Tuesday, September 30, 2014

sept 30/Another loss of 2.39 tonnes of gold at the GLD/no change in silver at SLV/another big hit on silver and gold today/

Gold closed down $7.00  at $1210.50 (comex to comex closing time ). Silver was down 52 cents at $17.00

In the access market tonight at 5:15 pm
gold: $1208.00
silver:  $16.97

GLD : we lost 2.39 tonnes of  gold inventory at the GLD (inventory now at 769.86 tonnes)

SLV  : as of 6 pm est no change in silver inventory at the SLV. It looks like the bankers cannot raid the SLV for physical silver because there is none...just paper silver 

 (inventory now 346.011 million oz)

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 basically moved slightly  towards the positive needle. On the 22nd of September the LBMA stated that they will not publish GOFO rates.  However today we still received today's GOFO rates 

 London good delivery bars are still quite scarce. 

Sept 30 2014

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

+.1275000%        +.12750000%         +.1300%         +.147500%    +  .2175000%

Sept 29 .2014:

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

+1200%         +.1233000%         +.13000%             +.1366700%       +.2233300%


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 again  today by 2,468 contracts from 380,779 down to 378,311  with gold up  $3.40 yesterday . We generally witness the collapse of OI when an active delivery commences.  The  non active delivery month is September is now off the board.   The next active delivery month is October and generally this is a very poor for deliveries. The October contract month fell by 4179 contracts down to 2,973. Today is first day notice so we should get a good idea of what will stand (see below).  However most players who are still willing to tackle the crooked comex generally roll to December. The estimated volume today was fair at  177,713 contracts. The confirmed volume yesterday was poor  at 116,498.  

The total silver Comex OI surprisingly rose by 1,469 contracts with silver up yesterday by a scant 4 cents.  Tonight the silver OI complex rests  at 169,872 contracts.  In ounces, this represents 849 million oz or 121% of silver annual production.  In commodity law generally the OI is represented by 3 to 5% of annual production. These 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. Probably this is as good a reason as ever for the bankers to raid on a continual basis trying to force those longs to puke their interests.   We have now exited the big delivery month of September as it is now off the board.

The next non active silver contract is October and here the OI surprisingly fell by only 1 contract down to 414. I have never seen this happen before as we enter first day notice, the entire OI for the month stands. Is somebody here trying to send a message?  Like China?  November is also a non active delivery month and here the OI went down by 11 contracts.

 The December silver contract is a biggy contract month and tonight it rests at   122,084 contracts for a gain of 1295 contracts. No doubt the December contract month may provide all the fireworks if our major entity tries to take delivery of much of the comex silver. In ounces, the December contract equates to 610 million oz or 87.1% of annual global production. This is totally unprecedented. The estimated volume today was excellent at 62,633.  The confirmed volume  yesterday was poor at  29,387 contracts. Both Bill Holter and I strongly believe that only one entity could possibly behind the majority of these longs and that entity is the sovereign Chinese government.

  data for the  October delivery month.

Initial standings

Sept 30.2014  

Withdrawals from Dealers Inventory in oz
Withdrawals from Customer Inventory in oz
160,910.75 oz(Manfra,JPMorgan/ 5005 kilobars???)
Deposits to the Dealer Inventory in oz
Deposits to the Customer Inventory, in oz
1607.500 oz (50 kilobars???)
No of oz served (contracts) today
419 contracts( 41,900 oz)
No of oz to be served (notices)
2554 contracts (255,400 oz)
Total monthly oz gold served (contracts) so far this month
 419 contracts  (41,900 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month                       

Total accumulative withdrawal of gold from the Customer inventory this month

160,910.75 oz

Today, we had zero dealer transactions today

total dealer withdrawal:   nil oz
total dealer deposit:  nil oz 

we had 2 customer withdrawal:

i) Out of Manfra:  160.75 oz  (5 Kilobars???)
ii)Out of JPMorgan: 160,750.000 oz (5,000 Kilobars?????

total customer withdrawals: 160,910.75 oz (5005 kilobars?

we had 1 customer deposits:

i)Into Scotia: 1607.500 oz  50 kilobars????

total customer deposit: 1607.500  oz

At the comex on a sale of kilobars, the seller is credited with a fineness of .995.
Kilobars are the big ticket item for China. However kilobars cannot head over to Shanghai unless they are remelted with a fineness of .9999.
Why on earth is the comex showing deposits and withdrawals in exact weight kilobars???

The comex is suppose to deliver 100 oz bars..why all of a sudden do we witness kilobars taking 100% of the transactions?

We had 0 adjustment:

Total Dealer inventory:  961,184.386 oz   29.89 tonnes
Total gold inventory (dealer and customer) =  9.127 million oz. (283.89) tonnes)

A few weeks ago we had total gold inventory of 303 tonnes, so during this short time period 20 tonnes have been transferred out. We will be watching this closely!

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 1 contract  of which 0 notices were stopped (received) by JPMorgan dealer and 2  notices stopped by JPMorgan customer account.

 We had 419 notices served upon our longs for 41900  oz of gold.  In order to calculate what will be  standing for delivery in September, I take the number of contracts served so far  this month at 419 x 100 oz  = 41,900 oz,to which I add the difference between the open interest for the front month of October (2973  )  minus the number of notices served upon today (419)  x 100 oz  =  297,300 oz or 9.24 tonnes

Thus: October initial  standings:

419 contracts x 100 oz =  41900 oz +  (2973 ) - (419)x 100     =  297,300 oz or 9.24 tonnes



Sept 30/2014:   



   October silver:  Initial standings



Withdrawals from Dealers Inventory 598,687.06 oz (CNT)
Withdrawals from Customer Inventory 280,544.65 oz (CNT, HSBC Scotia, )
Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory 385,747.660 (Brinks, HSBC)
No of oz served (contracts)61 contracts  (305,000 oz)
No of oz to be served (notices)353 contracts (1,765,000 oz)
Total monthly oz silver served (contracts)305 contracts (305,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month589,687.06
Total accumulative withdrawal  of silver from the Customer inventory this month280,544.65 oz

Today, we had 0 deposits into the dealer account:

 total dealer deposit:nil oz

we had 1 dealer withdrawal:

i) Out of CNT:  598,687.06 oz

total  dealer withdrawal: 598,687.06 oz

We had 3 customer withdrawals:
I) Out of CNT:   200.421.51 oz
ii) Out of HSBC:: 20,071.700  oz
iii) out of Scotia:  60,051.44  oz

total customer withdrawal:  280,544.65    oz

We had 2 customer deposit:

i) Into brinks: 5038.910 oz
ii) Into HSBC:  380,708.75

total customer deposits:  385,747.660   oz

we had 0 adjustment:

Total dealer inventory:  65.594 million oz
Total of all silver inventory (dealer and customer) =  182.194 million oz.

The CME reported that we had 61 notices filed for 305,000 oz today. To calculate what will stand for this  active delivery month of October, I take the number of contracts served for the entire  month at 61 x 5,000 oz per contract or 305,000 ounces upon which I add the difference between the open interest for the front month of October (414) - the number of notices served upon today (61) x 5000 oz per contract 

Thus initial  standings for silver:  61 notices x 5,000 oz per notice or 305,000 oz + (414) -  (61) x 5,000 oz  =  2,070,000 oz

this level will rise as the month progresses.

It looks like China is still in a holding pattern ready to pounce when needed.
The open interest on silver is  still highly elevated.  Gold has a low OI with a low gold price.  Silver has a high OI with a low silver price.  Something has got to give!!

As far as the silver inventory, it looks compromised as well.  Shanghai is in complete silver backwardation and yet comex seems to import huge amounts of silver. Note that every day we say either 500'000 or low 600,000 entry as a deposit or withdrawal.  The odds of this happening  3 out of 5 days on the comex on a continual basis is suspect.
These look like a paper deposit/withdrawal where no real metal enters or leaves.  Only when silver metal leaves an official vault does real metal leave.  


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:

sept 30.2014: we lost another 2.39 tonnes of gold inventory heading towards Shanghai.

sept 29.2014: we lost another 1.2 tonnes of gold inventory heading straight to Shanghai.  Later in this report you will see that 50 tonnes of gold exited SGE.  Thus the 1.2 tonnes is a drop in the bucket as to the inventory needed.  No doubt much of the gold will now come from the FRBNY:

current inventory: 772.25 tonnes.

sept 26.2014: no change in inventory/773.45 tonnes

sept 25  no change in gold inventory/773.45 tonnes

Sept 24.2014: no change in gold inventory/773.45 tonnes

sept 23.2014: another 1.20 tonnes of gold leaves the GLD heading for China.

Inventory:  773.45

Sept 22.2014:  another 1.79 tonnes of gold leaves the GLD heading for China:

inventory: 774.65 tonnes 

Sept 20.2014: a whopping 7.78 tonnes of gold left the GLD heading to China.
Inventory tonight:  776.44

sept 18.2014: no change in inventory/784.22

sept 17.2014 no change 874.22 tonnes
Sept 16.2014:  we lost a massive 4.18 tonnes of gold from the GLD/Inventory 784.22  

Sept 15.2014  no change in gold inventory at the GLD/788.40

Sept 11.2014: a slight decrease of .32 tonnes and this will be used to pay for fees , storage and insurance/Inventory 788.40

Sept 10.2014: we finally had an addition of  exactly 3.000 tonnes of gold/
new inventory:  788.72 tonnes.
As I have stated in the past I do not think the inventory will go below the 780 tonne mark as it is now all paper.  In order to satisfy China, the crooks will need to rob gold stationed at the FRBNY

Sept 9.2014: no change in gold inventory/785.72 tonnes

Sept 8.2014: no change in gold inventory/785.72 tonnes
Sept 5: no change in gold inventory/785.72 tonnes of gold.

Sept 4: wow!! a huge loss of  4.79 tonnes of gold/this gold is off to Shanghai
tonnage tonight:  785.72

Sept 3.2014: tonnage 790.51/ a loss of 2.69 tonnes of gold.
This gold is heading to the shores of Shanghai.  Remember that Shanghai takes in roughly 33 tonnes per week.

Sept 2.2014: tonnage 793.20 tonnes/a loss of 1.8 tonnes of gold.

August 29.2014/tonnage 795.00 a loss of .6 tonnes  (probably to pay insurance and storage fees)

August 28.2014: a loss from last week of 4.48 tonnes of gold.

 Today we lost 2.39 tonnes of gold in   gold inventory  ( Inventory:  769.86 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). 

GLD gold:  769.86 tonnes.


