DEC 11/AUTHORITIES LOSING CONTROL AS DOW/NASDAQ SWING WILDLY TODAY: DOW DOWN 53 POINTS BUT NASDAQ UP A TINY 11 POINTS/GE AND DEUTSCHE BANK CLOSE AT OR NEAR THEIR 2009 LOWS WITH GE AT $6.66 AND DEUTSCHE BANK AT 8.33 EUROS/GOLD LOSES $4.85 TO $1241.95 BUT SILVER HOLDS AS IT REFUSES TO GO DOWN: IT WAS UP ONE CENT TO $14.53/:HUGE STORIES WITH RESPECT TO CHINA TODAY: FIRST TWO RETALIATORY MEASURES INITIATED BY CHINA AND THEN THE USA CHARGES CHINA WITH ESPIONAGE ON THEIR PRODUCTS/JAPAN’S SOFTBANK, HUAWEI’S LARGEST SUPPLIER THREATENS TO STOP BUYING THEIR PRODUCTS BECAUSE OF THEIR ESPIONAGE/CHAOS CONTINUES IN THE UK WITH RESPECT TO BREXIT/FRANCE APPEASES ITS CITIZENS WITH FREE MONEY BUT NOW HAS A PROBLEM AS ITS DEFICIT IS NOW OVER 3.5% OF GDP: ITALY IS NOW THRILLED!!/A CLASSIC SHOWDOWN BETWEEN PELOSI AND TRUMP ON THE WALL: A MUST SEE + MORE SWAMP STORIES FOR YOU TONIGHT/

 

 

 

GOLD: $1241.95 DOWN $4.85 (COMEX TO COMEX CLOSINGS)

Silver:   $14.53 UP 1 CENT (COMEX TO COMEX CLOSING)

Closing access prices:

Gold :  1243.00

 

silver: $14.56

 

 

 

 

 

 

 

For comex gold and silver:

DEC

 

 

 

 

 

NUMBER OF NOTICES FILED TODAY FOR  DEC CONTRACT: 662 NOTICE(S) FOR 66200 OZ (2.059 tonnes)

Total number of notices filed so far for DEC:  6742  for 674200 OZ  (20.9704 TONNES)

 

 

 

 

SILVER

 

FOR DECEMBER

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2 NOTICE(S) FILED TODAY FOR  10,000  OZ/

Total number of notices filed so far this month: 341921 for 17,105,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Bitcoin: OPENING MORNING TRADE  $3371: DOWN 60

 

Bitcoin: FINAL EVENING TRADE: $3409  DOWN 28 

 

end

 

XXXX

 

 

Let us have a look at the data for today

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In silver, the total OPEN INTEREST FELL BY A GOOD SIZED 3009 CONTRACTS FROM 179,473 DOWN TO 178,609 WITH YESTERDAY’S  8 CENT FALL IN SILVER PRICING AT THE COMEX. TODAY WE ARRIVED FURTHER FROM  AUGUST’S  RECORD SETTING OPEN INTEREST OF 244,196 CONTRACTS.

WE HAVE ALSO WITNESSED A LARGE AMOUNT OF PHYSICAL METAL STAND FOR COMEX DELIVERY AS WE NOW HAVE JUST LESS THAN 20 MILLION OZ STANDING IN DECEMBER. 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:

1446 EFP’S FOR DECEMBER AND 0 FOR MARCH AND ZERO FOR ALL  OTHER MONTHS  AND THEREFORE TOTAL ISSUANCE: OF 1446 CONTRACTS. WITH THE TRANSFER OF 1446 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 1446 EFP CONTRACTS TRANSLATES INTO 7.23 MILLION OZ  ACCOMPANYING:

1.THE 8 CENT FALL IN SILVER PRICE AT THE COMEX AND

2. THE STRONG AMOUNT OF SILVER OUNCES WHICH STOOD FOR DELIVERY IN THE LAST SIX MONTHS:

JUNE/2018. (5.420 MILLION OZ);

FOR JULY: 30.370 MILLION OZ

FOR AUG., 6.065 MILLION OZ

FOR SEPT. 39.505 MILLION  OZ S

FOR OCT.2.525 MILLION OZ.

FOR NOV:  A HUGE 7.440 MILLION OZ STANDING FOR NOVEMBER AND

NOW 19.465 INITIALLY STAND FOR DECEMBER.

 

 

ACCUMULATION FOR EFP’S/SILVER/J.P.MORGAN’S HOUSE OF BRIBES, / STARTING FROM FIRST DAY NOTICE/FOR MONTH OF DEC: 10,690 CONTRACTS (FOR 7 TRADING DAYS TOTAL 10,690 CONTRACTS) OR 53.45 MILLION OZ: (AVERAGE PER DAY: 1527 CONTRACTS OR 7.63 MILLION OZ/DAY)

TO GIVE YOU AN IDEA AS TO THE HUGE SUPPLY THIS MONTH IN SILVER:  SO FAR THIS MONTH OF DEC:  53.45 MILLION PAPER OZ HAVE MORPHED OVER TO LONDON. THIS REPRESENTS AROUND 7.63% 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:           2,730.48    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

ACCUMULATION FOR NOVEMBER /2018:                                 247.18         MILLION OZ

RESULT: WE HAD A GOOD SIZED DECREASE IN COMEX OI SILVER COMEX CONTRACTS OF 2864 WITH THE 8 CENT FALL IN SILVER PRICING AT THE COMEX //YESTERDAY.. AS THE BOYS CONTINUE WITH THEIR CUSTOMARY MIGRATION OVER TO  ETFS AT THE START OF AN ACTIVE DELIVERY MONTH. THE CME NOTIFIED US THAT WE HAD A STRONG SIZED EFP ISSUANCE OF 1446 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 LOST A STRONG SIZED: 1418 TOTAL OI CONTRACTS ON THE TWO EXCHANGES:

i.e 1446 OPEN INTEREST CONTRACTS HEADED FOR LONDON  (EFP’s) TOGETHER WITH DECREASE OF 3009 OI COMEX CONTRACTS. AND ALL OF THIS  DEMAND HAPPENED WITH A 8 CENT FALL IN PRICE OF SILVER  AND A CLOSING PRICE OF $14.52 WITH RESPECT TO YESTERDAY’S TRADING. YET WE HAD A GIGANTIC AMOUNT OF SILVER STANDING AT THE COMEX FOR DELIVERY 

 

 

In ounces AT THE COMEX, the OI is still represented by JUST UNDER 1 BILLION oz i.e. .898 BILLION OZ TO BE EXACT or 128% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT DEC MONTH/ THEY FILED AT THE COMEX: 2 NOTICE(S) FOR 10,000 OZ OF SILVER

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

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

ON THE DEMAND SIDE WE HAVE THE FOLLOWING:

  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:  A HUGE 39.505 MILLION OZ./ OCTOBER: 2,520,000 oz  NOV AT 7.440 MILLION OZ./AND NOW DEC. AT 19.465 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 3952 CONTRACTS DOWN TO 403,733 WITH THE FALL IN THE COMEX GOLD PRICE/(A FALL IN PRICE OF $3.05//.YESTERDAY’S TRADING) 

 

THE CME RELEASED THE DATA FOR EFP ISSUANCAND IT TOTALED A STRONG  SIZED 8044 CONTRACTS:

 

DECEMBER HAD AN ISSUANCE OF 8044 CONTACTS  AND ALL OTHER MONTHS ZERO.  The NEW COMEX OI for the gold complex rests at 403,733. ALSO REMEMBER THAT THERE WILL BE A DELAY IN THE ISSUANCE OF EFP’S.  THE BANKERS REMOVE LONG POSITIONS OF COMEX GOLD IMMEDIATELY.  THEN THEY ORCHESTRATE THEIR PRIVATE EFP DEAL WITH THE LONGS AND THAT COULD TAKE AN ADDITIONAL, 48 HRS SO WE GENERALLY DO NOT GET A MATCH WITH RESPECT TO DEPARTING COMEX LONGS AND NEW EFP LONG TRANSFERS. . EVEN THOUGH THE BANKERS ISSUED THESE MONSTROUS EFPS, THE OBLIGATION STILL RESTS WITH THE BANKERS TO SUPPLY METAL BUT IT TRANSFERS THE RISK TO A LONDON BANKER OBLIGATION AND NOT A NEW YORK COMEX OBLIGATION. LONGS RECEIVE A FIAT BONUS TOGETHER WITH A LONG LONDON FORWARD. THUS, BY THESE ACTIONS, THE BANKERS AT THE COMEX HAVE JUST STATED THAT THEY HAVE NO APPRECIABLE METAL!! THIS IS A MASSIVE FRAUD: THEY CANNOT SUPPLY ANY METAL TO OUR COMEX LONGS BUT THEY ARE QUITE WILLING TO SUPPLY MASSIVE NON BACKED GOLD (AND SILVER) PAPER KNOWING THAT THEY HAVE NO METAL TO SATISFY OUR LONGS. LONDON IS NOW SEVERELY BACKWARD IN BOTH GOLD AND SILVER  AND WE ARE WITNESSING DELAYS IN ACTUAL DELIVERIES.

IN ESSENCE WE HAVE AN GOOD SIZED GAIN IN TOTAL CONTRACTS ON THE TWO EXCHANGES OF 4092 CONTRACTS:  3932 OI CONTRACTS DECREASED AT THE COMEX AND 8044 EFP OI CONTRACTS WHICH NAVIGATED OVER TO LONDON. THUS  TOTAL OI GAIN: 4092 CONTRACTS OR 409,200 OZ = 13.92 TONNES. AND ALL OF THIS DEMAND OCCURRED WITH A FALL IN THE PRICE OF GOLD/ YESTERDAY TO THE TUNE OF $3.05

 

 

 

 

YESTERDAY, WE HAD 7908 EFP’S ISSUED.

ACCUMULATION OF EFP’S GOLD AT J.P. MORGAN’S HOUSE OF BRIBES: (EXCHANGE FOR PHYSICAL) FOR THE MONTH OF DEC : 55,254 CONTRACTS OR 5,525,400 OZ OR 171.86 TONNES (7 TRADING DAYS AND THUS AVERAGING: 7893 EFP CONTRACTS PER TRADING DAY

TO GIVE YOU AN IDEA AS TO THE HUGE SIZE OF THESE EFP TRANSFERS :  THIS MONTH IN 7 TRADING DAYS IN  TONNES: 171.86 TONNES

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

THUS EFP TRANSFERS REPRESENTS 171.86/2550 x 100% TONNES =  6.73% OF GLOBAL ANNUAL PRODUCTION SO FAR IN JULY ALONE.***

ACCUMULATION OF GOLD EFP’S YEAR 2018 TO DATE:     6,936.24  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)

ACCUMULATION OF GOLD EFP FOR NOV 2018:                        552.88 TONNES (21 TRADING DAYS)

 

WHAT IS ALARMING TO ME, ACCORDING TO OUR LONDON EXPERT ANDREW MAGUIRE IS THAT THESE EFP’S ARE BEING TRANSFERRED TO WHAT ARE CALLED SERIAL FORWARD CONTRACT OBLIGATIONS AND THESE CONTRACTS ARE LESS THAN 14 DAYS.  ANYTHING GREATER THAN 14 DAYS, THESE MUST BE RECORDED AND SENT TO THE COMPTROLLER, GREAT BRITAIN TO MONITOR RISK TO THE BANKING SYSTEM.  IF THIS IS INDEED TRUE, THEN THIS IS A MASSIVE CONSPIRACY TO DEFRAUD AS WE NOW WITNESS A MONSTROUS TOTAL EFP’S ISSUANCE AS IT HEADS INTO THE STRATOSPHERE

Result: A CONSIDERABLE SIZED DECREASE IN OI AT THE COMEX OF 3952 WITH THE LOSS  IN PRICING ($3.05) THAT GOLD UNDERTOOK YESTERDAY) //.WE ALSO HAD A STRONG SIZED NUMBER OF COMEX LONG TRANSFERRING TO LONDON THROUGH THE EFP ROUTE: 8044 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 8044 EFP CONTRACTS ISSUED, WE HAD AN GOOD GAIN OF 4092 CONTRACTS IN TOTAL OPEN INTEREST  ON THE TWO EXCHANGES:

8044 CONTRACTS MOVE TO LONDON AND 3952 CONTRACTS DECREASED AT THE COMEX. (in tonnes, the GAIN in total oi equates to 12.73 TONNES). ..AND ALL OF THIS  DEMAND OCCURRED WITH THE FALL OF $3.05 IN YESTERDAY’S TRADING AT THE COMEX

 

 

we had: 662 notice(s) filed upon for 66,200 oz of gold at the comex.

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

GLD...

 

WITH GOLD DOWN $4.85 TODAY

 

A SMALL CHANGE IN GOLD INVENTORY:

A DEPOSIT OF .59 TONNES INTO THE GLD INVENTORY

 

 

 

 

 

 

 

 

 

 

/GLD INVENTORY   759.73 TONNES

Inventory rests tonight: 759.73 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 1 CENT  TODAY:

 

NO CHANGE IN SILVER INVENTORY AT THE SLV

 

 

 

/INVENTORY RESTS AT 318.735 MILLION OZ.

 

 

end

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

1. Today, we had the open interest in SILVER FELL BY A GOOD SIZED 3009 CONTRACTS from 179,473 DOWN TO 176,464  AND MOVING FURTHER FROM  THE NEW COMEX RECORD SET LAST IN AUG.2018 AT 244,196 WITH A SILVER PRICE OF $14.78/(AUGUST 22/2018)..THE PREVIOUS RECORD WAS SET ON APRIL 9/2018 AT 243,411 OPEN INTEREST CONTRACTS WITH THE SILVER PRICE AT THAT DAY: $16.53). AND PREVIOUS TO THAT, THE RECORD  WAS ESTABLISHED AT: 234,787 CONTRACTS, SET ON APRIL 21.2017 OVER  1 1/3 YEARS AGO.  THE PRICE OF SILVER ON THAT DAY: $17.89.  AS YOU CAN SEE, WE HAVE RECORD HIGH OPEN INTERESTS IN SILVER  ACCOMPANIED BY A CONTINUAL LOWER PRICE WHEN THAT RECORD WAS SET…..

 

.

OUR CUSTOMARY MIGRATION OF COMEX LONGS CONTINUE TO MORPH INTO LONDON FORWARDS  AS OUR BANKERS USED THEIR EMERGENCY PROCEDURE TO ISSUE:

 

1446 CONTRACTS FOR DECEMBER. 0 CONTRACTS FOR MARCH AND  AND ALL OTHER MONTHS: ZERO. TOTAL EFP ISSUANCE: 1446 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 3009 CONTRACTS TO THE 1446 OI TRANSFERRED TO LONDON THROUGH EFP’S,  WE OBTAIN A CONSIDERABLE LOSS  OF 1563 OPEN INTEREST CONTRACTS.  THUS IN OUNCES, THE LOSS ON THE TWO EXCHANGES: 7.815 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.,  7.440 MILLION OZ FINALLY STANDING IN NOVEMBER. AND NOW 19.465 MILLION OZ  STANDING IN DECEMBER.

 

 

RESULT: A GOOD SIZED DECREASE IN SILVER OI AT THE COMEX WITH THE 8 CENT PRICING GAIN THAT SILVER UNDERTOOK IN PRICING// YESTERDAY.BUT WE ALSO HAD ANOTHER GOOD SIZED 1446 EFP’S ISSUED TRANSFERRING COMEX LONGS OVER TO LONDON. TOGETHER WITH THE STRONG  SIZED AMOUNT OF SILVER OUNCES STANDING FOR SEPTEMBER, DEMAND FOR PHYSICAL SILVER CONTINUES TO INTENSIFY AS WE WITNESS SEVERE BACKWARDATION IN SILVER IN LONDON.

 

 

(report Harvey)

.

2.a) The Shanghai and London gold fix report

(Harvey)

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY: Bloomberg

3. ASIAN AFFAIRS

i)TUESDAY MORNING/ MONDAY NIGHT: 

SHANGHAI CLOSED UP 9.51 POINTS OR 0.37% //Hang Sang CLOSED UP 19.29 POINTS OR 0.07% //The Nikkei closed DOWN 71.48 OR 0.34%/ Australia’s all ordinaires CLOSED UP 0.42%  /Chinese yuan (ONSHORE) closed UP  at 6.8985 AS TRUCE DECLARED FOR 3 MONTHS /Oil DOWN to 51.57 dollars per barrel for WTI and 60.45 for Brent. Stocks in Europe OPENED GREEN//.  ONSHORE YUAN CLOSED UP AT 6.8985AGAINST THE DOLLAR. OFFSHORE YUAN CLOSED UP ON THE DOLLAR AT 6.8968: HUGE DEVALUATION/PAST SEVERAL DAYS RESUMES// TRADE TALKS NOW ON/MAJOR PROBLEMS AT HUAWEI /CFO ARRESTED   : /ONSHORE YUAN TRADING BELOW LEVEL OF 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)The stock market reacts to China’s move to cut auto tariffs.  Due to the extreme lower wages in China, a cut in tariffs for American cars will have no effect on Chinese purchases of cars.

( zerohedge)

ii)Zero hedge correctly labels the real war is intellectual property and China’s aid to be the leader in the next generation of products.

( zerohedge)

iii)Not good:  China arrests a former Canadian diplomat as we fear China is in reprisal form due to Meng’s arrest

(zerohedge)

iv)The war between China and the USA escalated again with Trump condemning China over hacking and economic espionage

( zerohedge)

v)China, Japan/Softbank

With the release of news that China may be engaging in espionage, Japan’s largest bank: Softbank is now mulling abandoning some Huawei Equipment over cypersecurity concerns.  Softbank is Huawei’s largest customer in Japan
( zerohedge)

4/EUROPEAN AFFAIRS

i)UK

The chaos inside the UK due to the Brexit problems…

( zerohedge)

ii)Europe insists that the Brexit deal will not be renegotiated as Theresa May hopes to “run out the clock”

( zerohedge)

ii b)It is such a mess in Britain that many traders are refusing to trade the pound any more

( zerohedge)

ic)The pound falls to an 18 month low on the report that the conservatives have the 48 no confidence votes. Now we await to see if the labour party joins in ousting May

( zerohedge)
iii)France
A good look as to what is going on in France
(David Brown /Gatestone)

iv)France

It now seems that France has solved Italy’s deficit problem as Macron has decided to lower taxes big time in the wake of the riots in his country. His budgetary deficit for 2019 will now widen to 3.6% much higher than Italy’s 2.4%. As we say in chess, check Mr Draghi…your move

(courtesy zerohedge)

v)And now its credit risk now soars

(courtesy zerohedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

 

 

6. GLOBAL ISSUES

 

7. OIL ISSUES

 

 

 

 

8 EMERGING MARKET ISSUES

i)Venezuela

 

 

 

9. PHYSICAL MARKETS

 

i)Due to the criminal conviction of trader Edmonds, the USA prosecution is seeking to halt the civil lawsuit. I was misinformed: all discoveries in a civil suit are public and because of that, the prosecution gives the defendants the right to plead the 5th if their testimony incriminates them

( zerohedge/Chris Powell)
ii)USA gold is telling us that sentiment is shifting towards our precious metals
(USAgold/GATA)

iii)Reuters is running a study purporting that an illegal gold rush in destroying the Amazon rainforest.

