FEB 18/GOLD UP $17.00 TO $1600.45//SILVER UP 42 CENTS// CORONAVIRUS ESCALATION!!/VERY SCARY!!//HUGE NUMBER OF COMMENTARIES PLUS SWAMP STORIES//

GOLD:$1600.45 UP $17.00    (COMEX TO COMEX CLOSING

 

 

 

Silver:$18.18 UP 42 CENTS  (COMEX TO COMEX CLOSING)

Closing access prices:

 

GOLD: 1602.50

 

SILVER: 18.18

 

 

 

COMEX DATA

 

 

JPMorgan has been receiving gold with reckless abandon and sometimes supplying (stopping)

today RECEIVING: 171/269

EXCHANGE: COMEX
CONTRACT: FEBRUARY 2020 COMEX 100 GOLD FUTURES
SETTLEMENT: 1,582.700000000 USD
INTENT DATE: 02/14/2020 DELIVERY DATE: 02/19/2020
FIRM ORG FIRM NAME ISSUED STOPPED
____________________________________________________________________________________________
355 C CREDIT SUISSE 10
435 H SCOTIA CAPITAL 39
624 C BOFA SECURITIES 8
657 C MORGAN STANLEY 264 5
661 C JP MORGAN 171
685 C RJ OBRIEN 2
732 C RBC CAP MARKETS 1
737 C ADVANTAGE 5 26
880 C CITIGROUP 6
905 C ADM 1
____________________________________________________________________________________________

TOTAL: 269 269
MONTH TO DATE: 7,507

we are coming very close to a commercial failure!!

 

 

NUMBER OF NOTICES FILED TODAY FOR  FEB CONTRACT: 269 NOTICE(S) FOR 26900 OZ (0.8367 tonnes)

TOTAL NUMBER OF NOTICES FILED SO FAR:  7509 NOTICES FOR 750,900 OZ  (23.356 TONNES)

 

 

 

 

SILVER

 

FOR FEB

 

 

0 NOTICE(S) FILED TODAY FOR nil  OZ/

total number of notices filed so far this month: 234 for 1,170,000 oz

 

XXXXXXXXXXXXXXXXXXXXXXXXX

Bitcoin: OPENING MORNING TRADE :  $ 9680. DOWN 253 

 

 

 

 

Bitcoin: FINAL EVENING TRADE: $ 10,153 UP 449 

 

 

 

Let us have a look at the data for today

 

 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

IN SILVER THE COMEX OI ROSE  BY ATMOSPHERIC SIZED 5418 CONTRACTS FROM 225,679 UP TO 231,097 DESPITE OUR SMALL 10 CENT GAIN IN SILVER PRICING AT THE COMEX.

TODAY WE ARRIVED CLOSER TO AUGUST’S 2018  RECORD SETTING OPEN INTEREST OF 244,196 CONTRACTS.

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 VERY STRONG  SIZED NUMBER OF COMEX LONGS TRANSFERRING THEIR CONTRACTS TO LONDON THROUGH THE EFP:,

; FEB 0; MARCH:  858 AND MAY: 0 AND DEC: 300 ZERO FOR ALL  OTHER MONTHS  AND THEREFORE TOTAL ISSUANCE  1158 CONTRACTS. WITH THE TRANSFER OF 1158 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 1158 EFP CONTRACTS TRANSLATES INTO 5.798 MILLION OZ  ACCOMPANYING:

1.THE 10 CENT RISE IN SILVER PRICE AT THE COMEX AND

2. THE STRONG AMOUNT OF SILVER OUNCES WHICH STOOD FOR DELIVERY IN THE LAST 12 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.:

27.120 MILLION OZ STANDING IN MARCH.

3.875 MILLION OZ STANDING FOR SILVER IN APRIL.

18.845 MILLION OZ STANDING FOR SILVER IN MAY.

2.660 MILLION OZ STANDING FOR SILVER IN JUNE//

22.605 MILLION OZ  STANDING FOR JULY

10.025   MILLION OZ INITIAL STANDING IN AUGUST.

43.030   MILLION OZ INITIALLY STANDING IN SEPT. (HUGE)

7.32     MILLION OZ INITIALLY STANDING IN OCT

2.630     MILLION OZ STANDING FOR NOV.

20.970   MILLION OZ  FINAL STANDING IN DEC

5.075     MILLION OZ FINAL STANDING IN JAN

1.170    MILLION OZ INITIALLY STANDING IN FEB

 

FRIDAY, AGAIN OUR CROOKS USED COPIOUS PAPER IN ORDER TO CONTAIN SILVER’S PRICE…AND THEY WERE  UNSUCCESSFUL IN KNOCKING THE PRICE OF SILVER DOWN (IT ROSE 10 CENTS).. AND, OUR OFFICIAL SECTOR/BANKERS  WERE  UNSUCCESSFUL IN THEIR ATTEMPT TO FLEECE  SOME SILVER LONGS AS THE TOTAL GAIN IN OI ON BOTH EXCHANGES TOTALED AN ATMOSPHERIC SIZED 6576 CONTRACTS. OR 32.88 MILLION OZ…..   WE HAD NO LONG LIQUIDATION AND WE HAD NO BANKER SHORT COVERING, JUST A STRONG ACCUMULATION OF SILVER LONG CONTRACTS ENTERING BOTH EXCHANGES.

 

 

WE HAVE NOW COMMENCED IN SILVER THE ILLEGAL SPREADING OPERATION AND THAT EXPLAINS THE RISE IN COMEX OI DESPITE THE LOSS IN PRICE.  FOR NEWCOMERS, HERE ARE THE DETAILS:

 

SPREADING LIQUIDATION HAS NOW STOPPED IN GOLD AS THEY NOW BEGIN TO MORPH INTO SILVER AS WE HEAD TOWARDS THE NEW FRONT MONTH WILL BE MARCH.

 

 

FOR THOSE OF YOU WHO ARE NEW, HERE IS THE MODUS OPERANDI OF THE SPREADERS AND THE CRIMINAL ELEMENT BEHIND IT:

 

THE SPREADING LIQUIDATION OPERATION IS NOW OVER FOR GOLD..AND WE WILL NOW MORPH INTO AN ACCUMULATION PHASE OF SPREADING CONTRACTS FOR SILVER.  THEY WILL ACCUMULATE CONSIDERABLE AMOUNT OF THE CONTRACTS AND THEN LIQUIDATE ONE WEEK PRIOR TO FIRST DAY NOTICE

FOR THOSE OF YOU WHO ARE NEWCOMERS HERE IS A BRIEF SYNOPSIS OF HOW THE CROOKS FLEECE UNSUSPECTING LONGS IN THE SPREADING ENDEAVOUR;

MODUS OPERANDI OF THE CORRUPT BANKERS AS TO HOW THEY HANDLE THEIR SPREAD OPEN INTERESTS:

.

 

 

AS I HAVE MENTIONED IN PREVIOUS COMMENTARIES:

 

 

“AS YOU WILL SEE, THE CROOKS WILL NOW SWITCH TO SILVER AS THEY INCREASE THE OPEN INTEREST FOR THE SPREADERS. THE TOTAL COMEX SILVER OPEN INTEREST WILL RISE FROM NOW ON UNTIL ONE WEEK PRIOR TO FIRST DAY NOTICE AND THAT IS WHEN THEY START THEIR CRIMINAL LIQUIDATION.

HERE IS HOW THE CROOKS USED SPREADING AS WE ARE NOW INTO THE NON ACTIVE DELIVERY MONTH OF FEB HEADING TOWARDS THE  ACTIVE DELIVERY MONTH OF MARCH FOR SILVER:

AS I HAVE MENTIONED IN PREVIOUS COMMENTARIES, HERE IS THE BANKERS MODUS OPERANDI:

YOU WILL ALSO NOTICE THAT THE COMEX OPEN INTEREST  STARTS TO RISE IN THIS NON  ACTIVE MONTH OF FEB .BUT SO IS THE OPEN INTEREST OF SPREADERS. THE OPEN INTEREST IN SILVER WILL CONTINUE TO RISE UNTIL ONE WEEK BEFORE FIRST DAY NOTICE OF AN UPCOMING  ACTIVE DELIVERY MONTH (MAR), AND THAT IS WHEN THE CROOKS SELL THEIR SPREAD POSITIONS BUT NOT AT THE SAME TIME OF THE DAY.  THEY WILL USE THE SELL SIDE OF THE EQUATION TO CREATE THE CASCADE (ALONG WITH THEIR COLLUSIVE FRIENDS) AND THEN COVER ON THE BUY SIDE OF THE SPREAD SITUATION AT THE END  OF THE DAY. THEY DO THIS TO AVOID POSITION LIMIT DETECTION. THE LIQUIDATION OF THE SPREADING FORMATION CONTINUES FOR EXACTLY ONE WEEK AND ENDS ON FIRST DAY NOTICE.”

 

 

 

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

12,658 CONTRACTS (FOR 11 TRADING DAYS TOTAL 12,658 CONTRACTS) OR 63.48 MILLION OZ: (AVERAGE PER DAY: 1150 CONTRACTS OR 5.753 MILLION OZ/DAY)

TO GIVE YOU AN IDEA AS TO THE HUGE SUPPLY THIS MONTH IN SILVER:  SO FAR THIS MONTH OF FEB: 63.48 MILLION PAPER OZ HAVE MORPHED OVER TO LONDON. THIS REPRESENTS AROUND 8.24% 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 2020 TO DATE SILVER EFP’S:          245.09 MILLION OZ.

JANUARY 2020 EFP TOTALS SO FAR: 181.61 MILLION OZ

FEB 2020 EFP’S TOTAL SO FAR:  ……     63.48 MILLION OZ

 

 

RESULT: WE HAD A HUMONGOUS SIZED INCREASE IN COMEX OI SILVER COMEX CONTRACTS OF 5,418, DESPITE THE SMALL 10 CENT RISE IN SILVER PRICING AT THE COMEX /FRIDAY… THE CME NOTIFIED US THAT WE HAD A STRONG SIZED EFP ISSUANCE OF 1158 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

 

TODAY WE GAINED A HUMONGOUS SIZED  SIZED:  6576 TOTAL OI CONTRACTS ON THE TWO EXCHANGES: (WITH THE GAIN IN PRICE)

i.e 1158 OPEN INTEREST CONTRACTS HEADED FOR LONDON  (EFP’s) TOGETHER WITH INCREASE OF 5418 OI COMEX CONTRACTS.AND ALL OF THIS HUGE DEMAND HAPPENED WITH A SMALL 10 CENT GAIN IN PRICE OF SILVER/ AND A CLOSING PRICE OF $17.76 // FRIDAY’S TRADING. YET WE STILL HAVE A STRONG AMOUNT OF SILVER STANDING AT THE COMEX FOR DELIVERY!! 

 

In ounces AT THE COMEX, the OI is still represented by JUST OVER 1 BILLION oz i.e. 1.155 BILLION OZ TO BE EXACT or 165% of annual global silver production (ex Russia & ex China).

FOR THE NEW  FEB DELIVERY MONTH/ THEY FILED AT THE COMEX: 0 NOTICE(S) FOR  NIL OZ OF SILVER.

IN SILVER,PRIOR TO TODAY, WE  SET THE NEW COMEX RECORD OF OPEN INTEREST AT 244,196 CONTRACTS ON AUG 22.2018. AND AGAIN THIS HAS BEEN SET WITH A LOW PRICE OF $14.70

 

.

 

ON THE DEMAND SIDE WE HAVE THE FOLLOWING:

  1. HUGE AMOUNTS OF SILVER STANDING FOR DELIVERY  (MARCH/2018: 27 MILLION OZ , APRIL/2018 : 2.485 MILLION OZ  MAY: 36.285 MILLION OZ ; JUNE/2018  (5.420 MILLION OZ) , JULY 2018 FINAL AMOUNT STANDING: 30.370 MILLION OZ   )  FOR AUGUST 6.065 MILLION OZ. , SEPT:  A HUGE 39.505 MILLION OZ./ OCTOBER: 2,520,000 oz  NOV AT 7.440 MILLION OZ./ DEC. AT 21.925 MILLION OZ   JANUARY AT  5.825 MILLION OZ.AND FEB 2019:  2.955 MILLION OZ/ MARCH: 27.120 MILLION OZ/  APRIL AT 3.875 MILLION OZ/ A MAY:  18.845 MILLION OZ ..JUNE 2.660 MILLION OZ//JULY 22.605 MILLION OZ; AUGUST 10.025 MILLION OZ/ SEPT 43.030 MILLION OZ//OCT: 7.665 MILLION OZ//   NOV: 2.630 MILLION OZ//DEC:  20.970 MILLION OZ; JAN:  5.075 MILLION OZ.//FEB 1.170 MILLION OZ//
  2. THE  RECORD WAS SET IN AUGUST 22/2018:  244,196 CONTRACTS,  WITH A SILVER PRICE OF $14.78//.
  3. HUGE ANNUAL EFP’S ISSUANCE EQUAL TO 2.9 BILLION OZ OR 400% OF SILVER ANNUAL PRODUCTION/2017 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)

 

GOLD

 

IN GOLD, THE COMEX OPEN INTEREST ROSE BY A GIGANTIC SIZED 14,323 CONTRACTS TO 688,396 AND MOVING CLOSER TO  OUR  NEW RECORD (SET JAN 24/2020) AT 799,541 AND  PREVIOUS TO THAT: (SET JAN 6/2020) AT 797,110.

THE HUGE GAIN IN COMEX OI OCCURRED WITH OUR MEDIOCRE ADVANCE OF $6.85 IN PRICING /// COMEX GOLD TRADING// FRIDAY// WE, FOR SURE HAD NO BANKER SHORT COVERING AND NO LONG LIQUIDATION.  TOGETHER WITH THE STRONG ISSUANCE OF EFP’S OUR BANKER FRIENDS BASICALLY COULD NOT FLEECE LONGS  FROM ANY GOLD ARENA AND THUS WE HAD OUR VERY STRONG GAIN IN OUR TWO EXCHANGES!  

 

 

E.F.P. ISSUANCE

 

 

 

THE CME RELEASED THE DATA FOR EFP ISSUANCAND IT TOTALED A STRONG SIZED 4205 CONTRACTS:

CONTRACTS, FEB>  0 CONTRACTS; MARCH 00 APRIL: 4205; JUNE. 0 AND ALL OTHER MONTHS ZERO//TOTAL: 4205.  The NEW COMEX OI for the gold complex rests at 688,396,.  ALSO REMEMBER THAT THERE WILL BE A DELAY IN THE ISSUANCE OF EFP’S.  THE BANKERS REMOVE LONG POSITIONS OF COMEX GOLD IMMEDIATELY.  THEN THEY ORCHESTRATE THEIR PRIVATE EFP DEAL WITH THE LONGS AND THAT COULD TAKE AN ADDITIONAL, 48 HRS SO WE GENERALLY DO NOT GET A MATCH WITH RESPECT TO DEPARTING COMEX LONGS AND NEW EFP LONG TRANSFERS. . EVEN THOUGH THE BANKERS ISSUED THESE MONSTROUS EFPS, THE OBLIGATION STILL RESTS WITH THE BANKERS TO SUPPLY METAL BUT IT TRANSFERS THE RISK TO A LONDON BANKER OBLIGATION AND NOT A NEW YORK COMEX OBLIGATION. LONGS RECEIVE A FIAT BONUS TOGETHER WITH A LONG LONDON FORWARD. THUS, BY THESE ACTIONS, THE BANKERS AT THE COMEX HAVE JUST STATED THAT THEY HAVE NO APPRECIABLE METAL!! THIS IS A MASSIVE FRAUD: THEY CANNOT SUPPLY ANY METAL TO OUR COMEX LONGS BUT THEY ARE QUITE WILLING TO SUPPLY MASSIVE NON BACKED GOLD (AND SILVER) PAPER KNOWING THAT THEY HAVE NO METAL TO SATISFY OUR LONGS. LONDON IS NOW SEVERELY BACKWARD IN BOTH GOLD AND SILVER  AND WE ARE WITNESSING DELAYS IN ACTUAL DELIVERIES.

IN ESSENCE WE HAVE AN ATMOSPHERIC SIZED GAIN IN TOTAL CONTRACTS ON THE TWO EXCHANGES OF 18,528 CONTRACTS: 14,528 CONTRACTS INCREASED AT THE COMEX  AND 4205 EFP OI CONTRACTS WHICH NAVIGATED OVER TO LONDON. THUS  TOTAL OI GAIN OF 18,528 CONTRACTS OR 1,852,800 OZ OR 57.63 TONNES. FRIDAY, WE HAD A MEDIOCRE GAIN OF $6.80 IN GOLD TRADING……

AND WITH THAT GAIN IN  PRICE, WE  HAD A GIGANTIC GAIN IN GOLD TONNAGE OF 57.63  TONNES!!!!!! THE BANKERS/OFFICIAL SECTOR WERE SUPPLYING INFINITE SUPPLIES OF SHORT GOLD COMEX PAPER WITH RECKLESS ABANDON. THE BANKERS WERE UNSUCCESSFUL IN THEIR ATTEMPT TO LOWER GOLD’S PRICE (GAIN $6.80). AND IT SEEMS THAT THEIR ATTEMPT TO FLEECE  GOLD LONGS FROM THE GOLD ARENA FAILED AGAIN AS WE HAD  A GOOD INCREASE IN EXCHANGE FOR PHYSICALS  (4205) ACCOMPANYING THE HUGE GAIN IN COMEX OI.(14,323):  TOTAL GAIN IN THE TWO EXCHANGES:  18,053 CONTRACTS

 

ACCUMULATION OF EFP’S GOLD AT J.P. MORGAN’S HOUSE OF BRIBES: (EXCHANGE FOR PHYSICAL) FOR THE MONTH OF FEB : 95,597 CONTRACTS OR 9,559,700 oz OR 297.34 TONNES (11 TRADING DAYS AND THUS AVERAGING: 9139 EFP CONTRACTS PER TRADING DAY

TO GIVE YOU AN IDEA AS TO THE STRONG SIZE OF THESE EFP TRANSFERS :  THIS MONTH IN 11 TRADING DAY(S) IN  TONNES: 297.34 TONNES

TOTAL ANNUAL GOLD PRODUCTION, 2018, THROUGHOUT THE WORLD EX CHINA EX RUSSIA: 3555 TONNES

THUS EFP TRANSFERS REPRESENTS 297.34/3550 x 100% TONNES =8.37% OF GLOBAL ANNUAL PRODUCTION

ISSUANCE OF EXCHANGE FOR PHYSICAL /GOLD HAS EXPLODED THIS MONTH.

 

 

ACCUMULATION OF GOLD EFP’S YEAR 2020 TO DATE:    854.45  TONNES

JANUARY 2220 TOTAL EFP ISSUANCE; SO FAR: 570.19 TONNES

FEB 2020 TOTAL EFP ISSUANCE SO FAR:            297.34  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 GIGANTIC SIZED INCREASE IN OI AT THE COMEX OF 14,323 DESPITE THE MEDIOCRE  PRICING GAIN THAT GOLD UNDERTOOK FRIDAY($6.80)) //.WE ALSO HAD A  STRONG SIZED NUMBER OF COMEX LONG TRANSFERRING TO LONDON THROUGH THE EFP ROUTE: 4205 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 TH GOLD COMEX FOR DELIVERY PURPOSES. IF YOU TAKE INTO ACCOUNT THE 4205 EFP CONTRACTS ISSUED, WE  HAD AN ATMOSPHERIC SIZED GAIN OF 18,528 CONTRACTS IN TOTAL OPEN INTEREST  ON THE TWO EXCHANGES:

4205 CONTRACTS MOVE TO LONDON AND  14,323 CONTRACTS INCREASED AT THE COMEX. (IN TONNES, THE GAIN IN TOTAL OI EQUATES TO 56.15 TONNES). AND THIS INCREASE OF DEMAND OCCURRED WITH THE GAIN IN PRICE OF $6.80 WITH RESPECT TO FRIDAY’S TRADING/// AT THE COMEX.

 

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

GLD...

 

 

WITH GOLD UP $17.00  TODAY

A BIG CHANGE IN GOLD INVENTORY AT THE GLD”

A DEPOSIT OF 1.76 TONNES OF GOLD//

 

FEB 18/2020/Inventory rests tonight at 623.99 tonnes

 

 

 

 

 

SLV/

 

 

WITH SILVER UP 42 CENTS TODAY

A BIG CHANGE IN SILVER INVENTORY AT THE SLV:

 

 

FEB 18/INVENTORY RESTS AT 363.433 MILLION OZ.

 

 

 

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

 

 

end

 

OUTLINE OF TOPICS TONIGHT

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

1.Today, we had the open interest in SILVER ROSE BY A ATMOSPHERIC SIZED 5418 CONTRACTS FROM 225,679 UP TO 231,097 AND CLOSER TO  OUR NEW COMEX RECORD.  THE LAST RECORDS WERE SET  IN AUG.2018 AT 244,196 WITH A SILVER PRICE OF $14.78/(AUGUST 22/2018)..THE PREVIOUS RECORD TO THAT 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  2 3/4 YEARS AGO.  THE PRICE OF SILVER ON THAT DAY: $17.89.

EFP ISSUANCE 1221

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

 FOR FEB. 0; FOR MAR  858:  AND MAY: 0; DEC: 300 CONTRACTS   AND ALL OTHER MONTHS: ZERO. TOTAL EFP ISSUANCE: 1158 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 5451 CONTRACTS TO THE 1158 OI TRANSFERRED TO LONDON THROUGH EFP’S,  WE OBTAIN A HUGE GAIN OF 6609 OPEN INTEREST CONTRACTS. THUS IN OUNCES, THE GAIN ON THE TWO EXCHANGES: 33.045 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 7.475 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,  27.120 MILLION OZ FOR MARCH., 3.875 MILLION OZ FOR APRIL  18.765 MILLION OZ FOR MAY  NOW 2.660 MILLION OZ FOR JUNE WITH JULY AT 22.605 MILLION OZ AUGUST AT 10.025 MILLION OZ//  SEPT: 43.030 MILLION OZ///OCT: 7.32 MILLION OZ//NOV 2.63 MILLION OZ//DEC: 20.970 MILLION OZ//JAN: 5.075 MILLION OZ//FEB: 1.70 MILLION OZ//

 

 

RESULT: A HUGE SIZED INCREASE IN SILVER OI AT THE COMEX DESPITE THE SMALLISH  10 CENT RISE IN PRICING THAT SILVER UNDERTOOK IN PRICING// FRIDAY. WE ALSO HAD A STRONG SIZED 1158 EFP’S ISSUED TRANSFERRING COMEX LONGS OVER TO LONDON. TOGETHER WITH THE STRONG  SIZED AMOUNT OF SILVER OUNCES STANDING FOR THIS MONTH, 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 ) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY: Bloomberg

3. ASIAN AFFAIRS

I)THURSDAY MORNING/ WEDNESDAY NIGHT: 

SHANGHAI CLOSED DOWN 30.52 POINTS OR 1.04%  //Hang Sang CLOSED DOWN 131.51 POINTS OR 0.46%   /The Nikkei closed DOWN 422.94 POINTS OR 1.97%//Australia’s all ordinaires CLOSED DOWN .42%

/Chinese yuan (ONSHORE) closed DOWN  at 6.8807 /Oil UP TO 57.21 dollars per barrel for WTI and 64.13 for Brent. Stocks in Europe OPENED MIXED//  ONSHORE YUAN CLOSED DOWN // LAST AT 6.8807 AGAINST THE DOLLAR. OFFSHORE YUAN CLOSED DOWN ON THE DOLLAR AT 6.8834 TRADE TALKS STALL//YUAN LEVELS GETTING DANGEROUSLY CLOSE TO 7:1//TRUMP INITIATES A NEW 25% TARIFFS FRIDAY/MAY 10/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 /TRADE DEAL NOW DEAD..TRUMP  RAISED RATES TO 25%

 

3A//NORTH KOREA/ SOUTH KOREA

South Korea/Japan

Another problem caused by the Coronavirus: a shortage of Chinese workers to man South Korean and Japanese enterprises

(zerohedge)

3b) REPORT ON JAPAN

JAPAN/GDP/TERRIBLE RESULTS

Now Japanese’s economy gets whacked because of the coronavirus: It slides into recession despite a small number of citizens inflicted.

(zerohedge)

3C  CHINA

i)CHINA/SATURDAY

Well that did not take long! Wuhan;s hastily constructed 1000 bed coronavirus hospital is already falling apart

(zerohedge)

ii)COVID 19/CHINA UPDATE SUNDAY AFTERNOON

The numbers just do not add up with the White House not believing them.
In China, the facts are simply this:
 that an unknown number of Chinese citizens are sick and dying in the largest quarantine in human history, and a virus which can be contracted by asymptotic “super spreaders,” and which has now begun to spread around the world”
(zerohedge)

iii)CHINA/ECONOMY/SUNDAY NIGHT

A warning to all: A trial balloon has just been floated that austerity and not huge money printing is on the horizon in China
(zerohedge)

iv)CHINA/SUNDAY NIGHT

China now realizes that its economy is rapidly heading to not only a zero GDP growth but zero GDP itself.  Its economy is heading to zero!!. Now China’s Central |Bank orders lenders to be lenient and allow higher levels of bad debt tin order to avoid a financial cataclysm

(zerohedge)

v)CHINA/MONDAY MORNING

A complete wipe out:   thieves in Hong Kong steal a truckload of toilet paper as basic goods are disappearing
(zerohedge)

vi)CHINA/POULTRY/COVID 19

China has down a massive cull of their chickens due to the COVID 19 virus. They have decided to import tens of millions of live chickens due to the rise in price in China
(zerohedge)

vii)CHINA/SUPPLY CHAIN CHAOS/FROZEN meat containers are piling up at major Chinese ports and this will rot

(zerohedge)

viii)CHINA/APPLE/CORONAVIRUS

Apple supply wows are just beginning:  they state that lack of supplies will last for months..I think longer
(zerohedge

4/EUROPEAN AFFAIRS

I)GERMANY/DEUTSCHE BANK//THE DARK SIDE OF THE BANK
The dark side of Deutsche bank: this bank is similar to JPMorgan and it is a criminal operation.
The author explains how Trump received 2 billion dollars of loans when nobody else would provide.
a must read..
(Chris Whalen)

II)JAGUAR LAND ROVER/UK/CHINA/CORONAVIRUS

JAGUAR Land Rover announces that they will run out of Chinese parts in weeks
(zerohedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

 

6.Global Issues

i)Westerdam/COVID 19/FRIDAY NIGHT

Nightmare on the “Westerdam”  You will recall at the Westerdam was floating on the seas and 5 countries would not allow it to dock. Then Cambodia allowed it do dock but then allowed 144 passengers to fly to Malaysia. At that point, one passenger, an American was tested positive for the COVID 19.

This will become a nightmare as no doubt others on that ship will be become infected.

(zerohedge)

ii)COVID 19 UPDATE/SUNDAY MORNING

Bill Gates is now worried that we could have a virus spread to Africa where all countries are basically ill equipped to handle the disease.
Taiwan reports its first death..a taxi cab driver who drove citizens ( asystematic) to ships and airplanes
(zerohedge)

iii)Immunologist and “bug” specialist Dr C. Martenson talks about the Covid 19 virus

(Dr Chris Martenson)

iv)MICHAEL EVERY OF RABOBANK ON THE CORONAVIRUS

Michael Every discusses the 4 scenarios economically :
1. the bad
2 the worse
3 the ugly
4.unthinkable
must read…
(Michael Every)

v)My goodness: this is escalating fast.  Nineteen days ago, Apple gave a glowing guidance.  They now have cut this guidance due to the virus disruptions(zerohedge)

7. OIL ISSUES

COVID 19 /OIL

PORTS ARE SHUT OUT AND THAT IS WHY TANKERS ARE FLOATING ON THE SEAS WITH NOWHERE TO GO.

The Virus is causing historic high seas traffic jams as Asian supply lines are just shut off

(zerohedge)

8 EMERGING MARKET ISSUES

INDIA/CHINA/CORONAVIRUS

Zero hedge is correct, the dominos are falling as just in time inventory management is crushing India’s already crumbling economy

(zerohedge)

9. PHYSICAL MARKETS

i)A mystery:  why do we have a huge export of London gold? It seems that it is not the import of gold into London on prior months.  Then it can only be the placing of unallocated gold into allocated gold.  The next big question is where did these get this huge amount of physical gold.

(CONWAY, GATA)

ii)Ted Butler believes that they will punish JPMorgan by banning them from futures trading but letting them keep their ill gotton gains like the huge amount of physical gold/silver they they have acquired.

I hope that this is not the case.

iii)Russia continues to develop its domestic market in gold by obtaining discounts on gold purchases

(Reuters/GATA)

iv)John Tamny comments that the Senate must confirm Judy Shelton or she will stop the nonsense of group think at the Fed

(RealClear Politics.GATA)

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

MARKET TRADING//USA

a)Market trading/LAST NIGHT/USA

 

b)MARKET TRADING/USA/AFTERNOON

ii)Market data/USA

iii) Important USA Economic Stories

a)USA/COVID 19

Japanese man with the virus visited a resort in Hawaii as well as mingled with Hawaiians during his recent visit.

We will watch for further cases coming to light on this one!

(zerohedge)

b)CORONAVIRUS/  14 PASSENGERS TEST POSITIVE DURING THE FLIGHT BACK TO THE USA.

This is a nightmare. It was decided upon that anyone who tested positive for the COVID 19 would not be allowed to be on the evacuation planes sent by the USA to rescue American citizens on board the “Diamond Princess”. The nightmare started that 14 Americans on the flight back to the USA tested positive.  The Toyko Marathon has been cancelled and we await decisions on the Summer Toyko games.
(ZEROHEDGE)

c) USA RENTERS

Renting is becoming a major problem for more and more renters.  Many are spending over half of their income on housing

(Mac Slavo)

d)Tom Cotton, Senator of Arkansas, states that China is still refusing to hand over evidence about the Wuhan Bio Lab. Cotton and others strongly believe that they are source of the virus outbreak and thus the COVID is a man made bioweapon

(zerohedge)

e)USA/JAPAN/DIAMOND PRINCESS

The USA has broken the cruise ship quarantine as they fly 13 Americans to an Omaha facility

(zerohedge)

f)PIER 1

Finally Pier one, a large home and decor furniture retailer files for bankruptcy

(zerohedge)

g)Macy’s/DOWNGRADED TO JUNK

The mighty angels are now falling. Macy’s has now been downgraded to junk..many more to come

(zerohedge)

iv) Swamp commentaries)

a)  1. Roger Stone rightly demands a new trial after an anti trump juror is discovered to be the for-woman and lead juror in his case

(zero hedge)

a 2)

This is what happens when you have a biased  (Democrat) judge coupled with criminal bias on the part of one juror
(zerohedge)

b)John Brennan is now under the John Durham microscope as his probe expands

a good commentary
(Sara Carter)

c)Mike Bloomberg considers Hillary for a running mate:(zerohedge)

d)..It begins:  The FBI raids business tied to James Biden

 and his influence peddling operations

(zerohedge)

e)Trump commutes sentence of Rod Blagojevich, pardons Kerik and Milken

(zerohedge)

v) King report/Courtesy of Chris Powell of GATA which includes the major swamp stories.

