Ladies and Gentlemen, Harvey Organ’s 8-14-14 Update
Oct 14.2014:
As many of you know, my website was pulled Friday afternoon and I could not post. Here is a copy of the email that I received.
Oct 10 (3 days ago)
to me, blogger-dmca-n.
Hello,
We’d like to inform you that we’ve received a court order regarding your blog http://harveyorgan.blogspot.com/. In accordance with the terms of the court order, we have removed content previously located at:
http://harveyorgan.blogspot.com/
A copy of the court order we received is attached. Thank you for your understanding.
Terms of Service: http://www.google.com/intl/en/policies/terms/
Content Policy: http://www.blogger.com/content.g
The Google Team
end
I have sent 5 emails to google for the copy of the court order to no avail.
I will be creating another website of my own. JS Slear and Silverdoctors have been gracious enough to allow me to post on their websites.
All material that I use has been from public sources and I never infringe on copyright laws.
Gold: 1233.60 up 4.30
Silver: 17.35 up 6 cents
In the access market:
Gold 1233.00
silver 17.40
The gold comex again had 0 notices filed for the 5th straight day, which is totally unusual for an active month. There are a little less than 5 tonnes of gold standing.
In silver, the open interest continues to remain high at 169,811 contracts. To boot, the December silver OI rose to 119,643 contracts.
Let’s head immediately to see the data has in store for us today.
First: GOFO rates/
we are moving closer and closer to backwardation!!
All months basically moved slightly in both directions with the various GOF) months. 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.
Oct 14 2014
1 Month Rate: 2 Month Rate 3 Month Rate 6 month rate 1 yr rate
+.02% +.030% +.0450% +.0975% + .180%
Oct 13 .2014:
1 Month Rate 2 Month Rate 3 Month Rate 6 month Rate 1 yr rate
+.02% +.0325% +.045% +.095 .1825%
end
Let us now head over to the comex and assess trading over there today,
Here are today’s comex results:
The total gold comex open interest surprisingly rose by a large 11,543 contracts from 386,149 all the way up to 397,729 with gold up $8.30 yesterday. We are now in the active delivery month of October and generally this is a very poor month for deliveries. The October contract month actually fell by 75 contracts down to 1059. We had 0 notices filed yesterday so we lost another 75 contracts or 7,500 additional oz will not stand for the October contract month. No doubt that these guys were cash settled. The November contract month saw its OI rise by 25 contracts up to 321. The December contract rose by 9,233 contracts up to 286,219. The estimated volume today was poor at 107,748 contracts. The confirmed volume yesterday was also poor at 126,928. Strangely this was the 5th consecutive day of 0 gold notices filed and only 3 out of 8 filing days had positive readings. The first two days had 98.7% of the entire total number of notices filed so far. They must have a great difficulty finding gold to serve upon our notices. That fact that London is also very close to backwardation kind of confirms this.
The total silver Comex OI rose by only 316 contracts despite the fact that silver was up yesterday to the tune of 4 cents. It seems that the shorts are reticent to supply for silver contracts. Tonight the silver OI complex rests at 169,811 contracts. In ounces, this represents 849 million oz or 121.00% of silver annual production (annual production of 700 million oz ex China). 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.No doubt that the open interest for tomorrow will be quite high.
We are in the non active silver contract of October and here the OI rose by 10 contracts up to 184 contracts. We had 0 notices served upon yesterday so we had another gain of 10 silver contracts or an additional 50,000 ounces will stand for delivery in October. November is also a non active delivery month and here the OI advanced by 2 contracts up to 126 contracts.
The December silver contract is a biggy contract month and tonight it rose to 119,643 contracts for a gain of 241 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 598 million oz or 85.4% of annual global production (ex China). The estimated volume today was poor at 24,492. The confirmed volume on Friday was also poor at 29.855 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.
October standings
Oct 14.2014
Gold
Ounces
Withdrawals from Dealers Inventory in oz nil
Withdrawals from Customer Inventory in oz 32.15 oz kilobar: 1 (JPMorgan)
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz 9645.000 oz
300 kilobars/Scotia
No of oz served (contracts) today 0 contracts( zero oz)
No of oz to be served (notices) 1059 contracts (105,900 oz)
Total monthly oz gold served (contracts) so far this month 483 contracts (48,300 oz)
Total accumulative withdrawals of gold from the Dealers inventory this month
15,000.27 oz
Total accumulative withdrawal of gold from the Customer inventory this month
542,335.11 oz
Today, we had zero dealer transactions today
total dealer withdrawal: nil oz
total dealer deposit: nil oz
we had 1 customer withdrawal:
i) Out of JPMorgan: 32.15 oz or 1 kilobar
total customer withdrawals: 32.15 oz
we had 1 customer deposit:
i) Into Scotia: 9645.000 oz
(300 kilobars)
total customer deposit:9645.000 oz
We had 0 adjustment:
Total Dealer inventory: 945,488.206 oz 29.408 tonnes
Total gold inventory (dealer and customer) = 8.989 million oz. (279.60) tonnes)
A few weeks ago we had total gold inventory of 303 tonnes, so during this short time period 24 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 0 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 0 notices stopped by JPMorgan customer account.
We had 0 notices served upon our longs for 0 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 483 x 100 oz = 48,300 oz,to which I add the difference between the open interest for the front month of October (1059 ) minus the number of notices served upon today (0) x 100 oz = 154,200 oz or 4.794 tonnes.
We lost 7500 oz of gold standing tonight.
