NOV 19/GOLD CLOSED UP $2.05 TO $1224.70/SILVER IS UP 3 CENTS/COMEX REGISTERED (DEALER) GOLD VAULTS BREAK THE 4 BARRIER TO ONLY 3.995 TONNES OF GOLD AVAILABLE FOR DELIVERY/BREXIT CHAOS CONTINUES/60% OF ALL ITALIANS DISAPPROVE OF THE EU/ECB/CREDIT SPREADS ARE BLOWING UP AND THIS IS DANGEROUS!!/ALSO THE COLLAPSE OF BBB INVESTMENT GRADE BONDS IS ALSO TROUBLESOME!!

 

 

 

 

GOLD: $1224.70 UP  $2.05 (COMEX TO COMEX CLOSINGS)

Silver:   $14.43 UP 3 CENTS (COMEX TO COMEX CLOSING)

Closing access prices:

Gold :  1224.10

 

silver: $14.42

 

 

 

 

 

 

 

 

For comex gold and silver:

NOV

 

 

 

 

 

NUMBER OF NOTICES FILED TODAY FOR  NOV CONTRACT:1 NOTICE(S) FOR 100 OZ

Total number of notices filed so far for NOV:  206  for 20600 OZ  (0.6407 TONNES)

 

 

 

 

 

FOR NOVEMBER

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

0 NOTICE(S) FILED TODAY FOR

NIL OZ/

Total number of notices filed so far this month: 1407 for 7,035,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Bitcoin: OPENING MORNING TRADE  $5357: down  $327

 

Bitcoin: FINAL EVENING TRADE: $4983  down 669 

 

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 FELL BY  A SMALL 245 CONTRACTS FROM 224,864 DOWN TO  224,619  DESPITE FRIDAY’S GOOD 9 CENT RISE IN SILVER PRICING AT THE COMEX. TODAY WE ARRIVED CLOSER TO  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 STRONG SIZED NUMBER OF COMEX LONGS TRANSFERRING THEIR CONTRACTS TO LONDON THROUGH THE EFP:

EFP’S FOR NOV.  2106 EFP’S FOR DECEMBER AND 0 FOR MARCH AND ZERO FOR ALL  OTHER MONTHS  AND THEREFORE TOTAL ISSUANCE: OF 2106 CONTRACTS. WITH THE TRANSFER OF 2106 CONTRACTS, WHAT THE CME IS STATING IS THAT THERE IS NO SILVER (OR GOLD) TO BE DELIVERED UPON AT THE COMEX AS THEY MUST EXPORT THEIR OBLIGATION TO LONDON. ALSO KEEP IN MIND THAT THERE CAN BE A DELAY OF 24-48 HRS IN THE ISSUING OF EFP’S. THE 2106 EFP CONTRACTS TRANSLATES INTO 10.53 MILLION OZ  ACCOMPANYING:

1.THE 9 CENT RISE 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 7,050,000 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: 36,179 CONTRACTS (FOR 13 TRADING DAYS TOTAL 36,179 CONTRACTS) OR 180.90 MILLION OZ: (AVERAGE PER DAY: 2783 CONTRACTS OR 13.92 MILLION OZ/DAY)

TO GIVE YOU AN IDEA AS TO THE HUGE SUPPLY THIS MONTH IN SILVER:  SO FAR THIS MONTH OF NOV:  180.90 MILLION PAPER OZ HAVE MORPHED OVER TO LONDON. THIS REPRESENTS AROUND 25.85% 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:           2,606.98    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 SMALL SIZED DECREASE IN COMEX OI SILVER COMEX CONTRACTS OF 245 DESPITE THE GOOD 9 CENT RISE IN SILVER PRICING AT THE COMEX //YESTERDAY. THE CME NOTIFIED US THAT WE HAD A VERY GOOD SIZED EFP ISSUANCE OF 2106 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 GOOD SIZED: 1861 TOTAL OI CONTRACTS ON THE TWO EXCHANGES:

i.e 2106 OPEN INTEREST CONTRACTS HEADED FOR LONDON  (EFP’s) TOGETHER WITH DECREASE OF 245 OI COMEX CONTRACTS. AND ALL OF THUS DEMAND HAPPENED WITH A 9 CENT RISE IN PRICE OF SILVER  AND A CLOSING PRICE OF $14.40 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 39.05 MILLION OZ OF SILVER STANDING FOR DELIVERY, WITH HUGE DELIVERIES OF OVER 2 MILLION OZ IN OCTOBER (A NON DELIVERY MONTH) AND NOW  7.050 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: 0 NOTICE(S) FOR NIL OZ OF SILVER

IN SILVER,PRIOR TO TODAY, WE  SET THE NEW COMEX RECORD OF OPEN INTEREST AT 243,411 CONTRACTS ON APRIL 9.2018 AND AGAIN THIS HAS BEEN SET WITH A LOW PRICE OF $16.51.  

AND NOW WE RECORD FOR POSTERITY ANOTHER ALL TIME RECORD OPEN INTEREST AT THE COMEX OF 244,196 CONTRACTS ON AUGUST 22/2018 AND AGAIN WHEN THIS RECORD WAS SET, THE PRICE OF SILVER WAS $14.78 AND LOWER IN PRICE THAN PREVIOUS RECORDS.

ON THE DEMAND SIDE WE HAVE THE FOLLOWING:

  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 7.050 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 A CONSIDERABLE  SIZED 4553 CONTRACTS DOWN TO 528,149 DESPITE THE STRONG GAIN IN THE COMEX GOLD PRICE/YESTERDAY’S TRADING (A RISE IN PRICE OF $8.00).THE CME RELEASED THE DATA FOR EFP ISSUANCAND IT TOTALED A STRONG SIZED 3817 CONTRACTS:

 

 

NOVEMBER HAD EFP’S ISSUED AND, DECEMBER HAD AN ISSUANCE OF 3817 CONTACTS  AND ALL OTHER MONTHS ZERO.  The NEW COMEX OI for the gold complex rests at 528,149. ALSO REMEMBER THAT THERE WILL BE A DELAY IN THE ISSUANCE OF EFP’S.  THE BANKERS REMOVE LONG POSITIONS OF COMEX GOLD IMMEDIATELY.  THEN THEY ORCHESTRATE THEIR PRIVATE EFP DEAL WITH THE LONGS AND THAT COULD TAKE AN ADDITIONAL, 48 HRS SO WE GENERALLY DO NOT GET A MATCH WITH RESPECT TO DEPARTING COMEX LONGS AND NEW EFP LONG TRANSFERS. . EVEN THOUGH THE BANKERS ISSUED THESE MONSTROUS EFPS, THE OBLIGATION STILL RESTS WITH THE BANKERS TO SUPPLY METAL BUT IT TRANSFERS THE RISK TO A LONDON BANKER OBLIGATION AND NOT A NEW YORK COMEX OBLIGATION. LONGS RECEIVE A FIAT BONUS TOGETHER WITH A LONG LONDON FORWARD. THUS, BY THESE ACTIONS, THE BANKERS AT THE COMEX HAVE JUST STATED THAT THEY HAVE NO APPRECIABLE METAL!! THIS IS A MASSIVE FRAUD: THEY CANNOT SUPPLY ANY METAL TO OUR COMEX LONGS BUT THEY ARE QUITE WILLING TO SUPPLY MASSIVE NON BACKED GOLD (AND SILVER) PAPER KNOWING THAT THEY HAVE NO METAL TO SATISFY OUR LONGS. LONDON IS NOW SEVERELY BACKWARD IN BOTH GOLD AND SILVER  AND WE ARE WITNESSING DELAYS IN ACTUAL DELIVERIES.

IN ESSENCE WE HAVE A TINY SIZED FALL IN TOTAL CONTRACTS ON THE TWO EXCHANGES OF 736 CONTRACTS:  4553 OI CONTRACTS DECREASED AT THE COMEX AND 3817 EFP OI CONTRACTS WHICH NAVIGATED OVER TO LONDON. THUS  TOTAL OI LOSS: 736 CONTRACTS OR 73600 OZ = 2.2 TONNES. AND ALL OF THIS  DEMAND OCCURRED WITH A  RISE IN THE PRICE OF GOLD/ YESTERDAY TO THE TUNE OF $8.00.

 

 

 

 

FRIDAY, WE HAD 5938 EFP’S ISSUED.

ACCUMULATION OF EFP’S GOLD AT J.P. MORGAN’S HOUSE OF BRIBES: (EXCHANGE FOR PHYSICAL) FOR THE MONTH OF NOV : 96,390 CONTRACTS OR 9,639,000 OZ OR 299.81 TONNES (13 TRADING DAYS AND THUS AVERAGING: 74144 EFP CONTRACTS PER TRADING DAY

TO GIVE YOU AN IDEA AS TO THE HUGE SIZE OF THESE EFP TRANSFERS :  THIS MONTH IN 13 TRADING DAY IN  TONNES: 299.81 TONNES

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

THUS EFP TRANSFERS REPRESENTS 299.81/2550 x 100% TONNES =  11.75% OF GLOBAL ANNUAL PRODUCTION SO FAR IN JULY ALONE.***

ACCUMULATION OF GOLD EFP’S YEAR 2018 TO DATE:     6,506.62  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 CONSIDERABLE SIZED DECREASE IN OI AT THE COMEX OF 4553 DESPITE THE GAIN IN PRICING ($8.00) THAT GOLD UNDERTOOK FRIDAY) //.WE ALSO HAD A GOOD SIZED NUMBER OF COMEX LONG TRANSFERRING TO LONDON THROUGH THE EFP ROUTE: 3817 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 3817 EFP CONTRACTS ISSUED, WE HAD AN TINY FALL OF 736 CONTRACTS IN TOTAL OPEN INTEREST  ON THE TWO EXCHANGES:

3817 CONTRACTS MOVE TO LONDON AND 4553 CONTRACTS DECREASED AT THE COMEX. (in tonnes, the GAIN in total oi equates to 2.2 TONNES). ..AND ALL OF THIS WEAK  DEMAND OCCURRED WITH A STRONG GAIN OF $8.00 IN FRIDAY’S TRADING AT THE COMEX????.

 

 

we had: 1 notice(s) filed upon for 100 oz of gold at the comex.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD...

 

WITH GOLD UP $2.05 TODAY: / 

 

NO CHANGE IN GOLD INVENTORY AT THE GLD

 

 

 

 

 

 

 

 

 

 

 

 

/GLD INVENTORY   759.68 TONNES

Inventory rests tonight: 759.68 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 UP 3 CENTS TODAY

 

 

NO CHANGES IN SILVER INVENTORY AT THE SLV/

 

 

 

 

 

 

 

 

/INVENTORY RESTS AT 324.456 MILLION OZ.

 

 

end

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

1. Today, we had the open interest in SILVER FELL BY 245 CONTRACTS from 224.864 DOWN TO 224,619  AND MOVING A LITTLE CLOSER TO 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) 0 EFP’s for November… and

 

2106 CONTRACTS FOR DECEMBER. 0 CONTRACTS FOR MARCH AND  AND ALL OTHER MONTHS: ZERO. TOTAL EFP ISSUANCE: 2106 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 245 CONTRACTS TO THE 2106 OI TRANSFERRED TO LONDON THROUGH EFP’S,  WE OBTAIN A GOOD  NET GAIN OF 1861 OPEN INTEREST CONTRACTS.  THUS IN OUNCES, THE  GAIN ON THE TWO EXCHANGES: 9.305 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 7.050 MILLION OZ STANDING IN NOVEMBER.

 

 

RESULT: A TINY DECREASE IN SILVER OI AT THE COMEX DESPITE THE 9 CENT PRICING GAIN THAT SILVER UNDERTOOK IN PRICING// FRIDAY.BUT WE ALSO HAD ANOTHER STRONG SIZED 2106 EFP’S ISSUED TRANSFERRING COMEX LONGS OVER TO LONDON. TOGETHER WITH THE STRONG  SIZED AMOUNT OF SILVER OUNCES STANDING FOR SEPTEMBER, DEMAND FOR PHYSICAL SILVER CONTINUES TO INTENSIFY AS WE WITNESS SEVERE BACKWARDATION IN SILVER IN LONDON.

 

 

(report Harvey)

.

2.a) The Shanghai and London gold fix report

(Harvey)

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY: Bloomberg

3. ASIAN AFFAIRS

i)MONDAY MORNING/ SUNDAY NIGHT: 

SHANGHAI CLOSED UP 24.40 POINTS OR 0.91% //Hang Sang CLOSED UP 188.47 POINTS OR 0.72% //The Nikkei closed UP 140.82 OR 0.65%/ Australia’s all ordinaires CLOSED DOWN 0.63%  /Chinese yuan (ONSHORE) closed UP  at 6.9440 AS POBC RESUMES  ITS HUGE DEVALUATION  /DELEGATION COMING TO THE USA TO SEE TRUMP IN NOVEMBER /Oil DOWN to 56.40 dollars per barrel for WTI and 66.65 for Brent. Stocks in Europe OPENED MIXED//.  ONSHORE YUAN CLOSED UP AT 6.9440AGAINST THE DOLLAR. OFFSHORE YUAN CLOSED UP ON THE DOLLAR AT 6.9388: 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 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)Saturday

Pence and Xi showdown intensifies as both trade barbs on separate speeches. This crushes all hope for a trade war de escalation.

( zerohedge)

ii)Mike Pence unveils plans for a USA Australian Pacific base and that is something that China will be quite angry about:

( zerohedge)

iii)Pay close attention to this development:  always, the Chinese treasuries yielded higher than the USA treasuries and we highlighted the fact that the spreads were now getting narrower.  Now we witness that the one year rate is higher for the Chinese treasury in comparison to the USA.  Thus the yuan is falling in value and will surpass 7. to one..China will now enter a huge deflationary phase.

( zerohedge)

 

4/EUROPEAN AFFAIRS

i)Saturday

UK/EU

The UK will not be happy with this;  The EU threaten the UK access to “security database”  as Theresa May struggles to sell her “doomed” Brexit deal.

( zerohedge)

ii)ITALY

This is extremely important: We now have 60% of Italians think that the EU is bad for Italy. This will make it easier for Salvini to leave the Euro when Brussels uses their force against her.

( zerohedge)

iii)A good commentary explaining how some countries in the EU are going against Brussels

( Savitsky/Strategic Culture Foundation)

iv)Daniel discusses the next one trillion Euro timebomb, the huge non performing loans coupled with a huge fall in Co Co bonds.

a must read…
( Daniel Lacalle/Dlacalle.com)

v)Whistleblower Wilkinson, a Danske employee blows the lid of the money laundering of Deutsche bank et al.  This is a huge scandal

(courtesy zerohedge)
vi)FRANCE
Renault shares crash after its CEO arrested for corruption in France;;
(courtesy zerohedge)

vi)UK

SUNDAY

Theresa May warns that the Brexit situation could be delayed as the draft deal does not have support of parliament

(courtesy zerohedge)

vii)MONDAY/UK

There is talk that the UK will not need transition and that sent the Pound reeling increasing fears of a “damaged” exit
( zerohedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

I) ISRAEL

Tom Luongo discusses the latest development in Israel.  He explains why Netanyahu wanted a quick cease fire and what it means for the future events

( Tom Luongo)

ii)The NBC story of two days ago in which the USA is contemplating sending Gulen to Turkey placating Turkey for the Khashoggi murder is simply false.

( zerohedge)

iii)Strange events:  Trump praises Saudi Arabia even after CIA blames the Crown Prince for the Khashoggi murder
( zerohedge)

iv)After a Friday attack which killed 22 Syrian soldiers, the Government of Syria launches an attack in South east Idlib Province

( zerohedge)

 

6. GLOBAL ISSUES

Central banks have pulled the plug on the markets as global trade plummets

( Graham Summers)

7. OIL ISSUES

 

 

8 EMERGING MARKET ISSUES

 

 

 

9. PHYSICAL MARKETS

i)Another Ponzi scheme exposed in a 170 million fraud
( Miller/Salt Lake Tribune/.GATA)

ii)Thom Callandra is offering a 1 yr subscription offer of 149 dollars and half of which is donated to GATAThom offers a good report

( Thom Callandra/GATA)

iii)Gold Money creates a new jewellry business and hopes to bring this investment west from Asia

( GoldMoney/Mene/GATA)

iv)Please pay attention to what Alasdair states with respect to gold and the Chinese…

( Alasdair Macleod/Mises)

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

 

 

MARKET TRADING

Afternoon trading: Dow dumps 500 points.

ii)Market data/

 

This is forewarning that trouble is ahead: credit spreads are blowing up!!!

(courtesy zerohedge)

iii)USA ECONOMIC/GENERAL STORIES

a)This is a must view.  Fellow Torontonian Rob Kirby describes how the Dept of Defense somehow “lost” 21 trillion dollars”.  These lost dollars no doubt found a home in the USA’s  plunge protection fund and it is these funds that are keeping gold and silver in check despite the fact that many central banks and sovereigns are buying gold.  Australia is the latest country to ask for its gold back from the Bank of England.

( Greg Hunter/Rob Kirby)

b)This is something that I will be watching:  the degradation of BBB investment grade bonds as they collapse.  The total issuance is somewhere around $1 trillion dollars and the collapse of GE and the rapid fall in oil prices is certainly placing a burden on these bonds.  An implosion will certainly precipitate an global economic collapse

( zero hedge)

C) NOT AGAIN!!????  AT MERCY HOSPITAL IN CHICAGO AN ACTIVE SHOOTER IS ON THE LOOSE…

(ZEROHEDGE)

iv)SWAMP STORIES

a)The White House is going to pull Acosta’s pass again after its temporary court order expires

( zerohedge)

b)More fun and game and it is an indicator of things to come from the Democrats:  they are now suing to remove Whitaker as Acting A-G
(courtesy zerohedge)
E)SWAMP STORIES/MAJOR STORIES//THE KING REPORT

Let us head over to the comex:

 

The total gold comex open interest FELL BY A CONSIDERABLE SIZED 4553 CONTRACTS DOWN to an OI level 528,149 DESPITE THE RISE IN THE PRICE OF GOLD ($8.00 IN FRIDAY’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  GOOD SIZED COMEX TRANSFER THROUGH THE EFP ROUTE AS THESE LONGS RECEIVED A DELIVERABLE LONDON FORWARD TOGETHER WITH A FIAT BONUS., THAT IS 3817 EFP CONTRACTS WERE ISSUED:

NOV: 0 EFP’S AND DECEMBER:  3817 AND  ZERO FOR ALL OTHER MONTHS:

TOTAL EFP ISSUANCE:  3817 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 LOST THE FOLLOWING TODAY ON OUR TWO EXCHANGES:  736 TOTAL CONTRACTS IN THAT 3817 LONGS WERE TRANSFERRED AS FORWARDS TO LONDON AND WE LOST A CONSIDERABLE 3455 COMEX CONTRACTS.

NET LOSS ON THE TWO EXCHANGES: 736 contracts OR 73600 OZ OR 2.2 TONNES.

 

We are now in the non active contract month of November. For the November contract month, we have 6 notices standing so we LOST 0 contracts. We had 0 notices served YESTERDAY so we gained 0 contracts or an additional NIL oz of gold will stand for gold at the comex and these guys refused to morphed into London based forwards as well as negate receiving a fiat bonus for the trouble.

 

 

 

 

 

The next delivery month after November is the very big December contract month and here the OI FELL by 11,520 contracts  to 289,320 contracts.  January saw a FALL TO 3520 FOR A LOSS OF 277 CONTRACTS.  February gained 6535 contracts to stand at 162,630 contracts.

FOR COMPARISON TO THE 2017 CONTRACT MONTH:

ON NOV 16/2017 WE HAD 257,076 OPEN INTEREST CONTRACTS COMPARED TO THIS YEAR: 290,445.

ON FIRST DAY NOTICE DEC 1/2017: 37.035 TONNES STOOD FOR DELIVERY

EVENTUALLY BY DEC 31.2017:  28.592 TONNES STOOD AND THE REST MORPHED INTO LONDON BASED FORWARDS.

AS A REMINDER WE HAVE ONLY 4.000 TONNES OF REGISTERED GOLD READY TO SERVE UPON OUR DEC LONGS.

 

 

 

 

WE HAD 1 NOTICES FILED AT THE COMEX FOR 100 OZ.

 

 

 

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And now for the wild silver comex results.

Total silver OI FELL BY 245 CONTRACTS FROM 224,864 UP TO 224,619 (AND CLOSER 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 GOOD  OI COMEX GAIN  OCCURRED WITH A 9 CENT GAIN IN PRICING.

