Friday, August 22, 2014

august 22/no changes in silver inventory at SLV/No changes in gold GLD inventories/gold advances/silver falls a bit/Silver OI climbs again despite silver's fall yesterday

Gold closed down $4.90  at $1278.60 (comex to comex closing time ). Silver was down 3 cents at $19.36

In the access market tonight at 5:15 pm
gold: $1281.00
silver:  $19.44

GLD: today no change in gold inventory at the GLD (tonnage now 800.08 tonnes).

SLV : no change in silver inventory at the SLV/now 330.281 million oz


Today's big physical news:

The lowering of silver margins with its record high OI?
Ladies and Gentlemen: get ready for another attack on Monday!!

(courtesy CME)

The CME lowers margins on gold and silver- AGAIN. The new margins now give gold 25.30-1 leverage and silver 13.64-1, based on the current contract prices. Yet another bizarro deal. Why lower silver margin while it sits at RECORD high O.I? It still has paltry leverage however compared to gold or nearly any other commodity. It feels very ominous as these things virtually never work in spec longs favor. Curious timing too, coming exactly on the eve of Sep. silver op. ex. and FND.
Gold/Silver trading:

not much to talk about today, just your usual manipulation/raid.

On the paper side of things:

In the Middle east, the Israeli Prime Minister stated that Israel will try and kill Hamas leaders.

With respect to ISIS, Senator Inhofe offered some scary stuff today on iSIS 

However the big story was the Russian humanitarian convoy that entered Ukraine
illegally  (supposedly without permission from the Ukrainians) and from that point on, the farce became surreal.  We have many stories on that front today.

We have a new front of turmoil to talk about today and that is Yemen where Shiites are ready to storm the government.

Other problem areas today are in Pakistan  and in Venezuela.

We will discuss these and other stories 

So without further ado..................

Let's head immediately to see the data has in store for us today.

First:  GOFO rates/

All months moved closer to the positive needle. 
Again, they must have found some gold to lease..

 London good delivery bars are still quite scarce. 

August 22 2014

1 Month Rate:  2 Month Rate   3 Month Rate   6 month rate  1 yr rate

+.0975000%        +.1125000%         +.1300%         +.1500%    +  .215000%

August 21.2014:

1 Month Rate  2 Month Rate   3 Month Rate  6 month Rate      1 yr rate

+06400%         +.084000%         +.10400%             +.13600%       +.204000%


Let us now head over to the comex and assess trading over there today,

Here are today's comex results: 


The total gold comex open interest fell today by 1250 contracts from 366,352 down to 366,102 with gold down by $19.70 yesterday (quite understandable).The  big delivery month of August saw it's OI fall by 132 contracts down to  372 contracts. We had 268 notices filed yesterday so we gained 136 contracts or 13,600  additional oz will  stand for delivery in the August contract month. 

The next non active delivery month is September and here  we see that the open interest surprisingly rose by 526 contracts up to 1,359.    The estimated volume today was poor at 88,837 contracts. The confirmed volume yesterday was fair at 154,813.  

The total silver Comex OI shockingly rose  by 122 contracts  despite silver being down  yesterday to the tune of 9 cents. Tonight the silver OI complex rests  at 167,594 contracts. The silver contracts are in very strong hands and as I have indicated to you on countless occasions, this will continue to bring nightmares to our bankers. Also the record high OI is incompatible with reality with low silver prices.  The front August contract month saw it's OI rise from 2 contracts up to 7  for a gain of 5 contracts.  We had 1 notice filed yesterday so in essence we gained 6  contracts or 30,000 oz of additional silver ounces will  stand for delivery. The next big delivery month is September and it is this month that is causing grave concern to our bankers. Without a doubt, continual raids for the past few weeks (and even today's attempted raid),  was orchestrated due to the high OI for the upcoming September contract month.  The  OI  for September fell normally by 5,851 contracts down down to 51,327 with 6 more reading days before first day notice (Friday Aug 29.) All of those paper players rolling out of September landed in the December contract.The estimated volume today was good at 57,741.  The confirmed volume yesterday was also good at 57,873 contracts.

data for the August delivery month.

August 22.2014  

Withdrawals from Dealers Inventory in oz
Withdrawals from Customer Inventory in oz
Deposits to the Dealer Inventory in oz
46,279.894 oz (Brinks)
Deposits to the Customer Inventory, in oz
4822.500 oz (Scotia)
No of oz served (contracts) today
233  (23,300 oz)
No of oz to be served (notices)
139  (13,900 oz)
Total monthly oz gold served (contracts) so far this month
5934   (593,400 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month                       

Total accumulative withdrawal of gold from the Customer inventory this month

 747,255.1 oz

we had good activity again in the comex gold vaults.

 we had  1 dealer deposits and 0 withdrawals from the dealer

i) Into Brinks 46,179.98 oz  (this arrived from the customer account of Manfra after being adjusted for the day before)

Total dealer deposit: 46,179.98  oz

we had 0 dealer withdrawals:

We had 1 customer deposits today

i) Into Scotia:  4822.500 oz (Scotia)

total customer deposit:  4822.500 oz

we had 0 customer withdrawals:

total customer withdrawal:  nil oz

Today we have 1   adjustment

i) Out of Brinks:

100.09 oz was adjusted out of the customer and this landed into the dealer account of Brinks.

JPM  dealer inventory remains  tonight at 288,540.533  oz or 8.974 tonnes

JPM customer inventory remains  tonight at: 1,594,931.301 oz  or  49.609 tonnes

(12 months ago we had a massive amount of kilobars enter the customer at JPMorgan.  It seems that the entire inventory of kilobars is still there)

Today, 0 notices was 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 233 contracts  of which 0 notices were stopped (received) by JPMorgan dealer and 82  notices stopped by JPMorgan customer account.
The total dealer comex gold  remains  tonight  at  1,158,657.167 oz or 36.03 tonnes of gold . The total of all comex gold (dealer and customer) rests at 9,857,842.909 oz or 306.62 tonnes.  

Tonight, we have dealer gold inventory for our  3 major bullion banks (Scotia, HSBC and JPMorgan) with its gold inventory  resting  tonight  at only 23.435 tonnes.

i) Scotia:  303,394.969 oz or 9.69 tonnes
ii) HSBC: 153,391.097 oz or  4.771 tonnes
iii) JPMorgan: 288,540.533 oz or 8.974 tonnes

total: 23.435 tonnes

Brinks dealer account which did have  the lions share of the dealer gold saw its inventory level lower  tonight  to 336,942.199 oz or 10.480 tonnes.  Several months ago they had over 13 tonnes of gold at its registered or dealer account.

Today we  had 233 notices served upon our longs for 23,300  oz of gold.  In order to calculate what will be  standing for delivery in August, I take the number of contracts served so far  this month at 5934 x 100 oz  = 593,400 oz, to which I add the  the open interest for the August contract month (372) - the number of notices served today (233) x 100 oz

Thus:  August  standings:

5934 notices served already x 100 oz  =  593,400 oz  +  372  (OI for August) - 268 (number of notices served today) x 100 oz per contract  =   607,300 oz or 18.889 tonnes of gold.

we gained an additional 13,600  oz of gold that will  stand for the August contract month and this is an excellent delivery month for gold.

In Summary:

i) the total dealer inventory of gold settles tonight  at a  level of 36.03 tonnes.

i)  a) JPMorgan's customer inventory rests tonight at 1,594,931.301 oz(49.609  tonnes)

ii  b)  JPMorgan's dealer account rests tonight at  288,540.533 oz (8.974 tonnes)

iii) the 3 major bullion banks have collectively only 23.435 tonnes of gold left in their dealer account.(JPMorgan, HSBC,Scotia)


now let us head over and see what is new with silver:


August 22/2014:   

  August silver:  August contract month

Withdrawals from Dealers Inventorynil
Withdrawals from Customer Inventory 1,899,945.200  oz (Brinks,Scotia )  
Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory 785,557.62 oz (CNT,Scotia)
No of oz served (contracts)6 contracts  (30,000 oz)
No of oz to be served (notices)1 (5,000 oz )
Total monthly oz silver served (contracts)313 contracts  (1,565,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month566,345.0 oz
Total accumulative withdrawal  of silver from the Customer inventory this month5,670,079.5 oz

Today, we  had good activity  inside the silver vaults 
 we had 0 dealer deposits and 0  dealer withdrawals.

total dealer withdrawals:  nil oz

we had no dealer deposits:

Total dealer deposits: nil

We had 2 customer deposits:

i) Into Brinks:  1,850,104.800 oz
ii) Into Scotia: 49,840.40 oz

Total customer deposit: 1,899,945.200 oz

We had 2 customer withdrawals:

i) Out of CNT:  124,071.45 oz
ii) Out of Scotia:  661,486.17 oz
Total customer withdrawals  785,551.62 oz

we had 1  adjustments:

i) Out of CNT:  24,372.200 oz was adjusted out of the customer account and this landed into the dealer account at CNT

Registered (dealer) silver   : 59.989 million oz  
total of all silver:                 178.193 million oz

The CME reported that we had  6 notices filed for 30,000 oz today. To calculate what will stand for this  active delivery month of August , I take the number of contracts served  for the entire  month at 313  x 5,000 oz per contract  or 1,565,000 ounces  to which I add the OI for August (7) - 6  (the number of notices served today x 5,000 oz  =   1,570,000 oz of silver

Thus  standings for silver:  313 notices x 5,000 oz per notice or  1,565,000 oz + (7- 6)x 5000 oz =   1,570,000  oz of silver standing right now for the August silver contract month. We  gained 6 contracts or an additional 30,000 oz of silver will stand for the August contract month.


The two ETF's that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.
There is now evidence that the GLD and SLV are paper settling on the comex.

***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold.  I can visualize demand coming to the buyers side:

i) demand from paper gold shareholders
ii) demand from the bankers who then redeem for gold to send this gold onto China

vs no sellers of GLD paper.

And now the Gold inventory at the GLD:

August 22.2014: no change in gold inventory/800.08 tonnes
August 21.2014: no gain in inventory/still 800.08 tonnes

August 20.2014: another gain of .89 tonnes/tonnage back to 800.08 

August 19.2014: another gain of 1.5 tonnes/tonnage 799.19 tonnes

August 18.2014: we had a gain of  2.09 tonnes of gold.  Tonnage 797.69
Great news!!

August 15.2014/no change in gold inventory at the GLD/795.60 tonnes

August 14.2014; no change in gold inventory at the GLD/795.60 tonnes
August 13.2014: a slight reduction to pay for fees/795.60 tonnes

august 12.2014: no change in gold inventory/795.86 tonnes

August 11.2014; no change in gold inventory/795.86 tonnes

August 8.2014: another 1.79 tonnes of gold leaves the shores of London heading straight to Shanghai./795.86

August 7.2014: no change in inventory at the GLD/tonnage 797.65 tonnes

August 6.2014: we lost  2.4 tonnes of gold today at the GLF/tonnage 797.65 tonnes.  This gold no doubt left the shores of England to eventually land into Shanghai.  China's appetite for gold is voracious!

 Today, August 22.2014:

 Today no change in tonnage of  gold inventory  800.08 tonnes.  


The registered  vaults at the GLD will eventually become a crime scene as real physical gold  departs for eastern shores leaving behind paper obligations to the remaining shareholders.   There is no doubt in my mind that GLD has nowhere near the gold that say they have and this will eventually lead to the default at the LBMA and then onto the comex in a heartbeat  (same banks). 

As a reminder the total comex gold had inventories of around 11 million oz in 2011. Today the total comex gold remains at   9.857 million oz  (306.62 tonnes).

The total dealer comex gold remains at : 1,158,657. oz or 36.03 tonnes.

GLD gold:  800.08 tonnes.


And now for silver:

August 22.2014: no change in silver inventory/330.281 millionoz

August 21/2014: another huge gain in silver at the SLV: a rise of 1.44 million oz


Net Assets
as of 21-Aug-2014
Ounces in Trust
as of 20-Aug-2014
Tonnes in Trust  
as of 20-Aug-2014

August 20.2014:  no change in silver inventory at the SLV (328.841 million oz)


Net Assets
as of 20-Aug-2014
Ounces in Trust
as of 19-Aug-2014

August 19.2014: a monstrous gain of 3.07 million oz in one day: now 328.841 million oz of inventory


Net Assets
as of 18-Aug-2014
Ounces in Trust
as of 18-Aug-2014
Tonnes in Trust  
as of 18-Aug-2014

August 18.2014:  no change in silver inventory


Net Assets
as of 15-Aug-2014
Ounces in Trust
as of 15-Aug-2014
Tonnes in Trust  
as of 15-Aug-2014

August 15.2014:   we gained 1.008 million oz of silver into the vaults at the SLV in London. 