( zerohedge)

iv)Detour mines extends the deadline has shareholders have so far voted to oust 5 out of 9 directors

( National Post/Friedman/GATA)

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

 

 

MARKET TRADING

i)This morning:  futures surge on USA/China trade talks and talk of China lowering tariffs
( zerohedge)
ii)This afternoon all the big gains have evaporated
( zerohedge)

 

 

ii)Market data/

Interesting:  core PPI surges but the total PPI weakens due to lower energy costs.

(courtesy zerohedge)

 

iii)USA ECONOMIC/GENERAL STORIES

i)Oh OH! this is dangerous;  GE falls to its March 2009 low of $6.66. GE is a large derivative player and no doubt that they are off side of many of their trades

(courtesy zerohedge)

ii)the bond king has spoken:  the economy is slowing down

also with the stock market woes, bonds should have rallied a lot more

Gundlach states that there will be no rate hikes in 2019

and he also states that the Fed is very worried on the flattening of the yield curve

(Jeff Gundlach)

iv)SWAMP STORIES

a)Nadler is claiming that Trump ordering the payoffs to mistresses would certainly be an impeachable offense.  Many from Fox TV disagree

( zerohedge)

b)Trump, Pelosi and Schumer square off in a shouting match in the Oval office.  The Democrats do not want a wall whereas Trump demands it.  The Democrats do not want to shut down government.

( zerohedge)

c)this is going to be really exciting once Lindsay Graham becomes head of the Senate Judiciary Committee.  He is going to ask for a special counsel to probe all things of Clinton including Uranium one

(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 3,952 CONTRACTS DOWN to an OI level 403,733 WITH THE LOSS IN THE PRICE OF GOLD ($3.05 IN YESTERDAY’S COMEX TRADING).FOR TWO YEARS STRAIGHT WE HAVE NOTICED THAT ONE WEEK PRIOR TO FIRST DAY NOTICE OF AN ACTIVE DELIVERY MONTH THE COMEX OPEN INTEREST CONTRACTS AND EFP’S NOTICES EXPONENTIALLY INCREASE AS WELL AS WE WITNESS THE COMEX OPEN INTEREST COLLAPSE. ONCE WE GET TO FIRST DAY NOTICE, THEN THE OPEN INTEREST RISES AND AGAIN THEY DID NOT DISAPPOINT US.

 

 

WE ARE NOW IN THE  ACTIVE DELIVERY MONTH OF DEC..  THE CME REPORTS THAT THE BANKERS ISSUED A CONSIDERABLE SIZED COMEX TRANSFER THROUGH THE EFP ROUTE AS THESE LONGS RECEIVED A DELIVERABLE LONDON FORWARD TOGETHER WITH A FIAT BONUS., THAT IS 8044 EFP CONTRACTS WERE ISSUED:

FOR DECEMBER:  8044 AND  ZERO FOR ALL OTHER MONTHS:

TOTAL EFP ISSUANCE:  8044 CONTRACTS.

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

ON A NET BASIS IN OPEN INTEREST WE GAINED THE FOLLOWING TODAY ON OUR TWO EXCHANGES:  4092 TOTAL CONTRACTS IN THAT 8044 LONGS WERE TRANSFERRED AS FORWARDS TO LONDON AND WE LOST A CONSIDERABLE SIZED 3,952 COMEX CONTRACTS.

NET GAIN ON THE TWO EXCHANGES: 4092 contracts OR 409,200 OZ OR 12.73 TONNES.

 

We are now in the active contract month of December and we now have a total of 1567 contracts stand in December so we had a loss of 129 contracts.  We had 98 notices served yesterday, so we lost only 31 contracts or 3100 oz will not stand as these guys  morphed into London based forwards and as well accepting a fiat bonus.  QUEUE JUMPING TOOK A HIATUS AT THE GOLD COMEX 

 

The next delivery month after December is January which saw it RISE TO 3198 FOR A LOSS OF 161 CONTRACTS.  February LOST A CONSIDERABLE 4874 contracts to stand at 304,667 contracts

 

FOR COMPARISON TO THE 2017 CONTRACT MONTH:

 

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 662 NOTICES FILED AT THE COMEX FOR 66200 OZ. (2.059 tonnes)

 

 

 

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And now for the wild silver comex results.

Total silver OI FELL BY 3009 CONTRACTS FROM 179,473 DOWN TO 176,464 (AND FURTHER FROM 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 OI COMEX GAIN  OCCURRED WITH A 8 CENT FALL IN PRICING.

 

WE ARE NOW INTO THE ACTIVE DELIVERY MONTH OF DECEMBER AND, WE WERE  INFORMED THAT WE HAD A GOOD SIZED 1446 EFP CONTRACTS:

 

FOR DECEMBER: 1446 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: 1446.  ON A NET BASIS WE LOST 1418 SILVER OPEN INTEREST CONTRACTS AS WE OBTAINED A  3009 CONTRACT LOSS AT THE COMEX COMBINING WITH THE ADDITION OF 1446 OI CONTRACTS NAVIGATING OVER TO LONDON.

NET LOSS ON THE TWO EXCHANGES:   1563 CONTRACTS...AND ALL OF THIS STRONG DEMAND OCCURRED WITH A 8 CENT FALL IN PRICING// YESTERDAY

 

 

 

 

We are now in the non active delivery month of DECEMBER and here in this front month of December we now have 473 contracts standing for a loss of 92 contracts.  We had 91 contracts stand for delivery yesterday so we lost  1 contract or an additional 5,000 oz will not stand for delivery as these guys morphed into London based forwards as well as  accepting a fiat bonus.

 

After  December we have the non active  January contract month and here we saw a gain of 4 contracts up to 1929 contracts.  February saw its another 10 contract gain to stand at 79. March, the next big delivery month after December saw a loss of 2427 contracts down to 145,431

FOR COMPARISON TO THE COMEX 2017 CONTRACT MONTH:

 

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 2 notice(s) filed for 10,000 OZ for the DEC, 2018 COMEX contract for silver

 

Trading Volumes on the COMEX

 

PRELIMINARY COMEX VOLUME FOR TODAY: 176,805 contracts,

 

CONFIRMED COMEX VOL. FOR YESTERDAY:  215,578  contracts

 

 

 

 

 

 

 

 

 

 

 

INITIAL standings for  DEC/GOLD

DEC 11-/2018.

Gold Ounces
Withdrawals from Dealers Inventory in oz nil oz
Withdrawals from Customer Inventory in oz
160.755
oz
brinks
5 kilobars
Deposits to the Dealer Inventory in oz 12,828.249 o

HSBC

 

oz

 

 

Deposits to the Customer Inventory, in oz  

 

 

 

 

 

32.15

 

1 kilobars

 

 

 

 

 

 

 

 

 

 

No of oz served (contracts) today
662 notice(s)
 66200 OZ
2.059 TONNES
No of oz to be served (notices)
905 contracts
(90500 oz)
Total monthly oz gold served (contracts) so far this month
6742 notices
674,200 OZ
20.9704 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 1 dealer entries:

 

i) Into HSBC:  12,828.249 oz

total dealer deposits: 12,828.249  oz

total dealer withdrawals: 0 oz

We had 3 kilobar entries

 

we had 1 deposits into the customer account

i) Into HSBC:  32.15 oz  (1 kilobars)

total gold customer deposits;  32.15 oz

 

we had 1 gold withdrawals from the customer account:

i) Out of brinks:  160.755 oz  (5 kilobars)

total gold withdrawing from the customer;  160.755 oz

 

we had 1  adjustment..
i) Out of HSBC:
48,1226.500 oz  (1500 kilobars) was adjusted out of the customer and this landed into the dealer HSBC

we still have not had any adjustments out of the dealer to the customer account to signify a settlement

FOR THE DEC 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 662 contract(s) of which 0 notices were stopped (received) by j.P. Morgan dealer and 139 notice(s) was (were) stopped/ Received) by j.P.Morgan customer account and 388 notices by the squid  (Goldman Sachs)

 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
To calculate the INITIAL total number of gold ounces standing for the DEC/2018. contract month, we take the total number of notices filed so far for the month (6742) x 100 oz , to which we add the difference between the open interest for the front month of DEC. (1567 contract) minus the number of notices served upon today (662 x 100 oz per contract) equals 764,700 OZ OR 23.78 TONNES) the number of ounces standing in this  active month of DECEMBER

 

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

No of notices served (6742 x 100 oz)  + {1567)OI for the front month minus the number of notices served upon today (662 x 100 oz )which equals 764,700 oz standing OR 23.78 TONNES in this  active delivery month of DECEMBER.

WE LOST 31 CONTRACTS OR 3100 OZ WILL NOT STAND AT THE COMEX AS THEY  MORPH INTO A LONDON BASED FORWARDS AS WELL AS ACCEPTING A FIAT BONUS.

 

 

 

 

 

THERE ARE ONLY 19.696 TONNES OF REGISTERED COMEX GOLD AVAILABLE FOR DELIVERY AGAINST 23.78 TONNES STANDING FOR DECEMBER

 

 

total registered or dealer gold:  694,290.983 oz or   21.595 tonnes*
total registered and eligible (customer) gold;   8,306,812.011 oz 258.37 tonnes
*however we have 20.9704 tonnes of gold ALREADY SERVED UPON against dealer inventory of 21.595 tonnes and so far we have had no settlements  as of yet.  We generally get a settlement when we see an adjustment from the dealer side to the customer side..
we have a total of 23.78 tonnes of gold standing for metal against only 21.595 tonnes of dealer gold and nothing has been settled so far…

IN THE LAST 27 MONTHS 96 NET TONNES HAS LEFT THE COMEX.

 

end

And now for silver

AND NOW THE NOV DELIVERY MONTH

DEC INITIAL standings/SILVER

DEC 11, 2018
Silver Ounces
Withdrawals from Dealers Inventory NIL oz
Withdrawals from Customer Inventory
121,203.072 oz
CNT
Delaware
HSBC
Scotia

 

 

Deposits to the Dealer Inventory
20,936.220 oz
Brinks
Deposits to the Customer Inventory
600,707.923
oz
CNT
No of oz served today (contracts)
2
CONTRACT(S)
10,000 OZ)
No of oz to be served (notices)
471 contracts
2,355,000 oz)
Total monthly oz silver served (contracts) 3421 contracts

(17,105,000 oz)

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

we had 1 inventory movement at the dealer side of things

i) Into Brinks: 20,936.220 oz

total dealer deposits: 20,936.220 oz

total dealer withdrawals: 0 oz

we had 1 deposits into the customer account

 

i) Into JPMorgan: 18,879.500 oz

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

JPMorgan now has 150.55 million oz of  total silver inventory or 51.03% of all official comex silver. (152.0 million/292 million)

 

ii) Into CNT:   600,727,923 oz

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

total customer deposits today: 600,727.923  oz

we had 4 withdrawals out of the customer account:
i) Out of CNT:  50,962.02
ii) Out of Delaware;  972.27 oz
iii) Our od HSBC: 20,082.62 oz
iv) Out of Scotia:  49,186.162 oz

 

 

 

 

 

total withdrawals: 121,203.072  oz

 

we had 1 adjustments

i) Out of Brinks:  5282.82 oz was adjusted out of the customer and this landed into the dealer account of HSBC

 

total dealer silver:  88.893 million

total dealer + customer silver:  296.693  million oz

 

 

 

 

The total number of notices filed today for the DEC 2018. contract month is represented by 2 contract(s) FOR 10,000 oz. To calculate the number of silver ounces that will stand for delivery in DEC., we take the total number of notices filed for the month so far at 3421 x 5,000 oz = 17,105,000 oz to which we add the difference between the open interest for the front month of DEC. (473) and the number of notices served upon today (2 x 5000 oz) equals the number of ounces standing.

.

Thus the INITIAL standings for silver for the DEC/2018 contract month: 3421(notices served so far)x 5000 oz + OI for front month of DEC( 473) -number of notices served upon today (2)x 5000 oz equals 19,460,000 oz of silver standing for the DEC contract month.  This is a strong number of oz standing for an off delivery month.

We lost 1 contract or 5,000 additional oz will not stand and these guys accepted a London based forward as well as ac a fiat bonus. The EFP route is nothing but a cash settlement process and it is done in London to avoid detection. It is becoming quite obvious that the bankers are in urgent need of silver as we witness the constant queue jumping in silver these past 20 months.

 

 

 

 

 

 

 

 

 

 

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ESTIMATED VOLUME FOR TODAY: 74M645 CONTRACTS  … 

 

 

 

 

CONFIRMED VOLUME FOR YESTERDAY: 58,375 CONTRACTS… 

 

 

 

 

YESTERDAY’S CONFIRMED VOLUME OF 58,375 CONTRACTS EQUATES to 291 million OZ  41.69% 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 -3.93-% (DEC 11/2018)
2. Sprott gold fund (PHYS): premium to NAV RISES TO -0.71% to NAV (DEC 11 /2018 )
Note: Sprott silver trust back into NEGATIVE territory at -3.93%-/Sprott physical gold trust is back into NEGATIVE/

(courtesy Sprott/GATA)

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

NAV 12.50/TRADING 12.01/DISCOUNT 3.91

END

And now the Gold inventory at the GLD/

DEC 11/WITH GOLD DOWN $4.85 A SMALL DEPOSIT OF .59 TONNES OF GOLD INTO THE GLD/INVENTORY RESTS AT 760.32 TONNES

DEC 10/WITH GOLD DOWN $3.05 TODAY: NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 759.73 TONNES

DEC 7/WITH GOLD UP $8.35/A BIG CHANGE IN GOLD INVENTORY AT THE GLD: A DEPOSIT OF 1.51 TONNES/INVENTORY RESTS AT 759.73 TONNES

DEC 6/WITH GOLD UP $1.60: NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 758.21 TONNES

DEC 5/WITH GOLD DOWN $4.25: NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 758.21 TONNES

DEC 4/WITH GOLD UP $7.25: A HUGE WITHDRAWAL OF 3.53 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 758.21 TONNES

DEC 3/WITH GOLD UP $13.25: NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 761.74 TONNES

NOV 30/WITH GOLD DOWN $4.00: NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 761.74 TONNES

NOV 29/WITH GOLD UP $1.30: NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 761.74 TONNES

NOV 28/WITH GOLD UP $9.45 TODAY: NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 761.74 TONNES

NOV 27/WITH GOLD DOWN $8.60 A WITHDRAWAL OF 1.18 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 761.74 TONNES

NOV 26/WITH GOLD DOWN 65 CENTS: NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 762.92 TONNES

 

NOV 23/WITH GOLD DOWN $4.25/A HUGE DEPOSIT OF 2.06 TONNES OF GOLD INTO THE GLD/INVENTORY RESTS AT 762.92 TONNES

NOV 21/WITH GOLD UP $6.70 TODAY: NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 760.86 TONNES

NOV 20/WITH GOLD DOWN $3.95: A BIG CHANGE: A GOOD SIZED DEPOSIT OF 1.18 TONNES OF GOLD INTO THE GLD/INVENTORY RESTS AT 760.86 TONNES

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

 

 

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DEC 11.2018/ Inventory rests tonight at 760.32 tonnes

*IN LAST 513 TRADING DAYS: 174.84 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 413 TRADING DAYS: A NET 14.84 TONNES HAVE NOW BEEN REMOVED FROM GLD INVENTORY.

 

end

 

Now the SLV Inventory/

DEC 11/WITH SILVER UP ONE CENT TODAY: NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY ESTS AT 318.735 MILLION OZ/

DEC 10/WITH SILVER DOWN 8 CENTS TODAY: NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 318.735 MILLION OZ/

DEC 7/WITH SILVER UP 16 CENTS: NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 318.735 MILLION OZ/

DEC 6/WITH SILVER DOWN 5 CENTS TODAY: A HUGE CHANGE IN SILVER INVENTORY AT THE SLV: A WITHDRAWAL OF 2.817 MILLION OZ//INVENTORY LOWERS TO 318.735 MILLION OZ/

DEC 5/WITH SILVER DOWN 6 CENTS TODAY: NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY REMAINS AT 321.552 MILLION OZ.

DEC 4/WITH SILVER UP 10 CENTS TODAY: A SMALL CHANGE IN SILVER INVENTORY AT THE SLV:A WITHDRAWAL OF 134,000 OZ//INVENTORY RESTS AT 321.552 MILLION OZ/

DEC 3/WITH SILVER UP 29 CENTS: NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 321.686 MILLION OZ/

NOV 30/WITH SILVER DOWN 17 CENTS TODAY: A BIG CHANGE IN SILVER INVENTORY AT THE SLV: A WITHDRAWAL OF 1.22 MILLION OZ FROM THE SLV /INVENTORY RESTS AT 321.686 MILLION OZ/

NOV 29/WITH SILVER DOWN 2 CENTS TODAY: NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 322.906 MILLION OZ.

NOV 28/WITH SILVER UP 23 CENTS TODAY: A DEPOSIT OF 188,000 OZ/INVENTORY RESTS AT 322.906 MILLION OZ/

NOV 27/WITH SILVER DOWN 14 CENTS TODAY: A HUGE WITHDRAWAL OF 2.301 MILLION OZ FROM THE SLV/INVENTORY RESTS AT 322.718 MILLION OZ/

NOV 26/WITH SILVER DOWN ONE CENT: NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 325.019 MILLION OZ

NOV 23/WITH SILVER DOWN 25 CENTS TODAY: NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 325.019 MILLION OZ.

NOV 21/WITH SILVER UP 23 CENTS TODAY: NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 325.019 MILLION OZ/

NOV 20/WITH SILVER DOWN 14 CENTS TODAY: A BIG CHANGE IN SILVER INVENTORY AT THE SLV: A DEPOSIT OF 563,000 OZ INTO THE SLV/INVENTORY RESTS AT 325.019 MILLION OZ/

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/

 

 

DEC 11/2018:

 

Inventory 318.735 MILLION OZ

LIBOR SCHEDULE AND GOFO RATES:

 

 

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

YOUR DATA…..

6 Month MM GOFO 2.60/ and libor 6 month duration 2.88

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

G0LD LENDING RATE: + .28

 

 

XXXXXXXX

12 Month MM GOFO
+ 2.78%

LIBOR FOR 12 MONTH DURATION: 3.08

GOFO = LIBOR – GOLD LENDING RATE

GOLD LENDING RATE  = +.30

end

 

PHYSICAL GOLD/SILVER STORIES

end
i) GOLDCORE BLOG/Mark O’Byrne

EU Recession Imminent – Euro Disunion as Brexit, Italy and End of QE Loom

by John Mauldin

Someone asked recently how many times I had “crossed the pond” to Europe. I really don’t know. Certainly dozens of times. It’s been several times a year for as long as I remember.