 

WE ARE NOW INTO THE NON ACTIVE DELIVERY MONTH OF NOVEMBER AND, WE WERE  INFORMED THAT WE HAD A  STRONG SIZED 2106 EFP CONTRACTS:  FOR NOVEMBER:  0 CONTRACTS AND FOR …

 

FOR DECEMBER: 2106 CONTRACTS, FOR MARCH 0 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: 2106.  ON A NET BASIS WE GAINED 1861 SILVER OPEN INTEREST CONTRACTS AS WE OBTAINED A  245 CONTRACT LOSS AT THE COMEX COMBINING WITH THE ADDITION OF 2106 OI CONTRACTS NAVIGATING OVER TO LONDON.

NET GAIN ON THE TWO EXCHANGES:   1861 CONTRACTS...AND ALL OF THIS  DEMAND OCCURRED WITH A 9 CENT GAIN IN PRICING// YESTERDAY

 

 

 

 

We are now in the non active delivery month of NOVEMBER and here we now have 3 notices  standing for a loss of 3 contacts.  We had 3 notices served upon yesterday so we gained 0 contracts or an additional nil oz will  stand for delivery as these longs refused to  morph into London based forwards as well as not accepting a fiat bonus for their efforts. 

 

 

 

 

After November, we have a December contract and here we LOST 7776 contracts DOWN to 124,417.  January saw a GAIN of 111 contracts up to 1251 contracts.   March, the next big delivery month after December saw a gain of 7226 contracts  up to 77,242

FOR COMPARISON TO THE COMEX 2017 CONTRACT MONTH:

ON NOV 16. 2017 WE HAD STILL  101,613 OPEN  INTEREST CONTRACTS LEFT TO BE SERVED UPON AND THIS COMPARES TO TODAY: 125.205 CONTRACTS

ON FIRST DAY NOTICE DEC 1.2017 WE HAD A RATHER LARGE: 19.47 MILLION OZ STAND FOR DELIVERY

BY THE END OF DECEMBER:  33.295 MILLION OZ AS QUEUE JUMPING WAS THE NAME OF THE GAME IN SILVER.

.

 

 

 

 

 

 

 

 

We had 0 notice(s) filed for NIL OZ for the NOV, 2018 COMEX contract for silver

 

Trading Volumes on the COMEX

 

PRELIMINARY COMEX VOLUME FOR TODAY: 215,926 contracts,

 

CONFIRMED COMEX VOL. FOR YESTERDAY:  281,786  contracts..

 

 

 

 

 

 

 

 

 

 

 

INITIAL standings for  NOV/GOLD

NOV 19-/2018.

Gold Ounces
Withdrawals from Dealers Inventory in oz nil oz
Withdrawals from Customer Inventory in oz
 643.000 oz
Scotia
20 kilobars
Deposits to the Dealer Inventory in oz NIL oz

 

Deposits to the Customer Inventory, in oz  

 

 

nil

 

oz

 

 

 

 

 

 

 

 

 

 

No of oz served (contracts) today
1 notice(s)
 100 OZ
No of oz to be served (notices)
5 contracts
(500 oz)
Total monthly oz gold served (contracts) so far this month
206 notices
20600 OZ
0.6409 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 1 kilobar transaction/
we had 1 withdrawal out of the customer account:
i )out of Scotia: 643.000 oz (20 kilobars)
total customer withdrawals:  643,000 oz
we had 0 customer deposits
total customer deposits nil oz
we had 1  adjustments..
i) Out of Manfra 197.260 oz was adjusted out of the dealer and into the customer account of Manfra and that would be a settlement of 200 oz of gold.

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 1 contract(s) of which 0 notices were stopped (received) by j.P. Morgan dealer and 0 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 (206) x 100 oz , to which we add the difference between the open interest for the front month of NOV. (6 contracts) minus the number of notices served upon today (1 x 100 oz per contract) equals 21,100 OZ OR 0.6562 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 (206 x 100 oz)  + {6)OI for the front month minus the number of notices served upon today (1x 100 oz )which equals 21100 oz standing OR 0.6562 TONNES in this NON active delivery month of NOVEMBER.

WE GAINED 0 CONTRACTS OR AN ADDITIONAL NIL WILL STAND AT THE COMEX AS THESE LONGS REFUSED TO MORPH INTO LONDON BASED FORWARDS AS WELL AS RECEIVE A FIAT BONUS. QUEUE JUMPING IN GOLD DID RETURN AS THE DEALERS QUEUE JUMPING OBTAINING GOLD AS THEY TRY AND PUT OUT FIRES ELSEWHERE.

 

 

 

 

 

THERE ARE ONLY 3.995 TONNES OF REGISTERED COMEX GOLD AVAILABLE FOR DELIVERY AGAINST 0.6562 TONNES STANDING FOR NOVEMBER  

 

 

 

total registered or dealer gold:  128,451.881 oz or   3.995tonnes
total registered and eligible (customer) gold;   8,025,418.729 oz 249.62 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. WE HAVE NOW BROKEN THE 4 TONNES BARRIER TO READ; 3.995 TONNES OF DEALER (REGISTERED) GOLD.

IN THE LAST 27 MONTHS 107 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 19, 2018
Silver Ounces
Withdrawals from Dealers Inventory NIL oz
Withdrawals from Customer Inventory
 2,000.000oz
??./
DELAWARE

 

 

Deposits to the Dealer Inventory
NIL
oz
Deposits to the Customer Inventory
287,478.478
oz
I-D
No of oz served today (contracts)
0
CONTRACT(S)
NIL OZ)
No of oz to be served (notices)
3 contracts
(15,000 oz)
Total monthly oz silver served (contracts) 1407 contracts

(7,035,000 oz)

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

 

we had 0 inventory movement at the dealer side of things

 

 

total dealer deposits: NIL oz

total dealer withdrawals: 0 oz

we had 1 deposits into the customer account

i) Into JPMorgan: nil oz

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

JPMorgan now has 151.7 million oz of  total silver inventory or 51.67% of all official comex silver. (151.7 million/293.9 million)

ii)Into  I-D:  287,478.478 OZ

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

total customer deposits today:  387,478.478 oz

we had 1 withdrawal out of the customer account:
i) Out of Delaware:  2,000.000 exactly??

 

 

 

 

 

total withdrawals: 2,000.000 oz

 

we had 0 adjustment

 

 

 

total dealer silver:  80.670 million

total dealer + customer silver:  294.508  million oz

The total number of notices filed today for the NOV 2018. contract month is represented by 0 contract(s) FOR NIL 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 1407 x 5,000 oz = 7,035,000 oz to which we add the difference between the open interest for the front month of NOV. (3) and the number of notices served upon today (0 x 5000 oz) equals the number of ounces standing.

.

Thus the INITIAL standings for silver for the NOV/2018 contract month: 1407(notices served so far)x 5000 oz + OI for front month of NOV( 3) -number of notices served upon today (0)x 5000 oz equals 7,050,000 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 0 contracts or an additional nil OZ will  stand at the comex as these longs refused to accept a London based forwards as well as negating the right to receive a fiat bonus.

 

 

 

 

 

 

 

 

 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

ESTIMATED VOLUME FOR TODAY: 74,480 CONTRACTS  … 

 

 

 

 

CONFIRMED VOLUME FOR YESTERDAY: 95,972 CONTRACTS… 

 

 

 

 

YESTERDAY’S CONFIRMED VOLUME OF 95,972CONTRACTS EQUATES to 479 million OZ  68.55% OF ANNUAL GLOBAL PRODUCTION OF SILVER

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

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

end

NPV for Sprott 

1. Sprott silver fund (PSLV): NAV FALLS TO -4.87% (NOV 19/2018)
2. Sprott gold fund (PHYS): premium to NAV RISES TO -1.49% to NAV (NOV 19/2018 )
Note: Sprott silver trust back into NEGATIVE territory at -4.87%-/Sprott physical gold trust is back into NEGATIVE/

(courtesy Sprott/GATA)

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

NAV 12.34/TRADING 11.780DISCOUNT 4.50

END

And now the Gold inventory at the GLD/

NOV 19/WITH GOLD UP $2.05: NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 759.68 TONNES

NOV 16/WITH GOLD UP $8.00: A BIG CHANGE IN GOLD INVENTORY AT THE GLD: A WITHDRAWAL OF 1.48 TONNES/INVENTORY RESTS AT 759.68 TONNES

NOV 15/WITH GOLD UP $5.35/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 761.16 TONNES

NOV 14/WITH GOLD UP $8.15: NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 761.16 TONNES

NOV 13/WITH GOLD DOWN $1.75: A HUGE DEPOSIT OF 6.77 TONNES AT THE GLD/THAT SHOULD END THE WHACKING OF GOLD FOR NOW AND A SMALL WITHDRAWAL OF 84 TONNES: INVENTORY RESTS AT 761.16 TONNES

NOV 12/WITH GOLD DOWN $4.65: NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 755.23

NOV 9/WITH GOLD DOWN $16.80: NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 755.23 TONNES

NOV 8/WITH GOLD DOWN $3.30: A WITHDRAWAL OF 1.47 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 755.23 TONNES

NOV 7/WITH GOLD UP $2.60″ NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 756.70 TONNES

NOV 6/WITH GOLD DOWN $5.80 A SMALL WITHDRAWAL OF .58 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 756.70 TONES

NOV 5/WITH GOLD DOWN $1.05 TODAY: A BIG CHANGE IN GOLD INVENTORY AT THE GLD: A WITHDRAWAL OF 1.77 TONNES OF GOLD FROM THE GLD INVENTORY/INVENTORY RESTS AT 757.29 TONNES

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

 

 

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NOV 19.2018/ Inventory rests tonight at 759.68 tonnes

*IN LAST 499 TRADING DAYS: 175.47 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 399 TRADING DAYS: A NET 15.47 TONNES HAVE NOW BEEN REMOVED FROM GLD INVENTORY.

 

end

 

Now the SLV Inventory/

NOV 19/WITH SILVER UP 3 CENTS TODAY:NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 324.456 MILLION OZ/

NOV 16/WITH SILVER UP 9 CENTS TODAY: NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 324.456 MILLION OZ/

NOV 15/WITH SILVER UP 21 CENTS TODAY: NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 324.456 MILLION OZ

NOV 14/WITH SILVER UP 10 CENTS/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 324.456 MILLION OZ

NOV 13/WITH SILVER DOWN 15 CENTS; A SMALL CHANGE IN SILVER INVENTORY AT THE SLV: A WITHDRAWAL OF 328,000 OZ FROM THE SLV/INVENTORY RESTS AT 324.456 MILLION OZ/

NOV 12/WITH SILVER DOWN 10 CENTS/ A SMALL CHANGE IN SILVER INVENTORY A THE SLV: A WITHDRAWAL OF 940,000 OZ/INVENTORY RESTS AT 324.784 MILLION OZ

NOV 9/WITH SILVER DOWN 29 CENTS: NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 325.724 MILLION OZ/

NOV 8/WITH SILVER DOWN 15 CENTS: A SMALL WITHDRAWAL OF 281,000 OZ FROM THE SLV/INVENTORY RESTS AT 325.724 MILLION OZ.

NOV 7: WITH SILVER UP 8 CENTS TODAY: NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 326.005 MILLION OZ/

NOV 6/WITH SILVER DOWN 14 CENTS: NO CHANGE IN SILVER INVENTORY/INVENTORY RESTS AT 326.005 MILLION OZ/

NOV 5/WITH SILVER DOWN 9 CENTS TODAY: ANOTHER BIG CHANGES IN SILVER INVENTORY AT THE SLV: A WITHDRAWAL OF 1.315 MILLION OZ FROM THE SLV INVENTORY/INVENTORY RESTS AT 326.005 MILLION OZ/

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.

 

 

NOV 19/2018:

 

Inventory 324.456 MILLION OZ

LIBOR SCHEDULE AND GOFO RATES:

SMALL JUMP IN LIBOR RATES TODAY./

 

 

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

YOUR DATA…..

6 Month MM GOFO 2.44/ and libor 6 month duration 2.86

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

G0LD LENDING RATE: + .42

 

 

XXXXXXXX

12 Month MM GOFO
+ 2.71%

LIBOR FOR 12 MONTH DURATION: 3.12

GOFO = LIBOR – GOLD LENDING RATE

GOLD LENDING RATE  = +.41

end

 

 

PHYSICAL GOLD/SILVER STORIES

end
i) GOLDCORE BLOG/Mark O’Byrne

Brexit’s Safe Haven Is a Dangerous Place

Gilts are on a tear as investors escape U.K. stocks and the pound. But a no-deal Brexit or a Corbyn government would soon change their status.

By Mark Gilbert  and Marcus Ashworth (via Bloomberg.com)

British investors have been fleeing their domestic stock market in droves all year, and everyone and their dog lined up to sell sterling on Thursday as the tally of resignations from Theresa May’s Brexit-plagued administration mounted. Gilts have become the haven of choice for those unable or unwilling to scrap all their U.K. exposure. But that search for safety could backfire if the political chaos brings down Prime Minister Theresa May.

The real and present danger to her and her draft Brexit agreement increases the risk of Britain crashing out of the European Union without a deal. That wouldn’t be good for anybody, including U.K. sovereign bondholders.

Because of all of the political uncertainty, British equities — particularly those lacking the buffer of big exports to cushion the blow — will no doubt continue to suffer.

Market Laggard

U.K. stocks have performed worse than their peers

Indeed, domestic investors who’ve bailed out of British stocks this year have dodged a bullet.

Love Don’t Live Here Any More
U.K. investors continue to favor overseas equity markets

While Brexit isn’t done yet, it’s already having direct economic effects, including making British consumers increasingly nervous. Retail sales fell by 0.5 percent last month, figures published on Thursday show, contradicting economists’ expectations for a gain of 0.2 percent. So it’s no surprise that the pound is suffering too against the dollar. It was nursing its biggest one-day drop in more than two years at its nadir on Thursday, leaving it looking more like an emerging-market currency.

 

News and Commentary

Gold ticks lower to $1220, though downside remains limited (FXStreet.com)

Global stocks push higher, dollar sapped by rate hike uncertainty (Reuters.com)

Asian markets quiet as U.S.-China trade tensions linger (MarketWatch.com)

Palladium zooms toward parity with gold for first time in 16 years (Reuters.com)

Labour gains three-point lead as May’s Brexit plan hits buffers (TheGuardian.com)

Gold advances as risk appetite falls on Brexit concerns (FXStreet.com)

Market Tactics For A Golden Smile (24HGold.com)

Global Silver demand likely to fall for the third consecutive year in 2018 (ScrapRegister.com)

Listen on SoundCloud , Blubrry & iTunesWatch on YouTube below

Gold Prices (LBMA AM)

16 Nov: USD 1,215.80, GBP 948.93 & EUR 1,073.07 per ounce
15 Nov: USD 1,210.60, GBP 948.26 & EUR 1,072.71 per ounce
14 Nov: USD 1,201.45, GBP 927.04 & EUR 1,066.05 per ounce
13 Nov: USD 1,197.55, GBP 928.70 & EUR 1,066.18 per ounce
12 Nov: USD 1,207.05, GBP 940.05 & EUR 1,072.34 per ounce
09 Nov: USD 1,219.05, GBP 936.96 & EUR 1,075.81 per ounce

Silver Prices (LBMA)

16 Nov: USD 14.29, GBP 11.15 & EUR 12.61 per ounce
15 Nov: USD 14.13, GBP 11.02 & EUR 12.49 per ounce
14 Nov: USD 13.97, GBP 10.80 & EUR 12.39 per ounce
13 Nov: USD 14.02, GBP 10.85 & EUR 12.46 per ounce
12 Nov: USD 14.16, GBP 11.00 & EUR 12.57 per ounce
09 Nov: USD 14.34, GBP 11.01 & EUR 12.63 per ounce


Recent Market Updates

– Gold and Silver Rise As Stocks Fall On Valuation Concerns, Italy and Brexit Risks
– Pound Falls 2.5% Against Gold as UK Government in Turmoil Over Brexit
– GoldCore Capitalising On Brexit With Dublin Gold Vault
– Store Gold In The Safest Vaults In Ireland
– Investors Set To Store Gold In Dublin Due To Brexit Risks
– Investors Start Buying Gold ETFs In October In Bullish Shift
– As Brexit Looms and Stocks Plunge In October – Now May Be The Time to Invest in Gold
– AMERICAN ELECTIONS FARCE AS POLITICIANS IGNORE THE LOOMING $121.7 TRILLION DEBT CRISIS
– Gold ETFs See Strong Demand In Volatile October After Robust Global Gold Demand In Q3
– Venezuela Seeks To Repatriate $550 Million Of Gold From London
– Big Short’s Eisman Is Shorting Two U.K. Banks on Brexit

Mark O’Byrne
Executive Director
 
 

NOV 19

ii) GATA stories
Another Ponzi scheme exposed in a 170 million fraud
(courtesy Miller/Salt Lake Tribune.GATA)

Utah coin dealer accused of fraud in $170 million

Ponzi scheme involving silver

 Section: 

By Jessica Miller
Salt Lake Tribune
Friday, November 16, 2018

A federal judge has frozen the assets of a Utah rare-coin dealer after state officials accused the business of defrauding hundreds of people in a precious-metals Ponzi scheme.

A civil complaint was filed Thursday by the Securities and Exchange Commission against Gaylen Dean Rust and his company, Rust Rare Coin Inc.

The Utah Department of Commerce said in a news release today that Rust had fraudulently obtained more than $170 million from people in Utah and 16 other states in a scheme involving silver.

The complaint alleges that for more than 10 years, Rust “tricked” investors who believed they were pooling their money so Rust and his company would sell silver held in a pool as market prices rose, and buy silver for the pool when prices fell. Investors were told this would lead to “extraordinarily high profits.”

But it was a sham, authorities say.

Rust told investors the silver was kept at a depository in Salt Lake City or Los Angeles — even though the company never purchased or stored anything of that value at those locations. And the investor money was not used to buy silver, either. …

… For the remainder of the report:

https://www.sltrib.com/news/2018/11/16/utah-rare-coin-dealer/

…end

Thom Callandra is offering a 1 yr subscription offer of 149 dollars and half of which is donated to GATA

Thom offers a good report

(courtesy Thom Callandra/GATA)

Support GATA by subscribing to The Calandra Report

 Section: 

1:51p ET Sunday, November 18, 2018

Dear Friend of GATA and Gold:

Our longtime friend the intrepid world-traveling market analyst Thom Calandra, publisher of The Calandra Report financial letter, is generously offering GATA supporters a deeply discounted one-year subscription offer in which half the price will be donated to GATA.

The regular price of a year’s subscription to The Calandra Report is $249. The discounted offer to GATA supporters is $149, of which $75 will be donated to GATA.

… 

Calandra says: “We are looking for a handful of investors and participants who care about honest, first-hand reporting and research about mining, exploration, and the royalty model — inside and outside of metals (gold, silver, platinum, copper, zinc, cobalt, nickel) — and biomedical issues and an occasional special situation.”

Samples of The Calandra Report can be viewed here:

http://thomcalandra.com

Along with GATA Chairman Bill Murphy and your secretary/treasurer, Thom spoke at the New Orleans Investment Conference this month and was interviewed there by Charlotte McLeod for the Investing News Network. The interview is headlined “Why Diversification in Commodities Is a Great Thing” and can be heard here:

https://investingnews.com/daily/resource-investing/precious-metals-inves…

The Calandra Report is a private letter and publishes actionable editions about twice weekly. Thom is readily available to his subscribers and is glad to correspond with them.

The Calandra Report started in 1999 under the umbrella of MarketWatch.com, which Thom co-founded. It has been in its current form as a private letter since 2011.

Two subscription choices with this special offer for GATA supporters are available. Both cost $149.

— A one-year, non-recurring subscription:

https://www.paypal.com/webapps/hermes?token=7MN21283VL6259608&useraction…

— And a one-year subscription that automatically renews unless you cancel:

https://www.paypal.com/cgi-bin/webscr?cmd=_s-xclick&hosted_button_id=URG…

This offer will continue through December 27. Please consider it, since The Calandra Report is always interesting and GATA really could use the help right now.

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

END

Gold Money creates a new jewellry business and hopes to bring this investment west from Asia

(courtesy GoldMoney/Mene/GATA)

GoldMoney’s Mene aims to bring monetary jewelry west from Asia

 Section: 

2:40p ET Sunday, November 18, 2018

Dear Friend of GATA and Gold:

Explaining this week why GoldMoney has gotten into the jewelry business with a new company called Mene, CEO Roy Sebag makes a point not fully recognized in the gold business in the West: that most gold jewelry owned in Asia is not for mere decoration but also for savings and investment. That is, it’s monetary jewelry.

Summarizing his travel to India and China two years ago, Sebag writes:

“What we discovered was that the concept of ‘jewelry’ in the East was vastly different than it is in the West. In the most basic sense, jewelry in the East is overwhelmingly made from either 24-karat pure (99.99 percent) or 22-karat (92 percent) gold. This stands in striking contradistinction to the way jewelry is made in the West, where I have never seen a jeweller sell an item with a purity in excess of 18 karats (75 percent), and, more often than not, the purity of the precious metal in jewelry is much lower than even that.

