GOLD: $1312.75 UP $5.00 (COMEX TO COMEX CLOSING)
Silver: $15.41 DOWN 7 CENTS (COMEX TO COMEX CLOSING)
Closing access prices:
Gold : $1313.15
silver: $15.43
Comex options expire next week: Wednesday March 27
London/LBMA expires Monday March 31/2019.
The crooks continue with their whacking right in front of the authorities/regulators despite the criminal probe of precious metals manipulations.
For comex gold and silver:
MARCH
NUMBER OF NOTICES FILED TODAY FOR MAR CONTRACT: 0 NOTICE(S) FOR nil OZ (0.00 tonnes)
TOTAL NUMBER OF NOTICES FILED SO FAR: 384 NOTICES FOR 38400 OZ (1.944 TONNES)
SILVER
FOR MARCH
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
1 NOTICE(S) FILED TODAY FOR 5,000 OZ/
total number of notices filed so far this month: 5380 for 26,900,000
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Bitcoin: OPENING MORNING TRADE $3987:UP $5
Bitcoin: FINAL EVENING TRADE: $3996 UP 16
end
XXXX
JPMorgan or Goldman Sachs are taking a huge issuance (stopping) of gold at the comex.
today 0/0
MONTH TO DATE: 384
Let us have a look at the data for today
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In silver, the total OPEN INTEREST CONTINUES TO RISE FOR THE FOURTH CONSECUTIVE TIME: THIS TIME BY A SMALLER SIZED 580 CONTRACTS FROM 190,335 UP TO 190,915 DESPITE YESTERDAY’S STRONG 15 CENT FALL IN SILVER PRICING AT THE COMEX. TODAY WE ARRIVED CLOSER TO AUGUST’S 2018 RECORD SETTING OPEN INTEREST OF 244,196 CONTRACTS. WE MUST HAVE HAD CONSIDERABLE SHORT COVERING AGAIN TODAY.
WE HAVE ALSO WITNESSED A LARGE AMOUNT OF PHYSICAL METAL STAND FOR COMEX DELIVERY 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 CONSIDERABLE SIZED NUMBER OF COMEX LONGS TRANSFERRING THEIR CONTRACTS TO LONDON THROUGH THE EFP:
0 EFP’S FOR MARCH, 0 FOR APRIL, 2175 FOR MAY, 0 FOR DECEMBER AND ZERO FOR ALL OTHER MONTHS AND THEREFORE TOTAL ISSUANCE: OF 2175 CONTRACTS. WITH THE TRANSFER OF 2175 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 2175 EFP CONTRACTS TRANSLATES INTO 10.787 MILLION OZ ACCOMPANYING:
1.THE 15 CENT RISE IN SILVER PRICE AT THE COMEX AND
2. THE STRONG AMOUNT OF SILVER OUNCES WHICH STOOD FOR DELIVERY IN THE LAST NINE 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 AND
21.925 MILLION OZ FINALLY STAND FOR DECEMBER.
5.845 MILLION OZ STAND IN JANUARY.
2.955 MILLION OZ STANDING FOR FEBRUARY.
AND NOW: 27.120 MILLION OZ STANDING IN MARCH.
ACCUMULATION FOR EFP’S/SILVER/J.P.MORGAN’S HOUSE OF BRIBES, / STARTING FROM FIRST DAY NOTICE/FOR MONTH OF MARCH:
31,439 CONTRACTS (FOR 16 TRADING DAYS TOTAL 31439 CONTRACTS) OR 157.195 MILLION OZ: (AVERAGE PER DAY: 1964 CONTRACTS OR 9.824 MILLION OZ/DAY)
TO GIVE YOU AN IDEA AS TO THE HUGE SUPPLY THIS MONTH IN SILVER: SO FAR THIS MONTH OF MAR: 157.195 MILLION PAPER OZ HAVE MORPHED OVER TO LONDON. THIS REPRESENTS AROUND 22.45% 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 2019 TO DATE SILVER EFP’S: 522.58 MILLION OZ.
JANUARY 2019 EFP TOTALS: 217.455. MILLION OZ
FEB 2019 TOTALS: 147.4 MILLION OZ/
RESULT: WE HAD A FAIR SIZED INCREASE IN COMEX OI SILVER COMEX CONTRACTS OF 580 WITH THE 15 CENT FALL IN SILVER PRICING AT THE COMEX /YESTERDAY..THE CME NOTIFIED US THAT WE HAD A STRONG SIZED EFP ISSUANCE OF 2157 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: 2737 TOTAL OI CONTRACTS ON THE TWO EXCHANGES:
i.e 2157 OPEN INTEREST CONTRACTS HEADED FOR LONDON (EFP’s) TOGETHER WITH INCREASE OF 580 OI COMEX CONTRACTS. AND ALL OF THIS DEMAND HAPPENED WITH A 15 CENT RISE IN PRICE OF SILVER AND A CLOSING PRICE OF $15.48 WITH RESPECT TO YESTERDAY’S TRADING. YET WE HAVE 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. 0.936 BILLION OZ TO BE EXACT or 134% of annual global silver production (ex Russia & ex China).
FOR THE NEW FRONT FEBRUARY MONTH/ THEY FILED AT THE COMEX: 1 NOTICE(S) FOR 5,000 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 JANUARY AT 5.825 MILLION OZ.AND FEB 2019: 2.955 MILLION OZ/AND NOW MARCH: 27.120 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 ONLY 64 CONTRACTS, TO 516,180 DESPITE THE STRONG RISE IN THE COMEX GOLD PRICE/(AN INCREASE IN PRICE OF $6.00//YESTERDAY’S TRADING).
THE CME RELEASED THE DATA FOR EFP ISSUANCE AND IT TOTALED A STRONG SIZED 8040 CONTRACTS:
MARCH HAD AN ISSUANCE OF 0 CONTACTS APRIL 8040 CONTRACTS,JUNE: 0 CONTRACTS DECEMBER: 0 CONTRACTS AND ALL OTHER MONTHS ZERO. The NEW COMEX OI for the gold complex rests at 516,180. ALSO REMEMBER THAT THERE WILL BE A DELAY IN THE ISSUANCE OF EFP’S. THE BANKERS REMOVE LONG POSITIONS OF COMEX GOLD IMMEDIATELY. THEN THEY ORCHESTRATE THEIR PRIVATE EFP DEAL WITH THE LONGS AND THAT COULD TAKE AN ADDITIONAL, 48 HRS SO WE GENERALLY DO NOT GET A MATCH WITH RESPECT TO DEPARTING COMEX LONGS AND NEW EFP LONG TRANSFERS. . EVEN THOUGH THE BANKERS ISSUED THESE MONSTROUS EFPS, THE OBLIGATION STILL RESTS WITH THE BANKERS TO SUPPLY METAL BUT IT TRANSFERS THE RISK TO A LONDON BANKER OBLIGATION AND NOT A NEW YORK COMEX OBLIGATION. LONGS RECEIVE A FIAT BONUS TOGETHER WITH A LONG LONDON FORWARD. THUS, BY THESE ACTIONS, THE BANKERS AT THE COMEX HAVE JUST STATED THAT THEY HAVE NO APPRECIABLE METAL!! THIS IS A MASSIVE FRAUD: THEY CANNOT SUPPLY ANY METAL TO OUR COMEX LONGS BUT THEY ARE QUITE WILLING TO SUPPLY MASSIVE NON BACKED GOLD (AND SILVER) PAPER KNOWING THAT THEY HAVE NO METAL TO SATISFY OUR LONGS. LONDON IS NOW SEVERELY BACKWARD IN BOTH GOLD AND SILVER AND WE ARE WITNESSING DELAYS IN ACTUAL DELIVERIES.
IN ESSENCE WE HAVE A VERY STRONG SIZED GAIN IN TOTAL CONTRACTS ON THE TWO EXCHANGES OF 8,104 CONTRACTS: 264 OI CONTRACTS INCREASED AT THE COMEX AND 8040 EFP OI CONTRACTS WHICH NAVIGATED OVER TO LONDON. THUS TOTAL OI GAIN OF 8104 CONTRACTS OR 810,400 OR 25.20 TONNES.
YESTERDAY WE HAD A GAIN IN THE PRICE OF GOLD TO THE TUNE OF $6.00....AND WITH THAT, WE HAD A HUGE GAIN IN TONNAGE OF 25.20 TONNES!!!!!!.
ACCUMULATION OF EFP’S GOLD AT J.P. MORGAN’S HOUSE OF BRIBES: (EXCHANGE FOR PHYSICAL) FOR THE MONTH OF MARCH : 111,627 CONTRACTS OR 11,162,700OR 347.185 TONNES (16 TRADING DAYS AND THUS AVERAGING: 6977 EFP CONTRACTS PER TRADING DAY
TO GIVE YOU AN IDEA AS TO THE STRONG SIZE OF THESE EFP TRANSFERS : THIS MONTH IN 16 TRADING DAYS IN TONNES: 347.185 TONNES
TOTAL ANNUAL GOLD PRODUCTION, 2018, THROUGHOUT THE WORLD EX CHINA EX RUSSIA: 2555 TONNES
THUS EFP TRANSFERS REPRESENTS 347.185/2550 x 100% TONNES = 13.61% OF GLOBAL ANNUAL PRODUCTION SO FAR IN DECEMBER ALONE.***
ACCUMULATION OF GOLD EFP’S YEAR 2019 TO DATE: 1216.18 TONNES
JANUARY 2019 TOTAL EFP ISSUANCE; 531.20 TONNES
FEB 2019 TOTAL EFP ISSUANCE: 344.36 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 TINY SIZED THAN EXPECTED INCREASE IN OI AT THE COMEX OF 64 DESPITE THE STRONG GAIN IN PRICING ($6.00) THAT GOLD UNDERTOOK YESTERDAY) //.WE ALSO HAD A STRONG SIZED NUMBER OF COMEX LONG TRANSFERRING TO LONDON THROUGH THE EFP ROUTE: 8040 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 8040 EFP CONTRACTS ISSUED, WE HAD A STRONG GAIN OF 8104 CONTRACTS IN TOTAL OPEN INTEREST ON THE TWO EXCHANGES:
8040 CONTRACTS MOVE TO LONDON AND 64 CONTRACTS INCREASED AT THE COMEX. (IN TONNES, THE GAIN IN TOTAL OI EQUATES TO 25.20 TONNES). ..AND ALL OF THIS STRONG DEMAND OCCURRED WITH A RISE IN PRICE OF $6.00 IN YESTERDAY’S TRADING AT THE COMEX!!!!!
we had: 0 notice(s) filed upon for nil 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 UP $5.00 TODAY
NO CHANGE IN GOLD INVENTORY AT THE GLD/
INVENTORY RESTS AT 778.09 TONNES
TO ALL INVESTORS THINKING OF BUYING GOLD THROUGH THE GLD ROUTE: YOU ARE MAKING A TERRIBLE MISTAKE AS THE CROOKS ARE USING WHATEVER GOLD COMES IN TO ATTACK BY SELLING THAT GOLD. IT SURE SEEMS TO ME THAT THE GOLD OBLIGATIONS AT THE GLD EXCEED THEIR INVENTORY
SLV/
WITH SILVER DOWN 7 CENTS IN PRICE TODAY:
A BIG CHANGES IN SILVER INVENTORY AT THE SLV//
THE CROOKS ROB THE COOKIE JAR OF 1.356 MILLION OZ/ (WITHDRAWAL)
/INVENTORY RESTS AT 309.488 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 FAIR SIZED 580 CONTRACTS from 190,335 UPTO 190,915 AND 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:
0 CONTRACTS FOR MARCH. 0 CONTRACTS FOR APRIL., 2157 FOR MAY AND AND ALL OTHER MONTHS: ZERO. TOTAL EFP ISSUANCE: 2157 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 720 CONTRACTS TO THE 2157 OI TRANSFERRED TO LONDON THROUGH EFP’S, WE OBTAIN A GAIN OF 2737 OPEN INTEREST CONTRACTS. THUS IN OUNCES, THE GAIN ON THE TWO EXCHANGES: 10.787 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 , 5.845 MILLION OZ STANDING IN JANUARY. 2.955 MILLION OZ STANDING IN FEBRUARY AND NOW 27.120 MILLION OZ FOR MARCH.
RESULT: A FAIR SIZED INCREASE IN SILVER OI AT THE COMEX DESPITE THE 15 CENT GAIN IN PRICING THAT SILVER UNDERTOOK IN PRICING// YESTERDAY.BUT WE ALSO HAD A FAIR SIZED 2157 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.
BOTH THE SILVER COMEX AND THE GOLD COMEX ARE IN STRESS AS THE BANKERS SCOUR THE BOWELS OF THE EXCHANGE FOR METAL
(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)FRIDAY MORNING/ THURSDAY NIGHT:
SHANGHAI CLOSED UP 2.69 POINTS OR 0.09% //Hang Sang CLOSED UP 41.69 POINTS OR 0.14% /The Nikkei closed UP 13.42 POINTS OR .09%/ Australia’s all ordinaires CLOSED UP .44%
/Chinese yuan (ONSHORE) closed DOWN at 6.7133 AS TRUCE DECLARED FOR 3 MONTHS /Oil UP to 59.51 dollars per barrel for WTI and 67.25 for Brent. Stocks in Europe OPENED RED
ONSHORE YUAN CLOSED DOWN // LAST AT 6.7133 AGAINST THE DOLLAR. OFFSHORE YUAN CLOSED DOWN ON THE DOLLAR AT 6.7201 / TRADE TALKS NOW ON/MAJOR PROBLEMS AT HUAWEI /CFO ARRESTED : /ONSHORE YUAN TRADING ABOVE 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
a)This is not going to happen: North Korea is demanding the USA remove weapons from Guam and Hawaii. What planet is Kim on anyway? This is escalating!!
(zerohedge)
(courtesy zerohedge)
b) REPORT ON JAPAN
3 C/ CHINA
i)Not good: another horrifying blast at a Chinese chemical plant kills 47 and injures a whopping 650 poor souls
( zerohedge)
the uSA preparing for a military conflict with China in the South China seas?
( zerohedge)
iii) Taiwan seeks to buy 100 main battle tanks as it believes that China will invade:
(courtesy zerohedge)
4/EUROPEAN AFFAIRS
i)UK
The pound rallies as the EU only gives them a 2 week “unconditional'” Brexit delay. What difference will two weeks do?
( zerohedge)
( zerohedge)
5. RUSSIAN AND MIDDLE EASTERN AFFAIRS
i)Russia is accusing the USA of stoking tensions by deploying 6 nuke capable bombers to Europe
( zerohedge)
6. GLOBAL ISSUES
CANADA
Looks like Canada will become the next Sweden as we witnessed the largest influx of immigrants since 1913 following Trudeau’s open door policy.
(courtesy zerohedge)
7. OIL ISSUES
Berman warns the USA oil patch to stop overproducing:
(courtesy Art Berman/OilPrice.com)
8 EMERGING MARKET ISSUES
Brazil
Very scary!! Brazilian nuclear fuel convoy attacked by gansters
(courtesy zerohedge)
9. PHYSICAL MARKETS
( Gata/Reuters)
ii)Ted Butler on the JPMorgan’s massive accumulation of silver on top of its massive short position. This is not a conspiracy as the CFTC confirmed the huge accumulation of silver by JPM
( Ted Butler/Cook/GATA)
iii)A super commentary from Alasdair Macleod on why we must accumulate physical gold. We must prepare for the next move in gold
(Alasdair Macleod/GATA)
iv)Paulson, the doorknob opposes Newmont’s bid for Goldcorp. The bozo owns huge amounts of GLD shares which has no gold inside the fund
( reuters/GATA)_
10. USA stories which will influence the price of gold/silver)
MARKET TRADING//early this morning
the 10 yr bond yield collapses to below 250 and that signals imminent recession..this is very dangerous
( zerohedge)
ii)Market data
a)There is no doubt that the Boeing fiasco will be a major hit on first quarter and then second quarter GDP
( zerohedge)
c)the only positive data today to report” existing home sales rise as mortgage rates tumble
( zerohedge)
d)As promised to you, the USA budgetary deficit was going to rise this year. For the month of Feb which is a pretty bad month for treasury due to tax refunds being paid out: the deficit climbed to a record $234 billion dollars.
( zerohedge)
ii)USA ECONOMIC/GENERAL STORIES
a)He is right: Gundlach states that the economy feels like 2007: he blasts the Fed’s unprecedented reversal
( zerohedge/Gundlach)
b) i BOND MARKET ARMAGEDDON
( jEFFREY SNIDER)
b ii:
c)The flooding that is occurring now in the Midwest is just the beginning. There is still a huge pile of snow waiting to melt which will saturate the rivers. This will threaten the USA food production
d)This is just the beginning…Indonesia Airlines just cancels hits $6 billion 737 Max order
iv)SWAMP STORIES
end
Let us head over to the comex:
AFTER MARCH, WE HAVE THE NON ACTIVE DELIVERY MONTH OF APRIL. HERE: APRIL REMAINS AT 797 CONTRACTS FOR A LOSS OF 1 CONTRACT. AFTER APRIL, THE NEXT BIG ACTIVE DELIVERY MONTH IS MAY AND HERE THE OI FELL BY 786 CONTRACTS DOWN TO 135,925 CONTRACTS.
