GOLD: $1278.60 DOWN $2.20 (COMEX TO COMEX CLOSINGS)
Silver: $15.42 UP 6 CENTS (COMEX TO COMEX CLOSING)
Closing access prices:
Gold : 1282.60
silver: $15.49
For comex gold and silver:
JANUARY
THIS IS A FIRST: EVEN THOUGH JANUARY IS A POOR DELIVERY MONTH WE STILL HAVE OPTIONS TRADED. FOR THE FIRST TIME IN QUITE SOME TIME, THE BANKERS COULD NOT KNOCK OFF GOLD AND SILVER..I.E. THEY LOST MONEY ON THE UNDERWRITING OF GOLD/SILVER OPTIONS.
NUMBER OF NOTICES FILED TODAY FOR JAN CONTRACT: 57 NOTICE(S) FOR 5700 OZ (0.1772 tonnes)
TOTAL NUMBER OF NOTICES FILED SO FAR: 57 NOTICES FOR 5700 OZ (.1772 TONNES)
SILVER
FOR JANUARY
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
102 NOTICE(S) FILED TODAY FOR 510,000 OZ/
total number of notices filed so far this month: 102 for 510,000
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Bitcoin: OPENING MORNING TRADE $3720: down 31
Bitcoin: FINAL EVENING TRADE: $3672 down 127
end
XXXX
JPMorgan or Goldman Sachs are taking a huge issuance (stopping) of gold at the comex.
today 16/57
EXCHANGE: COMEX
CONTRACT: JANUARY 2019 COMEX 100 GOLD FUTURES
SETTLEMENT: 1,279.900000000 USD
INTENT DATE: 12/28/2018 DELIVERY DATE: 01/02/2019
FIRM ORG FIRM NAME ISSUED STOPPED
____________________________________________________________________________________________
624 C MERRILL 15
657 C MORGAN STANLEY 5
657 H MORGAN STANLEY 15
661 C JP MORGAN 16
737 C ADVANTAGE 48 2
800 C RCG 4
905 C ADM 9
____________________________________________________________________________________________
TOTAL: 57 57
MONTH TO DATE: 57
Let us have a look at the data for today
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In silver, the total OPEN INTEREST ROSE BY AN SMALL SIZED 790 CONTRACTS FROM 173,459 UP TO 174,249 DESPITE FRIDAY’S STRONG 10 CENT GAIN 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 22 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:
2933 EFP’S FOR MARCH, 0 FOR APRIL AND ZERO FOR ALL OTHER MONTHS AND THEREFORE TOTAL ISSUANCE: OF 2933 CONTRACTS. WITH THE TRANSFER OF 2033 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 2933 EFP CONTRACTS TRANSLATES INTO 14.67 MILLION OZ ACCOMPANYING:
1.THE 10 CENT GAIN 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
21.925 MILLION OZ FINALLY STAND FOR DECEMBER.
AND NOW: INITIALLY 4.975 MILLION OZ STAND IN JANUARY.
ACCUMULATION FOR EFP’S/SILVER/J.P.MORGAN’S HOUSE OF BRIBES, / STARTING FROM FIRST DAY NOTICE/FOR MONTH OF DEC: 34,013 CONTRACTS (FOR 20 TRADING DAYS TOTAL 34,013 CONTRACTS) OR 170.06 MILLION OZ: (AVERAGE PER DAY: 1700 CONTRACTS OR 8.503 MILLION OZ/DAY)
TO GIVE YOU AN IDEA AS TO THE HUGE SUPPLY THIS MONTH IN SILVER: SO FAR THIS MONTH OF DEC: 170.06 MILLION PAPER OZ HAVE MORPHED OVER TO LONDON. THIS REPRESENTS AROUND 24.29% 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: 2,846.96 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
ACCUMULATION FOR DECEMBER 2018: 170.06 MILLION OZ
TOTAL FOR THE YEAR: 2,846.95 MILLION Oz.
RESULT: WE HAD A SMALL SIZED INCREASE IN COMEX OI SILVER COMEX CONTRACTS OF 865 DESPITE THE 10 CENT GAIN IN SILVER PRICING AT THE COMEX //MONDAY..THE CME NOTIFIED US THAT WE HAD A STRONG SIZED EFP ISSUANCE OF 2933 CONTRACTS WHICH EXITED OUT OF THE SILVER COMEX AND TRANSFERRED THEIR OI TO LONDON AS FORWARDS. SPECULATORS CONTINUED THEIR INTEREST IN ATTACKING THE SILVER COMEX FOR PHYSICAL SILVER (SEE COMEX DATA) .
TODAY WE GAINED A STRONG SIZED: 3723 TOTAL OI CONTRACTS ON THE TWO EXCHANGES:
i.e 2933 OPEN INTEREST CONTRACTS HEADED FOR LONDON (EFP’s) TOGETHER WITH INCREASE OF 790 OI COMEX CONTRACTS. AND ALL OF THIS DEMAND HAPPENED WITH A 10 CENT GAIN IN PRICE OF SILVER AND A CLOSING PRICE OF $15.36 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. .871 BILLION OZ TO BE EXACT or 125% of annual global silver production (ex Russia & ex China).
FOR THE NEW FRONT JANUARY MONTH/ THEY FILED AT THE COMEX: 102 NOTICE(S) FOR 510,000 OZ OF SILVER
IN SILVER,PRIOR TO TODAY, WE SET THE NEW COMEX RECORD OF OPEN INTEREST AT 243,411 CONTRACTS ON APRIL 9.2018. AND AGAIN THIS HAS BEEN SET WITH A LOW PRICE OF $16.51.
AND NOW WE RECORD FOR POSTERITY ANOTHER ALL TIME RECORD OPEN INTEREST AT THE COMEX OF 244,196 CONTRACTS ON AUGUST 22/2018 AND AGAIN WHEN THIS RECORD WAS SET, THE PRICE OF SILVER WAS $14.78 AND LOWER IN PRICE THAN PREVIOUS RECORDS.
ON THE DEMAND SIDE WE HAVE THE FOLLOWING:
- HUGE AMOUNTS OF SILVER STANDING FOR DELIVERY (MARCH/2018: 27 MILLION OZ , APRIL/2018 : 2.485 MILLION OZ MAY: 36.285 MILLION OZ ; JUNE/2018 (5.420 MILLION OZ) , JULY 2018 FINAL AMOUNT STANDING: 30.370 MILLION OZ ) FOR AUGUST 6.065 MILLION OZ. , SEPT: A HUGE 39.505 MILLION OZ./ OCTOBER: 2,520,000 oz NOV AT 7.440 MILLION OZ./ DEC. AT 21.925 MILLION OZ AND NOW JANUARY AT 4.975 MILLION OZ.
- HUGE RECORD OPEN INTEREST IN SILVER 243,411 CONTRACTS (OR 1.217 BILLION OZ/ SET APRIL 9/2018) AND NOW AUGUST 22/2018: 244,196 CONTRACTS, WITH A SILVER PRICE OF $14.78.
- HUGE ANNUAL EFP’S ISSUANCE EQUAL TO 2.9 BILLION OZ OR 400% OF SILVER ANNUAL PRODUCTION/2017
- RECORD SETTING EFP ISSUANCE FOR ANY MONTH IN SILVER; APRIL/2018/ 385.75 MILLION OZ/ AND THE SECOND HIGHEST RECORDED EFP ISSUANCE JUNE 2018 345.43 MILLION OZ
AND YET, WITH THE EXTREMELY HIGH EFP ISSUANCE, WE HAVE A CONTINUAL LOW PRICE OF SILVER DESPITE THE ABOVE HUGE DEMAND. TO ME THE ONLY ANSWER IS THAT WE HAVE SOVEREIGN (CHINA) WHO IS ENDEAVOURING TO GOBBLE UP ALL AVAILABLE PHYSICAL SILVER NO MATTER WHERE, EXACTLY WHAT J.P.MORGAN IS DOING. AND IT IS MY BELIEF THAT J.P.MORGAN IS HOLDING ITS SILVER FOR ITS BENEFICIAL OWNER..THE USA GOVERNMENT WHO IN TURN IS HOLDING THAT SILVER FOR CHINA.(FOR A SILVER LOAN REPAYMENT).
IN GOLD, THE OPEN INTEREST ROSE BY 3905 CONTRACTS UP TO 448,092 WITH THE GOOD GAIN IN THE COMEX GOLD PRICE/(A RISE IN PRICE OF $2.20//FRIDAY’S TRADING)
THE CME RELEASED THE DATA FOR EFP ISSUANCE AND IT TOTALED A GOOD SIZED 5426 CONTRACTS:
FEBRUARY HAD AN ISSUANCE OF 5426 CONTACTS AND ALL OTHER MONTHS ZERO. The NEW COMEX OI for the gold complex rests at 448,092. 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 STRONG SIZED GAIN IN TOTAL CONTRACTS ON THE TWO EXCHANGES OF 9331 CONTRACTS: 3905 OI CONTRACTS INCREASED AT THE COMEX AND 5426 EFP OI CONTRACTS WHICH NAVIGATED OVER TO LONDON. THUS TOTAL OI GAIN: 9331 CONTRACTS OR 933,100 OZ = 29.02 TONNES. AND ALL OF THIS VERY GOOD DEMAND OCCURRED WITH A GOOD GAIN IN THE PRICE OF GOLD/ FRIDAY TO THE TUNE OF $2.20
FRIDAY, WE HAD 10849 EFP’S ISSUED.
ACCUMULATION OF EFP’S GOLD AT J.P. MORGAN’S HOUSE OF BRIBES: (EXCHANGE FOR PHYSICAL) FOR THE MONTH OF DEC : 175,371 CONTRACTS OR 17.537,100 OZ OR 545.47 TONNES (20 TRADING DAYS AND THUS AVERAGING: 8768 EFP CONTRACTS PER TRADING DAY
TO GIVE YOU AN IDEA AS TO THE HUGE SIZE OF THESE EFP TRANSFERS : THIS MONTH IN 19 TRADING DAYS IN TONNES: 545.47 TONNES
TOTAL ANNUAL GOLD PRODUCTION, 2017, THROUGHOUT THE WORLD EX CHINA EX RUSSIA: 2555 TONNES
THUS EFP TRANSFERS REPRESENTS 545.47/2550 x 100% TONNES = 21.39% OF GLOBAL ANNUAL PRODUCTION SO FAR IN DECEMBER ALONE.***
ACCUMULATION OF GOLD EFP’S YEAR 2018 TO DATE: 7309.86 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)
ACCUMULATION OF GOLD EFP FOR DEC 2018 545.47 TONNES (20 TRADING DAYS)
TOTAL FOR 2018 7309.86 TONNES
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 GOOD SIZED INCREASE IN OI AT THE COMEX OF 3905 WITH THE GAIN IN PRICING ($2.20) THAT GOLD UNDERTOOK YESTERDAY) //.WE ALSO HAD A VERY GOOD SIZED NUMBER OF COMEX LONG TRANSFERRING TO LONDON THROUGH THE EFP ROUTE: 5426 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 5426 EFP CONTRACTS ISSUED, WE HAD A STRONG GAIN OF 9331 CONTRACTS IN TOTAL OPEN INTEREST ON THE TWO EXCHANGES:
5426 CONTRACTS MOVE TO LONDON AND 3905 CONTRACTS INCREASED AT THE COMEX. (in tonnes, the GAIN in total oi equates to 29.02 TONNES). ..AND ALL OF THIS GOOD DEMAND OCCURRED WITH THE GAIN OF $2.20 IN FRIDAY’S TRADING AT THE COMEX
we had: 57 notice(s) filed upon for 5700 oz of gold at the comex.
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With respect to our two criminal funds, the GLD and the SLV:
GLD...
WITH GOLD DOWN $2.20 TODAY
NO CHANGE IN GOLD INVENTORY AT THE GLD
/GLD INVENTORY 787.67 TONNES
Inventory rests tonight: 787.67 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 6 10 CENTS TODAY:
NO CHANGES IN SILVER INVENTORY
/INVENTORY RESTS AT 317.223 MILLION OZ.
end
First, here is an outline of what will be discussed tonight:
1. Today, we had the open interest in SILVER ROSE BY A TINY SIZED 790 CONTRACTS from 173,459 UP TO 174,249 AND MOVING CLOSER TO THE NEW COMEX RECORD SET LAST IN AUG.2018 AT 244,196 WITH A SILVER PRICE OF $14.78/(AUGUST 22/2018)..THE PREVIOUS RECORD WAS SET ON APRIL 9/2018 AT 243,411 OPEN INTEREST CONTRACTS WITH THE SILVER PRICE AT THAT DAY: $16.53). AND PREVIOUS TO THAT, THE RECORD WAS ESTABLISHED AT: 234,787 CONTRACTS, SET ON APRIL 21.2017 OVER 1 1/3 YEARS AGO. THE PRICE OF SILVER ON THAT DAY: $17.89. AS YOU CAN SEE, WE HAVE RECORD HIGH OPEN INTERESTS IN SILVER ACCOMPANIED BY A CONTINUAL LOWER PRICE WHEN THAT RECORD WAS SET…..