Graphic: European Central Bank

That makes me an extremely unusual American. Most of us never visit Europe, except maybe for a rare dream vacation. And that’s okay because our own country is wonderful and has a lifetime of sights to see. But it does affect our perspective on the world.

Many of us don’t fully grasp how important Europe is to the US and global economy.

We may soon get a lesson on that. I’ve talked about Italy’s ongoing debt crisis, which is not improving, but Europe has other problems, too.

Worse, events are coalescing such that several potential crises—all major on their own—could strike at the same time, and not too long from now.

As I’ve been saying for about three years, there is no reason for the US to have a recession on its own. I think events elsewhere will push us into it, and Europe is a really big current risk. I know from my visits to Europe and discussions with friends there, they see all sorts of problems with Trump and particularly his tariffs.

However, another concern is that the various actors in Europe are not playing nice with each other. I tell my European friends the same forces that yielded Trump are coming to a European country near them. In some places, they already have.

So, in my never-ending quest to keep you ahead of the curve, I’ll review what’s happening “over there.” This may be a turnabout for European readers who rely on me to describe what’s happening over here. But as you’ll see, we are far more connected than separated by distance.

(Note: The link is to my favorite version of “Over There” written by George M. Cohan, here sung by James Cagney in 1942 for the film Yankee Doodle Dandy. It was written at the beginning of World War I and quickly became the number one song of not just that era but also the World War II era. Younger generations may not remember music with so much unbridled, enthusiastic patriotism. They can be excused for not quite understanding such feverish intensity. It was a different era.)

Monetary Drug Withdrawal

Last week my British friend Jim Mellon sent me a fascinating article with an alarming title: “News from Euroland—Recession Imminent.” I’m not certain when Jim sleeps, as I get a few emails from him every day at seemingly random times, always with pithy, on-target reading material. (Although I can usually figure out when he is in Great Britain by their timing.)

Now, I am not one who falls prey to click-bait headlines (nor is Jim) and I’m also well aware Europe’s economy is weakening. I would not have said recession was imminent but reading this article left me more than a little concerned. The author, economist Victor Hill, ties events together in ways many haven’t considered.

Hill begins the piece this way.

Across Europe, and particularly in the 18-member Eurozone, the economic news is sobering. It’s now clear that the credit crunch in emerging markets which has played out over most of this year, plus the slowdown in China, are having negative consequences in Europe. Yet, despite the ongoing trauma of Brexit, the UK is cruising along relatively smoothly—for now.

A number of critical events are about to coincide…

The first such event is the impending end of the European Central Bank’s quantitative easing “Asset Purchasing Programme,” which has been propping up asset prices with wholesale purchases of bonds, stocks, and anything else that isn’t nailed down.

Mario Draghi and his crew borrowed our Federal Reserve’s plan and, if possible, made it even crazier. You can see in the chart they have been stepping down purchases. The pace should reach zero in early 2019. But this doesn’t account for assorted other loan programs, which some would like to see continue or even expand. Germany opposes all such policies and I think will get its way, especially since Draghi will be leaving next year.

This means the Eurozone is about to lose a monetary drug on which it has grown highly dependent. But those 18 nations will not be the only ones affected. The larger EU needs a thriving core to stimulate growth for the whole continent.

Note that Draghi will finish his term as ECB president in October 2019. Economists (what do they know?) project he will make his first interest rate increase just one month before he leaves, in September. That means taking rates from -0.40 bps to -0.20, still below zero.

In all likelihood, his replacement will have to be approved by Germany. What will be the new president’s appetite for negative rates even in the face of recession? Will he listen to the Bundesbank? Will the ECB once again expand its balance sheet? What is left to buy? All good questions with no answers yet but potential market dangers.

And if Europe falls into recession earlier in 2019, will Draghi reverse himself and resume expanding the balance sheet, buying yet more assets that are not nailed down? The Italians would certainly like that.

European Disunion and Brexit

Hill’s second “critical event” is Brexit, the latest plan for which is set for a December 11 vote in the UK’s Parliament. As of now its prospects look dim, at least without changes that the EU sidesays it won’t accept. That may not be true because, as we have learned, European officials are masters at vowing inflexibility and then bending when forced.

But let’s have some sympathy for Prime Minister Theresa May. She is dealing with a rebellion in her own party, has lost numerous votes and it is not clear she can force her (let’s call it) Brexit-lite proposal through Parliament. You can read about her troubles here.

This deal has monster implications for economics and investments and you really need to pay attention. I think I would vote against, not that anyone in Great Britain will care, as it seems to me that her compromise leaves Europe with more control over what a “final” agreement would look like. It’s not exactly what the “leave” crowd originally wanted. But in reality there are no good choices. If this is voted down, I see real chances for problems everywhere.

Another national vote might seem sensible, except that would look like the elites keep taking votes until they get the outcome they want. It would make a large part of the country upset no matter what. As I said, no good choices…

Regardless, it is highly uncertain what happens next. The UK gave formal notice it would leave the EU on March 29, 2019, whether terms of separation are reached by then or not. A “hard Brexit” would be chaotic, to say the least, as it would leave businesses trying to operate in a legal vacuum. World Trade Organization rules might serve as a backstop in some matters but the massive trade volume between the UK and EU would certainly slow. Can they walk that notice back? Fudge a little bit on the date? This is the EU. They can do anything they bloody well like. Damn the rules and full speed ahead…

On the other hand, remaining in the EU would enrage the millions who voted to leave and probably bring down the May government. Where it would go from there is anyone’s guess. It is hard to even imagine “democratic socialist” Jeremy Corbin as Prime Minister. So both economies are probably in for a shock unless some miracle produces orderly separation terms in the next three months, which seems unlikely.

The third critical event, says Hill, is the growing Italian crisis, which I’ve been warning about for quite some time. That kettle is getting ready to boil over. Now banks in Italy are having trouble refinancing their bond issues, which is forcing them to curtail lending to an already-weak private sector. Rising mortgage rates are cutting into consumer spending. Italy is arguably already in recession but the situation looks likely to get worse—which is a big problem for its creditors, mainly Germany, which we will discuss in a bit.

But Hill says, I think correctly, that the Italian crisis is no longer just economic, if it ever “just” was. It is emblematic of a culture war that is pitting anti-immigration populist movements against “elites” they believe are hostile to their interests. As happened elsewhere, unemployed and working-class people are losing faith in the system. We see this most recently in the violent gas-tax protests in France.

This protest movement has an altogether different feel when you pay close attention. It is not just about higher fuel taxes. It is about almost half the country being angry at the educated city-dwelling elite while the brunt of increased taxes falls on an increasingly burdened rural middle class. The French government now consumes 46.2% of GDP, making it the most-taxed OECD nation. Even a slight tax increase affects the working class disproportionately. And when it increases taxes on something like diesel fuel, which is critical in rural areas, it is particularly hard.


Image: Mish Shedlock

In Europe and around the world, we see this pushback against what is seen as an elite group at the top (the “Protected”) which pays no attention to the problems of their less successful “Unprotected” brethren. And those brethren are demanding attention.

This “morality play” is spreading through Europe. We now see German political patriarch Wolfgang Schauble backing a candidate to replace Merkel as head of the CDU (Christian Democratic Union), who is openly courting the same voters that have left their party and gone to the anti-immigration and populist Alternative for Germany (AfD). That means a conservative push for Germany and a more populist approach for mainstream parties.

The common thread running through these events is the idea of a united Europe. This idea was a driving force in the foundation of the European Union and is common in the establishment and/or “elite.” Up until a few years ago, the idea was popular across the political spectrum but support has weakened as economic times changed. It was never particularly feasible, but the effort made sense for a continent so damaged by centuries of repeated wars. The problem is that the EU can’t achieve its goals unless it gets stronger and much of the public has had its fill of centralization. I don’t know how they can solve this. Brexit, if it happens, may turn out to have been the test case for a full dissolution.

How that will unfold is hard to predict. For now, there are more immediate problems. Victor Hill thinks “a disorderly Brexit will be the spark that sets the Eurozone tinderbox aflame in the first half of 2019.” The tinderbox is already full in Italy and France. It won’t take much heat for that kettle to boil over.

But that’s not all.

Trade Threats

Speaking of unity, last weekend’s Buenos Aires G20 summit was a chance for world leaders to forge common ground on important global issues. That’s not exactly what happened but President Trump’s trade discussion with Chinese president Xi Jinping looked initially like a bright spot. They agreed to stop making things worse for a few months, at least. Markets were more skeptical after digesting the news—rightly so, at least from my standpoint.

As I’ve said, there are real issues with China on intellectual property and more. It is not unreasonable to ask for an open and fair playing field. China is no longer an emerging market nation. It has emerged, at least the eastern half. Beijing should play by the same rules as the rest of the developed world. But getting agreement with China is going to be a hard slog.

One encouraging but little-reported G20 event: US Secretary of State Mike Pompeo and Treasury Secretary Steven Mnuchin gathered their peers from the smaller G7 group for an unscheduled dinner. According to Ian Bremmer, they made significant progress on working together to solve the China issues. This should be positive if it continues.

Meanwhile, however, Louis Gave explains why problems with China may be bad news for Europe at a time when Europe doesn’t need any more challenges (bold is mine).

It is no secret that Trump is surrounded by men who want to “take China down,” who have argued at length that China is a house of cards built on unsustainable credit, and that all the US needs to do is give a gentle nudge for the whole edifice to come crashing down. So far, this talk of China’s vulnerability has proved way off-target. For all of the dire predictions of an imminent debt crisis and financial meltdown, China is still standing very much upright.

So, if Trump wants a win, where should he look? If a long cold war of attrition with China doesn’t look promising, perhaps bashing Europe—specifically Europe’s auto industry and lack of defense spending—could prove more attractive, especially as Europe is now politically rudderless and economically slowing. My bet would be that in the coming weeks, Trump stops speaking about China, and instead starts bashing Europe. And doubtless his favorite targets will be France and Germany, perhaps as payback for the slights he endured at last month’s commemoration of the World War I armistice. If nothing else, Trump has shown that he is a firm believer in the old adage that revenge is a dish best served cold.

I pay attention when Louis speaks. He often sees events that happen “around the curve.” His premise is simple: The automotive industry drives the German economy. Germany, in turn, drives the European economy. So if Trump decides to follow through on the car tariffs he’s threatened, it could be a serious blow. German auto executives met with him in Washington this week but the threat is still alive.

Oh, and one more thing. Deutsche Bank, Germany’s financial crown jewel, seems to be in deep trouble. Its shares, which never recovered from the 2007–2008 ugliness, dropped to all-time lows this week after German police raided the bank’s offices in a money-laundering probe. We don’t know exactly what the fire is but there sure is a lot of smoke. Other European banks are not exactly thriving but DB seems to be in particular trouble.

It is hard for us in the US to realize how important European banks are. European businesses, particularly small ones, get almost all their financing from banks. When Italian banks have trouble funding their bonds, that means Italian businesses will suffer.

So add all this up. We could see Europe faced with monetary tightening, hard Brexit, an Italian breakdown, popular unrest not just in France but all over, a trade war and a German/Italian bank crisis all at the same time. Again, this is not a far-off possibility. It could all be happening in the next three or four months.

If some combination of these crises develops into a perfect storm, the pain won’t stay in Europe. US, Canadian, Latin American, and Asian companies that do business with Europe will lose sales and have to lay off workers. Lenders everywhere who own Euro debt will face losses. Highly leveraged derivatives could blow up, forcing bailouts and currency interventions. We don’t know where it would lead but certainly nowhere good.

And it will end up being played out in the equity markets all over the world. Stay tuned…

The markets have been quite volatile for the past few weeks. My preferred ETF trading strategy, called Mauldin Smart Core, has performed well in this environment. Full disclosure, I have recently closed my own personal investment advisory firm down and moved my registration to my longtime friend Steve Blumenthal of CMG. As a personal business strategy, he has all the infrastructure and team to support me, and it really does allow me to spend more time researching and reading and writing. I am co-portfolio manager for the Mauldin Smart Core strategies which is available as a mutual fund or managed accounts.

We have done a report called “Investing During the Great Reset,” which explains our strategy and rationale. If nothing else, it will show you how I want to deal with the risk of a coming potential bear market and give you ideas for doing it yourself or in your own firm. Of course, I hope that some of you will become clients. But I am perfectly willing to help you whether you do or not. I want as many people as possible to get from where we are today to the other side of The Great Reset.

Full article on Mauldin Economics

 

Secure Storage Ireland – Click here for information

 

News and Commentary

Gold gains on weaker dollar, chance of slower US rate hikes (CNBC.com)

Gold is regaining poise in Asia, rising call demand suggests more gains ahead (FXStreet.com)

Dow erases 500-point drop and closes higher in another wild session (CNBC.com)

Apple helps Wall St. pull back after S&P hits eight-month low (Reuters.com)

Fed seen slowing, or even stopping, rate hikes next year (Reuters.com)


Source: KingWorldNews

Gold is looking interesting (Macromon)

Gold will take out 5 years of highs in 50 trading days – Oliver (KingWorldNews.com)

What’s next for global markets? Keep a close eye on the oil price (MoneyWeek.com)

Here’s what mortgage ‘rate lock’ looks like, in one chart (MarketWatch.com)

Switzerland – World’s Biggest Hedge Fund Is Getting Whacked & Why “Moneyness” Matters (DollarCollapse.com)

Bear Markets Everywhere: Over Half The World Is Now Down 20% Or More (ZeroHedge.com)

Australia Warned To Prepare For “Severe Housing Collapse” And “Banking Crisis” (ZeroHedge.com)

Listen on SoundCloud , Blubrry & iTunesWatch on YouTube below

Gold Prices (LBMA PM)

10 Dec: USD 1,246.80, GBP 980.61 & EUR 1,092.57 per ounce
07 Dec: USD 1,241.20, GBP 972.98 & EUR 1,091.51 per ounce
06 Dec: USD 1,236.45, GBP 971.48 & EUR 1,091.66 per ounce
05 Dec: USD 1,236.15, GBP 970.13 & EUR 1,090.16 per ounce
04 Dec: USD 1,239.25, GBP 966.74 & EUR 1,086.45 per ounce
03 Dec: USD 1,231.05, GBP 966.00 & EUR 1,084.92 per ounce

Silver Prices (LBMA)

10 Dec: USD 14.53, GBP 11.48 & EUR 12.73 per ounce
07 Dec: USD 14.49, GBP 11.34 & EUR 12.73 per ounce
06 Dec: USD 14.38, GBP 11.28 & EUR 12.68 per ounce
05 Dec: USD 14.48, GBP 11.34 & EUR 12.75 per ounce
04 Dec: USD 14.55, GBP 11.35 & EUR 12.77 per ounce
03 Dec: USD 14.39, GBP 11.31 & EUR 12.69 per ounce


Recent Market Updates

– Gold and Silver Gained 2% and 3% Last Week While Stocks Dropped Nearly 5%
– Irish Central Bank Refuses To Discuss Gold Reserves In Bank of England Vaults
– “Fake Markets” To Lead to Global Financial Crisis? – Goldnomics Podcast
– Gold Is “Coiled” and Looks Set To Surge Like Natural Gas — Bloomberg Intelligence
– “Collapse Of Civilisation Is On The Horizon” – Attenborough Warns World Leaders
– Deutsche Bank May Cause The Next Global Crisis
– Ireland’s Mr Gold Reveals Nuggets Of Wisdom For When The Next Crash Comes
– BREXIT May Lead to UK Property Crash and Depression
– General Motors And General Electric Highlight The Ponzi Scheme That Is The US Economy
– A Worldwide Debt Default Is A Real Possibility

 
END
 
ii) GATA stories
USA gold is telling us that sentiment is shifting towards our precious metals
(USAgold/GATA)

USAGold’s December letter: Where are we now in the investor cycle?

 Section: 

3:54p ET Monday, December 10, 2018

Dear Friend of GATA and Gold:

USAGold’s December News & Views letter records what seems to be the changing of tides in the market away from stocks and bonds and toward the long-unloved monetary metals. The letter is headlined “Where Are We Now In the Investor Cycle?” and it’s posted here:

http://www.usagold.com/publications/NewsViewsDEc2018.html

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

END

Reuters is running a study purporting that an illegal gold rush in destroying the Amazon rainforest.

(courtesy zerohedge)

Illegal gold rush destroying Amazon rainforest, study says

 Section: 

By Anastasia Moloney
Reuters
Monday, December 10, 2018

BOGOTA, Colombia — A rise in small-scale illegal gold mining is destroying swathes of the Amazon rainforest, according to research released today that maps the scale of the damage for the first time.

Researchers used satellite imagery and government data to identify at least 2,312 illegal mining sites across six countries in South America — Brazil, Bolivia, Colombia, Peru, Ecuador, and Venezuela. …

… For the remainder of the report:

https://www.reuters.com/article/us-latam-forests-mining/illegal-gold-rus..

 

END.

Detour mines extends the deadline has shareholders have so far voted to oust 5 out of 9 directors

(courtesy National Post/Friedman/GATA)

Paulson cries foul as Detour Gold extends voting to halt a board coup

 Section: 

‘This Is What Despots and Dictators Do’: Paulson Cries Foul as Detour Gold Extends Voting to Halt a Board Coup

By Gabriel Friedman
National Post, Toronto
Monday, December 10, 2018

Detour Gold Corp.’s management was left scrambling to fight off a board coup on Monday, after a crucial initial vote showed shareholders wanted to oust at least five out of its nine directors.

The board extended the deadline to vote, with ballots that had been due last Friday now due on Wednesday and a meeting to count final votes postponed from Tuesday until Thursday.

Detour’s management has been under fire from a group of shareholders led by U.S. billionaire John Paulson, whose hedge fund Paulson & Co. owns 5.7 per cent of the company. The campaign complained about abysmal returns at the Toronto-based miner including a 70 per cent fall in market capitalization since July 2016.

“This is unheard of. Shareholders have voted,” Marcelo Kim, a Paulson & Co. partner who led the campaign, wrote in an email. “They don’t like the result, so they are trying to change it? This is what despots and dictators do.” …

… For the remainder of the report:

https://business.financialpost.com/commodities/mining/this-is-what-despo…

end




iii) Other Physical stories
Due to the criminal conviction of trader Edmonds, the USA prosecution is seeking to halt the civil lawsuit. I was misinformed: all discoveries in a civil suit are public and because of that, the prosecution gives the defendants the right to plead the 5th if their testimony incriminates them
(courtesy zerohedge/Chris Powell)

US seeks halt in civil lawsuit accusing JP Morgan of manipulating metals market, citing criminal case

  • The U.S. wants a federal judge to halt a civil lawsuit accusing J. P. Morgan of manipulating precious metals markets. The Justice Department cited an ongoing criminal case as its reason for the request.
  • A former J. P. Morgan trader pleaded guilty in Connecticut last month to manipulation charges.
  • In the guilty plea, the trader said he had learned to make bogus trade orders from senior traders at the bank and that he used the strategy hundreds of times with the knowledge and consent of his immediate supervisors.

