Wednesday, July 23, 2014

july 23/a gain of .76 tonnes of gold into GLD/a loss of 1.583 million oz of silver/Turmoil continues in the Middle east and Putin recalls Duma

Gold closed down $1.60  at $1304.50 (comex to comex closing time ). Silver was down 2 cents at $20.95


In the access market tonight at 5:15 pm
gold: $1305.00
silver:  $20.92


GLD: a big gain of .76 tonnes of  gold inventory at the GLD (tonnage now 805.44) tonnes).

SLV : we lost 1.583 million oz of   silver  inventory at the SLV .




We have two major hot points: Israel's invasion of Gaza to destroy tunnels and their rockets, and continuing stories on the downing of the Malaysian aircraft.
Today Putin ordered the Duma to return for an emergency meeting.  Rumour has it that they want the Ukrainians to allow for the rebels to form a political party.
Poroshenko will have nothing to do with that.




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  GOFO rates are positive and thus we have no real backwardation. Some of the  months GOFO moved closer to the positive needle (the earlier months) with the  6 going closer to the negative and 12  month GOFO remaining constant. It looks to me like the Indian gold swap with the B. of E is entering the market as leases.

 London good delivery bars are still quite scarce. 


July 23 2014


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

+.126000%        +.122000%         +.12800%         +.14800%    +  .172000%


July 22.2014:


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

+.10200%         +.112000%         +.118000%             +.1500%       +.172000%


end





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 rose today by 547  contracts from 405,070  all the way up to 405,617 with gold down by  $7.60 yesterday. The non active gold contract month of July had its OI fall by 1 contracts down to 13.  We had 0 notices filed upon yesterday, so we  lost 1 contract or 100 oz will not stand for delivery in the July contract month. . The next big delivery month is August and here the OI fell by 6,735 contracts down to 130,265. We have  1 week before first day notice. The estimated volume today was poor at 90,431 contractsThe confirmed volume  yesterday was also poor at 144,574.  


The total silver Comex OI  fell slightly by 526 contracts as silver was unchanged c yesterday.  The total OI now rests tonight at 162,485 contracts. The silver contracts are in very strong hands and this will continue to bring nightmares to our bankers.  The July contract month saw it's OI fall by 12 contracts down to 176. We had 12 notices filed yesterday, so we neither gained nor lost any contracts  standing for silver metal in July. The estimated volume today was poor  at 23,815.  The confirmed volume yesterday was fair at 38,632 contracts.


July 23.2014   data for the July delivery month.





Ounces
Withdrawals from Dealers Inventory in oz
 nil
Withdrawals from Customer Inventory in oz
nil
Deposits to the Dealer Inventory in oz
3,000.01 oz (Brinks)
Deposits to the Customer Inventory, in oz
 64,158.20 (Scotia)
No of oz served (contracts) today
5  (500 oz)
No of oz to be served (notices)
8  (800 oz)
Total monthly oz gold served (contracts) so far this month
335   (33,500 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month
     nil oz
Total accumulative withdrawal of gold from the Customer inventory this month


 
  795.90    oz 


 we had good activity again inside the gold comex:

 we had  1 dealer deposits and 0 withdrawals from the dealer


i) Into Brinks:  3,000.01 oz  (I wonder if the xxx.01 was meant to appease me)


Total dealer deposit: 3,000.01 oz





total dealer withdrawals:  nil oz



We had 1  customer deposit today

i) Into Scotia;  64,158.20 oz


total customer deposits: 64,158.20 oz

we had 0 customer withdrawal:

Total customer withdrawals:  nil oz


Today we had 0   adjustments.




Thus tonight, we have the following JPMorgan inventory levels in gold;

  
JPM  dealer inventory remains  tonight at 289,135.635  oz or 8.993 tonnes

JPM customer inventory remains  tonight at: 1,016,231.306 oz  or  31.609 tonnes

(11 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 nil contracts  of which 5 notices were stopped (received) by JPMorgan dealer and 0  notices stopped by JPMorgan customer account.
  
The total dealer comex gold  remains  tonight  at  935,807.563 oz or 29.10 tonnes of gold . The total of all comex gold (dealer and customer) rests at 8,554,078.577 oz or  266.06 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 23.117 tonnes.


i) Scotia:  303,294.034 oz or 9.433 tonnes
ii) HSBC: 150,814.994 oz or  4.691 tonnes
iii) JPMorgan: 289,135.635 oz or 8.993 tonnes

total: 23.117 tonnes

Brinks dealer account which did have  the lions share of the dealer gold saw its inventory level lower  tonight  to 168,375.579 oz or 5.237 tonnes.  Several months ago they had over 13 tonnes of gold at its registered or dealer account.



Today we  had 5 notices served upon our longs for 500  oz of gold.  In order to calculate what will be  standing for delivery in April, I take the number of contracts served so far this month at 335 x 100 oz  = 33,500 oz, and then we add the difference between the total OI standing for July (13) minus the amount of notices served upon already x 100 oz per contract (5) x 100 oz per contract 


Thus:  July standings:

335 notices served already x 100 oz  =  33,500 oz + (13 - 5) x 100  =  34,300 oz or 1.0668 tonnes.

we lost 100 oz of gold that will not stand for delivery in July.
In Summary:


i) the total dealer inventory of gold settles tonight  at a  level of 29.10 tonnes.

i)  a) JPMorgan's customer inventory rests tonight at  1,016,231.306 (31.609  tonnes)

ii  b)  JPMorgan's dealer account rests tonight at  289,135.635 oz (8.993 tonnes)


iii) the 3 major bullion banks have collectively only 23.117 tonnes of gold left in their dealer account.(JPMorgan, HSBC,Scotia)



and what is totally remarkable is the fact that little gold entered the dealer comex vaults despite December and February  April and now June are  the busiest months for the gold calendar . Another oddity is that the only gold that does enter the customer account are kilobars and kilobars are generally of demand from Eastern persuasion. Lately we are witnessing gold entering of exact weight like Friday's 2,500.00 oz which are not kilobars.  That deposit was extremely suspect!!
end




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




Silver:


Jul 23/2014:  July delivery month

  
  July silver:
  

Silver
Ounces
Withdrawals from Dealers Inventorynil
Withdrawals from Customer Inventory 604,652.710  oz (CNT,,Scotia )  
Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory 300,006.14 oz (CNT)
No of oz served (contracts)4 contracts  (20,000 oz)
No of oz to be served (notices)172 contracts (860,000 oz)
Total monthly oz silver served (contracts)3067 contracts  (15,335,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month558,631.6 oz
Total accumulative withdrawal  of silver from the Customer inventory this month9,547,170.9 oz


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




total dealer deposit:  nil oz



total dealer withdrawal:  nil oz








We had 1 customer deposit:


i) Into CNT:  300,006.14 oz


Total customer deposit: 300,006.14 oz




We had 2 customer withdrawals:

i) Out of Scotia:  600,489.73 oz
ii) Out of CNT: 4,162.98 oz



Total customer withdrawals: 604,652.710    oz


we had 0  adjustments:




Registered (dealer) silver   : 58.148 million oz  
total of all silver:                 176.257 million oz

The CME reported that we had 4 notices filed for 20,000 oz today. To calculate what will stand for this  active delivery month of  July , I take the number of contracts served  for the entire  month at 3067  x 5,000 oz per contract  or 15,335,000 ounces to which I add the difference between the OI for the July contract month (176 contracts) minus the number of notices served today (4) x 5000 oz


Thus in summary,initial standings :  3067 contracts  x 5000 oz per contract (served so far) equals 15,335,000 oz +  ( 176 - 4 ) x 5,000  = total number of oz standing for July  ( 16,195,000   oz)

we neither gained nor lost any silver oz standing. 


end






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:

July 23.2014: another gain this time a gain of .76 tonnes/805.68 


July 22.2014: another rise/this time a gain of 1.5 tonnes of gold/tonnage 804.68


July 21.2014: a big reduction in gold inventory of exactly 1.8 tonnes/ 803.34/strange!!  (inventory the same figure as July 17.2014)

July 18.2014:  a big addition of gold inventory to the tune of 1.8 tonnes/805.14 tonnes

July 17.2014: we lost another 2.69 tonnes of gold at the GLD today.  No doubt that this gold is heading over to Shanghai./tonnage 803.34


July 16.2014: we lost 2.7 tonnes of gold at the GLD today/tonnage 806.03

July 15.2014: no change in gold inventory/808.73 tonnes/ In little over 2 weeks, a total of 24 tonnes of gold have been added to the GLD

July 14.2014: a huge addition of 8.68 tones of gold/tonnage 808.73

July 11.2014/no change in inventory /800.05 tonnes of gold


July 10.2014; a slight decrease of .25 tonnes and this is to pay for fees/tonnage 800.05

July 9.2014: no change in gold inventory/800.28 tonnes



July 8.2014: another big increase in gold inventory of 2.09 tonnes/
tonnage:  800.28  tonnes.  In one week 15 tonnes has been added


July 7.2014: wow@@/I think I am correct that London is out of gold to feed the Chinese:  we had another big, 1.8 tonnes of gold inventory, increase at the GLD/tonnage: 798.19 tonnes

July 3.2014: no change in gold inventory/remains at 796.39 tonnes


July 2.2014: no change in gold inventory/remains at 796.39




 Today, July 23.2014:

 we gained 7.6 tonnes of  gold inventory at the GLD today  resting tonight at 805.44 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   8.486 million oz  (263.97 tonnes).