.
OUR CUSTOMARY MIGRATION OF COMEX LONGS CONTINUE TO MORPH INTO LONDON FORWARDS AS OUR BANKERS USED THEIR EMERGENCY PROCEDURE TO ISSUE:
2933 CONTRACTS FOR MARCH. 0 CONTRACTS FOR APRIL AND AND ALL OTHER MONTHS: ZERO. TOTAL EFP ISSUANCE: 2933 CONTRACTS. EFP’S GIVE OUR COMEX LONGS A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON. IF WE TAKE THE OI GAIN AT THE COMEX OF 790 CONTRACTS TO THE 2933 OI TRANSFERRED TO LONDON THROUGH EFP’S, WE OBTAIN A GOOD GAIN OF 3723 OPEN INTEREST CONTRACTS. THUS IN OUNCES, THE GAIN ON THE TWO EXCHANGES: 18.62 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. 21.925 MILLION OZ STANDING IN DECEMBER AND 4.975 MILLION OZ STANDING IN JANUARY..
RESULT: A TINY SIZED INCREASE IN SILVER OI AT THE COMEX WITH THE 10 CENT PRICING GAIN THAT SILVER UNDERTOOK IN PRICING// FRIDAY.BUT WE ALSO HAD ANOTHER STRONG SIZE 2933 EFP’S ISSUED TRANSFERRING COMEX LONGS OVER TO LONDON. TOGETHER WITH THE STRONG SIZED AMOUNT OF SILVER OUNCES STANDING FOR SEPTEMBER, DEMAND FOR PHYSICAL SILVER CONTINUES TO INTENSIFY AS WE WITNESS SEVERE BACKWARDATION IN SILVER IN LONDON.
(report Harvey)
.
2.a) The Shanghai and London gold fix report
(Harvey)
2 b) Gold/silver trading overnight Europe, Goldcore
(Mark O’Byrne/zerohedge
and in NY: Bloomberg
3. ASIAN AFFAIRS
i)MONDAY MORNING/ SUNDAY NIGHT:
SHANGHAI CLOSED //Hang Sang CLOSED UP 341.50 POINTS OR 1.34% /The Nikkei closed / Australia’s all ordinaires CLOSED DOWN 0.11%
/Chinese yuan (ONSHORE) closed DOWN at 6.8785 AS TRUCE DECLARED FOR 3 MONTHS /Oil UP to 46.34 dollars per barrel for WTI and 54.57 for Brent. Stocks in Europe OPENED GREEN
//. ONSHORE YUAN CLOSED DOWN AT 6.8785 AGAINST THE DOLLAR. OFFSHORE YUAN CLOSED UP ON THE DOLLAR AT 6.8753: 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 WEAKER AGAINST USA DOLLAR/OFFSHORE YUAN TRADING WEAKER 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
J
3 C/ CHINA
i)CHINA/USA
Both sides report on a long and good call from Xi to Trump as a possible China/USA trade deal is moving along.
( zerohedge)
iii This is deadly!! China’s beige book surprisingly issues a dire 4th quarter review that its economy is in trouble
iv)MONDAY
4/EUROPEAN AFFAIRS
ITALY/EU
Laughter: Italy finally passes its revised 2019 budget at exactly 2.04% deficit. We still have to hear from France who dramatically increased their deficit trying to cool the rioting in their country.
(courtesy zerohedge)
5. RUSSIAN AND MIDDLE EASTERN AFFAIRS
i)RUSSIA
An excellent commentary from Tom Luongo as he states that despite low oil prices and sanctions, the rouble has remained quite constant. The reason for this is the continued use of roubles/yuan in commodity transactions by passing the dollar. As we explain on many occasions, the discontinued use of dollars is a nail in the life of USA hegemony
(courtesy Tom Luongo)
ii)Syria/Turkey/USA
USA helicopters still flying over Manbij as confusion still reigns. Still the Kurdish YPG has not officially left the area.
(courtesy zerohedge)
iii)After meeting with Lindsay Graham, the President has second thoughts on pulling out of Syria
(courtesy zerohedge)
6. GLOBAL ISSUES
A very important commentary from Alasdair Macleod. He first describes that there are three areas of concern that is causing the credit crisis which just arrived.:
- the Japanese low interest rate conundrum
- the Euro zone debt crisis
- the USA debt crisis
He tackles the latter two.
The USA crisis has already arrived and it will continue to get worse as long term interest rate rises as inflation finally gets a firm grip. The Fed is engaged in a process of raising rates despite a faltering economy. Powell is raising rates because of huge budgetary deficits of around 1.4 trillion dollars. The debt to the penny chart for last Christmas was 20.492 trillion so we had added 1.4 trillion to the debt. Officially it is around 1 trillion dollars but student loans and car loans are not included because there is a corresponding asset. Once default occurs, it is officially added to the deficit. Higher deficits mean high interest rate costs as we should see around 600 billion in costs this year compared to the high 400’s for last year. What we will see from this point on will be higher long term rates despite the faltering stock market and economy. Inflation will be the trigger.
In Europe the problem will be the huge amount of USA treasuries on the books on the EU banks. Once the dollar falls with the higher inflation, bonds will suffer losses and this will kill the European banks.
( Alasdair Macleod)
7. OIL ISSUES
8 EMERGING MARKET ISSUES
i)Venezuela
9. PHYSICAL MARKETS
(courtesy Reuters)
( Reuters/GATA)
iv)I wish that gold/silver commentators will not predict price rises in gold and silver especially when we are dealing with criminal elements.
\\(courtesy Sprott/Henke/GATA)
10. USA stories which will influence the price of gold/silver)
MARKET TRADING
ii)Market data/
The generally stronger Dallas Mfg fed just issued a terrible report for its area as it has collapsed to a level not seen since 2008. The all important “hope” collapsed.
( zerohedge)
a)With the release of the 3rd quarter GDP at 3.4% we find that 2/3 of that level was higher inventories. This could be a double edged sword: higher inventories can also mean lower sales.
(courtesy zerohedge)_
iv)SWAMP STORIES
Trump lashes out at the deep state claiming that both Mattis and Kelly are “failed generals”
( zero hedge)
Let us head over to the comex:
995 CONTRACTS X 5,000 OZ PER CONTRACT = 4,975,000 OZ.
THE CME REPORTS THAT WE HAD 2933 EFP CONTRACTS ISSUED FOR MARCH AND ZERO FOR ALL THE REST OF THE MONTHS.
THE NEXT NON ACTIVE DELIVERY MONTH IS FEBRUARY AND HERE THE OI ROSE BY 140 CONTRACTS UP TO 499. AFTER FEBRUARY IS THE VERY BIG AND ACTIVE DELIVERY MONTH OF MARCH AND HERE THE OI ROSE BY 263 CONTRACTS UP TO 142,227 CONTRACTS.
FOR COMPARISON TO THE COMEX 2017 CONTRACT MONTH AND JANUARY 2018 CONTRACT MONTH
ON FIRST DAY NOTICE JAN 1/2018 CONTRACT MONTH WE HAD A GOOD 2.695 MILLION OZ STAND FOR DELIVERY’
AT THE CONCLUSION OF JAN/2018 WE HAD 3.650 MILLION OZ STAND AS QUEUE JUMPING WAS THE NORM FOR SILVER
.
(courtesy Reuters)
(courtesy Reuters/GATA)
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.
CNBC.com
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.
-END-
Your early MONDAY morning currency, Asian stock market results, important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight/9 AM EST
i) Chinese yuan vs USA dollar/CLOSED DOWN TO 6.8785/HUGE DEVALUATION FOR THE PAST FOUR WEEKS STOPS ON TRUCE/
//OFFSHORE YUAN: 6.8753 /shanghai bourse CLOSED
HANG SANG CLOSED UP 341.50 POINTS OR 1.34%
2. Nikkei closed
3. Europe stocks OPENED ALL GREEN
/USA dollar index FALLS TO 96.20/Euro FALLS TO 1.1446
3b Japan 10 year bond yield: FALLS TO. +.00/ !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 110.27/ 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:: 46.34 and Brent: 54.57
3f Gold UP/JAPANESE Yen UP CHINESE YUAN: ON -SHORE DOWN/OFF- SHORE: DOWN
3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“HELICOPTER MONEY” OFF THE TABLE FOR NOW /REVERSE OPERATION TWIST ON THE BONDS: PURCHASE OF LONG BONDS AND SELLING THE SHORT END
Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.
3h Oil UP for WTI and UP FOR Brent this morning
3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO +.24%/Italian 10 yr bond yield DOWN to 2.74% /SPAIN 10 YR BOND YIELD UP TO 1.42%…ITALIAN 10 YR BOND YIELD/GERMAN BUND: 2.50: DANGEROUS FOR THE ITALIAN BANKING SYSTEM
3j Greek 10 year bond yield RISES TO : 4.40
3k Gold at $1283.90 silver at:15.49 7 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50
3l USA vs Russian rouble; (Russian rouble DOWN 9/100 in roubles/dollar) 69.64
3m oil into the 46 dollar handle for WTI and 54 handle for Brent/
3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation. This can spell financial disaster for the rest of the world/
JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 109.90 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION
30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning 0.9842 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1267 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 +0.24%
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 2.73% early this morning. Thirty year rate at 3.02%
5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.
6. TURKISH LIRA: UP TO 5.2872
Global Stocks Jump On Last Day Of 2018, Lifted By Trump-Xi Trade Optimism
It’s only fitting that the biggest geopolitical event of 2018, the US-China trade war, is also the defining factor setting the market mood on the last day of trading, and after Trump’s Saturday tweet that U.S.-China negotiations were “moving along very well” toward a comprehensive deal, global stocks and US equity futures are a sea of green.
The euphoria returned, however briefly, even though the WSJ warned to take Trump’s tweet with a grain of salt, especially since given the market volatility Trump is liable to be exaggerating the chances of a deal, especially since trade optimism is expected to boost markets, Trump’s favorite “barometer” of his administration.
… people familiar with the state of negotiations said the president may be overstating how close the two sides are to an agreement. They note Mr. Trump has looked to calm markets, which have gyrated in recent days, in part, because of concern that the trade fight between the US and China could spin out of control.
The tweet also followed a Friday CNBC report that the White House had spoken with a prominent hedge fund investor how to halt the market rout, who responded that the president should end his criticism of Powell on Twitter, stop administration turnover and reach a trade deal with China in order to help markets.
Despite the now traditional caution surrounding any Trump tweet, Emini futures were up 0.8%, trading back over 2,500, if below Friday’s highs as at least some shorts were spooked that this time Trump may be telling the truth.
“Market seems to take quite well to the Trump tweets that we got over the weekend,” said Kyle Rodda, an analyst at IG Group Holdings Plc. While the move is likely exaggerated given low holiday trading volumes “it’s certainly indicative of the overall sentiment with one day to go in the year,” he said.
It wasn’t just the US as world stock and commodity prices rose on Monday as the weekend’s hints of progress on the Sino-U.S. trade standoff provided a rare glimmer of optimism in what has been a punishing end of year for markets globally.
Europe’s Stoxx 600 index climbed for a second day, as much as 0.4 percent, trimming its annual decline and following a strong lead by Asia. The rebound, however, will be little comfort for the European index which is on course for a drop of about 13%, its biggest loss since 2008. Miners and retailers led Monday’s advance with hopes around trade rising again, while the euro held steady after Italy’s government won final parliamentary approval for its 2019 budget.
London’s FTSE and Paris’ CAC 40 climbed 0.2 and 0.7% respectively on the day but both are down more than 11% in 2018. Ironically, it was Germany’s export-heavy DAX, that has seen more than 18% wiped off its value, one of Europe’s worst performing markets this year.
Top European News
- Italy’s Populists Pass Budget After Weeks of Market Turmoil
- Nokia Names Sandra D. Motley as President of Fixed Networks
- Gas Blast in Russia Apartment Block Kills 3 People, Many Missing
- Italy’s doBank Buys Majority Stake in Debt Servicer Altamira
Earlier, Asian stocks closed up 0.5%, with the Shanghai Composite rising 0.4% to close off a dismal year for the stock index, despite the latest disappointing print in the Chinese Manufacturing PMI as survey data showed manufacturing activity contracting for the first time in two years even as the service sector improved.