A sign of JP Morgan Chase Bank is seen in front of their headquarters tower in New York.

Amr Alfiky | Reuters
A sign of JP Morgan Chase Bank is seen in front of their headquarters tower in New York.

The Justice Department is asking a judge to put the brakes on a civil lawsuit against J. P. Morgan Chase, citing an ongoing probe into a “related criminal case” that involves alleged manipulation of precious metals markets.

The department wants a six-month postponement in the proceedings of the civil lawsuit, which was filed in 2015 by hedge fund manager Daniel Shak and two commodity traders. The government also says it could ask for a longer delay in the case, according to a court filing on Monday.

The move comes days after Shak’s lawyer, David Kovel, sought permission to reopen questioning of two former J. P. Morgan traders and the bank’s current global head of base and precious metals trading.

Kovel, in making the request with the Manhattan federal judge in the civil case, cited last month’s guilty plea by one of those former traders, John Edmonds, in federal court in Connecticut.

Edmonds admitted making bogus bids on precious metals contracts while working at the bank from 2009 to 2015.

Neither J. P. Morgan Chase nor Kovel’s clients have opposed the Justice Department’s request.

In arguing for a delay, the Justice Department said Shak’s lawsuit is “related” to Edmonds’ criminal case and that Edmonds has “pleaded guilty and acknowledged his own participation in such conduct, as well as that of other traders.”

“Edmonds awaits sentencing, but the broader investigation is ongoing,” the Justice Department said. The U.S. wants to delay the civil case “to protect the integrity of its ongoing criminal investigation,” it said.

J. P. Morgan did not respond to a request for comment by CNBC. Kovel declined to comment.

Tuesday night, after this story first was published, Judge Paul Engelmayer ordered the federal prosecutors to explain in detail by Monday why postponing proceedings in the civil lawsuit would not harm those involved, and why reopening questioning “would be detrimental to the Government’s ongoing criminal investigation.”

Englemayer also wrote that he regards Edmonds’ guilty plea “as potentially highly consequential” to the civil case.

In his guilty plea, the 36-year-old Edmonds said he had learned to make bogus trade orders from senior traders at the bank and that he used the strategy hundreds of times with the knowledge and consent of his immediate supervisors. He admitted to working with “unnamed co-conspirators” at J. P. Morgan, according to the Justice Department.

Kovel wants to question Edmonds again as well as Michael Nowak, the bank’s global head of base and precious metal trading, and former J. P. Morgan Chase Managing Director Robert Gottlieb. The three had previously answered questions under oath in the civil case.

Kovel said in court filings that Nowak was the immediate supervisor of Edmonds, while Gottlieb was Edmonds’ mentor.

In his prior deposition, Edmonds said that Gottlieb sat only a “couple feet” away from him for about five years, and that he was “somebody [he] looked up to in the business,” who helped guide and train him.

Nowak is described by Edmonds as his direct supervisor, with whom he would sometimes discuss trading strategies. Nowak was also the person responsible for overseeing the performance and risk of Edmonds’ portfolio, according to the deposition.

Edmonds also stated in his prior deposition that he would enter precious metals trades for both Nowak and Gottlieb, among others.

The civil lawsuit claims Shak and his fellow plaintiffs lost tens of millions of dollars as a result of actions by J. P. Morgan’s traders.

good riddance to Giancarlo…they nominate Heath Tarbert, a senior treasury official
(courtesy Gabriel Rubin)

White House to Nominate Treasury Official to Run CFTC in 2019

Heath Tarbert, currently assistant secretary for international markets, expected to succeed J. Christopher Giancarlo

By Gabriel T. Rubin

Dec. 10, 2018 3:44 p.m. ET

WASHINGTON—The White House plans to nominate Heath Tarbert, a senior Treasury Department official, to serve as chairman of the Commodity Futures Trading Commission when the current agency head’s term ends in 2019, according to people familiar with the matter.

https://www.wsj.com/articles/white-house- to-nominate-treasury-off
icial-to-run-cftc-in-2019- 1544474688

-END-

LAWRIE WILLIAMS: Nervous equities should give gold price momentum

At the start of the current week U.S. equities opened down significantly again before picking up during the day and ending marginally higher overall. Markets are nervous and unsure what’s going to happen next – recovery or crash? There are plenty of respected advisers out there calling it either way.

As for gold a stronger dollar saw it slip back before making something of a recovery, but a break upwards through the psychological $1,250 level remained elusive. Some put this down to price management in the futures markets, and this certainly can’t be ruled out. A higher gold price implies significant dollar weakness and a visible sign that the U.S. economy is not nearly as healthy as the powers that be – the U.S. Administration, Treasury and the Fed – would like it to appear to be. After all President Trump is keen to try to demonstrate to the U.S. people that his policies are bringing prosperity and that the country is not headed for recession. A strong equities market helps reinforce that impression!

But the tariff war with China (the only one that really matters) may be backfiring. Chinese imports are still rising and U.S. exports to China are diving because of the strong dollar and the imposition of retaliatory tariffs. Hardly the outcome President Trump was looking for. And the whole situation has been exacerbated by the arrest and detention in Canada of China’s biggest tech company, Huawei’s, CFO at the U.S. behest pending possible extradition on Iran sanctions avoidance charges.

To put this in perspective, Huawei is at the forefront of global 5G technology, arguably is the world’s leading supplier of telecoms networking technology and a bigger seller of mobile phones than Apple. It is the world No. 2 cellphone manufacturer after South Korea’s Samsung, while Apple is only No. 3 and worryingly for the U.S., the latter company – until very recently the world’s largest by market capitalization – does around 20% of its business in China. Apple’s saving grace may be that it has huge manufacturing facilities in China and employs over 4 million Chinese so any retaliatory action may be limited, but the sales fallout in China given the adverse publicity generated by Meng Wanzhou’s arrest could be very significant. One suspects Apple executives will restrict any global travel plans until some kind of solution is reached regarding Meng’s arrest in Vancouver while changing planes. Indeed other executives of major U.S. companies will probably be doing likewise.

The arrested Meng Wanzhou is not only Huawei’s CFO, but also the daughter of the company’s founder, and this is a political firestorm already in process. Much of the world is becoming increasingly incensed at the U.S. applying its own domestic laws to real, or imagined, breaches by foreign entities which may be carrying out deals which are legal in their own countries. If anything could throw a new dimension into the trade war negotiations the arrest, and possible extradition of Meng would be it.

We suspect an initial compromise may be implemented which could reduce some of the political tensions – but still see the problem continuing. The bail hearing continues tomorrow and I suspect we will see Meng released on bail, but prevented from leaving Canada pending the extradition hearing. China won’t see this as a satisfactory outcome which will ensure the contretemps will continue, but at least it would ease Meng’s ordeal.

The arrest is but another significant factor which could well affect the U.S. tech sector in particular – and the this has been at the forefront of the huge equities markets gains in the past few years. Historically the gold price thrives on economic uncertainty with people choosing it as an insurance asset and wealth protector – not necessarily as a vehicle to enhance their investment value. It tends to perform steadily rather than spectacularly, but in the past couple of years its performance has been muted as people have looked for seemingly ever increasing gains first in bitcoin and then in the general equities markets. But bitcoin has collapsed, and is seemingly continuing on its downwards path despite recent attempts in the media to talk it back up, while equities markets are suddenly looking very uncertain after some huge falls. Price management and dollar strength has so far resulted in gold’s growth being suppressed, but the longer market uncertainty persists, the more likely it becomes that an unstoppable degree of upwards price momentum will fall into place. We don’t necessarily see a spectacular and sudden rise in price, but a steady one which should see it through $1,250, and perhaps back through $1,300 by the year end – and onwards and upwards in 2019, particularly if the U.S. Fed eases up on its proposed interest rate normalization plans, which currently seems more likely than not.

If equities resume their fall this week – and unless Meng Wanzhou is released rapidly they may well do so – then the Fed might even delay the planned rate rise considered highly likely at the FOMC meeting in a week’s time which would give a big and immediate boost for the gold price. But we consider this unlikely as things stand, but a reduction in the number of planned rate increases in 2019 has definitely to be on the cards. Next week’s ever-opaque Fed statements will thus be perused by financial commentators with special interest.

Whatever happens at the FOMC meeting we consider that gold will increasingly appear on institutions’ and individuals’ investment horizons and price momentum will continue to build into 2019. How far this will take us on the upwards path remains to be seen.

11 Dec 2018

________________________________________

 

 

 

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

i) Chinese yuan vs USA dollar/CLOSED UP TO 6.8985/HUGE DEVALUATION FOR THE PAST FOUR WEEKS STOPS ON TRUCE/

//OFFSHORE YUAN:  6.8968   /shanghai bourse CLOSED UP 9.51 POINTS OR 0.37%

HANG SANG CLOSED UP 19.29 POINTS OR 0.07%

 

 

2. Nikkei closed DOWN 71.48 POINTS OR 0.34%

 

3. Europe stocks OPENED ALL GREEN

 

 

 

 

 

/USA dollar index FALLS TO 96.93/Euro RISES TO 1.1395

3b Japan 10 year bond yield: RISES TO. +.05/ !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 113.13/ 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:: 51.37 and Brent: 60.45

3f Gold UP/JAPANESE Yen DOWN 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 +.26%/Italian 10 yr bond yield DOWN to 3.11% /SPAIN 10 YR BOND YIELD UP TO 1.46%…ITALIAN 10 YR BOND YIELD/GERMAN BUND: 2.85: DANGEROUS FOR THE ITALIAN BANKING SYSTEM

3j Greek 10 year bond yield RISES TO : 4.26

3k Gold at $1247.75 silver at:14.67   7 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50

3l USA vs Russian rouble; (Russian rouble UP 42/100 in roubles/dollar) 66.28

3m oil into the 51 dollar handle for WTI and 60 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 113.13DESTROYING 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 0.9884 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1264 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 +0.26%

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

4. USA 10 year treasury bond at 2.88% early this morning. Thirty year rate at 3.15%

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

6.  TURKISH LIRA:  UP  TO 5.3544

 

Global Stocks, S&P Futures Surge On Fresh Trade War De-escalation Hopes

After several days of precipitous market drops, and following yesterday’s dramatic Apple-led intraday rebound, the biggest since February, S&P futures and European stock markets are sharply higher even as Asian shares slipped, as investor sentiment was boosted by fresh prospects of a thaw in the trade war following overnight news that Chinese Vice Premier Liu He discussed a timetable for trade talks with Treasury Secretary Steven Mnuchin, coupled with a report this morning from Bloomberg that China is moving toward cutting its trade-war tariffs on imported U.S.-made cars, a step which had previously been brandished by President Donald Trump as a concession won during trade talks in Argentina.

The big news overnight was a report according to China’s Mofcom which said Vice Premier Liu He spoke by phone with US Treasury Secretary Mnuchin and Trade Representative Lighthizer in which both sides exchanged views on implementing consensus reached by their leaders, while they also exchanged views on pushing forward timetable and road map for next stage of trade discussions.  The news – taken as a positive sign for trade war de-escalation – sent S&P futures as much as 20 points higher, shrugging off losses in the Asian benchmark and a drop in Japanese equities…

… while Europe’s Stoxx 600 was trading at session highs, up over 1.5% as a result of a late catch up with yesterday’s S&P rebound, led by THE construction, basic resources, builders and telecom sectors even with today’s rebound it was still heading for its worst year since 2008.

European automakers also surged following the Bloomberg report that China is said to be moving on the US auto tariffs reduction that US President Trump has previously tweeted on. The proposal has been submitted for review, however, the decision has not been finalised and still could change.

Yet investors also have an eye on the continuing flap over Canada’s arrest of the chief financial officer of Huawei Technologies Co. And among a plethora of political risks, the U.K. is seeking reassurances from European partners over Brexit and fears linger over the possibility a French protest movement could escalate further.

After crashing on Monday to a 21 month low as Theresa May postponed a key Brexit vote in parliament, the pound staged a rally, trimming some of Monday’s tumble as the UK Prime Minister tried to convince EU leaders to renegotiate the current Brexit deal.

The broader risk-on sentiment weakened the dollar weakened while Treasuries and European sovereign bonds fell.

With market having been gripped by a growing sense of panic, some – like Nomura’s Charlie McElligott – have warned that the next move could be a furious rally higher as hedge funds scramble to recover some of their YTD losses in the last few days of 2018.

“Markets are highly volatile,” said hedge-fund pioneer Paul Tudor Jones at a conference in New York. “I can easily see a situation in 2019 where all the deleveraging that we’ve experienced in the last month and a half — really, the last four or five months — all that deleveraging gets reinvested back into the market.”

Meanwhile in India’s assets saw a choppy session, with stocks initially roiled by a surprise resignation of the central bank governor on Monday, before posting a recovery as traders mulled the implications for Prime Minister Narendra Modi of regional election results. Emerging-market currencies and shares edged higher. Oil climbed with most metals.

The dollar dropped versus most of its G-10 peers as concerns over a possible deterioration in U.S.-China trade talks persisted, while short-term positioning and U.K. wage data helped lift the pound from a 20-month low. The pound headed for its first gain in three days versus the dollar, having tumbled Monday to its lowest level since April 2017 after the U.K. Prime Minister opted to delay a key vote on her Brexit deal. The yen climbed against major global currencies as U.K. Prime Minister Theresa May’s Brexit vote deferral and weakness in equity markets deterred risk-taking

Brent (+0.9%) and WTI (+1.0%) prices rebounded, despite drifting lower at the start of the session following comments from Russian Energy Minister Novak that Russia plans to cut oil output by 50k-60k BPD in January which is significantly below the 228,000 BPD figure targeted as part of the latest OPEC deal. Novak adds that they will gradually reduce oil output. Separately, high level internal reports are to cut output by 139k BPD following the OPEC deal. Looking ahead today sees the API weekly data release, which saw a crude stocks build of 5.6mln last week. Gold has strengthened on a softer dollar, although the yellow metal is still off of the 5-month high of USD 1250.55/oz reached in the previous session. Separately, exploration by Rio Tinto in Australia has yet to find any economically viable copper ore veins; the site had been touted as being potentially rich in copper.

Expected data include PPIs and small-business optimism index. American Eagle and Pivotal Software are among companies reporting earnings.

Market Snapshot

  • S&P 500 futures up 0.7% to 2,662.00
  • MXAP down 0.3% to 147.99
  • MXAPJ up 0.1% to 477.40
  • Nikkei down 0.3% to 21,148.02
  • Topix down 0.9% to 1,575.31
  • Hang Seng Index up 0.07% to 25,771.67
  • Shanghai Composite up 0.4% to 2,594.09
  • Sensex up 0.2% to 35,044.71
  • Australia S&P/ASX 200 up 0.4% to 5,575.88
  • Kospi down 0.04% to 2,052.97
  • STOXX Europe 600 up 1.4% to 343.77
  • German 10Y yield rose 2.6 bps to 0.272%
  • Euro up 0.2% to $1.1383
  • Italian 10Y yield fell 2.6 bps to 2.74%
  • Spanish 10Y yield rose 1.7 bps to 1.46%
  • Brent futures up 0.5% to $60.45/bbl
  • Gold spot up 0.3% to $1,248.54
  • U.S. Dollar Index down 0.3% to 96.97

Top Overnight News from Bloomberg

  • Top Chinese and American trade officials spoke by phone, signaling that dialog between the two nations on trade issues is at least continuing despite a diplomatic row over the arrest of a senior Chinese businesswoman
  • Faced with a Brexit vote she can’t win, Theresa May appears to be gambling that running down the clock to a no-deal departure might change the arithmetic in Parliament
  • The European Union won’t allow U.K. Prime Minister Theresa May to reopen negotiations over the Brexit divorce deal — but it could offer some of the reassurances she says she wants, officials said.
  • In India, Urjit Patel’s shock exit as governor of the central bank roiled financial markets already nervous about early election results showing Prime Minister Narendra Modi’s ruling party losing support in key states.
  • OPEC’s surprise output reduction has wrong-footed short-sellers. Hedge funds increased wagers against rising Brent crude prices for a 10th straight week in the period that ended last Tuesday and cut bullish bets on West Texas Intermediate oil to the lowest in almost six years
  • Allies of Republican Representative Mark Meadows are pressing for him to be Donald Trump’s new chief of staff as the White House weighed other serious contenders, including U.S. Trade Representative Robert Lighthizer, for the vital leadership post
  • Jerome Powell is ramping up Federal Reserve communication to build public trust and help insulate it from political attack
  • Indian assets swung as investors weighed Modi’s performance in the polls in states which are key to his reelection bid in 2019

Asian equity markets were mixed as sentiment in the region only found mild solace from the tech-led recovery on Wall St. ASX 200 (+0.4%) was firmer at the open in which outperformance in the tech sector helped the index pick itself up from around 2-year lows although this later stalled amid weakness in energy and financials, while Nikkei 225 (-0.3%) swung between gains and losses due to a lack of fresh drivers and an indecisive currency. Shanghai Comp. (+0.4) and Hang Seng (unch.) were also choppy on trade uncertainty amid lingering concerns the Huawei situation could spill-over to US-China trade talks, although there were reports that Vice Premier Liu spoke with US Treasury Secretary Mnuchin and US Trade Representative Lighthizer in which they exchanged views on pushing forward the timetable and road map for the next stages of trade discussions. Meanwhile, India markets were initially pressured following the shock resignation by RBI Governor Patel which many viewed to be in protest for government meddling, while the state assembly elections added to the woes for the government with the ruling BJP party on track to lose some states to the main opposition ahead of next year’s general election. Finally, 10yr JGBs were uneventful amid the indecisive risk tone and with participants following mixed results at the 30yr JGB auction.

Top Asian News

  • Macau Casino Stocks Jump as Analysts Flag December Revenue Hopes
  • Tencent Music Guides Pricing Around Midpoint in $1.2 Billion IPO
  • HNA Is Said to Tap Credit Suisse to Revive Sale of Pactera Unit
  • Goldman Sachs Buys Minority Stake in Turkey’s Hurriyet Emlak
  • India Rupee, Stocks, Bonds Drop as RBI Chief’s Exit Roils Market

Major European Indices are in the green [Euro Stoxx 50 +1.6%], with some outperformance seen in the SMI (+1.6%) bolstered by strong performance in index heavyweight Novartis (+1.6%) after the FDA approved Pear Therapeutics mobile application, which their Sandoz unit will be rolling out in the US. The SMI is also bolstered by LafargeHolcim (+3.6%), which is benefitting from outperformance in the materials sector seen today on the back of US and Chinese representatives planning the next steps in trade discussions. FTSE 100 (+1.3%) is lagging its peers, amidst currency effects from ongoing Brexit developments. Other notable equity movers are WPP (+6.5%) after an update to guidance, and Ashtead Group (+4.2%) after they announced full year expected results to be ahead of expectations.