Russia Buys 1 Million Ounces Of Gold In February – Become Your Own Central Bank
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News and Commentary
Gold settles at a one-week high on dovish Fed (MarketWatch.com)
Wall Street powers world stocks; dollar up on Brexit woes (Reuters.com)
U.S. effective fed funds rate rises above interest on reserves (the first time ever) (Reuters.com)
No-deal Brexit fears send pound to a one-week low (RTE.ie)
Russian Gold Stockpile Grows as Analysts Warn of Global Recession (CNN.com)
EU Stops No-Deal Crash Now, Kicking Can to April: Brexit Update (Bloomberg.com)
Overnight stock futures have been manipulated upward for years (MRamseyKing.com)
US Housing Hits A Brick Wall: “The House Price Deceleration Is Staggering” (ZeroHedge.com)
Gold Prices (LBMA PM)
21 Mar: USD 1,317.30, GBP 1002.99 & EUR 1,155.80 per ounce
20 Mar: USD 1,303.00, GBP 985.07 & EUR 1,147.81 per ounce
19 Mar: USD 1,308.35, GBP 985.06 & EUR 1,152.53 per ounce
18 Mar: USD 1,305.35, GBP 986.19 & EUR 1,150.01 per ounce
15 Mar: USD 1,302.35, GBP 981.55 & EUR 1,150.55 per ounce
14 Mar: USD 1,299.20, GBP 982.84 & EUR 1,148.88 per ounce
Silver Prices (LBMA)
21 Mar: USD 15.54, GBP 11.85 & EUR 13.64 per ounce
20 Mar: USD 15.32, GBP 11.58 & EUR 13.49 per ounce
19 Mar: USD 15.41, GBP 11.61 & EUR 13.57 per ounce
18 Mar: USD 15.38, GBP 11.60 & EUR 13.54 per ounce
15 Mar: USD 15.35, GBP 11.58 & EUR 13.56 per ounce
14 Mar: USD 15.23, GBP 11.52 & EUR 13.48 per ounce
Recent Market Updates
– Exclusive Offer Of 6 Months Free Storage In Zurich and Valuable Complimentary Gifts
– 5 Ways to Prosper In the Coming Crisis – Goldnomics Podcast
– Deutsche Bank and Commerzbank May Become EU’s “Too Big To Fail” Bank
– Happy Saint Patrick’s Day from GoldCore
– 188 Internet Shutdowns In 2018 Show Why Physical Gold Is Ultimate Protection
– Buy Gold as Basel III Means “Central Banks and Banks Are Going To Be Buying Gold”
– Invest In Gold Or Bitcoin – Which Is The True Store Of Value?
– Silver Bullion Is The Portfolio Insurance To Buy Now
– EU Isn’t Ready for the Next Recession
GATA STORIES WITH RESPECT TO GOLD/PRECIOUS METALS.
Interesting: Citigroup is going to sell back the Venezuelan gold to Maduro. First of all where on earth will Maduro get the money as his exports of oil has been dwindling to zero. Gold is very tight and thus western central banks will probably seek to borrow his gold
(courtesy Gata/Reuters)
Citigroup to sell Venezuelan gold in setback to President Maduro, sources tell Reuters
Submitted by cpowell on Thu, 2019-03-21 00:35. Section: Daily Dispatches
Looks like the Western central banks need the metal pretty badly. Otherwise wouldn’t Citigroup keep the metal for itself, now that the price is rising?
* * *
By Mayela Armas and Corina Pons
Reuters
Wednesday, March 20, 2019
CARACAS, Venezuela — Citigroup Inc. plans to sell several tons of gold placed as collateral by Venezuela’s central bank on a $1.6 billion loan after the deadline for repurchasing them expired this month, sources said, a setback for President Nicolas Maduro’s efforts to hold onto the country’s fast-shrinking reserves.
Maduro’s government has since 2014 used financial operations known as gold swaps to use its international reserves to gain access to cash after a slump in oil revenues left it struggling to obtain hard currency.
…
In the past two years, however, it has struggled to recover its collateral.Under the terms of the 2015 deal with Citigroup’s Citibank, Venezuela was due to repay $1.1 billion of the loan on March 11, according to four sources familiar with the situation. The remainder of the loan comes due next year.
Citibank plans to sell the gold held as a guarantee — which has a market value of roughly $1.358 billion — to recover the first tranche of the loan and will deposit the excess of roughly $258 million in a bank account in New York, two of the sources said. …
… For the remainder of the report:
https://www.reuters.com/article/us-venezuela-politics-gold/citigroup-to-…
* * *
Join GATA here:
Mining Investment Asia
InterContinental Singapore Bugis Hotel
Singapore
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Wan Chai, Hong Kong
Tuesday-Thursday, April 2-4
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* * *
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END
Ted Butler on the JPMorgan’s massive accumulation of silver on top of its massive short position. This is not a conspiracy as the CFTC confirmed the huge accumulation of silver by JPM
(courtesy Ted Butler/Cook/GATA)
Ted Butler details JPMorganChase’s manipulation of the silver futures market
Submitted by cpowell on Fri, 2019-03-22 03:23. Section: Daily Dispatches
10:25a ICT Friday, March 22, 2019
Dear Friend of GATA and Gold:
Silver market analyst Ted Butler, interviewed by Jim Cook of Investment Rarities, details his conclusion that JPMorganChase is behind the rigging of the silver futures market and has managed to amass a huge physical stockpile of the metal. While the U.S. Commodity Futures Trading Commission conducted a years-long investigation of the silver market and found no impropriety, Butler notes, the U.S. Justice Department has gotten a confession from a former trader for JPMorganChase that he manipulated both the gold and silver markets during the CFTC’s investigation and did so with the knowledge of his superiors.
The interview is headlined “On the Hot Seat” and is posted at GoldSeek’s companion site, SilverSeek, here:
http://silverseek.com/commentary/hot-seat-17609
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
On The Hot Seat
|
March 21, 2019 – 9:10pm
Jim Cook Interviews Ted Butler
Q: A minor analyst recently remarked that he didn’t believe any of the claims you make about market manipulation and called it conspiratorial stuff. What do you say about that?
A: That’s the main reason my arguments have never caught on in a big way. Nobody wants to be associated with a conspiracy. However, I draw my conclusion from government data like the Commitment of Traders report and the Bank Participation report. There’s nothing conspiratorial about the data and my conclusions are factual.
Q: You have cast JPMorgan as the main villain in a market manipulation of silver. Hundreds, maybe thousands of people have queried the main regulator, the CFTC, about this manipulation and they have never responded to anyone. Are they writing us all off as conspiracy nuts?
A: They would probably like to. The Justice Department just indicted a JPMorgan trader for spoofing and indicated their investigation of this highly manipulative tactic was ongoing. Normally this comes under the jurisdiction of the CFTC. Why did they miss or ignore this practice when I told them about it a hundred times? We need an explanation.
Q: JPMorgan would certainly claim they are doing nothing wrong.
A: For ten years they have held the largest short position on the COMEX and in collusion with other banks, they have acted to suppress the price. Meanwhile they have accumulated a vast hoard of physical silver in their own COMEX warehouse and elsewhere. I call this an illegal market manipulation on steroids. Somebody please tell me where I’m wrong.
Q: I believe JPMorgan would say that they are short along with hundreds of other traders. Nothing wrong with being short and nothing wrong with buying physical silver.
A: First of all, you have great concentration among 8 big banks on the short side. That’s collusion and a key ingredient in a price manipulation. These 8 banks are currently short more than 500 million ounces or two-thirds of all the silver produced in a year. No other commodity comes close to this.
Q: Why go short at such a low price?
A: It’s hugely profitable if you dominate the market. In ten years JPMorgan has never lost money on a short sale. I can document that, if anybody in the government cares. They’ve made billions doing this while never a losing trade, which anyone who knows anything about futures trading will tell you is absolutely impossible. You do that by cheating.
Q: I’m not going to ask you about the big counterparties who are the losers in these trades because we are running out of space. JPMorgan is showing nearly 150 million ounces of silver in their name in their COMEX warehouse. That’s more than the Hunt brothers owned in 1980. However, you claim they have 800 million ounces in total. You don’t have the same kind of solid documentation on this figure as you do on the 150 million in their warehouse. Don’t you think this hurts your credibility?
A: I’ve been focusing on the futures market and silver for more than 30 years. I’ve been scrutinizing JPMorgan’s activities closely for ten years. They acted to squash and suppress the price of silver while accumulating as much physical silver as they could. This is the ultimate market crime. Of course they have tried to hide this fact, but if you read my newsletter, you will see the kind of detective work I have used to track their acquisition of the greatest hoard of silver in the history of mankind.
Q: You are saying they grossly manipulated the market to set up a mind-boggling profit, right?
A: For every ten dollars that silver rises they make 8 billion dollars. They forced down the market and bought silver bars on the cheap to set themselves up for an astonishing profit.
Q: Any other evidence?
A: Take JPMorgan out of the short side and the price of silver would be much higher. That’s proof of manipulation in itself. Look at the government data. It’s conclusive. It’s illegal to conspire to suppress the price of a commodity in order to buy it at a lower price and reap a big profit after you close out your short sale.
Q: Might this never end?
A: Manipulations always end and I’m hopeful the Justice Department will be all over this. How can they not be? That would end the manipulation and set the price of silver free. That in itself will be something to behold.
Q: What do you say to people who are getting impatient waiting for this to happen?
A: Waiting does not diminish the incredible opportunity for gain that I believe exists in silver. People who own silver will be glad they waited. The coming price rise in silver will be talked about for decades.
Jim Cook is the President of Investment Rarities.
END
A super commentary from Alasdair Macleod on why we must accumulate physical gold. We must prepare for the next move in gold
(Alasdair Macleod/GATA)
Alasdair Macleod: Preparing for the next move in gold
Submitted by cpowell on Fri, 2019-03-22 04:47. Section: Daily Dispatches
By Alasdair Macleod
GoldMoney.com, Jersey, Channel Islands
Thursday, March 21, 2019
The global economic outlook is deteriorating. Government borrowing in the deficit countries will therefore escalate. U.S. Treasury data confirms foreigners have already begun to liquidate dollar assets, adding to the U.S. government’s future funding difficulties.
The next wave of monetary inflation, required to fund budget deficits and keep banks solvent, will not prevent financial assets suffering a severe bear market, because the scale of monetary dilution will be so large that the purchasing power of the dollar and other currencies will be undermined.
Failing fiat currencies suggest the dollar-based financial order is coming to an end. But with few exceptions, investors own nothing but fiat-currency dependent investments. The only portfolio protection from these potential dangers is to embrace sound money — gold. …
… For the remainder of the commentary:
https://www.goldmoney.com/research/goldmoney-insights/gold-preparing-for…
Gold – preparing for the next move
Note: this article is not and must not be construed as investment advice. It is analysis based purely on economic theory and empirical evidence.
The global economic outlook is deteriorating. Government borrowing in the deficit countries will therefore escalate. US Treasury TIC data confirms foreigners have already begun to liquidate dollar assets, adding to the US Government’s future funding difficulties. The next wave of monetary inflation, required to fund budget deficits and keep banks solvent, will not prevent financial assets suffering a severe bear market, because the scale of monetary dilution will be so large that the purchasing power of the dollar and other currencies will be undermined. Failing fiat currencies suggest the dollar-based financial order is coming to an end. But with few exceptions, investors own nothing but fiat-currency dependent investments. The only portfolio protection from these potential dangers is to embrace sound money – gold.
The global economy is at a cross-road, with international trade stalling and undermining domestic economies. Some central banks, notably the European Central Bank, the Bank of Japan and the Bank of England were still reflating their economies by suppressing interest rates, and the ECB had only stopped quantitative easing in December. The Fed and the Peoples’ Bank of China had been tightening in 2018. The PBOC quickly went into stimulation mode in November, and the Fed has put monetary tightening and interest rates on hold, pending further developments.
It is very likely this new downturn will be substantial. The coincidence of the top of the credit cycle with trade protectionism last occurred in 1929, and the subsequent depression was devastating. The reason we should be worried today is stalling trade disrupts the capital flows that fund budget deficits, particularly in America where savers do not have the free capital to invest in government bonds. Worse still, foreigners are now not only no longer investing in dollars and dollar-denominated debt, but they are suddenly withdrawing funds. According to the most recent US Treasury TIC data, in December and January these outflows totalled $257.2bn.[i] At this rate, not only will the US Treasury need to fund a deficit likely to exceed a trillion dollars in fiscal 2019, but the US markets will need to absorb substantial sales from foreigners as well.
In short, America is going to face a funding crisis.To have this funding problem coinciding with the ending of credit expansion at the top of the credit cycle is a lethal combination, as yet unrecognised as the most important factor behind both American and global economic prospects. The problem is bound to emerge in coming months.
While today’s trade protectionism is less vicious than the Smoot-Hawley Tariff Act, America’s drawn-out trade threats today are similarly destabilising. The top of the credit cycle in 1929 was orthodox; its principal effect had been to fuel a speculative stock market frenzy in 1927-29.
This time, the credit bubble is proportionately far larger, and its implosion threatens to be even more violent. Governments everywhere are up to their necks in debt, as are consumers. Personal savings in America, the UK and in some EU nations are practically non-existent. The potential for a credit, economic and systemic crisis is therefore considerably greater today than it was ninety years ago.
Bearing in mind the Dow fell just under 90% from its 1929 peak, the comparison with these empirical facts suggests we might experience no less than a virtual collapse in financial asset values. However, there is an important difference between then and now: during the Wall Street crash, the dollar was on a gold standard. In other words, the price-effect of the depression was reflected in the rising purchasing power of gold. This time, no fiat currency is gold-backed, so a major credit, economic and systemic crisis will be reflected in a falling purchasing power of fiat currencies.
The finances of any government whose unbacked currency is the national pricing medium are central to determining future general price levels. Just taking the US dollar for example, the government’s debt to GDP ratio is over 100% (in 1929 it was less than 40%). At the peak of the cycle, the government should have a revenue surplus reflecting underlying full employment and the peak of tax revenues. In 1929, the surplus was 0.7% of estimated GDP; today it is a deficit of 5.5% of GDP. In 1929, the government had minimal legislated welfare commitments, the net present value of which was therefore trivial. The deficits that arose in the 1930s were due to falling tax revenues and voluntary government schemes enacted by Presidents Hoover and Roosevelt. Today, the present value of future welfare commitments is staggering, and estimates for the US alone range up to $220 trillion, before adjusting for future currency debasement.[ii]
Other countries are in a potentially worse position, particularly in Europe. A global economic slump on any scale, let alone that approaching the 1930s depression, will have a drastic impact on all national finances. Tax revenues will collapse while welfare obligations escalate. Some governments are more exposed than others, but the US, UK, Japan and EU governments will see their finances spin out of control. Furthermore, their ability to cut spending is limited to that not mandated by law. Even assuming responsible stewardship by politicians, the expansion of budget deficits can only be financed through monetary inflation.
That is the debt trap, and it has already sprung shut on minimal interest rates. For a temporary solution, governments can only turn to central banks to fund runaway government deficits by inflationary means. The inflation of money and credit is the central banker’s cure-all for everything. Inflation is not only used to finance governments but to provide the commercial banks with the wherewithal to stimulate an economy. An acceleration of monetary inflation is therefore guaranteed by a global economic slowdown, so the purchasing power of fiat currencies will take another lurch downwards as the dilution is absorbed. That is the message we must take on board when debating physical gold, which is the only form of money free of all liabilities.
Gold can only give an approximation of the loss of purchasing power in a fiat currency during a slump, because gold’s own purchasing power will be rising at the same time. Between 1930 and 1933 the wholesale price index in America fell 31.6% and consumer prices by 17.8%.[iii] These price changes reflected the increasing purchasing power of gold, because of its fixed convertibility with the dollar at that time.
Therefore, the change in purchasing power of a fiat currency is only part of the story. However, the comparison between purchasing powers for gold and fiat currency is the most practical expression of the change in purchasing power of a fiat currency, because the choice for economic actors for whom gold has a monetary role is to prefer one over the other.
It is an ongoing process, about to accelerate. Chart 1 shows how four major currencies have declined measured in gold over the last fifty years. The yen has lost 92.4%, the dollar 97.42%, sterling 98.5%, and the euro 98.2% (prior to 2001 the euro price is calculated on the basis of its constituents).
The ultimate bankruptcy of currency-issuing governments, likely to be exposed by the forthcoming slump, will be reflected in another lurch downwards in currency purchasing powers.
Technical and market analysis of gold’s position
It should become apparent as time progresses that the price of gold in fiat currencies will continue to rise. The reasons are not yet clear to the consensus of portfolio investors and speculators, but it is likely that the more prescient among them will begin to realise that in the event of a significant recession, slump or depression, the dollar price of gold will rise substantially.
For the moment, they are likely to concentrate on timing, using technical analysis, rather than thinking through economic concepts. Chart 2 illustrates the current technical position.
Following its peak in September 2011, gold found a bottom at $1047 in December 2015. That was followed by a 31% rally to $1375 in July 2016, since when gold has established a triangular consolidation pattern. Last August, the price sold off to $1160, becoming oversold to record levels. That established the second point of a rising trend, marked by the lower solid line.
In February the gold price mounted a challenge to the upper parameter of the consolidation range before retreating to test established support at $1280-$1305, shown by the pecked lines.
There is a good chance that another attempt to break through the $1350 level will take place soon, and that it will succeed. The following bullet points sum up this positive case:
- The current rally commenced from a record oversold condition on Comex. The selloff was consistent with extreme selling exhaustion, indicating a major turning point.
- The net managed-money position on Comex indicates the gold contract is still moderately oversold. However, the April contract is running off the board, which means that some 200,000 expiring contracts are still to be sold, stand for delivery or rolled forward by the end of this month (March). This suggests a little more consolidation may be needed before gold advances to attempt a challenge on the $1350 level.
- The 55-day and 200-day moving averages recently completed a bullish golden cross, with the price above both signalling a bullish trend. A retest of the 55-day MA occurred at the beginning of this month and is normal.