The total dealer comex gold remains at : 932,807.553 oz or 29.01 tonnes.

GLD gold:  804.84 tonnes.
end



And now for silver:


July 23.2014:  we lost 1.583 million oz of silver today

KEY FACTS

Net Assets
as of 22-Jul-2014
$6,681,335,811
Ounces in Trust
as of 22-Jul-2014
321,162,103.50
Tonnes in Trust  
as of 22-Jul-2014
9,989.26




July 22.2014:  no change

KEY FACTS

Net Assets
as of 21-Jul-2014
$6,753,115,595
Ounces in Trust
as of 21-Jul-2014
322,745,849.40
Tonnes in Trust  
as of 21-Jul-2014
10,038.52







July 21.2014: no change in inventory

KEY FACTS

Net Assets
as of 18-Jul-2014
$6,756,620,722
Ounces in Trust
as of 18-Jul-2014
322,745,849.40
Tonnes in Trust  
as of 18-Jul-2014
10,038.52



July 18.2014: no change in inventory

KEY FACTS

Net Assets
as of 17-Jul-2014
$6,705,073,237
Ounces in Trust
as of 17-Jul-2014
322,745,849.40
Tonnes in Trust  
as of 17-Jul-2014
10,038.52



July 17.2014:  again no change in silver inventory at the SLV

KEY FACTS

Net Assets
as of 16-Jul-2014
$6,679,345,067
Ounces in Trust
as of 16-Jul-2014
322,745,849.40
Tonnes in Trust  
as of 16-Jul-2014
10,038.52

July 16.2014: no change in silver inventory

KEY FACTS

Net Assets
as of 15-Jul-2014
$6,753,669,128
Ounces in Trust
as of 15-Jul-2014
322,745,849.40
Tonnes in Trust  
as of 15-Jul-2014
10,038.52



July 15.2014: no change in silver inventory at the SLV

KEY FACTS

Net Assets
as of 14-Jul-2014
$6,818,311,699
Ounces in Trust
as of 14-Jul-2014
322,745,849.40
Tonnes in Trust  
as of 14-Jul-2014
10,038.52




Today, July 23: we lost 1.583 million oz of  silver inventory at the SLV
end





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 5.9% percent to NAV in usa funds and Negative 6.00%  to NAV for Cdn funds. July 23/2014)  

2. Sprott silver fund (PSLV): Premium to NAV rises to positive 2.43% NAV (July 23/2014) 
3. Sprott gold fund (PHYS): premium to NAV rises to negative -0.41% to NAV (July 22. /2014)

Note: Sprott silver trust back hugely into positive territory at 2.43%. 
Sprott physical gold trust is back in negative territory at  -0.41%.


Central fund of Canada's is still in jail.






end







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


1

(courtesy Mark OByrne)



Apocalypse’ Krugman Ignores Keynes And Comrade Lenin’s Warnings

Published in Market Update  Precious Metals  on 23 July 2014
By Mark O’Byrne

Today’s AM fix was USD 1,307.50, EUR 971.04 and GBP 767.54 per ounce.
Yesterday’s AM fix was USD 1,307.00, EUR  969.44 and GBP 765.76 per ounce.
Gold fell $6.40 or 0.49% on yesterday to $1,306.50/oz and silver remained unchanged at $20.94/oz.

Gold in U.S. Dollars - 50, 100, 200 SMAs (Thomson Reuters)
Gold remains in a very tight range in London this morning as did gold bullion in Singapore overnight. Futures trading volumes were low and 7% below the average for the past 100 days for this time of day, according to Bloomberg data.
Silver, platinum and palladium are slightly firmer this morning. Silver for immediate delivery added 0.2% to $21.00 an ounce in London. Platinum was little changed at $1,485.84/oz. Palladium rose 0.1% to $874.01/oz and remains near the 13-year high of $889.75 reached on July 17.
Geopolitical tension appears to be supporting gold at the $1,300/oz level and above support at the 100-day moving average at $1,302/oz. The 50 and 200 day moving averages are also key levels of support.
Gold is down 1.5% for the month after the another peculiar bout of concentrated selling last week. It is in lockdown in a very tight trading range. According to Reuters, the spread between its highs and lows for the month is the narrowest since August 2009 at $53.30/oz.
Worries over tougher sanctions on Russia and their potential impact on fragile Eurozone growth saw equities make very tentative gains while the euro fell. German bond yields dipped back towards record lows, with conflicts in Ukraine and the Middle East supporting demand for government bonds.
The European Union yesterday threatened to restrict Russia’s access to capital markets and sensitive energy and defense technologies.
Brent crude oil futures eased 0.2%, despite geopolitical tensions threatening supplies from key oil producing regions.
‘Apocalypse’ Krugman Ignores Keynes And Comrade Lenin’s Warnings 
Paul Krugman’s latest missive in The New York Times again attacks those who warn about the risks of a new debt crisis and the ramifications of radical, ultra loose monetary policies.

Krugman says that the recent concern about “debts and deficits” was a “false alarm.” He attempts to paint those who were concerned about the debt crisis as scare mongers. He sarcastically says that “the debt apocalypse has been called off.”
This is a meme that Krugman uses frequently as seen in headlines like ‘Addicted to the Apocalypse’,
and ‘Apocalypse Fairly Soon.’ He uses this meme to try to link those concerned about the debt crisis and the current monetary response to it as alarmist doom and gloom merchants and irrational people who believe the “end of the world” is nigh.
It is a way to attack the straw man rather than sticking to the facts and having a more reasoned debate.
It is ironic as Krugman himself became quite apocalyptic in his warnings during the Eurozone debt crisis. He warned that “things are falling apart in Europe,” of a “gigantic bank run” and of an “emergency bank closing.”
Not only did he warn of a massive bank run and emergency bank holidays but he warned of the euro breaking up and Italy returning to the Italian lira and even warned of France returning to the French franc.
Krugman was wrong then, as indeed were many of the people he criticises. However, the crisis is far from over and reared its head in Portugal in recent days and there is a long way to go before this crisis reaches its conclusion.
He has also been quite apocalyptic himself regarding global warming. He has warned that “utter catastrophe” looks “like a realistic possibility,” and that the “rise in global temperatures that will be little short of apocalyptic.”
When it comes to the apocalypse, Krugman likes to have his apocalyptic cake and eat it too.
Krugman continues to advocate printing currency as one panacea to our economic ills. There is much groupthink on this topic amongst western central banks and policy makers and many share Krugman’s views.
Krugman is right that so far the record debt levels in the U.S. and throughout much of the western world and the currency printing response have not led to inflation or stagflation.
However, it is very premature to completely discount the risk. History clearly shows printing money on the scale that we have witnessed in recent years ultimately leads to inflation, and sometimes hyperinflation.
Lenin rightly warned that the "best way to destroy the capitalist system is to debase the currency.” History confirms this.
Krugman has great respect for Keynes and yet Keynes shared Lenin's concerns. "Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency" warned Keynes.
In a time of cosy Keynesian consensus, plurality of opinion is important and it is worth remembering this important warning from the past.
Krugman, has been one of the most vocal gold bears in recent years and his opinion on gold has lacked nuance and ignored the academic and historical record.
As ever, a historical perspective and a long term perspective is important. Only time will tell who was right and who was wrong. Until then, it remains prudent to have an allocation to physical gold in a diversified portfolio.
Click here for Important News & Important Analysis

end

Jeremy Warner: Have central banks been breaking the law?

