NOV 2/DESPITE A GOOD JOBS REPORT/DOW HIT FOR 114 POINTS AND NASDAQ DOWN 77/OIL DOWN AGAIN AS STORM CLOUDS ARE GATHERING WITH RESPECT TO THE GLOBAL ECONOMY/GOLD DOWN $5.05 TO $1231.75/SILVER HOLDS DOWN ONLY 6 CENTS TO $14.74/STOCKS INITIALLY UP ON A CHINA/USA TRADE DEAL BUT THAT TURNED OUT TO BE FALSE/APPLE FALLS ON POOR GUIDANCE/

 

 

 

 

GOLD: $1231.75 DOWN  $5.05 (COMEX TO COMEX CLOSINGS)

Silver:   $14.74 DOWN 6 CENTS (COMEX TO COMEX CLOSING)

Closing access prices:

Gold :  1233.25

 

silver: $14.73

 

 

 

 

 

 

 

 

 

 

 

For comex gold and silver:

NOV

 

 

 

 

 

NUMBER OF NOTICES FILED TODAY FOR  NOV CONTRACT: 20 NOTICE(S) FOR 2000

Total number of notices filed so far for NOV:  168  for 16,800 OZ  (0.5225 TONNES)

 

 

 

 

 

FOR NOVEMBER

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

6 NOTICE(S) FILED TODAY FOR

30,000 OZ/

Total number of notices filed so far this month: 926 for 4,630,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Bitcoin: OPENING MORNING TRADE  $6357: down  $14

 

Bitcoin: FINAL EVENING TRADE: $6429  up 20 

 

end

 

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 STRANGELY FELL BY  281 CONTRACTS FROM 211,846 UP TO  211,565 DESPITE YESTERDAY’S 52 CENT GAIN IN SILVER PRICING AT THE COMEX. TODAY WE  MOVED FURTHER FROM  AUGUST’S RECORD SETTING OPEN INTEREST OF 244,196 CONTRACTS.

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 JUST LESS THAN 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 HUGE SIZED NUMBER OF COMEX LONGS TRANSFERRING THEIR CONTRACTS TO LONDON THROUGH THE EFP:

EFP’S FOR NOV.  4130 EFP’S FOR DECEMBER AND ZERO FOR ALL  OTHER MONTHS  AND THEREFORE TOTAL ISSUANCE: OF 4135 CONTRACTS. WITH THE TRANSFER OF 4135CONTRACTS, 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 4135 EFP CONTRACTS TRANSLATES INTO 20.585MILLION OZ  ACCOMPANYING:

1.THE 52 CENT GAIN 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  39.505 MILLION  OZ STANDING  IN SEPT.  2,520,000 OZ STANDING IN OCTOBER. AND NOW SO FAR A HUGE 6,610,000 OZ STANDING FOR NOVEMBER

 

 

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

6519 CONTRACTS (FOR 2 TRADING DAYS TOTAL 6519 CONTRACTS) OR 32.595 MILLION OZ: (AVERAGE PER DAY: 3260 CONTRACTS OR 16.29 MILLION OZ/DAY)

TO GIVE YOU AN IDEA AS TO THE HUGE SUPPLY THIS MONTH IN SILVER:  SO FAR THIS MONTH OF NOV:  32.595MILLION PAPER OZ HAVE MORPHED OVER TO LONDON. THIS REPRESENTS AROUND 4.65% 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:           2,462.32    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.

ACCUMULATION FOR SEPTEMBER 2018:                                 167,05          MILLION OZ

ACCUMULATION FOR OCTOBER 2018:                                     224.875        MILLION OZ

RESULT: WE HAD A TINY DECREASE IN COMEX OI SILVER COMEX CONTRACTS OF 281DESPITE THE HUGE 52 CENT GAIN IN SILVER PRICING AT THE COMEX //YESTERDAY. THE CME NOTIFIED US THAT WE HAD A GOOD SIZED EFP ISSUANCE OF 4135 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 STRONG SIZED: 4117TOTAL OI CONTRACTS ON THE TWO EXCHANGES:

i.e 4135 OPEN INTEREST CONTRACTS HEADED FOR LONDON  (EFP’s) TOGETHER WITH DECREASE OF 281  OI COMEX CONTRACTS. AND ALL OF THUS HUGE  DEMAND HAPPENED WITH A 52CENT RISE IN PRICE OF SILVER  AND A CLOSING PRICE OF $14.80 WITH RESPECT TO YESTERDAY’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  IN SEPTEMBER A FINAL MONSTROUS 39.505 MILLION OZ OF SILVER STANDING FOR DELIVERY, WITH HUGE DELIVERIES OF OVER 2 MILLION OZ IN OCTOBER (A NON DELIVERY MONTH) AND NOW  OVER 6 MILLION OZ IN NOVEMBER….... 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 JUST OVER 1 BILLION oz i.e. 1.059 BILLION 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: 6NOTICE(S) FOR 30,000OZ 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:

  1. 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. , SEPT:  AN INITIAL HUGE 39.505 MILLION OZ./ OCTOBER: 2,520,000 oz AND NOW NOV AT OVER 6 MILLION OZ.
  2. 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.
  3. HUGE ANNUAL EFP’S ISSUANCE EQUAL TO 2.9 BILLION OZ OR 400% OF SILVER ANNUAL PRODUCTION/2017
  4. RECORD SETTING EFP ISSUANCE FOR ANY MONTH IN SILVER; APRIL/2018/ 385.75 MILLION OZ/  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 UNEXPECTED EXPECTED SIZED OF 380CONTRACTS DOWN TO 491,131 DESPITE THE HUGE GAIN IN THE COMEX GOLD PRICE/YESTERDAY’S TRADING (A HUGE RISE IN PRICE OF $23.85).THE CME RELEASED THE DATA FOR EFP ISSUANCAND IT TOTALED A VERY STRONG SIZED 12,715 CONTRACTS: ALWAYS, ON THE WEEK PRIOR TO FIRST DAY NOTICE IN ANY ACTIVE MONTH WHETHER GOLD OR SILVER THE OI COLLAPSES.  IT IS HERE THAT THE MIGRANTS RECEIVE THEIR FIAT BONUS FOR ENGAGING IN THIS EXERCISE. WE HAD THE FOLLOWING EFP ISSUANCE FOR TODAY:

 

NOVEMBER HAD EFP’S ISSUED AND, DECEMBER HAD AN ISSUANCE OF 12,715 CONTACTS  AND ALL OTHER MONTHS ZERO.  The NEW COMEX OI for the gold complex rests at 491,131. 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 HUGE RISE IN TOTAL CONTRACTS ON THE TWO EXCHANGES OF 12,335 CONTRACTS:  380 OI CONTRACTS DECREASED AT THE COMEX AND 12715 EFP OI CONTRACTS WHICH NAVIGATED OVER TO LONDON. THUS  TOTAL OI GAIN:12,335 CONTRACTS OR 1,233,500 OZ = 38.36 TONNES. AND ALL OF THIS HUGE DEMAND OCCURRED WITH A RISE IN THE PRICE OF GOLD/ YESTERDAY TO THE TUNE OF $23.85.

 

 

 

 

YESTERDAY, WE HAD 8966 EFP’S ISSUED.

ACCUMULATION OF EFP’S GOLD AT J.P. MORGAN’S HOUSE OF BRIBES: (EXCHANGE FOR PHYSICAL) FOR THE MONTH OF NOV : 21681CONTRACTS OR 2,168,100 OZ OR 65.84 TONNES (2 TRADING DAYS AND THUS AVERAGING: 10,841EFP CONTRACTS PER TRADING DAY

TO GIVE YOU AN IDEA AS TO THE HUGE SIZE OF THESE EFP TRANSFERS :  THIS MONTH IN 2 TRADING DAY IN  TONNES: 65.84 TONNES

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

THUS EFP TRANSFERS REPRESENTS 65.84/2550 x 100% TONNES =  1.09% OF GLOBAL ANNUAL PRODUCTION SO FAR IN JULY ALONE.***

ACCUMULATION OF GOLD EFP’S YEAR 2018 TO DATE:     6,277.39*  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)

ACCUMULATION OF GOLD EFP FOR SEPT 2018                       470.64 TONNES   (19 TRADING DAYS)

ACCUMULATION OF GOLD EFP FOR OCT. 2018                        543.92 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 TINY SIZED DECREASE IN OI AT THE COMEX OF 380DESPITE THE HUGE GAIN IN PRICING ($23.85) THAT GOLD UNDERTOOK YESTERDAY) //.WE ALSO HAD A STRONG SIZED NUMBER OF COMEX LONG TRANSFERRING TO LONDON THROUGH THE EFP ROUTE: 12715 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 12715EFP CONTRACTS ISSUED, WE HAD AN VERY STRONG RISE OF 12,335 CONTRACTS IN TOTAL OPEN INTEREST  ON THE TWO EXCHANGES:

12715 CONTRACTS MOVE TO LONDON AND 380 CONTRACTS DECREASEDAT THE COMEX. (in tonnes, the GAIN in total oi equates to 38.36 TONNES). ..AND ALL OF THIS  DEMAND OCCURRED WITH A GAIN OF $23.85 IN YESTERDAY’S TRADING AT THE COMEX.

 

 

we had: 20notice(s) filed upon for 2000oz 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 $5.05 TODAY: / 

 

A HUGE CHANGE AT THE GLD

 

A WITHDRAWAL OF 1.76 TONNES WHICH WAS USED TODAY TO KEEP GOLD LOWER

 

 

 

 

 

 

 

 

 

 

 

 

 

 

/GLD INVENTORY   759.06 TONNES

Inventory rests tonight: 759.06 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 6  CENTS TODAY

 

A SMALL INVENTORY CHANGE AT THE SLV: A WITHDRAWAL OF 143,000 OZ

 

 

 

 

 

 

 

 

/INVENTORY RESTS AT 327.320 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 281 CONTRACTS from 211,846 UP TO 211,565  AND MOVING A LITTLE FURTHER FROM THE NEW COMEX RECORD SET LAST IN AUG.2018 AT 244,196 WITH A SILVER PRICE OF $14.78/(AUGUST 22/2018)..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:

i) 5 EFP’s for November… and

 

4130 CONTRACTS FOR DECEMBER AND  AND ALL OTHER MONTHS: ZERO. TOTAL EFP ISSUANCE: 4135 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 281 CONTRACTS TO THE 4135 OI TRANSFERRED TO LONDON THROUGH EFP’S,  WE OBTAIN A STRONG  NET GAIN OF 3854 OPEN INTEREST CONTRACTS.  THUS IN OUNCES, THE  GAIN ON THE TWO EXCHANGES: 19,27 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..  A HUGE 39.505  MILLION OZ  STANDING FOR SILVER IN SEPTEMBER… OVER 2 million  OZ STANDING FOR THE NON ACTIVE MONTH OF OCTOBER., AND NOW OVER 6 MILLION OZ STANDING IN NOVEMBER.

 

 

RESULT: A TINY DECREASE IN SILVER OI AT THE COMEX DESPITE THE 52 CENT PRICING GAIN THAT SILVER UNDERTOOK IN PRICING// YESTERDAY.BUT WE ALSO HAD ANOTHER STRONG SIZED 4135 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

)FRIDAY MORNING/ THURSDAY NIGHT: 

SHANGHAI CLOSED UP 59.39 POINTS OR 2.70% //Hang Sang CLOSED UP 1070.35 POINTS OR 4.21% //The Nikkei closed UP 556.01 OR 2/58%/ Australia’s all ordinaires CLOSED UP 0.17%  /Chinese yuan (ONSHORE) closed UP  at 6.8755 AS POBC RESUMES  ITS HUGE DEVALUATION  /DELEGATION COMING TO THE USA TO SEE TRUMP IN NOVEMBER CANCELLED/Oil DOWN to 63.53 dollars per barrel for WTI and 72.57 for Brent. Stocks in Europe OPENED GREEN //.  ONSHORE YUAN CLOSED WELLUP AT 6.8755 AGAINST THE DOLLAR. OFFSHORE YUAN CLOSED WELL UP ON THE DOLLAR AT 6.8592: HUGE DEVALUATION/PAST SEVERAL DAYS RESUMES// TRADE TALKS NOW ON   : /ONSHORE YUAN TRADING WEAKER  AGAINST OFFSHORE YUAN/ONSHORE YUAN TRADING STRONGER AGAINST USA DOLLAR/OFFSHORE YUAN TRADING MUCH STRONGER AGAINST THE DOLLAR /CHINA RETALIATES WITH TARIFFS/ TRUMP RESPONDS TO NEW TARIFFS AND IT NOW A FULL TRADE WAR COMMENCED

 

 

 

 

 

 

 

 

 

 

3A/NORTH KOREA/SOUTH KOREA

i)North Korea/South Korea/USA/

 

 

 

b) REPORT ON JAPAN

3 C/  CHINA

i)Supposedly (and this was later deemed false) Trump asks cabinet to draw up a trade deal after a conversation with Xi. Just noise ahead of the elections

( zerohedge)

ii)As expected this was complete noise as they have a long way to go before a trade deal is announced

( zerohedge)

iii)As expected Kudlow confirms that there is NO  China trade progress.

( zero hedge)

 

 

 

4/EUROPEAN AFFAIRS

i)DENMARK/ISRAEL

The Israeli Mossad assists Denmark in thwarting an Iranian terror plot trying to assassinate 3 Iranian-Danes. Of course Iran slams the allegation as a “false flag”

( zerohedge)

ii)No wonder France is appealing to the EU to help Italy with respect to the 2019 budget:  The big French banks have 277 billion euros of loans to Italy.

( Don Quijones/WolfStreet)

iii) ECB

You will recall that in 2014 and 2016, the ECB engaged in long term L TRO’s in order to save their banking system.  It is now interesting that immediately after the Central Bank announces that it will not engage in QE out comes word that they are considering new T LTRO’s to replace all the loans which cannot be repaid
this is nuts…
the euro falls
( zerohedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

RUSSIA/CHINA/USA

Interesting:  in the view of both China and Russia, they apparently are under the impression that war with the USA is coming;

( Michael Snyder)

ii) Turkey

Turkish lira rises to 3 month highs after the USA lifts sanctions on Turkish officials.

( zerohedge)

 iii)Iran/USA

Sanctions are coming!!

(zerohedge)

6. GLOBAL ISSUES

 

 

7. OIL ISSUES

i)Various countries are working on waivers to import temporary Iranian oil.  This causes oil to fade in price

(courtesy zerohedge)

ii)An extremely important commentary on what the collapse in the oil space is telling us.  Oil is forward thinking and it is telling us of an economic collapse

(  Jeff Snider/Alhambra Partners)

ii b) And further echoing Snider piece, zero huge comments that the plunging oil price is due to storm clouds gathering over the global economy
(courtesy zerohedge)

 

8 EMERGING MARKET ISSUES

 

 

 

9. PHYSICAL MARKETS

i)This is a must read…
China must be ready to introduce a gold backed yuan in an attempt to stop the west’s “harvesting”..This is a wonderful history lesson as to how China accumulated massive amounts of gold and it is now time for China to change from a non backed yuan to a gold backed yuan
( Alasdair Macleod/GATA)

ii)The euro’s bid to challenge the hegemony of the dollar collides with political risk( GATA)

iii)Bill Holter’s latest piece…a must read..

( Bill Holter)
iv)We brought the data to you that Russia’s demand for gold is increasing, but it is worth repeating.  For the 3 month period ending Sept 2018, Russia has added over 92 tonnes to cross the 2,000 tonne barrier.  Also Turkey continue to buy 18.5 tonnes in the quarter, with Kazakhstan buying 13.4 tonnes and strangely India for the first time at 13.7 tonnes.  It seems sovereign India is now following the advice of its citizens in buying gold

(courtesy RT)

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

 

 

MARKET TRADING

After a huge gains at the opening, the stock market plummets into the red as Apple tumbles along with that evasive trade deal..

( zerohedge)

ii)Market data

a)The phony jobs report shows payrolls surged by 250,000 smashing expectations …also wage growth soars which is what the market wants.

( zerohedge)

b)Supposedly this is where the jobs went to in October: who is hiring and who is not

( zerohedge)

c)USA factory orders show a slowing in growth despite war spending surging

( zerohedge)

d)Seems that our trade deficit is increasing and not decreasing as the tariffs initiated are having no effect. It grew to 54 billion dollars

(Paul Wiseman/Associated Press)

 

iii)USA ECONOMIC/GENERAL STORIES

a)Apple tumbles on weak guidance and a big iphone sales miss.  Also the company willnot provide unit sales numbers for iphone, ipad and Mac anymore and that shocked investors who punished the company by sending its value below 1 trillion dollars.
( zerohedge)
b)With respect to the Kavanaugh debacle, Kim Strassel of the WSJ states that it does not matter what happens  in the midterms, the Dems will not a have a candidate worthy of going against Trump save Joe Biden
(courtesy  Kim Strassel/zerohedge)
c)We  point out the following to you because of its importance.  By the end of October 2018, the Fed has unwound 321 billion and on an annual basis is close to the 600 billion figure that have been provided to you.  The sales of these bonds must be paid by the Treasury.  So if you add the deficit of 1.2 to 1.3 trillion (the true deficit) plus the roll off on bonds 600 billion you have 1.8 to 19 billion dollars that must be written by Treasury.  The problem is the fact that libor is rising and killing the foreign swap business.  There is nobody on the planet that can purchase or fund the usa deficits.
(courtesy zerohedge)

iv)SWAMP STORIES

Trump late Thursday afternoon: Asylum is not a program for those living in poverty. There are billions of people living at the poverty level. The United States cannot possibly absorb them all.
 
DJT also said “anybody throwing rocks… we will consider that a firearm…”
 
Judicial Watch Sues FBI over Failure to Preserve Text Messages
“This lawsuit exposes a massive FBI cover-up of its text messages, which are government records and are, by the thousands, likely to have been deleted and lost by FBI employees,” said Judicial Watch President Tom Fitton. “And of course, this cover-up conveniently impacts the production of text messages to Judicial Watch and Congress of disgraced FBI officials Andrew McCabe, Peter Strzok, Lisa Page and James Comey.”     https://www.judicialwatch.org/press-room/press-releases/judicial-watch-sues-fbi-over-failure-to-preserve-text-messages/
 
Senate Judiciary Committee: CIA Gathered Congressional Communications on Whistleblowing; After 4 Years of Pressing, Grassley Gets Notifications Declassified
   “The fact that the CIA under the Obama administration was reading Congressional staff’s emails about intelligence community whistleblowers raises serious policy concerns as well as potential Constitutional separation-of-powers issues that must be discussed publicly. I have been asking the same question for years: what sources or methods would be jeopardized by the declassification of these notifications? After four and a half years of bureaucratic foot-dragging, led by Directors Brennan and Clapper, we finally have the answer: none…    https://www.judiciary.senate.gov/press/rep/releases/cia-gathered-congressional-communications-on-whistleblowing-after-4-years-of-pressing-grassley-gets-notifications-declassified
 
@GeorgePapa19: If my sources were correct in April 2017, largest channel on network tv and one of the two most powerful newspapers in America, and I had a FISA on me; if that country is named, it will rock one of the most important alliances the US has because of Obama DOJ misconduct. No Russia
    I’ll give a hint: it’s a country I was well known in, US ally and discovered energy. The rest will all come out hopefully after the midterms.
 
@RealSaavedra: Obama to migrants from Latin America in 2014: “Do not send your children to the borders. If they do make it, they’ll get sent back.

 

E)SWAMP STORIES/THE KING REPORT

Let us head over to the comex:

 

The total gold comex open interest FELL BY A SMALL SIZED 380 CONTRACTS UP to an OI level 491,131 DESPITE THE HUGE RISE IN THE PRICE OF GOLD ($23.85 IN YESTERDAY’S COMEX TRADING). FOR TWO YEARS STRAIGHT WE HAVE NOTICED THAT ONE WEEK PRIOR TO FIRST DAY NOTICE OF AN ACTIVE DELIVERY MONTH THE COMEX OPEN INTEREST CONTRACTS AND EFP’S NOTICES EXPONENTIALLY INCREASE AS WELL AS WE WITNESS THE COMEX OPEN INTEREST COLLAPSE. ONCE WE GET TO FIRST DAY NOTICE, THEN THE OPEN INTEREST RISES AND AGAIN THEY DID NOT DISAPPOINT US.

 

 

WE ARE NOW IN THE NON ACTIVE DELIVERY MONTH OF NOV..  THE CME REPORTS THAT THE BANKERS ISSUED A VERY STRONG SIZED COMEX TRANSFER THROUGH THE EFP ROUTE AS THESE LONGS RECEIVED A DELIVERABLE LONDON FORWARD TOGETHER WITH A FIAT BONUS., THAT IS 12715 EFP CONTRACTS WERE ISSUED:

NOV: 0 EFP’S AND DECEMBER:  12175 AND  ZERO FOR ALL OTHER MONTHS:

TOTAL EFP ISSUANCE:  12175 CONTRACTS.

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

ON A NET BASIS IN OPEN INTEREST WE GAINED THE FOLLOWING TODAY ON OUR TWO EXCHANGES: A 12,335 TOTAL CONTRACTS IN THAT 12715 LONGS WERE TRANSFERRED AS FORWARDS TO LONDON AND WE LOST A TINY 380 COMEX CONTRACTS.

NET GAIN ON THE TWO EXCHANGES: 12,335 contracts OR 1,233,500 OZ OR 38,36 TONNES.

 

We are now in the non active contract month of November. For the November contract month, we have 27 notices standing so we lost 27 contracts. WOW!!! we had 32 notices served upon yesterday so we again strangely gained 5 contracts or an additional 500 oz of gold queue jumped.  Gold has now joined silver in the queue jumping game as physical gold and silver is scarce at the comex.  The dealers need this physical to put out fires elsewhere. Also longs have refused to morph into London forwards and this they refuse to accept a fiat bonus to do that transfer.

 

 

 

 

 

 

The next delivery month after November is the very big December contract month and here the OI FELL by 5993 contracts  to 357,957 contracts.  January saw its initial one contract RISE TO 45 FOR A GAIN OF 44 CONTRACTS.  February gained 3848 contracts to stand at 83,436 contracts.

 

 

 

 

WE HAD 20 NOTICES FILED AT THE COMEX FOR 2000 OZ.

 

 

 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

And now for the wild silver comex results.

Total silver OI FELL BY 281 CONTRACTS FROM 211846 DOWN TO 211,565 (AND CLOSER TO THE NEW RECORD OI FOR SILVER SET ON AUGUST 22.2018.  (THE PREVIOUS RECORD WAS SET APRIL 9.2018/ 243,411 CONTRACTS) AND TODAY’S TINY  OI COMEX LOSS  OCCURRED DESPITE A 52 CENT GAIN IN PRICING????.