- If, as the chart suggests, a triangle pattern is emerging, it is an ascending triangle, which is bullish. An ascending triangle has a flat top and a rising base. Admittedly, the top line declines slightly but not enough to put it in the class of symmetrical triangles, where the eventual break-out direction is less certain.
- It is possible for the gold price to trade another down leg within the confines of the triangle before making its final breakout to the upside. In which case, the gold price might decline towards the low $1200s before making its upwards break.
The possibility that the ascending triangle might need longer to play out leads to the common technical recommendation to wait until gold breaks through the $1350-$1365 level before buying for the next leg of the bull market.
Chart 3 gives a longer-term perspective of gold’s valuation. It is of the gold price adjusted by mine supply and for changes in the fiat money quantity. Simply put, FMQ is the sum of cash, bank deposits and savings accounts, and also bank reserves held at the Fed. It is the total amount of fiat money both in circulation and available for circulation.
In 1934-dollars, deflated by the increase in the fiat money quantity, gold has returned to the extreme lows seen on only two previous occasions. The first was when the London gold pool failed in the 1960s followed by the collapse of the Bretton Woods Agreement in 1971. At that time the decline in the FMQ-adjusted price of gold since 1934 was fuelled by monetary expansion until a point was reached which could go no further. This led to an explosive recovery taking the price of gold in adjusted terms back to 1934 levels.
The realisation that the dollar faced the prospect of uncontrolled price inflation forced the Fed to raise interest rates so that the banks’ prime rate exceeded 21% in December 1980. This was sufficient to prevent the gold price from further rises, and physical gold then became the collateral of choice for a developing carry trade. Central bank sales were designed to signal the demonetisation of gold and deter buyers. They leased significant quantities of bullion for the carry trade, which increased supply synthetically and drove the gold price back to the same extreme valuation lows seen in the 1960s. This was 2000-2002.
After rallying from these extreme lows to a nominal high in September 2011, an increase in derivative supply coupled with the banking and investment establishment retaining an increasingly rosy view of fiat currencies have been instrumental in returning gold to the valuation lows of the 1960s and 2000 – 2002.
It is in this context that the outcome predicted in Chart 2 should be considered. If, as argued earlier in this article, America and the rest of the world faces a global slump, a premium for physical gold is likely to arise relative to the systemic risks of holding gold substitutes, such as derivatives and even physically-backed ETFs. In that event, a return to the 1934 price level for gold in FMQ-adjusted terms before any further monetary dilution implies a nominal gold price of about $24,000.
This conclusion does no more than indicate an upper target for the price of gold adjusted for historic monetary inflation. If, as seems likely, a developing credit crisis occurs as a consequence of today’s events, the quantity of fiat money in issue will rise significantly from current levels as government debt is monetised. Therefore, given the extreme undervaluation of gold suggested by Chart 3, it is hard to see how the price of gold, measured in dollars, can go much lower.
Defining the gold market and vanishing liquidity
The gold market has three basic elements to it. There is an underlying stock of approximately 170,000 tonnes, increasing at about 3,000 tonnes a year. It is impossible to define how much of the total above-ground stock is monetary gold, not least because jewellery in Asia is bought as a store of monetary wealth and is used as collateral against loans. However, if we are to classify Asian jewellery as non-monetary gold, then monetary gold in the form of bars and coin is thought by many experts to represent between thirty and forty per cent of the total.Assuming a median estimate of 35%, this is 60,000 tonnes, of which 33,760 tonnes is stated to be in national reserves. This leaves an estimated 26,240 tonnes of investment gold in public hands, worth $1.1 trillion. Much of this can be regarded as being in long-term storage. For market purposes, the physical market on its own is relatively illiquid.
Secondly, there are regulated futures and options markets, the most important of which is America’s Comex. Currently, there are about 520,000 Comex contracts of 100 oz each outstanding, which are worth a total of $68bn. Options on futures total a further 220,000 contracts, which are impossible to notionally value, being puts and calls at varying strike prices.
Third, there are unregulated OTC derivatives, mostly forward contracts in London. The last Bank of International Settlements statistics estimated total gold forwards and swaps were valued at $419bn, over six times the size of Comex. In addition, there were $149bn of OTC options.
The liquidity is broadly confined to Comex, London forwards and other OTC media. These are all derivatives, with minimal physical settlement taking place. Consequently, the price of physical gold is not determined by the marginal supply and demand for bullion, but almost entirely reflects financial factors in the banking system. If financial market conditions return to an approximation of the 1929-32 period for the reasons described earlier in this article, there is likely to be a banking crisis, or at the very least a serious dislocation of financial markets. Therefore, it is possible that at the same time investment funds and private individuals seek to gain portfolio exposure to the gold price, they will be doing so while the means of doing so are contracting, or even disappearing altogether.
An outcome of this sort hinges on the depth and pace of economic deterioration. Time will tell as to whether the current rapid deterioration in the economic outlook goes on to replicate the 1929-32 precedent, but it is getting increasingly difficult to argue against it happening. In which case, the gold price could rise rapidly due to its current undervaluation, a shortage of monetary gold outside central bank reserves, systemic disruption of paper markets and a renewed pace of monetary inflation before the fiat-money investment community realises what is happening.
Portfolio switching from fiat to gold
If the combination of both a developing credit and trade crises leads to a modern version of the 1929-32 global economic slump, financial asset values will fall heavily. But this time, there is the additional factor of a renewed acceleration of monetary inflation, which at some point might offer some support to stock prices, at least in nominal currency terms. In every hyperinflation, an index of stock prices can perform well on this basis, but adjusted for the currency’s loss of purchasing power, stock prices actually suffer substantial losses.
That assumes, of course, the rest of the world’s economy is broadly stable, which is almost certainly not going to be the case in our scenario.
Additionally, the inflationary conditions of a fiat currency’s twilight moments involve the market imposing increasing levels of time-preference on everything, including bond prices. Therefore, the discount between market prices and final redemption values widens dramatically. Governments and other borrowers face a near-impossible funding task, unless they are prepared to pay increasingly higher interest coupons. Unlike the experience of the great depression when interest rates reflected those of gold, this time bond yields paid in fiat currencies will rise and continue rising.
This leads towards a different progression of notable developments compared with 1929-32. An approximate sequence of how these might evolve is described as follows:
1. Evidence of a looming recession becomes increasingly apparent. Central banks respond in their time-honoured way, by easing monetary policy and replacing stalling credit creation with extra base money. Government bond prices rise as they are seen to be the least risky investment in an uncertain economic outlook, and equities rally after an initial sell-off. At the same time, lending bankers observe increasing risk in commercial lending and respond by quietly withdrawing loan facilities from all but the largest manufacturers of goods and producers of services. This appears to approximate to the current situation.
2. With unsold inventory increasing, industrial production is reduced, and rising numbers of workers are laid off. Analysts revise their forecasts for corporate profits downwards, and the number of corporate failures increases. Bond dealers adjust their expectations of government borrowing, and quantitative easing is reintroduced by central banks to ensure government bonds can be issued at suppressed interest rates. At this stage, investors face a worrying combination of falling equity prices reflecting a deteriorating economic outlook, combined with unexpected monetary inflation in the form of QE.
3. Foreigners liquidate US investments in order to sell dollars (the reserve currency – this appears to have started early) and repatriate funds to support their base operations. Bond dealers facing a glut of government bond issues expect bond yields to continue to rise. Stock markets slide, and with it is a growing realisation that the recession is turning into a wealth-destroying slump.
4. As the markets’ demands for increased time-preference undermine all debtors’ finances, investors increasingly avoid bonds and equities, abandoning hope of any recovery in financial asset prices. Hedging into gold mines and gold ETFs gathers pace, and the purchasing power of gold continues to rise measured against both fiat currencies and against the commodity and energy complex.
5. Having fallen behind the time-preference demanded by markets, central banks are reluctantly forced to raise overnight interest rates to protect the currency and bring price inflation under control. They have no choice, but this is seen as capitulation by investors. Residential mortgage costs increase sharply, driving consumers into negative equity as property prices suffer from forced selling. In countries where the home has become the middle class’s principal asset, the effect on consumer spending is devastating. Governments end up bailing-out or bailing-in lenders while trying to moderate mortgage interest costs.
6. By now, the gold price measured in unbacked currency is beginning to discount a continuing acceleration in monetary inflation. The gold price will be at multiples of current levels in all currencies, including the dollar.
7. The sense of crisis escalates and mounting bad debts at the banks raise the prospect of a systemic banking crisis. Despite depositor protection schemes, depositors begin to take steps to reduce their bank balances. With the facility to encash bank deposits being strictly limited, alternatives to deposits in insolvent banks will be in high demand. These will be gold, silver and other perceived stores of value. Cryptocurrencies could come into their own as an escape route from holding deposits in the banking system.
8. Those who attempt to escape systemic risk by exchanging bank balances for alternatives are simply passing bank deposits to the vendors. This is fine, so long as vendors are happy to accept the systemic risk. If not, then prices of alternative stores of value must rise to compensate. A classic flight out of money into anything else develops and is made more urgent by the lack of a cash alternative.
9. The currency rapidly loses purchasing power, and it will be moving into its end-of-life. Government bonds will have lost nearly all their value, measured in gold, and governments will still be accelerating inflationary financing, because bond financing without the central bank buying them will not be possible.
During this process, with few exceptions financial assets will face annihilation. A further problem is failing banks are the custodians of stock entitlements, with few being directly registered in the beneficial owners’ names. At best, this leads to a temporary loss of ownership. At worst, it provides the means for confiscation.
An intense bear market destroys wealth. At some stage, investors will begin to realise their portfolios are almost totally exposed to fiat currency risk. The belief that inflation hedges, such as overweight equities and underweight bonds, offer protection against extreme monetary inflation will be disproved. Investors will need a radical new approach, using sound money as their performance criteria. This is cannot be an inflation index, which is likely to become increasingly manipulated by statistical method. It has to be gold, instead of rapidly depreciating fiat currency.
The problem investors will then face is mathematical. There are probably less than 30,000 tonnes of monetary gold, excluding Asian jewellery, in private hands, today worth about $1.1 trillion. According to The Boston Consulting Group[iv], in 2015 there were $71.4 trillion of portfolio assets, of which $36.1 trillion were in US dollars. With the monetary gold held outside government reserves being about 1.5% of portfolio assets, how do you replace non-performing fiat-currency dependent assets with a portfolio designed with sound money in mind?
This is why the return to sound money will destroy the West’s financial system, driving the purchasing power of gold higher, measured against commodities, goods and services, while that of paper fiat moves towards worthlessness. The destruction of financial wealth could easily compare with 1929-32, and if it wipes out fiat currencies will be even worse.
The removal of cash as an effective escape route for investors fleeing systemic risk turns systemic risk directly into a collapsing preference for money relative to goods, gold, cryptocurrencies and the rest. One it starts, it could happen quite quickly.
END
Paulson, the doorknob opposes Newmont’s bid for Goldcorp. The bozo owns huge amounts of GLD shares which has no gold inside the fund
(courtesy reuters/GATA)_
Paulson opposes Newmont’s bid for Goldcorp
Submitted by cpowell on Fri, 2019-03-22 07:59. Section: Daily Dispatches
By Nichola Saminather
Reuters
Thursday, March 21, 2019
TORONTO, Ontario, Canada — Paulson & Co. Inc. will not support Newmont Mining Corp.’s planned $10 billion takeover of rival Goldcorp Inc. as the premium offered is unjustified, the investor said in a letter today.
The transaction is dilutive to Newmont shareholders and only Goldcorp shareholders would benefit from the deal’s synergies, founder John Paulson and partner Marcelo Kim said in the letter to Newmont Chief Executive Officer Gary Goldberg. …
… For the remainder of the report:
https://www.reuters.com/article/us-newmont-mining-m-a-goldcorp/paulson-s..
END
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Good Morning Bill/Harvey (from a Johannesburg experiencing near blackout conditions)
There were some very agitated expressions of disappointment in the opening lines of yesterdays’ MIDAS concerning the failure of the paper price of gold to react in a meaningful way to complete FED capitulation. If you are ‘agitated’, you are probably living on your nerves because you are ‘on margin’, and any ‘investor’ (punter) playing in the futures market almost certainly will not win by adopting a ‘long only’ position.
How should the price of paper gold react to the latest FOMC capitulation? If 50,000 long contracts had been thrown at the COMEX and the cartel had allowed the paper price of gold to rise by (say) $50,then these new longs would have been vulnerable to the inevitable ‘profit taking’ on Sunday evening as a ‘whatever it takes’ volume of short contracts would be dumped at the most illiquid moment possible. Maybe the Cartel would have waited a few more days and enlisted the support of a substantial margin hike. The Cartel simply cannot be overwhelmed in the paper gold markets with their limitless resources. MIDAS/Harvey have warned against the chicanery prevailing on the COMEX for many years now and Harvey’s warning against GLD has also been headlined in red for a long time now. Perhaps the message is now well understood. Indeed the LBMA has long ago abandoned its proposal to disseminate even high level consolidated data relating to OTC trading volumes/prices and the daily London fix data has now been virtually hidden from any true visibility. The only worthwhile information available about the true state of the physical gold market emanates from knowledgeable insiders like Andrew Maguire. Perhaps the GATA camp should be well pleased that the response of the last 48 hours has not been an insane and calamitous headlong lemming like rush into the corrupted paper markets.
Otherwise this physical gold market is opaque to the extreme. All we truly know is that China and Russia (and many others) continue to accumulate physical gold in accordance with their Master Plan along the lines expounded by Jim Willie. The role out of the Chinese blue print for the development of the historic Silk Road trading route gathers pace (even a beleaguered Italy is now reported to be extremely interested). It may be a few years (or just a few months) before China starts to re-introduce a role for gold into that rapidly expanding theatre of trading operations in which it is dominant. Then the USD and the failed concept of fiat currencies die. So before anyone laments the apparent anemic response of the paper price of gold to this week’s events, remember that the only response that matters is the impact on the demand for physical gold, and very few of us have any insight into that market. The paper gold market is just an amusing sideshow encapsulating the death throes of an atrophying empire as it goes the way of all empires before it.
Regards
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.
Federal judge tells traders they can combine cases accusing JP Morgan of rigging metals market
- Litigation in a separate civil case has been put on hold until at least May at the behest of the Justice Department, which is investigating a “related criminal case” that involves alleged market manipulation by precious metals traders at J. P. Morgan.
- Judge John Koeltl of the Southern District of New York appointed the White Plains, N.Y., law firm Lowey Dannenberg as interim lead counsel for the proposed class action.
A group of traders from across the U.S. who allege that J. P. Morgan Chase manipulated precious metals markets for years are one step closer to bringing a class action suit against the nation’s largest bank.
Earlier this month, a federal judge said five separate lawsuits making similar allegations against the bank could be combined, potentially including thousands of people who traded in the precious metals market from Jan. 2009 through Dec. 2015.
Litigation in a separate civil case has been put on hold until at least May at the behest of the Justice Department, which is investigating a “related criminal case” that involves alleged market manipulation by precious metals traders at J. P. Morgan.
J. P. Morgan declined to comment on this story.
Judge John Koeltl of the Southern District of New York appointed the White Plains, N.Y., law firm Lowey Dannenberg as interim lead counsel for the proposed class action.
Vincent Briganti, a partner at the firm, filed the first suit seeking class action status in November on behalf of Dominick Cognata, a trader who alleges he suffered losses due to J.P. Morgan’s illegal trading conduct in the silver and gold futures and options markets.
That was after the federal court in Connecticut unsealed a criminal plea agreement by John Edmonds, a former J.P. Morgan metals trader. In his guilty plea, Edmonds, who is 36-years old, admitted that he and other “unnamed co-conspirators” fraudulently manipulated the precious metals markets while they were employed at J. P. Morgan from 2009 to 2015.
Edmonds said he had learned the illegal trading tactics from senior traders, and then used them hundreds of times with the knowledge of and consent of his immediate supervisors.
Briganti’s lawsuit also names John Edmonds and a group of yet-to-be-identified precious metals traders and the bank as defendants.
On Wednesday, the lawyers sent a letter to Judge Koeltl saying they were having difficulty locating Edmonds to serve him legal papers and requested a 30-day extension to do so, which the judge granted on Thursday. Briganti noted that they have been in contact with Edmonds’ attorney in the criminal case. Edmonds’ attorney and Briganti could not be reached for comment.
“We are hopeful that this extension will result in completing service on Mr. Edmonds without formal motion practice and a request for alternative means of service,” Briganti said in the letter.
The next step in the civil case is for the plaintiffs to file an amended class action complaint and set a schedule for defendants to respond.
In addition to the proposed class action, J. P. Morgan also faces a separate civil suit which also accuses the bank of rigging precious metals markets.
end
Your early FRIDAY morning currency, Asian stock market results, important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight/9 AM EST
i) Chinese yuan vs USA dollar/CLOSED/ LAST AT: 6.7133/
//OFFSHORE YUAN: 6.7201 /shanghai bourse CLOSED UP 2.69 POINTS OR 0.09% /
HANG SANG CLOSED UP 41.69 POINTS OR 0.14%
2. Nikkei closed //UP 13.42 POINTS OR .09%
3. Europe stocks OPENED RED
/USA dollar index RISES TO 96.69/Euro FALLS TO 1.1304
3b Japan 10 year bond yield: FALLS TO. –.07/ !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 110.40/ 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//CARRY TRADERS GETTING KILLED
3c Nikkei now JUST BELOW 17,000
3d USA/Yen rate now well below the important 120 barrier this morning
3e WTI:: 59.51 and Brent: 67.25
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 FALLS TO –.01%/Italian 10 yr bond yield UP to 2.47% /SPAIN 10 YR BOND YIELD DOWN TO 1.08%…ITALIAN 10 YR BOND YIELD/GERMAN BUND: 2.48: DANGEROUS FOR THE ITALIAN BANKING SYSTEM
3j Greek 10 year bond yield RISES TO : 3.77
3k Gold at $1312.50 silver at:15.46 7 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50
3l USA vs Russian rouble; (Russian rouble DOWN 46/100 in roubles/dollar) 64.36
3m oil into the 59 dollar handle for WTI and 67 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 110.40 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 0.9944 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1242 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 FALLING to –0.01%
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 2.49% early this morning. Thirty year rate at 2.93%
5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.