 Section: 
By Jeremy Warner
The Telegraph, London
Monday, July 21, 2014
The best way to destroy the capitalist system, the Russian revolutionary leader Vladimir Lenin is reputed to have said, is to debauch the currency.
The world's major central banks have certainly been having a fair old go at it. In the six years since the financial crisis first broke, they've been printing money like there is no tomorrow.
Fortunately, they have not yet managed to bring down the free-market system. On the other hand, they have succeeded in putting a rocket under asset prices and, in so doing, they have greatly exaggerated the wealth divide.
In a number of cases, including the US and the UK, they have also significantly assisted governments in financing burgeoning fiscal deficits. To the extent that quantitative easing (QE) has had any effect at all, it is asset prices and governments that have been the prime beneficiaries.
This might seem something of an old issue now; the Bank of England stopped buying assets more than two years ago, while the US Federal Reserve is "tapering" fast. For the US and Britain, the age of "unconventional monetary policy" seems to be largely over.
Elsewhere, however, QE remains very much a work in progress. In Japan it's continuing at heroic pace, while on the Continent the European Central Bank is being urged by the International Monetary Fund to stop dilly-dallying in the face of deflationary pressures and get on with it.
Full marks, then, to Prof Andrew Johnstone and Trevor Pugh, of Sheffield Institute of Corporate and Commercial Law, for a new analysis, The Law and Economics of QE, which concludes that not only has QE been largely ineffectual but that it was also illegal.
Like common brigands, central banks have been acting outside the law -- their only real excuse being the supposedly higher purpose of economic necessity, a sort of Robin Hood-type operation where the ends justify the means, only with a slight flaw; by driving up the value of financial assets and real estate, QE further skews the distribution of wealth towards those with already large holdings of it. It robs from the poor and gives to the rich. Not that there is any possibility of the courts judging QE in all its various forms to be against the law, the writers concede. In Europe, the European Court of Justice has admittedly been asked to rule on ECB bond buying, but will almost certainly deem it to be a necessary price for holding the eurozone together. Never mind the law, the single currency comes first.
The director and deputy director of the IMF's Europe division said in a recent blog: "So long as the ECB buys sovereign bonds in pursuit of its mandate and in a way that has nothing to do with fiscal outcomes it can rebut the oft-heard charge that QE violates the prohibition against 'monetary financing of fiscal deficits.'" Thus does looking for ways around the law take precedence over its observation.
Lots of claims have been made for QE but no central bank has yet been able convincingly to demonstrate that it helps stimulate economic recovery. About the best that might be said for it is that it raised confidence at a critical moment in the crisis when financial and economic armageddon were threatened. But the persistence of asset purchases thereafter is much more questionable. There is not a whole lot of evidence to suggest it has played much of a role in restoring growth.
QE is supposed to work in a number of ways; it is, for instance, hard to argue that it hasn't depressed long-term interest rates. Some have benefited from this phenomenon undoubtedly, in particular mortgage holders and large companies, but it doesn't seem significantly to have reduced the cost or availability of finance to the real economy, which for many smaller companies remains high and scarce.
It was also meant to have led to "portfolio rebalancing", with investors replacing the bonds bought by the central bank with other assets such as equities. This in turn might have marginally reduced the cost of capital but, again, for the vast majority of privately-owned businesses it has made no difference at all.
Another declared purpose was to raise inflationary expectations, which in turn was meant to boost spending and wages. Again, nil effect, unless you count the scare stories in the early stages of QE of Weimar-style hyperinflation. In any case, real wages, the chief driver of domestically-generated inflation, have gone nowhere for nearly a decade now.
Expanding the money supply via increased central bank reserves was also supposed to have boosted bankers' willingness to lend, artificially generating the same "money multiplier" effect that rules in more normal times, when commercial bank lending and money creation is buoyant. Again, there is very little evidence that this occurred.
What very definitely did occur is that small cash savers got squeezed and debtors got bailed out.
The biggest of these debtors were governments, particularly the British, US and Japanese governments. All of them were able to borrow more cheaply than otherwise and, with the central bank mopping up supply, were able to raise a great deal more money. Central banks became enablers of continued deficit spending.
Remove the disciplines of the market, which is in effect what QE does, and governments will spend, if not with outright abandon, certainly with less concern than they would otherwise. Both in Britain and the US, much of the urgency of deficit reduction has been removed by QE.
Governments can proceed at a leisurely pace. Heck, why not make deficit spending a permanent feature of the economic landscape?
An invidious sophistry surrounds official explanations of QE, as well as a blanket denial of what it really is. No central bank will admit the unpalatable truth -- that it is backdoor monetisation of government debt -- certainly illegal under European law and possibly English law, too. As the Sheffield Institute authors argue, if you are going to use monetary means to finance government spending, you should at least be open and honest about it, as well as have a proper debate about whether QE is really the appropriate way of going about it.
In any case, underlying all this monetary manipulation is a deeply depressing set of contemporary assumptions and received wisdoms -- that government spending can somehow magic up economic growth; that politicians and regulators know better than markets how productively to allocate investment; that social equality should be the ultimate aim of all government activity. How ironic that QE has succeeded only in making this latter goal even more distant.


end





Gene Arensberg now believes that the gold trade sees very little in downside risk as paper  gold now seems to be held in very strong hands.

(courtesy Gene Arensberg/GATA)

Gene Arensberg: The gold trade seems to see little downside risk

 Section: 
10:40p ET Tuesday, July 22, 2014
Dear Friend of GATA and Gold:
The Got Gold Report's Gene Arensberg tonight looks again at trader positions in gold futures and concludes that "the gold trade," the people who do the biggest business in gold, "are currently positioned as though they do not believe that gold has any significant downside."
Arensberg's commentary is headlined "Comex Producer/Merchants in Gold, View from 30,000 Feet an Eye-Opener" and it's posted at the GGR here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


end


What a conflict of interest!!!!  CFTC commissioner leaves to become the regulator's biggest opponent.

(courtesy zero hedge)




A Revolving Door Farce: CFTC Commissioner Bails To Head Regulator's Biggest Opponent

Tyler Durden's picture




There is no better way to describe what the recently departed CFTC commissioner Scott O'Malia just did when he bailed from the commodity watchdog to become the new head of the International Swaps and Derivatives Association, aka ISDA, the biggest banking group that has constantly opposed every intervention and attempt to regulate the swaps market by the CFTC since the Lehman crisis, than an epic farce.
For those who are unaware ISDA is a global OTC derivative lobby group, counting the world's largest investment banks among its members, and has frequently fought regulatory efforts to reform the market after the financial crisis. ISDA itself was exposed as a complete joke during the European crisis when due to the overhang of avoiding Europe's insolvent reality, it made CDS protection obsolete as protection from sovereign restructurings and credit events, in the process crushing one of the key ways to hedge for credit event risk. 
A member of the U.S. Commodity Futures Trading Commission will become the new head of a bank lobby group that is fighting the derivatives regulator in court over a crucial new rule curtailing Wall Street.

The International Swaps and Derivatives Association said on Wednesday that Scott O'Malia, a Republican who often voted against new CFTC policy in the wake of the financial crisis, will become the trade group's next chief executive.

O'Malia will start his new job as of Aug. 18, ISDA said. The news came only days after O'Malia said he planned to leave the CFTC as of Aug. 8.

ISDA is one of three banking groups that sued the CFTC in December, hoping to beat back tough trading guidelines for U.S. companies doing business overseas, which they fear could hurt markets and cut profits.

The two sides are set to face each other in a first hearing in a federal court in Washington next week.
Even an otherwise impartial Reuters appears outraged by this blatant and painfully clear example of government capture of "public servants" by those who have dangle carrots of money in exchange for lobby (and future employment promise) favors, and thus set the rules, courtesy of people like O'Malia.
The speed of O'Malia's move, and ISDA's high profile, made the appointment striking even by Washington standards, where a 'revolving door' between regulators and those they oversee makes moves from one side to the other common.

"This is why Americans are so disgusted with so many high government officials and believe that Washington is in cahoots with Wall Street," said Dennis Kelleher, who heads Better Markets, a group urging tighter regulation of big banks.

O'Malia spent more than four years as a member of the CFTC, and was an outspoken critic of the rule-making process mandated by the 2010 Dodd-Frank financial reform law, which he said had been rushed, confused and lacked transparency. At the CFTC, he chaired the Technology Advisory Committee, which drives the agency's efforts to better cope with the vast amount of data it has to handle.
But wait, wasn't it that other former CFTC commissioner, Bart Chilton, who since has also departed for the far better paying confines of the private sector, who claimed every chance he got that it was the CFTC's "woefully small budget" that prevented it from analyzing the data it got? Apparently it turns out that the only reason for the CFTC's abysmal enforcement record is because the group in charge of processing said data was controlled by a coopted individual whose only prerogative was to cozy up to his future employer, ISDA, and not make any waves whatsoever.


end

And now trading from Europe and Asia early this morning with relevant event




1. Stocks mostly up for all Asian bourses   with the slightly lower yen values   to 101.39.

Nikkei down 15 points or .10%.  
3. Europe stocks all deeply in the green /Euro up/USA dollar index down   again at 80.75. Chinese bourse Shanghai up as  the yuan strengthens  in value  to 6.19898 per usa dollar/yuan. carry traders still very nervous.  Yen carry traders are still be unwinding their trades and are experiencing terrific pain and now we have the Chinese shadow banking sector collapsing!!  Home prices falling in half of Chinese cities.  The Chinese disappearance of collateral scandal goes systemic 

3b Japan 10 year yield at .54%/Japanese yen vs usa cross now at 101.39/
3c  Nikkei still above 14,000

3d  oil down in price ($102.44 WTI/$107.66Brent)