Net Assets
as of 14-Aug-2014
Ounces in Trust
as of 14-Aug-2014
Tonnes in Trust  
as of 14-Aug-2014

August 14.2014: no change in silver inventory at the SLV


Net Assets
as of 14-Aug-2014
Ounces in Trust
as of 13-Aug-2014
Tonnes in Trust  
as of 13-Aug-2014

Today, August 22.2014/ no change in silver inventory.

And now for our premiums to NAV for the funds I follow:

Note:  Sprott silver fund now deeply into the positive to NAV

Sprott and Central Fund of Canada. 

(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)

1. Central Fund of Canada: traded  at Negative 5.5% percent to NAV in usa funds and Negative 5.4%  to NAV for Cdn funds. August 22/2014)   

2. Sprott silver fund (PSLV): Premium to NAV rose to positive 4.24% NAV (Aug 22/2014)   (has been rising lately)
3. Sprott gold fund (PHYS): premium to NAV falls to negative -0.25% to NAV (Aug 22. /2014) 
Note: Sprott silver trust back hugely into positive territory at 4.24%. 
Sprott physical gold trust is back in negative territory at  -025%.

Central fund of Canada's is still in jail.


At 3:30 pm today we received the COT report which gives position levels of our major players.

First the Gold COT:

Gold COT Report - Futures
Large Speculators
Change from Prior Reporting Period

Small Speculators

Open Interest



non reportable positions
Change from the previous reporting period

COT Gold Report - Positions as of
Tuesday, August 19, 2014

Our large specs:

Those large specs that have been long in gold pitched (???) a huge 7479 contracts from their long side
Those large specs that have been short in gold added 2226 contracts to their short side

Our commercials;

Those commercials who are long in gold added a rather large 8515 contracts to their long side
Those commercials who are short in gold covered a rather large 4510 contracts from their short side

Our small specs:

Those small specs that have been long in gold pitched 1431 contracts to their long side
Those small specs that have been short in gold added 1889 contracts to their short side


commercials go net long and should be bullish and yet they whacked gold.


and now for Silver:

Silver COT Report: Futures
Large Speculators
Small Speculators
Open Interest
non reportable positions
Positions as of:

Tuesday, August 19, 2014
  © SilverSe

Our large specs;

Those large specs that have been long in silver pitched a tiny 265 contracts from their long side
Those large specs that have been short in silver added a huge 5281 contracts to their short side

(and they got it right)


Those commercials that have been long in silver added 3503 contracts to their long side
Those commercials that have been short in silver covered 2840 contracts from their short side

Small specs;

Those small specs that have been long in silver added 830 contracts to their long side
Those small specs that have been short in silver added 1627 contracts to their short side


commercials go net long by quite a bit and yet silver falls.
Do not put much faith in the data.


And now your overnight gold and silver trading (from Asia /Europe this morning) and physical commentaries:

(courtesy Mark O’Byrne)


U.S. Mint platinum coins bypassed in rush for gold

By Debarati Roy
Bloomberg News
Thursday, August 21, 2014
Five months after the U.S. Mint began producing coins made with platinum, sales have all but collapsed as investors continue to favor gold and silver.
"It's not considered a currency," said Jason Carstensen, a medical-sales representative in Ventura, California, who spends about $2,000 a month on coins. Gold and silver have value as hedges against a devaluation of the dollar, while platinum is viewed as an industrial commodity, he said.
The Mint, which resumed production of platinum coins in March after a six-year halt, has sold 13,600 ounces this year, including zero in July. By comparison, the Mint sold 313,500 ounces of gold coins and 27.71 million ounces of silver, fueled by concern that the Federal Reserve is inflating the economy with paper money to stimulate growth.
Gold and silver have been treasured by kings and merchants for millennia, and the metals are still popular today among retail investors who hold precious metals as a store of value. Platinum is even rarer and wasn't widely known until the 18th century, according to Johnson Matthey Plc, the biggest buyer. Now, it's used mostly in catalytic converters to reduce auto emissions.
"Platinum has been around for some time, but I would think of it more as an industrial metal," said Timothy Green, 78, an industry historian and consultant whose first book, "The World of Gold," was published in 1968. "Gold, on the other hand, has been associated with every old civilization. It is in a class of its own."
Reintroduced Coin
The U.S. Mint figured the tide had turned back in favor of the metal when it reintroduced the coins in March, after halting production in 2008 as demand slumped. In that first month, it sold 10,000 ounces. Since then, demand has all but disappeared.
"It has been a flop," said Michael Kramer, who has been selling coins for 37 years and is the president of New York-based MTB Inc., a dealer authorized to purchase directly from the Mint.
A one-ounce American Eagle gold coin fetched $1,332.25 as of Aug. 19, up 7 percent this year, while platinum coins sold for $1,443.14, up 0.3 percent, Mint data show. Silver American Eagle coins were at $21.44, down 4.2 percent. Over the same period, the Bloomberg Commodity Index of 22 raw materials fell 0.4 percent, while the MSCI All-Country World Index of equities rose 4.9 percent and the Bloomberg's Treasury Bond Index gained 4.1 percent.
Gold for December delivery was at $1,276.80 an ounce on the Comex in New York today. Silver for December delivery was at $19.415 an ounce, while platinum for October delivery was at $1,419.40 an ounce.
The Mint has no plans to discontinue the sale of platinum coins, "though we did not expect the response to be so weak," said Tom Jurkowsky, a spokesman for the Mint in Washington. "We will take a wait-and-watch attitude."
Edmund C. Moy, the director of the mint in 2008, said he canceled the platinum coins that year because declining sales made production financially unfeasible. "The law states that the Mint cannot lose money on its bullion products, yet sales barely made break even," he said in an interview Aug. 11.
While demand for platinum coins has been muted, investors aren't completely shunning the metal.
Holdings in the exchange traded funds backed by platinum are up 13 percent this year, after five straight monthly gains and touching an all-time high of 88.86 metric tons on July 23, data compiled by Bloomberg show. Money managers have more than doubled their bets on a price gain this year to 39,080 U.S. futures and options contracts, Commodity Futures Trading Commission data show.
Global output of the metal will trail demand this year by the most ever, Johnson Matthey estimates, after a disruption in supply during a five-month strike at mines in South Africa, the biggest producer.
Almost 38 percent of total platinum demanded will be used in pollution-control devices in cars and trucks this year, followed by demand for the jewelry industry, which will grow more than 5 percent this year, according to London-based Johnson Matthey, which makes a third of the world's catalytic converters. Almost a fifth of the metal is used by the chemical, petroleum, electrical and the medical industries.
"The fundamentals for platinum are very strong," Paul Christopher, the chief international strategist at Wells Fargo Advisors LLC, which manages $1.3 trillion, said by telephone from St. Louis on Aug. 15. "Investors are buying the metal as they expect prices to rise higher."
That appeal hasn't extended to buyers of coins, who tend to be smaller investors than the hedge funds or money managers who buy bullion or are the biggest holders of ETPs.
"The platinum coins are gorgeous," said Kevin Lipton, who has been selling coins for four decades and owns Kevin Lipton Rare Coin Inc. in Beverley Hills, California. "While I do sell a few coins, it's not really that much in demand. We live in a society that covets gold and silver."
The U.S. Mint last year sold a record 42.7 million ounces of silver coins and 856,500 ounces of gold coins, the most since 2011. Demand has slowed, with gold sales in the first seven months of this year down 56 percent from the same period in 2013, and silver slipped 11 percent.
"Long-term, coin buyers are more keen on buying gold and silver rather than platinum, and that's how it has been always," said Michael Haynes, 64, the chief executive officer of American Precious Metals Exchange, an online bullion dealer from Oklahoma City. "Even though it is precious, it's more an industrial metal in people's minds."


I hope nobody is stupid enough to invest in the latest South African junk;

(courtesy zero hedge)

As South Africa Reels From Unexpected Bailout, One Bank Has A Modest Proposal: Give Us Your Gold

Tyler Durden's picture

In a historic first, three days ago, South Africa's Rand Merchant Bank, a division of FirstRand Bank Limited, announced it would issue the FirstRand Gold Bond, or a bond denominated in South African Krugerrand gold coins. In other words, for the first time "holding" gold will pay a dividend (or in this case, interest). Sound odd? Maybe because it is.
Here is the statement from the Johannesburg Stock Exchange:
The Gold Bond has a term of five years and the first issue amounts to R2 billion. It requires investors to buy Krugerrands, which they then lend to FirstRand when purchasing the bond. At its expiry the value of the bond is determined by the current gold price, the Dollar/Rand exchange rate and the interest earned. This interest is calculated in terms of ounces of gold as represented by Krugerrands. Investors may take physical delivery of the Krugerrands on maturity or opt to get settled in cash.
Or they may end up with nothing if the bank is "suddenly" found to be insolvent. The marketing pitch is clear: have your gold and collect interest on it:
"The notes provide direct exposure to the rand gold price and a positive yield in the form of interest ounces payable on maturity. It offers both inflation and rand/dollar exchange rate protection while avoiding the significant storage and administration costs associated with other direct gold investment options available. Current market conditions are particularly attractive for gold investment because of rand/dollar weakness and expectations of higher inflation," says RMB Debt Capital Markets co-head Dale Wood.

Investors may not hold gold in unwrought form according to South African law; however they still need to pay for the administrative costs associated with holding and storing gold when they invest in products which track the price of gold. These costs are eliminated by the Gold Bond because investors earn a yield on the bond instead of paying fees. Investors can also opt to take physical delivery of the underlying gold because it is in the form of Krugerrands which are legal tender in South Africa. "Investors also benefit as they are able to buy and sell the Gold Bonds on the JSE, with RMB acting as a market facilitator to ensure liquidity and price transparency of the notes," says Wood.
In an attempt to get as many possible investors, the issuer has made the smallest bond denomination anyone can participate in this once in a lifetime opportunity to collect 0.5% per year for their gold: "Investors can also get a Gold Bond note with a single Kruger rand, which means that retail investors can use it to gain exposure to the gold price. Investors who already own Krugerrands can use the Gold Bond to achieve the same exposure to the gold price they would have enjoyed when physically holding Krugerrand coins, while also earning interest on the bond."
So is this truly a can't miss opportunity for institutions and, better yet, retail investors?
It all depends on one's quantification of counterparty risk: if the owner of gold believes that it makes sense to have someone else hold the gold in exchange for a meager sliver of interest, then by all means yes. The problem is that increasingly gold owners realize that possession is critical when it comes to the shiny metal in a world in which paper claims on gold are rehypothecated countless times. Which is surely the main attraction of the physical metal for all those who increasingly believe that the financial system is the precipice of completely collapse. Perhaps FirstRand Bank underestimated this part of the sales pitch.
However, one entity for which the deal makes perfect sense is none other than FirstRand Bank, because all the bank is doing is paying someone a nominal fee in order to be a gold holder. What it does with that gold subsequently is anyone's guess, and good luck trying to demand receipt of physical if something should happen to the bank.
But perhaps the biggest question is why now? This BBC report from two days ago should answer the question:
Shares in South Africa's largest banks fell on Wednesday, following downgrades from the ratings agency Moody's.
Standard Bank, FNB, Nedbank and ABSA, which is owned by Barclays, were all downgraded on Tuesday and Moody's warned of more possible ratings cuts.

The move comes a week after South Africa's central bank bailed out the smaller lender African Bank. Last week the South African Reserve Bank (SARB) announced a rescue plan for African Bank, a smaller lender that specialised in unsecured loans. The SARB bought up around $700m of bad loans from African Bank, but some investors still lost out.

On Monday, another lender, Capitec, saw its shares plunge after seeing its rating downgraded.
And some more from BusinessReport:
South Africa's decision to rescue a small lender seen as neither “too big” nor “too interconnected” to fail shows that taxpayers worldwide may have to accept that bank bailouts are here to stay.