And now for silver:
As many of you know, I believe that the silver inventory is basically gone through hypothecation and  other means.  It looks like the increase in the inventory at the SLV is nothing but a paper addition.  I doubt very much if any real silver entered their vaults.

again note the difference between the SLV and GLD:  GLD loses gold and SLV gains silver.  The bankers cannot raid silver from the SLV because there is no physical silver present .

sept 30.2104: no change in inventory/inventory 346.011 million oz

sept 29.2014: an addition of 767,000 oz/new inventory  346.011 million oz

sept 26 no change in inventory/remains at 345.244 million oz.

sept 25 another huge addition of 2.398 million oz of silver was added late last night (after I posted).  New inventory 345.244 million oz.

Sept 24.2014: no change in silver inventory at the SLV/remains at 342.846 million oz.

Sept 23.2014: another gain of 2.397 million oz of silver into the SLV/inventory 342.846 million oz  (note the difference between GLD and SLV movements)

sept 22.2014:  strange again/inventory remains the same:  340.449 million oz

Sept 19.2014:  inventory remains constant at 340.449 million oz

Sept 18.2014: late last night we picked up another 960,000 oz/inventory now 340.449 million oz

sept 17.2014: no change in silver inventory 339.489  million oz

Sept 16.2014: no change in silver inventory at the slv/339.489 million oz

 Sept 15.2014   today a massive 3.354 million oz increase  (inventory 339.489

Sept 12.2014: another gain of 1.486 million oz (inventory 336.132 million oz)

Sept 11.2014:  no change in silver inventory at the SLV

sept 10.2014: an increase of 1.439 million oz.  (334.646 million oz)

Sept 9.2014: no change in inventory  333.207 million oz

Today, Sept 26.2014 an addition of 767,000 oz in silver inventory /(346/011 million oz.)


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 7.9% percent to NAV in usa funds and Negative 7.8%  to NAV for Cdn funds
Percentage of fund in gold  60.80%
Percentage of fund in silver:38.70%
cash .7%

.( Sept 30/2014)   

2. Sprott silver fund (PSLV): Premium to NAV rises to positive 4.45% NAV (Sept 30/2014)   
3. Sprott gold fund (PHYS): premium to NAV  falls to negative -0.67% to NAV(Sept 29/2014) 
Note: Sprott silver trust back hugely into positive territory at 4.45%. 

Sprott physical gold trust is back in negative territory at  -0.67%

Central fund of Canada's is still in jail.


Now  your more important physical stories today:

Singapore starts trading in kilobars in two weeks.
The contracts are 25 kilobars (32.15 oz each) and there are 5 daily contracts.
Fineness will be 99.99

(courtesy Mark O'Byrne)

Singapore Becoming Global Gold Hub - Launches Kilo Bar Contract And Gold ATMs

Published in Market Update  Precious Metals  on 30 September 2014
By Mark O’Byrne

Singapore continues its push to be a global gold hub. The new exchange traded Singapore kilobar gold contract will launch in less than two weeks - on October 13. The new contract is a 1 kilogramme physically deliverable gold contract for the Asian and global wholesale gold market. 

Launching of SGX Gold Futures Contract: (from left) Harshika Patel, Managing Director, JP Morgan; Sunil Kashyap, Managing Director, Bank of Nova Scotia; Aram Shishmaniam, CEO, World Gold Council; Ng Cheng Thye, President, Singapore Bullion Market Association; Seah Moon Ming, Chairman, International Enterprise (IE) Singapore; Muthukrishnan Ramaswami, President, Singapore Exchange; Philip Hurley, CEO (South East Asia), Standard Merchant Bank; Jeremy East, Managing Director (Global Head of Metal Trading), Standard Chartered Bank.
In a joint statement, International Enterprise (IE) Singapore, Singapore Bullion Market Association (SBMA), Singapore Exchange (SGX) and the World Gold Council, announced the new contract yesterday.
The contract will be traded on SGX, the first wholesale 25 kilobar gold contract to be offered globally, and this is a collaboration among the four parties. The SGX is Singapore’s securities and derivatives exchange and clearing and depository provider.
This caters to the very high demand for physical gold in China and throughout Asia, which has increased significantly over the last decade.
This new gold contract differs from others in that as well as acting as a price discovery benchmark for 1kg gold bars in the Asian region, it has been specifically designed to actually deliver gold to large buyers, wholesalers and institutions, presumably including central banks. 
Settlement of the contract is in gold 1kg bars and not in cash. A 1kg gold bar is 32.15 troy ounces.
The Singapore contract will be in lots of 25 kilogrammes and denominated in U.S. dollars. It will trade for three hours in the Singapore morning time. Singapore is 7 hours ahead of London and 12 hours ahead of New York, and 2.5 hours ahead of the Indian market, but is in the same time zone as both Hong Kong and Shanghai.
Six consecutive daily contracts will trade at the same time, so when one contract expires, another will be added.
Physical settlement is two days after trade date and consists of 99.99 purity 1 kilogramme gold bars that meet the approval of the Singapore Bullion Market Association (SBMA) good delivery list . This means that wholesalers will be able to gauge demand and supply of 1 kg bars over the following week. 
Some analysts have said that the protests in Hong Kong and the uncertain political outlook in Hong Kong may give Singapore an advantage in terms of becoming Asia and possibly the world’s global gold hub. 
Separately, the first gold-dispensing automated teller machine in Asia have been launched in Singapore. The two ATMs are in Marina Bay Sands and Resorts World Sentosa hotels.
Launched by Asia Gold ATM, Singapore is the fourth country to have the facility, next to the UAE, the UK and the US. Items such as 1g to 10g pure gold bars, as well as customised gold coins, can be bought from the machine.
Last Wednesday, the day the machines were unveiled to the public, a one gram pendant sold for $100 while it was $660 for a 10 gramme. The items can be paid through credit card or cash. Gold will be sold at different prices daily, based on the day's global prices.
The ATMs mean little or nothing with regards to Singapore becoming a global gold hub. However, they show how gold is respected and sought after in Singapore and the people and institutions of Singapore, have a significant cultural affinity with gold.
Unlike in the west, where people who believe in using gold for wealth preservation or for saving are sometimes called names and dismissively called “gold bugs”.
Gold and money, throughout history has flowed to where it is better treated. Today, gold continues to flow from West to East. A sign of shifting economic fortunes.

Today’s AM fix was USD 1,210.00, EUR 959.94 and GBP 746.55 per ounce.  
Yesterday’s AM fix was USD 1,217.75, EUR 960.67  and GBP 750.54 per ounce.
Gold in Singapore was essentially flat and trading at $1,216.55 an ounce prior to a sharp bout of selling in late morning trading in London quickly pushed gold down nearly $10. 
Gold fell $1.00 or 0.08% to $1,216.50 per ounce and silver slipped $0.14 or 0.79% to $17.49 per ounce yesterday.

Gold has declined 5.5% in September, its worst monthly performance since June 2013, when it hit a 9 month low at $1,206.85 last week.
Silver was set for a third consecutive monthly loss, and platinum  is on track for an 8% drop, its worst monthly decline since May 2012.
Palladium has been by far the worst performer in the category with a 12.4% decline.
However, in physical markets, data from the U.S. Mint show that it has sold over 50,000 ounces of American Eagle gold coins so far in September, its highest monthly sales since January.
There is evidence too that demand has picked up significantly in India and China. 
The world’s largest bullion buyer, China imported more gold in September than in the previous month due to demand from retailers stocking up for the upcoming National Day holiday. 
In the last month, withdrawals from the SGE have totalled over 170 tonnes – this suggests an annual rate of over 2,200 tonnes. "The physical volumes have been high this month compared to August. I would say imports could be at least 30% higher than last month," a trader with one of the 15 importing banks in China told Reuters.

Meanwhile, demand in India - the second biggest buyer of gold - has also picked up significantly in recent days as the festival and wedding season began in earnest.
Speculators continue to sell paper and electronic gold while prudent buyers, in Asia and elsewhere  continue to accumulate.

(Mark O'Byrne)


John Embry and James Turk talk with Eric King of Kingworldnews)

(courtesy John Embry/James Turk/Eric King/Kingworldnews

Embry, Turk tell King World News about completely corrupted markets

6p ET Monday, September 29, 2014
Dear Friend of GATA and Gold:
Sprott Asset Management's John Embry tells King World News today that the U.S. government now is simply making up economic statistics. He notes the constant algorithmic futures trading smashing the price of silver and says he considers the metal to be the world's most undervalued asset. The interview is excerpted at the KWN blog here:
Also at King World News, GoldMoney founder James Turk says Comex spot silver prices seem to be falsified and that the monetary metal is in backwardation. Turk also notes that the Financial Times has permitted itself to describe the investment world as "distorted," a more polite term than "manipulated." Turk's interview is excerpted at the KWN blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


As we have been telling you over the past several years;  there are no free markets:

(courtesy Steve Lonegan/MarketWatch.com)

Steve Lonegan: There are no free markets when markets don't set money's value

There Ain't No Such Thing as a Free Market
By Steve Lonegan
Wednesday, September 10, 2014
Well-meaning conservative and libertarian groups beat the drum for something called "free markets." Liberal groups blame these "free markets" for many of the world's evils.
Here's the harsh reality neither side will tell you. There ain't no such thing as a "free market."
The free market ceased to exist more than 40 years ago. Nixon drove a stake through its heart by shutting down the Bretton Woods world monetary system, without which free markets cannot exist.
It cannot exist in its true form because the very money that is the foundation of our economy now is just pieces of paper: "legal tender for all debts public and private." Money's value is controlled not by the markets but by a federal agency, the Federal Reserve, that thinks it thereby can control the economy ... like tuning a carburetor on a car. ...
... For the remainder of the commentary:


Alan Greenspan tries to get his 2 cents worth in explaining why China is hoarding gold.

He is not truthful!