Another of the year’s the worst performers was the index of major Chinese companies which lost a quarter of its value. The only major Asian market in the black for the year was India, where the BSE was ahead by almost 6 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan closed up 0.6%, but was still down 16% for the year.
Top Asian News
- China Slowdown Deepens as Trade Truce Fails to Revive Factories
- China Dec. Manufacturing PMI at 49.4; Est. 50.0
- Rebound in 2019 Not Easy for India Bonds, Scrapped Sales Suggest
- Assets Rise as Trump Fuels U.S.-China Trade Optimism: Inside EM
Investor sentiment brightened when U.S. President Donald Trump said he held a “very good call” with China’s President Xi Jinping on Saturday to discuss trade and claimed “big progress” was being made. However, Chinese state media were more reserved, saying Xi hoped the negotiating teams could meet each other half way and reach an agreement that was mutually beneficial.
“Simply looking at the markets would suggest that the global economy is headed into recession,” said Robert Michele, chief investment officer and head of fixed income at J.P. Morgan Asset Management.
“However, while we agree the global economy is in a growth slowdown, we don’t see an impending recession,” he added, looking at the Fed to provide a policy cushion. “Already, commentary out of the Fed suggests that it is nearing the end of a three-year journey to normalise policy.”
Indeed, as noted last night, Fed fund futures have priced out any hike for next year and now imply a quarter point cut by mid-2020, even as Goldman still expects at least one rate hike in 2019.
At the same time, the Treasury market clearly thinks the Fed is done on hikes, with yields on two-year paper having fallen to just 2.52% from a peak of 2.977% in November. The Treasury market is heading for its biggest monthly rally in 2-1/2 years.
The precipitous drop in yields has undermined the U.S. dollar in recent weeks. The dollar is on track to end December with a loss of 0.8 percent but was still up on the year as a whole. Overnight, the Bloomberg Dollar Spot Index fell for a third day and headed for its steepest monthly drop since March, as the U.S. government shutdown continued into its tenth day.
The dollar also had a tough month against the yen with a loss of 2.8 percent this month, and was last trading at 110.14. However, 2018 was a pretty stable year for the pair given it spent all of it in a narrow trading range of 104.55 to 114.54.
Elsewhere, the euro is on track to end the month on a weaker note at $1.1425, nursing losses of almost 5% over the year to date.
That was a walk in the park compared with the hit oil prices have taken in the last couple of months, with Brent down almost 40% since its peak in October when Goldman was pounding the table on oil telling its clients oil was a screaming buy.
Brent rose 98 cents at $54.20 a barrel but was down 20% for the year. U.S. crude futures nudged up 62 cents to $45.95.
Meanwhile the only real safe haven, gold, is ending the year on a high note after rallying almost 5 percent in the past month to stand at $1,278.57 an ounce.
Market Snapshot
- S&P 500 futures up 0.8% to 2,505.50
- Brent Futures up 1.8% to $54.14/bbl
- Gold spot up 0.09% to $1,281.90
- U.S. Dollar Index down 0.1% to 96.30
- STOXX Europe 600 up 0.3% to 337.12
- MXAP up 0.5% to 146.72
- MXAPJ up 0.6% to 478.32
- Nikkei down 0.3% to 20,014.77
- Topix down 0.5% to 1,494.09
- Hang Seng Index up 1.3% to 25,845.70
- Shanghai Composite up 0.4% to 2,493.90
- Sensex up 0.05% to 36,093.05
- Australia S&P/ASX 200 down 0.1% to 5,646.40
- Kospi up 0.6% to 2,041.04
- German 10Y yield rose 1.1 bps to 0.242%
- Euro down 0.02% to $1.1442
- Brent Futures up 1.8% to $54.14/bbl
- Italian 10Y yield fell 0.5 bps to 2.384%
- Spanish 10Y yield rose 3.0 bps to 1.416%
Top Overnight News from Bloomberg
- President Donald Trump reported “big progress” in trade talks with his Chinese counterpart Xi Jinping, providing an optimistic start to what could be a make-or-break year for ties between the world’s two largest economies
- Gold is closing out 2018 on a strong note, with haven demand in the ascendant amid volatile trading in global equities, rising concern about the economic outlook and a drawn-out government shutdown in the U.S.
- The five presidents of the European Union used the euro’s 20th birthday to praise the single currency’s successes, while warning that the job isn’t yet complete
- Oil extended gains Monday on reports of the progress in trade talks
- China heads into the new year with its factories back in contractionary territory as the trade war damps sentiment
- A compromise between Trump and congressional Democrats to end a partial government shutdown could hinge on the definition of “wall” — what kind of physical barrier or other border security measures are acceptable to both sides
- The CEOs of some of Germany’s biggest companies are bracing for a difficult year in 2019 as trade conflicts, Brexit and political division could weigh on the economy, according to Bild-Zeitung
- Five presidents of the European Union used the euro’s 20th birthday to praise the currency’s successes, while saying the job isn’t yet complete
US Event Calendar
- 10:30am: Dallas Fed Manf. Activity, est. 15, prior 17.6
3. ASIAN AFFAIRS
i)MONDAY MORNING/ SUNDAY NIGHT:
SHANGHAI CLOSED //Hang Sang CLOSED UP 341.50 POINTS OR 1.34% /The Nikkei closed / Australia’s all ordinaires CLOSED DOWN 0.11%
/Chinese yuan (ONSHORE) closed DOWN at 6.8785 AS TRUCE DECLARED FOR 3 MONTHS /Oil UP to 46.34 dollars per barrel for WTI and 54.57 for Brent. Stocks in Europe OPENED GREEN
//. ONSHORE YUAN CLOSED DOWN AT 6.8785 AGAINST THE DOLLAR. OFFSHORE YUAN CLOSED UP ON THE DOLLAR AT 6.8753: 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 WEAKER AGAINST USA DOLLAR/OFFSHORE YUAN TRADING WEAKER 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
3 b JAPAN AFFAIRS
3 C CHINA
Both sides report on a long and good call from Xi to Trump as a possible China/USA trade deal is moving along.
(courtesy zerohedge)
After “Long And Very Good” Call With Xi, Trump Says China Trade Deal “Moving Along Well”
Update (3:30 pm ET): For all those wondering why Republicans didn’t manage to force through border wall funding when they held unilateral control over Washington…well.
Donald J. Trump
✔@realDonaldTrump
For those that naively ask why didn’t the Republicans get approval to build the Wall over the last year, it is because IN THE SENATE WE NEED 10 DEMOCRAT VOTES, and they will gives us “NONE” for Border Security! Now we have to do it the hard way, with a Shutdown. Too bad! @FoxNews
* * *
One day after reviving his threats to close the Southern border and withhold billions of dollars in aid to Central America, President Trump took to twitter Saturday morning – as he so often does – to continue his attacks on intransigent Democrats, demanding that the party leadership drop its “presidential harassment” and start focusing on “crime and our military”.
In an unusual move, Trump inadvertently signaled publicly for the first time that he might be open to cutting a deal, after repeatedly insisted that he wouldn’t accept anything less than $5 billion for wall. Though the White House has already reportedly broached a compromise (including a funding plan that would have set aside $2.5 billion for a “wall or fence” and other border-security improvements), which the Democrats have presumably rejected.
Donald J. Trump
✔@realDonaldTrump
I am in the White House waiting for the Democrats to come on over and make a deal on Border Security. From what I hear, they are spending so much time on Presidential Harassment that they have little time left for things like stopping crime and our military!
While the border-security battle has captivated the Washington press corp over the past week, the administration is preparing for the beginning of formal negotiations with the Chinese over striking a trade deal. Trump tweeted that he had a “long and very good” call with President Xi, and that “a deal is moving along very well.”
Donald J. Trump
✔@realDonaldTrump
Just had a long and very good call with President Xi of China. Deal is moving along very well. If made, it will be very comprehensive, covering all subjects, areas and points of dispute. Big progress being made!
Xi confirmed as much during a statement to China’s state media, where he said he hoped the US and China could “meet each other half way” to strike a “mutually beneficial” agreement as soon as possible.
- CHINA’S PRESIDENT XI SPOKE WITH TRUMP BY TELEPHONE ON DEC. 29 – CHINESE STATE MEDIA
- XI SAYS TEAMS FROM BOTH SIDES HAVE BEEN ACTIVELY WORKING TO IMPLEMENT CONSENSUS REACHED WITH TRUMP – CHINESE STATE MEDIA
- XI SAYS HOPES TEAMS FROM BOTH SIDES CAN MEET EACH OTHER HALF WAY, REACH AGREEMENT THAT IS MUTUALLY BENEFICIAL AS SOON AS POSSIBLE – CHINESE STATE MEDIA
- XI SAYS HOPES TO WORK WITH U.S. TO STRENGTHEN COOPERATION IN ISSUES RELATED TO ECONOMY, TRADE, MILITARY, LAW ENFORCEMENT – CHINESE STATE MEDIA
- XI SAYS HOPES TO MAINTAIN COMMUNICATION, COORDINATION WITH U.S. ON MAJOR GLOBAL, REGIONAL ISSUES- CHINESE STATE MEDIA
- XI SAYS HOPES TO PUSH FORWARD COORDINATED, COOPERATIVE, STABLE SINO-U.S. RELATIONSHIP – CHINESE STATE MEDIA
- XI REITERATES CHINA ENCOURAGES, SUPPORTS NORTH KOREA, U.S. TO CONTINUE TALKS, ACHIEVE POSITIVE RESULTS- CHINESE STATE MEDIA
- XI SAYS AT PRESENT CHINA, U.S. RELATIONSHIP IS AT IMPORTANT STAGE- CHINESE STATE MEDIA
A team of mid-level administration officials will travel to Beijing during the week of Jan. 7 to begin face-to-face talks with the Chinese. The team will reportedly be led by Deputy US Trade Representative Jeffrey Gerrish and will include David Malpass, Treasury under secretary for international affairs.
Meanwhile, as the partial shutdown enters its seventh day, the EPA, the Coast Guard and other agencies included in the nine departments affected by the shutdown are preparing to furlough even more workers.
First Details From US-China Trade Talks Emerge
With roughly a week left before the first round of in-person trade-deal talks, the White House has leaked a rough outline of its expectations for a deal reportedly gleaned from preliminary conversations between President Trump and President Xi (Trump tweeted on Saturday that he and Xi had made “big progress” toward a deal during their early calls).
If nothing else, the report in the Wall Street Journal offers a benchmark against which the final deal can be judged. According to WSJ, the talks are focusing on boosting US exports and loosening regulations that discriminate against US firms operating in China (something the Chinese have been hinting at in recent policy decisions to lift import bans and remove retaliatory tariffs, while also reportedly weighing a decision to scrap their “Made in China 2025” policy).
However, as with anything leaked from the West Wing, WSJ cautions its readers to take the report with a grain of salt. Because given the market volatility in December, Trump could be liable to exaggerate the chances of a deal if it might boost markets.
But people familiar with the state of negotiations said the president may be overstating how close the two sides are to an agreement. They note Mr. Trump has looked to calm markets, which have gyrated in recent days, in part, because of concern that the trade fight between the US and China could spin out of control.
One other notable detail from the WSJ report is that the US likely won’t seek a commitment from China to end its cyber espionage practices. Instead of bundling this in with the trade talks, Treasury is pushing for China’s espionage program (which recently won it the condemnation of the US and a group of its allies, as well as a host of indictments of hackers and agents allegedly affiliated with the Ministry of State Security), to be put off for a separate round of negotiations (showing that the US is being practical about setting realistic expectations for a deal, since China has repeatedly promised to rein in these practices, only to allow them to continue).
After the first round of in-person talks beginning Jan. 7, a more-senior delegation led by Treasury Secretary Mnuchin, Trade Rep. Lighthizer (on the US side) and Vice Premier Liu He (on China’s side) will meet in Washington the following week. Right now, Lighthizer’s office is leading the talks, with close cooperation from Treasury:
A team of U.S. trade officials, including Deputy Trade Representative Jeffrey Gerrish and Treasury Undersecretary David Malpass is expected in Beijing the week of Jan. 7 for several days of talks. If those negotiations make progress, Chinese trade officials, led by Vice Premier Liu He, will follow up with talks in Washington the following week, or soon after that with U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin.
The trade representative’s office is now leading trade talks, though Treasury is also playing a significant role.For instance, Mr. Mnuchin lobbied successfully before Christmas to keep Chinese firms from being hit with sanctions for cyber espionage on the same day that the Justice Department announced indictments of two Chinese citizens allegedly tied to a state-sponsored campaign to steal sensitive information from U.S. businesses.