6. TURKISH LIRA: UP TO 5.5833
Global Markets Slide, Yields Collapse As European Recession Deepens
After yesterday’s furious rebound in the S&P, which almost appeared staged to confirm the Fed hasn’t lost control after its shocking doubling down on dovishness which resulted in a bizarre drop in stocks in the last 30 minutes of trading on Wednesday, the rally once again fizzled overnight, dragged lower by European stocks with U.S. equity futures following, while the euro tumbled and 10-year German bunds slumped into negative for the first time since 2016 after miserable data from the German manufacturing sector renewed worries about global growth on Friday.
The Stoxx Europe 600 reversed earlier gains, with German shares tumbling 0.6% to hit their lowest in two weeks as markets in Paris and London FTSE tumbled 0.8% after Markit reported that sentiment in Germany’s manufacturing sector cratered, plunging to 44.7, the lowest since 2012.
Europe’s auto sector led the fall, dropping one percent, while industrial goods and banks dropped sharply as well. Notable movers this morning included Aggreko (+3.8%) at the top of the Stoxx 600 after being upgraded to buy at Stifel Nicolaus. Smith’s Group (+1.1%) are in the green following the company stating they plan to separate their medical business and thereafter separately list it in the UK.
“Numbers like the ones we have seen this morning from the European manufacturing sector in Europe would suggest there is more weak data to come,” said Tim Graf, EMEA Head of Macro Strategy at State Street Global Advisors. “Everybody is looking for that inflection point, I guess, for when it is finally going to get better – and it’s not quite arrived yet.”
“Manufacturing output has been declining, which means that growth continues to be based on service sector developments,” Bert Colijn, Senior Economist at ING Bank NV in Amsterdam, said in email to clients. “To fire on both cylinders again, the euro zone seems to require the global growth outlook to improve.”
The MSCI World index slipped 0.2%, pulling away from the 5-1/2 months high hit earlier in the week. U.S. stock futures indicated the souring mood would spill over to Wall Street, with e-mini futures for the Down Jones, S&P and Nasdaq all down 0.5%.
Meanwhile, on Friday Bloomberg reported that U.S. officials downplayed the prospect of an imminent trade deal with Beijing, just as a U.S. trade delegation headed by Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin is set to visit China on March 28-29.
The euro erased a modest gain, tumbling almost 100 pips and briefly dipping below 1.13…
… as and sovereign bonds reversed earlier losses and the 10Y Bund drifted briefly back under 0.00% for the first time since 2016.
The decline in German bund yields comes after the U.S. yield curve flattened further overnight, indicating increased market expectations of a recession. The spread between the three-month Treasury bill yield and the 10-year note yield shrank to its narrowest level since August 2007, collapsing to just 2 basis points.
“The main market reaction to the Fed’s announcement was that it has become a consensus that the Fed’s next move is a rate cut,” said Naoya Oshikubo, senior manager at Sumitomo Mitsui Trust Asset. “As economic data from China and elsewhere has not bottomed out yet, investors will be looking at economic fundamentals for now. If there are improvements, then markets could roll back expectations of a Fed rate cut.”
The plunge in the euro helped push the dollar up 0.3 percent against a basket of six rival currencies in a second straight day of gains.
One day after the EU granted Theresa May an unconditional 2 week Brexit delay until April 12, the algos were in charge of setting the price, with the British pound swinging wildly without news, and after sliding sharply from 1.3160 to 1.3082 before squeezing the new weak hand shorts sharply higher.
On Thursday, sterling plunged towards $1.30 on Thursday in its biggest one-day fall of 2019 as fears mounted that Britain would crash out of the EU on March 29. The EU has said Britain can have a short delay to Brexit, as requested by May, but she must first win parliamentary approval for her withdrawal deal that sets out the future relationship between London and its biggest trading partner.
Elsewhere, in commodity markets, oil prices pulled away from 2019 peaks as economic growth concerns hurt sentiment, pausing a three-month rally that was driven by OPEC-led supply cuts and U.S. sanctions against Iran and Venezuela.
Brent crude oil futures and U.S. crude futures slipped both around 0.7 percent to $67.36 and $59.56 per barrel respectively.
Gold headed for its best week since early February. Earlier in Asia, a late-day turnaround put benchmark stock indexes in Japan, Korea and Australia back into the green.
Market Snapshot
- S&P 500 futures down 0.4% to 2,851.25
- STOXX Europe 600 down 0.01% to 380.65
- MXAP up 0.2% to 161.05
- MXAPJ up 0.1% to 530.71
- Nikkei up 0.09% to 21,627.34
- Topix up 0.2% to 1,617.11
- Hang Seng Index up 0.1% to 29,113.36
- Shanghai Composite up 0.09% to 3,104.15
- Sensex down 0.4% to 38,249.63
- Australia S&P/ASX 200 up 0.5% to 6,195.23
- Kospi up 0.09% to 2,186.95
- German 10Y yield fell 2.1 bps to 0.02%
- Euro down 0.5% to $1.1322
- Italian 10Y yield fell 6.9 bps to 2.103%
- Spanish 10Y yield fell 1.5 bps to 1.086%
- Brent futures down 0.5% to $67.52/bbl
- Gold spot up 0.1% to $1,311.17
- U.S. Dollar Index up 0.1% to 96.63
Top Overnight News
- European Union leaders staved off the threat of the U.K. crashing out of the bloc without a deal next Friday by giving Theresa May an extra two weeks to work out what to do
- Japan’s 10- year bond yield dropped to its lowest since November 2016, joining a rally in sovereign debt around the world after the Federal Reserve this week cut its forecast for projected interest-rate increases to zero
- U.S. officials are downplaying the prospect of an imminent trade deal with China as President Donald Trump’s top negotiators prepare to head to Beijing for a fresh round of talks next week, according to people familiar with the matter
- Italy’s populist government is struggling to reach agreement on a tax-reduction plan that could extend the country’s indebtedness and lead to another clash with the European Union.
- Stephen Moore, a visiting fellow at the Heritage Foundation and a long-time supporter of Donald Trump, is being considered by the president for a seat on the Federal Reserve Board, according to two people familiar with the matter. Also under consideration for the board is Herman Cain, the former pizza company executive who ran for the 2012 Republican presidential nomination, according to the people, who asked not to be identified discussing Trump’s private deliberations
- Bond yields around the world are tumbling to multi-year lows as the global shift by central banks to a more accommodative stance has put the kibosh on the oft-predicted but still-unrealized end of the long bull run in government debt.
- European Union leaders staved off the threat of the U.K. crashing out of the bloc without a deal next Friday by giving Theresa May an extra two weeks to work out what to do. But in private, EU leaders weren’t so optimistic that May will be able to pull it off next week.
- U.S. officials are downplaying the prospect of an imminent trade deal with China as President Donald Trump’s top negotiators prepare to head to Beijing for a fresh round of talks next week, according to people familiar with the matter.
- Turkey’s lira tumbled along with bonds and stocks amid mounting signs local investors are losing faith in the currency ahead of elections later this month. The lira weakened more than 2 percent to 5.5791 per dollar, breaking out of a tight range that’s held since November.
Asian equity markets traded mixed as the region failed to sustain the momentum from the tech-led advances on Wall St, where the sector rose by nearly 2.5% in the S&P 500 with Micron shares up over 9% post-earnings and with Apple the best performer in the DJIA on bullish broker calls. As such, ASX 200 (+0.5%) was positive as tech names tracked the upside of their US counterparts and with broad strength seen across sectors aside from the mining names amid a subdued metals complex, while attempts by the Nikkei 225 (U/C) to play catch up to the prior day’s Fed-inspired performance was cut short by recent JPY strength. Elsewhere, Hang Seng (+0.1%) and Shanghai Comp. (U/C) were negative with focus in China centred on earnings releases including Tencent and PetroChina which both fell short of net profit estimates and resulted in the latter leading the declines in Hong Kong. Finally, 10yr JGBs were higher with prices boosted in the wake of the dovish Fed and as longer-term yields dropped to multi-year lows last seen in late 2016.
Top Asian News
- Star Trader’s Chinese Stock Fund Lures $10 Billion in 10 Hours
- Japan’s Manufacturing PMI Contracts for a Second Straight Month
- Singer’s Elliott Loses Fight With South Korean Auto Giant
- FWD Revives Talks to Buy Siam Commercial’s $3 Billion Insurer
In spite of a relatively upbeat open, major European indices are firmly in the red [Euro Stoxx 50 -0.7%], following disappointing European PMI data; with many of the indicators unexpectedly falling into contractionary territory including French, EZ & German Manufacturing PMIs, the latter dropping to a 72-month low of 44.7. The strong downside seen in European stocks, and more broadly in the EUR and 10yr Bunds – where the yield fell below 0% for the first time since October 2016, can be attributed to increased concerns surrounding EZ growth. Unsurprisingly, given the data induced downturn sectors are firmly in the red with some underperformance seen in industrial names following the dismal Manufacturing PMI from Germany; with the likes of Siemens (-1.9%) and Airbus (-1.3%) weighed on by the data, for reference the two Co’s have a joint weighting of around 16% in the Stoxx 600 industrial sector. Notable movers this morning include, Aggreko (+3.8%) are at the top of the Stoxx 600 after being upgraded to buy at Stifel Nicolaus. Smith’s Group (+1.1%) are in the green following the Co. stating they plan to separate their medical business and thereafter separately list it in the UK. While, Deutsche Bank (U/C) did initially trade with gains of around 1% after the Co. stated they expect 2019 revenue to be slightly higher than the 2018 figure.
Top European News
- French Economy Unexpectedly Shows Contraction as Orders Ebb
- Swedbank CEO Survives for Now as Laundering Probe Deepens
- BlackRock Is Said to Near Deal to Acquire Bridgepoint’s EFront
- Nokia Is Investigating Compliance Issues at Alcatel Lucent
- Aston Martin Kicks the Can Down the Brexit Road on Price Changes
In FX, the euro currency has slumped vs the Dollar, and right across the board in wake of the preliminary March PMIs that defied expectations for some form of recovery or at least stability, as Germany’s manufacturing sector plunged deeper into recessionary territory and France entered contraction to pull the pan-Eurozone measure further below 50. Eur/Usd was already on the retreat from near 1.1400 highs, but then lost the 1.1300 handle before finding some support and underlying bids, while Eur/Gbp reversed course from 0.8680+ towards 0.8600 even though the Pound also weakened in sympathy, not to mention ongoing/heightened Brexit uncertainty.
- CHF – The Franc has benefited from the Euro’s demise with the cross down near the middle of a 1.1300-1.1230 range, but is losing out vs the Greenback as Usd/Chf bounces from 0.9915 lows to 0.9970 and the DXY hits new post-Fed recovery peaks just over 96.800 given the Eur’s heavy weighting in the basket.
- AUD/CAD/NZD – All losing out to their US peer as the overall risk tone sours on the back of the aforementioned bleak EZ surveys, with Aud/Usd back under 0.7100, Usd/Cad close to the top of a 1.3385-50 band and Nzd/Usd also relinquishing its big figure+ status (0.6900) forged after solid NZ Q4 q/q GDP earlier this week.
- GBP – As noted above, Sterling has suffered a bout of Euro contagion with Cable slipping from 1.3150+ to sub-1.3100 at one stage having derived a degree of comfort from breathing space afforded by the EU on Article 50, albeit still aware that this could just be a stay of Brexicution if UK PM May fails to convince a majority in Parliament to back the WA again.
- NOK/SEK – Also victims of the current bout of broad risk aversion, and unwinding recent outperformance even against the Eur. In fact, Eur/Nok has bounced relatively firmly from Thursday’s near 9.5900 lows irrespective of Norges Bank rhetoric reinforcing the hawkish hike, while Eur/Sek is currently hovering around 10.4700 within 10.4960-4250 parameters. Note, however, Eur/Nok should be capped ahead of 9.7000 given a hefty 1.4 bn option expiry, while similar size resides down at 9.5000.
- JPY – Bucking the general trend and gaining some ground vs the Usd due to the Yen’s greater safe-haven allure, as the headline pair pulls back from circa 110.90 to around 110.45 and into very large option expiry terrain between 110.40-65 (3 bn).
In commodities, Brent and WTI are firmly in the red, impacted by the change in market sentiment following poor PMI data; diverting from the relatively directionless trade seen overnight with both Brent and WTI now at the bottom of what is still a relatively narrow range, currently trading around USD 67.40/bbl and USD 59.50/bbl respectively. Elsewhere, PVM note that the USD 70/bbl threshold remains elusive for Brent, which notched a 2019 high of USD 68.69/bbl recently; PVM highlight that the complex is generally stagnant awaiting a strong catalyst, likely in the form of a US-China trade agreement. Gold (+0.3%) benefitted from the negative diversion in market sentiment, with the yellow metal trading at the top of its USD 8/oz range at around USD 1313/oz. Separately, China’s Mofcom has announced it is to implement a temporary antidumping measure in stainless steel billets and hot-rolled steel plate imports from the EU, Japan, South Korea & Indonesia. Elsewhere, Glencore’s Australian McArthur zinc mine have suspended production ahead of an approaching cyclone.
Turning to the day ahead, the European Council summit enters its second day. On the agenda for discussion include “strengthening the European economic base” and climate change, while leaders “will also review progress in tackling disinformation and the need to protect the democratic integrity of the European and national elections”. In terms of data, we already had the dismal flash PMIs for France, Germany, the Eurozone with the US following suit, including manufacturing, services and composite figures. In the US, we have wholesale inventories data for January and existing home sales data for February. In Canada, we’ll get February CPI data and January retail sales, while the Russian central bank will also be announcing its key rate.
US Event Calendar
- 9:45am: Markit US Manufacturing PMI, est. 53.5, prior 53; Services PMI, est. 55.5, prior 56; Composite PMI, prior 55.5
- 10am: Wholesale Inventories MoM, est. 0.1%, prior 1.1%; Wholesale Trade Sales MoM, prior -1.0%
- 10am: Existing Home Sales, est. 5.1m, prior 4.94m; Existing Home Sales MoM, est. 3.24%, prior -1.2%
- 2pm: Monthly Budget Statement, est. $227.0b deficit, prior $215.2b deficit
DB’s Jim Reid concludes the overnight wrap
If you’ve met me over the last couple of weeks and I’ve smelt funny then apologies but my wife told me last night that she only just realised that she recently filled up our ecologically friendly reusable huge clothes washing bottle with washing up liquid rather than clothes washing liquid. I must admit that I passed the washing machine the other day and wondered why it looked so bubbly. I just assumed the bubbles were another side effect of the dovish Fed.
At least the risk of the U.K. running out of washing up liquid and washing powder in just 7 days time has reduced now after the EU summit last night. Day 1 of the summit saw lots of speculation but in the end it seems the continent’s leaders tried not to escalate the Brexit tensions too much. They eventually offered an unconditional extension to Article 50 until April 12 which extends to May 22 if the deal is passed before hand. This will reduce the cliff edge risk for next week but assuming Parliament won’t support May’s deal, the UK will within three week face a choice between a long extension or a no-deal Brexit. The pound, which had traded as much as -1.47% weaker yesterday, rebounded a bit on the unconfirmed reports that we were heading towards a short reprieve to close down -0.69% at 1.3107 and is trading up (+0.18%) this morning. A respected journalist (Sky News Deputy political editor Beth Rigby) tweeted earlier in the day that in the event May faced a choice next week between either a no-deal Brexit or a long extension, then May would go for no deal. So still a very high degree of uncertainty as to what happens if MV3 gets defeated early next week assuming the government are allowed to bring it back. So in the near term all eyes on the DUP and hard line Tory MPs again.
Outside of Brexit the main developments yesterday took place in European sovereign bond markets, with a major rally happening as investors reacted to the Federal Reserve’s dovish stance the previous day. German ten-year bund yields fell to 0.041%, their lowest level since October 2016, although above their session lows when they reached 0.0318%. For reference, the last time ten-year bund yields closed below zero was in October 2016, with yields having been negative for most of the period between June and October that year – the only time in history. Gilts also rallied yesterday, with ten-year yields falling -9.3bps to their lowest levels (1.064%) since September 2017, while French ten-year yields fell -5.6bps to their lowest (0.403%) since October 2016. The fall in yields meant that financials dragged on Euro equities, with the EURO STOXX Banks index down -1.69% yesterday.
The fact that Treasuries climbed +1.1bps and up +3.9bps from the session lows suggests that Europe may get some yield relief at least at the open today. However much will depend on the latest flash PMIs which will dictate the tone in Europe. Consensus expectations are for a moderate stabilisation, headlined by the euro area’s aggregate manufacturing index, projected to rebound 0.2pts to a still-contractionary reading of 49.5. The services print is forecast for 52.7 and the composite at 52.0. Those expectations mirror the country-level projections, with Germany’s manufacturing print expected at 48.0 from 47.6. France’s is forecast for 51.4 from 51.5. This morning Japan’s flash March manufacturing PMI came in at 48.9, the same as last month and marking the second month of contraction. 10yr JGBs are 3bps lower this morning at -0.07% – the lowest since late 2016.
