Commodities were very mixed with Copper surging and crude crushed… PMs ended unch…

WTI Crude tumbled to a $64 handle – neat two-month lows

WTI broke below its 100DMA…

Gold tested back above $1300 today but was rejected again…

end

Market data

Factory orders slide badly by a huge .8% tumble…the worst result since 2012

(courtesy zerohedge)

Factory Orders Slump – Worst April Since 2012

US Factory Orders continue their flip-flopping performance with a 0.8% tumble in April – worse than expected – after an upwardly revised 1.7% rise in March.

This is the worst April drop since 2012…

Year over year, factory order growth slowed from 9.1% to +7.4%.

Ex-Transports, factory orders rose 0.4% MoM – its 10th monthly improvement in a row.

However, new orders ex-defense for April fell 0.9% after rising 2.4% in March, suggesting what gains there were, were all driven by war-spending.

Here is a great commentary from zero hedge as they point out that the Trump auto tariffs instead of being net positive for USA jobs will in reality be a net negative by 157,000

(courtesy zerohedge)

Trump Auto Tariffs Would Be “Net Negative” –

Destroy 157,000 American Jobs

New tariffs on imported automobiles and parts under consideration by President Trump could threaten more than 157,000 American jobs, according to a recent policy briefing published by the Trade Partnership WorldWide, an international trade and economic consulting firm.

President Donald Trump talks with auto industry leaders, including General Motors CEO Mary Barra (4th L) and United Auto Workers (UAW) President Dennis Williams (4th R) at the American Center for Mobility in Michigan in March 2017. (Source: Reuters) 

The six-page policy report said automobile tariffs introduced by President Trump would ultimately be detrimental to American workers. The organization analyzed the potential net impacts on American jobs and the economy from a 25 percent tariffs imposed on U.S. imports from all trading partners of automobiles, lightweight trucks, other vehicles, and parts.

“We find that the tariffs would have a very small positive impact on high-skilled workers in the motor vehicle and parts sectors, but very large negative impacts on workers – both high- and lower-skilled – in other sectors of the economy. Overall, U.S. economic output would decline,” the report warned.

The organization’s models indicate that Trump’s auto tariffs would boost employment in the auto sector by about 92,000, however, then eliminate 250,000 jobs across many industries throughout the broad economy. On top of that, American consumers will dish out about $6,400 more for an imported automobile that would cost around $30,000, which accounts for nearly a 21 percent increase in overall price. All in all, the report stated the economy would lose about .01 percent of its value if the auto tariffs were enacted. The study found:

  • The tariffs would result in a net loss of 157,000 U.S. jobs. A net loss of 250,000 jobs in the rest of the economy would more than offset an increase in U.S. motor vehicle and parts sector employment of 92,000 jobs.
  • About three jobs would be lost for every job gained in the motor vehicle and parts sector.
  • GDP would decline by 0.1 percent as higher costs, net job losses, and declines in producer and consumer spending power work their ways through the economy
  • Tariffs would add about $6,400 to the price of an imported $30,000 car.

The briefing notes that its trade analysts did not take into account any potential retaliation measures by American trade partners for the tariffs.

Table 1. U.S. Macroeconomic Effects of 25% Tariffs on Motor Vehicles and Parts

“Table 1 shows that the tariffs are estimated to cause a net decline in the output of the U.S. economy of 0.1 percent in the time frame considered here. The decline results from higher costs that ripple through the economy, making U.S. exports less competitive, and new car purchases more expensive, for example.”

 (Source: Trade Partnership WorldWide)

“Tariffs would reduce GDP by $18 billion and overall U.S. exports by nearly 2 percent annually,” the report stated.

Tariffs will increase prices for both imported vehicles and the U.S.- made cars with foreign components.

 (Source: Trade Partnership WorldWide)

Table 2. Net Number of U.S. Jobs Impacted by 25% Tariffs on Motor Vehicles and Parts (Number). 

“Table 2 summarizes the estimated net job impacts. Overall, 157,291 net jobs would be lost, including 45,450 jobs in nonmotor vehicle manufacturing sectors. Most job losses would come from services sectors that feel the impacts of the tariffs as the U.S. economy slows. Many of those services jobs are tied to production in manufacturing sectors that are negatively impacted by higher costs for motor vehicles and parts – trade and distribution, construction, and high-skilled business and professional services. Within the motor vehicle and parts increase, just 17,676 of them – or 19 percent – are the higher-skilled jobs the Administration cited in launching the review.”