Treasury has wanted to keep the espionage issue separate from trade talks. But others in the government continue to press for Treasury sanctions, both to punish Beijing and to make clear that the U.S. will enforce agreements.
When it comes to Chinese promises to end or limit IP transfers and offer greater access to its markets, the US is planning to demand that verifiable steps be taken on China’s part before the US rolls back its tariffs.
The latter proposals include cracking down on Chinese officials who pressure U.S. firms to transfer technology to Chinese partners—the heart of the Trump administration complaints against China. Beijing is also expected to propose giving foreign firms greater access to financial services and other sought-after sectors.
But China has made pledges of this sort in the past. U.S. negotiators now are pressing their Chinese counterparts to spell out, in great detail, the kinds of changes they would make—and to assure that Beijing doesn’t use other means to restrict foreign firms. Over the past year, China has resisted giving such detailed information.
[…]
The U.S. is also focusing on how such a deal would be enforced. One way is to keep current tariffs on China and only remove them after Beijing has carried out its pledges.
If China promises to grant US firms greater access to its domestic market, the US will want to verify that Beijing isn’t using some other method to effectively drive them out.
For instance, if Chinese regulations are revised to boost foreign participation in financial markets, the US wants to be assured that Beijing won’t use government authority over licensing, environment, land use and other areas to hinder US firms anyway. Washington also wants to make sure US firms benefit quickly and that approvals don’t stretch out for years.
For those who have been following the trade dispute so far, it might seem like the US is setting a high bar for an agreement – and analysts at Goldman Sachs would agree. They don’t expect a deal to be forthcoming by the March 2 deadline, and that tariffs will likely rise further in 2019.
However, they believe the Trump administration will ultimately cave and strike a deal by 2020, just as it did with Canada and Mexico before the midterms.
* * *
Will the US impose further tariffs?
Yes. We believe tariffs on imports from China are likely to rise somewhat further in 2019, though we also expect that an agreement could be reached by late 2019. On March 2, tariffs are scheduled to increase to 25% on $200bn of imports from China unless the White House intervenes to prevent this. Chinese policymakers appear intent on easing tensions—China has announced purchases of US soybeans, rescinded retaliatory tariffs on US autos, and backed away from the “Made in China 2025” plan— but it is unclear whether this will be enough to satisfy the White House. US Trade Representative Robert Lighthizer, who is leading talks from the US side, has stated that March 2 is a “hard deadline” for reaching an agreement and that postponing the increase will require a “verifiable” deal that brings about “structural change” and “protection of US technology”, which appears to set a high bar for a deal. We also note that while Presidents Trump and Xi were able to reach an agreement at their face-to-face meeting on December 1, further postponement of the 25% tariff might be harder to achieve without another face-to-face meeting, which has not been scheduled.
While we believe an increase in the tariff rate is more likely than not, we nevertheless believe that tariffs on imports from China are likely to peak in 2019, for two reasons. First, we expect that the White House will want to announce a more comprehensive agreement with China ahead of the 2020 presidential election, similar to the agreement President Trump struck with Canada and Mexico on revising NAFTA ahead of the 2018 midterm election. Second, the measures the US government is taking with regard to China go beyond tariffs. In recent weeks, the Trump Administration has proposed restricting exports of certain technologies and foreign investment in companies that focus on such technologies, as well high-profile legal actions focused on technology-related issues having to do with China.
If no deal is reached by the March “hard deadline”, the US will raise tariffs on some $200 billion of Chinese imports from 10% to 25%, and begin the process of slapping tariffs on another $200 billion-plus worth of Chinese goods flowing into the US.
China Beige Book Issues Dire Fourth-Quarter Preview
By Rahul Vaidyanath of The Epoch Times
Just about every economic measure is trending down in China, and not surprisingly, deflation fears are mounting. The China Beige Book (CBB) fourth-quarter preview, released Dec. 27, reported that sales volumes, output, domestic and export orders, investment, and hiring all fell on a year-over-year and quarter-over-quarter basis.
A much-weaker 2019 appears to be in the offing for China, but it’s not solely due to trade tensions with the United States. The domestic economy was already on weak footing and the CBB argues that government support is unlikely.
The CBB is a research service that speaks to thousands of companies and bankers on the ground in China every quarter. It contends that deflation is the bigger threat compared to inflation.
“Because of China’s structural problems, deflation has very clearly emerged as the bigger threat in a slowing economy than inflation. Consumer demand has weakened, and you see that reflected in retail and services prices,” said Shehzad Qazi, CBB managing director, in an interview.
While lower prices look good for consumers, policy-makers don’t like deflation for a number of reasons. With prices falling, companies produce less, often lay off workers, and reduce investment, leading to a vicious circle of sorts. While the trade war hurts export-sensitive regions, local orders have now weakened for two straight quarters.
Hiring fell for the first time since early 2016. Worse still, the fall was concentrated in services and retail, two sectors being counted upon to pick up the slack left by manufacturing’s woes.
Also, debt—of which China has plenty—becomes more problematic under deflation, as its value adjusted for inflation rises.
And it’s an issue for central bankers, who typically target 2 percent inflation for price stability. Rate cuts to spur the economy and inflation are less effective, since the real interest rates are higher when accounting for deflation.
“China is an aging, leveraged country, with excess industrial capacity. Appearances by inflation should be cheered,” according to the CBB Q4 preview. “They are also rare.”
Qazi says that the only inflation is in agriculture commodities, which is not what Beijing wants.
The early signs of deflation are broad-based. Wages, sale prices, and input costs are all trending lower, according to CBB surveys. The November reading on Chinese inflation showed a drop of 0.3 percent. The statistic showed four months of deflation earlier this year before turning positive again.
China’s 10-year government bond yield has been trending lower since the start of the year, partially reflecting the market’s anticipation of deflation worsening and the economy slowing.
Two metals symbolic of global growth—copper and aluminum—are languishing. The CBB reports that the net share of copper firms raising production capacity fell to 30 percent from 60 percent two quarters prior, while aluminum firms raising capacity fell to 18 percent, which is half the Q3 figure.
“Dr. Copper” is not far from its lowest level in a year. Aluminum prices are at their lowest in 18 months.
No Help
“A major misconception presently is that China will announce another massive stimulus plan in the coming weeks,” Qazi said.
He added that further measures to stimulate the economy are unlikely. This is because true fiscal stimulus has never been attempted, and government spending distributed via state banks ends up being akin to monetary accommodation, which is what the Chinese authorities insisted would not happen again under their watch.
“The bottom line is that we see pervasive weakness in the economy as we look to 2019,” Qazi said.
China PMI Unexpectedly Plunges Into Contraction – Weakest December Since 2008
China’s official manufacturing PMI fell to 49.4 in December, from 50.0 in November, the lowest reading since February 2016; and the weakest reading for a December since 2008.
Under the hood, it was just as ugly, as Goldman notes, both the production and new order sub-indexes fell in December. The production index declined to 50.8 from 51.9, and the new orders decreased to 49.7 from 50.4. Trade indicators continued to soften as well – the imports sub-index dropped 1.2pp to 45.9 and the new export order sub-index was at 46.6, vs. 47.0 in November. Both indexes were at the weakest levels since late 2015/early 2016. The employment sub-index edged down slightly by 0.3pp to 48.0. Inventory indicators went down – the raw material inventories index was 0.3pp lower, and the finished goods inventory index dropped by 0.4pp in December to 48.2. Inflationary pressures eased meaningfully – the input price index dropped by 5.5pp to 44.8, the lowest level since December 2015, and the output prices index was 3.1pp lower at 43.3.
Judging by the official PMI surveys, manufacturing activity growth may have softened further in December. One small caveat though is that NBS manufacturing PMI tends to fall in December (since 2010, on average NBS manufacturing PMI fell by around 0.1pp). The lower commodity prices may have also contributed to the decline in the headline manufacturing PMI reading. Trade data may have continued to slow in December, as implied in the low readings of trade indicators under PMI. Weaker external demand combined with trade tensions have contributed to the slower trade growth.
“The next few months will be crucial to the Chinese economy’s direction and policy focus. Signs of domestic demand bottoming have yet to emerge. External pressures may accumulate, with exports possibly slowing as the front-loading effect wanes.”
–Chang Shu and David Qu, Bloomberg Economics.
Of course, all this bad news prompts the stablishment’s knee-jerk goldilocks response that this is good news because government will be forced to unleash more stimulus:
Goldman: “we continue to expect accommodative policy stance to support overall growth (in particular we expect lower interbank rates and more RRR cuts in 1H next year).”
“The slowdown will continue into the next year,” said Larry Hu, a Hong Kong-based economist at Macquarie Securities Ltd.
“The weak PMI could result in more government stimulus to shore up the economy.”
However, as we noted previously, it is not working!!
All of which leave us asking –Is Trump winning?
President Xi Defends China’s Economy As Growth Collapses
Shortly after the release of the latest round of disappointing economic data which confirmed that China’s economy likely continued to slow in December, President Xi Jinping delivered a speech to the nation where he defended his economic policies, saying China’s economy expanded “within a reasonable range” during 2018, despite the fact that its stock market was the worst performer among major economies and the rate of growth of its massive economy slowed for the first time in a decade.
On Monday, China’s official manufacturing PMI fell to 49.4 in December, from 50.0 in November, the lowest reading since February 2016, and the weakest reading for a December since 2008 (to be fair, some weakness in the December PMI is typical due to seasonal factors).
Factory orders and other economic indicators released so far this month suggest that China’s economy has slowed for the seventh straight month in December. This comes after China’s GDP grew 6.5% during the third quarter, the slowest rate since 2009.
With negotiations over the US-China trade truce expected to start shortly after the first of the year, Xi insisted that China would remain “resolute” in defending its sovereignty – a reference to China’s dominance of the South China Sea – and press ahead with its “One Belt, One Road” initiative.
“Looking at the world at large, we’re facing a period of major change never seen in a century. No matter what these changes bring, China will remain resolute and confident in its defence of its national sovereignty and security,” he said.
On the domestic front, Xi touted China’s success at lifting another 10 million people out of poverty this year, while praising its efforts to curb pollution in its air, water and soil.
“The improvement of the people’s well being speeded up and their living standards were steadily improved,” he said. “We have also made great strides in our poverty alleviation efforts in the past year. Another 125 poor counties and 10 million poverty-stricken rural residents were lifted out of poverty in 2018,” he said referring to progress to his pledge that China will eradicate poverty by 2020.
Xi’s remarks come after he confirmed that he had a constructive conversation with President Trump over the weekend about a trade war and urged the US to “meet China half way” when striking a trade deal.
Watch Xi’s address (with English subtitles) below:
subtitles
end
4.EUROPEAN AFFAIRS
ITALY/EU
Laughter: Italy finally passes its revised 2019 budget at exactly 2.04% deficit. We still have to hear from France who dramatically increased their deficit trying to cool the rioting in their country.
(courtesy zerohedge)
Italy Passes Revised 2019 Budget, Marking End Of EU Spending Battle
In what will likely come as a relief to anxious EU officials who have been hoping to avoid another calamitous confrontation with a restive member state, Italy’s ruling populist coalition managed to ram through approval of its revised budget plan – including its laughably precise projected budget deficit of 2.04% (because only economists can come up with such an “accurate” number without laughing at themselves) – ahead of a deadline that would have forced the country to revert to its 2018 spending regimen. The move marks the end of a scuffle between the EU and Italy that could have led to billions of euros in fines levied against debt-burdened Italy and another selloff in Italian bonds.
The final budget plan included some cutbacks to campaign promises made by the League and the Five Star Movement – the two partners in the populist coalition – including scrapping plans to lower the retirement aid and limiting a planned welfare expansion, according to Bloomberg.
Deputy PM Luigi Di Maio, Prime Minister Giuseppe Conte, Deputy PM Matteo Salvini
By passing the budget, investors in Italian bonds and stocks will likely drop their fears of an all-out collapse in the country’s banking system, a feared result of the country’s clash with the EU, which could come as a relief to Italian assets in the new year after the country’s sovereign bonds posted their first yearly decline since 2011.
The political opposition in Rome objected to the populists’ decision to curtail debate on the budget plan, as MPs aligned with former prime minister Silvio Berlusconi’s Forza Italia party were escorted from Parliament while members of the center-left Democratic Party are seeking a challenge in a constitutional court.
Budget debate was curtailed in both houses of parliament, sparking opposition outrage. Lawmakers from ex-premier Silvio Berlusconi’s center-right Forza Italia party donned blue vests with slogans like “Enough Taxes,” before being escorted from the lower house on Saturday afternoon.
