GOLD: $1193.60 DOWN $7.55 (COMEX TO COMEX CLOSINGS)
Silver: $14.16 DOWN 37 CENTS (COMEX TO COMEX CLOSING)
Closing access prices:
Gold $1191.60
silver: $14.16
For comex gold:
AUGUST/
And now Sept:
NUMBER OF NOTICES FILED TODAY FOR SEPT CONTRACT: 49 NOTICE(S) FOR 4,900 oz
Total number of notices filed so far for Sept: 420 for 42,000 (1.306 tonnes)
For silver:
Sept
316 NOTICE(S) FILED TODAY FOR
1,580,000 OZ/
Total number of notices filed so far this month: 4075 for 20,375,000 oz
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Bitcoin: BID $7278/OFFER $7363: UP $63(morning)
Bitcoin: BID/ $73405/offer $7390: UP $89(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: $1206.81
NY price at the same time:$1201.05
PREMIUM TO NY SPOT: $5.76
XX
Second gold fix early this morning: $ 1202.73
USA gold at the exact same time:$1198.35
PREMIUM TO NY SPOT: $3,.38
XXXX
China is controlling the gold market
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 CONTINUES TO FALL AND TODAY BY A CONSIDERABLE 2283 CONTRACTS FROM 215,123 DOWN TO 211,840 DESPITE FRIDAY’S TINY 1 CENT FALL IN SILVER PRICING AT THE COMEX.
TODAY WE AGAIN MOVED CONSIDERABLY AWAY FROM LAST WEEK’S RECORD SETTING OPEN INTEREST OF 244,196 CONTRACTS SET IN THE MONTH OF AUGUST.
WE HAVE ALSO WITNESSED A LARGE AMOUNT OF PHYSICAL METAL STAND FOR COMEX DELIVERY(WELL OVER 30 MILLION OZ AT THE COMEX FOR JULY , 6 MILLION OZ FOR AUGUST AND NOW OVER 31 MILLION OZ STANDING IN SEPTEMBER. AS WELL WE ARE WITNESSING CONSIDERABLE LONGS PACKING THEIR BAGS AND MIGRATING OVER TO LONDON IN GREATER NUMBERS IN THE FORM OF EFP’S. WE WERE NOTIFIED THAT WE HAD A VERY STRONG SIZED NUMBER OF COMEX LONGS TRANSFERRING THEIR CONTRACTS TO LONDON THROUGH THE EFP:
24 EFP’S FOR SEPT. 2650 EFP’S FOR DECEMBER AND ZERO FOR ALL OTHER MONTHS AND THEREFORE TOTAL ISSUANCE: OF 2674 CONTRACTS. WITH THE TRANSFER OF 2674 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 2674 EFP CONTRACTS TRANSLATES INTO 13.37MILLION OZ ACCOMPANYING:
1.THE 1 CENT FALL IN SILVER PRICE AT THE COMEX AND
2. THE STRONG AMOUNT OF SILVER OUNCES WHICH STOOD FOR THE JUNE/2018 COMEX DELIVERY MONTH. (5.420 MILLION OZ); 30.370 MILLION OZ STANDING FOR DELIVERY IN JULY, FOR AUGUST: 6.065 MILLION OZ AND NOW 31.505 MILLION OZ STANDING SO FAR IN SEPT.
ACCUMULATION FOR EFP’S/SILVER/J.P.MORGAN’S HOUSE OF BRIBES, / STARTING FROM FIRST DAY NOTICE/FOR MONTH OF SEPT:
2,674 CONTRACTS (FOR 1 TRADING DAYS TOTAL 2674 CONTRACTS) OR 13.37 MILLION OZ: (AVERAGE PER DAY: 2674 CONTRACTS OR 13.37 MILLION OZ/DAY)
TO GIVE YOU AN IDEA AS TO THE HUGE SUPPLY THIS MONTH IN SILVER: SO FAR THIS MONTH OF SEPT: 13.37 MILLION PAPER OZ HAVE MORPHED OVER TO LONDON. THIS REPRESENTS AROUND 1.91% OF ANNUAL GLOBAL PRODUCTION (EX CHINA EX RUSSIA)* JUNE’S 345.43 MILLION OZ IS THE SECOND HIGHEST RECORDED ISSUANCE OF EFP’S AND IT FOLLOWED THE RECORD SET IN APRIL 2018 OF 385.75 MILLION OZ.
ACCUMULATION IN YEAR 2018 TO DATE SILVER EFP’S: 2,051.2 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
ACCUMULATION FOR JUNE 2018: 345.43 MILLION OZ
ACCUMULATION FOR JULY 2018: 172.84 MILLION OZ
ACCUMULATION FOR AUGUST 2018: 205.23 MILLION OZ.
RESULT: WE HAD A CONSIDERABLE SIZED DECREASE IN COMEX OI SILVER COMEX CONTRACTS OF 2283 DESPITE THE 1 CENT FALL IN SILVER PRICING AT THE COMEX FRIDAY. THE CME NOTIFIED US THAT WE HAD A STRONG SIZED EFP ISSUANCE OF 2674 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) .
TODAY WE GAINED A FAIR SIZED: 391 TOTAL OI CONTRACTS ON THE TWO EXCHANGES:
i.e 2674 OPEN INTEREST CONTRACTS HEADED FOR LONDON (EFP’s) TOGETHER WITH A DECREASE OF 2283 OI COMEX CONTRACTS. AND ALL OF THIS GAIN IN DEMAND HAPPENED WITH A TINY 1 CENT LOSS IN PRICE OF SILVER AND A CLOSING PRICE OF $14.53 WITH RESPECT TO FRIDAY’S TRADING. YET WE HAD A GIGANTIC AMOUNT OF SILVER STANDING AT THE COMEX FOR DELIVERY IN THE BIG JULY DELIVERY MONTH OF SLIGHTLY OVER 30 MILLION OZ, IN AUGUST ANOTHER BIG 6.065 MILLION OZ IN A NON ACTIVE MONTH AND NOW IN SEPTEMBER AN INITIAL MONSTROUS 31.505 MILLION OZ AMOUNT OF SILVER STANDING FOR DELIVERY IN SEPTEMBER.. NOBODY IS PAYING ATTENTION TO THE HUGE NUMBER OF PHYSICAL OUNCES STANDING FOR SILVER THESE PAST SEVERAL MONTHS.
In ounces AT THE COMEX, the OI is still represented by OVER 1 BILLION oz i.e. 1.059 MILLION OZ TO BE EXACT or 151% of annual global silver production (ex Russia & ex China).
FOR THE NEW FRONT AUGUST MONTH/ THEY FILED AT THE COMEX: 316 NOTICE(S) FOR 1,580,000 OZ OF SILVER
IN SILVER,PRIOR TO TODAY, WE SET THE NEW COMEX RECORD OF OPEN INTEREST AT 243,411 CONTRACTS ON APRIL 9.2018. AND AGAIN THIS HAS BEEN SET WITH A LOW PRICE OF $16.51.
AND NOW WE RECORD FOR POSTERITY ANOTHER ALL TIME RECORD OPEN INTEREST AT THE COMEX OF 244.,196 CONTRACTS ON AUGUST 22/2018 AND AGAIN WHEN THIS RECORD WAS SET, THE PRICE OF SILVER WAS $14.78 AND LOWER IN PRICE THAN PREVIOUS RECORDS.
ON THE DEMAND SIDE WE HAVE THE FOLLOWING:
- HUGE AMOUNTS OF SILVER STANDING FOR DELIVERY (MARCH/2018: 27 MILLION OZ , APRIL/2018 : 2.485 MILLION OZ MAY: 36.285 MILLION OZ ; JUNE/2018 (5.420 MILLION OZ) , JULY 2018 FINAL AMOUNT STANDING: 30.370 MILLION OZ ) FOR AUGUST 6.065 MILLION OZ. AND NOW SEPT: AN INITIAL HUGE 30.505 MILLION OZ.
- HUGE RECORD OPEN INTEREST IN SILVER 243,411 CONTRACTS (OR 1.217 BILLION OZ/ SET APRIL 9/2018) AND NOW AUGUST 22/2018: 244,196 CONTRACTS, WITH A SILVER PRICE OF $14.78.
- HUGE ANNUAL EFP’S ISSUANCE EQUAL TO 2.9 BILLION OZ OR 400% OF SILVER ANNUAL PRODUCTION/2017
- RECORD SETTING EFP ISSUANCE FOR ANY MONTH IN SILVER; APRIL/2018/ 385.75 MILLION OZ/ AND THE SECOND HIGHEST RECORDED EFP ISSUANCE JUNE 2018 345.43 MILLION OZ
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).
IN GOLD, THE OPEN INTEREST FELL BY A CONSIDERABLE SIZED 6778 CONTRACTS DOWN TO 466,584 DESPITE THE GAIN IN THE COMEX GOLD PRICE/FRIDAY’S TRADING (A RISE IN PRICE OF $2.15). THE CME RELEASED THE DATA FOR EFP ISSUANCE AND IT TOTALED A VERY GOOD SIZED 4,330 CONTRACTS:
OCTOBER HAD 189 EFP’S ISSUED AND, DECEMBER HAD AN ISSUANCE OF 4141 CONTACTS AND ALL OTHER MONTHS ZERO. The NEW COMEX OI for the gold complex rests at 466,584. 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 AN A CONSIDERABLE SIZED OI LOSS IN TOTAL CONTRACTS ON THE TWO EXCHANGES OF 2448 CONTRACTS: 6778 OI CONTRACTS DECREASED AT THE COMEX AND 4330 EFP OI CONTRACTS WHICH NAVIGATED OVER TO LONDON. THUS TOTAL OI LOSS: 2448 CONTRACTS OR 244,800 OZ = 7.614 TONNES. AND ALL OF THIS LACK OF DEMAND OCCURRED WITH A RISE IN THE PRICE OF GOLD/ FRIDAY TO THE TUNE OF $2.15.
FRIDAY, WE HAD 10246 EFP’S ISSUED.
ACCUMULATION OF EFP’S GOLD AT J.P. MORGAN’S HOUSE OF BRIBES: (EXCHANGE FOR PHYSICAL) FOR THE MONTH OF SEPT : 4330 CONTRACTS OR 433,000 OZ OR 13.46 TONNES (1 TRADING DAYS AND THUS AVERAGING: 4330 EFP CONTRACTS PER TRADING DAY OR 433,000 OZ/ TRADING DAY),,
TO GIVE YOU AN IDEA AS TO THE HUGE SIZE OF THESE EFP TRANSFERS : THIS MONTH IN 1 TRADING DAYS IN TONNES: 13.46 TONNES
TOTAL ANNUAL GOLD PRODUCTION, 2017, THROUGHOUT THE WORLD EX CHINA EX RUSSIA: 2555 TONNES
THUS EFP TRANSFERS REPRESENTS 13.46/2550 x 100% TONNES = 0.52% OF GLOBAL ANNUAL PRODUCTION SO FAR IN JULY ALONE.***
ACCUMULATION OF GOLD EFP’S YEAR 2018 TO DATE: 5,210.42* TONNES *SURPASSED ANNUAL PROD’N
ACCUMULATION OF GOLD EFP’S FOR JANUARY 2018: 653.22 TONNES (21 TRADING DAYS)
ACCUMULATION OF GOLD EFP’S FOR FEBRUARY 2018: 649.45 TONNES (20 TRADING DAYS)
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)
ACCUMULATION OF GOLD EFP FOR JUNE 2018 650.71 TONNES (21 TRADING DAYS)
ACCUMULATION OF GOLD EFP FOR JULY 2018 605.5 TONNES (21 TRADING DAYS)
ACCUMULATION OF GOLD EFP FOR AUG. 2018 488.54 TONNES (23 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 DECREASE IN OI AT THE COMEX OF36778 DESPITE THE GAIN IN PRICING ($2.15 THAT GOLD UNDERTOOK FRIDAY) // . WE ALSO HAD A VERY GOOD SIZED NUMBER OF COMEX LONG TRANSFERRING TO LONDON THROUGH THE EFP ROUTE: 4330 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 4330 EFP CONTRACTS ISSUED, WE HAD A LOSS OF 2448 CONTRACTS IN TOTAL OPEN INTEREST ON THE TWO EXCHANGES:
4330 CONTRACTS MOVE TO LONDON AND 6778 CONTRACTS DECREASED AT THE COMEX. (in tonnes, the LOSS in total oi equates to 7.614 TONNES). ..AND THIS GAIN IN DEMAND OCCURRED WITH THE GAIN OF $2.15 IN FRIDAY’S TRADING AT THE COMEX.
we had: 49 notice(s) filed upon for 4900 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 $7.55 TODAY: /
THE COMEX BLEEDS GOLD AGAIN AS WE HAVE ANOTHER BIG CHANGE IN GOLD INVENTORY AT THE GLD
A WITHDRAWAL OF 2.65 TONNES
/GLD INVENTORY 755.16 TONNES
Inventory rests tonight: 755.16 tonnes.
TO ALL INVESTORS THINKING OF BUYING GOLD THROUGH THE GLD ROUTE: YOU ARE MAKING A TERRIBLE MISTAKE AS THE CROOKS ARE USING WHATEVER GOLD COMES IN TO ATTACK BY SELLING THAT GOLD. IT SURE SEEMS TO ME THAT THE GOLD OBLIGATIONS AT THE GLD EXCEED THEIR INVENTORY
SLV/
WITH SILVER DOWN 37 CENTS TODAY
NO CHANGES IN SILVER INVENTORY AT THE SLV;
/INVENTORY RESTS AT 329.856 MILLION OZ.
NOTE THE DIFFERENCE BETWEEN THE GLD AND SLV: THE CROOKS CAN RAID GOLD BECAUSE THEY DO HAVE SOME PHYSICAL. THEY DO NOT RAID SILVER PROBABLY BECAUSE THERE IS NO REAL SILVER INVENTORIES BEHIND THEM
end
First, here is an outline of what will be discussed tonight:
1. Today, we had the open interest in SILVER FELL BY A CONSIDERABLE SIZED 2674 CONTRACTS from 214,123 DOWN TO 211,804 AND MOVING CONSIDERABLY AWAY FROM THE NEW COMEX RECORD SET THIS MONTH AT 244,196 WITH A SILVER PRICE OF $14.78/(AUGUST 22/2018)..WE MUST HAVE HAD BOTH BANKER AND HEDGE FUND SHORT COVERING OCCURRING TO A HIGH DEGREE. THE PREVIOUS RECORD WAS SET ON APRIL 9/2018 AT 243,411 OPEN INTEREST CONTRACTS WITH THE SILVER PRICE AT THAT DAY: $16.53). AND PREVIOUS TO THAT, THE RECORD WAS ESTABLISHED AT: 234,787 CONTRACTS, SET ON APRIL 21.2017 OVER 1 1/3 YEARS AGO. THE PRICE OF SILVER ON THAT DAY: $17.89. AS YOU CAN SEE, WE HAVE RECORD HIGH OPEN INTERESTS IN SILVER ACCOMPANIED BY A CONTINUAL LOWER PRICE WHEN THAT RECORD WAS SET…..
.
OUR CUSTOMARY MIGRATION OF COMEX LONGS CONTINUE TO MORPH INTO LONDON FORWARDS AS OUR BANKERS USED THEIR EMERGENCY PROCEDURE TO ISSUE:
24 EFP CONTRACTS FOR SEPTEMBER, 2650 CONTRACTS FOR DECEMBER AND AND ALL OTHER MONTHS: ZERO. TOTAL EFP ISSUANCE: 2674 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 2282 CONTRACTS TO THE 2674 OI TRANSFERRED TO LONDON THROUGH EFP’S, WE OBTAIN A NET GAIN OF 391 OPEN INTEREST CONTRACTS. THUS IN OUNCES, THE GAIN ON THE TWO EXCHANGES: 1.95 MILLION OZ!!! AND YET WE ALSO HAVE A STRONG DEMAND FOR PHYSICAL AS WE WITNESSED A FINAL STANDING OF GREATER THAN 30 MILLION OZ FOR JULY, A STRONG 6.065 MILLION OZ FOR AUGUST.. AND NOW A HUGE 30.505 MILLION OZ INITIALLY STAND FOR SILVER IN SEPTEMBER….
RESULT: A CONSIDERABLE SIZED DECREASE IN SILVER OI AT THE COMEX DESPITE THE 1 CENT PRICING LOSS THAT SILVER UNDERTOOK IN PRICING YESTERDAY. BUT WE ALSO HAD A GOOD SIZED 2674 EFP’S ISSUED TRANSFERRING COMEX LONGS OVER TO LONDON. TOGETHER WITH THE STRONG SIZED AMOUNT OF SILVER OUNCES STANDING FOR SEPTEMBER, 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) TUESDAY MORNING/ MONDAY NIGHT: Shanghai closed UP 29.85 POINTS OR 1.10% /Hang Sang CLOSED UP 260.80 POINTS OR 0.94%/ / The Nikkei closed DOWN 10.48 POINTS OR 0.05%/Australia’s all ordinaires CLOSED DOWN 0.28% /Chinese yuan (ONSHORE) closed DOWN at 6.8390 AS POBC RESUMES SLIGHTLY ITS HUGE DEVALUATION /DELEGATION COMING TO THE USA TO SEE TRUMP IN NOVEMBER/Oil UP to 69.92 dollars per barrel for WTI and 77.55 for Brent. Stocks in Europe OPENED RED //. ONSHORE YUAN CLOSED DOWN AT 6.8390 AGAINST THE DOLLAR. OFFSHORE YUAN CLOSED UP ON THE DOLLAR AT 6.8597: HUGE DEVALUATION/PAST SEVERAL DAYS RESUMES// TRADE TALKS NOT DOING TOO GOOD : /ONSHORE YUAN TRADING WEAKER AGAINST OFFSHORE YUAN/ONSHORE YUAN TRADING WEAKER AGAINST USA DOLLAR/OFFSHORE YUAN TRADING MUCH STRONGER AGAINST THE DOLLAR /CHINA RETALIATES WITH TARIFFS/ TRUMP RESPONDS TO NEW TARIFFS AND IT NOW A FULL TRADE WAR COMMENCED
3A/NORTH KOREA/SOUTH KOREA
i)North Korea/South Korea/USA/
b) REPORT ON JAPAN
3 C/ CHINA
4/EUROPEAN AFFAIRS
i)Our resident expert on European affairs explains what Trump is up to with respect to the EU. Trump wants to put a wedge between Germany and the USA because he does not want to fund NATO. If Germany faces Russia then the USA will cut off funds to NATO.
( Tom Luongo)
ii))SPAIN/SPANISH BANKS
iii)Italy
Italy’s populist leaders are now challenging Brussels as they vow for much higher spending and intend on having the deficit rise from .8% of GDP up to its ceiling of 3%
should be an interesting year for Italy
( zerohedge)
5. RUSSIAN AND MIDDLE EASTERN AFFAIRS
i)RUSSIA/SYRIA/ISRAEL
Israel reports that there are new images which confirm Iran has placed surface to surface missile facility inside Syria
( zerohedge)
Very awkward: Iran has stunned Israel and the USA my moving ballistic missiles to USA controlled Iraq and within easy distance of both Tel Aviv and Riyadh. Israel will not wait to destroy those missiles
( zerohedge)
iii)Trump stops the UN funding for the Palestinian refugee program.
( Wise/the HILL)
This is dangerous as Erdogan vows to abandon the dollar. It does not look good for Trump to protect the Europeans if Turkey buys Russian defense systems and Germany buys Russian oil. There are two-fold major problems with this
- Turkey houses the second largest defense shield in Europe in Turkey and Incirlik, Turkey is the largest base. It would not be good if the west abandons Incirklik
- Turkey houses millions of migrants and no doubt will unleash all of those migrants onto Greece
( zerohedge)
You can thank Hillary for the mess inside Libya. Over the weekend, we witnessed rockets raining down on Tripoli and a massive prison break releasing many hardened criminals onto the streets..also many street battles.
This country is in turmoil..
(courtesy zerohedge)
vi)Syria/USA/Russia
Trump threatens Assad over the impending Idlib assault (which eventually began Monday)
( zerohedge)
6. GLOBAL ISSUES
i)SWEDEN
Friday night: Sweden on fire!
( zerohedge)
ii)A detailed look at the upcoming Swedish election and it could get very messy and nobody would form a government.
(Golterman/ING economics)
( zerohedge)
iv)MEXICO/CANADA/USA
TRUMP notifies congress that he is ready to sign a trade pact with Mexico but keep talking to Canada. There is still huge differences as Canada wants to protect its dairy industry. Canada also wants Chapter 19 of the trade dispute resolution to remain intact something that the uSA wants removed. It does not look like there will be a dea especially after Trump’s rant
( zerohedge)
7. OIL ISSUES
8 EMERGING MARKET ISSUES
( zerohedge)
ii)Sunday: Panic
The peso is now set to disintegrate after the IMF strangely tells the Central bank of Argentina to stop supporting its currency. The Central bank is doing the correct policy but if it doesn’t and the markets feel that the central bank does not have their backs, then the currency will collapse and that will lead to outright default and a huge depression inside Argentina.
(zerohedge)
iii)ARGENTINA/MONDAY
Macri initiates price controls on foods as well as higher taxes on exports. This has been one bright spot for Argentina and that will be taxed and raise 350 billion Argentinian pesos for the government. The country is well on its way to default and hyperinflation
( zerohedge)
iv)Brazil
( zerohedge)
iv b)
sad day for Brazil as fire gutted its National Museum with over 20 milllion exhibits and artifacts
( zerohedge)
vi)Late this morning/South Africa/Argentina
Rand hits an all time low of 15.325 to the dollar while the Argentinian peso hits: 39.07 to the dollar.
Both of these nations will see them default on their debt
( zerohedge)
India will join China in defying Trump and will allow imports of Iranian oil.
(courtesy zerohedge)
9. PHYSICAL MARKETS
ii)By pointed this out to you last week, that sovereign India has sold treasuries and bought gold for the first time in over 10 years. Citizens of India are a lot smarter than the government..they have been buying massive amounts of gold for an eternity.( Times of India/GATA)
iii)CFTC orders BNP Paribas to pay 90 million dollars in a penalty for rigging the ISDA fix benchmark
(courtesy Reuters/Schroder)
iv)A good look at the crashing Iranian economy. Interestingly enough renting an apartment requires the renter to cough up two gold coins
( Middle East Eye/London/GATA))
v)A must read…Alasdair Macleod echoes Andrew Maguire outlining the huge demand of physical gold and silver heading to China.
Alasdair outlines that the next phase will see the dollar fall and inflation skyrocket which will be a great for gold and silver.
( Alasdair Macleod..)
vi)How gold is providing some help to our emerging nations as their currencies collapse. Gold is certainly accumulated in these countries by smart individuals who realized what was going on
( Ronan Manly/Bullionstar)
vii)A little too late for these guys: Maduro introduces a gold backed crypto currency.
10. USA stories which will influence the price of gold/silver)
i)Market trading /GOLD/MARKET MOVERS:
MARKET TRADING
a)Get a load of the following total conflicted soft data: Either the USA manufacturing has slumped to a 9 month low or explodes to a 14 yr high. We have been witnessing this for the past few years.
(courtesy zerohedge)
b)Now it is the Democrats that are erupting after the White House will not release classified and privileged Bush ii era documents.
To recap: the FBI and the D of J. will not release classified documents and the democrats are howling that these should not be released and yet what the Kavanaugh papers to be released despite it being privileged.
Trump should declassify everything. He has enough votes and let’s be on with this.
(courtesy zerohedge)
iv)SWAMP STORIES
a)I feel sorry for Papadopoulos: He never hindered the authorities because he was set up. He also never told the Trump campaign of the Kremlin dirt and he heard of the “dirt” one month prior to the news that Hillary’s emails were stolen
Considering what all of the FBI crooks have done, he should not receive any penalty whatsoever
(courtesy zerohedge)
Let us head over to the comex:
The next active delivery month after August for silver is September and here the OI FELL by 3663 contracts DOWN to 2542.
We had 3759 notices filed on Friday so we gained 96 number of contracts or 480,000 oz will stand at the comex as these guys refused to accept a fiat bonus and desired the real physical at the comex. For the past 17 months starting in April 2017, we have been witnessing on a constant basis queue jumping as the commercials seek physical silver immediately after first day notice. The commercials jump ahead of spec longs to retrieve physical as this silver is needed somewhere. It continues again this month unabated.
October LOST 54 contracts to stand at 712. November saw its initial gain of 3 contracts to stand at 3.
ON FIRST DAY NOTICE FOR THE SEPT/2017 SILVER CONTRACT MONTH: 20.515 MILLION OZ STOOD FOR DELIVERY AND BY MONTH’S END: A HUGE 32.875 MILLION OZ WAS THE FINAL STANDING AS WE WERE WELL INTO THE PHENOMENON OF QUEUE JUMPING IN SILVER. THUS WE ARE WAY AHEAD OF LAST YEAR AS ALREADY WE HAVE 30.505 MILLION OZ OF SILVER INITIALLY STAND. WE WILL NO DOUBT PASS LAST YEAR’S TOTAL OF 32.875 MILLION OZ ONCE SEPTEMBER ENDS AS THE BANKS SCRAMBLE FOR PHYSICAL SILVER.
Major gold/silver trading /commentaries for TUESDAY
GOLDCORE/BLOG/MARK O’BYRNE.
September Is The Best Month For Gold and Worst Month For Stocks
by Mark Hulbert of Marketwatch
If you listen closely, you’ll hear gold investors whispering that “it’s an ill wind that blows no good.” That’s because, while September may be the worst month of the calendar for stocks, it’s the best month for gold.
Since it began trading freely in the U.S. in the early 1970s, gold bullion has produced an average gain of 2.1% in September. The comparable monthly average for all non-September months is 0.6%. (See table below)
This difference is significant at the 90% confidence level that some statisticians use when determining if a pattern is real — though not at the more stringent 95% confidence level.
To the extent the future will be like the past, therefore, September may finally bring some good news to long-beleaguered gold bugs. You may recall that I wrote about gold’s monthly seasonal patterns last May, pointing out that gold’s seasonal tendencies would be negative through the end of August. Since that column was written, gold has fallen by about 10%.
To be sure, as I wrote recently when discussing the stock market’s negative September seasonalities, statistics alone are not a sufficient reason to bet on a pattern’s persisting. Another prerequisite is that there exist a plausible theory for why the statistical pattern should exist in the first place.
Unlike the situation for stocks’ September seasonalities, there does appear to be a plausible explanation for gold’s September seasonality. Three, in fact.
I say this on the basis of a study by Dirk Baur, a professor of accounting and finance at the University of Western Australia business school. He discussed three possible explanations for what he termed gold’s autumn effect: “Hedging demand by investors in anticipation of the ‘Halloween effect’ in the stock market; wedding season gold jewelry demand in India, and negative investor sentiment due to shorter daylight time.”
A couple of crucial qualifications are in order. First, Baur also found that gold’s returns are more volatile in the autumn than in other seasons of the year. So on a risk-adjusted basis it may simply be that gold’s higher autumn returns are compensation for the additional volatility.
Second, these results are based on averages, and not every September is positive for gold. Last year, gold bullion lost 2.2%. So even if you believe the future will be like the past, there’s no guarantee that gold will do well this coming month.
Still, even with these qualifications, many gold investors are no doubt relieved that the seasonal winds are finally blowing in a more positive direction.