The report concludes that President Trump’s automobile tariffs would be an overall “net negative” for American jobs and the economy.

“Motor vehicle and parts tariffs of 25 percent would have serious net negative impacts on the U.S. economy overall. They would adversely impact many workers in manufacturing sectors, and hundreds of thousands of workers in services sectors that depend on the health of manufacturing. The tariffs would boost automobile prices, both domestic and imported. If supporting jobs and strengthening the economy are the motivations for invoking national security reasons for imposing protection, such tariffs would have the opposite impact from that intended.”

President Trump’s threat of stoking a trade war between its trading partners is unsettling. The administration has threatened 25 percent tariffs on Chinese products, steel and aluminum tariffs on Europe, and has attempted to renegotiate the North American Free Trade Agreement (NAFTA) with Canada and Mexico.

Trade organization and politicians who back free trade have been radically opposed to the administration’s trade tariff proposals.

“Extending the reach of these tariffs and quotas to additional countries is certain to provoke widespread retaliation from abroad and would put at risk the economic momentum achieved through the administration’s tax and regulatory reforms. We urge the administration to take this risk seriously,” U.S. Chamber of Commerce Executive Vice President Myron Brilliant said Wednesday.

The cautionary tale of the Smoot–Hawley Tariff Act of 1930 exacerbated the Great Depression as retaliatory tariffs by America’s trading partners reduced global growth. In a Central Bank induced economic expansion that is now entering the second longest cycle — and nearing the latter innings of the credit cycle. President Trump’s proposed trade war with trading partners might not be the best solution this late in the game if history means anything.

end

New Jersey spiraling out of control:

(courtesy zerohedge)

New Jersey Abruptly Freezes Spending As It Nears Financial Disaster

New Jersey Governor Phil Murphy’s administration ordered an immediate halt to state spending and hiring, because of what NJ.com describes as “an esoteric accounting maneuver caught up in charged state budget talks.”

In short, if the state doesn’t quit non-essential spending or the state Legislature doesn’t allow the Murphy administration to shuffle spending from one part of the budget to another, they risk ending next month’s fiscal end-of-year in the red, according to the New Jersey Treasury Department.

State Treasurer Elizabeth Muoio on Friday ordered the immediate hold on both spending and hiring “until further notice,” according to a news release. –NJ.com

We have to reserve all available resources in order to ensure we close out the general fund in a positive position,” said Muoio.

While more than half of New Jersey state funding comes from the general fund, the other half is generated through gross income taxes – which are currently unable to be spent on anything aside from property tax relief. Muoio has been sounding the alarm on the general fund of late, saying it will run into the red unless she can shift $788 million in utilities revenue.

It is essential that we freeze all discretionary spending to ensure we can support the crucial functions that keep the state operating — everything from caseworkers for children in foster care to the operation of our developmental centers to the safety and protection provided by the State Police,” she said.

The ability to shift the revenue has become a key bargaining chip in New Jersey legislature, with State Senate President Stephen Sweeny (D) demanding that the governor restore $123 million in funding to various programs which the Murphy administration previously slashed from the budget.

The administration needs to do what they need to do. We’re not saying no. We’re just saying ‘Listen, you’ve shown us your priorities. We’d like a commitment on our priorities’,” Sweeney said Friday. “It’s part of a negotiation.”

At the end of the day, there’s things that the Legislature feels are important and they stand for. $20 million in additional funding for people who work with the disabled and poor and needy. They’re things that matter to us,” he continued. “I didn’t think I’d have to fight with a Democrat to fund programs that help sexually abused kids.”

While a spending and hiring freeze isn’t the same as a government shutdown, the governor’s office circulated a letter to Cabinet officers on Friday giving them a heads up to prepare contingency plans in case a shutdown occurs.

The letter to Murphy’s cabinet members, obtained by NJ Advance Media, asked them to update contingency plans for their departments.

It was sent shortly after top staffers in the state Senate and Assembly met with Murphy’s senior staff Friday morning amid ongoing negotiations about Murphy’s first state budget proposal — which so far have been fraught.