Back to yesterday. Yields troughed around lunchtime and then risk sentiment improved markedly throughout the US session. Initially, the S&P 500 had opened lower, as investors worried about the reasons for the dovish Fed; the theory being that a softer outlook is not as bullish as a hot-running economy. As our economists pointed out, a couple of the Fed preferred yield curve measures have continued to flatten. Indeed, the Fed’s preferred metric (3m treasury bill rate 18months forward versus the current 3m treasury bill) has inverted all the way to -13bps. However, sentiment flipped on the data and positive earnings news (see below), and by the end of the US session lower yields and a dovish Fed were seen as a good thing again. The S&P 500 rose +1.09% and back to five month highs. With the futures market pricing around 18bps of cuts over the next 12 months and the equity market just 3% away from its all-time high, it’s hard to believe both are compatible with each other medium-term but for now it’s Goldilocks.
The US market rally was led by the tech sector, with the NASDAQ advancing 1.42% and the Philadelphia semiconductor index gaining +3.50%. That move was driven by positive earnings from Micron Technologies (+9.64%), a major US chipmaker. The company’s CEO said that, while there are “industry headwinds in the near term,” he nevertheless sees “demand growth strengthening in the second half of calendar 2019.” That helped ease recent concerns about the sector, with the Philly semiconductor index now up +34.83% from its December trough.
Earlier in Europe, the STOXX 600 pared losses to close –0.04% after the aforementioned stronger than expected data release from the Philadelphia Fed, whose index of current manufacturing activity rose to 13.7 in March (vs 4.8 expected), bouncing back from last month’s -4.1 figure (which was the lowest in over two years). The rise was the biggest one-month move since 2010. The breakdown was less encouraging however, with the index for six-month forecasts dropping to its lowest since February 2016. Looking across countries, aside from the FTSE 100 outperformance (+0.88%) on a Brexit related weaker GBP story, the FTSE MIB also ended the day +0.20%, although both the CAC 40 (-0.07%) and the DAX (-0.46%) closed lower.
Overnight in Asia markets are largely heading lower and haven’t been swayed by the US turnaround with the Nikkei (-0.15%), Hang Seng (-0.32%), Shanghai Comp (-0.77%) and Kospi (-0.17%) all down. In other news, Tencent said yesterday that its net income fell 32% yoy in Q4, the largest drop in over a decade. The stock has declined by -3.19% over two days (-1.27% today).
In terms of other overnight data releases, Japan’s February CPI came in at +0.2% yoy (vs. +0.3% yoy expected) while core CPI stood at +0.7% yoy (vs. +0.8% yoy expected) and core-core CPI came in line with consensus at +0.4% yoy. Moving on to trade, China’s Ministry of Commerce said in an overnight statement that the USTR Robert Lighthizer and Treasury Secretary Steven Mnuchin will be travelling to China for trade talks at the end of next week while China’s Vice Premier Liu He will then travel to the US in April to continue the trade talks.
Back again to yesterday and amidst the political turbulence, the Bank of England’s MPC voted to keep interest rates unchanged at 0.75%, in line with market expectations. Regarding Brexit, the minutes said that “Brexit uncertainties had also continued to weigh on confidence and short-term economic activity, notably business investment.” In terms of the future path of monetary policy, the minutes said that “were the economy to develop broadly in line with its February Inflation Report projections, an ongoing tightening of monetary policy over the forecast period, at a gradual pace and to a limited extent, would be appropriate to return inflation sustainably to the 2% target at a conventional horizon.”
The Brexit-induced drama outweighed some positive economic data, with better than expected February retail sales data seeing a 0.4% mom increase (vs -0.4% expected). In addition, public sector net borrowing (excluding public sector banks) came in at £0.2bn in February (vs. 0.7bn in January), bringing YTD borrowing (April-Feb) to its lowest level for 17 years.
In other central bank news, the Norweigian Krone appreciated by +0.87% versus the euro yesterday as the central bank raised interest rates by 25bps to 1%. While the rate hike was expected, the interest rate forecast for 2019 was faster than the Norges Bank had indicated in December. Governor Olsen said that he saw a greater than 50% probability that there would be a rate hike in June. Elsewhere, the Swiss National Bank kept their main interest rate at -0.75%, in line with expectations. However, they revised down their inflation forecasts, seeing 2019 inflation at 0.3% (vs 0.5% in December) and 2020 inflation at 0.6% (vs 1.0%).
In terms of other data releases yesterday, the advance Euro Area consumer confidence reading came in at -7.2 in March (vs 7.1 expected). Meanwhile, in the US initial jobless claims fell to a four-week low of 221k (vs 225k expected), and February’s leading index came in at 0.2% (vs 0.1% expected).
Turning to the day ahead, the European Council summit enters its second day. On the agenda for discussion include “strengthening the European economic base” and climate change, while leaders “will also review progress in tackling disinformation and the need to protect the democratic integrity of the European and national elections”. In terms of data, we have the prelimary PMI releases for France, Germany, the Eurozone and the US, including manufacturing, services and composite figures. In the US, we have wholesale inventories data for January and existing home sales data for February. In Canada, we’ll get February CPI data and January retail sales, while the Russian central bank will also be announcing its key rate.
3. ASIAN AFFAIRS
i)FRIDAY MORNING/ THURSDAY NIGHT:
SHANGHAI CLOSED UP 2.69 POINTS OR 0.09% //Hang Sang CLOSED UP 41.69 POINTS OR 0.14% /The Nikkei closed UP 13.42 POINTS OR .09%/ Australia’s all ordinaires CLOSED UP .44%
/Chinese yuan (ONSHORE) closed DOWN at 6.7133 AS TRUCE DECLARED FOR 3 MONTHS /Oil UP to 59.51 dollars per barrel for WTI and 67.25 for Brent. Stocks in Europe OPENED RED
ONSHORE YUAN CLOSED DOWN // LAST AT 6.7133 AGAINST THE DOLLAR. OFFSHORE YUAN CLOSED DOWN ON THE DOLLAR AT 6.7201 / TRADE TALKS NOW ON/MAJOR PROBLEMS AT HUAWEI /CFO ARRESTED : /ONSHORE YUAN TRADING ABOVE 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/
This is not going to happen: North Korea is demanding the USA remove weapons from Guam and Hawaii. What planet is Kim on anyway? This is escalating!!
(zerohedge)
North Korea Demanded That US Remove Weapons From Guam, Hawaii: Fmr CIA Korea Chief
The February summit between President Trump and North Korean leader Kim Jong Un broke down in part over North Korea’s insistence that the United States remove the strategic nuclear umbrella and the dismantling of the Indian Pacific Command, according to South Korea’s DongA, citing the CIA’s former Korea Mission Center Chief Andrew Kim.
Vincent Lee
✔@Rover829
SouthKorea’s DongA Ilbo:
Former CIA Korea Mission Center Chief Andrew Kim said at a closed-door event in Seoul that #NorthKorea continued to insist the #US remove strategic assets in Guam and Hawaii, avoided talks on denuclearisation before Hanoi summithttp://bit.ly/2HBipl7
Speaking at a lecture of the Stanford University alumni conference in Seoul on March 20, Kim added that North Korean officials demanded that they be allowed to develop weapons that can be deployed on the Korean Peninsula. They have also requested sanctions relief.
Vincent Lee
✔@Rover829
DongA: Kim said NK officials demanded resumption of Mt Kumgang tours, Kaesong industrial complex operations when pressed by US for specifics on sanctions reduction.
Kim also said Kim Jong Un may visit Russia before he returns to China following Hanoi summit
Kim said that North Korea has not been able to elaborate on specific steps to denuclearize during negotiations between representatives, and that North Korea’s special envoy Kim Hyeok-Cheol would not commit to anything – even using the word “denuclearization.”
When pressed for specific demands for sanctions relief, North Korea demanded that foreigners be allowed to resume tours in the Mount Kumgang region in North Korea, as well as the “special economic zone” of Kaesong – a border town with South Korea which at one point employed over 50,000 North Korean workers. In 2016, the South Korean Ministry of Unification shut down the joint industrial venture after suggesting it was a source of hard currency to bankroll North Korea’s nuclear program.
Meanwhile, the relationship between North and South Korea has continued to deteriorate, as North Korea is withdrawing from a join liaison office near the demilitarized zone (DMZ), according to CNN.
The move comes after the US slapped two Chinese firms with sanctions for doing business with Pyongyang, the first action taken by Washington against North Korea since the second summit between North Korean leader Kim Jong Un and US President Donald Trump in Hanoi ended early with no agreement.
South Korea’s Unification Ministry announced the move Friday, saying the decision had been taken by the North on “instructions from the superior authority.”
In its communication with the South, Pyongyang said it would not mind Seoul’s representatives “remaining in the office,” which is based in Kaesong, a part of North Korea near the de facto border between the two countries. –CNN
“We regard such a withdrawal as very sad and unfortunate (and) we hope that the North will return shortly and hope that the liaison contact office will operate normally as soon as possible,” said South Korea’s Vice Minister of Unification Chun Hae-sung at a Friday press conference.
Chad O’Carroll@chadoclNorth Korea’s pull-out Friday from the Kaesong Liason Office has been on cards since Hanoi, given recent no-shows there.
The message?
a–Seoul has insufficient influence on the U.S.-DPRK relationship
b–What’s point of inter-K talks when sanctions prevent practical cooperation?
Last Friday, US Secretary of State Mike Pompeo insisted that North Korea is keeping open the possibility of continued talksafter reports from Pyongyang’s deputy foreign minister that they may walk away from negotiations completely.
Following the Hanoi summit, the US and South Korea canceled major war games on the Korean Peninsula that have long irritated North Korea, in order to “support diplomatic efforts” with Pyongyang.
end
Strange: Trump lifts the new “large scale” sanctions on North Korea.
Very difficult to understand what is going on!
(courtesy zerohedge)
3 b JAPAN AFFAIRS
3 C CHINA
Not good: another horrifying blast at a Chinese chemical plant kills 47 and injures a whopping 650 poor souls
(courtesy zerohedge)
“Horrifying” Blast At China Chemical Plant Kills 47, Injures 640
“The air blast hit us and sent us up in the air,” one survivor told the Beijing News. “I can’t describe it. It was horrifying.”
Executives of a chemical plant in China’s Jiangsu province have been taken into police custody after an explosion on Thursday killed at least 47 people, injured 640 others and polluted areas several kilometers away.
Jiangsu Tianjiayi Chemical plant was flattened and 16 neighbouring factories were left with varying degrees of damage. The impact smashed windows and uprooted roofs of some buildings and reduced others to rubble.
The plant had been flattened and reduced to rubble, with only part of the workshop frame still standing.
South China Morning Post reports that Cao Lubao, mayor of Yancheng, where the blast occurred, said on Friday that nearly 3,000 people – employees of nearby plants and residents – had been evacuated after the explosion at the Jiangsu Tianjiayi Chemical plant in the township of Chenjiagang, which left a giant crater.
Schools and kindergartens had been closed while the authorities monitored air and water quality, Cao said.
State news agency Xinhua released a video of a man calling out to his family just after he was pulled from the rubble on Thursday night.
“I am out. Firefighters rescued me. I am fine, just some minor injuries,” the man said, gasping.
“I couldn’t get through on 120 [ambulance hotline] at all,”
“We had no other means but to drive this broken car … One had an injured foot and the other had damage to his internal organs.”
Workers at the Henglida Chemical Factory, 3km from the blast, said its windows and doors were blown out. Its roof collapsed as they tried to escape, causing head injuries.
The deadly blast caused pollution in the area’s air and rivers. Tests on Friday morning 3½km downwind from the explosion site found levels of nitrogen oxides that were almost twice the national air safety level for industrial zones, capable of causing respiratory infection, the Jiangsu Ecology and Environment Department said.
end
China/USA
the uSA preparing for a military conflict with China in the South China seas?
(courtesy zerohedge)
Marines Seize Pacific Island As Training For War With China
The 31st U.S. Marine Expeditionary Unit (31st MEU) seized a tiny island and airfield with special operations airmen and soldiers as part of a new island-hopping strategy.
Last week, 31st MEU, backed by the 3rd Marine Division, 3rd Marine Logistics Group and 1st Marine Aircraft Wing, members of the Air Force 353rd Special Operations Group, and Army soldiers with 1st Battalion, 1st Special Forces Group, conducted a series of simulated military exercises attacking and seizing Ie Shima Island located off the northwest coast of Okinawa Island in the East China Sea, reported Task Purpose.
The new military strategy, known as Expeditionary Advanced Base (EAB) Operations, will allow Marine units to seize, establish, and operate multiple small bases across the Pacific Ocean, a tactic that will be beneficial in a high-end fight with China.
During the exercise, special forces seized the island’s airport, 31st MEU then established a Forward Arming and Refueling Point. Marine Corps F-35B stealth fighters patrolled the island’s perimeter while C-130J Super Hercules transport aircraft delivered heavy artillery pieces.
M142 High Mobility Artillery Rocket Systems were hauled in by the transport aircraft, carried out simulated long-range precision fire missions while stealth fighter jets conducted strikes with guided munitions.
“This entire mission profile simulated the process of securing advanced footholds for follow-on forces to conduct further military operations, with rapid redeployment,” the Marines said in a statement.
Task & Purpose said the EAB exercise is an updated version of the WWII-era island-hopping strategy.
“It is critical for us to be able to project power in the context of China, and one of the traditional missions of the Marine Corps is seizing advanced bases,” Chairman of the Joint Chiefs of Staff Marine Corps Gen. Joseph Dunford told the Senate Armed Services Committee last week. “If you look at the island chains and so forth in the Pacific as platforms from which we can project power, that would be a historical mission for the Marine Corps and one that is very relevant in a China scenario.”
As the National Defense Strategy makes clear, the U.S. military has entered a new phase of power competition with rival China. In the South China Sea, China has constructed military bases on artificial islands to extend its reach, while the U.S. Navy continues to use freedom of navigation operations to sail its destroyers within ten or so miles from these islands to telegraph that the US will not allow Chinese expansion in the world’s busiest naval transit route to continue unimpeded.
Without a doubt, the latest island hopping strategy from the Marines is the clearest indication the Pentagon is preparing for military conflict with China in the South China Sea.
end
Taiwan seeks to buy 100 main battle tanks as it believes that China will invade:
(courtesy zerohedge)
Taiwan Seeks To Buy 100 US Main Battle Tanks Amid Chinese Invasion Threats
Taiwan has requested a purchase order for 108 third-generation American main battle tanks designated as M1A2X Abrams, ITV News reports.
Washington announced it would make a final decision on the M1A2X in June.
The Taiwanese Ministry of National Defense also submitted a request for 66 General Dynamics F-16V fighter jets on Feb. 27.
The China Times recently quoted a Taiwanese defense official that said, if the tanks were procured, the M1A2X would be deployed with two armored battalions under the command of the 6th Army Corps in northern Taiwan. The official said extensive training programs and a five-year supply of spare parts would also be included in the deal.
According to the Defense Blog, “the M1A2X is a special configuration of the M1A2C, the latest variant of Abrams tanks in production. This version rectifies many of the space, weight and power issues identified during Operation Iraqi Freedom and will be the foundational variant for all future incremental upgrades. In addition to having improved survivability, the Abrams M1A2C can host any mature technology the Army deems operationally relevant. Improvements focus on increasing the electrical power margin, Vehicle Health Management Systems, integrated counter-improvised explosive device protection, a new Auxiliary Power Unit, embedded training and an ammunition data link.”
At the moment, the Armed Forces of Taiwan are in urgent need of modernizing their aging main battle tank. M1A2X is expected to replace the M60A3 Patton and CM-11 Brave Tiger tanks.
Defense Blog said Taiwan would need to purchase 500 M1A2X to compete on the same level as the People’s Liberation Army of continental China.
American defense sales to Taiwan, which by the way China claims as its territory, has caused tensions to soar as a new cold war heats up in the Indo-Pacific region between the world’s two largest economies.
Earlier this year, Taiwan conducted live-fire war drills along its west coast amid mounting fears that Chinese President Xi Jinping could use military force to annex the democratic island.
The war exercise followed a new report from the Pentagon outlining concerns about Beijing’s expanding military might, including a possible invasion of Taiwan.
“China … believes that U.S. military presence … in Asia seeks to constrain China’s rise and interfere with China’s sovereignty, particularly in a Taiwan conflict scenario,” the Pentagon report said.
Taiwan’s request for 108 American main battle tanks and 66 new fighter jets makes sense. The island nation is preparing for a Chinese invasion.
4.EUROPEAN AFFAIRS
UK
The pound rallies as the EU only gives them a 2 week “unconditional'” Brexit delay. What difference will two weeks do?
(courtesy zerohedge)
Pound Rallies As EU Agrees to 2 Week ‘Unconditional’ Brexit Delay
1,002 days have passed since Britons voted to leave the EU in a referendum that, before Donald Trump’s electoral triumph, stood as the most strident populist repudiation of the globalist world order.
Yet after nearly three years of frenzied negotiations, the UK and the EU haven’t managed to agree upon a deal. So what difference could another two weeks possibly make?
Well, we’re about to find out.
With the Conservative Party in shambles, backbenchers on the brink of rebellion and cabinet members leaking stories about her impending ouster as prime minister, Theresa May has at least managed to convince the EU27 after another day of harrowing negotiations in Brussels – which produced a flurry of headlines on the rumors before a final decision was announced by European Council President Donald Tusk – to give her just a little more time to give her widely loathed withdrawal agreement one more go in the Commons (it has already been defeated twice by historic margins).
Specifically, Tusk revealed that the EU had authorized a two week ‘unconditional’ delay, with another six weeks on the table should May manage to pass the withdrawal agreement (which has already been defeated twice by historic margins, and which the EU has insisted will not be modified in any meaningful way).