News and Commentary
Gold inches down as trade worries keep dollar firm (Reuters.com)
Gold Prices Tick Higher During U.S. Holiday, Focus on Jobs Report (Investing.com)
Stocks Mixed on Global-Trade Fears; Pound Weakens (Bloomberg.com)
Perth Mint’s August gold, silver sales rise on lower prices (Reuters.com)
Perth Mint’s August gold, silver sales rise on lower prices (Reuters.com)
Source: Bloomberg.com
Gold could yet make a comeback as a reserve currency (GulfNews.com)
Global trade tensions are likely to get even worse after the US midterms (CNBC.com)
Why the US dollar is key to the fate of global markets (MoneyWeek.com)
The Beginning of the End? | John Rubino (Youtube.com)
Maduro Buys Gold to Boost Savings amid Five-Digit Inflation (StarTribune.com)
Maduro Buys Gold to Boost Savings amid Five-Digit Inflation (StarTribune.com)
Gold Prices (LBMA AM)
03 Sep: USD 1,201.70, GBP 933.00 & EUR 1,035.75 per ounce
31 Aug: USD 1,206.85, GBP 927.58 & EUR 1,034.03 per ounce
30 Aug: USD 1,202.35, GBP 924.25 & EUR 1,028.49 per ounce
29 Aug: USD 1,204.30, GBP 935.14 & EUR 1,032.33 per ounce
28 Aug: USD 1,212.75, GBP 939.88 & EUR 1,037.02 per ounce
24 Aug: USD 1,189.95, GBP 928.76 & EUR 1,029.43 per ounce
Silver Prices (LBMA)
03 Sep: USD 14.53, GBP 11.27 & EUR 12.50 per ounce
31 Aug: USD 14.66, GBP 11.27 & EUR 12.56 per ounce
30 Aug: USD 14.67, GBP 11.27 & EUR 12.54 per ounce
29 Aug: USD 14.69, GBP 11.40 & EUR 12.60 per ounce
28 Aug: USD 14.90, GBP 11.56 & EUR 12.74 per ounce
24 Aug: USD 14.62, GBP 11.37 & EUR 12.63 per ounce
Recent Market Updates
– Pound Investors Face Months of Volatility Into Brexit Endgame
– This Week’s Golden Nuggets
– Video: “Financial War” Deepens as Russia Buys Gold and Dollar Hegemony At Risk – Rickards on CNN
– Will Indebted Nations Globally Follow Venezuela Into Hyperinflation?
– End Of Dollar Hegemony May Happen Soon and Badly Impact Indebted America
– 10 Incredible Photos From Venezuela Show The Disastrous Risks Of Currency Devaluation
– This Week’s Golden Nuggets
– Video: Is Silver Set for a Massive Breakout?
– Banks Now Long Gold, Short Dollar. What Do They Know?
– Russia Buys 800,000 Ounces Of Gold In July
– Gold Season – Is This It?
– This Week’s Golden Nuggets
– Gold And Silver Prices Fall 1.6% and 4.3% To Near 2 Year Lows
– London House Prices Fall At Fastest Annual Rate Since Height Of Financial Crisis
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)
|
|
Dear Harvey Organ,
Thank you for your participation in our webinar on June 7th with our host and CEO of Kinesis, Thomas Coughlin.
The response we received has been incredible, we appreciate you taking the time to join us and hope you found it to be beneficial.
Due to such a high influx of questions we received we were unable to have them all answered. Nevertheless, if there was anything which requires more clarification, or you have a query which needs to be rectified, we invite you to join our telegram group:
We apologize for the technical issues we incurred during the webinar which resulted in it running a little over schedule, we hope that the next one we host will run seamlessly.
A video has been put together and uploaded onto our YouTube channel which can be found here:
Please share and subscribe to our YouTube channel to be notified of all the latest videos as they become available.
The rapid growth that we are currently experiencing has been incredible and with your support, is only going to get better.
We are working behind the scenes very hard to create a better experience for everyone involved! Stay tuned in as we have many more announcements to be released in the upcoming days.
Kind Regards,
 |
Kinesis Money
a:C/O ILS Fiduciaries (IOM) Limited, First Floor,Millennium House, Victoria Road, Douglas, Isle of Man IM2 4RW
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The following is self explanatory
(courtesy GATA/Chris Powell and Harvey Organ)
GATA asks bank regulator to check risks of gold
futures maneuver
Submitted by cpowell on Sun, 2018-06-10 16:17. Section: Daily Dispatches
12:21p ET Sunday, June 10, 2018
Dear Friend of GATA and Gold:
GATA has appealed to the U.S. comptroller of the currency, who has regulatory authority over banks, to review financial risks certain banks may have incurred through derivatives in the monetary metals markets, particularly through the recent heavy use of the “exchange for physicals” mechanism of settling gold and silver futures contracts on the New York Commodities Exchange.
The appeal was made in a letter sent May 5 to the comptroller, Joseph M. Otting, whose office is part of the U.S. Treasury Department, by your secretary/treasurer and GATA futures market consultant Harvey Organ.
“Exchange for physical” settlements of futures contracts long were considered emergency procedures when a seller was not able to deliver metal from an exchange-approved warehouse and wanted to settle with delivery elsewhere. But now such settlements appear to constitute most gold and silver futures settlements on the Comex. It is a strange development that appears to have been necessitated by the increasing difficulties of central banking’s gold and silver price suppression policy.
GATA has received no acknowledgment of the letter. Its text is below and a PDF copy of it is here:
http://www.gata.org/files/ComptrollerOfCurrencyLetter.pdf
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
* * *
May 5, 2018
Joseph M. Otting, Comptroller of the Currency
U.S. Treasury Department
400 7th Street, SW
Washington DC 20219
Dear Comptroller Otting:
Please let us bring to your attention financial risks to major banks involving their possibly unreported exposure to derivatives in the monetary metals markets.
In recent months gold and silver future contracts issued by U.S. banks on the New York Commodities Exchange have been moved off-exchange for delivery through a mechanism known as “exchange for physical” (EFP) contracts. Until recently use of this mechanism was considered an emergency procedure when a seller did not have access to metal for delivery through Comex warehouses. Now the mechanism seems to be in use for a large share of front-month contracts for which delivery is sought.
Here is an example that is happening at the Comex in the front active month of April for gold and the inactive delivery month of April for silver.
In gold, there were 229,436 EFP contracts for 713.64 tonnes, an average of 10,925 contracts and 1,092,500 ounces per trading day.
In silver, there were 77,150 EFP contracts for 385,750,000 ounces, an average of 3,673 contracts and 18,369,000 ounces per trading day.
London Bullion Market Association rules suggest that these contracts may not be reported to regulators. The LBMA’s bylaws say:
“Figures above exclude any contracts not subject to risk-based capital requirements, such as FX contracts with an original maturity of 14 days or less, futures contracts, written options, and basis swaps. Therefore, the total notional amount of derivatives by maturity will not add to the total derivatives figure in this table.”
We are told that these EFP contracts are transferred from the Comex to London as what are called “serial forwards” and their duration is always less than 14 days, which exempts them from being reported.
It is our understanding that in each quarter your office prepares a report detailing risk undertaken by the banks under the comptroller’s supervision.
These risks include derivatives undertaken by U.S. banks and other obligations that may cause a bank to fail. Our concern is that your office may not be aware of large unreported derivative exposure by banks.
Could you review this matter and let us know your conclusions?
Sincerely,
CHRIS POWELL
Secretary/Treasurer
HARVEY ORGAN
Consultant
Gold Anti-Trust Action Committee Inc.
7 Villa Louisa Road
Manchester, Connecticut 06043-7541
end
Finally, they replied and it was a complete brush off
(courtesy zerohedge)
Currency comptroller brushes off GATA’s inquiry on
gold, silver EFPs
Submitted by cpowell on Fri, 2018-08-10 15:37. Section: Daily Dispatches
11:35a ET Friday, August 10, 2018
Dear Friend of GATA and Gold:
The U.S. comptroller of the currency, a bank regulator, has declined GATA’s request to inquire into the strange explosion of the use of the emergency procedure of “exchange for physicals” in the settlement by banks of the gold and silver futures contracts they have sold on the New York Commodities Exchange.
Your secretary/treasurer and GATA’s consultant about the Comex, Harvey Organ, wrote to the comptroller, James M. Otting, on May 5, calling attention to the recent enormous use of EFPs, which implies derivatives risks being undertaken by U.S. banks that could cause the banks to fail:
http://www.gata.org/node/18303
“Our concern is that your office may not be aware of large unreported derivative exposure by banks,” GATA wrote.
As months passed without any acknowledgment from the comptroller’s office, your secretary/treasurer appealed to his U.S. representative, John B. Larson, D-Connecticut, to ask the comptroller’s office to reply. The congressman’s office made a second inquiry on Monday this week and today the comptroller’s office provided Larson with a copy of a reply written and mailed Wednesday.
The comptroller’s reply, signed by the deputy comptroller for public affairs, Bryan Hubbard, said only that the comptroller’s office has “dedicated examiners” at the largest banks who “continuously evaluate the credit, market, operational, reputation, and compliance risks of bank trading and derivative activities.”
The reply did not say anything about the use of the “exchange for physicals” procedure for settling futures contracts. That is, the reply was a begrudged brushoff and GATA’s letter would have been ignored completely if not for Representative Larson’s repeated intervention.
Of course GATA hardly expected a conscientious reply to its letter, the comptroller’s office being not an independent regulator but part of the Treasury Department, whose mandate includes administration of the Gold Reserve Act of 1934, which, as amended in the 1970s, authorizes the department’s Exchange Stabilization Fund to secretly intervene in and rig any market in the world, directly or through intermediaries:
https://www.treasury.gov/resource-center/international/ESF/Pages/esf-ind…
But there’s always value in demonstrating government’s lack of candor about what it is doing, especially in regard to the monetary metals.
A PDF copy of the reply from the comptroller’s office is posted at GATA’s internet site here:
http://www.gata.org/files/ComptrollerOfCurrencyReply-08-08-2018.pdf
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
END
CFTC orders BNP Paribas to pay 90 million dollars in a penalty for rigging the ISDA fix benchmark
(courtesy Reuters/Schroder)
CFTC orders BNP Paribas to pay $90 million penalty for rate-rigging
Submitted by cpowell on Fri, 2018-08-31 14:38. Section: Daily Dispatches
By Pete Schroeder
Reuters
Wednesday, August 29, 2018
WASHINGTON — U.S. federal regulators on Wednesday ordered BNP Paribas to pay a $90 million civil penalty after settling charges against BNP Paribas Securities Corp. for attempted manipulation of the ISDAfix benchmark.
Companies and investors use ISDAfix to price swaps transactions, commercial real estate mortgages and structured debt securities.
The Commodity Futures Trading Commission order found that BNP Paribas attempted to manipulate the benchmark to benefit its derivatives positions in instruments and that the conduct involved multiple traders and included supervisors, it said in a statement. …
… For the remainder of the report:
https://www.reuters.com/article/us-usa-cftc-bnp-paribas/u-s-cftc-orders-…
* * *
end
A good look at the crashing Iranian economy. Interestingly enough renting an apartment requires the renter to cough up two gold coins
(courtesy Middle East Eye/London/GATA))
Amid Iran’s currency crash, renting apartment requires two gold coins
Submitted by cpowell on Sat, 2018-09-01 13:52. Section: Daily Dispatches
By Rohollah Faghihi
Middle East Eye, London
Wednesday, August 29, 2018
TEHRAN, Iran — It’s the commodity that becomes a safe haven at times of economic crisis. Now, with the crash of the rial, Iranians are using gold for more everyday payments, most notably rent — but the resulting price hikes are starting to affect the demographics of Tehran itself. …
The downward spiral of the rial has led some landlords to try to safeguard their income by turning to gold
Hesam Oqabai, the chairman of the Real Estate Agents Union of Tehran province, said the housing market accounts for about 45 percent of activity in the Iranian economy.
“Given our country’s economic condition, the fluctuations in the foreign exchange market are affecting the housing market,” he said.
The result has been a doubling of rents in some Tehran neighborhoods, including Dibaji Jonubi, Shahrake Qarb, Mirdamad and Ferdows Qarb. …
Esamil Jalali is a landlord in Vanak, a wealthy and well-connected bustling neighbourhood in northern Tehran.
He is one of those property owners who not only has increased his rents but also asked for payment in gold rather than in rials.
Currently he is asking prospective tenants to pay two gold coins to rent a 95 square metre apartment for one month.
“I know that many may not be able to afford it,” he said, “but when I see that the currency I may get from my tenants would have less value compared to the previous month, then that leaves me with no choice. If I continue to rent out my apartment in return for rials, then I would face financial loss.” …
… For the remainder of the report:
https://www.middleeasteye.net/news/iran-currency-crisis-gold-coin-rial-d…
end
(courtesy of Nicholas Biezanek)
The Usual
| silver as at 31st Aug 2018 | gold as at 31st Aug 2018 | |
| 000,000 ozs. | tonnes | |
| YTD EFPs | 2,038 | 5,197 |
| EFPs/wold production | 291.11% | 216.65% |
| Open Interest | 1,071 | 1,472 |
| Registered holdings | 87 | 8 |
| Registered/OI | 8.13% | 0.55% |
Smart Investor magazine in Germany features GATA’s work
Submitted by cpowell on Sun, 2018-09-02 19:07. Section: Daily Dispatches
3:17p ET Sunday, September 2, 2018
Dear Friend of GATA and Gold:
September’s edition of the German financial magazine Smart Investor carries a major report about gold by Rainer Kromerek that cites GATA’s work, including that of our consultant on the Bank for International Settlements, Robert Lambourne. The report also cites the work of Craig Hemke of the TF Metals Report and Sprott Money and financial letter writer and author James G. Rickards.
The report is written in German and its headline, translated, is “The Gold Price Falls and No One Knows Why.” It indicates that while gold market manipulation is a largely prohibited subject for financial news organizations in North America and Britain, the subject can be raised east of the English Channel.
With Smart Investor’s kind permission, a PDF copy of its report is posted at GATA’s internet site here:
http://gata.org/files/SmartInvestor-09-2018.pdf
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
END
How gold is providing some help to our emerging nations as their currencies collapse. Gold is certainly accumulated in these countries by smart individuals who realized what was going on
(courtesy Ronan Manly/Bullionstar)
Ronan Manly: As emerging market currencies collapse, gold is being mobilized
Submitted by cpowell on Mon, 2018-09-03 13:31. Section: Daily Dispatches
9:35a ET Monday, September 3, 2018
Dear Friend of GATA and Gold:
Bullion Star gold researcher Ronan Manly today reviews the ascent of gold as protection against the collapse of currencies in Turkey, Iran, Venezuela, and other countries. Manly’s analysis is headlined “As Emerging Market Currencies Collapse, Gold Is Being Mobilized” and it’s posted at Bullion Star here:
https://www.bullionstar.com/blogs/ronan-manly/mobilization-gold-emerging…
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
END
By pointed this out to you last week, that sovereign India has sold treasuries and bought gold for the first time in over 10 years. Citizens of India are a lot smarter than the government..they have been buying massive amounts of gold for an eternity.
(courtesy Times of India/GATA)
India’s central bank sells Treasuries and buys gold for first time in nearly a decade
Submitted by cpowell on Mon, 2018-09-03 17:52. Section: Daily Dispatches
RBI Buys Gold for First Time in Nearly a Decade
By Gayatri Nayak
The Times of India, Mumbai
Monday, September 3, 2018
https://economictimes.indiatimes.com/markets/commodities/news/rbi-buys-g…
MUMBAI, India — The Reserve Bank of India has bought gold for the first time in nearly a decade, signalling that the metal could be in demand as a store of value when returns and capital values of fixed-income bonds are declining in a rising-rate environment.
The RBI added 8.46 metric tonnes of gold to its stock of holdings during the financial year 2017-18 ending June 30, taking the level of gold reserves to 566.23 metric tonnes, according to its latest annual report.
It last bought 200 metric tonnes from the International Monetary Fund to boost its reserves in November 2009.
Over the past nine years, the gold stock in RBI reserves was stable at 17.9 million troy ounces. But the RBI has started adding to its stock since December 2017, data submitted to the IMF indicate.
The RBI’s stock of gold, as of June 30, amounted to 18.20 million troy ounces or equivalent to 566.23 metric tonnes, up from 17.9 million troy ounces in November 2017.
The RBI’s decision to buy gold is significant because unlike many other central banks such as the People’s Bank of China, the RBI does not regularly trade in gold, although the RBI Act permits it to do so.
Economists reckon that investing in gold is a prudent treasury move by the central bank at a time of rising yields. The RBI has already sold close to $10 billion worth of U.S. treasury securities between April and June, data from the U.S. Treasury Department suggests.
“The addition of gold to RBI’s forex reserves is probably a diversification of assets for their deployment, keeping in mind both the buildup of reserves in 2017 as well as the evolving global risks, including market volatility and rising policy rates in the United States,” said Saugata Bhattacharya, chief India economist at Axis Bank.
Rising yields could trigger mark-to-market losses for the RBI’s bond portfolio. Of the $405 billion worth reserves with the central bank, $245 billion were held in the form of bonds and securities as of June 30, data submitted to the IMF show.
Diversifying reserves to include gold is a prudent measure at such times. The annual report points out that the RBI continued diversification of foreign currency assets with attention to risk management. The gold portfolio had also “been activated,” said Bhattacharya.
The RBI did not say where it bought the gold from or the reasons for such transactions. But economists say that the central bank might also want to create a buffer to meet the redemption needs of Gold Bond Schemes through which it sold bonds worth more than ?4,000 crore.
The RBI has to redeem the three-to-eight-year bonds at the prevailing price of the metal and keep an extra stock of gold in its kitty to hedge against price risks.
END
A must read…Alasdair Macleod echoes Andrew Maguire outlining the huge demand of physical gold and silver heading to China.
Alasdair outlines that the next phase will see the dollar fall and inflation skyrocket which will be a great for gold and silver.
(courtesy Alasdair Macleod..)
Alasdair Macleod: The dollar, commodities, and inflation
Submitted by cpowell on Mon, 2018-09-03 18:55. Section: Daily Dispatches
2:58p ET Monday, September 3, 2018
Dear Friend of GATA and Gold:
There are plenty of U.S. dollars floating around the world and foreigners are loaded with them, so there won’t be any serious squeeze on the world reserve currency, GoldMoney research director Alasdair Macleod writes in his new commentary, “The Dollar, Commodities, and Inflation.” Further, Macleod writes, the primary mechanism of central banks will continue to be money printing even as China starts spending again to support its infrastructure initiatives in Asia and Africa. The result, he concludes, will be inflation, breaking out more suddenly than expected, and rising commodity and monetary metals prices. Macleod’s analysis is posted at GoldMoney here:
https://www.goldmoney.com/research/goldmoney-insights/the-dollar-commodi…
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
The Dollar, Commodities & Inflation
We appear to be at a turning point not only for the dollar, but for all commodity markets, including precious metals, as well. The dollar has yet to reflect properly the enormous monetary expansion of recent years, and commodities will be corralled into supplying China’s Asian reformation. Taken together, the effect of a falling dollar and rising commodity prices, including energy, will drive price inflation upwards more violently than currently expected. This article looks at both these issues in turn.
The tenth anniversary of monetary rescue
This month is the tenth anniversary of a sudden increase in reserve balances at the Fed. From August 2008 onwards, the Fed began buying assets from commercial banks, thereby injecting money conjured up out of thin air into the banking system. Before August 2008, total bank reserves rarely exceeded $10bn.
Since then, bank reserves at the Fed increased to a staggering $2,786.9bn at the peak in January 2014. Between August 2008 and today, true money supply, a reflection of bank lending, has increased by just over ten trillion dollars, the equivalent of 65% of today’s private sector US GDP. It now stands at 100% of private sector GDP, representing an unprecedented growth in monetary inflation for any developed nation in modern times. It is still working its way into rising prices.[i]
However, an increase in the general level of prices appears to be the last thing on the minds of economists and investors. It is an odd paradox that price inflation is being ignored, spurred perhaps by the deliberate under-recording of it in official statistics. Behind it all appears to be an extreme fear that a global financial and economic meltdown is brewing, which will force foreigners to buy the dollar to cover dollar loans. But as I showed in two recent articles, this is a delusion, with speculators misunderstanding the true position.[ii] Furthermore, there are about $75 trillion of derivatives covering currency risk, so the idea that the currency world is a simplistic one with future currency risks unanticipated is simply nonsense.
Foreigners are already up to their eyeballs in dollars anyway, having invested an estimated nine trillion dollars in US dollar assets since the Lehman crisis at the last count. Doubtless, portfolio flows have recently added to that in order to take advantage of higher US treasury bond yields than that obtained from German and Japanese sovereign debt. Furthermore, in addition to portfolio and commercial dollar investments, foreigners owned over $4 trillion of liquidity in correspondent banks at the last date of record. It almost certainly over $5 trillion today.[iii] Furthermore, with the annual budget deficit accelerating into trillion-dollar figures from the next financial year, trade deficits, despite Trump’s tariffs, are also on their way to similar numbers, unless the American consumer suddenly decides to start saving.
That is unlikely. But fear of a financial crisis is not misplaced, but timing and form are the issues. There are two possible paths towards it, or perhaps a hybrid of the two. The Fed may be forced to raise interest rates to curb inflation more rapidly than is currently expected, in which case there will come a point where the interest cost of working capital fatally undermines established business calculations, leading to a conventional credit crisis. Alternatively, events may conspire to drive up stock markets into further overvaluation territory, as was the case in 1928-29, leading to a financial crash that directly undermines the US economy.
Now that the US economy is awash with foreign-owned dollars, foreigners are more likely to turn sellers in a crisis and drive the dollar down than be further buyers over and above dollars accumulated through trade. This is markedly different from US and Japanese corporations covering their exposure to emerging market currencies, as was the case during the Asian crisis in the late 1990s, when they drove the dollar and yen up.
Speculators take the precedent of a rising dollar leading to a new emerging market crisis so seriously that they have become incredibly myopic. They are not thinking through the consequences of a financial crisis for the dollar, otherwise they would not take out short positions in everything just to go long of it.
It bears repeating that in the event of a financial crisis, central banks have one and only one response. They have a morbid fear of deflation, an ill-defined condition characterised by a fall in the general price level. They believe that a rise in the general price level is healthy and believe they can regulate it by reducing interest rates and injecting more money into the system. In other words, they always stand ready to flood the economy with yet more money.
It is also worth pointing out that every bull market in equities is a wall of worry, and this one has been no different. Even after ten years of recovery from the last crisis, it is still conventional wisdom to worry about the euro and the Eurozone banking system. The imminent collapse of China’s economic miracle under a sea of debt is another often voiced concern. Now we have the collapse of the Turkish lira, the South African Rand, and the cross-infection into other vulnerable currencies. The slowing down of monetary growth accompanied by a flat yield curve in the bond markets is today’s favourite with monetarists, and we have been repeatedly warned about the overhang of unproductive debt.
These are all issues that central banks can deal with, or do not really matter. Central banks are very good at smothering systemic risk and keeping the game going, as the bears should have learned over the last nine years. Over which time, incidentally, the S&P500 Index has tripled and is still breaking new high ground.
The ending of almost all credit cycles occurs with unbridled optimism, and we are nowhere near that condition. When equity markets peak before the economy, usually due to rising interest rates, optimism is then to be found in the economy itself. If equity markets become wildly over-extended, as was the case in 1928-29 and 1999-2000, that is where the optimism lies and goes no further. In either case, we are emotionally not there yet.
The global economy is probably growing more rapidly than recorded by government statistics. The best indicator we have is the developing shortages of skilled labour. That doesn’t mean that the Fed, for example, will get ahead of the curve and raise interest rates, sufficiently to head off price inflation. The members of its FOMC are equally infected with worries about the future as are the investing public, and, as history has repeatedly shown, they only raise rates reluctantly.
We shall see, but these two separate paths into the immediate future, a wildly over-valued stock market or growing industrial optimism, will both lead to price inflation, measured in unbacked fiat dollars, irrespective of interest rates.
A credit crisis is triggered not by the overload of debt as commonly thought, but by the rising cost of working capital and is the one risk wholly beyond the control of central banks. It is the principal risk created by the central banks themselves, a consequence of their expansion of money and the reduction of interest rates as a response to the previous crisis. The cycle of interventions has been getting more destabilising with every cycle, and every cycle ends with an interest-rate driven crisis.
You do not have to be a slick hedge fund manager to understand that based on the massive expansion of the quantity of money over the last ten years, price inflation, not an ill-defined deflationary collapse, is what the future holds. The majority of professional investors are fixated on the latter as the immediate danger, which if anything, goes to show how distorted from reality markets have become.
Commodities – ripe for a large rise in prices
It’s not for nothing that western governments have begun to cosy up to African nations. Uhuru Kenyatta, Kenya’s president, spent some time at the White House earlier this week with his hand held out for American money, and Theresa May spent this week on a whistle-stop tour of South Africa, Nigeria, and then Kenya. African leaders probably hope for a return to the cold war, when they could play off one super-power against another, in return for bribes and funds to keep them in power.
Today, it’s the West’s determination to clip China’s wings in Africa. China dominates infrastructure development south of the Sahara in order to access the commodities she needs for her own development and that planned for a new Asian super-state. Therefore, the central issue is access to commodities and energy and the American geopolitical imperative to obstruct it. The Western powers will not succeed in containing China in Africa, because she is actually providing employment. You would think our governments would learn from experience.
No matter. This brings us to China. Earlier this month the leadership held a two-week meeting at Beidaihe, the beach resort in eastern Hebei province. It comes at a time when America is stepping up pressure on China in order to contain her influence. Doubtless Trump’s tariffs were on the agenda, but it is unlikely China will be deflected from her long-term strategy. This being the case, the Chinese approach continues to be one of damage limitation. In any event, US corporations have enormous investments in China, both in productive capacity and supply chains. China’s best course of action is to continue to exercise patience, and US business interests will probably undermine Trump’s trade policies against China from within.
With that in mind, China is now handing out state contracts for infrastructure development. Having reduced domestic speculation in financial assets and commodities by squeezing out shadow banking activities, she is now easing credit conditions. In other words, the leadership is now moving ahead with its infrastructure development programme, despite trade wars.
There can be little doubt that the recent weakness of base metal prices was driven in part by China’s clearing of the decks for her expansion plans. Western speculators then wrongly took this policy as evidence that China’s economy was in trouble, the victim of Trump’s trade war. This fuelled bullish speculation in the dollar and drove commodity prices even lower. Not only have Chinese-based speculators abandoned long positions in base metals, but international ones have as well.
It has been a perfect storm, leading to a reduction in warehouse stocks everywhere. Copper is particularly exposed to rising Chinese demand, and experts in this market tell me that the lack of physical metal available for delivery from warehouse stocks, as opposed to recorded stocks, is unusual.
Energy is probably the most vital of all industrial commodities, which China will need in increasing quantities, when shale-oil and non-OPEC production begins to decline in the next two or three years. My colleague, Stefan Wieler, who is a specialist in energy markets, has already covered this topic in Crude Oil – the Next 5 Years, published on the Goldmoney website.[iv]
It is against this background that the gold price has become badly out of whack.
Gold – a sheet-anchor at a time of excessive speculation
The commitment of traders’ report for 21 August showed a staggering net short position of over 90,000 contracts for the hedge funds on Comex, otherwise known as the managed money category. On previous oversold conditions, the last record was a net short position of 27,201 contracts on 29 December 2015, which was just after the low point at $1050, marking the beginning of a new bull phase for gold. The current net contract position is illustrated in the chart below.
The pecked line is the average net position since 2006, which at 111,000 long is fully 200,000 contracts adrift from the recent net short level. This extraordinary figure will probably go down in the market history of speculative excesses, being not so much a disparagement of gold, more a measure of bull-headed bullishness for the dollar. Furthermore, this was recorded after the price had recovered $35, suggesting that at its greatest depth the managed money category had been net short well over 100,000 contracts – that’s 311 tonnes of gold.