 

LET US BEGIN:

 

 

Let us head over to the comex:

 

THE TOTAL COMEX GOLD OPEN INTEREST ROSE BY GIGANTIC SIZED 14,323 CONTRACTS TO 687,921 MOVING CLOSER  TO OUR  RECORD THAT WAS SET IN JANUARY/2020: {799,541  OI(SET JAN 16/2020)} AND  PREVIOUS TO THAT: 797,110 (SET JAN 7/2020).  AND THIS GAIN IN OI WAS SET WITH A STRONG GAIN OF $6.80 IN GOLD PRICING //FRIDAY’S  COMEX TRADING//). ALSO WE HAD  ANOTHER STRONG EFP ISSUANCE, SO WE HAD ANOTHER FAILED ATTEMPT AT BANKER SHORT COVERING ……AS OUR TWO EXCHANGES ROSE HUGELY IN OPEN INTEREST..

 

 

WE ARE NOW IN THE  NON ACTIVE DELIVERY MONTH OF FEB..  THE CME REPORTS THAT THE BANKERS ISSUED A ,STRONG SIZED  TRANSFER THROUGH THE EFP ROUTE AS THESE LONGS RECEIVED A DELIVERABLE LONDON FORWARD TOGETHER WITH A FIAT BONUS., THAT IS 4205 EFP CONTRACTS WERE ISSUED:

  FEB: 0; MARCH 00 AND APRIL: 4205,  JUNE : 0 AND  ZERO FOR ALL OTHER MONTHS:

TOTAL EFP ISSUANCE: 4205 CONTRACTS.

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

ON A NET BASIS IN OPEN INTEREST WE GAINED THE FOLLOWING TODAY ON OUR TWO EXCHANGES: AN ATMOSPHERIC SIZED 18,528 TOTAL CONTRACTS IN THAT 13,848 LONGS WERE TRANSFERRED AS FORWARDS TO LONDON AND WE GAINED A GIGANTIC SIZED 13,848 COMEX CONTRACTS.  THE BANKERS PROVIDED THE NECESSARY SHORT PAPER TO WHICH OUR LONGS DUTIFULLY ACCEPTED AS THEY GOBBLED UP ATMOSPHERIC AMOUNTS OF EXCHANGE FOR PHYSICALS AND COMEX OPEN INTEREST CONTRACTS. 

 

THE BANKERS WERE  SOMEWHAT UNSUCCESSFUL IN LOWERING GOLD’S PRICE //// (IT ROSE BY $6.80). AND THEY WERE MOST DEFINITELY  UNSUCCESSFUL IN FLEECING ANY LONGS, AS THE TOTAL ON THE TWO EXCHANGES ROSE BY A VERY STRONG SIZED 18,528 CONTRACTS ….(57.63 TONNES)

 

NET GAIN ON THE TWO EXCHANGES ::  18,528 CONTRACTS OR 1,852,800 OZ OR 57.63 TONNES

 

COMMODITY LAW SUGGESTS THAT COMMODITY FUTURES OPEN INTEREST SHOULD APPROXIMATE 3% OF TOTAL PRODUCTION.  IN GOLD THE WORLD PRODUCES AROUND 3500 TONNES PER YEAR BUT ONLY 2200 TONNES ARE AVAILABLE FROM THE WEST (THUS EXCLUDING RUSSIA, CHINA ETC..WHO KEEP 100% OF THEIR PRODUCTION)

THUS IN GOLD WE HAVE THE FOLLOWING:  688,396 TOTAL OI CONTRACTS X 100 OZ PER CONTRACT = 68.84 MILLION OZ/32,150 OZ PER TONNE =  2,141 TONNES

THE COMEX OPEN INTEREST REPRESENTS 2,141/2200 OR 97.32% OF ANNUAL GLOBAL PRODUCTION OF GOLD.

 

 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

And now for the wild silver comex results

Total COMEX silver OI ROSE BY AN ATMOSPHERIC SIZED 5418 CONTRACTS FROM 225,679 UP TO 231,097 (AND CLOSER TO THE NEW RECORD OI FOR SILVER SET ON AUGUST 22.2018 (244,196).  THE PREVIOUS RECORD WAS SET APRIL 9.2018/ 243,411 CONTRACTS) AND OUR HUGE  OI COMEX GAIN OCCURRED DESPITE OUR SMALLISH 10 CENT INCREASE IN PRICING/FRIDAY.

 

WE ARE NOW INTO THE  NON-ACTIVE DELIVERY MONTH OF FEB.

FEB IS A NON ACTIVE DELIVERY MONTH.

 

THE FRONT MONTH OF FEBRUARY HAS A TOTAL OPEN INTEREST OF 0 CONTRACTS SHOWING A LOSS OF 1 CONTRACTS//FRIDAY TRADING. WE HAD 1 NOTICES SERVED YESTERDAY SO WE LOST 0 CONTRACT OR NIL OZ OF SILVER WILL STAND AT THE COMEX AS THEY REFUSED TO  MORPH INTO LONDON BASED FORWARDS AND AS SUCH THEY NEGATED A FIAT BONUS

 

 

March is a very active month and here we witness a LOSS of 1307 contracts  DOWN TO 111,338

APRIL saw a gain of 6 contracts up to 157.

MAY had a good 6657 gain in oi to stand at 81,078.

 

 

 

We, today, had  0 notice(s)  for NIL, OZ for the FEB, 2019 COMEX contract for silver

Trading Volumes on the COMEX TODAY: 404,719 contracts??  low volume/4 day vol.   

 

 

 

 

CONFIRMED COMEX VOL. FOR YESTERDAY:  251,689 contracts//low volume

 

 

 

INITIAL standings for  FEB/GOLD

 

 

 

Let us head over to the comex:

 

 

FEB 18/2020

 

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

 

 

 

 

Deposits to the Customer Inventory, in oz  

2300.000 OZ

DELAWARE

 

No of oz served (contracts) today
269 notice(s)
 26,900 OZ
(0.8367 TONNES)
No of oz to be served (notices)
430 contracts
(43000 oz)
1.337 TONNES
Total monthly oz gold served (contracts) so far this month
7509 notices
750,900 OZ
23.356 TONNES
Total accumulative withdrawals of gold from the Dealers inventory this month NIL oz
Total accumulative withdrawal of gold from the Customer inventory this month xxx oz

we had 0 dealer entry:

We had  1 kilobar entries

 

 

 

total dealer deposits:nil oz

total dealer withdrawals: nil oz

 

we had 1 deposit into the customer account

i) Into JPMorgan: nil  oz

 

ii) Into  Delaware: 2300.0000 oz ???

 

 

 

 

 

 

 

 

total deposits:  2300.000  oz

 

 

 

 

we had 1 gold withdrawals from the customer account:

i out of Brinks:  32.15 oz

one kilobar

 

total gold withdrawals;  32.15 oz

 

ADJUSTMENTS:  0

 

 

 

 

The front month of February saw its open interest fall by 27 contracts down to 699 contracts.  We had 33 notices filed upon yesterday, so we GAINED 6 contracts or an additional 600 oz will stand for delivery here and THUS THEY REFUSED TO MORPH into London based forwards and thus negate a fiat bonus. The March non active contract month saw its OI fall by 107 contracts down to 2644.  The big April contract month saw its OI RISE by 10,907 contracts UP to 508,057.

 

We had 269 notices filed today for 26,900 oz

 

 

 

FOR THE  FEB 2020 CONTRACT MONTH)Today, 0 notice(s) were issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 269 contract(s) of which 0 notices were stopped (received) by j.P. Morgan dealer and 171 notice(s) was (were) stopped/ Received) by j.P.Morgan customer account and 0 notices by the squid  (Goldman Sachs)

 

To calculate the INITIAL total number of gold ounces standing for the FEB /2020. contract month, we take the total number of notices filed so far for the month (7509) x 100 oz , to which we add the difference between the open interest for the front month of  FEB. (699 contracts) minus the number of notices served upon today (269 x 100 oz per contract) equals 793,900 OZ OR 24.693 TONNES) the number of ounces standing in this  active month of FEB

Thus the INITIAL standings for gold for the FEB/2020 contract month:

No of notices served (7509 x 100 oz)  + (699)OI for the front month minus the number of notices served upon today (269 x 100 oz )which equals 793,900 oz standing OR 24.693 in this  active delivery month of FEB. which is a still a great opening for gold // amount standing.

 

We GAINED 6 contracts or 600 oz REFUSED TO LEAVE USA shores to visit the Queen in London.  They REFUSED TO ACCEPT A London based gold forwards as well as NEGATING a fiat bonus

 

 

 

NEW PLEDGED GOLD:  BRINKS

3027.500 OZ  REMOVED TO THE PLEDGED ACCOUNT JAN 10.2020/Brinks

176,211.457 oz NOW PLEDGED  JAN 21.2020/HSBC  5.4807 TONNES

 

 

SURPRISINGLY WE HAVE BEEN WITNESSING NO REAL PHYSICAL GOLD ENTERING THE COMEX VAULTS FOR THE PAST YEAR!! ..ONLY PHONY KILOBAR ENTRIES…. WE HAVE ONLY 38.458 TONNES OF REGISTERED GOLD WHICH CAN SETTLE UPON LONGS.

HERE IS WHAT STOOD DURING THESE PAST 7 MONTHS:  AUGUST 27.153 TONNES

SEPT:                                                                      5.4525 TONNES

OCT…………………………………………………………………………..   37.99 TONNES

NOV……                                                                5.3841 tonnes

DEC………………………….                                              45.912 TONNES

JAN……………………                                                    8.448 TONNES

FEB……………………………………………..                             24.693 tonnes

 

total: 155.032 tonnes

ACCORDING TO COMEX RULES:

 

IF WE INCLUDE THE PAST 7 MONTHS OF SETTLEMENTS WE HAVE 23.7447 TONNES SETTLED (includes the 1.4847 tonnes of today)

 

IF WE ADD THE 7 DELIVERY MONTHS: 155.032  tonnes

 

Thus:

155.032 tonnes of delivery –

23.7447 TONNES DEEMED SETTLEMENT

=131.2873 TONNES STANDING FOR METAL AGAINST 38.458 TONNES OF REGISTERED OR FOR SALE COMEX GOLD! THIS IS WHY GOLD IS SCARCE AT THE COMEX.

 

total registered or dealer gold:   1,412,651.644 oz or  43.940 tonnes
which  includes the following:
a) pledged gold held at HSBC + BRINKS  which cannot settled upon   176,211.457 oz x ( 5.4807 TONNES)//
b)registered gold that can be used to settle upon:1,236,440.2  (38.458 tonnes)
true registered gold  (total registered – pledged tonnes  1,236,440.2  (38.458 tonnes)
total registered, pledged  and eligible (customer) gold;   8,714,991.655 oz 271.07 tonnes

 

 

THE GOLD COMEX IS NOW IN STRESS AS
1. GOLD IS LEAVING THE COMEX 
2. GOLD IS LEAVING THE REGISTERED CATEGORY OF THE COMEX.
3. NO GOLD IS ENTERING THE COMEX

WHY ARE THEY NOT SETTLING?

 

THE COMEX IS AN ABSOLUTE FRAUD..

 

 

end

 

And now for silver

AND NOW THE  DELIVERY MONTH OF FEB.

INITIAL  standings/SILVER

IN TOTAL CONTRAST TO GOLD, HUGE ACTIVITY IN SILVER TODAY.
FEB 18 2019
Silver Ounces
Withdrawals from Dealers Inventory NIL oz
Withdrawals from Customer Inventory
 19,889.093 oz
CNT

 

 

 

Deposits to the Dealer Inventory
443,786.700 oz
Scotia

 

Deposits to the Customer Inventory
165,046.570 oz
Scotia
No of oz served today (contracts)
0
CONTRACT(S)
(NIL OZ)
No of oz to be served (notices)
0 contracts
 NIL oz)
Total monthly oz silver served (contracts)  234 contracts

1,170,000 oz)

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

**

 

 

we had 1 inventory movement at the dealer side of things

 

i) Into Dealer Scotia:  443,786.700

 

total dealer deposits: 443,786.700 oz

total dealer withdrawals: nil oz

i)we had  1 deposits into the customer account

into JPMorgan:   0

 

i) into Scotia:  165,046.570 oz

 

 

 

 

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

JPMorgan now has 160.84 million oz of  total silver inventory or 50.15% of all official comex silver. (161.3 million/321.578 million

 

 

 

 

total customer deposits today:  154,046.570   oz

 

we had 1 withdrawals out of the customer account:

 

 

i) Out of CNT:  19,889.093 oz

 

 

 

 

 

 

 

 

total withdrawals; 19,889.093  oz

We had 0 adjustment:

 

 

total dealer silver:  80.713 million

total dealer + customer silver:  321.975 million oz

 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

The total number of notices filed today for the FEB 2019. contract month is represented by 0 contract(s) FOR NIL oz

To calculate the number of silver ounces that will stand for delivery in FEB, we take the total number of notices filed for the month so far at 234 x 5,000 oz = 1,170,000 oz to which we add the difference between the open interest for the front month of FEB. (0) and the number of notices served upon today 0 x (5000 oz) equals the number of ounces standing.

.

Thus the INITIAL standings for silver for the FEB/2019 contract month: 234 (notices served so far) x 5000 oz + OI for front month of Feb (0)- number of notices served upon today (0) x 5000 oz equals 1,170,000 oz of silver standing for the Feb contract month.

 

We lost 0 contracts or an additional NIL oz will stand at the comex as these guys refused to  morph into London based forwards and as such negated a fiat bonus 

 

 

 

LADIES AND GENTLEMEN:  THE COMEX IS UNDER ASSAULT FOR BOTH PHYSICAL GOLD AND SILVER WITH SILVER IN THE LEAD BY FAR. DESPITE  MASSIVE RAIDS, LONGS CONTINUE WITH THEIR HUNT AT THE COMEX FOR PHYSICAL METAL.. IT WILL NOT BE LONG BEFORE WE WITNESS A COMMERCIAL FAILURE..STAY TUNED..WE WITNESSED CONSIDERABLE BANKER SHORT COVERING IN SILVER TODAY AND AN ATTEMPTED BANKER SHORT COVERING IN GOLD WITH ZERO SUCCESS.

 

 

 

TODAY’S ESTIMATED SILVER VOLUME: 150,775 CONTRACTS //

 

 

CONFIRMED VOLUME FOR YESTERDAY: 73,549 CONTRACTS..

 

 

 

 

 

YESTERDAY’S CONFIRMED VOLUME OF 73,549 CONTRACTS EQUATES to 367 million  OZ  52.5% OF ANNUAL GLOBAL PRODUCTION OF SILVER..makes sense!!

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

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

 

end

 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

NPV for Sprott

 

1. Sprott silver fund (PSLV): NAV FALLS TO -1.81% ((FEB 18/2019)

2. Sprott gold fund (PHYS): premium to NAV FALLS TO -0.58% to NAV FEB 17/2019 )

Note: Sprott silver trust back into NEGATIVE territory at +%-/Sprott physical gold trust is back into NEGATIVE/ 1.81%

(courtesy Sprott/GATA)

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

NAV 15.83 TRADING 15.42///DISCOUNT 2.57

 

END

 

 

And now the Gold inventory at the GLD/

FEB 18. WITH GOLD UP $17.00//A BIG CHANGE IN GOLD INVENTORY AT THE GLD: A DEPOSIT OF 1.76 TONNES OF GOLD INTO THE GLD//INVENTORY RESTS AT 923.99 TONNES

FEB 14/WITH GOLD UP $6.80 NO CHANGE IN GOLD INVENTORY AT THE GLD//INVENTORY RESTS AT 922.23 TONNES

FEB 13/WITH GOLD UP $8.00 TODAY:NO CHANGE IN GOLD INVENTORY AT THE GLD//INVENTORY RESTS AT 922.23 TONNES

FEB 12/WITH GOLD UP $1.80 TODAY: A HUGE CHANGE IN GOLD INVENTORY AT THE GLD: A DEPOSIT OF 6.15 TONNES OF GOLD INTO THE GLD//INVENTORY RESTS AT 922.23 TONNES

FEB 11/WITH GOLD DOWN $9.30 TODAY: NO CHANGE IN GOLD INVENTORY AT THE GLD//INVENTORY RESTS AT 916.08 TONNES

FEB 10/WITH GOLD UP $6.10 TODAY:A HUGE CHANGE IN GOLD INVENTORY AT THE GLD: A DEPOSIT OF 1.17 TONNES OF GOLD INTO THE GLD////INVENTORY RESTS AT 916.08 TONNES

FEB 7/WITH GOLD UP $3.20 TODAY: NO CHANGE IN GOLD INVENTORY AT THE GLD//INVENTORY RESTS THIS WEEKEND AT; 914.91 TONNES

FEB 6/WITH GOLD UP $8.80: A HUGE CHANGE IN GOLD INVENTORY AT THE GLD: A DEPOSIT OF 2.33 TONNES OF GOLD INTO THE GLD////INVENTORY RESTS AT 914.91 TONNES

FEB 4//WITH GOLD DOWN $26.10: A VERY STRANGE PHENOMENA: A MONSTROUS DEPOSIT OF 9.38 TONNES//INVENTORY RESTS AT 912.58 TONNES

FEB 3/WITH GOLD DOWN $5.40 TODAY: A SMALL CHANGE: A TINY WITHDRAWAL OF .29 TONNES OF GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 903.21 TONNES( TO PAY FOR FEES LIKE STORAGE INSURANCE ETC)

JAN 31/WITH GOLD DOWN  $0.95 TODAY: NO CHANGES IN GOLD INVENTORY AT THE GLD//INVENTORY RESTS AT 903.50 TONNES

JAN 30/WITH GOLD UP $13.05 TODAY: A BIG CHANGES IN GOLD INVENTORY AT THE GLD: A PAPER DEPOSIT OF 4.09 TONNES INTO THE GLD/INVENTORY RESTS AT 903.50 TONES

JAN 29/WITH GOLD UP 0.40 TODAY: NO CHANGES IN GOLD INVENTORY AT THE GLD//INVENTORY RESTS AT 899.41 TONNES

JAN 28/WITH GOLD DOWN $6.70 TODAY: A BIG CHANGE IN GOLD INVENTORY AT THE GLD: A PAPER WITHDRAWAL OF 1.17 TONNES FROM THE GLD////INVENTORY RESTS AT 899.41 TONNES

JAN 27//WITH GOLD UP $6.15 TODAY: NO CHANGES IN GOLD INVENTORY AT THE GLD//INVENTORY RESTS AT 900.58 TONNES

JAN 24//WITH GOLD UP $6.65 TODAY: A BIG CHANGE IN GOLD INVENTORY AT THE GLD: A DEPOSIT OF 1.76 TONNES INTO THE GLD//INVENTORY RESTS AT 900.58 TONNES

JAN 23/WITH GOLD UP $8.90 TODAY: NO CHANGES IN GOLD INVENTORY AT THE GLD//INVENTORY RESTS AT 898.82 TONNES

JAN 22/WITH GOLD DOWN $1.00 TODAY: A HUGE CHANGE IN GOLD INVENTORY AT THE GLD: A MAMMOTH 19.33 TONNES OF PAPER GOLD ADDED//INVENTORY RESTS AT 898.82 TONES

JAN 21/2010//WITH GOLD DOWN $2.00 TODAY: NO CHANGES IN GOLD INVENTORY AT THE GLD//INVENTORY RESTS AT 879.49 TONNES

JAN 17/WITH GOLD UP $9.60 TODAY: A BIG CHANGES IN GOLD INVENTORY AT THE GLD: ANOTHER PAPER DEPOSIT OF 1.17 TONNES//INVENTORY RESTS AT 879.49

JAN 16//WITH GOLD DOWN $3.00 TODAY: A HUGE CHANGE IN GOLD INVENTORY AT THE GLD: A DEPOSIT OF 3.80 TONNES OF GOLD INTO THE GLD./INVENTORY RESTS AT 878.32

JAN 15/WITH GOLD UP $9.55 TODAY: NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 874.52 TONNES

JAN 14/WITH GOLD DOWN $5.00 TODAY: NO CHANGES IN GOLD INVENTORY AT THE GLD//INVENTORY RESTS AT 874.52 TONNES

 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

FEB 18/2019/Inventory rests tonight at 923.99 tonnes

*IN LAST 763 TRADING DAYS: 13.47 NET TONNES HAVE BEEN REMOVED FROM THE GLD

*LAST 663 TRADING DAYS: A NET 153.60. TONNES HAVE NOW BEEN ADDED INTO  THE GLD INVENTORY.

 

end

 

Now the SLV Inventory/

FEB 18/. WITH SILVER UP 42 CENTS TODAY: NO CHANGE IN SILVER INVENTORY AT THE SLV//INVENTORY RESTS AT 363.433 MILLION OZ.

FEB 14/WITH SILVER UP 10 CENTS TODAY: A BIG CHANGE IN SILVER INVENTORY AT THE SLV: A WITHDRAWAL OF 746,000 FROM THE SLV///INVENTORY RESTS AT 363.433 MILLION OZ.

FEB 13/WITH SILVER UP 14 CENTS TODAY: NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 364.179 MILLION OZ/

FEB 12//WITH SILVER DOWN 10 CENTS TODAY: NO CHANGES IN SILVER INVENTORY AT THE SLV//INVENTORY RESTS AT 364.179 MILLION OZ/

FEB 11/ WITH SILVER DOWN 19 CENTS TODAY: A HUGE CHANGE IN SILVER INVENTORY AT THE SLV: A PAPER DEPOSIT OF 1.166 MILLION OZ INTO THE SLV//INVENTORY RESTS AT 364.179 MILLION OZ//

FEB 10/WITH SILVER UP 8 CENTS TODAY: A SMALL CHANGE IN SILVER INVENTORY AT THE SLV: A DEPOSIT OF //INVENTORY RESTS AT 363.013 MILLION OZ//

FEB 7/WITH SILVER DOWN 11 CENTS TODAY: A SMALL CHANGE IN SILVER INVENTORY AT THE SLV A DEPOSIT OF 701,000//INVENTORY RESTS THIS WEEKEND AT 363.013 MILLION OZ//

FEB 6//WITH SILVER UP 24 CENTS TODAY:A SMALL  CHANGE IN SILVER INVENTORY: A WITHDRAWAL OF 154,000 OZ AT THE SLV/INVENTORY RESTS AT 362.312 MILLION OZ// AND GENERALLY THIS IS TO PAY FOR FEES LIKE INSURANCE/STORAGE

FEB 4//WITH SILVER DOWN 9 CENTS TODAY: NO CHANGE IN SILVER INVENTORY//SLV INVENTORY RESTS AT 362.466 MILLION OZ//

FEB 3/WITH SILVER DOWN 30 CENTS TODAY; A SMALL DEPOSIT OF 560,000 OZ INTO SILVER INVENTORY AT THE SLV//INVENTORY RESTS AT 362.466 MILLION OZ/

JAN 31/WITH SILVER UP 5 CENTS TODAY: A BIG CHANGE IN SILVER INVENTORY AT THE SLV; A WITHDRAWAL OF 840,000 OZ FROM THE SLV//INVENTORY RESTS AT 361/906 MILLION OZ//

JAN 30/WITH SILVER UP 47 CENTS TODAY: A BIG CHANGES IN SILVER INVENTORY AT THE SLV: A PAPER DEPOSIT OF 1.027 MILLION OZ INTO THE SLV//INVENTORY RESTS AT 362.746 MILLION OZ

JAN 29/WITH SILVER UP 2 CENTS TODAY: A BIG  CHANGE IN SILVER INVENTORY AT THE SLV: A PAPER DEPOSIT OF 1.587 MILLION OZ INTO THE SLV///INVENTORY RESTS AT 361.719 MILLION OZ//

 

JAN 28//WITH SILVER DOWN 59 CENTS TODAY: NO CHANGES IN SILVER INVENTORY AT THE SLV//INVENTORY RESTS AT 360.132 MILLION OZ

JAN 27//WITH SILVER DOWN 3 CENTS TODAY: A SMALL CHANGE IN SILVER INVENTORY AT THE SLV: A DEPOSIT OF 327,000 OZ INTO THE SLV..//INVENTORY RESTS AT 359.805 MILLION OZ//

JAN 24//WITH SILVER UP 27 CENTS TODAY: A HUGE PAPER DEPOSIT OF 5.975 MILLION OZ INTO THE SLV//INVENTORY RESTS AT 359.805 MILLION OZ//

JAN 23/WITH SILVER UP ONE CENT TODAY: NO CHANGES IN SILVER INVENTORY AT THE SLV//INVENTORY RESTS AT 353.830 MILLION OZ..

JAN 22/WITH SILVER DOWN ONE CENT: A HUGE CHANGE IN SILVER INVENTORY: A WITHDRAWAL OF 1.027 MILLION OZ FROM THE SLV//INVENTORY RESTS AT 353.830 OZ

JAN 21/WITH SILVER DOWN 24 CENTS TODAY: NO CHANGES IN SILVER INVENTORY FROM THE SLV//INVENTORY RESTS AT 354.437 MILLION OZ//

JAN 17/WITH SILVER UP 12 CENTS TODAY: A SMALL WITHDRAWAL OF 420,000 OZ FROM THE SLV//INVENTORY RESTS AT 354.437 MILLION OZ.

JAN 16/WITH SILVER DOWN 2 CENTS TODAY: A CONSIDERABLE CHANGES IN SILVER INVENTORY AT THE SLV: A WITHDRAWAL OF 840,000 OZ FROM THE SLV//INVENTORY RESTS AT 354,857 MILLION OZ//

JAN 15/WITH SILVER UP 21 CENTS TODAY: NO CHANGES IN SILVER INVENTORY AT THE SLV//INVENTORY RESTS AT 355.697 MILLION OZ//

JAN 14/WITH SILVER DOWN 23 CENTS TODAY: NO CHANGES IN SILVER INVENTORY AT THE SLV//INVENTORY RESTS AT 355.697 MILLION OZ//

 

FEB 18.2020:  SLV INVENTORY

363.433 MILLION OZ

 

LIBOR SCHEDULE AND GOFO RATES:

 

 

YOUR DATA…..

6 Month MM GOFO 1.65/ and libor 6 month duration 1.72

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

G0LD LENDING RATE: + .07

 

XXXXXXXX

12 Month MM GOFO
+ 1.74%

LIBOR FOR 12 MONTH DURATION: 1.79

 

GOFO = LIBOR – GOLD LENDING RATE

GOLD LENDING RATE  = +.05

end

 

 

 

PHYSICAL GOLD/SILVER STORIES
i) GOLDCORE BLOG/Mark O’Byrne

 

 

ii) Important gold commentaries courtesy of GATA/Chris Powell

A mystery:  why do we have a huge export of London gold? It seems that it is not the import of gold into London on prior months.  Then it can only be the placing of unallocated gold into allocated gold.  The next big question is where did these get this huge amount of physical gold.

(CONWAY, GATA)

Who has been taking all that gold out of London, and why?

 Section: 

The Multibillion Mystery of the Great Gold Sale

By Ed Conway
The Times, London
Friday, February 14, 2020

https://www.thetimes.co.uk/article/multibillion-mystery-of-the-great-gol…

Every so often you encounter a chart that takes your breath away. This week I saw just such a graph and I’m still struggling to get my head round it.

It depicts something which on the face of it sounds mundane — exports of gold from the UK — and it looks like a hockey stick.

… 

You’ve probably seen a hockey-stick chart before. There’s the one Al Gore put up on the big screen in “An Inconvenient Truth” showing temperatures hovering at about the same level for century after century before shooting up in recent decades. Or the one of GDP going back to the dark ages: for most of history we subsisted on meagre earnings until the industrial revolution came along and catapulted GDP into the stratosphere.

The one this week has much the same shape. Not much of anything for month after month from 1998 when it begins until October 2019. Sure, there were occasional months when the amount of gold leaving British hands would hit a few hundred million pounds. Once or twice it ticks over a billion. But nothing like what occurs in November and December last year: in those months it skyrockets at a rate that doesn’t make any sense.

Until then, the monthly average of gold exports was L126 million. Then in November they leapt to L4 billion. In December they doubled to L8 billion.

To put it in context, that’s more, in those two months, than we typically export to any single country in the world. It is more than the annual GDP of Jamaica.

Britain does not mine any significant quantity of gold yet we are the world’s hub for the trade in physical bullion. This is something of an accident of history, in much the same way as we are also the world’s centre for the trade in fine wine, though we produce very little of the stuff ourselves. Yet gold bullion is so valuable that every time it changes hands it massively distorts the trade figures.

Consider: Britain has not achieved a goods trade surplus, which is where we export more goods than we import, in any single month since comparable records began more than two decades ago. Yet in December that astonishing leap in gold exports meant that the headline figures published this week showed Britain achieving its first goods trade surplus in modern times.

That this was almost entirely down to a mysterious movement of gold bars was seemingly lost on Liz Truss, the international trade secretary, who promptly issued a press release hailing a “record-breaking year for UK exports.”

Well, yes, but only if you include those dodgy gold figures. Exclude them and Britain’s exports are not growing by 5 percent, as she proclaimed, but by 2.9 percent — the weakest rate since 2015. Exclude them and actually, far from hitting a new high, exports as a percentage of national income fell last year.

Still, none of this answers the most intriguing question: Why did gold exports soar at the end of last year?

Was it down to Brexit, with traders switching out of gold in the run-up to Brexit day? Was it to do with the election? Was it central banks repatriating gold or investment banks shifting their portfolios from UK-domiciled funds to EU ones?

We still don’t know. I have spoken to statisticians, to gold analysts and economists, to traders and industry experts. None of them have the foggiest idea what is going on.

One analyst took a look at the chart and spluttered a four-letter word. “That’s crazy,” he said. “Must be a mistake.” Another person pointed to the fact that Poland flew back about L4 billion worth of gold from the UK last year, before remembering that this happened before December and, oh, these kinds of things don’t count as official exports anyway.

The most plausible explanation I’ve heard is that this was simply an accounting change: one of London’s leading gold custodians, an American investment bank, shifted some of the gold from one column of its accounts to another. The gold didn’t leave the country; someone simply fiddled with a spreadsheet.

Even so, that raises further questions: Is that bank in trouble? Why do it now? Who ordered it: the bank holding the gold or the gold’s owners? If the latter, then who owns so much gold that they could single-handedly distort this country’s trade figures and surface in Britain’s national accounts?

We may never know the answer because there are few sectors in the City as cloak-and-dagger as the gold business. What we do know is that there is a lot of gold in London — more, probably, than in any other city in the world. The total amount in storage is going up rather than down.