Thus: October standings:
483 contracts x 100 oz = 48,300 oz + (1059 ) – (0)x 100 = 154,200 oz or 4.794 tonnes
end
Oct 14/2014:
October silver: Initial standings
Silver Ounces
Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory nil oz
Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory nil
No of oz served (contracts) 21 contracts (105,000 oz)
No of oz to be served (notices) 194 contracts (970,000 oz)
Total monthly oz silver served (contracts) 553 contracts (2,765,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month 1,783,683.3
Total accumulative withdrawal of silver from the Customer inventory this month 2,456,312.4 oz
Today, we had 0 deposits into the dealer account:
total dealer deposit:nil oz
we had 0 dealer withdrawal:
total dealer withdrawal: nil oz
We had 0 customer withdrawals:
total customer withdrawal nil oz
We had 0 customer deposit:
total customer deposits: nil oz
we had 1 adjustment:
i) Out of the Brinks vault:
60,127.770 oz was removed from the dealer and this landed into the customer account at Brinks
Total dealer inventory: 66.573 million oz
Total of all silver inventory (dealer and customer) 184.102 million oz.
The CME reported that we had 21 notices filed for 105,102 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 553 x 5,000 oz per contract or 2,765,000 ounces upon which I add the difference between the open interest for the front month of October (194) – the number of notices served upon today (21) x 5000 oz per contract
Thus Oct. standings for silver: 553 notices x 5,000 oz per notice or 2,765,000 oz + (194) – (21) x 5,000 oz = 3,630,000 oz
we gained an additional 50,000 silver ounces that will stand for silver at the Comex for the October delivery month.
this level will continue to 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.
end
The two ETF’s that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.
There is now evidence that the GLD and SLV are paper settling on the comex.
***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold. I can visualize demand coming to the buyers side:
i) demand from paper gold shareholders
ii) demand from the bankers who then redeem for gold to send this gold onto China
vs no sellers of GLD paper.
And now the Gold inventory at the GLD:
Oct 14. GLD inventory/stays the same at 761.23 tonnes
Oct 13.2014: this is good/it is quite possible that the gold has finally hit empty (due to gold near backwardation)
GLD 761.23 tonnes up 1.79 tonnes today.
Oct 10.2014: we lost 2.64 tonnes of gold from the GLD and this gold will head to Shanghai/inventory 759.44 tonnes
Oct 8.2014: we lost 5.39 tonnes of gold today and this gold will be heading to the friendly confines of Shanghai, China /New inventory 762.08 tonnes
oct 7.2014: as of 6 pm est, no change in gold inventory/767.47 tonnes
oct 6.2014: as of 6 pm est no change in inventory/767.47 tonnes
Oct 3.2014: as of 5 pm est no change in inventory/767.47 tonnes
Oct 2.2014: we lost another 1.19 tonnes of gold inventory heading towards Shanghai. (inventory 767.47 tonnes)
Oct 1.2014: we lost another 1.20 tonnes of gold inventory heading towards Shanghai. (inventory: 768.66 tonnes)
sept 30.2014: we lost another 2.39 tonnes of gold inventory heading towards Shanghai. (inventory 769.86 tonnes)
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
Today we had no change in gold inventory at GLD
inventory: 761.23 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: 761.23 tonnes.
end
And now for silver:
Oct 14.2014 today we had a loss of 1.201 million oz/SLV inventory rests at 344.565 million oz
Oct 13.2014: no change in silver inventory so far:
345.766 million oz
oct 10.2014: we lost a massive 3.25 million oz of silver leaving the SLV. Inventory 345.766 million oz
Oct.8/2014 no change in silver inventory 349.071 million oz
Oct 7.2014: a reduction of silver inventory to the tune of 863,000 oz/new inventory at SLV 349.071 million oz
Oct 6.2014: no change in inventory/349.934 million oz.
Oct 3.2014/ we had a minor loss of 152,000 oz and this is usually to pay for fees./Inventory 349.934
oct 2.2014: no change in silver inventory/350.086 million oz.
Oct 1 late last night at 11 pm I was notified by Fred that they added a remarkably high 4.075 million oz of silver inventory at the SLV.
new inventory: 350.086 million oz.
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
Today, Oct 11.2014
Inventory tonight we had a small loss 1.201 million oz/inventory rests at 344.565 million oz
end
And now for our premiums to NAV for the funds I follow:
Note: Sprott silver fund now deeply into the positive to NAV
Sprott and Central Fund of Canada.
(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)
1. Central Fund of Canada: traded at Negative 7.9% percent to NAV in usa funds and Negative 7.4% to NAV for Cdn funds
Percentage of fund in gold 60.50%
Percentage of fund in silver:38.90%
cash .6%
.( Oct 14/2014)
2. Sprott silver fund (PSLV): Premium to NAV rises to positive 4.74% NAV (Oct 14/2014) will pick up later
3. Sprott gold fund (PHYS): premium to NAV rises to negative -0.29% to NAV(Oct 14/2014) will pick up later.
Note: Sprott silver trust back hugely into positive territory at 4.74%.
Sprott physical gold trust is back in negative territory at -0.29%
Central fund of Canada’s is still in jail.
end
Now your more important physical stories today:
Important read….
(courtesy Mark O’Byrne)
Swiss Gold Referendum “Propaganda War” Begins
Published in Market Update Precious Metals on 14 October 2014
By Mark O’Byrne
The referendum for the Swiss Gold Initiative is scheduled for November 30th and the propaganda war – between the Swiss National Bank (SNB) and the Swiss Parliament on one side and the Swiss People’s Party (SVP) on the other – has begun and we expect it to escalate as the day draws nearer.
Swiss Gold Coin
The SNB, who oppose the initiative, has warned that a ‘yes’ vote would severely hamper the ability of the central bank to conduct its business. A proposal that the SNB should hold a fifth of its assets in gold and be prohibited from selling the precious metal in the future would severely restrict its ability to conduct monetary policy, Vice President, Jean-Pierre Danthine, told the Wall Street Journal.