It will of course correct. Bear squeezes commence when the gold price simply stops falling. So far, the price has rallied $40. But the commercial traders who are long of contracts are not registered charities: it is in their interests to screw the bears as hard as they can. Then, at some stage, the recovering gold price will be seen by the hedge funds as a way to short the dollar. We know this because that is the Comex playbook, repeated time after time.
While traders have focused on trends, they have missed the bigger picture. Russia, which happens to be the world’s largest energy supplier, is ditching the dollar in favour of gold. As the Deputy First Governor of Russia’s central bank said, “gold is a 100% guarantee from legal and political risks”.[v]
Russia is not alone. Asian countries, whose nationals still regard gold as the ultimate money share this view, and the more America uses the dollar as a financial weapon the more they are moving to ditch it. There is as yet no stable and credible paper currency replacement. That may or may not evolve in time. But there is no doubt that any Asian nation looking to the future benefits from China’s continent-wide development plans needs to find one to counter the risk of American interference. Gold is the only commonly accepted alternative to American hegemony, and if the dollar declines from its current overvalued status, the attractions of gold as the cross-border trade medium can only be enhanced.
It is clear that the Americans want to stop China’s influence developing and spreading. Unfortunately for America, China holds almost all the valuable cards, and together with Russia, she is on course to eliminate American influence not only in Asia, but to reduce her influence over the commodity-producing nations in both Africa and South America as well. President Trump has also alienated the Europeans and Canada, where the Trudeaus claim a special relationship with the Chinese leadership. Japan is politically allied to America, but commercially she jumped ship some time ago.
As the dollar weakens, we can expect these topics to come to the fore. Unless he backs down on trade issues after the mid-term elections, President Trump’s threats over trade tariffs will only serve to weaken American multinationals with Asian supply chains, raise domestic prices, thereby forcing up the pace of price inflation, and destroy American jobs. The only positive going for the dollar will be the rise in interest rates, as the Fed grapples with price inflation moving above its target, in an economy stimulated by increasing budget deficits. But it is likely to be a positive that only feeds weakness, as US Treasury prices fall stimulating portfolio outflows, and potentially leading to a government funding crisis.
So far as gold is concerned, anti-dollar sentiment can only grow. The deeply oversold conditions in the futures markets are therefore consistent with a major turning point.
Perhaps that is what we have just seen.
Silver
If gold is going to rally and enter a new bull phase, we can expect silver to benefit as well, traditionally moving nearly twice as much as gold. The hedge fund short positions have rocketed, as shown in the chart below.
However, hedge fund exposure to long contracts has held up somewhat, leading to a net short position of 27,717 contracts, extremely oversold, but not a record.
The difference from gold is silver is predominantly a commercially consumed metal, with a legacy of being a monetary one. The prospects for the silver price are therefore substantially set by industrial demand. However, out of identified demand last year totalling 31,652 tonnes, coins and bars absorbed 4,699 tonnes, to which we can add jewellery at 6,503 tonnes and possibly include silverware at 1,817. The relevance of jewellery and silverware is Asian demand, particularly from India, then China and other S.E. Asian countries accounted for 5,670 tonnes. Silver in these categories is seen by these peoples to have long-term investment and monetary value.[vi]
Therefore, investment and quasi-investment demand for silver accounts for up to 41% of the total, the rest being industrial. Total supply appears to be tight, at 1,094 tonnes less than total demand, meaning that any increase in industrial or investment demand could have a dramatic effect on the silver price.
These figures help explain why the silver price is more volatile than that of gold. But there is a further interesting consideration, and that is the Chinese government classifies silver as a precious metal, the responsibility of the People’s Bank. What that means is China’s central bank overseas 7% of global demand, and as with gold, the state has the refining monopoly.
While industrial demand has softened in recent years (having peaked in 2013), it is likely to pick up in the coming years, as China brings more of her population into the middle classes and expands her markets in Asia. As is the case with base metals it’s hard to see how mine supply can expand rapidly enough to meet the likely increase in demand. Therefore, the two factors driving future prices are likely to be an immediate shortage of physical metal as China restocks for her industrial demand, and the fall in an over-valued dollar stimulates investment demand.
Summary
It is clear that recent dollar strength has been driven mainly by speculative flows on the assumption that the Fed’s interest rate policy, coupled with Trump’s trade policies, will create a credit crisis leading to demand for the dollar. While a credit crisis is inevitable, market assumptions are wrong for two reasons: foreign ownership of dollar cash and dollar investments are at an all-time record already, and the Fed will do everything it can to avoid such a crisis occurring.
Meanwhile, China’s economic planning continues regardless, and will lead to a massive increase in demand for energy, base metals and other industrial resources over the coming years. That process is starting now.
The outlook for the dollar is therefore extremely bearish. Its purchasing power measured in commodity prices will fall, its relevance as a trade settlement currency will decline, and the excess deposit money in the US financial system will continue to work its way into rising domestic prices. Furthermore, when the credit crisis actually hits US financial markets, the only response the Fed can have is to flood markets with yet more money.
The confluence of current events and their prospective development appear to be extremely positive for precious metal prices.
[i] This assumes the sum of state and central government spending is 35% of GDP. See https://www.usgovernmentspending.com/percent_gdp
[ii] See https://www.goldmoney.com/research/goldmoney-insights/currency-woes and https://www.goldmoney.com/research/goldmoney-insights/valuing-gold-in-a-world-awash-with-dollars
[iii] Net foreign investment is extracted from Exhibit 19T on page 30 in US Portfolio Holdings of Foreign Securities (June 2017). Balance of trade figures from St Louis FRED.
[iv] https://www.goldmoney.com/research/goldmoney-insights/crude-oil-the-next-5-years
[v] Bloomberg, 22 August, article by Elizabeth Burden.
[vi] Figures from Silver Institute’s World Silver Survey 2018, Appendix 1.
Venezuela’s Maduro spends $6 on gold certificate as pensioners queue for their money
Submitted by cpowell on Tue, 2018-09-04 02:16. Section: Daily Dispatches
Maduro Buys Gold to Boost Savings amid Five-Digit Inflation
By Jorge Rueda
Associated Press
via Minneapolis Star-Tribune
Monday, September 3, 2018
CARACAS, Venezuela — President Nicolas Maduro said today he is investing part of his personal savings in a gold-backed certificate as part of a much-questioned plan to crush hyperinflation and reactivate Venezuela’s moribund economy.
Maduro and First Lady Cilia Flores were the first in line at the central bank in downtown Caracas on Monday as it began selling the certificates.
He said he spent 350 bolivars — or about $6 at the recently devalued official exchange rate — acquiring the certificate, which functions like a fixed-term deposit that matures in a year and is supposedly backed by a 1.5-gram piece of gold held with the monetary authority.
“If I had a little more savings in bolivars I would have invested more,” Maduro said as cameras were rolling during his televised visit to the central bank. “Cilia had a little more than me, so she bought her certificate for a little ingot of 2.5 grams.”
In a country where five-digit inflation has all but destroyed savings, it remains unclear how many Venezuelans will take up the government’s offer.
A few hours after Maduro left, the central bank’s main atrium — the only place where the certificates are being sold for now — was desolate, with only a handful of prospective buyers inquiring about the documentation required to make a purchase.
However, just around the block tensions were running high outside a state-owned bank as elderly pensioners waited in hours-long lines to withdraw the first part of a huge payment increase promised as part of Maduro’s monetary overhaul last month.
“This is a joke. How am I going to buy gold when my pension isn’t even enough to live on?” said Juan Vera, 71, sweating in the midday heat after waiting four hours for the bank to open.
Many in line, some of whom had arrived before dawn, said they were hoping to withdraw the pension in cash so they could resell the bills for a huge markup to wealthier Venezuelans looking to get their hands on cash that has gone scarce as the economy’s troubles have mounted. But many doubted the bank had enough bills on hand to satisfy the demand. …
… For the remainder of the report:
http://www.startribune.com/maduro-buys-gold-to-boost-savings-amid-five-d
end
A must view video tape where Andrew Maguire explains how China is accumulating massive amounts of gold from the West with the Petro yuan scheme and despite devalued yuan, China has been picking up gold at around 82.16 yuan per oz of gold The September Petro yuan contract will have about 8 tonnes of gold delivered upon and this is real gold, not the crazy stuff the comex is playing. However Andrew and Nicholas both agree that the big delivery month will be December to coincide with the liquidity at the comex..
(courtesy Andrew Maguire)
the Chinese game..How China is overpowering the gold manipulators
https://www.youtube.com/watch?v=O063vNsr1h0&app=desktop
Please disseminate if you can.
Best
Attachments area
Preview YouTube video ANDREW MAGUIRE: China Overpowering GOLD Manipulators, DEBUT Analysis!
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Your early TUESDAY morning currency, Asian stock market results, important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight/9 AM EST
i) Chinese yuan vs USA dollar/CLOSED DOWN TO 6.8390/HUGE DEVALUATION FOR THE PAST FOUR WEEKS RESUMES/CHINESE COMING TO USA FOR TRADE TALKS IN NOVEMBER //OFFSHORE YUAN: 6.8597 /shanghai bourse CLOSED UP 29.85 POINTS OR 1.10% /HANG SANG CLOSED UP 260.80 POINTS OR 0.94%
2. Nikkei closed DOWN 10.48 POINTS OR 0.05%/USA: YEN FALLS TO 111.32/
3. Europe stocks OPENED DEEPLY IN THE RED
/USA dollar index RISES TO 95.57/Euro FALLS TO 1.1556
3b Japan 10 year bond yield: RISES TO . +.12/ !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 111.32/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD IS NOW TARGETED AT .11%/JAPAN LOSING CONTROL OF THEIR BOND MARKET
3c Nikkei now JUST BELOW 17,000
3d USA/Yen rate now well below the important 120 barrier this morning
3e WTI:: 71,24 and Brent: 79.28
3f Gold DOWN/JAPANESE Yen DOWN/ CHINESE YUAN DOWN SLIGHTLY (ON SHORE)/OFF SHORE UP
3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“HELICOPTER MONEY” OFF THE TABLE FOR NOW /REVERSE OPERATION TWIST ON THE BONDS: PURCHASE OF LONG BONDS AND SELLING THE SHORT END
Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.
3h Oil UP for WTI and UP FOR Brent this morning
3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO +.340%/Italian 10 yr bond yield DOWN to 3.09% /SPAIN 10 YR BOND YIELD DOWN TO 1.43%
3j Greek 10 year bond yield RISES TO : 4.47
3k Gold at $1193.00 silver at:14.21 7 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50
3l USA vs Russian rouble; (Russian rouble UP 34 /100 in roubles/dollar) 67.93
3m oil into the 71 dollar handle for WTI and 77 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 111.32 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 0.9742 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1258 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 +0.36%
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 2.86% early this morning (THIS IS DEADLY TO ALL MARKETS). Thirty year rate at 3.03%
5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.
TURKISH LIRA: DOWN BADLY TO 6.7027
EM Rout Returns As Global Stocks Fade, Futures Sinke,
Dollar Surges
With the US returning from holiday, US equity futures have sunk to session lows, while stocks in Europe slumped, reversing an early gain as Italian and Spanish bank shares faded and the major London, Frankfurt and Paris bourses faltered; this followed a mirror image in Asian price action, where stocks reversed earlier losses helped by a 1.3% late surge from Shanghai.
S&P500 futures have sunk to session lows after trading rangebound since Friday. Nike fell 1.4% in the pre-market after the sportswear-maker revealed its new ad campaign will star Colin Kaepernik who led protests during the playing of the national anthem.
The Stoxx Europe 600 index dropped 0.3% after earlier rising as much as 0.4% led by banks, miners and carmakers. Danske Bank retreats as much as 7.1%, ING falls as much as 3.2%. Danske said it is in the process of finalizing an internal investigation into allegations that its Estonian operations were used to launder billions of dollars in illicit funds; separately ING agreed to pay 775 million euros to settle an investigation by the Dutch prosecutor into issues including money laundering and corrupt practices, one of the biggest fines ever given to the country’s banks in a criminal case.
Italian government bond yields fell back from three-month highs, with investors encouraged by soothing comments from Italian ministers on forthcoming budget proposals. According to Reuters, Rome’s Economy Minister Giovanni Tria was pushing the governing coalition to keep next year’s budget deficit below 2 percent of output. Deputy Prime Minister Matteo Salvini had said on Monday that it would not breach the European Union’s 3 percent limit.
“I would say the overall price action is quite encouraging and Salvini’s comments yesterday gave the market another push,” Commerzbank rates strategist Christoph Rieger said.
Asian equities were choppy with the region indecisive as trade-related concerns lingered and after a non-existent lead from the US which was shut for Labor Day holiday. ASX 200 (-0.3%) was negative and fell below the 6300 level as weakness in tech, energy and financials dragged, while Nikkei 225 (unch) swung between gains and losses amid currency fluctuations.
In China for the second day in a row stocks shot up in the afternoon session as the Shanghai Composite Index rose in afternoon trade to head for its first gain in six sessions, with the 1%-plus surges in most major indexes strong enough for traders to start talking about the national team backing the move after Monday’s sharp rebound. And, as Bloomberg’s Garfield Reyonds notes, it certainly looks sudden enough (and sufficiently motive-less) to make that speculation plausible. If the national team, as state funds are called, is leading the charge, that signals China wants to set the floor higher than the 2,655 area on the Shanghai Composite that sparked intervention on Aug. 20. The fact that they felt the need to move in again so soon also underscores the challenges mainland equities face after sentiment was beaten down so hard this year.
Meanwhile, in a rare failed attempt to intervene in the currency, at least one large Chinese state-owned bank bought a significant amount of one-month USDCNH forwards Tuesday morning, pushing forward points higher and draining offshore yuan liquidity Bloomberg reported. The bank also bought forwards in other tenors shorter than one month. And yet despite this intervention, the offshore yuan failed to move higher, and has been steadily sliding for much of the overnight session as the latest attempt to squeeze the shorts has failed.
In emerging markets, equities declined for a fifth session with the JPM emerging markets FX index dropping to the lowest level this decade, pulled down by Indonesia’s rupiah and South Africa’s rand.
The dollar squeeze continued, with the greenback surging since early London hours as Treasuries and emerging-market currencies dropped amid concerns over global trade. No clear catalyst was cited for the dollar strength with some noting end of U.S. tariff consultation period on Wednesday, possible allocation flows given first effective trading day of the month and catch-up to EM concerns such as Argentina given Labor Day holiday. The Bloomberg Dollar Spot Index rose a fourth day to a more than two-week high as investors remained cautious amid a possible escalation in U.S.-China trade tensions.
“The general sentiment is that the dollar has not done too badly out of the trade war concerns, with concerns the U.S. might signal a fresh escalation in the trade conflict,” said Kenneth Broux, an FX strategist at Societe Generale in London.
Dollar strength saw the Aussie reverse the gains that followed a Reserve Bank of Australia policy statement which reduced expectations the central bank would become more dovish; the currency had earlier dipped after data showed the nation’s current-account deficit widened. RBA kept the Cash Rate Target unchanged at 1.50% as expected and reiterated that low rates are supporting the economy and that progress on inflation is expected to be gradual, but that it sees inflation higher in 2019. Furthermore, the RBA stated that the labour outlook remains positive and the economy seems to have grown above trend.
Meanwhile, the daily rout in emerging market FX continued, with another sea of red across the intraday EM monitor….
… with India’s rupee and Indonesia’s rupiah slumping to new record lows in Asia and the Turkish lira, Mexican peso and Russian rouble all skidding again, but the biggest loser was the South African rand, following news that South Africa “unexpectedly entered its first recession in 9 years.
Investors are now shifting focus to the U.S., where trading resumes after a holiday during which Argentina’s urgent financial measures increased concern about more volatility in emerging-market stocks and currencies. The jitters may add to the outperformance of developed markets, which advanced during the summer despite trade salvos from President Donald Trump and a Federal Reserve that’s heading toward a late-September rate hike.
Meanwhile, Bloomberg notes that U.S. trade negotiators are in difficult talks with their Canadian counterparts over a revision to NAFTA already agreed to by the U.S. and Mexico. On the China front, Trump may announce implementation of tariffs on as much as $200 billion in additional Chinese products as soon as Thursday.
In other news, outgoing Mexican President Pena Nieto stated that they didn’t accept quotas or restrictions in the deal with US and that they will participate in trilateral discussions with NAFTA partners, while he added it is important for Canada to remain in NAFTA.
In the neverending Brexit saga, Jacob Rees-Mogg claimed that he and the EU’s chief negotiator, Michel Barnier, bonded in a meeting in Brussels over their shared view that Theresa May’s Chequers plan is “complete rubbish”. The majority of voters in the Conservatives’ most marginal constituencies believe PM May’s Chequers plan is “bad for Britain”, a new poll has found. UK Chancellor Hammond could reportedly unveil the budget as soon as next month in order to avoid clashing with last stages of
Brexit discussions. As a reminder, the Treasury has originally wanted to release the budget at the end of November.
In geopolitics, President Trump warned Syrian President Assad to not recklessly strike the Idlib province in Syria, while Trump also said that Iran and Russia would be making a grave humanitarian error and that hundreds of thousands could be killed if they attack Idlib. Russia’s Kremlin replied by saying US President Trump’s warning against Idlib is offensive and such warnings are not a comprehensive approach to the problem.
In bond markets, expectations that the Federal Reserve will raise U.S. interest rates again later this month pushed the yield on benchmark 10-year Treasury notes to 2.8640%. More sensitive two-year yields, touched 2.637%, compared with a U.S. close of 2.629% last week. U.S. markets were closed for the labor day holiday on Monday.
The moves were also helped by rising oil prices.
WTI and Brent futures trade on the front foot with both benchmarks above USD 71/bbl and USD 79/bbl respectively. Price action is supported as investors and traders assess the potential threat to US production from tropical storm Gordon that is expected to hit the Gulf Coast (with hurricane warnings in place). Anadarko Petroleum evacuated workers and shut production at two Gulf of Mexico platforms as the storm nears. Elsewhere, due to yesterday’s US Labor Day holiday, the API weekly crude inventories have been delayed until tomorrow. The metals complex was heavily pressured by the strengthening dollar with gold slightly lower as the dollar strengthened, with spot gold traded below $1,200 at $1,195 per ounce, while silver, palladium and industrial metals such as copper and nickel saw more than 1% falls.
Expected data include PMIs and construction spending. Coupa Software and HealthEquity are among companies reporting earnings, while Ford Motor Co. is scheduled to release August sales results
Market Snapshot
- S&P 500 futures up 0.1% to 2,905.25
- STOXX Europe 600 down 0.1% to 382.08
- MXAP down 0.2% to 163.96
- MXAPJ down 0.03% to 531.08
- Nikkei down 0.05% to 22,696.90
- Topix down 0.1% to 1,718.24
- Hang Seng Index up 0.9% to 27,973.34
- Shanghai Composite up 1.1% to 2,750.58
- Sensex down 0.2% to 38,248.43
- Australia S&P/ASX 200 down 0.3% to 6,293.07
- Kospi up 0.4% to 2,315.72
- German 10Y yield rose 1.5 bps to 0.348%
- Euro down 0.5% to $1.1564
- Italian 10Y yield fell 7.3 bps to 2.888%
- Spanish 10Y yield fell 2.6 bps to 1.424%
- Brent futures up 1.4% to $79.21/bbl
- Gold spot down 0.4% to $1,196.11
- U.S. Dollar Index up 0.4% to 95.54
Top Overnight News from Bloomberg
- President Donald Trump’s effort to force Canada into signing on to a new Nafta on his terms is facing new hurdles thanks to growing opposition at home to his threat to proceed without the U.S.’s northern neighbor. On the China front, Trump may announce implementation of tariffs on as much as $200 billion in additional Chinese products as soon as Thursday
- House Republicans had planned to use a second phase of tax cuts to force Democrats into a difficult vote ahead of mid-term elections. Now, party leaders may drop the effort, fearing it could backfire by antagonizing voters in some hotly-contested Congressional districts
- The only post-Brexit trade deal that the EU lead negotiator Michel Barnier will countenance with the U.K. is a so-called Canada Plus, meaning the rejection of Prime Minister Theresa May’s Chequers proposals, ITV News Political Editor Robert Peston wrote in a Facebook post, citing unidentified people familiar
- Global funds are cutting their holdings of Japanese debt at the fastest pace in more than two years, as investors juggle the possibility of higher yields in the world’s second-largest bond market
- European finance ministers and central bankers will gather in Vienna this week to discuss a key test for the euro zone’s expanding economy — whether it can cope with interest-rate hikes
- Italian Deputy PM Salvini is now pushing for a deficit/GDP level of 2% in the next budget (well below EU limit of 3%), La Stampa says, without saying where it got the information
- Syria: Russia is seen resuming air strikes on Idlib Province according to Reuters; Trump warned Russia and Iran yesterday against such moves
- U.K. Chancellor Hammond preparing to unveil budget as early as next month to avoid clashing with final stages of Brexit talks, according to people familiar: Times
- China has removed the 20% cap on domestic banks’ purchase of local government bonds that they underwrite, according to people familiar: Securities Journal
- South Africa 2Q GDP -0.7% vs +0.6% est; enters technical recession
- RBA holds rates at 1.50% expected; maintains overall positive assessment of the economy in its policy statement
Asian markets were choppy with the region indecisive as trade-related concerns lingered and after a non-existent lead from the US which was shut for Labor Day holiday. ASX 200 (-0.4%) was negative and fell below the 6300 level as weakness in tech, energy and financials dragged, while Nikkei 225 (-0.2%) swung between gains and losses amid currency fluctuations. Elsewhere, Hang Seng (Unch.) and Shanghai Comp. (-0.1%) also see-sawed as participants contemplated over the potential fresh US tariffs this week and amid CNY price swings, as well as continued liquidity inaction by the PBoC. Finally, 10yr JGBs were marginally higher amid the indecisive trade in riskier assets. However, upside was also capped as participants digested the BoJ’s Rinban announcement in which it upped its purchases of JPY 1-5yr by a total JPY 100bln, which would suggest monthly purchases of those maturities are on track to be reduced to JPY 3.25tln from JPY 3.30tln M/M if the purchase amounts are maintained, considering the recently announced reduction in the number of buying operations for this month.
- China Relaxes Rule for Banks’ Purchase of Local Govt Bonds: CSJ
- BOJ Lifts Short-Bond Purchases to Offset Fewer Buying Days
- Foreigners Love This Stock That China Investors Seem to Hate
- Tencent-Backed Meituan Takes Orders for $4.4 Billion IPO
- Philippine Stock Rebound Faces Skepticism Ahead of CPI Data
European equities trade mostly lower (Eurostoxx 50 -0.8%), with the core bourses unwinding gains and plunging into the red following a positive open. Italy’s FTSE MIB outperforming peers as the index is buoyed by Italian banks benefiting from BTP price action. Broad-based losses are experienced across European sectors, with energy names lifted by price action in the complex. The Eurostoxx 50 underwent a reshuffle with sources stating Deutsche Bank, E.on and St. Gobain due to leave the index whilst Linde, Amadeus and Kering are to ender the Stoxx 500. Elsewhere, SocGen (+0.1%) is expects to pay USD 1.4bln in fines over allegations of sanction violations, however the bank is expected to pay far less than rival BNP Paribas paid four years ago.
- ECB Endgame Has Governments Debating Possible Rate-Hike Damage
- Italian Markets Jump After Salvini’s Vow to Respect Budget Rule
- Covea Says Scor Refused to Enter Talks on $9.6 Billion Deal
- Rude Awakening for New WPP CEO as Margin Squeeze Hits Shares
- Danske Says ‘Complex’ Laundering Probe Is Now Being Finalized
In FX, there is a firm rebound in the dollar DXY index to almost 95.600 from lows only a fraction above 95.000 yesterday, and amidst broad gains vs G10 counterparts alongside further outperformance against flagging EMs. Technically, the DXY has near term resistance to aim for at 95.709, but will get further impetus and direction (one way or another) when US markets re-open after the long holiday weekend. EUR/CAD/CHF – All around 0.4-0.5% softer vs the Greenback, with the single currency well below 1.1600+ peaks and through a key Fib level (1.1569), but finding some traction ahead of 1.1500 and the 21 DMA (1.1544), while the Loonie has lost more ground ahead of the next round of NAFTA talks and BoC tomorrow, even though crude prices are bucking the weak commodity trend and in theory supportive. Usd/Cad is hovering just below 1.3150 with decent offers said to be sitting between 1.3160-70, while the Franc has retreated through 0.9700 and hardly flinched at in line Swiss CPI data. EM – More pain for the likes of the Lira, Peso, Rouble and Rand, with the latter hit even harder following an unexpected SA GDP contraction that means technical recession to compound the misery of domestic political problems and US sanctions. Usd/Zar up over 15.2500, Usd/Try 6.7200+ at one stage, Usd/Rub above 68.3800 and not helped by a non-committal Central Bank Governor ahead of next Friday’s policy meet, while Usd/Mxn is approaching 19.4400 and Usd/Ars is awaiting reaction to tighter fiscal measures announced yesterday.
In commodities, WTI and Brent futures trade on the front foot with both benchmarks above USD 71/bbl and USD 79/bbl respectively. Price action is supported as investors and traders assess the potential threat to US production from tropical storm Gordon that is expected to hit the Gulf Coast (with hurricane warnings in place). Anadarko Petroleum evacuated workers and shut production at two Gulf of Mexico platforms as the storm nears. Elsewhere, due to yesterday’s US Labor Day holiday, the API weekly crude inventories have been delayed until tomorrow. In terms of metals, the complex is heavily pressured by the strengthening dollar with gold taking out USD 1200/oz to the downside.
Looking at the day ahead, there’s a number of potentially interesting releases in the US particularly in the manufacturing sector with the ISM manufacturing print for August (57.6 expected) and final August manufacturing PMI due. July construction spending data is also due while August vehicles sales data will also be out at some stage. Away from the data the BoE’s Carney is scheduled to testify before lawmakers this afternoon on the August inflation report and policy decision. Also potentially interesting is a possible town hall meeting featuring German Economy and Energy Minister Peter Altmaier who may discuss Europe and US relations, Brexit and China. It’s worth noting today also marks the day that the full US Congress returns.
US Event Calendar
- 9:45am: Markit US Manufacturing PMI, est. 54.5, prior 54.5
- 10am: Construction Spending MoM, est. 0.4%, prior -1.1%
- 10am: ISM Manufacturing, est. 57.6, prior 58.1
- 10am: ISM Employment, prior 56.5
- 10am: ISM Prices Paid, est. 69.5, prior 73.2
- 10am: ISM New Orders, prior 60.2
- Wards Total Vehicle Sales, est. 16.8m, prior 16.7m
DB’s Jim Reid concludes the overnight wrap
The first business day of September might mark the start of the long slog into year-end but hopes were never really high for it being one of any real entertainment given the US holiday yesterday. Indeed it was a fairly mixed day across most of Europe in the end with the main stories being some divergence across country level PMIs following the final August data, a largely in-line Turkish CPI print but with little sign of respite ahead and a fiscal update from Argentina although both of which failed to stem more weakness across EM currencies including the Lira and Peso. We also had a bunch more mixed headlines second guessing Italy’s deficit target and finally a tough day at the races for Sterling post the weekend’s more Brexit unfriendly rhetoric.