 

WE ARE NOW INTO THE NON ACTIVE DELIVERY MONTH OF NOVEMBER AND, WE WERE  INFORMED THAT WE HAD A VERY STRONG SIZED 4135 EFP CONTRACTS:  FOR NOVEMBER:  5 CONTRACTS AND FOR …

 

FOR DECEMBER: 4130 CONTRACTS AND ZERO FOR ALL OTHER MONTHS.  THESE EFPS WERE ISSUED TO COMEX LONGS WHO RECEIVED A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON.  THE TOTAL EFP’S ISSUED: 4135.  ON A NET BASIS WE GAINED 3854 SILVER OPEN INTEREST CONTRACTS AS WE OBTAINED  281 CONTRACT LOSS AT THE COMEX COMBINING WITH THE ADDITION OF 4135 OI CONTRACTS NAVIGATING OVER TO LONDON.

NET GAIN ON THE TWO EXCHANGES:   3854 CONTRACTS...AND ALL OF THIS STRONG DEMAND OCCURRED WITH A 52 CENT GAIN IN PRICING// YESTERDAY

 

 

 

 

We are now in the non active delivery month of NOVEMBER and here we now have 407 notices  standing for a loss of 456 contacts.  We had 467 notices served upon yesterday so we again gained 11 contracts or an additional 55,000 oz will stand for delivery as these longs refused to morph into London based forwards as well as not accept a fiat bonus.  QUEUE JUMPING IS NOW THE NAME OF THE GAME IN BOTH GOLD AND SILVER AS BOTH METALS ARE SCARCE ON THIS SIDE OF THE POND.

 

 

 

After November, we have a December contract and here we lost 4135 contracts down to 157,029.  January saw a loss of 65 contracts down to 3893 contracts.   March, the next big delivery month after December saw a gain of 3882 contracts  up to 42,673.

 

 

 

 

 

 

 

 

We had 6 notice(s) filed for 30,000 OZ for the NOV, 2018 COMEX contract for silver

 

Trading Volumes on the COMEX

 

PRELIMINARY COMEX VOLUME FOR TODAY: 249,924 contracts,

 

CONFIRMED COMEX VOL. FOR YESTERDAY:  349,059  contracts..

 

 

 

 

 

 

 

 

 

 

 

INITIAL standings for  NOV/GOLD

NOV 2-/2018.

Gold Ounces
Withdrawals from Dealers Inventory in oz nil oz
Withdrawals from Customer Inventory in oz
 nil  oz
Deposits to the Dealer Inventory in oz NIL oz

 

Deposits to the Customer Inventory, in oz  

 

NIL

 

oz

 

 

 

 

 

 

 

 

No of oz served (contracts) today
20 notice(s)
 2000 OZ
No of oz to be served (notices)
7 contracts
(700 oz)
Total monthly oz gold served (contracts) so far this month
168 notices
16,800 OZ
0.5225 TONNES
Total accumulative withdrawals of gold from the Dealers inventory this month NIL oz
Total accumulative withdrawal of gold from the Customer inventory this month xxx oz

 

we had 0 dealer entry:

 

total gold entering dealer:  0 oz

total gold withdrawing from the dealer;  0 oz

 

we had 0 kilobar transaction/
we had 0 withdrawal out of the customer account:
total customer withdrawals:  nil oz
we had 0 customer deposit
total customer deposits: NIL oz
we had 0  adjustment..

FOR THE NOV 2018 CONTRACT MONTH)

Today, 0 notice(s) were issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 20 contract(s) of which 0 notices were stopped (received) by j.P. Morgan dealer and 12 notice(s) was (were) stopped/ Received) by j.P.Morgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
To calculate the INITIAL total number of gold ounces standing for the NOV/2018. contract month, we take the total number of notices filed so far for the month (168) x 100 oz , to which we add the difference between the open interest for the front month of NOV. (27 contracts) minus the number of notices served upon today (20 x 100 oz per contract) equals 17,500 OZ OR 0.5443 TONNES) the number of ounces standing in this non active month of NOV

 

Thus the INITIAL standings for gold for the NOV/2018 contract month:

No of notices served (168 x 100 oz)  + {27)OI for the front month minus the number of notices served upon today (20x 100 oz )which equals 17,500 oz standing OR 0.5443 TONNES in this NON active delivery month of NOVEMBER.

WE GAINED 5 CONTRACTS OR AN ADDITIONAL 500 OZ WILL STAND AT THE COMEX AS THESE LONGS REFUSED TO MORPH INTO LONDON BASED FORWARDS. WE ARE NOW WITNESSING GOLD JOIN SILVER IN QUEUE JUMPING AS PHYSICAL SEEMS TO BE SCARCE.

 

 

 

 

 

THERE ARE ONLY 4.2819 TONNES OF REGISTERED COMEX GOLD AVAILABLE FOR DELIVERY AGAINST 0.5543 TONNES STANDING FOR NOVEMBER  

 

 

 

total registered or dealer gold:  137,664.218 oz or   4.2819 tonnes
total registered and eligible (customer) gold;   8,066.489.712 oz 250.90 tonnes
 I BELIEVE THAT THIS IS THE LOWEST REGISTERED GOLD READING IN THE COMEX HISTORY..AS WELL AS THE LONGEST WE HAVE SEEN THE REGISTERED COLUMN AT 5 TONNES OR LESS.

IN THE LAST 27 MONTHS 105 NET TONNES HAS LEFT THE COMEX.

LADIES AND GENTLEMEN: THERE IS NO GOLD AT THE COMEX..AS THE CROOKS SEEMS TO BE FORCING LONGS TO TAKE DELIVERY OF LONDON FORWARDS AND NOT TAKE POSSESSION OF ANY GOLD AT THE COMEX/

end

And now for silver

AND NOW THE NOV DELIVERY MONTH

NOV INITIAL standings/SILVER

NOV 2 2018
Silver Ounces
Withdrawals from Dealers Inventory NIL oz
Withdrawals from Customer Inventory
 2,086,297.888 oz
CNT
Delaware
Malca
Scotia

 

 

Deposits to the Dealer Inventory
nil
oz
CNT
Deposits to the Customer Inventory
nil
No of oz served today (contracts)
6
CONTRACT(S)
30,000 OZ)
No of oz to be served (notices)
401 contracts
(2,005,000 oz)
Total monthly oz silver served (contracts) 932 contracts

(4,660,000 oz)

Total accumulative withdrawal of silver from the Dealers inventory this month NIL oz
Total accumulative withdrawal of silver from the Customer inventory this month

lot of activity in the silver vaults today.

 

we had 0 inventory movement at the dealer side of things

 

 

 

total dealer deposits: nil oz

total dealer withdrawals: 0 oz

we had 0 deposits into the customer account

i) Into JPMorgan: nil oz

*** JPMorgan for most of 2017 and in 2018 has adding to its inventory almost every single day.

JPMorgan now has 150.9 million oz of  total silver inventory or 51.94% of all official comex silver. (150.9 million/290.5 million)

ii)Into  everybody else:  zero

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

total customer deposits today:  nil  oz

we had 4 withdrawals from the customer account;

 

i) Out of CNT:  605,629.557   oz

ii) out of Delaware:  41,287.688 oz

iii) Out of Malca:  1,1199,199.843 oz

iv) Out of Scotia:  240,286.800 ox

 

 

 

 

total withdrawals: 2,08,297.888  oz

 

we had 0- adjustments

 

 

 

 

 

 

 

 

total dealer silver:  84.752 million

total dealer + customer silver:  290.552  million oz

The total number of notices filed today for the NOV 2018. contract month is represented by 6 contract(s) FOR 30,000 oz. To calculate the number of silver ounces that will stand for delivery in NOV., we take the total number of notices filed for the month so far at 932 x 5,000 oz = 4,660,000 oz to which we add the difference between the open interest for the front month of NOV. (407) and the number of notices served upon today (6 x 5000 oz) equals the number of ounces standing.

.

Thus the INITIAL standings for silver for the NOV/2018 contract month: 932(notices served so far)x 5000 oz + OI for front month of NOV( 407) -number of notices served upon today (6)x 5000 oz equals 6,665,000 oz of silver standing for the NOV contract month.  This is a gigantic number of oz standing for an off delivery month. Somebody is after a large supply of physical silver. We gained 11 contracts or an additional 55,000 will stand at the comex as these longs refused to accept a London based forwards as well as relinquish the right for a fiat bonus.  As we mentioned above silver is being joined by gold in queue jumping as physical is scarce at this side of the pond.

 

 

 

 

 

 

 

 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

ESTIMATED VOLUME FOR TODAY: 106,853 CONTRACTS  … HUGE VOLUME

 

 

 

CONFIRMED VOLUME FOR YESTERDAY: 131,864 CONTRACTS….HUGE VOLUME

 

 

YESTERDAY’S CONFIRMED VOLUME OF 131,864 CONTRACTS EQUATES to 659 million OZ  OR 94.1% OF ANNUAL GLOBAL PRODUCTION OF SILVER

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

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

end

NPV for Sprott 

1. Sprott silver fund (PSLV): NAV RISES TO -4.79% (NOV 2/2018)
2. Sprott gold fund (PHYS): premium to NAV FALLS TO -1.82% to NAV (NOV 2/2018 )
Note: Sprott silver trust back into NEGATIVE territory at -4.79%-/Sprott physical gold trust is back into NEGATIVE/

(courtesy Sprott/GATA)

3.SPROTT CEF.A FUND (FORMERLY CENTRAL FUND OF CANADA):

NAV 12.50/TRADING 11.91/DISCOUNT 4.91

END

And now the Gold inventory at the GLD/

NOV 2/WITH GOLD DOWN $5.05: A BIG CHANGE IN GOLD INVENTORY AT THE GLD: A WITHDRAWAL OF 1.76 TONNES FROM THE GLD INVENTORY//INVENTORY RESTS AT 759.06 TONNES

NOV 1/: 2 TRANSACTIONS:WITH GOLD UP $23.85,A SMALL WITHDRAWAL OF .80 TONNES OF GOLD TO PAY FOR FEES, INSURANCE AND STORAGE: INVENTORY AT THE GLD RESTS AT 754.06 TONNES THEN A DEPOSIT OF 6.76 TONNES OF GOLD INTO THE GLD/INVENTORY RESTS AT 760.82

OCT 31: WITH GOLD DOWN $11.35: NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RE3STS AT 754.94 TONNES

OCT 30/WITH GOLD DOWN $2.00: A HUGE DEPOSIT OF 5.30 TONNES OF GOLD INTO THE GLD/INVENTORY RESTS AT 754.94 TONNES

OCTOBER 29/WITH GOLD DOWN $7.75 TODAY/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 749.64 TONNES

OCTOBER 26/WITH GOLD UP $3.65 TODAY: NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 749.64 TONNES

OCT 25/WITH GOLD UP $1.15: A DEPOSIT OF 1.76 TONNES OF GOLD INTO THE GLD INVENTORY/INVENTORY RESTS AT 749.64 TONNES. FROM ITS LOW POINT AT THE BEGINNING OF OCTOBER THE GLD HAS ADDED.19.47 TONNES OF GOLD

OCT 23/WITH GOLD UP $11.85 TODAY: NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 747.88 TONNES

Oct 22/WITH GOLD DOWN $3.90 TODAY: A WITHDRAWAL OF 2.97 TONNES OF GOLD FROM THE GLD INVENTORY/INVENTORY RESTS AT 745.82

AND THEN: A DEPOSIT OF 2.06 TONNES SUCH THAT THE FINAL RESTING INVENTORY IS 747.88 TONNES

OCT 19/WITH GOLD DOWN $1.70 : NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 748.76 TONNES

OCT 18/WITH GOLD UP $2.80/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RSTS AT 748.76 TONNES

OCT 16/WITH GOLD UP BY ONLY $1.00/WE HAD ANOTHER 4.12 TONNES OF GOLD ADDED TO THE GLD/INVENTORY RESTS AT 748.76 TONNES

OCT 15/WITH GOLD UP $8.45/ANOTHER 5.65 TONNES OF GOLD WAS ADDED TO THE GLD INVENTORY/INVENTORY RESTS AT 744.64 TONNES

OCT 12/WITH GOLD DOWN $4.35/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 738.99 TONNES

OCT 11/WITH GOLD UP $35.20 TODAY: A HUGE PAPER GOLD INVENTORY GAIN OF 8.82 TONNES/INVENTORY RESTS AT 738.99 TONNES

OCT 10/WITH GOLD UP $2.65 TODAY: NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 730.17 TONNES

OCT 9/WITH GOLD UP $2.00 TODAY: NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 730.17

OCT 8/WITH GOLD DOWN $18.60 NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 730.17TONNES

OCT 5/WITH GOLD UP $3.75, WE HAD A BIG WITHDRAWAL OF 1.47 TONNES FROM THE GLD INVENTORY/INVENTORY RESTS AT 730.17 TONNES

OCT 4/WITH GOLD DOWN $1.90/WE HAD NO CHANGES IN GOLD INVENTORY AT THE GLD/731.64 TONNES

OCT 3/WITH GOLD DOWN $4.05, ANOTHER HUGE REMOVAL OF 6.18 TONNES

OCT 2 WITH GOLD UP $15.80 TODAY A HUGE WITHDRAWAL OF 8.35 TONNES

OCT 1…GOLD ADDS 3.94 TONNES TO THE GLD INVENTORY RESTS AT 746.17 TONNES

SEPT 28/WITH GOLD UP $8.90/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 742.23 TONNES

SEPT 27/WITH GOLD DOWN $10.90: NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 742.23 TONNES

 

 

 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

NOV 2.2018/ Inventory rests tonight at 759.06 tonnes

*IN LAST 490 TRADING DAYS: 174.07 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 390 TRADING DAYS: A NET 16.77 TONNES HAVE NOW BEEN REMOVED FROM GLD INVENTORY.

 

end

 

Now the SLV Inventory/

NOV 2/WITH SILVER DOWN 6 CENTS TODAY: A SMALL CHANGES IN SILVER INVENTORY AT THE SLV: A WITHDRAWAL OF 143,000 OZ/INVENTORY RESTS AT 327.320 MILLION OZ/

NOV 1/WITH SILVER UP 54 CENTS TODAY: A BIG CHANGE IN SLV” A WITHDRAWAL OF 1.033 MILLION OZ FROM THE SLV. /INVENTORY RESTS AT 327.463 MILLION OZ.

OCT 31/WITH SILVER DOWN  18 CENTS: NO CHANGES IN SLV INVENTORY/INVENTORY RESTS AT 328.496 MILLION OZ/

OCT 30/WITH SILVER UP 4 CENTS TODAY: NO CHANGES IN SLV INVENTORY/INVENTORY RESTS AT 328.496 MILLION OZ

OCTOBER 29/WITH SILVER DOWN 27 CENTS NO  A HUGE CHANGE IN SILVER INVENTORY AT THE SLV” A WITHDRAWAL OF 1.879 MILLION OZ FROM THE SLV/INVENTORY RESTS AT 328.496 MILLION OZ.

OCTOBER 26/WITH SILVER UP 7 CENTS NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 330.375 MILLION OZ

OCT 25/WITH SILVER DOWN 7 CENTS: ANOTHER HUGE WITHDRAWAL OF 1.315 MILLION OZ FROM THE SLV INVENTORY/INVENTORY RESTS AT 330.375 MILLION OZ/

OCT 23/WITH SILVER UP 22 CENTS/A HUGE CHANGE IN SILVER INVENTORY AT THE SLV: A WITHDRAWAL OF 2.819 MILLION OZ /INVENTORY RESTS AT 331.690 MILLION OZ.

OCT 22/WITH SILVER DOWN 8 CENTS: A SMALL CHANGES IN SILVER INVENTORY AT THE SLV: A DEPOSIT OF 470,000/INVENTORY RESTS AT 334.509 MILLION OZ/

OCT 19/WITH SILVER UP 6 CENTS TODAY: NO CHANGES IN SILVER INVENTORY AT THE SLV/INV. RESTS AT 334.039 MILLION OZ

OCT 18/WITH SILVER DOWN 6 CENTS: A HUGE CHANGE IN SILVER INVENTORY AT THE SLV: A DEPOSIT OF 1.127  MILLION /RESTS AT 334.039 MILLION OZ/

OCT 16/WITH SILVER DOWN 2 CENTS/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 332.912 MILLION OZ/

OCT 15/WITH SILVER UP 10 CENTS TODAY: NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 332.912 MILLION OZ/

OCT 12/WITH SILVER UP 3 CENTS TODAY: NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 332.912 MILLION OZ/

OCT 11/WITH SILVER UP 25 CENTS TODAY; NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 332.912 MILLION OZ/

OCT 10/WITH SILVER DOWN 7 CENTS TODAY: NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 332.912 MILLION OZ/

OCT 9/WITH SILVER UP 9 CENTS TODAY: NO CHANGE IN SILVER INVENTORY: SLV INVENTORY RESTS AT 332.912 MILLION OZ

OCT 8/WITH SILVER DOWN 33 CENTS, A GOOD SIZE WITHDRAWAL OF 563,000 OZ/INVENTORY RESTS AT 332.912 MILLION OZ.

OCT 5/WITH SILVER UP 5 CENTS, NO CHANGE IN SILVER INVENTORY AT THE SLV

OCT 4/WITH SILVER DOWN 9 CENTS/A WITHDRAWAL OF 1.316 MILLION OZ

OCT 3 WITH SILVER FLAT, A GOOD INCREASE OF 1.879 MILLION OZ INTO INVENTORY

OCT 2 A HUGE CHANGE IN SILVER INVENTORY AT THE SLV/INVENTOR RESTS AT 332.912

OCT 1.NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 333.046 MILLION  OZ.

SEPT 28/WITH SILVER UP 41 CENTS, STRANGELY WE HAD A WITHDRAWAL OF .517 MILLION OZ AT THE SLV.INVENTORY RESTS AT 333.046 MILLION OZ/

SEPT 27/WITH SILVER DOWN 10 CENTS: A HUGE WITHDRAWAL OF 1.457 MILLION OZ AT THE SLV/INVENTORY RESTS AT 333.563 MILLION OZ/

 

 

NOV 2/2018:

 

Inventory 327.320 MILLION OZ

LIBOR SCHEDULE AND GOFO RATES:

HUGE JUMP IN LIBOR RATES TODAY./GOLD LENDING RATES

 

THE RISE IN LIBOR IS CREATING A SCARCITY OF DOLLARS BECAUSE FOREIGN EXCHANGE SWAPS (COSTS) ARE SIMPLY PROHIBITIVE

YOUR DATA…..

6 Month MM GOFO 2.30/ and libor 6 month duration 2.82

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

G0LD LENDING RATE: + .52

 

 

XXXXXXXX

12 Month MM GOFO
+ 2.59%

LIBOR FOR 12 MONTH DURATION: 3.10

GOFO = LIBOR – GOLD LENDING RATE

GOLD LENDING RATE  = +.51

end

 

 

PHYSICAL GOLD/SILVER STORIES

end
i) GOLDCORE BLOG

Red October” Highlights Importance of Rebalancing Portfolios and Gold’s “Very Positive” Outlook

Key Gold and Precious Metals News, Commentary and Charts – This Week’s Golden Nuggets

After a volatile month, which is being called “Red October,” our latest video update was released and we considered the sharp fall in stock markets globally, falling property markets in the UK and Australia and gold’s safe haven gains in all currencies.

Gold acted as a hedge in all currencies in October, rising 1.7% in dollars, 4.4% in euro terms and 4.2% in sterling terms. Bitcoin and other crypto currencies did not act as hedges or stores of value and bitcoin was down nearly 4%.


October Market Performance (Source: Finviz.com)

As we told Bloomberg yesterday (excerpt below), the long term outlook “looks very positive for gold”:

“Risk aversion has crept back in as we’ve seen declines in emerging markets around the world and now Asian markets following,” said Mark O’Byrne, Dublin-based executive director at brokerage Goldcore Ltd. “Fund managers are rebalancing after a very good run on the stock market, taking chips off the table and putting money into gold and cash, hence why the dollar has also risen.”

Gold and the dollar may continue to rise in tandem in the short term, “but I’d be amazed if that continues into 2019,” said O’Byrne. U.S. policymakers won’t want the currency to go much higher, whereas gold demand is just starting to come back. “So although I wouldn’t want to bet against the dollar in the short-term, longer term it looks very positive for gold.”

Market volatility and the ever more uncertain economic outlook are increasing the demand for and diversification into physical gold by investors, store of value buyers and indeed central banks (see News today).

Gold bullion buying by central banks has reached its highest level in almost three years – since Q4, 2015. There was nearly $6 billion worth of gold accumulated in the third quarter alone. It was surprising in this context to see the gold price actually weaken and remained depressed until the pick up just seen in October.

Central bank gold buying was strong and so too was global investor demand for gold coins and bars.  They have seen a sharp 28% rise year on year as bullion buyers accumulated on gold’s price weakness.

This very robust global demand was offset by surprisingly heavy selling of the U.S. gold ETF (SPDR) during the same period. We will consider these important demand trends in more detail next week.

From all the GoldCore team – have a great weekend!