The gold referendum was proposed by the SVP and backed by the necessary 100,000 signatures required the put an issue to referendum in Switzerland. The SVP is one of the largest political parties in Switzerland. The party is the largest party in the Swiss Federal Assembly, with 54 members of the National Council and 5 of the Council of States.
This indicates a degree of popular support for the measure and all eyes are on November 30th. If the referendum is passed, it would result in the following:
*the repatriation of Swiss gold reserves currently believed to be in the UK and Canada
*an increase in gold holdings of the SNB to reflect an allocation of 20% of total reserves (today gold accounts for 7.7% of total reserves)
*and a moratorium on the sale of Swiss gold reserves
The SNB opposes the repatriation issue on the somewhat flimsy grounds that in a dire national emergency foreign holdings could be sold quickly whereas domestic holdings may be tied up.
This appears to be disingenuous as many international buyers including the People’s Bank of China and other central banks would likely be willing to buy theSwiss gold reserves in loco Switzerland, and then repatriate or take delivery to their own country.
Many Swiss look with alarm at the recent German experience, when Germany attempted to have their sovereign gold repatriated from the U.S. Of the 300 tonnes requested it has, to date, received a mere 5 tonnes.
Speculation, even among more sober gold analysts, is that the central banks of the world no longer have the gold they claim to have. Some of the gold belonging to the people of the west appears to have been loaned, leased or indeed sold onto the market.
This may have been done in an attempt to suppress to gold price and maintain faith in the dollar, euro and other fiat currencies and indeed maintain faith in the fragile monetary and financial system.
Much of the physical bullion is now in the very strong hands of store of wealth buyers in India, China and Asia. Other strong hands who have been allocating to gold are Asian and other central banks including Russia’s central bank as stealthcurrency wars continue.
That central banks have likely been involved in manipulating the gold price was confirmed again recently by Alan Greenspan in his recent essay in Foreign Affairs on gold as an invaluable monetary asset where he wrote “[the western central banks] all agreed to an allocation arrangement of who would sell how much, and when…”
The requirement for the SNB to hold 20% of its reserves in gold is also opposed by the central bank on the basis of the jaded and disingenuous argument that gold does not pay interest and does not yield a dividend. Therefore, the stipends it regularly pays to the state and the cantons would have to be curtailed.
This overlooks the fact that with interest rates at record low levels near 0%, central banks are receiving very little yield on their dollar and foreign exchange reserves.
It also ignores the very purpose of holding gold. As we consistently emphasise, gold is a real tangible, safe haven asset that cannot be debased by politicians, bankers and central bankers.
In this time of continuing QE, it is more prudent than ever to hold a greater balance of gold as a hedge against fiat currencies being further devalued and from potential declines in stock, bond and property markets.
Indeed, as Bloomberg reported over the weekend, Mario Draghi has intimated that the ECB may disregard German objections and begin to expand its balance sheet and print euros in a last-ditch attempt to stave off deflation.
This, despite the fact that the same policies have been an abysmal failure in Japan and are not working in the U.S.
Indeed, the weak data out of Europe last week spurred Stanley Fischer, vice-chair of the Fed, to state that the European situation would have to factor into any decision to raise interest rates in the U.S.
This weak data and the apparently dovish tone of last weeks Fed statement had already had an adverse affect on the dollar – reversing a 12-week run-up – and equities in recent days- indicating, once again, that currencies are as volatile as gold and, in extremis, far less safe.
The reserve status of the dollar grows ever-more precarious as confirmed, yet again, over the weekend when Bloomberg reported that the governor of the central bank of China claimed that some countries were already using the yuan as a reserve currency, albeit informally.
While on the subject of China it is worth noting that Chinese gold demand last year – previously regarded as voracious – was actually twice as high as had been estimated and is on track for over 2,000 tonnes again this year.
The previous estimate was based on flows of gold through Hong Kong. But Xu Luode from the Shanghai Gold Exchange confirmed what more astute gold analysts have been asserting in recent months, that other cities in China are now also importing large volumes of gold – far more than through Hong Kong alone.
Demand from the growing middle classes of China, India and the East continues to grow ever stronger. Clearly, China, India and Asia’s appetite for gold is far from sated.
Back in Switzerland, the SNB also objects to the third aspect of the Swiss Gold Initiative i.e. the moratorium on sales of Swiss gold. From their perspective it would encumber their ability to conduct business.
In a shameless display of attacking the man and not the ball and with tongue planted firmly in cheek, we would question the SNB’s skill in conducting effective monetary policy at all – at least insofar as gold is concerned.
We would recall how, in 1999 – around the same time as Gordon Brown’s infamous blunder, the SNB sold a whopping 50% of the gold belonging to the Swiss people at the very bottom of the market in what appears to have been an attempted coup de grace on the “barbarous relic.”
Gold in U.S. Dollars- 20 Years (Thomson Reuters)
Well fifteen years later and gold has risen from $250/oz in 1999 to over $1,230/oz or nearly 5 times, and gold is as valued as it has ever been, particularly by non western central banks and by the people of Asia.
The maxim that all fiat currencies eventually revert to their intrinsic value has generally been vindicated in monetary and economic environments such as we are now witnessing.
And if the mass of what has historically been regarded as a true store of wealth, gold bullion bars, are now sitting in vaults in the East – it suggests that we in the West could be in store for further currency devaluations and a further decline in our living standards.
With this in mind we hope the Swiss people display their fierce independence and reject the advice of the “experts,” many of whom got us into this mess, in favour of the policies that have kept them peaceful and prosperous for centuries.
The referendum has the potential to become a lightning rod that leads to an increase in awareness about the importance of gold as a hedging instrument and a monetary, safe haven asset. It could also potentially lead to a marked increased in official or central bank gold demand and substantially higher gold prices.