This means that jewelry in the East is really a vehicle for pure gold ownership, with a sophisticated economy around it, including financing, lending, and layaway firms. This economy services an estimated $2 trillion in jewelry owned by an estimated 2 billion people in China and India alone. Far-reaching and resulting from thousands of years of evolution, this decentralized jewelry economy possesses an impressive integrity.

“No matter where we traveled or which jeweler, manufacturer, or lender we visited, this pure-gold jewelry was always bought or sold using the following simple formula: [(Purity of Gold) x (Weight of Gold) x (Daily Market Value of Gold)] + 7-10 percent markup for design.

“Regardless of purchaser, this clear formula resulted in a condition wherein the consumer clearly understood that he or she was not merely buying jewelry but was truly acquiring gold.”

So Mene aims to bring monetary jewelry to the West.

Sebag doesn’t mention it, but there may be an argument for monetary jewelry quite apart from savings and investment: likely insurance against another round of confiscation of gold held in frankly monetary formats.

Sebag’s commentary is headlined “Jewelry Worth Its Weight in Gold” and it’s posted at GoldMoney’s internet site here:

https://www.goldmoney.com/research/goldmoney-insights/jewelry-worth-its-…

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

end

In an updated autobiography, Volcker continues to urge central bankers to control the price of gold

(courtesy zerohedge)

Volcker’s updated autobiography urges gold price suppression

 Section: 

11p ET Sunday, November 18, 2018

Dear Friend of GATA and Gold:

With the latest version of his autobiography, published last month, “Keeping At It — the Quest for Sound Money and Good Government” —

https://www.publicaffairsbooks.com/titles/paul-volcker/keeping-at-it/978…

— former U.S. Federal Reserve Chairman Paul A. Volcker reiterates that gold price suppression long has been a tool in the arsenal of central banks for surreptitious market rigging in defense of their currencies.

… 

Volcker acknowledged as much in the first edition of his autobiography, which seems to have been published only in serial form in the Nikkei Weekly in Japan in 2004.

Of an international currency revaluation agreement announced on February 12, 1973, Volcker wrote:

“That day the United States announced that the dollar would be devalued by 10 percent. By switching the yen to a floating exchange rate, the Japanese currency appreciated and a sufficient realignment in exchange rates was realized. Joint intervention in gold sales to prevent a steep rise in the price of gold, however, was not undertaken. That was a mistake.”

See http://www.gata.org/files/VolckerMemoirs.pdf

In his updated autobiography, Volcker writes of that 1973 currency revaluation:

“The newly agreed exchange rates and gold price ($42.22), in my view, would be highly vulnerable to renewed speculation. To convey a sense of confidence, we should be prepared to intervene collectively to stabilize the gold market: in effect to create a new gold pool. That, unfortunately, was not agreed.”

See: http://www.gata.org/files/VolckerAutoBiography2018-Page81.pdf

The “gold pool” to which Volcker referred was the London Gold Pool of the 1960s, the mechanism by which the United States and the governments of seven European allies dishoarded from their gold reserves, through the Bank of England in London, to hold the international gold price at $35 per ounce.

The London Gold Pool collapsed in March 1968, overwhelmed by offtake in the face of U.S. inflation caused by government social programs and spending on the Vietnam War:

https://en.wikipedia.org/wiki/London_Gold_Pool

In correspondence with the German financial journalist Lars Schall in 2012, Volcker defended central bank intervention against the gold price to counter “exchange rate instability at a critical point”:

http://gata.org/node/10926

Through the years GATA has discovered admissions by various other central bankers that intervention against gold is far from mere “conspiracy theory” but actually longstanding Western central bank policy. But even with Volcker’s new reiteration of that policy, will any mainstream financial news organization or even any monetary metals mining company or gold-advocating investment house try questioning central banks about their policy toward gold particularly and surreptitious intervention in markets generally?

Until that happens, the greatest power of central banks will remain not their ability to create infinite money and apply it to surreptitious interventions in markets but rather their ability to intimidate news organizations out of reporting the cosmic deception.

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

* * *

end

Bill Holter

l
Bill Holter’s latest interview


* * *

end




iii) Other Physical stories
Please pay attention to what Alasdair states with respect to gold and the Chinese…
(courtesy Alasdair Macleod/Mises)

Does China Have Enough Gold to Move Toward Hard Currency?

11/17/2018 Alasdair Macleod

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.1 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. 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.

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 monopolize 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 recognize the value of gold beyond being simply a strategic asset, and will they recognize the real reasons behind the West’s economic failures, given they have successfully embraced its economic and monetary policies?

Were the Chinese to take a turn toward hard-money policies, it is hard to see how the US could 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.

Whether China implements such a plan, 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.

https://mises.org/wire/does-china-have-enough-gold- move-toward-hard-currency

-END-

__________________________________________

 

 

 

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

i) Chinese yuan vs USA dollar/CLOSED UP TO 6.9440/HUGE DEVALUATION FOR THE PAST FOUR WEEKS RESUMES/CHINESE COMING TO USA FOR TRADE TALKS IN NOVEMBER NOW ON //OFFSHORE YUAN:  6.9388   /shanghai bourse CLOSED UP 24.40 POINTS OR 0.91%

. HANG SANG CLOSED UP 188.47 POINTS OR 0.72%

 

 

2. Nikkei closed UP 140.82 POINTS OR 0.65%

 

3. Europe stocks OPENED ALL MIXED

 

 

 

 

/USA dollar index FALLS TO 96.43/Euro RISES TO 1.1421

3b Japan 10 year bond yield: FALLS TO. +.10/ !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 113.60/ 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:: 56.40 and Brent: 66/65

3f Gold DOWN/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 +.38%/Italian 10 yr bond yield UP to 3.51% /SPAIN 10 YR BOND YIELD UP TO 1.64%…ITALIAN 10 YR BOND YIELD/GERMAN BUND: 3.13: DANGEROUS FOR THE ITALIAN BANKING SYSTEM

3j Greek 10 year bond yield RISES TO : 4.57

3k Gold at $1220.45 silver at:14.38   7 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50

3l USA vs Russian rouble; (Russian rouble UP 7/100 in roubles/dollar) 65.92

3m oil into the 56 dollar handle for WTI and 66 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 112.83DESTROYING 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 0.9971 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1384 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 +0.38%

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 3.08% early this morning. Thirty year rate at 3.34%

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

6.  TURKISH LIRA:  UP  TO 5.3178

Futures Slide After US-China APEC Clash, Apple Production Cuts

After a dramatic end to the APEC summit in Papua New Guniea which concluded in disarray, without agreement on a joint communique for the first time in its history amid the escalating rivalry between the United States and China, U.S. index futures initially traded sharply lower as investors digested signs that America-China trade tensions are set to persist, however they staged a modest rebound around the time Europe opened, and have traded mixed since amid subdued volumes as a holiday-shortened week begins in the US.

Last Friday, US stocks jumped after President Trump said that he might not impose more tariffs on Chinese goods after Beijing sent a list of measures it was willing to take to resolve trade tensions.  However, tensions between the two superpowers were clearly on display at the APEC meeting over the weekend where Vice President Mike Pence said in a blunt speech that there would be no end to U.S. tariffs on $250 billion of Chinese goods until China changed its ways.

“The comments from Trump were seen as offering a glimmer of hope that further tariff action could be held in abeyance,” said NAB’s head of FX strategy, Ray Attrill. “The exchange of barbs between Pence and Chinese President Xi Jinping in PNG on the weekend continues to suggest this is unlikely.”

US Futures were also pressured following a report by the WSJ that Apple has cut iPhone production, creating turmoil for suppliers and sending AAPL stock 1.6% lower and pressuring Nasdaq futures.

Yet while early sentiment was downbeat following the APEC fiasco, US futures staged a rebound as shares in both Europe and Asia rose while Treasuries declined, the dollar faded an initial move higher as traders focused on the Fed’s new-found concerns over the global economy, and the pound advanced amid speculation that the worst may be over for Theresa May, since the potential for a vote of no confidence in May may be losing traction: the Sun reported that 42 lawmakers have sent letters of no confidence to Graham Brady, 6 more are needed to trigger a leadership challenge

Asia took a while to warm up but made a strong finish, with the Shanghai Composite closing 0.9% and Japan’s Nikkei 0.7% higher, helping Europe start the week off strong too as a 1 percent jump in mining, tech and bank stocks helped traders shrug off last week’s Brexit woes. At the same time, stocks fell in Australia and New Zealand, where the Aussie and kiwi currencies dropped after U.S. Vice President Mike Pence attacked China at the weekend APEC summit.

Telecommunications and construction shares pushed Europe’s Stoxx 600 Index higher, along with stocks in Italy, where Deputy Premier Luigi Di Maio said the government is ready for dialog with the European Commission over the country’s budget, which however seems just more semantics as Italy refused to concede to European budget demands.

Meanwhile, in addition to confusion over trade, the outlook for U.S. interest rates was also uncertain. While Federal Reserve policymakers are still signaling rate increases ahead, they also sounded more concerned about a potential global slowdown, leading markets to suspect the tightening cycle may not have much further to run and Morgan Stanley to write that “We Sense A Shift In Tone From The Fed.”

Goldman Sachs also chimed in, saying it expected the pace of U.S. economic growth to slow toward the global average next year.  The bank now sees a broad dollar decline next year, and revised its long-standing bearish view on the Japanese yen and tipped Latin American currencies, the Swedish krona, the Canadian, Australian and New Zealand dollars and the Israeli shekel to rise.

“We see several changes to the global economic backdrop which, combined with a few negative medium-run factors, point to more downside than upside to the broad dollar in 2019,” Goldman economists said in an outlook report. Goldman’s bearish tilt will focus attention on an appearance by New York Fed President John Williams later on Monday to see if he echoes the same theme. As Reuters notes, investors have already cut odds of further hikes, with a December move now priced at 73%, down from over 90%. Futures imply rates around 2.74% for the end of next year, compared to 2.93% early this month.

As a result, yields on 10-year Treasurys declined to 3.08 percent, from a recent top of 3.25 percent while the currency market saw the dollar fade early gains while the pound rebounded from sharp losses last week as Theresa May prepared to appeal to business leaders to help deliver her Brexit deal as the premier fights almost insurmountable Parliamentary opposition.

May said on Sunday that toppling her would risk delaying Brexit as she faces the possibility of a leadership challenge from within her own party. With both pro-EU and pro-Brexit lawmakers unhappy with the draft agreement, it is not clear that she will be able to win the backing of parliament, increasing the risk that Britain will leave the EU without a deal.

Elsewhere, the Australian and New Zealand dollars held on to their declines after Mike Pence’s attack on China this weekend fueled concern Sino-U.S. trade tensions will worsen; the yen neared a month-to-date high on the risk-aversion, onshore yuan weakened for the first time in five days.

Treasuries slipped while European bonds were mixed, with core notes slipping and peripherals rising led by Italy. In the U.S., trading activity may be thinned before the Thanksgiving holiday later this week.

In commodity markets, gold found support from the drop in the dollar and held at $1,1220.19. Oil prices suffered their sixth straight week of losses last week, but climbed toward $57 a barrel in New York on Monday. Bitcoin dropped further below $6,000, at one point touching a one-year intraday low.

 

Market Snapshot

  • S&P 500 futures down 0.2% to 2,738.50
  • STOXX Europe 600 up 0.5% to 359.37
  • MXAP up 0.4% to 152.43
  • MXAPJ up 0.2% to 488.43
  • Nikkei up 0.7% to 21,821.16
  • Topix up 0.5% to 1,637.61
  • Hang Seng Index up 0.7% to 26,372.00
  • Shanghai Composite up 0.9% to 2,703.51
  • Sensex up 0.9% to 35,758.30
  • Australia S&P/ASX 200 down 0.6% to 5,693.66
  • Kospi up 0.4% to 2,100.56
  • German 10Y yield rose 2.4 bps to 0.391%
  • Euro up 0.04% to $1.1419
  • Italian 10Y yield unchanged at 3.119%
  • Spanish 10Y yield fell 0.4 bps to 1.632%
  • Brent futures up 0.4% to $67.05/bbl
  • Gold spot down 0.3% to $1,219.37
  • U.S. Dollar Index down 0.1% to 96.41

Top Overnight News from Bloomberg:

  • Theresa May will appeal to business leaders to help deliver her Brexit deal, as she fights almost insurmountable opposition in Parliament and a possible leadership challenge. You do the math: Can May get her Brexit deal through Parliament?
  • Vice President Mike Pence sharpened U.S. attacks on China during a week of summits that ended Sunday, most notably with a call for nations to avoid loans that would leave them indebted to Beijing
  • An Asia- Pacific summit ended in tumult after the U.S. and China failed to agree on language in a final statement, the latest sign that a trade war between the world’s biggest economies won’t end anytime soon
  • The European Central Bank shouldn’t rush to spell out how long it plans to reinvest proceeds from bonds maturing under its asset-purchases program, said French policy maker Francois Villeroy de Galhau
  • President Donald Trump said he wouldn’t stop acting Attorney General Matthew Whitaker if he curtails special counsel Robert Mueller’s investigation into possible collusion by Trump campaign officials with Russian interference in the 2016 presidential election
  • U.K. house asking prices fell from a year earlier for the first time since 2011, led by declines in London and among the most expensive properties.
  • President Donald Trump said Saudi Crown Prince Mohammed bin Salman has denied to him perhaps five times any role in the killing of journalist Jamal Khashoggi, and the U.S. may never know whether he was involved in the murder
  • Trump’s famously opaque business will face a bracing new reality next year when House Democrats hit it with a flurry of subpoenas for the first time
  • The European Central Bank shouldn’t rush to spell out how long it plans to reinvest proceeds from bonds maturing under its asset-purchases program, said French policy maker Francois Villeroy de Galhau
  • The European Union is hammering out the first bloc-wide rules to prevent foreign investments from threatening national security, as Chinese acquisitions foster political unease
  • Hedge funds’ wagers against West Texas Intermediate and Brent crude soared for a seventh straight week, the longest global short-selling streak in data going back to 2011

Asian equity markets began the week somewhat cautious on lingering trade concerns and after disunity at the APEC summit over the weekend which failed to agree on a joint communique for the first time in history due to US-China tensions.  ASX 200 (-0.6%) and Nikkei 225 (+0.6%) traded mixed in which nearly all of Australia’s sectors were in the red aside from miners, while Nikkei 225 was positive as participants digested mixed trade data which showed a jump in imports. Elsewhere, Hang Seng (+0.7%) and Shanghai Comp (+0.9%) were choppy amid trade-related uncertainty following the verbal jabs between US and China in which Chinese President Xi warned that countries which embraced protectionism were doomed to fail and US Vice President Pence later commented the US could more than double the tariffs imposed on Chinese goods. Finally, 10yr JGBs futures rose to match the YTD high as they tracked the recent upside in T-notes and with the BoJ also present in the market for JPY 800bln of JGBs in the belly to the short-end of the curve. APEC summit ended without an agreement on a joint communique for the first time in its history after China refused to sign amid US-China tensions, while there had been comments from Chinese President Xi Jinping that countries which embraced protectionism were “doomed to failure” and US Vice President Pence later commented that he was prepared to “more than double” the tariffs imposed on Chinese goods.

Top Asian News

  • China’s Ping An Buys Stake in German Fintech Incubator Finleap
  • Japan Bank Shares Fall Most in Month After U.S. Yields Drop
  • Asian Markets Come out of Their Torpor as Stock Gains Accelerate
  • An Accountant Stirs Debate as India Central Bank Board Meets

Major European indices are in the green, with the outperforming FTSE MIB (+1.1%) bolstered by news that Luigi Gubitosi has been appointed as the new CEO of Telecom Italia (+4.3%). The SMI (-0.2%) gave up initial gains and is lagging its peers, weighed on Swatch (-4.0%) and Richemont (-1.4%) following unfavourable price outlook for both by Bank of America Merill Lynch. Sectors are mostly all in the green, with outperformance in telecom names, while energy names are lower given pullback in oil prices in recent trade and consumer discretionary names are weighed on by Renault (-7.0%), with the company shares extending losses following reports that Nissan’s boss has been arrested in Japan regarding allegations of financial violations. Renault shares are hit given the Renault-Nissan-Mitsubishi alliance. Elsewhere, BPost (-5.7%) shares are hit following a downgrade at HSBC, while Tele2 (+1.8%), are near the top of the Stoxx 600 after being upgraded at Berenberg.

Top European News

  • Villeroy Sees No Need to Define Reinvestments Length in December
  • U.K. Housing Woes Deepen With First Asking-Price Drop Since 2011
  • EU Set to Tighten Rules on Foreign Investment to Fend Off China
  • New Telecom Italia Boss Deepens Activist Shareholder’s Clout

In FX, the Greenback has regained some composure following its downturn at the end of last week amidst soft US data and cautious if not concerned or outright dovish Fed rhetoric (Clarida conscious about contagion from slower global growth, Kaplan envisaging headwinds from rising debt and Harker opposed to a December rate hike), but the DXY remains capped below a key Fib level (96.590) and the Dollar overall is mixed vs major counterparts.

  • NZD/AUD/CAD – All on the back foot against their US peer and underperforming other G10 currencies, with the Kiwi retreating below 0.6850 and undermined by cross flows as Aud/Nzd rebounds further from recent lows towards 1.0700 and Aud/Usd holds above 0.7300 in wake of last week’s strong Aussie jobs data.
  • GBP – The Pound has derived some comfort, or is simply just relieved that the Tory uprising and challenge to UK PM May has not reached the minimum level required to trigger a no confidence vote and adding another potential spanner in the Brexit works. However, the situation remains far from stable and certain given that Parliament still has to vote on the Withdrawal Agreement and the room for further renegotiation with the EU looks limited at best ahead of Sunday’s Summit and more meetings planned in the run up to try and sound out whether there is scope to tweak elements of the draft. Cable has tested and marginally breached last Friday’s peak at 1.2877, but far from convincingly amidst supply ahead of 1.2900, and with the 21 DMA also representing formidable tech resistance just above the big figure (1.2918-20). Meanwhile, Eur/Gbp has not pulled back too far below 0.8900, as the single currency holds firm in its own right.
  • EM – The Rand has made an encouraging start to the week, with a break through 14.0000 vs the Usd exposing recent peaks and momentum to re-test 13.8700 ahead of 13.6000 (50% Fib).

In commodities, Brent (+0.5%) and WTI (+0.1%) are in positive territory, albeit off highs, following market expectations that Saudi Arabia will steer OPEC and Russia to cut oil supply. Meanwhile, Russian Energy Minister Novak said the country is planning to sign an output agreement with OPEC at their December 6th meeting in Vienna. Overnight gains in the complex were driven by reports that Saudi is said to want oil prices around USD 80.00/bbl. Elsewhere, Iranian President Rouhani emerged on state TV and stated that the US has failed to reduce Iran’s oil exports to zero and Iran will continue to sell their crude. Conversely, Gold (-0.2%) prices fell this morning, with traders citing profit taking from last week’s gains, while Palladium is nearing parity with gold as an all-time high of USD 1185.4/oz was hit on Friday. Separately, copper is lower following tension between the US and China at the APEC summit which ended without an agreement on a joint communique for the first time in its history.

It’s a fairly quiet start to the week on Monday with the only data of note being the Euro Area and the November NAHB housing market index reading in the US. Away from that, the Fed’s Williams is due to speak in the afternoon, while BoJ Governor Kuroda, Bank of France Governor Villeroy de Galhau and his predecessor, Noyer, will all speak at the Europlace Financial Forum. Euro Area finance ministers are also due to gather in Brussels to seek to make progress on Franco-German plans to shore up the currency union.

US Event Calendar

  • 10am: NAHB Housing Market Index, est. 67, prior 68
  • 10:45am: Fed’s Williams Speaks in Moderated Q&A in the Bronx

DB’s Jim Reid concludes the overnight wrap

Brexit was left in a bit of phoney war this weekend. We’re no closer to a leadership contest for Mrs May but it could still happen at any point. The Sun -citing their “extensive investigation” – has concluded that 42 lawmakers have sent letters of no-confidence in the PM (48 needed). Overall though more Conservative MPs are disliking the deal – and will vote against it – than will ask for a leadership battle in our opinion. The consensus that is forming amongst the Conservative MPs who dislike the Withdrawal Agreement is that it can be improved upon. This time next week we will have just had the Sunday EU summit to sign off their side of the deal but its not clear how meaningful tweaks could be made before this and before the agreement goes before UK Parliament in the next 2-3 weeks. The only thing that could be fleshed out is more on the future relationship between the UK and Europe as Mrs May travels to Brussels this week to try to progress on this. That might appease some MPs but likely not enough to  help the vote pass. As such my personal view is that May stays on as leader, the EU offer no concession, the vote doesn’t get through Parliament and then the fun and games start. The UK may go back to Europe and ask for specific concessions at this point or we may end up with a path towards a hard Brexit or a second referendum. Quite binary options. For the EU maybe the gamble is to offer nothing and assume the UK Parliament eventually offers a second referendum and voters eventually decide to stay. This increases the risk of a cliff-edge hard Brexit but also one where no Brexit happens at all. This story has a lot of legs left in it.