Donald Tusk
✔@eucopresident
EU27 unanimously agrees on its response to UK’s requests. I will now meet PM @theresa_may. #brexit #euco
Donald Tusk
✔@eucopresident
EU27 responds to UK requests in a positive spirit and:
agrees to Art. 50 extension until 22 May if Withdrawal Agreement approved next week
Tusk and Jean Claude-Juncker made a joint statement after the announcement:
Donald Tusk
✔@eucopresident
LIVE NOW – my remarks following the #EUCO working session on #Brexit https://www.pscp.tv/w/b2QLTTFEWUVYR2VXSlBhamd8MURYR3lhanBiUldHTRo18j-mJ2ixu9MA1z-kjzAEMYhB6jNXiOFSGxZP6pcs …
Donald Tusk @eucopresident
Following what amounted to the first real hint of optimism (however meager) all week, the pound has rebounded off the session lows.
Intransigent Brexiteers and members of the pivotal DUP – the Northern Irish party that has effectively held the Tories hostage with its opposition to May’s deal – have already insisted that they won’t budge. So, with the final countdown under way, can May forge a deal for a ‘softer’ Brexit with Labour?
Or will she just go ahead and resign?
-END-
England is in a mess: A petition to cancel Brexit now appears with more than 2 million signatures and it crashes the Parliament website
(courtesy zerohedge)
Petition To Cancel Brexit Gets More Than 2 Million Signatures, Crashes Parliament Website
If it was Theresa May’s goal during the tedious Brexit negotiations has been to turn public sentiment against Brexit to soften them up for a second referendum, she has, apparently, succeeded.
Following her speech Wednesday night, where the prime minister effectively repeated much of her rhetoric from past speeches, once again offering MPs a choice between her supremely unpopular deal, a hard Brexit, or no Brexit at all, so many Britons rushed to sign a digital petition calling for Brexit to be cancelled that it crashed a government website.
According to Bloomberg, parliament’s petitions website repeatedly crashed late Wednesday as thousands of Britons, inspired by a string of celebrity endorsements, flooded the site and signed the petition. Celebrities who shared the petition included Annie Lennox, actor Hugh Grant, science broadcaster Brian Cox and comedian David Mitchell.
The rush was the highest rate of signing that the site had ever handled, and it crashed multiple times (though that clearly didn’t stop people from signing the petition).
Petitions Committee
✔@HoCpetitions
The rate of signing is the highest the site has ever had to deal with and we have had to make some changes to ensure the site remains stable and open for signatures and new petitions. Thanks for bearing with us.
Since last night, more than 2,100,000 people have signed the petition. Parliament is obliged to consider any petition with more than 100,000 signatures for debate. The government is also obligated to issue a response.
Though the petition is unlikely to have any impact on the Commons deliberations (or lack thereof), it’s only the latest sign that Britons are becoming increasingly frustrated with the Brexit chaos.
Though, to be fair, geographical data released by the government showed the bulk of the support coming from areas like Edinburgh and London that supported ‘remain’ during the 2016 referendum. It also showed that a not-insignificant number of signatories came from outside the UK.
Labour now supports a second referendum, though opposition still largely outweighs support in the Commons. But as panic about a hard Brexit at the end of the month intensifies, it’s worth remembering that anything is possible – particularly if Theresa May resigns.
END
German Manufacturing Craters, Sending Bund Yields Negative
Two weeks ago, traders were puzzled by the ECB’s especially dovish stance (just days before the Fed followed suit). They got their answer today with the release of the latest German and French manufacturing PMIs, both of which cratered deeper into contraction territory.
Confirming that Germany – and Europe – is currently in a deep manufacturing recession, Markit’s Manufacturing PMI crashed to 44.7 from 47.6, the lowest since 2012 and far below economists’ expectation of a modest rebound to 48. That’s the third consecutive reading below 50, which indicates contraction (and recession). The new orders and employment components also declined.
Germany’s composite index, which includes services, slipped to 51.5, the lowest in 69 months. The services index came in at 54.9 after posting 55.3 in February.
“The downturn in Germany’s manufacturing sector has become more entrenched,” said Phil Smith, Principal Economist at IHS Markit. “Uncertainty towards Brexit and US-China trade relations, a slowdown in the car industry and generally softer global demand all continue to weigh heavily on the performance of the manufacturing sector, which is now registering the steepest rate of contraction since 2012.”
“The domestic market remains strong, which continues to be reflected in wage pressures and robust growth across the services sector of the economy, but the question is whether it can withstand a protracted downturn in manufacturing. The first decrease in factory employment for three years is perhaps a warning sign for the health of domestic demand, with overall job creation now running at its lowest since May 2016.”
Markit said if the weakness persists into the next quarter, it may leave the euro-zone economy struggling to grow by much more than 1 percent this year. The ECB currently sees growth averaging 1.1 percent in 2019.
“The bloc’s economic problems are far from over,” said Bert Colijn, euro zone economist at ING. “To fire on both cylinders again, the euro zone seems to require the global growth outlook to improve. Unfortunately, uncertainty is continuing into April with many of the global growth concerns still undecided.”
Commenting on the striking decline, Bloomberg economist Maeva Cousin said that “This disappointing reading raises the risk that euro-area growth failed to recover decisively in the first quarter, after last month’s rebound had provided a glimmer of hope that 2019 was starting on a stronger footing.”
As Bloomberg further notes, much of the source of the economic weakness appears to be external, with export orders – particularly in manufacturing – under pressure. Trade tensions, tariffs and weaker global growth are all taking a toll, with Germany feeling much of the pain. Japan, another export heavy economy, also reported a contraction in activity in its manufacturing sector on Friday.
There’s “uncertainty with regards to Brexit, diesel-gate fallovers in the German car economy and also a slowdown in the Chinese economy,” said Mark Burgess, who helps oversee about 431 billion pounds as chief investment officer for Columbia Threadneedle Investments in Europe. “All of that is weighing heavily on the prospects for European growth.”
Elsewhere, France – where the ongoing Yellow vest protests have continued to sap the economy – was also hit with the Manufacturing PMI also sliding into contraction, from 51.5 to 49.8, while the Service index tumbled 50.2 to 48.7.
While jolting markets, the latest recessionary data confirms that the ECB was badly behind the curve entering 2019, as it ended its QE program (alternatively one can say that Europe’s QE has led to the current recession) and explains Draghi’s panic to launch the TLTRO as soon as possible.
Following the latest dismal data out of the Eurozone, the euro tumbled nearly 100 pips, briefly sliding 1.13 before staging a modest rebound.
But more remarkable was the latest leg lower in German bunds, where the yield on the 10Y benchmark tumbled back under 0.0%, the lowest it has been since 2016, with yields on Spanish, French and Italian debt also sliding…
… as traders anticipate that just months after the ECB halted its sovereign debt QE program it will have no choice but to restart it.
5.RUSSIAN AND MIDDLE EASTERN AFFAIRS
Russia is accusing the USA of stoking tensions by deploying 6 nuke capable bombers to Europe
(courtesy zerohedge)
6.GLOBAL ISSUES
7 OIL ISSUES
Berman warns the USA oil patch to stop overproducing:
(courtesy Art Berman/OilPrice.com)
One Last Warning For The U.S. Shale Patch
Authored by Arthur Berman via OilPrice.com,
Oil price lost 44% of its value late last year. That price collapse was a signal to tight oil companies to stop over-producing. The message will be repeated until action results.
From October 3 to December 24 2018, WTI fell from $76.41 to $42.53 (Figure 1).
Figure 1. The oil-price collapse of 2018.
Source: Quandl and Labyrinth Consulting Services, Inc.
Since then, WTI has recovered to nearly $60/barrel and Brent to about $68. Market observers seem to have largely forgotten the scale of price collapse just a few months ago. Although the magnitude of that collapse was not as great as in 2014-2015, the rate of decline was greater. That is because it occurred more quickly.
In 2018, WTI price fell an average of -$0.42 per day for 81 days. In 2014-2015, it fell -$0.29 per day for 218 days (Figure 2).
Figure 2. Rate of price collapse in 2018 was greater than in 2014-2015.
Source: Quandl and Labyrinth Consulting Services, Inc.
Analysts are making fairly aggressive calls for 2019 average Brent price of $74 and $83 in 2020. I hope those calls are right but I am less optimistic. That is because the world remains over-supplied with oil.
The balance between world oil production and consumption moved from a deficit of -0.24 million barrels per day (mmb/d) in 2017 and early 2018 to a surplus of +0.44 mmb/d beginning in the third quarter of 2018 (Figure 3).
Figure 3. The world is over-supplied with oil.
Source: EIA STEO and Labyrinth Consulting Services, Inc.
It is likely that the production surplus will persist through 2019 and possibly 2020 based on EIA forecasts for production and consumption. EIA’s forecast for quarterly WTI price is below $65 per barrel through 2020.
The global supply and demand outlook is similar. World oil supply-demand balance reached an over-supply of +1.6 mmb/d in the 4th quarter of 2019. It has fallen to around +0.6 mmb/d today (Figure 4).
Figure 4. World over-supply of oil expected to peak at 1 million barrels of oil per day in the second quarter of 2019.
Source: IEA, EIA and Labyrinth Consulting Services, Inc.
Forecasts based on EIA supply and IEA demand suggest that the surplus will rise to +1 mmb/d in the second quarter and then, decline through the rest of the year.
Market sentiment has turned bullish since OPEC+ cuts were announced late last year even though concern remains about the strength of the global economy and the status of U.S.-China trade talks.
I am less concerned about those demand-side issues than about the ongoing over-production in the world generally and in the Permian basin in particular. Despite talk of fiscal restraint by shale companies and more limited capital supply from credit markets, production continues to increase.
I share Khalid Al-Falih’s concerns that world inventories are moving in the wrong direction for a sustainable price recovery beyond recent gains. Some analysts seem to forget that world oil prices have been on OPEC+ life support since late 2016 and apparently need even stronger measures in 2019.
The oil-price collapse of 2018 should have sent a clear message to producers to change their behavior or risk further crushing price reactions going forward.
8. EMERGING MARKETS
Brazil
Very scary!! Brazilian nuclear fuel convoy attacked by gansters
(courtesy zerohedge)
Brazilian Nuclear Fuel Convoy Attacked By Heavily Armed Gangsters
Brazillian gangsters armed with assault rifles attacked a convoy of trucks carrying nuclear fuel in Southern Brazil earlier this week, according to police reports.
The convoy left the headquarters of Indústrias Nucleares de Brasil in Resend around 6:20 am Tuesday and headed towards the Angra Nuclear Power Plant located at the Central Nuclear Almirante Álvaro Alberto on the Itaorna Beach in Angra dos Reis, Rio de Janeiro, Brazil.
Within the convoy, there were two specialized trucks hauling uranium pellets were escorted by the Federal Highway Police and vehicles of the State Environmental Institute.
According to Brazil’s O Globo newspaper, the convoy was peppered by heavy fire two miles north of the power plant. The Brazilian Federal Highway Police said in a statement that its vehicles were escorting the nuclear fuel convoy when the attack occurred. Law enforcement returned fire, which developed into a fierce shootout.
The statement from authorities said attackers retreated when law enforcement personnel returned fire.
The convoy arrived at its final destination [nuclear power plant] without further incident 20 minutes following the attack.
The statement by police was then followed by a public announcement by Eletronuclear, Eletrobras’ nuclear utility arm. The letter said that national security was not compromised during the attack, as the nuclear pellets carried by the trucks consisted of “uranium in its natural state.”
The mayor of Angra dos Reis, Fernando Jordão, asked the governor of Rio, Wilson Witzel, for additional security around the nuclear power plant following the attack.
“I told the governor that we need to make a security plan for the region, since we have nuclear power plants here. It’s a sensitive area. The governor stopped talking with the federal government and revealed that he will seek the Minister Sergio Moro, Justice and Public Security – said the mayor.
In a statement, after the incident, Eletronuclear revealed that the nuclear cargo was at risk: “If a gunshot was able to cross the protection of the container, it could damage the nuclear fuel, but this would not endanger the population or the environment because the fuel is in the natural state.”
Violence has erupted in Angra dos Reis in recent years, and heavily armed criminals now roam the highways near the power plant.
Whether the attackers had intended to steal the nuclear fuel has yet to be determined. Law enforcement is now trying to figure out the motive behind the incident.
end
Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings FRIDAY morning 7:00 AM….
Euro/USA 1.1304 DOWN .0070 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 RED
USA/JAPAN YEN 110.40 DOWN .416 (Abe’s new negative interest rate (NIRP), a total DISASTER/NOW TARGETS INTEREST RATE AT .11% AS IT WILL BUY UNLIMITED BONDS TO GETS TO THAT LEVEL…
GBP/USA 1.3149 UP 0.0021 (Brexit March 29/ 2019/ARTICLE 50 SIGNED/BREXIT FEES WILL BE CAPPED
USA/CAN 1.3388 UP .0018 CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/(TRUMP INITIATES LUMBER TARIFFS ON CANADA/CANADA HAS A HUGE HOUSEHOLD DEBT/GDP PROBLEM)
Early THIS FRIDAY morning in Europe, the Euro FELL by 70 basis points, trading now ABOVE the important 1.08 level FALLING to 1.1304 Last night Shanghai composite closed UP 2.69 POINTS OR 0.09%/
//Hang Sang CLOSED UP 41.69 POINTS OR 0.14%
/AUSTRALIA CLOSED UP 0.44% EUROPEAN BOURSES RED/
The NIKKEI: this FRIDAY morning CLOSED UP 13.42 POINTS OR 0.09%
Trading from Europe and Asia
1/EUROPE OPENED RED
2/ CHINESE BOURSES / :Hang Sang CLOSED UP 41.69 POINTS OR 0.14%
/SHANGHAI CLOSED UP 2.69 POINTS OR 0.09%
Australia BOURSE CLOSED UP .44%
Nikkei (Japan) CLOSED UP 13.42 POINTS OR 0.09%
INDIA’S SENSEX IN THE RED
Gold very early morning trading: 1312.75
silver:$15.48
Early FRIDAY morning USA 10 year bond yield: 2.49% !!! DOWN 5 IN POINTS from THURSDAY’S night in basis points and it is trading WELL ABOVE resistance at 2.27-2.32%. (POLICY FED ERROR)/
The 30 yr bond yield 2.93 DOWN 3 IN BASIS POINTS from THURSDAY night. (POLICY FED ERROR)/
USA dollar index early FRIDAY morning: 96.69 UP 19 CENT(S) from THURSDAY’s close.
This ends early morning numbers FRIDAY MORNING
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And now your closing FRIDAY NUMBERS \12: 00 PM
Portuguese 10 year bond yield: 1.26% DOWN 2 in basis point(s) yield from THURSDAY/
JAPANESE BOND YIELD: -.07% DOWN 30 BASIS POINTS from THURSDAY/JAPAN losing control of its yield curve/
SPANISH 10 YR BOND YIELD: 1.07% DOWN 3 IN basis point yield from THURSDAY
ITALIAN 10 YR BOND YIELD: 2.45 UP 1 POINTS in basis point yield from THURSDAY/
the Italian 10 yr bond yield is trading 138 points HIGHER than Spain.
GERMAN 10 YR BOND YIELD: FALLS TO –.03% IN BASIS POINTS ON THE DAY//
THE IMPORTANT SPREAD BETWEEN ITALIAN 10 YR BOND AND GERMAN 10 YEAR BOND IS 2.52% 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 FRIDAY
Closing currency crosses for FRIDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/1:00 PM
Euro/USA 1.1284 DOWN .0090 or 90 basis points
USA/Japan: 109.79 DOWN 1.025 OR YEN UP 126 basis points/
Great Britain/USA 1.3210 UP .0081( POUND UP 81 BASIS POINTS)
Canadian dollar DOWN 41 basis points to 1.3411
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The USA/Yuan,CNY closed AT 6.7182 0N SHORE (DOWN)
THE USA/YUAN OFFSHORE: 6.7259( YUAN DOWN)
TURKISH LIRA: 5.7123
the 10 yr Japanese bond yield closed at -.07%
Your closing 10 yr USA bond yield DOWN 7 IN basis points from THURSDAY at 2.42 % //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 2,86 DOWN 6 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, 96.73 UP 24 CENT(S) ON THE DAY/1.00 PM/
Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for FRIDAY: 12:00 PM
London: CLOSED DOWN 155.54 2.11%
German Dax : DOWN 165.39 POINTS OR 1.43%
Paris Cac CLOSED DOWN 104.17 POINTS OR 1.94%
Spain IBEX CLOSED DOWN 158.90 POINTS OR 1.70%
Italian MIB: CLOSED DOWN 303.87 POINTS OR 1.42%
WTI Oil price; 58.63 1:00 pm;
Brent Oil: 66.28 12:00 EST
USA /RUSSIAN / ROUBLE CROSS: 64.74 THE CROSS HIGHER BY 0.84 ROUBLES/DOLLAR (ROUBLE LOWER BY 84 BASIS PTS)
TODAY THE GERMAN YIELD FALLS TO –.03 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 : 58.93
BRENT : 66.89
USA 10 YR BOND YIELD: … 2.44… VERY DEADLY//
USA 30 YR BOND YIELD: 2.87..VERY DEADLY
EURO/USA DOLLAR CROSS: 1.1300 ( DOWN 75 BASIS POINTS)
USA/JAPANESE YEN:109.96 DOWN .859 (YEN UP 86 BASIS POINTS/..