Must Read Guide To Gold Storage In Switzerland
GOLDCORE MARKET UPDATE
Today’s AM fix was USD 1,233.00, EUR 974.55 and GBP 772.41 per ounce.
Yesterday’s AM fix was USD 1,228.00, EUR 969.14 and GBP 763.82 per ounce.
Gold climbed $9.00 or 0.74% to $1,232.70 per ounce and silver rose $0.10 or 0.58% to $17.45 per ounce yesterday.
Silver in U.S. Dollars – 1984 to October 14, 2014 (Thomson Reuters)
Gold in Singapore ticked marginally higher initially but then saw slight falls and it remains largely unchanged from yesterday’s close in New York.
SPDR Gold Trust holdings, a gauge for investor demand, climbed 1.79 tonnes to 761.23 tonnes on Monday, making it the fund’s first inflow since September 10th.
News of the latest delay in interest rate hikes from the Fed and concerns about the Eurozone and global economy has seen sharp sell offs in stock markets. This coupled with the dollar registering its worst day in a year, sent investors into safe haven gold bullion.
end
We have been reporting to you on previous occasions the hardship facing Italy as it’s labour is 40% higher than in Germany. It is just not competitive and they will not internally devalue. Now Beppi Grillo their 5 star leader is now demanding that Italy removes itself from the Euro
a must read…
(courtesy Ambrose Evans Pritchard/UKTelegraph)
Ambrose Evans-Pritchard: The great lira revolt has begun in Italy
Submitted by cpowell on Mon, 2014-10-13 23:12. Section: Daily Dispatches
By Ambrose Evans-Pritchard
The Telegraph, London
Monday, October 13, 2014
The die is cast in Italy. Beppe Grillo’s Five Star movement has launched a petition to drive for Italian withdrawal from Europe’s monetary union and for the restoration of economic sovereignty.
“We must leave the euro as soon as possible,” said Mr Grillo, speaking at a rally over the weekend. “Tonight we are launching a consultative referendum. We will collect half a million signatures in six months — a million signatures — and we will take our case to parliament, and this time, thanks to our 150 legislators, they will have to talk to us.”
Ever since the pugnacious comedian burst on the political scene, the eurozone elites have comforted themselves that the party is not really Eurosceptic at heart and certainly does not wish bring back the lira. This illusion has been shattered. …
… For the remainder of the report:
http://www.telegraph.co.uk/finance/economics/11159649/The-great-Lira-rev…
end
Keith is absolutely correct.
(courtesy Keith Barron/Kingworldnews)
Gold initiative is needed to restore Swiss independence, Barron tells KWN
Submitted by cpowell on Mon, 2014-10-13 23:25. Section: Daily Dispatches
7:25p ET Monday, October 13, 2014
Dear Friend of GATA and Gold:
As the Swiss National Bank opposes the Swiss gold initiative, it is actually advocating keeping Switzerland subservient to the European Central Bank and particularly to the most financially irresponsible members of the euro zone, mining entrepreneur Keith Barron tells King World News today.
The SNB, Barron says, has “shackled the Swiss franc to the euro by pegging the franc at 1.20. They have supported that peg by buying up an incredible amount of euros. Now about 83 percent of Switzerland’s foreign reserves are held in euros. What does that mean? To me it means that the independence of Switzerland is on the verge of being lost.”
Barron says switching some of the Swiss reserves into gold is necessary to restore the country’s independence.
Barron’s interview is excerpted at the KWN blog here:
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/10/13_T…
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
end
(courtesy Reuters)
Silver price-fixing lawsuits consolidated in Manhattan federal court
Submitted by cpowell on Tue, 2014-10-14 19:20. Section: Daily Dispatches
By Brendan Pierson
Reuters
Tuesday, October 14, 2014
NEW YORK — Litigation alleging that Deutsche Bank, Bank of Nova Scotia, and HSBC illegally fixed the price of silver has been centralized in Manhattan federal court.
Lawsuits filed by investors since July over the alleged price-fixing were consolidated on Tuesday in the U.S. District Court for the Southern District of New York, following an order issued last Thursday by the U.S. Judicial Panel on Multidistrict Litigation, a special body of federal judges that decides when and where to consolidate related lawsuits.
The panel ruled that the cases should be handled by U.S. District Judge Valerie Caproni in Manhattan, who is already overseeing similar litigation over alleged gold price-fixing.
… For the remainder of the report:
http://www.reuters.com/article/2014/10/14/antitrust-silver-idUSL2N0S91QO…
end
(courtesy London’s Financial times)
JPMorgan sets aside $1 billion for forex-rigging penalty
Submitted by cpowell on Tue, 2014-10-14 12:06. Section: Daily Dispatches
By Tom Braithwaite and Martin Arnold
Financial Times, London
Tuesday, October 14, 2014
JPMorganChase set aside $1 billion in legal reserves, depressing third-quarter results, as the largest US bank by assets prepares to pay big penalties over allegations it manipulated the foreign exchange market.
The bank has paid billions of dollars in penalties over regulatory violations and lawsuits in the past two years — ranging from the “London whale” trading fiasco to mis-selling mortgage-backed securities.
Bulking up its reserves by $1 billion was more than analysts expected and took the bank’s profits for the three months to the end of September below expectations, at $5.6 billion.
It is a sign, according to people familiar with the matter, that JPMorgan is close to settling enforcement action, which is being led by authorities in the UK and US, and affects several of the world’s biggest currency trading banks. …
… For the remainder of the report:
http://www.ft.com/intl/cms/s/0/01f4693c-5380-11e4-929b-00144feab7de.html
end
South Africa cannot mine profitably at these low prices and also at huge depths (5,000 ft at some mines)
(courtesy Kevin Crowly/GATA)
South Africa’s gold CEOs ready for mergers as prices decline
Submitted by cpowell on Tue, 2014-10-14 12:20. Section: Daily Dispatches
By Kevin Crowley
Bloomberg News
Tuesday, October 14, 2014
JOHANNESBURG, South Africa — South Africa’s gold miners are ready for mergers and acquisitions as the falling price of bullion forces companies to cut costs and repay debt.