On the one hand this is encouraging: Brexit has not made Britain any less attractive a destination for foreign investors. On the other, that hockey stick chart is a reminder. Britain is a complex, sophisticated economy. It is a great trading nation doing business with all corners of the world. Yet in the end, all those statistics can be overshadowed by our other line of business: being a great place for rich people to stash their stuff, whether that’s financial investments, bottles of wine, or bars of gold.

—–

Ed Conway is economics editor of Sky News.

end

Ted Butler believes that they will punish JPMorgan by banning them from futures trading but letting them keep their ill gotton gains like the huge amount of physical gold/silver they they have acquired.

I hope that this is not the case.

Ted Butler: Spotlight on the Justice Department and JPMorgan

 Section: 

8:40p ET Friday, February 14, 2020

Dear Friend of GATA and Gold:

Silver market analyst Ted Butler today speculates on the possible outcomes of the U.S. Justice Department’s investigation of JPMorganChase’s manipulation of the gold and silver markets, an investigation unfortunately limited so far to futures market “spoofing.”

Butler suggests that a good penalty might be to ban the investment bank from futures trading in the metals.

… 

His commentary is headlined “Spotlight on the Justice Department and JPMorgan” and it’s posted at GoldSeek’s companion site, SilverSeek, here —

http://silverseek.com/commentary/spotlight-doj-and-jpmorgan-17840

— and at 24hGold here:

http://www.24hgold.com/english/news-gold-silver-spotlight-on-the-doj-and…

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

Ted Butler..

Spotlight on the DOJ and JPMorgan:

Manipulation and Fractional Gold

It has now been more than eleven years that I have been writing about the leading role that the US’ largest bank, JPMorgan, plays in the pricing of silver and gold. My suspicions that JPMorgan was the big silver and gold manipulator started shortly after the release of the August 2008 Bank Participation report, which indicated an unnaturally large increase in the short positions of one or two US banks in COMEX silver and gold futures contracts. That’s when I started speculating that JPMorgan was the big COMEX short seller. On Nov 10, 2008, I stopped speculating and directly pointed to JPM, as a result of correspondence between a US congressman and the CFTC.
https://www.investmentrarities.com/ted-butler-commentary-november-10-2008/

Back when I wrote that article silver was under $10 and gold was around $730. Before three years went by, silver rose to nearly $50 in early 2011 only to fall as low as $14 a year or so. Gold rose to $1900 by the fall of 2011 and subsequently fell to as low as $1050 in late 2015. As I have tried to chronicle since 2008, JPMorgan has been the prime price driver in silver and gold, never losing when it added short positions and, since 2011, acquiring massive amounts of physical gold and silver. To this point, JPMorgan has pulled off the manipulative fraud of all time.

Eleven+ plus years is a long time, but it’s not just the passage of time that points to an important change in JPMorgan’s dominant role in silver and gold. For the past couple of years the US Justice Department has been openly investigating the role of JPMorgan, with recent leaks by the agency indicating it is seriously considering charging the bank itself and not just its traders with a criminal pattern of manipulation. To be sure, the DOJ is steering clear of charging JPMorgan with the real crimes I have alleged, price suppression and the accumulation of physical metal at those suppressed prices, because those crimes are so serious that it would doom the continued existence of the bank as a going concern. Instead, the Justice Department is focusing on spoofing, which has been used as a tool in JPM’s manipulation of silver and gold prices.

Still, spoofing is a serious enough market crime that the DOJ has seen fit to invoke racketeering statutes in criminally charging individual traders of the bank and the only remaining decision is whether the agency will charge the bank as a criminal enterprise as well. Since JPMorgan has been a virtual breeding ground for systematic market manipulation with its institutionalized use of spoofing, it’s hard to see how the Justice Department can avoid charging the bank as a criminal enterprise. Should the agency bring such charges, the remaining question will be the appropriate punishment.

As I recently suggested, the “perfect” solution would be for the DOJ to suspend or ban JPMorgan from COMEX futures trading for its own account and/or for clients. Such a suspension or ban would be highly appropriate. After all, that’s what is done when professional athletes take performance enhancing drugs and spoofing is little more than an illegal trading enhancing aid. Of course, there is a big difference between an athlete seeking enhanced performance and a trading practice that harms markets and participants.

And as I also indicated, the DOJ suspending or banning JPMorgan from futures trading is only “perfect” for the agency and JPMorgan, not you or I or the markets in general, as it wouldn’t undo the damage JPMorgan has wrought for more than a decade. Then again, the only parties involved in the decision are the Justice Department and JPMorgan and the solution only has to be suitable to them, not anyone else.

A trading suspension or ban (accompanied by a substantial monetary penalty) would make the DOJ look tough and would also allow JPMorgan a graceful exit and free the way for the bank to profit immensely on its massive physical metal holdings – a true win/win. The only real plus for silver and gold investors is that a trading suspension or ban on JPMorgan would avoid the DOJ demanding that the bank divest itself of its massive physical holdings. By sticking to spoofing, the DOJ escapes having to deal with JPM’s decade+ price suppression and accumulation of physical metal.

There is no question that whatever the Justice Department decides to charge JPMorgan with, the decision will be highly political. The problem with that is that the politics are unknown to most, certainly including me. Is JPMorgan and its CEO considered a friend or foe to the White House? I don’t have the slightest idea. What I do know is that the Justice Department’s investigation of JPMorgan has been highly political to this point, in that it has studiously avoided the real crimes of JPM from the start.

It’s simply impossible that the DOJ is unaware of JPM’s long term price suppression or accumulation of massive amounts of physical gold and silver. Not only have I personally notified the DOJ of the facts both before and during its current investigation; the agency was intimately involved with the CFTC’s five year investigation into precious metals manipulation from 2008 to 2013, which stemmed from my complaints about the 2008 Bank Participation Report. We know of the Justice Department’s prior involvement from the last interview by the late CFTC Commissioner Bart Chilton. There’s no way the Justice Department could be so inept and incompetent so as not to grasp JPMorgan’s crimes.

I want to be clear that when I say political, I’m not distinguishing between a Democratic or Republican decision to treat JPMorgan with kid gloves. The fruitless and compromised five year investigation came on the Democratic watch and the current investigation is a Republican affair. This transcends political parties. Let’s face it, when it comes to silver and gold, JPMorgan is a stone-cold crook that both political parties have trouble standing up to, given the bank’s power and influence.

In fact, as time has progressed, I have trouble understanding why the DOJ began to investigate JPMorgan in the first place and even more trouble understanding why the DOJ has put blinders on itself not to see beyond spoofing. But there can be no doubt that the issue is in the spotlight and some type of a resolution will soon be reached. It’s not as if the Justice Department can go from leaking stories threatening JPMorgan with criminal prosecution to letting the whole matter drop without a more definitive resolution.

After all, the DOJ went out of its way to make a very big deal about its ongoing investigation and the criminal charges of JPMorgan traders (complete with overly dramatic press announcements and leaks to the press) and it’s high time for it to show its cards. I admit to having lost faith in the Justice Department’s handling of this whole matter, but will be more than happy to be proven wrong. Which it will be should be known in the fairly near future.

So while the Justice Department has done its very best to avoid the real issues surrounding JPMorgan, it did succeed in focusing attention on the bank and its role in gold and silver. Certainly, nothing the DOJ has done in any way undermines or refutes anything I’ve alleged about JPMorgan for the past 11 years and more observers are now aware of the issues. That’s the thing about being in the spotlight – you never know what else is going to be revealed.

I can’t dismiss the possibility of a much deeper correction in both silver and gold, given the current market structure, but that’s been the case for many months. It does seem that recent fairly static trading ranges in both silver and gold, suggests some type greater price volatility ahead, like being in the calm before the storm. If we do break sharply lower, instead of higher, the only possible explanation will be positioning on the COMEX, same as ever. That’s not a prediction, just an explanation in advance. What still remains a prediction is that if we finally do get a substantial selloff, it will be the last such selloff.

The real shame, of course, is that we are simultaneously involved in a self-reported investigation by the Justice Department into a criminal manipulation of precious metals prices and a continuing manipulation. It is beyond outrageous a formal investigation by the nation’s leading law enforcement agency into precious metals manipulation can exist while the manipulation continues in full view. Here’s some advice to the DOJ – stop leaking stories to the press and get off your butts and end the manipulation.

Ted Butler
February 14, 2020
www.butlerresearch.com

 

end

 

Russia continues to develop its domestic market in gold by obtaining discounts on gold purchases

(Reuters/GATA)

To develop domestic market, Russia’s central bank keeps peak discount on gold purchases

 Section: 

By Elena Fabrichnaya and Polina Devitt
Reuters
Friday, February 14, 2020

MOSCOW — Russia’s central bank has maintained the discount at which it buys gold for its reserves at December’s peak level, it told Reuters today, potentially prompting more local producers and bankers to export the metal.

The central bank remains the largest buyer of gold produced in Russia, but since May it has been buying at a discount to the previously used London benchmark to help develop the domestic market and stimulate exports. …

… For the remainder of the report:

https://www.reuters.com/article/russia-cenbank-gold/update-2-russian-cen…

end

John Tamny comments that the Senate must confirm Judy Shelton or she will stop the nonsense of group think at the Fed

(RealClear Politics.GATA)

John Tamny: Confirm Judy Shelton, for she’ll arrest obtuse groupthink at the Fed

 Section: 

By John Tamny
Real Clear Politics, Chicago
Monday, February 17, 2020

In “The Great Successor,” Washington Post reporter Anna Fifield’s very uneven and very poorly edited book about North Korean dictator Kim Jong-un, she indicated that among other things Kim passed his childhood days listening to Whitney Houston while frequently dressed in Nike garb. More modernly, Fifield reports that Kim brings an Apple MacBook with him when he travels on one of his many jets.

About what’s been written so far, some readers might be nonplussed. Didn’t the U.S. long ago impose a trade embargo on North Korea? If so, why does Kim enjoy very American plenty?

… 

The answer is simple: there’s no accounting for the final destination of any good. That U.S. companies are forbidden to sell inside North Korea is of no consequence when it’s remembered that the feds do not control those whom U.S. companies sell to. So long as they’re selling their wares, U.S. companies are ultimately selling to North Koreans who desire U.S. products, and who have the means to purchase them. And how do North Koreans exchange goods and services, including that which is U.S. produced? According to Fifield, “the U.S. dollar is still the preferred currency for North Korean businessmen since it is easier to convert and spend.”

You read that right: the economy of one of the U.S.’s foremost “enemies” is liquefied by U.S. dollars. That the dollar facilitates exchange in Pyongyang, and that it does so without the help of the Federal Reserve, is a statement of the obvious. Simply stated, money is a consequence of production, not a driver of it. Individuals produce in order to exchange what they produce with others, which explains why the dollar factors into so much global trade. Precisely because the dollar can be exchanged for goods and services the world over, its role in global trade and investment is of the 90%+ kind.

All of which brings us to Judy Shelton’s nomination to the Federal Reserve board. Up front, what’s previously been said should exist as yet another reminder that the Fed’s presumed ability to influence economic outcomes is exponentially more theoretical than real. That the U.S. dollar liquefies the economy of this most economically isolated country speaks to how overstated the Fed’s power is. Credible money finds production, period. That the Fed can’t limit dollars flowing to their highest use in North Korea should have even the mildly sapient questioning why so many pundits, politicians and economists focus so much on the Fed stateside. If the central bank can’t keep dollars from refereeing trade and investment in a police state, does anyone seriously think the Fed can “tighten” or “loosen” access to dollars in the U.S.? The question answers itself.

So while all this breathy excitement about the Fed is silly, and something that future historians will marvel at, it’s still easy to energetically support Shelton for the Fed board. The Fed employs more economists than any other entity in the world, these economists almost unanimously believe that economic growth causes inflation, so it will do the Fed good to have someone inside who thinks differently. Shelton knows well that economic growth is actually a consequence of investment, and investment is what brings about falling prices. How fun to see what’s calcified and ludicrous (economists also almost unanimously think that empowering Nancy Pelosi and Kevin McCarthy to spend with abandon is the path to prosperity) to be shaken up by the unafraid Shelton. She should be confirmed yesterday. Thank goodness Shelton doesn’t think like economists.

Thinking about the nominee more broadly, the discussion of Shelton within the pundit class would be quite a bit more productive if those who presume to talk money understood that no one trades it, or exchanges it. Underlying all transactions that involve money is the exchange of real goods, services, and labor. Always. Money is merely an agreement about value among producers that facilitates the exchange of actual things, thus explaining yet again why the dollar is the currency of choice in a country whose official currency is the won. The problem is that the won commands little in North Korea, and nothing outside of it. Since financial transactions are yet again always about the exchange of goods and services for goods and services, the currency refereeing these exchanges must once again be seen as exchangeable for market goods.

All of this rates stress given Shelton’s past support for a gold-defined dollar. To be clear, she’s long been a supporter of just such a currency. As she put it in her classic 1994 book “Money Meltdown,” “Going on a global gold standard would provide a much more democratic international monetary system than the one that exists today. …” Statements like this are all over the book.

That they are speaks to Shelton’s possession of common sense; the latter something that’s very challenging to find inside the Marriner Eccles building on Washington’s Constitution Avenue, or for that matter any of the other Fed branches around the country. Shelton’s support for stable money is an explicit statement from her that she understands money’s sole purpose as a medium of exchange, nothing else. Shelton’s support for a gold-defined dollar is an acknowledgement of a simple truth previously stated: no one trades money. Currency exchanges signal the exchange of goods, services and labor. Let’s say it again: always. Given this statement of the supremely obvious, it’s only natural that the goal among serious people when it comes to currencies is that they be as stable as a measure of value as possible.

And for those who say a gold-defined dollar, or a stable dollar (pick your commodity) would limit the ability of the Fed to act during recessions, you’re showing how little you understand money. To say that a dollar with a stable definition exists as a barrier to central bankers, politicians and economic growth is the equivalent of some dope saying that a “slow second” keeps his 40-yard dash times at 6 seconds, and is keeping him out of the NFL as a consequence. Seconds measure objectively. Money measures objectively. Nothing else.

Of course, this too is a pointless discussion when it’s remembered that the Fed’s policy portfolio doesn’t include the dollar’s exchange rate. In short, Shelton’s support of the gold standard and dollar-price stability would only be relevant if she were being appointed Treasury Secretary. And for those readers absolutely convinced the Fed manages the dollar’s value despite all evidence revealing the exact opposite, don’t forget that the Fed operates under an implied consensus rule. 4-3 votes, or even 5-2 votes by Fed board members are the major exception to the rule. Shelton would be but one believer in a gold defined dollar. Translated, even if it were true that the Fed controlled the dollar’s value, the Fed is short about four or five Sheltons if the goal is a return to the gold standard. This is true even if Shelton ultimately replaces Jerome Powell.

Some object to Shelton because her views have “evolved” with those of the man who appointed her. This is true, but it’s also irrelevant. About it being true, in a Wall Street Journal interview from 2019, Shelton recalled U.S. auto workers telling her in the 1980s “that ‘we can compete against the best in the world, but we can’t compete against the central bank of Japan.'” In particular, Shelton made the point more than once that currency devaluation by countries makes their products more competitive globally. In Shelton’s 2019 words, “nations gain a price advantage over competitors by devaluing their currencies.” That’s what she was referencing while discussing Japan.

Except that what she referenced isn’t true, and the source supporting the previous claim is Shelton’s previously mentioned 1994 classic, “Money Meltdown.” Contrary to modern commentary from Shelton about Japan’s central bank devaluing the yen versus the dollar, the Fed nominee knows well what really happened. And the truth will inform her thinking while at the Fed. Or it should. Writing about the 1985 Plaza Accord in “Money Meltdown” Shelton observed that if the success of it were “judged by the steep descent in the dollar’s value as measured against other currencies in the ensuing months, there can be no denying that the plan worked.” 36 pages later Shelton noted that the “yen was at 358 to the dollar in 1970, 265 yen to the dollar in 1973, 184 in 1978, 129 in 1988, and 105 in 1993.” Shelton described the dollar’s steep drop against the yen in the 1980s as a “final outcome of the deliberate government effort engineered by Baker and Darman to lower the value of the dollar against the yen.” Baker was Treasury secretary at the time, and Darman was his #2. Translating all this, Shelton has tailored her views to fit those of the president appointing her, and Trump incorrectly believes that the dollar has soared against the yen since the 1980s. No. Not at all.

Arguably something similar is at work with interest rates, or the Fed’s role. Shelton is too smart to believe that price controls work. That’s why her modern stance in favor of so-called Fed ease is so easy to read as politics in play. If we ignore what’s true, that the Fed can’t control access to credit in the first place, the idea that it could expand credit access by lowering the Fed funds rate is as silly as the belief that artificially low apartment rent controls will lead to apartment abundance. No, not at all. And the Fed can’t create easy credit. Shelton knows this. Politics is once again at work, and that’s ok. The Fed has long been a politicized institution, and so it remains under President Trump. It says here that Shelton doesn’t need to compromise her views on the dollar and interest rates, but she knows her own situation better than yours truly.

Furthermore, her compromises or evolving opinions that have some up in arms are a distraction from the much bigger truth about the economics profession: it’s populated by the near monolithically incorrect. It’s not just that they believe against all evidence that growth causes inflation, or that government spending stimulates growth as opposed to it being a consequence of it. Economists also near unanimously believe World War II ended the Great Depression. Yes, they believe that maiming and killing boost economic progress.

The economics profession is increasingly ridiculous, and so is the Fed ridiculous when it’s remembered how many economists are in its employ. Shelton will greatly improve an institution and an economics discussion that’s degenerated into the wildly silly, and that can’t hurt. Her existence will surely trigger some on the left, and that can’t hurt either. All that, plus she’s a remarkably gracious person. Confirm Judy Shelton at the Fed!

—–

John Tamny is editor of Real Clear Markets, vice president at FreedomWorks, and a senior economic adviser to Toreador Research and Trading (www.trtadvisors.com). His new book is titled “They’re Both Wrong: A Policy Guide for America’s Frustrated Independent Thinkers.” Other books by Tamny include “The End of Work,” about the exciting growth of jobs more and more of us love, “Who Needs the Fed?,” and “Popular Economics.” He can be reached at jtamny@realclearmarkets.com.

end

John Kim: What do crashing emerging-market currencies say about gold and silver?

 Section: 

11:40a ET Tuesday, February 18, 2020

Dear Friend of GATA and Gold:

Central banks in both developing and developed countries are steadily and openly devaluing their currencies now, market analyst John Kim writes, thereby making the case for gold and silver — at least for people who have heard of the monetary metals and are paying attention.

Kim’s commentary is headlined “What Do Crashing Emerging Market Currencies Signal About Future Gold and Silver Prices?” and it’s posted at his internet site here:

https://maalamalama.com/wordpress/what-do-crashing-emerging-market-curre…

Information about Kim’s impending new venture can be found here:

https://maalamalama.com/wordpress/learn-about-the-maalamalama-mission-an…

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

iii) Other physical stories:

ttps://www.jsmineset.com/2020/02/17/the-precious-metals-shorts-are-up-against-the-trade/

The Precious Metals Shorts Are Up Against The Trade!

Posted February 17th, 2020 at 10:31 AM (CST) by J. Johnson & filed under General Editorial.

Great and Wonderful Monday Morning Folks,

      Gold is starting the week off in the red with April Gold at $1,584.20, down $2.20 after hardly dipping down to $1,581.80, with the “hardly a high” at $1,586.80. Silver is aiming at the opposite direction, trading in the green with the March contract at $17.77 up 3.6 cents with its high at $17.865 and the low at $17.670. Even our Dollar is in holiday trade mode with the trade held at 99.035, up 3.2 points and close to the high at 99.045 with the low at 98.935. Of course all of this happened already, before 5 am pst, the Comex open, the London close, and after Bloomberg suggested Hillary as a VP runner on the Democratic ticket, which was immediately met with State Farm Cancels Bloomberg’s Life Insurance After Hillary’s VP Announcement. PS, before you send in your rhetorical emails, read the whole thing.

      Even the Emerging Market Currencies are showing the trouble the shorts are in. In Venezuela, their currency now has Gold price at 15,822.20 Bolivar, giving those that bought already a 46.94 gain with Silver at 177.478, showing a gain of 0.899 Bolivar. In Argentina, their Peso price for Gold now sits at 97,246.09 popping in an additional 400.065 A-Peso’s since our Friday report with Silver at 1,090.77 Peso’s showing an additional gain of 6.78. Over in Turkey, Gold’s price is now trading at 9,583.23, showing a gain of 9.26 T-Lira with Silver gaining 0.338 of a Lira with the last trade at 107.498.

      February Silver’s Delivery Demands have not budged since last Thursday with the Open Interest still stuck at 1 and with zero Volume once again up on the board. The Overall Open Interest, however, jumped by 5,406 controlling contracts, proving the shorts are up against the trade bringing the total to 231,131 Overnighters during Friday’s 11+ cent rally. This proves to us the idea of how stuck the shorts are with the count only 13,065 contracts away from making a new all-time paper high. As long as the price is used as a measure and not the papers behind it, people who watch the financial news services will believe things are static, while we (and the DOJ?) watch the movements behind the price.

      February Gold’s Delivery Demands is doing just the opposite of Silver’s with the Demand Count now at 699 fully paid for contracts, proving a reduction of 27 receipts from Friday’s quote and with a Volume of 10 posted up on the board with a trading range between $1,580.00 and $1,579.80, with the last trade at the high. As a side note here, February Deliveries for Gold is a primary delivery month, unlike Silver (March is Ag’s pdm). Gold’s Overall Open Interest gained 13,657 more short contracts on Friday’s gains proving the Overall Count to be at 687,921 Obligations, bringing the score closer to making another HSBC all time “paper contract” high once it passes 798,541 Overnighters.

      It seems Hong Kong is having a “Just In Time” supply issue as basic needs are becoming harder and harder to find with one instance showing a truckload of toilet paper being stolen right off the truck. The entire JIT system is proving to be an issue, and now for all nations, because China is pretty much in a complete shutdown with over 80 cities locked up one way or another. Yesterday’s NYP pointed out a very scary issue with the Diamond Princess cruise ship infection count reaching up to 355 souls. So, from last Monday’s Petri dish thesis to now, the count increased by 220 (above the starting point at 135), more than doubling the count in under a weeks’ time. We feel that this Wednesday release date given by the Japan’s authorities, will be extended, maybe up to and beyond the 24 days China has imposed. Now we see a Supposed 760 million (+/-) people in China are under some type of restriction, and with no real trustworthy data coming from the nation as their system of population control, may prove to be under a complete change, that is if they don’t start immediately saving the lives of their minions.

      We have prepared by becoming our very own warehouse since JIT is failing. We have accumulated over 6 months of foods that we eat normally, in addition all types of hygiene products, along with an additional “bleach in a spray bottle” to squirt down any incoming packages coming from anywhere, and the medicines we need to sit tight for up to a year. Also of note, inside our own personal petri dish, we have not received any of our purchases from China in over 1-1/2 months, that won’t bother us too much since it’s only fishing equipment. I even asked our mail carrier if she knew if packages from China were being shuttered. She said her orders haven’t even shown up either, and it seemed to me she was not telling me all she knew too (they must have discussed this at higher levels). We hope there is a solution, yet we feel it best to be overprepared.

      Keep the attitudes positive, because it really does keep sickness away. Have a smile on your face for all you see, and a prayer in the heart for those infected. Now is not the time to blame, now is the time to prepare and to stay away from traveling and the crowds, until we’re given the “All Clear”. Enjoy President’s Day, and as always …

Stay Strong!

JJohnson

ttps://www.jsmineset.com/2020/02/18/the-diamond-princess-info-is-quite-unsettling/

The Diamond Princess Info Is Quite Unsettling

Posted February 18th, 2020 at 9:47 AM (CST) by J. Johnson & filed under General Editorial.

Great and Wonderful Tuesday Morning Folks,

      Gold is in the green in the early morning with the April trade at $1,589.80, up only $3.40 after reaching $1,592.40 before “the calm” was put into place with the low at $1,581.80. Silver is up as well with the March contract at $17.845, up 11.1 cents after hitting $17.895 with the low at $17.670. The US Dollar’s rate continues to move higher with the value pegged at 99.135 up 13.2 points and right by the high at 99.160 with the low down at 99.030. Of course, all of this happened already while we slept, before 5 am pst, the Comex open, the London close, and after Japan (or the US?) allowed the passengers on the Diamond Princess cruise ship to go free a day before their incubation period ended.

      The Emerging Markets Currency Watch continues to show the value of currencies failing as the precious metals rise with Venezuela’s Bolivar holding Gold’s value at 15,878.13 providing the holder an additional 55.93 in Bolivar value with Silver adding another 0.749 with its price now at 178.227 Bolivar. Argentina’s Peso has Gold valued at 97,767.33 it too adding more to yesterday’s price to the tune of 521.24 Peso’s with Silver at 1,096.83 Peso’s popping in an additional 6.06. The Turkish Lira’s value for Gold now sits at 9,649.74 showing a 66.51 T-Lira increase in value with Silver increasing by 0.816 of a Lira with the price at 108.314.

      February Silver’s Delivery requests have stagnated with no trades or swaps done since last Thursday leaving that lonely number 1 up on the board and with no Volume. So, how come it’s taking Comex so long to settle this one lot order that’s been out there since last Thursday? Can’t be because they don’t have any Silver can it? After all, a certain element supposedly has a bunch of Silver sitting in its folds, unconfirmed by any outside auditing source and with that famous disclaimer at the bottom of the COMEX inventory count that says ““The information in this report is taken from sources believed to be reliable; however, the Commodity Exchange, Inc. disclaims all liability whatsoever with regard to its accuracy or completeness. This report is produced for information purposes only” and since, June 3, 2013. Their post should also include; “this information, in no way should be used for trading purposes, it is only for entertainment.” Silver’s Overall Open Interest sits at 231,131 Obligations, virtually unchanged from yesterday even though the Commodities did trade during most of the holiday, showing how the rest of the world moves money around while our numbers are artificially “stayed in place”.

      February Gold’s Delivery Demands are also stuck at 699 fully paid for contracts with this morning’s Volume at 72 when yesterday’s “holiday” Volume was at 27, helping to proving once again the holes in the Comex accounting procedures. If all this activity is traceable within the computerized systems, the updates should show up as they occur, so why are the deliveries, swaps, buys/sells, not posted even if there was a federal holiday? Yesterday’s “Delivery” low just so happens to be same price as today at $1,579.80 with a new high at $1,588.30 as the purchasing carries on with the last trade at $1,586.10. Comex Gold’s Open Interest is also unchanged from yesterday’s numbers with the count at 687,921. At the very least, the Comex is consistent in “not reporting”. Billions of dollars trade in the precious metals with people going against the computer algos, so this updated information, inside these computer-generated trades, is imo, intentionally not being posted for a reason.

      Yesterday’s “later in the day” reports on the Diamond Princess Cruise ship was quite unsettling. The last confirmed tally before my write up brought the infected count to 355. After our post, Japan gave out another infection count totaling 542 showing the acceleration as we watched the passengers leave the petri dish. Admittedly, I do not have the knowledge to say this is right or wrong, but the infections acceleration in body count, makes me wonder wtf is going on? Within an 8-day period, we watched the infection count go from 135 to 542 more than quadrupling last week’s Monday tally. We have to allow those who have the knowledge, to make the right decisions based on what is known, so we have to trust “those on the ground” with making good decisions. Bringing back our people to be sequestered here instead of an encapsulated cruise ship, imo, may not be a good idea at all. Alas, our American brothers and sisters are home, to be cared for by our specialists. I hope these people know what they are doing, because I sure don’t understand who/what/why this was done?

     Things are changing daily, and with that, my posts are being brought into the paid for side. I hope you have gleaned value from my missives. There will be more information brought in as we move forward in the ever-changing world of precious metals and the declines in all fiat. So, keep that smile on your face and a prayer for all in the heart, and as always…

Stay Strong!

  1. Johns

Bill Holter interview with SGT

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A federal judge tells traders that they can combine cases (with the other 6 banks) as they accused JPMorgan of rigging the precious metals market
(courtesy CNBC)

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.

71671201

Spencer Platt | Getty Images

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

March 4.2019

Parker City News

JP Morgan faces potential class action lawsuit after guilty pleas by a former metals trader

Traders from across the U.S. are banding together to accuse J. P. Morgan Chase of manipulating precious metals markets for years.

At least six lawsuits, all making similar allegations against the nation‘s largest bank, have been filed in New York federal court in the past month, since federal prosecutors in Connecticut with a former J. P. Morgan Chase metals trader.

The cases could potentially include thousands of people who traded in the precious metals market. The White Plains, N.Y., law firm Lowey Dannenberg is asking the court to combine the cases and name it as the lead.

The law firm‘s commodities group is led by Vincent Briganti, the attorney who filed the first lawsuit on behalf of Dominick Cognata, a New York resident who alleges he suffered losses due to J. P. Morgan‘s trading conduct in the silver and gold futures and options markets.

A combined case, seeking class action status, would include anyone who purchased or sold futures contracts or an option on NYMEX platinum or palladium or COMEX silver or gold between at least Jan. 1, 2009, and Dec. 31, 2015. The lawyers believe that “at least hundreds, if not thousands” of traders would be eligible to join the case.

Named as defendants in all of the lawsuits are John Edmonds, a 36-year old former metals trader at J. P. Morgan, a group of yet-to-be-identified precious metals traders and the bank.

Edmonds, a New York resident, pleaded guilty in October to one count of conspiracy to defraud the market and manipulate prices of precious metals futures contracts and one count of commodities fraud. In the criminal plea, Edmonds admitted that he and other “unnamed co- conspirators” at J. P. Morgan, fraudulently manipulated precious metals markets from 2009 to 2015, the same time frame covered in the class action suits.

Briganti filed the initial class action on Nov. 7, just one day after the Justice Department unsealed Edmonds‘ plea in the U.S. District Court of Connecticut.

Edmonds admitted in his guilty plea that he deployed the illegal trading scheme hundreds of times with the direct knowledge and consent of his immediate supervisors. Plaintiffs say they have suffered economic injury, including monetary losses, as a direct result of actions by Edmonds and the other unnamed J. P. Morgan metals traders in the futures and options contracts.

One of the suits alleges that “the number of unlawful trades that JP Morgan traders executed in precious metals futures markets is at least in the thousands.”

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

The Justice Department‘s criminal investigation is still ongoing and recently caused a separate related civil case to be put on hold for at least six months while the government continues its investigation. That civil lawsuit, which also accuses J. P. Morgan of rigging the precious metals market, was filed in 2015 by hedge fund manager Daniel Shak and two commodity traders.

After reviewing the details of the plea agreement, David Kovel, the attorney for Shak‘s suit, sought to re- interview Edmonds, along with two other current and former senior traders at the bank. However, the government argued that reopening questioning would be detrimental to the ongoing criminal investigation. The federal judge overseeing the proceedings ordered a six-month stay in the civil case.

Kovel declined to comment.