USA DOLLAR INDEX: 96.63 UP 14 cent(s)/
The British pound at 4 pm: Great Britain Pound/USA:1.3197 UP 68 POINTS FROM YESTERDAY
the Turkish lira close: 5.8210
the Russian rouble 64.68 DOWN .78 Roubles against the uSA dollar.( DOWN 78 BASIS POINTS)
Canadian dollar: 1.3425 DOWN 54 BASIS pts
USA/CHINESE YUAN (CNY) : 6.7182 (ONSHORE)/
USA/CHINESE YUAN(CNH): 6.7233 (OFFSHORE)
German 10 yr bond yield at 5 pm: ,0.08%
The Dow closed DOWN 459.85 POINTS OR 1.77%
NASDAQ closed DOWN 196.29 POINTS OR 2.50%
VOLATILITY INDEX: 16.63 CLOSED UP 3.00
LIBOR 3 MONTH DURATION: 2.601%//
FROM 2.607
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
Bank Bloodbath Brings Down ‘Bull Market’ As Yield Curve Crashes
Bonds, Bullion, & The Greenback are all higher since The Fed threw in the towel… stocks are lower…
And despite the desperate efforts to talk up the economy, SHTF today…
Chinese stocks managed gains on the week, thanks to three big liftathons…
European markets were ugly all week…
US equity markets had their worst day since Jan 3rd – all ending the week lower…
Dow futures fell 500 points from the overnight highs…
And the S&P 500 fell all the way to stop dead on 2800…
Marking the sixth refusal at that magical level…
As Bloomberg noted, you know things have gone a bit pear-shaped when utilities and tech are the top gainers, comfortably outperforming the broader market. But they took quite divergent paths to get there.
It appears the squeezers ran out of ammo…
Buybacks had a good week – until Friday, as the blackout window looms…
Big bank stocks have bloodbath’d this week (worst week of the year) as the hopes of higher rates and steeper curve evaporate…
But Regional banks were clubbed like a baby seal… the biggest weekly drop since Sept 2011 – after the USA downgrade
And bank CDS have started to creep higher…
Tesla had an ugly week…
Credit and equity protection costs surged on the week…
Yields collapsed around the world this week, with 10Y bunds going negative once again…
Global average sovereign yields plunged to lowest since April 2018…
US Treasury yields crashed this week… this is the biggest weekly drop in 5Y, 7Y, and 10Y yields since April 2017
For the first time since 2007, the spreads between 3m and 10y yields inverted – flashing the most-effective recession indicator since WW2…
And inflation breakevens plunged, despite a lack of oil confirmation…
The yield curve is now inverted to Fed Funds out to almost 10Y…
Notably, The Fed is now priced to be easier than The ECB in 2019…
The dollar index ended the week very marginally higher thanks to serious buying-panic in the last two days since The Fed…
The relative stability expected from an easing Fed has prompted a run into carry trades and USD remains a big player.
The Turkish Lira collapsed today as a surprise tightening by the Turkish central bank failed to stem a rout in the wake of an unexplained drop in official reserves.
“Today the unsustainable nature of state-owned banks being the only sellers of [US dollars in exchange for lira] over recent weeks became evident,” said Roger Hallam, chief investment officer for currencies at JPMorgan Asset Management.
Bitcoin managed gains on the week but Bitcoin Cash outperformed…
Copper ended the week lower as China growth questions continued but WTI and PMs managed to hold on to gains despite the dollar ending higher…
Gold rallied for the 3rd week in a row…
WTI topped $60 intraweek, but ended back below $59…
Finally, we refer to Knowledge Leaders Capital Bryce Coward’s analysis of what happens next...
We’ve cataloged all 20 uninterrupted 15% declines in the post-war period and documented what has happened afterward, as well as the type of market environment in which those declines have taken place. By uninterrupted decline, we mean a waterfall decline of at least 15% without an intermediate counter-trend rally of at least 5%. Some bullet points describing the rallies following those declines are below:
- The average counter-trend rally following a 15% waterfall decline is 11.9% (11% median) and it takes place over 21 trading days on average (median 11 days).
- The rallies end up retracing 57% of the decline on average (median 52%).
- Waterfall declines of at least 15% have only taken place in bear markets.
- The average of those bear markets have a peak-to-trough decline of 33% (median 29%)
- The duration of those bear markets is 284 trading days on average (median 139 days)
- In 16 of 19 instances (excluding the decline we just witnessed), a recession was associated with the bear market
- 100% of the time the low resulting from the waterfall decline was retested, and in 15 of 19 cases a new lower lower was made.
It’s different this time though…
MARKET TRADING/
the 10 yr bond yield collapses to below 250 and that signals imminent recession..this is very dangerous
(courtesy zerohedge)
10Y Yield Collapses, Curve Crash Sparks Imminent Recession Warning
On the heels of a dismal German PMI print, world bond yields have tumbled, extending US Treasuries’ rate collapse since The Fed flip-flopped full dovetard.
Bonds and stocks bid after Powell threw in the towel…
But the message from the collapse in bond yields is too loud to ignore. 10Y yields have crashed below 2.50% for the first time since Jan 2018…
Crushing the spread between 3-month and 10-year Treasury rates to just 2.4bps – a smidge away from flashing a big red recession warning…
Critically, as Jim Grant noted recently, the spread between the 10-year and three-month yields is an important indicator, James Bianco, president and eponym of Bianco Research LLC notes today. On six occasions over the past 50 years when the three-month yield exceeded that of the 10-year, economic recession invariably followed, commencing an average of 311 days after the initial signal.
Bianco concludes that the market, like Trump, believes that the current Funds rate isn’t low enough:
While Powell stressed over and over that the Fed is at “neutral,” . . . the market is saying the rate hike cycle ended last December and the economy will weaken enough for the Fed to see a reason to cut in less than a year.
Equity markets remain ignorant of this risk, seemingly banking it all on The Powell Put. We give the last word to DoubleLine’s Jeff Gundlachas a word of caution on the massive decoupling between bonds and stocks…
“Just because things seem invincible doesn’t mean they are invincible. There is kryptonite everywhere. Yesterday’s move created more uncertainty.”
Dow Dumps 400 Points From Overnight Highs, Erases Thursday’s Buying-Panic
We’re gonna need more AAPL buybacks…
But stocks still have a long way to go to catch down to bonds…
ii)Market data/
There is no doubt that the Boeing fiasco will be a major hit on first quarter and then second quarter GDP
(courtesy zerohedge)
(courtesy zerohedge)
US Budget Deficit Hits A Record $234 Billion As Interest On Debt Soars
Another month, another frightening jump in the US budget deficit. And this time it was a record.
According to the latest Treasury data, the US budget surplus in February – traditionally the worst month of the year due to tax refunds – was a whopping $234 billion, missing the $227 billion deficit expected, and well worse than the $214 billion deficit recorded last February. And even though there may have been one-time tax refund and government shutdown factors at play, the February deficit was also the biggest budget deficit on record.
For Feb, receipts rose 7.5% y/y to $167.3BN while outlays rose 8.2% to $401.2BN in Feb. As a result, the budget deficit for the first five months of the fiscal year, widened to $544 billion, a whopping 39% higher than the $391 billion reported for the same period last year, largely the result of the revenue hit from Trump’s tax cuts and the increase in government spending. The deficit was the result of a modest drop in fiscal YTD receipts to $1.278 trillion, while spending jumped 9% to $1.823 trillion.
The jump in the deficit was despite the bump in customs duties, which almost doubled to about $29.5 billion this fiscal year from $15.3 billion a year ago, reflecting the Trump administration’s tariffs on Chinese imports.
On a trailing 12 month basis, the deficit rose again, hitting $932 billion, the highest since February 2013, when it was just above $1 trillion.
What was more concerning perhaps is that rolling 12 month receipts declined 0.7% Y/Y, after posting a 1.5% drop last month and now represents three consecutive months of declining receipts since March 2017. Worse, the absolute drop in tax receipts, which declined for both corporations and individuals, was the biggest since the financial crisis; and, as shown in the chart below, every time that receipts have posted an annual decline, a recession either followed shortly or had already arrived.
Unfortunately, since receipts are set to decline even more in the coming months, the overall budget deficit is set to widen further in the coming years as the Republican tax cut package and increased spending for defense and other priorities boost government outlays. Some policy makers and economists are flagging concern about the growing debt burden, saying it risks America’s credit quality among borrowers, while other economists see more room to run.
According to the CBO, the budget deficit in fiscal 2019 will widen to $897 billion, up by $118 billion from a year earlier; any economic recession will result in a far greater number.
Finally, and perhaps most concerning, is that for the first four months of this fiscal year, interest payments on the U.S. national debt hit $221 billion, $19 billion, or 9% more than in the same five-month period last year. As a reminder, according to the Treasury’s conservative budget estimates, interest on the U.S. public debt is on track to reach a record $591 billion this fiscal year, more than the entire budget deficit in FY 2014 ($483 BN) or FY 2015 ($439 BN), and equates to almost 3% of estimated GDP, the highest percentage since 2011.
And since total debt, which recently surpassed $22 trillion is only set to keep rising – once the latest pesky debt ceiling issue is resolved in a few months – expect interest on the debt to keep rising, especially if inflation comes back with a bang and the Fed reverts to its tightening trajectory, and hit $1 trillion per year as soon as 2021, making it one of the biggest spending categories, and on pace to surpass total US defense spending (roughly $950BN per year) in dollar terms in just two years.
end
iii)USA ECONOMIC/GENERAL STORIES
He is right: Gundlach states that the economy feels like 2007: he blasts the Fed’s unprecedented reversal
(courtesy zerohedge/Gundlach)
“It Feels Eerily Like 2007” – DoubleLine’s Gundlach Blasts Fed’s “Unprecedented Reversal”
As the whipsaw in stocks and the dollar sank in today – while the bond market remains unimpressed by the machine’s liftathon today – market participants are still shaking their heads at what just happened.
One of the more outspoken of those market participants is DoubleLine CEO Jeffrey Gundlach who took to Twitter this morning to express his disdain…
“Three months ago the Fed predicted totally different policy than where they are now. How can they predict 2020 policy with a straight face?”
Jeffrey Gundlach
✔@TruthGundlach
Three months ago the Fed predicted totally different policy than where they are now. How can they predict 2020 policy with a straight face?
But he was not done, in a brief interview with Reuters after the close, Gundlach unleashed on Jay Powell and rest of the FOMC warning that their sudden cautious stance on raising interest rates could backfire by creating uncertainty in the economy…
“This U-Turn – on nothing fundamentally changing – is unprecedented,” Gundlach said in a telephone interview.
“Three months ago, we were on ‘autopilot’ with the balance sheet – and now the bond market is priced for a rate cut this year. The reversal in their stance is stunning.”
Gundlach, the new “Bond King” now that Bill Gross has ‘retired’, oversees more than $123 billion in assets (we offer that tidbit to suggest he is worth listenig to), said he feels the Fed’s massive shift in such a short period on quantitative tightening could hurt the U.S. central bank’s credibility.
“They aren’t telling you what they are targeting. It’s like they aren’t really telling you what their motivation is,” Gundlach said.
“Just because things seem invincible doesn’t mean they are invincible. There is kryptonite everywhere. Yesterday’s move created more uncertainty.”
Gundlach, who correctly predicted the S&P 500 would post negative returns in 2018, said the benchmark index is set for another negative year.
He said the stock market, for now, “likes the fact that they (the Fed) aren’t going to give them any problems.”
But things could change quickly and dramatically, he said, with his final comment, the most ominous:
“It feels eerily like ‘07,” he said.
“The stock market is near its high and the economy is noticeably weaker – and yet everyone is saying ‘Everything is Great!’”
And just in case you wondered how bad the underlying is – despite equity market’s enthusiasm – Citi’s Economic Data Change index as its worst level since 2009…
Which is perhaps why Gundlach said he favors a plain-vanilla Treasury fund investing in maturities of one to five years.
END
BOND MARKET ARMAGEDDON
(COURTESY jEFFREY SNIDER)
What The Fed Got Wrong (But The Bond Market Knew All Along)
Authored by Jeffrey Snider via Alhambra Investment Partners,
The Real End of The Bond Market
These things are actually quite related, though I understand how it might not appear to be that way at first. As noted earlier today, the Fed (yet again) proves it has no idea how global money markets work. They can’t even get federal funds right after two technical adjustments to IOER (the joke).
But as esoteric as all that may be, recent corporate statements leave much less doubt at least as to the primary effect. Before the FOMC gave up on the boom, company bellwethers like FedEx beat them to it.
Corporate giants doing business abroad are painting a dreary picture of the world’s economy…This week, top executives at FedEx, BMW, UBS and others described bleak global business conditions while discussing quarterly results. Fitch Ratings also “aggressively” cut its forecast for the year.
The head of UBS was among the latest to blame the world’s backdrop for weaker-than-expected results. CEO Ermotti told a conference in London on Wednesday that it “one of the worst first-quarter environments in recent history,” Reuters reported.
Economists would do well if they would ever learn to curve (stop it with the ridiculous one-year forwards and term premiums nonsense). The bond markets have been saying all along that this was the way it was going to turn out. The reason: liquidity risks. These are high, unusually high because of that one thing. The Federal Reserve has no idea what it takes to fix the broken monetary system (they can’t even get the simplest part right).
QE’s and bank reserves didn’t accomplish a thing. In light of recent EFF and repo events, officials are turning to more bank reserves. Brilliant.
If you thought that was bad enough, things are still taking a turn for the worse. Having more and more considered a downside scenario and the growing probability for it, attention is now focused on depth and duration.
There are a couple things worth noting along those lines, in addition to the yield or eurodollar futures curves. TIPS yields, for example, are a composite of inflation perceptions balanced against the nominal environment. In other words, the 5-year TIPS yield is the 5-year UST nominal minus what the market assumes is average inflation over the duration of the instrument (since you get compensated by the US Treasury for the CPI).
That remainder can be thought of as “real” growth expectations. My interests tend toward the monetary and therefore inflationary side of TIPS. My colleague Joe Calhoun (correctly, as usual) takes the broader approach when assessing those “real” yields, too. Guess what they’ve been doing all during this Fed “pause.”
Growth expectations in the bond market have been collapsing, pretty much what the CEO of UBS as well as the earnings report from FedEx have been talking about. Inflation expectations must therefore rise to offset them; because nominal UST yields have run into a roadblock of sorts:
As noted before, I believe UST rates would be falling faster and farther (like in Germany or Japan) if Jay Powell had been more honest (or capable, really) in reading the economic situation. The short end is in the way, to put it mildly. More and more, however, that is proving to be less of a problem.
With the belly of the UST curve now regularly falling below EFF, the market is becoming comfortable, for lack of a better term, with this upside down situation. Risks, in other words, are being perceived as still rising and therefore overwhelming the natural tension/shape of the yield curve keeping it from whole-hearted collapse.
If, rather when UST yields push through the ST “boundary” then you’ll likely see both inflation breakevens as well as “real” TIPS yields decline in concert. For now, the short end is holding up the nominal topside, leaving inflation breakevens to follow along with oil.
This view is corroborated by indications like swap spreads. The Fed pause never once registered in them, only the falling growth expectations. Swap spreads are, essentially, an indirect measure of balance sheet capacity especially when they are negative. The 10s are right on the boundary from falling below zero again (even the 5s were edging closer to the netherworld this week).
Economists and central bankers the world over misinterpreted Reflation #3; they really did, and a lot on purpose. They specifically talked up “globally synchronized growth” trying more so to make it happen rather than out of an honest assessment of the shape of the global economy as it really was. If this was a game of poker, the flat curve in 2017 was the bond market calling their bluff.
The FOMC meeting this week was Jay Powell showing his weak hand (again, he can’t even get EFF right). What comes next is markets assessing what it means with the Fed totally out of the game. The initial inclination, falling real yields, obviously isn’t a good one. And as recent corporate news projects, it’s not limited to being a market-driven curiosity.
Monetary breakdown to financial chaos to economic downturn.
The Fed’s Historic Policy Error In One Chart
It’s official: whether it wanted to or not, the Fed’s doubling-down on dovishness this Wednesday is now seen by the market as a major policy error, perhaps the biggest in Fed history.
While equities have yet to determine if terrible news is good news (we already knew that “bad news is good news” until today), the continuation of devastating economic data in combination with the Fed’s capitulatory response has sparked a selloff in what is arguably the most important asset class of all, if only for the Fed: inflation expectations.
And looking at the 5Y-5Y Forward breakevens, which are derived from market-based inflation expectations between 5 and 10 years into the future, i.e. a testament to whether the Fed will be successful in reflating the economy over the medium to longer run, we are seeing the biggest drop in this series since July 2017. But what is far more concerning, is that today’s violent drop took place after the most powerful dovish surprise by the Fed in recent history: in other words, for the Fed to surprise even more – and spark higher inflation hopes – it would have to either cut rates or launch QE.
Here is BMO’s Jon Hill explaining, in very clear terms, why the Fed has not only made a policy error, but – as Jeff Gundlach warned – may be on the road to losing all credibility:
A classic dovish fed should push real yields lower and breakevens wider (more accommodative Fed = more economic activity and thus more inflationary pressure); we saw exactly that play out after the January FOMC as well as in the immediate aftermath to Wednesday’s meeting.
However, today, we’re seeing both real yields and breakevens fall which is better described as a negative growth shock. We’d point to weak data out of Germany out overnight and the ongoing recalibration of global growth expectations.
As Hill concludes, “It’s been a key question as to whether the FOMC’s dovish pivot could avert a global synchronized slowdown” and according to the market today, the answer is now a resounding no.
Catastrophic Flooding In Midwest Could Last “For Months”, Threatens US Food Production
Authored by Michael Snyder via The End of The American Dream blog,
The worst flooding disaster in the history of the Midwest is just getting started, and as this crisis unfolds we are all going to be feeling the pain. The “bomb cyclone” that recently brought hurricane-force winds and blizzard conditions to the middle of the nation was the spark that set off this catastrophic flooding, and now all of the snow from one of the snowiest winters in decades is going to be feeding into rivers that have already shattered all-time flood records. As you will see below, most of the Great Plains and Upper Midwest is currently covered by more than 10 inches of snow, and all of that water has to go somewhere. As all of that snow melts, we are going to witness an agricultural disaster that is far beyond anything that we have ever seen before in modern American history.