 

Market Updates and Key News this Week

Alarm Bells Ring and Gold Rises In October As Stocks and Property Fall Globally

Gold Analysts At LBMA See 25% Return To $1,532/oz In 12 months

Gold Improves Investment, Pension and Central Bank Portfolio’s Risk-Adjusted Returns

How Gold Outshone Bitcoin In October

Gold Is Acting As a “Hedge and Safe-haven Asset, Exactly When Investors Need One” said GoldCore

 

Charts this Week

 


Gold in USD – 10 Years – GoldCore.com

 


Source: ZeroHedge

 

Source: U.S. Global Investors

 

Listen on iTunes, Blubrry  & SoundCloud  or watch on YouTube above

 

Today’s News and Commentary

 

“Longer Term It Looks Very Positive For Gold” (Bloomberg.com)

Gold buying by central banks hits its highest level in almost three years (CNBC.com)

Gold prices steady; U.S. nonfarm payroll data awaited (Reuters.com)

Central bank gold buying hits highest level since 2015 – $5.8 Billion in Q3 (EconomicTimes)

ISM manufacturing index falls to 6 month low in October as price rises, shortages weigh (MarketWatch.com)


Source: World Gold Council

Gold Demand Trends Third Quarter 2018 (Gold.org)

The Best And Worst Performing Assets In “Brutal” October (ZeroHedge.com)

Euro Bid to Challenge King Dollar Collides With Political Risk (Bloomberg.com)

You have far more control over your money than the system would have you believe (SovereignMan.com)

Mortgage rates slide as echoes of 2006 haunt the housing market (MarketWatch.com)

 

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DAG Video Still Play V2

Gold Prices (LBMA AM)

01 Nov: USD 1,223.25, GBP 950.47 & EUR 1,075.85 per ounce
31 Oct: USD 1,217.70, GBP 955.77 & EUR 1,074.25 per ounce
30 Oct: USD 1,220.00, GBP 956.36 & EUR 1,074.33 per ounce
29 Oct: USD 1,230.75, GBP 958.88 & EUR 1,078.38 per ounce
26 Oct: USD 1,236.05, GBP 964.98 & EUR 1,087.23 per ounce
25 Oct: USD 1,232.15, GBP 954.67 & EUR 1,079.36 per ounce

Silver Prices (LBMA)

01 Nov: USD 14.45, GBP 11.19 & EUR 12.68 per ounce
31 Oct: USD 14.34, GBP 11.23 & EUR 12.64 per ounce
30 Oct: USD 14.43, GBP 11.32 & EUR 12.71 per ounce
29 Oct: USD 14.65, GBP 11.42 & EUR 12.86 per ounce
26 Oct: USD 14.69, GBP 11.48 & EUR 12.94 per ounce
25 Oct: USD 14.74, GBP 11.43 & EUR 12.92 per ounce

Recent Market Updates

– Alarm Bells Ring and Gold Rises In October As Stocks and Property Fall Globally
– Gold Analysts At LBMA See 25% Return To $1,532/oz In 12 months
– Gold Improves Investment, Pension and Central Bank Portfolio’s Risk-Adjusted Returns
– Gold Gains Nearly 1% On Week As Global Stock Markets Fall Sharply
– Dublin Housing Boom Set To Bust?
– Palladium Surges To All Time Record High On Russian Supply Concerns
– Happy Birthday GoldCore
– “IMF Warning Highlights Gold’s Importance As A Diversification and Happy Birthday GoldCore”
– End Of The Financial World?
– Gold Reserves Surge 1,000% In Hungary As It Joins Poland, Russia, China and Other Central Banks Buying Gold

Mark O’Byrne
Executive Director
 

ii) GATA stories
This is a must read…
China must be ready to introduce a gold backed yuan in an attempt to stop the west’s “harvesting”..This is a wonderful history lesson as to how China accumulated massive amounts of gold and it is now time for China to change from a non backed yuan to a gold backed yuan
(courtesy Alasdair Macleod)

Alasdair Macleod: China can’t avoid ‘harvesting’ by U.S. unless it backs yuan with gold

 Section: 

By Alasdair Macleod
GoldMoney.com, St. Helier, Jersey, Channel Islands
Thursday, November 1, 2018

The next credit crisis poses a major challenge to China’s manufacturing-based economy, because higher global and yuan interest rates are bound to have a devastating effect on Chinese business models and foreign consumer demand. Dealing with it is likely to be the biggest challenge faced by the Chinese government since the ending of the Maoist era. However, China does have an escape route by stabilising both interest rates and the yuan by linking it to gold.

Will the Chinese have the gumption to take it? This article examines the challenges and the possible solution. It concludes there is a reasonable chance China will embrace sound money, because it is in a position to do so and the dangers of not doing so could destroy the state. …

… For the remainder of the report:

https://www.goldmoney.com/research/goldmoney-insights/china-s-monetary-p…

China’s monetary policy must change

The next credit crisis poses a major challenge to China’s manufacturing-based economy, because higher global and yuan interest rates are bound to have a devastating effect on Chinese business models and foreign consumer demand. Dealing with it is likely to be the biggest challenge faced by the Chinese Government since the ending of the Maoist era. However, China does have an escape route by stabilising both interest rates and the yuan by linking it to gold.

But will the Chinese have the gumption to take it? This article examines the challenges and the possible solution. It concludes there is a reasonable chance China will embrace sound money, because it is in a position to do so and the dangers of not doing so could destroy the State.

Are the Chinese Keynesian?

We can be reasonably certain that Chinese government officials approaching middle age have been heavily westernised through their education. Nowhere is this likely to matter more than in the fields of finance and economics. In these disciplines there is perhaps a division between them and the old guard, exemplified and fronted by President Xi. The grey-beards who guide the National Peoples Congress are aging, and the brightest and best of their successors understand economic analysis differently, having been tutored in Western universities.

It has not yet been a noticeable problem in the current, relatively stable economic and financial environment. Quiet evolution is rarely disruptive of the status quo, and so long as it reflects the changes in society generally, the machinery of government will chug on. But when (it is never “if”) the next global credit crisis develops, China’s ability to handle it could be badly compromised.

This article thinks through the next credit crisis from China’s point of view. Given early signals from the state of the credit cycle in America and from growing instability in global financial markets, the timing could be suddenly relevant. China must embrace sound money as her escape route from a disintegrating global fiat-money system, but to do so she will have to discard the neo-Keynesian economics of the West, which she has adopted as the mainspring of her own economic advancement.

With Western-educated economists imbedded in China’s administration, has China retained the collective nous to understand the flaws, limitations and dangers of the West’s fiat money system? Can she build on the benefits of the sound-money approach which led her to accumulate gold, and to encourage her citizens to do so as well?

China’s economic advisors will have to display the courage to drop the misguided economic policies and faux statistics by which she will continue to be judged by her Western peers. If she faces up to the challenge, China should emerge from the next credit crisis in a significantly stronger position than the West, for which such a radical change in economic thinking undertaken willingly is impossible to imagine.

Post-Mao financial and monetary strategy

Following Mao Zedong’s death in 1976, the Chinese leadership faced a primal decision over her destiny. With Mao’s demise, the icon that forcibly united over forty ethnic groups was gone. It was the end of an era of Chinese history, and she had to embrace the future with a new approach. Failure to do so risked the fragmentation of the state through civil disobedience and would probably have ended in a multi-ethnic civil war.

Wise heads, which had observed the remarkable successes of Hong Kong and Singapore being driven by Chinese diasporas, prevailed. It was clear that in order to survive, the Communist Party would have to embrace capitalism while retaining political control. Mao’s nominated successor, Hua Gofeng, lasted no more than a year, being promoted upstairs out of harm’s way. It was his successor, Deng Xiaoping, who reinvented China. In the late-1970s, Deng, hating the Soviets for their involvement in Vietnam, reaffirmed the USSR as China’s main adversary. At this crucial point in China’s pupation she secured a strategic relationship with America by sharing a common enemy.

The seeds for the relationship with America had already been sown by Nixon’s first visit to China in 1972, so the Americans were prepared to help ease China into their world. Through the 1980s, the relationship opened China up to inward investment by American and other Western corporations, and there was a rush to establish new factories, taking advantage of a cheap diligent labour force and the lack of restrictive regulations and planning laws.

By 1983 it was clear that China’s central bank, the Peoples Bank (PBOC), had a growing currency problem on its hands, because it bought all the foreign exchange against which it issued yuan for domestic circulation. Inward capital flows were added to by the policy of managing the yuan exchange rate lower in order to stimulate economic development. Accordingly, as well as foreign currency management the PBOC was tasked with the sole responsibility of the state’s gold and silver purchases as a policy offset.[i] The public was still banned from owning both metals.

In those days, China’s gold objective was simply to diversify her reserves. The leadership grasped the difference between gold and fiat money, just as the Arabs had in the 1970s, and the Germans had in the 1950s. It was prudent to hold some physical gold. Furthermore, Marxist economic theory taught in the state universities impressed on students that western capitalism was certain to fail, and that being the case, their fiat currencies would become worthless as well.

China’s secret accumulation of gold in the 1980s was also an insurance against future economic instability, which is why it was spread round the institutions that were fundamental to the state, such as the Peoples Liberation Army, the Communist Party and the Communist Youth League.[ii] Only a relatively small portion was declared as monetary reserves.

In the 1990s, inward capital flows were beginning to be supplemented by exports, and a new wealthy Chinese class was emerging. The PBOC still had an embarrassment of dollars. Fortunately, gold was unloved in Western markets, and bullion was readily available at declining prices. The PBOC was able to accumulate gold secretly on behalf of the state’s institutions in large quantities. But there was a new strategic reason emerging for buying gold, following the collapse of the USSR.

The end of the USSR in 1989 meant it was no longer America’s and China’s common enemy, altering the strategic relationship between the two. This led to a gradual change in China’s foreign relationships, with America becoming increasingly concerned at China’s emergence as a super-power, threatening her own global dominance.

These shifting relationships changed China’s gold policy from one where gold acted as a sort of general insurance policy against monetary unknowns, to its accumulation as a strategic asset.

Bullion was freely available, partly because Western central banks were selling it in a falling market. The notorious sale of the bulk of Britain’s gold by Gordon Brown at the bottom of the market was the public face of Western central banks’ general disaffection with gold. China was on the other side of the deal. Between 1983 and 2002, mine supply added 42,460 tonnes to above-ground stocks, when the West were net sellers.[iii]

The evidence of China’s all-out gold policy is plain to see. She invested heavily in gold mining and is now the largest national miner of gold by far. Chinese government refiners were also importing gold and silver doré to process and keep, and they set a new four-nines standard for one kilo bars. Today, China has a tightening grip on the entire global bullion market.

A decision was taken in 2002 by China to allow the public to buy gold, and the benefits of ownership were widely promoted by state media. We can be certain this decision was taken only after the State had accumulated sufficient bullion for its supposed needs.

China’s public has accumulated approximately 15,000 tonnes to date, net of scrap recycling, based on deliveries out of the Shanghai Gold Exchange’s vaults. Given the public is still banned from owning foreign currency, gold ownership should continue to be popular as an alternative store of value to the yuan, and currently between 150-200 tonnes are being delivered from SGE vaults every month.

Other than declared reserves, it is not known how much gold the state owns. But assessing capital flows from 1983 and allowing for the availability of physical bullion through mining supply and the impact of the 1980-2002 bear market, the PBOC could have accumulated as much as 15,000-20,000 tonnes before the public were permitted to buy gold. If so, it would represent approximately 10% of those capital flows at contemporary gold prices.

The truth is unknown, but we can be sure gold has become a strategic asset for China and its people. China must have always had an expectation that in the long-term gold will become money again, presumably as backing for the yuan. Otherwise, why go to such lengths to monopolise the global bullion market?

But there is a problem. As time goes on and a newer, western-educated generation of leaders emerges, will they still fully recognise the value of gold beyond being simply a strategic asset, and will they recognise the real reasons behind the West’s economic failures, given they have successfully embraced its economic and monetary policies?

These remain fundamental questions. But before teasing out answers to China’s current dilemma, we must dissect China’s current economic, monetary and geostrategic policies.

Working with the West’s monetary standards

The Chinese have embraced fractional reserve banking as the means of financing economic expansion. There are, however, significant differences compared with the West in the way this credit is dispersed. In the US, the commercial banks are all independent entities, nominally controlled through regulation. In China, roughly two-thirds of all bank assets are in state-owned banks.[iv] This structure permits the Chinese government to directly control overall bank lending strategy.

By controlling lending strategy, the state can ensure financing is provided for its strategic objectives. But importantly, the state also uses its nationalised banks to influence private sector capital flows and to ensure a cap is put on speculative excesses. Most recently, this has been seen in the deliberate reduction of shadow banking. Before that, the state jumped on speculation in commodities, and in 2015, the stock market bubble was pricked (though there were other influences at work – see below).

A point rarely recognised by Western analysts is that while the expansion of China’s bank credit has been more rapid than in the US, there is less money tied up in speculative activities. And it is excessive speculation that unseats markets.

Contrary to what many observers seem to realise, China’s financial system is more effective at financing production than that of the US. The US’s M2 may have doubled in the last ten years, but nominal GDP has increased by only 40%. China’s M2 has tripled, but China’s nominal GDP growth has almost matched it.[v] In America, the balance of monetary expansion has gone into financial speculation and supports an economy dependent on continually increasing asset values as the basis of wealth creation.

China’s policy of ensuring that the expansion of bank credit is invested in production and not speculation may seem old-fashioned. But there is another reason she avoids the destabilising potential of speculative flows, and that is the likelihood America will use them to undermine China’s economy. Major-General Qiao Liang, the People’s Liberation Army strategist, in a speech to the Chinese Communist Party’s Central Committee (CCPCC) in April 2015 identified a cycle of dollar weakness against other currencies followed by strength, which first inflated debt in foreign countries and then bankrupted them. That then allowed US business interests to acquire assets at rock-bottom prices.

Qiao argued it was a deliberate American policy and would be used against China.[vi]

In his words, it was time for America to “harvest” China. Drawing on Chinese intelligence reports, in early 2014 he was made aware of American involvement in the “Occupy Central” movement in Hong Kong. After several delays, the Fed announced the end of QE the following September which drove the dollar higher, and “Occupy Central” protests broke out the following month.

It was obvious to Qiao that the two events were connected. By undermining the dollar/yuan rate, the Americans tried to disrupt the economy. Within six months, the focus of speculative excesses at that time, the Shanghai stock market, began to collapse with the SSE Composite Index falling from 5,160 to 3,050 between June and September 2015.

We cannot know for certain if Qiao’s suspicions are correct, but we can understand the Chinese leadership’s caution based on his analysis. It is extremely relevant to the situation today. A strong dollar is being driven by rising interest rates, “harvesting” Turkey, South Africa, and all the other states hooked on cheap dollars. It is also undermining the yuan exchange rate, threatening to harvest China as well. It seems likely, to the Chinese at least, that the current commentary about the disasters likely to befall China if the rate crosses Y7.000 to the dollar are down to whispers coming from the US Government.

For this and other reasons, the Chinese leadership is extremely wary of having dollar liabilities and the accumulation of unproductive, speculative money in the economy. It justifies to them their strict exchange control regime, whereby dollars are not permitted to circulate in China, and all inward capital flows are turned into yuan by the PBOC. However, the current exchange control regime also blocks the yuan from being widely circulated outside China, limiting its acceptance as an international currency.

That will have to change, if the yuan is to replace the dollar for China’s trade. Furthermore, a policy that leads to the mass accumulation of dollars has to be terminated at some point.

The answer is to back the yuan with gold

Major-General Qiao made it clear to the CCPCC that the dollar achieved global domination only after August 1971, when the link with gold was abandoned and replaced with oil. The link with oil was not through exchange values, as had been the case with gold, but through a payment monopoly. In Qiao’s words, “The most important thing in the 20th century was not World War 1, World War 2, or the disintegration of the USSR, but rather the August 15, 1971 disconnection between the US dollar and gold.”[vii]

Strong words, indeed. But if that’s the case, the Chinese will know that the most important event of this new century will be the destruction of the dollar’s hegemonic status. It requires careful consideration, and many unforeseen consequences may arise. The Chinese know they must not be blamed for the dollar’s demise.

So long as the world economy continues to grow without periodic credit dislocations, then China needs only to react to events, doing nothing overtly to undermine the dollar. She need never seek reserve currency status. No one can complain about that. But while central bankers may presume that they have banished credit crises, the reality is different. An independent, market-based view of the current credit cycle is that the onset of another credit crisis is becoming more likely by the day. That being the case, on current monetary policies China’s economy can be expected to crash, along with those of the West’s welfare states.

China’s manufacturing economy will be particularly hard hit by the rise in interest rates that normally triggers a credit crisis. Higher interest rates turn previous capital investments in the production of goods into malinvestments, because the profit calculations based on lower interest rates and lower input prices become invalid. This is a greater problem for China than for many other economies, because of her emphasis on the production of goods. In short, unless China finds a solution to the next credit crisis before it hits, she could find herself in greater difficulties than states where the production of goods is a minority occupation, purely from a production point of view.

From what we know of their strategic analysis of money and credit, the Chinese should be aware of the cyclical risk to production. If the yuan and the dollar go head-to-head as purely fiat currencies, the yuan will be the loser every time. It would mean the yuan would inevitably sink faster than the dollar in the run-up to the credit crisis, which appears to be happening now. As Qiao puts it, China is already being harvested by America. At some stage, China must act to protect herself from this harvesting. And that’s where her gold comes into play.

Stabilising the currency and the economy with gold

China originally accumulated undeclared reserves of gold as a prudent diversification from holding nothing but other governments’ liabilities. This then turned into a quasi-strategic policy, through encouraging her citizens to accumulate gold as well, while continuing to ban them from owning foreign currencies. We know roughly how much gold her own citizens have, but we can only guess at the state’s holding. It will soon be time for China to declare it.

The reasoning is straightforward. At this late stage in the global credit cycle, and so long as the yuan is unbacked, yuan interest rates will rise to the point where Chinese business models will be destroyed. The only way that can be stopped is to link the yuan to gold, so that interest rates align with that of gold, not the rising rates of an unbacked yuan weakening against the dollar whose interest rates are rising as well.

China will be taking a major step by putting an end to the dollar era that has existed since August 1971, when gold as the ultimate money was driven out of the monetary system. She must be ready to do this urgently, despite the opinions of Western-educated economists within her own administration. Some Western central banks may face acute embarrassment, having sold and leased their gold reserves, so that they are no longer in possession. China must move soon to avoid further rises in dollar interest rates undermining the yuan even more.

That time must be approaching. China must resist the temptation to defer such an important decision, allowing the yuan to fall much further. The neo-Keynesians in Beijing will argue that a lower yuan will compensate exporters facing American tariffs. But all that does is drive up domestic prices, and increase the cost of commodities required for China’s infrastructure plans. No, the decision to move must be sooner rather than later.

Assuming China has significant undeclared gold reserves, this could be done very simply through the issuance of a perpetual jumbo bond, paying coupons in gold or yuan at the holder’s option. This financial model, without the gold convertibility feature, is based on Britain’s Consolidated Loan Stock, first issued in 1751 and finally redeemed in 2015.[viii] Being undated, there was no capital drain on the exchequer, except at the exchequer’s option.

The broad advantages to this approach will become self-evident, and what follows is an outline proposal showing how monetary stability and the removal of systemic risk can be achieved. To give the markets time to adjust the gold price for China’s remonetisation, these proposals should be announced in advance of the bond’s introduction, together with full disclosure of China’s true gold reserves. The bond would impart a basic yield to gold, allowing for an additional portion of the yield to reflect China’s credit risk. It will be priced to ensure holding the bond is attractive to savers and investors, making it a credible alternative to owning physical bullion. Because the bond need never be paid off, it should benefit China’s credit standing in the markets and underwrite international demand for the yuan itself.

Further currency issues by the PBOC would then have to be backed by gold, as was the case with the Bank of England’s note issuance under the Bank Charter Act of 1844. Banks would be given a limited timescale to separate their deposit-taking functions from their loan books, which would substitute bond issues as the main instrument for funding loan business.

Bank deposits would earn nothing, and perhaps even face administrative costs. Depositors and savers would therefore channel their savings into the new bank bonds or the new jumbo bond. The banks and the banking system would no longer present a systemic risk.

This would mean that monetary expansion in China would only occur through gold imports, mine supplies, and scrap recycling of jewellery. Given China’s annual mine output of over 400 tonnes, and assuming the state already owns significant undeclared reserves, there should be sufficient gold backing to put the yuan on a gold standard by these means. A one-trillion-yuan bond issue with a 3% gold coupon, assuming a gold price of Y15,000 ($2,150 at current exchange rates) would require a maximum of only 62 tonnes of gold to pay the annual coupon, assuming all holders opt for interest paid in gold. In practice, most interest is likely to be drawn in yuan.

The cost of borrowing for production would then be realigned with the general price level in China, reinstating Gibson’s paradox as the producer’s price-to-funding cost relationship.[ix] Export businesses would be saved from higher interest rates on their borrowings but would have to adjust to a sound currency environment. Switzerland manages with a relatively strong currency, and in pre-euro days, so did Germany. Foreign-owned factories, whose owners are only there for a declining yuan exchange rate, will face wide-spread closures. But that releases workers for other functions more relevant to China’s future.

Therefore, disruption of legacy export industries is unavoidable, even necessary. The drift away from them is already embedded in economic policy. The Chinese always knew that relying on exports was only a stepping-stone to her own self-sufficiency. For the long-term, we may presume she knows sound money provides a more stable business environment than fiat money, especially when she is the world’s largest consumer of industrial materials priced in dollars.

It was gold-backed sterling that made tiny Britain the greatest nation on earth in the second half of the nineteenth century. Sound money works for a savings-driven economy, and with the Chinese saving a substantial part of their net income, that is China’s defining characteristic.

Protecting citizens’ wealth and savings is the leadership’s underlying priority. The value of the accumulated wealth of China’s savers relative to those in other nations with declining fiat currencies would be both secured and enhanced. Doubtless, the purchasing power of gold would continue to rise compared with that of unbacked fiat currencies, encouraging foreign demand for China’s new undated jumbo bond. The rise in its market value measured in foreign currencies would not only ensure continuing demand for the bond but create capital gains for existing owners of it along the way.

Making the yuan convertible into gold would allow China to end exchange controls and for the currency to be freely available and desired for trade. The PBOC would wind down its foreign currency reserves and take no further part in foreign exchange markets.

However, it would amount to a fatal attack on the federal dollar’s status, unless, as seems unlikely, the American Treasury swiftly follows it by reintroducing a credible form of convertibility into gold that avoids the flaws of the Bretton Woods system. The US Treasury states that it holds 8,133 tonnes of gold, which could be used for this purpose.

At current prices, the UST’s gold is valued at $325bn, and at a likely price after China’s announcement, perhaps $600bn. If the Treasury’s gold actually exists, China should be delighted to buy it if the US tries to sell some of it to suppress the gold price. After all, China has both dollars and Treasury bonds to sell in return for gold in far larger quantities. And America would be foolish to obstruct settlement of Chinese sales of Treasuries as some commentators have suggested, because that would simply undermine global confidence in both the dollar and dollar bond markets.

It is hard to see how the US can match a sound-money plan from China. Furthermore, the US Government’s finances are already in very poor shape and a return to sound money would require a reduction in government spending that all observers can agree is politically impossible. This is not a problem the Chinese government faces, and the purpose of a gold-linked jumbo bond is not so much to raise funds; rather it is to seal a price relationship between the yuan and gold.

Whether China implements the plan suggested herein or not, one thing is for sure: the next credit crisis will happen, and it will have a major impact on all nations operating with fiat money systems. The interest rate question, because of the mountains of debt owed by governments and consumers, will have to be addressed, with nearly all Western economies irretrievably ensnared in a debt trap. The hurdles faced in moving to a sound monetary policy appear to be simply too daunting to be addressed.

Ultimately, a return to sound money is a solution that will do less damage than fiat currencies losing their purchasing power at an accelerating pace. Think Venezuela, and how sound money would solve her problems. But that path is blocked by a sink-hole that threatens to swallow up whole governments. Trying to buy time by throwing yet more money at an economy suffering a credit crisis will only destroy the currency. The tactic worked during the Lehman crisis, but it was a close-run thing. It is unlikely to work again.