Edmonds was originally scheduled to be sentenced in Hartford, Conn., on Wednesday, Dec. 19, but a court filing on Nov. 27 shows the sentencing has been postponed until June. A spokesman for the U.S. Attorney for Connecticut could not elaborate on why the sentencing was postponed since the court filing is under seal.

-END-

Justice Department stalls another class action in gold market rigging, this one against JPM

 Section: 

9:47a ET Tuesday, March 5, 2019

Dear Friend of GATA and Gold:

Proceedings in the federal class-action anti-trust lawsuit against JPMorganChase charging the investment bank with manipulating the gold and silver futures markets —

http://www.gata.org/node/18844

— have been suspended for three months at the request of the U.S. Justice Department, just as the department has arranged suspension of proceedings in the class-action anti-trust lawsuit against Deutsche Bank charging similar market manipulation.

… 

In both cases the Justice Department has told U.S. District Court for the Southern District of New York that proceedings would jeopardize its criminal investigation into market rigging, which has been admitted by a former JPMorganChase trader, John Edmonds, who awaits sentencing.

According to court filings, the White Plains, New York, law firm representing the plaintiffs against JPMorganChase, Lowey Dannenberg, concurred in the government’s request to suspend proceedings. The stay is to continue for three months and may be extended.

The Justice Department’s motion, granted by the court on February 26 —

http://www.gata.org/files/JPMorganChaseClassActionStay.pdf

— said “the government is not seeking an open-ended stay that could indefinitely postpone this matter and thus jeopardize the parties’ interests in a timely resolution.” The motion added, “Any developments in the criminal case during the period the consolidated action is stayed may reduce or completely resolve the need to litigate certain issues in the consolidated action.”

Much of the Justice Department’s motion is redacted to conceal from the public evidence still under investigation. Edmonds has said he and other traders manipulated the gold and silver markets for years with the knowledge of their supervisors at JPMorganChase. In its motion to conceal that evidence, also granted by the court on February 26, the Justice Department said disclosure “could lead to destruction of evidence, flight from prosecution, and otherwise interfere with the government’s ability to conduct its investigation”:

http://www.gata.org/files/JPMorganChaseClassActionStaySeal.pdf

Monetary metals investors may be skeptical of the Justice Department’s stalling the Deutsche Bank and JPMorganChase cases, since the department and the U.S. Commodity Futures Trading Commission do not seem ever to have responded conscientiously to complaints of gold and silver market rigging until the class actions commenced.

How much time will the court give the Justice Department to delay getting to the bottom of the issue? The court might hasten matters if enough monetary metals mining companies protested the harm done to them and their shareholders by market rigging, but of course most monetary metals mining companies don’t mind at all.

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

* * *

Your early TUESDAY morning currency, Asian stock market results,  important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight/7 AM EST

i) Chinese yuan vs USA dollar/CLOSED / LAST AT: 7.0023/ GETTING VERY DANGEROUSLY CLOSE TO 7:1

//OFFSHORE YUAN:  7.0055   /shanghai bourse CLOSED UP 1.35 POINTS OR 0.05%

HANG SANG CLOSED DOWN 429.40 POINTS OR 1.54%

 

2. Nikkei closed DOWN 329.40 POINTS OR 1.40%

 

 

 

 

3. Europe stocks OPENED MOSTLY RED/

 

 

 

USA dollar index UP TO 99.25/Euro FALLS TO 1.0815

3b Japan 10 year bond yield: FALLS TO. –.07/ !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 109.74/ 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:: 51.05 and Brent: 56.41

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 DOWN for WTI and DOWN FOR Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO -.42%/Italian 10 yr bond yield DOWN to 0.90% /SPAIN 10 YR BOND YIELD DOWN TO 0.27%…ITALIAN 10 YR BOND YIELD/GERMAN BUND: 1.32: DANGEROUS FOR THE ITALIAN BANKING SYSTEM

3j Greek 10 year bond yield FALLS TO : 0.97

3k Gold at $1586.95 silver at: 17.87   7 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50

3l USA vs Russian rouble; (Russian rouble DOWN 35/100 in roubles/dollar) 63.84

3m oil into the 51 dollar handle for WTI and 56 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 109.74 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 .9819 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0619 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 NEGATIVE territory with the 10 year FALLING to 0.42%

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 2.05% early this morning. Thirty year rate at 1.99%

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

6.  TURKISH LIRA:  UP  TO 6.0679..VERY DANGEROUS FOR THE COUNTRY

MONDAY

China Stocks Surge, S&P Futs Hit All Time High On Latest Chinese Monetary Stimulus

European stocks rose on Monday, Chinese shares surged, recovering all their post-coronavirus losses and S&P and Nasdaq futures jumped to new all time highs as investors took encouragement from the Asian country’s monetary (if not fiscal) pledges to support the world’s second-biggest economy in the face of the coronavirus outbreak. The yen and gold both slipped.

Gains in Europe’s Stoxx 600 Index were led by the China-heavy sectors of automakers and miners. US futures climbed, though Wall Street is shut for a holiday, and Treasuries weren’t trading. European bonds were mixed, while the euro ticked higher after closing on Friday at its lowest since early 2017.

With the US closed for president’s day, the attention was on China, where both cases and deaths linked to the Coronavirus hit a new all time high of over 70,000 and 1,775 respectively. The yuan climbed after China cut rates and added medium-term funding to banks to cushion the impact of a virus outbreak; specifically, the People’s Bank of China offered 200 billion yuan ($29 billion) of one-year medium-term loans on Monday. The rate was lowered by 10 basis points to 3.15%

As a result of the latest burst of monetary stimulus (which came at a time when the finance ministry warned that China would have to pursue austerity on the fiscal side), the Shanghai Composite soared almost 2.3% while gains in China’s CSI 300 Index have recouped all losses since trading resumed after the Lunar New Year break, after the central bank unveiled plans to reduce corporate taxes and fees.

The momentum failed to buoy most Asian markets, however. Stocks dipped in Seoul and Sydney, while Japan’s Topix Index dropped after data showed the country’s GDP cratered shrank the most in five years in the last quarter.

Hurt by a sales-tax hike, Japan’s gross domestic product shrank at an annualized pace of 6.3% from the previous quarter in the three months through December, the worst slide in more than five years. That left the economy on the verge of a technical recession as the virus outbreak hit activity in Q1 2020.

So it’s all back to central bank stimulus. As Saxo Bank’s Eleanor Creagh writes, the S&P 500 and the Nasdaq on Friday closed at an all-time high, but although equities remain resilient, doubts remain about the impact of the virus outbreak on global growth and treasury yields edged lower. Across equities, investors are banking that ample global liquidity and supportive central banks will backstop equity prices even in the face of weaker economic growth. The prospect of weaker inflation via a weaker commodity complex, strong USD and disinflationary pressures arising impact of the coronavirus outbreak underpin an already ongoing recalibration of long term interest rate expectations. This is turn drives large amounts of capital up the risk spectrum into equity markets.

Asian stocks have started the week on a mixed footing, Chinese equities are in the green as investors are heeding the impending monetary and fiscal stimulus and influx of liquidity from the PBOC. Pledges from officials that vow to meet China’s 2020 growth targets underscores the sentiment that authorities will prioritise short term growth over financial stability and deleveraging goals. With this in mind markets expect enough policy support to mitigate downside risks and mainland equities have now recovered all of the losses seen following the Lunar New Year holidays.

In line with those expectations to support the economy, the PBOC today cut interest rates on its one year medium-term lending facility (MLF) by 10 basis points to 3.15% in a bid to reduce funding costs. This along with offering 200 billion yuan of one-year medium-term loans. The move all but guarantees a similar reduction in the loan prime rate (LPR – the new benchmark loan rate) come Feb 20. The pledges of additional fiscal stimulus that came over the weekend, in the form of corporate tax cuts are also lending support to mainland equities today and fuelling risk sentiment.

Continued policy support, both fiscal and monetary, will be required in China to mitigate downside risks from the coronavirus outbreak and promote a self-sustaining trajectory for growth. On that basis we expect more RRR cuts, along with further cuts in the MLF/LPR and more support for private firms as this sector continues to drive job creation, accounting for 80% of jobs and more than 90% of new jobs, according to the National Development and Reform Commission of the People’s Republic of China. Limiting job losses is as ever a key focus as employment remains key for social stability.

Elsewhere in Asia a big miss on Japan 4Q GDP (-6.3% vs. -3.8% estimate) is souring sentiment in Japanese equities. Although the buoyant sentiment across mainland markets has softened the blow.

As Creagh notes, “It is our sense that the Japan 4Q GDP data, which is pre virus outbreak, is just a taste of what is to come in terms of downside surprises to growth. The irony is that as we outlined above, in the current investment paradigm, this bad news is good news as investors anticipate more liquidity. Allowing equities to diverge further from economic fundamentals. Although 2019 saw multiple downwards revision to global growth and earnings forecasts, the S&P 500 returned 30% as the Fed and a raft of other central banks across the globe pivoted their policy stance early in the year. This served as a costly reminder for many not to fight liquidity. As the PBOC pledge ongoing support for the Chinese economy and fiscal stimulus efforts are ramped up, investors do not want to make the same mistake in 2020.”

The caveat – fat tails! There are still many unknowns as it relates to the ultimate impact of the coronavirus outbreak. There is a huge question mark over the reliability of all data relating to COVID-19 cases. This means that within any forecast outcomes should be embedded an enormous degree of variability. As is often case, garbage in, garbage out – incorrect or poor-quality input will produce faulty output, which is likely the case here given the lack of reliable data. And the current virus outbreak may represent an example of a devastating real world event for which a normally distributed model will understate various outcomes potentially leading to large mispricing of risk. Given the complete lack of reliable data we must balance complacent markets with elevated tail risks, participating in the upside momentum and maintaining optionality/tail risk hedging with respect to potentially much more negative outcomes.

END

TUESDAY

Global Stocks Slide After Apple Guidance Cut Is “Wake Up Call” To Zombified Investors

Two weeks ago, when looking at the supply-chain crippling consequences of the Coronavirus epidemic, we asked “Is Tech About To Suffer A “Dot Com” Bubble Collapse?” and concluded that “It’s now all in China’s hands” noting that “…while the market leaders did not disappoint in the last quarter of 2019 when stocks exploded higher with the blessing of the Fed’s QE4, what about the current quarter and the future? What happens to revenues and demand, to established supply chains, to profit margins, if the Coronavirus epidemic keep spreading and tens of millions of Chinese remain under quarantine? What happens to Apple’s iPhone sales in China if the Cupertino company is unable to reopen its store for a month, or two, or three?”

Then, a week later, just in case algos were still unclear who is most at risk to the coronavirus pandemic, we said that “the one sector with the greatest exposure to Greater China and Asia Pacific in general, is also the sector that has outperformed the most in recent months. Tech.”

As such, while we were certainly not surprised to learn that AAPL took advantage of the quiet President’s Day Holiday to cut revenue guidance for the current quarter – guidance which it laid out just three weeks ago on Jan 28 – warning that production and retail store closures have lasted longer than “anticipated” just a month ago (despite our warning that AAPL would cut guidance just days after the company’s earnings release due to the coronavirus), judging by the plunge in AAPL stock which tumbled as much as 4% this morning, the AAPL news sure came as a surprise to all the millennials and algos that set marginal prices in this “market.”

“Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated. As a result, we do not expect to meet the revenue guidance we provided for the March quarter due to two main factors.

The first is that worldwide iPhone supply will be temporarily constrained. While our iPhone manufacturing partner sites are located outside the Hubei province — and while all of these facilities have reopened — they are ramping up more slowly than we had anticipated. The health and well-being of every person who helps make these products possible is our paramount priority, and we are working in close consultation with our suppliers and public health experts as this ramp continues. These iPhone supply shortages will temporarily affect revenues worldwide.”

And to be fair, while many companies have by now issued warnings it seems it had to take Apple for the market to wake up, spooked amid hopes for a limited economic impact from the deadly coronavirus.

It wasn’t just AAPL however: HSBC – Europe’s largest bank – announced a massive restructuring that involved shedding $100 billion of assets and slashing 35,000 jobs over three years. It also warned about the impact of the coronavirus on its Asia business. The stock fell more than 2% in Hong Kong trade.

And as two of the world’s mega companies reported damage from the coronavirus outbreak, world stocks markets were knocked off record highs on Tuesday, with equities around the globe a sea of red, while Treasuries rose and the dollar edged higher.

The warning from Apple sobered investors who had hoped fiscal stimulus from China (which we reported over the weekend is not coming after the Global Times warned to brace for austerity) and other countries would protect the global economy from the effects of the epidemic, sending contracts on the three major U.S. equity benchmarks sharply lower, with Apple shares slumping as much as 4.2% in pre-market trading. We know, shocking, right: you can’t print your way out of a global viral pandemic.

“We have been pointing out that the market reaction in past weeks was excessively constructive and this could be a wake-up call to all investors that ignored so far potential negative impact,” analysts at UniCredit said.

“Apple is saying its recovery could be delayed, which could mean the impact of the virus may go beyond the current quarter,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities. “If Apple shares were traded cheaply, that might not matter much. But when they are trading at a record high, investors will be surely tempted to sell.”

In Europe, tech stocks were the biggest laggards in the Stoxx 600 index as Apple suppliers including Dialog Semiconductor Plc and AMS AG slid. HSBC Plc tumbled the most in more than a decade after saying it will slash jobs in a “fundamental restructuring,” while also flagging risks due to the virus. Europe’s 0.4% to 0.5% declines came after Tokyo’s Nikkei dropped 1.4% as tech stocks globally reacted to Apple’s warning.  There was more bad news in Europe after Germany’s latest ZEW Economic Sentiment printed at a dismal 8.7, far below the 26.7 in January and a huge miss to the 21.5 expected, confirming that Germany’s economy is set for another slump and this time recession may be unavoidable.

Earlier in the session, Asian stocks fell as semiconductor equities took a hit on the Apple news, and as investors finally realized the virus outbreak in China is taking a bigger-than-predicted toll on one of the world’s most-valuable companies. The MSCI Asia Pacific Index dropped 1.1%, led by declines in technology and communication services shares. Most markets in the region were down, with South Korea’s Kospi index, Hong Kong’s Hang Seng Index and Japan’s Topix index sliding more than 1%. India’s Sensex index declined to two-week low. China’s CSI300 gave up 0.5% after gaining on Monday, encouraged by a central bank rate cut and government stimulus hopes. TSMC lost 2.9%. Samsung Electronics dropped 2.9% and Sony Corp shed 2.5% after the Apple coronavirus warning.

Meanwhile, as China’s authorities try to prevent the spread of the disease or at least fabricate data suggesting Beijing is winning the war on the coronavirus, the economy is paying a heavy price. Some cities remain locked down, streets are deserted, and travel bans and quarantine orders are preventing migrant workers from getting back to their jobs. In short, as we showed on Friday, China’s economy is “disintegrating” and frankly it is shocking it took the market as long as it did to finally realize it. As Reuters finally admits, “many factories have yet to re-open, disrupting supply chains in China and beyond, as highlighted by Apple.”

As investors dumped risk assets, bonds were in demand, with the 10-year U.S. Treasuries yield falling 4 basis point to just above 1.5%, while safe-haven gold rose to its highest in two weeks and oil prices fell nearly 2% after five days of gains. China’s 10-year government bond yield declined following a two-day rise, amid risk-off sentiment in Asia after Apple warned. Futures contracts on notes of the same tenor also rose for the first time in three days. That came despite the People’s Bank of China’s net withdrawal of 220 billion yuan worth of cash from the financial system on Tuesday. The central bank drained another 700 billion yuan Monday, even though it provided medium-term loans to commercial banks and cut the rate its charges for the money by 10 basis points.

“Sentiment toward global risk turned sour today,” said Dariusz Kowalczyk, an EM strategist at Credit Agricole. “We continue to believe that markets have not yet fully priced in the magnitude of the hit to China’s economy as a result of the Covid-19 outbreak.”

In FX, the yen rose 0.15% to 109.69 yen per dollar while the risk- and China-sensitive Australian dollar lost 0.4% to $0.6686. The yuan was steadier, trading at 6.9950 per dollar. The euro was near a three-year low versus the dollar at $1.0830 before Germany’s ZEW survey, which is expected to fuel growing pessimism about Europe’s largest economy. [/FRX]

Expected data include U.S. Empire State Manufacturing Survey. PG&E, Walmart, Air Canada, and Agilent are among companies reporting earnings

Market Snapshot

  • S&P 500 futures down 0.5% to 3,363.50
  • STOXX Europe 600 down 0.6% to 429.56
  • MXAP down 1.1% to 168.17
  • MXAPJ down 1.1% to 550.53
  • Nikkei down 1.4% to 23,193.80
  • Topix down 1.3% to 1,665.71
  • Hang Seng Index down 1.5% to 27,530.20
  • Shanghai Composite up 0.05% to 2,984.97
  • Sensex down 0.6% to 40,806.11
  • Australia S&P/ASX 200 down 0.2% to 7,113.70
  • Kospi down 1.5% to 2,208.88
  • German 10Y yield fell 2.1 bps to -0.422%
  • Euro down 0.06% to $1.0829
  • Italian 10Y yield fell 1.5 bps to 0.74%
  • Spanish 10Y yield fell 2.4 bps to 0.265%
  • Brent futures down 1.9% to $56.60/bbl
  • Gold spot up 0.5% to $1,588.52
  • U.S. Dollar Index up 0.2% to 99.22

Top Overnight News from Bloomberg

  • Apple Inc.’s shares fell 4.1% in pre-market trading after the company said the fallout from the coronavirus will cause it to miss its sales targets this quarter, sending shockwaves across tech stocks globally
  • Intesa Sanpaolo SpA launched one of the biggest European banking deals since the financial crisis with an unsolicited 4.9 billion-euro ($5.3 billion) bid for smaller rival Unione di Banche Italiane SpA
  • Investors have been plunged back into a gloomy mood over the German economy on concern the coronavirus outbreak in China will disrupt global trade, with expectations for the next six months falling below even the most pessimistic estimate in a Bloomberg survey
  • The U.K. economy created jobs at an impressive pace in the fourth quarter, defying the political turmoil over Brexit, with the jobless rate at a four-decade low of 3.8%

Asia-Pac equities traded with losses across the board following a non-existent lead from Wall Street, but as sentiment was dented following a profit warning by Apple, citing the coronavirus outbreak. At the electronic open, major US equity futures experienced downside, with Nasdaq Mar’20 futures immediately giving up the 9600 mark as Apple carries an 11%+ weighting in the index. ASX 200 (-0.2%) was led lower by broad losses across the majority of its stocks in the index, and with material names pressured amid a pullback in base metal prices and as mining-giant BHP traded lower despite topping Adj. EBITDA and underlying profit forecasts, as the miner anticipates net demand losses in the near term amid the virus outbreak. Nikkei 225 (-1.4%) conformed to the overall risk tone but underperformed the region throughout a bulk of the session amid currency dynamics, and with Nissan shares under renewed pressure after its CEO foresees challenges to earnings and cashflow for the remainder of the FY. Other notable movers from the Apple fallout included Samsung Electronics, Taiwan Semiconductor, SK Hynix and Pegatron whose shares all traded lower by 1.5-3.0%. Elsewhere, Hang Seng (-1.5%) and Shanghai Comp (U/C) joined the downbeat performance across the region, with the former weighed on by its heavyweight financials and oil-giants, whilst the latter fared slightly better following yesterday’s PBoC stimulus injection.

Top Asian News

  • How Fast Can China’s Economy Bounce Back from Virus Lockdown
  • Apple’s Outlook Cut Revives Questions About China Over- Reliance
  • Singapore Aims to Phase Out Internal Combustion Vehicles By 2040
  • AXA-Affin Insurer Said to Draw Great Eastern, Generali Interest

European equities (Eurostoxx 50 -0.4%) mostly reside in negative territory as the fallout from Apple’s (pre-market -3.3%), revenue warning reverberates across the marketplace. Apple ‘s warning for Q1 revenue guidance was attributed to the coronavirus with the Co. noting it is experiencing a slower return to normal conditions than had anticipated and noted slower demand in products in China alongside iPhone supply constraints. Given that rival peers will likely be subject to similar supply-chain disruptions, IT names lag this morning with ASML International (-2.0%), Dialog Semiconductor (-4.5%), STMicroelectronics (-3%) and Infineon (-1.5%) all enduring losses. From a more medium-term perspective (referring to the US semiconductor sector), Credit Suisse notes “while we expect Semis to trade lower – we would recommend investors who can look into 2H and beyond should use weakness to accumulate best in class companies with a solid structural outlook”. Elsewhere, given the broader macro implications of Apple’s warning, material names are also softer thus far with uninspiring updates from Glencore (-3.9%) and BHP (-2.6%) pressuring the sector. Financials are falling victim to lower yields and a lacklustre update from HSBC (-5.7%) with the Co. unveiling a 33% decline in profits and a restructuring plan that will lead to a job cull of around 35k. Bucking the trend of the pessimism in Europe is the FTSE MIB (+0.3%), in the wake of Intesa Sanpaolo’s (+2.0%) takeover approach for UBI Banca (+22%), which has also stoked optimism around the prospect of further sector consolidation in Italy.

Top European News

  • InterContinental Hotels Full Year Revenue Meets Estimates
  • U.K. Employment Surges as Labor Market Shrugs Off Weak Economy
  • Emissions Clampdown Sends Europe Car Sales to January Slide
  • German Investor Confidence Plunges Amid Coronavirus Risks

In FX, although daily updates from China continue to signal that the worst may be over in terms of coronavirus cases and casualties, Apple has joined others issuing warnings about the fallout hitting Q1 production and sales targets with wider repercussions for the tech sector and risk sentiment in general. Hence, the traditional safe haven currencies (and assets) have regained a firm bid after losing some appeal at the start of the week and the DXY is back on track to post higher 2020 peaks as it edges further above 99.000 with only the likes of the Yen, Franc and Gold managing to keep pace or stay ahead of the Greenback. Indeed, Usd/Jpy has eased back a bit further from recent 110.00+ levels, while Usd/Chf is gravitating back towards 0.9800 alongside Eur/Chf on the 1.0600 handle and Usd/Xau is just below Usd1590/oz compared to a low of Usd1579 yesterday. Back to the index, 99.249 resistance has been eclipsed and 99.500 is the obvious next target for bulls ahead of last year’s 99.667 best.

  • NZD/AUD/SEK/NOK – The Antipodes are vying with their Scandi peers for the unenviable, though largely unavoidable tag of biggest G10 lower, and the Kiwi is shading it as Nzd/Usd slips under 0.6400 and Aud/Nzd holds near 1.0450 even though Aud/Usd has lost grip of the 0.6700 handle in wake of RBA minutes also flagging the Chinese nCoV outbreak as the biggest near term threat and keeping a rate cut on the table. Meanwhile, the Swedish Crown has been undermined by a rebound in jobless rates and its Norwegian counterpart by a sharp retreat in crude prices amidst the broad deterioration in risk appetite, with Eur/Sek up over 10.5600 at one stage and Eur/Nok near the top of a 10.0220-10.1100 range.
  • GBP – Bucking the overall trend, and seemingly gleaning a belated fillip from encouraging UK jobs data (claimant count and employment change) Cable has recouped all and more of its losses around 1.3000 after testing major technical support at 1.2971 (where the 10 DMA aligns with a 50% Fib retracement), while Eur/Gbp has reversed from circa 0.8350 to just above 0.8300. Note, some selling subsequently noted in the headline pair around the 200 WMA (1.3038).
  • EUR/CAD – Both succumbing to widespread Usd strength, with the single currency also weighing up divergent independent factors in the form of a worrying ZEW survey in contrast to reports that all Eurogroup Finance Ministers are on board with apportioning some budget finances in the event of an economic downturn, whatever that is deemed to be in terms of severity and how much cash will be allocated. Eur/Usd skirting last week’s 1.0821 base vs around 1.0837 at one stage, while Usd/Cad straddles 1.3250 ahead of Canadian manufacturing sales and with the Loonie also hampered by the aforementioned recoil in oil.
  • EM – Further depreciation vs the Dollar across the board, but the Rand also wary about more Eskom load-shedding, while the Lira and Rouble are still embroiled in Syria-related issues, and the latter also undermined by heightened conflict in the Ukraine.

In commodities, WTI and Brent front month futures are subdued this morning with losses just shy of USD 1/bbl at present in-line with the general risk sentiment. Newsflow has picked up on the geopolitical front, although not enough to dictate price action at present; with focus returning to the ongoing dispute between Russia and Ukraine which has flamed up once more on reports of heavy fighting in the Lugansk province. Ukraine has one of the largest gas transmission systems in the world, which is heavily linked to Russian, Belarus, Poland and other surrounding nations; the region in question does contain a number of gas pipelines but it is unclear as to whether they are currently in use as a bypass has been constructed. Focus will remain on how this escalates, and if it leads to disruptions to gas supply. Sticking with Russia, the Kremlin this morning noted that Energy Minister Novak is still considering his position with reference to the recommended JTC production cuts. In terms of outlook, given the coronavirus ING have revised down their price forecasts as the virus causes consumption to drop; with cuts of USD 5/bbl for Q1 Brent (from USD 60/bbl to USD 55/bbl), although their forecasts are unchanged by 2021. Note, given the US holiday the weekly API and EIA metrics will be released one day late on Wednesday and Thursday respectfully. Turning to metals, where spot gold is firmer this morning on the aforementioned geo-political tensions and as the coronavirus begins to impact US tech giants; albeit, the metal has dipped marginally from session highs in recent trade ahead of the US’ entrance to market. Elsewhere, copper prices are little changed but were hit overnight in-line with general risk sentiment.

US Event Calendar

  • 8:30am: Empire Manufacturing, est. 5, prior 4.8
  • 10am: NAHB Housing Market Index, est. 75, prior 75
  • 4pm: Net Long-term TIC Flows, prior $22.9b
  • 4pm: Total Net TIC Flows, prior $73.1b

DB’s Jim Reid concludes the overnight wrap

In the same way a solar eclipse requires the sun and earth’s orbit to be completely in synch, tonight the orbits of my work travel and my favourite football team’s all conquering path through world football are perfectly aligned. After a busy day of meetings in Madrid (I had to say that) I’m off to the Wanda Metropolitan stadium to watch Liverpool take on Athletico Madrid in the Champions League. I’ve got a feeling I’m in the home end so if you’re watching it on the telly and see one guy with the opposite reaction to the rest of the surrounding crowd then you’ll know it’s me.

If you had to describe yesterday in football parlance it would be a dull 0-0 with no shots on target for either side. The US holiday and half term drove down activity to a crawl. However after the time that the US market would have closed had it not been on holiday Apple issued a revenue warning for Q1 and became the highest profile market victim of the virus impact so far.

The company said in a statement that while work is starting to resume in China, “we are experiencing a slower return to normal conditions than we had anticipated,” and global iPhone supply will be “temporarily constrained.” Apple suppliers including TDK Corp. (-3.87%) and Tokyo Electron Ltd. (-5.06%) slumped after the warning. Comments from Apple came after similar comments by the American Chamber of Commerce in Shanghai. They said that most US factories in China’s manufacturing hub around Shanghai will be back at work this week, but the “severe” shortage of workers due to the coronavirus will hit production and global supply chains. Our FX Analysts updated a piece yesterday that shows that our proprietary shipping data still hasn’t recovered yet post the NY holidays and virus shutdowns (link here). We’ll continue to watch this data for signs of economic activity picking back up.

Also impacting sentiment overnight is news from Bloomberg that the White House is considering new restrictions on exports of cutting-edge technology to China in a push aimed at limiting Chinese progress in developing its own passenger jets and also on clamping down further on Huawei’s access to vital semiconductors. The report added that senior officials are expected to decide by the end of this month whether to block exports of jet engines made by a JV of General Electric and France’s Safran to China. Further, the administration is also considering separate measures to broaden export controls related to the existing restrictions on Huawei by blocking foreign chipmakers, such as Taiwan’s TSMC and US suppliers, from selling components made overseas to Huawei.

Markets are heading lower in Asia this morning on the back off these stories with the Nikkei (-1.46%), Hang Seng (-1.45%), Shanghai Comp (-0.37%) and Kospi (-1.47%) all down. As for Fx, the onshore Chinese yuan is down -0.21% to 6.9958 and the Australian dollar is down -0.36% as the RBA said that it considered a rate cut at its last meeting but shied away from it to avoid extra borrowing as house prices rise. Elsewhere, futures on the S&P 500 are down -0.30% while yields on 10yr USTs are down -3.7bps as they reopened post a holiday with 30yrs back below 2% again. Brent crude oil prices are down -1.04% and spot gold prices are up +0.29%.

The latest on the virus is that in China the total confirmed cases now stand at 72,436 with the death toll at 1,868. Japan also said overnight that it will remove all passengers from the quarantined cruise liner by Friday. There were 454 confirmed cases of the virus on the ship by yesterday. Also worth flagging was the news yesterday that Macau casinos will reopen this Thursday, albeit conditional based on unspecified criteria according to the secretary for economy and finance in Macau.

This all followed a very uneventful session in Europe yesterday. The STOXX 600 closed up +0.34%, bucking two consecutive down days and traded in a range of less than half a percent as sentiment got a boost from the China stimulus announcement which came before Europe had walked in. There were similar gains also for the DAX (+0.29%) and CAC (+0.27%) while the FTSE MIB outperformed with a +1.02% gain. BTPs also had a better day than their counterparts, with yields down -1.6bps versus +0.1bps for Bunds although there didn’t appear to be any specific Italy-related news which helped the outperformance so it’s probably more the high beta element driving the price action.

Elsewhere, the euro was little changed after losing ground almost every day in February so far, while in commodities there wasn’t much to talk about in Oil or Gold either, with both also trading fairly flattish through the last 24 hours. Meanwhile in credit, HY spreads in Europe were -1.8bps tighter. Speaking of credit its worth seeing how Kraft Heinz bonds trade today following their downgrade to HY by Fitch and then later S&P on Friday. Given that the S&P move came very late in the day we haven’t really seen the full reaction yet. Craig and Nick put out a note yesterday which looked at the technical impact the downgrade will have on the HY market. It also looks at other potential fallen angel candidates and where their bonds trade relative to the average BBB- and BB+ bonds. See the US note here and the Euro one here. As we said yesterday this is a real glimpse into the future problems in credit markets. When the economy turns there will likely be a huge problem given the weight of weaker BBBs out there. For now though this is likely idiosyncratic.

BBB used to mean Brexit, Brexit and more Brexit until the recent lull in newsflow. In another glimpse of problems down the line, the U.K. chief Brexit negotiator David Frost last night aggressively pushed back on the EU’s insistence on a level playing field provision in trade talks saying that “We must have the ability to set laws that suit us” and that having to abide by EU rules “simply fails to see the point of what we are doing”. Not a surprise but confirms the expected likely high tensions ahead.