“Maybe there’s some smart consolidation that can take place on a regional basis,” Sibanye Gold Ltd. Chief Executive Officer Neal Froneman said last week. “I think there will be. I think it’s the right time. I think it’s necessary. I don’t think my counterparts in the industry are on completely different pages either.” The company is the country’s biggest producer of the metal.
Gold’s 27 percent drop since the start of last year has prompted executives to consider deals as a way of cutting costs in South Africa’s aging mines and insulating investors from risks such as labor strikes in the country that’s the world’s sixth-biggest producer of the metal. AngloGold Ashanti Ltd. failed in its attempt last month to split its local mines from its international operations only because investors balked at the accompanying $2.1 billion share sale.
“We’re probably a good target right now,” Graham Briggs, CEO of Harmony Gold Mining Co., South Africa’s third-largest bullion producer, said in an interview last week. “A low share price, we’re fairly good with our cost control. If we had bigger management fees to take out, it would be even more of an advantage. We have low debt.”
… For the remainder of the report:
http://www.bloomberg.com/news/2014-10-13/south-africa-gold-ceos-ready-fo…
end
Bill Holter’s open letter to the mining industry must a struck a nerve with one company:
First Majestic decides it doesn’t want to get ripped off in the paper market? John
Tue Oct 14, 2014
Produces 3.5 Million Silver Eqv. Ounces in Q3; Postpones the Sale of 934K Silver Ounces of Inventory
Silver prices declined 19% in the third quarter representing the second largest quarterly decline since the financial crisis in 2008. As a result of this weakness, the Company decided to temporarily suspend silver sales in an attempt to maximize future profits. This suspension of sales will result in lower revenues and earnings for the third quarter, however, it is likely that these inventories of unsold ounces will instead be sold in the fourth quarter. As of September 30, 2014, approximately 934,000 ounces of silver were held in inventory.
http://www.firstmajestic.com/s/NewsReleases.asp?ReportID=678487&_Type=News-Releases&_Title=Produces-3.5-Million-Silver-Eqv.-Ounces-
in-Q3-Postpones-the-Sale-of-934K-Si…
end
Bill Holter analyzes gold demand and comes to the conclusion that China et al are being fed by central bank vaults and namely the Bank of England and the USA
(courtesy Bill Holter/Miles Franklin)
Supply and demand WILL matter!
Whether or not the prices of gold and silver have been “suppressed” has been a topic for several years now. The “no manipulation” camp has argued from “governments and central banks don’t care, to the regulators have found nothing, a scheme this far and wide could never be kept secret, to it doesn’t even matter”.
It does matter, it matters a lot! It matters because if even just one market is “rigged” it means there can be other markets rigged. If gold and silver prices are rigged then by definition since they are the direct competitors of government issued currencies, the currencies are also priced incorrectly. It means the currencies are valued “too high”. It means that governments can issue currency which is valued too high which gives the issuing government more power than they should have based on fundamentals.
This past week Koos Jansen put out an article https://www.bullionstar.com/article/sge%20chairman%20xu%20luode%20chinese%20gold%20demand with a transcript of a speech given by Xu Luode, chairman of the Shanghai Metals Exchange. In this speech given in June, Mr. Luode said on three different occasions his exchange supplied 2,000 tons of gold in 2013. He said this gold was “supplied to Chinese consumers”. I have several observations on this, first, kudos to Koos Jansen because this confirms what he has been saying all along by following Chinese imports of gold. Secondly, it appears that I and others who have done this math may have been wrong in thinking it was the Chinese government doing the accumulation. This speech argues the demand has come from the population or “consumers”, regardless, this was confirmation China is chewing up 2,000 tons of gold in a world where only a total 2,700 tons are produced per year (including Chinese production).
Going one step further we can add roughly 1,000 tons of demand which comes from India bringing the total demand to 3,000 tons versus new global production of 2,700 tons. This is only 2 countries! What about demand from North and South America? What about Europe and the rest of Asia? Or even Australia? Do you see where I am going with this? “Where” is the extra gold coming from? Please don’t tell me “scrap” as I am sure you have already seen your local “cash for gold” shop pull up stakes and close …because grandma’s old earrings have already been sold.
The supply can only be coming from where it is (was) held, the central banks themselves. Another “please don’t tell me” would be that central banks would never ever sell gold to suppress the price and create enough supply to portray “plenty”. The central banks have already done this and done it in a public manner. Remember the “London gold pool” back in the late 1960′s? Do you remember August of 1971 when Nixon closed the gold window and we found out that our holdings went from 20,000 tons to just over 8,000 tons? We “lost” 60% of our holdings back then in an effort to keep gold at $35 per ounce, why is it now impossible that central banks have again tried to suppress the price of gold? Do you believe central bankers have matured, grown consciences and learned by their mistakes of the past? All you need to do is look at money supplies and the amounts of debt the central banks have underwritten to see this is not so. Or better yet, what have their responses to the financial crisis been? Exponentially higher doses of the poisons that got into the mess in the first place, that’s what!
Getting back to supply and demand, it is clear demand for gold has been outstripping new supply for many years, Frank Veneroso first wrote about this nearly 15 years ago …yet the price has been dropping for the last 2 years. Let me ask you this, what price would the stock of IBM be trading at if someone was able to print up a few billion extra yet “fake” shares out of thin air and sell them as real? How can 50% of global silver production be sold on one market (COMEX) within 36 hours and then shortages suddenly appear? If silver was truly sold then it should be so plentiful that picking it up off the street would give you a sore back! If silver was sold and was plentiful then why has the U.S. mint suspended sales several times over the last 3 years? The answer of course was they ran out of supply and could not source what was supposedly “so plentiful”, that’s what.