The center-left Democratic Party has appealed to the country’s constitutional court in protest after government moves to ram the budget bill through parliament. The coalition has said time was limited because of lengthy negotiations with the European Commission, which helped avert fines being imposed on Italy.
Passing the budget caps weeks of nervous negotiations with the EU, which is also grappling with the departure of the UK next year. Financial analysts have been looking to Italy for clues about the cohesiveness of the EU itself. Ironically, Italy’s decision to lower its deficit target from 2.4% to 2.04% (there’s that number again) was more than negated by the Italian government’s decision to lower its GDP growth projections to 1% from 1.5%.
But financial analysts can now sleep soundly, assured that the whipsaw volatility triggered by the budget showdown with the EU will likely subside – at least at until the 2.04% number is exposed for the goal seeked political farce it is.
5.RUSSIAN AND MIDDLE EASTERN AFFAIRS
An excellent commentary from Tom Luongo as he states that despite low oil prices and sanctions, the rouble has remained quite constant. The reason for this is the continued use of roubles/yuan in commodity transactions by passing the dollar. As we explain on many occasions, the discontinued use of dollars is a nail in the life of USA hegemony
(courtesy Tom Luongo)
A Stable Ruble Is The Key To Russia’s Survival
The Russian ruble moved sharply this week as the global equity and commodities rout continues in the wake of the Federal Reserve raising interest rates.
Russia’s central bank over-reacted to a rise in inflation as the global economy moves towards a chaotic and politically dangerous 2019.
Oil prices are moving in sync with equities as the markets have entered a panic phase anticipating a global recession next year. Normally the Ruble is very strongly tied to oil prices. But as I showed in an article just before Thanksgiving, the ruble didn’t respond at all to a drop in Brent Crude from $80+ per barrel to around $60.
Amidst a 38% drop in the price of Brent Crude since October, the ruble has fluctuated in a 4% band around 67 to the dollar. This is shocking stability given the volatility in oil prices.
Ruble weakness from earlier this year was an over-reaction to heightened sanctions by the U.S. especially at a time where the threat of further sanctions on Iran and Venezuela’s collapse kept prices high.
Oil’s Outlook
And now it is catching up to this drop in oil prices with this week’s weakness. Oil prices are unsustainable above $65 per barrel amidst this level of supply.
They are equally unsustainable below $40 per barrel for just about everyone due to budget constraints (the Saudis) or debt-servicing (U.S. Frackers).
Since free-floating the ruble back in late 2014, Russia has been less and less affected by the fluctuations in oil prices. Because domestic costs are paid in rubles and income earned in dollars is offset by the weaker ruble.
It is government expenditures which suffer during waves of lower oil prices. But this year’s high prices have swelled Russia’s state coffers, running a 2.1% of GDP budget surplus this year.
Russia has an auto-budgeting system based on oil tariff revenues the budget will adjust based on anticipated oil prices.
And given the announced 1.2 million barrel per day cut from OPEC don’t expect the Russians to budget near $80 per barrel for 2019. That was a bearish signal, a sign of weakness.
Energy makes up the bulk of the country’s exports but that proportion is falling steadily as other industries mature. In 2017 oil/gas made up just under 60% of exports down from 69% in 2014.
They’ll likely be up as a percentage this year because of higher prices, but non-resource exports hit a record $147 billion this year, according to a recent statement from Andrey Slepnev, Chief Executive of the Russian Export Center.
That’s the important part.
The double whammy of increased sanctions (with threats of even more) and lower prices should have sent the ruble skyrocketing similar to what we saw this year with the Turkish lira.
I’m sure that’s been the hope on Capitol Hill.
But we haven’t and that speaks to the growing proportion of Russian trade settling outside the dollar. Russian exports continue to grow thanks to the weaker ruble and Putin’s continued growing stature as a statesman.
This is having the positive effect of opening up more markets for Russian goods and working with countries willing to skirt U.S. sanctions.
The Real Ideological War
Trump and Putin are locked in an ideological war of how to conduct trade now. And the shoe, nominally, is on the other foot. I have to marvel at Trump turning mafioso, punishing people for doing business with anyone but him while Putin pulls a Dale Carnegie looking for wins where he can get them.
Trump has his stick. Putin offers carrots.
It’s a sad commentary on what’s become of the U.S. that Trump believes he can bully his way to remaking America in his image. He talks a lot about America being respected again. But that’s not the sense I get when I look around the geopolitical game board.
In fact, it is the opposite. Trump may get obedience and he can choose to see deference to the U.S.’s power as ‘respect’ but it’s not. It’s resentment. And he should be smart enough to know this.
He’s undermining the one thing that makes the dollar the dollar. Stability and consistency.
Putin, on the other hand, chooses to ignore Trump where he can and make offers which tie Russia and its neighbors together in a web of trade. The hysterical neoconservatives here shout incoherently about “undo Russian influence.”
This is simply code for, “We want Russia poor, weak and incapable of defending herself so we can take it over.”
But the reality is that with each pipeline built between Russia and Europe, India and/or China the likelihood of war between them recedes. Viewed through that lens, Russia uses its energy resources to defend its future.
The West calls it ‘Pipeline Diplomacy,’ and our opposition to it stems from outdated ‘Great Powers’ theory of how to play the great game of geopolitics.
Because Russia knows all too well the belligerence of U.S. and European elites towards it. It’s been dealing with it for centuries. And Putin, as a student of history, knows that time is Russia’s greatest ally.
Stability Becomes Reserves
When looking at the geopolitical picture you have to look at the overall trend, the players at the table and where their motivations lie. For Russia the goal is an independent path which does not leave it at the mercy of U.S. political imperatives.
No one gets out of a conflict with the U.S. over trade unscathed, but that’s not the goal. The goal is minimizing the damage and building stronger local relationships which fell into disrepair after the fall of the U.S.S.R.
Prime Minister Dmitri Medvedev finally made it clear that Russian political leaders have turned a corner on their thinking.
He added that US sanctions have pushed Moscow and Beijing to think about the use of their domestic currencies in settlements, something that “we should have done ten years ago.”
“Trading for rubles is our absolute priority, which, by the way, should eventually turn the ruble from a convertible currency into a reserve currency,” the Russian prime minister said.
That’s what Putin’s endless meetings are all about, building trade across central Asia with the ruble as a viable alternative for the dollar.
The trend is clear. The West is broke. The endless hunt for taxes to shore up federal budgets will continue. The U.S. is interested solely in maintaining its power. This is really what Trump means when he says, “Make America Great Again.”
And he will do anything to achieve that goal, regardless of the secondary effects. This makes U.S. policy aggressive, violent and vindictive. And that is not the recipe for long-term economic or political stability.
This is what Trump and his national security team most fear, a Russia capable of building a parallel institutional system operating outside their control.
Because people respond to incentives. And each day that Trump makes using the dollar more expensive is another day where someone else makes the decision not to use them.
So, a stable ruble, unfazed by sanctions and wild swings in the price of oil, makes that decision that much easier. Each day that brings another small deal settled in rubles or another load of oil paid for in yuan and swapped for gold is another day closer to that reality.
* * *
end
Syria/Turkey/USA
USA helicopters still flying over Manbij as confusion still reigns. Still the Kurdish YPG has not officially left the area.
(courtesy zerohedge)
US Helicopters Flying Over Manbij As Confusion Reigns; Turkey, Russia Agree To “Coordinated” Action
As confusion and tensions mount in the Syrian Kurdish city of Manbij, located just 70 miles north of Aleppo, US helicopters have been filmed hovering above the potential battle lines, even after widespread reports of a US troop pullout from the area and following Kurdish militias quickly calling on Assad’s help to prevent a Turkish invasion.
This as Turkish Armored Personnel Carriers (APCs), other heavy equipment, and Turkish troop reinforcements were seen crossing into Syria. Currently, the Syrian Army is deployed in and around the city saying it stands ready to protect it from nearby pro-Turkish forces after Friday Syria’s defense ministry announced it had “raised the flag of the Syrian Arab Republic” over Manbij for the first time after years of waras confirmed by Russian television footage from on the ground; however, Turkish President Recep Tayyip Erdogan reportedly refused to acknowledge the Syrian Army’s presence, dismissing the Syrian statement as a “psychological action.”
However, Erdogan vowed to keep any possible Turkish action limited in press statements on Friday:
“In the current situation, we are still supporting the integrity of Syrian soil. Areas like Manbij belong to Syria. Once the terrorist organizations leave the area, we will have nothing left to do there.”
Also amid reports that American military advisers to the SDF — whose civilian council still appears in control of Manbij apparently with the blessing of Damascus — rapidly withdrew as pro-Turkish forces approached, the Pentagon on Friday issued a vague statement denying reports of “changes to military forces” saying they are “incorrect,” suggesting US forces could still be in or around Manbij. The presence of US helicopters hovering over the province seem to confirm this.
As mentioned previously, though the situation remains highly fluid and dangerous for major escalation, especially as Turkish-backed jihadists have been for days mustered at the western border of the province declaring their willingness to “cleanse” the region of Kurds, there appears an uneasy status quo emerging and possible indirect negotiations happening between US, SDF, and Syrian Army forces, with broader negotiations between Turkey and Russia — the latter which controls the airspace above the province.
On Saturday Russia and Turkey announced plans to coordinate ground operations in Syria following last week’s surprise announcement of a full US troop draw down from Syria, according to statements by Moscow’s top diplomat, Russian Foreign Minister Sergei Lavrov. When it comes to Manbij, for Erdogan this will require proof of a full withdrawal of armed Kurdish YPG fighters from the town and countryside.
Lavrov said after talks with his Turkish counterpart Mevlut Cavusoglu in Moscow, “Of course we paid special attention to new circumstances which appeared in connection with the announced US military pullout.” He explained further, “An understanding was reached of how military representatives of Russia and Turkey will continue to coordinate their steps on the ground under new conditions with a view to finally rooting out terrorist threats in Syria.”
“We will continue active work (and) coordination with our Russian colleagues and colleagues from Iran to speed up the arrival of a political settlement in the Syrian Republic,” he said in remarks also confirmed by Cavusoglu, according to the AFP.
However, the wild card that remains is whether or not US forces will fully and truly make a complete break from the theater. Considering the Trump administration is currently considering whether or not to leave US weapons with the Kurds, it appears a full pullout is indeed happening.
Is A ‘Land Swap’ Between Turkey And Syria Being Brokered By Russia?
As confusion and tensions continue to mount in the Syrian Kurdish city of Manbij, located just 70 miles north of Aleppo, and as pro-Turkish forces prep for an invasion, is there a land swap in the works in northern Syria being brokered between Russia and Turkey? This is the pressing question as over the weekend US helicopters were filmed hovering above the potential battle lines, even after widespread reports of a US troop pullout from the area and following Kurdish militias quickly calling on the Syrian Army’s help to prevent a Turkish invasion and massacre of the province’s Kurdish inhabitants.
Prior file photo of pro-Turkish Syrian rebel sitting in Afrin, via AFP.Following a high level Turkish defense delegation visit to Moscow on Saturday, which involved talks between Russian Foreign Minister Sergei Lavrov and his Turkish counterpart Mevlut Cavusoglu, RT reports the future of the Syrian-Turkish border region is on the line. This as many in Washington worry that a rapid American draw down will create a power vacuum :
Moscow and Ankara are to “define certain areas of influence and understand who will control what.” There are residual groupings of Islamic State (IS, formerly ISIS/ISIL) fighters who are ready to exploit any no power vacuum in northern Syria…
Turkish ambitions to reinstate full control over the northern Syria may not be an option for Damascus, but “it is also important for Russia to not lose Turkey as an ally.”
Marianna Belenkaya, a Middle East expert and commentator at Russia’s Kommersant daily, noted: “There’s a possibility that some kind of a land swap will be discussed,” and explained, “What is happening around Manbij is similar to what Russia has suggested a year ago in Afrin.”
Essentially this means Moscow is pressuring Kurdish militias to disarm as an independent entity and come under Damascus’ jurisdiction; and in exchange the Turks would agree to not invade the Kurdish-populated canton. Regarding Afrin, the Kurds rejected the deal at the time and were forced out during Turkey’s ‘Operation Olive Branch’.
Though few details were given, on Saturday Russia and Turkey announced plans to coordinate ground operations in Syria following last week’s surprise announcement of a full US troop draw down from Syria, according to statements by Moscow’s top diplomat, Russian Foreign Minister Sergei Lavrov. When it comes to Manbij, for Erdogan this will require proof of a full withdrawal of armed Kurdish YPG fighters from the town and countryside.