Top European News

  • Amsterdam Brothels to Get a Review by City’s First Female Mayor
  • Danske to Sell Swedish Pension Assets to Polaris, Acathia
  • Vivendi Urges Telecom Italia to Hold Shareholders Meeting
  • Future of ‘Macronomics’ Tested by Violence on French Streets
  • Casino Debt Swaps Rise to Record as French Protests Add Pressure

In FX, the GBP is ahead of the pack in terms of broad G10 currency advances vs the Greenback as the DXY ducks back under the 97.000 level. Cable has bounced further from yesterday’s new 2018 low circa 1.2507, through the pre-official cancellation of the Brexit vote base around a big figure higher and just shy of 1.2640, mainly on short covering and consolidation, but also with the aid of strong UK average earnings. Meanwhile, Eur/Gbp has retreated towards 0.9000 having cleared 0.9050 and topped out not too far from 0.9100.

  • EUR/CHF/SEK/NOK – The next best majors, with the single currency maintaining its recovery momentum off 1.1350 lows vs the Usd, but capped ahead of 1.1400 and perhaps conscious of hefty option interest between 1.1390 and the bog figure (2 bn). The Franc remains relatively firm within a 0.9905-0.9865 range and above 1.1250 vs the Eur, while the Scandi crowns have clawed back recent losses amidst an improvement in risk sentiment, and with the Sek awaiting Swedish inflation data on Wednesday after significantly stronger than forecast Norwegian CPI metrics yesterday. Eur/Nok is around 9.7000 and Eur/Sek back below 10.3000.
  • JPY – Also trying to pare losses vs the Dollar after extending its downturn from 112.25 to 113.35 and extremely close to a Fib level, but unable to rebound through 113.00 where heavy supply is touted and a 1.5 bn option expiry resides.
  • AUD/CAD/NZD – Mixed fortunes once again as the Aud reclaims 0.7200+ status vs its US counterpart, albeit just, on more promising vibes regarding US-China trade, which have also nudged the Aud/Nzd cross back up towards 1.0500, as the Kiwi losses sight of 0.6900 vs the Usd. Meanwhile, the Loonie is back on the 1.3400 handle and regaining some composure alongside crude prices.
  • EM – The Try continues to underperform on bearish technical rather than fresh fundamental impulses, but did glean support from another upbeat snapshot of Turkey’s current account to trade back near 5.3500 vs the Dollar from 5.4000+ at one stage.

In commodities, Brent (+0.9%) and WTI (+1.0%) prices have strengthened, despite drifting lower at the start of the session following comments from Russian Energy Minister Novak that Russia plans to cut oil output by 50k-60k BPD in January; which is significantly below the 228,000 BPD figure targeted as part of the latest OPEC deal. Novak adds that they will gradually reduce oil output. Separately, high level internal reports are to cut output by 139k BPD following the OPEC deal. Looking ahead today sees the API weekly data release, which saw a crude stocks build of 5.6mln last week. Gold has strengthened on a softer dollar, although the yellow metal is still off of the 5-month high of USD 1250.55/oz reached in the previous session. Separately, exploration by Rio Tinto in Australia has yet to find any economically viable copper ore veins; the site had been touted as being potentially rich in copper.

US Event Calendar

  • 8:30am: PPI Final Demand MoM, est. 0.0%, prior 0.6%; PPI Ex Food and Energy MoM, est. 0.1%, prior 0.5%
  • 8:30am: PPI Final Demand YoY, est. 2.5%, prior 2.9%; PPI Ex Food and Energy YoY, est. 2.5%, prior 2.6%

 

3. ASIAN AFFAIRS

i)TUESDAY MORNING/ MONDAY NIGHT: 

SHANGHAI CLOSED UP 9.51 POINTS OR 0.37% //Hang Sang CLOSED UP 19.29 POINTS OR 0.07% //The Nikkei closed DOWN 71.48 OR 0.34%/ Australia’s all ordinaires CLOSED UP 0.42%  /Chinese yuan (ONSHORE) closed UP  at 6.8985 AS TRUCE DECLARED FOR 3 MONTHS /Oil DOWN to 51.57 dollars per barrel for WTI and 60.45 for Brent. Stocks in Europe OPENED GREEN//.  ONSHORE YUAN CLOSED UP AT 6.8985AGAINST THE DOLLAR. OFFSHORE YUAN CLOSED UP ON THE DOLLAR AT 6.8968: HUGE DEVALUATION/PAST SEVERAL DAYS RESUMES// TRADE TALKS NOW ON/MAJOR PROBLEMS AT HUAWEI /CFO ARRESTED   : /ONSHORE YUAN TRADING BELOW LEVEL OF 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

The stock market reacts to China’s move to cut auto tariffs.  Due to the extreme lower wages in China, a cut in tariffs for American cars will have no effect on Chinese purchases of cars.

(courtesy zerohedge)

China Moves To Cut Auto Tariffs, Sending Futures Higher

Conflicting trade war headlines have flooded out of Beijing over the past week, complicating analysts’ attempts to parse exactly how the arrest of Huawei CFO Meng Wanzhou has impacted the prospects for a future deal. But amid the chaos, a headline that hit the tap a few minutes ago could set the stage for US stocks to build on yesterday’s late-day rebound.

According to Bloomberg, China is moving to cut its trade-war tariffs on US autos. US equity futures spiked on the news, mirroring their reaction from last Monday after Trump bragged about the concession twitter, only for Treasury Secretary Steven Mnuchin and advisor Larry Kudlow to pour cold water on the president’s boasts by saying that the cuts had merely bee “discussed”.

Futures

Bloomberg said China is planning to cut tariffs on US-made cars to 15% from the current 40% has been submitted to China’s Cabinet to be reviewed in the coming days. China boosted tariffs on US-made cars to 40% as part of a raft of retaliatory measures against the US imposed over the summer. To be sure, nothing is set in stone just yet. The decision is being reviewed, and could still change.

While US automakers will undoubtedly benefit from the move, Bloomberg pointed out that European automakers like Mercedes-Benz and BMW will be the biggest beneficiaries after both companies – which have sizable manufacturing operations in the US – warned about lower profits this year.

European auto stocks have posted the largest gains on the news:

Autos

Here’s a roundup of headlines from BBG:

  • Faurecia stock rises 5%
  • Volkswagen stock jumps 4.3%
  • VW controlling shareholder Porsche SE gains 4.7%
  • Stoxx Europe Automobiles & Parts Index rises 2.9%, 2nd-biggest jump on broader index
  • Among car suppliers, Continental +3.7%, Valeo +3.5%
  • Daimler +3.1%, PSA +2.5%

Unless something goes seriously wrong in the next two-and-a-half hours, expect stocks to rip higher at the open:

Jim Cramer

@jimcramer

Now an insane rally on China looking to cut tariffs on US cars.

END

Zero hedge correctly labels the real war is intellectual property and China’s aid to be the leader in the next generation of products.

(courtesy zerohedge)

This is What The “Trade” War With China Is Really All About

Forget soybeans, auto imports, iPhones, crude oil, and cheap Chinese gadgets. Also forget tariffs, duties, and subsidies. Even forget weapons.

The real reason behind the US-China “trade” war has little to do with actual trade, and everything to do with what China’s president, Xi Jinping, said when he visited a memory chip plant in the city of Wuhan earlier this year. In a white lab coat, he made an unexpectedly sentimental remark, comparing a computer chip to a human heart: “No matter how big a person is, he or she can never be strong without a sound and strong heart”.

What is really at the basis of the ongoing civilizational conflict between the US and China, a feud which many say has gradually devolved into a new cold war if few top politicians are willing to call it for what it is, are China’s ambitions to be a leader in next-generation technology, such as artificial intelligence, which rest on whether or not it can design and manufacture cutting-edge chips, and is why Xi has pledged at least $150 billion to build up the sector.

But, as the FT notes, China’s plan has alarmed the US, and chips, or semiconductorshave become the central battlefield in the trade war between the two countries. And it is a battle in which China has a very visible Achilles heel.

Even with the so-called truce between the two sides signed last weekend, and which promptly unraveled after the Huawei CFO’s arrest was unveiled last week, Washington plans to ramp up export controls next year on so-called foundational technologies — those that can enable development in a broad range of sectors — and the equipment for manufacturing chips is one of the key target areas under discussion.

This is a concern for China as the $412 billion global semiconductor industry rests on the shoulders of just six equipment companies, with three of them based in the US. Together, these companies make nearly all of the crucial hardware and software tools needed to manufacture chips, meaning an American export ban would choke off China’s access to the basic tools needed to make their latest chip designs.

“You cannot build a semiconductor facility without using the big major equipment companies, none of which are Chinese,” said Brett Simpson, the founder of Arete Research, an equity research group. “If you fight a war with no guns you’re going to lose. And they don’t have the guns.”

To observe China’s reliance on foreign products, look no further than the over $300 billion in semiconductor equipment China has imported over just the past 12 months.

Chart: @brad_setser

To be sure, under Beijing’s auspices, Chinese chip companies have made enormous gains in semiconductor design as well as chip testing and packaging, in an attempt to catch up to the US. Several private and state-owned Chinese companies — Intel-backed Tsinghua Unigroup, Cambricon Technologies and Huawei’s HiSilicon among them — have already begun to venture into designing the leading edge chips capable of AI applications.

But, as the FT, notes, the real difficulty is not in designing the chips, but in making them: “From a design perspective, Chinese companies are at least on par with anyone else in the world,” said Risto Puhakka, president of VSLI Research. “Where they have a challenge is if they decide to make a very cutting-edge chip.”

The country’s recent scramble, amid the push for China 2025 strategic plan, to become technologically self-sufficient in chip production is clearly visible in the next chart, showing the big spike in recent imports of equipment for semiconductor manufacturing.

Chart: @brad_setser

Still, as Chinese semiconductor plants try to catch up, they have few choices when outfitting or upgrading their chip foundries. The reason: only a few equipment suppliers remain after a decade of consolidation.

Foremost among them is the Netherland’s ASML, which makes the photolithography machines that print and etch designs on to silicon wafers. It is the only supplier of the extreme ultra violet (EUV) lithography machines needed to make a 7-nanometre processor, the industry’s current gold standard.

Over in the US, Lam Research and Applied Materials as well as Japanese company Tokyo Electron dominate the market for equipment that can deposit billions of transistors and other active components on to a single chip. Another US company, KLA Tencor, sells much of the technology used in testing and monitoring the quality of chip production.

It is China’s reliance on these companies, more than any down swing in the stock market, that has made it vulnerable.

“Firms like Applied Materials, Lam Research and KLA-Tencor made 10 to 20 per cent of their revenues in China in 2017, a share which is expected to rise in 2018,” said Dan Wang, an analyst at Beijing research group Gavekal Dragonomics. “China is a large and growing market for them, and these companies don’t want export controls that are too restrictive.”

What would happen if the trade war escalates to prevent China from catching up with the US technologically?

Under current laws, an export ban on semiconductor equipment would mean both foreign companies, such as Samsung and Intel with foundries located in China, as well as wholly owned Chinese foundries would be unable to buy American equipment, though foreign companies are likely to be able to apply for waivers.

“One of the ideas of export controls is to prevent the release of the tech to certain foreign nationals from China: as an example, that could mean to a Chinese national wherever they are located, or to anyone within the physical geographic region of China,” said Anthony Capobianco, a partner at Hogan Lovells in Washington DC.

A US ban would also impact non-American chip equipment suppliers, because of the integration of what is a highly specialised supply chain: “ASML cannot do without Applied Materials and the other way around. If you take even one out of the value chain, that may hamper Chinese fabs,” said a former ASML executive.

Puhakka of VSLI Research said: “[These equipment suppliers] have the research and development, the trade secrets in metallurgy, the recipes: all of that knowledge base is 40 years old.” said VSLI Research’s Mr Puhakka.

“This is not about money. This about the knowledge base . . . and that knowledge base is not moving” he added, delineating China’s core dilemma.

* * *

Still, slowly China is catching up and some mainland companies are starting to produce their own chip-making equipment. At the head of the pack are Shanghai-based AMEC, which makes both wafer fabrication and packaging equipment for 28nm chips, Shanghai Micro Electronics Equipment, which is creating chip-etching lithography machines, and CETC, the state defence company, which announced a 28nm ion implanting device this August.

But what matters in the global technological arms race is that no Chinese company is close to being able to offer equipment that can produce the current target size of 7nm chips.SMEE’s machines can only match what ASML was able to do about 15 years ago. Today’s most basic smartphones require chips that are between 14nm and 16nm in size, but the smallest chips offered by China’s biggest manufacturer, SMIC, is 28nm.

And if the US cuts them off from purchasing foreign equipment, Chinese plants will also miss out on accumulating operational experience. “Basically, it’s a double whammy,” said Mr Simpson from Arete Research.

“You’ve got two big bottlenecks. You need to get the equipment into your fabs [plants] and secondly, you’ve got to know how it runs and the intellectual property process to make use of that equipment,” he explained.

Of course, being behind doesn’t mean China would give up, and if faced with US export controls, Chinese-owned plants could simply continue producing lower-end semiconductors, such as analogue chips, used in everything from industrial robots to electric vehicles.

However, out of reach in the medium term would be making the most advanced chips able to support AI functions or 5G telecommunication networks. Leading edge chips are also where sales and margins are highest. TSMC expects revenue from sales of advanced chips 28nm and smaller to rise to as much as 70% by this year, up from 42% only four years ago.

The risk is that an overly aggressive posture would backfire, and force China to become entirely self sufficient, because in the long term, analysts said, a US export ban would likely cement Beijing’s resolve to cultivate a wholly home grown semiconductor industry along every step, from design to fabrication to packaging.

“In the short term, US export controls can seriously set back Chinese progress on semiconductors. In the longer term, it’s hard to say if China will be permanently set back,” said Gavekal’s Wang, noting that fear of US export controls helped marshal the resources that shaped Japan’s most dominant semiconductor equipment players.

“The more tightly the US controls these goods, the more important it becomes for China to make these goods itself.”

At the end of the day, however, it is a simple question of money, because if China is willing to throw enough money at the problem, the solution will come. And as we showed back in May, China has every intention of not only matching, but surpassing total US military spending – springing the biggest Thucydides Trap ever witnessed in civilization – and in light of the importance of an autonomous, self-reliant semiconductor industry, one can argue that much of this spending will go toward beating the US where it truly matters…

… in the technological arms race.

Because remember what Bank of America’s Michael Hartnett said half a year ago: for all the talk of the escalating confrontation between the US and China, the “trade war” of 2018 should be recognized for what it really is: “the first stage of a new arms race between the US & China to reach national superiority in technology over the longer-term via Quantum Computing, Artificial  Intelligence, Hypersonic Warplanes, Electronic Vehicles, Robotics, and Cyber-Security.”

Which is why, at this point delaying Beijing may be the best option for the US which is slowly but surely losing its one insurmountable technological advantage. But while that may win the short-term battle, will it merely lead to an even faster victory for China in the war, first trade and eventually, real.

end

Not good:  China arrests a former Canadian diplomat as we fear China is in reprisal form due to Meng’s arrest

(zerohedge)

China Arrests Former Canadian Diplomat As Government Fears Reprisal For Huawei CFO

Is this one of the “severe” reprisals threatened by Beijing when it summoned Canada’s ambassador to Beijing for a meeting over the weekend?

According to Reuters, former Canadian diplomat Michael Kovrig has been detained in China. Kovrig’s employer, International Crisis Group, is working to secure his “safe” release.

Kovrig

The reason for Kovrig’s detention wasn’t immediately clear, and Beijing has refused to comment on his detention. However, Reuters noted that the arrest of Huawei CFO Meng Wanzhou has “stoked fears of reprisals.”

“International Crisis Group is aware of reports that its North East Asia Senior Adviser, Michael Kovrig, has been detained in China,” the think-tank said in a statement.

“We are doing everything possible to secure additional information on Michael’s whereabouts as well as his prompt and safe release,” it added.

China’s Foreign Ministry and Ministry of Public Security did not respond immediately to questions faxed earlier about Kovrig’s detention.

The exact reason for the detention was not immediately clear. The Canadian embassy declined to comment, referring queries to Ottawa.

Kovrig, a Mandarin speaker, has been working for the ICG as an in-house “expert” since February 2017. Prior to that, he served as a diplomat for the Canadian government between 2003 and 2016, with stints in Hong Kong and Beijing.

And while it’s possible that the timing of Kovrig’s arrest is purely coincidental, the timing is certainly suspicious.

end

And now more collateral damage as there is a boycott of Canada Goose Apparel in China as its shares drop 20%

(courtesy zerohedge)

“Collateral Damage”: Canada Goose Shares Fall 20% As Chinese Consumer Boycott Threatens Sales

The trials and travails facing Western purveyors of luxury goods as they seek to break into the Chinese market have been well documented in the press (see Dolce & Gabbana and Victoria’s Secret for two examples of what can happen when retailers hoping to gain entree to the world’s largest consumer market cross the Communist Party).

Canada

And in the demonstration of the leverage that China’s government exercises over Western retailers, shares of Canada Goose are tumbling as Chinese citizens have started a boycott of its goods in retaliation for the arrest of Huawei CFO Meng Wanzhou (the daughter of one of China’s most revered corporate titans). Formerly the second-best performer on Canada’s benchmark stock index, CG has seen its shares tumble some 20% over the past four days, as investors worry about a lasting impact on sales at two planned stores in Hong Kong and Beijing.

This suggests that China’s retaliation for Meng’s imprisonment won’t be limited to the arrest of a former Canadian diplomat.

CG

And a report in Communist Party mouthpiece the Global Times warned that this boycott could expand to other Canadian firms if Canada doesn’t release Meng. One “academic” quoted in the article warned that luxury goods brands are “very likely” to being targeted.

Zeng Mingyue, a research fellow at the Luxury China Institute of the University of International Business and Economics in Beijing, said luxury brands, embedded with high added-value and representing their original countries’ cultural backgrounds, are very likely to be targeted when political or cultural friction emerges and escalates.

 Global Times article about the boycott featured quotes from Chinese shoppers who patriotically criticized the Canadian government over its treatment of Meng. One woman said she had been planning to buy a Canada Goose parka until news of the arrest broke.

A Chongqing-based female surnamed Huang told the Global Times on Monday that she had been intending to buy a Canada Goose parka before Meng was arrested.