When South Africa's central bank recently announced a $700 million (520 million euro) rescue of faltering African Bank Investments Limited, it scarcely made a splash outside the country. The bottom line, at least for the rest of the world, was that African Bank is not very big and not very important.

The bank's managers made far too many bad loans to too many South Africans who could not afford to pay them back.
Because it had not asked borrowers to put up their car or any other asset as collateral, it was left with a massive hole in its balance sheet when they failed to pay.

African Bank is not one of South Africa's “big-four” - Standard Bank, FNB, Nedbank or ABSA (Barclays Africa) - which are deeply enmeshed in the global financial system.
In other words, South Africa is just the latest country to undergo a banking sector crisis. But don't worry: "The South African Reserve Bank insisted the country's banking sector remained "healthy and robust."
So what does one of these "healhty and robust", but not systematic, banks do? It has a modest proposal: please give us your gold, for which generous offer we will pay you a whopping 0.5% per year.
Good luck.
P.S. why not just borrow the gold from the BIS, or are they also out?


Former PPT team member Philippa Malmgren tells Kingworld news that governments have an interest in suppressing the price of gold and silver;

(courtesy Philippa Malmgren/Kingworldnews/GATA)

Former presidential aide Malmgren says government has interest in suppressing gold

2:35p ET Friday, August 22, 2014
Dear Friend of GATA and Gold:
Former presidential adviser and Plunge Protection Team member Philippa Malmgren today tells King World News that governments have an interest in suppressing the price of gold and silver and in otherwise blocking the exits from currency devaluation as official inflation figures begin to be exposed as lies. An excerpt from her interview is posted at the KWN blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


The following is important as China will overtake the comex as the Chinese gold exchanges come into being.  The SGE targeted 30 foreign companies to partake in this venture.  So far 40 firms have joined.

(courtesy Reuters/GATA)

China gold exchange gains traction as yuan reforms stir interest

By A Ananthalakshmi
Friday, August 22, 2014
China's planned global gold exchange has signed up more members than targeted, as foreign banks and trading houses seek direct access to the world's top physical gold consumer and to test out reforms allowing them to trade commodities in the yuan currency.
The strong response from foreign players will boost efforts by China -- also the world's biggest producer of gold -- to gain pricing power over the metal and to challenge the dominance of London and New York in trading. ...
... For the remainder of the report:


And now important paper stories which will influence the price of gold and silver. 

Early morning trading from Europe/Asia

1. Stocks mixed  Asian bourses with the  higher yen values   to 103.68.

Nikkei down 47 points or .30%

3. Europe stocks mostly in the  red /Euro down/USA dollar index up  again at 82.20.  Chinese bourse Shanghai up as  the yen strengthens  in value  to 6.15317 per usa dollar/yuan.(default looming on many bonds) 

3b Japan 10 year yield at .52%/Japanese yen vs usa cross now at 103.68/
3c  Nikkei still above 14,000

3d  Russian aid convoy allegedly enters Ukraine illegally/then changes verbiage that it allowed convoy to avoid provocations/more UKraine disinformation
3f.Oil:  WTI  93.67 and Brent: 102.53 
3g Jackson Hole/the main event for toay. 

3h Gold at $1280.50 dollars/ Silver: $19.53

4.  USA 10 yr treasury bond at 2.38% early this morning.

5. Details Ransquawk/Bloomberg/Deutche bank/Jim Reid

(courtesy zero hedge/Bloomberg/Deutsche bank/Jim Reid)

Futures Tread Water As Ukraine Tries To Steal The Jackson Hole Scene

Tyler Durden's picture

While today's key events were supposed to be the Jackson speeches first by Janet Yellen at 10:00am Eastern and then by Mario Draghi at 2:30 pm, Ukraine quickly managed to steal the spotlight yet again when moments after the first Russian humanitarian aid convoys entered Ukraine allegedly without permission, Kiev first accused Russia of staging a direct invasion, even if moments later it changed its tune and said it had allowed the convoy in to "avoid provocations." In other words, your daily dose of Ukraine disinformation, which initially managed to push futures down some 0.3% before futs regained virtually all losses on the subsequent clarifications. Expect much more conflicting, confusing and very provocative headlines out of Kiev as the local government and the CIA try to get their story straight.
In terms of overnight markets, Asian equities and credits are mostly firmer ahead of Jackson Hole. The Shanghai Composite ad HSCEI indices are both around 0.2% as they recover somewhat from yesterday’s disappointing flash manufacturing PMI. Chinese stocks are poised to close higher for the 6th consecutive week in what would be its longest streak since March 2012. Elsewhere in Asia the Nikkei is flat on the day while the Hang Seng and the KOSPI are +0.4% and +0.5%, respectively. Turning to credit, Asian IG cash continues to grind tighter amid very light supply. Key benchmarks are about 1bps tighter as we type. The UST 10-year yields are a touch firmer at 2.40% while the Dollar index is unchanged.
After initially opening flat, European equities drifted slightly lower ahead of the US crossover on position squaring ahead of Fed Chair Yellen’s appearance at Jackson Hole. The financials sector is slightly supporting the indices as European bank stocks look forward to ECB’s Draghi speech in Wyoming, expected to stress the broad divergence in monetary policy between the US and the Eurozone. Vodafone (+1.1%) shares traded in minor positive territory this morning after AT&T bid chatter was recycled in UK press. US stock futures trade relatively flat ahead of the open, with record highs still well within reach. In pre-market news, Apple (AAPL) are reportedly suffering from supply chain issues, with the drive for a thinner iPhone model is causing backlight issues, with the supply chain source remaining unsure on whether this could delay release.
There is nothing of note on today's US econ release docket: it will be a very quiet day for data which sets up the spotlight nicely for Yellen and friends at Jackson Hole.
Bulletin headline summary from RanSquawk and Bloomberg:
  • After a flat open, Bund futures broke above yesterday’s highs of 150.40 as markets remain wary over Russia’s aid convoy making its way to Luhansk – reportedly escorted by a small group of pro-Russian rebels without Kiev’s approval
  • European equity markets trade slightly lower on position squaring ahead of various central bank speeches in Jackson Hole, Wyoming later today
  • Speeches from Fed Chair Yellen (1500BST/0900CDT) and ECB Governor Draghi (1930BST/1330CDT) are expected to stress the policy divergence between the Federal Reserve and the ECB
European fixed income futures opened flat amid particularly light newsflow and thin volumes. Nonetheless, Bund futures broke above yesterday’s highs as Russia warned that any disruption to the aid convoy heading toward Luhansk, eastern Ukraine would not be tolerated. Still, volumes below 100k in Sep-14 Bund futures kept price action relatively erratic. Despite this, witness reports suggest the aid convoy is being escorted by a small number of pro-Russian rebels, without Ukraine’s consent is keeping markets wary of the developments. Core fixed income markets remain somewhat supported by the particularly chunky month-end extensions, particularly in the US:
Prelim Barclays month end extension for Pan-Euro Agg at +0.03y (Prev. 0.12yrs, 12m average +0.03yrs)
Prelim Barclays month end extension for Sterling Agg Tsy at +0.08y
Prelim Barclays month end extension for US Treasuries +0.12yrs (Prev. 0.08yrs, 12m average +0.09yrs)
After initially opening flat, European equities drifted slightly lower ahead of the US crossover on position squaring ahead of Fed Chair Yellen’s appearance at Jackson Hole. The financials sector is slightly supporting the indices as European bank stocks look forward to ECB’s Draghi speech in Wyoming, expected to stress the broad divergence in monetary policy between the US and the Eurozone. Vodafone (+1.1%) shares traded in minor positive territory this morning after AT&T bid chatter was recycled in UK press. US stock futures trade relatively flat ahead of the open, with record highs still well within reach. In pre-market news, Apple (AAPL) are reportedly suffering from supply chain issues, with the drive for a thinner iPhone model is causing backlight issues, with the supply chain source remaining unsure on whether this could delay release.
The USD continued to retreat from 11-month highs this morning, allowing EUR/USD and GBP/USD to pull back toward 1.3300 and 1.6600 respectively. Elsewhere, USD/JPY trades slightly lower as the pair continues to retreat way from 104.00 after a failure to break that level yesterday. Looking ahead, Canadian CPI will likely dictate the USD/CAD range, with a slew of option expiries at 1.0920-25 (280mln) and 1.1000 (1.23bln) at the 10am (1500BST) NY cut particularly close to market.
WTI and Brent crude futures fell ahead of the NYMEX open, with WTI futures prices retreating to the mid-point of yesterday’s range, on track to mark a sharp weekly loss of over USD 1.50/bbl. Spot gold still sits below the 200DMA at USD 1,284.49, however has benefited this morning from renewed risk surrounding eastern Ukraine and a moderately softer USD.
* * *
DB's Jim Reid, or rather his team while he is on vacation, concludes the rest of the overnight events
The Jackson Hole symposium is the main event for today. If that wasn’t enough we also have an all star line up of central bank governors this year. All eyes will clearly be on the Yellen’s key note address but this time round we’ll also hear from Draghi at lunchtime, Kuroda from the Bank of Japan, and Broadbent from the Bank of England. It was 2011 when we last had both the Fed Chair and ECB President at Jackson Lake Lodge so today’s line up is certainly eye-catching especially given the policy divergence amongst the themselves. The theme of this year's symposium is "Re-Evaluating Labour Market Dynamics". Yellen will kick things off with her opening remarks at 8.30am local time (3pm UKT) followed by a luncheon address from Draghi at 12.30pm (7.30pm UKT). Broadbent, Kuroda and Tombini are panellists at a panel discussion titled ‚Labour Markets and Monetary Policy? the next day which could be an interesting one given Carney’s recent comments on wages.
So what can we expect from Yellen? Our US economists expect the Fed Chair to provide us with an updated assessment on the infamous ‘Yellen dashboard’ in evaluating the ongoing labour market slack and how they have yet to normalise relative to 2002-2007 levels. Some of these alternative measures she monitors include duration of unemployment, quit rate in JOLTS data, labour force participation etc. Any sound bite that touches on the debate of cyclical versus structural drivers of labour force participation will also be closely followed. Unlike some of the previous Jackson Hole symposiums, this is likely not one that will serve as a precursor of any monetary policy changes but the tone of Yellen's speech may still have a market impact and set the mood for busier times ahead in September. Given markets are seemingly expecting nothing but another dovish display from Yellen the risk is perhaps skewed to the other side.
In terms of overnight markets, Asian equities and credits are mostly firmer ahead of Jackson Hole. The Shanghai Composite ad HSCEI indices are both around 0.2% as they recover somewhat from yesterday’s disappointing flash manufacturing PMI. Chinese stocks are poised to close higher for the 6th consecutive week in what would be its longest streak since March 2012. Elsewhere in Asia the Nikkei is flat on the day while the Hang Seng and the KOSPI are +0.4% and +0.5%, respectively. Turning to credit, Asian IG cash continues to grind tighter amid very light supply. Key benchmarks are about 1bps tighter as we type. The UST 10-year yields are a touch firmer at 2.40% while the Dollar index is unchanged.
Staying on macro matters we thought global supply chain manager Li & Fung’s latest results yesterday offered some interesting anecdotes. The company’s performance for the first 6 months was hampered by ongoing macroeconomic weakness, geopolitical and weather events in its key destination markets (US and Europe). Price discounting remains a theme in US retail even beyond the end of June. The company also noted a reduction of foreign tourist flow by Russian tourists into Europe which is affecting retail markets there. This fits consistently well with some of the ECB’s geopolitical concerns outlined at its previous policy meeting.
Back to yesterday markets had a positive day as strong US data outweighed the mixed European PMI reads. The Eurozone Composite PMI disappointed, falling to 52.8 vs expectation of 53.4. As our European economists noted yesterday, the disappointment was driven by the periphery as the combined Italian, Spanish and Irish index fell by 1.8 points compared to a fall on the combined German-French composite PMI index of 0.1 points (implied consensus -0.4). Other then this regional divergence, there was a continued divergence between the Eurozone services and manufacturing read as the former came in just below expectation (53.5 vs 53.7) whilst the latter came in at 50.8 vs expectation of 51.3. In terms of what these reads mean for Europe, according to our economists these reads are still consistent with between +0.3% and +0.4% qoq GDP growth in Q3 GDP.
Across the Atlantic, it was a strong day for US data with every data point of note beating expectation. The initial jobless claims came in lower than expected at 298k (vs 303k consensus). On the activity side the Markit manufacturing PMI came in at an impressive 58 (vs 55.8 consensus), the highest read in the indexes 3 year history, the Philly Fed reached its highest level in over 3 and a half years at 28, and finally the string of good US housing data continued with July existing home sales coming in at +2.4% MoM against expectations that it would slip -0.5%.
Despite the mixed European PMI data stocks in Europe were up with the Stoxx 600 up +0.66% led by strong gains on the FTSE MIB (+2.06%), IBEX 35 (+1.30%) and CAC (+1.23%). Credit also performed yesterday with iBoxx Main and Xover -1bp and -3bps tighter. Yesterday’s peripheral outperformance even given the PMI’s suggests the moves were largely driven by rising expectations for European QE activism which probably adds more importance (if any were needed) to Draghi’s luncheon speech later today. Over in the US, the stronger data were clearly helpful which saw the S&P 500 (+0.29%) close at a new all time high of 1992. In US credit, the CDX IG and HY moved -2bp and -6bps tighter, respectively.
Whilst on Credit it’s worth noting that weekly US HY fund flows turned positive for the first time in 7 weeks. According to EPFR data the asset class received inflows of US$2.7bn during the week that ended 20 August vs an outflow of US$781m in the previous week and US$8.2bn the week before that. European HY outflows have also slowed down with the latest weekly outflows coming in at US$193m versus US$654m in the previous week and US$934m the week prior to that.
Moving on to geopolitical updates, US strikes have continued in Iraq in support of Kurdish and Iraqi forces fighting IS near the city of Mosul (BBC). In Ukraine, guards at the country’s border have begun to inspect the Russian aid convoy’s trucks. Ukrainian President yesterday also announced that he may dissolve parliament as early as Sunday to set up parliamentary elections in late October (Reuters). Focus this weekend will be his meeting with Merkel at home followed by the Russia-Ukraine summit in Minsk next Tuesday in an effort to de-escalate the conflict.
Looking ahead to today it will be a very quiet day for data which sets up the spotlight nicely for Yellen and friends at Jackson Hole.