In other news, Bloomberg ran a story yesterday looking at the political frictions impeding another ECB rate cut. On a similar vein it’s worth highlighting a report our economists in Europe published on asking whether the ECB was heading for another showdown between the monetary policy technicians on the one side and the monetary policy politicians on the other. The team discuss the rising risks to their baseline assumption that ECB policy will remain unchanged this year. These are: First, the coronavirus. Second, the weakness of the euro area economy just before the virus. Some on the ECB see space for further easing, if needed. Others would find it more difficult to ease. There are arguments supporting a more patient attitude, that is, a less reactive policy stance. One main reason is that the more the ECB reacts to events the more it delays fiscal policy which is ultimately what the ECB wants. We suspect patience is also what Lagarde would prefer, as long as the euro area is not facing a substantial downgrading of the outlook.

Looking at the day ahead, this morning it’ll be worth keeping an eye on the December and January labour market data in the UK before we get the February ZEW survey in Germany. With the US returning, data releases will include the February empire manufacturing print and February NAHB housing market index reading.

3A/ASIAN AFFAIRS

I)TUESDAY MORNING/ MONDAY NIGHT: 

SHANGHAI CLOSED UP 1/35 POINTS OR 0.05%  //Hang Sang CLOSED DOWN 429.40 POINTS OR 1.54%   /The Nikkei closed DOWN 329.44 POINTS OR 1.40%//Australia’s all ordinaires CLOSED DOWN .18%

/Chinese yuan (ONSHORE) closed DOWN  at 7.0023 /Oil UP TO 51.05 dollars per barrel for WTI and 56.41 for Brent. Stocks in Europe OPENED MOSTLY RED//  ONSHORE YUAN CLOSED DOWN // LAST AT 7.0023 AGAINST THE DOLLAR. OFFSHORE YUAN CLOSED DOWN ON THE DOLLAR AT 7.0057 TRADE TALKS STALL//YUAN LEVELS GETTING DANGEROUSLY CLOSE TO 7:1//TRUMP INITIATES A NEW 25% TARIFFS FRIDAY/MAY 10/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 /TRADE DEAL NOW DEAD..TRUMP  RAISED RATES TO 25%

 

 

3 a./NORTH KOREA/ SOUTH KOREA

South Korea/Japan

Another problem caused by the Coronavirus: a shortage of Chinese workers to man South Korean and Japanese enterprises

(zerohedge)

“I Have No Idea What To Do Now”: South Korean & Japanese Firms Screwed By Shortage Of Chinese Migrant Workers

Since COVID-19 went global just over two weeks ago, we’ve spent a lot of time discussing how China’s economic shutdown is going to impact the global economy. But by focusing on giant companies like GM and Foxconn, we’ve maybe overlooked some of the little people.

People like the millions of Chinese migrant workers who occupy unskilled and skilled jobs in South Korea and Japan. Many companies in agriculture and construction employ young Chinese ‘technical interns’ to compensate for serious labor shortages. These workers effectively form the base of a transnational supply chain. And without workers, the agricultural sector could be in a serious bind as the spring and summer approach.

In a story published Friday, the Nikkei Asian Review offers a glimpse into the world of migrant workers in Japan and South Korea (the paper essentially caters to English speakers in East Asia outside mainland China).

As Nikkei reminds us, South Korea’s economy has experienced a serious backlash from the global resurgence of protectionism and mercantilist trade policies. These changes have disrupted trade and global supply chains across Asia, creating winners and losers (Vietnam has often been cited as a beneficiary of President Trump’s antagonism of Beijing), and South Korea is an example of a fast-growing economy that has been upended. Some economists have gone so far as to argue that it could be the ‘canary in the coal mine’ for the global economy if trade continues to decline.

That being said, the situation is often overshadowed by South Korea’s accomplishments in culture and arts. A foreign film directed by a South Korean and produced in South Korea won best picture at the 2019 Academy Awards, becoming the first foreign film to ever win the honor. Young Americans are increasingly listening to Korean “K-Pop” artists directed at the teenage demographic in South Korea.

In some cases, Chinese workers who have lived in South Korea for years are being fired in what some might describe as a xenophobic panic.

Ahn and Choi are among those impacted by the outbreak. On Wednesday, the two men were sharing a drink of Korean rice wine at a convenience store in Daelim-dong, the largest residential and commercial area for Korean-Chinese workers in Seoul, and commiserating over their plight.

Choi, 62, said he was fired a week ago from a hospital in Pyeongtaek, 65 km south of Seoul, where he had worked as a caregiver for a year. Choi is from Jilin Province in northeastern China, where many people of Korean descent live.

“I was forced to leave my job just because I am Chinese,” said Choi, adding that he has been in South Korea for more than a decade.

“I have no idea what to do now.”

Ahn, meanwhile, said he has no hope of getting a cleaning job at a sauna or a golf course because people are avoiding such activities due to fear of the coronavirus, which had infected 28 people in the country as of Wednesday.

“Many stores and companies are closed due to the virus. I hope it goes away as soon as possible.”

Chinese who speak Korean (there are ethnic Korean communities in mainland China) are often sought after in South Korea for jobs, some of which can still pay a decent wage, even if the primary appeal of the workers is that they’re generally cheaper to hire than locals (veteran Silicon Valley coders should recognize this dynamic).

But some of the labor shortages are the result of genuine problems with getting workers from one place to the next when countries around the world are tightening their borders. As NAR explains, in Japan, the problem is that prospective and current employees can’t get back to Japan after going home to visit family for the LNY holidays.

Agriculture, construction and other industries are really feeling the squeeze.

The problem is particularly acute for sectors such as agriculture and construction, which rely on Chinese “technical interns” to fill serious labor shortages.

The government-backed technical trainee program is often seen as a back door for foreign unskilled workers to work in manual labor in Japan. The interns typically stay in the country for three years, and are crucial for rural areas, whose own young populations are increasingly moving to big cities.

According to the Organization for Technical Intern Training, there were about 90,000 Chinese approved interns in 2018, accounting to 23% of the total.

Representatives from Japan’s big ag cooperatives spoke to the NAR about the problems, possibly in an effort to influence popular opinion and/or government policy.

They cited specific examples in the industry where companies depending on the Chinese “interns” are being left high and dry.

Several regional representatives for the Japan Agricultural Cooperatives expressed their concerns to the Nikkei Asian Review.

“Honestly, it will be a difficult situation if the trainees miss their schedule,” said Takayuki Fukuda, manager at JA Churui in Hokkaido.

Churui was expecting three interns from China’s Hubei Province, where the virus broke out, to arrive in March. Even if Japan allows entries from the province by then, the prospective interns are not able to take the necessary training in China. That means their arrival is likely to be delayed or cancelled, Fukuda said.

At Iwai in Ibaraki Prefecture, which produces green onions and lettuce, three technical interns from Hubei and Sichuan provinces who went home for the Lunar New Year are unable to come back to Japan. JA Iwai is also expecting four new Chinese trainees in June, but “we are considering delaying their participation,” a representative said.

In Tokyo, Takashi Maruyama at Shutoken Shouko Kensetsu Cooperative for the construction sector also said some Chinese interns cannot return for work from their holidays. He added that he is concerned about the new interns who were scheduled to arrive in the next months.

The cooperative sends about five to 10 Chinese interns to its member companies every month. “There has been labor shortage in the last few years,” Maruyama said. “If the virus situation do not calm down, companies will be affected.”

The virus may also hit factories. Some Chinese interns for Aichi Machine Industry Cooperative, which is located in the hometown of Toyota and its suppliers, are also expected to delay their arrival.

The cooperative’s representative said it will consider taking more interns from other countries instead “depending on the situation.” It currently accepts about 440 interns from China, Vietnam and the Philippines.

Globalization has created an international tapestry of goods, services and labor that’s almost inscrutably complex. But examples like these are a reminder: the economic ramifications of the outbreak will be felt outside the PRC.

Then again, we can’t help but wonder: Where could these countries turn for reliable migrant labor?

We have a few ideas…

 

b) REPORT ON JAPAN

JAPAN/GDP/TERRIBLE RESULTS

Now Japanese’s economy gets whacked because of the coronavirus: It slides into recession despite a small number of citizens inflicted.

(zerohedge)

Unexpectedly Reports Terrible GDP As It Slides Into Recession

One look at the latest GDP print out of Japan, and one would think the country’s economy was already being ravaged by the coronavirus: at -1.6% Q/Q and a whopping -6.3% annualized – nearly double the 3.8% estimated drop – this was the second worst GDP print since the financial crisis and the second-worst quarter of the Shinzo Abe era, surpassing even the drop in the aftermath of the Fukushima disaster.

Of course, the latest plunge in Japan’s GDP has nothing to do with the coronavirus as it took place in Q4, and the drop was largely a byproduct of the sale tax hike, which led to a similar collapse in Q2 2014 GDP, following the first such tax hike.

One look at the GDP components confirms that the plunge was largely the result of collapsing consumption, with Household Consumption plunging at an 11.5% annualized pace, the second biggest drop that Private Demand plummeted at an -11.1% annualized basis…

 

… the second worst on record, and also just behind the -18.1% drop recorded after the first sales tax hike in 2014.

It wasn’t just households who retrenched, however, and as the following breakdown from Japan’s cabinet office reveals, in Q4, Japan’s capex fell fore the first time in 3 quarters, dragged down by construction and production machinery. Finally, the economic misery was complete as a result of a second consecutive drop in exports led by cars, as the global automotive sector remains mired in the deepest recession since the financial crisis.

And since Q1 GDP will likely be even worse due to the paralysis in Chinese supply chains which have knocked out a good part of Japanese domestic manufacturing indefinitely, today’s bleak GDP report means that a Japanese recession – definied as two quarters of negative GDP – is now just a matter of time.

The unexpected plunge in Japan’s GDP triggered a kneejerk reaction of selling on the Topix, which slid more than 1% in early trading, though bond yields and the yen showed little reaction to the worst nominal GDP performance since Prime Minister Shinzo Abe took office (U.S. futures were of course higher, because the closer the world gets to depression, the more likely central bankers are to start buying, well, everything).

END

CORONAVIRUS UPDATE.JAPAN/CRUISELINE UPDATE

Japan Confirms 88 More Cases Aboard ‘Diamond Princess’, Bringing Total To 542 One Day Before Quarantine Set To End

Last night, the western press exposed the Americans for breaking Japan’s quarantine on the ‘Diamond Princess’ by ferrying some 14 infected individuals to the US. But with one day left to go before the Japanese government ends its quarantine and releases thousands of terrified and paranoid passengers into the streets of Tokyo.

On Tuesday, another 88 passengers from the Diamond Princess were diagnosed with the virus, bringing the total to 542.

Jake Sturmer

@JakeSturmer

: Another 88 confirmed new cases from on board the Diamond Princess @abcnews

View image on Twitter

Japan has completed tests for all passengers and crew aboard the ship as of Monday, but the results for the last batch of tests aren’t expected until Wednesdaythe day that the quarantine is slated to end. So far, results are back for 2,404 passengers and crew, out of the 3,711 who were  on board the ship when the quarantine began on Feb. 5.

Japanese Health Minister Katsunobu Kato said Tuesday that people who have tested negative for the virus would start leaving on Wednesday, but that the process of releasing passengers and crew won’t be finished until Friday, according to the Washington Post.

The remaining 61 American passengers on the DP who opted not to join the evacuation will not be allowed to return to the US until March 4, according to the American embassy in Tokyo. The governments of Australia, Hong Kong and Canada have also said they would evacuate passengers.

Elsewhere, Japan confirmed three more cases of the virus. This time, they were confirmed in Wakayama, a prefecture in eastern Japan.

In the latest indication that the 14-day quarantine simply wasn’t enough to kill the virus, a British couple has tested positive for the virus just one day before Japanese authorities are set to release everybody from quarantine, according to the Guardian.

“David and Sally Abel, a British couple onboard the Diamond Princess cruise liner in Japan, have tested positive for coronavirus, a day before passengers who tested negative were due to start leaving the ship after spending two weeks in quarantine.”

Including all of the cases announced overnight, there are now 73,336 confirmed cases of the virus worldwide, compared with 1,874 deaths.

Johns Hopkins

As the battle against the virus rages in Wuhan, Liu Zhiming, 51, a neurosurgeon and the director of the Wuchang Hospital in Wuhan, became the latest high-profile medical worker to succumb to the virus, as we noted last night. Late last week, China confirmed that nearly 2,000 medical workers had been infected.

The Commission overseeing China’s virus response has released a statement commemorating Liu’s life and honoring his death.

“From the start of the outbreak, Comrade Liu Zhiming, without regard to his personal safety, led the medical staff of Wuchang Hospital at the front lines of the fight against the epidemic,” the commission said. Dr. Liu “made significant contributions to our city’s fight to prevent and control the novel coronavirus,” it added.

In Beijing, senior officials including President Xi continued to play down the economic blowback from the virus. During remarks on Tuesday, Xi insisted that China could still meet its 2020 economic targets – which called for a doubling of the size of the Chinese economy in 10 years – despite the outbreak.

RANsquawk

@RANsquawk

We cross live to the Chinese Statistics Bureau as President Xi says China can still meet 2020 economic targets despite coronavirus

Embedded video

Of course, China’ goalseeked economic data has never offered a truly accurate reflection of the world’s second-largest economy. And a report by PitchBook warns that Chinese startups are struggling to raise money as the epidemic complicates deal talks an deals a serious blow to the country’s ‘venture capital’ scene.

From the start of the year through Feb. 12, venture capital activity in China fell from 381 to 137 deals, and the capital raised declined from $4.05 billion to $1.37 billion, compared to the same period last year.

Prior outbreaks like SARS and swine flu also weighed on investment activity.

Moving south to Seoul, South Korean President Moon Jae-in called for South Korea to take “emergency steps” to prepare for a more widespread outbreak of COVID-19.

In contrast to Xi, Moon warned the coronavirus could have a “bigger and longer-lasting impact” on his country’s economy than the 2015 MERS outbreak, which prompted South Korea to roll out a supplemental budget while the central bank cut rates, WaPo reports. Speculators are now betting on a rate cut at the Bank of Korea’s meeting next week. Singapore also announced on Tuesday that it had earmarked $2.8 billion for virus relief measures to help stabilize its economy and assist workers.

Over in the Philippines, 25,000 stranded workers can now return to work.

French Health Minister Olivier Veran said Tuesday there was a “credible risk” that the virus could transform into a pandemic, Reuters reports.

“This is both a working assumption and a credible risk,” Veran told France Info radio, when asked about the possibility of the coronavirus spreading globally.

Taking a brief break from the news, our disturbing video of the day comes from Xinjiang, the far-flung province that’s home to millions of Uyghur Muslims.

In this video, shared by the Epoch Times’ Jennifer Zeng, a police officer suddenly collapses while walking. His current status is unknown.

曾錚 Jennifer Zeng@jenniferatntd

Zhou Shunxin, a police officer in , suddenly collapses while walking. Official report says vaguely that he “passed out” at the front line of control, and sent to the hospital, but doesn’t talk about why he collapsed or his current status.

Embedded video

Offering a lesson in contrasts, the Global Times, a mainland tabloid, has continued to tweet lighthearted human interest stories from the heart of the outbreak. Today’s story: A health-care worker getting married in the heart of the outbreak.

Global Times

@globaltimesnews

Wedding dress, bridal veil and confetti made from a hospital bedsheet with a rubber glove bridal bouquet. Watch this medical staff member’s wedding in the battleground against the novel in . http://bit.ly/2P5xD3I 

View image on TwitterView image on TwitterView image on TwitterView image on Twitter

The GT also reported that officials in Hubei are continuing with a “comprehensive search” for patients with fevers, and have even started tracking down every individual who has purchased fever or cough medicine since Jan. 20.

Central China’s Hubei Province, where epicenter is located, launched a comprehensive search of fever patients on Tuesday. Authorities are tracking down people with symptoms of fever or those who bought fever and cough medicines since January 20.

View image on Twitter

As we reported last night, Apple published a press release admitting it “does not expect to meet the revenue guidance we provided for the March quarter” due to coronavirus-related issues.

Since we haven’t reported a full breakdown of cases in a while, here’s a complete list and breakdown of infections by country and territory, courtesy of the AP:

Mainland China: 1,868 deaths among 72,436 cases, chiefly in Hubei
Hong Kong: 58 cases, 1 death
Macao: 10
Japan: 607 cases, including 542 from a cruise ship docked in Yokohama, 1 death
Singapore: 77 cases
Thailand: 35
South Korea: 31
Malaysia: 22
Taiwan: 22 cases, 1 death
Vietnam: 16 cases
Germany: 16
United States: 15 cases; separately, 1 US citizen died in China
Australia: 14 cases
France: 12 cases, 1 death
United Kingdom: 9 cases
United Arab Emirates: 9
Canada: 8
Philippines: 3 cases, 1 death
India: 3 cases
Italy: 3
Russia: 2
Spain: 2
Belgium: 1
Nepal: 1
Sri Lanka: 1
Sweden: 1
Cambodia: 1
Finland: 1
Egypt: 1

In a recent study, China’s CCDC found that the virus’s fatality rate – 14.8% – is for people aged 80 or older with co-occurring medical conditions. Young and healthy people, meanwhile, typically experience much more mild symptoms, according to the BBC. Along those same lines, the WHO confirmed on Tuesday that the virus manifests as only a minor infection in four out of five people who contract it, according to the Guardian.

For everybody still saying that the virus is no more dangerous than the annual flu outbreak, here’s some food for thought: An analysis of 44,672 coronavirus patients in China whose diagnoses were confirmed by laboratory testing has found that 1,023 had died by Feb. 11, a fatality rate of 2.3%. That’s far higher than the mortality rate for the seasonal flu.

Finally, the New York Times has reviewed lockdown conditions across China, and confirmed that more than 760 million people are living in neighborhoods or villages with at least some imposed strictures regulating residents’ comings and goings. That represents half of China’s population, and one out of every ten people on the planet.

Some neighborhoods only require residents to show ID, sign in and have their temperature checked. Other villages prohibit bringing in guests. In places with more stringent restrictions, households are only allowed to send one person out at a time – and often not even every day.

Last night, Zeng reported that in some parts of Wuhan the lockdown has become so strict that people aren’t allowed to come outside at all.

曾錚 Jennifer Zeng@jenniferatntd

The locking down in is getting tighter. No coming out at all now. 小区封锁加剧。从七天可出一次门变为任何时候不得出门。

Embedded video

END

3 C CHINA

CHINA/SATURDAY

Well that did not take long! Wuhan;s hastily constructed 1000 bed coronavirus hospital is already falling apart

(zerohedge)

Wuhan’s Hastily-Constructed 1,000-Bed Coronavirus Hospital Is Already Falling Apart

The 1,000-bed hospital constructed in about a week to handle the Covid-19 outbreak in Wuhan, China, opened its doors about 13 days ago, or around Feb 03, has already experienced a massive water leak that has flooded hallways, according to an alleged video posted by Twitter handle Harry Chen PhD on Saturday.

Harry Chen PhD@IsChinar

The hospital built in 5 days leaks! And not a little…a lot!

Exclusive insider’s look!!!

Embedded video

Chen tweeted another video of water falling from the ceiling on hospital beds for virus-infected patients.

Harry Chen PhD@IsChinar

The little hospital that couldn’t is a petri dish of positive vibes…

“its just a fancy humidifier and it’s just the flu…go back to sleep…🔥🔥🔥🤫

-coronavirus, February, 2020

Embedded video

We noted earlier this month that Wuhan’s new 25,000-square-meter hospital, one of two new facilities commissioned in response to the virus outbreak, was completed around the first of the month. Here’s a time-lapse video of the construction:

The building of the hospital, and the news headlines that surrounded it, was nothing more than propaganda spread by the Communist Party of China to Western media outlets to obtain the image that everything was under control. However, that narrative of “contained” collapsed last week as confirmed cases in China skyrocketed, and deaths soared, leaving many to believe that the virus crisis is worsening.

What a disaster the virus outbreak has become. Governments and their corporate media counterparts are failing to control the narrative that everything is “contained” as we close out the second week of Feb.

The virus is going global, and there’s no vaccine for at least 12-18 months.

END

ROBERT H TO ME:  FRIDAY NIGHT

“As I keep writing, China economy has gone negative in growth and this will not be a sharp V to turn back up.
They have no idea of the total scope of the problem let alone the real containment timeline. Add to that the very likelihood of someone working on a device who could well be infected, what happens to all that come into contact with the device while the virus lives?

Chinese Investment Bank, China International Capital Corp. published a survey report which says of 163 companies of all sizes across China found that less than half were able to get back to work this week. Even more alarming: a third of roughly 1,000 small and medium-sized companies surveyed by academics from Tsinghua University and Peking University last week said they could only survive for a month with the cash they have. That may well spell terrible news for China’s entrepreneurs — and an even worse reality for the country’s economy. About 30 million small and medium-sized businesses contribute more than 60% of the country’s GDP, according to government statistics published last September. The taxes they pay account for more than half of government revenue, and they employ more than 80% of China’s workers.

The very real picture is how one may continue operations without China parts and how fast can one change suppliers, and source elsewhere. It is not about being reliant on China coming back any time soon. Those companies who seize the opportunity to bypass China quickly will be the ones who suffer the least in losses. Pity the commodity houses and base mining producers who are and will experience a bloodbath.


Cheers
Robert
END
COVID 19/CHINA UPDATE SUNDAY AFTERNOON
The numbers just do not add up with the White House not believing them.
In China, the facts are simply this:
 that an unknown number of Chinese citizens are sick and dying in the largest quarantine in human history, and a virus which can be contracted by asymptotic “super spreaders,” and which has now begun to spread around the world”
(zerohedge)

China’s Coronavirus Numbers Don’t Add Up, And The White House Doesn’t Believe Them

As we’ve been highlighting for weeks, China’s official coronavirus numbers aren’t adding up. The evidence is overwhelming; overloaded crematoriums in Hubei province, to the official death rate maintaining an improbable 2.1% (within + / – 0.1%) for weeks, to coronavirus deaths counted as pneumonia before they were able to test positive – and finally, all the bodies currently decomposing in apartments (government-sealed or not).

Officially, there are currently 69,289 confirmed cases, and 1,670 fatalities, with 95% of those coming from China.

To that end, Barron’s notes that China’s coronavirus numbers are “too perfect to mean much.”

A statistical analysis of China’s coronavirus casualty data shows a near-perfect prediction model that data analysts say isn’t likely to naturally occur, casting doubt over the reliability of the numbers being reported to the World Health Organization. That’s aside from news on Thursday that health officials in the epicenter of the outbreak reported a surge in new infections after changing how they diagnose the illness. –Barron’s

This week, the Trump administration said that it does “not have high confidence in the information coming out of China,” while CNBC notes that Beijing has been reluctant to accept help from the Centers for Disease Control and Prevention (CDC), and has been suppressing information about the outbreak from scientists that run counter to their prevailing narrative that everything is under control and the virus is peaking.

U.S. officials’ mistrust of China goes as far back as the 1950s, when national authorities set unrealistic production quotas that led local officials to inflate data. Mishaps with the 2003 outbreak of SARS, which sickened 8,098 people and killed about 800 over nine months, and discrepancies in reporting of economic data over the past two decades has only hardened the U.S. government’s belief that China cannot be trusted, experts say. White House advisor Peter Navarro has even called China a “disease incubator.” –CNBC

Meanwhile, the World Health Organization (WHO) – which receives the second-largest financial contribution from China after the United States – has been defending Beijing and praising their response while insisting that travel restrictions are unnecessary and racist (would spread “fear and stigma”).

How’s that going?

 

Note, Japan figures include cruise ship passengers (source)

“This is a very obviously tense political environment because of the economic issues and because of everything else,” said Dr. Mike Ryan, executive director of WHO’s emergencies program while speaking from Geneva. “Please, let our scientists get on. Let our public health professionals get on. Let them work together.”

This is the time for facts, not fear. This is the time for science, not rumors. This is the time for solidarity, not stigma,” said WHO Director-General Tedros Adhanom Ghebreyesus last month.

The facts, Tedros, is that an unknown number of Chinese citizens are sick and dying in the largest quarantine in human history, and a virus which can be contracted by asymptotic “super spreaders,” and which has now begun to spread around the world.

END
CHINA/ECONOMY/SUNDAY NIGHT
A warning to all: A trial balloon has just been floated that austerity and not huge money printing is on the horizon in China
(zerohedge)

Beijing Crashes The Party: Chinese Media Warns Austerity Is Coming After FinMin Says “Proactive Fiscal Policy” No Longer Feasible

One of the top reasons why stocks have continued to hit new all time highs despite the ongoing economic shock that has crippled China’s economy, which according to Goldman will push its GDP to zero (or lower)…

… and frayed global supply chains, is the investing public’s absolute certainty that China will unleash an unprecedented fiscal stimulus to offset the collapse in economic output (which to those who mistakenly claim that this is “contrarian view” we urge you to carefully review the definition of contrarian when everyone is convinced it will happen).

And in all honesty, until today there was little reason to believe otherwise. After all, with China’s economy disintegrating, as we showed on Friday, courtesy of real-time indicators that show there has been zero economic uptick since the lunar new year as the economy remains paralyzed, it would appear Beijing has little choice but to unleash the proverbial stimulus flood, or rather continue unleashing stimulus, as shown in the timeline below.

Furthermore, with articles such as this one in Bloomberg “China Vows More Fiscal Support as Virus Roils a Slowing Economy“, a stimulus appears a done deal.

There is just one problem: none of it is true based on what China’s finance minister Liu Kin actually wrote today in Qiushi, the Communist Party of China’s flagship magazine.

First, a quick look at what the misleadingly titled Bloomberg article, which cited Liu, says it is far from the blanket “vow” of unconditional fiscal stimulus that one would conclude based on just reading the headline, as just two paragraphs in we read that “the nation will further perfect and implement measures this year to reduce corporate taxes and cut unnecessary government expenses.

For those confused, “cutting unnecessary government spending” is the opposite of the unlimited stimulus most investors hope for; in fact one can almost interpret it as a form austerity with Chinese characteristics.

And as further confirmation that China may be about to shock the stock market and its stimulus junkies, China’s Global Times propaganda outlet wrote on Sunday that “with the Chinese economy taking a major hit from the outbreak of the novel coronavirus pneumonia (COVID-19), the central government appears to pursue fiscal austerity as part of the efforts to pull through the difficult times.

Crushing the “unlimited fiscal support” argument pushed by Bloomberg, and which is propping up the entire market, the Global Times warns that while it is generally expected that fiscal stimulus and monetary easing will undoubtedly be the two main tools of central authorities for alleviating downward pressure on the economy and for maintaining macroeconomic stability, “given the past experience and the financial risks currently facing China, a flood of spending programs seems no longer on the financial regulators’ list of choices for stimulating the economy.”

And here is why one can no longer even trust Bloomberg for objective and accurate, reporting of news: according to the Global Times’ report of what the Chinese finance minister said, instead of “vowing more fiscal support”, China’s top financier actually urged local government to brace for “belt-tightening”, to wit:

“China will face decreased fiscal revenues and increased expenditures for some time to come, and the fiscal operation will maintain a state of ‘tight balance.’, Chinese Finance Minister Liu Kun wrote in an article published on Qiushi, a magazine affiliated with the Communist Party of China Central Committee. In this situation, it won’t be feasible to adopt a proactive fiscal policy by expanding the fiscal expenditure scale. I, and instead, policies and capital must be used in a more effective, precise and targeted way,”  Liu said. Chinese Finance Minister Liu Kun wrote in an article published on Qiushi, a magazine affiliated with the Communist Party of China Central Committee.

Much to the chagrin of anyone betting that Beijing will do anything to offset the economic decline about to slam the economy, the Global Times said that “Liu’s article sent a clear signal that China would not stimulate the economy by rolling out another massive monetary stimulus.”

Which is not to say that China won’t do anything, it just won’t do as much as many hope: due to the dire impact of the coronavirus outbreak on businesses across the country, the Ministry of Finance has already made it clear that it would continue to reduce the tax burden on enterprises, which will undoubtedly weigh down the already slowing fiscal income. However, a potential decrease in fiscal revenues directly points to the limited room for splashing out on unnecessary programs. China’s fiscal revenues grew 3.8 percent in 2019, the slowest growth since 1987, while fiscal expenditures during the same year gained 8.1 percent compared with the previous year, outpacing economic growth.

 

Therefore, to maintain a “tight balance,” the Chinese economy will have to tighten its belt by curbing non-essential expenditures while expanding investment in a precise and targeted manner, as the Global Times said, which as a reminder is under the auspices of the Chinese Communist Party’s People’s Daily newspaper and thus represents the message China’s communist party wants to convey to the world.

While there has been a consensus among economists and investors for the fiscal deficit ratio to break the 3% GDP mark temporarily so that more space could be given to fiscal expenditures to stabilize the economy amid the epidemic, the Global Times says that the fiscal space constraint is not the key reason for belt-tightening. Instead, China appears to now be learning from the past, when massive stimulus has showed that “a flood of investments could lead to many consequences like high levels of local government debts, and to the detriment of high-quality economic growth.”

The Global Times’ conclusion is ominous: the pain will be equally felt by everyone:

In 2019, China’s fiscal expenditures reached 23.9 trillion yuan ($3.4 trillion), of which only 3.5 trillion yuan was spent by the central government, and the rest by local governments.  In this sense, governments at all levels should be prepared for belt-tightening in the future to come.

The question is whether US investors, who have so far ignored all the adverse newsflow betting Beijing would bail them out – and with the S&P at all time highs, they have yet to be proven wrong – will join them.

end

CHINA/SUNDAY NIGHT

China now realizes that its economy is rapidly heading to not only a zero GDP growth but zero GDP itself.  Its economy is heading to zero!!. Now China’s Central |Bank orders lenders to be lenient and allow higher levels of bad debt tin order to avoid a financial cataclysm

(zerohedge)

China Central Bank Orders Lenders To “Tolerate” Higher Bad Debt Levels To Avoid Financial Cataclysm

Last week we reminded readers that unless Beijing manages to contain the coronavirus epidemic, China faces a fate far worse than just reported its first ever 0% (or negative) GDP print in history. For those who missed it, here it is again: back in November, we reported that as part of a stress test conducted by China’s central bank in the first half of 2019, 30 medium- and large-sized banks were tested; In the base-case scenario, assuming GDP growth dropped to 5.3% – nine out of 30 major banks failed and saw their capital adequacy ratio drop to 13.47% from 14.43%. In the worst-case scenario, assuming GDP growth dropped to 4.15%, some 2% below the latest official GDP print, more than half of China’s banks, or 17 out of the 30 major banks failed the test. Needless to say, the implications for a Chinese financial system – whose size is roughly $41 trillion – having over $20 trillion in “problematic” bank assets, would be dire.

Well, with GDP set to print negative if Goldman is right (with risk clearly to the downside as China’s economy remains completely paralyzed)…

every single Chinese bank is set to fail a “hypothetical” stress test, and the immediate result is an exponential surge in bad debt. The result, as we discussed in detail last week, is that the bad loan ratio at the nation’s 30 biggest banks would soar at least five-fold, and potentially far, far more, flooding the country with trillions in non-performing loans, and unleashing a tsunami of bank defaults.