3e both the Israeli ground assault in Gaza  and the attack on a commercial jet liner again weighing in on stocks this morning.
3g Huge Chinese construction company (Huatong Road) says it will default on  400 million Rb loans maturing this week (July 23).  It states that it will default on both interest and principal. This will be the first Chinese company to default on both interest and principal.  (Actually the first to default was Solar Chaori but that was only on interest) 

3h Gold at 1307.00 dollars


4.  USA 10 yr treasury bond at 2.49% early this morning.


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




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




Overnight Futures Levitation Mode Engaged But Subdued

Tyler Durden's picture




For all the talk of how stellar this earnings season has been so far (mostly for the financials if only relative to crushed expectations, and all in non-GAAP terms of course), some of the biggest bellwethers had nothing to write home about yesterday with Coca-cola (-2.85%), Travelers (-3.8%) and McDonalds (-1.3%) all falling after reporting mixed Q2 results with the latter saying that there was some “some trepidation” amongst franchisees about boosting staffing amid rising labor costs related to state minimum-wage increases and health care expenses. Adding to that, Apple, the largest company by market cap, fell 0.6% in afterhours trading after reporting Q2 EPS of $1.28 (vs 1.23 consensus), but missing top line estimates ($37.4bn vs $37.9 expected).
And if despite yesterday's lackluster earnings the most recent market levitation on low volume was largely due to what some considered a moderation in geopolitical tensions after Europe once again showed it is completely incapable of stopping Putin from dominating Europe with his energy trump card, and is so conflicted it is even unable to impose sanctions (despite the US prodding first France with BNP and now Germany with the latest DB revelations to get their act together), as well as it being, well, Tuesday, today's moderate run-up in equity futures can likely be best attributed to momentum algos, which are also rushing to recalibrate and follow the overnight surge in the AUDJPY while ignoring any drifting USDJPY signals.
Overnight markets have shaken off the mixed US earnings tape to trade higher across credit, FX and equities. The major mover during the Asian timezone is the AUD, which is about 0.4% firmer against the greenback following the Australian CPI print which rose to +3.0% YoY. The front end of the Australian bond curve has sold off by around 4-5bp. In EM Asia, Indonesia has seen a 1% richening in the IDR and 5-yr sovereign CDS has tightened 6bp following official news that the market-friendly Jokowi has indeed won the presidential election. However there has been profit-taking in Indonesian assets as we go to print, with headlines that the runner-up, Prabowo is planning to contest the vote in the Constitutional Court (Bloomberg).
Elswhere in Asia, global markets continue to watch the developments in the Chinese property market and today there were further signs that some Chinese cities are loosening home purchase restrictions to boost sales. Chinese construction material stocks are up 1.1% today and this is news has boosted the Shanghai Composite to a six-week high. We’ve also got one eye on what could be the second ever default in the Chinese onshore bond market by a company called Huatong Road & Bridge. The company failed to meet a principal repayment yesterday, but there are reports today that the local government may step in to help ensure the company meets bondholder obligations. How the Chinese authorities react to this case will be interesting.Asian stocks mostly rise with Hang Seng outperforming and Nikkei underperforming; MSCI Asia Pacific up 0.4% to 148.5; Nikkei 225 down 0.1%, Hang Seng up 0.8%, Kospi little changed, Shanghai Composite up 0.1%, ASX up 0.6%, Sensex up 0.4%; 8 out of 10 sectors rise with energy, materials outperforming and information technology, telecom services underperforming.
Heading into the North American open, stocks in Europe are seen broadly higher, with the German DAX outperforming following earnings by Daimler (+1.41%) pre-market. At the same time, Deutsche Bank (-0.98%) shares remained under pressure and headed for their largest fall in a month as market participants reacted to reports by the WSJ which indicated that bank overseers faulted some of the firm’s businesses in the US last year for “inaccurate and unreliable” financial reports. 17 out of 19 Stoxx 600 sectors rise; autos, basic resources outperform; utilities, banking underperform; 63.3% of Stoxx 600 members gain, 31.5% decline; Eurostoxx 50 +0.2%, FTSE 100 +0.1%, CAC 40 +0.2%, DAX +0.4%, IBEX -0.1%, FTSEMIB -0.5%, SMI +0%
Events in Ukraine have somewhat pushed Portugal’s banking troubles out of the headlines over the past few days even as the situation has continued to evolve. Banco’s parent ESI asked for protection from creditors at the end of last week and over the weekend BES promised to reimburse at maturity all the CP’s issued by its various parent holdco’s - a commitment worth around €820mn. Adding in Banco’s other exposures to the rest of the Espirito Santo Group it seems likely that BES at some point will have to raise further capital. On this note the Governor of the Bank of Portugal, Carlos Costa, was quoted on Friday in remarks to Parliament that, “preliminary contacts between BES and international investment banks, as well as interest shown by several entities, [namely] investment funds and European banks, show that a private solution to reinforce capital is possible" (Bloomberg). Yesterday it came out that Banco has postponed its Q2 earnings report, due on July 25th. In related news there were headlines after the market close last night that Compagnie Bancaire Helvetique had acquired a majority stake in Espirito Santo Private Bank although no further details beyond this announcement were given.
Looking at the day ahead, the corporate reporting season rolls on with Daimler, Iberdrola, Boeing, Dow Chemical, Simon Property reporting today. Facebook reports after the US market close. The Bank of England publishes its July meeting minutes this morning. Finally, today the SEC meets to vote on rules imposing redemption gates on money market funds: expect the money market gates we firstdiscussed in 2010 to be finally imposed.
Market Wrap
  • S&P 500 futures up 0.1% to 1976.3
  • Stoxx 600 up 0.2% to 343.2
  • US 10Yr yield up 1bps to 2.47%
  • German 10Yr yield up 0bps to 1.17%
  • MSCI Asia Pacific up 0.4% to 148.5
  • Gold spot up 0% to $1306.9/oz
Bulletin Headline Summary from Bloomberg and RanSquawk 
  • Treasury curve spreads steepen led by modest weakness in long end as global stocks gain amid strong corporate earnings; Daimler AG, Apple Inc. among companies beating estimates.
  • China avoided a second default in its onshore corporate bond market as Huatong Road & Bridge Group Co. paid all principal and interest on 400 million yuan ($65 million) of notes today, four people familiar with the matter said
  • The Bundesbank is resisting a weaker euro and opposing the most aggressive strategies Mario Draghi could deploy to ignite growth in Europe, says Simon Derrick, chief market strategist at Bank of New York Mellon Corp
  • The Bank of England said some members of its Monetary Policy Committee have started to argue that the risk of a rate increase undermining the recovery has diminished as growth becomes more entrenched
  • Deutsche Bank AG dropped in Frankfurt trading after the NY Fed was said to have faulted the regulatory reports of some of the firm’s U.S. businesses last year
  • Obamacare and the cost of health coverage for millions of Americans were cast into doubt after two federal appeals courts issued opposite verdicts on whether the government can subsidize policies through federally run insurance exchanges
  • Chinese banks will probably offer discounted mortgage rates to their clients in the second half of 2014 as demand in the country’s housing market weakens, according to a Bloomberg News survey
  • Diplomatic pressure to halt more than two weeks of fighting between Israel and Hamas mounted; complicating efforts is the hostility between the new government of Egypt, a traditional mediator of Gaza truce deals, and Hamas
  • The first plane carrying bodies from flight MH17 left eastern Ukraine for the Netherlands for identification, as questions arose over whether all victims’ remains had been recovered from rebel-held territory
  • Sovereign yields mostly lower. Euro Stoxx Banks +1.1%. Asian mostly higher. European equities, U.S. stock futures gain. WTI crude steady, copper and gold gain
US Event Calendar
  • 7:00am: MBA Mortgage Applications, July 18 (prior -3.6%) Central Banks
  • 7:45am: Bank of England’s Carney speaks in Glasgow
  • 5:00pm: Reserve Bank of New Zealand seen raising official cash rate to 3.5% from 3.25%
  • 11:00am: Fed to purchase $2.5b-$3.25b notes in 2021-2024 sector
FIXED INCOME
Despite the alleviation of tensions between the West and Russia which resulted in the MICEX snapping a six day losing streak, Bunds traded higher, largely mimicking the upside surge by Gilts after the minutes from the most recent MPC meeting revealed a unanimous vote to keep rates unchanged. At the same time, the MPC remained reluctant towards committing to rate hikes and pointed to the need to re-assess spare capacity after the QIR release in August. As a result, Short-Sterling curve bull flattened, while the UK/GE 10y spread narrowed to its tightest level since July 14th.
Barclays Prelim Pan Euro Agg Month-end Extension +0.11y (Prev. month 0.09y, 12m avg. 0.08y), Prelim Treasury Month-end Extension +0.08y (Prev. month 0.08y, 12m avg. 0.09y)
EQUITIES
Heading into the North American open, stocks in Europe are seen broadly higher, with the German DAX outperforming following earnings by Daimler (+1.41%) pre-market. At the same time, Deutsche Bank (-0.98%) shares remained under pressure and headed for their largest fall in a month as market participants reacted to reports by the WSJ which indicated that bank overseers faulted some of the firm’s businesses in the US last year for “inaccurate and unreliable” financial reports.
As a reminder, after the closing bell yesterday Apple reported Q3 EPS USD 1.28 vs. Exp. USD 1.23 and Q3 Gross margin 39.4% vs. Exp. 37.8%, while Microsoft Corp reported Q4 EPS USD 0.55 vs. Exp. USD 0.60; adding that Nokia accounted for 0.08/shr loss in Q4.
FX
The release of somewhat dovish MPC minutes resulted in GBP reversing some of the outperformance vs. EUR, which saw EUR/GBP come off multi-month lows, while also lifting EUR/USD off its 8-month low printed earlier in the session and back into positive territory. Elsewhere, AUD/USD rose to a 2-week high after trimmed mean inflation reading, the RBAs preferred measure, rose to 2.9% vs. Exp. 2.7%, close to the upper bound of the central bank’s 2-3% target band, which prompted fears that the central bank may subvert its neutral tone.
COMMODITIES
In terms precious metals, the price action was range-bound by both gold and silver, with gold remaining above the key USD 1,300 level as geo-political related premium (Israel/Gaza and Russia/Ukraine) continued to offset growing expectations for a Fed rate hike. Elsewhere, both WTI and Brent crude futures are seen little changed ahead of DoE inventories data later on in the session
* * *
DB's Jim Reid concludes the overnight market recap
Markets are struggling for direction at the moment with geopolitical concerns halting what was a strong run to the end of Q2 and start of Q3. Indeed, in recent weeks the S&P 500’s 13%+ rally from the February lows has stalled at just below the optically-important 2,000 level. Yesterday’s +0.50% gain in the index notched up seven consecutive days where the S&P500 has moved in the opposite direction to the session before. This is the longest streak since late February and one of the longest since the financial crisis.
While geopolitical risks may be to blame for the recent risk-on/risk-off episodes, it was interesting to see corporate earnings turn from a supportive factor to a drag on markets yesterday. Indeed, Coca-cola (-2.85%), McDonalds (-1.3%) and Travelers (-3.8%) all fell after reporting mixed Q2 results. For what it’s worth, McDonald’s CEO said yesterday that there some “some trepidation” amongst franchisees about boosting staffing amid rising labor costs related to state minimum-wage increases and health care expenses (WSJ). Adding to that, Apple, the largest company by market cap, fell slightly in late-hours trading after reporting Q2 EPS of $1.28 (vs 1.23 consensus), but missing top line estimates ($37.4bn vs $37.9 expected). The tech giant also said that the current quarter’s revenue will be US$37-40bn, below consensus of $40.5bn, which may have added to the mixed investor reaction.
The better sentiment over the last 24 hours was in part driven by the outcome of the EU foreign ministers meeting where leaders agreed to expand a list of Russian entities subject to asset freezes and travel bans but did not take the extra step of introducing phase three sanctions. Europe is always going to struggle to reach an aggressive agreement on sanctions given the different countries level of trade/activity with Russia. This is an evolving story though, and the ministers agreed to prepare by Thursday a list of possible options including potential sanctions targeting the energy and financial sectors (Washington Post) and restrictions on Russian companies accessing parts of the EU capital markets. However such measures would be imposed later only if Russia does not force pro-Moscow separatists to grant unfettered access to the crash site and fulfil its pledge to co-operate with an international investigation. The Ruble squeezed 0.7% and Russian CDS tightened 12bp on the day.
Overnight markets have shaken off the mixed US earnings tape to trade higher across credit, FX and equities. The major mover during the Asian timezone is the AUD, which is about 0.4% firmer against the greenback following the Australian CPI print which rose to +3.0% YoY. The front end of the Australian bond curve has sold off by around 4-5bp. In EM Asia, Indonesia has seen a 1% richening in the IDR and 5-yr sovereign CDS has tightened 6bp following official news that the market-friendly Jokowi has indeed won the presidential election. However there has been profit-taking in Indonesian assets as we go to print, with headlines that the runner-up, Prabowo is planning to contest the vote in the Constitutional Court (Bloomberg). Elswhere in Asia, global markets continue to watch the developments in the Chinese property market and today there were further signs that some Chinese cities are loosening home purchase restrictions to boost sales. Chinese construction material stocks are up 1.1% today and this is news has boosted the Shanghai Composite to a six-week high. We’ve also got one eye on what could be the second ever default in the Chinese onshore bond market by a company called Huatong Road & Bridge. The company failed to meet a principal repayment yesterday, but there are reports today that the local government may step in to help ensure the company meets bondholder obligations. How the Chinese authorities react to this case will be interesting.
Yesterday’s data docket was pretty supportive for risk, most notably the benign US CPI reading. Going into the day, there was some concern that we could see a high CPI print, and indeed 10yr USTs sold off by around 3bp leading into the data. For the record, US core inflation's YoY growth rate slipped back to 1.9% from 2.0% previously. Headline inflation rose 0.3% (in line with consensus), as food/beverages was unchanged and energy rose 1.6% in the month—mainly due to seasonal factors related to gasoline prices. The release of the data saw yields rally 4bp, to close 1bp lower of the day at 2.46%. The manufacturing and housing data was also fairly positive from a markets point of view. US existing home sales rose 2.6% in June (1.9% expected) to an annualized rate of 5.04m units. The Richmond Fed manufacturing index rose to 7 (vs 3 in the prior month and 5 expected).
Events in Ukraine have somewhat pushed Portugal’s banking troubles out of the headlines over the past few days even as the situation has continued to evolve. Banco’s parent ESI asked for protection from creditors at the end of last week and over the weekend BES promised to reimburse at maturity all the CP’s issued by its various parent holdco’s - a commitment worth around €820mn. Adding in Banco’s other exposures to the rest of the Espirito Santo Group it seems likely that BES at some point will have to raise further capital. On this note the Governor of the Bank of Portugal, Carlos Costa, was quoted on Friday in remarks to Parliament that, “preliminary contacts between BES and international investment banks, as well as interest shown by several entities, [namely] investment funds and European banks, show that a private solution to reinforce capital is possible" (Bloomberg). Yesterday it came out that Banco has postponed its Q2 earnings report, due on July 25th. In related news there were headlines after the market close last night that Compagnie Bancaire Helvetique had acquired a majority stake in Espirito Santo Private Bank although no further details beyond this announcement were given.
Elsewhere in the periphery banking sector, Cyprus’ largest bank (Bank of Cyprus) is potentially returning to capital markets with a senior unsecured bond. According to the FT, there is investor demand for products that leverage the expected Cypriot recovery and there has been a steady OTC trade in deposits that were turned into Bank of Cyprus equity last year. Non-performing loans of EUR12.8bn make up almost half its balance sheet and have been shifted into an internal “bad bank” to be run down, sold or restructured, per the article. The Financial Times also reports that there has been growing US demand for total return swaps linked to Markit bond and loan indices. According to the article, there is sufficiently broad demand that a major US bank is looking to issue EUR10bn of the instruments in one deal – the funds are being deployed to offer leveraged returns at a time when credit spreads are low and volatility is low. This is perhaps an offset to the recent news of outflows in US HY.
Looking at the day ahead, the corporate reporting season rolls on with Daimler, Iberdrola, Boeing, Dow Chemical, Simon Property reporting today. Facebook reports after the US market close. The Bank of England publishes its July meeting minutes this morning. The US SEC meets to vote on rules imposing redemption gates on money market funds.