The farce continues with the Russian humanitarian convoy as the Ukraine first announces that the trucks enters the country without permission and thus the convoy invaded the country. They then changed their verbiage to say that they "allowed" them in to avoid provocations.

(courtesy zero hedge)

Russian Humanitarian Convoy Enters Ukraine Without Authorization; Ukraine Considers Move "Direct Invasion"

Tyler Durden's picture

Update: the farce is complete, although at least this time it didn't take Ukraine several hours to fabricate then unfabricate its plot line, because literally minutes after it accused Russia of invading, Ukraine's foreign minister said the convoy was "allowed" to avoid provocations. He added that the rebel militants are using mortars on the convoy route and that it had taken all necessary steps to ensure cargo safety but that Russia wouldn't discuss security for the convoy.  Nonetheless it still accused Russia's convoy of breaking international law and said that convoy would go to separatists, not civilians, and called on its "international partners" (we suppose it means the CIA here, which apparently is feeding it this ridiculous script) to condemn the Russian convoy.
From Bloomberg:
Translation: it will accuse "rebels" of a direct attack on the Russian convoy when it happens, blaming Russia for trying to stage an attack so Russia has a provocation pretext to really invade, as opposed to the fake "invasion" Ukraine accused Russia of just moments ago.
In other words, the "MH17 scenario" is now in play, with the question not so much if and who "provokes" the Russian convoy in the coming days, but how Russia will react to it. It appears that contrary to expectations, today will be another trading session in which the main catalyst will be not Jackson Hole but Ukraine once again, as algos react, in an already illiquid market, with extended momentum to each and every contradictory headline.
Finally, with a scenario evolving in such a farcical and chaotic fashion, one wonders if John Kerry somehow managed to sail his sailboat into Kiev and is currently giving the Ukraine government the play by play.

Here we go again. Precisely a week after the fabricated headlines last Friday that Ukraine had blown up Russian military vehicles in Ukraine territory, "news" which promptly was forgotten when Russia denied and Ukraine couldn't produce any proof of said attack, now it is time for the real "humanitarian" convoy to become the topic du jour, and so it did a few hours ago when some 90 trucks from the convoy were said to have entered Ukraine territory, a move which Ukraine promptly denounced as a direct invasion.
The reason for the convoy movement came overnightwhen the Russian Foreign Ministry said Ukraine seems to be seeking military victory by country’s independence day, "deliberately" delaying delivery of humanitarian aid.  Russia added that is sees no reason to delay further, and the aid convoy starts moving toward Luhansk.  "We warn against any attempts to halt solely humanitarian mission" that was prepared transparently with cooperation from Ukraine, Red Cross, ministry says.
RT adds that Russia said it had met all imaginable and unimaginable demands, including handing exhaustive lists of cargo details to the Red Cross, and that Kiev was inventing new pretexts each day for delaying humanitarian convoy, while the Red Cross reportedly said it was frustrated with Kiev in letting the convoy into Ukraine. That said, because it could not obtain security assurances, the Red Cross would not accompany the Russian convoy.
It is this perhaps why moments ago, Interfax (the Ukraine version that is) blasted the following headline via Bloomberg:
With the head of security council Nalyvaychenko cited as the source. Additionally Ukraine speaker Lysenko added that Russia aid convoy ignored agreement on cargo processing.
This promptly resulted in a drop in S&P 500 futures fall 0.3% to 1983.40, Stoxx Europe 600 falls 0.6% to session low after the Interfax report that Ukraine sees Russian aid convoy as invasion.
Expect much more disinformation out of Ukraine over the next few. hours as last Friday plays out once again.


The farce continues on as the Pentagon demands that Russia removes its convoy immediately.
The New York times reports artillery firing:

(courtesy zero hedge)

Pentagon Demands Russia Remove Convoy "Immediately" As NYT Reports Russians Firing Artillery In Ukraine

Tyler Durden's picture

The Russian military has moved artillery units manned by Russian personnel inside Ukrainian territory in recent days and is using them to fire at Ukrainian forces, New York Times reported, citing NATO officials. The Russian move, NYTimes reports, represents a significant escalation of the Kremlin’s involvement in the fighting there and comes as a convoy of Russian trucks with humanitarian provisions has crossed into Ukrainian territory without Kiev’s permission. The US is now getting involved, as WSJ reports,
  • Pentagon calls on Russia to 'Remove Vehicles Immediately' From Ukraine
  • Kirby says "very concerned" by Russian convoy in Ukraine.
Ukrainian Security Service chief Valentyn Nalyvaichenko said the move amounted to a "direct invasion," and The Pentagon has warned "failure to [remove its vehicles] will result in further costs and isolation."
Time for some YouTube clips?
*  *  *
The Russian military has moved artillery units manned by Russian personnel inside Ukrainian territory in recent days and is using them to fire at Ukrainian forces, NATO officials said on Friday.


Since mid-August NATO has received multiple reports of the direct involvement of Russian forces, “including Russian airborne, air defense and special operations forces in Eastern Ukraine,” said Oana Lungescu, a spokeswoman for NATO.

“Russian artillery support — both cross-border and from within Ukraine — is being employed against the Ukrainian armed forces,” she added.

The United States is very concerned about the movement of a Russian convoy into Ukraine in violation of its territorial integrity and is calling on Moscow to withdraw its equipment and personnel immediately, the Pentagon said on Friday.

"This is a violation of Ukraine's sovereignty and territorial integrity by Russia," Rear Admiral John Kirby, the Pentagon press secretary, told a briefing. "Russia must remove its vehicles and its personnel from the territory of Ukraine immediately. Failure to do so will result in additional costs and isolation."
No, not more "costs" - Germany, which is about to enter full blown recession, is crying uncle already. Just ask the NSA...
And the Russian denial...


The Ukraine goes full retard as they issue a statement on the "illegal" entry by the Russian humanitarian convoy:

(courtesy zero hedge)

Ukraine Issues Statement On "Illegal" Entry By Russian Convoy, Warns Of "Planned Provocation"

Tyler Durden's picture

Because the comedy never ends. Btw, how is that "evidence" of a destroyed Russian convoy coming along... or the MH-17 ATC tapes? Any minute now?
Statement of the MFA of Ukraine in connection with illegal crossing of the state border of Ukraine by the Russian convoy

On August, 22 Russia began smuggling humanitarian aid to Ukraine, ignoring established international rules, procedures and agreements, without the consent and escort of the International Committee of the Red Cross.

Although the border and customs services of Ukraine have already started clearance of the Russian convoy, in the morning Ukrainian officials were blocked by the Russian forces and detached from the inspection of the rest of the trucks in the column, despite previous agreements and the fact that they had been invited to the territory of Russia. We are concerned about the safety of our employees. Moreover, deep concern is raised because so far neither Ukrainian side nor the ICRC are aware of the content of the cargo.

The fact that Russian trucks entered the territory of Ukraine without proper border and customs procedures and that the cargo was not donated to the representatives of the International Committee of the Red Cross indicates deliberate and aggressive nature of Russia’s actions.

As we have previously emphasized the Russian side is fully responsible for the safety of the cargo. It is important to note that the Ukraine has already taken all necessary measures to ensure the security of the cargo.

In order to prevent any provocations we have issued all necessary instructions for the safe passing of the convoy. Despite all attempts by the Ukrainian side the contact between the General Staff of the Armed Forces of Ukraine and the one of Russia, has not been established, which is critical to ensure security along the route. We point out that terrorists carry out mortar attacks along the possible route of the cargo.

We also are not aware of the content of the agreements of the Russian side with Luhansk insurgents and we do not exclude the possibility of any planned provocation.

We consider this act to be another flagrant violation of the fundamental principles of international law, including inviolability of borders, non-interference in the internal affairs of another state and bona fide fulfillment of international obligations by the Russian Federation.

We call on all international partners to join the strong condemnation of illegal and aggressive acts of the Russian Federation.
So it's "the Ukraine" after all? And some headlines from Yatseniuk:
And the punchline:
So, attack imminent which will then be blamed on Russia as a false flag attemp provocation. Got it.


Then Russia announces another big army drill to commence on August 24 and end on August 27.

(courtesy zero hedge)

Russia Releases Video Of Massive Army Drill To "Contain Armed Conflict In Imaginary State"; Schedules 2 More

Tyler Durden's picture

Two weeks ago today, on Friday, August 8, the "market" seemingly desperate for any excuse to soar, did just that when Russia, tongue-in-cheek, announced that a Russian military drill, which everyone knew in advance would end that day, and which "worried the US department of state" finished. So by that logic the announcement of a new, and even more massive, military drill by Russia should send stocks crashing, right? We are joking of course: there is no news in this world that could possibly send stocks lower as good news is great but bad news only means even more intervention of various central banks, however Russia did indeed announce that it will take part in counter- terrorism exercise called Peace Mission in China with other members of Shanghai Cooperation Organization, RIA Novosti reports, citing unidentified Defense Ministry official.
The main part of drill is set to run from August 24 until the 29, so next Friday when the market soars on "news" that the drill has ended you know that algos once again failed to read anything beside the headline.
According to Bloomberg, Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan to deploy total of 7,000 military personnel, the largest ever for SCO.
And just in case stocks need more catalysts to soar (if not drop), Russia announced it would hold another exercise, called East-2014, some time in mid-September, which would involves multiple branches of armed forces.  The scenario for that particular exercise is not yet disclosed.
Finally, all this is happening as Russia is currently taking part in a third exercise, called Interaction-2014, located in Kazakhstan with members of the Collective Security Treaty Organization. The purpose of this particular drill: "seek to contain armed conflict in imaginary state."
Yes... imaginary.
Below is a just released clip from this drill as well as RT's description: joint military drills of the Collective Security Treaty Organization (CSTO) were conducted in the Karaganda region of Kazakhstan, Friday. About 3,000 soldiers, 200 vehicles and about 30 planes took part in the drills. Military units from the Air Assault Brigade of the Russian Airborne Troops, the Air Forces of Kazakhstan, the mobile team from the Special Operations Forces of Belarus, the Special Forces of the Armed Forces of Kyrgyz Republic and a commando squadron from Tajikistan participated in the exercises.