More on all those shortly but as far as markets were concerned, the Stoxx 600 clawed back to a +0.07% gain by the end of play after spending much of the session passing between gains and losses. The CAC (+0.13%) did likewise however the DAX (-0.14%) failed to really get out of the starting blocks. The IBEX (-0.24%) also struggled however the FTSE MIB did jump to a +0.62% gain after falling heavily on the final two days of last week. The FTSE 100 (+0.97%) also had its best day in a month inspired by that decent slide for Sterling (-0.69%). There wasn’t much to write home about for bonds with Bunds (+0.7bps) a shade weaker and the periphery (BTPs -6.9bps) broadly stronger. Finally it was another tough session for EM FX led by the Turkish Lira (-1.45%), Brazilian Real (-2.51%)and Argentine Peso (-4.17%). Indeed EM FX as a broad index was down -0.71% and for the ninth time in the last eleven sessions.
There’s a similar mixed picture across Asia this morning although moves have been fairly modest by all accounts. The Nikkei (-0.27%) and Shanghai Comp (-0.06%) are both tracking lower while the Hang Seng (+0.03%) and Kospi (+0.20%) are both just about holding onto gains. Futures on the S&P 500 are also +0.10% while Treasuries are little changed. Meanwhile the BoJ announced increased purchases of JGBs in the 1-3 and 3-5 year maturity buckets overnight, compensating for the now lower frequency of purchase operations. So more evidence that the stealth taper is in play. JGB yields are little changed on the back of that news.
Coming back to some of those main stories yesterday. In Turkey the August CPI print came in a shade above expectations at 17.9% (vs. 17.6% expected) but more significantly jumped a full two percentage points from July and to a new 15-year high. Our economists in Turkey noted that there were signs of general upward pressure across most sub-components owing to the unprecedented FX shock as well as higher utility tariffs. Also worth noting was the climb in producer prices with PPI jumping to 32.1% from 25.0% and also the highest in 15 years. The outlook for Turkish inflation doesn’t look like getting positive anytime soon with our economists noting that a new shock is scheduled to arrive in September in the form of a 15% and 9% rise in electricity and gas prices respectively. Our team have a 19% forecast for CPI by year end with single digit inflation unlikely any time soon (or at least until 2023).
Accompanying the CPI print was an unusual short statement from Turkey’s central bank stating that the “monetary policy stance will be adjusted at the September Monetary Policy Meeting in view of the latest developments”. So a hike in 10 days’ time appears a given now and our economists expect this to be in the magnitude of 425bps for the one week repo rate, pushing the rate to 22%. So with economic growth likely to slow meaningfully a great stagflation shock is looking more and more likely and it’s hard to see the newsflow out of Turkey dying down any time soon.
Rivalling Turkey for column space however is Argentina. Yesterday President Macri announced that the country was to impose taxes on exporters and aim to balance its budget a year earlier than previously planned. As another measure to cut spending, around half the current cabinet ministries will be cut. As noted earlier those measures did little to stem the collapse in the Peso again which has now weakened 51.61% YTD. Argentina’s main stock market also shed -1.66% after rallying in the few days ending last week. It’s worth noting that IMF Director Christine Lagarde is due to meet Argentina’s Treasury Minister today to review the details of a loan agreement from the IMF so we might well see more headlines as the day progresses.
In contrast to the EM turmoil yesterday’s PMIs in Europe were at least slightly more stable notwithstanding a bit of country divergence. The final Eurozone manufacturing reading was confirmed at 54.6 and unchanged versus the flash. Germany was revised down 0.2pts to 55.9 and back to the recent June low while France was also revised down the same amount to 53.5, albeit still a three-month high. Spain printed at 53.0 (vs 52.5 expected) however the big downside surprise came from Italy which came in at 50.1 (vs. 51.2 expected) and down 1.4pts from July. That’s a two-year low for Italy while the output index actually dipped into contraction territory at 49.4. Forward-looking components like new orders paint a picture of further softness ahead too so signs that the uncertain fiscal outlook is spilling over into Italy’s manufacturing sector.
Staying with Italy, yesterday was another day with a slow trickle of budget related headlines. Reuters reported in the afternoon that Economy Minister Tria was pushing for a budget deficit below 2% which contrasted to Deputy PM Salvini’s weekend comment about “touching” 3%. Salvini then said yesterday that the budget would respect “all the rules” which appeared to be a much softer tone compared to his weekend comments. Clearly there is still plenty of noise around the subject though especially as we tick down to the deadline at the end of the month. Senior League officials are meeting with Salvini today about the budget so it’s worth looking out for any headlines on the back of that.
Here in the UK, as well as the various Brexit related headlines which seemed to be doing the rounds, namely the comments from the EU’s Michel Barnier on the weekend and former foreign secretary Boris Johnson, there was also a bit of back and forth concerning BoE Governor Mark Carney. A government spokesman was quoted as saying that “the Governor has said that he intends to step down in 2019 and that is still the plan” which is contrary to a BBC report suggesting that Carney might stay on. Carney is speaking to lawmakers today so it’s a topic that could be addressed this afternoon.
To the day ahead now where this morning it’s pretty quiet for data with the July Euro area PPI print the only release of note. There’s a number of potentially interesting releases in the US this afternoon though particularly in the manufacturing sector with the ISM manufacturing print for August (57.6 expected) and final August manufacturing PMI due. July construction spending data is also due while August vehicles sales data will also be out at some stage. Away from the data the BoE’s Carney is scheduled to testify before lawmakers this afternoon on the August inflation report and policy decision. Also potentially interesting is a possible town hall meeting featuring German Economy and Energy Minister Peter Altmaier who may discuss Europe and US relations, Brexit and China. It’s worth noting today also marks the day that the full US Congress returns.
3. ASIAN AFFAIRS
i) TUESDAY MORNING/ MONDAY NIGHT: Shanghai closed UP 29.85 POINTS OR 1.10% /Hang Sang CLOSED UP 260.80 POINTS OR 0.94%/ / The Nikkei closed DOWN 10.48 POINTS OR 0.05%/Australia’s all ordinaires CLOSED DOWN 0.28% /Chinese yuan (ONSHORE) closed DOWN at 6.8390 AS POBC RESUMES SLIGHTLY ITS HUGE DEVALUATION /DELEGATION COMING TO THE USA TO SEE TRUMP IN NOVEMBER/Oil UP to 69.92 dollars per barrel for WTI and 77.55 for Brent. Stocks in Europe OPENED RED //. ONSHORE YUAN CLOSED DOWN AT 6.8390 AGAINST THE DOLLAR. OFFSHORE YUAN CLOSED UP ON THE DOLLAR AT 6.8597: HUGE DEVALUATION/PAST SEVERAL DAYS RESUMES// TRADE TALKS NOT DOING TOO GOOD : /ONSHORE YUAN TRADING WEAKER AGAINST OFFSHORE YUAN/ONSHORE YUAN TRADING WEAKER AGAINST USA DOLLAR/OFFSHORE YUAN TRADING MUCH STRONGER AGAINST THE DOLLAR /CHINA RETALIATES WITH TARIFFS/ TRUMP RESPONDS TO NEW TARIFFS AND IT NOW A FULL TRADE WAR COMMENCED
3 a NORTH KOREA/USA
North Korea/South Korea/USA/China
3 b JAPAN AFFAIRS
3C CHINA
4.EUROPEAN AFFAIRS
Our resident expert on European affairs explains what Trump is up to with respect to the EU. Trump wants to put a wedge between Germany and the USA because he does not want to fund NATO. If Germany faces Russia then the USA will cut off funds to NATO.
(courtesy Tom Luongo)
Luongo: Trump Doesn’t Want Peace With The EU
Donald Trump is on a mission. His goal? Destroy the post-WWII institutional order that has outlived its usefulness.
And there have been a number of major moves that fundamentally tear at the fabric of that order. In a span of a day we’ve had the following things occur in quick succession.
- French President Emmanuel Macron holds a press conference calling for a new “strategic relationship with Russia and Turkey.”
- At the same time he softened the EU’s stance on Russia’s reunification with Crimea, saying Russian – EU relations needed “to be brought up to date.”
- On the trade and tariff war with Trump, Germany called Trump’s bluff about free trade on cars by offering to scrap all import tariffs on theirs in exchange for the U.S. lifting them on light trucks and pickups, which Trump promptly rejected.
- Trump then called the EU “Worse than China” and threatened to pull the U.S. out of the World Trade Organization.
- Ayatollah Khamenei put pressure on the EU to stand up to Trump over the JCPOA, clearly threatening a return of their nuclear program.
Just last week German Foreign Minister Heiko Maas, clearly frustrated with Trump’s endless dollar belligerence called for the EU to develop, like Russia and China, it’s own electronic interbank payment system to skirt U.S. sanctions.
So in one week we’ve had the Germans threaten SWIFT, the French question the validity of NATO and Trump threaten to leave the WTO.
All against the backdrop of the end of the Syrian Civil War and the potential withdrawal of U.S. troops from there while the Taliban arrive in Moscow to discuss peace terms with the Afghan government.
Is it just me or are things about to look very different very soon.
If we take Trump at his word then we were supposed to believe Trump wanted peace and free trade with the EU. In this case his word was this tweet from July 24th where he said:
The European Union is coming to Washington tomorrow to negotiate a deal on Trade. I have an idea for them. Both the U.S. and the E.U. drop all Tariffs, Barriers and Subsidies! That would finally be called Free Market and Fair Trade! Hope they do it, we are ready – but they won’t!
— Donald J. Trump (@realDonaldTrump) July 25, 2018
Oops, Donald. They were. And as I said above, his big bluff on this was called. Trump doesn’t want free trade with Germany. He rejected the offer to scrap all automobile tariffs because “their consumer culture doesn’t buy our cars.”
Yes, because our cars suck, frankly. And they’ve sucked for a long time. And you can’t mandate they buy them.
But, I digress.
This sequence of events highlights exactly what I said about Trump last week, that he is purposefully driving a wedge between Europe and the U.S. to end NATO, among other things.
By driving a wedge between Germany and the U.S. over NATO and attacking the foundations of the German economy Trump is ensuring the current rapprochement between Germany and Russia?
Merkel, for her part, has been so terminally weakened by her immigration policy and strong-armed approach to dissent that this whirlwind weekender by Putin was as much for her benefit, politically, as his.
The implication being that if Merkel wants to stay in power with her weakening coalition and poll numbers it’s time for her to reverse course. And if that means cozying up to Russia then so be it.
Merkel will continue to talk a good game about Crimea and Ukraine while Putin will speak directly to the German people about ending the humanitarian crisis in Syria as a proxy for ending the threat of further immigration.
He knows most of the people who are behind the opposition to his Presidency are the same people driving the globalist bus, those I call The Davos Crowd.
He knows that Merkel and Macron both work for them. And The Davos Crowd are hell-bent on destroying the multiplicity of cultures that make Europe what it is.
So, Trump doesn’t want a solution to this trade spat. He wants to inflict maximum pain on them to force a radical realignment while extricating the U.S. from subsidizing their march towards centralized tyranny from Brussels.
At the same time this gives Macron and Merkel all the breathing room they need to patch things up with Russia while the Brits fume over not being able to destroy both Trump and Putin, since MI6 and the British Deep State are the ones doing the dirty work to undermine Trump and Putin at every turn.
Macron’s statement about Crimea was the first made by a major European leader that didn’t explicitly mention the Minsk II agreement as a prerequisite for normalizing relations with Russia.
Trump has pushed the EU into a corner, essentially saying, if you want to choose Russia, China and Iran over us, you’ll do so without our money and our banks.
Trump has all the subtlety of a wolverine in rut, but he’s pretty clear about what his intentions are if you are listening.
* * *
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No Other Banks Are This Exposed to Turkey, Argentina,
Brazil…. Emerging Markets Haunt Spanish Banks
by Don Quijones • • 59 Comments
To diversify from the euro-debt-crisis, the biggest Spanish banks pushed deeply into Emerging Markets. Now, they’re in a new crisis.
By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET.
Almost exactly six years ago, the Spanish government requested a €100 billion bailout from the Troika (ECB, European Commission and IMF) to rescue its bankrupt savings banks, which were then merged with much larger commercial banks. Over €40 billion of the credit line was used; much of it is still unpaid. Yet Spain’s banking system could soon face a brand new crisis, this time not involving small or mid-sized savings banks but instead its alpha lenders, which are heavily exposed to emerging economies, from Argentina to Turkey and beyond.
In the case of Turkey’s financial system, Spanish banks had total exposure of $82.3 billion in the first quarter of 2018, according to the Bank for International Settlements. That’s more than the combined exposure of lenders from the next three most exposed economies, France, the USA, and the UK, which reached $75 billion in the same period.
According to BIS statistics, Spanish banks’ exposure to Turkey’s economy almost quadrupled between 2015 and 2018, largely on the back of Spain’s second largest bank BBVA’s madcap purchase of roughly half of Turkey’s third largest lender, Turkiye Garanti Bankasi. Since buying its first chunk of the bank from the Turkish group Dogus and General Electric in 2010, BBVA has lost over 75% of its investment under the combined influence of Garanti’s plummeting shares and Turkey’s plunging currency.
But the biggest fear, as expressed by the ECB on August 10, is that Turkish borrowers might not be hedged against the lira’s weakness and begin to default en masse on foreign currency loans, which account for a staggering 40% of the Turkish banking sector’s assets. If that happens, the banks most exposed to Turkish debt will be hit pretty hard. And no bank is as exposed as BBVA, though the lender insists its investments are well-hedged and its Turkish business is siloed from the rest of the company.
In Argentina, whose currency continues to collapse and whose economy is now spiraling down despite an IMF bailout, Spanish banks’ total combined investments amounted to $28 billion in the first quarter of 2018. That represented almost exactly half of the $58.9 billion that foreign banks are on the hook for in the country. The next most at-risk banking sector, the US, has some $10 billion invested.
Big Spanish banks — and other large Spanish companies — have a massive presence throughout Latin America. In the aftermath of Spain’s real estate collapse, when opportunities at home were few and far between, Latin America’s fast-growing economies were a godsend to many of those companies.
In 2012 Spain’s then King, Juan Carlos I, even went so far as to ask for helpfrom the leaders of “friendly” Latin American economies. “On this side of the Atlantic we have seen difficult situations develop as a result of the economic and financial crisis,” he told attendees at an Ibero-American summit. “Our sights now turn towards you. We need more ‘Ibero-America.’”
Some countries, including Mexico, Colombia and Peru, agreed to lend a hand by lowering the barriers to their economies for Spanish companies. Large Spanish firms such as Repsol, OHL, Iberdrola and Telefónica and Spain’s two biggest banks, Santander and BBVA, took full advantage of the invitation, expanding their operations to take advantage of the region’s strong economic growth being driven by the global commodities boom.
But this diversification strategy was not without risk. As long as economic conditions in Latin America are buoyant, or at least benign, things are fine. But if emerging market assets suddenly begin to lose their allure and all the yield-hungry hot-money begins to get cold feet, as appears to be happening right now, what was once a godsend can quickly become a curse.
As the IMF warned in an assessment of Spain’s financial sector at the end of last year, the significant international presence of the country’s biggest banks, while providing welcome diversification effects, may also have significant implications for inward and outward spillovers:
The share of financial assets abroad has grown continuously for the Spanish banking sector, with the largest international exposures by financial assets concentrated in the United Kingdom, the United States, Brazil, Mexico, Turkey and Chile.
Most worrisome of all is Spain’s banking exposure to Latin America’s two mega-economies, Brazil and Mexico, both of which face months of political uncertainty and are also at high risk of contagion from the fallout from Turkey and Argentina. The Brazilian Real has already shed 20% of its value against the dollar so far this year, while the Mexican peso is down around 6%, having been buoyed by recent signs of progress in the NAFTA talks.
In Brazil Spanish banks have total exposure to the economy of $167 billion, according to BIS data. That’s the equivalent of 44.6% of total foreign banking investments in the country. For Banco Santander, Brazil is by far its biggest market, accounting for 26% of its global operating profits, compared to just 16% for Spain.
Meanwhile, in Mexico Spanish banks have over $160 billion invested, which represents 42% of total foreign banking exposure. Once again, it’s BBVA that is doing the heavy lifting, through its subsidiary BBVA Bancomer, the largest bank in Mexico. It provided 45% of BBVA’s group profits in the first half of 2018.
This pattern of exposure to emerging-market risk is replicated across most Latin American economies. In Chile Spanish banks account for 43% of total foreign bank-owned debt; in Colombia, it’s 32% and in Peru, it’s 40%.
So to diversify away from the crisis in Spain, banks pushed deeply into the Emerging Markets, only to find that some of them are now sliding into their own crisis. By Don Quijones.
Turkey’s lira is plunging, and now the economy faces a “substantial increase in the risk of a downside scenario.” Read… Turkey’s Debt & Currency Crisis Morphs into Financial Crisis as Banks Face Funding Squeeze
end
Italy
Italy’s populist leaders are now challenging Brussels as they vow for much higher spending and intend on having the deficit rise from .8% of GDP up to its ceiling of 3%
should be an interesting year for Italy
(courtesy zerohedge)
Italy’s Populist Leaders Challenge Brussels, Vow Much
More Spending
After an initial burst of panic selling in May, Italian bond yields have continued to drift higher – the yield on the Italian 10Y is now well above the May highs – as the coalition government’s fiscal plans and expensive election promises have remained a key focus for investors and Brussels all summer, spooking bondholders who have continued to quietly offload their holdings of Italian bonds amid fears of an angry response from the EU to Italy’s “budget busting” ways.
Such fears will only grow after Italy’s populist leaders rejected the finance minister’s attempts to reassure investors that Italy won’t engage in a spending spree, and insisted voters’ needs must come before European spending constraints. Speaking at an event in Italy on Sunday, deputy Prime Minister Matteo Salvini said that next year’s budget will see the deficit almost double to “touch” the EU’s 3% deficit ceiling.
Quoted by Bloomberg, he said that the government will “try to respect all the hurdles Europe imposes, but the well-being of Italian citizens comes first,” he said.
Reminding markets that Italy remains Europe’s bond market flashpoint, on Friday Fitch Ratings cited budget concerns as it changed its outlook on Italy to negative from stable, even as it kept the overall rating unchanged, just two notches above junk.
In response to the Fitch announcement, Italian bonds initially rose on Monday with the 10Y yield 3 bps lower at 3.19 percent on relief that Fitch’s verdict wasn’t more severe. However, the early gains were quickly erased and the yield on 10Ys quickly rose back to multi-year highs, as the market continues to fret over the government’s budget plans and the growing sense of discord within the government.
To that point, in an interview with La Repubblica, finance minister Giovanni Tria said he is fighting to contain public spending and said that bonds will rise further when investors see the details of the 2019 budget. “Budget stability will be respected,” he said, although he probably did not expect Salvini to dash optimistic outlook within hours.
Tria, an economics professor drafted at a late stage of the coalition negotiations, has been trying to rein in the ambitions of Salvini and Luigi Di Maio of the anti-establishment Five Star Movement, though as Bloomberg notes, “he lacks the political muscle of the two populist party leaders.” The Italian government is due to set new public-finance and economic-growth targets by Sept. 27 and submit a draft budget to the European Commission by Oct. 15.
Salvini’s view of the 2019 deficit – a product of his generous campaign promises – is in stark contrast with the targets set by Italy’s previous government. They saw the budget gap narrowing to 0.8 percent of GDP from 1.6 percent this year. Tria told Bloomberg News in July that his aim is not to worsen the structural-budget situation and possibly to improve it. Still, he’s also said that slower-than-expected economic growth means the deficit is heading toward 1.2% in 2019.
In terms of what is priced in by the market, Deutsche Bank analysts wrote over the weekend that a twin deficit approach suggests that the market is pricing 2.25% deficits in 2019 (with a bias towards even higher implied deficits).
This means that as more details leak and as Salvini’s ambition of “touching” the 3% deficit limit is realized, even more pain await Italian bondholders, especially with the ECB’s QE – that traditional backstop to Italian bonds and only real buyer of BTPs in recent years – set to fade away in just four months.
Meanwhile, Goldman said Italian assets will remain volatile as divisions within the administration cast doubt on the government’s commitment to lowering public debt. “Agreeing on such a budget will likely be a difficult and controversial process, with the risks skewed to a less favorable outcome,’’ said Silvia Ardagna, a fixed-income strategist at the bank.
Finally, confirming that it will be virtually impossible to reconcile the budget limits of Brussels, the wishes of Italian bondholders, and the spending needs of the government, Di Maio, Italy’s other deputy prime minister, doubled down on campaign pledges, saying at a rally in Tuscany that the so-called citizen’s income remains among the government’s top priorities. The citizen’s income, a relief plan for the poor that critics have dubbed an expensive handout, will be implemented in 2019. It is unclear if that will be the straw that breaks the budget’s 3% back, but looking at Italian bonds, the number of investors willing to take the risk is declining sharply.
end
5.RUSSIAN AND MIDDLE EASTERN AFFAIRS
RUSSIA/SYRIA/ISRAEL
Israel reports that there are new images which confirm Iran has placed surface to surface missile facility inside Syria
(courtesy zerohedge)
Israeli Reports Claim New Images Confirm Iranian Surface-to-Surface Missile Facility In Syria
At the end of a week where tensions with Iran and Syria have reached a high point of late, and as the final showdown between the Syrian Army and al-Qaeda insurgents in Idlib looms, multiple Israeli media reports claim Iran is constructing new surface-to-surface ballistic missile factories in Syria.
What’s more, the reports claim, Iran’s military is taking advantage of Russia’s sophisticated antiaircraft defense missile systems in Syria to build the sites within range of the their protective defense umbrella.
The Jerusalem Post, for example, echoing other Israeli outlets, relies on the open-source satellite image analysis site ImageSatto claim Iran is taking advantage of Russian defenses to avoid Israeli retaliation.
According to the Jerusalem Post report:
According to ImageSat, both the facility in Masyaf and the one in Wadi Jahannam are located within the operational range of a Russian S-400 deployment, showing that Iran is “utilizing or exploiting the defense abilities of Russia.”
Russia deployed the advanced mobile S-300 and S-400 anti-aircraft batteries to Syria in October 2017. The batteries are capable of engaging multiple aircraft and ballistic missiles at a distance of up to 380 kilometers, covering virtually all of Syria as well as significant parts of Israel and neighboring countries such as Turkey and Jordan.
Israeli Prime Minister Benjamin Netanyahu has on multiple occasions over the past year warned that Iranian missiles in Syria would constitute a “red line” for which Israel would act militarily.
Over a dozen Israeli strikes have occurred at different locations in Syria recently — mostly in the south and central parts of the country, ostensibly aimed at curtailing the establishment of any permanent Iranian troop or weapons deployment presence.
As lately as Wednesday Netanyahu warned that Israeli would continue being proactive against its enemies and that it “has the means to destroy them”.
The Israeli prime minister said during a ceremony: “Those who threaten to wipe us out put themselves in a similar danger, and in any event will not achieve their goal.”
Israeli officials and military officials have lately tried to claim Iran “is taking over” Syria, though Syrian war analysts have by and large dismissed the claims.
In a similar vein, the Jerusalem Post provides the following commentary on supposed Iranian expansion right up to Israel’s border:
In the past year, the IDF noticed that Iranian efforts in Syria have been increasing, with Soleimani sending from Iran advanced air defense systems with a range of up to 110 kilometers that could threaten Israel’s freedom of action in Syria.
The satellite images, provided by ImageSat as part of a lengthy formal report, purport to show at least one Iranian missile production site under construction which the unconfirmed report notes is in “its final stages of construction and will likely be completed by early 2019”.
imagesatintl@imagesatint#Iran is a major contributor to the #Syrian #missile project, including building the new #SSM facility near #Baniyas.
For the full new #intelligence report, please visit our website: https://www.imagesatintl.com/iranian-ssm-activity-syria/ …
While we don’t know the accuracy of such claims, and it appears the threshold of “proof” ought to be much higher (and more than mere visual comparisons of buildings between Iran and Syria based on remote viewed satellite images), it seems that Israeli government and media sources begin circulating such claims every time Washington or Tel Aviv ramps up threats, or are preparing for military strike on targets in Syria.
Meanwhile, Iran has owned up to placing long-range ballistic missiles inside Iraqi territory, under the control of Iraqi Shia paramilitary units (PMF) being trained by the IRGC, according to a Reuters report out Friday.
As we warned previously this week, it appears that something big is coming in Syria.
end
IRAN/IRAQ/ISRAEL
Very awkward: Iran has stunned Israel and the USA my moving ballistic missiles to USA controlled Iraq and within easy distance of both Tel Aviv and Riyadh. Israel will not wait to destroy those missiles
(courtesy zerohedge)
Iran Stuns Enemies By Moving Ballistic Missiles To Iraq – Within Easy Striking Distance of Tel Aviv
In what is sure to be a realization of one of Netanyahu’s worst nightmares, and deeply awkward for US advisers to Baghdad, Iran has transferred ballistic missiles to Shia proxy forces in Iraq, according to Western and Iraqi intelligence sources cited in a new Reuters report.
The revelation comes as tensions between Washington and Tehran are already at their highest point in years as aggressive sanctions continue crippling Iran’s economy, and after threats and counter-threats over Tehran laying claim to the vital Strait of Hormuz oil waterway over the past weeks, through which some one-third of the world’s oil passes.
The Reuters report cites multiple officials and intelligence sources, including Iranian officials who seem willing to inform the world of the provocative move:
According to three Iranian officials, two Iraqi intelligence sources and two Western intelligence sources,Iran has transferred short-range ballistic missiles to allies in Iraq over the last few months. Five of the officials said it was helping those groups to start making their own.
“The logic was to have a backup plan if Iran was attacked,” one senior Iranian official told Reuters. “The number of missiles is not high, just a couple of dozen, but it can be increased if necessary.”
The news is sure to cause a stir for European signatories to the 2015 nuclear deal (JCPOA) like Germany, the UK, and France, who are still trying to salvage it, as it is a clear sign that the deal which the Trump White House pulled out of is in tatters.
Reuters identifies the Zelzal, Fateh-110 and Zolfaqar missile systems as among those transferred — with ranges of between 200 and 700km, which puts “Saudi Arabia’s capital Riyadh or the Israeli city of Tel Aviv within striking distance if the weapons were deployed in southern or western Iraq”.
And notably the elite Islamic Revolutionary Guard Corps (IRGC) Quds force head, Gen. Qassem Soleimani, is overseeing the missile transfers and their operation in what regional foes Saudi Arabia and Israel are sure to interpret as the most provocative and escalatory move by its archenemy in recent years.
Israeli Prime Minister Benjamin Netanyahu has consistently lobbied the White House for more aggressive action against Iran, and speaking last week along side US National Security Advisor John Bolton, affirmed Bolton’s call for both to weaken Iran’s regional presence in places like Syria.
Bolton had praised Israel’s repeat attacks on Iranian targets inside Syria, saying “every time Iran has brought missiles or other threatening weapons” into the country, Israel hasn’t hesitated to act. Bolton hailed those strikes as “a legitimate act of self-defense”.
However, the case of Iraq is clearly a more delicate situation, as the pro-Shia government in Baghdad is propped up by the United States, and Baghdad in turn facilitates the operation of Tehran-aligned militias who act in concert with Iraqi military forces. Of course, in an irony that won’t be lost on future historians, it was the United States and its allies that installed a Shia government in Baghdad in the first place by toppling Saddam Hussein in its 2003 invasion, which Netanyahu had given loud and consistent support for.
One Western source cited by Reuters says the missile transfer is clearly intended as a “warning” to both the US and Israel. “It seems Iran has been turning Iraq into its forward missile base,” the source said.
The sources also pointed out that elite Iranian IRGC forces have already trained Iraqi personnel to operate its sophisticated missiles, and that Iran has already long established forward bases in parts of Iraq.
One senior IRGC commander confirmed this to Reuters, saying: “We have bases like that in many places and Iraq is one of them. If America attacks us, our friends will attack America’s interests and its allies in the region.”