There was lots in the press this weekend about Brexit but interestingly for me as a credit strategist by day, there was also a fair bit of negative press about credit with some of the more sensational articles suggesting that credit could soon blow up financial markets due to (amongst other things) the weight of US BBBs about to swamp the HY market, record levels of Cov-lite issuance and due to record high US corporate leverage. For us there needs to some perspective. We have been on the underweight side of credit all year, more weighted to a US underweight of late but that’s been more of a valuation play than over too much concerns about immediate credit quality. The US economy remains strong and credit deterioration is likely to remain idiosyncratic until it rolls over. At that point we will have big problems though and last week’s activity made us more confident liquidity will be bad when the cycle turns as we moved a fairly large amount on nervousness as much as anything else. GE, PG&E, plunging oil and the factors discussed above provided a jolt but we don’t think this is enough for now to impact the economy so credit will probably stabilise. However once there is actual broad economic weakness, this last week will be a dress rehearsal for the problems ahead and there will be little two-way activity with spreads gapping wider. However that’s for further down the cycle. For now credit’s main problem
has been it hadn’t responded enough to the pick up in vol. The good news is that this is starting to catch-up and correct. Last week, EU non-fin. IG spread widened by 13bps and HY by 45bps while those on US IG by 14bps and HY by 49bps. Big moves relative to a small down week in equities.

Looking ahead to the highlights for this week, I’d imagine if you’re in the US this will revolve around family, friends and perhaps Turkey as you sit down for Thanksgiving on Thursday. Outside of that we get the flash PMIs around the globe on Friday which in a period of nervousness about the global growth outlook will be scrutinised in thin post holiday trading. Black Friday will also mark the start of Xmas shopping season for retailers. Also worth noting is the European Commission’s opinions on the budget plans of the Euro Area countries on Wednesday. While the EC formally has three weeks to provide an opinion on Italy’s new fiscal plan following their budget resubmission last week, it’s possible that they will issue this for Italy alongside this and thus kick starting the EDP process.

This morning in Asia, markets have kicked off the week on a positive note with the Nikkei (+0.48%), Hang Seng (+0.40%) and Shanghai Comp (+0.22%) all up along with most Asian markets. Elsewhere, futures on S&P 500 (-0.33%) are pointing towards a weaker start. In terms of overnight data releases, the UK Rightmove house prices index fell -0.2% yoy (-1.7% mom), first dip since 2011, led by declines in London (-2.4% yoy). Japan’s October adjusted trade balance stood at –JPY 302.7bn (vs. –JPY 48.3bn) as growth in imports (+19.9% yoy vs. +14.1% yoy expected) outpaced the growth in exports (+8.2% yoy vs. +8.9% yoy expected).

In other news, the US Vice President Pence delivered some sharp rhetoric on China over the weekend where he called upon countries to avoid taking debt from China as that would leave them indebted to China. He also added that the US wasn’t in a rush to end the trade war and would “not change course until China changes its ways.” Elsewhere, the APEC summit ended in disarray on Sunday after the US and China failed to agree on a joint statement, reflecting tensions due to the ongoing trade war. This is the first time since the summit began in 1993 that no joint statement was issued.

Looking back briefly now to last week before we focus on the full day-byday week ahead. Friday was an eventful day for market-moving rhetoric from policymakers, highlighted by Fed Vice Chair Clarida and President Trump. First, the dollar shed -0.52% after Clarida discussed the global economy and said there “is some evidence it’s slowing.” Two-year treasury yields rallied -3.8bps (-11.0bps on the week) and the market removed 6bps of Fed hikes through the end of next year (priced out a total of 16bps on the week). This came despite Clarida’s other remarks, which emphasised the strong US economy and his support for moving policy to a “neutral” level, consistent with the FOMC’s projections. Later in the session, Chicago Fed President Evans said that he too wants to move policy to neutral, and then another 50bps or so beyond that level.

Later on Friday, President Trump injected optimism on the trade policy front by telling reporters that China wants to make a deal and that he may not institute further tariffs. China has apparently offered a list of potential concessions, which could prove to be the basis of a trade deal at the 30 November G20 summit. Even though unnamed White House sources subsequently tried to soften expectations, the market rallied with the S&P 500 up +0.22% (-1.31% on the week). The DOW and Russell 2000 closed -2.22% and -1.42% on the week, though they both rallied on the President’s comments as well (+0.22% and +0.49% on Friday, respectively). After Pence’s weekend comments we should probably discount some of the above optimism.

Other markets were already closed when President Trump’s comments boosted sentiment. The STOXX 600 closed the week -2.20% (-0.20% on Friday), while UK equities outperformed marginally, with the FTSE 100 shedding only -1.29% on the week (-0.34% Friday). This reflected the weaker pound, which retreated -1.13% versus the dollar (+0.41% Friday) and -1.83% versus the euro (its worst such week since July 2017, and -0.38% on Friday). Asian equities were mixed, with the Shanghai Composite advancing +3.09% (+0.41% Friday) on trade optimism and the Nikkei down -2.56% (-0.57% Friday). German Bunds rallied -4.0bps last week, while peripheral spreads widened slightly with Italy leading the way. BTPs sold off +8.8bps (flat on Friday) as the government  continued to escalate its confrontation with the European Commission.

It’s a fairly quiet start to the week on Monday with the only data of note being September construction output data for the Euro Area and the November NAHB housing market index reading in the US. Away from that, the Fed’s Williams is due to speak in the afternoon, while BoJ Governor Kuroda, Bank of France Governor Villeroy de Galhau and his predecessor, Noyer, will all speak at the Europlace Financial Forum. Euro Area finance ministers are also due to gather in Brussels to seek to make progress on Franco-German plans to shore up the currency union.

 

 

 

3. ASIAN AFFAIRS

i)MONDAY MORNING/ SUNDAY NIGHT: 

SHANGHAI CLOSED UP 24.40 POINTS OR 0.91% //Hang Sang CLOSED UP 188.47 POINTS OR 0.72% //The Nikkei closed UP 140.82 OR 0.65%/ Australia’s all ordinaires CLOSED DOWN 0.63%  /Chinese yuan (ONSHORE) closed UP  at 6.9440 AS POBC RESUMES  ITS HUGE DEVALUATION  /DELEGATION COMING TO THE USA TO SEE TRUMP IN NOVEMBER /Oil DOWN to 56.40 dollars per barrel for WTI and 66.65 for Brent. Stocks in Europe OPENED MIXED//.  ONSHORE YUAN CLOSED UP AT 6.9440AGAINST THE DOLLAR. OFFSHORE YUAN CLOSED UP ON THE DOLLAR AT 6.9388: 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 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

Saturday

Pence and Xi showdown intensifies as both trade barbs on separate speeches. This crushes all hope for a trade war de escalation.

(courtesy zerohedge)

 

Pence, Xi Showdown Crushes Hopes For Trade War De-escalation

For two consecutive days US stocks surged on renewed hopes that trade tensions between the US and China may be thawing ahead of the upcoming G-20 meeting between presidents Trump and Xi, when first an FT suggested that USTR Lighthizer had said no further tariff raises would be forthcoming (the report has since been denied), and subsequently when Trump himself told reporters on Friday he may not impose more tariffs after China sent the United States a list of measures it was willing to take to resolve trade tensions.

Unfortunately for markets, and bulls such as JPM’s Marko Kolanovic who saw last week’s traces of trade de-escalation as a reason to quadruple-down on his recommendation to buy stocksany hopes of an imminent trade war end or even ceasefire came crashing down overnight when Vice President Mike Pence traded sharp barbs with Chinese leader Xi Jinping in back-to-back speeches at the Asia Pacific Economic Co-operation (APEC) summit in Papua New Guinea, which confirmed yet again that neither country is willing to compromise in the escalating trade war.

Xi received applause Saturday when he told the Asia-Pacific Economic Cooperation summit in Papua New Guinea that implementing tariffs and breaking up supply chains was “short-sighted” and “doomed to failure.” According to Bloomberg, Xi called for a stronger World Trade Organization and defended his signature Belt-and-Road Initiative, saying it’s “not a trap as some people have labeled it.”

Speaking moments later, vice president Pence – who in recent weeks has been pushing an aggressive anti-China agenda – threw down the gauntlet to China on trade and security in the region, saying the US will not back down from its trade dispute with China, and might even double its tariffs, unless Beijing bows to U.S. demands: “we have taken decisive action to address our imbalance with China,” adding that “we put tariffs on $250 billion in Chinese goods, and we could more than double that number.”

“We’re in a very strong position,’’ Pence said when asked whether there was a deadline to end the trade war. “The American people know that we have to do something to reset this relationship with China economically. So, I don’t think there’s a timetable.”

Pence told delegates the U.S. offers countries in the region “a better option’’ for economic and diplomatic relations than Beijing’s heavy-handed approach.

In a pun on words on China’s “One Belt, One Road” initiative, Pence warned against taking Chinese loans, saying the U.S. “doesn’t drown our partners in a sea of debt” nor offer “a constricting belt or a one-way road.”

Embedded video

Vice President Mike Pence

@VP

The United States deals openly and fairly – and we don’t offer a constricting belt or a one-way road. When you partner with us, we partner with you, and we all prosper. #APEC2018

Technically he is right: the World Bank does that, and then the US-led IMF comes in to “bail them out” at terms that are preferential only to the creditors (see Greece, or any other nation “saved” by the IMF).

Embedded video

Vice President Mike Pence

@VP

Do not accept foreign debt that could compromise your sovereignty. Protect your interests. Preserve your independence. And just like America, always put your country first. #APEC2018

“China has taken advantage of the United States for many years. Those days are over,” he told delegates gathered on a cruise liner docked in Port Moresby’s Fairfax Harbour.

He also took aim at China’s territorial ambitions in the Pacific and, particularly, Xi’s Belt and Road Initiative to expand land and sea links between Asia, Africa and Europe with billions of dollars in infrastructure investment. “We don’t offer constricting belts or a one-way road,” said Pence.

And then came the punchline: “The United States, though, will not change course until China changes its ways.” Later, Pence told reporters he was “very hopeful” the U.S. and China could reach a deal, but “things have to change” for that to happen.

Tensions between the two nations are likely to deteriorate even more after the US took aim at China’s territorial ambitions. While not referring directly to Chinese claims over various disputed waters in the region, Pence said the United States would work to help protect maritime rights and said that the US seeks to establish a military base in Papua New Guinea, aka China’s back yard.

“We will continue to fly and sail where ever international law allows and our interests demand. Harassment will only strengthen our resolve.”

Meanwhile, Xi gave no indication of giving in on any U.S. demands, including an end to technology transfer, support for state-run enterprises, and giving up on its Made in China 2025 plan to lead the world in key industries. He said intellectual property rights are important to protect innovation but they shouldn’t widen the digital gap between countries.

In a further provocation to the Trump Admin, Xi also made a veiled reference to a new grouping known as “the Quad” that aims to counter China’s influence in the Asia-Pacific. Consisting of the U.S., Japan, India and Australia, the group met in Singapore for the third time this week to discuss ways to cooperate. “Attempts to form exclusive blocs or impose one’s will on others should be rejected,” Xi said. “History has shown that confrontation, whether in the form of a cold war, a hot war or a trade war, will produce no winners.”

Finally, Xi said talks would only work if both sides treated each other with respect: “If countries can only treat each other equally and understand each other,” he said, “there will be no issues that can’t be settled by negotiation.”

The only problem is that there has been virtually no mutual response, no compromises and no true negotiation.

Pence’s Saturday warning contrasted with remarks made by Trump on Friday, which were interpreted by the market as a tentative olive branch to China and a step to defuse tensions.  Trump, who did not attend the APEC meeting and is due to meet Chinese President Xi Jinping at a G-20 summit in Argentina – told reporters Friday that the Chinese response to U.S. trade demands was largely complete but was missing four or five big issues. Those comments helped U.S. stocks erase losses, and sent the Dow Jones surging 200 points higher.

The bottom line: since there was no hint of a compromise from either Pence or Xi – in fact, quite the opposite as both sides retrench – any hopes for a thaw in relations were summarily crushed. And, as Reuters warns, Pence’s stark warnings will “be unwelcome news to financial markets which had hoped for a thaw in the Sino-U.S. dispute and perhaps even some sort of deal at a G20 meeting later this month in Argentina.”

end

Mike Pence unveils plans for a USA Australian Pacific base and that is something that China will be quite angry about:

(courtesy zerohedge)

 

Pence Unveils Plan For US-Australian Pacific Base, Spiking Tensions With China

Amid the United States maintaining nearly 800 military bases in more than 70 countries and territories abroad, what’s one more base in the South Pacific?

At a moment when China is also reported to be eyeing deep water development around Papua New Guinea’s Manus Island, the United States and Australia have announced plans to build a joint naval base there.

VP Mike Pence and Australian Prime Minister Scott Morrison both addressed APEC on Saturday, via ABCVice President Mike Pence unveiled the plan on Saturday at a Asia-Pacific forum hosted by Papua New Guinea (PNG) where world leaders discussed trade and accessibility of international waters at a time when China is growing more brazen in laying claim to sea and air space in the South China Sea. The push comes as regional powers compete to firm up alliances and maintain access to key infrastructure ensuring open navigation and ease of unimpeded trade routes.

Announcing the US-Australian military base, VP Pence said, “We will work with these nations to protect the sovereignty and maritime rights of Pacific islands as well.” In what appeared a passing shot at China, Pence continued, “And you can be confident, the U.S. will continue to uphold the freedom of the seas and the skies.”

Though Australian Prime Minister Scott Morrison first discussed his country would fund a development of a base on Manus Island in partnership with the PNG government on November 1st, this is the first time the White House has formally announced the US role in its establishment.

Longtime close US ally Australia has in recent years felt China begin to compete for influence in the Pacific, ending Australia’s previously unrivaled influence in the region. China’s growing Pacific presence also has huge implications for the United States, as Reuterssummarizes:

Analysts say a Chinese presence on Manus Island could impact the West’s ability to navigate the Pacific while offering Beijing close access to U.S. bases in Guam.

Manus Island was a major U.S. naval base during the Second World War, playing a key role in Washington’s Pacific strategy. Recently, it has hosted one of Australia’s two controversial offshore immigration detention centers.

Residents of Manus Island, which has a population of about 50,000, are said to be angry that no representatives of either the US or Aussie governments have consulted them, and have often been at odds with decisions of the central PNG government — something the island’s Governor, Charlie Benjamin, told reporters.

Much of the PNG’s entire navy is made up of patrol boats and landing craft supplied by Australia — a relationship cultivated over the decades given Papua New Guinea’s geographic closeness to the Australian continent.

Meanwhile assuming that Beijing perceives that the new US Pacific base is part of a broader trend of American military ships and aircraft being more active in China’s perceived backyard, this could only heighten potential aggression during future “intercept” incidents in the area of the South China Sea as it continues to lay claim to what the rest of the world recognizes as international waters.

Chinese President Xi Jinping had addressed the same forum just before the US Vice President, saying in response to White House accusations of Beijing using debt-trap diplomacy:

No-one has the power to stop people from seeking a better life. We should strengthen development cooperation.

And the Chinese president warned further against ramping up the trade war as well as potential military escalation, saying, “hot, cold or trade [war]” could spell catastrophe. “Mankind has once against reached a crossroad,” he said. “Which direction should we choose? Cooperation or confrontation, openness or closing one’s door?”

end
Pay close attention to this development:  always, the Chinese treasuries yielded higher than the USA treasuries and we highlighted the fact that the spreads were now getting narrower.  Now we witness that the one year rate is higher for the Chinese treasury in comparison to the USA.  Thus the yuan is falling in value and will surpass 7. to one..China will now enter a huge deflationary phase.
(courtesy zerohedge)

For The First Time In Decades, 1 Year Treasuries Yield More Than Chinese Debt

Over the weekend, we noted something unexpected: the yield differential between Chinese and US 10Y Yields had collapsed in the past month, dropping to under 30bps, the lowest level in years, as the market appeared to telegraph that China would not only be unlikely to spur inflation, but more concerningly, succumb to deflation.

zerohedge@zerohedge

Chinese 10Y yielding just 29bps more than US 10Y Treasury: market saying China deflation coming

57 people are talking about this

However, while there is still time before Chinese 10Y paper yields less than its US equivalent, a look at closer maturities reveals that for the first time in decades, one-year Treasuries yield more than short-term Chinese debt, which BMO Capital Markets said would spell further trouble for China’s currency.

The recent sharp drop in 12-month Treasury bills, the result of the Fed’s push to hike rates despite concerns about the slowing US economy, has sent 1 Year yields to 2.66%, rising above the 2.56% yield on matched-maturity Chinese securities for the first time since at least 2008. Putting this dramatic move in context, at the start of 2018, the Chinese 1 Year government paper yielded about 200bps more than the T-bills.

“For the first time in decades, a 12-month Treasury bill has a higher yield than one-year Chinese debt,” BMO rates strategist Jon Hill wrote in a Monday note, echoing what we said a few weeks ago, namely that the collapse in the rate differential “should put further depreciation pressure on the renminbi which would serve as a disinflationary force domestically, and help to offset the taxes on imports.”

Meanwhile, the divergence of monetary policy between the tightening Federal and the easing PBOC means the gap is likely to keep growing, leaving the yuan increasingly vulnerable.

In addition to indicating that the market is increasingly concerned about the stability of China’s economy, the slumping yields and resulting yuan devaluation – which will almost certainly push the yuan below the critical “redline” level of 7.00 against the dollar – it will also further infuriate the Trump administration.

As the trade war between the US and China escalates, the offshore yuan has weakened 6% against the dollar this year, making it one of the worst-performing Asian currencies and raising speculation that China has been deliberately weakening its currency amid trade tensions with the US; it also prompted repeated accusations by Trump that Beijing is purposefully devaluing its currency, resulting in threats of even harsher sanctions should China fail to address US concerns, leading to even more aggressive retaliation in the ongoing currency and trade war.

BMO sees those woes deepening especially after Vice President Mike Pence renewed U.S. attacks on China at the Asia-Pacific Economic Cooperation summit, which ended on Sunday in dramatic fashion without a joint statement for the first time since 1993, as the full extent of disagreement between Washington and Beijing was made public.

4.EUROPEAN AFFAIRS

Saturday

UK/EU

The UK will not be happy with this;  The EU threaten the UK access to “security database”  as Theresa May struggles to sell her “doomed” Brexit deal.

(courtesy zerohedge)

 

EU Threatens UK Access To ‘Security Database’ As May Struggles To Sell Brexit Deal

As Theresa May struggles to shove her ‘best Brexit deal possible’ down the throats of Tory lawmakers, across the English Channel, May’s European colleagues are refining their own approach to the ‘hard sell’. After chief EU negotiator Michel Barnier and German Chancellor Angela Merkel insisted on Thursday that the deal negotiations couldn’t be reopened, Barnier took his threatening rhetoric one step further on Friday by warning that the UK could find itself cut off from European resources for combating serious security threats like terrorism.

According to the Financial TimesBarnier said during a meeting with ambassadors from the EU’s 27 non-UK members earlier this week that the negotiations over the UK’s desire to maintain access to the bloc’s internal security database would be “difficult”. A framework for these negotiations is expected to be included in the seven-page political statement that will sit alongside the formal 500-plus-page Brexit treaty, and serve as a foundation for negotiations during the transition. The political statement will effectively mark a starting point in negotiations surrounding everything from fisheries access to security to data protection to finance.

Barnier

Barnier’s made his threat as Scottish MPs warned that they would resist any attempt to remain a part of the Common Fisheries Policy, which sets quotas for each type of fish that EU fishermen are allowed to catch. Security cooperation has emerged as  key sticking point in the negotiations; Barnier has said that no other country outside the Schengen free trade area receives the level of cooperation that the UK has demanded. Access to the security database has emerged as one of the “two serious problems” overshadowing negotiations over the text of the political statement, the other being access to EU markets.

Mr Barnier dismissed the UK’s demand to maintain access to the EU’s internal security system, including its passenger name recognition database, Europol and Eurojust. He said no other country outside the Schengen free travel area enjoyed such a level of access. “The UK does not accept all the consequences of its status as a third country”, Mr Barnier said, according to the note.

Diplomats said they expected a tough negotiation over the future relationship text, as EU governments seek to protect their key economic interests. These include future access to fishing waters for the likes of France, and demands that the UK cannot undercut EU standards for governments including Denmark and the Netherlands.