This is what sent all bourses into the red today:

(courtesy zero hedge)

Stocks Slide As NATO 'Condemns" Russian Invasion, Warns Of "Alarming Build-Up" Of Forces

Tyler Durden's picture

The last time NATO warned about (and threatened) Russian forces on Ukraine, stocks freefell - but the market knew better...

We will see if that happens this time:
As Former US Ambassador to Ukraine Bill Taylor warns"markets should be concerned, this is an actual invasion... and likely means war."

As Bloomberg reports,
“I condemn the entry of a Russian so-called humanitarian convoy into Ukrainian territory without the consent of the Ukrainian authorities and without any involvement of the International Committee of the Red Cross,” NATO Secretary General Anders Fogh Rasmussen says.

“This is a blatant breach of Russia’s international commitments, including those made recently in Berlin and Geneva, and a further violation of Ukraine’s sovereignty by Russia,” Rasmussen says in statement

“It can only deepen the crisis in the region,which Russia itself has created and has continued to fuel. The disregard of international humanitarian principles raises further questions about whether the true purpose of the aid convoy is to support civilians or to resupply armed separatists,” Rasmussen says

“We have also seen transfers of large quantities of advanced weapons, including tanks, armoured personnel carriers, and artillery to separatist groups in Eastern Ukraine. Moreover, NATO is observing an alarming build-up of Russian ground and air forces in the vicinity of Ukraine,” Rasmussen says

And The US is piping in...
BREAKING: Russia has up to 18,000 "combat ready" troops on its border with Ukraine, U.S. defense official says - CNN

The following sanctions are killing  the EU as they resort to fruit smuggling into Russia

(courtesy zero hedge)

Russia Busts European Sanctioned-Fruit Smuggling Ring

Tyler Durden's picture

Just days after Russia banned the import of various foods from sanctions-supporting nations, VZ reports Russia's food safety ministry Rosselhoznadzor has discovered fruit being smuggled in via Belarus that was restamped as being from Zimbabwe and various other non-sanctioned nations. It appears the smuggling nationculprits are Poland, Slovenia, and Greece and Russia is now "actively monitoring the situation," suggesting they may extend import bans to Belarus also if the situation continues. In addition, Rosselhoznadzor intends in the future to move to a system of electronic certification of goods in transit.

Rosselhoznadzor for a few days gave delivery to Russia via Belarus parties apples, peaches, plums, tomatoes without specifying the country of origin or an indication of permitted Turkey, Serbia, Macedonia, and a number of African countries, including Zimbabwe. However, phytosanitary documents of origin have not been parties or they caused suspicion among Russian inspectors. During the inspection it was found that fruits and vegetables imported from Poland, Slovenia, the Netherlands, Lithuania and some other EU countries, he continued. A number of parties had no permits phytosanitary documents Belarus.

"Some EU countries have started to send products to Belarus, without specifying the actual country of origin. and we found that it is Poland and Greece, because there is no evidence of Macedonian origin", - he said, reports ITAR-TASS .

"We are actively monitoring the situation and will promptly verify the origin of dubious parties to prevent the supply of so-called countries cover", - he said.

In terms of sanctions phytosanitary certification transit of European goods lies on Belarus recalled Dankvert. "If we have a detection of quarantine objects, we impose restrictions on the supply of Belarus", - he said.

Rosselhoznadzor intends in the future to move to a system of electronic certification of goods in transit, continued Dankvert. In the meantime, the agency is in contact with the authorized supplier countries, and intends to establish the involvement of buffer states to the issuance of phytosanitary documents for re-export products.

In addition, Rosselhoznadzor intends to monitor re-dairy, meat and fish products through Switzerland, Kazakhstan and the Faroe Islands, continued to head the agency. "In Switzerland, while no cases at the Faroe Islands, too - there are a few companies, it will be immediately obvious, and Kazakhstan already have the facts of transit goods, which are deposited in Moscow ", - stressed Dankvert.
*  *  *
And this is happening as Poland and Greece demand recompense from their EU leaders for lost revenues over the sanctions...
*  *  *
No big surprise...

'It's a catastrophe. The cold-storage warehouse is overflowing with fruit that we can't sell'


A great perspective on the Ukraine

(courtesy Alasdair Macleod)

Ukraine: A Perspective From Europe

Tyler Durden's picture

The eminent historian Niall Ferguson in an op-ed for theFinancial Times (Friday August 1st) made a comparison between the events leading up to the start of WW1 and the Ukraine situation today. While the comparison is apposite given the 100-year anniversary of the former, these are very different times. The assassination of the successor to the Austria-Hungarian Empire in Sarajevo by anarchists was initially dismissed as a local difficulty in an obscure province, which had been annexed from the Ottoman Empire in 1906. While regrettable and unexpected to observers outside the Balkans there was no reason to suspect the chain of events that followed would lead to the greatest war in history.
It is still a mystery to many historians as to how and why this event led to the slaughter of nine million people, and this uncertainty is admitted in Ferguson’s article. But his analysis of different parties to the original event pursuing their own vested interests without a grasp of the bigger picture certainly rings true of the Ukrainian situation today with regards to the West, embodied in a disparate committee called NATO. The similarity with the chaotic diplomacy that led to WW1 stops there: Russia under Vladimir Putin’s leadership appears to have a good grasp of its objective.

The History Is Important

The relevant history of Ukraine and the interests of the great powers go back to the Second World War, when it was fought over between Germany and Russia with tremendous loss of life. When Germany was finally defeated Ukraine ended deep in Soviet territory. Stalin subdued all nationalism by executing dissenters or transporting them to the gulags rarely to return. There was a high element of ethnic cleansing, and this affects political relationships to this day.
It was inevitable that following the collapse of the Soviet Union Ukrainian nationalism would reassert itself. But Ukraine’s borders had never been fixed and its claim to be a well-defined state is dubious: at best it was no more than a federation of provinces that retained their individual identities over the centuries. Crimea was never part of Ukraine: it had been “gifted” by Khrushchev in 1954 it is said in a drunken moment. The eastern provinces of Luhansk and Donetsk are heavily populated with ethnic Russians. Luhansk held a referendum in early May and the organisers claimed that 96% of the population voted in favour of self-rule (allied to Russia) on a turn-out of 81%. A similar referendum in Donetsk claimed 88% in favour on a 75% turnout.
Putin distanced Russia from these referendums, asking the breakaway governments to delay them, there being at that time a degree of diplomatic cooperation between Russia and the other G8 nations. This has now evaporated, but Putin had at least tried even though he probably smiled on the result. And everyone has forgotten that imperfect though the polling process might have been (lack of international observers, alleged intimidation of minorities etc.) there can be no doubt the clear majority in these two provinces wish to secede to Russia.
Europe in the knowledge the referendum results were certain to back independence condemned this show of democracy when first proposed. European politicians have a fundamental problem with the idea that geographical parts of a country’s population might want political independence anyway. Think Basque separatists and think Scotland. So far as Brussels is concerned, the existence of individual member countries is a passing phase towards full political integration, so fragmentation is a retrograde step. What happened in Luhansk and Donetsk was counter to all the EU’s own statist ambitions which are behind the development and continuing integration of the EU. This sets the tone behind the automatic support Europe affords the Ukrainian government. Furthermore European politicians have an unquestioning belief in the benefits of EU membership and expect anyone who shares the EU’s socio-economic ideals to align themselves accordingly.
So on the political level there is a natural dialog between the Kiev government desperate to escape the embrace of the Russian Bear and the EU. On a military level relationships and geopolitical interests are managed through NATO, which is funded mostly by the US. And as the principal financial backer, America expects and usually gets the deference from Europe it wants. America’s military and strategic objectives are however very different from the EU’s economic interests, because the EU is dependent on Russian energy, other raw materials and trade.
There is however a military fly in the ointment so far as NATO is concerned. Ukraine is surrounded by Russia and Russian-supporting enclaves, including Belarus to the north and north-west of Ukraine, and the breakaway state of Transnistria, which lies along the border between Moldova and Ukraine. Only about 20% of Ukraine’s borders are with NATO allies. NATO simply cannot afford to have boots on Ukrainian soil, because its supply lines can be cut off by Russia. Perhaps for this reason the approach favoured by the west has been to undermine the Ukrainian relationship with Russia by encouraging Kiev towards both economic and military cooperation with the west, rather than upping the west’s presence.

The Russian Dimension

Russia’s reactions to NATO and the EU’s policy ambitions towards Ukraine have been perfectly logical and could easily have been foreseen by any competent analyst. In this context there are two elements to consider, Russia itself and the personality of President Putin.
The Russian people have enjoyed a significant uplift in their standard of living under Putin, and a new middle class has emerged, which is growing and becoming wealthier by the day. Unlike more advanced, welfare driven economies this improvement has been real and not degraded by ever-accumulating debt. There is much that is wrong in Russia as western critics continually tell us, but the fact is that Russia is economically more resilient than its western counterparts, and her people are thankful and loyal to a strong leader.
This strength is seriously underestimated by western economists who have been brought up in the ivory-tower world of Keynesian and monetarist economics. This is why they mistakenly think cutting Russia off from western capital markets is a severe punishment. It is not: the Russian leadership are not dependant on access to debt finance, not intimidated, and they feel no need to hurry their responses. Putin’s advisers are fully aware that implementing sanctions will harm NATO members far more than Russia, and nothing done so far is likely to affect their minimum objective of ensuring Ukraine does not become a vassal state of the west.
Now that Russia has recovered her identity following the fall of communism her people naturally wish to secure and enhance it. They see their own “flesh and blood” in Luhansk and Donetsk being subjugated by a corrupt Nazi-sympathising Ukrainian regime. They know that America and NATO have been actively undermining Russo-Ukrainian ties having supported first the Orange Revolution and more latterly the fall of Viktor Yanukovych earlier this year. They also know that the west supported the neo-fascists in Yanukovych’s overthrow, reviving for the Russians memories of the terrible losses inflicted by the Nazis in the Second World War.
At this stage to counter economic threats Russia is generally content with sending signals that she is not dependent on the west for trade. To this end she has concluded pan-Asian energy deals with China and India, deals that were in the pipeline, so to speak, anyway. Russia is activating her relationships within the Shanghai Cooperation Organisation (the SCO), which was set up with China twelve years ago for this purpose. Furthermore, the population of full SCO members is set to double to over 3.5 billion people in September, when India, Pakistan, Iran and Mongolia become full members.

Putin’s Personality

President Putin, like many of Russia’s political in-crowd and some of the supporting oligarchs, is an ex-KGB officer. By all accounts he is controlling, hard-working, focused and dedicated. He is 5’6” tall which compared with western male leaders is noticeably short (though his Prime Minister, Dmitry Medvedev is only 5’3”). Short men often feel a need to assert themselves in the company of taller men, and Putin appears to exhibit these traits, with his annual holiday pictures depicting him as an action-man. As judo black-belt he throws larger men with ease and has been deliberately filmed doing so.
Putin is a man who the west turned its back on when he would have personally wanted to be accepted at the top-table of world leaders. This is the second time: the first was the spat with the UK over the murder by polonium poisoning of an ex-KGB officer, Alexander Litvinenko, in London in 2006. The Russians refused extradition requests for the principal suspect, Andrey Lugovoy and four others. In July 2007 Britain expelled four Russian diplomats.
It took a long time for the dust to settle from the Litvinenko affair, and it was only in the last eighteen months that the UK went out of her way to repair foreign relations with Russia, putting the Litvinenko affair behind it. So when the Ukrainian crisis broke six months ago there were very few entrenched vested interests at the political level between the UK and Russia, and therefore little invested on the British side to maintain relations.
The western view of Vladimir Putin as portrayed by the media is often very wide of the mark. And it is with some irony that we observe left-wing European politicians denouncing this pragmatic ex-communist, but their instincts, that he is a modern mercantilist are correct. His wealth and position are built on the wealth of his people: socialism’s power by contrast is derived from wealth destruction, which explains much of the political divide. While European socialists have no coherent political and economic philosophy, Putin is a realist. He doesn’t care who he deals with, so long as the profit, or reason, stacks up. And it is Russia’s vast natural resources, making her the world’s largest exporter of energy and with monopoly or duopoly power in a range of strategically important elements that gives him the power to forge a favourable political settlement anywhere he chooses.
We should think of Putin as the ringmaster in control of the Mackinder Heartland, which Mackinder summed up as follows:
Who rules East Europe commands the Heartland;
Who rules the Heartland commands the World-Island;
Who rules the World-Island controls the world.
The Heartland runs from the Volga to the Yangtze, and the World-Island is the inter-linked continents of Europe, Asia and Africa. Halford Mackinder’s paper was presented to the Royal Geographical Society in London in 1904. Since then the Russia he knew has been destroyed twice, once by the October Revolution of 1914 and once by communism. Yet still Russia survives, her power remains, and Putin is now master of it all.