Before finishing on supply and demand I want to pose a trading scenario with you regarding just 2 banks or traders. If the regulators turned a blind eye, what would prevent Bank A from selling 25% of global silver production on a Monday while Bank B “tepidly” bought throughout the day? Then on Tuesday, Bank B sells whatever was bought on Monday plus say another 10%-15% of global production While bank A “tepidly” buys what is sold and thus “flattens” their position with a huge profit in hand? Of course Bank B is still short but the sentiment has turned bearish, not to mention the margin call liquidations their sales have created. Bank B will worm it’s way out of being short by “buying to close” their positions from scared …and forced liquidations. So bank A probably made more than Bank B without working as hard. the gentleman’s agreement will be reversed the next time and Bank A has to do the heavy lifting. I wanted to mention this scenario because so many have asked me “how” it could possibly be done, this is how.
Physical supply and demand has been “made” to not matter over the last 2 plus years but it will, eventually. It has mattered over the last 15 years and was evidenced by price. The “operation” we have witnessed to depress gold and silver prices has been masterful with one exception, by definition “the game” has to end when the supply runs out. The speech given by Xi Luode has thrown a bit of a monkey wrench in my thinking as he said “consumers. Now I have to wonder about their “official” or state purchases. In my mind I can only imagine they are all lumped together and this figure of just over 2,000 tons is the sum total. If this is not correct then it means the total demand is even higher than this confirmation. It would be very difficult to believe central banks could be supplying more than 2,000-2,500 ton deficit but we have lived through more strange events than this since 2008?
The bottom line is this, total global demand is and has been outstripping supply …and for many years. The available “stock” must be running very low and while temporarily it has been made to look like supply and demand don’t matter, … it will! Like the saying goes, “it doesn’t matter until it matters”, but in this case it will matter greatly because once it is “allowed” to matter there will be little to no supply available as the ammunition has already been spent. This is not a head scratcher in any fashion, short term the prices have been depressed by issuing “fake supply”. Price will readjust violently once the true stock and supply is revealed. Regards, Bill Holter
Early Tuesday morning trading from Europe/Asia
1. Stocks mostly down on Asian bourses with the higher yen values to 106.78
2 Nikkei down 364 points or 2.38%
3. Europe stocks down/Euro down USA dollar index up at 85.74. Chinese bourse Shanghai up as the yuan slightly weakens in value to 6.12569 per usa dollar/yuan.
3b Japan 10 year yield at .50%/Japanese yen vs usa cross now at 106.79/
3c Nikkei now below 15,000
3d Japan tries to stimulate economy by buying $USA/yen.
3e European data awful, Europe stocks implode along with German collapsing industrial production
3f/ negative German ZEW (negative German confidence)
3gOil: WTI 84.75 and Brent: 87.99
3h/ Gold up/yen up; yen below 107 to the dollar/
3i Greek bonds blowing out of the water/signifies trouble
3j Abenomics looks like it is finished!
3k Gold at $1235.00 dollars/ Silver: $17.50
4. USA 10 yr treasury bond at 2.28% early this morning.
5. Details Ransquawk/Bloomberg/Deutche bank/Jim Reid
(courtesy zero hedge)
Futures Euphoria Deflated By Latest Batch Of Ugly European News: Germany Can’t Exclude “Technical Recession”
Submitted by Tyler Durden on 10/14/2014 06:47 -0400
• AllianceBernstein
• Australia
• BOE
• Borrowing Costs
• Capital Markets
• Central Banks
• Citigroup
• Copper
• CPI
• Crude
• Eurozone
• Fail
• fixed
• France
• Germany
• Greece
• Hong Kong
• Iraq
• Italy
• Jim Reid
• NFIB
• Nikkei
• POMO
• POMO
• Precious Metals
• RANSquawk
• Recession
• recovery
• Trade Balance
• Wells Fargo
inShare
So far the overnight session has been a mirror image of Monday’s, when futures languished at the lows only to ramp higher as soon as Europe started BTFD. Today, on the other hand, we had a rather amusing surge in the AUDJPY as several central banks were getting “liquidity rebates” from the CME to push the global carry-fueled risk complex higher, only to see their efforts crash and burn as Europe’s key economic events hit. First, it was the Eurozone Industrial Production, which confirmed that the triple dip is well and here, when it printed -1.8%, below the expected -1.6%, and far below last month’s 1.0%. This comes in the month when German IP plunged most since 2009, confirming that this time it’s different, and it is Germany that is leading Europe’s collapse into the Keynesian abyss not the periphery. And speaking of Germany, at the same time Europe’s former growth dynamo released an October ZEW survey of -3.6%, the 10th consecutive decline and well below the 0.0% expected: first negative print since late 2012!
Just as bad,the ZEW current condition print of 3.2, is once again below the 10 year average as Bloomberg notes:
The cherry on top was Zew’s Fuest saying he “can’t exclude a technical recession in Germany” which in turn led to another record low in Bund yields, a slide in the Dax to fresh 1 year lows, and a break in the carry-trading central banks’ concentration asthe US futures ramps was almost entirely undone.
In other news, Greek bonds are blowing out to levels not seen since May, crossing 7%, on the previously noted concerns the European Court of Justice could further defang the OMT, in the process unwinding 2 years of “whatever it takes”iness.
Finally, with earnings season now well underway, the first company to report today did so with a whimper when JP Morgan pre-released numbers, showing a miss on EPS (USD 1.36 vs. Exp. USD 1.39), even thought non-GAAP (yes, non-GAAP) revenues fared better than expected.