The political statement is expected to be finalized during negotiations on Saturday and Sunday. The statement is expected to be the key issue in negotiations ahead of the special UK-EU Brexit summit on Nov. 25, which could still be canceled if May cannot secure support for her deal. But by threatening the UK’s access to information that could potentially help prevent terrorist attacks Barnier has made his position clear: The EU has already “bent over backwards” to accommodate the UK. Now, the Tories need to ‘get on with it’ and take the deal, or risk very serious real-world blowback.

end

ITALY

This is extremely important: We now have 60% of Italians think that the EU is bad for Italy. This will make it easier for Salvini to leave the Euro when Brussels uses their force against her.

(courtesy zerohedge)

 

60% Of Italians Think EU Is Bad For Italy

If the European Commission does levy billions of fines against the Italian government (or enforce some other punishment), some “60 million Italians will rise up” against the trade bloc – or at least that’s what a clearly frustrated Deputy Prime Minister Matteo Salvini told a group of Italian reporters following reports that the Commission could move to punish Italy as soon as next week.

The Italian people, Salvini added, would never accept those penalties, according to a report in Italy’s ANSA newswire. And according to the latest polling, there’s more than a little truth to that.

As the 27 EU members who aren’t the UK brace for the inevitable fallout for what increasingly looks to be a bumpy Brexit, one shocking poll revealed that 60% of Italians feel that their country has been mistreated by the European Union. If accurate, that’s several percentage points higher than the percentage of Britons who voted to leave the EU back in 2016.

Italy

According to Expresspollsters Coldiretti and Ixè found that some 43% of Italians believe that Brussels’ economic policies were designed by stronger economies with little concern for weaker EU members. And fittingly enough, one of Italians’ biggest concerns about the EU and its unfair treatment of Italy stems from policies related to agriculture.

Two-thirds of Italians believe that the EU’s policies on food damage products made in Italy and only 10 percent believe the Italian agri-food sector is benefitting from EU choices.

A spokesperson for Coldiretti said: “The clear majority of Italians therefore believe that community regulation and the recent choices regarding international treaties are not adequate to guarantee quality, safety but also respect for the gastronomical traditions of Italy.”

But the dissatisfaction runs deeper than food.

Italians expressed their frustration with Europe when they voted for the League and Five Star Movement during the March elections. That vote, and the rising popularity enjoyed by both parties, represented what many believed to be a clear mandate: To shake up a relationship with Brussels that was no longer working for Italians.

Europe Elects@EuropeElects

Italy, Index poll:

LEGA-ENF: 33%
M5S-EFDD: 26%
PD-S&D: 18%
FI-EPP: 7%
FdI-ECR: 4%
LeU-S&D: 3%
+E-ALDE: 2%

Field work: unrevealed
Sample size: unrevealed

On Thursday, Deputy Prime Minister Luigi Di Maio told reporters in Rome that the EU is asking Italy “for a blood and tears budget,” according to Bloomberg.

“It is unbelievable that they don’t understand our reality.”

But the intensity of Italians’ anger toward the EU has apparently been lost on the European Commission. In comments that sounded lie they were meant to aggravate the situation, EC Vice President Valdis Dombrovskis warned in an interview with an Italian paper that Italy had defied the EU with its irresponsible fiscal policies, and threatened to sanction the country for its reckless spending.

Meanwhile, Italy’s leaders have insisted that abandoning plans for fiscal stimulus would be like committing “suicide.”

Disillusionment is particularly high among young Italians, who still struggle with high unemployment and other social ills. Support for leaving the bloc is much higher among young Italians when compared with young Europeans in general.

Edwards

Interestingly, Italy’s GDP growth had kept pace with Germany’s until the 2011 eurozone crisis.

GDP

And as Albert Edwards explains, the EU’s budget rules have consistently seen Italy run a budget surplus, keeping fiscal conditions tighter than they would otherwise be (the growth in Italian debt actually slowed after it joined the euro). Edwards compared these rules to a “fiscal straightjacket.”

Which goes back full circle to the austerity being imposed upon Italy by the EU: it is this fiscal straitjacket that the Italian government has been forced to wear over the last decade that has become intolerable to the Italian electorate (see chart below showing persistent large primary surpluses) according to Edwards, who notes that “it was only a matter of time before they broke free, but to be honest I am surprised it has taken so long for this confrontation with the EC to occur.”

The degree to which this tightening has occurred can be seen in cyclically adjusted government spending, which suggests that the country’s fiscal impulse has actually weakened since Italy joined the eurozone.

Tightening

All of this certainly supports Edwards’ expectation that if the contemporary populist regime doesn’t take Italy out of the eurozone, the next crisis will yield a government that is even more fanatically opposed to the bloc’s policies. In other words, it’s not so much a question of ‘if’, but ‘when’.

end

A good commentary explaining how some countries in the EU are going against Brussels

(courtesy Savitsky/Strategic Culture Foundation)

 

Italy Throws Down The Gauntlet To Challenge The Brussels Establishment

Authored by Arkady Savitsky via The Strategic Culture Foundation,

The EU has had a lot of trouble on its hands, as its members, such as Poland and Hungary, are openly challenging the established order. This time it’s a very serious situation, because Brussels is facing defiance from Italy, the 3rd largest national economy in the eurozone and the 8th largest global economy in terms of nominal GDP. It has a population of over 60 million. It is also a Europhile country and the bloc’s founding member.

The Italian government has rejected the EU’s calls to revise its draft budget for 2019 that includes a 2.4% deficit of GDP, which could dangerously boost the nation’s public debt. The ruling coalition in Rome, which is made up of the League and the populist Five Star Movement, has decided to increase borrowing so that it can fund its campaign promises, such as lowering the retirement age and increasing welfare payments.

Last month the European Commission claimed that these spending targets went against EU rules. Rome is burdened by the second-highest amount of public debt in the eurozone. There’s a 131.8% difference between borrowing and economic output there,)debt to GDP: 132 : Harvey) but the government believes it will achieve substantial economic growth, while the EU’s predictions for Italy are rather gloomy. Nov. 13 was the deadline for submitting a revised draft budget. Rome did not comply. Now the EU leadership is threatening it with sanctions it until it falls into line. Italy could be slapped with a fine of €3.4 billion.

The Italian government takes an independent stance on a multitude of issues. It is seen as Russia-friendly in its calls for lifting, or at least easing, the sanctions against the Russian Federation. Italian Prime Minister Giuseppe Conte believes Moscow should be re-admitted to the G7. The Italian PM visited Moscow in late October,  hailing Russia as an essential global player and inviting Putin to visit Italy. Despite the EU-imposed punitive measures that are in place, Mr. Conte signed a slew of trade and investment agreements. Last year, Russia’s parliamentary majority party, United Russia, and Italy’s Lega Nord (Northern League), a ruling coalition member, signed a cooperation agreement. The regional council in Veneto, where Deputy Prime Minister Matteo Salvini holds a strong position, recognized Crimea as part of Russia in 2016.

Austria is another Russia-friendly EU member. Even the recent “spy scandal” that was obviously staged by outside forces to spoil that bilateral relationship, has failed to damage that rapport. “We are a country that has good contacts with Russia, we are aimed at dialogue, it will not change in the future,” said Austrian Chancellor Sebastian Kurz, speaking to reporters on Nov .14. The conservative People’s Party and the far-right Freedom Party — the members of the ruling coalition — are well-disposed toward Moscow. They don’t support the EU sanctions policy.

Hungary is another Russia-friendly EU member. Last month, the European parliament voted to initiate the Article 7 sanctions procedure against Hungary. The government led by PM Victor Orban has been accused of silencing the media, targeting NGOs, and removing independent judges. Launching the procedures stipulated under that article  opens the door to sanctions. Hungary could eventually be temporarily deprived of its EU voting rights. In reality, the country is being punished for refusing to take in migrants.

This is the second time Article 7 procedures have been launched. The first time was last year, when the European Commission set that article into motion against Poland over its judicial reforms. A unanimous vote is required to suspend Hungary’s voting rights and introduce sanctions. That move is likely to be blocked by Poland. It turn, Hungary said it would stand by Warsaw should the EU launch procedures to punish it. The two nations are united in their efforts to support each other and fend off Brussels’ encroachments at a time when the bloc is undergoing the most difficult times in its history.

Hungary, Poland, and Russia are trying to draw Europe’s attention to the threat to democracy and peace emanating from Ukraine — a problem that has been largely hushed up by the EU leadership.

Slovakia is another EU member state to nurture what some call “special ties” with Russia. It has never been happy with the sanctions against Moscow and has openly said so. Last month, its new prime minister, Peter Pellegrini, called on the EU to revise the sanction policy.

A diplomatic row was also staged in Greece but, as in case of Austria, it may have clouded those historically close ties but has failed to sever them. Cyprus has always been friendly toward Moscow, but Nicosia and Athens are not in a position to protect their independence, as both are heavily indebted and dependent on foreign loans.

The battle between Brussels and Rome comes at a time when Europe is preparing for the European Parliament elections in May 2019. Punitive measure taken by the EU against Italy will most certainly lead to growing public support of that government that is standing up to pressure in order to defend its people. It will increase the number of Italian Eurosceptics who win seats. With so many countries dissatisfied with the EU leadership, it’s hard to predict the outcome. There will soon be other people at the helm who hold quite different views on the problems faced by the EU, as well as on the bloc’s future. Everything may change, including the relationship with Russia and the sanctions that have become so unpopular and have resulted in many national leaders openly challenging the wisdom of such policy imposed by a powerful few.

end
Daniel discusses the next one trillion Euro timebomb, the huge non performing loans coupled with a huge fall in Co Co bonds.
a must read…
(courtesy Daniel Lacalle/Dlacalle.com)

The Eurozone Banks’ Trillion-Dollar Timebomb

Authored by Daniel Lacalle via dlacalle.com,

Eurozone banks have fallen dramatically in the stock market despite the results of the stress tests carried out by the ECB. EU Banks Index is down 25% on the year despite year-long bullish recommendations from almost every broker. This should not surprise anyone because we have seen in the past that these tests are only a theoretical exercise. Moreover, stress tests’ results are widely challenged, and rightly so, because the exercise starts with the most ridiculous premise in economics: Ceteris Paribus, or “all else remaining equal”, which never happens. Every asset manager knows that risk builds slowly and happens fast.

Disappointing earnings, rising risk in the eurozone as well as in their diversification markets such as emerging economies, weak net income margins and low return on tangible equity are factors that have contributed to the weak performance of European banks. Investors are rightly suspicious about consensus estimates for 2019 with expectations of double-digit EPS growth rates. Those growth rates look impossible in the current macroeconomic scenario.

Eurozone banks have done a good job of strengthening their capital structure, reaching almost a one per cent per annum increase in Tier 1 core capital. The question is whether this improvement is enough.

Two factors weigh on sentiment.

  1. More than EUR104 billion of riskyhybrid bonds” (CoCos) are included in the calculation of core capital.
  2. The total volume of Non-Performing Loans across the European Union is still at around EUR 900 billion, well above pre-crisis levels, with a provision ratio of only 50.7%, according to the European Commission.  Although the ratio has declined to 4.4%, down by roughly 1 percentage point year-on-year, the absolute figure remains elevated and the provision ratio is too small.

This is what I call the “one trillion eurozone timebomb”.One trillion euro risk when the MSCI Europe Bank index has a total market capitalization of around EUR790 billion.

(Source: Bloomberg, Bologna, Miglietta, Segura)

Let us focus on the CoCos, because it is a less commented issue.

The EUR104 billion of CoCos can be a double-edged sword. On one side, they have been one of the favourite instruments to improve core capital rapidly. It was a very popular instrument in recent years to reinforce capital and diversify funding sources. On the other hand, it is a highly risky asset that can create a domino effect on the equity and the other bonds of the entity. Let us face it, the idea that a CoCo can default with no contagion risk to the rest of the capital structure is simply ludicrous.

These CoCos are hybrid bonds. Rating agencies assign them up to a 50% of ‘equity’ component because the investor can lose the entire coupon, as well as part or all the principal if the issuer’s capital ratio falls below 7% or 5%.

These high-risk bonds have been issued widely and with great success in a world in which investors were hungry for some yield in the face of falling interest rates when many assumed the rising strength of banks. It was almost a “no brainer”. Core capital was rising, banks were stronger than ever, and the yields of these Co-Cos ranged between 4 and 7%. Except the risk was much higher.

In 2011, European banks issued 10 billion euros in these products with returns that reached 10%. It seemed a safe business with almost no risk of default.

The policy of central banks and financial repression, once again, led investors to take more risk for lower yields.

By 2017, Eurozone banks had issued more than 70 billion euros with yields that fell to 4%.

From 10% to 4% yield as risks were gradually building, bank stocks were falling and economic data began to disappoint.

These products were extremely popular because few investors thought that the banks would have no problem meeting the required 10% Tier 1 core capital figure. The risk of breaching the core capital threshold seemed impossible.

“Impossible” and “no risk” are very dangerous words in any asset class. In hybrid bonds, it is reckless to believe in no risk.

A recent paper (Contagion in the European CoCos market) by professors Pierluigi Bologna, Arianna Miglietta and Anatoli Segura, concludes: “The recapitalisation of the banks as a going concern provided by CoCos cannot be detrimental for the stability of the rest of the market. Should the operational features of CoCos keep on proving destabilising in future stress situations, rethinking their role as bank regulatory capital tools would be necessary”.

Unsurprisingly, CoCos have fallen sharply and created a domino effect that impacts equities as well.

The idea that a bond can default with no threat to the equity or solvency of the issuing bank could have only occurred to central planners with no clue of risk and contagion.

Eurozone banks bounced in late August while forward earnings estimates were falling (see above).

Risks in CoCos are evident. In NPLs, concerns are mounting:

  • Weaker earnings from the borrowers due to the slowdown. According to the BIS, the percentage of large zombie companies (those that cannot pay interest expenses with operating profits) has soared to 9% of quoted names.
  • The need to accelerate recapitalization to avoid the next crisis will make it less easy to refinance NPLs.
  • The impact of the global slowdown in banks that had opted to grow in emerging markets, commodities and public infrastructure financing.

Anyone who believes these two problems will be solved by extending quantitative easing and low rates has learnt nothing from the past years.

What these risks show is that eurozone banks need to implement a much more aggressive recapitalization plan. Capital increases and eliminating cash dividends will likely have to return. Managers do not want to do it because shares are too low according to them. However, waiting for a bounce has proven to be a big mistake. 2018 was the year of the perfect combination to drive banks shares higher: Confidence in the eurozone, the likelihood of rate hikes, improvement of fundamentals and earnings growth. None of it happened. Waiting for things to get better for asset classes is not enough.

Eurozone banks are better than three years ago. They are nowhere close to having solved their challenges.

END
Whistleblower Wilkinson, a Danske employee blows the lid of the money laundering of Deutsche bank et al.  This is a huge scandal
(courtesy zerohedge)

Whistleblower Implicates Deutsche Bank In $150 Billion Money Laundering Scandal

Just when Deutsche Bank probably thought the worst of its legal troubles (over the Libor scandal, sales of shoddy mortgage-backed securities, FX and precious metal rigging which collective resulted in tens of billions in legal fines) were behind it, the struggling German lender is being drawn deeper into the biggest money laundering scandal in European history.

Following reports over the weekend that Deutsche, JPM and Bank of America had been approached by federal investigators about their correspondent banking business’s involvement in clearing transactions for Danske Bank’s Estonian branch, the whistleblower who helped blow the lid off Danske’s $234 billion money laundering scandal said during testimony to the Danish Parliament that $150 billion of the money had been cleared by a large European lender, stopping short of naming Deutsche, likely to respect confidentiality rules governing the whistleblower’s work at Danske. Incidentally, as Bloomberg adds citing a “person familiar”, the unnamed bank is Deutsche Bank.

Deutsche continued to clear transactions for Danske’s Estonia branch until 2015, two years after JPM had ended its correspondent banking relationship with Danske’s Estonia branch over AML concerns. The suspicious funds flowed through Danske between 2007 and 2015 before Denmark’s largest lender closed its non-resident portfolio over AML concerns.

DB

In an internal audit released earlier this year, Danske admitted that most of the $234 billion in non-resident cash came from suspicious sources in Russia, Azerbaijan and Moldova. With the help of its dollar-clearing correspondent banks, Danske converted the rubles and other foreign currency into dollars and moved it into the Western financial system. Roughly $8 billion of the money was converted via legal-though-shady “Mirror Trades”, where a client buys and sells a security in two different currencies, typically to help launder their money into dollars and euros (in a strange but sadly unsurprising coincidence, Deutsche’s Moscow desk got caught up in a mirror trading scandal of its own a couple years back).

Howard Wilkinson, the former Danske employee-turned-whistleblower, claimed that some of the money flowed through a London-based trading firm called Lantana Trade, which is rumored to have ties to the family of Russian President Vladimir Putin and members of the FSB. Wilkinson is expected to testify before both the Danish and EU parliaments this week, and will also be speaking with US investigators, according to the Financial TimesIn addition to the DOJ and SEC, FinCEN has said it is actively interested in the Danske case.

Wilkinson, who first warned Danske’s directors in Copenhagen about suspicious activity in Estonia back in 2013 and 2014, also alluded to a “large US bank,” which the Financial Times identified as JPM.

Mr. Wilkinson also hit out at “large US bank 1” — known to be JPMorgan Chase — which stopped its correspondent banking relationship with Danske in 2013 over concerns about the non-resident portfolio in Estonia at the heart of the scandal which ran from 2007 until 2015. “It takes them seven years,” he said, of how long it took them to end their relationship with Danske.

In the past, correspondent banks involved in money laundering scandals similar to Danske’s have been treated as unwitting dupes by prosecutors. But the aggressive steps being taken by US prosecutors (regulators in Denmark, London, Estonia and the EU are also looking into the scandal) suggest that this could be the beginning of a crackdown that could fundamentally change how large international banks manage AML controls on their correspondent banking business.

That, in turn, could create serious problems for Baltic banks, which might find themselves effectively cut off from the broader global financial system, even if they take the necessary steps to tighten their AML controls. According to meeting minutes first reported by the FT,Danske directors acknowledged the suspicious activity in Estonia, but by April 2014, Wilkinson said it had become clear that the bank wasn’t planning to act. Indeed, former Danske CEO Thomas Borgen, who had previously run the bank’s international business, had reportedly taken steps to protect the Estonian branch, which Danske took over during its acquisition of Finnish Sampo Bank.

We’ll give you one guess as to why:

Danske

 END
FRANCE
Renault shares crash after its CEO arrested for corruption in France;;
(courtesy zerohedge)

Renault Shares Crash After Carlos Ghosn Arrested For Corruption

Update II: As was widely expected, Nissan’s board will take steps to oust Ghosn at a meeting on Thursday, according to CEO Hiroto Saikawa, who is speaking at a late night press conference being carried live on Japanese TV.

  • *NISSAN CONFIRMS GHOSN ARRESTED; BOARD TO DISMISS HIM THURSDAY
  • *NISSAN: 3RD PARTY INVESTIGATION TO BE LED BY EXTERNAL DIRECTORS
  • *NISSAN: WILL CONSULT WITH ALLIANCE PARTNERS ON ANY CHANGES
  • *SAIKAWA: GHOSN MIS-USED BOTH INVESTMENT FUNDS AND EXPENSES
  • *SAIKAWA: GHOSN, KELLY WERE THE MASTERMINDS OF THE MISCONDUCT

As investors speculate about what Ghosn’s ouster will mean for the future of the Nissan-Renault relationship, Bloomberg highlighted signs of fracture that will likely be exacerbated by the scandal.

Regardless of the rights and wrongs of this case, it’s hard to escape the sense that we’re seeing some of the tensions within the Renault-Nissan alliance coming to the surface here.

From Nissan’s union in 2015 objecting to the French state’s power-grab to unnamed executives this year being quoted in the Nikkei Asian Review saying there’s no way a merger with Renault could be accepted, there’s been a testier tone emerging from Japan for a while.

We’ll have to see the charge sheet, but Nissan is moving with remarkable alacrity to distance itself from Ghosn and Kelly given the nature of the acts they’ve been accused of in its press release.

* * *

Update: As Nissan prepares to hold a press conference where it is expected to reveal more details about Ghosn’s alleged financial misdeeds, a 2016 story in Town and Country magazine is making the rounds on twitter. While many avid readers of the business press might not remember, back in the fall o 2016, Carlos and his wife Carole Ghosn rented out Versailles (yes, that Versailles) for a party to celebrate their civil wedding, which had taken place earlier that year.

Ghosn

The party featured colorful sweets meant to evoke former French princess Marie Antoinette’s “Let them eat cake.”

“When you invite people to a party, they say maybe. When you invite them to Versailles, they will come,” Ghosn said.