(courtesy Alan Greenspan/zero hedge)

Why Is China Hoarding Gold? Alan Greenspan Explains

Tyler Durden's picture

Remember when instead of pontificating on and explaining the consequences of three decades of devastating, ruinous, irresponsible Fed policies, and eagerly sharing ideas on how to "fix" these unfixable problems, Alan Greenspan was the primary culprit behind everything that is now wrong and broken with the world's financial system? Oh, and also was not an "Austrian" economist?
Good times.
Today we bring you the "other" Greenspan: the one who is blissfully unaware that, almost singlehandedly, he destroyed western capitalism, which is now living day to day, on borrowed time from one central bank printer to another. Ironically, the topic of his most recent Op-Ed for the Council of Foreign Relation's Foreign Affairs magazine, is none other than the default Kryptonite to every central banker, himself included if only a decade or so ago: gold.
And specifically the reason why, as we have covered consistently over the past 3 years, while the rest of the world is selling (if only paper gold), China just can't get enough of (physical) gold.
So for everyone curious what the world's most infamous central banker, probably of all time, thinks about China's gold hoarding ambitions, read on.
* * *
Why Beijing Is Buying
By Alan Greenspan, first posted in Foreign Affairs
If China were to convert a relatively modest part of its $4 trillion foreign exchange reserves into gold, the country’s currency could take on unexpected strength in today’s international financial system. It would be a gamble, of course, for China to use part of its reserves to buy enough gold bullion to displace the United States from its position as the world’s largest holder of monetary gold. (As of spring 2014, U.S. holdings amounted to $328 billion.) But the penalty for being wrong, in terms of lost interest and the cost of storage, would be modest. For the rest of the world, gold prices would certainly rise, but only during the period of accumulation. They would likely fall back once China reached its goal.
The broader issue -- a return to the gold standard in any form -- is nowhere on anybody’s horizon. It has few supporters in today’s virtually universal embrace of fiat currencies and floating exchange rates. Yet gold has special properties that no other currency, with the possible exception of silver, can claim. For more than two millennia, gold has had virtually unquestioned acceptance as payment. It has never required the credit guarantee of a third party. No questions are raised when gold or direct claims to gold are offered in payment of an obligation; it was the only form of payment, for example, that exporters to Germany would accept as World War II was drawing to a close. Today, the acceptance of fiat money -- currency not backed by an asset of intrinsic value -- rests on the credit guarantee of sovereign nations endowed with effective taxing power, a guarantee that in crisis conditions has not always matched the universal acceptability of gold.
If the dollar or any other fiat currency were universally acceptable at all times, central banks would see no need to hold any gold. The fact that they do indicates that such currencies are not a universal substitute. Of the 30 advanced countries that report to the International Monetary Fund, only four hold no gold as part of their reserve balances. Indeed, at market prices, the gold held by the central banks of developed economies was worth $762 billion as of December 31, 2013, comprising 10.3 percent of their overall reserve balances. (The IMF held an additional $117 billion.) If, in the words of the British economist John Maynard Keynes, gold were a “barbarous relic,” central banks around the world would not have so much of an asset whose rate of return, including storage costs, is negative.
There have been several cases where policymakers have contemplated selling off gold bullion. In 1976, for example, I participated, as chair of the Council of Economic Advisers, in a conversation in which then U.S. Treasury Secretary William Simon and then Federal Reserve Board Chair Arthur Burns met with President Gerald Ford to discuss Simon’s recommendation that the United States sell its 275 million ounces of gold and invest the proceeds in interest-earning assets. Whereas Simon, following the economist Milton Friedman’s view at that time, argued that gold no longer served any useful monetary purpose, Burns argued that gold was the ultimate crisis backstop to the dollar. The two advocates were unable to find common ground. In the end, Ford chose to do nothing. And to this day, the U.S. gold hoard has changed little, amounting to 261 million ounces.
I confronted the issue again as Fed chair in the 1990s, following a decline in the price of gold to under $300 an ounce. One of the periodic meetings of the G-10 governors was dedicated to the issue of the European members’ desire to pare their gold holdings. But they were aware that in competing with each other to sell, they could drive the price of gold down still further. They all agreed to an allocation arrangement of who would sell how much and when. Washington abstained. The arrangement was renewed in 2014. In a statement accompanying the announcement, the European Central Bank simply stated, “Gold remains an important element of global monetary reserves.”
Beijing, meanwhile, clearly has no ideological aversion to keeping gold. From 1980 to the end of 2002, Chinese authorities held on to nearly 13 million ounces. They boosted their holdings to 19 million ounces in December 2002, and to 34 million ounces in April 2009. At the end of 2013, China was the world’s fifth-largest sovereign holder of gold, behind only the United States (261 million ounces), Germany (109 million ounces), Italy (79 million ounces), and France (78 million ounces). The IMF had 90 million ounces.
However much gold China accumulates, though, a larger issue remains unresolved: whether free, unregulated capital markets can coexist with an authoritarian state. China has progressed a long way from the early initiatives of Chinese leader Deng Xiaoping. It is approaching the unthinkable goal of matching the United States in total GDP, even if only in terms of purchasing-power parity. But going forward, the large gains of recent years are going to become ever more difficult to sustain.
It thus seems unlikely that, in the years immediately ahead, China is going to be successful in vaulting over the United States technologically, more for political than economic reasons. A culture that is politically highly conformist leaves little room for unorthodox thinking. By definition, innovation requires stepping outside the bounds of conventional wisdom, which is always difficult in a society that inhibits freedom of speech and action.
To date, Beijing has been able to maintain a viable and largely politically stable society mainly because the political restraints of a one-party state have been offset by the degree to which the state is seen to provide economic growth and material wellbeing. But in the years ahead, that is less likely to be the case, as China’s growth rates slow and its competitive advantage narrows.


Ned Naylor Leyland adds his two cents worth in the William H Cohan non publication affair:

(courtesy Ned Naylor Leyland)

Ned Naylor-Leyland: Journalist can and should publish his report on silver rigging

By Ned Naylor-Leyland
Investment Director
Quilter Cheviot Investment Management
London, England, United Kingdom
Tuesday, September 30, 2014
Last week I wrote about financial journalist William Cohan's unpublished article about silver market manipulation and a regulatory cover-up. This week Cohan has claimed that lawyers for London metals trader and market-rigging whistleblower Andrew Maguire were stopping him from publishing his article.
Cohan is demanding that the main perpetrator of metals manipulation (the institution also known as Voldemort) be named specifically in the article. Without this, Cohan says, he won't publish.
Contrary to his claim, this was never agreed by Maguire's lawyers and for legal reasons cannot happen. But since everyone has a pretty good idea who the institution is anyway, I find it ridiculous that Cohan is making a demand that cannot be met and using that as a reason to remain mute. Contrary to what he appears to be saying, this detail wasn't agreed in the version of the article he wanted to put in newspapers.
Cohan appears to want this all to go away, which it won't.
I repeat: Cohan told me that his article "got killed everywhere I took it" and that it is "an amazing story that really should be out there." These statements and that he did see the evidence and did write a long expose of the subject are unavoidable.
Cohan's thoughts on the matter, in light of his reputation, would be worthwhile indeed and metals investors deserve to have this subject cleared up. If, as well may be the case, silver and gold prices are being managed with not just impunity but also with the collusion of the government, then this truly is a monster of a story with far-reaching implications.
Maguire has been relentless in pursuit of the prosecution of criminal behavior in the metals markets, so any suggestion that he is getting in the way of Cohan's publishing his article is really absurd. Such a complaint deflects the blame, as of course Cohan said and thought he could get the article published in the mainstream financial news media and then discovered otherwise.
Who other than Maguire approached the government regulators with folders full of evidence, risked life and limb to do this, and will not let go of the subject despite a monstrous cover-up admitted by a former member of the U.S. Commodity Futures Trading Commission, Bart Chilton?
The article Cohan wrote can and should be published. He already has mentioned one of the things he was told not to publish -- that other enforcement agencies have been involved -- and the other detail he is insisting on cannot be included.
Enough of the obfuscation, please, Mr. Cohan. Let's see your article, on your own Internet site if you can't publish it elsewhere.


(courtesy Koos Jansen)

China Aims For Official Gold Reserves At 8500t

Published: 29-09-2014 20:52
China Aims For Official Gold Reserves At 8500t
China should accumulate 8,500 tonnes in official gold reserves, more than the US, according to Song Xin, President of the China Gold Association, General Manager of the China National Gold Group Corporation and Party Secretary. He wrote this in an opinion editorial published on Sina Finance July 30, 2014. Gold is moneypar excellence in all circumstances and will help support the renminbi to become an international currency as "gold forms the very material basis for modern fiat currencies", Song notes. In the short term the Chinese will not back the renminbi with gold (establish a fixed renminbi price for gold), butsupport the renminbi with an appropriate amount of gold in reserve to allot credibility and manage its value - in my humble opinion.   
The previous President of the China Gold Association (CGA), Sun Zhaoxue, was also the General Manager of the China National Gold Group Corporation, these jobs are apparently connected. Song took over from Sun as CGA President and Manager of China National Gold in February 2014. Remarkably, when Sun was in office he wrote equally candid articles (in Chinese) about the importance of gold for China's economy. Sun's most renowned article is titled "Building A Strong Economic And Financial Security Barrier For China", published on August 1, 2012, in Qiushi magazine, the main academic journal of the Chinese Communist Party’s Central Committee (click here for a translated version). From Sun:
The state will need to elevate gold to an equal strategic resource as oil.
Currently, there are more and more people recognizing that the ‘gold is useless’ story contains too many lies. Gold now suffers from a ‘smokescreen’ designed by the US, which stores 74% of global official gold reserves, to put down other currencies and maintain the US Dollar hegemony. Going to the source, the rise of the US dollar and British pound, and later the euro currency, from a single country currency to a global or regional currency was supported by their huge gold reserves. 
Individual investment demand is an important component of China’s gold reserve system, we should encourage individual investment demand for gold. Practice shows that gold possession by citizens is an effective supplement to national reserves and is very important to national financial security.
Song's vision is in line with these statements which confirms the strategy of the Communist Party of China to aggressively accumulate official gold reserves and to stimulate individual gold investment in order to strengthen the Chinese economy and protect it from internal and external shocks.
Note, Song is the President of the CGA that for political reasons largely understates Chinese gold demand figures in order to conceal China's true hunger. Though clearly expressing his point of view in the next article, he could not disclose deviant data regarding CGA demand numbers. Actual Chinese wholesale gold demand in 2013 was 2197 tonnes, as is confirmed numerous times.   
Translated by LK, gold investor from Hong Kong. 

Gold Will Support Renminbi As It Moves To Join World

By Song Xin, General Manager of the China National Gold Group Corporation, Party Secretary and President of the China Gold Association.
2014-05-06 edition 6
For China, the strategic mission of gold lies in the support of RMB internationalization, and so let China become a world economic power and make sure that the "China Dream" is realized. 
Gold is the only thing carrying the dual mantels of a commodity as well as a monetary substance. It's both a very 'honest' asset and forms the very material basis for modern fiat currencies. Historically, gold has played an irreplaceable role in responses to financial crises and wars as it comes to protecting a country's economic security. Because of this, gold carries with it an honored and divine-given strategic mission in the ascend of the Chinese people and the pursuit of the "China Dream".