Because China’s economy has had its debt expansion of the last ten years mostly aimed at production, if she fails to act soon she faces an old-fashioned slump with industries going bust and unemployment rocketing. China offers very limited welfare, and without Maoist-style suppression, faces the prospect of not only the state’s plans going awry, but discontent and rebellion developing among the masses.

For China, a gold-exchange yuan standard is now the only way out. She will also need to firmly deny what Western universities have been teaching her brightest students. But if she acts early and decisively, China will be the one left standing when the dust settles, and the rest of us in our fiat-financed welfare states will left chewing the dirt of our unsound currencies.

END

 

The euro’s bid to challenge the hegemony of the dollar collides with political risk

(courtesy GATA)

 

Euro’s bid to challenge King Dollar collides with political risk

 Section: 

By Anooja Debnath, Charlotte Ryan, and Katherine Greifeld
Bloomberg News
Thursday, November 1, 2018

Europe’s dream of turning the euro into a global reserve currency that can rival the dollar is proving more elusive than ever.

A rally today notwithstanding, the euro is trading within striking distance of its low this year as a confluence of political risks looming large over Europe damp sentiment toward the common currency.

The flare-up of political risk across a landscape that shares the euro as its common currency shows European Commission President Jean Claude Juncker has his work cut out before realizing his vision of upending the global dominance of the dollar.The euro has lost almost a fourth of its value since before the euro-area debt crisis erupted in 2011, suggesting that central banks aren’t quite embracing Juncker’s dream just yet. …

… For the remainder of the report:

https://www.bloomberg.com/news/articles/2018-11-01/euro-quest-for-reserv…

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

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To contribute to GATA, please visit:

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iii) Other Physical stories
Bill Holter’s latest piece…a must read..
(courtesy Bill Holter)

As I alluded to a couple of days ago, “look around, what do you see?”. People who own precious metals are quaking in their boots at EXACTLY THE PRECISE TIME they should be comfortable. We have gotten many “scared” e-mails recently, some from people I would have never guessed. Even a $10 move down in gold has sparked fearful e-mails … but why?

It should be clear to you now, the “unwind” has begun. Jim and I tried to tell you this a couple of months back, now there is absolute evidence. Look at real estate in many parts of the world. Australia, China, London, Vancouver, New York and now even San Francisco. The most important thing to look at is “volume”, as price always follows. Pricing, as it did back in 2006 has gotten to unaffordable levels …and banks have begun to pull back on lending. Ask yourself this simple question, where would pricing be if everyone had to pay cash for new purchases? I am not sure the answer but it would surely be less than 50% of current pricing. “Credit” is the reason real estate attained the values they did, lack of credit is now reducing sales volume …and thus pricing.

Then we can look at autos all over the world. Asia, Europe and North America, all markets are soft and the build up in “sub prime” auto loans has exploded. Any discussion of credit and sub prime in the same sentence should certainly not leave out “student loans”. This sector is now well over $1 trillion. Yes, for a good cause I suppose you could say, but we now have an entire generation in hock before they even leave the starting gate? Not to mention, college grads today are not exactly what their parents expected when they first wrote their checks, rather they tend to melt under pressure. Is this a “solid credit”?

We can also look at the corporate sector. There is a $3 trillion “junk” time bomb sitting here, especially the fracking sector. Even supposed good credits have recently tarnished, how about GE being shut out of the commercial paper market ? Or banks? Can anyone say Monte de Paschi? Or Deutsche Bank? Or look at pensions, anywhere on the planet …how is it possible they are underfunded after pushing interest rates to zero and blowing asset bubbles across the board? What will these look like in just a garden variety bear market?

“Asset values” were (are) the crux to the whole scheme. If you can get asset values “up”, the populace will believe anything you tell them. This is the key tenet to MOPE. Never mind that industrial production has yet (10 years later) to eclipse the previous high back in 2006, none of that mattered as long as stocks. bonds, and real estate marched higher. The entire game was bet on reflating asset values, it worked and the can was kicked down the road …until today.

Now, there are no entities on the planet that can step in and play the role of white knight. All central banks and sovereign treasuries are up to their eyeballs in balance sheet debt. Interest rates are now moving higher, at a time when debt ratios and gross debt has never been higher. And don’t forget “globalism”, everyone is in bed with everyone else financially. Never mind six degrees of separation, we are at the point where stress is appearing everywhere in a world where NO ONE can fail …or we all fail.

I assume you originally purchased your gold/silver assets as “protection” from some sort of financial/economic/social mishap? If you bought gold because it would “go up”, (I am ashamed you are reading this). To this point, pretty much everything the precious metals community expected to happen …is in the process of happening right before your very eyes! The blunt reason to own gold is because it is money with no attached liability in a world awash in liabilities. Asset values across the board have reached untenable levels because the bidding process was aided by leverage. Currencies themselves are “debt instruments”.

The danger (a mathematical certainty at this point) is a scenario of cascading defaults of debt. We are already seeing high stress levels in global credit markets due to higher interest rates and a “stronger” dollar. Other than gold and silver, there are exactly zero other monetary alternatives with no liability. THIS is why you own gold! In a world where everything has been bid up by debt …or is a debt asset itself, getting as far away from debt is the obvious choice. I might add, “leverage” in gold and silver is massively on the short side but this is a story for another day…

As I started with, “look around you”. There cannot be infinite growth in a finite world. It may seem like this on the way up as credit fuels the expansion but both credit and growth have limits. Growth due to limited resources and credit due to the inability systemically to incur more debt at some point. I termed this “debt saturation” in 2007, we have arrived again! Quite simply, all Ponzi schemes require continual and eventually exponential new investors. Debt has been the “new investor” for many years. This source of funds has been over used and is in the exhaustion phase.
To finish, the teeth gnashing in the gold community makes no sense at all.

Nearly all the conditions are firmly and maturely in place to demand financial caution and extremely defensive positioning. The experiment is failing and the “wall” is clearly in sight. Worrying about gold holdings now is like wondering whether you should have your seatbelt on just moments before a head on collision!

Standing Watch,
Bill Holter
Holter-Sinclair collaboration
http://www.jsmineset.com

end
We brought the data to you that Russia’s demand for gold is increasing, but it is worth repeating.  For the 3 month period ending Sept 2018, Russia has added over 92 tonnes to cross the 2,000 tonne barrier.  Also Turkey continue to buy 18.5 tonnes in the quarter, with Kazakhstan buying 13.4 tonnes and strangely India for the first time at 13.7 tonnes.  It seems sovereign India is now following the advice of its citizens in buying gold
(courtesy RT)
Russia’s gold reserves smash Soviet-era record as part of Moscow’s de-dollarization drivePublished time: 2 Nov, 2018 10:01

The Central Bank of Russia bought over 92 tons of gold in the three months to the end of September breaking the Soviet peak of 2000 tons in gold reserves seen in 1941, according to a new report by the World Gold Council (WGC).

Russia reportedly purchased more gold than any other country in the world, followed by Turkey, Kazakhstan, and India, which bought 18.5 tons, 13.4 tons and 13.7 tons respectively.

That marks the highest quarterly net purchase since 1993, when the WGC started tracking the country’s data. Russia’s gold stockpile now accounts for 17 percent of the country’s overall foreign exchange reserves.

Read morehttps://www.rt.com/business/434500-russia-gold-reserves-history/Where does Russia keep its huge gold reserves?

The Central Bank of Russia will keep adding bullion to its reserves, while reducing the share of US sovereign bond holdings at the same time, according to Anatoly Aksakov, the chairman of the State Duma Committee on Financial Markets.

“This is a growing trend. Over the last five years, countries have been boosting the share of gold in their reserves, reducing the dollar share,” Aksakov told RIA Novosti.

“Investments in the US Treasury securities have been in record decline. I think this trend will continue.”

The regulator started a gradual sell-off of the US sovereign debt shortly after Washington introduced economic sanctions against Russia, threatening to fence off the country from dollar transactions, as well as from the SWIFT global payment network. The share of Russian investments in US Treasuries, which totaled nearly $176 billion in 2010, has dropped to a record low of $14 billion as of August.

When it comes to foreign exchange reserves, Russian authorities are pursuing the policy of absolute safety. Earlier this year, Russian Finance Minister Anton Siluanov said the country has to ditch its holdings of US Treasuries in favor of more secure assets, such as the ruble, the euro, and precious metals.

https://www.rt.com/business/442934-russia-central-bank-record-gold

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

i) Chinese yuan vs USA dollar/CLOSED UP TO 6.8755/HUGE DEVALUATION FOR THE PAST FOUR WEEKS RESUMES/CHINESE COMING TO USA FOR TRADE TALKS IN NOVEMBER NOW ON //OFFSHORE YUAN:  6.8592   /shanghai bourse CLOSED UP 59.39 POINTS OR 2.70%

. HANG SANG CLOSED UP 1070.35 POINTS OR 4.21%

 

 

2. Nikkei closed UP 1070.35 POINTS OR 4.21%

 

3. Europe stocks OPENED ALL GREEN 

 

 

 

/USA dollar index FALLS TO 96.04/Euro RISES TO 1.1448

3b Japan 10 year bond yield: RISES TO. +.13/ !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 112.89/ 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:: 63.53 and Brent: 72.57

3f Gold UP/JAPANESE Yen UP/ CHINESE YUAN:   ON SHORE UP/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 DOWN for WTI and DOWN FOR Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO +.43%/Italian 10 yr bond yield DOWN to 3.33% /SPAIN 10 YR BOND YIELD UP TO 1.57%

3j Greek 10 year bond yield RISES TO : 4.30

3k Gold at $1233.70 silver at:14.75   7 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50

3l USA vs Russian rouble; (Russian rouble UP 30/100 in roubles/dollar) 65.68

3m oil into the 63 dollar handle for WTI and 72 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 112.79DESTROYING 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 0.9978 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1411 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 +0.43%

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

4. USA 10 year treasury bond at 3.16% early this morning. Thirty year rate at 3.38%

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

6.  TURKISH LIRA:  UP  TO 5.4680

Global Stocks Soar As Trump Doubles-Down On China Trade Deal Hopes

World stock markets are closing out the week on a euphoric note, with Asian and European stocks and S&P futures roaring higher on Friday amid a sea of green on Friday on renewed hopes that the US and China were starting to repair their badly damaged trade relations.

As shown in the table above, stocks extended gains around the world, as Treasuries dropped and the dollar tumbled on Friday on the back of fresh hopes for trade between the world’s two biggest economies. The buying frenzy was unleashed after Bloomberg News reported that Trump was interested in reaching an agreement on trade with Chinese President Xi Jinping at the Group of 20 nations summit in Argentina this month, and has asked key officials to begin drafting potential terms.

The latest attempt at easing trade tensions (and boosting stocks, incidentally just 5 days before the midterm elections) came less than 24 hours after Trump tweeted that he held a “long and very good conversation” with China’s President Xi, in which trade was the key topic and “discussions are moving along nicely.”

Whether or not the news was signal or more noise – and we’ve had a lot of it in the past 6 months – it achieved its goal, resulting in a surge in Asian stocks that included 2.5-4% leaps for most of region’s big bourses, taking gains on the MSCI Asia Pacific Index to 5% for the week and put the world’s main emerging market index up 3%, on course for its best day and week since early 2016. Even China was quick to forget about its trade troubles, as the Shanghai Composite jumped 2.7%…

… while the yuan soared 500 pips as the USDCNH tumbled from 6.93 to 6.88

Europe was overjoyed too. Germany’s export-heavy DAX jumped 1.5% in its best start since July with Volkswagen +4.5%, pushing the DAX up to best levels this week, while European shares were headed for their best week since late 2016. The Stoxx Europe 600 was over 1% higher taking this week’s gain to 4.1 percent. Even the long-suffering auto and mining sectors edged higher. Luxury and chemicals got a boost, as did technology shares that might otherwise be fretting more over Apple’s disappointing sales forecast.

European earnings have improved lately, though this quarter is still the weakest season in four years as margin pressures build, according to Morgan Stanley. Earnings revisions are at the lowest in 2 1/2 years, while share prices have reacted more strongly to result misses than they have to beats, the U.S. bank said. On the other hand, final Mfg PMIs from around Europe came in slightly on the softer side of prelims while Italian manufacturing shrank the most in nearly four years, but trade news trumped data this morning, however fleeting that may be. BTPs print fresh highs having been knocked on the data, Bund/BTP spread tightens to 289bp.

Meanwhile, even the long-running Brexit drama saw a positive twist this week, with Brexit Secretary Dominic Raab saying he expects a deal by Nov. 21. That’s caused the FTSE 100 to underperform Europe for a third-straight day, as the pound continues to gain.

Dow Jones and S&P futures were also up almost one percent ahead of the monthly non-farm payrolls jobs data, and even the Nasdaq was higher despite the drop in Apple shares pre-market trading after underwhelming sales forecasts.

There was no hiding from today’s euphoria: an index of emerging-market equities jumped the most since March 2016, while currencies from South Korea to Australia joined the rally.

As risk aversion faded, the Bloomberg dollar index tumbled back below 1200 and commodity currencies rallied. Risk-sensitive currencies and stocks extended their recent rebound as the onshore yuan headed for biggest two-day gain since January.

Sterling made ground again to $1.30 on hopes London is closing in on transitional deal for when it leaves the EU next year. If it doesn’t slip it will be the second best week of the year for the pound. Thursday was its best day of the year. “Were it not for Brexit uncertainty, the Bank of England would probably have laid the groundwork (at its meeting on Thursday) for its next rate hike,” BNP Paribas analysts said in a note.

Overall, prospects for easing protectionist tensions are helping round out a week that’s seen appetite for risk assets return following the October rout in equities; the question of course is how much of what Trump has said is just an attempt to goose stocks into the midterms.

“Either President Trump is paving the way for a trade deal being agreed at the Buenos Aires G-20 summit later this month, or he’s cynically driving up equity indices ahead of U.S. mid-terms,” said SocGen FX strategist Kit Juckes. “What’s for sure, is that talk of a trade deal has added further juice to the last few day’s risk appetite.”

“When Trump wants to bump the market ahead of the mid-terms the market likes it,” Saxo Bank’s head of FX strategy John Hardy referring to next week’s mid-term U.S. elections. Hardy said while it might just be “political theater” from Trump for now, the real test would come when he and China’s President Xi Jinping meet at a summit of world leaders later this month in Argentina.

Meanwhile, doubts remain on the capacity of earnings to deliver. Apple’s disappointing forecast for the key holiday period suggested weaker-than-expected demand for the company’s pricier new iPhones. Next up is the U.S. jobs report for October later Friday, while U.S. mid-term elections next week are also weighing on investors’ minds.

As for the renewed euphoria of world trade peace, Bloomberg notes that talks between the U.S. and China may not be straightforward, with intellectual property theft still a stumbling block. A Chinese state-owned company was charged Thursday with conspiring to steal trade secrets from American chipmaker Micron Technology Inc. as the Justice Department steps up actions against the Asian nation in cases of suspected economic espionage.

In rates, Europe’s bond yields rose already on the rise as economists expect a 200,000 rise in U.S. jobs and see hourly earnings increasing 3.1% Y/Y. US 10Y Treasury yields with 3bps higher, at 3.1627%.

In commodity markets, metals led the charge on the hopes a trade deal will prevent China’s resource-hungry economy faltering. Three-month copper on the LME climbed as much as 2.5% to $6,240.50 a ton, its highest in a week. Other base metals were up across the board too, with zinc rising 1.8 percent, nickel climbing 1.7 percent, lead up 1.3 percent and aluminum gaining 0.9 percent.

Meanwhile, WTI was steady as fears over a supply disruption eased after the U.S. was said to agree on giving waivers to eight nations to continue importing Iranian crude. Bloomberg’s gauge of industrial metals extended a rebound from a 15-month low as copper, zinc and nickel led gains in other raw materials.

Market Snapshot

  • S&P 500 futures up 0.9% to 2,762.00
  • STOXX Europe 600 up 1.1% to 367.19
  • MXAP up 2.5% to 154.05
  • MXAPJ up 3.1% to 493.46
  • Nikkei up 2.6% to 22,243.66
  • Topix up 1.6% to 1,658.76
  • Hang Seng Index up 4.2% to 26,486.35
  • Shanghai Composite up 2.7% to 2,676.48
  • Sensex up 2.1% to 35,165.01
  • Australia S&P/ASX 200 up 0.1% to 5,849.21
  • Kospi up 3.5% to 2,096.00
  • Brent Futures down 0.4% to $72.59/bbl
  • Gold spot up 0.1% to $1,234.99
  • U.S. Dollar Index down 0.2% to 96.10
  • German 10Y yield rose 3.5 bps to 0.434%
  • Euro up 0.3% to $1.1438
  • Brent Futures down 0.4% to $72.58/bbl
  • Italian 10Y yield fell 4.6 bps to 3.01%
  • Spanish 10Y yield rose 1.0 bps to 1.578%

Top Overnight News from Bloomberg

  • President Donald Trump has asked key U.S. officials to begin drafting possible trade deal with China as the two leaders look to meet at G-20 summit this month in Argentina; said will make the right deal with China, President Xi “wants to do it”
  • Xi says China will cut taxes, give market access to help private firms
  • PBOC: China will speed up opening; sees continued “gray rhino” financial risks; economic and financial risks are controllable overall
  • The U.S. has agreed to let eight countries keep buying Iranian oil after it reimposes sanctions on the OPEC producer on Nov. 5, according to a senior administration official
  • The Financial Times reported that EU Brexit negotiators are exploring a plan for Northern Ireland that would give U.K. stronger guarantees that a customs border won’t be needed
  • Eurozone final Oct. Markit Mfg PMI: 52.0 vs 52.1 flash; fall in order books as exports decline for first time nearly 5.5Y
  • Riksbank’s Ingves: matters little whether hike in Dec. or Feb.
  • U.S. is said to give 8 countries oil waivers under Iran sanctions

Asian equity markets tracked their Wall St counterparts higher after US stocks posted a 3rd consecutive gain with sentiment underpinned by optimism regarding US-China trade after what US President Trump described as a ‘very good’ conversation between him and Chinese President Xi Jinping. Furthermore, reports that Trump asked the cabinet to draft a potential China trade deal added fuel to the rally and helped US equity futures recover from the after-market pressure triggered by declines in Apple shares after the tech giant missed on iPhone and iPad sales, provided soft Q1 revenue guidance and announced to halt product unit sales data. ASX 200 (+0.1%) and Nikkei 225 (+2.6%) were mixed throughout most the session with Australia dampened by energy names after WTI crude futures slipped 2.7% to below USD 64.00/bbl on higher OPEC production in October, while the Japanese benchmark surged on a weaker currency and the encouraging trade related news. Elsewhere, Hang Seng (+4.2%) and Shanghai Comp. (+2.7%) also rose aggressively on the positive developments between US and China, with gains led by strength in tech names as well as casino stocks post-Macau gaming revenue numbers. Finally, 10yr JGBs were eventually flat as the initial upside was wiped out as US-China trade hopes were kindled by overnight reports, while the BoJ were also in the market today and increased its purchase amounts in the 1-5yr JGBs which was unsurprising given the reduction in the number of occasions it had planned for those purchases this month.

Top Asian News

  • Chinese Property Dollar Bond Demand Wanes Amid Heavy Supply
  • Fraud-Hit PNB’s Losses Mount as Provisions Surge to $1.3 Billion
  • $2.8 Million to Switch Sides? Bribe Allegation Rattles Sri Lanka
  • ’Wrath of Markets?’ New Delhi Pokes at India’s Central Bank
  • Donmez: Turkey May Be Among Nations Exempted From Iran Sanctions

Main European indices are in the green, continuing the trend from Asia. The FSTE MIB (+1.5%) is leading after reports in Il Sole that Banca Carige are the only Italian bank seen as fragile; while the SMI is lagging (+0.1%) after the US FDA announced that Roche’s (-1.5%) recall is Class 1. Indices are mixed with materials (+2.3%) outperforming due to trade progression between the  US and China, notably President Trump said to have asked his cabinet to draft a potential trade deal. In terms of individual equities Kering (+5%) are higher after being upgraded at RBC, which has had a knock-on impact on other luxury names such as Burberry (4.5%), Moncler (+5.5%) and LVMH (+3.8%) who are up in sympathy. Separately, BMW (+2.5%) are up as they state they are expanding their car share service into 5 more London boroughs.

Top European News

  • Russian Missile Tests Ground Helicopters to Norway Oil Platforms
  • It’s Crunch Time for Trump Versus the World on Iran Sanctions
  • Macquarie Lures Prop Traders to London After Rivals Retreated
  • British Airways Owner Lifts Long Term Profit Goals: IAG Update
  • Italy Considers Amending Rules on Strategic Industry M&A: Sole

In currencies, there was no respite for the Dollar, as its retracement from midweek peaks continues, albeit at a more measured pace. The latest downturn comes amidst reports that US President Trump has commissioned a draft trade accord with China following his encouraging chat with Xi and plans for a dinner+ date between the 2 at the upcoming G20 summit in Argentina. The Greenback is weaker vs all G10 counterparts, bar the JPY, which is still bucking the trend as an even safer currency haven, although the headline pair has topped out just above 113.00+ again and is back below its 30 DMA at 112.85, which could be pivotal on a closing basis. On that note, the DXY looks precarious just a fraction ahead of 96.000 in advance of NFP that could determine whether the index stabilises, recoils further or rebounds. AUD – The major outperformer and main beneficiary of constructive dialogue between China and the US, with Aud/Usd extending its marked recovery to 0.7250 before fading and essentially tracking Yuan moves after a considerably lower Usd/Cny fix overnight. EUR/CHF/NZD/GBP/CAD – All firmer vs the Buck, with the single currency not deterred by some downbeat Eurozone manufacturing PMIs and breaching a key Fib at 1.1426 to expose 1.1450 before 1.1460. However, a cluster of hefty option expiries, and 3.1 bn at the 1.1400 strike may stall Eur/Usd, ahead of 1.6 bn between 1.1450-60. The Franc is back above parity, and perhaps belatedly taking some note of SNB commentary yesterday about the inevitability of tighter policy, while the Kiwi continues to piggy-back its Antipodean peer with gains up towards 0.6700 before waning. Elsewhere, Cable has sustained 1.3000+ status after a knee-jerk visit post-BoE super Thursday, and cleared its 10 DMA circa 1.3005-10 with the aid of more positive-sounding Brexit reports (on paper), but respecting the 100 DMA from 1.3045-50. The Loonie is holding near the upper end of 1.3050-1.3100 parameters and also has jobs data looming to provide some independent direction. EM – Broad gains vs the Usd, with the Try through 5.5000 and Cnh breaking 6.9000, but Rub lagging against the backdrop of still soggy oil prices.