Western and Iraqi sources identified that missile producing factories overseen by Iranians are present in al-Zafaraniya, east of Baghdad, and Jurf al-Sakhar, north of Kerbala. And further there is said to be a site under the operation of Kata’ib Hezbollah, which is considered one of Iran’s closest proxy paramilitary forces.
Though the Iraqi government didn’t comment on an official level, Reuters cites the following alarming words from an Iraqi government source:
The Iraqi source said it was difficult for the Iraqi government to stop or persuade the groups to go against Tehran.
“We can’t restrain militias from firing Iranian rockets because simply the firing button is not in our hands, it’s with Iranians who control the push button,” he said.
The Iraqi official continued, “Iran will definitely use the missiles it handed over to Iraqi militia it supports to send a strong message to its foes in the region and the United States that it has the ability to use Iraqi territories as a launch pad for its missiles to strike anywhere and anytime it decides.”
And meanwhile, hours after the Reuters story broke early Friday, Iran’s Tasnim news agency reported the country’s domestically produced long-range ballistic missiles will be ready for use by the Spring of 2019, according to a commander that oversees Iran’s Air Defense.
Surely, Israel will respond at some point to what Netanyahu has long ago identified as a “red line” concerning Israel’s security interests in the region. The only question is how and when, and how awkward will in be for US officials in Baghdad?
end
Trump stops the UN funding for the Palestinian refugee program.
(courtesy Wise/the HILL)
Trump administration to stop funding for UN Palestinian refugee program
end
TURKEY
This is dangerous as Erdogan vows to abandon the dollar. It does not look good for Trump to protect the Europeans if Turkey buys Russian defense systems and Germany buys Russian oil. There are two-fold major problems with this
- Turkey houses the second largest defense shield in Europe in Turkey and Incirlik, Turkey is the largest base. It would not be good if the west abandons Incirklik
- Turkey houses millions of migrants and no doubt will unleash all of those migrants onto Greece
(courtesy zerohedge)
Erdogan Vows To Abandon Dollar, “Doesn’t Need Permission” To Buy Russian Missiles
Another day, another angry rant by Turkish President Recep Tayyip Erdogan aimed at the US, who on Sunday vowed Ankara would abandon the dollar in transactions with Russia and other countries, accusing the US of behaving like “wild wolves.”
“America behaves like wild wolves. Don’t believe them,” Erdogan told a business forum during the Turkey-Kyrgyzstan Business Forum in Kyrgyzstan, according to AFP.
Erdogan also echoed the dedollarization call from Russia’s deputy foreign minister Serkey Ryabkov, saying said that Turkey country was in negotiations with Russia over non-dollar trade.
“Using the dollar only damages us. We will not give up. We will be victorious,” Erdogan told the meeting, attended by Kyrgyz and Turkish businessmen as well as government officials.
On August 24, Moscow said it would respond to Washington’s latest sanctions by accelerating efforts to abandon the American currency in trade transactions: “The time has come when we need to go from words to actions, and get rid of the dollar as a means of mutual settlements, and look for other alternatives,” said Russia’s Deputy Foreign Minister Ryabkov.
“Thank God, this is happening, and we will speed up this work,” Ryabkov said, explaining the move would come in addition to other “retaliatory measures” as a response to a growing list of US sanctions.
Erdogan also said that Ankara doesn’t need permission from anyone to purchase Russian S-400 missile systems, just days after the US once again warned the country against buying the hotly discussed air-defense system.
“We have made S-400 deal with Russia. Someone is offended by it. We don’t need permission from anybody,” the Turkish leader said in Kyrgyzstan.
Last Tuesday US Defense Secretary James Mattis warned NATO-member Turkey against buying the systems. “Turkey had a choice to make, a sovereign decision to make. But clearly Turkey bringing a Russian anti-aircraft, anti-missile system into a NATO country, we cannot integrate that into NATO,” Mattis said. “Yes, it does concern us and we do not recommend that.”
Ankara and Washington are not locking horns over Turkey’s decision to buy Russian S-400 missile systems, although neither the US nor NATO approves of the move.
At the same time Erdogan’s government is also pushing ahead with the purchase of American F-35 jets, which US lawmakers are trying to block due to Ankara’s S-400 deal.
Erdogan’s statement shows that Turkey is shaping its defense policy without any regard to the US, Igor Korotchenko, editor-in-chief of National Defense magazine, told RT. For Turkey, the purchase of these weapons means getting “a new geopolitical status of a country” that is able to fully control its airspace and, if necessary, use such weapons against its enemies, he said.
The US understands Turkey’s intentions and that’s why it has recently showed “unprecedented attempts” to intimidate the country, Korotchenko added.
The recent statement of the Turkish president is “an attempt to strengthen [Ankara’s] positions” in the international arena, Dmitry Abzalov, head of the Center for Strategic Communications think tank, explained to RT, noting that relations between Ankara and Washington have “seriously deteriorated.”
Ties between NATO members Washington and Ankara hit a new low last month as US President Donald Trump announced steep new tariffs on Turkish steel and aluminium in response to the detention of an American pastor in Turkey. As a result, the Turkish lira crashed, shedding a quarter of its value last month as the trade war with the US ratcheted up.
Russia meanwhile saw its ruble tumble to two-year lows in August after the US announced fresh sanctions in connection with a nerve agent poisoning incident in the British city of Salisbury.
Erdogan also used the visit to ex-Soviet Kyrgyzstan to demand the Central Asian country of six million people relinquish all ties to Fethullah Gulen, a US-based cleric and educator Ankara accuses of fomenting a coup in 2016. Speaking Sunday, Erdogan said Turkish businesses should invest in Kyrgyzstan but “may face barriers from FETO,” the term Ankara uses to describe the network of people and institutions linked to Gulen.
The refusal of the United States to extradite 77-year-old Gulen whom Erdogan has accused of being behind the “failed” 2016 presidential coup attempt, to face trial in Turkey is one of several sore points that have plagued a once-strong bilateral relationship.
Gulen, whose Hizmet movement has led to the creation of schools in dozens of countries including Kyrgyzstan has always denied any links to the 2016 coup attempt, however, since July 2016, over 55,000 people from the so-called “shadow state” have been arrested over coup links in Turkey, while more than 140,000 public sector employees have been sacked or suspended.
END
The Turkish lira plummets again as inflation in this country rips north of 17%. The Central bank has pledged a rate hike contrary to the wishes of Erdogan
(courtesy zerohedge)
Turkey Inflation Soars To 15 Year High As Central Bank Pledges Imminent Rate Hike
With the Turkish lira plunging, it was not exactly a surprise that Turkish inflation data reported today came even hotter than expected, with inflation jumping a surprising 17.9% Y/Y in August, up from 15.9% and above the 17.6% consensus, with monthly inflation rising 2.3%. This was the highest increase in annual inflation going back to 2003.
Core inflation increased from +15.1% Y/Y in July to +17.2%, above the +16.0%expected, and contributed 1.2% to the overall 2.1% rise in the headline figure and more than fully accounted for the surprise in headline inflation compared to forecasts. Following the hike to electricity and natural gas prices, energy inflation contributed another 0.5%. The rest of the increase in headline inflation was due to higher gold and food prices.
As shown in the Goldman chart below, inflation in nonfood goods and energy categories were the main drivers behind the rise in the headline figure.
Looking ahead, Bloomberg economist Ziad Daoud said that Turkey’s year-on-year inflation is likely to jump to 19.1% in August, showing the initial economic impact of the recent meltdown in the lira.
Meanwhile, producer prices soared 32.1%, Turkstat reported on Monday: the PPI’s nearly double increase vs CPI confirmed that companies are finding it next to impossible to pass on much of their added costs to end-users just yet, but eventually they will have little choice according to Bloomberg.
According to Bluebay Asset Management strategist Tim Ash the inflation data showed consumer demand collapsing, and it could weaken further if borrowing costs are raised. Still, “if they don’t hike again by something significant, the lira will be left exposed again,” Ash told Bloomberg. “They need to do whatever they need to do short-term to hold the lira, and that means hiking rates.”
And while the Turkish lira slumped promptly on the news of the higher than expected inflation, the loss was quickly offset after the Turkey’s central bank stepped in shortly after the inflation data was released, and signaled higher interest rates are imminent: “The monetary stance will be adjusted at the September monetary policy committee meeting in view of the latest developments,” the central bank said in a statement, citing the deterioration in the inflation outlook.
The central bank tipped its hand 10 days before it is scheduled to meet, and in verbal defense of the currency which looked set to resume its slide. As a result, after initially sliding then erasing all losses, the TRY was back to unchanged from its Friday close.
Whether the central bank will actually hike rates – much to the distaste of president Erdogan – remains to be seen. Erdogan has opposed outright tightening, instead placing a premium on economic growth over the lira’s robustness. He’s accused foreign agitators of trying to undermine the Turkish economy by “attacking” the lira, and has said his country can withstand the alleged onslaught.
By signaling a hike, the bank has also created expectations that the increase will be big enough to stem the rise in inflation, according to Piotr Matys, a currency strategist at Rabobank in London. “Such a pledge puts more pressure on the Turkish central bank to deliver a proper rate hike,” Matys said. “Essentially, the central bank raised the bar for itself to exceed expectations on Sept. 13.”
The lira has lost more than 40% of its value against the dollar this year even as the central bank raised costs by around 5% points before the latest run on the lira. The bank used fringe tools and an extraordinary lending mechanism to increase the cost of cash it provides to commercial lenders from mid-August to deliver another 150 basis points of tightening.
end
Libya
You can thank Hillary for the mess inside Libya. Over the weekend, we witnessed rockets raining down on Tripoli and a massive prison break releasing many hardened criminals onto the streets..also many street battles.
This country is in turmoil..
(courtesy zerohedge)
Libya Chaos: Rockets Rain Down On Tripoli, Mass Prison Break Of 400, Week Of Street Battles
After we reported heavy inter-factional fighting within the UN-backed Government of National Accord (GNA)-controlled Tripoli last week, Libya’s capital city has only descended into further chaos and is quickly sliding toward full-on civil war.
On Saturday a barrage of rockets rained down on the city center, reportedly striking residential homes and a popular hotel; and tanks continue to roam the streets amidst intensifying street-to-street fighting which after a week has left 40 dead, nearly half of those civilians, and four of those children. Local authorities also have cited over 100 wounded in battles that have often raged in the heart of residential areas in Tripoli’s southern districts.
And what’s more, the largest prison break in the country’s recent history occurred on Sunday, with some 400 detainees taking advantage of nearby fighting in southern suburbs to escape Ain Zara prison, according to the AFP.
The 15 or more rockets landing on the capital city and its surrounding environs over the weekend forced the suspension of all flights at Tripoli’s only operational airport. A state of emergency has been declared by the ruling GNA over the entirety of the capital area.
Though post-Gaddafi Libya, long forgotten about in the media after its “liberation” by NATO and Islamist militants, has since 2011 existed in varying degrees of anarchy and chaos with up the four governments recently ruling different parts of the country, this past week has witnessed the worst unrest in Tripoli in years.
Al Jazeera summarizes the factions involved and their motives in some of its latest coverage:
The fighting between the rival armed groups broke out earlier this week. Street battles on Monday and Tuesday pitted the Seventh Brigade, or Kaniyat, from Tarhouna, a town 65km southeast of Tripoli, against the Tripoli Revolutionaries’ Brigades (TRB) and the Nawasi, two of the capital’s largest factions.
The Kaniyat and other groups from outside Tripoli have noticed the success of rivals inside the city with growing unease. Reports about the wealth, power and extravagant lifestyles of some Tripoli rebel commanders have fuelled resentment.
So nearly seven years after Muammar Gaddafi’s field execution beside a ditch outside of Sirte in October 2011, the dozens of factions ruling the streets of Tripoli are still essentially fighting for the spoils of power.
Local and international reports confirm that both sides of the fighting are loyal to the UN and internationally backed GNA.
In a joint statement released through the the French foreign ministry, Britain, France, Italy and the US condemned the violence as “attempts to weaken the legitimate Libyan authorities”.
“We are calling on the armed groups to immediately stop all military action and warn those who seek to undermine stability, in Tripoli or elsewhere in Libya, that they will be made accountable for it,” the statement added.
And on Sunday a massive prison break occurred in connection with the fighting, according to the AFP:
Some 400 detainees escaped after a riot on Sunday at a prison in the southern suburbs of the Libyan capital Tripoli, theatre of a week of deadly battles, the police said.
“The detainees were able to force open the doors and leave” as fighting between rival militias raged near the prison of Ain Zara, the police said in a statement, without specifying what crimes the escapees had committed.
Guards were unable to prevent the prisoners escaping as they feared for their own lives, the statement said.
Likely, many of the escaped prisoners will themselves join the fighting alongside rival factions, though most are reported to be former Gaddafi loyalists and petty criminals.
The Government of National Accord (GNA) has long tried to bring its own armed factions, who are in real powers in de facto control of streets and checkpoints throughout the city, to heel.
The internationally backed government in Tripoli attempted to broker a short-lived ceasefire on Thursday. A subsequent official GNA statement blamed unnamed factions for “undermining the ceasefire … by blindly launching rockets and shells on Tripoli and its suburbs”.
Since the NATO-backed overthrow of Gaddafi in 2011, Libya has remained split between rival parliaments and governments in the east and west, with militias and tribes lining up behind each, resulting in fierce periodic clashes.
Perhaps the most significant of these warring militias nationwide is Khalifa Haftar’s Libyan National Army, which controls much of eastern Libya and is the chief rival to the GNA in the western half of the country.
Haftar is reportedly poised to make a move on Libya’s vital “oil crescent region” while bolstering his forces with Chadian mercenaries, according to local reports.
ISIS also maintains a scattered presence in various parts of the country, claiming responsibility for a deadly attack on a security checkpoint as recently as a week ago in the western part of the country. Six soldiers loyal to the GNA were reportedly killed in that attack.
Meanwhile the GNA continues to appear helpless to act as international pressure increases to stop the fighting: “We warn these gangs and outlawed groups that have terrorised civilians and residents; there is no space for such lawlessness and chaos,” the GNA’s Presidential Council said in a statemen early in the week. “We have given orders to the interior ministry to counter these attacks,” the statement said.
Though the recently “liberated” Libya has remained conflict-prone after NATO and US forces promised an “Arab Spring”-style “blossoming of democracy” — things have clearly only gone from worse to worse as the capital now inches toward full blown civil war.
Welcome to the “new” Libya… where the US and UN recognized government is at war with itself.
end
Syria/USA/Russia
Trump threatens Assad over the impending Idlib assault (which eventually began Monday)
(courtesy zerrohedge)
“Grave Mistake”: Trump Threatens Assad Over Impending Idlib Assault
It seems to happen just about every September and April over the past years: every time the Syrian proxy war seems to have receded from international media attention for a period of a long summer or a winter, a mass attention-grabbing event or massacre happens to suddenly yank the world’s (and the White House’s) focus right back on the war and a return to intervention and escalation mode.
And curiously, this seems to occur the moment Assad and the Syrian Army alongside the Russians are on the path to overwhelming victory.
On Monday evening of Labor Day, President Donald Trump weighed in with what’s clearly a veiled threat warning Syria and its allies via Twitter:
President Bashar al-Assad of Syria must not recklessly attack Idlib Province. The Russians and Iranians would be making a grave humanitarian mistake to take part in this potential human tragedy. Hundreds of thousands of people could be killed. Don’t let that happen!
Donald J. Trump
✔@realDonaldTrump
President Bashar al-Assad of Syria must not recklessly attack Idlib Province. The Russians and Iranians would be making a grave humanitarian mistake to take part in this potential human tragedy. Hundreds of thousands of people could be killed. Don’t let that happen!
And immediately following, US Ambassador to the United Nations Nikki Haley tweeted her own statement based on the president’s words, while specifically invoking the US charge that Assad plans to use chemical weapons.
Haley wrote: All eyes on the actions of Assad, Russia, and Iran in Idlib. #NoChemicalWeapons
Nikki Haley
✔@nikkihaley
All eyes on the actions of Assad, Russia, and Iran in Idlib. #NoChemicalWeapons
Donald J. Trump
✔@realDonaldTrump
President Bashar al-Assad of Syria must not recklessly attack Idlib Province. The Russians and Iranians would be making a grave humanitarian mistake to take part in this potential human tragedy. Hundreds of thousands of people could be killed. Don’t let that happen!
These latest threats confirm what we previously reported over the weekend: that the US is seeking to create a quagmire for Russia and Iran in order to pressure both countries to acquiesce to Washington’s demands.In the case of Iran the White House is seeking new negotiations after the US pulled out of the 2015 nuclear deal (JCPOA) last May.
In 2013, top Obama Administration officials described their policy in the Syrian War as one of keeping the war going.The administration wanted a big seat at the table for a political settlement, which officials clarified meant ensuring that the war kept going so that there was never a clear victor. The Trump Administration is now slipping into that same destructive set of priorities in Syria.
The Washington Post last week quoted an unnamed Administration official as saying that “right now, our job is to help create quagmires [for Russia and the Syrian regime] until we get what we want.”
During the two prior Aprils, Trump ordered massive airstrikes on Syrian government targets after blaming Damascus for claimed chemical weapons attacks on civilians.
Trump’s latest tweet, for the first time addressing the final showdown over Idlib specifically, singles out “the Russians and Iranians” as “making a grave humanitarian mistake” should they “recklessly attack Idlib Province”.
Thus the president seems to be precisely calculating that the battle for Idlib can be used an opportunity for putting increased pressure and global attention on Tehran and Moscow.
So clearly, something big is coming possibly in the form of a “rebel” claimed “provocation” as the Pentagon and US officials have over the past week continued pushing the gambit, setting the stage to play the “Assad is gassing his own people” card should so much as an inkling of a White Helmets allegation emerge, in an unprecedented level of telegraphing intentions for leverage on the battlefield.
Except someone should remind the president that the “rebel” coalition in control of this major “final holdout” is but the latest incarnation of al-Qaeda, calling itself Hay’at Tahrir al-Sham (HTS) and has held the province, the capital city of which is Idlib city, since a successful Western and Gulf ally sponsored attack on the area in 2015.
Regardless, it now appears the US stands ready to respond militarily to even the most unlikely and flimsiest of accusations issued by al-Qaeda terrorists and groups like the ‘White Helmets’ which operate alongside AQ-linked fighters.
And why wouldn’t Hay’at Tahrir al-Sham militants, now surrounded by Syrian and Russian forces and facing imminent defeat, redeem what’s essentially the US offer to “call in the Air Force” against Assad’s army? All they have to do is utter the words “chemical weapons attack!” to their friends in the Western media and in Washington.
But in terms of the trustworthiness of such a claim that’s surely being prepared, all the president needs to do is honestly listen to his own top State Department official, Special anti-ISIL envoy Brett McGurk, who accurately described in an unusually frank assessment a year ago:
“Idlib provice is the largest al-Qaeda safe-have since 9/11, tied to directly to Ayman al Zawahiri, this is a huge problem.”
But again, Trump’s latest words appear more designed for leverage — unfortunately with the threat now on record (similar to Obama’s 2013 “red line” threat) it matters little whether the president actually believes Assad will use chemical weapons or not.
end
Russia and Syria do not listen to Trump;s warnings on the assault of Idlib
(courtesy zerohedge)
Despite Trump Warning, Russia Resumes Major Airstrikes On Idlib
lt doesn’t appear that Syrian and Russian forces are overly concerned with the Monday evening threats from both President Trump and Nikki Haley warning Assad and Russia against attacking Idlib Province, as Middle East sources now report that Russia has resumed an intense air campaign over Idlib for the first time in 22 days.
Beirut-based Al Masdar Newsreports,citing Syrian military sources, the Russian Air Force has begun its largest bombing campaign of the year in the Idlib Governorate.
Moments ago at least ten Russian Sukhoi jets launched dozens of airstrikes over the southern and western parts of the Idlib Governorate.
Al Masdar’s sources said the Russian Air Force specifically targeted the Jisr Al-Shughour District, including the towns of Al-Shughour, Mahambel, Basnqoul, Zayzooun, Ziyarah, Jadariyah, Kafrdeen, Al-Sahn, Saraseef, and dozen others. The source added that the Russian airstrikes numbered over 50 thus far.
With the large Russian bombardment, the Syrian Arab Army’s (SAA) long-awaited ground offensive is bound to start in the next few days.
Donald J. Trump
✔@realDonaldTrump
President Bashar al-Assad of Syria must not recklessly attack Idlib Province. The Russians and Iranians would be making a grave humanitarian mistake to take part in this potential human tragedy. Hundreds of thousands of people could be killed. Don’t let that happen!
Meanwhile the Kremlin has responded to President Trump’s Monday evening tweet. According to Reuters, Kremlin spokesman Dmitry Peskov said, “Just to speak out with some warnings, without taking into account the very dangerous, negative potential for the whole situation in Syria, is probably not a full, comprehensive approach.”
The Kremlin added that the area was a “nest of terrorists” in what’s a clear dismissal of Trump’s warnings of “Hundreds of thousands of people could be killed. Don’t let that happen!”
And following Trump’s Monday tweet, US Ambassador to the United Nations Nikki Haley tweeted her own statement based on the president’s words, while specifically invoking the US charge that Assad plans to use chemical weapons. Haley wrote: All eyes on the actions of Assad, Russia, and Iran in Idlib. #NoChemicalWeapons.
It appears that Trump and his cabinet were likely briefed on Monday that Russian strikes would be imminent.
We described previously how Washington is seeking to use the “Assad is gassing his own people” claim to gain leverage over Syria, Russia, and Iran as they seek to root out last major pocket of the al-Qaeda jihadist insurgency from the country.
Despite the latest words from President Trump condemning Syrian and Russian actions in Idlib, the White House’s own top State Department official, special anti-ISIL envoy Brett McGurk, issued an unusually frank and accurate assessment of the situation in Idlib a year ago:
“Idlib provice is the largest al-Qaeda safe-have since 9/11, tied to directly to Ayman al Zawahiri, this is a huge problem.”
But Trump’s latest words appear primarily designed for leverage as there is little on the ground pressure that the US is capable of exerting at this late hour, barring some kind of “chemical provocation” claim.
As Russia has initiated what’s already being widely described as a “massive” campaign, we will likely see the major powers involved in the Syrian proxy war go further up the escalation ladder.
end
Israel Warns It Could Attack Iranian Military Assets In Iraq
In response to what could soon be a big headache for Israeli PM Netanyahu and US “military advisors” to Baghdad, Israeli Defense Minister Avigdor Liberman indicated on Monday that it could launch air strikes on suspected Iranian military assets in Iraq, as it has widely done in war-torn Syria, Reuters said.
Last week we reported that according to Reuters, Iran had transferred short-range ballistic missiles to allies in Iraq over the last several months. This revelation comes as tensions between Washington and Tehran are at their highest point in years as aggressive sanctions continue crippling Iran’s economy, and after threats and counter-threats over Tehran laying claim to the vital Strait of Hormuz oil waterway over the past weeks, through which one-third of the world’s oil passes.
Israel views Iran’s regional expansion as dangerous for its well-being, and has frequently launched air strikes in Syria to thwart any Iranian forces defending Damascus in the war.
“We are certainly monitoring everything that is happening in Syria and, regarding Iranian threats, we are not limiting ourselves just to Syrian territory. This also needs to be clear,” Lieberman told reporters Monday.
Explicitly asked if this included new operations in Iraq, Lieberman answered: “I’m saying we will handle any Iranian threat, no matter where it comes from. We are maintaining the right to act… and any threat or anything else that comes up is dealt with.”
Reuters said there was no response from the government of Iraq – which is technically at war with Israel – nor from the Pentagon, which oversees US military operations in the country.
The report cited several unnamed Iranian, Iraqi and Western officials who said that several dozen rockets capable of hitting Israel and Tehran’s Sunni rival Saudi Arabia had been deployed with Iran’s Shiite groups in Iraq. It added that Iran was working to provide its Iraqi proxy armies with missile manufacturing facilities, and training to local militia members in operating the new missile systems.
On Saturday, US Secretary of State Mike Pompeo tweeted that he was “deeply concerned” by the reported Iranian missile transfer. “If true, this would be a gross violation of Iraqi sovereignty and of UNSCR 2231. Baghdad should determine what happens in Iraq, not Tehran,” he said referring to a United Nations Security Council Resolution endorsing the 2015 international nuclear deal with Iran. The Trump admin abandoned that agreement in May, citing Iran’s ballistic missile projects, said Reuters.
Secretary Pompeo
✔@SecPompeo
Deeply concerned about reports of #Iran transferring ballistic missiles into Iraq. If true, this would be a gross violation of Iraqi sovereignty and of UNSCR 2231. Baghdad should determine what happens in Iraq, not Tehran.
Iran’s missile deployment in Iraq would be intended to increase its missile capacity in the region, and to retaliate against any Western or Arab attacks on its territory, as the threat of an upcoming war grows.
* * *
Iran on Saturday denied the report. “The lie disseminated by some media on shipment of Iran-made missiles to Iraq is totally irrelevant and unfounded,” Iranian Foreign Ministry spokesman Bahram Qasemi said.
“Such news comes merely to cause panic among countries in the region and is in line with their policy to spread Iranophobia,” Qasemi said.
At the end of the conference, Liberman also reiterated his previously stated opposition to ongoing negotiations being moderated by Egypt and the United Nations for a ceasefire in the Gaza Strip. Indirect negotiations between Hamas and Israel are unlikely to succeed because Israel says the current blockade is in place to stop weapons and other military assets from entering the Strip.
“I know exactly what’s going on, I’m aware of the negotiations but I’m not involved in that, I don’t believe in it,” Liberman said. “We need to understand that negotiations, whether with [the Palestinian Authority in] Ramallah or with [Hamas in] Gaza, won’t lead us anywhere. All the negotiations have led us to dead ends.”
He maintained Israel should act unilaterally both in Gaza and the West Bank “and mold the reality as we see fit.” And now it appears that Israel is preparing to launch military action in Iraq over reports from anonymous sources. What is more curious that these developments are taking place just before the US midterm election.
GLOBAL ISSUES
SWEDEN
Friday night: Sweden on fire!
(courtesy zerohedge)
As Election Looms, Sweden Is Burning Again Tonight
With the highly anticipated Swedish election looming next weekend, and the anti-immigrant Sweden Democrats party having surged in the polls (until the last few days), the timing of tonight’s gang riots is only likely to enrage voters even more.
Up to 22 cars were torched or damaged across southern Sweden Friday morning, weeks after dozens of cars were set on fire using molotov cocktails.
Police in the southern city of Trollhättan have opened an investigation into one fire which left up to 10 cars damaged, according to local news outlet Aftonbladet. Authorities were also called to the Kronegården around 3:30 a.m. to put out a “fully-fledged” fire which had fully engulfed three cars before spreading further.
“It was a fully-fledged fire in three cars and then spread to the fire related cars,” said Johan Ytterberg, internal officer at Norra Älvsborg’s Rescue Service Federation.
According to the police, four cars were totally burned out and six cars, which were nearby, were injured by the fire.
The police have written a notification of gross damage, but no person is arrested for the crime. –Aftonbladet
Two weeks ago, we reported that multiple gangs of masked youths rampaging across three major Swedish cities, setting cars on fire in what appeared to be a coordinated action.
Intelligence Fusion@IntellFusionMultiple arson attacks on vehicles in #Gothenburg tonight
– An estimated 15 cars alleged to have been torched
– Youths with molotov cocktails are reported to have set fire to the vehicles
– Other arson attacks reported in Trollhättan
– Ongoing#Sweden #Göteborg #svpol #breaking
As The Daily Mail reported at the time, police said they were dealing with multiple fires as dramatic footage showed youths targeting vehicles in a shopping centre and hospital car park at Frölunda Torg, south-west of Gothenburg.