Of course, regular readers are well aware that China’s banks are already suffering record loan defaults as the economy last year expanded at the slowest pace in three decades while bankruptcies soared. As extensively covered here previously, the slump tore through the nation’s $41 trillion banking system, forcing not only the first bank seizure in two decades as Baoshang Bank was nationalized , but also bailouts at  Bank of Jinzhou, China’s Heng Feng Bank, as well as two very troubling bank runs at China’s Henan Yichuan Rural Commercial Bank at the start of the month, and then more recently at Yingkou Coastal Bank.

All that may be a walk in the park compared to what is coming next.

“The banking industry is taking a big hit,” You Chun, a Shanghai-based analyst at National Institution for Finance & Development told Bloomberg. “The outbreak has already damaged China’s most vibrant small businesses and if it prolongs, many firms will go under and be unable to repay their loans.”

According to a recent Bloomberg report, S&P estimates that a worst-case scenario (one which however saw GDP remain well in positive territory) would cause bad debt to balloon by 5.6 trillion yuan ($800 billion), for an NPL ratio of about 6.3%, adding to the already daunting 2.4 trillion yuan of non-performing loans China’s banks are sitting on (a number which, like the details of the viral epidemic, is largely massaged lower and the real number is far higher according to even conservative skeptics).

S&P also expects that banks with operations concentrated in Hubei province and its capital city of Wuhan, the epicenter and the region worst hit by the virus, will likely see the greatest increase in problem loans. The region had 4.6 trillion yuan of outstanding loans held by 160 local and foreign banks at the end of 2018, with more than half in WuhanThe five big state banks had 2.6 trillion yuan of exposure in the region, followed by 78 local rural lenders, according to official data.

Meanwhile, exposing the plight of small bushiness, most of which are indebted to China’s banks, a recent nationwide survey showed that about 30% said they expect to see revenue plunge more than 50% this year because of the virus and 85% said they are unable to maintain operations for more than three months with cash currently available. Perhaps they were exaggerating in hopes of garnering enough sympathy from Beijing for a blanket bailout; or perhaps they were just telling the truth.

Finally, the market is increasingly worried that all this bad debt will have a dire impact on bank assets: consider that the “big four” state-owned lenders, which together control more than $14 trillion of assets, currently trade at an average 0.6 times their forecast book value, near a record low. This also means that in the eyes of the market, as much as $6 trillion in bank assets are currently worthless.

All of this led us to conclude last week that “nothing short of a coronavirus cataclysm faces both China’s banks and small businesses if the coronavirus isn’t contained in the coming weeks.”

In retrospect, there is one thing we forgot to footnote, and that is that China could buy some extra time if the central bank suspend financial rules and moves the goalposts once again.

And so, just three days after our first article on China’s looming bad debt catastrophe, that’s precisely what the PBOC has opted to do, because as Reuters writes, on Saturday the PBOC said that the country’s lenders will tolerate higher levels of bad loans, part of efforts to support firms hit by the coronavirus epidemic.

“We will support qualified firms so that they can resume work and production as soon as possible, helping maintain stable operations of the economy and minimizing the epidemic’s impact,” Fan Yifei, a vice governor at the People’s Bank of China, told a news conference.

He added that the problem will be manageable as China has a relatively low bad loan ratio.

What the PBOC really means is that China’s zombie companies are about to take zombification to a preciously unseen level, as neither the central bank nor its SOE-commercial bank proxies will demand cash payments amounting to billions if not trillions of dollars from debtors, who will plead “force majeure” as part of their debt default explanation. In other words, we may be about to see the biggest “under the table” debt jubilee in history, as thousands of companies are absolved from the consequences of having too much debt.

 

Separately, during the same briefing, Liang Tao, vice chairman of the China Banking and Insurance Regulatory Commission, said that lending for key investment projects will be sped up, while Xuan Changneng, vice head of the country’s foreign exchange regulator, said China was expected to maintain a small current account surplus and keep a basic balance in international payments. We wouldn’t hold our breath for a surplus if China is indeed producing nothing as real-time indicators suggest.

And just so the message that debt will flow no matter what is heard loud and clear, on Friday, said Liang Tao, vice-chairman of the China Banking and Insurance Regulatory Commission said that financial institutions in the banking sector had provided more than 537 billion yuan ($77 billion) in credit to fight against the novel coronavirus outbreak as of noon on Friday.

“The regulator will soon launch more measures to give stronger credit support to various industries,” said Liang at a news conference held by the State Council Information Office on Saturday. “It will continue to lead banks’ efforts on increasing loans to small and micro enterprises, making loans accessible to a larger number of small businesses, and further lowering their lending costs.”

Hilariously, Liang highlighted the importance for banks to take accurate measures to renew loans for small businesses to reduce their financial pressure. It wasn’t clear just how burdening the small businesses with even more debt they will never be able to repay reduces financial pressure, but we can only assume that this is what is known as financial strategy with Chinese characteristics.

The bottom line is simple: no matter how or when the coronavirus epidemic ends, the outcome for China – which already toils under an gargantuan 300% debt/GDP burden…

… will be devastating as more companies are encumbered by even more debt which they will never be able to repay, and once rates jump or the Chinese economy hits another pothole – viral or otherwise – the avalanche in defaults will be a sight to behold.

end

Robert to me: SUNDAY NIGHT

“A number of Chinese companies have declared force majeure, potentially allowing it to walk away from contractual commitments, in various commodities and in contracts.

This was to be expected given the severity of the virus problem. What is hilarious, if it were not so serious is the denial by companies and banks to accept force majeure as being appropriate. This is the first approach in denial of what is really happening.
This is a clear attempt to signal that such action is not acceptable to the stalwarts of industry and banking as the losses to them are catastrophic. Since many of not most are public companies, refusal and denial allows them to potentially litigate the matter and not take a direct charge resulting in a loss. This is a absurd way to keep confidence up and allow none reporting on the balance sheet for now.
The salient reality is that all manner of shipments of goods to China are off the table for now to be reconsidered perhaps later while the flow of capital is removed from both the importer in China and the exporter abroad. Both will suffer liquidity contraction as business activity declines causing problems for both and their bankers none the less, who will see the liquidity contraction as a indication to “become more secured in lending and in many cases cause credit line reductions as those boats loaded with product have no  liquidity.
As I have indicated to you, this will be the Achilles tendon that collapses trade credit and in turn will force companies to use their real assets to separately secure trade credits as opposed to relying on the end customer contracts as being the means to payment of drawn credit from banks. The banks simply will not take the risk and cannot afford the losses.
This will force a much more restricted level of trade ability even upon the strongest of companies who will revalue the ability and willingness of alternative customers, who also maybe affected by China declining as a commercial global consumer in good faith, based on none stop growth. The world of the globalization will be receding quickly as a result, especially as more countries and companies seek more localized supply.
And the more publicity things like no hockey sticks for the NHL will go a long way to change consumers minds to believing production in far away places is a good idea. Such things get much more attention than shuttered car plants of Hyundai or Nissan in South Korea.

Cheers

Robert
END
And then this Monday afternoon:  Robert to me
“Apparently now half the country is under quarantine, that means like 750MM people. No country can manufacture, let alone function . Rumor has it that essential factories are now being commandeered by the army. This makes sense as all effort will be made to restore internal services and supply.
Forget whether these factories are owned outside of China. Ponder the capital risk to those who invested so heavily. Private property interest means nothing any more. The losses will mount fast as com aids will have to reserve against loss. And that means a removal of assets from global balance sheets. I suggest that many exporters into China are going to learn that receivables and contracts mean nothing with or without force majeure. It is not like you can sue and collect as many parties have already found out as their intellectual pro was stolen.
When markets get wise to this many stocks and values will be reassessed and that also means banks who will will stare at outright loss, and credit impairment.
Amongst all this upheaval, what happens to trusting any Chinese outfit to pay ? I suggest that in days to come, serious examination of acceptable guarantees for payment will mean more than an order, and I doubt a Chinese bank Letter of Credit will pass mustard.”
Cheers
Robert
And today:

Russia temporarily bans ALL Chinese visitors amid coronavirus epidemic — RT Russia News

Ok so Russia is first to ban Chinese people from entering Russia, who will be next ?
The fallout from this socially made economically is only in the early stages.
While no one is talking, the impact is already being felt in Russia in lower oil and gas transfers to China. The more severe the fallout in China the more the impact is felt in Russians exports causing pressure on spending and deficits.
And it is interesting that in Eurasia proper, countries are turning to Russia for supplies and direction as China flounders.
There is also rumors of complete rail stoppage on the Chinese border unless the box cars are fumigated in advance. Good luck with that one.https://www.rt.com/russia/481133-russia-bans-china-visitors-coronavirus/Cheers
Robert
CHINA/MONDAY MORNING
A complete wipe out:   thieves in Hong Kong steal a truckload of toilet paper as basic goods are disappearing
(zerohedge)

Armed Thieves Steal Truckload Of Toilet Paper In Hong Kong Amid Worsening Shortage Of Basic Goods

Looks like the sh*t is really about to hit the fan in Hong Kong…and we mean that literally.

In a shocking indication of just how bad shortages of basic goods have gotten as mainland China expands its lockdown to more than 700 million people and Hong Kong closes some of its borders, a gang of armed thieves in Hong Kong stole a truckload of toilet paper in a daring robbery last night.

Police say the truck driver was taken by surprise and held up by a man with a knife, while two others loaded the toilet paper into their getaway vehicle.

WickedTart@Wicked_Tart

Wow, I thought I needed tp bad…
“Masked men stole hundreds of rolls of toilet paper in HK amid coronavirus fears” https://twitter.com/i/events/1229313970781077505 

Masked men stole hundreds of rolls of toilet paper in HK amid coronavirus fears

Don’t worry: We suspect they may have left a “paper” trail. Police are said to be hunting the gang, according to the AFP, after the heist, which was carried out early Monday by three men. The target was a supermarket in Mong Kok, a neighborhood that, AFP claims, has a close association with Triad organized-crime gangs.

Here’s the most ridiculous element of this whole story: Police said the men held up a truck driver all to steal HK1,000 ($130) in toilet paper.

We look forward to the day when the virus subsides and Hong Kong’s Triad gangs can go back to their old rackets, like prostitution and smuggling heroin.

China has down a massive cull of their chickens due to the COVID 19 virus. They have decided to import tens of millions of live chickens due to the rise in price in China
(zerohedge)

4/EUROPEAN AFFAIRS

 GERMANY/DEUTSCHE BANK//THE DARK SIDE OF THE BANK
The dark side of Deutsche bank: this bank is similar to JPMorgan and it is a criminal operation.
The author explains how Trump received 2 billion dollars of loans when nobody else would provide.
a must read..
(Chris Whalen)

Dark Towers: Deutsche Bank, Donald Trump, And An Epic Trail Of Destruction

Submitted by Chris Whalen of Institutional Risk Analyst

This week in The Institutional Risk Analyst, we review the new book by David Enrich, “Dark Towers: Deutsche Bank, Donald Trump, and an Epic Trail of Destruction.” Enrich is currently financial editor at The New York Times and was previously an editor at The Wall Street Journal covering financial institutions.

This important book puts in perspective the history of Deutsche Bank AG (NYSE:DB), one of the most mismanaged and politically tainted global banks in modern history. “Dark Towers” also tells the story of how Deutsche Bank provided $2 billion in financing to President Donald Trump, cash that enabled the former real estate developer to continue in business despite his many poor business decisions and credit defaults. As the book makes clear, the only reason that Donald Trump was able to win the American presidency was due to the financial support of Deutsche Bank over more than two decades.

Reading “Dark Towers,” one is left with the impression that Deutsche Bank is less a financial institution and more an ongoing criminal enterprise. We published a negative credit profile of DB earlier this year, but frankly our assessment was far too generous. Deutsche Bank cut a swath of destruction “and is about the consequences—dead people, doomed companies, broken economies,” Enrich writes, “and the 45th president of the United States—that Deutsche Bank wrought on the world.”

From the founding of Deutsche Bank in the 1870s, to the bank’s near failure financing an American railroad baron, to its active support for the Nazis under Adolf Hitler, to its involvement in money laundering, risky derivatives and the subprime mortgage crisis in the early 2000s, the history of the “German Bank” is a tale of malfeasance and mismanagement that has few equals.

As we said to a senior Fed official last week: Everyone in the Federal Reserve System needs to read this book and ask a basic question: why was this bank not shut down? The simple answer is politics. The Fed and other agencies would not or could not do their jobs as required by US law for fear of the political ramifications in Germany.

“Dark Towers” follows the transformation of Deutsche Bank from a small, relatively low risk institution that existed after WWII to a malignant cancer on the body of global political economy. The bank’s focus on derivatives and investment banking, albeit as a second-rate player in the global capital markets, is presented in simple terms that leaves a sense of astonishment, even for veteran risk professionals. The poorly considered strategies, acquisitions, and geopolitical machinations of Deutsche Bank are skillfully described in a concise yet detailed fashion, reflecting hundreds of interviews and thousands of documents obtained during the research for the book.

Enrich follows the tragic careers of Edson Mitchell and his sidekick and best friend, Bill Broeksmit, who took his own life in 2014 when the businesses accumulated within Deutsche Bank starting in the 1980s finally exploded two decades later. Neither the Federal Reserve System, EU regulators, Deutsche Bank’s management nor the German government are spared from the harsh light of scrutiny that this book brings into sharp focus.

The fact that Deutsche Bank laundered billions in dirty money for the likes of Russian dictator Vladimir Putin and others via Deutsche Bank Trust Company in New York raises basic question about the efficacy of the bank supervision functions of the Federal Reserve, the State of New York and other agencies around the globe. The fact that Deutsche Bank’s US subsidiary was home to both the Trump loans and the money-laundering Russian mirror trades makes the culpability of American regulators even more alarming.

While the Fed emerges badly tainted from the narrative so skillfully presented in “Dark Towers,” the incompetence and indifference of European regulators and political leaders also is laid bare. The role played by former Deutsche Bank CEO Josef Ackerman, in particular, is painted by Enrich as being extremely damaging to the bank and the global financial system.

Starting from the acquisition of Morgan Grenfell in 1990 and then Bankers Trust a decade later, Deutsche Bank officials oversaw a sharp increase in the bank’s risk-taking activities that was neither prudent nor well-supervised. By the time Ackerman left Deutsche Bank in 2012, the bank was the largest in the word but was also in serious trouble, difficulties that would bring it to the brink of financial failure.

In particular, Ackerman’s obsession with an absurd 25% target for equity returns and his focus on Russia seemed to doom the bank to take ever increasing risks and violate laws in the search for profits. Enrich writes of Ackerman’s doomed strategy to expand in Russia in the early 2000s:

“Doubling down on Russia with the United Financial acquisition only added to the risks the bank was taking. But this was what it took to achieve Ackermann’s return-on-equity target—especially since Ackermann himself was an unabashed cheerleader of the bank’s expansion into Russia. Just as Georg von Siemens’s entrancement with the United States had led Deutsche into the Henry Villard swamp a century earlier, now Ackermann’s fixation with Russia would spur Deutsche into a similar quagmire. Like Siemens in America, Ackermann was blinded by his fascination with Russian culture and had developed tastes for its theater, opera, and food (blini with caviar was among his favorite dishes). He visited the country as much as once a month, striking up what he described as friendships with some of the bankers in Vladimir Putin’s inner circle.”

At times the story told in “Dark Towers” is extremely sad, particularly following the trail of dead bodies that seemed to follow this very large global banking institution. At other times, the narrative will almost seem absurd to financial professionals as the accumulation of poor management decisions and outright criminality created an impossible situation. Enrich writes:

“Inside Deutsche, some senior executives, including Anshu Jain, warned Mitchell that Bankers Trust was a third-rate institution with a lot of third-rate employees and a deep well of managerial, financial, and accounting problems. Jain expressed his preference to acquire a more conservative and well-respected firm like Lehman Brothers.”

The deliberate indifference to risk and the overt willingness of Deutsche Bank officials to engage in money laundering, fraud and other wanton acts of criminality raises basic questions about the ability of governments in the EU to regulate financial institutions. Officials up to the board level of Deutsche Bank, for example, apparently were aware of illegal activities such as providing billions in cash to the Revolutionary Guards in Iran, yet did nothing to stop the activity.

Enrich reports that “By 2006, Deutsche had zapped nearly $11 billion into Iran, Burma, Syria, Libya, and Sudan, providing desperately needed hard currency to the world’s outlaw regimes and singlehandedly eroding the effectiveness of peaceful efforts to defuse international crises.” The book seemingly confirms a 2018 lawsuit which alleges that Deutsche played an “integral role in helping Iran finance, orchestrate, and support terrorist attacks on U.S. peacekeeping forces in Iraq from 2004 to 2011.”

The book also documents the role of Deutsche Bank in financing the real estate activities of President Donald Trump, presenting a textbook case of failure to manage credit and reputational risk. The comical situation where one arm of Deutsche Bank refused to lend to Trump while another aggressively pursued his business provides a classic example of “unsafe and unsound” banking practices in the United States. But, again, the Federal Reserve Board and other US regulators repeatedly refused to shut down this renegade institution.

Enrich describes how “for nearly two decades, Deutsche had been the only mainstream bank consistently willing to do business with [Trump]. It had bankrolled his development of luxury high rises, golf courses, and hotels. Over the past eighteen years, the bank had doled out well over $2 billion in loans to Trump and his companies…”

“Dark Towers” is an important and very timely book. It reveals the seamy underside of the world of illicit banking and money laundering but also documents the incompetence of regulators in the US and Europe. This book makes a mockery of American banking and anti-money laundering laws, and raises basic questions about the state of prudential regulation on both sides of the Atlantic. The role of Deutsche Bank in these activities was a deliberate choice by management that is impossible to explain away as the result of innocent errors and omissions. Here was a bank that decided that it needed to be large and hyper-profitable, and was willing to do literally anything to achieve these goals.

As readers of The Institutional Risk Analyst know well, when a bank pretends to deliver supra-normal equity returns without excessive risk, you can be sure that there is something wrong with the institution. After reading “Dark Towers,” most reasonable observers will ask one basic question: Why is this bank still open for business at all but specifically in the United States? Sadly, neither officials of the Federal Reserve Board, the US Treasury nor the other agencies responsible for oversight and surveillance of financial institutions and markets have ever been called to account for their failure to supervise Deutsche Bank.

end
JAGUAR LAND ROVER/UK/CHINA/CORONAVIRUS
JAGUAR Land Rover announces that they will run out of Chinese parts in weeks
(zerohedge)

Jaguar Land Rover UK Factory To Run Out of Chinese Parts In Weeks

The amount of supply chain disruptions that are coming out of the woodwork is nothing short of astonishing. This could shock the hell out of the global economy, forcing a trade recession that would lead to a readjustment of stock prices. At this moment, central bankers are terrified, because monetary policy is virtually ineffective during a virus outbreak.

Jaguar Land Rover (JLR) warned Tuesday that their UK factory has enough Chinese parts for the next two weeks, but heading into March, their production lines could grind to a halt due to the lack of parts, reported Reuters.

JLR’s CEO Ralf Speth, told reporters that their sales have fallen in China because dozens of cities are closed and hundreds of millions of people are in quarantine.

Speth said, “car sales are not happening in China; there are no sales” at the moment. He added that he “isn’t sure if lost Chinese sales will come back.”

India’s Tata Motors owns JLR. Shares of Tata trading on the National Stock Exchange of India plunged 4.44% on Tuesday.

Speth also said that he plans on retiring from his current role as CEO at the end of his contract term in Sept. He wants to exit the company as the virus outbreak in China risks tilting the world into the next financial crisis.

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

 

6.Global Issues

Westerdam/COVID 19/FRIDAY NIGHT

Nightmare on the “Westerdam”  You will recall at the Westerdam was floating on the seas and 5 countries would not allow it to dock. Then Cambodia allowed it do dock but then allowed 144 passengers to fly to Malaysia. At that point, one passenger, an American was tested positive for the COVID 19.

This will become a nightmare as no doubt others on that ship will be become infected.

(zerohedge)

Another ‘Nightmare At Sea’: First COVID-19 Case Detected Aboard Cruise Ship Given ‘Safe Harbor’ In Cambodia

Remember the cruise ship that was refused entry by four countries, despite having zero confirmed cases of COVID-19? In hindsight, those countries might have had a point.

Because Reuters reports that the first case of coronavirus has been detected among the ship’s passengers, who docked in Cambodia on Friday.

Remember when the whole region applauded Cambodia for its heroism in accepting the ship, which was close to running out of food and other essential supplies?

What’s more: the patient is an 83-year-old American woman. Health authorities in Malaysia confirmed the infection after the woman tested positive on Saturday.

Wait, but didn’t the ship dock in Cambodia? Why is this woman being tested in Malaysia.

Well, first – yes, it did.

Second, it appears that the Cambodian authorities allowed 144 passengers to fly to Malaysia after disembarking on Friday, apparently without even screening them thoroughly.

According to Reuters, the passengers were tested regularly on board and Cambodia also tested 20 passengers after the ship docked. But it’s not clear what kind of tests they were using – swab tests have proved notoriously unreliable.

And clearly, whatever they did, it wasn’t thorough enough, because this woman got through.

At some point, the woman’s symptoms were noted, she was tested, and is now being quarantined.

But if there’s one thing we’ve learned about COVID-19, it’s that there’s never just one case in a group. And Malaysia has already reported dozens of cases.

Also, as we’ve seen with the ‘Diamond Princess’ cases, cruises are extremely susceptible to widespread outbreaks, which means there could be dozens of others infected.

The Westerdam was carrying 1,455 passengers and 802 crew,and it spent two weeks at sea.

After reading a story in today’s South China Morning Post, we realized that President Xi’s immediate economic priority is making sure he can present a believable vision of China having ‘contained’ the outbreak so that the Chinese people and the global community will accept his government’s growth-rate targets laid out in the Party’s ‘Annual Work Report’, which is expected to be released at the next National People’s Congress in early March.

Here’s SCMP’s latest global tally for cases and deaths; it’s missing cases in Singapore that were reported earlier Saturday morning.

Delaying the release could be construe

d as a sign of weakness, so we suspect Xi will make sure to pad it with some of China’s famously goalseeked stats. Still, like any other form of propaganda, goalseeking is a strategy, and it only works if at least some of the target audience finds it believable.

Elsewhere, there was an interesting COVID-19 development in North Korea overnight: Yonhap has reportedly confirmed that a North Korean coronavirus patient escaped quarantine and traveled to a public area before being apprehend and…immediately executed.

The State Department has said it wants to help North Korea deal with the outbreak, though Kim Jong Un and his government continue to insist that there is no outbreak (though of course Kim would probably rather watch 1 million North Koreans suffocate to death from pneumonia before allowing the US to play white knight).

We’ve already noted some other interesting developments that were reported early Saturday, including the first coronavirus death in Europe, while cases aboard the ‘Diamond Princess’ spike 30%.

end
COVID 19 UPDATE/SUNDAY MORNING
Bill Gates is now worried that we could have a virus spread to Africa where all countries are basically ill equipped to handle the disease.
Taiwan reports its first death..a taxi cab driver who drove citizens ( asystematic) to ships and airplanes
(zerohedge)

Bill Gates Warns “10 Million Lives” At Risk As Virus Spreads To Africa And Taiwan Reports First Death

Summary:

  • Taiwan reports 1st coronavirus death
  • Taiwan taxi driver who died from virus carried passengers from mainland, Hong Kong, Macau
  • Singapore reports 3 more cases
  • Indonesia says 6 passengers from Westerdam cruise ship tested negative
  • There are now at least 68,500 cases worldwide, and at least 1,665 deaths from the Covid-19 virus
  • Japan found 70 more cases aboard the Diamond Princess cruise ship
  • Second African confirms suspected coronavirus case
  • Hubei province, the outbreak’s epicenter, reported fewer new infections for the second day
  • Bill Gates warns “10 million deaths” possible in Africa
  • China’s facemask shortage likely won’t be over anytime soon
  • WHO says Beijing’s actions bought the world time, but “we don’t know how much time”

* * *

Update (1140ET): It’s almost Monday in China. Here’s a smattering of updates from the region as the number of confirmed cases ex-China is starting to go exponential. If these cases continue accelerating, it will soon become impossible for the Chinese government to continue rigging their data.

First, Malaysia reports that six passengers who have been quarantined since arriving in the country from Cambodia after disembarking from the Westerdam cruise ship have tested negative for the virus. Yesterday, we reported that an 83-year-old American woman tested positive for the virus after flying to Kuala Lumpur.

As we noted earlier, the Taiwanese man who succumbed to the virus was a taxi driver who apparently carried three fares all returning from China, Hong Kong and Macau. The three fares are being tracked very closely by the government in Taiwan. The man also had a history of diabetes and hep B.

Singapore’s ministry of health reported three new cases, two of which appear to be linked to a cluster of cases at the Grace Assembly of God church, Bloomberg reports.

Following reports that one of Wuhan’s hastily constructed hospitals is already falling down, a hospital head in the city appeared on state television to insist that a “turning point has been reached” in the government’s fight to suppress the virus. ‘Experts’ speaking to Xinhua on Sunday parroted the message from the regime and insisted that the outbreak will only leave a slight dent in the economy.

* * *

As we move into the late evening hours of Sunday on mainland China, Taiwan has become the latest country or territory to report a virus-related fatality, the SCMP reports. They join Hong Kong, Japan and the Philippines in having reported virus-related deaths outside China.

Here are the latest global totals from SCMP:

Island says fatality was a 60-year-old unlicensed taxi driver with chronic health problems.

Meanwhile, in the latest statement from the WHO, the international health organization seemed to back away from its newly hostile tone toward China, saying Beijing’s actions bought the world time, but “we don’t know how much time.”

As the world’s greatest minds examine the epidemic, it’s worth remembering that Bill Gates has repeatedly  warned us that humanity isn’t ready for the next pandemic.

Now, he’s repeating those warnings to an even larger crowd – but this time, with far more gravitas.

The Microsoft founder warned everyone during a speaking engagement at a conference on Friday that a Covid-19 outbreak in Africa could overwhelm the continent’s health services and trigger “10 million deaths,” reported The Telegraph.

Gates’ warning at the 2020American Association for the Advancement of Science (AAAS) Annual Meeting in Seattle on Friday came hours before Egypt’s ministry of health confirmed that a 33-year-old male foreigner who flew into Cairo International Airport had tested positive for the virus. Authorities said the infected man had 17 contacts and many interactions at the airport before testing positive.

amanda@amanda40159151

Bill Gates presentation at this years AAAS meeting in Seattle.

View image on Twitter

Gates said: “This is a huge challenge. We’ve always known the potential for a naturally caused, or intentionally caused, pandemic is one if the few things that could disrupt health systems and economies and cause more than 10 million excess deaths.”

“This could be particularly if it spreads in areas like sub-Saharan Africa and some Asia, it could be very, very dramatic.”

He added that Covid-19 is more concerning than Ebola because the rate of which the disease spreads is far faster.

“Ebola is terrible, but it’s not like a lightning flu,” he said.

“This coronavirus has a lot of similarities to a very bad flu, in terms of the death rate, so far more like the 1957 flu outbreak,” Gates said.

“This disease, if it’s in Africa it’s more dramatic than if it’s in China, even though I’m not trying to minimize what’s going on in China in any way,” he said.

The risk, as Gates points out, is that the virus could spread to Africa next, where governments, even governments that have been bracing for an outbreak by readying beds and quarantines while stockpiling supplies, might still risk a rapid transmission that could lead to a health crisis far worse than China.

On Saturday, Africa Centers for Disease Control and Prevention’s (Africa CDC) director Dr. John Nkengasong said Africa CDC has been working with African countries “in preparedness and response to the disease.”

The Health Ministry in Eswatini, a tiny southern African country, identified its first suspected case of the deadly on Friday.

Director of Health Services in Eswatini, Dr. Vusi Magagula, said the person had been placed in quarantine, and blood samples have been taken for further analysis, reported SABC News.

“She presented with a fever and was at the hospital, then the rapid response team took over and took up the case. She came through the Ngwenya Port of Entry on February 6 having arrived from the Republic of South Africa. I don’t think she was presenting with any symptoms, we only picked her up on the 14th because she was already now in hospital, ill and had to be admitted to the isolation ward. So I guess when she passed through or even through Ngwenya border post, she didn’t have the symptoms.”

Meanwhile, the Chinese Ambassador to South Africa warned South African nationals in China to not return for fear the virus could spread.

The African continent does not need another crisis, already battling locust plagues and food shortages.

But still the close economic ties between China and Africa are difficult to ignore.

Africa is home to nearly one million Chinese, health officials across the continent are extremely worried that it’s only a matter of time before the breakout begins.

As we detailed previously, Ethiopia’s Bole International airport is the leading African gateway to and from China. On average, 1500 passengers per day arrive from China. Ethiopia scans all passengers from Asia for symptoms, which essentially means taking their temperature.

Many of those passengers then fly on to other parts of Africa, where Chinese companies are doing business, and inadvertently spreading the virus to nations along the BRI (the Belt & Road Initiative). These are 2018 figures courtesy of Brookings.

The question of why no infections have been reported in Africa was raised via twitter by Jim Bianco, of Bianco Research, earlier this month: “did anyone on the continent actually get a testing kits to look for infected people?” he asked.

Jim Bianco@biancoresearch

To date no infections on the continent of Africa have been reported. Why?

Only today, February 7, did anyone on the continent actually get a testing kits to look for infected people.

What will this number be in two weeks? https://twitter.com/ncovperspectiv1/status/1225682760125169664 

COVID-19 Perspective@nCoVPerspectiv1

1. Today is a huge day for #Africa in the fight against the #coronavirus. More than half a billion people across 25 countries, will for the first time have access to #ncov2019 testing kits. We have compiled a list of the 25 countries from the @WHO map below… #coronavirusafrica

View image on Twitter

Fast forward one week: As we noted above, a case has already been confirmed in Egypt with a suspected case in Eswatini. With the understanding that Ethiopia international airport is a continental gateway for the Chinese.

This could mean super-spreaders, during the incubation period, undetected by temperature readings or showing no symptoms, have likely invaded Africa from China via Ethiopia’s main airport, as it’s only a matter of time before cases on the continent could start increasing.

1000 Genomes Project has published a list of various types of people with the highest risks of contracting the virus. Several countries in Africa are seen on the list:

And oddly enough, Gates has been warning about how the world needs to “prepare for pandemics in the same serious way it prepares for war.”

At the 2017 Munich Security Conference, Gates asked world leaders to “imagine that somewhere in the world a new weapon exists or could emerge that is capable of killing millions of people, bringing economies to a standstill, and casting nations into chaos. If it were a military weapon, the response would be to do everything possible to develop countermeasures,” he said at the 2017 event, adding that a “sense of urgency is lacking” when it comes to biologic threats.