In commodities, WTI (-0.1%) and Brent (+0.3%) began the session lower following increased oil supply from Russia, OPEC and the US for October, notably the highest OPEC level since December 2016; an increase which has thrust the oil market into an oversupply dragging down prices. However, this has since reverted as Iran’s Deputy Oil Minister commented that he is unsure if waivers are permanent; comments which follow reports that 8 countries have received waivers allowing them to continue to purchase Iranian oil. Gold (+0.1%) is continuing the steady trade seen in Asia overnight, although off of yesterday’s highs of USD 1237.39/oz as market sentiment improves following Presidents Trump and Xi expressing optimism over the trade dispute. Separately, Trump has initiated an executive order preventing anyone within the US from dealing with anyone associated with gold sales from Venezuela. US is to give 8 countries waivers on new Iran oil sanctions, according to sources; updates to follow on the breakdown but India and South Korea have been touted as two of the nations.

Looking ahead to today, the highlight is almost certain to be the October employment report in the US this afternoon however prior to that this morning we’ll get the final manufacturing PMI revisions in Europe including those for the Euro Area, France and Germany, as well as a first look at the data for the periphery. Also out this morning is the September import price index reading in Germany, while in the US we’ll also get the September trade balance, September factory orders and final September durable and capital goods orders data. Away from that, the BoE’s Tenreyro is due to take part on the panel of an IMF conference while the big earnings releases include Berkshire Hathaway, Alibaba, Exxon Mobil, Chevron and AbbVie.

US Event Calendar

  • 8:30am: Trade Balance, est. $53.6b deficit, prior $53.2b deficit
  • 8:30am: Change in Nonfarm Payrolls, est. 200,000, prior 134,000
    • Unemployment Rate, est. 3.7%, prior 3.7%
    • Average Hourly Earnings MoM, est. 0.2%, prior 0.3%
    • Average Hourly Earnings YoY, est. 3.1%, prior 2.8%
    • Average Weekly Hours All Employees, est. 34.5, prior 34.5
  • 10am: Factory Orders, est. 0.5%, prior 2.3%; Factory Orders Ex Trans, prior 0.1%
  • 10am: Durable Goods Orders, prior 0.8%; Durables Ex Transportation, prior 0.1%
  • 10am: Cap Goods Orders Nondef Ex Air, prior -0.1%; Cap Goods Ship Nondef Ex Air, prior 0.0%

DB’s Jim Reid concludes the overnight wrap

Early in the session yesterday it had looked like US equity markets might have had their legs taken away from them after this week’s rally. This followed a softer than expected ISM reading (more below) but a more upbeat comment from President Trump on Twitter about potential upcoming trade talks with China seemed to kick start a steadily climbing market for most of the rest of day. The S&P 500 rallied +1.06% which means it is now up +3.75% in the last three sessions. So it’s recouped about a third of the loss the index took into October 29th from the end of September. That three-day gain is the biggest since immediately following the US elections in November 2016 now for the S&P. The DOW (+1.06% yesterday) has also had its strongest three-day run since November 2016 while the NASDAQ (+1.75% yesterday) and NYSE FANG index (+2.56% yesterday) have had the strongest runs since June and February 2016 respectively.

Apple earnings poured a bit of cold water on things after the bell though. Earnings per share and revenue both beat the consensus forecasts at $2.91 versus $2.78 and $62.9bn versus $61.4bn, but the company’s guidance was disappointing. In addition, Apple sold fewer iPads, Macs, and iPhones than expected, and the stock traded around -6% lower in after hours trading.

In Asia S&P futures were initially down around 0.5% on the back of Apple but more positive China/US trade headlines have reversed this as we type. They are now up 0.6%. Looking at the trade headlines chronologically, the tweet from President Trump which helped markets to bounce in the morning US session was a vote of confidence from the President that conversations with Chinese President Xi Jingping on trade and also North Korea ahead of the G20 meeting later this month are “moving along nicely.” Reuters followed with a headline quoting Xi as saying that the President hopes China and the US can promote a steady and healthy relationship. The reporting by Chinese state-run television was similarly rosy, saying that Trump “cherishes the good relationship with the Chinse president” and that Xi “wishes to keep the Sino-US relationship healthy and stable.”

Overnight, following yesterday’s call between the US President Trump and China’s President Xi Jinping, Trump has asked his key cabinet secretaries to have their staff draw up a potential deal to signal a ceasefire in an escalating trade conflict. This was reported by Bloomberg citing unidentified sources. In the meantime, China’s daily South China Morning Post reported, quoting unidentified sources, that Mr Trump has offered to host a dinner for Chinese President Xi Jinping on December 1 in Buenos Aires after the G20 leaders summit, an invitation China has tentatively accepted.

The possible thaw in the trade war has helped risk gain momentum in Asia this morning. The Nikkei (+2.36%), Hang Seng (+3.58%), Shanghai Comp (+2.14%) and Kospi (+3.46%) are all up along with most Asian markets. Asia FX is largely up on the pause in trade war escalations with export oriented countries leading the gains – the Taiwan dollar (+0.85%), South Korean Won (+1.43%), China’s onshore yuan (+0.23%) and Australian dollar (+0.51%) are all up.

In spite of the rebound this week, October won’t be forgotten in a hurry, given the extent of the sell-off across markets. This is a good time to remind readers that we published our usual monthly performance review yesterday for October as a supplement to the usual EMR. You can find the link here .In it, we show an interesting chart that highlights how 2018 is shaping up to be the worst year on record in terms of breadth of negative assets returns in dollar terms, with data going back to 1901. In our sample, 89% of assets have now seen negative total returns in dollar terms this year. That is after 2017 saw the ‘best’ performance on this measure with just 1% (or 1 asset) with a negative dollar return. Hardly a coincidence in our view that this occurred as we moved from peak global QE to global QT over the past 2 years.

With markets faring well into the end of the week, there’s still one more test with today’s payrolls report in the US due up. The market consensus is for a 200k reading following that softer-than-expected 134k last month. Our US economists expect a 185k print, but believe that risks are to the downside due to the hurricane disruptions. Our colleagues expect the unemployment rate to remain steady at 3.7% (with risks it rounds down to 3.6%) while they expect average hourly earnings to rise +0.2% mom and to a new post-crisis high of 3.1% yoy – the highest since early 2009. This represents a jump of almost 40bps from the September reading which is largely due to base effects from October 2017, when earnings plunged after Hurricane Harvey, Irma and Maria boosted September 2017’s print.

Staying with economics, our German economics yesterday downgraded their near-term growth forecasts in light of recent data and also published the first big DB 2019 Outlook piece. In it they revised down their third quarter GDP forecast from 0.4% for 0.0.%, and their 2019 projection to 1.3% from 1.7%. This partially reflects the disruptions from new emissions standards, but it is also attributable to softer external demand as net exports drag on growth. On the political front, snap elections look more likely after Chancellor Merkel’s decision to not seek another term as party leader. The continuity replacement candidate would be Annegret Kramp-Karrenbauer, while a slightly more conservative and market-friendly option would be Friedrich Merz. Regardless, the SPD will reconsider its membership in the grand coalition and snap elections could come sooner than many currently expect.

Back to yesterday and European markets lagged behind the US with the STOXX 600 closing +0.41% and the DAX +0.18% – the former hindered by a struggling energy sector after oil tumbled around -2.5% following the latest supply numbers from OPEC which showed crude production had climbed to the highest level since 2016. European Banks did, however, finish up +1.47% – the third >1% rise for the index in the last six sessions – while bonds were slightly weaker at the margin (Bunds +1.4bps) with the exception of BTPs which ended -4.8bps lower in yield. Treasury yields turned lower after the ISM manufacturing print which declined 2.1pts from September to a below market 57.7 (vs. 59.0 expected). New orders tumbled 4.4pts to 57.4 and employment 2pts to 56.8. While these headline moves looked a lot softer than expected its worth putting the overall level in the context of what is still a number firmly in growth territory. Plus, the prices paid subindex rose to 71.6 versus the expected 69.0. It’s therefore unlikely to deter the Fed from the current path with respect to the growth outlook.

Here in the UK, we had the double act of a BoE meeting and more Brexit headlines. Gilt yields faded from early highs to close just +1.8bps higher, however Sterling rallied +1.93% for its biggest gain since April 2017 and in the process edged above $1.300 again after trading as low as 1.2696 just three days ago. The BoE meeting wasn’t much of game changer with policy left unchanged as expected, but with minor tweaks to the Inflation Report (mostly in line with our expectations) tilting the outlook slightly towards the hawkish side.

As for Brexit, well the Times “financial services deal” article that was out early yesterday morning was quickly downplayed from all sides, however a more material story was the MNI article which said that the EU is moving toward a semi-temporary customs union arrangement for the whole of the UK. Such a setup would apparently include strong regulatory alignment and would have no  fixed end-date. This would likely be sufficient to prevent the imposition of border checks in Northern Ireland (between NI and either Ireland or the rest of the UK), which should keep the DUP onside. We have long viewed this outcome as the most likely, though it is likely to enrage the hard Brexit wing of the Conservative government, potentially raising the odds of a political crisis if the story is confirmed. Later in the session, the FT reported a similar story about the proposed deal, and the pound held its gains. The chatter of late points to a deal being in sight but then the domestic political fun and games will start.

Apart from the ISM print, covered above, US data showed that productivity rose +2.2% qoq in the third quarter while unit labour costs increased +1.2%. This indicates that the supply side of economy may be improving, while inflationary pressures simultaneously continue to build. September construction spending printed at 0.0% as expected, but August was revised up to +0.8% from +0.1%. This presents upside risks to the second print of third quarter GDP. The only notable data releases in Europe were the UK’s nationwide house price index (which rose +1.6% versus expectations for +1.9%) and the October manufacturing PMI, which fell to 51.1 compared to consensus forecasts for 53.0. That’s its lowest level since July 2016 immediately following the Brexit referendum

Looking ahead to today, the highlight is almost certain to be the October employment report in the US this afternoon however prior to that this morning we’ll get the final manufacturing PMI revisions in Europe including those for the Euro Area, France and Germany, as well as a first look at the data for the periphery. Also out this morning is the September import price index reading in Germany, while in the US we’ll also get the September trade balance, September factory orders and final September durable and capital goods orders data. Away from that, the BoE’s Tenreyro is due to take part on the panel of an IMF conference while the big earnings releases include Berkshire Hathaway, Alibaba, Exxon Mobil, Chevron and AbbVie.

 

 

3. ASIAN AFFAIRS

i)FRIDAY MORNING/ THURSDAY NIGHT: 

SHANGHAI CLOSED UP 59.39 POINTS OR 2.70% //Hang Sang CLOSED UP 1070.35 POINTS OR 4.21% //The Nikkei closed UP 556.01 OR 2/58%/ Australia’s all ordinaires CLOSED UP 0.17%  /Chinese yuan (ONSHORE) closed UP  at 6.8755 AS POBC RESUMES  ITS HUGE DEVALUATION  /DELEGATION COMING TO THE USA TO SEE TRUMP IN NOVEMBER CANCELLED/Oil DOWN to 63.53 dollars per barrel for WTI and 72.57 for Brent. Stocks in Europe OPENED GREEN //.  ONSHORE YUAN CLOSED WELLUP AT 6.8755 AGAINST THE DOLLAR. OFFSHORE YUAN CLOSED WELL UP ON THE DOLLAR AT 6.8592: HUGE DEVALUATION/PAST SEVERAL DAYS RESUMES// TRADE TALKS NOW ON   : /ONSHORE YUAN TRADING WEAKER  AGAINST OFFSHORE YUAN/ONSHORE YUAN TRADING STRONGER AGAINST USA DOLLAR/OFFSHORE YUAN TRADING MUCH STRONGER AGAINST THE DOLLAR /CHINA RETALIATES WITH TARIFFS/ TRUMP RESPONDS TO NEW TARIFFS AND IT NOW A FULL TRADE WAR COMMENCED

 

3 a NORTH KOREA/USA

 

North Korea/South Korea/USA/China

3 b JAPAN AFFAIRS

 
END

3 C CHINA

Supposedly (and this was later deemed false) Trump asks cabinet to draw up a trade deal after a conversation with Xi. Just noise ahead of the elections

(courtesy zerohedge)

Trump Asks Cabinet To Draw Up Trade Deal After Conversation With China’s Xi: BBG

Is a harmonious conclusion to the six-month-long US-China trade battle finally within reach? Or this just a ploy to push US stocks higher ahead of an election that will decide which party controls Congress for the balance of Trump’s term?

That’s the question that traders will be asking themselves as they try to suss out the implications of a Bloomberg report claiming that President Trump has asked his cabinet to begin drawing up the terms of a deal following a “long and very good” conversation with Chinese President Xi Jinping on Thursday – the first phone call between the leaders of the world’s two largest economies in months. According to Bloomberg, Trump has asked key cabinet secretaries to have their staff draw up a draft deal that he hopes will signal an end to the trade conflict, BBG’s anonymous sources said. What remains unclear is whether Trump will drop the list of demands that have reportedly been a sticking point in negotiations since the spring. Among those demands are that China scale back state support for its ‘Made in China 2025’ initiative, drop policies that support the siphoning of intellectual property from foreign companies and reduce the country’s trade surplus with the US.

Xi

Predictably, the news ignited a torrid rally in Asian shares, with the Hang Seng Index rising 4.2%, the biggest gain since 2011, while the Shanghai Composite Index climbed 2.7% to cement its first four-day winning streak since February. The Chinese yuan, meanwhile, traded back below 6.9 to the dollar, while US stock futures moved higher, signaling that shares could be on their way to a fourth straight day of gains.

shanghai

Shang

Analysts were split on their interpretation of the news. Some believed that the rash of downbeat forward guidance that helped trigger the ‘Shocktober’ market rout had finally inspired the president to try and quash the trade beef.

Tuuli McCully, head of Asia-Pacific economics at Scotiabank in Singapore, called the news “encouraging.” It “likely reflects the fact that businesses in the U.S. are starting to feel the impact of the trade conflict through higher prices and squeezed margins,” she said.

Others insisted that the news was a ploy and that, if anything, deal talks remain in preliminary stages.

The telephone conversation on Thursday was Trump and Xi’s first publicly disclosed call in six months. Both sides reported that they had constructive discussions on North Korea and trade, with Chinese state media saying that Trump supported “frequent, direct communication” between the presidents and “joint efforts to prepare for” the planned meeting on the sidelines of the Group of 20 summit, which is scheduled to take place from from Nov. 30 to Dec. 1.

SocGen’s Kit Juckes noted the possibility that the talk of trade war peace is nothing more than Trump “cynically driving up equity indices.”

“Either President Trump is paving the way for a trade deal being agreed at the Buenos Aires G-20 summit later this month, or he’s cynically driving up equity indices ahead of U.S. mid-terms,” said SocGen FX strategist Kit Juckes. “What’s for sure, is that talk of a trade deal has added further juice to the last few day’s risk appetite.”

Sean George, Stockholm-based CIO at Strukturinvest, manager of the Hamiltonian Global Credit Opportunity fund, agreed that the rally sparked by the report would be a “short-term tactical play.”

“For us at Hamiltonian, we view this as a short-term tactical trade. We are cognizant of the elections on Tuesday, and the cynic in me says maybe this is being done for votes.”

Another economist argued that both Chinese President Xi Jinping and President Trump could benefit from even the perception of a trade detente.

  • “October data confirmed China is slowing, and markets were searching for conviction on whether the government can engineer a soft landing given domestic and external stress,” says Trinh Nguyen, senior economist in Hong Kong
  • “Since then, that fear has receded on conjecture that we may have a stronger policy signal from China to provide support for the economy, and today we have both Trump and the Chinese government signaling potential progress to ease trade tensions.”
  • “At this critical juncture for both the US and China, there is an alignment in timing. For China, it is prioritizing stabilizing domestic sentiment, and for Trump we have Nov. 6 mid-term elections.”
  • “Whether the positive words will culminate into actual action remains to be seen, but at the moment, the timing of a possible deal appears to be a great reprieve for not just the two largest economies but also global prospects and risk appetite.”

Meanwhile, the South China Morning Post is reporting that the meeting between Trump and Xi on the sidelines of the G-20 summit in Buenos Aires, tentatively scheduled for Nov. 29, has been rescheduled and expanded into a “meeting plus dinner” on Dec. 1.

* * *

We now wait for Trump economic advisor Larry Kudlow to pour cold water on the report during a Friday morning interview.

end

As expected this was complete noise as they have a long way to go before a trade deal is announced

(courtesy zerohedge)

 

“Not True” – Stocks, Yuan Slide After Admin Official Denies Trump Trade Deal Rumor

It seems it was ‘noise‘ after all, CNBC’s Eamon Javers confirms that The White House is admitting that “there is a long way to go” on a trade-deal with China… stocks and yuan are rapidly erasing their hope-strewn ramp…

NEW: A senior administration official tells me that the report president Trump is ready to cut a trade deal with China is not true. “There is a long way to go” on negotiations, the official said.

Eamon Javers

@EamonJavers

NEW: A senior administration official tells me that the report president Trump is ready to cut a trade deal with China is not true. “There is a long way to go” on negotiations, the official said.

Stocks are tumbling…

And Yuan is dropping notably…

So was it just a ruse to juice stocks ahead of midterms? Surely not?

end

As expected Kudlow confirms that there is NO  China trade progress.

(courtesy zero hedge)

Stocks, Yuan Extend Losses As Kudlow Confirms “No” China Trade Progress

It seems Bloomberg’s sources are ‘fake’ as Larry Kudlow confirms to CNBC that the President did not ask the cabinet to draw up any trade deal with China and that there has been no responses from China on trade.

“…there is no massive movement between US and China on trade…”

Additionally, Kudlow confirmed that more tariffs on China are possible and that he is “not as optimistic” on a deal as he once was.

Stocks extended losses on the news…

Erasing all of Bloomberg headlines gains…

And Yuan is dropping back further…

4.EUROPEAN AFFAIRS

DENMARK/ISRAEL

The Israeli Mossad assists Denmark in thwarting an Iranian terror plot trying to assassinate 3 Iranian-Danes. Of course Iran slams the allegation as a “false flag”

(courtesy zerohedge)

 

Mossad Assisted Denmark In Thwarting Terror Plot;

Iran Slams Allegation As “False Flag”

Mossad has claimed responsibility for tipping off Danish authorities after they thwarted an alleged terror plot by Tehran to assassinate three opposition figures living in Denmark, according to a senior Israeli intelligence official quoted in the Times of Israel.

This comes days after it was revealed this week that a Norwegian citizen of Iranian background was arrested in Sweden on Oct. 21 in connection with the plot and extradited to Denmark. The head of Danish intelligence announced on Tuesday that the assassination was meant to target the leader of the Danish branch of the Arab Struggle Movement for the Liberation of Ahvaz (ASMLA)which seeks a separate state for ethnic Arabs in Iran’s oil-producing southwestern province of Khuzestan.

Israeli officials now say European authorities were tipped off by its elite foreign intelligence service, according to the Times of Israel report:

The information about Israel’s involvement in the thwarting of the plot was first released to a small number of journalists by a “senior official,” but was later confirmed by others.

According to Israel, the Mossad gave Denmark the information about the Iranian plot to kill three Iranians suspected of belonging to the anti-regime Arab Struggle Movement for the Liberation of Ahvaz.

The suspect in custody has denied the charges, which have also been slammed by Tehran as a “false flag attempt” to frame Iran and further tarnish its reputation and global standing.

A manhunt for the Iranian plotters caused road closures in Denmark and Sweden. via EPAIranian foreign minister Mohammad Javad Zarif  issued the following statement via Twitter on Wednesday“Mossad’s perverse & stubborn planting of false flags (more on this later) only strengthens our resolve to engage constructively with the world,” he wrote.

Though neither Denmark nor Sweden where the suspect was apprehended would confirm whether they had assistance from Mossad, Danish intelligence chief Finn Borch Andersen said at a press conference, “We are dealing with an Iranian intelligence agency planning an attack on Danish soil,” and said further, “Obviously, we can’t and won’t accept that.”

However, Iranian FM Zarif followed his tweet alleging a Mossad orchestrated false flag with a chronology of events he said suggests a “Mossad program to kill the JCPOA”:

Javad Zarif

@JZarif

Incredible series of coincidences. Or, a simple chronology of a MOSSAD program to kill the JCPOA?

During another press conference by European authorities involving Danish Foreign Minister Anders Samuelsen, he said that Denmark believes the Iranian government was behind the attempted attack, and that the Danish ambassador has been recalled from Iran. Samuelsen also said that Denmark will push for EU-wide sanctions against Iran in light of the attempted assassination.

During the conference, Samuelsen also said evidence presented to him by Danish intelligence leaves “no doubt” Iran’s government was behind the plan, and said that behavior by Iranian intelligence was not restricted to Denmark, causing alarm across several European nations. At the same time, Samuelsen said that Denmark doesn’t want the EU to withdraw from nuclear deal, a pact which is “in our best interests” and yet it wasn’t clear how it could co-exist with a new round of EU sanctions against Tehran.

Meanwhile these latest accusations of Iranian assassination plots in Europe follow prior revelations of a separate suspected Iranian plot to target a Paris rally by an opposition group in June, which led to the arrest of a number of Iranians in Europe over the summer.

President Trump had referenced the summer incident and others to bolster his case that European countries should follow Washington’s lead in pulling out of the 2015 nuclear deal and reimpose sanctions, most of which are set to kick back into effect next week, on November 5th.

END

No wonder France is appealing to the EU to help Italy with respect to the 2019 budget:  The big French banks have 277 billion euros of loans to Italy.

(courtesy Don Quijones/WolfStreet)

277 Billion Reasons Why France Is So Worried About

Italy’s Showdown With Brussels

Authored by Don Quijones via WolfStreet.com,

…the French megabanks are on the hook!

France was just served with a stark reminder of an inconvenient truth: €277 billion of Italian government debt — the equivalent of 14% of French GDP — is owed to French banks. Given that Italy’s government is currently locked in an existential blinking match with both the European Commission and the ECB over its budget plan for 2019, this could be a big problem for France.

On Friday, France’s finance minister, Bruno Le Maire, urged the commission to “reach out to Italy” after rejecting the country’s draft 2019 budget for breaking EU rules on public spending. Le Maire also conceded that while contagion in the Eurozone was definitely contained, the Eurozone “is not sufficiently armed to face a new economic or financial crisis.” As Maire well knows, a full-blown financial crisis in Italy would eventually spread to France’s economy, with French banks serving as the main transmission mechanism.