If you think that I am exaggerating even a little bit, please read this article all the way to the end.
As I did research for this article, I was floored by the immense devastation that has already taken place. But if the crisis was over, at least farmers could start picking up the pieces.
Unfortunately, the crisis is not over. In fact, Iowa Governor Kim Reynolds is saying that we are “just getting started”. The following comes from a USA Today article entitled “‘It looked like an ocean’: Severe Midwest flooding could last all spring”…
Gov. Kim Reynolds is warning Iowans what millions of Midwesterners have come to understand in recent days – the severe flooding that has swamped much of the regionmay be a long way from over.
Reynolds said the snowmelt and spring rains could create additional flooding in the weeks ahead because of compromised levees.
“We’re in for the long haul. We’re just getting started,” said Reynolds, who added that her tour of western Iowa this week had revealed unprecedented flooding. “It looked like an ocean.”
This was one of the worst winters for the middle part of the country that we have seen in ages, and now we are entering melting season.
According to Bloomberg, the amount of snow currently covering the upper Midwest and Great Plains is absolutely staggering…
At least 91 percent of the upper Midwest and Great Plains is snow covered to an average depth of 10.7 inches, according to the U.S. National Operational Hydrologic Remote Sensing Center in Chanhassen, Minnesota. The center tracks snow nationwide and sends out airplanes to measure its depth.
So what is going to happen when all of that snow melts and starts pouring into the major rivers?
Needless to say, this is beyond a “worst case scenario” for countless numbers of Midwest farmers.
I am going to share with you some excerpts from mainstream news reports about the devastation that we have already witnessed. After reading each excerpt carefully, I think that you will agree with me that we are literally facing a national food production nightmare.
At this moment, millions of acres of farmland are underwater, and that is not going to change any time soon. When the flood waters came, they moved so rapidly that they literally picked up pigs and baby calves and carried them along. Roads, rail lines and entire small towns have been washed away, and so even if farmers had something left to sell they couldn’t get it to market anyway.
We have also witnessed the loss of massive stockpiles of wheat, corn and soybeans that had already been harvested. The following comes from Reuters…
As river levels rose, spilling over levees and swallowing up townships, farmers watched helplessly as the waters consumed not only their fields, but their stockpiles of grain, the one thing that can stand between them and financial ruin.
“I’ve never seen anything like this in my life,” said Tom Geisler, a farmer in Winslow, Nebraska, who said he lost two full storage bins of corn. “We had been depending on the income from our livestock, but now all of our feed is gone, so that is going to be even more difficult. We haven’t been making any money from our grain farming because of trade issues and low prices.”
According to the U.S. Food and Drug Administration, flood-soaked wheat, corn and soybeans are considered to be “adulterated” and they must be destroyed.
And thanks to the ongoing trade war with China, farmers had a staggering amount of wheat, corn and soybeans stored on their farms right now…
As of Dec. 1, producers in states with flooding – including South Dakota, Nebraska, Kansas, Minnesota, Iowa, Missouri, Wisconsin and Illinois – had 6.75 billion bushels of corn, soybeans and wheat stored on their farms – 38 percent of the total U.S. supplies available at that time, according to U.S. Department of Agriculture data.
Are you starting to get the picture?
In one county alone, more than a million bushels of corn are sitting under the floodwaters at this moment…
Fremont County farmers estimate about 390,000 bushels of stored soybeans and about 1.2 million bushels of stored corn are under water. And Jorgenson said more of last year’s grain was being swallowed up Tuesday as the Missouri River crests.
At local cash prices for corn and soybean, that’s about $7.3 million farmers may be unable to replace. And that’s just one county, Jorgenson noted.
Ladies and gentlemen, food prices are about to start soaring in a major way. There has not been such a massive blow to U.S. food production in my entire lifetime.
For many farmers, this truly is the end of the line. One of the farmers that has reached his breaking point is 23-year-old Clint Pischel…
“When you’re losing money to start with, how do you take on extra losses?” asked Clint Pischel, 23, of Niobrara, Neb., whose lowland fields were flooded by the ice-filled Niobrara River after a dam failed. He spent Monday gathering 30 dead baby calves from his family’s ranch in this northern region of the state, finding their bodies under huge chunks of ice.
Can you imagine losing 30 baby calves and not being able to do anything about it?
But Doug and Eric Alberts were hit even harder. They lost nearly 700 animals to the floodwaters…
Doug and Eric Alberts are trying to round up the surviving hogs on their 9-acre farm in Fremont, Nebraska. There aren’t many. The family estimates they were only able to save 14 out of 700 of their livestock.
The father and son have worked for three years to build this business. Then, a few days ago, the water came.
“About a 3-foot wall … 100-foot wide … just flowing over the road,” Doug recalled.
Within minutes, 7 feet of water covered their farm.
Even before the flooding, farm bankruptcies had hit the highest level since the Great Recession, and now those numbers are going to explode much, much higher.
In addition to everything else, all of this flooding is causing massive topsoil erosion. We had already lost over half our topsoil, and we aren’t too far from an apocalyptic situation…
And severe winter and spring floods take another toll that’s much more difficult to quantify: Soil loss, on a grand scale, right in the region that provides a huge amount of our food supply. The Midwest boasts one of the globe’s greatest stores of topsoil, more than half of which has been lost in the past 50 years. Topsoil is the fragile, slow-to-regenerate resource that drives agriculture. As University of Washington ecologist David Montgomery explained in his terrific 2007 book Dirt: The Erosion of Civilizations: “With just a couple feet of soil standing between prosperity and desolation, civilizations that plow through their soil vanish.”
I wish that I could accurately convey the seriousness of what we are facing.
Food production in the United States is going to be way, way down this year. Prices at the grocery store are immediately going to start rising, and they are going to keep rising all year long. So now is the best time to stock up and to get prepared for what is coming. Our breadbasket has been absolutely devastated, and things are only going to get worse. The mainstream media seems to think that this is just another in a long string of major natural disasters that has hit our nation in recent years, but the truth is not so simple. This disaster is going to have a dramatic impact on our ability to grow our own food, and even if everything went perfectly from this point forward we are talking about a recovery that would take many, many years.
As I conclude this article, I would like to share with you an extended excerpt from something that was posted on Facebook by Cane Creek Mercantile…
Stories have slowly been surfacing, and images have been taken showing the complete and utter chaos Nebraska is currently in. Images of farmers and ranchers wading through the water carrying hay to the haggard cattle, and frightened horses… Using a Deweze feed box to pull near frozen sheep from what would be a snowy grave… Using aluminum scoop shovels to quite literally tunnel out buried bulls. Taking tractors into the mud and slop to skillfully grab ahold of cows who are stuck in belly deep mud and carry them to safety and feed. Highway patrol officers helping free baby calves that had been quite literally frozen to the ground. The list of things go on. Our ag community is working night and day to save each and every animal that they can, sacrificing sleep, food, and their own well-being to provide the livestock those very things. Our farmers and ranchers, and neighbors of the rural communities around the nation are banding together to ensure that help will arrive.
With these things being said, there will be death loss, and sadly in staggering numbers. Fields that are normally used for growing beans, corn, and grain for example… All are under tons of snow or several feet of water. This means these fields will more than likely not produce a crop this year, which will drive prices up throughout the year and into the future until we as a nation can recover further down the road. But please, keep in mind why that is when you go to the grocery store, and remember just how many are affected by this disaster.
There will be families that have lost everything. They lost equipment, their houses, sheds, tools, and worst of all, their animals they care deeply for. Their livelihoods are being stripped from them in the most painful manner possible. Many will no longer be able to live the life they’ve known and loved their entire life. They will be displaced, and times for them will be harder than anything anyone will ever have to face. So, when you are at the grocery store, please keep in mind the cause for the prices climbing up, and instead of getting frustrated and complaining for having to pay more, be thankful for what you have and say a prayer for the folks suffering in Nebraska.
The “new normal” along the Mississippi River, the Missouri River and other major rivers in the middle part of the country is going to mean much, much higher prices at the grocery store.
These days, a full cart of groceries can easily run $200 or more.
So how bad will things ultimately get as this crisis continues to unfold?
We are facing something that we have never faced before, and nobody is quite sure what is going to happen ne
In Major Blow To Boeing, Indonesian Airline Cancels $6 Billion 737 Max Order
Indonesia’s national carrier became the first Boeing customer to announce it was cancelling a multibillion-dollar aircraft order, inflicting a major commercial blow after the model was involved in two fatal crashes in five months. Airline Garuda Indonesia said on Friday that it is requesting the cancellation of 49 Boeing 737 Max 8 jets valued at $6 billion, according to Reuters.
Garuda – which has just one 737 Max in its fleet, is the first airline to publicly confirm plans to cancel an order following the Ethiopian Airlines crash that killed 157 people – just five months after another Max 8 operated by Lion Air crashed off the coast of Indonesia, killing 189. The world’s entire fleet of 737 Max 8s was grounded following the latest incident.
Garuda’s CFO says they may change their order to widebody Boeing models. Spokesman Ikhsan Rosan told CNBC that the airline sent a letter to Boeing on March 14 to cancel its current order. The company has yet to hear back from Boeing, however the aircraft manufacturer will visit Jakarta on March 28 for “further discussion.”
As we noted earlier, according to JPM economist Michael Feroli, unless resolved quickly Boeing’s problems will soon make a dent in the economy. As JPM calculated, if 737 MAX production is halted for an extended period of time, it would take about 0.15% off the level of GDP, or about 0.6%-point off the quarterly annualized growth rate of GDP in the quarter in which production is stopped.
Based on similarities between the two Max 8 crashes, investigators suspect a malfunctioning stall sensor system may have forced both planes into nosedives. The day before the Lion Air crash last October, an off-duty pilot flying in the cockpit saved the same plane from a nosedive by explaining to frantic pilots how to disable the anti-stall system.
The US Department of Transportation has requested an audit of the FAA’s approval process for the Max8 jets, while the FBI is reportedly participating in a criminal investigation of the certification process.
SWAMP STORIES
This is a biggy!! Wall Street editorial board member Stephen Moore and a good guy is now tapped to fill one of the Fed’s vacant seats. He is against the Fed’s Powell and just about all of its members. He is not Keynesian and probably closer to the Austrian school like us…
(courtesy zerohedge)
Trump Reportedly Taps Former WSJ Ed Board Member To Fill Vacant Fed Seat
President Trump has just enlisted a key ally in his battle of wills with Fed Chairman Jerome Powell.
Though Powell and the Fed have already capitulated to Trump’s demands to end QT, the president has reportedly tapped campaign advisor and former Wall Street Journal editorial board member Stephen Moore to fill one of the two remaining vacancies on the Federal Reserve Board of Governors.
Bloomberg reported Thursday night that Moore was being considered for the seat, and on Friday morning, WSJ Fed correspondent Nick Timiraos reported Friday morning that Trump had informally offered Moore the job. Though Moore told Timiraos that he hadn’t yet received a formal offer, he said he would absolutely accept it. According to Timiraos, the administration is now beginning to process of vetting Moore, and the FBI will presumably run a background check.
The timing is not inauspicious: Trump praised Moore for a WSJ editorial published last week, where he and another author attacked the Powell Fed as a “threat to growth”.
Once a prominent critic of the Fed’s loose-money policies, Moore has shifted his view to better accommodate the president, arguing that the Fed shouldn’t support excessively loose or excessively tight monetary policy, and that it should seek to stabilize monetary conditions by pursuing “stable commodity prices” (i.e. “inflation”).
Assuming Moore clears his vetting and the Senate, the Trump Administration will still need to fill a second seat on the Fed’s Reserve Board.
Other rumored candidates have included Herman Cain (yes, that Herman Cain) – though WSJ reported that the administration isn’t anywhere close to settling on a candidate.
Blatant ESM manipulation forced stocks prices higher on Thursday. If similar action to the downside had occurred, there would be beaucoup calls for an investigation and prosecution.
As we noted in Thursday’s missive, after falling early on Thursday night due to the criminal investigation in Boeing over its 737 Max approval process, ESMs rallied 13 handles during Asian trading. We opined that the usual overnight ESM manipulation appeared earlier than usual.
ESMs then sank until hitting a low of 2813.75, down 23 handles from its overnight high, at 8:28 ET. After a modest rally, ESM started to surge minutes before the NYSE open. ESMs went vertical from 9:27 ET until 9:49 ET. Obviously, this is not normal market action. It is blatant manipulation. Its euphemism is impact trading: trying to generate a trend with aggressive orders.
ESMs rallied 20 handles from its 8:28 ET low until 9:49 ET – on no news. The egregious manipulation persisted until the final 35 minutes of trading. Once upon a time, Street wise men would have prevented this type of abuse on the capital markets. Now, short-term greed and abject corruption rule.
effrey Gundlach @TruthGundlach: Three months ago the Fed predicted totally different policy than where they are now. How can they predict 2020 policy with a straight face?
Nomura: “BOOM, Roasted: The Fed’s “Clown Car” Experiment Is Now Complete”
The Fed’s hilarious tightening / normalization “clown car” experiment (and ensuing credibility farce) is now complete, and I feel….vindicated.
I was openly dismissed / laughed-at by many, many investors late last Spring – early last Summer when I first-posited my “UST steepener” call… based-upon a then-building “tightening ourselves into a slowdown” impulse which would metastasize- then-force the Fed to pivot away from “tightening” and towards “easing” as early as 2019—all because the market would experience a late 2018 “Financial Conditions Tightening Tantrum.”…
Fed Chair Powell is now Arthur Burns, the Fed Chair who succumbed to pressure from Nixon to ease for the election of 1972. Inflation soared; the worst recession and stock market decline since the Thirties appeared in 1973-1974. Jerry could soon become G. William Miller, the Fed Chair who buckled under pressure from Carter in 1978 and unleashed the virulent inflation of 1979-1980, the worst US inflation since the US Civil War. A horrible double-dip recession appeared in 1981-1982.
What is Fed chair Jerome Powell really worried about?
At the end of last year, Powell was afraid that the stock market was creating “asset inflation”… Powell has his own euphemism for this — “financial imbalances” — and it had him concerned that rate hikes were going to come fast and furiously. Then stocks tanked. And Trump bellowed. So Powell caved…
https://nypost.com/2019/03/20/what-is-fed-chair-jerome-powell-really-worried-about/
Today – After an obvious manipulation or rig, trading tends to become very quiet, barring news. Few want to buy at artificial levels; fewer want to sell because they fear another rig could appear.
The window for important upward manipulation opens late next week with Q1 performance gaming.
Clinton, in newly revealed emails, discussed classified foreign policy matters, secretive ‘private’ comms channel with Israel – and apparently met with Putin-aligned Georgian oligarch Bidzina Ivanishvilibefore he became prime minister on a staunchly pro-Russian platform — and with reported help from a Russian interference operation…
@paulsperry_: Dossier creator Christopher Steele was never in fact a British “spy” in Russia and never even handled spies or worked any assets while employed by MI6; and when he wrote the infamous Russia “collusion” dossier, he had not stepped foot inside Russia for over seven years
Fox Hires Joe Biden’s Top Aide as Chief Lobbyist
https://www.newsmax.com/newsfront/obrien-fox-lobbyist-biden/2019/03/21/id/908059/
Former NFL Star Warrick Dunn Gives Away His 145th Home to a Single Parent, a Mom in Tampa
Washington Seeks to Bar Trump from Ballot – the Washington state senate passed a bill that would remove President Trump’s name from the presidential ballot if he does not release his tax returns.
No law exists mandating that presidential candidates release their tax records. Indeed, it has been a tradition only since President Richard Nixon decided to release his returns during his campaign…
https://www.libertynation.com/washington-states-plan-to-ban-trump-from-the-2020-ballot/
@seanmdav: The Electoral College is the last remnant of the Founders’ vision for a state-governed republic, rather than an all-powerful central gov’t. The 17th Amendment eliminated state authority in Congress. Killing the EC will officially eliminate state authority over the presidency.
The House was designed to represent the people. The Senate was designed to represent state legislatures. The presidency was designed to represent the states as a whole. The whole system was designed to prevent tyranny. Would-be tyrants want it destroyed.
Satire account @TheBabylonBee: Candidates Propose Changes to Fix Flaw in Constitution That Allows Republicans to Be Elected
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Let us close out the week with this offering courtesy of Greg Hunter
(courtesy Greg Hunter)
Dem Marxism Exposed, Trump Coup Ending, Fed Folds
By Greg Hunter On March 22, 2019
The new blood that was elected in the Democrat party in 2018 are as far Left as you can get. Freshmen Congress women Omar, Ocasio-Cortez and Tlaib have Marxist/communist ideas and want that repressive lifestyle for us all. Many say they have turned the Democrat party Left, but I say it was always Left. These people have just exposed Democrats for what they really are–freedom and American hating Marxists. Now, we know what we are really voting for when these folks campaign in the 2020 election.
The failed coup on President Trump is winding down and being exposed for what it really is. The Obama Administration DOJ and FBI made up a story of Russian collusion to try and blow Trump out of office. Team Trump is about to hit back but has had plenty to do in cleaning up the corruption in the swamp before he strikes.
The Federal Reserve has officially thrown in the towel on raising interest rates anymore in 2019. Fed Head Jay Powell made the announcement this week, but why now? Maybe the economy is not nearly as strong as you have been told.
Join Greg Hunter as he gives his take on the week’s top stories in the Weekly News Wrap-Up.
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