The meeting was tense and unproductive, according to six sources with knowledge of the event who would speak only on the condition of anonymity. One source described it as “ugly.” –NJ.com

https://www.scribd.com/embeds/380816970/content?start_page=1&view_mode=scroll&access_key=key-zN6TQxcvs0YSdv2IDFCK&show_recommendations=true

As we noted in March, New Jersey’s fiscal situation is so dire that new Governor Phil Murphy has proposed taxing online-room booking, ride-sharing, marijuana, e-cigarettes and Internet transactions along with raising taxes on millionaires and retail sales to fund a record $37.4 billion budget that would boost spending on schools, pensions and mass transit.

The proposal which is 4.2% higher than the current fiscal year’s, relies on a tax for the wealthiest that is so unpopular it not only has yet to be approved, but also lacks support from key Democrats in the legislature, let alone Republicans. It also reverses pledges from Murphy’s predecessor, Republican Chris Christie, to lower taxes in a state where living costs are already among the nation’s highest.

Murphy, a Democrat who replaced term-limited Christie on Jan. 16, said his goal is to give New Jerseyans more value for their tax dollars; instead he plans on bleeding them dry. He has promised additional spending on underfunded schools and transportation in a credit-battered state with an estimated $8.7 billion structural deficit for the fiscal year that starts July 1.

“If we enact another budget like the one our administration inherited, our middle class will continue to be the ones shouldering the burden, while seeing little in return,” Murphy said Tuesday in his budget address to lawmakers. His solution? Socialist wealth redistribution: “A millionaire’s tax is the right thing to do –- and now is the time to do it.”

A better way of putting it, as Bloomberg has done, is that New Jersey’s budget “would raise taxes on almost everything.”

On the bright side, Murphy agreed to cut sales tax in half in five New Jersy cities; Bridgeton, Camden, Newark, Plainfeld and Trenton, restoring a decades-old program allowing the cities to levy half the state’s sales tax to help economically struggling areas.

For the remaining residents of New Jersey, one wonders what the sales tax rate will need to rise to in order to offset the change. While the state sales tax currently sits at 6.625%, Murphy has proposed returning it to 7% – reversing a deal both Christie and Democratic lawmakers struck in 2016 in exchange for a .23c gas tax hike.

Then there’s the state pension – which just hiked its expected return to an ambitious 7.5%. From March:

New Jersey’s acting state treasurer Elizabeth Maher Muolo said that she will increase the expected rate of return for the state’s struggling public pension system which manages over $76 billion in assets, from 7% to 7.5%, “then lower it again over time” in hopes that the recent market surge persists indefinitely into the future and quietly wipes away some of the state’s massive underfunding.

The announcement prompted Bloomberg’s Muni expert Joe Mysak to simply exclaim that “this is madness.

Madness indeed.

end

SWAMP STORIES

As we have indicated to you on several occasions, the genesis of this “Russian Collusion” started in the spring of 2016 probably around April.  New details seem to show this.

Also next texts seem to implicate the Obama White House getting involved in this right from the beginning and maybe directing this

(courtesy zerohedge)

FBI Spying On Trump Started In London, Earlier

Than Thought, New Texts Implicate Obama

White House

A new report from John Solomon of The Hill ties together several loose threads floating around over the genesis of the FBI/DOJ espionage operation against the Trump campaign, who was involved in the “setup” of campaign aides, and how text messages between FBI employees suggest that the Obama White House was not only aware of the operation – but possibly directing it.

Not only is the timeline moved up from the summer of 2016 to spring, Solomon provides clarification on early contacts between the players involved in  DOJ/FBI sting and Trump campaign aides.

The bridge to the Russia investigation wasn’t erected in Moscow during the summer of the 2016 election.

It originated earlier, 1,700 miles away in London, where foreign figures contacted Trump campaign advisers and provided the FBI with hearsay allegations of Trump-Russia collusion, bureau documents and interviews of government insiders reveal. These contacts in spring 2016 — some from trusted intelligence sources, others from Hillary Clinton supporters — occurred well before FBI headquarters authorized an official counterintelligence investigation on July 31, 2016.