France isn’t the only Eurozone nation with unhealthy levels of exposure to Italian debt, although it is far and away the most exposed. According to the Bank of International Settlements, German lenders have €79 billion worth of exposure to Italian debt and Spanish lenders, €69 billion. In other words, taken together, the financial sectors of the largest, second largest and fourth largest economies in the Eurozone — Germany, France and Spain — hold over €415 billion of Italian debt on their balance sheets.

While the exposure of German lenders to Italian debt has waned over the last few years, that of French lenders has actually grown, belying the ECB’s long-held claim that its QE program would help reduce the level of interdependence between European sovereigns and banks.

If anything, the opposite has happened: thanks to the ECB’s tireless efforts to underpin the Eurozone’s bond markets (by doing “whatever it takes” to make sovereign bonds virtually risk-free), banks have been able to make a tidy margin by simply bulk-buying government bonds at officially zero risk.

A few years ago fiscally hawkish Eurozone countries such as Germany, the Netherlands, and Finland lobbied to put an end to this practice by removing the risk-free status of certain risk-prone sovereign bonds. But their efforts were staunchly opposed by French, Italian and Spanish politicians and bankers, who feared that any such move would result in market mayhem.

Today, market mayhem is not off the cards. The dispute over Italy’s draft budget is unsettling investors. This is reflected not only in the spread between Italian and German ten-year bond yields, which hit four-year highs a couple of weeks ago, but also the sentix Euro Break-up Index, which in October rose to its highest level since April 2017, mainly due to the strong rise in the Italian sub-index.

On a more positive note, investors do not yet appear to fear negative contagion effects, as reflected in the low rise of the Greek sub-index and the index for the contagion risk, which even dropped slightly from 36% to 33%. In other words, investors don’t yet fear for the stability of the Eurozone. But as Bloomberg points out, the exposures of French and German banks to Italian debt mean that those countries’ leaders are strongly incentivized to seek a compromise in the current standoff over Italy’s government budget.

Italy’s coalition partners are perfectly aware of this fact. They know that during the Greek crisis of 2010-11, French and German banks held around $115 billion of Greek debt. That was enough to convince the French and German governments of the day to offer Greece a partial bondholder bailout, though eventually, some private-sector bondholders were given a large haircut as part of the deal.

This is all perfectly understood by Italy’s government, as is the fact that French, German and Spanish banks are now far too exposed to Italian debt for their respective governments to even entertain the idea of pushing Italy to the edge. That knowledge is fueling the coalition government’s bravado, with some lawmakers now even talking about extending Italian government funds to struggling Italian banks if economic conditions continue to worsen.

“Brussels would love to see our defeat,” said Claudio Borghi, the Lega economics chief and budget chairman in the Italian parliament.

“They think that we’ll surrender if they cause a crisis for our banks. But we still have €15 billion left in the bank rescue fund from the Renzi era. It is not a great situation but we’re still relatively comfortable. In the end, it will be they who have to back down.”

Lorenzo Bini-Smaghi, a former member of the ECB board, disagrees. He believes that events are following a similar script to the onset of the Eurozone debt crisis in 2011, when surging bond yields caused a massive contraction in credit.

“Italy is going straight into a wall,” he says.

“The economy risks tipping into recession in the fourth quarter. The banks have already cut loans over the summer, as soon as the spreads began to rise. The Italian government has not understood this. You can’t see the wall yet, but the crash is going to be violent.”

It may sound like rank fear mongering from a dyed-in-the-wool eurocrat, but besides being a former central banker, Bini-Smaghi is also the current Chairman of Société Générale, France’s second largest bank, which is presumably filled to the gills with Italian debt. As such, he probably has even more to fear from a full-scale Italian debt crisis than most.

But outside Italy, credit markets are sanguine, and no one says, “whatever it takes.” Read…  Italy’s Debt Crisis Thickens 

end
You will recall that in 2014 and 2016, the ECB engaged in long term L TRO’s in order to save their banking system.  It is now interesting that immediately after the Central Bank announces that it will not engage in QE out comes word that they are considering new T LTRO’s to replace all the loans which cannot be repaid
this is nuts…
the euro fallls
(courtesy zerohedge)

“Only A Serious Economic Shock”: ECB Said To Consider New T-LTRO; Euro Tumbles

2012 was a seminal year for Europe and the ECB: that was the year when tensions in Euro markets receded in the second half of 2012, following Mr. Draghi’s seminal “whatever it takes” intervention in July of that year. The resulting containment of re-denomination risk in the Euro area and the wider improvement in market sentiment that followed helped re-establish a basis for better functioning of private markets. As a result, the need for central bank intermediation of intra-Euro area cross-border financial flows diminished.

But just as importantly, that was also the year when the ECB’s balance sheet had peaked shortly after the first 3-year Longer-Term Refinancing Operation (LTRO) was conducted…

… and whose runoff resulted in a major shrinkage in the ECB’s balance sheet, ultimately forcing Mario Draghi to launch QE as yields blew out.

Fast forward to today, when it is “deja vu” all over again for the ECB’s T(argeted)-LTRO.

But first, some background: At his press conference following the October 25 Governing Council meeting, ECB President Mario Draghi mentioned that “the TLTRO was raised by two speakers … but not in any detail”. And subsequently in a speech given in Paris, Banque de France Governor François Villeroy de Galhau remarked that “the question of TLTROs will need to be considered”.

Apparently, the targeted long-term refinancing operations (T-LTROs) initiated by the ECB in mid-2014 are coming back into policymakers’ focus, as one of the range of policy instruments available to manage the evolution of Euro area monetary policy.

Part of this renewed focus results from the first wave of 4-year T-LTROs starting to run off the ECB’s balance sheet. The first such operation was conducted in June 2014. The second was announced in March 2016. And, as Goldman points out in a recent note, to the extent that these operations maturing is associated with better market access for banks that had funded through the T-LTROs, this is a healthy sign of the re-booting of the credit system following the travails of the crisis years.

However, policymakers revisiting T-LTROs may also be a symptom of less benign developments. In particular, it may be symptomatic of the funding situation of banks that remain reliant on ECB operations to finance their balance sheets.

And, with the Italian sovereign debt/bank crisis once again on the radar at a time when the central bank is about to end its QE, any suggestion that the ECB will soon experience a period of significant balance sheet shrinkage will likely be met with even more dread by the market.

Here is the problem in a nutshell: Euro-area lenders are facing a cliff edge for their funding, and, as Bloomberg notes, some are hoping the European Central Bank will help them out. Around €722 billion ($832 billion) of long-term loans granted to banks by the ECB will start maturing from 2020, and new regulatory standards mean replacement funds could be needed as soon as next year. Adding to the concerns of balance sheet reducation is that lenders could be forced to refinance just as market rates rise, spurred by tighter U.S. policy and tensions such as Brexit and Italian politics.

As a result, some banks have been in contact with the ECB to discuss the risk of letting those four-year loans expire without affordable alternatives being in place, Bloomberg sources report, with some discussions taking place on the sidelines of the International Monetary Fund meeting in Bali this month.

And now, according to MarketNews, the ECB has responded to these concerns and is indeed considering a fresh T-LTRO.

That the ECB is considering this, or merely “trial ballooning” the concept, suggests that the ECB is getting nervous about a confluence of events, one of which is the sharp slowdown in the Eurozone economy, which just printed the lowest GDP in 4 years…

…even as the standoff between Rome and Brussels over Italy’s deficit continues with zero progress, resulting in sporadic episodes of bond market turbulence and threatening not only Italian sovereign bonds, but also Italian banks (due to the doom loop), and by implication, contagion into the broader Eurozone.

According to MNI, a new T-LTRO could be discussed as soon as December, but notes that “only a serious economic shock could prompt the move.

Of course, since nothing has been fixed in the Eurozone, the ECB will have no choice but launch a new T-LTRO, one which merely allows existing debt to be rolled over, however by doing so it would confirm that the Eurozone has, in fact, triggered an “economic shock.”

Which is why it is no surprise why the Euro tumbled to session lows on the news…

… sent the dollar to highs, and pushed yields higher now that the sequence of events at the ECB appears to be T-LTRO first, and only then more QE, confounding those analysts who expected Draghi to give up on his plan to end QE and continue monetizing Eurozone debt.

In any case, and as is customary for the ECB, watch for a round of denials in the near-term, followed by another trial balloon to gauge the market reaction, before Draghi ultimately commits to a new, and massive T-LTRO some time around the turn of the new year.

* * *

For those interested in more, here are some additional observations from Goldman on the touchy issue of T-LTROs, and their return to Europe:

Bank reliance on T-LTROs. Reflecting their relative difficulty in accessing private funding markets, Italian banks were large subscribers to the 4-year T-LTROs offered by the ECB.

Admittedly, thus far we have not seen a re-emergence of bank funding tensions as the initial round of T-LTROs starts to mature. But banks were able to roll their recourse to the first wave of T-LTROs into the second wave (which started in June 2016) if they chose to do so. As a result, the maturing of the first wave has not proved to be a binding constraint for the funding of T-LTRO-dependent banks.

The second wave of T-LTROs was announced in March 2016 with the first tender in June 2016, so that they will only start to run off the Eurosystem balance sheet in mid-2020. This may still appear some time away. Yet the implementation of the new Basle liquidity rules – specifically, the net stable funding ratio (NSFR) rule – brings forward the impact of a prospective end to T-LROs.

In essence, the NSFR requires a certain proportion of bank funding to have residual maturity of at least one year. By implication, the 4-year T-LTROs implemented in the second wave of operations starting in June 2016 will cease to support this ratio from the middle of next year. This is likely to imply a squeeze on T-LTRO-dependent banks, with Italian regional banks to the fore.

While there is little appetite for introducing specific measures to address Italian market tensions – with Mr. Draghi repeatedly emphasising that ECB policy is governed by an area-wide perspective, and cannot be oriented to the specific needs of an individual country or region – the political hurdle to another wave of T-LTROs appears lower. T-LTROs are now firmly established as part of the ECB’s policy toolkit. This may explain why policymakers have singled out T-LTROs in recent communication.

Political economy of rolling T-LTROs. Against this background, policy choices regarding a new wave of T-LTROs can play an important role in shaping the environment facing Italy and Italian banks.

On the one hand, allowing funding tensions on Italian regional banks to build by withholding reassurance that T-LTRO funding will be renewed is a powerful lever by which the European authorities can influence the market pressure on the Italian government to change its fiscal trajectory.

On the other hand, allowing funding tensions in T-LTRO-dependent banks to become excessive or systemic could threaten broader instability across the European financial sector. In that case, not only would pressure on the Italian government be dissipated as the impact became less surgically targeted, but other more malign vulnerabilities could resurface.

The sensitive task facing the Governing Council over the coming months is how to manage the difficult trade-off between these two dynamics.

The way forward. With (i) the Italian government facing higher borrowing costs, (ii) the regulatory environment for government bank bailouts more complex since the implementation of the EC’s new bank recovery and resolution directive (BRRD), and (iii) the willingness of the Italian government to accept the conditionality implicit in an ESM bank support programme (akin to that implemented in Spain at the peak of the crisis) uncertain, we see further T-LTROs as likely.

For still weak Italian regional banks that hold Italian sovereign debt on their balance sheet, the recent and prospective market environment is likely to increase their dependency on T-LTROs.

Rather than a monetary policy or liquidity impact, such T-LTROs would essentially provide a funding backstop to contain risks to financial stability. But such actions can be justified – as in the past – as measures to preserve the transmission of monetary policy across the Euro area. The legal basis for such measures has been established.

The terms of any new T-LTROs are likely to be less favourable than for previous waves. In particular, with the ECB continuing to signal the likelihood of policy rate hikes in late 2019, which may get pushed out to 2020H1 (at least on our reading), the scope to conduct a 4-year operation on a fixed rate basis (as is currently the case for the T-LTROs) is limited. A shorter maturity and a rate indexed to the policy rate would be possible innovations. This would imply that there is less of a policy signal in the T-LTROs and that these should not be seen as part of the ECB’s forward guidance. They would also not be used, as was the case in the past, as a way to increase the ECB’s balance sheet. In this sense, the T-LTROs become more of a ‘micro’ rather than ‘macro’ tool to deal with specific funding issues for certain banks and keep the transmission mechanism of its monetary policy to Italy intact.

At the same time, we do not expect the Governing Council to announce further T-LTROs in the very near term, i.e., the coming few months, as the funding pressure on T-LTRO-dependent Italian banks remains a powerful lever to pressure the Italian government towards a fiscal stance that is more compliant with EU rules.

 

5.RUSSIAN AND MIDDLE EASTERN AFFAIRS

RUSSIA/CHINA/USA

Interesting:  in the view of both China and Russia, they apparently are under the impression that war with the USA is coming;

(courtesy Michael Snyder)

 

Russia And China Are Apparently Both Under The

Impression That War With The US Is Coming

Authored by Michael Snyder via The American Dream blog,

Could it be possible that the U.S. is heading for a major war?  If you ask most Americans that question, they will look at you like you are crazy.  For most people in this country, war with either Russia or China is not something to even be remotely concerned about.

But the Russians and the Chinese both see things very differently.  As you will see below, Russia and China both seem to be under the impression that war with the United States is coming, and they are both rapidly preparing for such a conflict.

Let’s start with Russia.  After repeatedly slapping them with sanctions, endlessly demonizing their leaders and blaming them for just about every problem that you can imagine, our relationship with Russia is about the worst that it has ever been.

And when the Trump administration announced that it was withdrawing from the Intermediate-Range Nuclear Forces Treaty, that pushed things to a new low.  In the aftermath of that announcement, Russian official Andrei Belousov boldly declared that “Russia is preparing for war”

He said: “Here recently at the meeting, the United States said that Russia is preparing for war.

Yes, Russia is preparing for war, I have confirmed it.

“We are preparing to defend our homeland, our territorial integrity, our principles, our values, our people – we are preparing for such a war.”

Here in the United States, there is very little talk of a potential war with Russia in the mainstream media, but in Russia things are very different.  Russian news outlets are constantly addressing escalating tensions with the United States, and the Russian government has been adding fuel to that fire.  For example, the Russian government recently released a video of a mock nuclear strike against their “enemies”

Russian submarines have recently carried out a mock nuclear attack against their “enemies.” The Russian government has released footage of the atomic strike and it is sparking fears that the third world war is quickly approaching.

The Russian Ministry of Defense (MoD) has published shocking videos that show a range of nuclear missile drills including a submarine carrying out a mock atomic strike. These videos are the latest in a series of escalating war-games ordered by Russian President Vladimir Putin, according toThe Express UK.

I’ll give you just one guess as to who the primary enemy in that drill was.

And what Russian President Vladimir Putin recently told the press about a potential nuclear war was extremely chilling

If any nation decides to attack Russia with nuclear weapons, it may end life on Earth; but unlike the aggressors, the Russians are sure to go to heaven, President Vladimir Putin has said.

“Any aggressor should know that retribution will be inevitable and he will be destroyed. And since we will be the victims of his aggression, we will be going to heaven as martyrs. They will simply drop dead, won’t even have time to repent,” Putin said during a session of the Valdai Club in Sochi.

Under normal circumstances, Putin would never talk like that.

But these are not normal times.

Meanwhile, Chinese President Xi Jinping is ordering his military to focus on “preparations for fighting a war”

China’s President Xi Jinping ordered the military region responsible for monitoring the South China Sea and Taiwan to “assess the situation it is facing and boost its capabilities so it can handle any emergency” as tensions continue to mount over the future of the South China Sea and Taiwan, while diplomatic relations between Washington and Beijing hit rock bottom.

The Southern Theatre Command has had to bear a “heavy military responsibility” in recent years, state broadcaster CCTV quoted Xi as saying during an inspection tour made on Thursday as part of his visit to Guangdong province.

“It’s necessary to strengthen the mission … and concentrate preparations for fighting a war,” Xi said. “We need to take all complex situations into consideration and make emergency plans accordingly. “We have to step up combat readiness exercises, joint exercises and confrontational exercises to enhance servicemen’s capabilities and preparation for war” the president-for-life added.

So who are the Chinese concerned that they may be fighting against?

Needless to say, the United States is at the top of the list

The president instructed the military to ramp-up opposition to ‘freedom of navigation’ exercises being undertaken by the US, Australia, France, the UK, Japan and others through the waterway through which arterial shipping lanes have grown since the end of World War II.

Tensions over the South China Sea have been increasing for several years, and starting a trade war with China in 2018 has certainly not helped things.

At this point, even many U.S. analysts can see the writing on the wall.  For instance, just consider what Harvard Professor Graham Allison recently told Steve LeVine

He said, if history holds, the U.S. and China appeared headed toward war.

Over the weekend, I asked him for an update — specifically whether the danger of the two going to war seems to have risen.

“Yes,” he responded. The chance of war is still less than 50%, but “is real — and much more likely than is generally recognized.”

Of course we didn’t get to this point overnight.  Tensions with Russia and China have been simmering for quite a while, and both of those nations have been rapidly modernizing their military forces.  For much more on this, please see my recent article entitled “Russia And China Are Developing Impressive New Weapons Systems As They Prepare For War Against The United States”.

Sadly, the vast majority of the U.S. population is utterly clueless about these things.

But those that are serving in the military have a much better understanding, and one recent survey found that about half of them expect the U.S. to be “drawn into a new war within the next year”…

Nearly half of all current military troops believe the United States will be drawn into a major war soon, a jarring rise in anxiety among service members worried about global instability in general and Russia and China in particular, according to a new Military Times poll of active-duty troops.

About 46 percent of troops who responded to the anonymous survey of currently serving Military Times readers said they believe the U.S. will be drawn into a new war within the next year. That’s a jarring increase from only about 5 percent who said the same thing in a similar poll conducted in September 2017.

Those numbers are jarring.

Some major stuff must be going on behind the scenes in order to go from 5 percent to 46 percent in a single year.

We truly are living in apocalyptic times, and our world seems to be getting more unstable with each passing day.

We should hope for peace, but throughout human history peace has never lasted for long.  Major global powers continue to edge closer and closer to conflict, and that is a very dangerous game to be playing.

end

Turkish lira rises to 3 month highs after the USA lifts sanctions on Turkish officials.

(courtesy zerohedge)

Lira Spikes To 3-Month Highs After US Lifts Sanctions

On Turkish Officials

Following a court’s decision to free American pastor Andrew Brunson in October, Washington has decided to lift sanctions on some Turkish officials.

Specifically, Turkey’s Minister of Justice Abdulhamit Gul and Minister of Interior Suleyman Soylu, who were sanctioned for their roles in organizations responsible for the arrest and detention of Pastor Andrew Brunson, were removed from Treasury’s sanctions list early Friday.

The Lira is rebounding further on the news…

To 3-month highs…

Of course, we are sure people will decry this move as Trump ‘promised’ there was no ‘deal’ to have Brunson released; but given the fact that the sanctions were placed because of Turkey’s decision not to release him, this seems redundant.

In response, Turkey has reciprocated and removed sanctions on two US officials – Jeff Sessions and Kirsten Nielsen.

end

Trump to Iran:

Sanctions are coming!!

President Trump Sends His Most Direct Warning To Iran Yet…

Having reportedly ‘folded’ by agreeing to let eight countries – including Japan, India and South Korea – keep buying Iranian oil after it reimposes sanctions on the OPEC producer next week, it seems President Trump wanted to show how tough he is once again.

In what can only be described as a ‘Game Of Thrones’-style tweet, the president just tweeted an image of himself with the words Sanctions Are Coming” (playing on the HBO show’s ‘Winter is Coming’ warning)…

Donald J. Trump

@realDonaldTrump

The identity of the countries getting waivers is expected to be released officially on Monday, when U.S. restrictions against oil dealings with Iran go back into effect.

“We’re quite confident moving forward that the actions that are being taken are going to help us exert maximum pressure against the Iranian regime,” deputy State Department spokesman Robert Palladino said at a briefing on Thursday.

“This leading state sponsor of terrorism is going to see revenues cut off significantly that will deprive it of its ability to fund terrorism throughout the region.”

Still, reverting back to the Game of Thrones analogy, we hope Tr7ump is not underestimating the ‘dragon’ that Iran has at its back.

end

6. GLOBAL ISSUES

end

7  OIL ISSUES

Various countries are working on waivers to import temporary Iranian oil.  This causes oil to fade in price

(courtesy zerohedge)

US Approves Waivers On Iranian Oil Imports As Supply Panic Fades

With oil prices already extending the drop from their highs as the trader “panic attack” identified by celebrated energy analyst Art Berman abates, and approaching a bear market from recent highs, a Friday morning report from Bloomberg will likely ensure that prices continue to move lower.

According to an anonymous “senior administration official”,the US will soon approve waivers for eight countries, including Japan, India and South Korea, that will allow them to continue buying Iranian crude oil even after sanctions are reimposed on Monday. China is also believed to be in talks to secure a waiver, while the other four countries weren’t identified. The waivers are part of a bargain for continued import cuts, which the administration hopes will lead to lower oil prices.  Secretary of State Mike Pompeo is expected to announce the exemptions on Friday.

Speculation that waivers could be forthcoming had been brewing for some time, and has been one of the factors driving oil prices lower in recent weeks. Pompeo has acknowledged that waivers were being considered for countries who insist that they depend on Iranian supplies,while adding that “it is our expectation that the purchases of Iranian crude oil will go to zero from every country or sanctions will be imposed.” Assuming the US does follow through with the waivers, it’s expected that they would be temporary, and the US would expect that the recipients would continue to wean themselves off Iranian crude. The administration will also reportedly ask that these countries reduce their trade in non-energy goods.

It’s believed that Turkey, another major importer of Iranian crude, may be one of the four working on an exemption, according to Turkish Energy Minister Fatih Donmez told reporters in Ankara on Friday. Iran was Ankara’s biggest source of oil last year, accounting for more than 25% of Turkey’s daily average imports of around 830,000 barrels. The identities of the recipients are expected to be released on Monday as sanctions take effect.

Oil

Despite the international outcry over Trump’s decision to withdraw from the Iran deal, the administration believes the sanctions are working. According to internal estimates, exports of Iranian crude have fallen to 1.6 million barrels a month, from 2.7 million barrels. That compares favorably to the 1.2 million barrels a month removed from the market under President Obama and the EU during the negotiations for the deal. Obama also extended waivers to 20 countries.

The administration’s decision to issue waivers to eight countries also marked a significant reduction from the Obama administration, which issued such exemptions to 20 countries over three years. During the previous round of sanctions, nations were expected to cut imports by about 20 percent during each 180-day review period to get another exemption.

And in order to ensure that oil money isn’t used by Iran to finance terrorism, the US is reportedly developing an escrow system that will ensure that Iran can only spend its oil money on food, medicine and other crucial supplies.