The Consequences for Western Europe

The greatest concerns over Russia’s actions come from the countries that were previously suppressed by the Soviet Union and are proximate to Russia.These include Poland, the Baltic States, and ex-members of the Austrian-Hungarian Empire in middle Europe. Twelve of the twenty-eight NATO members were former communist satellites and very sensitive to Russia’s real or imagined territorial ambitions. They are a large bloc in voting terms, a frightened group sometimes aggressively supportive of intervention.
The other main category of European states is the welfare economies of the original European Union, some of which have significant economic and financial ties with Russia. Best known in this group is Germany, dependent on Russia for 38% of her gas, 35% of her oil and 25% of her coal imports. There are no suitable alternatives in sight that could cover shortfalls of these magnitudes. Short-term, some extra gas could be piped from the Netherlands and Norway, two of her other import sources; but this is North Sea gas which is being rapidly depleted and demanded by other customers. Fracking from shale rocks is possible in North Rhine-Westphalia, but this takes time to establish and strong environmental opposition would have to be overcome. Then there are the commercial energy deals. Gazprom and Germany’s Wintershall, a subsidiary of BASF, have executed a large share swap. They jointly own Germany’s “Gascade” 2,000 km pipeline and Russia through Gazprom now controls all Germany’s gas storage facilities.
Naturally, an increasingly wealthy Russian middle class buys large quantities of Mercedes, BMWs and VWs. Furthermore, Russia imports from Germany chemical products, food and agricultural products. It is estimated that one in ten German exporters traded with Russia last year exporting €36bn worth of goods. German companies have invested €16bn in Russia.
France and Italy export about €10bn each to Russia, and import €11bn and €18bn respectively, mostly energy. France has also built one Mistral Class helicopter carrier which is undergoing sea trials and crew training, and a second carrier is in production. At President Holland’s insistence, this deal is excluded from the EU’s arms embargo: a good litmus test for the degree of EU solidarity.
Western Europe’s banking system also has significant exposure to Russia. French banks have an estimated $50bn, Italian $28.6bn, German $23.7bn, British $19.1, Dutch $17.6, Swedish $14bn, and Swiss $6.8bn out of an estimated $184bn, or 76% of total foreign bank lending to Russia. Individual banks with high exposure include France’s Society Generale with $30bn, representing half this highly geared bank’s equity. Unicredit of Italy has exposure of $25bn, representing 40% of its shareholder funds. These are two prominent examples of potential casualties in a financial war with Russia. Furthermore European corporates also have substantial investments in Russia, notably BP.
It is clearly not in the interests of the long-standing members of the EU to escalate a 'sanctions and financial conflict' with Russia. The European Central Bank will have almost certainly discussed contingency plans with the major regional central banks in the Eurozone, because the banking system might have to make available special credit and financing facilities, i.e. a rescue from a financial crisis if NATO goes much further down the sanctions route. This is why politicians are walking on eggshells, paying lip-service to America and the scared Eastern fringe members of NATO while hoping this goes no further.
So long as this is the case it is clear that NATO members are powerless to stop Russia from wresting control of all or parts of Ukraine from the government in Kiev. Putin knows this; unfortunately it is not clear to us that the American government does. All in all it seems likely that after a period of slow-burn as Putin dictates the pace of developments, the political situation in Ukraine will deteriorate with some unhelpful nudges from Russia.
In Part 2: The Rise of the East, we outline how the Ukrainian situation is likely to develop. Spoiler alert: Russia has a hand full of aces.
And on a higher level, we explore the growing commitment in the East to charting its own course, one much more separated from western influence than seen in the past century. Increasingly, the East is challenging why the needs of its population of 5 billion should be so deferential to the West's 1 billion.
Click here to access Part 2 of this report (free executive summary; enrollment required for full access)


This is alarming!

(courtesy zero hedge)

More Scaremongery: Inhofe Warns ISIS "Developing A Method To Blow Up A Major US City"

Tyler Durden's picture

Last night it was SecDef Chuck Hagel who warned ISIS was a bigger threat to America than 9/11 and primed the narrative for the next round of defense-spending (and this deficit-boosting, QE-enabling money printing). Today it is Senate Armed Services Committee member Jim Inhofe who told Fox that "we're in the most dangerous position we've ever been in as a nation." While that seems a little bit of stretch (oh and hasn't the Senator seen stocks?) he adds - rather ominously, "they're crazy out there and they're rapidly developing a method of blowing up a major U.S. city and people just can't believe that's happening." But then again, when have we ever needed to 'believe' anything anyway (especially without YouTube clips to prove it).

Senator Inhofe explains...
ISIS, they are really bad terrorists, they're so bad even Al Qaida is afraid of them,” Inhofe said reflecting on the recent beheading of American journalist James Foley. Beyond the beheading, Inhofe said the current terror organizations are not going to stay contained to the Middle East. “They're crazy out there and they're rapidly developing a method of blowing up a major U.S. city and people just can't believe that's happening.”

Inhofe blames policy decisions from the Obama administration and cuts in defense spending for putting the country in what he calls a dangerous situation.

He's [President Obama] going to have to come up with something that we're going to do because they're holding another hostage in place and the problem is, the President says all these things and he never does them,” Inhofe said.

Inhofe said he hopes after the mid-term elections there will be more Republicans in the Senate and more of a willingness for both parties to work on restoring cuts to defense spending.
*  *  *
So - to confirm - this is a massive threat that needs a solution, that is Obama's fault because he cut spending, but we need to cut spending more? Okeydokey then...


Yemen is now on high alert of an overthrow of government
Special thanks to Robert H for sending this for us

Yemen on high alert as rebels push to overthrow government

Tens of thousands of Shiite rebel supporters are in the capital Sanaa in a bid to topple the government. Thousands of armed rebels strengthened their position on Wednesday as they pressed on with their campaign.
Sanaa 18.08.2014
Led by heavily armed Shiite rebels, thousands of demonstrators are demanding the government step down by the end of the week. Rebel commander Abdulmalik al-Huthi said the authorities must meet protesters' grievances by the end of the week, or additional forms of "legitimate action" would take place.
According to reports, rebel militias were deploying on rooftops in parts of the capital and armed rebel convoys were entering the capital and setting up checkpoints. Military officials said forces were on standby in case of an attack.
The protests were sparked by a steep rise in gas prices - due to a government stop to fuel subsidies. The demonstrations are gaining in strength as supporters continue to join the anti-government camps. On Wednesday, men armed with Kalashnikovs were seen guarding walled camps set up by the demonstrators.
In the northwestern province of al-Jouf, a local reporter told the German press agency (dpa) that at least 20 militants had been killed in clashes with police that began on Wednesday night.
"Both sides are using heavy and medium weapons in the fighting that is still going on," he told dpa via telephone.
'All measures to ensure safety'
In a bid to stem the crisis, President Abd Rabbo Mansour Hadi has called for dialogue with the rebels and invited representatives to join a "unity government."
A delegation was due to meet rebel leader Huthi later on Thursday, AFP news agency reported, to deliver a letter "inviting dialogue and encouraging them to join a unity government."
Yemen's Supreme Security Committee, its most senior security body, warned earlier in the week it would take "all measures to ensure the safety and security of the country."
Yemeni President Abed Rabbo Mansour Hadi said in televised remarks during a government emergency meeting that he would take "decisive and legal action" against the rebels and said the demonstrations were "unacceptable."
Shiites are a minority in Yemen, aside from the north of the country, where they make up the majority. They have been engaging in fighting with government forces for around a decade, though a six-year insurgency against then President Ali Abdullah Saleh, who had been in power for 33 years, officially ended in 2010.
sb/glb (AP, AFP)


And now the Pakistan opposition lead Khan slams the USA.  Will the USA come in and aid the current leader?

(courtesy zero hedge)

Pakistan Opposition Leader Slams US: "You Like Only Those Governments In Muslim Countries That Are Your Slaves"

Tyler Durden's picture

It is no secret that of all geopolitical crises in the past 5 years, the US has been the instrumental puppetmaster in virtually all of them: from Libya, to Egypt, to Syria, to Ukraine ("US Revealed As Alleged Mastermind Behind Ukraine Unrest"), even the ISIS insurrection in Iraq whose success would have been impossible without prior US weaponizing of al-Qaeda splinter groups in neighboring Syria. And now it appears the US has found yet another country for its "intelligence services" to alienate. According to go the WSJ, the leader of protests against Pakistan's Prime Minister Nawaz Sharif lashed out at the U.S. Thursday, accusing Washington of interfering in the country's political crisis.
As a reminder, the nuclear-armed country neighboring India is currently gripped in a political crisis, where the opposition-leader (and cricket legend) Imran Khan asked his followers two days ago to surround the nation's parliament building, and calling for a Tahrir-Square-like protest to oust Prime Minister Nawaz Sharif. While political instability is a hallmark of Pakistan's coup-prone government, Khan's concerns at the demise of law-and-order in the nation along with a belief that May 2013's election was "stolen" through conspiracies to rig the results, have led him to demand his followers stop paying taxes and utility bills.
Yesterday the government agreed to begin talk with Khan howeverm earlier today the former cricketer said he had suspended talks with the government saying the administration planned an "aggressive crackdown" on the thousands of demonstrators currently protesting in front of Parliament. Mr. Khan claims that the government came to power after rigging the 2013 elections.
And while his domestic ambitions are clear, it is his hatred of a certain country in the international arena that was most notable: "You like only those governments in Muslim countries that are your slaves," Mr. Khan said in remarks directed at the U.S. "Is there another democracy for you, and another for us?"
If Khan succeeds in overturning the Sharif government, one can be sure that this will only be the beginning. In the meantime, the US is certainly doing everything in its power to antagonize yet another future anti-American regime:
Mr. Khan's comments came after the State Department said Wednesday that Mr. Sharif's government was legitimate. "We support the constitutional and electoral process in Pakistan," said spokeswoman Marie Harf. Mr. Sharif, she added, "is the prime minister, period."
In other words, if Khan ascends to power and if Sharif requests US assistance, America will find its drones delivering "humanitarian assistance" to yet another country in a world where daily US bombings, pardon, "lethal ordnance delivery advisory work" have become so common it is easier to keep track of the countries the US isn't liberating.
Diplomats in Islamabad say they are concerned about the stability of Pakistan and fear that a battle for survival is consuming Mr. Sharif's government, sinking his economic-revival program and hopes of forging peace with traditional foe India.

Mr. Khan and Muslim cleric Tahir ul Qadri, whose supporters are staging a parallel sit-in protest, are demanding Mr. Sharif's resignation. Government aides say they believe that the demonstrations are secretly backed by the military and its spy agencies. The prime minister has clashed with the armed forces over a range of issues in recent months.

The protesters have been gathering in Islamabad since Friday, having set off the previous day by car and bus from the eastern city of Lahore, 200 miles away. Mr. Khan insists that he won't call off the protest until Mr. Sharif quits.

While Mr. Sharif is determined not to resign, he won't use force against the demonstrators, aides said.

"The political impasse is hurting the economy, the prime minister concedes," said one aide. "But he is confident that he can handle the situation. He will just wait them out. Their numbers are thinning."
Worst case, if the economy truly collapses, Pakistan can just blame snow in the upcoming winter: after all if it works for the US it should work for everyone.
Meanwhile the political situation in Pakistan has reached a fever pitch:
Some 30,000 security forces have been deployed around Islamabad in response to the protests, including soldiers requisitioned by the government. Mr. Khan had promised to bring one million protesters to Islamabad, but the actual numbers are much smaller, with independent estimates putting the combined strength of the two demonstrations at between 20,000 and 60,000.