In Asia, besides the Nikkei (-1.5%), key indices in Hong Kong, Korea and Australia are +0.6%, +0.3%, and +1.0%, seemingly unaware that Europe would defeceate the bed once again. The bid for Treasuries remains firm with the 10yr yield down another 7bp to 2.21% in Tokyo. In Hong Kong, police have stepped up their effort to reopen the roads overnight by tearing down barricades and tents and have been met with no resistance. Elsewhere, the Asia iTraxx is 2bp wider wrapped around 121bp. The Dollar is weaker against key currencies and that is not helping the further slide in Brent either.
After yesterday’s sharp sell-off in US equities, it’s no surprise to see European cash markets also in the red, as a spate of poor earnings updates from SAB Miller, Burberry and Michael Page hit sentiment. US focus shifts to the slew of earnings releases today. Other large-cap earnings releases today include Johnson & Johnson with many on the street looking for the company to beat expectations due to performance in key drugs, with sales of Remicade expected at USD 1.72bln, Olysio at USD 768.8mln and Zytiga at USD 588.3mln.
In summary: futures are trying to get some carry currency to lift them higher even as the 10Year is printing at the unthinkable at the beginning of the year 2.21%, while the 30Year is solidly back under 3%, at a whopping 2.96%. Must be the recovery and great rotation everyone was talking about…
Bulletin headline summary from RanSquawk and Bloomberg:
• Very poor German and UK data prompts sharp strength in core fixed income, with spill-over buying in T-notes setting up US 10yr yields to test Jun’13 lows at 2.13%
• US equity futures signal another day of losses after the S&P 500 cemented the worst three-day performance in three years yesterday, lifting the VIX index to Jun’12 highs
• Near-term focus shifts to earnings from Wells Fargo, Citigroup, Johnson & Johnson after JP Morgan released earnings early: EPS USD 1.36 vs. Exp. USD 1.39, Rev. USD 25.2bln vs. Exp. USD 24.3bln
• Treasuries gain, 10Y yield touches lowest since June 2013 as global sell-off in stocks continues amid weak eco data, growth concerns.
• German investor confidence fell to the weakest in almost two years, with the ZEW index falling to -3.6 in October from6.9 in September, the 10th month of declines and first negative reading since November 2012
• U.K. inflation fell to 1.2% in September from 1.5% in August, more than economists forecast and the lowest since September 2009
• The Court of Justice, the EU’s highest court, will weigh whether Draghi’s ECB overstepped its powers in 2012 with the mechanism to buy the debt of stressed countries if needed
• Traders are facing new global rules on how they determine the value of collateral in repo transactions as regulators seek to prevent panic writedowns that are seen fueling future financial crises
• Too big to fail is likely to prove a costly epithet for the world’s biggest banks as regulators demand they increase debt securities to cover losses should they collapse; the shortfall facing lenders from JPM to HSBC could be as much as $870b, according to estimates from AllianceBernstein Ltd
• Obama will try to shore up a coalition against Islamic State forces today as airstrikes have failed to stop Islamic State forces from gaining territory in Iraq and Syria and as questions grow about a plan that lacks effective ground forces
• As the Ebola virus spreads in and beyond Africa, it’s raising the possibility of a global pandemic that U.S. intelligence agencies have warned is among the greatest potential threats to global security
• Hong Kong police used chain saws and sledgehammers to clear barricades in the city’s business district erected by pro-democracy demonstrators, hours after Chief Executive Leung Chun-ying signaled he’s losing patience with the protests
• JPMorgan swung to a third-quarter profit from a year-earlier loss, while setting aside $1b for legal expenses
• Sovereign yields mostly lower; Greece 10Y surges by 37bps. Asian stocks lower, Nikket falls 2.3%; European stocks slide, U.S. equity-index futures higher. WTI crude and gold lower, copper higher
US Event Calendar
• 7:30am: NFIB Small Business Optimism, Sept., est. 95.8 (prior 96.1)
• 11:00am POMO: Fed to purchase $850m-$1.05b in 2036-2044 sector
• 11:30am: U.S. to sell $24b 3M bills, $27b 6M bills
FIXED INCOME
The German curve flattened aggressively in reaction to a particularly poor ZEW survey (-3.6 vs. Exp. 0.0), with the index falling into negative territory for the first time since late 2012 as the data records the 10th consecutive decline. As such, Dec-14 Bund futures tripped stops on the way through contract highs of 150.78 to push Germany’s borrowing costs to record lows once more. The Gilt curve has steepened, with 2s/30s steeper by 3.8bps in an effort to delay pricing of a rate hike from the BoE after a 5yr low UK CPI reading (1.2% vs. Exp. 1.4%). The SONIA-market has also taken note, pricing in the next 25bps rate hike from the MPC in eight months’ time, as opposed to six-months’ pre-data.
EQUITIES
After yesterday’s sharp sell-off in US equities, it’s no surprise to see European cash markets also in the red, as a spate of poor earnings updates from SAB Miller, Burberry and Michael Page hit sentiment. US focus shifts to the slew of earnings releases today – JP Morgan have gotten things off to a poor start, after pre-releasing their numbers, showing a miss on EPS (USD 1.36 vs. Exp. USD 1.39), however revenues fared better than expected (USD 25.2bln vs. Exp. USD 24.3bln). Other large-cap earnings releases today include Johnson & Johnson with many on the street looking for the company to beat expectations due to performance in key drugs, with sales of Remicade expected at USD 1.72bln, Olysio at USD 768.8mln and Zytiga at USD 588.3mln.