“I have been watching closely toward progress of the Huawei case. I feel very anxious about the Canadian side arresting the Huawei CFO out of groundless reason,” Huang noted.

“So far, I have not seen any sincere and cooperative attitude from the Canadian side. If the case is not dealt properly, I will definitely not buy the Canada Goose jacket and turn to other similar products,” she added.

Adding to the company’s anxieties about its prospects for expanding in the Chinese market, Canada Gooses losses have benefited one of its regional rivals, as shares of Hong Kong-based downy apparel maker Bosideng have climbed nearly 13% to a five-year high as investors expect the company could experience a sales bump thanks to the CG boycott.

And with Bosideng improving the quality of its products, investors are probably asking if the “collateral damage” to Canadian brands could result in a lasting disadvantage in the Chinese market.

The war between China and the USA escalated again with Trump condemning China over hacking and economic espionage

(courtesy zerohedge)

Trump To Condemn China Over Hacking, Economic Espionage; Stocks Slide

First thing this morning, we reported that “it appears that the next leg of the market’s violent whiplash is upon us, as active traders scramble to reposition from being max short to as long as they possibly can… at least until the next flashing red headline unleashes the next panic selling round.”

Well, moments ago we got just that headline, when the Washington Post reported that the Trump administration is preparing to condemn Beijing for what it says are China’s continued efforts to steal America’s trade secrets and advanced technologies and compromise sensitive government and corporate computers,

  • U.S. TO CONDEMN CHINA OVER HACKING, ECONOMIC ESPIONAGE: WAPO

Citing U.S. officials, the WaPo reports that “multiple government agencies are expected to condemn China, citing a documented campaign of economic espionage and the alleged violation of a landmark 2015 pact to refrain from hacking for commercial gain.”

And in what may be the most significant move, the DOJ is expected to announce the indictments of multiple hackers suspected of working for a Chinese intelligence service and participating in a long-running espionage campaign that targeted U.S. networks.

The coming indictments are the latest salvo in a major Justice Department initiative launched last month to combat Chinese commercial spying. Since September, federal prosecutors have brought charges in three intellectual property theft cases involving Chinese hackers and spies and one involving alleged economic espionage by a Chinese state-owned company.

The forthcoming indictments involve hackers whom U.S. authorities have connected to the Ministry of State Security, China’s intelligence and security agency, which has in recent years greatly increased its cyberintrusions into U.S. targets as China’s military has dialed back its activities.

In September 2015, Xi came to Washington and, standing in the Rose Garden alongside President Barack Obama, pledged that his country would not seek to steal trade secrets and intellectual property from U.S. companies to help Chinese industry. And although the military curtailed its commercial hacking in 2016, Beijing’s cyberspies — in particular those affiliated with the MSS — have stepped into the breach, government and industry officials said.

Additionally, the Trump administration is planning to declassify intelligence relating to the breaches, which date to 2014, and to sanction some of those believed responsible, according to people familiar with the plans.

“The tariff war is a bit of a sideshow to the broader geopolitical competition that is almost inevitably going to heat up,” said Ely Ratner, executive vice president of the Center for a New American Security, a think tank. “There is essentially no overlap between Xi’s vision for China’s rise and what the U.S. would consider an acceptable outcome for Asia.”

Taken together, the announcements represent a major broadside against China “over its mounting aggression against the West and its attempts to displace the United States as the world’s leader in technology, officials said”, echoing our discussion from yesterday that the real reason for the US-China trade war is to containg China’s technological advancement, and specifically its growing independence in semiconductor manufacturing.

They are part of an intensifying government-wide approach to confronting China and would come as the two countries have reached a momentary detente in their trade war.

In short, China is the new Russia.

The reported slammed the Dow Jones, wiping out virtually all gains for the day…

… with bank stocks on the verge of turning red as yield slide negative for the day.

END
China, Japan/Softbank
With the release of news that China may be engaging in espionage, Japan’s largest bank: Softbank is now mulling abandoning some Huawei Equipment over cypersecurity concerns.  Softbank is Huawei’s largest customer in Japan
(courtesy zerohedge)

SoftBank Mulls Abandoning Some Huawei Equipment Over ‘Cybersecurity Concerns’

The White House has spoken, and apparently, the US’s allies are listening.

Less than one month after WSJ reported on an “extraordinary outreach campaign” launched by the US government to lobby private companies and allied governments to abandon Huawei equipment (citing concerns that Huawei’s tech might be vulnerable to Chinese spies), the paper reported Tuesday that several of Huawei’s customers are reportedly examining the pros and cons of ditching at least some equipment manufactured by the Chinese telecom giant.

Softbank

SoftBank, the only firm cited by name in the latest WSJ story and Huawei’s largest customer in Japan, is reportedly assessing the impact of eliminating some less-expensive Huawei gear. Of course, it’s extremely probable that SoftBank might decide that the costs of moving away from some of Huawei’s equipment are too steep; the telecoms conglomerate, which operates Japan’s third-largest mobile phone network, relies on Huawei’s equipment to offer rates that are competitive against its two larger rivals, who together control about three-quarters of Japan’s mobile market and are reportedly planning to cut rates as much as 40%. Also, SoftBank could be fearful of damaging its relationship with Huawei as the two companies have already partnered on trials of new 5G technology.

The study is preliminary, yet it remains the first indication that SoftBank is beginning to doubt the security of Huawei’s equipment. Until very recently, SoftBank had insisted that Huawei’s equipment was safe.

Until recently, SoftBank had said it believed equipment from Huawei and Chinese telecom-equipment maker ZTE Corp. was safe. But a company official involved in SoftBank’s discussions said Tuesday the company was assessing whether it could source equipment from other makers, and if so how that would affect network quality, cost and the timeline for introducing 5G. The official said the study was preliminary and no decision has been made.

Meanwhile, Huawei has insisted that its equipment is safe, and a government spokesman in Beijing told WSJ that nobody has produced even a shred of evidence to suggest otherwise.

In Beijing, Foreign Ministry spokesman Lu Kang said Huawei’s critics “haven’t provided one piece of evidence that Huawei threatens their national security. Any action based on such speculations is ridiculous.” Mr. Lu said Huawei has signed 5G contracts with companies in more than 20 countries and is “gaining greater trust from its international partners.”

The US has already banned government agencies from sourcing Huawei equipment, and on Monday, Japanese government revised its guidelines for buying telecoms equipment to help improve its defenses against cybersurveillance – a change Huawei decried as a “backdoor” ban. SoftBank is in discussions with regulators about how it should comply with these guidelines. Meanwhile, accusations that Huawei violated US and EU sanctions against Iran (Canada triggered a mini diplomatic crisis when it arrested Huawei’s CFO more than a week ago) could grant the US additional leverage as it seeks to hamstring the Chinese telecom giant.

Setting aside cyber security concerns, the US only stands to benefit if its allies shun Huawei. Because US firms are working on their own 5G equipment as they struggle to regain lost ground in the battle over who will dominate in 5G.

end

Funny! Meng offers her husband and children plus the two houses as bail collateral

(courtesy zerohedge)

Huawei CFO Offers Husband, Children As Bail Collateral

Lawyers for indicted Huawei CFO Meng Wanzhou put a new spin on an old Rodney Dangerfield joke on Tuesday when they offered to pledge both of Meng’s multimillion dollar homes as well as her husband (and her children) as collateral should the executive be granted bail.

Yes, you read that right:

  • HUAWEI CFO’S LAWYER PLEDGES HUSBAND PLUS 4 OTHERS AS SURETIES

Meng’s lawyer also agreed that their client would wear an ankle bracelet while free on bail.

  • MENG’S LAWYER ALSO AGREES TO ELECTRONIC SURVEILLANCE FOR BAIL
  • CANADA JUDGE AKS HOW `HYPOTHETICAL’ BAIL RELEASE TO BE FRAMED

Canadian prosecutors argue that Meng is an obvious flight risk and should be held until she is extradited to the US (a process that could take years) or tried in Canada. Meng has no deep ties to Canada and also has at her disposal immense resources (including numerous passports and her father’s $2 billion fortune) to evade justice in perpetuity should she return to China, which doesn’t have an extradition treaty with the US or Canada. Meng’s lawyers, meanwhile, cited her family’s residences in Vancouver as well as their clients ill health following a bout with thyroid cancer as reasons why she should be released.

Meng

Meng’s bail hearing has already dragged on for the better part of three days, but one reporter for Canada’s Global News hinted that complaints from Beijing might push the Canadian government to grant her release (indeed, the Canadians fear that the arrest of a former Canadian diplomat in China might be retaliation for Meng’s arrest).

Sam Cooper

@scoopercooper

I’m hearing some interesting things from BC political and policing sources today. 1. There appears to be high level interest about where and how Meng kept, while under arrest. Phones have been buzzing. 2. Speculation is she will be released on bail today.

And here’s that Dangerfield gag:

 

4.EUROPEAN AFFAIRS

UK

The chaos inside the UK due to the Brexit problems…

(courtesy zerohedge)

Meanwhile In Brexit… Total Chaos

It has been a furiously chaotic day for Brexit developments, which considering the “organized” nature of the process to date, is saying something.

Just a few hours after the embattled U.K. prime minister announced to the House of Commons she would defer the critical Brexit vote – facing certain and humiliating defeat – and return to Brussels to seek “assurances” from European Union leaders, the fate of any upcoming votes to ratify the deal is now in limbo.

As ITV’s Richard Peston reported, “it appears that UK PM May could keep the current talks with EU going well past January 21st perhaps right up to Brexit day 29 March, and avoid any parliamentary Brexit vote,”effectively eliminating a popular vote of disapproval for her process.

Robert Peston

@Peston

I may have got this wrong. Looking at European Union Withdrawal Act it seems that @theresa_may could keep the current talks with EU going well passed 21 Jan, perhaps right up to Brexit day 29 March, and avoid any parliamentary Brexit vote. @YvetteCooperMP understandably concerned

 

Speaker Bercow appears to confirm that there is a deadline of 21 January for Parliament to have its meaningful Brexit vote

That, as Bloomberg notes, raises the prospect that May will be back in Parliament in January with virtually the same deal, relying on tanking markets, a crashing pound and frightening no-deal preparations – including even more doomsday rhetoric from the Bank of England – to convince lawmakers to back her. Sadly for May, the parliamentary arithmetic won’t have changed, as only an election can do that. And an election is out of the question as May will almost certainly lose her job, potentially resetting the Brexit process back to square one (or perhaps minus one).

Meanwhile, with the Brexit vote in parliament indefinitely postponed, the UK Parliament will debate the vote delay for three hours on Tuesday according to House of Commons Speaker John Bercow, assuring even more drama and chaos.

The debate was demanded by opposition Labour Party leader Jeremy Corbyn, who said May has shown “disregard for Parliament and the rights of this house” by making a “unilateral” decision to delay vote on her Brexit deal. While the debate won’t be binding on May’s government, contributions “will reflect anger” at May avoiding what was predicted to be a heavy defeat of her deal in House of Commons, according to Bloomberg.

Even so, Corbyn won’t table a “no confidence” motion against Theresa May’s government until there’s been a formal vote on the withdrawal agreement, effectively trapping May in a no way out situation.

And while the domestic chaos hit previously unseen levels, in Brussels European Council President Donald Tusk called a leaders’ meeting on Brexit for Thursday, but made it clear that the EU “will not renegotiate the deal” even as he tweeted that “we are ready to discuss how to facilitate ratification.”

Amusingly, it’s not just Europe that refuses to renegotiate the deal: Irish PM Leo Varadkar was also on the tape re-iterating that the deal cannot be renegotiated.

All this is happening as May’s critics hate the agreement she negotiated because, as BBG notes, they think she’s allowing the U.K. to be trapped in the EU’s orbit indefinitely – a situation they consider even worse than current membership.

To that end, the Daily Mail’s tweeted that Brexiteers claim to have heard of “a couple more” letters of no confidence in Theresa May going in tonight, which means that should the total surpass 48, May’s cabinet may fall even before a vote in Parliament is held… if one is held to begin with.

If that wasn’t enough, juggling a seemingly infinite number of variables, May said the government will step up preparations in case Britain does crash out of the bloc on March 29, which is less than 4 months from now. She once again brought up the threat of no-deal – the worse-case scenario for business – as a weapon to try and bring rebellious Conservatives on both sides of the Brexit debate into line.

To be sure, as the Brexit chaos hits previously unimaginable levels, traders no longer are able to follow every twist and turn in this melodramatic tragicomedy, and appears to be resigned to just sell the pound as it now appears that the only thing that can get the pound to surge – i.e., get a Brexit deal – is if the pound first crash. It did so today, with sterling hit the lowest since April as the market either judged that the risk of no-deal Brexit has increased, or realized that the only way to get a deal is to scare parliament into voting for May’s deal.

So what happens next? Nobody knows.

As Bloomberg reports when pressed by members of Parliament to tell them when she would bring the deal back, May refused to answer, saying only that Jan. 21 served as a deadline because it’s the date in the law when the government has to report back to Parliament on what it’s doing if there’s no deal.

“The worst case is no vote until January 21,” according to Societe Generale SA strategist Kenneth Broux, adding that the longer it takes, the lower the pound is likely to fall.

END

Europe insists that the Brexit deal will not be renegotiated as Theresa May hopes to “run out the clock”

(courtesy zerohedge)

Europe Insists Brexit Deal Won’t Be Renegotiated As May Hopes To ‘Run Out The Clock’

The apprehension that gripped cable on Monday has faded, sparking a modest recovery in the pound on Tuesday as Theresa May embarks on her “dash to Brussels” – a whirlwind tour of European capitals where the prime minister is expected to meet with a bevy of bureaucrats and elected leaders to try and win assurances that – at the very least – the Brexit withdrawal agreement could be modified to include “assurances” that entering into the controversial “Irish backstop” would require approval from Parliament.

But – so far, at least – European leaders are standing firm regarding their insistence that the deal on the table is the ‘best possible deal’ and won’t be open to renegotiation.

According to the Telegraph, Jean-Claude Juncker assured MEPs in Strasbourg that the ‘finalized’ deal currently on the table is “the only deal possible” and ruled out making changes – though he added that there would be room for “further clarifications” and “further interpretations” of the deal (though many believe this wouldn’t be enough to win over EU votes).

Embedded video

Conor McMorrow

@ConorMcMorrow

BREAKING:@JunckerEU tells @Europarl_EN “withdrawal agreement will not be re-opened.” He said the backstop “necessary for the entire coherence of the agreement and it is necessary for Ireland. Ireland will never be left alone.” #Brexit

Here’s more from the Telegraph:

MEPs applauded as Mr Juncker said: “There is no room whatsoever for renegotiation, but of course there is room if used intelligently, there is room enough to give further clarifications and further interpretations without opening the Withdrawal Agreement.”

“This will not happen: everyone has to note that the Withdrawal Agreement will not be reopened.”

The offer of “further clarifications” on the backstop issue is unlikely to be enough to win over sceptical Brexiteer MPs who want the Irish border protocol removed from the Withdrawal Agreement.

Mr Juncker said the Irish backstop was the “big problem” and explained: “We have a common determination to do everything to be not in the situation one day to use that backstop.”

“But we have to prepare: it’s necessary for the entire coherence of what we have agreed with Britain and it is necessary for Ireland. Ireland will never be left alone.”

Meanwhile, May met with Dutch PM Mark Rutte in the Hague for talks that Rutte described as “useful”…

Mark Rutte

@MinPres

This morning I received PM @Theresa_May in The Hague for a breakfast meeting in preparation for the European Council later this week. A useful dialogue which saw us discuss the latest #Brexit developments.

… and is expected to meet with German Chancellor Angela Merkel in Berlin and European Council President Donald Tusk in Brussels before heading back to London for a Wednesday cabinet meeting (notably, Paris isn’t on the list of European capitals that May is expected to visit).

Laura Kuenssberg

@bbclaurak

Morning – PM is in The Hague for breakfast with Rutte, then Berlin with Merkel then meetings with Tusk and Juncker in Brussels this afternoon – trying to get meaningful concessions that no one really believes are possible to get

Danny Kemp

@dannyctkemp

Rutte just arrived on his bike 🚲

View image on Twitter

May has also scheduled a meeting with Juncker:

Jean-Claude Juncker

@JunckerEU

I will meet @theresa_may this evening in Brussels. I remain convinced that the #Brexit deal we have is the best – and only – deal possible. There is no room for renegotiation, but further clarifications are possible.

Back in Westminster, May’s refusal to commit to a timeline for a vote is inspiring speculation that she plans to “run out the clock” to force MPs into backing her deal by effectively leaving them two options: Her deal, or no deal. Parliament leaves for a holiday recess on Dec. 20, and won’t return until Jan. 7.

Even if the EU relents and reopens the deal, May doesn’t expect material changes to be made. Her new strategy was perhaps best summarized by an anonymous cabinet source during an interview with a Bloomberg reporter.

A Cabinet ally of May’s, speaking on condition of anonymity, put the prime minister’s strategy more charitably, saying that if the deal can’t go through then the only option is to keep talking –  to EU leaders, in the hope they might offer something more, and to lawmakers, in the hope they might ask a little less.

One anonymous “cabinet source” told the BBC that May and her senior ministers would discuss “preparations for no deal” during tomorrow’s cabinet meeting (the meeting was moved from Tuesday to allow May some time to try and ‘handbag’ the EU). While May and her time have long prioritized contingency planning for a worst-case scenario, the BBC’s source said this would now take on a “special urgency.”

Laura Kuenssberg

@bbclaurak

Cabinet source says Cabinet meeting in diary for tmrw afternoon – with preparation for no deal on the agenda (as has been on lots of occasions, but may have added urgent now, maybe)

Putting to rest speculation that a vote could be postponed until late January or early February (or perhaps even later) a government source told reporters that a vote on May’s deal would be held no later than Jan. 21, two weeks after MPs return from their holiday recess.

Few Wall Street analysts are willing to accept that a “no deal” outcome is a serious possibility. However, they unwittingly offered some support for May’s “Project Fear” by releasing forecasts that were nothing short of apocalyptic.

Richard Turnill, global chief investment strategist at BlackRock, said that, while he doesn’t expect a ‘no deal’ exit, the downside for UK stocks could be massive – as much as 30% from current levels.

Others, including MUFG’s Lee Hardman, embraced May’s plan to “run out the clock”, according to the Financial Times.

“The longer it takes to put the deal back to parliament, the more pressure will be applied on MPs to accept the deal given the looming risk of a “No Deal” outcome.The Brexit stand-off at this late stage of negotiations is clearly unwelcome for the pound. At the same time though the likelihood of a second referendum and alternative softer Brexit deals being adopted is also rising, so it’s not all bad news for the pound,” said Lee Hardman, currency analyst at MUFG.

Perhaps the most amusing take came from Deutsche Bank’s Jim Reid, who contrasted the UK’s fraught Brexit negotiations with the news that the US’s Voyager 2 probe had finally left our galaxy and made it to interstellar space (the probe was launched back in the 1970s), noting that “it seems easier to leave the galaxy than the EU.”