The outbreak continues to worsen over the weekend, despite China’s National Health Commission’s optically pleasing phony statistics of how confirmed cases and deaths declined for the third straight day. There were 2,009 new cases in mainland China on Sunday, bringing the total to 68,500.

The government of Hubei province, the center of China’s virus outbreak, told residents on Sunday evening that a ban on vehicle traffic across the region will go into immediate effect to prevent further transmission of the virus.

According to the new conditions, only police cars, ambulances, military vehicles, and cars hauling essential goods are permitted on roads. Local authorities told companies not to resume work unless they have approval from officials, which will undoubtedly throw a wrench in the factories who were planning to open facilities last Monday. They could now be delayed even longer, which would start creating shortages of goods destined for the West for the spring and summer retail season.

Meanwhile, health officials on mainland China recently reported 2,009 new infections and 142 deaths from the coronavirus on Sunday. Hong Kong said it now had 57 cases of infection in the city after another man tested positive, while Hongkongers stranded on the Diamond Princess cruise ship in Japan learned they will face another 14 days quarantine when they arrive home.

Meanwhile, as the US prepares its evacuation, 40 US passengers who have been infected have opted to go to a Japanese hospital rather than take the State Department flight. Anthony Fauci with the CDC said anyone showing symptoms of the virus will be blocked from the flight

 

On Sunday, the SCMP, one of the most reliable chroniclers of the outbreak, published a story that investors might want to take note of: The facemask shortage in China – a big component of the general shortage of medical supplies – likely won’t be over any time soon, and will likely spread to other countries.

Why? Because most of the big facemask makers are based in China, and their operations have been badly restricted by the outbreak.

China’s dominance in the global supply chain as a result of competitive pricing has come back to bite the country where it currently hurts the most – in the manufacturing of medical facial masks, a shortage of which is intensifying as the coronavirus continues to spread across the country and around the world.

Demand for masks has surged in recent weeks, exhausting not just China’s stockpile, but emptying shelves from Bangkok to Boston. In China, it is now mandatory to wear facial masks in public areas in many cities.

China, which accounts for about half of the world’s mask production, is scrambling to snap excess supply from overseas, both through official diplomatic channels, and buyers like Cai.

An update on the Diamond Princess, a virus- stricken cruise ship, held under quarantine in the Japanese port of Yokohama: Several countries with citizens aboard the ship have announced plans for an emergency evacuation following reports that passengers are literally going mad with paranoia.

Among them, the US is scheduling a charter plane for its 380 citizens aboard the ship. On Sunday, South Korea said it’s planning to evacuate 355 of its people from the vessel. It was noted by Japanese authorities that anyone testing positive for the virus would not be able to leave.

However, the Hong Kongers, Americans and others among them will likely be less-than-pleased to learn that the clocks will restart and they will face another 14 day quarantine when they return.

As for the cruise ship docked in Cambodia, an American passenger tested positive for the virus on Sunday. The 83-year-old woman has been aboard the MS Westerdam, operated by Carnival Corp. The ship is carrying 1,455 passengers and 802 crew.

In Taiwan, it was confirmed on Sunday night that the first death related to the virus was seen, Health Minister Chen Shih-Chung told reporters.

The island’s health minister said the deceased man was in his sixties, had not traveled to China, and had diabetes and hepatitis B. This is the first death in the country with at least 20 confirmed cases.

It appears the World Health Organization (WHO) finally admitting the COVID-19 outbreak is a global pandemic, along with the announcement last week that there’s no vaccine for at least 12-18 months, is more than enough to recognize their “contained” narrative is bullsh*t, with new risks emerging of an outbreak in Africa.

Simultaneously, China’s economy is disintegrating at the seams, producing one of the most massive economic shocks not seen since the 2008/09 financial crisis, as nearly two-thirds of its economy has ground to a halt. China was responsible for over half of the world’s credit creation in the last decade, and if China decelerates, so does the world.

END
Immunologist and “bug” specialist Dr C. Martenson talks about the Covid 19 virus
(Dr Chris Martenson)

Covid-19 Contagion – An “Unprecedented” Moment For Our Hyper-Connected Planet

Authored by Chris Martenson via PeakProsperity.com,

There’s a reason we’ve re-directed so much of our attention towards reporting on and trying to understand the novel coronavirus (covid-19) that originated in Wuhan, China in December.

The heart of our approach is to be “systems thinkers.”

 

We don’t see the economy as a closed ecosystem to be analyzed and understood all on its own.  It’s connected to energy flows, especially oil.  So we investigate those, too, with an eye towards working out how fossil fuels’ eventual dwindling will impact an economic system that is utterly dependent on perpetual growth.

Without a healthy planet, without intact and functioning ecological systems, nothing matters in either the economy or the energy markets.  Both impact the ecological world And vice versa.  So we analyze and report on the environment, too.

Which is why we’re confident in claiming thathumanity is now facing its greatest threat Our current path of depleting our essential resources at an accelerating rate in the pursuit of “more growth” is both unsustainable and self-destructive.

So here we are, with a global economy that’s very cost-efficient but not resilient.  It’s wonderful that Walmart has worked out how to order a new tube of toothpaste from China the second one is pulled off a shelf in Topeka, KS. But that means there is no deep storage to draw upon in times of disruption to the status quo.  No warehouses stocked with 12 months of future goods.  Just a brilliantly-complicated supply chain thousands of miles long that has to work perfectly for things to keep running.

As an example that drives home this point: we learned during the 2011 earthquake in Japan that there was just one single factory making a necessary polymer gel for the odd-shaped lithium batteries used in smartphones and iPods.  There was no backup factory.

We watched closely during that enormous crisis (which also spawned the Fukushima nuclear disaster) as electronics companies scrambled to triage their remaining supplies and attempt to find new sources.  It was very touch and go.  Vast portions of the battery-fueled electronic industry came within a whisker of simply shutting down production — all for want of an esoteric polymer gel.

Yes, the most cost-effective way to make that gel was to house it all in a single plant.  But it made no sense from a redundancy and resilience standpoint.

And did ‘we’ learn from that experience?  Nope.

Supply Chain Armageddon

The global economy is more interdependent than ever. Its supply chains are built on a huge network of dependencies with many ‘single points of failure’ strung along its many branches.

Can anybody predict what will happen next?  No.

But we’re already seeing early failures as Chinese plants, factories and ports sit idle from the country’s massive quarantine efforts:

China set to lose out on production of 1M vehicles as coronavirus closes car plants

China exports about $70 billion worth of car parts and accessories globally, with roughly 20 percent going to the U.S.

Feb. 5, 2020, 4:32 PM EST

By Paul A. Eisenstein

China could suffer the loss of a million vehicles worth of production as factories in its crucial automotive industry remain shuttered until at least next week — and likely longer in Wuhan, the “motor city” at the center of the coronavirus outbreak.

With more than 24,000 people infected, the impact of the highly contagious disease is also beginning to be felt by automakers in other parts of the world. Hyundai is suspending production in its South Korean plants because of a shortage of Chinese-made parts, and even European car manufacturers could be hit: Volkswagen and BMW could see a dip of 5 percent in their earnings for the first half of 2020, according to research firm Bernstein.

(Source – NBC)

We’re predicting that these auto shutdowns are just beginning.  All it takes is a single component to be unavailable and the entire line has to be shut down.

Is China the sole source for many critical components in the auto industry?  Absolutely.

Here’s an inside view:

On Monday, Steve Banker and I had the opportunity to speak with Razat Gaurav, CEO of Llamasoft. Razat had some interesting takes on the outbreak, especially as it relates to the automotive and pharmaceutical supply chains. On average it takes 30,000 parts to make a finished automobile.

Due to the virus, production facilities have already indicated that they will have lower than normal parts volumes. This has left companies scrambling to make contingency plans. During my conversation with Razat, he mentioned that inventories for most of these automotive parts are managed on a lean just-in-time basis.

This means that, on average, companies have anywhere between two and twelve weeks of buffer inventory on-hand for automotive parts. As production volumes are decreasing, this has the potential to cause quite the global shortage of parts. The buffer inventory will only last so long, and once the pre-holiday supply runs dry, the industry is going to be in serious trouble. According to Gaurav: “Most OEMs single source components for new vehicles and China is a large supplier of those.”

(Source – Logistics Viewpoints)

“Single sourcing” is exactly what it implies.  There’s a single factory somewhere churning out a single component that is absolutely vital to make a motorized vehicle.  If that factory goes away for any length of time, a new source has to be identified or – worse, from a time and cost standpoint – built from scratch.

But this vulnerability to China-dependent supply chains is by no means unique to the auto industry:

Last month, the U.S.-China Economic and Security Review Commission held a hearing on the United States’ growing reliance on China’s pharmaceutical products. The topic reminded me of a spirited discussion described in Bob Woodward’s book, Fear: Trump in the White House.

In the discussion, Gary Cohn, then chief economic advisor to President Trump, argued against a trade war with China by invoking a Department of Commerce study that found that 97 percent of all antibiotics in the United States came from China.

(Source – CFR)

That’s as close to a ‘sole source’ as you can get.

And to put the cherry on top: guess the name of the region in China responsible for producing all if these antibiotics?  Yep, Hubei province.  With Wuhan its most important production hub.

Can we find another source for our generic drugs and antibiotics?  India, possibly.  But here again we run into the same global interdependency issue:

Another industry that is feeling the impact of the coronavirus is the pharmaceutical industry. The average buffer inventory for the pharmaceutical industry is between three and six months. However, this does not tell the full story. Gaurav mentioned that China is responsible for producing 40 percent of the active pharmaceutical ingredients (APIs) for the pharmaceutical world.

Additionally, China supplies 80 percent of key starting materials (KSM’s), which are the chemicals in APIs, to India. Put together, this represents 70 percent of all APIs across the world.

(Source – Logistics Viewpoints)

India’s production is directly tied to uninterrupted supply from China:

Indian generic drugmakers may face supply shortages from China if coronavirus drags on

Feb 13 (Reuters) – Shortages and potential price increases of generic drugs from India loom if the coronavirus outbreak disrupts suppliers of pharmaceutical ingredients in China past April, according to industry experts.

An important supplier of generic drugs to the world, Indian companies procure almost 70% of the active pharmaceutical ingredients (APIs) for their medicines from China.

India’s generic drugmakers say they currently have enough API supplies from China to cover their operations for up to about three months.

“We are comfortably placed with eight to 10 weeks of key inventory in place,” said Debabrata Chakravorty, head of global sourcing and supply chain for Lupin Ltd, adding that the company does have some local suppliers for ingredients.

Sun Pharmaceuticals Industries Ltd said it has sufficient inventory of API and raw materials for the short term and has not seen any major disruption in supplies at the moment.

The Indian drugmaker, however, said supply has been impacted for a few API products and the company is closely monitoring the situation. It did not identify the products.

India supplies nearly a third of medicines sold in the United States, the world’s largest and most lucrative healthcare market.

(Source)

Is this a huge concern?  Of course it is.

If you’re dependent in any way on prescription drugs, it would be entirely rational to chase down whether those come from China or India and, if they are, begin talks with your doctor about alternatives or what to do if supplies get pinched.

A Fast-Moving Situation

Look, we entirely get why the authorities and media are downplaying the covid-19 pandemic.  We really do.  They feel the need to manage the crisis, which means managing the public narrative.

But c’mon. Does it make any sense for Apple’s stock price to be up while its main Foxconn manufacturing facility is all but completely shuttered?

Fewer iPhones and Airpods being made should equate with lower future earnings and thus a lower stock price. But no, AAPL is up handily over the past month:

And this is even crazier. Does it make ANY sense for Boeing’s stock to be up $12 over the past month? As it reported its first year (2019) of NEGATIVE orders and a completely order-free January (2020)?  No, of course not.

But those are the sorts of ‘signals’ that the officials believe have to be sent in order to keep the masses from catching on that something really concerning is happening.

Unfortunately, such signals work on the masses.  Higher stock prices send a powerful comforting message that “all is well”.

But prudent critical thinkers, which defines those in the Peak Prosperity tribe, can readily see through the ruse and get busy preparing themselves for what’s coming.

It’s Time For Action

The situation with covid-19 is fluid, and fast-moving.  Staying on top of the breaking developments and making sense of them for you is our primary job.

But information without informed action is useless.

After all, knowing something concerning but then doing nothing about it is merely cause for anxiety if not alarm.

The only ways to remain calm and protect your loved ones from the threat of this pandemic are rooted in taking smart action.

Yes, we can all hope this blows over.  We sincerely wish the macro-planners all the best in shaping the narrative and keeping the macro economy somehow functioning and glued together.

But we’re going to prepare as best we can, here at our micro level because that’s our duty to ourselves, to our families, and to our communities.

Creating A Resilient Defense Against The Coronavirus

This is a huge moment in history.  The first global pandemic at a time when the world economy is sole-sourced and completely interdependent.

Nobody can predict what will happen next.  Autos, drugs…who knows what the next industry to stumble will be?

Given the ridiculously high rate of infectivity of covid-19 there’s really no chance of stopping its spread.  The rate is now just a equation of time, luck, and official actions to aggressively isolate and quarantine infected individuals and communities.

Our position affords us many experienced contacts with experts throughout the world, and those we know with deep medical training are preparing the most aggressively right now. This outbreak has their full attention; and that informs us that it should have ours, too.

Which is why our advice is to get busy preparing yourself now.

Last week we issued the guide How We’re Personally Preparing For The Coronavirus to our premium subscribers. It’s a great resource providing specific recommendations for prevention and treatment.

Today, we’re releasing an expanded companion guide A Resilient Defense Against The Coronavirus, again for our premium members.

Particularly useful for those who have recently found their way to PeakProsperity.com, it offers both a valuable framework to use in preparing for any disaster (including pandemics) and then details out specific action steps to take today across all aspects of your life (i.e., not just health & hygiene) against a coronavirus outbreak in your local area.

Click here to read this report (free executive summary, enrollment required for full access).

end
MICHAEL EVERY OF RABOBANK ON THE CORONAVIRUS
Michael Every discusses the 4 scenarios economically :
1. the bad
2 the worse
3 the ugly
4.unthinkable
must read…
(Michael Every)

The Four Coronavirus Scenarios: The Bad; The Worse; The Ugly; And The Unthinkable

Submitted by Michael Every of Rabobank

Summary

  • The Covid-19 coronavirus could be more disruptive than markets are currently pricing in. Not in the least because the ‘true’ number of infected people remains uncertain, as the recent surge in cases exemplifies
  • We outline four scenarios in which the virus increasingly becomes severe: The Bad; The Worse; The Ugly; and The Unthinkable
  • We provide rough estimates for China’s growth trajectory in these scenarios although we stress that these are not our official forecasts since we are still working out the details
  • The three main channels through which Covid-19 will affect the global economy are tourism, net exports, and intermediate goods
  • In the ‘Bad’ scenario the virus outbreak does not last far beyond Q1. China’s GDP growth for 2020 could drop to below 5%, with production taking the biggest hit and a catch up in Q3 and Q4. This is our base case scenario, although with the recent surge in mind, the second scenario is becoming increasingly likely
  • In the ‘Worse’ scenario, the virus outbreak lasts beyond Q1. In that case China’s GDP growth could end up below 4% in 2020
  • In this scenario, next to China, Asia will bear the brunt of the prolonged outbreak due to its dependence on Chinas as an export market and intermediate imports as well as for tourism
  • In China itself, defaults of non-financial corporates in China could start to rise rapidly
  • This will lead to a decline in China’s long-term growth potential as private companies will suffer most, while less efficient SOEs will likely be bailed out. As a result, debt levels will balloon further, leaving China more vulnerable in the future
  • There will also be downwards pressure on the Chinese currency as extra CNY liquidity is made available
  • In the Ugly scenario, the virus spreads beyond China, and spreads to Asia as well as developed economies. Its effects will likely resemble the Global Financial Crisis of 2008/2009 more than the SARS outbreak in 2003
  • The Unthinkable scenario is a far left tail scenario, in which the virus mutates and becomes a truly global pandemic

Risk on?

 

Financial markets have been on a roller-coaster ride since the Novel coronavirus Covid-19 stole the headlines – albeit mainly on the ascent phase (bar today’s reaction) of the ride so far in terms of equities at least. At this stage, it’s still too early to tell whether or not Covid-19 is ‘under control’ or not. Especially given that the most surge in cases (due to a new counting methodology) shows that we don’t really know the actual number of infected cases (Figure 1).

In a research report published end-January we discussed the ‘most likely’ outcome for the global economy and markets based on what we knew at the time. But the huge uncertainty surrounding the spread of the virus as well as its impact on economic behaviour implies that we are still dealing with a wide range of possibilities from a relatively quick stabilization of the situation to a full-blown pandemic with far far-reaching consequences.

This report will therefore examine what the potential impact of the virus will be on the Chinese, Asian, and global economies under four different scenarios. As shall be seen, none of these are positive, in contra-distinction to the relative optimism shown by equity markets at present. In fact, all of them are negative to varying degrees such that we dub them: The Bad; The Worse; The Ugly; and The Unthinkable.

The Bad

This scenario is actually the ‘good’ one that markets are apparently pricing for, which would see a quick stabilization of the situation in China and assumes that the international spread of the virus remains limited to a number of countries, notably in the Asian region, but with no repeat of the swift spread we initially saw on mainland China.

This is a relatively benign scenario with the economic effects mostly concentrated in Q1 and part of Q2 2020. Regardless, we still envisage that China’s Q1 growth rate in this scenario could fall to 2.9% y-o-y, which is 3% lower than our previous forecast of 5.9%. Assuming the most draconian containment measures are gradually withdrawn during Q2, the impact on Q2 growth is likely to be smaller but still negative. Only in H2 would we expect a partial rebound. For 2020, our ballpark growth figure is 4.8% – 5.6% y/y GDP growth, and then and between 5.5% – 6.3% for 2021. (These are not our official forecasts. We are still working out the details and will present them in our upcoming quarterly outlook).

We expect Chinese industrial production to take the biggest hit near-term as factories remain mostly closed in Q1. Production growth in this scenario will drop to 2.2% y-o-y in the quarter, which is 4% below its 3-year average (6.1% y/y). However, there will likely be some catch-up growth in production in Q3 and Q4.

Services will take the second largest hit, slowing to 3.5% y-o-y, which is 3 percentage points below its 3-year average (7.5% y/y). Services will rebound too in H2, albeit partially. We say partially because while industrial production may “catch-up”, consumer spending is less likely to do so. People will not get an extra haircut or go on vacation twice to catch up on missed haircuts and vacations. Crucially, the services sector now comprises more than half of China’s economy (52%); in 2003 this was just 42%.

In terms of stimulus, we can naturally expect both fiscal and monetary policy to play a large role. The PBOC has already injected a significant quantity of liquidity via various channels, including reverse repo, totalling CNY2.9 trillion (USD 414 bn) at the time of writing (although a large part of this injection is for refinancing of previously ending contracts). More will be forthcoming, in their own words. Interest rates, such as where they matter in a quantity-driven credit economy like China, will also be lowered.

At the same time, the fiscal taps will have to open. We are again already seeing accelerated issuance of local government special bonds, and the central government fiscal deficit will also widen as needed to ensure the economy gets back on track as soon as possible.

However this is not a cost-free exercise. Already-high debt-ratios of corporates and the state in China will rise even higher. The narrative of deleveraging, which we did not subscribe to, will be comprehensively debunked. China will have to carry that debt with it in the future.

Concurrently, this new stimulus runs counter to China’s ambition to make its financial system more stable. Chinese banks already face rising non-performing loan (NPL) levels. For example, S&P estimate that in a growth slow-down these could multiple five or six fold, into the hundreds of USD billions. The actual, rather than realised, figure is likely to be far worse.
Crucially, China’s banks are also already capital constrained. Having to step in and support so much of the economy will almost certainly see them having to raise capital or rely on the PBOC. Indeed, in almost all scenarios the PBOC will be doing much more ahead.

In which case, a combination of increased CNY liquidity and lower Chinese rates, to say nothing of a drop in capital inflows, is likely to place significant downwards pressure on CNY. Might this even limit the PBOC’s room for action given China’s commitment to the US under the Phase One Trade Deal not to weaken its currency? Notably, the US is already recognising that there will be delays in China meeting its other promise, of huge US goods purchases.

For the global economy this scenario is also painful as China has become a critical driver of global economic growth. The sensitivity of the world economy to China’s growth rate was 0.17 between the 1980s and 2000, which has almost tripled to 0.47 in the last 15 years. Thus each percentage point of Chinese GDP growth coincides (we don’t say ‘leads to’) with about half a percentage point in world GDP growth (Figure 2). This scenario will see 2020 world GDP growth -0.2ppts lower than our current estimate of 2.9%.

The economic transmission mechanisms are as clear as those of the virus.

Automatic transmission

On the demand side, China is responsible for more than 25% of tourists in a host of countries such as South Korea, Vietnam and Thailand, but also Australia, New Zealand, and Hong Kong (Figure 3). It also sends millions of tourists further afield, to Europe and the US, for example. Naturally, a decline in Chinese tourists will hit hardest for the countries where tourism is largest as a share of GDP.

Thai tourism, for example, constitutes 20% of GDP and employs about 10% of the workforce. Chinese tourists alone account for about 6% of Thai GDP. Indeed, the virus is already hitting Thailand hard as seen from anecdotal reports from Thai resorts and Bangkok, which is a popular destination for visitors from Wuhan.

The second channel of demand-based transmission is exports. For Australia, New Zealand, Taiwan, and South Korea, more than 25% of exports go to China; for Hong Kong this figure is as high as 78% (Figure 4).

Even Europe cannot escape: 7% of Germany’s exports (EUR 96 bln) go to China, a quarter of which are cars. The rest of Asia constitutes 11% of German exports. Thus a full 18% of German exports will be hit directly or indirectly be less demand from China as well as disruption of transport routes. With German automotive output already at its lowest level since 2010 (Figure 5), significant weakness in Chinese demand could be a serious headwind for Germany.

The third transmission channel is indirect, and potentially just as disruptive: a supply shock. China is a vital part of international value chains and international firms rely on Chinese intermediate goods to produce their end products. Thus, a disruption in Chinese output means these companies are unable to produce their final goods, or at least face delays in production, depending on when production in China can be re-started.

On a macro level countries such as Vietnam, South Korea and Indonesia are especially prone to this (Figure 6), and in Europe so is Germany: about 9% of Germany’s total import of intermediate goods is from China. Germany’s car sector could thus feel the effects of the coronavirus via its exports to China, which will be hit, as well as in the difficulty getting of getting key imports from China in order to produce the cars.

Indeed, we have already seen several major Korean firms such as Hyundai and Kia shut down some local production due to lack of inputs from China, with consequent spill-over effects on to their own national supply-chains.

It should also go without saying that this trend is also playing out within China itself: China is vastly more correlated with China than it is with the rest of the world! Indeed, the under-appreciated risks of long- and China-centric supply chains are being underlined by the current crisis.

Longer-term impact

One also needs to consider the longer-term structural damage that will be seen the longer the virus is present for. The Chinese government will naturally aim to bail out its large State-Owned Entities (SOEs) if they suffer; but could it really do the same for private companies, SMEs, or for indebted households? That seems far less achievable. How far can the state really prop up the domino effect of cascading small and medium firm failures? How can it make households good short of suspending mortgage payments, for example, or huge increases in welfare spending, which China does not currently have systems in place for?

As such, Chinese GDP growth may only be sustained by a deepening of state activity and PBOC activism. The long-term effects of this kind of bail-out at a time when China is ostensibly supposed to be reforming would be that the Chinese economy as whole becomes less efficient in terms of its investment, which is already a key problem. This would mean a short-term stimulus sitting alongside a reduction China’s long term growth potential.

In addition, and as we already noted, either China’s government debt will balloon because of large bailouts of even-more indebted firms and households, at a time when this is already becoming an issue of concern. Note that the combined debt of non-financial corporates, the government and households has already reached 260% of GDP (Figure 7).

The Chinese currency could come under increased downwards pressure in financial markets as well, due to the massive extra CNY liquidity and matching lower Chinese rates.

The Worse

In ‘The Worse’ scenario the virus spreads further within China and lasts longer than in the previous scenario (6-9 months).

Within China, the economic impact will naturally be amplified, with only a partial bounce-back in H2 2020. The pressures on the Chinese government, corporates, and households if nobody is able to work for an extended period, and then on its banks and through to CNY, would increase by orders of magnitude.

In order to ascertain how likely this outcome is, one can arguably track real-time day-to-day air quality data looking at Nitrous Dioxide (NO2) levels in major Chinese cities, as a proxy for the polluting effects of economic activity. What can be seen at time of writing matches anecdotal descriptions of a property market in deep-freeze, ghost cities, and shuttered factories.

Assuming a longer, deeper virus impact we see China’s GDP growth for 2020 in a 3.8%-4.6% y/y range. Again production will take the largest hit because factories will be shut down longer. Services will take the secondary hit. Moreover, the global effect will be far stronger: global growth could decline by a full 1% in 2020. However, we do expect some rebound in late Q3 and in Q4, although the recovery in services will be relatively less due to an extended period of negative sentiment.

The Ugly

This ‘Ugly’ scenario would see the virus continue to rage in China, spread to ASEAN, Australia and New Zealand, and the cluster of cases in the US and Europe snowball at an exponential growth rate from their currently low base. In other words, developed economies would also be hit.

If the virus spreads in the West public panic would naturally be the immediate response. Just as seen in China today, people would stop going out and shopping to stay safe at home, or make panic purchases on fears of supply shortages and then stay at home. In short, the economy would largely grind to a halt.

Naturally, the services sector on which the West relies far more than China would be smashed: restaurants; pubs; bars; cinemas; concerts; conferences would all grind to a halt. International travel bans would be put in place. Supply chains would be broken. International trade would collapse along with domestic demand.

The government would immediately start to institute similar quarantine steps as seen in China. Regardless of the differences in political systems, quarantine is quarantine (and the word originates from Venice, after all). Presuming this was ineffective due to earlier symptom-free transmission then the quarantine would have to be expanded. We could expect a mirror of the Chinese villages building barriers around themselves to keep strangers out.

In this kind of scenario it is impossible to estimate the precise impact on the global economy – because there would be little *global* economy to speak of. Suffice to say, it would be a true depression: a sharp downturn like in 2008-09 that grinds on – and a recovery based on medical breakthroughs rather than monetary-policy ones.

Nonetheless, interest rates would obviously be slashed, where they can, and emergency government spending on anti-virus measures would be stepped up regardless of the size of fiscal deficits. At the same time banks would be told by central banks to keep supporting all firms, especially SMEs, that are facing bankruptcy as their revenues evaporate.

Yet would banks listen to their new orders to lend? Which staff would be doing this, if nobody is in the office? Banks haven’t done much real-economy lending under QE liquidity and no virus conditions, for example. Firms themselves would be told to keep paying their workers even if they can’t do any work – but as in China, would SMEs be able to afford to? And what about the gig economy and the huge number of self-employed?

As such, the state would be forced to expand its role markedly in order to stop a total economic collapse – once again, as in China. This would be akin to current populist arguments for a fiscal-QE-driven ‘Green New Deal’, but in this case wrapped up in biosecurity terms. However, our health and armed forces (which would be needed to keep control) are arguably over-stretched and under-resourced already in many countries, and are not something that can be turned on/off quickly like a switch.

The Unthinkable

This scenario is very short. The virus spreads globally and also mutates, with its transmissibility increasing and its lethality  increasing too. The numbers infected would skyrocket, as would casualties. We could be looking at a global pandemic, and at scenarios more akin to dystopian Hollywood films than the realms of economic analysis. Let’s all pray it does not come to pass and just remains a very fat tail risk.

However, one can see that in each of these four scenarios things are ugly, even in the first two ones. As such, the relative financial market optimism still seems to be based on the belief that central-bank liquidity supersedes virus transmissibility. That’s still quite optimistic given the uprise in uncertainty about the coronavirus.

end
COVID 19 FACTS
As we warned you, the virus seems to attack ACE 2 receptors. The body has many ACE2 receptors but the big ones are in the lungs, the heart and the kidneys.  We also know that the virus can re infect as you are cured the first time but then you are susceptible to heart failure
please read…

Hubei Doctors Warn Of Even-Deadlier Coronavirus Reinfection Causing Sudden Heart Attacks

Doctors working on the front lines of the novel coronavirus (COVID-19) outbreak have toldthe Taiwan Times that it’s possible to become reinfected by the virus, leading to death from sudden heart failure in some cases.

It’s highly possible to get infected a second time. A few people recovered from the first time by their own immune system, but the meds they use are damaging their heart tissue, and when they get it the second time, the antibody doesn’t help but makes it worse, and they die a sudden death from heart failure,” reads a message forwarded to Taiwan Newsfrom a relative of one of the doctors living in the United Kingdom.

The source also said the virus has “outsmarted all of us,” as it can hide symptoms for up to 24 days. This assertion has been made independently elsewhere, with Chinese pulmonologist Zhong Nanshan (鍾南山) saying the average incubation period is three days, but it can take as little as one day and up to 24 days to develop symptoms.

 

Also, the source said that false negative tests for the virus are fairly common. “It can fool the test kit – there were cases that they found, the CT scan shows both lungs are fully infected but the test came back negative four times. The fifth test came back positive.” –Taiwan Times

Notably, one of the ways coronaviruses cripple the immune system is via an HIV-like attachment to white blood cells, which triggers a ‘cytokine storm‘ – a term popularized during the avian H5N1 influenza outbreak – in which an uncontrolled release of inflammatory ‘cytokines’ target various organs, often leading to failure and in many cases death.

The cytokine storm is best exemplified by severe lung infections, in which local inflammation spills over into the systemic circulation, producing systemic sepsis, as defined by persistent hypotension, hyper- or hypothermia, leukocytosis or leukopenia, and often thrombocytopenia.

In addition to lung infections, the cytokine storm is a consequence of severe infections in the gastrointestinal tract, urinary tract, central nervous system, skin, joint spaces, and other sites. (Tisoncik, et. al, Into the Eye of the Cytokine Storm)(2012)

According to the 2012 study, “Cytokine storms are associated with a wide variety of infectious and noninfectious diseases and have even been the unfortunate consequence of attempts at therapeutic intervention.”

How do coronaviruses enter the body?

With SARS (sudden acute respiratory syndrome), another coronavirus, researchers discovered that one of the ways the disease attaches itself is through an enzyme known as ACE2, a ‘functional receptor’ produced in several organs (oral and nasal mucosa, nasopharynx, lung, stomach, small intestine, colon, skin, lymph nodes, thymus, bone marrow, spleen, liver, kidney, and brain).

ACE2 is also “abundantly present in humans in the epithelia of the lung and small intestine, which might provide possible routes of entry for the SARS-CoV,” while it was also observed “in arterial and venous endothelial cells and arterial smooth muscle cells” – which would include the heart.

This has led some to speculate that Asians, who have higher concentrations of ACE2 (per the 1000 genome project) may be affected to a greater degree than those of European ancestry, who produce the least of it – and have largely been the asymptomatic ‘super spreaders‘ such as Diamond Princess coronavirus victim Rebecca Frasure.