The Important Function Of Gold

Gold is the world's only monetary asset that has no counter party risk, and is the only cross-nation, cross-language, cross-ethnicity, cross-religion and cross-culture globally recognized monetary asset. Gold is the last protection for a country's economic security; it safeguards a nations sovereignty in times of crises. A textbook example happened in 1997 during the Asian financial crisis. To work through Korea's severe debt problem, the IMF's condition for a rescue package was to sell large enterprises. In the end, the Korean government had no choice but to call on its people to donate gold to settle the foreign debt, and it was only through this act that the chaebols at the center of the country's economy and independence survived.
From our country's point of view, gold has played an irreplaceable role in the development of our economic society. In the wars during the Revolution [1921-1937] gold provided strong support in the economic development of the liberated zones and achievements in reforms; in the three years of natural disasters, the nation used gold reserves to obtain information on living and production conditions and took actions to alleviate hardship. At the start of the great Reforms (1980's), gold boosted our foreign reserve levels and helped the promising private sector and it advanced society. After 1989, we suffered economic sanctions from Western countries for a while and the PBOC used our gold reserves to enter into swap agreements to obtain needed foreign currencies. Right now, gold is still serving its functions to protect against economic risks; contributing in ever more important ways to our financial security. For the moment, although in general the international scene is peaceful, conflicts can develop in certain regions. If there should be a blockade or regional war, there could be only one method of payment left: gold.

The strategic Mission Of Gold

Since the 18th People Congress, general secretary Xi Jinping brought up the goal to revive our nation, to realize the "Chinese dream ". One important part of this dream is to have a strong economy. Though China is already the world's second largest economy, there is still a long way to go to become an economic powerhouse. The most critical part to this is that we don't have enough say in matters such as international finance and matters regarding the monetary system, the most obvious of which is the fact that the RMB hasn't fully internationalized.
Gold is a monetary asset that transcends national sovereignty, is very powerful to settle obligations when everything else fails, hence it's exactly the basis of a currency moving up in the international arena. When the British Pound and the USD became international currencies, their gold reserve as a share of total world gold reserves was 50% and 60% respectively; when the Euro was introduced, the combined gold reserves of the member countries was more than 10,000 tonnes, more than the US had. If the RMB wants to achieve international status, it must have popular acceptance and a stable value. To this end, other than having assurance from the issuing nation, it is very important to have enough gold as the foundation, raising the 'gold content' of the RMB. Therefore, to China, the meaning and mission of gold is to support the RMB to become an internationally accepted currency and make China an economic powerhouse.
In this view, our gold reserves are very low, both in terms of a nominal level as well as a percentage of official reserves. From the nominal level, the total official reserves of gold in the world stands at 30,000 tonnes, of which the USA has been occupying the first place at 8133.5 tonnes - 26 % of the world total. Germany has 3387.1 tonnes and Italy and France both hold more than 2,400 tonnes. Ours is 1054 tonnes at the sixths place - only 3.4% of the world total. As a percentage of a country's total reserves, US gold reserves amount to 71.7 % and European nations have kept their levels between 40% to 70%. The average of the world is about 10%, but for us it's only 1%.
That is why, in order for gold to fulfill its destined mission, we must raise our gold holdings a great deal, and do so with a solid plan. Step one should take us to the 4,000 tonnes mark, more than Germany and become number two in the world, next, we should increase step by step towards 8,500 tonnes, more than the US.

All-round, Multi-channel Increases In Gold Levels. Fulfill Our Part In Enabling Gold To Accomplish Its Strategic Mission.

How to achieve growth in our gold reserve? Apart from the PBOC directly buying in the open market, we should use also use the following strategies:
1. Relax gold import controls, grant large scale gold enterprises permits to import gold. In 2013, our gold consumption reached 1176.4 tonnes. Compared to the 426 tonnes of local production, there is a shortage of 750 tonnes. To meet this gap, we presently let the 12 commercial banks with gold-trading rights import standard gold ingots. But these banks lack the ability to refine and assay gold, they can only import standardized gold, missing the large amount of non-standardized gold and wasting the international resources that we could reach. By relaxing import controls, the large-scale gold companies can then obtain this gold and use their own technology to refine it into standard quality gold. This can help meet demand in the market, or turn gold into official reserves as required.
2. Establish a gold reserve building fund. This can be seeded using capital from the State Treasury, and open it for participation by private-sector capital in the public. It should be controlled by the State and used to target diverse off-shore gold resources, acquire mines and raw gold and in so doing, extend our reach beyond our borders and add a layer of opaque reserves to otherwise standard reserve numbers. 
3. Establish a Gold bank. We need to establish our gold bank as soon as possible, and enable it to break the barrier between the commodity and monetary world. It can further help us acquire reserves and give us more say and control in the gold market. It may be guided under the PBOC and led by the China Gold Association, involving leading gold industry companies and commercial banks, and it's business would include: gold pricing (fix), gold financing and leasing, gold-guaranteed payments, gold saving accounts, gold lending, gold production chain financing and issuance and trading of paper gold and other gold investments. This gold bank can then naturally use market-oriented methods to change commodity gold into monetary gold reserves, thus help us increase our strategic gold reserves.


BIS is main mechanism for manipulating the gold market, Rickards says

2:15p ET Tuesday, September 30, 2014
Dear Friend of GATA and Gold:
Interviewed by the Turkish financial journalist Erkan Oz at the Forex World conference in Istanbul last week, fund manager and author James G. Rickards remarked that central banks use the Bank for International Settlements for manipulating the gold market.
As quoted by Oz, Rickards said the BIS is "the primary intermedia for manipulating the gold market. That is not a mystery. ... This BIS is manipulating the gold market. They are the intermedia between the central banks and commercial banks and other central banks. They have been doing that."
The interview is posted at Oz's Internet site, Financial Flood, here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc


From Lemetropole cafe's Rhody who talks about the silver scandal and references myself along with Bill Holter:

Not long after James checked in, my pilot friend Norm Bailey forwarded a note he received from "Rhody," who contributed commentary here over the years. This is his take on the silver market and what CafĂ© member Harvey Organ had to say in his recent Greg Hunter interview…
Harvey is a little inarticulate, so the interview comes off as unclear. I know what he is talking about, but for example, Harvey will refer to ‘it’ repeatedly and if you do that often enough, the whole thread weakens. A few things are clear: December is a critical month for silver, and therefore gold. These guys think China is behind the huge, entrenched long position at COMEX, now resting at 850 Moz. COMEX, and probably the entire West does not have this silver. So, when China demands delivery, COMEX will default. That, in turn will blow up gold.
Apparently, as told by Harvey Organ and others, back in 2003, the United States exhausted its Strategic Stockpile of silver that it had been using to suppress the silver market. The U.S. approached China, which still had significant silver reserves at its central bank and persuaded them to lease their silver to the U.S. for ten years in exchange for Most Favoured Nation Status. How much silver was involved is unknown. It would be a lot.... This silver was sold to back futures contracts to sell down the market. In 2013, the lease was up and China asked for its silver back. The U.S. told them it was gone and defaulted. YOU DON’T DO THAT TO THE CHINESE! The Chinese began buying COMEX futures and holding them, while the West blasted the paper silver market to try to force more silver into the market. The more the price of paper silver fell, the more the Chinese bought and held. (You must realize that this is the opposite of what usually happens in the futures market. Usually as the futures sell off, investors sell out and that causes the Open Interest to fall. When the OI reaches a low, the price does too, and then the market turns as speculative longs buy back the cheapened contracts... That hasn’t happened over the past year and a half or so. Now we sit with silver at extreme lows (down from $50) while open interest is at record highs) Increasingly, analysts believe that these persistent longs are the Chinese, wanting their silver back. When they demand delivery COMEX will fold. Harvey thinks this will happen in December because that is when the last bit of silver in Shanghai gets delivered and since China needs over 100 Moz of silver for industrial consumption each year from abroad, Harvey thinks that’s when COMEX will face the demand for delivery.
Could Harvey Organ be mistaken? Sure. He has been before, and timing is the most difficult skill in trading. China gets a lot of silver from contract smelting and refining too, so if the price rises a little as Shanghai’s stockpiles shrink, more of this contract metal may stay in China because of arbitrage. This would extend the BIG BANG. Squeezing COMEX so that it defaults will end paper pricing of gold and silver and therefore end the cheapened metal manipulation forever. No more cheap bullion for anyone, including the Chinese. I expect there will be discussion and trade offs between China and the U.S. to try to save COMEX and prolong the fraud in these markets.
Silver was hit for 50 cents more this morning. Harvey thinks the suppression goes on until December and then we see the blow up. Ignore the spot price. It’s a fabrication. Keep stacking real ounces and avoid futures and derivative forms of gold and silver. This is all good advice. ALL the original directors of the CFTC are gone now. Rats leaving a sinking ship. The CFTC has colluded with the bullion banks and the Government to prolong and cover up the fraudulent pricing of silver particularly but also gold and other commodities. Ducking out is an attempt to distance these directors from the greatest financial scandal the world has ever seen. The futures market is a financial sewer. What is coming in December or early next year is likely to be very ugly.
I hope Harvey Organ, and Bill Holter are wrong, but I very much fear they are right. If the past 15 years has taught me anything, it is that absolutely NOTHING is the way it seems. Fraud and deceit are what keep the West alive, and everyone except the 1% suffers. There are now too many victims for this system to survive.
Perhaps the above will help in understanding Harvey Organ’s interview below... It is worth a listen.... Bryan


A great piece from Bill Holter tonight on the huge derivatives outstanding initiated by our bankers:

(courtesy Bill Holter/Miles Franklin)

It's no laughing matter.