Babak Taghvaee@BabakTaghvaeeTo protect #US Army Special Forces & #SDF from danger of #Turkey backed terror groups such as & Ahrar al-Sharqia, these 2 AH-64D Apache attack helicopters of 35th CAB “Task Force Trailblazers” patrolled over the #Manbij today. Op. #InherentResolve
Lavrov said after talks with his Turkish counterpart Mevlut Cavusoglu in Moscow, “Of course we paid special attention to new circumstances which appeared in connection with the announced US military pullout.” He explained further, “An understanding was reached of how military representatives of Russia and Turkey will continue to coordinate their steps on the ground under new conditions with a view to finally rooting out terrorist threats in Syria.”
“We will continue active work (and) coordination with our Russian colleagues and colleagues from Iran to speed up the arrival of a political settlement in the Syrian Republic,” Lavrov said in remarks also confirmed by Cavusoglu, according to the AFP.
Russia had previously agreed that Turkey control a small area in the east of Idlib province, “but it’s yet to be seen if Russia would agree to a Turkish zone being extended to the entire north of Syria,” according to RT.
However, the wild card that remains is whether or not US forces will fully and truly make a complete break from the theater. Currently the Trump administration is considering whether or not to leave US weapons with the Kurds; thus it appears a full pullout is indeed happening.
Early but unconfirmed reports suggest US troops withdrawing from Syria may be relocated to the American base in Erbil, Iraq.
According to Iraqi Kurdistan’s Rudaw News:
The United States will carry out its planned troop withdrawal from Syria via the Harir Air Base in Kurdistan Region’s Erbil province, according to Anadolu Agency (AA).
AA correspondents quote local sources as saying that the Harir airbase has seen increasing air traffic and preparations.
But the situation remains highly fluid and dangerous for major escalation, especially as Turkish-backed jihadists which have been for days mustering at the western border of Manbij countryside, have declared their readiness to “cleanse” the region of Kurds according to Erdogan’s bidding.
end
After meeting with Lindsay Graham, the President has second thoughts on pulling out of Syria
(courtesy zerohedge)
“The President Is Reconsidering”: Syria Pullout On Thin Ice After Lunch With Lindsey Graham
President Trump is “reconsidering” his strategy to pull US forces out of Syria following an “eye-opening trip to Iraq” the day after Christmas, Bloomberg reports.
Sen. Lindsey Graham (R-SC) who sits on the Senate Armed Forces Committee – a harsh critic of Trump’s announced pullout, said earlier Sunday that he would try to change Trump’s mind during a private lunch since the Islamic state isn’t quite defeated in the region as the President had previously stated.
“I feel better about Syria than I felt before I had lunch,” said Graham after he left the White House. “I think the president is taking this really seriously, and the trip to Iraq was well timed.” Trump has apparently devised a strategy with his generals in the field that “makes sense” according to the Senator.
Washington Examiner
✔@dcexaminer
Lindsey Graham said it was a successful lunch and the discussion he had with Trump made him “feel much better” about the decision to pull troops out of Syria >> https://washex.am/2QUD3lf
On Sunday morning, Graham told CNN‘s “State of the Union” that Trump had spoken with General Joseph Dunford, chairman of the Joint Chiefs of Staff.
“I got a call from General Dunford,” said Graham. “The president is reconsidering how we do this.”
The White House didn’t immediately respond to a request for comment on whether Trump is considering reversing the decision, announced by tweet earlier this month, to pull U.S. troops from Syria. That move, which came against the advice of the president’s top national security advisers, triggered the resignation of Defense Secretary Jim Mattis.
Trump has already has backed away from the notion of an immediate withdrawal, saying a week ago that the pullout of U.S. troops from the area would be “slow & highly coordinated.” –Bloomberg
Sort of like how Trump’s “immediate” and full declassification of the Justice Department’s Russiagate documents turned into a “slow & highly coordinated” handoff to the DOJ Inspector General.
When asked whether President Trump would be to blame if ISIS became more powerful after US troops leave Syria, Graham responded that the blame belongs to former President Barack Obama due to his decision to withdraw from Iraq in 2011.
“Everything we’re dealing with today falls on Obama’s watch. He’s the one who withdrew from Iraq,” said Graham.
“But he did it because there was a Status of Forces Agreement in Iraq, right?” shot back CNN host Dana Bash.
“Listen. No, that’s a bunch of bullshit. Pardon my French. That’s a complete lie. That’s a complete, absolute lie,” said Graham, to which Bash asked “That didn’t happen?”
“ISIS came about as a result of our withdrawal from Iraq. The caliphate was established in Syria because Obama sat on the sidelines and watched the place be dismembered,” said Graham, adding of Trump: “He was dealt a bad hand by Obama and he needs to play it better than he’s playing it. Keeping the troops in Iraq is great.”
6. GLOBAL ISSUES
A very important commentary from Alasdair Macleod. He first describes that there are three areas of concern that is causing the credit crisis which just arrived.:
- the Japanese low interest rate conundrum
- the Euro zone debt crisis
- the USA debt crisis
He tackles the latter two.
The USA crisis has already arrived and it will continue to get worse as long term interest rate rises as inflation finally gets a firm grip. The Fed is engaged in a process of raising SHORT TERM rates despite a faltering economy. Powell is raising rates because of huge budgetary deficits of around 1.4 trillion dollars. The debt to the penny chart for last Christmas was 20.492 trillion so we had added 1.4 trillion to the debt. Officially it is around 1 trillion dollars but student loans and car loans are not included because there is a corresponding asset. Once default occurs, it is officially added to the deficit. Higher deficits mean high interest rate costs as we should see around $600++ billion in costs this year compared to the high 400’s for last year. What we will see from this point on will be higher long term rates despite the faltering stock market and economy. Inflation will be the trigger.
In Europe the problem will be the huge amount of USA treasuries on the books on the EU banks. Once the dollar falls with the higher inflation, bonds will suffer losses and this will kill the European banks.
(courtesy Alasdair Macleod)
The Arrival Of The Credit Crisis
Those of us who closely follow the credit cycle should not be surprised by the current slide in equity markets. It was going to happen anyway. The timing had recently become apparent as well, and in early August I was able to write the following:
“The timing for the onset of the credit crisis looks like being any time from during the last quarter of 2018, only a few months away, to no later than mid-2019.” [i]The crisis is arriving on cue and can be expected to evolve into something far nastier in the coming months. Corporate bond markets have seized up, giving us a signal it has indeed arrived. It is now time to consider how the credit crisis is likely to develop. It involves some guesswork, so we cannot do this with precision, but we can extrapolate from known basics to support some important conclusions.
If it was only down to America without further feed-back loops, we can now suggest the following developments are likely for the US economy. Warnings about an economic slowdown are persuading the Fed to soften monetary policy, a process recently set in motion and foreshadowed by US Treasury yields backing off. However, price inflation, which is being temporarily suppressed by falling oil prices, will probably begin to increase from Q2 in 2019. This is due to a combination of the legacy of earlier monetary expansion, and the consequences of President Trump’s tariffs on consumer prices.
After a brief pause, induced mainly by the threat of an unstoppable collapse in equity prices, the Fed will be forced to continue to raise interest rates to counter price inflation pressures, which will take the rise in the heavily suppressed CPI towards and then through 4%, probably by mid-year. The recent seizure in commercial bond markets and the withdrawal of bank lending for working capital purposes sets in motion a classic unwinding of malinvestments. Unemployment begins to rise sharply, and consumer confidence goes into reverse.
Equity prices continue to fall, as liquidity is drained from financial markets by worried investors, but price inflation remains stubbornly high. Consequently, bond prices continue to weaken under a lethal combination of foreign-owned dollars being sold, increasing budget deficits, and falling investor confidence in the future purchasing power of the dollar.
The US enters a severe recession, which is similar in character to the 1930-33 period. The notable difference is in an unbacked pure fiat dollar, which being comprised of swollen deposits[ii] (currently 67% of GDP versus 36% in 2007), (HARVEY: 15 TRILLION DOLLARS OF DEPOSITS OF WHICH 4 TRILLION$ ARE FOREIGN OWNED)) triggers an attempted reversal of deposit accumulation. The purchasing power of the dollar declines, not least because over $4 trillion of these deposits are owned by foreigners through correspondent banks.
One bit of good news is the US banking system is better capitalised than during the last crisis and is unlikely to be taken by surprise as much it was by the Lehman crisis. Consequently, US banks are likely to act more promptly and decisively to protect their capital, driving the non-financial economy into a slump more rapidly by calling in loans. Price inflation will not subside, because that requires sufficient contraction of credit to offset the declining preference for holding money relative to goods. Any credit contraction will be discouraged by the Fed, seeking to avert a deepening slump by following established monetary remedies.
The Fed’s room for manoeuvre will be severely restricted by rising price inflation, which it can only combat with higher interest rates. Higher interest rates will become a debt trap springing tightly shut on government finances, forcing the Fed to buy US Treasuries under cover of monetary stimulation. The true reason for QE will be that with a rapidly escalating budget deficit exceeding $1.5 trillion and more, the Fed will want to suppress borrowing costs compared with what the market will demand. Economic conditions will be diagnosed as a severe case of stagflation. In reality, the US will be ensnared in a debt trap from which the line of least resistance will be accelerating monetary inflation.
It will prove difficult for neo-Keynesian central bankers to understand the seeming contradiction that an economy can suffer a slump and escalating price inflation at the same time. It is, however, the condition of all monetary inflations and hyperinflations suffered by economies with unbacked fiat currencies. The choice will be to rewrite the textbooks, discarding current groupthink, or to soldier on. We can be certain the neo-Keynesians will soldier on, because they are intellectually unable to reform existing monetary policy in a manner acceptable to them.
That would be the likely outcome of the developing credit crisis if it wasn’t for external factors. There is precedent for it, and we can expect it from a purely theoretical analysis. It would be a rolling crisis, becoming progressively worse, taking six months to a year to unfold, followed by a period of economic recovery. But there is a major snag with this analysis for the US economy, and that is US monetary policy has long been coordinated with the monetary policies of other major central banks through forums such as the Bank for International Settlements, G20 and G7 meetings.
The surprise election of President Trump upset this apple-cart with his untimely budget stimulus and the havoc he is wreaking on international trade. The result is the Fed is no longer on the same page as the other major central banks, particularly the Bank of Japan and the European Central Bank. Therefore, unlike crisis phases of previous credit cycles, the Eurozone enters it with negative interest rates, as does Japan, which are creating enormous currency and banking tensions. We will put Japan to one side in our search for knock-on systemic and economic effects triggered by the Fed’s increase in interest rates, and instead focus on the Eurozone, the heart of the European Union.
The Eurozone is irretrievably bust
It is easy to conclude the EU, and the Eurozone in particular, is a financial and systemic time-bomb waiting to happen. Most commentary has focused on problems that are routinely patched over, such as Greece, Italy, or the impending rescue of Deutsche Bank. This is a mistake. The European Central bank and the EU machine are adept in dealing with issues of this sort, mostly by brazening them out, while buying everything off. As Mario Draghi famously said, whatever it takes.
There is a precondition for this legerdemain to work. Money must continue to flow into the financial system faster than the demand for it expands, because the maintenance of asset values is the key. And the ECB has done just that, with negative deposit rates and its €2.5 trillion Asset Purchase Programme. That programme ends this month, making it the likely turning point, whereby it all starts to go wrong.
Most of the ECB’s money has been spent on government bonds for a secondary reason, and that is to ensure Eurozone governments remain in the euro-system. Profligate politicians in the Mediterranean nations are soon disabused of their desires to return to their old currencies. Just imagine the interest rates the Italians would have to pay in lira on their €2.85 trillion of government debt, given a private sector GDP tax base of only €840bn, just one third of that government debt.
It never takes newly-elected Italian politicians long to understand why they must remain in the euro system, and that the ECB will guarantee to keep interest rates significantly lower than they would otherwise be. Yet the ECB is now giving up its asset purchases, so won’t be buying Italian debt or any other for that matter. The rigging of the Eurozone’s sovereign debt market is at a turning point. The ending of this source of finance for the PIGS[iii] is a very serious matter indeed.
A side effect of the ECB’s asset purchase programme has been the reduction of Eurozone bank lending to the private sector, which has been crowded out by the focus on government debt. This is illustrated in the following chart.