And so while more research on COVID-19 is urgently needed – we know that coronavirus can target ACE2 receptors, which are found in the cardiovascuar system. And we have seen evidence of both sudden collapses and neurological damage from footage pouring out of Wuhan, China.

If the virus can reinfect patients and cause cytokine storms and sudden death – possibly exacerbated by therapeutic intervention – treating the coronavirus which CDC director Dr. Robert Redfield says will become widespread throughout the United States ‘this year or next,’ it is vitally important to understand exactly how COVID-19 works, and how to treat it. That would require cooperation from China and a CDC team on the ground in the epicenter. For some unknown reason, however, China still refuses to grant US scientists access to ground zero.

end

My goodness: this is escalating fast.  Nineteen days ago, Apple gave a glowing guidance.  They now have cut this guidance due to the virus disruptions

(zerohedge)

“The Situation Is Evolving” – AAPL Cuts Guidance Due To Virus Disruptions

Surprise!

Apple has issued a press released, admitting it does “not expect to meet the revenue guidance we provided for the March quarter” due to coronavirus related issues.

In other words, the guidance we issued 19 days ago – blowing off any impact from the virus – is completely worthless.

Full Statement Below:

As the public health response to COVID-19 continues, our thoughts remain with the communities and individuals most deeply affected by the disease, and with those working around the clock to contain its spread and to treat the ill. Apple® is more than doubling our previously announced donation to support this historic public health effort.

Our quarterly guidance issued on January 28, 2020 reflected the best information available at the time as well as our best estimates about the pace of return to work following the end of the extended Chinese New Year holiday on February 10. Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated. As a result, we do not expect to meet the revenue guidance we provided for the March quarter due to two main factors.

  • The first is that worldwide iPhone® supply will be temporarily constrained. While our iPhone manufacturing partner sites are located outside the Hubei province — and while all of these facilities have reopened — they are ramping up more slowly than we had anticipated. The health and well-being of every person who helps make these products possible is our paramount priority, and we are working in close consultation with our suppliers and public health experts as this ramp continues. These iPhone supply shortages will temporarily affect revenues worldwide.
  • The second is that demand for our products within China has been affected. All of our stores in China and many of our partner stores have been closed. Additionally, stores that are open have been operating at reduced hours and with very low customer traffic. We are gradually reopening our retail stores and will continue to do so as steadily and safely as we can. Our corporate offices and contact centers in China are open, and our online stores have remained open throughout.

Outside of China, customer demand across our product and service categories has been strong to date and in line with our expectations.

The situation is evolving, and we will provide more information during our next earnings call in April. Apple is fundamentally strong, and this disruption to our business is only temporary. Our first priority — now and always — is the health and safety of our employees, supply chain partners, customers and the communities in which we operate. Our profound gratitude is with those on the front lines of confronting this public health emergency.

What is notable is the absence of a “but we’ll increase out share buyback program” rescue package for shareholders to rely on.

Finally we note that the timing of this statement is anything but coincidence – on a market holiday in the US – as it gives the analyst community enough time to script their narrative for why this can all be discounted… or is more than priced in already… and/or will be erased thanks to an imminent v-shaped recovery or some such completely unknowable bullshit.

Of course this is all great news for the stock – consider what happened the last time AAPL cut guidance…

The stock price doubled!

With most markets still closed, we look to USDJPY for some idea of a reaction…

 

And it appears, Nasdaq Futs will open lower – but not dramatically so.

end

THIS SUMMARIZES EVERYTHING:  THIS IS A MUST READ…

Covid-19 Pandemic: The Complacent Are Clueless

Authored by Charles Hugh Smith via OfTwoMinds blog,

The eventual price of substituting magical thinking and survivorship bias for actual evidence will be far higher than the complacent realize.

Here’s a sampling of complacent assertions being made about the COVID-19 virus as if they were certitudes:

  • It’s no worse than a bad cold.
  • It’s less deadly than a normal flu.
  • You can’t catch it unless you’re in sustained close contact with a carrier.
  • Carriers are only contagious for 14 days. After that, you’re home free.
  • A vaccine is just around the corner.
  • The Chinese government has it under control.
  • Only 2,000 people have died, it’s no big deal.
  • The few cases in other countries are being managed, and it will soon disappear.
  • The pandemic will fade away by April due to rising temperatures.
  • China’s GDP will only take a 1% hit, and global growth will only drop 0.25%.

Interestingly, there is no large-scale, credible data to support any of these claims. But the complacent are not just falling for false claims being passed off as “facts” rather than what they really are–magical thinking–they’re making a much larger error known as Survivorship Bias.

The complacent are focusing on the few who have been tested for the virus, not the millions who haven’t been tested.

The complacent are focusing on the accurate tests, not the many carriers who tested negative or the healthy people incorrectly tagged by false positive tests. The complacent are overlooking the fact that multiple tests are needed to confirm and even multiple tests can fail.

The complacent are focusing on the few who went to the hospital to get tested and treated, not the multitudes who did not go to a doctor or hospital (for a variety of reasons).

The complacent are focusing on the few carriers who have been forcibly hauled off by Chinese police and not the many who have wisely hidden away from prying eyes.

The complacent are focusing on the few facilities with test kits, not on the multitude of clinics which do not have test kits.

The complacent are focusing on the few who have been identified as carriers in other nations, not the asymptomatic carriers who have not been identified because 1) they have no symptoms and thus no reason to get tested and 2) they chose not to go to a doctor or hospital despite having symptoms.

In effect, the complacent are focusing solely on the few carriers who are symptomatic and have been tested, not on the much larger number of asymptomatic carriers who have not been tested. The complacent are ignoring the highly contagious nature of COVID-19, and the impossibility of controlling a virus that can be spread by asymptomatic carriers for up to 24 days.

The complacent are assuming 100% of all carriers outside China have come forward and been identified as carriers via tests, when the reality is asymptomatic carriers don’t even know they are infected and contagious.

The complacent are assuming every healthcare facility in China has test kits in such abundance that they can test suspected carriers three times to confirm the diagnosis, when the reality is test kits are scarce and one test is not enough to make a reliable assessment. Carriers can test negative, positive and then negative.

The complacent are assuming casual contact isn’t enough to catch the virus while a rising tide of cases confirm that brief, casual contact is enough to get the virus.

The complacent are assuming 100% of symptomatic carriers will go to the hospital to be tested and treated, when an unknown but consequential number of symptomatic carriers are fearful of what will be done to them and their families by authorities, so they hide from prying neighbors and authorities.

The complacent are assuming that asking people if they recently visited China or hosted a visitor from China will identify 100% of the asymptomatic carriers, when there is already proof that asymptomatic carriers have caught the virus from others: they did not visit China or have any known contact with anyone who came from China. They caught the virus from an intermediary who didn’t even know they were infected.

The complacent are looking at cases and carriers that are known, not the cases and carriers which are unknown. Since asymptomatic carriers can spread the pathogen, the majority of carriers remain unknown. Since not every symptomatic carrier chooses to go to the hospital, many cases remain unknown.

In sum, the complacent are clueless. The eventual price of substituting magical thinking and survivorship bias for actual evidence will be far higher than the complacent realize. Playing games with statistics and high finance will not limit the spread of the virus or limit its profound economic impact.

My COVID-19 Pandemic Posts

END

7. OIL ISSUES

COVID 19 /OIL

PORTS ARE SHUT OUT AND THAT IS WHY TANKERS ARE FLOATING ON THE SEAS WITH NOWHERE TO GO.

The Virus is causing historic high seas traffic jams as Asian supply lines are just shut off

(zerohedge)

“Tankers, Tankers. Everywhere!” – Virus Causes Historic’ Traffic Jam’ Across Asian Supply Lines

Covid-19’s effect on global energy markets has been disastrous. OPEC slashed its oil demand forecast last week, and Goldman Sachs doubled down on its bearish oil take and has cut its oil price target by $10 to $53 for the year, as a result of a “demand shock” that is set to collapse Chinese oil consumption by 20%, or as much as 4 million barrels per day.

The sharp decline in demand in China, which by the way, is the world’s largest oil importer, is now stranding oil cargoes off the country’s coast and across Asia.

Bloomberg’s Stephen Stapczynski records footage of an impressive parking lot of tankers and other vessels off the coast of the anchorages of the port of Singapore, one of the largest freight hubs and busiest ports in the world.

Much of the oil consumption decline is because, as we reported on Friday, China’s economy is faltering as its industrial hubs remain shuttered.

Take a look at the chart below, in the Feb 7-13 week, steel apparent demand is down a whopping 40%, but that’s only because flat steel is down “only” 12% Y/Y as some car plants have ordered their employee to return to work.

Real-time measurements of air pollution (a proxy for industrial output), daily coal consumption (a proxy for electricity usage and manufacturing), and traffic congestion levels (a proxy for commerce and mobility) suggest that the second-largest economy in the world has frozen. This all indicates the demand for energy products to power machines and vehicles has abruptly stopped.

A significant bottleneck for Very Large Crude Carriers (VLCCs) deliveries to China is developing, forcing some ports to reject new tanker loads, contributing to a parking lot of tankers sitting off the coast and in other regions in Asia.

Some cargos have been diverted to Singapore, Malaysia, South Korea, but even in those regions, tanker traffic jams are building.

Crude storage in China filled up near full capacity last summer, mostly due to declining demand thanks to a decelerating economy.

China’s overall crude storage is around 760 million barrels, versus a peak of 780 million barrels last June.

Middle East traders who export crude via VLCCs to China reported weaker demand. VLCC rates from the Middle East to China have plunged since the virus outbreak began early last month.

“In gas markets, a one Chinese company declared force majeure, potentially allowing it to walk away from contractual commitments. The measure was rejected by Total SA and Royal Dutch Shell Plc. There are now 12 empty liquefied gas carriers sitting off the coast of Qatar, one of the world’s biggest producers. While the precise reasons for the idling vessels aren’t known, the timing coincides with ship diversions, cargo cancellations and reduced demand in Asia since the virus took hold. Oil tankers have been dawdling off China,” reported Bloomberg.

The parking lot of tankers developing off the coast of not just China but other countries in the region have forced some traders to transfer crude to less expensive tankers to save on demurrage costs, over the fear cargos could be moored offshore for an extended period as an economic crisis in China unfolds.

And to summarize what we know so far: China’s economy is collapsing, crude consumption is plunging, which has forced refiners to cut runs as a glut is developing, has now led to tanker parking lots moored off the shores of many countries in Asia.

What is also known is that bunker fuel prices at major ports in Asia, including Singapore, Hong Kong, South Korea, Taiwan, and Japan, have been declining since the virus outbreak began early last month.

The world is bracing for a huge virus shock from China, not seen in over a decade – this could easily tilt the world into recession.

end

8 EMERGING MARKET ISSUES

INDIA/CHINA/COVID 19

Zero hedge is correct, the dominos are falling as just in time inventory management is crushing India’s already crumbling economy

(zerohedge)

Dominos Are Falling – China Shutdown To Crush India’s Already-Crumbling Economy

The supply chain shock emanating from China to other Asia Pacific countries and Europe, could become a major headache for India.

Bloomberg focuses on how an industrial shutdown of China’s economy has already had a profound effect on India’s economy and could get worse.

Pankaj R. Patel, chairman of Zydus Cadila, said prices of medicine in India have exponentially jumped in the last several weeksthanks to much of the medicine is sourced from China.

The Indian pharmaceutical industry is experiencing massive disruptions that could face shortages starting in April if supplies aren’t replenished in the next couple weeks, Patel warned.

Manufacturers in China have idled plants, and at least two-thirds of the economy is halted. Some factories came online last week with promises of full production by the end of the month, but for most factories, their resumption will likely be delayed. This will undoubtedly lead to medicine shortages in India in the coming months ahead.

A new theme is developing from all this mayhem – that is the reorganization of complex supply chains out of China to a more localized approach to avoid severing. But in the meantime, these complex supply chains in India and across the world will experience massive disruption caused by the shutdown. All of this points to ugly end of globalization:

Pankaj Mahindroo, chairman of the India Cellular and Electronics Association (ICEA), said the wrecking of supply chains in China could soon have a devastating impact on India’s smartphone production. 

Mahindroo represents companies including Foxconn, Apple Inc., Micromax Informatics Ltd., and Salcomp India, warned the “impact is already visible… If things don’t improve soon, production will have to be stopped.”

Already, the production of iPhones and Airpods has been reduced in China because of factory shutdowns.

The closure of Foxconn plants in India would be absolutely devastating for Apple.

Apple produces iPhone XR in India. If the production of affordable smartphones is halted or reduced, the Californian based company could see full-year earnings guidance slashed.

Mohnidroo said if things don’t improve in the next couple of weeks, smartphone factories in India could start running out of “critical components like printed circuit boards, camera modules, semiconductors, resistors, and capacitors.” 

Even before all of this, India’s economy is rapidly decelerating into an economic crisis. 

Former Indian Finance Minister Yashwant Sinha warned several months ago that the country is in a “very deep crisis,” witnessing “death of demand,” and the government is “befooling people” with its economic distortions  of how growth is around the corner.

Supply chain disruptions are moving from East to West. It’s only a matter of time before production lines are halted in the US because sourcing of Chinese parts is offline. The disruptions of supply chains is the shock that could tilt the global economy into recession.

END

 

Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings TUESDAY morning 7:00 AM….

Euro/USA 1.0815 DOWN .0021 REACTING TO MERKEL’S FAILED COALITION/ REACTING TO +GERMAN ELECTION WHERE ALT RIGHT PARTY ENTERS THE BUNDESTAG/ huge Deutsche bank problems ///ITALIAN CHAOS //CORONAVIRUS/AND NOW ECB TAPERING BOND PURCHASES/JAPAN TAPERING BOND PURCHASES /USA RISING INTEREST RATES /FLOODING/EUROPE BOURSES /MOSTLY RED EXCEPT ITALY

 

 

USA/JAPAN YEN 109.74 DOWN 0.090 (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 1.3039   UP   0.0034  (Brexit March 29/ 2019/ARTICLE 50 SIGNED/BREXIT FEES WILL BE CAPPED

USA/CAN 1.3258 UP .0021 CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/(TRUMP INITIATES LUMBER TARIFFS ON CANADA/CANADA HAS A HUGE HOUSEHOLD DEBT/GDP PROBLEM)

Early THIS  TUESDAY morning in Europe, the Euro FELL BY 21 basis points, trading now ABOVE the important 1.08 level FALLING to 1.0815 Last night Shanghai COMPOSITE CLOSED UP 1.35 POINTS OR 0.05% 

 

//Hang Sang CLOSED DOWN 429.48 POINTS OR 1.54%

/AUSTRALIA CLOSED DOWN 0,18%// EUROPEAN BOURSES MOSTLY RED

 

Trading from Europe and Asia

EUROPEAN BOURSES MOSTLY RED EXCEPT ITALY. 

 

 

2/ CHINESE BOURSES / :Hang Sang CLOSED DOWN 429.40 POINTS OR 1.54%

 

 

/SHANGHAI CLOSED UP 1.35 POINTS OR 0.05%

 

Australia BOURSE CLOSED DOWN. 18% 

 

 

Nikkei (Japan) CLOSED DOWN 329.44  POINTS OR 1.40%

 

 

 

INDIA’S SENSEX  IN THE RED

Gold very early morning trading: 1586.90.10

silver:$17.87-

Early TUESDAY morning USA 10 year bond yield: 1.54% !!! DOWN 4 IN POINTS from FRIDAY’S night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%.

 

The 30 yr bond yield 1.99 DOWN 5  IN BASIS POINTS from FRIDAY night.

USA dollar index early TUESDAY morning: 99.25 UP 24 CENT(S) from  FRIDAY’s close.

This ends early morning numbers TUESDAY MORNING

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx6

And now your closing TUESDAY NUMBERS \1: 00 PM

Portuguese 10 year bond yield: 0.28% DOWN 1 in basis point(s) yield from YESTERDAY/

JAPANESE BOND YIELD: -.07%  DOWN 2   BASIS POINTS from YESTERDAY/JAPAN losing control of its yield curve/56

SPANISH 10 YR BOND YIELD: 0.29%//DOWN 1 in basis point yield from yesterday.

ITALIAN 10 YR BOND YIELD:0.93 UP 2 points in basis points yield from yesterday./

 

 

the Italian 10 yr bond yield is trading 64 points higher than Spain.

 

GERMAN 10 YR BOND YIELD: FALLS TO –.41% IN BASIS POINTS ON THE DAY//

THE IMPORTANT SPREAD BETWEEN ITALIAN 10 YR BOND AND GERMAN 10 YEAR BOND IS 1.32% AND NOW ABOVE THE  THE 3.00% LEVEL WHICH WILL IMPLODE THE ENTIRE ITALIAN BANKING SYSTEM. AT 4% SPREAD THERE WILL BE A HUGE BANK RUN…

 

END

IMPORTANT CURRENCY CLOSES FOR TUESDAY

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

Euro/USA 1.0813  DOWN     .0024 or 24 basis points

USA/Japan: 109.81 DOWN 0319 OR YEN UP 3  basis points/

Great Britain/USA 1.3017 UP .0011 POUND UP 11  BASIS POINTS)

Canadian dollar DOWN 20 basis points to 1.3017

 

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The USA/Yuan,CNY: AT 6.9963    ON SHORE  (DOWN)..GETTING DANGEROUS

THE USA/YUAN OFFSHORE:  7.0036  (YUAN DOWN)..GETTING REALLY DANGEROUS

TURKISH LIRA:  6.0565 EXTREMELY DANGEROUS LEVEL/DEATH WISH.

the 10 yr Japanese bond yield cloSEd at -.079%

Your closing 10 yr US bond yield DOWN 3 IN basis points from FRIDAY at 1.54 % //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 1.99 DOWN 5 in basis points on the day

Your closing USA dollar index, 99.28 UP 28  CENT(S) ON THE DAY/1.00 PM/

 

Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for TUESDAY: 12:00 PM

London: CLOSED DOWN 63.07  0.85%

German Dax :  CLOSED DOWN 117.94 POINTS OR .86%

 

Paris Cac CLOSED DOWN 30.13 POINTS 0.50%

Spain IBEX CLOSED DOWN 25.20 POINTS or 0.25%

Italian MIB: CLOSED UP 79.01 POINTS OR 0.31%

 

 

 

 

 

WTI Oil price; 51.37 12:00  PM  EST

Brent Oil: 57.00 12:00 EST

USA /RUSSIAN /   RUBLE FALLS:    63.95  THE CROSS HIGHER BY 0.46 RUBLES/DOLLAR (RUBLE LOWER BY 46 BASIS PTS)

 

TODAY THE GERMAN YIELD FALLS  TO –.41 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 :  52.05//

 

 

BRENT :  57.68

USA 10 YR BOND YIELD: … 1.55…down 3 b asis pts…

 

 

 

USA 30 YR BOND YIELD: 2.01..down 3 basis pts…

 

 

 

 

 

EURO/USA 1.0786 ( DOWN 42   BASIS POINTS)

USA/JAPANESE YEN:109.86 UP .021 (YEN DOWN 2 BASIS POINTS/..

 

 

USA DOLLAR INDEX: 99.44 UP 44 cent(s)/

The British pound at 4 pm   Britain Pound/USA:1.2979 DOWN 6  POINTS

 

the Turkish lira close: 6.0671

 

 

the Russian rouble 63.84   DOWN 0.35 Roubles against the uSA dollar.( DOWN 35 BASIS POINTS)

Canadian dollar:  1.3257 DOWN 21 BASIS pts

USA/CHINESE YUAN (CNY) :  6.9963  (ONSHORE)/

 

 

USA/CHINESE YUAN(CNH): 7.0072 (OFFSHORE)

 

German 10 yr bond yield at 5 pm: ,-0.41%

 

The Dow closed UP 165.69 POINTS OR 0.56%

 

NASDAQ closed UP 1.57 POINTS OR 0.01%

 


VOLATILITY INDEX:  14.83 CLOSED UP 1.15

LIBOR 3 MONTH DURATION: 1.692%//libor dropping like a stone

 

USA trading today in Graph Form

China Shutdown Fears Spark Dip-Buying Frenzy In Stocks As Gold Soars, Yield Curve Inverts

As the numbers of companies issuing guidance cuts or outlook warnings have mounted, the stock market has pushed ever higher. Even as the world’s largest company issues its second outlook cut in 13 months…

Source: Bloomberg

…the stock market barely even blinks… in fact Nasdaq surged off the overnight lows into the green…

Source: Bloomberg

But as the machines bought the dip in stocks, yuan didn’t bounce at all and gold was bid along with safe-haven bonds…

Can u spot the odd one out?

Source: Bloomberg

The divergence between small-cap momo tech and the bigger Chinese stocks was extremely evident overnight…

Source: Bloomberg

Only the UK’s FTSE managed gains in Europe today with Germany’s DAX the laggard…

Source: Bloomberg

In the US, Trannies and Nasdaq roared back into the green (from Friday) while the Dow was the laggard…

Defensives dominated price action today…

Source: Bloomberg

Treasury yields dropped across the curve today with the long-end outperforming…

Source: Bloomberg

The yield curve re-inverted today with 3m10Y dropping to -2bps…

Source: Bloomberg

The Dollar closed at its highest since Oct 10th 2019…

Source: Bloomberg

A close up on Yuan’s drop today shows the decoupling with Nasdaq…

Source: Bloomberg

Cryptos were bid today after sliding across the long weekend…

Source: Bloomberg

Bitcoin jumped back above $10,000 today

Source: Bloomberg

Copper ended the day lower but crude clung to yesterday’s gains on a big bounce back as PMs soared…

Source: Bloomberg

WTI surged from the open of the US equity market…

Gold spiked above (and held) $1600 (back to Iran WW3 levels)… This is gold’s highest close since March 2013

Silver outperformed gold, rising 2.5%, back above $18…

Meanwhile, Palladium continues to surge to a new record high, testing very close to $2600 today…

Source: Bloomberg

Finally, just a little more and it’s all over…

Source: Bloomberg

And Short Interest in the SPY (S&P ETF) has reached its lowest since pre-Lehman…

Source: Bloomberg

END

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

MARKET TRADING//USA

a)Market trading/LAST NIGHT/USA

 

b)MARKET TRADING/USA/AFTERNOON

ii)Market data/USA

iii) Important USA Economic Stories

a)USA/COVID 19

Japanese man with the virus visited a resort in Hawaii as well as mingled with Hawaiians during his recent visit.

We will watch for further cases coming to light on this one!

(zerohedge)

NYT Reports Japanese Man Diagnosed With Virus Visited Resort, Mingled With Hawaiians During Recent Visit

Yesterday, we mentioned that one of the latest cases of COVID-19 confirmed in Japan was a man in his 60s who recently traveled to Hawaii.

While the news was certainly alarming, with few details available, we had little to choice but to wait for the next report.

A few hours later, the New York Times published what appears to be a deeply-sourced story filed from Honolulu. In it, the reporter appears to have pinpointed some of the contacts that the unnamed Japanese man made during his trip to Hawaii – though the most critical piece of information, the source of the man’s infection, has yet to be ascertained.

The piece begins from the perspective of Chantelle Pajarillo, a Hawaiian woman spending a long weekend at the famous resort on Waikiki Beach, when she saw a local news report claiming the infected patient may have stayed at the very same resort during his recent trip to the island.

She immediately requested a package of disinfectant wipes and started “wiping down everything.”

“I wiped down everything I knew they would touch: the sliding door, the refrigerator, countertops and the bathroom,” Ms. Pajarillo said on Saturday as she walked back to the pool at the Grand Waikikian, toting a stack of towels. “I’m a germaphobe myself and I have three little kids so I want to make sure I take every precaution.”

According to the NYT, neither Hawaiian health officials nor Japanese health authorities has any idea whether he picked up the virus in Hawaii, in Japan, or possibly while traveling to Hawaii (the option that health officials suspect is the most likely).

Hawaii health officials were working swiftly over the weekend to find anyone who might have had contact with the Japanese couple, who had also visited the island of Maui. Health authorities said the couple, both in their 60s, was not diagnosed until they returned to Japan, but the husband began showing symptoms while still staying in one of Hawaii’s most popular tourist neighborhoods.

But the NYT reporter did find a local resident named John Fujiwara who believes the Japanese patient is a friend of his whom he refued to name. The man recently visited Hawaii and met Fujiwara for a coffee before exchanging gifts of chocolates.

Fujiwara said he reached out to a local paper and Hawaiian state health officials with his story. They told him not to panic, and when he offered to self-quarantine, the state said he should go about his day as normal, but report any suspicious symptoms.

Let’s back up for a second: We suspect we’re not the only ones who were surprised – and not exactly reassured – by the state’s response to this man.

True, he could be wrong. But isn’t it better to be safe than sorry when a simple one-line email from the state could have put this man in a self-quarantine?

Instead, the man says he plans to go out with his girlfriend as normal because he “has it in writing from the state.”

But at least one local resident said he believed that he had spent time with the Japanese man who was later confirmed with the virus. The resident, John Fujiwara, 52, said the friend that he had visited with for about half an hour on Feb. 4 had the same travel itinerary as the man described by state health officials; he also lives in the same city and is also in his 60s. Mr. Fujiwara said he had not been able to reach his friend since he left Hawaii on Feb. 7.

The man seemed healthy, if a bit tired, when they had met to drink coffee, catch up and exchange chocolates as gifts, Mr. Fujiwara said. The man had spent that morning shopping in Chinatown, and had told him that he planned to attend a Japanese language event at a local grocery store immediately after their visit.

Mr. Fujiwara said that he had reached out to state health officials, and had offered to isolate himself after reading a report about the man in The Honolulu Star-Advertiser.

In an email he shared with The New York Times, a disease intervention specialist with the Hawaii Department of Health did not confirm that Mr. Fujiwara’s friend was the one who had been diagnosed, but told him that he should contact the department if he had any symptoms before Tuesday, which would be two weeks after he saw his friend — the maximum incubation period for coronavirus.

“I plan to go to dinner with my girlfriend tonight, unless things change, specifically because I have it in writing from the State of Hawaii Department of Health to continue my daily routine,” Mr. Fujiwara said.

For some unexplained reason, state health officials believe the infected Japanese patient didn’t have any “prolonged, close contact with Hawaii residents.” What we want to know: How can they be so certain of this while claiming to know so little about the man’s movements?

Janice Okubo, a spokeswoman for the Hawaii Department of Health, said that the man who was confirmed with the virus “is not believed to have had any prolonged, close contact with Hawaii residents,” but that health officials were continuing to investigate.

Dr. Sarah Park, the state epidemiologist, said the man had most likely been exposed to the virus before leaving Japan or while traveling to Hawaii. He and his wife, who was also confirmed on Saturday with the virus but did not show symptoms while in Hawaii, arrived on Maui on Jan. 28. The man was also symptom-free in Maui, but after the couple moved to Honolulu, on Oahu, on Feb. 3, he began showing signs of a cold.

Outside health experts said people who traveled with the man were most likely to have contracted the hyper-contagious virus (hardly a surprise given the situation on the ‘Diamond Princess’ and now this new cruise ship situation in Cambodia).

Aubree Gordon, an associate professor of epidemiology at the University of Michigan, said she agreed with Hawaiian health officials that people who had traveled with the man were at greatest risk, though anyone who touched surfaces shortly after he did – such as a faucet or toilet handle – could also be at risk.

I think we’re going to have a lot of cases like this popping up, where people come into a place and get diagnosed there, or leave and we find out after the fact that they’re sick,” Professor Gordon said.

So far, 16 cases of the virus have been confirmed in the US, while officials from the CDC have warned that more are expected, particularly in California and Texas where the Americans who traveled aboard the evacuation flights are being quarantined and examined.

Surprisingly, we’ve heard little about efforts to contain the virus in Hawaii. None of the airports screening Americans traveling back from infected parts of the world are in the state. It’s without a doubt a point of vulnerability given the high numbers of travelers from China and Japan who visit.

But given what we know so far, we wouldn’t be surprised to see more cases popping up in the state.

END
b)
CORONAVIRUS/  14 PASSENGERS TEST POSITIVE DURING THE FLIGHT BACK TO THE USA.
This is a nightmare. It was decided upon that anyone who tested positive for the COVID 19 would not be allowed to be on the evacuation planes sent by the USA to rescue American citizens on board the “Diamond Princess”. The nightmare started that 14 Americans on the flight back to the USA tested positive.  The Toyko Marathon has been cancelled and we await decisions on the Summer Toyko games.
(ZEROHEDGE)

14 ‘Diamond Princess’ Passengers Test Positive During Flight Back To US; Tokyo Marathon Cancelled

It’s like the ‘Alien’ franchise: The evacuation ship always carries the monster.

Unfortunately, in this instance, the monster is an invisible, inaudible yet highly infectious virus. And instead of the Nostromo, we have two chartered Boeing 747s.

According to the New York Post, 14 Americans among the more than 300 US citizen passengers being evacuated from the cruise ship ‘Diamond Princess’ after nearly two weeks of quarantine have tested positive for the virus. Officials said they didn’t learn of the positive tests until the flight was about to take off.

Ahead of the flight, the State Department said that 40 Americans who had tested positive wouldn’t be eligible for the evacuation flight, and would instead be entrusted to Japanese authorities. Of course, all of the Americans who traveled on the evacuation flights had to agree to a two week quarantine after returning to the US.

The sick individuals were reportedly “isolated” during the flight (but in a closed environment like an airplane during flight, how secure could they possibly be?).

“These individuals were moved in the most expeditious and safe manner to a specialized containment area on the evacuation aircraft to isolate them in accordance with standard protocols,” the statement said. “During the flights, these individuals will continue to be isolated from the other passengers.”

One of the evacuation flights is headed to Travis Air Force Base in California, and another for Lackland Air Force Base in Texas. At this time, it’s unclear which plane the infected are traveling on, where they are going, or where they’ll be treated.

In other news, Japanese health authorities have decided to cancel a major public sporting event despite there only being 65 confirmed cases of the virus in Japan (outside the Diamond Princess): The Tokyo Marathon, which was set to begin later this month, has been cancelled

Many international events and trade shows have been cancelled because of the outbreak, including events like the Mobile world Conference in Barcelona, an area with zero confirmed COVID-19 infections, and the Beijing Autoshow, which was cancelled Monday morning, according to Reuters.

But the Tokyo Marathon is an important attraction for Tokyo’s tourism industry. Furthermore, it doesn’t bode well for another high-profile sporting event: The 2020 Summer Olympics in Tokyo.

At this point, we suspect the biggest tail risk for global markets involving Japan would be a decision to cancel or postpone the Olympics (it’s not like they can simply pick another venue). That would ignite a wave of hysteria and uproar that even these Fed-assisted markets likely wouldn’t be able to withstand.

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c) USA RENTERS

Renting is becoming a major problem for more and more renters.  Many are spending over half of their income on housing

(Mac Slavo)

Economic Woes: 1-In-4 Renters Are Now Spending Over Half Their Income On Housing