 I read an article penned by Michael Snyder and posted on ZeroHedge http://www.zerohedge.com/news/2014-09-25/5-us-banks-each-have-more-40-trillion-dollars-exposure-derivatives last week and could only shake my head.  In fact, the more I thought about it the more I started laughing.  Yes, I laughed until tears came to my eyes.  This is really not normal for me to break up laughing so hard at anything and certainly when it's not even close to a laughing matter.  Why did I laugh?  Because it struck me as so funny that the "side bets" are so much larger than the system itself yet people expect the system to survive?
  Snyder dug into the OCC's latest quarterly report to find that the U.S. now has a 5th bank with derivatives held surpassing the $40 trillion mark, yes, TRILLION!  JP Morgan of course has the largest U.S. position with $68 trillion while DeutschBank leads globally with $75 trillion.  If you recall, some 4 years back the BIS changed the "way they count" derivatives and what "was" globally $1.4 quadrillion (with a "Q") was magically recounted and restated at $700 trillion.  Maybe they figured any number starting with a "Q" was just too scary to allow out to the public?  I personally believe the "Q" number but for this exercise let's assume the $700 trillion figure is correct
  How much is $700 trillion?  We can make a comparison and get some perspective by looking at a few other benchmarks.  If we add up total global public debt we get a number of $54 trillion.  If we include ALL global debt it is about $230 trillion.  Looking at global stock market capitalization we get a number a little over $60 trillion.  So, adding the values of ALL debt and ALL stocks on the planet together we come up short of $300 trillion.  In case you were wondering, global GDP for 2012 was just shy of $72 trillion and the value of all gold ever mined we get a number of a puny $6 trillion.
  If you take "only" the derivative holding of just the five biggest banks in the U.S., it dwarfs everything else.  How is this really possible?  How is it that the "bets" made and "insurance" purchased can be bigger than the system itself?  I think the best way to look at this is the house has become far too large for the foundation.  The house has grown far outside of the footings and grown multiple stories high.  The "growth" of this financial house has been caused by the overuse of debt and the ease of financial derivatives.  They were "good" once upon a time and did serve a purpose of hedging and protection.  This all changed as they became used to "force" pricing, negate unwanted market moves and to paint whatever picture was desired.  The problem is this, these derivatives are already in place and have already been used (spent) to paint "pretty prices", it will take exponentially more derivatives to keep the picture painted correctly.  The "bullets" have already been spent so to speak.  This is a problem, there is not enough equity (collateral) left to create more derivatives from but they are needed to keep the game going... a serious problem.
  Why did I make these comparisons?  I wanted to show you just how BIG the derivatives market really is.  The derivatives market is so big (even after the BIS lowered their total estimate by half) it is truly a "tail that wags the dog itself"!  Just the top 5 U.S. banks control $280 trillion worth of derivatives notional value, this is about equal to all debt and all stock values combined ...for the entire planet!  When this manmade chain of financial instruments breaks, there is no entity on the planet big enough who can ride in on a white horse to save the situation.  The Fed has blown their balance sheet up fivefold to get to where they are now.  This was in response to the last crack up.  They cannot go another fivefold from here, even if they could it would still not be enough to stop the pyramid from crumbling. 

  I wrote yesterday about how the public has become "comfortably numb", a break in derivatives will change ALL of this.  The banks have bet their assets at least 30 times and their capital 100's of times over ...and with it "your" savings.  The pyramid will come down and when it does you have to ask yourself "what will have value"?  The answer of course is and always has been "money".  Gold and silver have been real "money" for thousands of years, paper monies which have been "legislated" into having value will be broken as badly as the derivatives, the banks and most all markets. 
  Do not try to time this event because being even 1 second too late will affect you for your entire lifetime.  You must also take into consideration where and how you store your "money".  As I have said many times before, having at least a portion of your "savings" out of the country and stored in a non bank vault is a wise idea.  Miles Franklin offers storage at the Brink's facility in Montreal and can offer storage solutions in Zurich, Singapore and also Hong Kong.  I cannot stress how important it is now to have capital out of the way of the oncoming financial freight train barreling down the tracks.  Mathematically the derivatives monster will derail as it is manmade and run on manmade "assumptions".  No one knows the timing but as I said earlier, being just one second late will last and ruin many a lifetimes.  Regards,  Bill Holter 
  P.S.  on a completely side note, my amigo Principe' is "forecasting" a hard winter here in South Texas.  He started growing "pelito's" (little hairs) about 3 weeks ago which is very early and much earlier than last year which was the hardest winter I can ever remember. 

Early Tuesday morning trading from Europe/Asia

1. Stocks mostly up  on  Asian bourses (except Nikkei, Hang Sang,) with the lower yen  values   to 109.81

Nikkei down 137 points or 0.84%
3. Europe stocks all green except London/Euro down USA dollar index down at 86.20.  Chinese bourse Shanghai up as  the yuan strengthens  in value  to 6.13767 per usa dollar/yuan. (due to Riots in Hong Kong)
3b Japan 10 year yield at .52%/Japanese yen vs usa cross now at 109.81/
3c  Nikkei still above 14,000
3d  Rioting in Hong Kong 
3e. Chinese PMI well short of expectations
3fOil:  WTI  94.34 and Brent: 97.32
3g/ Gold down/yen  down;;  yen above 109 to the dollar/
3h Catalan independence fears . Vote Nov 9.2014
3i bad economic data on all fronts which means good news for stimuli across the globe

3k Gold at $1206.50 dollars/ Silver: $17.18

4.  USA 10 yr treasury bond at 2.51% early this morning.

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

(courtesy zero hedge)

A Day Of Global Economic Disappointments Is Just What The Stock Ramp Algo Ordered