* * *

As anxious global markets enter what’s expected to be a period of holiday-dampened liquidity (in the US, at least), reports that Japanese authorities have arrested (soon-to-be former) Nissan-Renault Chairman Carlos Ghosn on charges that he used company assets for personal purposes, underreported his compensation and is suspected of “numerous acts of misconduct”. The report sent shares of Nissan and French carmaker Renault tumbling more than 12%, dragging down the broader European market. Ghosn is expected to be fired by Nissan over the allegations.

Ghosn

Ghosn has been credited as the architect of the Nissan-Renault-Mitsubishi alliance and is widely seen as the “essential man” at both Nissan and Renault.

Renault

Details are still murky, but Bloomberg (via Kyodo) is reporting that Ghosn is suspected of understating income by 5 billion yen ($44 million) over 5 years. While Ghosn was one of the best-paid executives in Japan, compared with auto executives in Europe and the US, he was dramatically underpaid, according to Bloomberg.

In his final years as Nissan’s president in 2015 and 2016, Ghosn earned over 1 billion yen a year, which was about $9.6 million at the time. In Japan, that made him one of the country’s best-paid executives. However, compared with global auto executives, his pay was about half of the average.

Nissan is preparing to hold a press conference to release more details at 7 am ET. Right now, it’s unclear what led investigators in Tokyo to look into Ghosn. Indeed, much remains unknown.

In a statement released by Nissan, the company said it had been conducting an internal investigation into Ghosn and his fellow director Greg Kelly:

Based on a whistleblower report, Nissan Motor Co., Ltd. (Nissan) has been conducting an internal investigation over the past several months regarding misconduct involving the company’s Representative Director and Chairman Carlos Ghosn and Representative Director Greg Kelly.

The investigation showed that over many years both Ghosn and Kelly have been reporting compensation amounts in the Tokyo Stock Exchange securities report that were less than the actual amount, in order to reduce the disclosed amount of Carlos Ghosn’s compensation.

Also, in regards to Ghosn, numerous other significant acts of misconduct have been uncovered, such as personal use of company assets, and Kelly’s deep involvement has also been confirmed.

Nissan has been providing information to the Japanese Public Prosecutors Office and has been fully cooperating with their investigation. We will continue to do so.

As the misconduct uncovered through our internal investigation constitutes clear violations of the duty of care as directors, Nissan’s Chief Executive Officer Hiroto Saikawa will propose to the Nissan Board of Directors to promptly remove Ghosn from his positions as Chairman and Representative Director. Saikawa will also propose the removal of Greg Kelly from his position as Representative Director.

Nissan deeply apologizes for causing great concern to our shareholders and stakeholders. We will continue our work to identify our governance and compliance issues, and to take appropriate measures.”

According to Bloomberg, Citigroup analysts said that the reaction in Renault shares has been so strong because Ghosn is seen as “pivotal” for any potential streamlining of the Renault-Nissan structure.

The pressures on European automakers on Monday are adding to what has already been a tough year (European auto stocks had already fallen 22% YTD through Friday).

Autos

Nissan is expected to release more details at a 7 am ET press conference

END
UK
SUNDAY

Theresa May warns that the Brexit situation could be delayed as the draft deal does not have support of parliament

(courtesy zerohedge)

 

Theresa May Warns Brexit Could Be “Delayed Or Frustrated” As Draft Deal Faces Overwhelming Opposition

Facing a “critical week” that will include a meeting with EU bureaucrats in Brussels and culminate with a weekend summit to iron out the final details of May’s draft Brexit plan, as well as an accompanying political statement, Theresa May is resorting to threats and scare tactics to drum up support for her supremely unpopular draft Brexit plan, which she insists is the “best deal possible” and “in the national interest” despite many salient criticisms expressed by Brexiteers and remainers alike.

In an interview with Sky News on Sunday that featured May facing off with Labour leader Jeremy Corbyn, the prime minister claimed that some of the concerns raised by opponents of the deal could be addressed with alternations to the accompanying political statement, a nonbinding agreement that is intended to create a ‘framework’ for the future trading relationship between the two sides.

May

And if this isn’t enough, well, MPs would be better off if they swallowed their doubts and trusted the process – at least, if they want Brexit to succeed. Because provoking a leadership change at this point would likely jeopardize the UK’s ability to reach any deal with the EU. And faced with the possibility of a “no-deal” Brexit, it’s likely that MPs would vote for a second referendum to would raise the possibility of Brexit being scrapped altogether.

“These next seven days are going to be critical, they are about the future of this country,” May told Sky News. “I am not going to be distracted from the important job.”

“A change of leadership at this point isn’t going to make the negotiations any easier…what it will do is mean that there is a risk that actually we delay the negotiations and that is a risk that Brexit gets delayed or frustrated.”

May’s suggestion that Brexit could still be cancelled comes as Scottish leader Nicola Sturgeon said her MPs would vote against the draft plan, while a poll of 505 Tory MPs found that more were against the deal than for it. This would add to the unanimous opposition from the DUP (the Northern Irish party propping up May’s government) and almost guarantee that the deal would lose by a staggering margin, given that most Labour MPs would also be expected to vote against.

Brexit

Meanwhile, in an interview on the Andrew Marr show, May’s former Brexit Secretary Dominic Raab offered his most detailed explanation yet about why he decided to resign this week. As Raab explained, with “two or three points” being changed, Raab said he would be able to support the deal. But instead of pushing for these changes, Raab said May is “being bullied, I do think we are being subjected to what is pretty close to blackmail frankly.”

“This is a manageable problem,” Raab said.

While Raab said he would support May should a leadership challenge arise, he played down speculation about his own leadership ambitions, which is exactly something that somebody with leadership ambitions would do.

Even more discouraging is the latest Ipsos poll, which showed that May’s unpopular deal has bolstered Labour’s popularity, as its leader, Jeremy Corbyn, has been steadfastly critical of May’s deal (voices many of the same concerns as the ERG), insisting that Labour could win a better deal in time for Brexit and hinting that, if the current deal isn’t modified, a second Brexit referendum (what conservative and labour MPs have referred to as a “People’s Vote) might be necessary at some point.

Here’s the Guardian:

Compared with a month ago, the Conservatives have dropped five points to 36% while Labour has gained three to stand on 39%. The proportion of Leavers backing the Tories has dropped by 10 points in one month.

And as if the domestic opposition wasn’t enough of an obstacle, Brussels on Sunday deepened May’s predicament by declaring in a seemingly arbitrary way that any extension to the Brexit transition period last at least a year, and be accompanied by an additional 10 billion euro payout (in addition to the 39 billion euros the UK would be expected to pay under May’s plan, according to the Guardian.

If there was one silver lining in the weekend onslaught of Brexit-related news, it was that Graham Brady, the leader of the conservatives’ 1922 committee, confirmed that he has not received the 48 no confidence letters necessary to trigger a leadership challenge against May.

But the European Research Group, the umbrella group of Brexiteer Torys who have ferociously opposed May’s deal, released on Sunday a concise accounting of its criticisms of May’s plan. After a close reading, the arguments would seem to undercut May’s insistence that her deal is a “good deal” that was negotiated on the “UK’s terms.” In essence, the ERG is accusing May of abandoning her promise, made in January 2017, that she would avoid any deal that would leave the UK “half in, half out” of the EU. But by allowing for the possibility that the UK could be bound by EU rules set by the ECJ, as well as customs union rules over which the UK would have no say, May is setting up the UK to become a “vassal state” beholden to the EU’s rules, with no say in deciding them.

Flow

With investment banks like Deutsche Bank seeing a renegotiation of May’s deal as a base case (while also allowing for the possibility that another Brexit referendum could follow if May is ousted), and May’s own top cabinet ministers reportedly planning to pressure her to approach Brussels about renegotiating the deal, UK traders should be bracing for more turmoil in markets because – regardless of what happens – it looks like this fraught back-and-forth could continue right up until the March 29 “Brexit Day” deadline.

end
MONDAY/UK
There is talk that the UK will not need transition and that sent the Pound reeling increasing fears of a “damaged” exit
(courtesy zerohedge)

Pound Tumbles On Renewed Brexit Transition, May Exit Fears

After a tumultuous week for the pound, cable started off on the strong foot because, amid reports that the potential for a vote of no confidence in Theresa May may be losing traction because as DB’s Jim Reid noted this morning, “we’re no closer to a leadership contest for Mrs May but it could still happen at any point.” The strategist cited The Sun – and their “extensive investigation” – which concluded that 42 lawmakers have sent letters of no-confidence in the PM (48 needed), but noted that overall though more Conservative MPs are disliking the deal – and will vote against it – than will ask for a leadership battle in Deutsche Bank’s opinion.

The consensus that is forming amongst  the Conservative MPs who dislike the Withdrawal Agreement is that it can be improved upon. This time next week we will have just had the Sunday EU summit to sign off their side of the deal but its not clear how meaningful tweaks could be made before this and before the agreement goes before UK Parliament in the next 2-3 weeks.

However, after some early strength, cable tumbled sharply on a Reuters headline citing Theresa May’s spokesman who said the government believes the UK does not need any extension to the implementation period, but it makes sense to have that option as an alternative to the backstop. Additionally, the Sun’s Political editor tweeted that “No10 say PM is adamant transition extension must end before next general election (June 2022). Six months earlier than Barnier… but 6 years after the referendum, to the very month.”

This followed news from the FT that there may be an extension: “The EU’s chief Brexit negotiator has proposed extending Britain’s transition out of the bloc until as late as December 2022 in a move that could prolong free movement of people to the UK and big payments to Brussels beyond the next election.”

Also this morning, the Times’ Matt Chorley tweeted that “Of the 48 needed to trigger a vote of no confidence, 25 have gone public so far.. Senior Brexiteers tell The Times they have “firm pledges” from 50+ MPs to submit letters by this evening, with a vote triggered within two days” suggesting that May could indeed be on her way out.

Meanwhile, another headline also hit ahead of the EU summit this Sunday, according to which “More clarity is needed on Gibraltar’s status before Spain’s government can back the Brexit deal, minister says.” refuting reports that the Gibraltar issue had been sorted. Bloomberg adds some more:

Spanish officials are working with the EU on Monday to try to fix the wording on Gibraltar, according to a Foreign Ministry official. Spain doesn’t like the wording about the future relationship between the EU and the U.K. as it could be interpreted as including Gibraltar. Spain wants it to be clearer.

“We want to make sure the interpretation of this text is clear and shows that what’s being negotiated between the EU and the U.K. does not apply to Gibraltar,” Foreign Minister Josep Borrell told reporters.

Spain has requested changes to Art. 184 of the draft Withdrawal Treaty, even though Michel Barnier said that the text shouldn’t be reopened. Its foreign minister said that Spain’s support for the exit deal is contingent on the content of the political declaration on the future ties between the two sides, according to the person, who asked not to be named as the discussion wasn’t public.

In this context, Times Journalist Bruno Waterfield tweeted that “Madrid wants clear language that future trade relationship does not apply to Gibraltar unless UK negotiates it first bilaterally with Spain.”

Bruno Waterfield@BrunoBrussels

Spanish are very unhappy with the withdrawal agreement

Bruno Waterfield@BrunoBrussels

Madrid wants clear language that future trade relationship does not apply to Gibraltar unless UK negotiates it first bilaterally with Spain

While it is difficult to pin what precisely caused the slump in cable, just around 7am ET cable tumbled by nearly 100 pips and EURGBP rebounded through 0.8900 with RanSquawk speculating that the renewed pressure is due to uncertainty/divergence over extensions to the Brexit transition.

In short, jitters over Brexit are hardly over and cable will remain sensitive to any newsflow in the coming days with Theresa May’s fate still on the chopping block.

 

END

5.RUSSIAN AND MIDDLE EASTERN AFFAIRS

I) ISRAEL

Tom Luongo discusses the latest development in Israel.  He explains why Netanyahu wanted a quick cease fire and what it means for the future events

(courtesy Tom Luongo)

Is The Gaza Ceasefire The End For Netanyahu?

Authored by Tom Luongo,

“Democracy is the theory that the common people know what they want, and deserve to get it good and hard.”
H. L. Mencken

The resignation of Defense Minister Avigdor Lieberman over the terms of the ceasefire with Palestinians in Gaza has thrown Israeli politics into real turmoil.  

Depending on whose analysis of this situation you read you may be tempted to see this as a good thing or a bad thing.

Bernard at Moon of Alabama sees a weakened Prime Minister Benjamin Netanyahu being forced to sue of peace after the upgraded response from Gaza.  From MoA:

The short conflict demonstrated that:

  • Israel is deterred. It does not want to launch another war on Gaza.
  • The siege of Gaza, by Israel, Egypt and by the Palestinian authority under Mahmoud Abbas, failed. The reputational cost of the siege became too high after Israel killed some 160 Palestinians during weekly protests along the demarcation fence. It had to allow diesel fuel and money from Qatar to reach Gaza.
  • The siege failed to prevent that Islamic Jihad, Hamas and other groups acquired a larger number of missiles and other new capabilities.
  • The Palestinians in Gaza are united. The resistance against the occupation is alive and well.

This leaves Netanyahu scrambling to fend off snap elections and the rise of the even more hard-line Naftali Bennett who has threatened Bibi’s coalition outright unless he is made Defense Minister, replacing Lieberman.

MoA sees Netanyahu in a very precarious position, which he is, and will be forced to placate Bennett or risk a snap election that could see his government fall.

And it is on this point that Mintpressnews’s Whitney Webb takes another view, namely, that this is not the political victory for Gaza the Palestinians think it is.  Since Bennett will step up the brutality to include all Gazans, including children.

With Lieberman’s party already withdrawing from Israel’s far-right coalition, Netanyahu will likely capitulate to Bennett’s demands in order to stabilize the current government and avoid dissolving the Knesset and subsequent snap elections. Thus, the current instability facing the Likud-led coalition now seems fated to result in a rightward surge, whether it’s through snap elections or through Netanyahu-led efforts to placate other right-wing parties and prevent them from defecting.

Other powerful politicians within Jewish Home, such as Uri Ariel, have also pushed for Bennett to be appointed. Ariel told Israeli media outlet Arutz Sheva:

Prime Minister Netanyahu should appoint Minister Bennett as defense minister and this government can continue to function. I think there is an advantage in stability, of course assuming that Bennett will bring security policy to a much better place.

Naturally, there is a desire of more than one person to be defense minister, but the most appropriate one is Minister Bennett, who was promised the portfolio by the prime minister in the past, and the promise was not honored.”

Over the past year, Bennett has repeatedly accused Lieberman of showing “restraint and weakness” as defense minister, especially in relation to his approach to Gaza’s Great Return March. Accusing Lieberman of “weakness” is particularly shocking given that the Israeli military under Lieberman repeatedly used lethal force to quell protests in Gaza, killing over 200 unarmed Palestinians – including children, medics and journalists – and wounding over 22,000.

As bad as Bibi and Lieberman are/were Bennett makes them look like Quakers.  

So, the situation in Israel is similar to that in Russia for U.S. anti-Russian types.  If you think Vladimir Putin is a dictator and a dangerous right-wing fanatic (which he isn’t) then you don’t understand what stands behind him.

In other words, be careful what you wish for — regime change — because you just might get it … good and hard, to quote Mencken. 

In effect, weakening figures like them empowers the hyper-nationalists who are 1) eager to prove the other guy was a wimp and 2) untested in actual confrontation.  So, they are unpredictable and likely to go off half-cocked.

For all of his faults, Netanyahu is at least battle-tested and can be reasoned with to some extent.

I think, however, Webb overstates the danger for the Palestinians here.  Israel is in the precarious position.  Too much of the world has turned against them and their handling of this situation.

And that reputational loss is putting Netanyahu in the bind he’s currently in.  He knows what will happen if Bennett is in charge of Israel’s defense forces.  It will be the best recruitment drive for anti-Israeli sentiment the world over, but most especially here in the U.S.

And that is something he can’t have.

Broadly speaking, the height of Israel’s influence over U.S. politics has already occurred with the peak of the Baby Boomers’ political power.  As the generational shift happens more Gen-X’ers and Millennials who have had their fill of subordinating U.S. foreign policy to the whims of Israel will gain influence over U.S. policy.

This isn’t a judgment, it’s a sober observation.

So if Bennett takes over the IDF and takes things to eleven versus the Palestinians in Gaza, then it will cost Donald Trump politically at home and the best ally Israel has had in two decades in the White House will be lost.

They, along with the Saudis, are now having to truly deal with international criticism of their behavior and can no longer rely on a compliant (and paid for) western media to spin the narrative in their favor.

And Trump & Kushner’s Project Netanyahu, as Alistair Crooke recently described it, has been nothing but a disaster for all involved, especially the people it was supposed to help — The Saudis and the Israelis.  

And all of Trump’s enemies, even the ones who are also pro-Israel, will turn up the heat on him over our relationship with these two countries if

They both overplayed their hands thinking that Trump would back whatever play they made.

It has played right into the hands of Iran, Russia and Hezbollah by continuing to think the insurgency against Syrian President Bashar al-Assad could be successful.  What Obama thought would be a quagmire for the Russians turned out to be one for the U.S./Israel/Saudi coalition.

This is why Trump and his advisors have pushed all-in on regime change in Iran.  Netanyahu is right that Iran can and will continue to supply the arms needed to grind out a win versus Israel in the long run.

If Russia’s S-300s and air defense systems are as good as advertised then Bennett will end the myth of Israeli air superiority after Israel loses a few F-16i’s when he inevitably needs to show strength.

Unfortunately for Israel, that myth is one of the few things keeping things relatively quiet.

Iran will find it’s way through the sanctions.  Netanyahu didn’t have many other options and the neocons in D.C. really believe that this time it’ll be different.  But it won’t be.

In fact, if you don’t think Iran and Russia haven’t game-planned this very scenario then you are as clueless as those that think getting rid of Putin would make Russia more pliable.

Oh right, those are the same people.

The silver lining to all of this is now that Bibi is on thinner ice in the Knesset the best path forward for Israel and Trump is to come to the bargaining table as honest brokers to end the conflict in Syria, something to this point hasn’t occurred.

That will get Iran to stand down, because otherwise Israel’s position in the region will continue to erode.

Putin was forced by his hard-liners to finally protect both Russian and Syrian interests directly from Israeli harassment.  And that set us on the path we’re on today.  The best deal Trump and Netanyahu are going to get from Putin and Assad is on the table today, not next year or 2020.  

Provided, of course, that either one or the both of them survive.

END

The NBC story of two days ago in which the USA is contemplating sending Gulen to Turkey placating Turkey for the Khashoggi murder is simply false.

(courtesy zerohedge)

Trump Denies US Will Extradite Gulen To Turkey

Two days after NBC reported that in what would amount to a stunning foreign policy concession by the White House, the Trump Administration was contemplating extraditing Turkish president Erdogan’s nemesis, cleric Fethulah Gulen who has been living for decades in rural Pennsylvania, in order to placate Turkey over the murder of journalist Jamal Khashoggi, on Saturday Trump denied the report, rejecting that he is considering handing over Erdoğan’s foe.

Fethulah GulenTrump told reporters at the White House before leaving for a trip to California that extraditing exiled Turkish cleric Fethullah Gülen was “not under consideration.” Trump also said that “we’re having a very good moment with Turkey,” referring Erdogan’s release of American pastor Andrew Brunson last month, and said the U.S. is always looking for “whatever we can do for Turkey.”

On Thursday, NBC reported that the White House had directed the DOJ and FBI to find ways to extradite Gulen and that cooperation over the extradition was an attempt quell tensions between key US allies, Saudi Arabia and Turkey, over the killing of journalist Jamal Khashoggi inside the Saudi consulate in Istanbul last month.

Trump’s comment echoed that of DOJ spokeswoman Nicole Navas Oxman, who on Friday told Reuters that the DOJ “has not been involved in nor aware of any discussions” regarding Gülen’s extradition in an attempt to appease Turkey. State Department spokeswoman Heather Nauert also rejected the NBC News report on Thursday, saying, “The White House has not been involved in any discussions related to the extradition of Fethullah Gulen.”

Saudi Crown Prince Mohammed bin Salman, Khashoggi, ErdoganPredictably, US national security and foreign policy experts had been stunned by the NBC report: “This is the Trump administration seeking to barter away a US resident who has lived here legally for years,” the former National Security Council senior director Ned Price told Business Insider, adding that such a move would be “seeking to skirt the rule of law.”

Then again, even if the NBC report weren’t fake news, any extradition meant to ease tensions would have proven futile: on Friday Turkey said any US attempt to suppress its investigation into the journalist Jamal Khashoggi’s death wouldn’t work. Ankara, which has provided the news media with a steady drip of leaks from the Turkish investigation implicating Saudi leadership in Khashoggi’s death, has ruled out any sort of cooperation with the US to wind down its investigation according to Business Insider.

“At no point did Turkey offer to hold back on the Khashoggi investigation in return for Fethullah Gulen’s extradition,” an unnamed senior Turkish official told Reuters on Friday. “We have no intention to intervene in the Khashoggi investigation in return for any political or legal favour.”