The new timeline makes one wonder: Did the FBI follow its rules governing informants? –The Hill

The revelation of purposeful contact initiated by alleged confidential human sources prior to any FBI investigation is troublesome,” Rep. Mark Meadows (R-N.C.), an ally of President Trump and chairman of a House subcommittee that’s taking an increasingly aggressive oversight role in the scandal, told me. “This new information begs the questions: Who were the informants working for, who were they reporting to and why has the [Department of Justice] and FBI gone to such great lengths to hide these contacts?

Retired assistant FBI director for intelligence Kevin Brock also has questions. Brock supervised an agency update to their longstanding bureau rules governing the use of sources while working under then-director Robert Mueller. These rules prohibit the FBI from directing a human source to perform espionage on an American until a formal investigation has been opened – paperwork and all. 

Brock sees oddities in how the Russia case began. “These types of investigations aren’t normally run by assistant directors and deputy directors at headquarters,” he told me. “All that happens normally in a field office, but that isn’t the case here and so it becomes a red flag. Congress would have legitimate oversight interests in the conditions and timing of the targeting of a confidential human source against a U.S. person.” -The Hill

The Text Messages

A series of text messages recovered by DOJ Inspector General Michael Horowitz between FBI lawyer Lisa Page and special agent Peter Strzok reveal political pressure around the same time as the Trump-Russia probe officially opened.

We’re not going to withstand the pressure soon,” Page texted Strzok on Aug. 3, 2016 – days after Strzok returned from London and opened the official Trump-Russia investigation. At the time, as John Solomon of The Hill notes, “they were dealing with simultaneous challenges: the wrap-up of the Hillary Clinton email scandal and the start of the Russia-Trump probe.”

The texts reveal that Strzok and Page were also concerned about someone within the DOJ leaking details of their investigation (“This is MUCH more tasty for one of those DOJ aholes to leak,” Strzok texted Page), as well as concerns that the White House was spearheading the investigation.

Went well, best we could have expected,” Strzok texted Page after an Aug. 5, 2016, meeting. “Other than Liz quote ‘the White House is running this.’ ” Page then texted to assure Strzok of a paper trail showing the FBI in charge: “We got emails that say otherwise.

Kambree Kawahine Koa

@KamVTV

SHOCKER! New details and text revealed in the Trump- Russia probe.

FBI colleague – “Liz” – suggested the Obama White House was about to hijack the investigation.

‘’The White House (Obama) is running this.'” -Lisa Page http://thehill.com/opinion/white-house/390228-london-bridges-falling-down-curious-origins-of-fbis-trump-russia-probe?amp#click=https://t.co/X2yBdpyNL9 

London ‘bridges’ falling down: curious origins of FBI’s Trump-Russia probe

In 2016, the FBI investigated possible Trump campaign-Russia collusion for months before authorizing an official counterintelligence investigation.

thehill.com

The next day, Strzok and Page went into further detail about President Obama. “So maybe not the best national security president, but a genuinely good and decent human being,” Page texted Strzok, to which he replied: “Yeah, I like him. Just not a fan of the weakness globallyWas thinking about what the administration will be willing to do re Russia.”

What ever did Strzok mean about Obama being weak?

London

Perhaps so that the agency’s targeting of Trump associates wouldn’t occur on U.S. soil, the very beginnings of “Operation Crossfire Hurricane”  – the code name given to the early official Trump-Russia investigation, all have ties to London

The ties are so strong that some have begun to accuse the UK of colluding with the Obama administration and Clinton campaign to influence the 2016 US election

According to documents and government interviews, one of the FBI’s most senior counterintelligence agents visited London the first week of May 2016. Congress never got the FBI to explain that trip — but, soon after it, one of the most consequential moments of the scandal occurred: On May 10, Australian diplomat Alexander Downer met in a London bar with Trump adviser George Papadopoulos, who boasted of knowing that Russia would release dirt on Clinton.

That contact was not immediately reported to U.S. intelligence.

By early June, a second overture to a Trump campaign adviser occurred in London. In a “Dear Carter” email, a Cambridge University graduate student invited Trump campaign adviser Carter Page to attend a popular July security conference in London.

While Page would not reveal the name of the graduate student, he did say that the student studied under Stefan Halper – the Cambridge professor and longtime FBI / CIA asset who was sent in to perform espionage on the Trump campaign.

Halper, according to Page, asked to be introduced to high-ranking Trump campaign official Sam Clovis.