Tyler Durden's picture

It has been a night of relentless and pervasive disappointing economic data from just about every point on the globe: first the Chinese HSBC manufacturing data was well short of expectations (50.2 vs. Exp. 50.5), which was promptly spun as bullish and a reason for more stimulus by the PBOC even though the central bank has been constantly repeating it will not engage in western-style shotgun easing. Then Japanese wages, household spending and industrial production came in far below expectations - in fact at levels which suggest Japan is once again in a recession - which once again was spun as bullish, because the BOJ has no choice but to do more of the same failed policies that have made Abenomics the laughing stock of the world. Finally, moments ago Europe reported the lowest inflation data in 5 years, as well as core CPI sliding to just 0.7%, and which was, wait for it, immediately spun as bullish for risk as once again the local central bank would have "no choice but to ease." In other words, thank god for horrible news: because how else will the rich get even richer?
As DB summarizes, in terms of the latest from Hong Kong, the government has withdrawn riot police from the streets as protestors began to calm down. Still that has not deterred tens of thousands of people from pouring into the Central/Admiralty district on Monday night although in comparison with the heated street clash on Sunday evening the mood has been rather peaceful over the last 24 hours. Protests are still ongoing on Tuesday morning as we type although the crowds are smaller. But again this has become somewhat of a routine over the last few days, where protestors tend to diminish during the day but return in the evening and stay throughout the night. The event has attracted international headlines and attention from the West although China is seemingly taking a firm stance on this.
Indeed a spokeswoman from the Foreign ministry has said that Beijing "vehemently objected to illegal actions that undermine the rule of law and social security," adding that any international intervention in China's matters was also unacceptable?. These came just before comments from Britain’s call for "constructive talks" and hopes that it would eventually lead to ?a meaningful advance for democracy?. A White House spokesman has also urged Hong Kong authorities to "exercise restraint" and protesters to "express their views peacefully". Chinese authorities have also tightened its grip on social media with the number of restricted Weibo (a Twitter like service) posts increasing fivefold between last Friday and Sunday (SCMP). Instagram has also been banned in China.
Looking ahead, a bigger crowd is expected to flood the streets leading up to China’s 1 October National Day Holiday on Wednesday. Pro-democracy organisers have also set a Wednesday deadline for a response from the government to meet their demands for reforms and for him to step down as a leader of HK (AP). S&P has said that the protests have minimal implications on HK’s AAA/Stable rating in the near term unless the situation deteriorates severely. The rating agency says HK’s economic performance could be modestly affected but the impact on Hong Kong’s banking system is manageable. Clearly this is still a ‘live’ situation so developments in HK and how it will ultimately be managed by the authorities will be closely watched.
Turning to markets, the Hang Seng (-1.2%) is extending its losses for the fourth consecutive day now and has broken past what is thought to be a support level of 23,000 for the index. Interestingly Chinese equities are faring relatively better (Shanghai Composite -0.1%) despite further data weakness. The final September HSBC Chinese manufacturing PMI index came in at 50.2, versus an initial reading of 50.5 a week ago. Elsewhere in Asia, bourses in Korea, Taiwan and Japan are down -0.5%, -0.2% and -1.2%, respectively. A stronger JPY is perhaps adding pressure to the local markets. Asian IG credit spreads continued to lead 2-4bp wider across the board. That said Indonesia USD bonds is seeing some intraday support with the benchmark 2024 bonds largely unchanged as we go to print.
In Europe, equities trade firmer across the board, with the Spanish IBEX-35 leading the way after Madrid postponed Catalonia’s independence bid. The FTSE-100 slightly underperforms as UK retailer Next warned that the warm weather at the end of September dented its sales growth at the end of Q3, and the Co. may have to revise guidance lower. As such, Next shares fell sharply, and dragged down Marks & Spencer with it, countering the upside in RBS shares today, which rose as the Co. are seen significantly outperforming their guidance due to lower impairment costs.
We have Chicago PMI today which is usually seen as a good preview of ISM manufacturing tomorrow. The market is looking for the headline to slide a touch lower to 62.0 from 64.3 in August. We also have the Consumer Confidence Index and Case-Shiller Home Prices in the US.
Market Wrap
  • S&P 500 futures up 0.3% to 1975
  • Stoxx 600 up 0.2% to 341.6
  • US 10Yr yield up 2bps to 2.5%
  • German 10Yr yield at 0.97%
  • MSCI Asia Pacific down 0.5% to 140.5
  • Gold spot down-0.9% to 1208
Bulletin Headline Summary from RanSquawk and Bloomberg
  • Eurozone Core CPI equals the lowest on record, suggesting the Eurozone’s disinflationary spiral cannot be wholly attributed to falling energy prices
  • EUR and bond yields fall as equity futures rise on hopes that lower-than-expected inflation will drive the ECB to do more
  • Chicago PMI the highlight of a busy data calendar, with Fed’s Powell and BoE’s Miles also due to be speaking
  • Treasuries sold off in overnight trading, with 2Y yield reaching level not seen since May 3, 2011 as Euro-area CPI slowed in September, raising speculation that ECB will use further monetary policy moves to prevent prices from adjusting lower.
  • The dollar’s strongest year since 2008 is a source of growing concern among some Federal Reserve policy makers, who say further gains have the potential to curb economic growth and keep inflation too low
  • Money-market investors who have endured almost-zero interest rates for about six years are bracing for even worse returns after the Federal Reserve limited how much cash it is willing to sop up
  • On his first full business day at Janus Capital Bill Gross got a blue-chip endorsement of his economic outlook from a group of former central bankers
  • Morningstar Inc. cut the rating of Pimco’s Total Return Fund, the world’s largest bond fund, to bronze from gold after co-founder Bill Gross’s exit
  • U.K. economy grew faster than estimated in 2Q, extending a recovery that’s been more robust than previously thought. GDP rose 0.9%, fastest pace in nine months and above the 0.8% previously published
  • Protesters continued to block roads in central Hong Kong in the fifth day of pro-democracy demonstrations as leaders warned the standoff would escalate in the coming days if their demands aren’t met
  • Turkey sent troops to its border with Syria and pondered military options as an Islamic State onslaught against Syrian Kurds drew Turkey deeper into its neighbor’s fighting
  • Sovereign 10Y yields mostly higher, led by Greece. USD strengthens, at highest level since June 11, 2010. Asian stocks mostly lower, European stocks rise. U.S. equity-index futures rise. WTI crude higher, gold, copper falls
US Economic Data Calendar
  • 9:00am: ISM Milwaukee, Sept., est. 61 (prior 59.63)
  • 9:00am: S&P/Case Shiller Home Priced m/m, July, est. 0.0% (prior -0.2%)
    • S&P/CS Composite 20 y/y, July, est. 7.4% (prior 8.10%, revised 8.07%)
    • S&P/CS Composite Index NSA, July, est. 174.45 (prior 172.33)
  • 9:45am: Chicago Purchasing Manager, Sept., est. 62 (prior  64.3)
  • 10:00am: Consumer Confidence Index, Sept., est. 92.5 (prior 92.4)
  • 3:00pm: Fed issues QE schedule for Oct.
The Hang Seng (-1.3%) closed lower amid political unrest in Hong Kong, with the bourse set for its biggest monthly drop (-7.4%) since May. The Nikkei 225 (-0.8%) is also markedly lower in the wake of disappointing Japanese Industrial Production and Household Consumption data, further weighed by Softbank (-7%) after their takeover bid for DreamWorks fell through. Elsewhere, the Shanghai Comp closed up 0.3% despite Chinese HSBC mfg. reading falling short of expectations (50.2 vs. Exp. 50.5), as it showed a 4th consecutive month of expansion and the exports component was the strongest in four years. As a reminder, mainland Chinese markets will be closed after today's trade until next Wednesday for Golden Week, while Hong Kong markets will closed tomorrow and Thursday.
After a tepid start, core and peripheral European government bonds rallied after Eurozone core CPI fell to 0.7% vs. Exp. 0.9%, suggesting the Eurozone’s price level woes cannot be attributed solely to the slide in commodities prices. As such, markets have accelerated their expectations of further action from the ECB, with all eyes now turning to the press conference from the ECB President Draghi on Thursday. Spain outperforms all others, with the Spanish curve trading markedly flatter after the Constitutional court suspended Catalonia’s ability to vote on independence, stemming the speculative outflow that Spain has suffered since the beginning of the week.
Pan Euro Agg month-end extensions +0.08yrs (Prev. +0.03yrs), 12-month average +0.07yrs (IFR)
RANsquawk sources report large Sterling month-end extensions, ranging between +0.28yrs to +0.31yrs – Unconfirmed.
Equities trade firmer across the board, with the Spanish IBEX-35 leading the way after Madrid postponed Catalonia’s independence bid. The FTSE-100 slightly underperforms as UK retailer Next warned that the warm weather at the end of September dented its sales growth at the end of Q3, and the Co. may have to revise guidance lower. As such, Next shares fell sharply, and dragged down Marks & Spencer with it, countering the upside in RBS shares today, which rose as the Co. are seen significantly outperforming their guidance due to lower impairment costs.
EUR/USD tumbled to September 2012 lows after Core CPI in the Eurozone fell sharply, suggest the ECB may have to provide further monetary stimulus (perhaps even QE) should the disinflation spiral not bottom. As such, EUR/USD tripped stops on the way through YTD lows, targeting a touted large option barrier at 1.2615, below which, S3 lies at 1.2608. The USD-index has soared to a fresh four year high on the back of EUR weakness, lifting USD/JPY close to YTD highs of 109. In Scandinavian currencies, NOK trades at monthly highs against the EUR after Norway announced they are to buy NOK for first time from the oil fund in order to cover domestic budget requirements. Norway will purchase NOK 250mln per day in October for this purpose.
WTI and Brent crude futures both trade higher as China’s lower than expected final HSBC manufacturing PMI is shrugged off, as traders read into the  greenshots within the report, as the exports component rose to four year highs. Nonetheless, precious and industrial metals have fallen throughout the session, with gold down over USD 5.50/oz as the stronger USD weighs on prices. Looking ahead, Heating Oil and RBOB October'14 futures expire at 1930BST/1330CDT.
* * *
DB's Jim Reid concludes the overnight recap
So it wasn’t exactly the start that the bulls were hoping for with risk assets kicking off the week generally lower across the board. There weren’t any specific drivers for markets per se but the combination of the political uncertainty in Hong Kong, the selloff in selected parts of EM, and the fresh violence in Ukraine was probably just enough to keep markets on the back foot for now.
We’ll start off with Asia today with Hong Kong and China still the key focus for markets. In terms of the latest from Hong Kong, the government has withdrawn riot police from the streets as protestors began to calm down. Still that has not deterred tens of thousands of people from pouring into the Central/Admiralty district on Monday night although in comparison with the heated street clash on Sunday evening the mood has been rather peaceful over the last 24 hours. Protests are still ongoing on Tuesday morning as we type although the crowds are smaller. But again this has become somewhat of a routine over the last few days, where protestors tend to diminish during the day but return in the evening and stay throughout the night. The event has attracted international headlines and attention from the West although China is seemingly taking a firm stance on this.
Indeed a spokeswoman from the Foreign ministry has said that Beijing "vehemently objected to illegal actions that undermine the rule of law and social security," adding that any international intervention in China's matters was also unacceptable?. These came just before comments from Britain’s call for ‚constructive talks? and hopes that it would eventually lead to ?a meaningful advance for democracy?. A White House spokesman has also urged Hong Kong authorities to "exercise restraint" and protesters to "express their views peacefully". Chinese authorities have also tightened its grip on social media with the number of restricted Weibo (a Twitter like service) posts increasing fivefold between last Friday and Sunday (SCMP). Instagram has also been banned in China.
Looking ahead, a bigger crowd is expected to flood the streets leading up to China’s 1 October National Day Holiday on Wednesday. Pro-democracy organisers have also set a Wednesday deadline for a response from the government to meet their demands for reforms and for him to step down as a leader of HK (AP). S&P has said that the protests have minimal implications on HK’s AAA/Stable rating in the near term unless the situation deteriorates severely. The rating agency says HK’s economic performance could be modestly affected but the impact on Hong Kong’s banking system is manageable. Clearly this is still a ‘live’ situation so developments in HK and how it will ultimately be managed by the authorities will be closely watched.
Turning to markets, the Hang Seng (-1.2%) is extending its losses for the fourth consecutive day now and has broken past what is thought to be a support level of 23,000 for the index. Interestingly Chinese equities are faring relatively better (Shanghai Composite -0.1%) despite further data weakness. The final September HSBC Chinese manufacturing PMI index came in at 50.2, versus an initial reading of 50.5 a week ago. Elsewhere in Asia, bourses in Korea, Taiwan and Japan are down -0.5%, -0.2% and -1.2%, respectively. A stronger JPY is perhaps adding pressure to the local markets. Asian IG credit spreads continued to lead 2-4bp wider across the board. That said Indonesia USD bonds is seeing some intraday support with the benchmark 2024 bonds largely unchanged as we go to print.
Much of the overnight action was largely an extension of the US and European session yesterday with equities, credit and the Dollar all weaker. The S&P 500 (-0.25%) finished off the lows after having declined nearly 1% at the open. Credit markets are still weighed by concerns around PIMCO unwinds which saw widening pressure across IG and HY. In synthetic markets, the CDX IG index was around 4bp wider whilst the HY index was down by nearly a point. US HY ETFs continue to drop lower with both the SPDR Barclays HY Bond ETF (-0.27%) and the iShares iBoxx $ HY Corporate Bond ETF (-0.21%) down for their 6th consecutive day. In reality balance sheet constraints around month/quarter end likely contributed to the volatility/weakness as well. Treasuries enjoyed their flight-to-quality moment with the 10yr yield closing 5bps lower at 2.477%. Some dovish comments from Fed’s Evans also helped as he sad that the strong USD will make it harder for the Fed to achieve its inflation target.
In the world of EM, Brazil’s benchmark equities dropped over 4% and 5yr CDS widened by 16bps yesterday after latest polls suggests that the Brazil’s President Rousseff has opened up a nine point lead over Ms Silva in a likely second round runoff (WSJ). In Ukraine, pro-Russian insurgents launched an attack which saw 13 soldiers and civilians killed in 24 hours in a move that is seen as the worst violence since a truce was struck few weeks ago. The Russian Micex index closed 1.8% lower whilst 5yr CDS widened by nearly 10bps.
Quickly updating the data flow yesterday, US personal income (+0.3%) was as expected whilst personal spending (+0.5% v 0.4% expected) was slightly ahead. Pending home sales was disappointing though with a 1.0% mom decline in August. In reality though yesterday’s data flow was hardly inspirational but today’s releases should be more interesting.
Indeed we have Chicago PMI today which is usually seen as a good preview of ISM manufacturing tomorrow. The market is looking for the headline to slide a touch lower to 62.0 from 64.3 in August. We also have the Consumer Confidence Index and Case-Shiller Home Prices in the US. In Europe the highlights will be consumer spending updates from Germany and France but the main focus will be on the first September inflation reading for Europe as it will likely weigh on the QE debate ahead of the ECB meeting on Thursday. Markets are looking for a 0.3% yoy increase in the headline and 0.9% yoy increase at the core level.

The latest on the Hong Kong protests:

(courtesy zero hedge)

Hong Kong Protesters Give Wednesday Deadline For Reform As Chinese Army Watches From Above

Tyler Durden's picture

The crowds of protesters in Hong Kong swelled overnight with some estimates that 3-400,000 "will join in a show of people's power," on the eve of the two-day National Day holiday. With neither side showing any signs of backing down, protestors remain calm and police keeping their distance - though monitoring from on high - as the Occupy Central group said it will announce plans for its next stage of civil disobedience on Wednesday if Hong Kong Chief Executive Leung Chun-ying does not meet their demands for democratic reform, including true universal elections by October 1 and Leung's resignation. Leung has called for Occupy Central leaders to "fulfill the promise they made to society" and immediately stop the protests, which he said have gotten "out of control," adding that, for now, they could keep control without the help of the People's Liberation Army (PLA). The protest meme remains one heard around the world - in addition to their concerns about democracy and out of control local government, Hong Kong’s younger generation are worried about low-paying jobs.