Johan Jansson@JJohanJJansson
Alternativ för Sverige@AfS_riksVideon som visar Sveriges förfall med bilbränderna på Frölunda torg i Göteborg togs ner på Facebook efter att den på en timme fått över 150 000 visningar!
RETWEETA SÅ ATT ALLA FÅR SE VAD SOM PÅGÅR I SVERIGE!
#AfS2018 #svpol #val2018 #FrölundaTorg
There were also reports of young people setting cars on fire in Hjällbo in the north of Gothenburg and further reports of fires in Trollhättan, where some of Friday morning’s torchings took place.
PeterSweden
✔@PeterSweden7
Photos from Gothenburg in Sweden right now.
It’s a war zone.
Police reported that the situation iwas under control and they remain on the premises to keep order.
Frölunda: A group of about 6-8 masked youth fires and throws stones. 31 cars have burned and in addition to these 35 cars are injured. Nobody is arrested.
Nordost: A group of about 8-10 young people throws stones and fires. 15 cars have burned. Nobody is arrested.
Trollhättan: A larger group of about 30-40 young people throws stones and fires. Six cars have burned and another few cars must be damaged. Here roads have been blocked by youngsters and they have even thrown stones against the police and their vehicles. At the moment, identification of young people is ongoing.
When most fires started within a short period of time, it can not be excluded that there is a connection between the fires, the case will be investigated. Polish patrons will remain in the affected areas as long as it is considered necessary.
***
It is no surprise then, as we noted previously, judging by the recent polls, the rise of extreme populist groups in Sweden is accelerating fast.
As Reuters reports, dozens of people have been killed in the past two years in attacks in the capital Stockholm and other big cities by gangs that are mostly from run-down suburbs dominated by immigrants.
With public calls growing for tougher policies on crime and immigration, support has risen for the ironically named, Sweden Democrats, a party with neo-Nazi roots that wants to freeze immigration and to hold a referendum on Sweden’s membership of the European Union.
Their worried mainstream rivals have started moving to the right on crime and immigration to try to counter the Sweden Democrats’ threat in the Sept. 9 election. But so far, they are playing into the hands of the far-right.
“Right now they (mainstream parties) are competing over who can set out the most restrictive policies,” said Deputy Prime Minister Isabella Lovin, whose Green Party is part of a minority government led by the Social Democratic Party.
“It clearly benefits the Sweden Democrats.”
Opinion polls put the Sweden Democrats on about 20 percent support, up from the 13 percent of votes they secured in the 2014 election and the 5.7 percent which saw them enter parliament for the first time in 2010.
The Sweden Democrats’ rise on the back of anti-immigration sentiment mirrors gains for right-wing, populist and anti-establishment parties in other European countries such as Italy, France, Germany, Poland, Hungary, Slovenia and Austria.
The Sweden Democrats still trail the Social Democratic Party but has overtaken the main opposition Moderates in many polls. All mainstream parties have ruled out working with them.
But they could emerge from the election as kingmakers, and a strong election showing could force the next government to take their views into consideration when shaping policy.
Their policies include a total freeze on asylum seekers and accepting refugees only from Sweden’s neighbors in the future. They also want tougher penalties for crime and more powers for police, and say tax cuts and higher spending on welfare could be funded by cutting the immigration budget.
Jimmie Akesson, the leader of the Sweden Democratic party, has described the situation as “pretty fantastic”.
“We are dominating the debate even though no one will talk to us,” he told party members.
The Sweden Democrats have succeeded in linking the two in the minds of many voters, even though official statistics show no correlation between overall levels of crime and immigration. However, while the government denies it has lost control but Prime Minister Stefan Lofven has not ruled out sending the military into problem areas.
“Sweden is going down a more right-wing path,” said Nick Aylott, a political scientist at Sodertorn University said. “It is almost impossible to avoid according some sort of influence to a party with around 20 percent of the vote.”
Trump was right after all.
end
A detailed look at the upcoming Swedish election and it could get very messy and nobody would form a government.
(Golterman/ING economics)
The Swedish Election Could Get Very Messy: Here’s
Why
A stable foundation
Swedish elections are usually fairly staid affairs and historically, have not been all that interesting from a market perspective. When it comes to economic policy, the differences between the mainstream centre-left and centre-right political blocks in Sweden are arguably not all that significant. The centre-left tends to favor welfare spending when in power while the centre-right is more likely to pursue tax-cuts, but both are committed to a sound budget underpinned by a fiscal rule.
Fiscal policy is constrained by a requirement to run a structural surplus of 0.33% of GDP over the economic cycle and keep government debt anchored around 35% of GDP. In practice, this means there is limited scope for any government to pursue radically different fiscal policies. And key long-term decisions (e.g. pension reform) have historically been agreed by consensus among the major parties.
But an unfamiliar situation
This election is unusual though, for two reasons. First, the rise of the far-right Swedish Democrat party has disrupted the traditional left vs right dynamic in Swedish politics, and is likely to make it difficult for anyone to form a stable government after the elections.
Second, this year the Swedish krona (SEK) has become a bellwether for global risk sentiment, depreciating at signs of escalating trade tensions or emerging market stress. The wobbly housing market, a peaking economy, and the ultra-dovish Riksbank have also undermined SEK.
The trade-weighted krona index has depreciated 10% since last autumn. We think that in this environment, domestic political uncertainty could easily become another factor driving SEK volatility.
No one is going to win a majority
Polls have been pretty clear for some time that neither the current centre-left government nor the centre-right opposition alliance is likely to win a majority in September. Both blocks are polling below 40%, and the leading parties on both sides (the Social Democrats and the Conservatives (Moderaterna) are headed for historically poor showings.
Neither government nor opposition looks likely to gain a majority
In contrast, the populist far-right Sweden Democrats have gone from strength to strength, and are polling around 20% (having only entered parliament in 2010). Some polls even show they could become the largest party, though there is a discrepancy between polls that use self-selecting online panels (which show the far-right winning the largest share) and the standard polls (which have the Social Democrats in first place).
Among the smaller parties, the Greens, the Liberals, and the Christian Democrats are all at risk of missing the 4% threshold for entering parliament. The Christian Democrats, in particular, look to be struggling, though this is a familiar pattern for them and in previous elections they’ve always managed to squeak past the 4% barrier. If one of the smaller parties drops out of parliament it would alter the balance between the two mainstream blocks, but would not leave either much closer to a majority.
Polls by party
Post-election confusion likely
It is hard to say how the post-election negotiations will go. The positions of the main parties during the campaign imply a deadlock: none of the mainstream parties want to work with the Swedish Democrats, the centre-right parties will not govern with the Social Democrats and the Social Democrats will not allow a centre-right government. If the result reflects current polls, these positions imply an impasse.
In 2014 and 2010, neither of the two main blocks had a majority either, but the mainstream parties agreed that the block with the larger vote-share would form a minority government – in effect ignoring the far-right vote.
That is one plausible outcome this time around as well and would result in either a continuation of the current government or a return to the previous centre-right coalition. But there appears to be less willingness on both sides to compromise in this way, and a realisation that ignoring the far-right has only served to strengthen its position.
So two other options are on the table. The Conservatives could chose to govern with support from the far-right. While they have consistently excluded this option, the temptation may become too great post-election (especially if the Conservatives, Christian Democrats and Swedish Democrats win a majority in Parliament).
The other alternative is a centrist coalition led by the Social Democrats with support from the Liberals, Centre Party, and the Greens (and probably implicit support from the Left). A grand coalition between the Social Democrats and the Conservatives is a more remote possibility, given the two parties have always defined themselves in opposition to the other.
In short, the weeks after the election are likely to be very messy. Forming a new government and passing a budget for 2019 could easily take up the rest of the year. New elections, if the deadlock cannot be resolved, are a clear possibility (this almost happened in 2014, and the current situation looks more difficult). That would prolong the period of uncertainty into the first half of 2019.
Economic policy implications
The Swedish economy is doing well. After several years of strong growth, government finances are in good shape (net government debt is below 30% of GDP). Though we see a slowdown ahead, and the potential for a rather nasty downturn if weakness in the domestic economy were to coincide with a global downturn, the immediate situation facing the new government is fairly benign.
Given the fiscal rule, regardless of what shape the next government comes in, fiscal policy will not change materially. Major reforms (a comprehensive tax reform and a new housing policy have been mooted) would likely be undertaken through cross-party consensus, which will be a slow-moving process and likely a story for 2019 or later.
Deliberate disruption (the Swedish Democrats have called for a referendum on EU membership, while the Liberals want Sweden to join the euro) looks unlikely. Neither is a realistic political proposition: polls suggest Swedes are content with the status quo – less than a quarter would support leaving the EU, and less than 20% want to join the euro.
Looking a bit further ahead, a weak minority government could lead to difficulties in some scenarios. If there was a sharp slowdown (for example, due to the housing market taking a turn for the worse, or the global trade war worsening) and difficult decisions had to be taken, a minority government may struggle to take decisive action.
end
MEXICO/CANADA/USA
TRUMP notifies congress that he is ready to sign a trade pact with Mexico but keep talking to Canada. There is still huge differences as Canada wants to protect its dairy industry. Canada also wants Chapter 19 of the trade dispute resolution to remain intact something that the uSA wants removed. It does not look like there will be a dea especially after Trump’s rant
(courtesy zerohedge)
Trump Notifies Congress He Will Sign Trade Pact With
Mexico, Keep Talking To Canada
With trade talks between the U.S. and Canada ending on Friday with no deal to revamp NAFTA after “insulting” Trump comments from his Bloomberg interview were leaked by the Canadian press, the US president notified Congress of his intent to sign a bilateral trade pact with Mexico in one month, while agreeing to keep talking to Canada.
The move by Trump to notify Congress that he planned to sign a deal with Mexico in 90 days and would include Canada “if it is willing” avoided what many in the U.S. business community and Congress had seen as a worst-case scenario, according to Bloomberg.
The president threatened earlier this week to go ahead with a bilateral trade agreement with Mexico that would leave out Canada, which he on Friday again accused of “ripping us off.”
Sending the notification to Congress effectively sets a new clock for the Nafta negotiations. Under rules set by Congress, the administration is now facing a 30-day deadline to provide a full text of the agreement.
Following four days of intensive talks in Washington between Canada and the United States during which “progress” was made – but not enough to reach a successful deal – the biggest sticking points remained open: U.S. demands for more access to Canada’s closed dairy market and Canadian insistence that the “Chapter 19” trade dispute settlement system be maintained, not scrapped as Trump wants.
“We know that a win-win-win agreement is within reach,” Chrystia Freeland, the Canadian foreign minister, told reporters in Washington after talks wrapped up on Friday. But “Canada will only sign a deal that’s a good deal for Canada, we are very, very clear about that,” she added. She declined to identify the trickiest issues that were holding up a deal.
Initially deal sentiment was optimistic, and markets expected a favorable outcome from the negotiation after a bilateral deal was announced by the US and Mexico on Monday which paved the way for Canada to rejoin the talks this week with a Friday deadline looming. But on Friday sentiment turned, partly on Trump’s explosive off-the-record remarks made to Bloomberg News that any trade deal with Canada would be “totally on our terms.” He later confirmed the comments, which the Toronto Star first reported.
“At least Canada knows where I stand,” Trump said on Twitter later.
Donald J. Trump
✔@realDonaldTrump
Wow, I made OFF THE RECORD COMMENTS to Bloomberg concerning Canada, and this powerful understanding was BLATANTLY VIOLATED. Oh well, just more dishonest reporting. I am used to it. At least Canada knows where I stand!
Later on Friday, Trump notified Congress that he intends to sign the trade pact by the end of November. Text of the deal will be published by around Oct. 1.
Congressional approval of a bilateral deal as replacement to the trilateral NAFTA, however, is unlikely.
According to Reuters, U.S. lawmakers and business groups have expressed concern about Canada’s not yet being not yet part of the agreement. “Anything other than a trilateral agreement won’t win Congressional approval and would lose business support,” the chief executive of the U.S. Chamber of Commerce, Thomas Donohue, said in a statement.
There are other potential complications: Trump had been pushing to get a new Nafta approved under a process known as fast-track authority that allows him to seek a simple yes-or-no vote in Congress on trade deals, as long as his administration clears certain procedural hurdles.
Under fast-track rules, Trump must notify Congress 90 days before signing the deal. The White House set a deadline for Friday because it wanted to notify Congress in time for Mexican President Enrique Pena Nieto to sign the accord before his successor, Andres Manuel Lopez Obrador, takes office on Dec. 1.
However, any vote in U.S. Congress is unlikely to take place before 2019. By then, the Democrats may control at least one chamber of Congress, and Nancy Pelosi, the minority leader in the House of Representatives, made clear on Friday that any deal must include Canada.
* * *
Meanwhile, even as the US announced it would continue talks with Canada next Wednesday, it is unclear who will compromise first or when, especially after Trump’s controversial comments were leaked.
U.S. Trade Rep Robert Lighthizer has refused to budge despite repeated efforts by Freeland to offer some concessions on dairy to maintain the independent trade dispute resolution mechanism under Chapter 19 of NAFTA, The Globe and Mail reported on Friday.
In response, a USTR spokeswoman countered that Canada had made no concessions on agriculture, which includes dairy, but said that negotiations continued.
Trump has argued that Canada’s dairy tariffs are hurting U.S. farmers, an important political base for his Republican party. But as Reuters notes, “dairy farmers have great political clout in Canada, too, and concessions could hurt the ruling Liberals ahead of a 2019 federal election.”
On Saturday morning, Trump echoed a statement he made during a Friday speech in North Carolina when he took another swipe at Canada. “I love Canada, but they’ve taken advantage of our country for many years,” he said.
Donald J. Trump
✔@realDonaldTrump
I love Canada, but they’ve taken advantage of our Country for many years!
end
It does not look good for a new NAFTA deal but USA business leaders will not vote on the Mexican deal unless Canada is included. Actually if Canada wanted to play hardball with the uSA they would say that they would disallow any water from being exported to the USA, something that the uSA will desperately need
(courtesy zerohedge)
Trump Slams Canada’s “Decades Of Abuse”, Warns Congress Not To Interfere
In NAFTA Talks
President Trump said on Saturday there was no need to keep Canada in NAFTA, slammed the US neighbor’s “decades of abuse” while warning Congress not to meddle with the trade negotiations or he would terminate the trilateral trade pact altogether one day after trade talks with Canada collapsed hours before a deadline.
“There is no political necessity to keep Canada in the new NAFTA deal. If we don’t make a fair deal for the U.S. after decades of abuse, Canada will be out,” Trump tweeted on Saturday. “Congress should not interfere w/these negotiations or I will simply terminate NAFTA entirely & we will be far better off.”
Donald J. Trump
✔@realDonaldTrump
There is no political necessity to keep Canada in the new NAFTA deal. If we don’t make a fair deal for the U.S. after decades of abuse, Canada will be out. Congress should not interfere w/ these negotiations or I will simply terminate NAFTA entirely & we will be far better off…
Late on Friday, Trump notified Congress of his intent to sign a bilateral deal with Mexico and would include Canada “if it is willing.” On Monday, Trump unveiled a surprise bilateral deal with Mexico.
As discussed earlier, Trump’s notification of Congress that he planned to sign a deal with Mexico in 90 days appeared to avoid what many in the U.S. business community and Congress had seen as a worst-case scenario. But according to Bloomberg, Saturday’s tweets opened the door again to that outcome.
“We were far better off before NAFTA — should never have been signed. Even the Vat Tax was not accounted for. We make new deal or go back to pre-NAFTA!” Trump said.
Donald J. Trump
✔@realDonaldTrump
….Remember, NAFTA was one of the WORST Trade Deals ever made. The U.S. lost thousands of businesses and millions of jobs. We were far better off before NAFTA – should never have been signed. Even the Vat Tax was not accounted for. We make new deal or go back to pre-NAFTA!
The threat echoed what the president said earlier in the week when he warned he would forge ahead with a bilateral trade agreement with Mexico that would leave out Canada, which he on Friday again accused of “ripping us off.”
“We can’t have these countries taking advantage of the United States,” Trump told a rally in North Carolina.
While the two sides failed to meet a deadline set by the White House, both U.S. and Canadian negotiators insisted that they were making progress. They also announced that they would resume talks on Wednesday after four days of intense negotiations in Washington ended without a final agreement.
While Trump’s negotiating tactics may yet prove successful, there is also a risk that the president antagonizes Ottawa enough to lead to a substantial decline in the trade relationship, one which is critical for the US as Canada remains the biggest buyer for more US states’ exports:
Meanwhile, by sending the notification to Congress, Trump effectively “reset the clock” for the Nafta negotiations. Under rules set by Congress, the administration is now facing a 30-day deadline to provide a full text of the agreement. Because of that, negotiations could still drag on for not just days but weeks even as both U.S. and Canada are facing their own pressures.
U.S. business groups welcomed the signs of progress but made clear that they would oppose any deal that did not include Canada.
“Anything other than a trilateral agreement won’t win Congressional approval and would lose business support,” the U.S. Chamber of Commerce said in a statement.
Speaking to Bloomberg, Carleton University political scientist Laura Macdonald said despite the rhetorical pressure from Trump, the negotiations still appeared to be proceeding remarkably normally. But the limits of Trump’s leverage were also becoming clear with the president still needing to get any agreement through a Congress that has concerns about any pact that does not include Canada.
“Trump is making it blatantly obvious who has the most power in this situation, but he doesn’t have complete power: Congress has a role to play,”
Congressional support could be further impaired since any vote in U.S. Congress is unlikely to take place before 2019. By then, the Democrats will likely regain control of the House, and Nancy Pelosi, the minority leader in the House of Representatives, made clear on Friday that any deal must include Canada. “Actually fixing Nafta requires reaching a trade agreement with both Mexico and Canada,” she said. “Without a final agreement with Canada, the administration’s work is woefully incomplete.”
Separately, Trump’s leaked “off the record” comments to Bloomberg and continuing vitriol toward Canada has complicated the politics for Canadian Prime Minister Justin Trudeau, who on Friday said he’ll only sign an agreement that’s right for his country.
Trudeau reiterated his government wouldn’t concede to U.S. demands to dismantle its dairy system, known as supply management. Talks were also hung up on U.S. insistence to eliminate dispute-resolution panels that Ottawa considers essential, Canadian officials said on Friday.
7 OIL ISSUES
8 EMERGING MARKET ISSUES.
(courtesy zerohedge)
In Argentina “All Bets Are Off” As Peso Disintegrates
“All bets are off” in Argentina” – as Bloomberg puts it – where the value of the local peso has plummeted, falling 20% this week alone. It is now 50% weaker on the year versus the USD, making it the worst performing currency of 2018 and sending massive shockwaves through Argentina’s economy. The effect on business owners and anyone who transacts in local currency has been profound, according to Bloomberg.
“There’s no clear price reference after the peso plunge,” one business owner told Bloomberg. The price plunge has created havoc for him and his surgical equipment business, where he buys in foreign currencies and sells in pesos.
Unlike hyperinflating economic basket case Venezuela, Argentina is a sizable $640 billion economy that is now being put to the test to see how much strain it can truly endure.
The peso crippling could also be a precursor to political unrest, as President Mauricio Macri’s chances of being reelected are reportedly falling, despite being known as a leader who has been friendly to the markets over the course of his tenure. However, as a result of the recent turmoil, he’s “struggling” to restore investor confidence in the Argentinian peso.
Argentina and its Central Bank have taken a number of decisive steps to try and halt the plunge, yesterday hiking interest rates to the world’s highest 60%. Previously, the country had requested quicker payouts from the International Monetary Fund, which promptly granted the collapsing country’s request.
And speaking of Argentina’s $50 billion loan agreement in place with the IMF – the largest ever in IMF history – this isn’t that too different from the country’s 2001 default, when it was on a similar IMF loan program. Since then, the country underwent a “decade of budget-busting left-populist government – and isolation from world financial markets”.
The result appears to be the country coming full circle.
Argentinian residents who voted for President Macri went on record telling Bloomberg they “wouldn’t do it again.”
“I see a country that’s lost its way. They need to find a way to stop this slide,” one 46-year-old bank worker told Bloomberg after buying some dollars she hoped to sell later. She concluded, “The problem is, they don’t know what to say.”
The government forecasts now that the economy is going to contract 1% this year despite predictions of 3% growth at the start of this year; the most likely outcome will be a severe recession if not depression. Inflation is at a stunning 30% and is accelerating.
This makes the issue of price discovery incredibly difficult for business owners, who are now purchasing physical supplies as currency hedges. At the same time, vendors are roping in their lines of credit with customers and demanding immediate payment due to the extreme volatility.
President Macri’s plan initially was to reduce the country’s deficit slowly. The goal was to move it from 6.5% of GDP last year to 3.8% of GDP in 2019. Now, it is likely that the government will release a plan for an even lower target for 2019, reportedly below 1.3% of GDP, Bloomberg noted. The problem is that as Greece has shown, such “austere” measures usually end up in a cycle of economic depressions.
Meanwhile, the economy is starting to grind to a halt: labor strikes are also expected, as negotiating with unions is going to be extremely difficult due to the uncertainty with what the value of the currency is.
“Our salaries are constantly eroding,” 62-year-old union leader Ruben Garrido told Bloomberg.
Even those at the upper end of the socioeconomic spectrum are feeling the brunt of the currency’s plunge, but at least they seem to understand monetary policy better than the country’s central bankers. Alicia Quadri, a dance teacher and former star ballerina at the prestigious Teatro Colon.
“I was hoping to go to Europe with my daughter at the end of the year,’’ she said. “With this exchange rate, I won’t. I’ll wait for things to calm down.’’ When, and how, will that happen? Quadri wasn’t sure.
“They need to get all the major stakeholders, the best economists, to find a solution,’’ a former star ballerina at the prestigious Teatro Colon told Bloomberg. She continued, “But not the IMF, or outsiders. They’ll only make the country take on more debt. And they don’t live through the consequences.’’
END
Sunday: Panic
The peso is now set to disintegrate after the IMF strangely tells the Central bank of Argentina to stop supporting its currency. The Central bank is doing the correct policy but if it doesn’t and the markets feel that the central bank does not have their backs, then the currency will collapse and that will lead to outright default and a huge depression inside Argentina.
Peso Set To Disintegrate After IMF Tells Argentina To Stop Supporting Currency
On May 11, three days after Argentina secured a $50 Billion IMF bailout – the largest in the fund’s history – we jokingly noted that with the peso resuming its slide, an indication the market did not view the IMF backstop as credible, the ECB would need to get involved.
zerohedge@zerohedgeARGENTINE PESO EXTENDS LOSS, HITS NEW ALL-TIME LOW AT 23.16/USD
Time to add ECB to IMF bailout
In retrospect, it now appears that this may not have been a joke, because with the Peso plummeting, and surpassing the Turkish Lira as the worst performing currency of 2018 having lost half its value YTD…
… with the bulk of the collapse taking place in August…
… Christone Lagarde had even more bad news for Buenos Aires and Argentina president Mauricio Macri:the IMF now insists that after burning through billions in central bank reserves, Argentina should stop using funds to support the peso, and float it freely.
According to Infobae, the Argentine foreign currency reserves have declined below the level demanded by the IMF, with Argentine authorities selling $2.5BN to support the peso in August; meanwhile the overall level of reserves has slumped even more, approaching the levels before the IMF bailout while failing to prop up the currency which, as shown below, has collapsed in a move reminiscent of what is taking place in hyperinflating Venezuela.
Worse, the Argentine Peso suffered its latest sharp drop in the days after the central bank unexpectedly hiked rates to 60% – the highest in the world – and another indication that the market is firmly convinced that not even the IMF backstop will force Argentina into a painful, and politically destabilizing structural program.
After all it is less than two decades after the IMF tried the exact same playbook with Argentina and the result was a default.
Meanwhile, as the IMF tells Argentina to let the peso “drop dead”, fears of an economic depression are growing, and as Infobae notes, “unable to defuse the bomb left by the Kirchner regime, the government now faces the obligation to make a painful structural adjustment , as has happened so many other times in Argentina. Everything that the government wanted to avoid with its gradualist policies was ushered in by the market: mega-devaluation, high inflation and a collapse in purchasing power” as IMF enforces another round of austerity in Argentina; the same Argentina which defaulted the last time the IMF was in charge. The result, Infobae laments, is well known: “a fall in activity and increase in poverty.”
Even before the IMF shift, the administration of Mauricio Macri was preparing to implement the painful measures, with TN reporting that after a seven-hour meeting with advisers on Saturday to discuss currency crisis, Macri would raise export taxes to take advantage of the one silver lining from the collapsing currency, a boost to Argentine exports, and close 10 to 12 ministries, including Science and Technology, Culture, Energy and Agro-Industry. The president would also remove deputy Cabinet Chiefs Gustavo Lopetegui and Mario Quintana.
Of course, the export taxes mean that much of the peso devaluation will be offset by the government taking its own pound of flesh, as per IMF instructions.
Here Infobae does not mince its words, warning that the result of this tax reform will be disastrous, as next year the tax pressure will increase again, instead of falling, and will add further pressure on the exchange rate that in less than three months has left the country in the middle of a deep recession.
The deterioration is so great, the publication notes, that all the government can do is hope to avoid a “knock out blow”, and another sovereign debt default.
Now events are set in motion that would result in a new default, which would not only have tremendous consequences for an already weakened economy, but also pose a big question mark how president Mauricio Macri reaches the end of his term.
Meanwhile, further pressuring the economy will be the “strong fiscal adjustment” that will be enacted per IMF instructions in 2019. “Start with 0” , explained the Government when asked how it will achieve a fiscal balance. That would mean not only higher taxes, but slashing spending, and a wave of popular unrest and political chaos. As Infobae predicts, the 1.3% primary deficit is now a thing of the past, and the government is hoping to reach levels between 0.4% and 0.5%, “a fiscal goal that is as ambitious as it is difficult to meet.”
But while the government agrees with the IMF on the need to launch a highly unpopular fiscal adjustment, it certainly disagrees on the IMF’s demands that Argentina reserve be used exclusively for the payment of the debt; here the Government insists on the necessity to have flexibility to intervene in the exchange market when it is necessary.
And this is where the IMF’s unexpected order to stop intervening in the peso came in: there were heated discussions between the staff of the IMF and the president of the Central Bank, Luis Caputo, as the IMF “bureaucrats” were alarmed not only by the rate of rise of the dollar, but by the loss of reserves, Infobae reports.
Specifically, the IMF is alarmed that in August alone, Central Bank reserves fell by $5.3 billion, from $58 billion at the end of July, to just $52.7 billion one month later. This level is $2.5 billion below the goal of reserves that the IMF had “instructed” the Government to keep by the end of September; this has been seen as a “flagrant breach of the commitments promise to Washington”, as the terms of the agreement did not even last three months.
A big reason for this slide is that, as noted above, the Central bank was extremely active in the market, supporting the peso even as it plunged, and intervened through a series of tenders: throughout August, it sold almost $2.5 billion, even as the peso lost over a third of its value in August.
This prompted the IMF to insist on its original idea: the dollar must float freely, the price of the currency must be fixed by the market, and in addition, the Fund’s loan should not be used to finance the flight of capital.” The message is clear: if investors want to buy dollars, make it very expensive for them to do so.
The bigger problem is that the Argentina Central Bank has already lost control: last Thursday, the dollar soared from $34.50to $42 against the peso, underscoring the fragility of the exchange policy, because even as the central bank sold $400 million, the currency plunged 20%. Then the central bank was forced to urgently sell another $300 million before the USDARS closed at 40.