An unnamed Turkish official also told NBC News on Thursday that the government did not link its investigation into Khashoggi’s death with Gulen’s extradition case.

“We definitely see no connection between the two,” the official said. “We want to see action on the end of the United States in terms of the extradition of Gulen. And we’re going to continue our investigation on behalf of the Khashoggi case.”

And perhaps to confirm that there will be no silencing Turkey’s “probe” of the dissident journalist’s murder, on Friday a Turkish daily reported that the planning of Khashoggi’s execution was caught on audio.

The audio tape, allegedly in the possession of Turkish investigators, features a 15-minute conversation, in which “the Saudi team discusses how to execute Khashoggi,” the Turkish Hurriyet Daily wrote on Friday, citing its columnist Abdulkadir Selvi. In a recording that was allegedly made even before the journalist entered the Saudi consulate, “they are reviewing their plan, which was previously prepared, and reminding themselves of the duties of each member,” he said.

The Hurriyet report contradicted the statement made by the Saudi deputy public prosecutor, Shaalan al-Shaalan, who said that the team was actually sent to Istanbul to retrieve the journalist and bring him back to Saudi Arabia. A decision to murder the reporter –and outspoken critic of Riyadh– was allegedly taken by the head of the team after its ‘persuasion’ failed.

end
Strange events:  Trump praises Saudi Arabia even after CIA blames the Crown Prince for the Khashoggi murder
(courtesy zerohedge)

Trump Praises Saudi Arabia After CIA Blames Crown Prince For Khashoggi’s Murder

Hours after the publication of a bombshell CIA report claiming that Saudi Crown Prince Mohammad bin Salman had almost certainly ordered the killing of Saudi dissident and former US resident Jamal Khashoggi, responses from lawmakers and senior US government officials – including the president himself – are rolling in.

Trump

One of the first to respond was none other than Bob Corker, the outgoing chairman of the Senate Foreign Relations Committee, who said he believed the CIA’s conclusion that MbS ordered the killing, and demanded that the administration “do something” to hold MbS accountable and stop the kingdom from executing the five suspects who had been set up to take the fall for the murder.

“Everything points to the Crown Prince of Saudi Arabia, MbS, ordering @washingtonpost journalist Jamal #Khashoggi’s killing,” Corker said. “The Trump administration should make a credible determination of responsibility before MbS executes the men who apparently carried out his orders.”

Senator Bob Corker

@SenBobCorker

Everything points to the Crown Prince of Saudi Arabia, MbS, ordering @washingtonpost journalist Jamal #Khashoggi‘s killing. The Trump administration should make a credible determination of responsibility before MbS executes the men who apparently carried out his orders.

Corker also tweeted a statement about the possibility of imposing Magnitsky Act sanctions on senior Saudi officials believed to be involved with the killing. In the statement, he said the Treasury Department sanctions against 17 Saudis, including a top aide to the Crown Prince who is suspected of having organized the 15-man hit squad that carried it out, was a “significant step.”

Senator Bob Corker

@SenBobCorker

I have a lot of concerns about the trajectory that Saudi Arabia is on right now, and I think a price needs to be paid. My full statement on the Global Magnitsky sanctions against Saudi officials for the murder of #JamalKhashoggi:

President Trump, who has notably toned down his rhetoric about the killing and MbS’s potential complicity, doubled down on Saturday when he defended the US’s “spectacular” relationship with the Saudis and once again pointed to the massive number of jobs and investments he said Saudi Arabia brings to the US.

“We’re taking a look at it. You know, we also have a great ally in Saudi Arabia,” Trump said. “They give us a lot of jobs, they give us a lot of business, a lot of economic development. They have been a truly spectacular ally in terms of jobs and economic development.”

Trump continued: “And I also think that you know, I’m president, I have to take a lot of things into consideration so we will be talking to the CIA later and lots of others. I’ll be doing that while I’m on the plane. I’ll be speaking also with Secretary of State Mike Pompeo.”

Trump added that he had not yet been briefed about the CIA’s report, he also said that he’d be speaking with Secretary of State Mike Pompeo.

Embedded video

NBC Nightly News with Lester Holt

@NBCNightlyNews

President Trump said he will be briefed today on the CIA report that Saudi Crown Prince Mohammed bin Salman ordered the killing of journalist Jamal Khashoggi while also calling Saudi Arabia “a truly spectacular ally.” https://nbcnews.to/2DKaX59

Playing the bad cop to Trump’s good cop, Vice President Mike Pence delivered a decidedly more aggressive statement about the CIA report, telling a group of pool reporters on Saturday that “couldn’t comment on classified information” but assured them that Khashoggi’s death was an “atrocity” that would be punished by the US, per the Hill.

“It was also an affront to a free and independent press and the United States is determined to hold all of those accountable who are responsible for that murder,” he said, according to pool reports.

But Pence carefully hedged his remarks, clarifying that the US would “follow the facts” on Khashoggi’s death while arguing that the Trump administration wanted to find a way to preserve a “strong and historic partnership” with the kingdom.

Aside from the purported recording of Khashoggi’s agonizing final moments, US intelligence agencies reportedly based their conclusion on a transcript of a phone call between Khalid bin Salman, Mohammad’s brother and the kingdom’s ambassador to the US. During the call with Khashoggi, the CIA says, KbS assured the journalist that he wouldn’t be harmed if he visited the Istanbul consulate, where he would be able to retrieve paperwork needed to marry his Turkish fiance.

For what it’s worth, Khalid bin Salman denies that he ever instructed Khashoggi to visit the Saudi embassy in Istanbul.

Khalid bin Salman خالد بن سلمان

@kbsalsaud

As we told the Washington Post the last contact I had with Mr. Khashoggi was via text on Oct 26 2017. I never talked to him by phone and certainly never suggested he go to Turkey for any reason. I ask the US government to release any information regarding this claim.

Looking ahead, we wait to see if Saudi Arabia will reward Trump with another 7% drop in the price of oil by coming out against another OPEC+ production cut.

end

 

After a Friday attack which killed 22 Syrian soldiers, the Government of Syria launches an attack in South east Idlib Province

(courtesy zerohedge)

Major Syrian Army Assault On Southeast Idlib As Sochi Deal Unravels

The Syrian Army unleashed a major assault across the southeastern part of Idlib province on Saturday, a military source told Middle East news site Al-Masdar in a breaking report. According to the source, government forces pounded jihadist defenses across the southeast Idlib axis with a plethora of artillery shells and surface-to-surface missiles.

This latest exchange between the Syrian military and jihadist rebels comes as the Sochi Agreement falls apart in northwestern Syria, and in response to a Friday attack by jihadists which killed 22 Syrian soldiers near a planned buffer zone around the country’s last major anti-Assad and al-Qaeda held region. The jihadist strikes resulted in the highest number of casualties for the army since the Sochi Agreement was established on September 17th.

Though the Syrian war has grown cold in terms of international spotlight and media interest since September, it is likely again going to ramp up dramatically over the next few months.

The Al-Masdar source said the primary targets for the Syrian Army were the trenches and military posts for Hay’at Tahrir Al-Sham in the towns of Al-Taman’ah, Khuwayn, Babulin, Haish, Jarjanaz, Um Jalal, and Mashirfah Shmaliyah. In retaliation for the Syrian Army assault, the jihadist rebels began shelling the government towns of Ma’an, Um Hariteen, and ‘Atshan.

Damascus has been critical of the Sochi deal from the start as it’s criticized Turkey’s role in the Russian-brokered ceasefire plan, especially as a proposed ‘de-militarized’ zone has failed due to jihadist insurgents still holding around 70% of the planned buffer area which they were supposed to withdraw from by mid-October. Sporadic clashes have rocked the “buffer zone” since.

Russia itself recently acknowledged the on the ground failure of the Sochi agreement even as parties officially cling to it. During a Thursday press briefing by Russian Foreign Ministry Spokesperson Maria Zakharova admitted the following:

We have to state that the real disengagement in Idlib has not been achieved despite Turkey’s continuing efforts to live up to its commitments under the Russian-Turkish Memorandum of September 17.

This followed Russia also recently condemning  “sporadic clashes” and “provocations” by the jihadist group HTS (the main al-Qaeda presence) in Idlib.

Likely due to Moscow seeing the writing on the wall that all-out fighting and a full assault by government forces on Idlib will soon resume, Russian naval forces continued a show of force in the Mediterranean this week.

Russian military and naval officials announced Friday that its warships held extensive anti-submarine warfare drills in the Mediterranean. Specifically the Russian Black Sea Fleet’s frigates Admiral Makarov and Admiral Essen conducted the exercise in tandem with deck-based helicopters near Syrian coastal waters.

Notably, according to TASS, the warships central to the drill are “armed with eight launchers of Kalibr-NK cruise missiles that are capable of striking surface, coastal and underwater targets at a distance of up to 2,600 km.”

Since September when what was gearing up to be a major Syrian-Russian assault on Idlib was called off through the Russian-Turkish ceasefire agreement, possibly in avoidance of the stated threat that American forces would intervene in defense of the al-Qaeda insurgent held province (also claiming to have intelligence of an impending government “chemical attack”), the war has largely taken a back-burner in the media and public consciousness.

But as sporadic fighting between jihadists and Syrian government forces is reignited and fast turning into major offensive operations by government forces, the war could once again be thrust back into the media spotlight as ground zero for a great power confrontation between Moscow and Washington.

end

It has now been established that Iran was caught trying to bomb an anti Iran protest in Paris on June 30.  Now the EU is planning limited Iran sanctions.

Rock And A Hard Place? EU Backs Limited Iran Sanctions Over Paris

Bomb Plot

Europe finds itself between a rock and a hard place: on the one hand seeking to salvage the 2015 Iran nuclear deal amidst continuing US pressure to abandon the JCPOA, and on the other taking action against alleged Iranian terror plots in the heart of Europe.

EU officials announced Monday the European bloc would back a French government decision to sanction Iranian nationals who were accused last month of plotting a major bomb attack on an Iranian opposition rally in Paris on June 30th. Though the sanctions on the individual plotters and their alleged Iranian intelligence agency handlers would be effectually symbolic, the move has huge implications in European-Iranian relations given the sanctions could potentially take effect across the bloc.

Per the breaking Reuters report:

The ministers said technical work could now start on an EU-wide asset freeze on two Iranians and the Iranian intelligence service over a failed plot to carry out a bomb attack at a rally near Paris organized by an exiled Iranian opposition group.

This comes simultaneous ongoing Danish investigation after police uncovered another alleged plot involving a wide-ranging assassination plot in his soil. Denmark has since pushed for similar EU-wide sanctions, according to diplomats.

Sanctions on Iran intelligence agencies which investigators are pointing the finger to would be tantamount to anti-government sanctions, and could lead to a further breakdown in attempts by both sides to keep trade relations aliveas US sanctions peel away foreign companies from maintaining a presence in Iran.

Iran for its part has insisted both the bomb and assassination plots are fabrications and has called for talks. Iranian media and commentators have long pointed the finger at Israeli Mossad as well as anti-Iran western linked groups such as the MEK for essentially staging ‘false flag’ operations at the most sensitive moments in which Iran is trying to keep its suffering economy afloat.

 

Reuters concludes of the significance of Monday’s announcement:

Though largely symbolic, the EU’s readiness to target Iranians marks a shift after months of division within the bloc over how to punish Iranians accused of destabilizing activities in Europe and the Middle East.

Meanwhile the US establishment, which has long sought regime change in Tehran as the ultimate goal of broader Mid-east policy has pointed to Iran’s alleged terror activities abroad a prime reason for tearing up the Obama brokered JCPOA, with Trump himself focusing on this as a perpetual theme. The White House has also used the latest terror allegations against Iranian intelligence serves to argue that Europe must withdraw from trade with Iran.

Allegations of thwarted terror plot in June“Three terror plot suspects were arrested in France and Germany… over an alleged terror attack plot to bomb a rally organised by the National Council of Resistance of Iran in Paris.”

Europe has thus far largely stuck by the Iranian supreme leader Ayatollah Ali Khamenei’s calls warning that “European banks should safeguard trade with the Islamic Republic.”

“Europe should fully guarantee Iran’s oil sales. In case Americans can damage our oil sales,” he said just as Washington pulled out of the JCPOA. “Europeans should make up for that and buy Iranian oil.”

However, as EU endorsement of limited sanctions gain steam and as potential future allegations of Iran-sponsored “terror plots” could emerge at any inopportune moment, it’s possible the writing is already on the wall in terms of the nuclear deal unraveling further into final dissolution.

6. GLOBAL ISSUES

Central banks have pulled the plug on the markets as global trade plummets

(courtesy Graham Summers)

Central Banks Have Officially Pulled the Plug on the Markets

Last week the markets rallied on hype and hope of a potential trade deal between the US and China… and the fact it was options expiration week.

Wit those items out of the way, the markets will now begin to adjust to economic realities again.

Those economic realities? That the global economy is slowing… and not a little.

Indeed, the latest spate of economic data indicates just had bad things are getting.

  • Japan’s core machine orders for the month of September was expected to drop 9%. It fell 18% instead.
  • That same month, South Korea, a bell-weather for global trade/ growth, saw exports collapse 8%.
  • And then China’s manufacturing PMI fell to 50 in September… just on the border of showing outright economic contraction. But given how heavily massaged Chinese data is to show growth, it is safe to assume the REAL number was MUCH lower (think 40).

This is happening at a time when EVERY major Central Bank is pulling the plug on liquidity.

The US Federal Reserve is now actively draining $50 billion per month from the financial system.  The ECB will be ending its QE program next month. And now even the Bank of Japan is stating that large-scale monetary programs (QE) are losing favor.

Japan’s economic activity and prices are no longer in a situation where decisively implementing a large-scale policy to overcome deflation was judged as the most appropriate policy conduct, as was the case before,” Kuroda said in a speech to business leaders in Nagoya, central Japan:

Source: Marketwatch.

China, Germany, and Japan’s stock markets have already figured this out. It now time for US stocks to “play catch up.”

How bad will it get?

Lumber, perhaps the most “growth sensitive” asset on the planet, suggests the S&P 500 should be at 2,100.

Buckle up, the next crisis is about to hit.

If you are not already preparing for this, NOW is the time to do so.

With that in mind, I’m actively preparing clients of my weekly trading service Private Wealth Advisory with our proprietary CRASH trades to profit from the coming market melt down.

These are the same kind of high impact trades we made in 2008 to return triple digit gains while the rest of the investment world got taken to the cleaners.

To find out what they are, all you need to do is take out a 30-day $9.99 trial to Private Wealth Advisory.

 

END

7  OIL ISSUES

 

8. EMERGING MARKETS

 

 

END

 

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

Euro/USA 1.1421 UP .0013 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 MIXED

 

 

 

 

 

USA/JAPAN YEN 112.83  UP 0.03850 (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 1.2809 DOWN   0.0025  (Brexit March 29/ 2017/ARTICLE 50 SIGNED/BREXIT FEES WILL BE CAPPED

USA/CAN 1.3173  UP .0036 CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/(TRUMP INITIATES LUMBER TARIFFS ON CANADA/CANADA HAS A HUGE HOUSEHOLD DEBT/GDP PROBLEM)

Early THIS MONDAY morning in Europe, the Euro ROSE by 12 basis point, trading now ABOVE the important 1.08 level RISING to 1.1421 / Last night Shanghai compositeCLOSED UP 24.40 POINTS OR 0.91%

 

//Hang Sang CLOSED UP 188.47 POINTS OR 0.72% 

 

/AUSTRALIA CLOSED DOWN  0.65% /EUROPEAN BOURSES MIXED

 

 

 

 

The NIKKEI: this MONDAY morning CLOSED UP 140.82 POINTS OR 0.65%

 

 

 

Trading from Europe and Asia

1/EUROPE OPENED MIXED

 

 

 

 

 

 

 

 

 

2/ CHINESE BOURSES / :Hang Sang CLOSED UP 188.47 POINTS OR 0.72% 

 

 

/SHANGHAI CLOSED UP 24.40      POINTS OR 0.91%

 

 

 

Australia BOURSE CLOSED DOWN 0.63%

Nikkei (Japan) CLOSED DOWN 123.28 POINTS OR 0.57%

 

 

 

INDIA’S SENSEX  IN THE GREEN

Gold very early morning trading: 1219.20

silver:$14.36

Early MONDAY morning USA 10 year bond yield: 3.08% !!! UP 1 IN POINTS from FRIDAY’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 3.34 UP 1  IN BASIS POINTS from FRIDAY night. (POLICY FED ERROR)/

USA dollar index early MONDAY morning: 96.43 DOWN 3  CENT(S) from FRIDAY’s close.

This ends early morning numbers MONDAY MORNING

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And now your closing MONDAY NUMBERS \1: 00 PM

 

Portuguese 10 year bond yield: 1.99% UP 1    in basis point(s) yield from FRIDAY/

JAPANESE BOND YIELD: +.10%  DOWN 0  BASIS POINTS from FRIDAY/JAPAN losing control of its yield curve/EXTREMELY VOLATILE YESTERDAY…

 

SPANISH 10 YR BOND YIELD: 1.65% up 1  IN basis point yield from FRIDAY

ITALIAN 10 YR BOND YIELD: 3.60 up  11   POINTS in basis point yield from FRIDAY/

 

 

the Italian 10 yr bond yield is trading 195 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: RISES UP TO +.37%   IN BASIS POINTS ON THE DAY//

THE IMPORTANT SPREAD BETWEEN ITALIAN 10 YR BOND AND GERMAN 10 YEAR BOND IS 3.23% AND NOW ABOVE THE  THE 3.00% LEVEL WHICH WILL IMPLODE THE ENTIRE ITALIAN BANKING SYSTEM. AT 4% SPREAD THERE WILL BE A MASSIVE BANK RUN…

 

END

IMPORTANT CURRENCY CLOSES FOR MONDAY

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

Euro/USA 1.1447 UP .0039 or 39 basis points

 

 

USA/Japan: 112.51 down .290 OR 29 basis points/

Great Britain/USA 1.2845 UP .0017( POUND UP 17 BASIS POINTS)

Canadian dollar DOWN 55 basis points to 1.3194

 

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This afternoon, the Euro was ROSE BY 39 BASIS POINTS  to trade at 1.1447

The Yen ROSE to 112.51 for a GAIN of 29 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 GAINED 17 basis points, trading at 1.2845/

The Canadian dollar LOST 55 basis points to 1.3151

 

 

The USA/Yuan,CNY closed UP AT 6.9420-  ON SHORE  (YUAN UP)

THE USA/YUAN OFFSHORE:  6.9362(  YUAN UP)

TURKISH LIRA:  5.3460

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

 

 

 

Your closing 10 yr USA bond yield DOWN 2 IN basis points from FRIDAY at 3.06 % //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 3.33 DOWN 1 in basis points on the day /

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

Your closing USA dollar index, 96.25 DOWN 21 CENT(S) ON THE DAY/1.00 PM/

 

Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for MONDAY: 4:00 PM 

London: CLOSED DOWN 12.99 POINTS OR 0.19%

German Dax : CLOSED DOWN 96.46 POINTS  OR 0.85%
Paris Cac CLOSED DOWN 39.75 POINTS OR 0.79%
Spain IBEX CLOSED DOWN 50.80 POINTS OR 0.66%

Italian MIB: CLOSED DOWN: 55.18 POINTS OR 0.29%/

 

 

WTI Oil price; 56.20 1:00 pm;

Brent Oil: 66.40 1:00 EST

USA /RUSSIAN /   ROUBLE CROSS:    65.79  THE CROSS LOWER BY .19 ROUBLES/DOLLAR (ROUBLE HIGHER by 19 BASIS PTS)

USA DOLLAR VS TURKISH LIRA:  5.3460 PER ONE USA DOLLAR.

TODAY THE GERMAN YIELD RISES +.37 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:56.76

 

BRENT:66.83

USA 10 YR BOND YIELD: 3.05%..

 

 

USA 30 YR BOND YIELD: 3.32%/.

 

 

 

EURO/USA DOLLAR CROSS: 1.1452 ( UP 45 BASIS POINTS)

USA/JAPANESE YEN:112.53 DOWN .277 (YEN UP 28 BASIS POINTS/ .

 

USA DOLLAR INDEX: 96.21 DOWN 25 cent(s)/

The British pound at 5 pm: Great Britain Pound/USA: 1.2852 up 45 POINTS FROM YESTERDAY

the Turkish lira close: 5.3129

the Russian rouble:  65.61 UP 37 Roubles against the uSA dollar.( UP 37 BASIS POINTS)

 

Canadian dollar: 1.3181 DOWN 42 BASIS pts

USA/CHINESE YUAN (CNY) : 6.9420  (ONSHORE)

USA/CHINESE YUAN(CNH):  6.9325 (OFFSHORE)

German 10 yr bond yield at 5 pm: ,0.37%

 

The Dow closed  DOWN 395.78 POINTS OR 1.56%

NASDAQ closed DOWN 219.40  points or 3.03% 4.00 PM EST


VOLATILITY INDEX:  20.27 CLOSED UP  2.13

LIBOR 3 MONTH DURATION: 2.644%  .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/WEEKLY SUMMARY/FOLLOWED BY TODAY

 

RIP FANG

The message from many investors today to their favorite stocks….