Countries that get waivers under the revived sanctions must pay for the oil into escrow accounts in their local currency. That means the money won’t directly go to Iran, which can only use it to buy food, medicine or other non-sanctioned goods from its crude customers. The administration sees those accounts as an important way of limiting Iranian revenue and further constraining its economy.

“It’s a virtual certainty that Western banks are not going to violate the escrow restrictions,” said Mark Dubowitz, the chief executive of the Washington-based Foundation for Defense of Democracies who has advised Pompeo. “The message they’re sending is don’t screw around with these escrow accounts and try to get cute.”

Oil prices were little-changed following reports of the waivers, though it’s possible the reaction could be delayed until Pompeo releases more details about the countries that will be granted the waivers, and the details of what the waivers will look like.

It’s also possible that, since the killing of Jamal Khashoggi has thrown a wrench in the US’s plans to enlist Saudi help to further pressure the Iranian energy industry, that the likelihood of waivers had already been priced in.

 

end

An extremely important commentary on what the collapse in the oil space is telling us.  Oil is forward thinking and it is telling us of an economic collapse

(courtesy  Jeff Snider/Alhambra Partners)

Crude’s Collapse & The ‘C’ Word: “Let’s Just Pretend This Isn’t Happening…Again”

 

Why aren’t more people talking about this? It’s a huge development and nary a peep anywhere. The mainstream media is filled with baited expectations for 3% wage growth on Payroll Friday. All eyes are on the labor market, which is a lagging indication, instead of on the oil market, which is forward looking.

As of this writing, the futures curve for WTI has expanded this current selloff. The level of alarming contango has continued to widen, in both amplitude as well as frequency, in just the past few days.

The question at the front was rhetorical. The reason everyone wishes to focus on the labor report is obvious. The wage data in particular outwardly though misleadingly conforms to the idea of an economic boom, at least in the US. The crude market isn’t just saying “wait a minute”, it completely refutes that very thing.

Furthermore, the oil curve had only been in backwardation less than a year. It flipped toward that positive economic signal, which was widely covered, exactly one year ago today.

We’ve seen this all before. The oil curve shifted to contango last on November 20, 2014. It was ignored then, too, and after catching some reluctant notice immediately dismissed as a supply glut in favor of data showing the “best jobs market in decades.” The payroll reports four years ago were just too lovely to set aside for this impossible, according to Economists, ugliness.

Guess which one proved more valuable in assessing the way the global economy was headed, US most definitely included:

Etc., etc.

That, too, was a rhetorical exercise. Expect to hear about another “supply glut”, OPEC and some such, when convention finally does address another futures curve leaning the wrong way. And then we will hear about how “unexpected” everything will be when the labor market data proves irrelevant (already being legitimately uninspiring) all over again.

Honest analysis would take the WTI futures curve, along with the yield curve and eurodollar futures curves, as the world economy and markets traversing deeper into the red (below). Here as well as overseas. 

The alarms grow louder and louder. 

END
And further echoing Snider piece, zero huge comments that the plunging oil price is due to storm clouds gathering over the global economy
(courtesy zerohedge)

Oil Prices Plunge As Storm Clouds Gather Over Global Economy

Oil declined more than 3% on Thursday, and extended those losses Friday, with ICE West Texas Intermediate (WTI) Light Sweet Crude Oil Futures probing lows not seen since April, due to weakening global demand at a time when the output from the Organization of the Petroleum Exporting Countries (OPEC), Russia, and the U.S. is rising.

Record crude production from the U.S. and Russia, along with a surge from OPEC, has once more created oversupplied conditions.

Russian, U.S. & Saudi crude oil production (data via Reuters Eikon Graphics) 

Oil prices started declining in early October on fears that global economic momentum was waning as the U.S-China trade war escalates, and a slowdown in emerging market economic data (primarily in Asia) was becoming more evident.

Global Crude Futures (data via Reuters Eikon) 

WTI has plunged 17% since its 76-handle probe in early October. Analysts told Reuters they anticipate more selling in coming sessions, noting that oil did not bounce on Thursday on weakness in the dollar, nor did it positively correlate with the rebound in equity markets.

WTI monthly futures (data via Reuters Eikon) 

Besides global growth momentum waning, another reason for downward pressure in oil could be that Washington just granted several waivers on sanctions on Tehran, allowing countries like South Korea, Japan, and India to continue to import Iranian crude (in other words, more supply).

John Kemp, Reuters Senior Market Analyst of Commodities and Energy, believes oil prices are falling as a broad range of financial and real-economy indicators show the global economy is slowing.

“The depth and duration of the slowdown is impossible to gauge at this point, whether it turns out to be simply a mild and short-lived “soft patch”, a longer but still positive “growth recession” with output falling relative to trend, or an “outright recession” with activity falling in absolute terms.

Recent declines in equity markets and softness in freight indicators may turn out to be a false alarm or a pause within an extended cycle rather than mark a cyclical turning point.

Most commentary about the economic cycle is still influenced by the last deep and wrenching recession which accompanied the global financial crisis in 2008/09.

But severe recessions have not been common since the end of the Second World War and most downturns have proved milder, which therefore seems a more likely prediction for the next cyclical slowdown.

In the United States, post-1945 recessions have tended to be short, lasting less than a year in most instances, and in some cases have seen business activity level off rather than decline,” said Kemp.

Kemp provides historical charts on the business cycle: 

Duration of U.S. business cycle (expansion) since 1858

Duration of U.S. business cycle (expansion) since 1857

Duration of U.S. business cycle (complete cycle) since 1857

If the economy is at a turning point (or a cyclical peak), the sequence of events to follow by the Trump administration would likely involve some combination of fiscal expansion, monetary easing, and or possible reduction in trade tensions. A further slowdown in global growth could send oil prices much lower, as consumption growth declines while production continues to accelerate.

It seems like today could be one of those rare points in time when macro fundamentals and technicals are possibly lining up to signal that one of the most extended bull markets ever is hitting a brick wall. As of now, watch oil prices as a proxy to global growth

8. EMERGING MARKETS

INDIA

 

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

Euro/USA 1.1448 UP .0044 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 ALL gGREEN

 

 

 

 

 

USA/JAPAN YEN 112.89  UP 0.157  (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 1.3018 UP   0.0016  (Brexit March 29/ 2017/ARTICLE 50 SIGNED/BREXIT FEES WILL BE CAPPED

USA/CAN 1.3061  DOWN .0030 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 FRIDAY morning in Europe, the Euro ROSE by 44 basis point, trading now ABOVE the important 1.08 level RISING to 1.1448; / Last night Shanghai composite CLOSED UP 59.39 POINTS OR 2.70%

 

//Hang Sang CLOSED UP 1070.35 POINTS OR 4.21% 

 

 

/AUSTRALIA CLOSED UP  0.17% /EUROPEAN BOURSES ALL GREEN

 

 

 

The NIKKEI: this FRIDAY morning CLOSED UP 556.01 POINTS OR 2.58%

 

 

 

Trading from Europe and Asia

1/EUROPE OPENED  GREEN 

 

 

 

 

 

 

 

 

2/ CHINESE BOURSES / :Hang Sang CLOSED UP 1070.35 POINTS OR 4.21% 

 

 

/SHANGHAI CLOSED UP 59.39 POINTS OR 2.70%

 

 

 

Australia BOURSE CLOSED UP 0.17%

Nikkei (Japan) CLOSED UP 556.01 POINTS OR 2.58%

 

 

 

INDIA’S SENSEX  IN THE GREEN

Gold very early morning trading: 1235.65.

silver:$14.81

Early FRIDAY morning USA 10 year bond yield: 3.16% !!! UP 0 IN POINTS from THURSDAY’S night in basis points and it is trading WELL ABOVE resistance at 2.27-2.32%. (POLICY FED ERROR)/

The 30 yr bond yield 3.39 UP 1  IN BASIS POINTS from THURSDAY night. (POLICY FED ERROR)/

USA dollar index early FRIDAY morning: 96.04 DOWN 23  CENT(S) from THURSDAY’s close.

This ends early morning numbers FRIDAY MORNING

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

 

And now your closing FRIDAY NUMBERS \1: 00 PM

 

Portuguese 10 year bond yield: 1.88% DOWN 1    in basis point(s) yield from THURSDAY/

JAPANESE BOND YIELD: +.13%  UP 1  BASIS POINTS from THURSDAY/JAPAN losing control of its yield curve/EXTREMELY VOLATILE YESTERDAY…

 

SPANISH 10 YR BOND YIELD: 1.58% UP 1 IN basis point yield from THURSDAY

ITALIAN 10 YR BOND YIELD: 3.32 DOWN 6   POINTS in basis point yield from THURSDAY/

 

 

the Italian 10 yr bond yield is trading 174 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: RISES UP TO +.44%   IN BASIS POINTS ON THE DAY//

 

END

IMPORTANT CURRENCY CLOSES FOR FRIDAY

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

Euro/USA 1.1376 DOWN .0026 or 26 basis points

 

 

USA/Japan: 113.12 UP .391 OR 39 basis points/

Great Britain/USA 1.2964 DOWN .0034( POUND DOWN 34 BASIS POINTS)

 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was FELL BY 26 BASIS POINTS  to trade at 1.1376

The Yen FELL to 113.12 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 39 basis points, trading at 1.2964/

The Canadian dollar LOST 21 basis points to 1.3111

 

 

The USA/Yuan,CNY closed DOWN AT 6.8907-  ON SHORE  (YUAN UP)

THE USA/YUAN OFFSHORE:  6.8946(  YUAN UP)

TURKISH LIRA:  5.4221

the 10 yr Japanese bond yield closed at +.13%

 

 

 

Your closing 10 yr USA bond yield UP 0 IN basis points from THURSDAY at 3.20 % //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 3.44 UP 0 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, 96.46 UP 18 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 FRIDAY: 4:00 PM 

London: CLOSED DOWN 5.83 POINTS OR 0.08%

German Dax : CLOSED UP 78,35 POINTS  OR 0.68%
Paris Cac CLOSED DOWN 21.92 POINTS OR 0.43%
Spain IBEX CLOSED UP 33.60 POINTS OR 0.38%

Italian MIB: CLOSED UP:  188,40 POINTS OR 0.40%/

 

 

WTI Oil price; 63.28 1:00 pm;

Brent Oil: 72.91 1:00 EST

USA /RUSSIAN /   ROUBLE CROSS:    66.07  THE CROSS HIGHER BY .40 ROUBLES/DOLLAR (ROUBLE LOWER by 40 BASIS PTS)

USA DOLLAR VS TURKISH LIRA:  5.4221 PER ONE USA DOLLAR.

TODAY THE GERMAN YIELD RISES +.44 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:62.97

 

BRENT:72..58

USA 10 YR BOND YIELD: 3.21%..deadly….

 

USA 30 YR BOND YIELD: 3.45%/..deadlly…

 

EURO/USA DOLLAR CROSS: 1.11395 ( DOWN 8 BASIS POINTS)

USA/JAPANESE YEN:113.20 UP .408 (YEN DOWN 41 BASIS POINTS/ .

 

USA DOLLAR INDEX: 96.47 UP 19 cent(s)/

The British pound at 5 pm: Great Britain Pound/USA: 1.2964 DOWN 34 POINTS FROM YESTERDAY

the Turkish lira close: 5.4247

the Russian rouble:  66.17 DOWN 0.50 Roubles against the uSA dollar.( DOWN 50 BASIS POINTS)

 

Canadian dollar: 1.3102 DOWN 11 BASIS pts

USA/CHINESE YUAN (CNY) : 6.8907  (ONSHORE)

USA/CHINESE YUAN(CNH):  6.8974 (OFFSHORE)

German 10 yr bond yield at 5 pm: ,0.44%

 

The Dow closed  DOWN 113.90 POINTS OR 0.45%

NASDAQ closed DOWN 77.06  points or 1.04% 4.00 PM EST


VOLATILITY INDEX:  19.61  CLOSED UP  0.27

LIBOR 3 MONTH DURATION: 2.581%  .LIBOR  RATES ARE RISING/HUGE jump today

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

TRADING IN GRAPH FORM FOR THE DAY

 

Stocks Soar On Biggest Weekly Short-Squeeze Since Election, Bonds Bloodbath

After Schocktober, November’s chaos likely left a lot of traders thinking this…

Chinese stocks saw an orgy of sudden mysterious buying pressure after Monday’s dip… (heaviest volume week since February)

 

European stocks were  higher but considerably less linearly manipulated…Everyday saw a solid open sold off…

 

US Stocks are back in the green for the year thanks to this mega squeeze…

US Markets were utter chaos on the week with plunge protection bids and short-squeezes everywhere… Small Caps and Trannies outperformed…

 

Today was all about Apple and China Trade – An initial tumble after hours (Apple) was quickly erased on Bloomberg headlines about progress in US-China trade talks. This lasted until 3 White House officials (off the record) and Larry Kudlow (on the record) confirmed no such deal progress existed, sending stocks slamming lower. Then in the last hour of the day Trump told reporters progress was being made and stocks recovered…

 

What really helped the week overall was a massive short-squeeze (an 8% surge) – the biggest since Nov 2016 (US Election)…

 

Dow made it back above it 200DMA (but failed with its 100DMA) but S&P, Nasdaq, and Small Caps all remain below the 200DMA still..

 

Obviously Apple was making all the headlines, tumbling back below a trillion dollar market cap…

 

FANG stocks rallied, breaking a four-week losing streak, but it was anything but convincing…

 

Despite VIX compression this week, the term structure remains inverted…this is the 20th day in a row…

 

As stocks tumbled during the day, bonds were also sold as it seems quant derisking remains

 

Treasury yields blew wider all week, accelerating as November started…

 

30Y took out 2018 yield highs – pushing to 3.46% – the highest since July 2014…

 

The Dollar ended the week almost unchanged after yesterday’s tumble and today’s chaotic swings…

 

But the big story was the surge in offshore yuan (and give back today)…

For some context, that 2-day spike erases a month of weakness – but we have seen this kind of manipulated squeeze a few times…

 

Cryptos ended the week practically unchanged (aside from Bitcoin Cash)…

 

Copper ripped on the China headlines, crude dumped as Iran squeeze fears abated…

 

Mirroring the dollar, Gold ended the week almost unchanged in a big V-shaped recovery

 

It seems the new Yuan peg is at 8500 per oz of gold…

 

WTI Crude crashed this week to its lowest in 7 months with a $62 handle…

 

Finally, just in case you thought October was the ‘pause that refreshes’ and encourages investors to buy the dip for another leg higher to infinity and beyond… they are already ‘all in’…

Which is not a good sign as Bloomberg reports that Ned Davis Research just went bearish on global stocks for the first time since 2009… Investors should sell stocks and buy bonds because the equity decline is only halfway done, according to Tim Hayes, the firm’s chief global investment strategist.

“In making this move on market strength, we are recognizing that the global market downtrend has not led to the levels of panic and capitulation needed to start a bottoming process,” Hayes wrote in a note late Thursday.

“We have yet to see a waterfall decline with extremely high downside volume and volatility.”

Four out of the 10 components in the firm’s model have turned bearish. If another one goes sour, Hayes said he’ll downgrade stock allocation further.

Soft survey data started to catch down to reality this week…

Tighter financial conditions still point to a considerably lower stock market…

No matter what – something changed!!

 

 

market trading

After a huge gains at the opening, the stock market plummets into the red as Apple tumbles along with that evasive trade deal..

(courtesy zerohedge)

Stocks Slammed Into Red As Apple Tumbles, Trade Deal Hopes Evaporate

After a brief bounce this morning, Apple is trading down over 7% and back below the trillion-dollar market cap level

(yes we know new shares outstanding are imminent)

This has weighed on an already weak market as hopes for a China trade deal evaporate…

Three senior administration officials now telling me there is no indication of an imminent trade deal with China. Options are always being discussed behind the scenes, but no significant progress, I’m told.

Eamon Javers

@EamonJavers

Three senior administration officials now telling me there is no indication of an imminent trade deal with China. Options are always being discussed behind the scenes, but no significant progress, I’m told.

Eamon Javers

@EamonJavers

NEW: A senior administration official tells me that the report president Trump is ready to cut a trade deal with China is not true. “There is a long way to go” on negotiations, the official said.

Yuan is also

 

After a brief bounce this morning, Apple is trading down over 7% and back below the trillion-dollar market cap level

(yes we know new shares outstanding are imminent)

This has weighed on an already weak market as hopes for a China trade deal evaporate…

Three senior administration officials now telling me there is no indication of an imminent trade deal with China. Options are always being discussed behind the scenes, but no significant progress, I’m told.

Eamon Javers

@EamonJavers

Three senior administration officials now telling me there is no indication of an imminent trade deal with China. Options are always being discussed behind the scenes, but no significant progress, I’m told.

Eamon Javers

@EamonJavers

NEW: A senior administration official tells me that the report president Trump is ready to cut a trade deal with China is not true. “There is a long way to go” on negotiations, the official said.

 

 

market data/

The phony jobs report shows payrolls surged by 250,000 smashing expectations …also wage growth soars which is what the market wants.

(courtesy zerohedge)

October Payrolls Surge By 250K, Smashing Expectations As Wage Growth Soars

With a number that many warned would be impacted by not one by two hurricanes and as such the forecast range was extremely wide, from 105K to 253K, moments ago the BLS reported that indeed consensus was way off when it announced that in October payrolls soared by 250K, just shy of the highest Wall Street estimate, and more than double last month’s downward revised 118K (down from 134K). At the same time, August was revised up from +270,000 to +286,000, offseting the upward revision in August.  After revisions, job gains have averaged 218,000 over the past 3 months.

Still, like last month, one should be careful with today’s weather-affect month: as Bloomberg economist Tim Mahedy writes, “just as economists should have avoided conclusions last month when payrolls surprised on the downside at 118k, today’s strong print of 250k should be understood in the context of payback from Hurricane Florence.’

Oddly, while the BLS reported that a whopping 198K workers were unable to work due to bad weather…

… what is curious about the number is that according to the BLS, “Hurricane Michael had no discernible effect on the national employment and unemployment estimates for October, and response rates for the two surveys were within normal ranges.”

Commenting on the weather, Bloomberg economist Yelena Shulyatyeva said that “Hurricane Michael had a significant impact on employment and hours worked in October, even though there was no discernible impact on the headline payroll print. Absences from work due to bad weather (198k) were three times higher than the average of 62k for the month in the previous 10 years. Weather-related hour curtailments (1020k) were five times above their historical average of 208k.”

Going back to the data, the unemployment rate in October remained unchanged at 3.7%, as the number of employed workers (Household Survey) soared by 600K to a record 156.562MM employed Americans, while the number unemployed rose modestly to 6.075MM from 5.964M.

One data point that will no doubt be seized upon by Trump with the midterms next week, is that Hispanic unemployment dropped to a record low (even as joblessness for black Americans rose fractionally) White and Asian unemployment are hanging in the low 3s.

The people not in the labor force shrank by nearly half a million, from 96.364MM to 95.877M. The labor force participation rate rose from 62.7% to 62.9%, well above the 62.7% consensus estimate.

That’s a big jump in the participation rate, which suggests consumer confidence will remain at a high level.

But the most important part of today’s report is that the increase in average hourly earnings jumped by 3.1%, in line with expectations and up from 2.8% in September. As we previewed overnight, this was the highest print since April 2009.

While much of this jump is due to calendar and base effects, the Fed will certainly pay attention to what it increasingly sees as an overheating economy which is drifting every further from “Goldilocks.” As a result, expect odds of more rate hikes in 2019 to jump accordingly.

Separately, the average workweek for all employees on private nonfarm payrolls increased by 0.1 hour to 34.5 hours in October, in line with expectations. In manufacturing, the workweek edged down by 0.1 hour to 40.8 hours, and overtime was unchanged at 3.5 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls, at 33.7 hours,
was unchanged over the month.

Breaking down the jobs by category, in October, job growth occurred in health care, in manufacturing, in construction, and in transportation and warehousing. However, the overall breadth of job gains was narrow, with one in six new hires going to the leisure and hospitality industry where wages are low.

  • Health care added 36,000 jobs in October. Within the industry, employment growth occurred in hospitals (+13,000) and in nursing and residential care facilities (+8,000). Employment in ambulatory health care services continued to trend up (+14,000). Over the past 12 months, health care employment grew by 323,000.
  • Employment in manufacturing increased by 32,000. Most of the increase occurred in durable goods manufacturing, with a gain in transportation equipment (+10,000). Manufacturing has added 296,000 jobs over the year, largely in durable goods industries.
  • Construction employment rose by 30,000 in October, with nearly half of the gain occurring among residential specialty trade contractors (+14,000). Over the year, construction has added 330,000 jobs.
  • Transportation and warehousing added 25,000 jobs in October. Within the industry, employment growth occurred in couriers and messengers (+8,000) and in warehousing and storage (+8,000). Over the year, employment in transportation and warehousing has increased by 184,000.
  • Employment in leisure and hospitality edged up in October (+42,000). Employment was unchanged in September, likely reflecting the impact of Hurricane Florence. The average gain for the 2 months combined (+21,000) was the same as the average monthly gain in the industry for the 12-month period prior to September.
  • Employment in professional and business services continued to trend up (+35,000). Over the year, the industry has added 516,000 jobs.
  • Employment in mining also continued to trend up over the month (+5,000). The industry has added 65,000 jobs over the year, with most of the gain in support activities for mining.

Overall, a very strong job report with hourly earnings growth now well inside the “redline”, and assuring not only a December rate hike, but – all else equal – quite a few more rate hikes in 2019.

end

Supposedly this is where the jobs went to in October: who is hiring and who is not

(courtesy zerohedge)

Where The Jobs Were In October: Who’s Hiring And Who Isn’t

After a disappointing payrolls report last month, which was downward revised to 118K jobs mostly due to a hurricane impacting hiring and resulting in a sharp drop in retail and hospitality jobs, October was the payback month with many of the jobs “lost” in September coming back and headline payrolls printing at 250K, 50,000 more than the 200K expected.

Notably, it was not just last month’s hurricane which impacted the data, but also last year’s duo of Hurricanes which negatively impacted hourly earnings in Oct 2017 as SouthBay Research notes. It was this weakness that created the “base effect” wage spike this month, resulting in the artificially high 3.1% average hourly earnings print, the highest since April 2009.