end




Early this morning, the insolvent Chinese construction company, Huatong, receives a bailout from the government in the last minute avoiding China's second bond default


(courtesy zero hedge)




Insolvent Chinese Construction Company Gets Last Minute Bailout, Avoids China's Second Bond Default

Tyler Durden's picture




It seems like it was only yesterday when China lied it would open up its bond market to real price discovery and unleash a wave of corporate defaults resulting from epic capital misallocation and central planning, consequences be damned. Well, one company, one single solitary company did default in March, and after the new bond issuance market ground to a halt, and coupled with the swoon in Chinese housing, the consequences were promptly undamned and every single company that was set for bankruptcy was bailed out in the last moment as once again China re-evaluated its options and decided to keep the status quo (the other being the so-called deleveraging and debt issuance slowdown which, paradoxically, resulted in the biggest increase in bank assets in history in Q1).
Which brings us to Huatong Road & Bridge Group, a company which as we reported last week was set to be the second public default in China's massive interbank bond market after Chaori (and after countless others which would have gone tits up had it not been for government interventions), and technically the first principal default in China history (Chaori was only an interest payment default). Things seemed virtually assured after Huatong chief executive Wang Guorui was publicly dismissed from Shanxi province's Chinese People's Political Consultative Conference, a political advisory body, on suspicion he broke the law, according to a statement posted on the provincial government's website on July 10.
Well, those keeping track and hoping the second default would finally hit have to hold their breath again after yet another last minute bailout has now made a complete mockery of China's "deliberate" intentions to clear up the rot plaguing its bond market. As Reuters reports, Huatong avoided a "landmark bond default at the last minute on Wednesday, raising enough funds to pay off both principal and interest on a 400 million yuan ($64.51 million) bond."
Who bailed it out? Why the same government which continues to say one thing and do something totally different.
The people said there was aggressive fundraising by Huatong Road & Bridge Group Co Ltd, as well as collection of its accounts payable by a local government in Shanxi province, where the firm is based.