With today’s long anticipated vote now postponed, it takes an intergalactic sized mind to work out the end game from here. Feel free to tell me if you have one.

If there is one silver lining from this week’s Brexit chaos, it’s that Labour is apparently backing down from its threats to try and force a general election by calling a no confidence vote in the government. Leader Jeremy Corbyn has reportedly tabled this plan for now, though leaders of the Liberal Democrats and Scottish National Party have reportedly written to urge him to reconsider.

Meanwhile, one Labour MP’s decision to hoist Parliament’s ceremonial Mace – reportedly an act of protest – has apparently backfired and served as a convenient distraction for May.

Henry Zeffman

@hzeffman

Vaguely normal people on my tube carriage talking about the mace. This is not normal

Video of that spectacle can be found below.

 

.

 

 

END
It is such a mess in Britain that many traders are refusing to trade the pound any more
(courtesy zerohedge)

“It’s A Horrible Mess”: Disgusted Traders Refuse To Trade The British Pound Any More

After yesterday’s “peak” Brexit chaos, which slammed cable to a 21 month low…

… currency traders have finally had enough, and are making their disgust public.

While the pound may recover some of its losses in the long run, Ensemble Capital is one fund that will watch from the sidelines, and refuses to trade the currency due to ongoing uncertainty over Brexit, said Damien Loh, chief investment officer at the Singapore-based hedge fund.

“I’m staying out of it – it’s basically like trying to pick a roller coaster as your commuter,” says Loh, who oversees an artificial intelligence-driven hedge fund he jointly set up with former JPMorgan Chase & Co. FX option trader, Atsuo Ogaki.

“It’s so headline driven and everyone feels they’re entitled to give their opinion. So do I really want to be open to the vagaries of someone’s trading opinion right now? Not really.”

Others, such as AMP Capital, were even more explicit in their disgust over what has become a headline-driven, algorithmic love/hate fest:

“It’s a mess – in a world of turmoil Brexit has become a bit of comic relief, it’s like a British comedy,” Shane Oliver, head of investment strategy at the $138BN Sydney-based asset fund, told Bloomberg.

“It’s more than two years now since the Brexit vote and most of that time leaders have taken to arguing among themselves.”

“I’ll say stay away for now. It’s just too hard to trade the pound. You can’t really trade it on technicals because it’s driven by political announcements that flip and flop.”

“What you’d want to see is more certainty about which way this will go. The dust needs to settle before you can make decisions based on fundamentals for the pound.”

Alas for Shane, if he is indeed waiting for “certainty” before he resumes trading, he will be waiting a long, long time.

We give the last word to Bill Blain who summarized the mess best: “yesterdays no vote decision, and the likelihood Europe is not going to give us any change to the current agreement, and Derivative Contracts to be settled in 90 days time will need somewhere to settle… and its clear we’re in a horrible mess.”

end
The pound falls to an 18 month low on the report that the conservatives have the 48 no confidence votes. Now we await to see if the labour party joins in ousting May
(courtesy zerohedge)

Pound Falls To 18-Month Low On Reports

Conservatives Have Enough ‘No Confidence’ Votes

What looked like the first stirrings of a recovery in the pound Tuesday morning has given way to more selling, as the British currency tumbled to $1.2502 – just above a key psychological threshold – following reports that the conservatives’ 1922 committee had finally received the 48 letters of no confidence necessary to trigger a vote of no confidence in Prime Minister Theresa May.

The no confidence letter count stood at 46 as recently as Tuesday morning. However, a few frustrated remainers joined with their Brexiteer peers to push the total over the top. What’s worse, the gesture of contempt comes as May is out of the country on a “whistlestop” our of European capitals in a desperate bid to achieve “assurances” on the Irish backstop that multiple EU leaders have said they wouldn’t be willing to give.

Brexit

In what has become a regular feature of the Brexit chaos, reports that the threshold had been reached were almost immediately contradicted…

Laura Kuenssberg

@bbclaurak

Masses of speculation about the numbers going in – lots of people hoping the 48 has been reached, but not clear – ‘we’ll def have them by….’ – fill in the blanks – but as @BethRigby says, mood seems to be hardening towards PM for sure

Laura Kuenssberg

@bbclaurak

One formerly loyal Remainer tells me they’ve put letter of no confidence knows today – says ‘it’s disgraceful what’s going on … it’s to save her skin’

240 people are talking about this

…Which was followed by a wave of reports insisting that yes, the threshold has been reached.

Adam Payne

@adampayne26

Here we go again. An ERG source writes: “They’ve reached 48 letters. Whitehall confirmed and someone in the chairman’s office.”

134 people are talking about this

And as fate would have it, this bout of internecine warfare among the Tories is brewing just as Labour is reportedly backing away from its plans to call for a no confidence vote in May’s government.

France
A good look as to what is going on in France
(David Brown /Gatestone)

Why The French People Feel Screwed

Authored by David Brown via The Gatestone Institute,

On December 4, French Prime Minister Édouard Phillipe told deputies of the ruling party, “La République en Marche”, that a proposed fuel tax rise, which had led to the largest protests France has seen in decades, would be suspended.

The protesters, called Gilets-Jaunes — “Yellow Vests,” because of the vests drivers are obliged by the government to carry in their vehicles in the event of a roadside breakdown — say that the fuel tax was the last straw from a president who took office with a promise to help the economically left-behind but instead has favoured the rich.

Even by French standards, the protests of the “Yellow Vests” during the weekend of December 1 were startling. Burning cars and vast plumes of grey smoke seemed to engulf the Arc De Triomphe as if Paris were at war. Comparisons were drawn with the Bread Wars of the 17th Century and the spirit of the Revolution of the 18th Century.

For more than two weeks, the “Yellow Vests” disrupted France. They paralyzed highways and forced roads to close — causing shortages across the country – and blocked fuel stations from Lille in the North to Marseilles in the South.

During protests in France’s capital, Paris, the “Yellow Vests” were soon joined by a more violent element, who began torching cars, smashing windows and looting stores. 133 were injured, 412 were arrested and more than 10,000 tear gas and stun grenades were fired.

One elderly lady was killed when she was struck by a stray grenade as she tried to shutter her windows against the melee.

There was talk of imposing a State of Emergency.

The “Yellow Vests” present the most significant opposition French President Emmanuel Macron has faced since coming to office in May 2017. Unlike previous protests in France, which have divided public opinion, these have widespread support – 72% according to a Harris Interactive Poll published December 1st.

Fuel tax rises — announced in November before being retracted on December — were intended to help bring down France’s carbon emissions by curbing the use of cars. Macron makes no secret of his wish to be seen as a global leader for environmental reform.

He forgets that back at home, among the people who elected him, fuel prices really matter to those outside big cities, where four-fifths of commuters drive to work and a third of them cover more than 30km each week.

The increases have incensed people in smaller communities, where they have already seen speed limits reduced to please the Greens and cuts to the local transport services.

These additional costs-of-living increases come at an extremely bad time for ordinary French people working outside of Paris. Lower-middle class families are not poor enough to receive welfare benefits but have seen their income flat-line whilst cost-of-living and taxes have risen.

An analysis by the Institut des Politiques Publiques think-tank shows that benefits cuts and tax changes in 2018 and 2019 will leave pensioners and the bottom fifth of households worse off, while the abolition of the wealth tax means that by far the biggest gains will go to the top 1%

This is tough to swallow. Macron is seen as being out of touch with ordinary people and is unlikely to escape his new title, “the President of the Rich.”

“People have this feeling that the Paris technocrats are doing complicated things to screw them,”said Charles Wyplosz, an economics professor at the Graduate Institute of International and Development Studies in Geneva.

It is probably not as complex as that. The French people feel screwed.

As employment and growth are slowing, Macron, for the first time in his presidency, is under serious pressure. Unemployment is at 9%; his efforts to reform Europe are stalling, and his approval rating has plummeted to just 23% according to a recent opinion poll by IFOP.

Images of Macron at the Arc De Triomphe daubed in graffiti calling for him to step down, or worse, have done little to bolster his image abroad.

So far, Macron had said he would not bow to street protests. To underline his point, in September 2017, he called protestors against French labour-market reform “slackers”.

The political U-Turn on the fuel tax is a turning point for the Macron presidency. The question is : What next, both for Macron and the “Yellow Vests”?

Macron most likely needs to plough ahead with his reform agenda, and doubtless knows he has the support of a solid majority in the National Assembly to do so. France is crippled by debt (nearly 100% of GDP) and its grossly bloated public sector. There are 5.2 million civil servants in France, and their number has increased by 36% since 1983. These represent 22% of the workforce compared to an OCDE average of 15%.

Tax-expert Jean-Philippe Delsol says France has 1.5 million too many “fonctionnaires [officials]. When you consider that public spending in France now accounts for 57 per cent of gross domestic product. Soon the system will no longer function as there will be less and less people working to support more and more people working less”.

Macron’s mistake, in addition to a seeming inclination for arrogance, is not to have made national economic reform his absolute priority right from his initial grace period after his election. Lower public expenses would have made it possible to lower taxes, hence creating what economists call a virtuous circle. Instead, he waited.

Now, at a time when he is deeply unpopular and social unrest is in full sway he is looking to make further reforms in unemployment benefits, scaling them back by reducing the payments and the length of time beneficiaries can receive the money. The “President of the Rich” strikes again.

There is talk that he may also re-introduce the wealth tax to try to placate the protestors.

Macron’s presidential term lasts until May 13, 2022. Understandably, Macron will be focused on the elections to the European Parliament expected to be held May 23-26, 2019. Headlines have signalled that Marine Le Pen and the National Rally (formally National Front) are ahead in the polls at 20%, compared to Macron’s En Marche at 19%.

The shift is understandable, given the divide between the countryside, where Le Pen has solid support, and the cities, where Macron’s centre-left prevail.

In contrast, the “Yellow Vests” have galvanised support after standing up for the “impotent ordinary”, and seem much buoyed by the solidarity they have been shown by both fire fighters and the police. There are images online of police removing their helmets and firefighters turning their backs on political authority to show their support for the protestors.

Whilst Macron’s political opposition may be fragmented, this new breed of coherent public opposition is something new. Leaderless, unstructured and organised online, the “Yellow Vests” have gained support from the left and right, yet resisted subjugation by either.

Being leaderless makes them difficult to negotiate withor to reason with in private. The “Yellow Vests” seem acutely aware of this strength, given their firm rebuttal of overtures for peace talks from the Macron government.

Enjoying huge support from the public and with reforms to the social welfare system on the horizon, the “Yellow Vests” are not going away.

For the first time in his Presidency, Macron is in trouble and Europe and America are looking on.

After Macron rebuked nationalism during his speech at the armistice ceremony, Trump was quick to remind the French President of his low approval rating and unemployment rate near 10%. A stinging broadside from Trump on twitter suggests that Macron may well be relegated to Trump’s list of global “Losers“:

“Emmanuel Macron suggests building its own army to protect Europe against the U.S., China and Russia. But it was Germany in World Wars One & Two – How did that work out for France? They were starting to learn German in Paris before the U.S. came along. Pay for NATO or not!”

The “impotent ordinary” in the United Kingdom, who might feel betrayed over Brexit, and the nationalists in Germany, who have suffered under Merkel , are no doubt staring in wonder at the “Yellow Vests”, wishing for the same moxie.

The historian Thomas Carlyle, chronicler of the French Revolution, said the French were unrivaled practitioners in the “art of insurrection”, and characterised the French mob as the “liveliest phenomena of our world”.

Mobs in other countries, by comparison, he argued were “dull masses” lacking audacity and inventiveness. The blazing yellow vests of the French protest movement , however, have made Macron appear increasingly dull and weak too.

end

France

It now seems that France has solved Italy’s deficit problem as Macron has decided to lower taxes big time in the wake of the riots in his country. His budgetary deficit for 2019 will now widen to 3.6% much higher than Italy’s 2.4%. As we say in chess, check Mr Draghi…your move

(courtesy zerohedge)

Europe Has A New Problem: Macron’s “Populism” To Blow Out French Budget Deficit Far Beyond Italy’s

As if Brussels didn’t have its hands full already with Italy and the UK, the European Union will soon be forced to rationalize why one of its favorite core members is allowed to pursue populist measures to blow out its budget deficit to ease domestic unrest while another is threatened with fines potentially amounting to billions of euros.

Macron

When blaming Russia failed to quell the widespread anger elicited by his policies, French President Emmanuel Macron tried to appease the increasingly violent “yellow vests” protesters who have sacked his capital city by offering massive tax cuts that could blow the French budget out beyond the 3% budget threshold outlined in the bloc’s fiscal rules.

Given the concessions recently offered by Italy’s populists, Macron’s couldn’t have picked a worse time to challenge the bloc’s fiscal conventions. As Bloomberg pointed out, these rules will almost certainly set the Continent’s second largest economy on a collision course with Brussels. To be clear, Macron’s offered cuts come with a price tag of about €11 billion according to Les Echos, and will leave the country with a budget gap of 3.5% of GDP in 2019, with one government official said the deficit may be higher than 3.6%.

By comparison, Italy’s initial projections put its deficit target at 2.4%, a number which Europe has repeatedly refused to consider.

Macron’s promises of fiscal stimulus – which come on top of his government’s decision to delay the planned gas-tax hikes that helped inspire the protests – were part of a broader ‘mea culpa’ offered by Macron in a speech Monday night, where he also planned to hike France’s minimum wage.

Of course, when Brussels inevitably objects, perhaps Macron could just show them this video of French police tossing a wheelchair-bound protester to the ground.

Already, the Italians are complaining.  Speaking on Tuesday,Italian cabinet undersecretary Giancarlo Giorgetti said Italy hasn’t breached the EU deficit limit. “I repeat that from the Italian government there is a reasonable approach, if there is one also from the EU a solution will be found.”

France has several times breached the 3% deficit. Italy hasn’t done it. They are different situations. There are many indicators to assess.”

Still, as one Guardian columnist pointed out in an op-ed published Tuesday morning, the fact that the gilets jaunes (yellow vest) organizers managed to pressure Macron to cave and grant concessions after just 4 weeks of protests will only embolden them to push for even more radical demands: The collapse of the government of the supremely unpopular Macron.

Then again, with Brussels now facing certain accusations of hypocrisy, the fact that Macron was pressured into the exact same populist measures for which Italy has been slammed, the French fiasco raises the odds that Rome can pass any deficit measure it wants with the EU now forced to quietly look away even as it jawbones all the way from the bank (i.e., the German taxpayers).

“Macron’s spending will encourage Salvini and Di Maio,” said Giovanni Orsina, head of the School of Government at Rome’s Luiss-Guido Carli University. “Macron was supposed to be the spearhead of pro-European forces, if he himself is forced to challenge EU rules, Salvini and Di Maio will jump on that to push their contention that those rules are wrong.”

While we look forward to how Brussels will square this circle, markets are less excited.

Exhausted from lurching from one extreme to another following conflicting headlines, traders are already asking if “France is the new Italy.” The reason: the French OAT curve has bear steepened this morning with 10Y yields rising as much as ~6bp, with the Bund/OAT spread reaching the widest since May 2017 and the French presidential election. Though well below the peaks of last year, further widening would push the gap into levels reserved for heightened political risk.

As Bloomberg macro analyst Michael Read notes this morning, it’s hard to see a specific near-term trigger blowing out the Bund/OAT spread but the trend looks likely to slowly drift higher.

While Macron has to fight on both domestic and European fronts, he’ll need to keep peace at home to stay on top. Remember that we saw the 10Y spread widen to ~80bps around the May ’17 elections as concerns of a move toward the political fringe played out in the markets, and the French President’s popularity ratings already look far from rosy.

And just like that France may have solved the Italian crisis.

end

 

And now its credit risk now soars

(courtesy zerohedge)

French Credit Risk Soars As Macron Bailout Blows-Out Deficit

Having bitched and moaned at the utter temerity of the Italians to suggest a growth budget that busts Brussels’ mandated deficit limits, the French are about to make Milan’s defiance look like child’s play.

French Prime Minister Edouard Philippe said the measures announced on Monday by President Emmanuel Macron to appease so-called Yellow Vests protesters will “necessarily” have an impact on the country’s deficit.

“The measures will have consequences in terms of spending and that necessarily implies consequences in terms of deficit and we know it will have an impact on the 2019 deficit.”

Philippe said the government will take measures to avoid accelerating public spending, but for now, it’s not looking good.

Specifically, as the EU pressures Italy to retreat from a deficit of 2.4% of GDP next year, the promises Macron unveiled Monday night, from a 100-euro ($114) a month hike in the minimum wage to abolishing a tax on pensions, are expected to cost around EUR 10 billion (or 0.5ppt of GDP), which, as French Budget Minister Gerald Darmanin indicated, will send the 2019 budget to a deficit at 3.4% of GDP.

And that budget-busting populist bailout for Macron has sent French credit risk soaring to its highest since May 2017

Perhaps most notably, as opposed to disgust projected from Brussels when Italy pitched their budget, the European Commission said it will assess the impact of French President Emmanuel Macron’s proposed increase in spending in the spring in its regular process of assessing EU governments’ budgets.

“We have a well-established process in place to monitor and assess member states’ economic situations and fiscal policies. Our position on France is well known and the opinion on the French draft budgetary plan was published recently,” commission spokesman Margaritis Schinas says.

“The fiscal impact of the final budget that emerges from the parliamentary process will be assessed in spring when we publish our economic forecasts,” Schinas tells reporters.

As always, it’s one rule for the core, and one for the periphery.

As Bloomberg reports,  while investors are starting to look more closely at French spending, Italy has periodically complained that Paris gets special treatment when the EU Commission is assessing budgets.

“Macron’s spending will encourage Salvini and Di Maio,” said Giovanni Orsina, head of the School of Government at Rome’s Luiss-Guido Carli University.