Mr. Sharif enjoys a majority in Parliament. Mr. Khan's Pakistan Tehreek-e-Insaf party gained just 34 out of 342 seats in the May 2013 election that saw a landslide victory for Mr. Sharif. The other opposition parties are supporting the prime minister, bolstering his position.

The Parliament, in the absence of Mr. Khan's PTI, passed a unanimous resolution Thursday that "rejects the unconstitutional demands" of the protesters.
And while the US so far has backed Sharif, that is hardly assured for the indefinite future. After all it was not that long ago that the US flip flopped in its Pakistan political alliance, during its latest intervention in the country:
Mr. Sharif's last government was ousted in a coup in 1999 by then-army chief Pervez Musharraf. Mr. Sharif's determination to prosecute Mr. Musharraf for treason is one of the main sources of his friction with the current military leadership.

After the Sept. 11, 2001, attacks in the U.S., Washington allied itself with Mr. Musharraf's military-led government. However, by 2008, in a change of policy, Washington backed a transition to democracy in Pakistan, supporting elections that year that brought to power the Pakistan Peoples Party led by President Asif Ali Zardari.

In the Musharraf years and early period of Mr. Zardari's government, then-U.S. ambassador Anne Patterson played a central role in Pakistani politics, including as a mediator between the military and the politicians, leaked U.S. diplomatic cables have shown. However, U.S. officials insist that they no longer seek to influence internal politics in Pakistan, where anti-American sentiment runs high.
Hardly surprising considering anti-American sentiment appears to be the dominant theme covering the world these days, even in countries that supposedly pass for US allies.
Mr. Khan, in his speech, singled out current U.S. ambassador Richard Olson. "Please don't take sides and please do not back stooges like Nawaz Sharif," Mr. Khan told a roaring crowd, in remarks in English directed at Mr. Olson. "If you want Pakistan to be a friend of the United States, we are willing to be friends, but please [understand], a Prime Minister Imran Khan can never become a stooge like Nawaz Sharif."

A statement issued by the U.S. embassy in Islamabad Thursday denied local media reports of a hands-on U.S. role in the current crisis. "The United States is in no way involved in the process or discussions between parties. Any suggestion to the contrary is false and unhelpful to the dialogue between parties," said the U.S. embassy.
Just in case anyone needed proof that is. As for the fact that virtually every populist and nationalist leader around the globe now uses America as a enemy symbol around which to "rally the troops", that may be something even the GOTUS should carefully evaluate, whether or not he is on (permanent) vacation.


The Chinese have now little respect for the USA as fighters cross to within 30 feet of a US P 8:
the White House responds:  "Provocative Action"
(courtesy zero hedge)

Chinese Fighter Crosses Within 30 Feet Of US P-8, White House Blasts "Provocative Action"

Tyler Durden's picture

It appears China is as happy as Russia to show just how little respect it has for the US' superpower 'hegemony' statusIn May China flew close to Japan's airforcein June, Russia flew nose-to-nose with the US; and now The Pentagon reports a Chinese fighter plane came within 30 feet of a US Navy Poseidon 8 plane. The 'Top-Gun' move came after several passes across the nose of the P-8 about 220km east of China's Hainan Island. The US has registered "strong concerns" with the Chinese government about "unsafe and unprofessional" conduct andThe White House called the incident a "provocative action."

As DPA reports,
The United States charged Friday that a Chinese war plane made a "dangerous intercept" of a US Navy aircraft over international waters this week in the South China Sea.

The US has registered "strong concerns" with the Chinese government about "unsafe and unprofessional" conduct by its air force that put the safety of the US crew at risk, said Rear Admiral John Kirby, the Pentagon spokesman.

The incident happened Tuesday, within 220 kilometres east of China's Hainan Island, Kirby said.

The Chinese war plane made several passes around the US Navy's Poseidon 8 plane,coming at one point within 9 metres of the P8's wing.

The Chinese plane passed the nose of the P8 at a 90-degree angel, showing its belly and most likely its weapons load, Kirby said, and conducted a barrel roll over the top of the P8 at 15 metres.

"This kind of behaviour is not only unprofessional. It's unsafe," Kirby said. "It undermines efforts to continue developing military to military relations with the Chinese military." Kirby said he was not aware of any radio communications from the Chinese plane before the intercept.

"The message we are sending back to China is that it is unacceptable," Kirby said.
This is not the first time...
In 2001 a Chinese jet collided with a U.S. Navy surveillance aircraft off Hainan Island, killing the Chinese pilot and forcing the Navy plane to make an emergency landingon the island. Washington severed military relations with China after that episode.
And The White House National Securty Advisor blasted:
*  *  *
So if its not the military, what else is backing the USDollar's hegemony?


In Venezuela the plan is to have citizens (shoppers)  fingerprinted so as to not buy too much bread. The move is to combat food shortages.  Is this a forerunner of what will happen in the USA and the rest of the world?

(courtesy zero hedge)

Trouble In Socialist Paradise: Maduro Rating Plummets As Shoppers Prepare To Be Fingerprinted

Tyler Durden's picture

It appears Venezuelan President Nicolas Maduro has run out of other people's money. Just 8 months after his exuberant 60% approval rating at the end of last year after local elections (appealing to the ever-more-impoverished ultra-poor who remain entirely dependent on his 'fairness'), the socialist leader's popularity has plunged. As Bloomberg reports, Hinterlaces polling shows only a 39% approval rating (oddly similar to President Obama's). There are numerous reasons of course, but we suspect the news that Maduro has announced a mandatory grocery fingerprinting system to combat food shortages, will not exactly endear him to his 'followers'.

Hope and Change, it appears, fades after socialists win elections...
Maduro Approval Rating Falls to 39% in Venezuela: Hinterlaces

The President’s rating has fallen from abt 60% after Dec. 8 local elections, director of Hinterlaces polling company, Oscar Schemel, comments by phone.
Venezuelans soon may need to have their fingerprints scanned before they can buy bread.

President Nicolas Maduro has announced mandatory grocery fingerprinting system to combat food shortages.

He said late Wednesday the program will stop people from buying too much of a single item, but did not say when it would take effect.

The move was met with skepticism. Critics say the new system is tantamount to rationing and constitutes a breach of privacy.

The socialist South American country has been grappling with shortages of basics like cooking oil and flour for more than a year. The administration blames the shortages on companies speculating and people smuggling subsidized staples out of the country.

In the spring, Venezuela tried a similar system in government-run supermarkets on a voluntary basis.
*  *  *
Coming to an American grocer near you soon...?


And this is why Portugal is next in line for bank bail ins:

(courtesy Giambruno/Doug Casey International Man)

Is Portugal Next In Line For Wealth Confiscation?

Tyler Durden's picture

The pattern should be seared in your memory by now. If you fail to recognize it, you could be struck with a huge financial blow.
It’s a pattern that has played out over and over throughout history: a government gets into financial trouble, then denies there’s a problem, which is followed by a surprise wealth grab.
That’s exactly what happened when bank deposits in Spain and Cyprus were raided. We’ve also seen retirement savings confiscated in some form in Poland, Portugal, and Hungary. Capital controls have been imposed in Cyprus and Iceland.
Of course these aren’t the only examples of blatant government thievery. These examples are just within Europe and just within recent years. They can and will happen anywhere.
These events highlight the need to use international diversification to mitigate your political risk—the risk that comes from governments.
I think they also give us some clues as to what country is next on the chopping block.

A Roadmap to Confiscation

It starts out with government officials telling you everything is all right—when clearly everything is not all right.
Like when the president of Cyprus promised that bank deposits would be safe. A promise that we all know turned out to be worthless. Another example of why you’re almost always better off believing the opposite of whatever the government says, especially in a crisis.
Deceptions like this don’t happen by accident. The politicians and media deliberately lull the people into complacency so that they can optimize their forthcoming theft.
The next thing that happens needs to come as a surprise, otherwise it loses its effectiveness. It starts with a bank holiday or capital controls. It’s usually optimal—from the government’s view—to impose these measures on weekends or during a holiday to catch people off guard. They need the element of surprise or else people would take protective measures, like moving their money abroad and safely out of reach.
Once the banks are closed and capital is trapped, the government is free to confiscate as much wealth as it can get away with. It doesn’t matter what they call it or how they do it, the bottom line is they are making an unscrupulous grab. Capital controls are usually kept in place after the grab to prevent the remaining money from fleeing further slaughter.
So don’t forget the pattern:
  1. Country gets into serious financial trouble;
  2. Official government denials;
  3. Surprise bank holiday/capital controls; and
  4. Confiscation.
I think Portugal is a ripe candidate for being the next country to fall into this pattern.

Portugal Is Blinking Red

In late July 2014, Banco Espírito Santo (BES)—Portugal’s second-largest bank—went bust amid allegations of accounting problems and fraud.
BES is no ordinary bank. The Espírito Santo family, which owned the bank and a large empire of companies in Portugal and abroad, has been described as Portugal’s Rockefellers.
BES was quickly bailed out by the Portuguese government, the EU, and the IMF.
When I read about the incident in the mainstream financial media, most outlets refused to use the word “bailout.” Instead, it seemed that someone handed down the order to describe the event as a “rescue.” Such a concerted effort to coordinate talking points seems to me to be an Orwellian attempt to make this incident seem less objectionable, and perhaps to help conceal the real nature of Europe’s continued economic problems.
The fact that such a huge fraud at such a significant bank for so long escaped the notice of regulators—which supposedly had kept a close watch on Portugal due to a prior crisis in 2011—has reinforced fears that the banks and banking systems of the PIIGS countries (Portugal, Italy, Ireland, Greece, and Spain) are not as good as they seem.
So looking at our roadmap to confiscation, Portugal is clearly at the first stage in the pattern—serious financial trouble.
We also have government officials telling us everything is OK when it is probably too early to declare victory. Mario Draghi, the head of the ECB, recently stated that the collapse of BES “affected neither the banking sector in Portugal, nor Portugal at large, nor other markets.” It’s reminiscent of how, prior to the crisis in Cyprus, government officials were assuring everyone that there was nothing to worry about. Portugal also seems to be at stage two of our confiscation roadmap.
So in short we have another serious financial mess in Portugal. It occurred right under the noses of the regulators who were supposedly keeping a close watch on the country from a prior bailout and crisis in 2011. We have the media sugarcoating the incident, and government officials telling us everything is fine.
To me, it smells like a wealth confiscation in Portugal is just around the corner.

Get Out Before They Close the Window

If you have any money in a Portuguese bank, I think it’s clear that now is the time to head for the exits while you still can.
When it comes to protecting yourself from confiscations, capital controls, bank holidays, and other desperate measures of an out-of-control government, it’s absolutely essential to take action before it’s too late.
Unless you’re part of the political elite, you won’t know exactly when the window of opportunity will slam shut. In Cyprus, that moment came on an ordinary Saturday morning—to surprise as many people as possible before they could take defensive action.
While the window is still open for those in the US to protect themselves, the warning signs are clearly there. And the writing is on the wall.
It’s only logical to find ways to protect yourself.Moving some of your savings outside of the immediate reach of your home government and into a competently run jurisdiction with relatively sound banks makes sense no matter what happens.
Fortunately you can do this from the comfort of your own living room, by opening offshore bank and brokerage accounts remotely.
Naturally, things can change quickly. New options emerge, while others disappear. This is why it’s so important to have the most up-to-date and accurate information possible. That’s where International Man comes in. Be sure to get the free IM Communiqué to keep up with the latest on the best international diversification strategies


And now for your major data points for today:

Portuguese 10 year bond yield:  3.21% down 1  in basis points  from Thursday night.
(Portugal imploding)

Your closing Portuguese 10 year bond yield Friday night up 2 in basis points on the day 
(economy imploding/see special commentary)

Portuguese 10 year bond yield:  3.24%  

Your closing Japanese yield Friday morning: down 1  in basis points from Thursday night:

 yield .52%  (weak export numbers again!!) 