Danny Chen, chief credit officer at China Lianhe Ratings, which downgraded Huatong in response to that announcement, said while he could not comment absent a fresh official announcement, he expected the company to make some statement on Wednesday.

A bond trader at a commercial bank in Shanghai said news that Huatong had obtained enough funds to avoid default "isn't much of a surprise to the market".

"People had expected the local government and company to try to avoid default given the impact," he said. "You may argue that in the long run, one day such defaults will happen, but not for now."
Precisely: one day the full impact of delaying the inevitable will no longer be avoidable, and when that day comes run, because it will be the end of China's central planning regime. But for now, just enjoy the present, be hopeful and not cynical.
Amusingly it wasn't just the government that stepped in this time: it was also the underwriters of the bond, who know quite well that once the dominoes start tumbling, it is all over and the bank can i) kiss any hopes of generating interest income goobye and ii) will finally have to mark those trillions in bad loans on China's bank books to something resembling reality, in the process starting the biggest credit crisis the world has ever seen (there are $25 trillion in Chinese bank loans, or said otherwise: Lehman was a walk in the park).
Huatong's fundraising effort was aided by the bond's primary underwriters, China Guangfa Bank and Guotai Junan Securities, which sent teams to Huatong to ensure information disclosure and facilitate recovery. Bond analysts said that while yields on Huatong's bond last week surged to nearly 15 percent from 6 percent, the market priced in a delay in payment, not a permanent default, as Huatong largely appeared to have short-term liquidity problems.
So yes, it was a group effort:
Huatong had previously told media it expected strong support from the local government in rounding up overdue accounts receivable and in delaying collection of outstanding loans coming due.

Analysts said many receivables involved other local government bodies that had hired Huatong to build real estate projects, then delayed payment due to their own financial difficulties.
Reuters' conclusion:
The analysts also said avoidance of a default is unlikely to reassure China's fixed income markets, which have seen steadily rising rates for short-term debt as demands from cash-strapped companies for money continue.

"No market can sustain a status quo of no-defaults," a trader at an Asian bank in Shanghai said. "Chinese authorities will find one day that they cannot support all money-losing companies."
Yes, one day. But not today. For now let's all pretend that China is growing, that the global economy is recovering and the the system is stable. As for inconvenient reminders such as this one, that none of the above is true, well... see above about hope vs cynicism.

end


Hamas seems out of control:

(courtesy zero hedge)


Confused Hamas Demands Truce But Only On Its Terms



 Ukrainian side: rebels shoot down two Ukrainian fighter jets.

The propaganda machine continues!! Claims the rocket fire came from the Russian side.


(courtesy zero hedge)

Rebels Shoot Down Two Ukraine Fighter Jets, Defense Ministry Reports

Tyler Durden's picture




At this point it is beyond any one (or countless number of) human beings to distinguish truth from lies from epic propaganda, so we won't even try. Here is the latest relevant news that just crossed the stream from Ukraine's defense ministry. From Bloomberg:
  • REBELS DOWN 2 UKRAINIAN FIGHTER PLANES TODAY, IFX REPORTS
  • REBELS DOWN SU-25 FIGHTERS IN DONETSK REGION: DEFENSE MINISTRY
More from Reuters: Pro-Russian rebels have shot down two Ukrainian fighter jets, a spokesman for Ukraine's military operations said on Wednesday. The spokesman said the two were downed near Savur Mogila in eastern Ukraine. No details were known about the pilots.
As a reminder, it was the same Ukraine which hours before the MH17 crash insisted that a Russian fighter jet had downed a Ukraine warplane, a story which promptly disappeared once Russia rejected it as idiotic and once the much more severe fallout from the MH17 disaster hit.
Somehow we have a feeling this is merely yet another attempt by Ukraine to keep the pressure on the rebels now that the international response to MH17 has been muted by nearly 100% following Europe's complete inability to agree on what if any sanctions should be imposed on Putin, and the US state department presenting evidence of Russian involvement that can best be described as laughable.


end


Poroshenko demands Ukraine separatists to be declared as terrorists:

(courtesy zero hedge)





Poroshenko Demands Ukraine Separatists Be Declared "Terrorists" Under International Law

Tyler Durden's picture




As the tit-for-tat public relations blitz continues to play out, Ukrainian President Petro Poroshenko has demanded that the self-proclaimed Donetsk People's Republic (DPR) and Luhansk People's Republic (LPR) be recognized as terrorist organizations, "so that any cooperation or support the terrorists receive is recognized as such under international law." Now that the US has 'proved' that the separatists shot down MH17, we suspect the calls will grow louder... even as Poroshenko says he opposes martial law.

Ukraine will demand at an EU Foreign Affairs Council meeting on Tuesday that the self-proclaimed Donetsk People's Republic (DPR) and Luhansk People's Republic (LPR) be recognized as terrorist organizations, Ukrainian President Petro Poroshenko said.

"We [Ukraine] and the Netherlands will make every effort, in particular during the meeting tomorrow of the EU Foreign Affairs Council where Ukrainian Foreign Minister Pavlo Klimkin will speak, so that the so-called Luhansk and Donetsk People's Republics be declared terrorist organizations and so that any cooperation or support the terrorists receive is recognized as such under international law," Poroshenko said on Monday while visiting the Dutch embassy in Kyiv.

Ukraine is preparing international lawsuits against the self-proclaimed DPR and LPR, to label them as terrorist organizations, Poroshenko said earlier on July 19 during a meeting with Dutch Foreign Minister Frans Timmermans.
But...
  • *POROSHENKO SAYS HE OPPOSES MARTIAL LAW IN UKRAINE
Introduction of martial law would make military operations more difficult, Ukrainian President Petro Poroshenko says in statement.
Martial law would also impact possible IMF support
*  *  *
We're all terrorists now.



end



Obama Prepared To Unleash More Sanctions On Russia

Tyler Durden's picture




With almost metronomic frequency, and perhaps related toPutin's emergency meeting of the State DumaThe Wall Street Journal is reporting that the Obama administration is prepared to expand a new set of economic sanctions against Russia if the country doesn't take steps to end Ukraine's conflict with pro-Russia separatist fighters. No details were exposed by the senior administration official, but as WSJ notes, current sanctions don't prevent U.S. entities from doing business with the Russian firms or freeze their assets. We await the new boomerang.

The Obama administration is prepared to expand a new set of economic sanctions against Russia if the country doesn't take steps to end Ukraine's conflict with pro-Russia separatist fighters, a senior administration official said.

...

Under the new sanctions program, the Treasury Department could expand the number of institutions affected and expand the limitations placed on the Russian firms, the senior administration official said. The current rules prevent people or firms with ties to the U.S. from providing medium- and long-term credit to Rosneft, Russia's second-biggest natural-gas producer and two major financial institutions. The Treasury also bars equity financing for some of the firms.

The official didn't elaborate on what a broader array of limitations might look like. The current sanctions don't prevent U.S. entities from doing business with the Russian firms or freeze their assets.

...

But Obama administration officials are prepared to take more extreme steps if necessary that could have a broader economic impact to force Russian cooperation, the official said.
*  *  *
But the US will keep buying its satellite rockets from them?


end


The big story of the day:  Russia is set to recall its Duma.  Rumour has it that Russia will demand that the rebels be classified as a political party.  Poroshenko will have none of that.

Putin Recalls State Duma From Vacation, "Planning Something" On Ukraine Situation

Tyler Durden's picture




In a somewhat disconcerting move, Russian President Vladimir Putin has recalled The State Duma from a planned vacation to participate in an unscheduled meeting because of the situation in eastern Ukraine. As Ukrinform reports, sources confirm "Something is being planned, because many deputies come, probably for a quorum." Rumors are spreading that Putin is set to issue Kiev an ultimatum over recognizing separatists or face military intervention.

State Duma deputies, who are currently on a planned vacation, urgently come to Moscow to participate in an unscheduled meetingbecause of the situation in eastern Ukraine, a source in the State Duma told Ukrinform on Wednesday.

"Maybe something will happen tomorrow. Now this issue is being solved. Something is being planned, because many deputies come, probably for a quorum. Many deputies arrive... and today they already have to be in Moscow," he said.

According to the source, it is still unknown which document is to be considered by Russian deputies.