Macron was supposed to be the spearhead of pro-European forces, if he himself is forced to challenge EU rules, Salvini and Di Maio will jump on that to push their contention that those rules are wrong.”

end

5.RUSSIAN AND MIDDLE EASTERN

AFFAIRS

IRAN/USA/GLOBE

6. GLOBAL ISSUES

 

end

 

7  OIL ISSUES

 

8. EMERGING MARKETS

Venezuela

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

Euro/USA 1.1395 UP .0040 REACTING TO MERKEL’S FAILED COALITION/ REACTING TO +GERMAN ELECTION WHERE ALT RIGHT PARTY ENTERS THE BUNDESTAG/ huge Deutsche bank problems + USA election:///ITALIAN CHAOS /AND NOW ECB TAPERING BOND PURCHASES/JAPAN TAPERING BOND PURCHASES /USA RISING INTEREST RATES /FLOODING/EUROPE BOURSES ALL GREEN

 

 

 

 

 

USA/JAPAN YEN 113.13  DOWN 0.069 (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 1.2613 UP   0.0054  (Brexit March 29/ 2017/ARTICLE 50 SIGNED/BREXIT FEES WILL BE CAPPED

USA/CAN 1.3364  UP .0002 CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/(TRUMP INITIATES LUMBER TARIFFS ON CANADA/CANADA HAS A HUGE HOUSEHOLD DEBT/GDP PROBLEM)

Early THIS TUESDAY morning in Europe, the Euro ROSE by 40 basis point, trading now ABOVE the important 1.08 level RISING to 1.1395/ Last night Shanghai composite CLOSED UP 9.51 POINTS OR 0.37%

 

//Hang Sang CLOSED UP 19.29 POINTS OR 0.07%

 

/AUSTRALIA CLOSED UP  0.42% /EUROPEAN BOURSES DEEPLY IN THE GREEN 

 

 

 

 

 

The NIKKEI: this TUESDAY morning CLOSED  DOWN 71.48 POINTS OR 0.34%

 

 

 

Trading from Europe and Asia

1/EUROPE OPENED GREEN 

 

 

 

 

 

 

 

 

 

 

2/ CHINESE BOURSES / :Hang Sang CLOSED UP 19.29 POINTS OR -.07% 

 

 

/SHANGHAI CLOSED UP 9.51  POINTS OR 0.37%

 

 

 

Australia BOURSE CLOSED UP  0.42%

Nikkei (Japan) CLOSED DOWN 71.48 POINTS OR 0.34%

 

 

 

INDIA’S SENSEX  IN THE GREEN

Gold very early morning trading: 1248.50

silver:$14.68

Early TUESDAY morning USA 10 year bond yield: 2.88% !!! UP 2 IN POINTS from MONDAY’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 3.15 UP 2  IN BASIS POINTS from MONDAY night. (POLICY FED ERROR)/

USA dollar index early TUESDAY morning: 96.93 DOWN 29  CENT(S) from  FRIDAY’s close.

This ends early morning numbers TUESDAY MORNING

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

 

And now your closing TUESDAY NUMBERS \1: 00 PM

 

Portuguese 10 year bond yield: 1.76% DOWN 3    in basis point(s) yield from MONDAY/

JAPANESE BOND YIELD: +.05%  UP 1  BASIS POINTS from MONDAY/JAPAN losing control of its yield curve/EXTREMELY VOLATILE YESTERDAY…

 

SPANISH 10 YR BOND YIELD: 1.44% DOWN 0  IN basis point yield from MONDAY

ITALIAN 10 YR BOND YIELD: 3.12 UP 1     POINTS in basis point yield from MONDAY/

 

 

the Italian 10 yr bond yield is trading 168 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: RISES UP TO +.23%   IN BASIS POINTS ON THE DAY//

THE IMPORTANT SPREAD BETWEEN ITALIAN 10 YR BOND AND GERMAN 10 YEAR BOND IS 2.89% 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 TUESDAY

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

Euro/USA 1.1312 DOWN .0046 or 46 basis points

 

 

USA/Japan: 113.46 UP  0 .260 OR 26 basis points/

Great Britain/USA 1.2507 DOWN .0054( POUND DOWN 54 BASIS POINTS)

Canadian dollar DOWN 22 basis points to 1.3420

 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

 

The USA/Yuan,CNY closed UP AT 6.9000-  ON SHORE  (YUAN UP)

THE USA/YUAN OFFSHORE:  6.0056(  YUAN UP)

TURKISH LIRA:  5.3633

the 10 yr Japanese bond yield closed at +.05%

 

 

 

Your closing 10 yr USA bond yield UP 2 IN basis points from MONDAY at 2.86 % //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 3.11 DOWN 2 in basis points on the day /

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

Your closing USA dollar index, 97.48 UP 26 CENT(S) ON THE DAY/1.00 PM/

 

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

London: CLOSED UP 85.40 POINTS OR 1.27%

German Dax : CLOSED UP 158.44 POINTS  OR 1.49%
Paris Cac CLOSED UP 63.82 POINTS OR 1.35%
Spain IBEX CLOSED UP 102.40 POINTS OR 1.18%

Italian MIB: CLOSED UP: 180.88 POINTS OR 0.98%/

 

 

WTI Oil price; 51.90 1:00 pm;

Brent Oil: 60.35 1:00 EST

USA /RUSSIAN /   ROUBLE CROSS:    66.47  THE CROSS LOWER BY .10 ROUBLES/DOLLAR (ROUBLE HIGHER BY 23 BASIS PTS)

USA DOLLAR VS TURKISH LIRA:  5.3633 PER ONE USA DOLLAR.

TODAY THE GERMAN YIELD FALLS +.23 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 :51.74

 

BRENT:60.56

USA 10 YR BOND YIELD: 2.88%..

 

 

USA 30 YR BOND YIELD: 3.12%/.

 

 

 

EURO/USA DOLLAR CROSS: 1.1321 ( DOWN 35 BASIS POINTS)

USA/JAPANESE YEN:113.40 UP .205 (YEN DOWN 21 BASIS POINTS/ .

 

USA DOLLAR INDEX: 97.46 UP 24 cent(s)/

The British pound at 5 pm: Great Britain Pound/USA: 1.2488 DOWN 72 POINTS FROM YESTERDAY

the Turkish lira close: 5.3664

the Russian rouble:  66.42 UP .29 Roubles against the uSA dollar.( UP 29 BASIS POINTS)

 

Canadian dollar: 1.3392 UP 6 BASIS pts

USA/CHINESE YUAN (CNY) : 6.9000  (ONSHORE)

USA/CHINESE YUAN(CNH):  6.9050 (OFFSHORE)

German 10 yr bond yield at 5 pm: ,0.23%

 

The Dow closed  DOWN 53.02 POINTS OR 0.22%

 

NASDAQ closed UP 11.31 POINTS OR 0.16%

 


VOLATILITY INDEX:  22.64 CLOSED DOWN 0.59 

 

LIBOR 3 MONTH DURATION: 2.776%  .LIBOR  RATES ARE RISING/SMALL RISE 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

 

Breakeven

‘Rumble In The Oval’ Sparks Shutdown Fears, Market Mayhem

 

Don, Chuck, & Nancy (oh, and Mike) battled it out in the Oval Office and sent stocks reeling… they both came out claiming victory though clearly both (and the markets) suffered a fleshwound…

‘Rumble In The Oval’ Sparks Shutdown Fears, Market Mayhem

 

China stocks were majestically bid into the close last night and sparked the overnight strength in US futures…(but China remains red on the week)

 

European stocks were buoyed by China early on but as Italy and France began to heat-up, risk rolled over and the US open added to selling…

 

As French credit risk has started to crack…

 

Overnight excitement after positive comments from Mnuchin and then from Trump on a big china announcement were quickly stymied by the apparent end of the trade truce (as WaPo reports Washington about to sanction China over cyberspying) and Trump’s Oval Office debacle with Chuck and Nancy sparked selling into and beyond the European close…

 

On the cash side, it’s clear that selling was instant at the open and accelerated after the Oval Office Deathmatch

 

Dow futures really show the chaos – a 400pt ramp, a 600pt plunge and 350 pt surged before dropping almost 200 into the close…

 

NOTE that at around 215pmET, AAPL shares were suddenly bid (cough…buybacks…cough) and that lifted the broad markets

 

And VIX was monkeyhammered to get Stocks green…

 

As @vader7x noted, ES bounced exactly at last weeks low 2621.25. There are no humans helping steer this ship. Just bots and pain.

 

Banks stocks opened gap up but quickly plunged into and beyond the European close…down for 5 days in a row

 

And GE puked to $6.66 March 2009 closing lows…

 

Early Cyclical stock strength was crushed from the open and then panic-bid as the last hour began…

 

And we note that the broad market bottomed to the tick when GE hit $6.66…

 

 

Once again the Treasury complex was selling across the curve dominated by the short-end as the long-end actually saw yields lower…

NOTE – once again as Europe closed, bonds started to sell off again

 

This sent the yield curve tumbling back to one-week lows…

The short-end of the curve remains inverted from 2s to 5s and 2s10s broke back to a 10 handle intraday…

 

The Dollar Index surged again intraday, but rolled over shortly after the European close – NOTE it has now made 2 Lower Highs since the peak in November

 

Cable was clubbed like a baby seal to fresh 18-month lows… (cable briefly broke below 1.25 intraday)

 

Offshore Yuan ended the day stringer (thanks to some overnight strength on trade hopes)

 

Cryptos continued to be sold with all the majors now in the red for the week…

 

Crude and Copper got a lift overnight but faded during the US day…

Gold in Yuan faded back towards its apparent 8500 peg

 

Finally, The T-Bill market is starting to worry about a government shutdown…

Who can blame them…

END

market trading

This morning:  futures surge on USA/China trade talks and talk of China lowering tariffs
(courtesy zerohedge)

Futures, Yuan Surge On US-China Trade Talk Headlines

Update: Just minutes after stocks and yuan legged down at the China open, MOFCOM  issued a statement confirming that China’s Vice Premier Liu He had spoken with US Treasury Secretary Mnuchin and US Trade Representative Lighthizer.

The two sides exchanged views on the implementation of the consensus on the meeting between the two heads of state and the promotion of the next economic and trade consultations.

And just like that, traders (and their algos) grabbed the slippery olive branch of hope and bid both US futures and yuan notably higher…

 

*  *  *

As we detailer earlier…

The S&P and Dow have erased their intraday gains and Nasdaq is sliding as China opens and Yuan weakens.

It seems the intraday algo pumpathon tagged the overnight highs and ran out of ammunition for the squeeze…

 

Yuan has almost erased all of the post-Taper gains…

END
This afternoon all the big gains have evaporated
(courtesy zerohedge)

“Aaand, It’s Gone” – Dow Dumps Into Red As Europe Closes

Everything was looking so good… follow-through from yesterday’s short-squeeze, some positive headlines, what could go wrong?

Well, it appears the trade-truce is over as the DOJ is expected to announce the indictments of multiple hackers suspected of working for a Chinese intelligence service and participating in a long-running espionage campaign that targeted U.S. networks.

But the sellers sold the rip…

Removing all the morning’s gains for The Dow…

Blame AAPL!

And Bank stocks…again…

end

 

market data/

Interesting:  core PPI surges but the total PPI weakens due to lower energy costs.

(courtesy zerohedge)

Goldilocks? Core PPI Surges Near 7-Year Highs, Headline Weakest In 15 Months

After rebounding in October, Final Demand Producer Prices grew slower in November (at 2.5% YoY, and the weakest since August 2017). 

However, Core PPI surged to 2.7% YoY – near its highest since September 2011…

 

Under the hood, Energy prices plunged as food costs jumped…

Final demand services:

Most of the November advance in prices for final demand services can be traced to margins for fuels and lubricants retailing, which jumped 25.9 percent. The indexes for health, beauty, and optical goods retailing; cellular phone and other wireless telecommunications services; airline passenger services; food wholesaling; and truck transportation of freight also moved higher. Conversely, prices for guestroom rental fell 3.5 percent. The indexes for machinery and equipment wholesaling and for portfolio management also declined.

Final demand goods:

Leading the November decrease in the index for final demand goods, gasoline prices dropped 14.0 percent. The indexes for liquefied petroleum gas, electric power, fresh fruits and melons, jet fuel, and primary basic organic chemicals also moved down. Conversely, the index for pharmaceutical preparations rose 1.5 percent. Prices for fresh and dry vegetables and for residential natural gas also increased.

None of this should be a huge shock as the market’s inflation expectations have collapsed as oil’s price has plunged…

Over to you Jay.

USA ECONOMIC STORIES OF INTEREST

Oh OH! this is dangerous;  GE falls to its March 2009 low of $6.66. GE is a large derivative player and no doubt that they are off side of many of their trades

(courtesy zerohedge)

GE Slumps To Ominous $6.66 March 2009 Lows

GE stocks plunged once again to its ominous closing low from March 2009 of $6.66…

The GE share price is now unchanged since October 1992

The company announced Monday that it added Paula Rosput Reynolds, former restructuring chief of AIG, to its board of directors to bolster turnaround efforts. The change is the latest move by Chairman and Chief Executive Officer Larry Culp, who took the helm in October, to pull GE out of one of the worst crises in its 126-year history.

And we note that the broad market bottomed to the tick when GE hit $6.66…

END

the bond king has spoken:  the economy is slowing down

also with the stock market woes, bonds should have rallied a lot more

Gundlach states that there will be no rate hikes in 2019

and he also states that the Fed is very worried on the flattening of the yield curve

(Jeff Gundlach)

“The Economy Is Slowing”: Jeff Gundlach Live Webcast

One month after Jeff Gundlach’s latest webcast issued a stern warning to corporate bond investors, warning at just the right time that both corporate and high-yield bonds are at or close to their most extreme levels of overvaluation historically, and that if the BBB-rated market, is downgraded to junk, it would “flood” the high-yield market, the DoubleLine CEO is back discussing the current state of the market of the economy, and for those wondering, it does not start optimistically with Gundlach  warning that the global economic growth is slowing, that GDP – excluding inventories – is at one of the weaker levels in the past 4 years, and that consumer confidence expectations are lower than prior to the 2007 recession.

Some other highlights via BBG (we will have a fuller breakdown after the webcast):

  • GUNDLACH: BOND MKT SEES LITTLE OR NO FED TIGHTENING IN 2019-20
  • GUNDLACH: FLAT YIELD CURVE GIVES FED REASON FOR CONCERN
  • GUNDLACH: BOND MARKET RALLY UNIMPRESSIVE GIVEN STOCK WOES

Gundlach also sees the US stock market catching down to the rest of the world and going below the February 2018 lows: “I certainly think we can head lower.”

To listen to the free webcast, please register at the following link or click on the slide below.

SWAMP STORIES

Nadler is claiming that Trump ordering the payoffs to mistresses would certainly be an impeachable offense.  Many from Fox TV disagree

(courtesy zerohedge)

Nadler: Trump Ordering Payoffs To Mistresses Would “Certainly” Be “An Impeachable Offense”

Two days after incoming House Judiciary Chairman Jerry Nadler told a group of reporters that he intends to put the kibosh on a House probe into allegations of political bias at the highest levels of the DOJ and FBI, Nadler told CNN‘s Jake Tapper during an appearance on the cable channel’s “State of the Union” Sunday show that, if President Trump is found to have directed payoffs made to two former mistresses (as Special Counsel Robert Mueller alleged in Cohen’s sentencing memo), it would “certainly” be “an impeachable offense.”

However, in keeping with the Democratic leadership’s position not to pursue impeachment proceedings against Trump, Nadler argued that just because somebody committed “an impeachable offense” doesn’t mean they should be impeached.

“They would be impeachable offenses. Whether they are important enough to justify an impeachment is a different question, but certainly they’d be impeachable offenses because even though they were committed before the president became president, they were committed in the service of fraudulently obtaining the office,” Nadler said.

Cohen, whom recently admitted to lying to Congress, promised to testify that Trump ordered him to facilitate payoffs to former adult film actress Stormy Daniels and former Playboy centerfold Karen McDougal. If true, this would constitute a gross violation of campaign finance laws.

But President Trump has insisted that Cohen is lying to avoid a lengthy prison sentence (an eventuality that, as fate would have it, appears to be unavoidable now that prosecutors have recommended that a federal judge impose a term of more than 40 months).

Embedded video

State of the Union

@CNNSotu

CNN’s @jaketapper: “If it is proven that the President directed or coordinated with Cohen to commit these felonies … are those impeachable offenses?”

Democratic Rep. @JerryNadler: “They would be impeachable offenses.” #CNNSOTU

Later in the interview, Nadler called on Congress to “get to the bottom” of Trump’s alleged involvement in the payoffs, before clarifying that the House “shouldn’t necessarily launch an impeachment” against the president, even if they find evidence of wrongdoing. That’s because an impeachment is “an attempt to…change the results of an election”, something that should only be undertaken in the most dire of circumstances.

“There are several things you have to look at. One, were there impeachable offenses committed? How many? And secondly, how important were they? Did they rise to the gravity where you should undertake an impeachment?” he said.

“An impeachment is an attempt to, in effect, overturn or change the result of an election,” Nadler continued. “You should do it only for very serious situations.”

But Nadler insisted that there’s nothing in the Constitution that would save Trump from being indicted.

“This country originated in a rebellion against the English king,” he said. “We did not seek to create another king. Nobody – not the president, not anybody else – can be above the law.”

While we applaud Nadler’s transparency, we’re not sure why he felt compelled to compare Trump with a king. Because the last time we checked, Trump is subject to the same term limits that applied to his predecessors.

END

Trump, Pelosi and Schumer square off in a shouting match in the Oval office.  The Democrats do not want a wall whereas Trump demands it.  The Democrats do not want to shut down government.

(courtesy zerohedge)

SWAMP STORIES/MAJOR STORIES//THE KING REPORT
AND SPECIAL THANKS TO CHRIS POWELL OF GATA FOR SENDING THIS TO US:
[Confirming his bias, motives and actions] Comey calls on Americans to ‘use every breath we have’ to oust Trump in 2020      https://www.cnn.com/2018/12/09/politics/james-comey-donald-trump-2020/index.html
 
@jsolomonReports: Former Mueller deputy questions legality of Rosenstein memo appointing special prosecutor
      The poorly written memo authored in May 2017 by Deputy Attorney General Rod Rosenstein authorizing the special counsel could be called a joke if it weren’t so irresponsible and dangerous…
    The second request is problematic and, as written, is a violation of the attorney general’s own guidelines for the initiation of a counterintelligence investigation. Guidelines, by the way, that even a special counsel is bound to follow (see 28 C.F.R. § 600.4(a).)…
    Some charges don’t appear to have “arisen” from the authorized investigation into Russian interference.  All charges might be at risk of being called into question as a kind of “fruit of the poisonous tree” if they were enabled by the overly broad and insufficiently predicated section b(i) of the memo… Comey went to great lengths in July 2016 to explain that “no reasonable prosecutor” would indict Hillary Clinton on charges not normally applied to individuals of lesser stature. In other words, she should not be singled out because she is high-profile and involved in a presidential campaign. And yet, it appears that high-profile individuals tied to the Trump campaign have been vigorously pursued with criminal charges not normally leveraged in lesser counterintelligence investigations
 
Corsi sues Mueller over alleged grand jury leaks, seeks $350M in damages: report
 
Victoria Toensing: Why has Mueller ignored Obama administration crimes?
Mueller should have pursued these crimes as he is authorized to investigate any crime he finds in the course of the “collusion” investigation.  He has had no problem charging Paul Manafort for decades-old tax crimes and looking into former Trump lawyer Michael Cohen’s taxi medallions.  Yet the crimes against Flynn have been ignored.  Why?
end
I WILL YOU ON WEDNESDAY
H
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