 On July 16, 2016, Carter Page relayed the overture to Clovis: “Professor Stef Halper spends part of the year in Virginia where he has a home in Falls Church; he’s a big fan of yours having followed you on CNN and offered a range of possibilities regarding how he and the University might be able to help.”

Halper, a month later, emailed Clovis, referencing his contacts with Carter Page. “May I suggest we set a time to meet when you are next in Washington?” Halper invited on Aug. 29, 2016.

There are more links to London which strengthen the case for a setup. One week before Carter Page left for London, former MI6 agent Christopher Steele – recently hired by opposition research firm Fusion GPS, made contact with the FBI for an unknown purpose. Weeks later, Steele began working with the agency, while his infamous “Steele Dossier” – full of wild, salacious and largely unverified claims, would become a key document in the application for a FISA warrant to spy on Page.

What’s more, the London meeting between Papadopoulos and Alexander Downer was reported to the FBI just weeks after the July 23, 2016 release of Hillary Clinton’s emails by WikiLeaks.

Downer notably arranged a $25 million grant to the Clinton foundation a decade ago to help fight AIDS. This was part of an overall $88 millionfunneled from Australian taxpayers to the charity.

As Solomon of The Hill notes, “This timeline doesn’t prove wrongdoing; these contacts could have occurred organically, or been directed legally through intelligence channels. Yet, congressional investigators and FBI insiders tell me, they raise questions about when the investigation officially started and how.”

END
\
In a leaked letter, Trump’s lawyers correctly state that the President has the authority to fire anybody he wishes in the executive branch of Government.  This is nothing but a witchhunt
(courtesy zerohedge)

In Leaked Letter, Trump’s Lawyers Tell Mueller To Go Pound Sand

A 20-page confidential letter from President Trump’s legal team leaked to the New York Times argues that President Trump could not have obstructed justice at any point during his presidency due to his Constitutional authority, and that he cannot be compelled to testify in front of Special Counsel Robert Mueller due to his Constitutional powers as President.

The letter, crafted by Trump’s legal team, reveals that the White House has been waging a quiet campaign for several months to prevent Mueller from trying to subpoena  the president – contending that because the Constitution empowers him to “if he wished, terminate the inquiry, or even exercise his power to pardon,” Trump could not have illegally obstucted any aspect of the investigation into potential collusion between his campaign and Russia during the 2016 US election.

Mr. Trump’s defense is a wide-ranging interpretation of presidential power. In saying he has the authority to end a law enforcement inquiry or pardon people, his lawyers ambiguously left open the possibility that they were referring only to the investigation into his former national security adviser, Michael T. Flynn, which he is accused of pressuring the F.B.I. to drop — or perhaps the one Mr. Mueller is pursuing into Mr. Trump himself as well.

Mr. Dowd and Mr. Sekulow outlined 16 areas they said the special counsel was scrutinizing as part of the obstruction investigation, including the firings of Mr. Comey and of Mr. Flynn, and the president’s reaction to Attorney General Jeff Sessions’s recusal from the Russia investigation. -NYT

“It remains our position that the president’s actions here, by virtue of his position as the chief law enforcement officer, could neither constitutionally nor legally constitute obstruction because that would amount to him obstructing himself, and that he could, if he wished, terminate the inquiry, or even exercise his power to pardon if he so desired,” writes President Trump’s former attorney John Dowd, who left the team in March.

The leaked letter effectively reveals Trump’s trump card in the event Mueller proceeds with a subpoena.

“We are reminded of our duty to protect the president and his office,” wrote the lawyers, who stressed that “Ensuring that the office remains sacred and above the fray of shifting political winds and gamesmanship is of critical importance.

Translation – this is a clown show, go pound sand.

Mueller’s office has told Trump’s lawyers they need to speak with the president to determine whether he criminally obstructed any aspect of the Russia investigation. If Trump refuses to be questioned, Mueller will be forced to choose whether or not to try and subpoena him – which, as Trump’s lawyers have made abundantly clear, will result in a Constitutional crisis.

They argued that the president holds a special position in the government and is busy running the country, making it difficult for him to prepare and sit for an interview. They said that because of those demands on Mr. Trump’s time, the special counsel’s office should have to clear a higher bar to get him to talk. Mr. Mueller, the president’s attorneys argued, needs to prove that the president is the only person who can give him the information he seeks and that he has exhausted all other avenues for getting it. -NYT

The president’s prime function as the chief executive ought not be hampered by requests for interview,” they wrote. “Having him testify demeans the office of the president before the world.”