 

 

Most indices extended last week’s outlier exuberance in Chinese stocks, except tech/small cap-dominated CHINEXT  dropped…

 

European stocks saw selling from shortly after the opening bounce to all end lower led by DAX… (as automakers got hit across the board after Carlos “Gone”)

 

It was all looking so hopeful at around 3amET as the overnight weakness in futures had been ramped into the European open, but as soon as AAPL headlines hit… along with every other previous leader – US equities cratered at the open and barely looked back…

 

On the day, Nasdaq was worst across all the cash indices (Nasdaq Composite now at its lowest close since April)

NOTE – there was no dramatic volume selling programs on the day

Dow futs had a 600 point range intraday… (this is the first Dow cash close below 200DMA since Oct 31st)

 

Only Trannies remain green for November…

 

For 2018, S&P is now up less than 1% and Nasdaq Composite up only 2.2%…Small Caps and Trannies are negative YTD

Viewed another way: the Nasdaq 100 is still up 4 percent this year. But so good has its performance been in the last decade that a gain of that size qualifies as the second-worst annual return since the bull market began. The index has now had three separate 10 percent corrections in 2018, something that hasn’t happened since the financial crisis.

FANG Stocks at their lowest since February…

For some context – that is a $610 billion drop in market cap between those four names.

Cap-weighted FANG stocks are down 26.5% from their highs, deep in bear market, and all the underlying names are also now in a bear: FB -39.6%, AMZN -25.8%, NFLX -35.9%, GOOGL -20.2%

 

Value stocks are soaring relative to Growth stocks…

 

AAPL at new cycle lows below the 200DMA…down 20.2% (in a bear market)…

 

VIX jumped back above 20 and the term structure re-inverted…

 

High Yield credit continues to blow out across ETFs, cash, and CDS…

 

And investment grade credit risk is now at its widest since Trump’s election in Nov 2016 (but still underpriced relative to VIX)…

 

Suggesting there’s a lot more pain to come for stocks…

 

Treasury yields fell broadly on the day (after being higher overnight)…

 

And notably bull-steepened… (back near the Nov peak, steepest since June)

Although we note that it seems like 55bps for 2s30s is a cap for now.

 

10Y Inflation Breakevens plunged to their lowest since Jan 3rd, catching down to crude’s collapse…

 

And for the first time in decades, a 12-month Treasury bill has a higher yield than one-year Chinese debt…

 

The Dollar fell for the 4th day in 5, extending losses below the key 97 level…

 

And offshore yuan dropped back below its Onshore Fix…

 

Cryptos continued their crashing trend today with Bitcoin back below $5,000 briefly…

 

Commodities ended marginally higher on the day…

 

Gold rallied and held above its 50- and 100-DMA (Silver tested its 50DMA but couldn’t break it)…

 

WTI Crude futures managed a modest bounce

 

Finally, we note that Fed rate-hike odds – and trajectory – are tumbling with only 31.5bps of tightening now expected next year and 2020 and 2021 both expected to see rate-cuts…

As markets have entirely decoupled from The Fed…

 

 

 

market trading

Afternoon trading: Dow dumps 500 points.

 

Dow Dumps 500 Points – Back Below Key Technical Support

While Nasdaq and all its ‘no brainer’ stock leaders are getting all the headlines, The Dow has now crashed 500 points, breaking back below its 200-day moving-average…

 

As selling hasn’t stopped since the cash open… (Nasdaq futs worse)

As AAPL breaks to new cycle lows…

end

market data/

This is forewarning that trouble is ahead: credit spreads are blowing up!!!

(courtesy zerohedge)

Credit Spreads Are Blowing Up

For years, it appeared that nothing could shake the relentless bid for US corporate credit, whether in the investment grade space or in junk bonds. In fact, just over a month ago, on October 2, we reported that high yield spread printed the tightest levels seen since the financial crisis. 

A lot has changed since then.

As discussed earlier after ignoring the move in stocks, credit spreads have been rocked sharply wider due to a confluence of negative factors ranging from the plunge in stocks and spike in the VIX, escalating trade war concerns, fears about rising rates and deteriorating fundamentals, worries about the end of the US fiscal stimulus, Brexit and Italy’s budget’s woes, and last but not least, the recent collapse in GE and PG&E bonds.

In fact, junk bond spreads blew out by the most in almost two years last weekleaving the lowest-quality U.S. companies paying the most for their debt since mid-2016 according to Bloomberg. The yield on the Bloomberg Barclays US Corporate High Yield Total Return Index has risen by over 100 basis points since Oct. 1 to almost 7.2%, the highest since June 2016. The spread on the index widened by 51 bps, its biggest weekly gain since February 2016.

The repricing was most acute for CCC-rated debt, which after outperforming the rest of the high yield market, saw a sharp, 200 basis point jump in the average yield to about 10.8%. And, as shown in the chart below, investment grade debt wasn’t spared -or spread – either, blowing out by nearly 20 bps since the first week of November.

Meanwhile, after today’s latest blowout, credit-default swaps on North American investment grade corporations are now wider than they were the day Donald Trump was elected. According to Bloomberg’s Sebastian Boyd, since November 2016, the return on investment-grade credit has been a pathetic 0.6%.

As Boyd warns, “it’s hard to see the outlook improving” adding that “the market last week got itself very excited about an apparent change in tone from the Fed, but leaving aside the likelihood that there’s a bit of self-deception going on there, rising-rate environments are terrible for investment grade. They’re not great for junk either.”

Meanwhile, as 2019 progresses, the risk of the Fed overshooting will rise, and as Goldman warned last night, the Federal Reserve has never engineered a soft landing when the labor market was beyond full employment as it is now: “If it fails to stick this one, which is the most likely outcome, junk investors will feel much of the pain” Boyd said.

That said, not everyone is doomy and gloomy: despite the recent turmoil, the U.S. junk bond market should remain supported by steady growth and robust earnings, and the default rate is expected to be low according to Deutsche Bank’s Jim Reid, however despite a relatively manageable debt maturity schedule, as financing costs increase, balance sheet risk will come into focus. Below we republish some of Reid’s thoughts on what happens next to the US corporate bond market, and why the next recession could be devastating for trillions in deteriorating credits:

We have been on the underweight side of credit all year, more weighted to a US underweight of late but that’s been more of a valuation play than over too much concerns about immediate credit quality. The US economy remains strong and credit deterioration is likely to remain idiosyncratic until it rolls over.

At that point we will have big problems though and last week’s activity made us more confident liquidity will be bad when the cycle turns as we moved a fairly large amount on nervousness as much as anything else.

GE, PG&E, plunging oil and the factors discussed above provided a jolt but we don’t think this is enough for now to impact the economy so credit will probably stabilise. However once there is actual broad economic weakness, this last week will be a dress rehearsal for the problems ahead and there will be little two-way activity with spreads gapping wider.

To Reid, these various circles of credit hell are not quite here yet and are reserved for further down the cycle:

“For now credit’s main problem has been it hadn’t responded enough to the pick up in vol.  The good news is that this is starting to catch-up and correct. Last week, EU non-fin. IG spread widened by 13bps and HY by 45bps while those on US IG by 14bps and HY by 49bps.”

On the other hand, if predictions of a sharp slowdown in the US economy which could kick in as soon as the first half of 2019 are confirmed, then the worst case scenarios about corporate credit being the culprit behind the next financial crisis will surely be justified.

end

USA ECONOMIC STORIES OF INTEREST

This is a must view.  Fellow Torontonian Rob Kirby describes how the Dept of Defense somehow “lost” 21 trillion dollars”.  These lost dollars no doubt found a home in the USA’s  plunge protection fund and it is these funds that are keeping gold and silver in check despite the fact that many central banks and sovereigns are buying gold.  Australia is the latest country to ask for its gold back from the Bank of England.

(courtesy Greg Hunter/Rob Kirby)

Growth Rate of US Dollar Gone Vertical – Rob Kirby

By Greg Hunter’s USAWatchdog.com (Early Sunday Release)

Macroeconomic analyst Rob Kirby has one burning question for the U.S. Treasury selling record amounts of debt to finance the federal government. Kirby asks, “The question is . . . and more and more people are asking, with the traditional financiers absent from the game, so they are not buying the new debt . . . The question is who is buying it? The only credible answer is the debt is being monetized. This $21 trillion . . . in “missing money” . . . is being mobilized to monetize the debt. It’s memory holed, but this is not a game that can go on forever. This is not a sustainable practice.”

This may be a good reason why the Bank of England is not giving Venezuela’s gold back after it asked for it. It is also holding on tightly to Australia’s gold. Is the Bank of England afraid the global debt balloon is going to pop soon? Kirby contends, “This balloon will pop, and at some point in time, the price of gold is going to go bananas up. This will happen as sure as there will be wild fires again in California.”

Kirby says as the gold price skyrockets, the buying power of the U.S. dollar will implode. Kirby explains, “The growth rate of the current world reserve currency, the fiat U.S. dollar, is in a phase where its growth is vertical. It must remain vertical, and the minute it stops going vertical, it collapses onto itself, and that likely means a hyperinflation event. It means the currency goes to a zero value. All fiat currencies return to their true intrinsic value, which is zero. Fiat currencies throughout history have all shared that one common trait. They all return to their true intrinsic value, and the U.S dollar will be no different than the hundreds of other fiat currencies before it.”

Kirby also arranges the purchase of gold by the ton for wealthy clients. What has been happening in his world? Kirby says, “In the last three or four months, I would share with you that the urge for very serious money to get out of fiat and into physical metal has been unprecedented. We are talking many, many, many billions of dollars worth of fiat money looking to get converted into physical metal. The lineup of billions of dollars to get into physical metal is astoundingly large.”

If you think this all sounds crazy, well it is, and the financial elites know it. Kirby says, “When the financial elites are dealing with hopeless situations, they will make decisions that they know are absolutely foolhardy, have no merit and no prospects for success long term. They will push the mantra that if we can prevent the collapse from happening today and buy another day, or buy another week, or buy another month, then it’s worth doing. They avoid anarchy and basically they avoid meeting their end, and they avoid being hung. What this is really all about is treason has been committed at the very highest levels by financial elites and the people in control of the financial apparatus. In America, the people controlling the financial apparatus are the Deep State, and we know that Trump is anti-Deep State.”

In closing, Kirby says, “Why has this gone on so long? Most people are dumbfounded it (a crash) did not happen 10 to 15 years ago. The reason it hasn’t happened? . . . . The explanation is these jokers have created so much more money than anyone can wrap their head around. The money was created because we are on the vertical part of the growth curve of the dollar. This money has to be continually fed into the system or the whole thing blows up.”

Join Greg Hunter as he goes One-on-One with Rob Kirby of KirbyAnalytics.com.

(To Donate to USAWatchdog.com Click Here)

After the Interview:

Rob Kirby has some free information on KirbyAnalytics.com. If you want to become a subscriber to his newsletter, click here.

end

This is something that I will be watching:  the degradation of BBB investment grade bonds as they collapse.  The total issuance is somewhere around $1 trillion dollars and the collapse of GE and the rapid fall in oil prices is certainly placing a burden on these bonds.  An implosion will certainly precipitate an global economic collapse

(courtesy zero hedge)

Deutsche Bank: “Last Week Is A Dress Rehearsal For The Credit Problems Ahead”

In recent months we have covered extensively the threat to the credit market that is the downgrade of over a $1 trillion in BBB-rated investment grade bonds – most extensively in “The Next Bond Crisis: Over $1 Trillion In Bonds Risk Cut To Junk Once Cycle Turns” – with recent sharp moves wider by GE, PG&E and Ford bonds confirming that the credit market is starting to crack, and prompting a deluge of media coverage on this topic which we first discussed would be a major threat to the financial system last November.

Overnight, Deutsche Bank’s credit strategist Jim Reid shared a good summary of his thoughts on the ongoing repricing in both investment grade and high yield, putting the recent moves in a broader context.

Below we excerpt his key thoughts from his latest Morning Reid publication.

From Deutsche Bank’s Jim Reid:

There was lots in the press this weekend about Brexit but interestingly for me as a credit strategist by day, there was also a fair bit of negative press about credit with some of the more sensational articles suggesting that credit could soon blow up financial markets due to (amongst other things) the weight of US BBBs about to swamp the HY market, record levels of Cov-lite issuance  and due to record high US corporate leverage. For us there needs to some perspective.

We have been on the underweight side of credit all year, more weighted to a US underweight of late but that’s been more of a valuation play than over too much concerns about immediate credit quality. The US economy remains strong and credit deterioration is likely to remain idiosyncratic until it rolls over.

At that point we will have big problems though and last week’s activity made us more confident liquidity will be bad when the cycle turns as we moved a fairly large amount on nervousness as much as anything else.

GE, PG&E, plunging oil and the factors discussed above provided a jolt but we don’t think this is enough for now to impact the economy so credit will probably stabilise. However once there is actual broad economic weakness, this last week will be a dress rehearsal for the problems ahead and there will be little two-way activity with spreads gapping wider.

However that’s for further down the cycle. For now credit’s main problem has been it hadn’t responded enough to the pick up in vol.  The good news is that this is starting to catch-up and correct. Last week, EU non-fin. IG spread widened by 13bps and HY by 45bps while those on US IG by 14bps and HY by 49bps.

Big moves relative to a small down week in equities.

end

NOT AGAIN!!????  AT MERCY HOSPITAL IN CHICAGO AN ACTIVE SHOOTER IS ON THE LOOSE…

(ZEROHEDGE)

‘Active Shooter’ Reported At Chicago Hospital

A local CBS affiliate station in Chicago is reporting that an active shooting is in progress at Mercy Hospital on the South Side of the city. ‘Multiple victims’ have been reported.

An officer is reportedly one of the victims. They are in critical condition but receiving ‘excellent care’.

Spot News@SPOTNEWSonIG

Spot News@SPOTNEWSonIG

https://twitter.com/AJGuglielmi/status/1064639876249907200 

Anthony Guglielmi

@AJGuglielmi

A #ChicagoPolice officer has been shot in the active shooter incident at Mercy Hospital. He is in critical condition but receiving excellent care. Please send your prayers.

View image on Twitter

SWAMP STORIES

The White House is going to pull Acosta’s pass again after its temporary court order expires

(courtesy zerohedge)

White House To Pull Acosta’s Pass Again After

Temporary Court Order Expires

The White House will pull CNN correspondent Jim Acosta’s press credentials again after a 14-day temporary court-order expires, according to the network, which has asked for an emergency hearing to defend Acosta’s access.

“Friday’s court ruling means that a temporary restraining order is in effect for 14 days. But [White House] officials sent Acosta a letter stating that his press pass is set to be suspended again once the restraining order expires,” reports CNN’s Brian Stelter.

Brian Stelter

@brianstelter

A new threat to Jim @Acosta‘s press pass. Details in tonight’s @ReliableSources digest: https://mailchi.mp/cnn/rs-nov-18-2018 

Brian Stelter

@brianstelter

Friday’s court ruling means that a temporary restraining order is in effect for 14 days. But W.H. officials sent @Acosta a letter stating that his press pass is set to be suspended again once the restraining order expires… https://bit.ly/2Kfv1fY

418 people are talking about this

CNN said in a statement that rescinding Acosta’s press pass again would threaten “all journalists and news organizations.”

“The White House is continuing to violate the First and 5th Amendments of the Constitution,” the network said, adding: “These actions threaten all journalists and news organizations. Jim Acosta and CNN will continue to report the news about the White House and the President.

Acosta’s press credentials were pulled after a heated exchange with President Trump in which the CNN Senior White House correspondent refused to relinquish the microphone – batting a White House intern’s arm away as she attempted to take it from him.

U.S. District Judge Timothy Kelly last Friday granted CNN’s request to restore Acosta’s hard press pass through a 14-day temporary injunction that expires on Nov. 30.

The ruling was limited, however, with Kelly stating that only Acosta’s Fifth Amendment rights to due process were violated. The judge, who was appointed by Trump, did not issue a ruling on whether the correspondent’s First Amendment rights were violated.

“I want to emphasize the very limited nature of this ruling,” Kelly said Friday. –The Hill

Following the decision, White House press secretary Sarah Huckabee Sanders said that officials would “temporarily” reinstate Acosta’s hard pass, telegraphing that it would likely be pulled again once the ruling expired.

“Today, the court made clear that there is no absolute First Amendment right to access the White House,” Sanders said. “In response to the court, we will temporarily reinstate the reporter’s hard pass. We will also further develop rules and processes to ensure fair and orderly press conferences in the future.”

In a Sunday interview with Fox News‘s Chris Wallace, President Trump had a few ideas of his own on Acosta, including throwing him out.

I think one of the things we’ll do is maybe turn the camera off that faces them because then they don’t have any air time, although I’ll probably be sued for that and maybe, you know, win or lose it, who knows,” said Trump. “I mean, with this stuff you never know what’s going to happen.”

Calling Acosta “unbelievably rude to [White House press secretary] Sarah Huckabee, who’s a wonderful woman,” Trump said his administration is currently formulating “rules and regulations” for White House reporters. “And if he misbehaves, we’ll throw him out or we’ll stop the news conference,” the president added. –Fox News

END
More fun and game and it is an indicator of things to come from the Democrats:  they are now suing to remove Whitaker as Acting A-G
(courtesy zerohedge)

Senate Democrats Sue To Remove Whitaker As Acting

AG

Not content to sit back and let the State of Maryland do all the heavy lifting (and reap all of the credit should it succeed) three of the most publicity hungry Democrats in the Upper Chamber are reportedly filing a federal lawsuit to challenge Acting AG Matthew Whitaker’s appointment, arguing that President Trump’s decision to elevate Whitaker over Deputy AG Rod Rosenstein using a controversial federal succession law was unconstitutional.

Whitaker

According to the Daily Beast, which first reported on the lawsuit, the senators are hoping a federal judge will remove Whitaker from his post immediately, allowing Rosenstein to serve as acting AG until the White House can shepherd its nominee through the Senate. The lawsuit comes after the DOJ’s office of legal counsel affirmed Whitaker’s appointment on constitutional grounds last week.

The suit, which is being filed by Sens. Richard Blumenthal (D-CT), Sheldon Whitehouse (D-RI), and Mazie K. Hirono (D-HI) in U.S. District Court for the District of Columbia, is the latest and most aggressive salvo against the Whitaker appointment. Last week, the Department of Justice Office of Legal Counsel defended Whitaker’s promotion in a memo that drew immediate criticism for its expansive understanding of the president’s power. That view is in hot dispute, including from the state of Maryland, which petitioned a federal judge to stop him from serving on constitutional grounds.

The Senators are working with two groups, Protect Democracy and the Constitutional Accountability Center, on the lawsuit. Their argument hinges on the notion that Whitaker wasn’t confirmed by the Senate, and is therefore ineligible to serve. Though he was confirmed years ago as US Attorney for the Southern District of Iowa under George W Bush, the suit argues that this confirmation has effectively lapsed. By comparison, the White House has argued that Whitaker’s position as chief of staff to Session constituted a “senior role” in the Department, making him eligible for elevation under the Vacancies Reform Act. What little precedent exists appears to favor Trump: Last year, a federal judge ruled in the White House’s favor when Trump use of the act to appoint Mick Mulvaney to lead the CFPB triggered Democratic resistance. The Democrats must also prove that they have “standing” to challenge Whitaker’s appointment – meaning that Whitaker’s appointment violated their rights.

Blumenthal, who has been angling to replace Dianne Feinstein as the top Dem on the Senate Judiciary Committee after she steps down or retires, said in a statement that Whitaker’s appointment was a flagrant violation.

“Installing Matthew Whitaker so flagrantly defies constitutional law that any viewer of Schoolhouse Rock would recognize it,” Blumenthal said in a statement. “President Trump is denying Senators our constitutional obligation and opportunity to do our job: scrutinizing the nomination of our nation’s top law enforcement official. The reason is simple: Whitaker would never pass the advice and consent test. In selecting a so-called “constitutional nobody” and thwarting every Senator’s constitutional duty, Trump leaves us no choice but to seek recourse through the courts.”

If that’s true, Richard, then why hasn’t a federal judge already ruled Whitaker ineligible to serve?

I HOPE TO SEE YOU ON TUESDAY IF ALL GOES WELL
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One comment

  1. themagicbusguy · · Reply

    Thanks Harvey, you are needed and appreciated

    Like

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