Hurricanes aside, the job market continues to grow at a blistering pace with the following key highlights of greatest impact:

  • Manufacturing has soared with +296,000 jobs added this year
  • Construction wages +4.2%, beating overall 3.1% rate (best in nearly a decade)
  • Lowest Hispanic unemployment rate ever

To be sure, much of this overheating in the US labor market is the result of Trump’s fiscal stimulus, whose impact will soon begin to fade at a rapid pace as payback time comes. Until then, however, the labor market remains especially strong  – in fact not a single major category saw a drop in employment – with the following industries especially hot right now:

  • Employment in the well-paying professional and business services increased by 35,000.
  • Health care employment rose by 36,000 as hospitals added 13,000 jobs, and employment in ambulatory health care services continued to trend up, +14,000.
  • Employment in transportation and warehousing rose by 24,000. Job gains occurred in warehousing and storage (+8,000) and in couriers and messengers (+8,000).
  • Construction employment continued to trend up in October, up +33,000.
  • Employment in manufacturing continued to trend up in September, rising +18,000
  • Employment in mining, employment in support activities for mining rose by +5,000

And visually:

Looking over the past year, the following charts from Bloomberg show the industries with the highest and lowest rates of employment growth for the prior year. The latest month’s figures are highlighted.

USA factory orders show a slowing in growth despite war spending surging

(courtesy zerohedge)

Factory Orders Growth Slows In September As War Spending Plunges

Amid significant revisions, September’s factory order growth slowed from +2.6% MoM in August to +0.7% MoM as it seems the pre-tariff surge is over…

 

Year-over-year growth in factory orders also slowed notably but remains solid…

Notably, New orders ex-transports for September rose 0.4%, and New orders ex-defense were unchanged for September after rising 1.5% in August as defense new orders plunged 14.5% MoM.

And down 9.4% YoY – the worst since Dec 2017…

It seems we’re gonna need more war…

end
Seems that our trade deficit is increasing and not decreasing as the tariffs initiated are having no effect. It grew to 54 billion dollars
(Paul Wiseman/Associated Press)
US trade gap grew to $54 billion in SeptemberBy PAUL WISEMAN –

11/2/18 8:42 AMWASHINGTON — Record imports expanded the U.S. trade deficit for the fourth straight month in September, as the politically sensitive trade deficit in goods with China hit a record.

The Commerce Department said Friday that the gap between what America sells and what it buys abroad climbed to $54 billi

on, up 1.3 percent from $53.3 billion in August and the highest level since February.

Imports climbed 1.5 percent to a record $266.6 billion, led by an influx of telecommunications equipment and clothing. Exports also rose 1.5 percent to $212.6 billion, led by increases in shipments of civilian aircraft and petroleum products.

President Donald Trump has made a priority of reducing America’s huge, persistent trade deficits. Despite his tariffs on imported steel and aluminum and on Chinese goods, the deficit so far this year is up 10.1 percent to $445.2 billion. The goods deficit with China rose by 4.3 percent in September to a record $40.2 billion.

China and other countries have counterpunched with import taxes on American products. U.S. exports of soybeans, targeted for retaliatory tariffs by China, dropped 29.4 percent in September.

Trump sees the lopsided trade numbers as a sign of U.S. economic weakness and as the result of bad trade deals and abusive practices by U.S. trading partners, especially China.

Mainstream economists view trade deficits as the result of an economic reality unlikely to yield to changes in trade policy: Americans buy more than they produce, and imports fill the gap. The strong U.S. economy also encourages Americans to buy more foreign products.

U.S. exports are also hurt by the American dollar’s role as the world’s currency. The dollar is usually in high demand because it is used in so many global transactions. That means the dollar is persistently strong, raising prices of U.S. products and putting American companies at a disadvantage in foreign markets.

In September, the U.S. ran a $23.2 billion surplus in the trade of services such as banking and tourism. But that was offset by a $77.2 billion deficit in the trade of goods such as cellphones and cars.

-END-

USA economic/general stories
Apple tumbles on weak guidance and a big iphone sales miss.  Also the company willnot provide unit sales numbers for iphone, ipad and Mac anymore and that shocked investors who punished the company by sending its value below 1 trillion dollars.
(courtesy zerohedge)

Apple Tumbles On Soft Guidance, iPhone Sales Miss; To Stop iPhone Unit Sales Data

Update: AAPL shares were already tumbling after hours on weak guidance and iPhone sales miss, when during the earnings call the stock was rocked lower when the company shocked investors with news that said it would stop providing unit sales numbers for iPhone, iPad and Mac.

While CFO Lucas Maestri “explained” on the earnings call that unit sales do not represent clear indication of a performance of the company and are less relevant, investors clearly disagreed and punished the stock, sending it back under the much discussed $1 trillion market cap.

Commenting on the Apple stopping unit sales, analyst Gene Munster said: “I was shocked, but it makes sense. Apple wants investors to focus less on iPhone units, and more on the overall Apple business (including iPhone) as a service. It’s going to take a few quarters for Apple to win investor confidence in this new way of analyzing the Apple story.”

The bigger risk for Apple is that it now relies exclusively on raising prices at a time when the global economy is said to be within 1-2 years of a recession. Meanwhile, if a big part of value is growing the ecosystem and services, the poor unit growth (and implied share loss) should be a harbinger of slowing service growth.

As another analyst notes, “Seems they are making a huge mistake taking ASP up so much.  Sure it is like doing a few lines of blow over the short term.  Feels great.  But can only do it so long.  Really is amazing their only real innovation has been to take up ASP, but some big warning signs underneath what optically looks good over short term.”

* * *

With Apple the last remaining hope to bring back some enthusiasm for the flagging FAANG/growth sector – and perhaps overall market – investors were focused on three key things that Apple would report in its earnings report today: i) whether the average selling price of its iPhone would remain above $700 (and continue rising), indicating continued demand for its top-end products; ii) whether Apple services would remain a source of continued strong growth even as iPhone unit sales appear to have plateaued in recent quarters, and iii) most importantly, Apple’s guidance for the all important holiday quarter will be to gauge the success of the new iPhones and especially the lower-priced XR model.

With that in mind, here’s what Apple reported moments ago.

In the fourth fiscal quarter, Apple sold 46.9MM iPhones, well below analyst estimates of 48.4MM with iPad unit sales of 9.8 million also missing expectations,even as it beat on the bottom and top line, reporting Q3 EPS of $2.91, vs Exp. $2.78 on revenue of $62.9BN, and also beating expectations of $61.44BN. More good news from Tim Cook: the average selling price of its iPhones soared to $793, up from $618 a year ago, and smashing analyst expectations of $729.

But the main reason why the stock is sliding in after hours trading is that Apple’s holiday quarter guidance was somewhat soft, at $89BN-$93BN, with the midpoint below the analyst estimate of $92.74BN.

A summary of key metrics from the fourth fiscal quarter:

  • Q4 EPS: 2.91BN, beating Exp. $2.78
  • Revenue: $62.9BN, beating Exp. $61.44 billion
  • iPhone sales: 46.9 million, missing Exp. 48.4 million
  • iPad sales: 9.8 million, missing Exp. 10.5 million, and down from 10.3 million a year ago
  • Mac sales: 5.3 million, beating Exp. 4.9 million, and down from 5.4 million a year ago
  • iPhone ASP: $793, up from $618, smashing Exp. $729
  • Guidance for holiday quarter revenue: $89-$93billion, with the midline below Wall Street estimates of $92.74 billion

Of the above, the last items most important according to Morgan Stanley analyst Katie Huberty, who said that: “Guidance will be the most important driver of investor sentiment as it provides the first read on iPhone XR demand.” And judging by the market’s reaction, the company’s guidance could have been better.

Looking at the income statement, net income grew 32% Y/Y, EPS rose by 40.6% even as iPhone sales were effectively flat at 0.4%.

Just like last quarter, the key driver for the strong revenue growth despite iPhone sales miss, is that ASPs came well above expectations, at $793 vs the $729 expected, and up from $618 a year ago. Meanwhile, gross profit margin came in slightly below expectations, at 38.2%, up 0.7% Y/Y but below the 38.3% expected. As shown in the chart below, the average iPhone price remained above $700 for the 4th straight quarter.

Like last quarter, iPhone unit sales year over year was essentially flat, but now that the flagship iPhone costs between $1000 and $1450, they make up for this in revenue. That’s a 29% year over year jump for Apple in the quarter.

As expected, Tim Cook was euphoric as usual:

“We’re thrilled to report another record-breaking quarter that caps a tremendous fiscal 2018, the year in which we shipped our 2 billionth iOS device, celebrated the 10th anniversary of the App Store and achieved the strongest revenue and earnings in Apple’s history,” Cook said. “We enter the holiday season with our strongest lineup of products and services ever.”

However, digging through the data revealed several red flags. First, going back to the point about peak iPhone sales which emerged first last quarter, Q4 iPhone sales were nearly the same as the fourth quarter last year despite the new flagship iPhone not launching until the holiday quarter. That, according to Bloomberg, means unit sales are flat despite there being new flagship iPhones this year and not last year. “That could be concerning to investors as well.” Meanwhile both iPad and Mac sales continues to decline, perhaps as a result of the company’s recent price hikes.

As flagged above, despite flat unit sales, the continued rise in ASPs resulted in a nearly 29% increase in iPhone revenues Y/Y, the highest in three years.

Looking ahead, look for much of the same next quarter: revenues making up for slowing unit sales growth. This fourth quarter only includes about a week of iPhone XS and XS Max sales, so we’ll get the full picture when they report Q1 2019 either in late January or early February. It’ll be the same for the Macs and iPads too, in all likelihood, which earlier this week got nice price jumps too.

Another red flag: Apple’s latest revenue prediction would represent growth of “only” 3% year over year, ending a streak of five-straight quarters of double digit percentage gains and is lower than analysts estimates which called for an expansion of 5%.

Other observations: Apple’s “Other Products” category – which includes the Apple Watch and AirPods – blew it out of the water with $4.2 billion in revenue, growing 13% from Q3 and 31% year over year, suggesting that the new Apple Watch may be enjoying a bit of a renaissance (although it is unlikely that products like the HomePod helped much).

Apple’s Service revenue jumped again, but was just shy of $10 billion, or $9.981BN to be exact, up from $9.548BN last quarter, and up 27% Y/Y (growth slowed from last quarter’s 30.8%)

As Bloomberg analyst John Butler notes, services “is getting bigger and becoming a more important contributor to revenue. Strong services growth helps cushion the volatility in iPhone sales. My concern is that services won’t continue to grow 30% quarter in, quarter out.”

In talking about services, Cook mentioned that year over year services growth would have been even higher (29%) if you exclude a one time accounting adjustment that happened in the year ago quarter. There was also a lawsuit related adjustment to services last quarter. Here’s Apple’s explanation:

Services net sales in the third quarter of 2018 included a favorable one-time item of $236 million in connection with the final resolution of various lawsuits. Services net sales in the fourth quarter of 2017 included a favorable one-time adjustment of $640 million due to a change in estimate based on the availability of additional supporting information.

* * *

Looking at the regional breakdown, there was more good news here, as sales grew Y/Y in every region around the globe. Greater China posted solid 16.4% Y/Y growth, offsetting fears of a decline in China due to tariffs or nationalistic retaliation. U.S revenues increased year over year by 19.1%, while the rest of the Asia Pacific increased by 21.9% year over year, and Europe also saw a solid 18.2% increase. Curiously, the biggest jump in Revenue came in Japan, where sales rose 33% Y/Y.

As a result of tax reform, for the fourth consecutive quarter, Apple’s cash hoard dropped, from $285BN in Q1, to $267BN in Q2, to $243.7BN as of June 30 to $237.1BN in Q4, as Apple used cash on hand to buyback stocks and fund dividends, instead of issuing more debt.

Net cash also declined, and was the lowest since Sept 2014 as it no longer has tax incentives to hoard cash offshore.

And while Tim Cook was delighted over another record quarter and said he couldn’t be more bullish about Apple’s future, the market does not share his sentiment, with the stock down over 4% after hours and near session lows, on concerns about “peak iPhones” and soggy guidance.

end
With respect to the Kavanaugh debacle, Kim Strassel of the WSJ states that it does not matter what happens  in the midterms, the Dems will not a have a candidate worthy of going against Trump save Joe Biden
(courtesy  Kim Strassel/zerohedge)

No Matter What Happens With Midterms, Democrats Still Losers After Kavanaugh Debacle: WSJ

The Wall Street Journal‘s Kim Strassel is at it again. In a Thursday Op-Ed, she describes how Democrats, over the course of six weeks, turned a “blue wave” of momentum into an absurd circus over Supreme Court nominee Brett Kavanaugh – tainting all of the 2020 Democratic presidential hopefuls except Joe Biden.

“Democrats obliterated their own breaker in the space of two weeks with the ambush of Supreme Court nominee Brett Kavanaugh,” Strassel writes, displaying some of the “vilest political tactics ever seen in Washington, with no regard for who or what they damaged or destroyed along the way.”

And despite support for insurgent Democratic candidates such as Alexandria Ocasio-Cortez and Andrew Gillum sweeping voters off their feet during primaries, Democrats have been running candidates with conservative credentials,” or “candidates who can’t run fast enough from liberal positions.”

And at the end of the day, no matter how midterms turn out – “save for Joe Biden, every current leading contender for the Democratic nomination either was a ringleader of the Kavanaugh spectacle (Sens. Cory “Spartacus” Booker and Kamala Harris) or is a progressive icon (Ms. Warren, Mr. Sanders, Kirsten Gillibrand).”

Via the Wall Street Journal: 

In a few days the U.S. will have its midterm results, and the Beltway press corps will lecture us on the lessons. Don’t expect to hear much about the one takeaway that is already obvious: that today’s preferred progressive politics—of character assassination, mob rule, intimidation and wacky policies—is an electoral bust. It is not what is winning Democrats anything. It is what is losing the party the bigger prize.

Six weeks ago, Democrats were expecting a blue wave to rival the Republican victory of 2010, when the GOP picked up 63 House seats. Everything was in their favor. History—the party in power almost always loses seats. Money—Democrats continue to outraise Republicans by staggering amounts. The opposition—some 41 GOP House members retired, most from vulnerable districts where Donald Trump’s favorability is low. Democrats were even positioned to take over the Senate, despite defending 10 Trump-state seats.

Democrats obliterated their own breaker in the space of two weeks with the ambush of Supreme Court nominee Brett Kavanaugh. The left, its protesters and its media allies demonstrated some of the vilest political tactics ever seen in Washington, with no regard for who or what they damaged or destroyed along the way—Christine Blasey Ford, committee rules, civility, Justice Kavanaugh himself, the Constitution. An uncharacteristically disgusted Sen. Lindsey Graham railed: “Boy, y’all want power. God, I hope you never get it!”

A lot of voters suddenly agreed with that sentiment. The enormous enthusiasm gap closed almost overnight as conservative voters rallied to #JobsNotMobs. Even liberal prognosticators today forecast that Republicans will keep the Senate and Democrats will manage only a narrow majority in the House, if that. It’s always possible the polls are off, or that there is a last-minute bombshell. But it remains the case that the ascendant progressive movement blew an easy victory for Democrats.

Meanwhile, to the extent Democrats are winning, it has been in large part due to party leaders’ quiet but laborious efforts to sequester that movement. Yes, talk-show hosts have made a darling of Alexandria Ocasio-Cortez, the progressive activist who defeated incumbent Rep. Joe Crowley in a New York primary. And liberal pundits are already claiming a victory by left-wing Tallahassee Mayor Andrew Gillum in Florida’s gubernatorial race will prove America aches for Medicare for All.

But on the ground, Mr. Gillum and Ms. Ocasio-Cortez are the anomalies of this cycle. The far bigger if less covered story is the extent to which Democrats have run candidates with conservative credentials, or candidates who can’t run fast enough from liberal positions.

For all the talk of the “year of the woman,” it is equally the year of the Democratic “veteran.” In battleground after battleground district, Democrats recruited former service members as their candidates: Amy McGrath in Kentucky, Richard Ojeda in West Virginia, Jason Crow in Colorado, Jared Golden in Maine, Conor Lamb in Pennsylvania, Mikie Sherrill in New Jersey, Max Rose in New York. By at least one count, more than half the veterans who’ve run in 2018 are Democrats—a huge shift, and a reason some traditionally GOP districts are competitive.

Senate races, meanwhile, have been entirely defined by the extent to which Democratic candidates have positioned themselves as “moderates.” Arizona’s Kyrsten Sinema, a self-described “Prada socialist” and onetime antiwar activist, now insists she would be an “independent” voice in favor of bipartisanship. Nevada’s Jacky Rosen was one of three House Democrats who voted in September to make the Trump individual tax cuts permanent. Missouri incumbent Claire McCaskill is running a radio ad boasting she “is not one of those crazy Democrats.” Asked on Fox News about her Senate colleagues, she took a swipe at Elizabeth Warren and Bernie Sanders.

All of this is reminiscent of 2006 and 2008, when Democrats won Congress by running moderates and then the White House by nominating a candidate who promised to unite the nation. Only after the party jerked left did the GOP win its 2010 blowout.

Will it be different this time? The moment the polls close on Tuesday, it will be wheels up for the 2020 presidential campaign. And save for Joe Biden, every current leading contender for the Democratic nomination either was a ringleader of the Kavanaugh spectacle (Sens. Cory “Spartacus” Booker and Kamala Harris) or is a progressive icon (Ms. Warren, Mr. Sanders, Kirsten Gillibrand).

If Democrats win Tuesday, it will be despite this crowd, not because of it. They’d be wise to remember that a vote to rebuke President Trump’s inflammatory politics isn’t the same as an embrace of a progressive agenda or its candidates. The Democrats’ own recent history and campaign strategy prove it.

Write to kim@wsj.com.

end
We  point out the following to you because of its importance.  By the end of October 2018, the Fed has unwound 321 billion and on an annual basis is close to the 600 billion figure that have been provided to you.  The sales of these bonds must be paid by the Treasury.  So if you add the deficit of 1.2 to 1.3 trillion (the true deficit) plus the roll off on bonds 600 billion you have 1.8 to 19 billion dollars that must be written by Treasury.  The problem is the fact that libor is rising and killing the foreign swap business.  There is nobody on the planet that can purchase or fund the usa deficits.
(courtesy zerohedge)

Fed’s Balance Sheet Shrinks The Most On Record; QE Unwind Hits $321 Billion

On Monday, when discussing the two key, opposing forces facing stocks this week, we said that while on one hand stock buybacks will make a triumphant return, as companies with $50bn of quarterly buybacks exited their blackout periods, and the total number of permitted stock repurchases jumps to $110bn by the end of next week and to $145bn the following…

… the offset of the favorable flows from corporate buybacks would be the Fed itselfas the largest Fed balance-sheet reduction-to-date ($-33.3B) would take place on Halloween.

And sure enough, one month after the Fed quantitative tightening entered its peak monthly unwind phase, during which the Fed’s balance sheet is scheduled to shrink by “up to” $30 billion in Treasuries and “up to” $20 billion in MBS a month, for a total of “up to” $50 billion a month, on October 31 the balance sheet declined by $33.8 billion  – the biggest weekly total yet – consisting of $23.8 billion in Treasuries, $8 billion in Mortgage Backed Securities, and a modest decline in various other assets.

As a result of Wednesday’s maturities, the Fed’s balance sheet has now shrunk by $321 billion to $4.140 trillion, the lowest since February 12, 2014; since October 2017, when the Fed began its QE unwind, it has now shed $321 billion, or just over 7% from its all time highs.

While MBS totals shifted around over the month, the Treasury decline took place in one day as there were no Treasury securities maturing on Oct. 15, while three security issues matured all in one day on Oct. 31, totaling $23 billion. Those were allowed to “roll off” entirely without replacement. In other words, the Treasury Department paid the Fed $23 billion for them, money which the Fed will promptly “shred”, digitally speaking.

Total October TSY maturities were $7BN below the $30BN cap, and while December sees $59N in Treasuries maturing, the Fed’s maturity cap means that roughly half of this amount will be allowed to rollover, while $29 billion worth of new Treasuries will be repurchased. Then, one month later,

One month later, in December, another $18 billion in Treasuries are scheduled to mature, and so forth as determined by the maturity schedule of the Fed’s current Treasury holdings (shown below) until such time as the Fed finally halts QT and/or launches even more QE.

Finally, for traders hoping to time the unwind of the balance sheet “to the day”, this is problematic as there are discrete steps in the process of actual liquidity extraction: as WS notes, the drains runs from the bond market through Treasury auctions and then the Treasury Department’s cash account to the Fed. Throughout the process, the timing of the drainage gets disbursed – as does the impact on the markets.

This week is a case in point: in a time when the Fed just saw the largest shrinkage of its balance sheet since the start of QT, the market soared higher, which once again begs the question: are stock buybacks a more powerful “flow” factor for risk asset prices than the Fed’s balance sheet unwind, and how much longer will this be the case

 

 

SWAMP STORIES

 

SWAMP STORIES COURTESY OF THE KING REPORT

and special thanks to Chris Powell of GATA for sending this down to us:

end

Let us close out the week as usual with this offering courtesy of Greg Hunter

(Greg Hunter/USAWatchdog)

2018 Election PSYOP, Caravan Invasion by NWO, Economic Update

By Greg Hunter On November 2, 2018 In Weekly News Wrap-Ups

By Greg Hunter’s USAWatchdog.com (WNW 359 11.2.18)

Whether it is the polls done by the mainstream media (MSM) or the phony pipe bombs with no explosives sent to prominent Democrats, this election looks like one giant PSYOP. Democrats have no platform except open borders, pro-illegal immigration, cop hating and tax raising. You simply cannot run on that. So, for the Dems, they have to lie and cheat, and that’s what they are doing.

Who is paying for the thousands in the so-called caravan making its way towards America via Mexico? The MSM would like you to think it’s just a group of people from Central America wanting a better life, but what they don’t say is that it is a well-funded and well organized threat on the southern border of the U.S. It looks like it is to cause even more negative press for Donald Trump and Republicans before the midterm elections. Is it being paid for by the New World Order globalists? The facts clearly say yes.

Is the economy getting better? Is it strong? Some say no, and they point to exploding government debt.

Join Greg Hunter as he talks about these stories and more in the Weekly News Wrap-Up.

(To Donate to USAWatchdog.com click here)

After the Interview:

Renowned geopolitical and economic cycle expert Charles Nenner will be the guest for the Early Sunday Release.

One more thing: I forgot to tell you all to go see the movie “Gosnell.” He was the mass murdering abortion doctor that murdered babies that were born alive. It was done by Christians and it was fantastic. Dean Cain is one of the stars and the action by him and others was top notch. The story is equally top notch and riveting. Please go see and support the movie “Gosnell.” You will be happy you did.

Video Link

https://usawatchdog.com/2018-election-psyop-caravan-invasion-by-nwo-economic-update/

-END-

I HOPE TO SEE YOU ON MONDAY IF ALL GOES WELL

Harvey

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One comment

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