Hence the dilemma faced by the IMF and Argentina: for the Fund it is essential to preserve to avoid sending a signal of weakness, and leading to a collapse in the local bond market. But for central bank head Luis Caputo, allowing the dollar to rise so quickly leads to an even worse outcome, generating fear among investors and accelerating the collapse of local assets.
Meanwhile, the recent unprecedented rate hike became irrelevant, as it is useless to offer a 60% rate on pesos if the dollar rises 30% or 40% in a month.
Therefore, to Argentina it is essential that the monthly devaluation be well below the level of rates in the coming months. Only then – the bank claims – it will be possible to attract investors who are willing to buy Argentine risk.
“With bonds that yield 11% annually in dollars and bonds in pesos at 60%, it is the ideal time to awaken greed”. But for that to happen it is necessary to ease the panic the behavior of the exchange rate.
That won’t happen if the IMF does not back off its latest position; in fact, if the market sees the peso as no longer having the support of the central bank, the ARS could disintegrate as soon as the Monday open, plunging by a record amount.
This is why the president of the Central Bank, Luis Caputo, and his deputy, Gustavo Cañonero, scrambled to urgently get on the plane to the IMF’s Washington HQ, where Finance Minister Nicolás Dujovne will also bepresent. The Argentina officials will go to Washington to convince the IMF authorities that they need much more leeway to intervene and calm the exchange market.
If they don’t get it, the Emerging Market currency crisis is about to get far worse, and another Argentina default would be inevitable. As Infobae concludes, “it is an open-ended fight that is keeping in suspense not only the negotiators, but all the Argentines who will suffer the ravages of the mega-devaluation of the last month.”
end
ARGENTINA/MONDAY
Macri initiates price controls on foods as well as higher taxes on exports. This has been one bright spot for Argentina and that will be taxed and raise 350 billion Argentinian pesos for the government. The country is well on its way to default and hyperinflation
(courtesy zerohedge)
Argentine President Admits “More Poverty” To Come, Announces Price Controls, Higher Taxes, Smaller Govt
Having been told by The IMF that he must stop using their bailout funds to prop up his currency (which has been utterly futile), Argentine President Mauricio Macri addressed the troubled nation this morning to announce his plans to satisfy Christine Lagarde’s demands in order to receive the next tranche of bailout cash sooner.
Things have not worked out so well since The IMF “bailed them out”…
In his address, there was good news, bad news, and ugly news.
“Everyone has to make sacrifices,” Macri implored of his nation’s citizens – who have lost 50% of their wealth year-to-date due to the collapse of the peso, which he also attributes to being “exaggerated by Turkey and Brazil weakness.”
Having blamed “mostly external factors” for the collapse of the economy (not bingeing on too much dollar-denominated debt in order to manufacture a smoke-and-mirrors-based boom), Macri notes that investors “have started doubting” Argentina’s ability to function.
The Good News
Macri has promised to dramaticallyshrink the size of the government, eliminating several ministries entirely, adding that Argentina must “set a goal not to spend more than we have.”
The Bad News
In an effort to close its budget gap, Macri will raise taxes on its one positive economic attribute – its exporters.
The Ugly News
Amid the hyperinflationary regime shift that is occurring, Macri will resort to price controls of some essential foods. When has that ever ended well.
All of which, as Bloomberg notes, is intended to signal a shift in the government’s strategy as it heads into talks on Tuesday with the International Monetary Fund to speed up the disbursement of cash from a $50 billion credit line.
To roughly translate the plan above – some exporters are going to be killing it because of the plunging peso… so we are going to tax them into ground over their ‘fair share’.
Macri is now caught between the ‘rock’ of pleasing investors by cutting spending, and the ‘hard place’ of ensuring that the belt-tightening of austerity doesn’t cause social upheaval ahead of next year’s election.
These measures, Macri warned “will lead to more poverty.”
Argentina has set a target to balance the budget in 2019, and achieve a primary fiscal surplus of 1% in 2020 (thanks to raising over 350 billion pesos in export taxes). As we noted previously, this is going to be as painful as it is hard to achieve.
Meanwhile, further pressuring the economy will be the “strong fiscal adjustment” that will be enacted per IMF instructions in 2019. “Start with 0” , explained the Government when asked how it will achieve a fiscal balance. That would mean not only higher taxes, but slashing spending, and a wave of popular unrest and political chaos. As Infobae predicts, the 1.3% primary deficit is now a thing of the past, and the government is hoping to reach levels between 0.4% and 0.5%, “a fiscal goal that is as ambitious as it is difficult to meet.”
For now, the peso is stable (modestly weaker)…
But “price controls” and higher taxes on what little growth there is the economy – we are sure that will end well…
“You Are Here” Argentina…
Brazil
Lulu barred from the Presidential election by the court. Probably the running mate of Lulu will be put on the ballot and that may be enough to carry the socialists to power. The two other parties are extreme right and extreme left
(courtesy zerohedge)
Lula Barred From Presidential Election By Brazilian Court
Traders who were bidding up the Brazilian real and local stocks on Friday on the expectation that Lula would be barred from running for president in Brazil’s upcoming presidential elections proved to be right: late on Friday, Brazil’s top electoral court banned jailed former president Luiz Inacio Lula da Silva from running in this year’s presidential because of his prior corruption conviction.
In the 6-1 ruling, the country’s top electoral court decided that Lula’s candidacy cannot stand, given his 12-year sentence for corruption and money-laundering by an appeals court earlier this year Bloomberg reported.
The ruling came after a dramatic and gruelling late-night session broadcast live on television and across news sites, and defied a request from the United Nations human rights committee that he be allowed to stand.
“I declare the candidate ineligible and I deny his application to run for the presidency,” said Luis Roberto Barroso, the lead judge reading out a summary of the ruling at the court. “I veto electoral propaganda until the candidate’s name is replaced on the ballot.”
“What is at stake here today is the equality of all citizens before the law and the Constitution,” Judge Og Fernandes told the court in his vote to declare Lula ineligible. Judge Admar Gonzaga, who as a lawyer worked for Lula’s handpicked successor Dilma Rousseff’s 2010 election, cast the decisive vote in the 6-1 decision that sealed the leftist icon’s ejection from the presidential election.
From behind bars, Lula, the hugely popular, two times former leftist president and union leader leads polling in Brazil’s most unpredictable and polarised presidential election in decades. The decision to bar his candidacy plays to the advantage of extreme rightwing candidate Jair Bolsonaro, running second in polls and ahead without Lula.
The widely expected decision removes a cloud hanging over Brazil’s most uncertain election in decades, in which polls gave Lula – widely seen as a “market unfriendly” – a huge lead over his challengers, though Lula’s lawyers and the Workers Party have said they would appeal an adverse decision to the Supreme Court.
Lula, who had a 20 point lead ahead of his closest competitor, far-right candidate Jair Bolsonaro, and is the most influential political figure in Brazil’s recent history, has been in jail since April after an appeals court confirmed a 12 year sentence for corruption and money laundering. His Workers Party registered him as its presidential candidate for the Oct. 7 vote anyway, saying he is innocent.
Despite his conviction and several graft cases pending against him, Lula leads the presidential race by a long stretch, with 39% of voter support, according to pollster Datafolha. His nearest rival, Bolsonaro, has 19%.
However, barring an extraordinary upset through appeal, it looks all but certain that the iconic former metalworker won’t run on Oct. 7 and will be replaced by his running mate, former Sao Paulo mayor Fernando Haddad, who is expected to head the ticket hoping to inherit the bulk of Lula’s votes.
The Workers Party has until Sept. 17 to swap their names on the ballot; The court also ruled that Lula should not appear in the Workers Party’s television and radio ads campaign until the ticket has been officially altered to remove him.
The question now, according to Bloomberg, is how much of his huge support Lula can transfer to Haddad from his prison cell. Opinion polls suggest it could be enough to push his protege, a 55 year-old academic into a runoff with the front-runner, former Army Captain Jair Bolsonaro.
Campaign ads that circulated on social media in recent days showed images of Lula before he was jailed, and of Haddad, both promising better days for Brazil. Free radio and TV air time allotted to presidential candidates begins on Saturday
That said, investors remain concerned about the possible return of the same left wing party that oversaw the worst recession on record, and whose president Dilma Rousseff was impeached in 2016. The leftist party proposes to ramp up government intervention by taxing banks who charge high interest rates and introducing capital controls to reduce volatility.
With the chances for market-friendly candidates increasingly gloomy, investors have dumped Brazilian assets, exacerbating the impact of an emerging market selloff. The real has lost 19% in 2018 making it one of the worst performing currencies after the Argentine Peso and Turkish Lira.
A left-wing victory that would boost social spending would be seen as a disaster for markets: as Bloomberg warns, if the next president doesn’t adopt draconian austerity measures, including far-reaching cuts to pension benefits, government spending would break through constitutionally imposed limits, putting at risk the creditworthiness of $950 billion in federal government debt.”
Of course, the reason why Lula remains so popular in the first place, is that the local population fondly remembers the Brazilian growth phase in the early part of the century under the former two-time leftist president – if not the painful depression that followed – and equates the current period of economic pain with precisely the economic policies that Brazil will need to implement in the coming months to avoid an even bigger economic meltdown.
END
sad day for Brazil as fire gutted its National Museum with over 20 milllion exhibits and artifacts
(courtesy zerohedge)
Stunning Footage Inside Brazil’s Fire-Gutted National Museum
It contained centuries-old priceless artifacts charting the history of an entire country and people. The National Museum of Brazil was established in 1818 under King John VI of Portugal and contained over 20 million exhibits and artifacts, but was consumed completely by a devastating fire on Sunday night after it closed for the day.
Now Brazilians are raging at their government’s failure to take simple preventative measures that could have saved the museum after its central building caught fire, quickly engulfing side buildings, which firefighters were helpless to do much about. There wasn’t even so much as a working fire suppression system, considered standard for most any national antiquities museum across the globe, according to local reports.
Witnesses say that though security and other staff were evacuated in time, nothing of the museum’s priceless collection could be saved.
Matthew Champion
✔@matthewchampion
incredibly sad video from inside Brazil’s gutted National Museum — only the meteorites withstood the fire
“This is a tragic day for Brazil,” Brazilian President Michel Temer said in a statement the following day. “Two hundred years of work and research and knowledge are lost.”
And the director National History Museum told Globo TV that “this is a cultural tragedy.”
Meanwhile Reuters reported that the institution had suffered from years of neglect under numerous governments: “We never got anything from the federal government… We recently finalized an agreement with (state-run development bank) BNDES for a massive investment, so that we could finally restore the palace and, ironically, we had planned on a new fire prevention system,” said museum vice director Luiz Duarte.
Isabella, or Shira. #Olheiras a mil@IsabellaShiraToday Brazil is mourning the fire of the National Museum. Part of our culture died in this incident due to lack of investment, because the most important is carnival and parties.
This is the real Brazil.
Others also lashed out at the pattern of neglect which they say led to the fire. Luiz Fernando Dias Duarte, a deputy director, vexpressed “profound discouragement and immense anger” according to local reports, and accused Brazilian authorities of a “lack of attention”.
“We fought years ago, in different governments, to obtain resources to adequately preserve everything that was destroyed today,” Dias Duerte told journalists.
In recent years the museum had reportedly suffered from severe funding cuts. Many Brazilians took to social media in the immediate aftermath, calling out the hypocrisy of floating massive funds toward hosting the Rio 2016 Summer Olympics or building towering soccer stadiums, but all the while starving the national museum for funds.
BBC News (World)
✔@BBCWorld
“It’s a loss for Brazil, our history was stored there” – A fire has gutted the National Museum of Brazil in Rio de Janeirohttp://bbc.in/2PYEFWV
The main building of the museum, now utterly destroyed after in took firefighters some five hours to snuff out the fire, was once the residence of the Portuguese royal family.
Per Axios, among the priceless items destroyed include the following:
- One of the Americas’ oldest human fossils — the skull and bones of a 25-year-old “Luzia” who died around 11,500 years ago, according to National Geographic.
- It also held the largest meteorite ever found in Brazil, bones of Brazilian dinosaurs as well as Latin America’s oldest collection of ancient Egyptian mummies and artifacts.
- The museum housed one of the best collections of indigenous literature, Guardian journalist Jonathan Watts wrote on Twitter. Urutau Guajajara, a leader and researcher of indigenous right, told Watts, “This is the greatest loss of indigenous writing in Latin America… Our memory has been erased.”
- There were also pre-Colombian, Incan treasures, according to the museum’s website, and extensive collections of ancient Greek and Roman artifacts.
- Some items were brought to Brazil by the country’s founder and first ruler Dom Pedro I, according to the Guardian.
There’s yet to be an official reason given for the cause of the fire, but multiple reports suggest the museum’s structure and wiring had suffered from years of neglect and was in dire need of repairs.
“Very little will be left,” preservation director Joao Carlos Nara told Agencia Brasil,according to CNN.
Judging from the new to emerge footage inside the museum showing the aftermath, it appears that all is indeed lost.
end
South Africa Unexpectedly Slides Into Recession For The First Time Since 2009
With South Africa reeling amid concerns of land expropriation, the rand tumbling amid broad emerging market fears and the local economy pressured by collapsing consumer spending, moments ago the Pretoria-based Statistics South Africa announced that Q2 GDP contracted at a 0.7% annualized rate, missing expectations of a 0.6% increase, and together with the sharp drop in Q1 GDP, South Africa has now officially entered its first recession since 2009.
There is a certain “rhyming” to this event because as Bloomberg notes, South Africa’s new President Cyril Ramaphosa suffered the same false start as his predecessor nine years ago: a recession in his first six months in office.
The decline was largely due to a collapse in agriculture and the farming sector – to be expected at a time when white farmers don’t know if they will be allowed to keep their land or have it be forcibly expropriated – and a parallel drop in consumer spending. Some more details from the report:
- Agriculture declined the most, recording an annualized 29.2% contraction
- Manufacturing shrank 0.3%
- Trade contracted 1.9%
The one positive was the mining sector where production expanded 4.9% Q/Q.
The rand fell 2.5% to 15.24 per dollar in Johannesburg on Tuesday. The currency has tumbled 18.8% YTD, with sentiment in the rand initially boosted after Ramaphosa came to power in December, ending Jacob Zuma’s corruption-plagued tenure of almost nine years, but that optimism quickly faded as structural reforms were not implemented fast enough while global trade wars emerging market turmoil has further sour sentiment, Bloomberg notes.
“Expect More Pain”: As EM Contagion Goes Global, Wall Street Sees No Way Out
With Trump set to announce another $200BN in Chinese tariffs as soon as Thursday, sparking fears of a more acute phase of global trade wars and sending the dollar higher and US equity futures lower, the emerging market contagion vortex is starting to take on a life of its own and as Bloomberg notes this morning, “even when the most vulnerable countries vow to protect their currencies, the dollar steps in to rain on their parade.”
As noted earlier, the selloff in emerging market currencies has been relentless, dragging down the MSCI FX index to the lowest level in over a year, pressured by the trio of the South African rand, which dropped after Pretoria reported that the nation had entered only its second recession in 9 years, the Turkish lira, which is down again after the central bank failed to restore confidence that even a telegraphed rate hike will be sufficient to curb the country’s soaring inflation, and the Argentine peso which slumped 4% yesterday after president Macri’s latest announcement of emergency measures did little to raise sentiment.
Meanwhile, in addition to the imminent announcement of a new $200BN in China tariffs, US investors are now eyeing the Fed’s September rate hike which now appears inevitable, helping the dollar extend gains which in turn is further pressuring emerging markets amid deepening worries over idiosyncratic risks in emerging markets including Argentina’s fiscal woes, Turkey’s twin deficits, Brazil’s contentious elections and South Africa’s land-reform bill.
And after observing developments in emerging markets with a sanguine eye for months, Wall Street analysts are finally starting to get concerned, and as the following soundbites demonstrate, as long as the Fed keeps tightening rates, virtually nobody sees a quick – or any – way out to break the global emerging markets contagion “doom loop”:
The dollar is winning by default, according to Kit Juckes, a global strategist at Societe Generale: “There’s not much to make me think the dollar should be going up, but there’s plenty to make me nervous about other currencies. The dollar is very strong and lacking rate support, but other currencies are worse.”
Below, courtesy of Bloomberg, are some other hot takes from Wall Street analysts:
“It’s Not Enough”, from Tsutomu Soma, general manager for fixed-income trading at SBI Securities Co. in Tokyo:
- “The measures announced by Argentina and Turkey are probably not enough to lead to a significant improvement in their fundamentals”
- “Contagion risks to other emerging markets are growing especially as the Fed tightens”
“Set to Suffer”; from Michael Every, head of Asia financial markets research at Rabobank in Hong Kong:
- “Emerging-market FX are set to suffer almost regardless of what they do, the only issue is how much”
- “The dollar will remain on the front foot against emerging markets as long as the U.S. continues to raise rates and boost fiscal spending while keeping the trade war fears on the radar”
“Further Pain”. from Lukman Otunuga, research analyst at FXTM:
- “Emerging market currencies could be destined for further pain if the turmoil in Turkey and Argentina intensifies”
- “The combination of global trade tensions, a stabilizing U.S. dollar and prospects of higher U.S. interest rates may ensure EM currencies remain depressed in the short to medium term”
“A Penny Short”, from Stephen Innes, head of Asia Pacific trading at Oanda Corp. in Singapore:
- Argentina’s measures are “likely a day late and a penny short”
- “These moves are a step in the right direction, but they’re unlikely to be convincing enough to remove currency speculators from the driver’s seat. I guess it’s all down the IMF’s ‘White Knight’ to the rescue. However, we are getting into the realm of unquantifiability which makes the market utterly untradable”
“Most Vulnerable“, from Masakatsu Fukaya, an emerging-market currency trader at Mizuho Bank Ltd.:
- “Contagion risks from Argentina and Turkey are growing for other emerging markets and economies with weak fundamentals such as those with current-account deficits and high inflation rates”
- “Currencies of countries such as Indonesia, India, Brazil and South Africa have been among most vulnerable”
- “The Fed’s rate increases and trade frictions means the underlying pressure on emerging currencies is for a further downward move”
Source: Bloomberg
end
Late this morning/South Africa/Argentina
Rand hits an all time low of 15.325 to the dollar while the Argentinian peso hits: 39.07 to the dollar.
Both of these nations will see them default on their debt
(courtesy zerohedge)
Peso, Rand Plummet As Emerging Market Crisis Deepens
The EM contagion is slamming currencies around the globe, and while the Turkish Lira remains relatively immune for the time being, traders are now focusing their attention on the South African rand and the Argentine peso, both of which are in freefall this morning.
The ZAR has plunged 3.2%, the most since Nov. 10, 2016 on a closing basis, after the country reported that it had unexpected slumped into recession, which in turn is reigniting concerns about a rating agency downgrade. At the same time, the yield on rand-denominated government bonds has jumped 24bps to 9.24%, the highest since Dec. 1.
The Argentine peso is the other EM currency in freefall this morning, dropping 5.5% to 39 per dollar (vs the Friday close dueo the Monday US holiday) when the market opened in Buenos Aires Tuesday following a new series of measures announced by the government on Monday, including new export tariffs to help close fiscal gap by 2019, a move which the market clearly finds insufficient.
As Bloomberg notes, NY-traded shares of Argentine companies opened down, with the Bank of New York Mellon Argentina ADR Index dropping 4.4 percent at the open. Bank stocks led declines with drops of as much as 13 percent.
end
India/China/USA Iran
India will join China in defying Trump and will allow imports of Iranian oil.
(courtesy zerohedge)
India Joins China In Defying Trump, Will Allow Imports Of Iranian Oil
Two weeks after China – the top importer of Iranian crude oil – defied the White House, disclosing that it would continue importing Iranian oil ignoring US sanctions on Tehran, India, the second biggest buyer of Iranian oil exports, has given permission to its state refiners to import Iranian oil using a similar scheme as China in which Tehran would arrange tankers and insurance after firms including the country’s top shipper Shipping Corp of India halted voyages to Iran due to U.S. sanctions.
According to Reuters, New Delhi’s attempt to keep Iranian oil flowing mirrors a step by China, where buyers are shifting nearly all their Iranian oil imports to vessels owned by National Iranian Tanker Co (NITC). China previously said that it would not stop buying Iranian oil despite U.S. efforts to bring the Iranian exports down to ‘zero.’ But Beijing is also said to have agreed not to increase its oil purchases from Iran.
The decisions by Iran’s two top crude oil customers confirm that the Islamic Republic will not be fully cut off from global oil markets from November, when U.S. sanctions against Tehran’s petroleum sector are due to start.
“We have the same situation (as most Western shippers) because there is no cover, so we cannot go (to Iran),” an SCI official told Reuters.
New Delhi turned to the NITC fleet after most insurers and reinsurers had begun winding down services for Iran, wanting to avoid falling foul of the sanctions given their large exposure to the United States. As a reminder, President Trump ordered the reimposition of economic curbs after withdrawing the United States from a 2015 nuclear deal between Iran and six world powers. No one trading with Iran will do business with America, he said although that threat appears to not be too concerning to either China or India.
SCI had a contract until August to import Iranian oil for Mangalore Refinery and Petrochemicals Ltd (MRPL), two sources familiar with the matter said.
Eurotankers, which had a deal with MRPL to import two Iranian oil cargoes every month, has also said it cannot undertake Iranian voyages from September, the sources said.
“The shipping ministry has given refiners permission to buy Iranian oil on a CIF (cost, insurance and freight) basis,” a government source told Reuters. Under the CIF arrangement, Iran will provide shipping and insurance, enabling Indian refiners to continue purchases of the country’s oil despite the non-availability of cover from Western insurers due to the restrictions imposed by Washington.
* * *
The move will benefit Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and MRPL, which plan to lift Iranian cargoes during the rest of the fiscal year ending on March 31. India wants to continue buying oil from OPEC member Iran as Tehran is offering almost free shipping and an extended credit period.
With the Indian decision, it is possible that virtually all of Iran’s output could be captured by just China and India if Tehran’s other “pro-US” clients decide to comply with the US sanctions. Indian state refiners, which drove India’s July imports of Iranian oil to a record 768,000 barrels per day, had planned to nearly double oil imports from Iran in 2018/19.
Reuters notes that unlike their private peers, India’s state-run refiners need government permission to import oil on a delivered, or CIF, basis. Federal policy requires them to favor Indian insurers and shippers by buying only on a free on board (FOB) basis. However, the permission for CIF purchases applies only to existing annual contracts with Iran, the government source said.
India will finalize its strategy on crude purchases from Tehran after a meeting with top U.S. officials this week, a senior government official told Reuters last week. With it now public knowledge that India will defy the White House on Iran oil purchases, it remains to be seen what, if any, retaliation the Trump administration will threaten against India should it proceed as planned.
end
Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings TUESDAY morning 7:00 am
Euro/USA 1.1564 DOWN .0058/ REACTING TO MERKEL’S FAILED COALITION/ 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 DEEPLY IN THE RED
USA/JAPAN YEN 111.32 UP 0242 (Abe’s new negative interest rate (NIRP), a total DISASTER/NOW TARGETS INTEREST RATE AT .11% AS IT WILL BUY UNLIMITED BONDS TO GETS TO THAT LEVEL
GBP/USA 1.2821 DOWN 0.0047 (Brexit March 29/ 2017/ARTICLE 50 SIGNED/BREXIT FEES WILL BE CAPPED
USA/CAN 1.3152 UP .0057(CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/(TRUMP INITIATES LUMBER TARIFFS ON CANADA/CANADA HAS A HUGE HOUSEHOLD DEBT/GDP PROBLEM)
Early THIS TUESDAY morning in Europe, the Euro FELL by 58 basis points, trading now ABOVE the important 1.08 level FALLING to 1.1556; / Last night Shanghai composite CLOSED UP 29.85 POINTS OR 1.10% /Hang Sang CLOSED UP 260.80 POINTS OR 0.84% /AUSTRALIA CLOSED DOWN .28% / EUROPEAN BOURSES ALL RED
The NIKKEI: this TUESDAY morning CLOSED DOWN 10.48 POINTS OR 0.05%
Trading from Europe and Asia
1/EUROPE OPENED ALL RED
2/ CHINESE BOURSES / :Hang Sang UP 260.80 POINTS OR 0.84% /SHANGHAI CLOSED UP 29.85 POINTS OR 1.10%
Australia BOURSE CLOSED DOWN .28%
Nikkei (Japan) CLOSED DOWN 10.48 POINTS OR 0.05%
INDIA’S SENSEX IN THE RED
Gold very early morning trading: 1192.80
silver:$14.22
Early TUESDAY morning USA 10 year bond yield: 2.86% !!! UP 0 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 3.03 UP 1 IN BASIS POINTS from THURSDAY night. (POLICY FED ERROR)/
USA dollar index early TUESDAY morning: 94.57 UP 43 CENT(S) from FRIDAY’s close.
This ends early morning numbers TUESDAY MORNING
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And now your closing TUESDAY NUMBERS \1: 00 PM
Portuguese 10 year bond yield: 1.87% DOWN 6 in basis point(s) yield from FRIDAY/
JAPANESE BOND YIELD: +.12% UP 1 BASIS POINTS from FRIDAY/JAPAN losing control of its yield curve/EXTREMELY VOLATILE YESTERDAY
SPANISH 10 YR BOND YIELD: 1.43% DOWN 4 IN basis point yield from FRIDAY/
ITALIAN 10 YR BOND YIELD: 3.02 DOWN 22 POINTS in basis point yield from FRIDAY/
the Italian 10 yr bond yield is trading 159 points HIGHER than Spain.
GERMAN 10 YR BOND YIELD: RISES UP TO +.36% IN BASIS POINTS ON THE DAY
END
IMPORTANT CURRENCY CLOSES FOR TUESDAY
Closing currency crosses for TUESDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/1:00 PM
Euro/USA 1.1564 DOWN .0049(Euro DOWN 49 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/
USA/Japan: 111.46 UP 0.380 Yen DOWN 39 basis points/
Great Britain/USA 1.2828 DOWN .0040( POUND DOWN 40 BASIS POINTS)
USA/Canada 1.3180 Canadian dollar DOWN 88 Basis points AS OIL ROSE TO $70.15
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This afternoon, the Euro was FELL BY 49 BASIS POINTS to trade at 1.1564
The Yen FELL to 111.46 for a LOSS of 39 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 40 basis points, trading at 1.2828/
The Canadian dollar LOST 88 basis points to 1.3180/ WITH WTI OIL RISING TO 70.15
The USA/Yuan,CNY closed UP AT 6.8442 ON SHORE (YUAN DOWN)
THE USA/YUAN OFFSHORE: 6.8563 ( YUAN DOWN)
TURKISH LIRA: 6.6790
the 10 yr Japanese bond yield closed at +.12% UP 0 BASIS POINTS FROM YESTERDAY
Your closing 10 yr USA bond yield UP 6 IN basis points from FRIDAY at 2.90 % //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 3.07 UP 8 in basis points on the day /
THE RISE IN BOTH THE 10 YR AND THE 30 YR ARE VERY PROBLEMATIC FOR VALUATIONS
Your closing USA dollar index, 95.53 UP 39 CENT(S) ON THE DAY/1.00 PM/
Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for TUESDAY: 1:00 PM
London: CLOSED DOWN 46.74 POINTS OR 0.62%
German Dax : CLOSED DOWN 136.20 POINTS OR 1.10%
Paris Cac CLOSED DOWN 71,10 POINTS OR 1.31%
Spain IBEX CLOSED UP 00.20 POINTS OR 0.00%
Italian MIB: CLOSED UP: 205.21 POINTS OR 1.01%/
The Dow closed DOWN 12.34 POINTS OR 0.05%
NASDAQ closed DOWN 18.29 points or 0.23% 4.00 PM EST
WTI Oil price; 70.15 1:00 pm;
Brent Oil: 78.39 1:00 EST
USA /RUSSIAN / ROUBLE CROSS: 68.01/ THE CROSS HIGHER BY /9 ROUBLES/DOLLAR (ROUBLE LOWER BY 9 BASIS PTS)
USA DOLLAR VS TURKISH LIRA: 6.6790 PER ONE USA DOLLAR.