According to the source, it is clear only that Russia's top-ranking officials "planned something" on the situation in the east of Ukraine if they plan to hold an unscheduled meeting of the State Duma.
It appears Putin is preparing to issue an ultimatum to Kiev(as LB.ua reports via Google Translate)
Russian attempt to legalize the terrorists as a political entity

Security Council in Moscow lasted until now and almost ended at 21.00 on Kiev.

This LB.ua said a source close to the Russian State Duma.

According to the information tomorrow, July 23, probably held a joint meeting of both houses of the Russian parliament - the Federation Council on which PresidentVladimir Putin "may declare any serious initiative."

According to the source LB.ua , tonight Ukrainian leadership will probably be an ultimatum, demanding a ceasefire and start negotiations in the Ukraine-Russia-"DNR" / "LC".

Thus, Russia will try to legitimize the terrorists as a political entity.

If Ukraine does not agree Putin, according to the interlocutor LB.ua, may decide onentering the Russian troops in Ukraineunder the guise of "peacekeepers."

As reported, after the meeting of the EU Council has learned that the European Union could recognize so-called "DNR" and "LC" terrorist organizations.
*  *  *
Given that Poroshenko has demanded the separatists be labeled "terrorists" under international law, we suspect this is one demand they cannot fulfil... and of course, Ukraine is claiming that the 2 fighter jets shoit down this morning were shot down by and from Russia... sure, with the whole world watching, Putin would do that?

end

A very important interview of Jim Willie courtesy of Greg Hunter

(courtesy Jim Willie/Greg Hunter)

Germany Secretly Planning on Joining BRICS-Jim Willie


By Greg Hunter’s USAWatchdog.com 
Financial newsletter writer Jim Willie says no matter who shot down the Malaysian commercial jet over Ukraine recently, there is going to be massive fallout.  Willie contends, “Here’s the big, big consequence.  The U.S. is basically telling Europe you have two choices here.  Join us with the war against Russia.  Join us with the sanctions against Russia.  Join us in constant war and conflicts, isolation and destruction to your economy and denial of your energy supply and removal of contracts.  Join us with this war and sanctions because we’d really like you to keep the dollar regime going.  They are going to say were tired of the dollar. . . . We are pushing Germany.  Don’t worry about France, don’t worry about England, worry about Germany.  Germany has 3,000 companies doing active business right now.  They are not going to join the sanctions—period.”
Willie goes on to say, “It’s a war game and Europe is sick of U.S. war games.  The defense of the dollar has come to war versus trade.  Are you with us or are you against us?”  As far as the NSA spying on Germany, Willie says, “I think they are looking for details on assisting Russia on dumping the dollar.  I think they are looking for details for a secret movement for Germany to get away from the dollar and join the BRICS (Brazil, Russia, India, China and South Africa.)  This is exactly what I think they are going to do.” 
Willie thinks as countries move away from the U.S. dollar, the money printing (quantitative easing, QE) increases, and the economy gets worse.  Willie calls this a “feedback loop” that he contends, “You get the feedback loop from the damage of lost income that comes from the higher costs that comes from QE.  It’s not stimulus, people.  It’s a back door Wall Street bailout that degrades, deteriorates and damages the economy in a feedback vicious system. . . . You are seeing the free-fall and acceleration of the damage; and, so now, you get even more cost damage.  QE didn’t happen by accident.  Foreigners didn’t want to buy the Treasuries anymore.  They don’t want to buy a bond where the same central bank is printing money to buy the bond!  QE raises the cost structure and brings about shrinkage and disappearance of profits.  QE is not stimulus.  It’s capital destruction. ”
On the so-called “recovery” the mainstream media has been harping on for years, Willie says, “I believe the U.S. has gone into a recession that it is not going to get out of until the dollar is gone. When you factor inflation in properly . . . we got a monster recession of -6% or -7% right now.  I don’t think it will get better until the dollar is disposed of.  So, we’re entering the final phase of the dollar.”
In closing, Willie says, “You want to get rid of political obstacles?  Go straight to commerce and trade.  Why is it that Exxon Mobil is still doing projects in the Artic and still doing projects in the Black Sea, which is Crimea, with the Russians and their energy companies?  We already got the U.S. energy companies defying our own sanctions, and yet we are prosecuting French banks for doing the same thing.  This is insane.  We are losing control.
Join Greg Hunter as he goes One-on-One with Jim Willie, Editor of “The Hat Trick Letter” which can be found on GoldenJackass.com.
(There is much, much more in the video interview.)
Video Link
http://usawatchdog.com/germany-secretly-planning-on-joining-brics-jim-willie/


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The following is interesting:  nobody showed up for the Argentinian debt mediation.
The black market Argentinian Peso collapses

(courtesy zero hedge)



Argentina Debt "Mediation" Goes Surreal As Neither Side Turns Up For Meeting, Black-Market Peso Tumbles

Tyler Durden's picture




Despite Judge Griesa's demands that the holdouts and the Argentinian government hold "continuous" mediation until the debt conflict is resolved "or fear the worst," this morning's headlines are somewhat surreal:
  • *NEITHER SIDE IN ARGENTINE DEBT CONFLICT HAS ARRIVED TO MEETING
Argentina decided not to send the economy minister (just a 'delegation') as BTG analysts warn that "all the music from the Argentine government indicates default," and judging by the tumble in Argentina's black-market Peso (Dolar Blue) the last few days, that risk is starting to rise.

As Bloomberg reports,
Neither Argentine govt delegation nor attorneys for the South American nation or holdout creditors had arrived at 10am meeting called with court-appointed mediator Daniel Pollack in Manhattan.

Pollack didn’t respond to e-mail seeking comment

Argentine Economy Minister Axel Kicillof wasn’t part of delegation that traveled to NY
“All the music from the Argentine government indicates default,” according to a BTG report (as Bloomberg annotates):
“It is not that much that they are myopic about the consequences of default. Rather it is fear of the legal consequences of the RUFO clause”

A deal shouldn’t trigger RUFO clause “but govt wants to be sure, and nobody could give that sort of assurance”

“In this circumstance Cristina Kirchner herself seemed to have taken the decision of not paying”

“Still we do not lose hope on a deal”

Incentives of all parties favor a deal

Analysts expect volatile environment until July 30

“We will not be sure about the outcome until the very last minute”
In case of default, economy will suffer scarcity of dollars, which may lead govt to restrict imports further, thus harming value chains and reducing activity
Govt likely to print “an awful lot of pesos” given impossibility of tapping market

Central Bank could increase rate to lure peso holders
There may be pressure on parallel dollar market, which eventually could force govt to either depreciate the currency or try to settle with bondholders
UPDATE: Argentine Debt Talks in NY Postponed Until Tomorrow (maybe)





end





The foreign exchange rigging probe accelerates as we have some bankers willing to settle first and prevent future damage:

(courtesy zero hedge)








FX-Rigging Probe Settlement Accelerates With UK Regulator

Tyler Durden's picture




As the proof piles up, and retired/suspended traders increase, Bloomberg reports that talks to reach the first settlement in the FX-rigging probe are accelerating, with Britain’s markets regulator preparing to reach a deal with a group of banks this year, people with knowledge of the talks said.
  • *FCA SAID TO BE SEEKING FAST-TRACK SETTLEMENT WITH NARROW SCOPE
  • *FCA TALKS SAID TO INCLUDE BARCLAYS, CITIGROUP, JPMORGAN, UBS, RBS, AND HSBC
The question remains, will guilt be admitted... or is the pending fine just another cost of doing business in the trillion dollar market manipulation miasma in which we find ourselves.
As Bloomberg reports,
The Financial Conduct Authority is in talks with banks including Barclays Plc, Citigroup Inc., JPMorgan Chase & Co. and UBS AG, said the people, who asked not to be identified because the discussions are private. Royal Bank of Scotland Group Plc and HSBC Holdings Plc may also be part of the group settlement, one of the people said.

The FCA is trying to fast-track the process and may levy any fines in the coming months, three of the people said. The watchdog is seeking to keep the scope of the deal narrow to speed up the settlement, two of the people said. The talks are still continuing and an agreement may stretch into next year, the people added. Representatives of the banks and FCA in London declined to comment on the talks.
*  *  *
The timing seems odd, but maybe the banks (or more likely the traders themselves) got spooked by the opening of a criminal investigation and the possibility of real hard time...


end



And now important data points for today:







Portuguese 10 year bond yield:  3.71%/down 1 basis point  from Tuesday night.