Trump’s attorneys also argued that the president did nothing to technically violate obstruction-of-justice statutes.

“Every action that the president took was taken with full constitutional authority pursuant to Article II of the United States Constitution,” they wrote of the part of the Constitution that created the executive branch. “As such, these actions cannot constitute obstruction, whether viewed separately or even as a totality.”

According to legal experts cited by the Times, the president wields broad authority to control the actions of the executive branch, which includes the Department of Justice and the FBI. The Supreme Court, however, has ruled that Congress can impose some restrictions on that power, including limiting a president’s ability to fire certain officials.

“As a result, it is not clear whether statutes criminalizing obstruction of justice apply to the president and amount to another legal limit on how he may wield his powers,” notes the Times.

About that Russia probe…

And while Trump’s team works to make the case against testifying, media reports and Congressional investigations have revealed what appears to be grave misconduct by the FBI and Department of Justice in order to prevent Trump from winning the 2016 US election, and then once he won – discredit him with a Russia allegations fabricated by US Intelligence agencies, UK intelligence assets – in collusion with the Clinton campaign and the Obama administration. 

We now know that Trump campaign aides were likely fed rumors that Russia had damaging information on Hillary Clinton, and then used as patsies by Clinton-linked operatives in what appears to have been a set-up, something Trump once again hinted in his latest tweet, in which he also asked if the Mueller team or the DOJ is leaking his lawyers’ letters to the “Fake News Media.”

Donald J. Trump

@realDonaldTrump

There was No Collusion with Russia (except by the Democrats). When will this very expensive Witch Hunt Hoax ever end? So bad for our Country. Is the Special Counsel/Justice Department leaking my lawyers letters to the Fake News Media? Should be looking at Dems corruption instead?

Trump’s attorneys have also attacked the credibility of former FBI Director James Comey, while also contesting what they believe are Mueller’s version of significant facts.

Mr. Giuliani said in an interview that Mr. Trump is telling the truth but that investigators “have a false version of it, we believe, so you’re trapped.” And the stakes are too high to risk being interviewed under those circumstances, he added: “That becomes not just a prosecutable offense, but an impeachable offense.” -NYT

They argue that Trump couldn’t have intentionally obstructed justice anyway based on the fact that he did not know that Mike Flynn was under investigation when Trump spoke to Comey.

“There could not possibly have been intent to obstruct an ‘investigation’ that had been neither confirmed nor denied to White House counsel,” the president’s lawyers wrote, adding that FBI investigations generally do not qualify as the type of “proceeding” covered by an obstruction-of-justice statute.

“Of course, the president of the United States is not above the law, but just as obvious and equally as true is the fact that the president should not be subjected to strained readings and forced applications of clearly irrelevant statutes,” wrote Mr. Dowd and Mr. Sekulow.

The Times, however, suggests that their argument may be outdated, as a 2002 law passed by Congress makes it a crime to obstruct proceedings that have not yet begun.

But the lawyers based those arguments on an outdated statute, without mentioning that Congress passed a broader law in 2002 that makes it a crime to obstruct proceedings that have not yet started.

Samuel W. Buell, a Duke Law School professor and white-collar criminal law specialist who was a lead prosecutor for the Justice Department’s Enron task force, said the real issue was whether Mr. Trump obstructed a potential grand jury investigation or trial — which do count as proceedings — even if the F.B.I. investigation had not yet developed into one of those. He called it inexplicable why the president’s legal team was making arguments that were focused on the wrong obstruction-of-justice statute.

Regardless, it appears Trump’s team is going to tell Mueller to take a hike if he tries to subpoena the president, and that it will simply further embarrass the United States on the world stage.