Japanese 10 year bond yield:  .52% 

And now for your closing Japanese 10 year bond yield from NY/down another 1 in   basis points from the morning: ( Japanese markets imploding)

Japanese 10 year bond yield:  .51%


Your opening currency crosses for Friday morning:

EUR/USA:  1.3271  down .0009
USA/JAPAN YEN  103.68   down   .150
GBP/USA  1.6568  down .0010
USA/CAN  1.0946 up .0002  

This morning the Euro is down ,  trading now just below at the 1.33 level at 1.3271.  The yen is up and trading now well above the all important  102 cross. It closed in Japan up 15 in basis points at 103.68 yen to the dollar  (dollar down).  The pound weakened  a bit, from yesterday  as it now trades well below the 1.66 level  to 1.6568.  The Canadian dollar is down this morning with its cross at 1.0946 to the USA dollar.

 Early Friday morning USA 10 year bond yield:  2.38% down 3 in basis points  from Thursday night/   (USA economy not doing so well with this low yield)

USA dollar Index early Friday morning: 82.20  up 4 cents from Thursday's close


The NIKKEI:  Friday morning: down 47 points or .30%

Trading from Europe and Asia:

1/ Europe, all in the red.

2/    Asian bourses mixed  / Chinese bourses: Hang Sang green, Shanghai in the green,  Australia in the green:  /Nikkei (Japan) red/India's Sensex in the  green. 

Gold early morning trading:  $1280.50

silver:$ 19.52



Your closing Spanish 10 year government bond :Friday/ down 2 in basis points in yield from Thursday night.  

Spanish 10 year bond yield:  2.38%  

 Your  Wednesday closing Italian 10 year bond yield: down 1 in basis points and trading 20 in basis points above Spain./ominous!!!

Italian 10 year bond yield;  2.58% 



Closing currency crosses for Friday night/USA dollar index/USA 10 yr bond:   Europe falling apart this afternoon

Euro/USA:  1.3288 down .0042
USA/Japan:  103.93 up .090
Great Britain/USA:  1.6577 down .0003
USA/Canada:  1.0945 up  .0002

The euro rose in value during this afternoon's  session, but it was still down on the day , closing well below  the 1.33 level to 1.3288.  The yen was also down  during the afternoon session, and it lost 9 basis point on the day closing  well above   the magical support 102 level to 103.93 (dollar up). A breach below the 102 usually sends the Dow and many bourses southbound as many key on this cross and as well if breached many of the yen carry traders must unwind their trades.  The British pound rose  during the afternoon session but was also down for the day as it closed at 1.6577. The Canadian dollar was up during the afternoon session, and it was down on the day closing at 1.0945. 

Your closing USA dollar index:

82.32  up 17 cents on the day  

Your closing 10 year USA bond yield down 1 in basis point on

the day. 


USA 10 yr Bond Yield:  2.40%.  


Closing bourses figures for  Friday: 

i) England FTSE down 2.41 or 0.04%

ii) Paris/CAC down 40.13 or 0.93%

 iii) German DAX: down 62.36 or 0.66%
iv) Spanish ibex down 56.20 or 0.53%

v) Italian bourse (MIB) down 92.53 or 0.46%  (Italy is now in recession)

and the Dow down 38.27  points or 0.22 %

Nasdaq up 6.45 or  0.14% 

Oil close:  WTI  93.64/Brent: 102.25


The Big USA stories:

Today's summary of trading from NY

(courtesy zero hedge)

Stocks Stumble On J-Hole But Close Best Week In 4 Months

Tyler Durden's picture

US equity markets were led by the stodgy old low-beta Dow this week - not the high-flying muppetry of the Russell or Nasdaq - as stocks enjoyed the best week in 4 months amidst escalation of geopolitical time-bombs in Israel, Iraq, and Ukraine. Dow and Trannies gained 2% by the close as today's disappointment in Yellen and Draghi took the exuberant shine off an otherwise bottom-left-to-top-right Birinyi ruler-based market. The USDollar gained 1.1% on the week - its best week since November - closing at one-year highs. Gold was slapped almost 2% lower (worst week in almost 3 months) as did WTI (back at $1280 and $93.50 respectively). Copper surged 3.2% on the week (2nd best week in a year) on China restocking chatter. Treasuries were a mixed bag with dramatic flattening on the week (30Y +2bps, 5Y +12bps) to 2009 flat. Credit markets cratered on the day - ignoring equity's relative shrug.

From Yellen's speech....

Stocks on the week led by The Dow...

Today was all about the machines and VWAP...

It appears algos were all set for mashing VIX-mode once Draghi spoke but stocks were caught between that algo buying pressure and credit's massive selling pressure...

Credit was not happy...

Tresasuries a mixed bag this week with 30Y ending marginally changed on the week...

The USD had a big JPY got mashed back ove 104...

Commodities were very active... Copper's 2nd best week in a year, gold's worst in 3 months...

Charts: Bloomberg


The real story behind the July existing home sales:

(courtesy Dave Kranzler/IRD)

July Existing Home Sales: The Headline Reports Belie A Declining Market


  • July existing home sales were 4.3% lower than July 2013.
  • Lower mortgage rates are not stimulating sales.
  • Rising inventories and rising rates will choke off demand and cause significant price declines.
  • Fannie Mae cuts its home sales forecast for 2014.
Although interest rates have fallen in recent months, median family incomes are still lagging behind price gains, and mortgage rates will inevitably rise with the upcoming changes in monetary policy - NAR Chief Economist Lawrence Yun
The National Association of Realtors released its existing home sales report for July this morning. While the seasonally adjusted annualized rate of home sales for July showed a small gain over June, there are several underlying trends that continue to show up in the monthly data that lead me to believe that - contrary to the view held by most analysts - the housing market is entering a significant decline in sales and price.
Today's report showed that, according to NAR data surveys, the number of home sales in July, when presented on a "seasonally adjusted" annualized basis, increased 2.4% over the same number for June. The problem with looking at just this number is that June was revised lower. I expect that July's number will also be revised lower in next month's report. But more significantly, July's sales were 4.3% below last July's sales level. Furthermore, July marked the ninth consecutive month of year over year monthly declines:
(click to enlarge)
This shows us that the overall level of sales this year is below that of last year. That is not the definition of a market in recovery or even of a healthy market.
In addition, it had been the narrative for the past year that low inventories were restraining sales. However Inventory has been climbing steadily since December and yet, year over year, sales continue to decline. In fact, the inventory in July was nearly 6% higher than July 2013 (see the link at the top), yet sales dropped 4.3% from last July. This problem is compounded by the fact that 30 year mortgage rates are well below a year ago's rate:
Lower interest rates are supposed to be stimulating sales volume, yet sales from July 2013 to July 2014 have dropped.
Finally, if you look at the unadjusted data for July home sales, which are stripped of the "seasonal adjustments" and "annualization" of the data, it shows that July's existing home sales actually declined 2.4% vs. June and 4.8% vs. last July. While the case can made that July's sales should be slightly lower than June's on a seasonal basis, the fact that July 2014 was well below July 2013 despite lower mortgage rates further reinforces the view that the housing market is in a state of decline.
With rising inventories, I see a couple problems. First, per the NAR report linked above, distressed sales dropped down to 9% of sales from 15% last July. The NAR noted that its the first time distressed sales dropped into single digits since 2008. This reflects the fact that the large institutional "buy to rent" buyer is quickly fading from the market, a point I've detailed in previous reports. The big investment buyer has been the primary driver of price and volume for the last two years. With inventories climbing every month now, I believe a large inventory overhang will develop. This will further depress sales and cause prices to drop, as any potential "organic" market buyers will see this develop and likely defer buying a home.
The second problem with rising inventories, and another sign that the housing market is deteriorating, is the time it is taking to sell a home once it's listed. In July 2014, the average home was on the market for 48 days, up from 44 days in June and 42 days last July. This reflects both higher inventory and slowing sales volume. These inventory metrics do not include "coming soon" homes, which are homes for which one broker has a limited-time exclusive and which is not listed in the MLS system. While it's impossible to monitor the size of the "coming soon" inventory, there's no question that it means that the real inventory on the market is higher than is being reported by the NAR. Again, this means that there will likely be more downside pressure on prices in the near future.
Finally, while homebuilders and realtors are still looking for a steady increase in home sales going forward, Fannie Mae issued its August Forecast, in which it slashed its forecast for new and existing home sales for 2014. Fannie Mae cited "disappointing housing activity" so far this year and its economists were not seeing the economic factors that would lead to a rise in housing market activity. The fact is, and this has been one of the pillars in my bearish housing market view, the largest "organic" segment of the housing market - the first-time buyer - has declined from 40% of the market historically to 29%, per the latest NAR report. As has been widely publicized, this population demographic is strapped with student loan debt, credit card debt and is having trouble finding jobs that pay enough to support a mortgage. The housing market can't grow without this demand segment.
The best way to take advantage of a bearish view of the housing market is to short the homebuilder stocks. I have spent a considerable amount of time looking at most of the publicly traded homebuilding companies. They are all ramping up their inventories to levels not seen since the peak of the big housing bubble and they are issuing debt almost every quarter to finance the build-up (this will be another source contributing to the inventory overhang). Furthermore, most of them trade at p/e multiples in the mid-teens to the mid-20's. This is compared to the historical p/e range of 5-8x. In other words, the fundamentals look bad and the stocks are overvalued. You can take a look at some of my previous articles for homebuilder short ideas. In addition, you can visit my website for more housing market analysis and details on specific companies.

By Greg Hunter’s
This may sound strange to you, but the top story is still the Ukraine crisis because it is far from over.  In my view, the West is still inching towards war with Russia.  The building of a new natural gas pipeline through Bulgaria has been stopped for the second time this week.  Nearly 200 troops and a dozen NATO F-15 fighter jets are also going to Bulgaria for more war games. Meanwhile, Germany’s Leader, Angela Merkel, is saying that NATO will defend the Baltic States, if needed.  On top of that, the fighting in Eastern Ukraine is still going full force in several towns in Eastern Ukraine with dozens of deaths and wounded on both sides.  I am sure there is going to be lots of talks to try to make nice between Russia and Europe, but I don’t see how this is going to be worked out without more violence.  Russia does not want NATO in Ukraine, and NATO has to know this.  It looks like war is intentional, or at the very least, inevitable.  By the way, McDonald’s in Russia is being inspected for health violations in many locations around the country.  This is just part of the ongoing financial war.
Well, it looks like ISIS (also known as ISIL) went from “JV” (as the President said earlier this year) to a full blown global terror problem in a short amount of time.  Secretary of Defense Chuck Hagel said that ISIS poses an “imminent threat” to the world.  Hagel also said, “This is way beyond anything we have seen. We must prepare for everything. Get Ready!”  I guess that means the U.S. is going to keep bombing ISIS in Syria and Iraq.  This statement comes out during a week when an American Journalist was beheaded on YouTube.  I guess this really is a threat and one that was caused in part by the U.S. helping arm the so-called rebels in Syria.  Texas Governor Rick Perry says because the border has been left open by a flood of illegals that ISIS may already be inside the U.S.  Perry is also under indictment for abuse of power, but I think they are going to have a hard time making that stick.
The ceasefire between Hamas and Israel is off, and this time, I predict it will stay off for a while.  Hamas has been shooting more rockets into Israel, and Israel has been bombing targets in Gaza.  The latest strikes killed the wife and child of the top Hamas military leader.  Other Israeli strikes killed some top Hamas commanders.  I see no end in sight for this bloody war.
It looks like the violence in Ferguson, Missouri, is winding down.  The National Guard has been recalled, and a Grand Jury is deciding whether to charge the officer who shot an unarmed teen.  At first, I thought this was an unjust shooting, but as more and more details and witnesses come forward, I am getting a different picture.  The shooter had his eye socket crushed by the victim, and the autopsy appears to show the teen was not shot with his hands up.  This could end up being a long drawn out case where we find out the officer was justified in shooting the victim.  That’s not the real take away here.  It’s the militarization of the police.  Multiply Ferguson by police departments across the nation.  The Federal Government is responsible for this militarization because they have supplied the military vehicles and arms.  This is a dangerous mix when you decrease Constitutional rights and increase police power.  The real question is why all the military firepower?  What is the government getting ready for?  I think the next financial collapse will be the big one, and most will wake up and realize they will never recover.
Join Greg Hunter as he analyzes these stories and more in the Weekly News Wrap-Up.
Video Link

well that is all for this week.
I will not do a commentary on Monday through Wednesday 
However On Thursday I will bring you one.

all the best

Search This Blog