TODAY THE GERMAN YIELD RISES +.36 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, 4:00 pm/and 10 year USA interest rate:
WTI CRUDE OIL PRICE 4:30 PM:$69.28
BRENT: $77.75
USA 10 YR BOND YIELD: 2.90%
USA 30 YR BOND YIELD: 3.07%/
EURO/USA DOLLAR CROSS: 1.1586 DOWN .0028 ( DOWN 58 BASIS POINTS)
USA/JAPANESE YEN:111.46 UP 0.372 (YEN DOWN 37 BASIS POINT/ .
USA DOLLAR INDEX: 95.43 UP 29 cent(s)/
The British pound at 5 pm: Great Britain Pound/USA: 1.2855 down 13 POINTS FROM YESTERDAY
the Turkish lira close: 6.6809
the Russian rouble: 68.17 DOWN .24 roubles against the uSA dollar.
Canadian dollar: 1.3180 DOWN 85 BASIS pts
USA/CHINESE YUAN (CNY) : 6.8442 (ONSHORE)
USA/CHINESE YUAN(CNH): 6.8526 (OFFSHORE)
German 10 yr bond yield at 5 pm: ,0.36%
VOLATILITY INDEX: 13.16 CLOSED UP 0.30
LIBOR 3 MONTH DURATION: 2.325% .LIBOR RATES ARE RISING
And now your more important USA stories which will influence the price of gold/silver
TRADING IN GRAPH FORM FOR THE DAY
September Starts With A Swoon After Quietest August In
Over 50 Years
What the markets increasingly feel like…
BisphamGreen@BisphamGreenEMFX
China rebounded overnight with a miraculous liftathon as the afternoon session started…
European stocks were mixed with Italy stronger and Germany, France weaker…
After the quietest August in 50 years, US equities started September weak…
As Bloomberg notes, despite the negative headlines, from an escalation in trade tensions to emerging-market turmoil, peace prevailed, with the S&P 500 Index never swinging more than 0.8 percent on any given day,marking the calmest August by this measure since 1967.
US equities opened weak, ramped as always into the European close, faded again to the lows of the day before – for no news-driven reason at all – ramped back higher so that The Dow erased its losses… Despite desperate machines buying the close, by the bell Trannies were the only ones who managed to hold gains as Small Caps underperformed…
Futures show the difference between a day when the algos are playing and not playing…
Nike was the Dow’s worst-performer after its Kaepernick decision…
Amazon joined Apple in the trillion-dollar-market-cap club…
As Amazon soared, Tesla stock tumbled to three-month lows and bonds hit record low as Mercedes unveiled its E-SUV…
While stocks were down, bonds were also sold with Treasury yields 3-5bps higher…
30Y Yield extended its rise above 3.00% – back to unch from the start of August…
The Dollar was flat yesterday but rallied overnight, sliding lower through the US day session…
Offshore Yuan leaked lower…
Emerging Market currencies tumbled once again, extending yesterday’s losses…
September so far…
The South African Rand suffered its biggest drop since Nov 2016 (US election) after GDP disappointed, signaling the nation is back in recession…
Cryptos are notably higher since Friday’s close with Bitcoin Cash soaring over 17% (only Ripple is down among the majors)…
Bitcoin is holding gains back above $7000
Dollar gains sent Copper and Silver lower but WTI ignored it until comments from Iran’s Rouhani sparked a selloff…
Gold futures limped back below $1200…
WTI tagged $71 then began to slide, not helped by Iran’s production proclamations…
Finally, we note that Long/Short funds have never been more levered long to the S&P 500 than now…
And it’s all about fun-durr-mentals… hard data continues to slump as ‘soft’ survey data (today’s ISM completely opposite to today’s PMI) rises…
end
market trading/this morning
Market data
Get a load of the following total conflicted soft data: Either the USA manufacturing has slumped to a 9 month low or explodes to a 14 yr high. We have been witnessing this for the past few years.
(courtesy zerohedge)
US Manufacturing Survey Slumps To 9-Mo Lows Or Explodes To 14-Yr Highs
Following July’s drop in US manufacturing surveys, expectations remained lower for August as ‘hard’ data slumps to 11-month lows – but – as has become so ubiquitous in recent months – the surveys vehemently disagreed with each other.
Markit’s Manufacturing PMI survey fell from 55.3 to 54.7 (the lowest since Nov 2017), but was very modestly better than the 54.5 flash print earlier in the month. Under the hood, Markit showed Output slowed to weakest since Sept 2017 and New Orders slipped to the weakest growth since Nov 2017.
ISM’s Manufacturing soared from 58.1 to 61.3 (smashing expectations of a modest drop to 57.6) – The highest since May 2004’s all-time record high.
Which as the chart below shows, is utterly idiotic!!!
Under the hood in ISM, New Orders and Production surged (channel-stuffing ahead of tariffs?) as Prices Paid dropped and Export Orders contracted…
New Orders rebounded notably…
However, Chris Williamson, Chief Business Economist at IHS Markit said something very different from ISM:
“Manufacturers reported the smallest output rise for almost a year in August, suggesting production growth could be as weak as 0.2% in the third quarter.
Williamson continues:
“Exports remain the key source of weakness for producers, with foreign orders barely rising in August after two months of modest declines. The strongest growth is being seen in consumer-facing companies, reflecting robust domestic demand, in turn linked to the strong labour market and buoyant consumer confidence, though even here growth has slowed.
“However, at least some of the slowdown compared to earlier in the year reflects production being curbed by widespread shortages of inputs, hauliers and labour, leading to a further build-up of backlogs of work. For producers of investment goods such as plant and machinery, order books are backing-up at a rate not exceeded in over ten years.
“Tariffs and trade wars were also commonly cited as factors behind companies building safety stocks of inputs to ensure supply or lock-in lower prices, exacerbating supply shortages and also driving prices even higher.
“Looking at the survey responses, almost two-thirds (64%) of companies reporting higher input prices explicitly blamed tariffs as the cause of increased costs. Almost one-in-three went on to cite tariffs as the cause of having to hike prices to customers. Overall price pressures eased somewhat, however, which if sustained could take some heat off consumer price inflation in coming months.”
GM Sales Plunge 13% As August Passenger Car Sales Collapse
When GM surprised the market several months ago with its announcement that, unlike most other US automakers, it would stop disclosing monthly sales, some immediately saw through this as a thinly veiled confirmation that pain is coming. Nowhere was that more obvious than in the company’s August sales, which while undisclosed, predictably leaked with Bloomberg reporting that in the last month, GM sales plunged 13% for the same reason most other automakers saw a sharp drop in July sales: a sharp pull back on sales incentives, especially for full-size pickups.
In addition to the biggest drop in years, GM’s total sales also missed analysts’ average estimate for a decline of 7.7%. Speaking to Bloomberg, company spokesman Jim Cain refused to comment on the sales drop, but he did confirm that GM dialed back discounts during the month.
The report extended the decline for GM shares, which dropped 1.3% to $35.58. The stock is now down 13% YTD.
Meanwhile, other OEMs also reported weak August results: with the exception of Ford Motor, all other major automakers also reported sales that trailed analysts’ estimates, as demand for passenger cars including the Honda Accord and Toyota Camry plunged.
Looking over the past month, Honda was perhaps the best indicator of the tectonic shifts in the US auto market: as Bloomberg notes, the Japanese automaker extended “a bleak stretch” for a car model widely regarded as one of the best on the U.S. market, showing just how swiftly consumer demand has shifted to SUVs and away from sedans.
Total deliveries for Honda rose 1.3% last month, missing estimates, and while Honda SUVs – including the Honda Pilot and Acura RDX – are setting sales records, the Accord’s 11% drop just how loathed sedans have become, as the sales drop has now extended for a dismal 10 consecutive months for the award-winning Accord.
Sedan sales also slumped for Toyota and Ford as consumers snubbed traditional favorite models like the Camry and Fusion, picking SUVs instead.
The revulsion to passenger cars has been so extensive, that according to Michelle Krebs, senior analyst with AutoTrader, the segment may have plunged to just 29% of the market in August, which would be an all-time low. Five years ago, sedans were 49% of industry-wide deliveries, she said.
“If it continues to slide, then one wonders how low it can go,” Krebs said of the sedan market. “We were anticipating passengers cars would make up 30 percent of the market this year and that may have been optimistic.”
The silver lining for automakers is that as sedan sales have collapsed, overall US car demand has been a little better than analysts anticipated entering the year, thanks to surging demand for roomy and fuel-efficient SUVs. The seasonally adjusted annualized rate of sales in August probably accelerated to 16.8 million according to Bloomberg, from 16.6 million a year ago, when Hurricane Harvey crippled deliveries to Texas’s gulf coast.
Illinois Breaks Pension-Debt Record For US States
Authored by Adam Schuster via IllinoisPolicy.org,
According to a new report by Moody’s Investors Service, Illinois’ unfunded pension liabilities equaled 601 percent of state revenues in 2017, a U.S. record.
Illinois’ pension debt has set a new record to which no state should aspire.
Credit ratings agency Moody’s Investors Service released a report Aug. 27 comparing unfunded pension liabilities across all U.S. states. According to the report, Illinois’ unfunded pension liabilities grew 25 percent in fiscal year 2017 to $250 billion. That equates to 601 percent of “own source” revenue, meaning money brought in by the state excluding federal funds. That ratio of pension debt to revenue is the highest on record for any U.S. state, according to Moody’s. The national median is 107 percent.
This matters much for the same reason banks look at an individual’s debt-to-income ratio when considering applications for a personal loan. Banks typically won’t issue a qualified mortgage to anyone with a debt-to-income ratio of more than 43 percent.
When a state’s pension debts far exceed its revenue, that means those debts are less likely to be repaid. Illinois’ inability to manage its pension system in a sustainable and affordable way is one of the main reasons both Moody’s and S&P Global Ratings put the Prairie State’s bond rating just one notch above “junk” status. The state’s credit rating has been downgraded 21 times since 2009, primarily due to runaway pension debt.
A low bond rating increases the cost of borrowing money for taxpayers and makes it difficult for state government to invest in core services residents want, such as needed infrastructure improvements.
Other measures of the state’s ability to repay pension debt tell a similarly bad story for Illinois. The state has the worst pension debt in the nation as a percentage of both GDP and personal income, which are broad economic measures that indicate how much money is being brought in by the funding sources for government expenditures: individual and corporate taxpayers.
A recent report from the Illinois Policy Institute, “Tax hikes vs. reform: Why Illinois must amend its constitution to fix the pension crisis,” details the threat of pensions crowding out core government services, which has led to calls for economically damaging tax hikes that can erode Illinois’ financial health. Annual state pension costs already exceed 25 percent of general revenue expenditures.
If tax hikes are off the table as a solution to this problem – as they should be given Illinois’ weak economy and already-painful total tax burden – lawmakers’ only remaining options are to structurally reform pensions so that they are in line with what taxpayers can afford going forward, or to allow pension spending to crowd out government services.
Crowding out effects can already be seen at the local level in Illinois. In Harvey, Illinois, pension obligations caused mass layoffs in the city’s police and fire departments. Because of a statutory provision that allows the state comptroller to intercept state money due to local governments that underfund their pensions, many other municipalities could soon find themselves in a similar situation. Over 50 percent of Illinois’ police and fire pension funds did not receive full payment in 2016, putting their municipalities at risk of facing the same choices as Harvey.
The city of Peoria on Aug. 15 and 16 sent layoff notices to 27 municipal employees, according to the Journal Star, after unions rejected a cost-saving plan requesting four furlough days. According to Peoria City Manager Patrick Urich, 85 percent of the city’s property tax revenue currently goes to pensions, rather than services. Urich told the Journal Star that the round of layoffs was necessary to close a $1.5 million deficit in the city’s budget.
Peoria’s 2018 budget warns, “[T]he growth in pension obligations is crowding out the use of property taxes for operations.” According to projections included in the document, the city will no longer be able to use any property tax dollars for operations starting in 2019.
Public employment data from the U.S. Bureau of Labor Statistics suggest this may be a statewide problem. Since the dramatic increases in pension expenditures began in 2008 – resulting from the Edgar ramp – Illinois state and local government employment has been decreasing.
The only way out, as Peoria’s city budget documents note, is a “comprehensive solution” from the Illinois General Assembly.
To achieve balanced budgets and a strong credit rating – without gutting core services or crushing the state’s economy with more tax hikes – Illinois must amend its pension clause to make clear that while already-earned benefits are protected, future increases in those benefits are subject to change to bring them in line with what taxpayers can afford.
To eliminate the pension liability, lawmakers should focus on the following reforms:
- Increasing the retirement age for younger workers
- Capping maximum pensionable salaries
- Replacing permanent compounding benefit increases with true cost-of-living adjustments, or COLAs
- Implementing COLA holidays to allow inflation to catch up to past benefit increases
- Enrolling all newly hired employees in 401(k)-style retirement plans, similar to what’s available to State Universities Retirement System employees, which will ensure government worker retirements are predictable and sustainable going forward.
Reforming future pension benefits growth through a constitutional amendment is the only way to ensure the retirement security of government workers, protect taxpayer budgets and provide core services to Illinoisans.
end
Now it is the Democrats that are erupting after the White House will not release classified and privileged Bush ii era documents.
To recap: the FBI and the D of J. will not release classified documents and the democrats are howling that these should not be released and yet what the Kavanaugh papers to be released despite it being privileged.
Trump should declassify everything. He has enough votes and let’s be on with this.
(courtesy zerohedge)
Democrats Erupt After White House Won’t Release Bush II-Era Kavanaugh Docs
Democrats slammed the Trump administration on Sunday for refusing to release thousands of documents related to US Supreme Court nominee Brett Kavanaugh, Reuters reports.
Nominated by President Trump in the wake of Justice Anthony Kennedy’s retirement, Kavanaugh worked in the White House under former President George W. Bush – whose lawyers pored over extensive records from that time period and concluded in a Friday letter to Judiciary Committee Chairman Chuck Grassley (R-IA) that 27,000 of them were protected under “constitutional privilege.”
The White House directed them not to hand them over to the Senate Judiciary Committee, one of Bush’s lawyers said in a letter to the chairman of the Senate Judiciary Committee, which will host the hearings scheduled to start on Tuesday. –Reuters
Meanwhile, another 102,000 pages of Kavanaugh-linked materials were not turned over for other reasons. That said, the committee has been able to review more than 415,000 pages on Kavanaugh’s background, the lawyer said in the letter.
In a Saturday press release, the Senate Judiciary Committee said that they had “expanded access to confidential material beyond that for any other Supreme Court nominee.”
Taking issue with the withheld documents on Fox News Sunday was Dick Durbin, the #2 Senate Democrat from Illinois , who said that the White House citing privilege over the documents was the first time this has occurred in US history.
Fox News
✔@FoxNews
.@SenatorDurbin on Brett Kavanaugh: “He is the most unpopular Supreme Court nominee in the last 40 years.” #FNS
“There has been more concealment of documents that are concerning his public service and his position on issues than ever in the history of the United States … If he’s so proud of his conservative credentials, show us the record,” Durbin said.
Judiciary Committee member Amy Klobuchar (D-MN) parroted Durbin in a Sunday appearance on Meet The Press, saying “This is not normal.”
In a Saturday tweet, Senate Minority Leader Chuck Schumer of New York said that the decision to withhold the records was “not only unprecedented in the history of SCOTUS noms [sic], it has all the makings of a cover up.”
Chuck Schumer
✔@SenSchumer
We’re witnessing a Friday night document massacre. President Trump’s decision to step in at the last moment and hide 100k pages of Judge Kavanaugh’s records from the American public is not only unprecedented in the history of SCOTUS noms, it has all the makings of a cover up.
The Associated Press
✔@AP
Trump administration withholding more than 100,000 pages of court nominee Brett Kavanaugh’s records from Bush White House. http://apne.ws/p5Yg4nu
Chuck Schumer
✔@SenSchumer
Republicans in the Senate and the President of the United States are colluding to keep Judge Kavanaugh’s records secret, and trying to hide their actions from the American people by doing it on the Friday night of a holiday weekend.
What are they trying so desperately to hide?
Republicans hit back, defending Kavanaugh’s qualifications for the Supreme Court.
“Democrats have more than enough information to understand that this is a highly qualified jurist that should be the next Supreme Court justice,” Said Sen. Ron Johnson (R-WI) in an interview on ABC’s This Week.
To be confirmed, Kavanaugh needs to win a majority of the 100-seat Senate. Most Republicans – who hold a slim majority, are anticipated to back him.
Fox News
✔@FoxNews
Sen. @LindseyGrahamSC on the Supreme Court confirmation hearings: “I think there are a handful of Democrats that will vote for Judge Kavanaugh if he does well.” #FNS
Perhaps Trump should just release everything – along with all of the heavily redacted or otherwise unreleased documents related to the Russia investigation.
end
SWAMP STORIES
I feel sorry for Papadopoulos: He never hindered the authorities because he was set up. He also never told the Trump campaign of the Kremlin dirt and he heard of the “dirt” one month prior to the news that Hillary’s emails were stolen
Considering what all of the FBI crooks have done, he should not receive any penalty whatsoever
(courtesy zerohedge)
Papadopoulos Never Told Trump Campaign Of Kremlin “Dirt” On Hillary
In a Friday night court filing trying to spare their client from a lengthy prison sentence, attorneys for George Papadopoulos claim that he never told the Trump campaign about claims of Kremlin “dirt” on Hillary Clinton, and that a month before he knew about said dirt, Donald Trump and Jeff Sessions positively responded to a March, 2016 proposal that the young energy consultant facilitate a meeting between Trump and Russian President Vladimir Putin.
Eager to show his value to the campaign, George announced at the meeting that he had connections that could facilitate a foreign policy meeting between Mr. Trump and Russian President Vladimir Putin. While some in the room rebuffed George’s offer, Mr. Trump nodded with approval and deferred to Mr. Sessions who appeared to like the idea and stated that the campaign should look into it.
Other attendees at that meeting, “including former Pentagon spokesman J.D. Gordon, say that Sessions shut down Papadopoulos’ suggestion,” according to the Daily Caller‘s Chuck Ross. Sessions himself testified in November 2017 that he “pushed back” against the proposal.
A month later at an April 26, 2016 breakfast in London, Papadopoulos learned from Maltese professor Joseph Mifsud (who bragged last year that he was on the Clinton Foundation – and has been missing since October 2017), that Moscow possessed “dirt” on Hillary Clinton.
According to Papadopoulos’s Friday night court filing – he never told this to the Trump campaign, while continuing to push for a Trump-Putin meeting.
Papadopoulos lied to FBI agents in a January 27, 2017 interview – claiming that Mifsud told him about the “dirt” on the Clinton campaign before he joined the Trump campaign. He also told federal investigators that he never revealed this to anyone within Trump’s orbit:
“He told the agents he was unaware of anyone in the campaign knowing of the stolen Hillary Clinton emails prior to the emails being publicly released,” reads the Friday night court filing.
Papadopoulos would later tell the Greek Foreign Minister about the Kremlin “dirt” on Clinton, as well as Australian diplomat Alexander Downer at a May 10, 2016 London dinner in which he “drunkenly” admitted that Russia had information that could hurt Trump’s opponent. The FBI claims it was the meeting with Downer which resulted in the agency opening a counterintelligence investigation into the Trump campaign on July 31, 2016.
Lawyers for Papadopoulos also argue that he didn’t hamper the FBI’s investigation into Russian meddling – and only “misled investigators to save his professional aspirations and preserve a perhaps misguided loyalty to his master.”
“In his hesitation, George lied, minimized, and omitted material facts. Out of loyalty to the new president and his desire to be part of the administration, he hoisted himself upon his own petard.”
Friday’s filing also reveals new details about the FBI’s initial interview with Papadopoulos. According to Papadopoulos’s lawyers, FBI agents showed up to interview Papadopoulos at his mother’s house in Chicago.
The agents asked Papadopoulos to accompany them to their office to answer “a couple questions” about “a guy in New York that you might know[,] [t]hat has recently been in the news.”
Papadopoulos believed that the agents wanted to ask him about Sergei Millian, a Belarus American businessman who is alleged to be a major source in the Steele dossier. Millian approached Papadopoulos in July 2016 and the pair met several times during the presidential campaign. –Daily Caller
FBI agents reportedly assured George that the focus of the discussion would be on Sergei Millian – however the conversation quickly turned to the Russian “dirt.”
“Less than twenty minutes into the interview, the agents dropped the Millian inquiry and turned to recent news about Russian influence in the presidential election. George told the agents he had no knowledge of anyone on the campaign colluding with the Russians and it would not have been in anyone’s interest to undermine the democratic process. George was surprised to be answering questions about Russian interference in the election and told the agents the topic caught him off guard. The FBI agent confirmed that the Sergei Millian inquiry was just a ruse to get him in a room when he told George that:”
… the reason we wanted to pull you in today and have that conversation because we wanted to know to the extent of your knowledge being an insider inside that small group of people that were policy advisors who, if anybody, has that connection with Russia and what, what sort of connections there were.
Read the filing below: see zero hedge for the complete plea.
By Ignoring Sept. 1 Deadline, Mueller Probe Risks Meddling With Midterm Vote
In what for Republicans must be a very bitter irony, Special Counsel Robert Mueller’s probe into alleged “Russian interference” in the 2016 election (a probe that has reached far beyond its original mandate) is now at risk of unduly influencing the upcoming midterm vote.
As Bloomberg points out, Trump lawyer Rudy Giuliani has been arguing for weeks that Sept. 1 is the deadline for Mueller to finish his investigation under Department of Justice guidelines. According to Giuliani, Mueller is obligated to either finish his investigation and publish his findings – or at least place the probe into a two-month “deep freeze.” However, Mueller has refused to rebut Giuliani’s claims and has instead maintained his public silence.
Giuliani, President Donald Trump’s lawyer, has maintained for weeks that Saturday, Sept. 1, was a deadline under Justice Department guidelines for Mueller to finish his Russia probe to avoid improperly affecting the midterm elections on Nov. 6. “I always thought that was the day to make some decision,” the former New York mayor said in an interview.
Mueller has responded to Giuliani’s ultimatums with the public silence he’s maintained ever since he was named in May 2017 to lead the probe into Russian interference in the 2016 presidential election. But there’s no indication that the special counsel is going to abide by Giuliani’s clock, and there’s no law or clear policy requiring him to do so.
But Mueller’s refusal to abide by this policy could have serious repercussions if Mueller’s office chooses to subpoena the president, who has refused to commit to a requested sit-down interview with the special counsel for more than eight months. As Giuliani points out, kicking off such a momentous legal battle months before a crucial election could be construed as interference. His pronouncement also gives the Trump Administration more ammunition to continue delaying its decision on whether to grant Mueller an interview.
While the DOJ is reportedly weighing whether it should revise these rules, the US Attorney’s Handbook makes clear that prosecutors are prohibited from using their authority to interfere with an election.
The U.S. Attorneys’ Manual prohibits department personnel from using their official authority or influence to interfere with or affect the result of an election. It also requires prosecutors to consult with the department’s Public Integrity Section of the Criminal Division on major investigative steps.
In 2012, Attorney General Eric Holder issued a binding policy memo on election-year activities that said “prosecutors may never select the timing of investigative steps or criminal charges for the purpose of affecting any election.”
Justice Department officials are currently reviewing whether the policy should be updated, but no decisions have been made, according to two people with knowledge of the matter who asked not to be identified. If the policy were changed, it would be part of a broader update of the manual, one of the people said.
Mueller’s persistence is even more galling considering the findings of the Inspector General report on former FBI chief James Comey’s handling of the investigation into Hillary Clinton. In his report, the IG said prosecutors should avoid all appearance of tampering in an election – not just during the weeks immediately preceding the vote.
“Several department officials described a general principle of avoiding interference in elections rather than a specific time period before an election during which overt investigative steps are prohibited,” according to the report.
Ray Hulser, a deputy assistant attorney general in the Criminal Division, told the inspector general that officials previously considered codifying a 60-day rule, but rejected the approach as unworkable.
Of course, Mueller’s team is expected to be very busy in the weeks between Tuesday and Nov. 6. His prosecutors are preparing for their second trial of former Trump campaign executive Paul Manafort.
Still, some have argued that Mueller isn’t constrained by these principles because Trump isn’t on the ballot in November. But as anybody who has been paying attention to the political media landscape for the past year and a half would likely agree, the US public widely views the midterms as a referendum on Trumpism (after all, that’s the narrative that the media has been pushing). Whether or not Mueller can be held liable for his intrusion doesn’t change the fact that the special counsel is committing an extremely brazen hypocrisy.
END
21 Trillion in Dark Money Will Cause Hyperinflation – Rob Kirby
By Greg Hunter On September 2, 2018 In Political Analysis
By Greg Hunter’s USAWatchdog.com (Early Sunday Release)
Macroeconomic analyst Rob Kirby says the big elephant in the global financial room, that nobody wants to acknowledge, is the still “missing” $21 trillion from the DOD and HUD. Kirby contends, “They don’t want to believe it. They don’t want to believe that, at least, $21 trillion in extra dollars has been created out of thin air. It is siloed, and I would say it is siloed in dark places like the Exchange Stabilization Fund (ESF), which is the secretive adjunct to the U.S. Treasury. I would also contend that this enormous cache of dark money is exactly what is used to do dirty tricks like rig the precious metals market because that is a very expensive operation to carry out. That is not a sustainable sort of thing. The Fed . . . knew years and years ago that they were going to hit a point where the amount of money that they would need to be put into the system would have to grow vertically. This is why they created and siloed at least $21 trillion extra dollars.”
Kirby also says the extra $21 trillion “missing” dollars has been a well-kept secret. Kirby says, “This is a true secret, and I am going to say a true secret of the Deep State. This is why everybody avoids this at all costs.”
What is the downside to massive money printing? Kirby says, “Is everything going to be okay in America when people really realize how much money there really is in existence. When people realize instead of money supply being “X,” and it’s really 10 times “X,” is everything going to be okay then? I don’t think so. Once there is widespread acceptance that the money supply is not “X,” but it is 10 times “X,” 10 “X” is going to come home to America very quickly. That 10 “X” worth of money is going to be buying anything that isn’t nailed down things, and it might be buying things that are nailed down. We are going to get a hyperinflation. There is absolutely no doubt in my mind. It’s not a question of if, it’s only a question of when.”
Kirby, who is also a broker of physical precious metals by the ton for wealthy clients, says people are quietly panicking. Kirby explains, “If you look at a duck moving across the water, it looks very graceful. But if you take a picture of what’s going on underneath the waterline, you see the duck paddling seriously. In the precious metals space, what we see above the waterline is the reckless suppression of physical precious metals . . . but what’s really going on beneath the waterline is mega, mega money is on a ‘seek and acquire’ mission to secure physical precious metals in amounts that would stagger most people. . . . There will come a point where physical precious metal will be hard, if not impossible, to find in exchange for fiat currency. . . .The amount of money seeking physical precious metals would alarm a lot of people. You are talking stupid amounts of money.”
Join Greg Hunter as he goes One-on-One with Rob Kirby of KirbyAnalytics.com.
Video Link
https://usawatchdog.com/21-trillion-in-dark-money-will- cause-hyperinflation-rob-kirby/
WE WILL SEE YOU ON WEDNESDAY NIGHT.
HARVEY
harveyorganblog.com 