“We write to address news reports, purportedly based on leaks, indicating that you may have begun a preliminary inquiry into whether the president’s termination of former FBI Director James Comey constituted obstruction of justice,” the June 2017 memo from Trump attorney Marc Kasowitz to Mueller reads – while a more recent memo outlines the 16 areas they believe Mueller is focusing on (via CBS News)

  1. Former National Security Advisor Lt. Gen. Michael Flynn — information regarding his contacts with Ambassador Kislyak about sanctions during the transition process;
  2. Lt. Gen. Flynn’s communications with Vice President Mike Pence regarding those contacts;
  3. Lt. Gen. Flynn’s interview with the FBI regarding the same;
  4. Then-Acting Attorney General Sally Yates coming to the White House to discuss same;
  5. The president’s meeting on Feb. 14, 2017, with then-Director James Comey;
  6. Any other relevant information regarding former National Security Advisor Michael Flynn;
  7. The president’s awareness of and reaction to investigations by the FBI, the House and the Senate into possible collusion;
  8. The president’s reaction to Attorney General Jeff Sessions’ recusal from the Russia investigation;
  9. The president’s reaction to former FBI Director James Comey’s testimony on March 20, 2017, before the House Intelligence Committee;
  10. Information related to conversations with intelligence officials generally regarding ongoing investigations;
  11. Information regarding who the president had had conversations with concerning Mr. Comey’s performance;
  12. Whether or not Mr. Comey’s May 3, 2017, testimony lead to his termination;
  13. Information regarding communications with Ambassador Kislyak, Minister Lavrov, and Lester Holt;
  14. The president’s reaction to the appointment of Robert Mueller as Special Counsel;
  15. The president’s interaction with Attorney General Sessions as it relates to the appointment of Special Counsel; and,
  16. The statement of July 8, 2017, concerning Donald Trump, Jr.’s meeting in Trump Tower.
end
Peter Schiff has got this one right:  Not only Deutsche bank has a problem with its huge debt but also the the USA banking system has a problem.  When interest rates rise, the USA banks’ portfolio of loans become non performing just like Italy. Then the dollar is smashed and after that nobody could be saved:
(courtesy Peter Schiff_

“This Is Not Going To End Well” Peter Schiff Warns The US Banking System “Has A Huge Problem”

Via Greg Hunter’s USAWatchdog.com,

Money manager Peter Schiff says even though Deutsche Bank is the most systemically dangerous bank in the world (according to the IMF), that is just the tip of severe global financial problems.

Schiff explains, “I think it’s a problem, and it’s not just Deutsche Bank.

Deutsche Bank could be the weak link of a chain. If you remember back to when we had the financial crisis (2008). First, you had the sub-prime mortgages blowing up, and everybody was like don’t worry about it. It’s contained. I said it’s not contained, it’s just showing up first in the sub-prime market because these are the weakest mortgages.

The entire mortgage market has a problem.  I think the banking system has a huge problem because it’s lived off of the life support of artificially low interest rates. As that is removed, it’s like pulling the plug off of someone who has lived off life support. The irony is you have so many analysts that think higher rates are good for the banks…

Low interest rates saved the banks, Schiff notes, but points out the hypocrisy of current market thinking:

“You can’t have it both ways. It can’t be low interest rates helped the banks, and high interest rates will help the banks. It’s one or the other. I think higher interest rates are going to crush the banks. I think it’s going to destroy the value of their loans and their collateral. It’s going to lead to defaults…

All those banks that were too big to fail in 2008 are much bigger now, and it’s going to be a lot more difficult to bail them out.”

Schiff issues a stark warning,

This is not going to end well, and I don’t think the Fed is going to be able to save us again. If you get it wrong this time, you’re done. You are down for the count.

You just can’t hold and hope. If the stock market gets cut in half again, the Fed is not going to bail you out with another round of quantitative easing.

They’re not going to bail you out with rate cuts because the next time the Fed tries to do that, it will destroy the dollar. I am confident of that. The next time is the last time.We will have a dollar crisis and a sovereign debt crisis.

Then the U.S. can’t bail anybody out because it’s the U.S. that is in trouble. It will be the U.S. debt that nobody will want to own. It’s the U.S. dollar that nobody wants to own. Whatever the paper profits that people have because they have been in this bull market the last number of years, none of it is going to matter. The profits are going to go up in smoke as the market implodes.

What about gold in a rising rate environment? Schiff says,

“Gold can go up when rates are rising. In fact, gold will go up when rates are rising. Rates are generally rising because you have more inflation. More inflation is good for gold.”

Join Greg Hunter as he goes One-on-One with Peter Schiff, founder of Euro Pacific Capital.

I will  see you TUESDAY night

HARVEY

 

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