Following the Lehman crisis, the banks were forced to increase their lending to private sector companies, whose cash flow had taken a bad hit. Early in 2012 this began to reverse, and today total non-financial bank assets are even lower than they were in the aftermath of the Lehman crisis. Regulatory pressure is a large part of the reason for this trend, because under the EU’s version of the Basel Committee rules, government debt in euros does not require a risk weighting,while commercial debt does.[iv] So our first danger sign is the Eurozone banking system has ensured that banks load up on government debt at the expense of non-financial commercial borrowers.
The fact that banks are not serving the private sector helps explain why the Eurozone’s nominal GDP has stagnated, declining by 12% in the six largest Eurozone economies over the ten years to 2017. Meanwhile, the Eurozone’s M3 money increased by 39.2%. With both the ECB’s asset purchasing programmes and the application of new commercial bank credit bypassing the real economy, it is hardly surprising that interest rates are now out of line with those of the US, whose economy has returned to full employment under strong fiscal stimulus. The result has been banks can borrow in the euro LIBOR market at negative rates, sell euros for dollars and invest in US Government Treasury Bills for a round trip gain of between 25%-30% when geared up on a bank’s base capital.
The ECB’s monetary policy has been to ignore this interest rate arbitrage to support an extreme overvaluation in the whole gamut of euro-denominated bonds. It cannot go on for ever. Fortunately for Mario Draghi, the pressure to change tack has lessened slightly as signs of a US economic slowdown appear to be increasing, and with it, further dollar interest rate rises deferred.
TARGET2
Our second danger sign is the massive TARGET2 interbank imbalances, which have not mattered so long as everyone has faith that it does not matter. This faith is the glue that holds a disparate group of national central banks together. Again, it comes down to the maintenance of asset values, because even though assets are not formally designated as collateral, their values underwrite confidence in the TARGET2 system.
Massive imbalances have accumulated between the intra-regional central banks, as shown in our next chart, starting from the time of the Lehman crisis.
Germany’s Bundesbank, at just under €900bn is due the most, and Italy, at just under €490bn owes the most. These imbalances reflect accumulating trade imbalances between member states and non-trade movements of capital, reflecting capital flight. Additionally, imbalances arise when the ECB instructs a regional central bank to purchase bonds issued by its government and local corporate entities. This accounts for a TARGET2 deficit of €251bn at the ECB, and surpluses to balance this deficit are spread round the regional central banks. This offsets other deficits, so the Bank of Italy owes more to the other regional banks than the €490bn headline suggests.
Trust in the system is crucial for the regional central banks owed money, principally Germany, Luxembourg, Netherlands and Finland. If there is a general deterioration in Eurozone collateral values, then TARGET2 imbalances will begin to matter to these creditors.
Eurozone banks
Commercial banks in the Eurozone face a number of problems. The best way of illustrating them is by way of a brief list:
- Share prices of systemically important banks have performed badly following the Lehman crisis. In Germany, Commerzbank and Deutsche Bank have fallen 85% from their post-Lehman highs, Santander in Spain by 66%, and Unicredit in Italy by 88%. Share prices in the banking sector are usually a reliable barometer of systemic risks.
- The principal function of a Eurozone bank has always been to ensure its respective national government’s debt requirement is financed. This has become a particularly acute systemic problem in the PIGS.
- Basel II and upcoming Basel III regulations do not require banks to take a risk haircut on government debt, thereby encouraging them to overweight government debt on their balance sheets, and underweight equivalent corporate debt. Banks no longer serve the private sector, except reluctantly.
- Eurozone banks tend to have higher balance sheet gearing than those in other jurisdictions. A relatively small fall in government bond prices puts some of them at immediate risk, and if bond prices decline, it is the weakest banks that will bring down the whole banking system.
- Eurozone banks are connected to the global banking system through interbank exposure and derivative markets, so systemic risks in the Eurozone are transmitted to other banking systems.
This list is not exhaustive, but it can be readily seen that an environment of declining asset prices and higher euro bond yields increases systemic threats to the entire banking system. As was the case with Austria’s Credit-Anstalt failure in 1931, one falling domino in the EU can easily topple the rest.
The ECB itself is a risk
As stated above, the ECB through its various asset purchase programmes has caused the accumulation of some €2.5 trillion of debt, mostly in government bonds. The euro system’s central banks now have a balance sheet total of €4.64 trillion, for which the ECB is the ringmaster. Most of this debt is parked on the NCBs’ balance sheets, reflected in the TARGET2 imbalances.
The ECB’s subscribed equity capital is €7.74bn and its own balance sheet total is €414bn.[v] This gives an operational gearing on core capital of 53 times. Securities held for monetary purposes (the portion of government debt purchased under various asset purchase programmes shown on the balance sheet) is shown at €231bn (it will have increased further in the current year). This means a fall in the value of these securities of only 3% will wipe out all the ECB’s capital.
If the ECB is to avoid an embarrassing recapitalisation when, as now seems certain, bond yields rise, it must continue to rig euro bond markets. Therefore, the reintroduction of its asset purchase programmes to stop bond yields rising becomes the last fling of the dice. The debt trap Eurozone governments find themselves in has also become a trap for the ECB.
Conclusion
We can see that the global credit crisis has now been triggered. It always happens at some point anyway. The proximate triggers have been non-monetary, being the combination of President Trump’s fiscal reflation late in the credit cycle, and his imposition of tariffs on imported goods. The weakening of other economies from Trump’s tariff war is an additional factor undermining the global economic outlook.
Given these fiscal developments, the Fed had no option but to seek to urgently normalise interest rates, bringing on the credit crisis.
Inaction by the Fed would have undoubtedly seen price inflation accelerate, even allowing for the confines of a heavily suppressed consumer price index. The slowing of the US economy has, at least for the short-term, reduced price inflation factors. But as argued in this article they are unlikely to last.
These monetary developments have come at a time when two important central banks, the ECB and the Bank of Japan, are still applying negative interest rates. The disparity between these policies and that of the Fed, besides creating monetary and currency strains, will almost certainly lead to them both revising monetary policies. Only this month, quantitative easing in the Eurozone ceases, and bond prices are likely to fall significantly without it. A rise in the ECB’s deposit rate from minus 0.4% will surely follow, and it is hard to see how a developing systemic crisis in the region can then be prevented.
Since the Lehman crisis, inflation has been mostly bottled up in the financial sector, while being statistically suppressed in the productive economy. That is now about to change, leading to excess deposits at the banks trying to escape the consequences of their deployment for mainly financial speculation. It will not provide a boost in consumption, because consumers are maxed out and unemployment is rising. It will simply undermine the purchasing power of an increasingly unwanted, unbacked fiat currency.
[i] See https://www.goldmoney.com/research/goldmoney-insights/end-of-credit-cycle-dynamics
[ii] The sum of cash, checking accounts and savings deposits
[iii] Portugal, Italy, Greece and Spain.
[iv] See https://www.globalbankingandfinance.com/sovereign-risk-weights-the-big-missing-piece-of-basel-iii/
[v] ECB Annual Report and Accounts, 2017.
The views and opinions expressed in this article are those of the author(s) and do not reflect those of Goldmoney, unless expressly stated. The article is for general information purposes only and does not constitute either Goldmoney or the author(s) providing you with legal, financial, tax, investment, or accounting advice. You should not act or rely on any information contained in the article without first seeking independent professional advice. Care has been taken to ensure that the information in the article is reliable; however, Goldmoney does not represent that it is accurate, complete, up-to-date and/or to be taken as an indication of future results and it should not be relied upon as such. Goldmoney will not be held responsible for any claim, loss, damage, or inconvenience caused as a result of any information or opinion contained in this article and any action taken as a result of the opinions and information contained in this article is at your own risk.
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 1.1446 UP .0006 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 GREEN
USA/JAPAN YEN 109;90 DOWN 0.321 (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…DEADLY TO OUR YEN SHORTERS
GBP/USA 1.2786 UP 0.0098 (Brexit March 29/ 2017/ARTICLE 50 SIGNED/BREXIT FEES WILL BE CAPPED
USA/CAN 1.3620 DOWN .0014 CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/(TRUMP INITIATES LUMBER TARIFFS ON CANADA/CANADA HAS A HUGE HOUSEHOLD DEBT/GDP PROBLEM)
Early THIS MONDAY morning in Europe, the Euro ROSE by 39 basis point, trading now ABOVE the important 1.08 level RISING to 1.1469/ Last night Shanghai composite CLOSED
//Hang Sang CLOSED UP 341.50 POINTS OR 1.34%
/AUSTRALIA CLOSED DOWN 0.11% /EUROPEAN BOURSES GREEN
The NIKKEI: this MONDAY morning CLOSED FOR NEW YEAR
Trading from Europe and Asia
1/EUROPE OPENED GREEN
2/ CHINESE BOURSES / :Hang Sang CLOSED UP 341.50 POINTS OR 1.34%
/SHANGHAI CLOSED
Australia BOURSE CLOSED DOWN 0.11%
Nikkei (Japan) CLOSED
INDIA’S SENSEX IN THE GREEN
Gold very early morning trading: 1283.00
silver:$15.46
Early MONDAY morning USA 10 year bond yield: 2.73% !!! UP 2 IN POINTS from FRIDAY’S night in basis points and it is trading WELL ABOVE resistance at 2.27-2.32%. (POLICY FED ERROR)/
The 30 yr bond yield 3.02 UP 0 IN BASIS POINTS from FRIDAY night. (POLICY FED ERROR)/
USA dollar index early MONDAY morning: 96.27 DOWN 13 CENT(S) from FRIDAY’s close.
This ends early morning numbers MONDAY MORNING
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And now your closing MONDAY NUMBERS \1: 00 PM
Portuguese 10 year bond yield: 1.72% UP 0 in basis point(s) yield from FRIDAY/
JAPANESE BOND YIELD: +.00% DOWN 0 BASIS POINTS from FRIDAY/JAPAN losing control of its yield curve/
SPANISH 10 YR BOND YIELD: 1.42% UP 0 IN basis point yield from FRIDAY
ITALIAN 10 YR BOND YIELD: 2.74 DOWN 0 POINTS in basis point yield from FRIDAY/
the Italian 10 yr bond yield is trading 129 points HIGHER than Spain.
GERMAN 10 YR BOND YIELD: RISES UP TO +.24% IN BASIS POINTS ON THE DAY//
THE IMPORTANT SPREAD BETWEEN ITALIAN 10 YR BOND AND GERMAN 10 YEAR BOND IS 2.50% AND NOW ABOVE THE THE 3.00% LEVEL WHICH WILL IMPLODE THE ENTIRE ITALIAN BANKING SYSTEM. AT 4% SPREAD THERE WILL BE A MASSIVE BANK RUN…
END
IMPORTANT CURRENCY CLOSES FOR MONDAY
Closing currency crosses for MONDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/1:00 PM
Euro/USA 1.1452 UP .0012 or 12 basis points
USA/Japan: 109.72 DOWN 0.515 OR 52 basis points/
Great Britain/USA 1.2747 UP .0060( POUND UP 60 BASIS POINTS)
Canadian dollar DOWN 9 basis points to 1.3642
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The USA/Yuan,CNY closed DOWN AT 6.8785- ON SHORE (YUAN UP)
THE USA/YUAN OFFSHORE: 6.8688( YUAN UP)
TURKISH LIRA: 5.2955
the 10 yr Japanese bond yield closed at +.00%
Your closing 10 yr USA bond yield DOWN 4 IN basis points from FRIDAY at 2.70 % //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 3.02 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, 96.19 DOWN 21 CENT(S) ON THE DAY/1.00 PM/
Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for MONDAY: 1:00 PM
London: CLOSED DOWN 5.84 OR 0.09%
German Dax : CLOSED
Paris Cac CLOSED UP 51.95 POINTS OR 1.11%
Spain IBEX CLOSED UP 46.20 POINTS OR 0.54%
Italian MIB: CLOSED
WTI Oil price; 45.08 1:00 pm;
Brent Oil: 53.33 1:00 EST
USA /RUSSIAN / ROUBLE CROSS: 69.36 THE CROSS LOWER BY .19 ROUBLES/DOLLAR (ROUBLE HIGHER BY 19 BASIS PTS)
USA DOLLAR VS TURKISH LIRA: 5.2955 PER ONE USA DOLLAR.
TODAY THE GERMAN YIELD RISES +.24 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 :45.89
BRENT :53.53
USA 10 YR BOND YIELD: 2.68%….deadly
USA 30 YR BOND YIELD: 3.01%/.
EURO/USA DOLLAR CROSS: 1.1457 ( UP 17 BASIS POINTS)
USA/JAPANESE YEN:109.61 DOWN 0.622 (YEN UP 62 BASIS POINTS/..deadly to yen shorters
.