Pro-democracy protests swelled in Hong Kong on the eve of a two-day holiday that may bring record numbers to rallies spreading throughout the city as organizers pressed demands for free elections.

With the workday ended and temperatures dropping, thousands of people were returning to the three main demonstration points, blocking some of the city’s roadways. Hong Kong marks China’s National Day tomorrow, the 65th anniversary of the founding of the People’s Republic of China and Chung Yeung Festival on Thursday, when Hong Kong people honor their ancestors.

“It’s quite possible that at least more than 100,000, if not up to 300,000, 400,000 people, will join in the protest in a show of people’s power,” Willy Lam, adjunct professor at Chinese University of Hong Kong, said in an interview today. “They want to convince the Hong Kong government and Beijing that any use of force will be counter-productive. It will only galvanize more of the rest of Hong Kong’s 7 million people.”
Neither side is showing any signs of backing down even as China prepares to mark its National Day on Wednesday.

In a short statement, the Occupy Central group said it will announce plans for its next stage of civil disobedience on Wednesday if Hong Kong Chief Executive Leung Chun-ying does not meet their demands for democratic reform, including true universal elections by October 1 and Leung's resignation.


Leung said he would not give into the protesters' demand for his resignation or for greater democratic reforms.

In a speech Tuesday, Leung called for Occupy Central leaders to "fulfill the promise they made to society" and immediately stop the protests, which he said have gotten "out of control."

Leung said the central government decision on Hong Kong on August 31 shows that it will not comply to illegal threats made by certain people.


He also said on Tuesday Hong Kong police would be able to maintain security without help from People's Liberation Army (PLA) troops from the mainland.


Hong Kong police have withdrawn now for more than a day and protesters are continuing their efforts to prepare for a longer, more drawn out confrontation.
But, as SCMP reports, Beijing may be keeping quiet about the Occupy Central protests, but the army appears to be keeping a keen eye on what's going on.
This picture taken by an SCMP photographer today shows a man in the People's Liberation Army using binoculars to survey the protest site in Admiralty.

A row of tripods can be seen in the windows, suggesting the occupiers have been under the watchful eye of China for some time.

Some protesters have voiced concern that authorities may return again in force later Tuesday in a bid to clear the streets before the Chinese holiday, when even more protesters are expected to join the rally.


The red star on Chinese military headquarters in Admiralty is flashing bright tonight. The star was included in renovations to the building months ago, and it was unveiled in January.

While it was unclear when it had been switched on since then, the last time the People's Liberation Army's HQ decided to stage a light show on the harbour (in June), it generated controversy and set tongues wagging on whether Beijing was emphasising its sovereignty over Hong Kong.
It's a protest meme we have seen and heard around the world...
Of those who support Occupy Central, 47 percent were under the age of 24.

In addition to their concerns about democracy, Hong Kong’s younger generation are worried about low-paying jobs and increasing competition from mainland Chinese coming to the financial hub to work.

Hong Kong University of Science and Technology professor David Zweig said the controversy surrounding the 2017 elections and concerns that Leung is taking the port city down the wrong path are not the only issues driving the protests.

“I think the other issue is that there is a lot of anger. If you look at the data in general in Hong Kong, January this year, the anger at the central government, the anger at the local government, the concerns about future job prospects and all that and anxiety in general, this is worst than anytime since the major marches of 2003," Zweig said.
"I think if we want something, sacrifices cannot be avoided. No pain, no gain, right? When I see the young people's passion, I support them from deep within my heart. I hope there won't be any bloodshed," said Fung.


As we pointed out to you on several occasions, Europe is deflating: Euro/usa rate tumbles:
(courtesy zero hedge)

Eurozone Inflation Drops To Fresh 5 Year Low, EURUSD Tumbles

Tyler Durden's picture

Anyone confused why futures are doing their best to surge in the overnight session, the answer is simple: first it was Japan reporting the latest batch of atrocious economic data, which an hour ago was followed by Europe own abysmal econofreakshow, where Eurostat just reported that in September Eurozone inflation rose a meager 0.3% from a year ago, the lowest annual increase since October 2009.This marks the 12th straight month that Euro inflation has been below 1%, and far below the ECB's goal of 2% inflation.
More importantly, it also shows that some 3 months of a sliding Euro have not only had zero impact on European export competitiveness, as the entire continent is careening into a triple dip recession, but that the ECB is completely powerless to create an inflationary spark, as not only is the bulk of the Eurozone flirting with disinflation but more and more European countries are in outright deflation.
Also of note, while headline inflation was in line with expectations, it was core CPI that missed expectations of a 0.9% increase, and rose by only 0.7%, confirming that the most recent bout of deflation in Europe is about far more than just sliding energy prices. In fact for the culprit, perhaps look at Japan which is now exporting deflation hand over fist.
Then again, there is always hope. From the WSJ:
There are reasons to expect the rate of inflation will begin to pick up from next month. With food and energy prices very low in Europe last fall, annual comparisons for these sectors should start rising in October. Analysts refer to these statistical forces as base effects.

However, inflationary pressures are likely to remain very weak. Surveys of businesses have pointed to a weakening of activity as the third quarter has progressed, making it unlikely that the eurozone economy has picked up significantly after stagnating in the second quarter.
To be sure, the already weak and sliding EUR welcomed the news with open arms, weakening and sliding even more.

As for the great news, here is Bloomberg:
European stocks rebounded from a five-week low, as investors speculated on the possibility of further European Central Bank stimulus, after data showed euro-area inflation slowed this month. U.S. stock futures gained, while Asian shares fell.

The Stoxx 600 Europe Index climbed 0.6 percent to 342.87 at 10:17 a.m. in London, extending earlier gains. The equity benchmark fell 0.4 percent yesterday, as banks slid and data showed economic confidence in the region dropped to the lowest since November.

“The ECB has done a lot already to stimulate economic activity in Europe,” Teis Knuthsen, chief investment officer at Saxo Bank A/S’s private-banking unit, said by phone from Hellerup, Denmark. “This week we’ll look for more details regarding the asset-backed securities program and covered bond program. We’re still waiting for the big bazooka, which would be the ECB really expanding their balance sheet.”
In other words, the European economic collapse is bullish because it means more failed monetarist experiments to make rich richer. QE and D.


Russia activates its air dense missile system to guard its southern frontiers;

(courtesy zero hedge)

Russia Activates Air Defense Missile System "To Guard Its Southern Frontiers"

Tyler Durden's picture

Just a month after announcing plans to deploy its newest S-500 air defense systems to protect Moscow and central regions, Xinhua reports that Russia has activated an air defense regiment armed with advanced S-400 surface-to-air missile systems in the Southern Military District to guard its southern frontiers. Furthermore, a spokesperson for Russia's Aerospace Defense Forces, said that 12 missile regiments will receive the S-400 systems, as it seems NATO's moves are prompting retaliatory advances by Russia.

As Xinhua reports, Russia activates S-400 missile systems in south to guard frontiers
Russia has activated an air defense regiment armed with advanced S-400 surface-to-air missile systems in the Southern Military District to guard its southern frontiers, the Russian military said Tuesday.

"An air defense missile regiment from the Fourth Command of the Air Force and Air Defense entered into service in the Krasnodar region. It is equipped with S-400 Triumph advanced missile systems and Pantsir-S air defense missile and gun complex," the Southern Military District's press service said in a statement.

Earlier this month, the S-400 systems arrived at their permanent base after completing tests at the Ashuluk firing range in southern Astrakhan region.

During the tests, they successfully destroyed high-speed targets simulating incoming ballistic missiles and other aerial targets.

In August, Russia also announced plans to deploy its newest S-500 air defense systems to protect Moscow and central regions.

Alexei Zolotukhin, a spokesperson for Russia's Aerospace Defense Forces, said Monday that 12 missile regiments will receive the S-400 systems by 2020.

The S-400 system, which can engage targets at a maximum range of up to 400 km at an altitude of 40,000-50,000 meters, is expected to form the cornerstone of Russia's air defense by 2020.

The S-500 systems will have an extended range of up to 600 km and is capable of engaging up to 10 targets simultaneously.
*  *  *


Russia cuts gas supplies to Europe by 15%:/the Ukraine transit system for gas is slashed by 54%:

(courtesy zero hedge)

Did The Winter War Just Begin? Russian Gas Supplies To Europe Plunge 15%, Ukraine Transit Slashed 54%

Tyler Durden's picture

Just a week ago, the Russian energy minister made the first public 'threat' of gas supply "throttling" disruptions to Europe but judging by the data that has just been released, it appears the 'throttling' has begun. Bloomberg reports that Russian gas supplies to Europe fell 15% year-over-year in Q3 - the most in over two years - as natural gas transit through Ukraine plunged 54% year-over-year. In 2013, Gazprom sent 60% of its supply via Ukraine pipelines, in August that dropped to 39%, and in September only 34%. Of course, Europe remains confident its storage efforts will buffer any "Winter War" disruptions, as we noted here, but as Citi warned previously, "if colder weather arrives, storage levels will be drained," and then there is the Spring (and German industry needs).
As Bloomberg reports,
Russian 3Q Gas Supplies to Europe Drop ~15% Y/y, Most in 2 Yrs

Export outside CIS in 3Q set to decline to ~34bcm from 40.4bcm last yr; biggest drop since at least 2Q 2012, according to Bloomberg calculations, based on preliminary data of Russian Energy Ministry’s CDU-TEK unit.

Exports fell 15% in 2Q 2012; decreased 25% in 3Q 2010

Russia Cuts Sept. Natgas Transit Via Ukraine 54% Y/y to 3.7Bcm

Russia’s natgas transit through Ukrainian pipelines continues decreasing; it dropped to ~3.7bcm this mo. vs 4.5bcm in Aug. and 8.1bcm in Sept. 2013, according to Bloomberg calculations, based on website data from Ukraine’s pipeline operator UkrTransGaz, Energy Ministry.

Transit to EU ~3.5bcm in Sept. vs 4.4bcm in Aug.

Total Russian deliveries via Ukraine in Jan.-Sept. ~50bcm vs 62.5bcm yr earlier

Gazprom Cuts Sept. Transit Via Ukraine to 34% of Exports

Gazprom sent ~34% of Sept. natgas exports outside CIS using Ukrainian pipelines vs 39% last mo., ~60% in Sept. 2013, according to Bloomberg calculations based on preliminary data from Ukraine’s pipeline operator UkrTransGaz, energy ministries of Ukraine, Russia.