Your closing Portuguese 10 year bond yield Wednesday night: down 3 in basis points on the day 





Portuguese 10 year bond yield:  3.69% 


end




Your closing Japanese yield Wednesday morning: par  in basis points from Tuesday night:







 yield .54% 





Japanese 10 year bond yield:  .54% 





And now for your closing Japanese 10 year bond yield from NY/par in   basis points from the morning:



Japanese 10 year bond yield:  .54%




end




Your opening currency crosses for Wednesday morning:



EUR/USA:  1.3474  up .0008
USA/JAPAN YEN  101.39   down .070
GBP/USA  1.7047  down .0019
USA/CAN  1.0724 down .0015  


This morning the Euro is a little stronger  trading now well below the 1.35 level at 1.3474.  The yen is a little stronger and trading now well below the all important  102 cross. It closed in Japan up 7 basis points at 101.39 yen to the dollar  (dollar down).  The pound weakened a bit  as it now trades just below the 1.71 level  to 1.7047.  The Canadian dollar is up this morning with its cross at 1.0724 to the USA dollar.





 Early Monday morning USA 10 year bond yield:  2.47%  up 1 in basis points  from Tuesday night/   (USA economy not doing so well with this low yield)


USA dollar Index early Wednesday morning: 80.75  down 3 cents from Tuesday's close



end





The NIKKEI:  Wednesday morning:  down 15 points  or  .10%

Trading from Europe and Asia:

1/ Europe, all deeply  in the green. 

2/    Asian bourses mostly in the green / 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:  $1307.00

silver:$ 20.95






 

end





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



Spanish 10 year bond yield:  2.56% 
  



 Your  Wednesday closing Italian 10 year bond yield: down 3 in basis points and trading 18 in basis points above Spain.



Italian 10 year bond yield;  2.74% 


end



 IMPORTANT CLOSES FOR TODAY

Closing currency crosses for Wednesday night/USA dollar index/USA 10 yr bond: 

Euro/USA:  1.3461 down .0058
USA/Japan:  101.52 up   .060
Great Britain/USA:  1.7034 down .0013
USA/Canada:  1.0727 down .0007



The euro lowered  in value during this afternoon's  session, and it was down on the day , closing well below  the 1.35 level to 1.3461.  The yen was down during the afternoon session, and it lost 6 basis points on the day closing below  the magical support 102 level to 101.50 (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 lowered during the afternoon session and was down for  the day as it closed at 1.7034. The Canadian dollar was down during the afternoon session, but was up on the day closing at 1.0727. 


Your closing USA dollar index:




80.82  up 4 cents on the day  


Your closing 10 year USA bond yield par in basis points on

the day.  



YIELD TONIGHT:



USA 10 yr Bond Yield:  2.46%.  

  

Closing bourses figures for  Wednesday: 






i) England FTSE up 2.81 or 0.04%


ii) Paris/CAC up 6.80 or 0.16%


 iii) German DAX: up 19.23 or 0.20%
  
iv) Spanish ibex up 10.20 or 0.10%

v) Italian bourse (MIB) down 42.24   or .20% 


and the Dow down 26.91 or .36 %

Nasdaq up 17.68 or  0.40% 


Oil close:  WTI  102.99/Brent:  108.13


end




The Big USA stories:



Today's summary of trading from NY:

(courtesy zero hedge)




No Data, Mo War, No Worries: S&P Hits New Record High

Tyler Durden's picture




On a day with no macro data and more warmongering, it only makes sense that stocks should continue to levitate. Aside from The Dow (troubled by weakness in Boeing dragging 20 points off the index), US equity markets rose with the S&P 500 breaking to new all-time record highs just shy of 1990 (2000 tomorrow?) Treasuries were very quiet, trading in a 2bps range and ending basically unch. Gold and silver limped lower (but were also quiet) as the USD pushed modestly higher (with AUD strength on the inflation print overnight the big story). Oil prices recovered yesterday's losses closing back above $103. Biotechs were a notable mover (on M&A hopes) as they retraced all Yellen's warning losses. This is the 3rd day in a row that "most shorted" stocks were snap-squeezed higher at the open.

The S&P 500 reaches new record highs

Today was all about the opening ramp... and the Dow just could not make it back into the green

Since the MH17 headlines hit, stocks haven't looked back...apart from the Dow...

This is the 3rd day in a row of an instant snap squeeze at the open...

Bonds don't seem to buy what ever stocks are drinking?

Something odd going on in credit markets... 2nd day in a row where HY spreads have blown wider as soon as Europe closes (and POMO ends)...

Commodities were flat to slightly lower (as the USD rose very modestly) but oil prices recovered yesterday's losses...

Treasury yields traded in a very narrow range - testing 2014's closing low yields...

AUD's strength following a hot inflation print was th emain news as the USD rose modestly all day...

Charts: Bloomberg
Bonus Chart: "Fight The Fed" in Biotechs...though it seems like the ETF got stuck at Yellen's levels...

end


The IMF now slashes full year USA GDP from 2.0% down to 1.7%:  and that is wishful thinking.




(courtesy zero hedge)


IMF Cuts US GDP From 2.0% To 1.7% As US Retail Sales Forecast Slashed From 4.1% To 3.6%: Winter Blamed

Tyler Durden's picture




This is what happens when a priced to perfection global economy (and well beyond perfection based on the S&P 500) runs into the utterly and completely unpredictable and unforseeable "harsh winter weather."
First, the IMF just cut (again) its forecast for US GDP, this time from 2.0% to the consensus-estimate 1.7%. The IMF cited the 1Q contraction, which from a +3% original estimate ended up being that, just with a minus sign. It also says second-half growth to accelerate... because it must!
  • Some other brilliant points from the IMF:
  • IMF staff: U.S. to reach full employment “only by end-2017”
  • “The economy is expected to reach full employment only by end-2017 and inflationary pressures are expected to remain muted”
  • “If true, policy rates could afford to stay at zero for longer than the mid-2015 date currently foreseen by markets”
  • Says job market “reasonably healthy,” wages should rise slowly
Or not at all.
And while IMF just slashed its 2014 forecast, it kept its growth forecast steady at 3%. Tomorrow the IMF releases its entire World Economic Outlook quarterly pamphlet which has been the source of so much amusement around these parts. We can't wait to update it for tomorrow's latest and greatest growth slashing.
And just so the IMF doesn't appear alone as the only idiot who, for the 5th year in a row, issued an optimistic forecast about US growth which is crashing before its eyes, here is the National Retail Federation which also just cut its 2014 retail sales growth outlook from 4.1% to 3.6%.
The National Retail Federation today lowered its retail sales forecast for 2014 because of slow growth recorded during the first half of the year, but said sales are expected to grow significantly faster over the next five months. NRF forecasted in January that retail sales would grow 4.1 percent in 2014 over 2013, but today’s revision lowers the forecast to 3.6 percent.

NRF calculated that sales grew 2.9 percent during the first half of the year and are expected to grow at least 3.9 percent during the second half. The numbers include general retail sales and non-store sales, and exclude automobiles, gasoline stations, and restaurants.

“No retailer was immune to the doldrums witnessed during the first quarter, and as a result, the year’s growth trajectory was impacted,” said NRF President and CEO Matthew Shay. “That said, there is plenty of evidence that the second half of the year will be better for the industry as consumers begin to feel more optimistic about their spending decisions.

“And though we maintain realistic expectations of retail sales growth in 2014, we are optimistic that the chances for a stronger economy still exist,” continued Shay.

“The severe weather and other factors we experienced earlier this year have taken their toll on retail, but most of those problems are behind us,” said NRF Chief Economist Jack Kleinhenz. “A second look at our forecast shifted our expectations slightly, but it’s important to note that the outlook is positive. Sales are growing and we expect them to continue at a moderate pace.”

In this month’s Monthly Economic Review, Kleinhenz noted, “…one of the worst winters in recent memory kept shoppers home during the first quarter, and weak numbers for real estate, inventories and exports continued to hamper the economy through the second quarter. However, employment has grown at its strongest pace since 2005, business and consumer confidence have edged higher, manufacturing activity has expanded and inflation pressures remain tame, improving expectations for the second and third quarters.”
And while we enjoy the "it's the weather's fault" joke as much as the next one, can we please move on: said joke hasn't been funny in about 5 months now.


end




The real story on yesterday's existing homes sales:

(courtesy Dave Kranzler/IRD)




Existing Home Sales: The Headlines Have Hope But Actual Data Needs Help






The amount and degree of propaganda spewing forth out of Wall Street and DC staggers the mind.  Anyone who read “Animal Farm” and thought the vision was exaggerated for the purposes of conveying an idea is sadly mistaken.   Indeed, “Animal Farm” may understate the current degree of absurd fiction emanating from every crack and crevice in NYC and Capitol Hill.
A perfect example was yesterday’s existing home sales report for June released by the National Association of Realtors (NAR).   NAR refers to the organization’s data reporting which is Not Actually Real.
If you only saw the headline reports, you are thinking that the housing market is well on its way to recovery.  But if you bother to drill down into the data – and the methodology used to collect and a manipulate the data – you’ll see that home sales are in a downtrend, among several problematic aspects embedded in the numbers.
I’ve written an article for Seeking Alpha, which if you spend time reading you’ll see that the true condition of the housing market right now is deteriorating:   Existing Home Sales For June.

end


Well that is all for today
I will see you tomorrow night
hARVEY


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