USA DOLLAR INDEX: 96.11 DOWN 29 cent(s)/
The British pound at 5 pm: Great Britain Pound/USA: 1.2751 UP 65 POINTS FROM FRIDAY
the Turkish lira close: 5.2983
the Russian rouble: 69.67 down .13 Roubles against the uSA dollar.( down 13 BASIS POINTS)
Canadian dollar: 1.3652 DOWN 18 BASIS pts
USA/CHINESE YUAN (CNY) : 6.8785 (ONSHORE)
USA/CHINESE YUAN(CNH): 6.8688 (OFFSHORE)
German 10 yr bond yield at 5 pm: ,0.24%
The Dow closed UP 264.99 POINTS OR 1.15%
NASDAQ closed UP 50.76 POINTS OR 0.77%
VOLATILITY INDEX: 26.36 CLOSED DOWN 1.95
LIBOR 3 MONTH DURATION: 2.797% .LIBOR RATES ARE RISING/
FROM 2.803
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
“They Said It Could Never Happen Again?” – Global Stocks Suffer Worst Year In A Decade
The world’s central banks’ safety harness finally gave way and one by one the world’s markets started to plunge.
Global stock markets lost almost $12 trillion in 2018
– the largest market cap loss since 2008 (and second largest in history)…
In fact, from its highs in January, world market cap is down $20 trillion.
As global central banks ‘allowed’ their balance sheets to contract on an annual basis for the first time ever…
But they said “It could never happen again” … fortress balance sheets and all, and yet global systemically important banks collapsed in 2008.
No corner of the world escaped unscathed.
Asia Ex Japan was the worst year since 2008 (and 2nd worst on record)
This was China’s 2nd worst year on record (2nd to 2008).
All the major Chinese markets were a mess.
The only major Asian market in the black for the year was India, where the BSE was ahead by almost 6 percent.
Europe was a bloodbath with the Stoxx 600 down 13% in 2018, its biggest loss since 2008.
And as Project Fear kicked in, The FTSE 100 ended 2018 down 12% – also its worst year since 2008 – but Germany’s export-heavy DAX was even worse.
US equities looked unstoppable… until Humpty Dumpty fell off the wall.
… and December was a bloodbath (even with the last few days’ manic bounce):
And so, this is still the worst December for US stocks since The Great Depression.
Gold and bonds outperformed notably in December as stocks plunged.
But on the year, only the dollar survived unscathed…
This is the first time since the 1970s that the S&P 500 has slumped so much when earnings growth was more than 10%.
So what should retail investors do? Well don’t turn to the hedgies – Long-short equity fund performance in December is the worst since August 2011.
Bonds were all underwater on the year – despite a huge compression in yields over the last two months – with the short-end the worst performer on a yield basis.
In fact this is the Treasury market’s biggest monthly rally since Jun 2016.
And the yield curve collapsed further this year…(inverting in the 2s5s region)
And yields have a long way to fall if cyclical stocks are right.
While Treasuries were bid recently, corporate bonds were not… Junk bonds tumbled in December, for the worst month since Dec 2015.
And worst quarter for junk bonds since Q3 2015.
Investment Grade corporate bond prices suffered their worst yearly loss since at least 2002:
Meanwhile, the dollar rallied on the year to its best annual gain since 2015:
While all commodities ended the year lower, gold outperformed (and WTI did not):
Oil suffered its first annual decline since 2015,slumping more than 20 percent in a turbulent year that saw fears of supply scarcity turn to expectations of a surplus.
“We are most likely past the peak of this long economic uptrend,” said analysts at JBC Energy GmbH in Vienna.
While gold is down in 2018 in dollar terms, it appreciated against the yuan:
US Economic data was the most disappointing since 2008:
“Simply looking at the markets would suggest that the global economy is headed into recession,” said Robert Michele, chief investment officer and head of fixed income at J.P. Morgan Asset Management.
“However, while we agree the global economy is in a growth slowdown, we don’t see an impending recession,” he added, looking at the Fed to provide a policy cushion.
“Already, commentary out of the Fed suggests that it is nearing the end of a three-year journey to normalise policy.”
And the market agrees that The Fed will cut rates more than hike them from here on out…
The question is – will the Fed’s policy error reversal crash stocks further amid a total loss of confidence in central command once again?
Finally, we note with a glass of champagne inches away from our hands, this will not end well for bond bears and if bond shorts are squeezed – what happens to stocks from there?
market trading
US Stocks Tumble Into Red As Europe Ends Worst Year In A Decade
Having hovered higher overnight, US stock markets slid from their open and dropped into the red for the day as European markets closed their worst year since 2008…
Will stocks catch down to bonds?
Europe was a bloodbath with the Stoxx 600 down 13% in 2018, its biggest loss since 2008…
And as Project Fear kicked in, The FTSE 100 ended 2018 down 12% – also its worst year since 2008…but Germany’s DAX was worst
1Y-2Y Treasury Yield Curve Inverts Most Since Financial Crisis
With the 10Y Treasury yield, fittingly enough, sliding to the lowest level since January, closing Friday trading at 2.6842%, some 55 bps below where it traded less than two months ago when it peaked at 3.2373% on November 8, a more interesting move in TSYs has been observed in the short end where the 1 Year (or 52 Week Bill) closed at 2.590%, up 1.81bps, while the 2Y yield, seen by many as the bond market’s estimation of what the Fed will do in 2019, has continued to slide, and on Friday closed 2.8bps lower at 2.4878%, the lowest since the start of June.
As a result, the 1s2s curve has inverted to a whopping -10.8bps.
What the reason is for this bizarre divergence in preference for 2Y paper over 1Y we are not sure, however we will point out that the last time the 1s2s traded almost this negative, when it touched -10.2bps, was in October 2008, just after the government announced it had bailed out AIG.
market data/
The generally stronger Dallas Mfg fed just issued a terrible report for its area as it has collapsed to a level not seen since 2008. The all important “hope” collapsed.
(courtesy zerohedge)
Trump ‘Bump’ Dumped – Dallas Fed Survey Collapses Most Since 2008 As ‘Hope’ Crashes
The last time The Dallas Fed’s business survey collapsed at this pace, the US economy was in the heart of its last recessionary contraction…
Against expectations of a modest drop from 17.6 last month to 15.0 in December, the Dallas Fed Manufacturing survey collapsed to a stunning -5.1 – dramatically below the lowest analyst eastinate of +13.0.
Current new orders increased as did wages and benefits but the headline index was crushed by a plunge in hope – as future expectations crashed from 38.0 to 35.6 to 25.7 to 3.2!! in the last few months…
Erasing all the post Trump bump.
USA ECONOMIC STORIES OF INTEREST
With the release of the 3rd quarter GDP at 3.4% we find that 2/3 of that level was higher inventories. This could be a double edged sword: higher inventories can also mean lower sales.
(courtesy zerohedge_
SWAMP STORIES
Trump lashes out at the deep state claiming that both Mattis and Kelly are “failed generals”
(courtesy zero hedge)
Lashing Out At Mattis And Kelly, Trump Says “Failed Generals” Need To Stop Complaining
President Trump once prided himself in the fact that he had stocked his administration with capable military men like ex-Defense Secretary James Mattis and now-former Chief of Staff John Kelly. But as both men have departed his administration – with Mattis explicitly citing Trump’s decision to pull US troops out of Afghanistan and Syria, and Kelly criticizing these decisions in an exit interview – Trump Monday morning lashed out at “failed generals” who “complain” about Trump’s decision to fulfill his campaign promise to finish the “never-ending” wars in the US.
Donald J. Trump
✔@realDonaldTrump
…I campaigned on getting out of Syria and other places. Now when I start getting out the Fake News Media, or some failed Generals who were unable to do the job before I arrived, like to complain about me & my tactics, which are working. Just doing what I said I was going to do!
Trump also reminded Americans that he campaigned on ending wars like Afghanistan, which has dragged on for 17 years, while circumstances in the country have only seemed to deteriorate further.
Donald J. Trump
✔@realDonaldTrump
…..Except the results are FAR BETTER than I ever said they were going to be! I campaigned against the NEVER ENDING WARS, remember!
Taking another shot at Kelly, who left the administration during an acrimonious battle over President Trump’s promised border wall, Trump responded to Kelly’s exit-interview claim that the ‘border wall’ isn’t actually a wall (he said ‘barrier’ or ‘fence’ would probably be more appropriate).
“To be honest, it’s not a wall,” said Kelly – who embarked in early 2017 on seeking advice from those who “actually secure the border,” on what to do. Speaking with Customs and Border Protection agents – referred to by Kelly as “salt-of-the-earth, Joe-Six-Pack folks,” the outgoing Chief of Staff recounts “They said, ‘Well we need a physical barrier in certain places, we need technology across the board, and we need more people’.”
“The president still says ‘wall’ — oftentimes frankly he’ll say ‘barrier’ or ‘fencing,’ now he’s tended toward steel slats. But we left a solid concrete wall early on in the administration, when we asked people what they needed and where they needed it.”
President Trump was unsurprisingly less than pleased to hear Kelly once again publicly question the president’s dedication to building a wall, and in a Monday morning tweet, Trump contradicted Kelly’s assertion that plans for a concrete border wall had been abandoned during the early days of the administration after consulting with CBP agents. Instead, Trump insisted that “some sections” of the wall would be made of concrete, while other portions would be “see through” in accordance with the wishes of border patrol experts.
“An all concrete Wall was NEVER ABANDONED, as has been reported by the media. Some areas will be all concrete but the experts at Border Patrol prefer a Wall that is see through (thereby making it possible to see what is happening on both sides). Makes sense to me!”
Donald J. Trump
✔@realDonaldTrump
An all concrete Wall was NEVER ABANDONED, as has been reported by the media. Some areas will be all concrete but the experts at Border Patrol prefer a Wall that is see through (thereby making it possible to see what is happening on both sides). Makes sense to me!
The tweet didn’t mention Kelly by name, but Trump’s dissatisfaction with his former chief of staff’s decision to break with the party line was obvious to all. Though whether Trump will succeed in securing funding to start construction remains to be seen, as the partial government shutdown provoked by his funding battle with Democrats enters its tenth day, halfway to tying the longest shutdown ever.
END
let us close out the year with this offering courtesy of Greg hunter and the very popular Dr Dave Janda. And yes, he is an ex medical doctor
(courtesy Dave Janda/Greg hunter)
Deep State is Deep Bottomless Corruption – Dave Janda
By Greg Hunter’s USAWatchdog.com (Early Sunday Release)
Host of the popular radio show “Operation Freedom” Dr. Dave Janda comes on to talk about what has been going on and what’s coming in the fight with Deep State globalists to control America. Janda says before the indictments can happen, Trump “has to clean up the FBI and DOJ.” 25 top people from the FBI and DOJ have been fired or quit for misconduct, including treason in trying to remove Donald Trump form office in a failed coup. Part of the cleanup also includes getting rid of “dirty judges” and installing judges that “will follow the Constitution and the rule of law.”
Janda contends, “The Deep State equals deep bottomless corruption.” Anyone that thinks that nothing is getting done to get rid of the corrupt Deep State is misinformed. Dr. Janda says reports of prosecutor John Huber (who was installed by Jeff Sessions) and DOJ Inspector General Michael Horowitz not doing their jobs and covering up for the Deep State are totally false and explains why in great detail. He also tells us all what to expect in 2019 concerning indictments and prosecutions. There is not just one case of corruption and treason in America, but several huge cases unlike anything ever before seen in American history.
Janda also contends the high level players involved in fraud, treason, money laundering, espionage, obstruction of justice, racketeering and sedition are turning on each other. Dr. Janda says, “The Deep State is panicked and desperate because they are not hardened criminals. . . . They are turning on each other to cut a deal to keep them out of prison.” The punishment may also include something worse than prison for the massive crimes and treason some have committed.
Another big blow to the Deep State is the recent ruling that says Obama Care is unconstitutional. Dr. Janda is an expert on healthcare and will explain this piece of good news for “We the People.”
Janda also talks about the massive debt problems the world is facing and the coming economic reset. Dr. Janda says Trump is correct when he says, “The real problem is the Fed and not China.” Janda says the Deep State “rigged the economy to implode” with massive amounts of debt. Dr. Janda says, “Trump has been buying time” to put the American people in the best position possible when it all comes down. Dr. Janda says the economic system is “vapor” and contends, “This is all part of the war we are in right now.”
Don’t worry because Janda says, “The hammer of justice will fall in 2019.”
Join Greg Hunter as he goes One-on-One with Dr. Dave Janda, host of “Operation Freedom.”
(This is a two hour interview that covers a variety of subjects all patriots will be interested in.)
(To Donate to USAWatchdog.com Click Here)
-END-
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