Ukraine transshipped ~42% of Russian gas to Europe in Jan.-Sept. vs 51% last yr

UkrTransGaz ships Russia’s gas to borders w/ Moldova, 4 EU countries: Poland, Hungary, Slovakia, Romania, which    delivers some volumes to Turkey
*  *  *

*  *  *
European storage facilities contained a record 75.7 billion cubic meters (2.7 trillion cubic feet) of gas yesterday, making them more than 91 percent full, according to Gas Infrastructure Europe, a Brussels-based lobby group.

“If colder weather arrives, then storage levels could well be drained,” Citigroup said.

The USA stock market was hit today due to the rouble plunging as Russia now prepares for capital controls.  The sanctions seem to be hurting everyone!

(courtesy zero hedge)

US Stocks Slide, Ruble Plunges As Russia Prepares Capital Controls

Tyler Durden's picture

Just days after Ukraine began discussing capital controls, and Russian lawmakers passed a bill enabling asset freezes, it appears Russia has reached its limit.
The Ruble is plunging towards 40 to the USD (CB intervention levels), US equity futures gapped lower, and European stocks are sliding.
As Bloomberg reports,
Russia’s central bank is weighing the introduction of temporary capital controls if the flow of money out of the country intensifies, according to two officials with direct knowledge of the discussions.

Such measures would be preventative and used only if net outflows rise significantly, the people said, who asked not to be identified because no decision has been made. They didn’t give a timeline or a level that may force such a move, saying they are looking at all possible scenarios.

The discussions are the latest sign that U.S. and European sanctions are hurting Russia and rethink policies the central bank has sought to avoid. The Economy Ministry last week raised its estimate for this year’s outflows to $100 billion from $90 billion. Russia hasn’t had a net inflow of private capital since 2007, the year after lifted restrictions.

Central bank Chairman Elvira Nabiullina, a former economic aide to President Vladimir Putin, said in an address to the government on Sept. 25 that “introducing capital controls doesn’t make sense.”

Still, if trades restrictions -- such as the U.S. and EU sanctions and Russia’s retaliatory measures -- are prolonged and the tax burden rises, capital outflows will intensify. That will push the regulator to shift its focus more toward ensuring financial stability from fighting inflation and use various instruments “including non-standard” means, Nabiullina said.

The central bank’s press service declined to comment. The Finance Ministry isn’t discussing such measures, Svetlana Nikitina, a spokeswoman, said by text message.
US equities gapped lower...

And the Ruble plunged...

Rajoy suspends Catalonia's right to vote:

(courtesy Martin Armstrong)

Martin Armstrong Blasts "Ruthless, Undemocratic, Pretend Leader" Rajoy For Denying Catalonia's Right To Vote

Tyler Durden's picture

Spain’s constitutional court has decided to suspend Catalonia’s referendum on independence following a request from the Spanish Prime Minister Mariano Rajoy.
This ruthless undemocratic pretend leader jumps whatever height the EU Commission tells him to do betraying his own country to the rising dictatorship of Brussels.
As reported, a court spokeswoman stated that the 12 judges reached the decision to suspend Catalonia’s November independence referendum after an hour-long emergency meeting.
They too are a total disgrace to the very idea of democracy and the West should just stop the pretense that they are any different from Russia.
Power devolves to dictatorship whenever there are no checks and balances.
This is a simple truth of history without exceptions.


oh oh this is not good!!

(courtesy zero hedge)

CDC Confirms First Ebola Case Diagnosed In The US

Tyler Durden's picture

CDC will hold a press conference at 530ET.
It appears the term "contained" means a different thing once again.... as we warned here:
There’s a roughly 25 percent chance Ebola will be detected in the United Kingdom– and as much as an 18 percent chance it will turn up in the U.S. – by the end of September, the analysis of global mobility and epidemic patterns shows. The new paper includes the top 16 countries where Ebola is most likely to spread.
Though concerning, a spread to Western nations is not the biggest threat. At most, there would be a cluster of a few cases imported to the U.S., probably through air travel.
“We are at a crucial point,” Vespiginani said. “If the number of cases increases and we are not able to start taming the epidemic, then it will be too late. And then it requires an effort that will be impossible to bring on the ground.”

and now for your major data points for today:

Portuguese 10 yr bond yield:  3.10 par in basis points  from Monday night.

(Portugal imploding)

Your closing Portuguese 10 year bond yield Tuesday night up 6 in basis points on the day 

Portuguese 10 year bond yield:  3.16%  

Your closing Japanese yield Tuesday par in basis point from 
Friday night:

 yield .52%  

Japanese 10 year bond yield:  .52% 

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

Japanese 10 year bond yield:  .53%


Your opening currency crosses for Tuesday morning:

EUR/USA:  1.2582  down  .0108

USA/JAPAN YEN  109.81   up .420

GBP/USA  1.6184 down .0057

USA/CAN  1.1187 up .0023

This morning the Euro is well down , trading now just below  the 1.26 level at 1.2582 as Europe continues to face deflation.  The yen is down a lot and It closed in Japan down 42 basis point at 109.81 yen to the dollar .  The pound is well down   from Monday as it now trades just below the 1.62 level  to 1.6184.  The Canadian dollar is down badly this morning with its cross at 1.1187 to the USA dollar.

 Early Tuesday morning USA 10 year bond yield:  2.51% !!! up 2 in  basis points from  Monday night/   (USA economy not doing so well with this low yield)

USA dollar Index early Tuesday morning: 86.20 !!!! up 60 cents  from Monday's close


The NIKKEI: Tuesday morning: down 137 points or 0.84%

Trading from Europe and Asia:

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

Gold early morning trading:  $1206.00

silver:$ 17.18



Your closing Spanish 10 year government bond Tuesday/ down 8 in basis points in yield from Monday night.  

Spanish 10 year bond yield:  2.14% !!!!!!  

 Your Tuesday closing Italian 10 year bond yield down 7 in basis points and trading  19 in basis points above Spain./

Italian  10 year bond yield;  2.33% 



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

Euro/USA:  1.2628 down .0062
USA/Japan:  109.65 up .3000   
Great Britain/USA:  1.6207  down .0034 

USA/Canada:  1.1207 up .0049 

The euro rose  in value during this afternoon's  session, but it was 
down on the day , closing below the 1.27 level to 1.2628.  The yen was up  during the afternoon session,but it lost 30 basis points on the day closing well above the 109 cross at 109.65.   The British pound gained some ground  during the afternoon session but it was down for the day as it closed at 1.6207

. The Canadian dollar was down badly during the afternoon session, and it was down on the day closing at 1.1207. 

Your closing USA dollar index:

85.93 up 33.5 cents on the day  

your 10 year USA bond yield, a rise of 2 basis points: 2.51%!!!!

European and Dow Jones stock index closes:

England FTSE down  23.88 or 0.36%
Paris CAC   up  58.17 or 1.33%
German Dax   up  51.39 or 0.55%
Spain's Ibex 35 up 139.50 or  1.31%  
Italian FTSE-MIB  up 366.26   or 1.78%

The Dow:  down 25.40. or 0.17%
Nasdaq; down 12.46  or 0.28%

OIl:  WTI  91.30
        Brent:  94.77


And now for your big USA stories:

Today's NY trading:

(courtesy zero hedge)

Small Caps Suffer Worst Quarter In 3 Years; Bonds Leading Year-To-Date

Tyler Durden's picture

Despite the ubiquitous v-shaped recovery in stocks from the US open to EU close (decoupling entirely from bonds), stocks slumped into the end of the quarter leaving the S&P and Dow barely positive for Q3 and Russell 2000 down 7.9% - its worst quarter since Q2 2011 (and -5.2% year-to-date). Treasury yields flip-flopped around in a 4-5bps range with alate-day ramp (suggesting liquidations cough PIMCO cough) leaving 30Y -1bps on the week. The USDollar suged higher in the European session and traded lower in the US session. The bigger news on the day was the carnage in commodities that appeared to occur around the European close (desk chatter of commodity fund liquidations). Silver and WTI Crude were monkey-hammered, gold and copper dropped to down 1% on the week. VIX pumped and dumped again but closed above 16. Stocks closed very weak with Russell tumbling 1.5% on the day to not "off the lows."

Year-to-date, bonds are the big winners (long-end +14.2%) with the Dollar and S&P up around 6.7%, Gold unch, and Silver -12.7%.

On the quarter, Russell 2000 is the big loser but it was hardly a big one for the rest of the US equity market... (woirst Quarter for S&P since Q4 2012)

30Y bonds massively outperformed in Q3 (while 5Y drastially underperformed) with a 30bps flattening in 5s30s over the quarter...

And High Yield credit notably underperformed and decoupled from stocks...

Especially notable in financials...

The USD surged on the quarter... a oneway street

Commodities all slid, led by Silver...
*  *  *
On the day, Equities followed yesterday's playbook pivoiting around the European close but closed very weak today...

Stocks decoupled from bonds once again out of the gate... and then bonds and stocks weakened late on..

USDJPY seemed modestly in control...

Treasury yields chopped around today closing higher on the day...

FX markets once again saw USD buying in Europe and EUR buying in US...

Commodities on the day were monkey-hammered from the US open to EU close...

Charts: Bloomberg


USA consumer confidence plunges again.  The data seems contrived again:

(courtesy zero hedge)

Consumer Confidence Plunges, Biggest Miss Since Jan 2012

Tyler Durden's picture

Despite stock indices hitting record highs (apart from small caps and 50% of individual stocks down notably), The Conference Board's Consumer Confidence narrowed its divergence with UMich confidence and tumbled to 86.0 (missing expectations of 92.5). This is the biggest miss since Jan 2012. The gap between the confidence of rich and poor increased but the gap between economic confidence and consumer confidence narrowed.
Confidence missed by the most since Jan 2012...

Narrowing its gap to UMich confidence...

But the QE inspired confidence is beginning to catch down to the reality of the economic confidence



Chicago's PMI misses again:

(courtesy zero hedge)

Chicago PMI Misses As New Orders & Production Slump

Tyler Durden's picture

US equity markets were sliding into the Chicago PMI print as early release indications proved correct and it missed expectations. Having flip-flopped from worst since July 2013 to almost cycle highs last month, Chicago PMI printed 60.5 (vs 62.0 expectations) hindered a drop in new orders and production. The silver lining, the employment index improved modestly. Prices Paid surged to its highest since 2012.
Chicago PMI flip-flopped again...

Not exactly the smoothest most consistent indicator of economic health?!


I will see you tomorrow night

all the best


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