FX
EUR/USD fell following the miss on Germany’s ZEW survey, also hitting EUR/JPY, which fell to 11-month lows. EUR/GBP has found resistance at the 100DMA of 0.7957 after the UK CPI, however the subsequent German data pulled the cross lower. The one major currency underperforming the EUR is GBP today, as UK CPI collapsed to 5-year lows, as falls in the cost of transport, recreation and hotels kept CPI flat over September, suggesting a broader fall in inflationary pressure independent to the slump in commodities prices. AUD outperformed its peers overnight, underpinned by the PBoC lowering its Repo rate for the 2nd time in less than a month spurring more easing hopes. This was twinned with the sharpest rise in the benchmark Chinese iron ore price in two years.
COMMODITIES
WTI and Brent crude futures saw little reprieve overnight, with a brief spell of upside being erased by a bout of USD strength after poor German and UK data. The USD-strength has also knocked precious metals lower in tandem, with industrial metals the only strong sector of commodities. Copper futures trade close to monthly highs after China’s benchmark iron ore price rallied at the fastest rate in two years overnight as traders eyed China’s trade balance data earlier in the week, which shows the country’s steelmakers ramping up output and re-stocking after the Golden Week holiday. Elsewhere, energy traders remain focused on the Islamic State’s progress toward Baghdad in central Iraq, with 180,000 citizens being forced to flee Western Iraq in response.
* * *
DB’s Jim Reid concludes the overnight recap
Even though the US session was thin due to Columbus Day, we had another nasty close with the S&P 500 (-1.65%), falling from flat in the last 2 hours. The third successive day of losses puts the index firmly below its 200-day moving average – a level that is closely watched by market technicians. It was also a negative session for the Dow (-1.35%) which posted its steepest 3-day decline (-3.96%) since 2011. There weren’t any specific drivers behind the move so sentiment was likely weighed again by uncertainties around global growth (or the lack of it) and how life will look like without the Fed’s QE. For equities the Energy sector (-2.85%) was the biggest drag to the S&P 500 on the back of continued falls in Oil. Brent slumped another 1.5% yesterday, not helped by reports that the Saudis have no plans to cut back production as they seem comfortable with lower for longer oil prices. The S&P 500 Energy index and Brent are now around 19% and 22% below their respective highs in June.
We haven’t seen a four-day loss for the S&P 500 so far in 2014 so the bulls will be hoping for a good set of earnings today as the season starts in earnest. Indeed JPMorgan will kick off the US banks’ Q3 earnings season at midday UKT, followed by Wells Fargo and Citigroup (both at 1pm UKT). Overall DB’s US banks analyst, Matt O’Connor, expects most banks to meet/beat Q3 estimates on continued better-than-expected credit trends as well as upside from fixed income trading (for capital markets banks). Outlook commentaries from bank executives will be key as usual but better FIC trading (mostly driven by FX trading) and weaker net interest income (with narrowing commercial loan spreads) are likely the two biggest themes for Q3 and potentially beyond. We also have some non-financials such as Johnson & Johnson and Intel (after-market) today but the spotlight will be on the banks.
We’ll also see if the firmer Asian risk tone overnight will set the pace for the rest of the day ahead. Besides the Nikkei (-1.5%), key indices in Hong Kong, Korea and Australia are +0.6%, +0.3%, and +1.0% higher as we type. The S&P 500 Futures are also up +0.5% although the bid for Treasuries remains firm with the 10yr yield down another 3bp to 2.25% in Tokyo. In Hong Kong, police have stepped up their effort to reopen the roads overnight by tearing down barricades and tents and have been met with no resistance. Elsewhere, the Asia iTraxx is 2bp wider wrapped around 121bp. The Dollar is weaker against key currencies and that is not helping the further slide in Brent either.
Looking ahead to today, the European Court of Justice (ECJ) will hold a hearing on the ECB’s OMT programme. This comes after the German Constitutional Court in February passed the case against the OMT (along with a list of specific questions on legality) onto the ECJ thus pausing their own proceedings. As our European economics team wrote in this past week’s Focus Europe, the hearing will be “an official exchange of views between the plaintiffs and the ECB. Neither the statements nor the hearing will be public.” Whilst the hearing will be held today, in terms of a time frame for an answer our economics team noted that, ”there will be no judgement, and similar proceedings have taken up to 15 months on average in the past,” although the actual time frame for this case could be significantly different. This case is important as it will affect the legal ability of the ECB to bring in future QE. Looking ahead our economists expect that, “it is quite likely that the ECJ and subsequently the GCC will come to a favourable ruling on the subject of OMT. However, proceedings and timeline are still unclear. They expect economic conditions to force the ECB into public QE within the next 6 months. However the market perception of the efficacy and durability of the public QE may be weakened if the final judgement on OMT is still outstanding.”
As far as data flow is concerned, the German ZEW survey for October usually gets some market attention. Today will also see the release of some inflation numbers from the UK, France, Italy and Spain. These could be quite important numbers given recent trends.
end
France and Brussels are having a war of words over their deficit.
France is adamant that it remains at 4.6% instead of cutting it to 3.0% by agreement of the 17 signing members of the Euro currency block.
(courtesy zero hedge)
France Tells Brussels ‘Bullies’ “Non Non Non”, Won’t Change Treaty-Busting Budget
Submitted by Tyler Durden on 10/14/2014 14:33 -0400
• Budget Deficit
• France
• Germany
• Italy
• Reality
inShare3
Having noted last week of the rising tensions between the French (pushing forward with plans for a budget deficit that far exceeds EU Treaty rules) and Germany (letting a Frenchman run EU’s finances is “an unwise personnel decision”) and Brussels (planning to reject the French budget); it seems the French are unimpressed. As les Echos reports, French finance minister Michel Sapin has proclaimed he won’t change the budget, arguing that the EU commission has no power to reject a budget as sovereignty belongs to France’s parliament… fighting words for a ‘union’! In addition, the EU is now planning to reject Italy’s budget, due to its “serious violation” of EU rules.
Italy is now up for rejection:
• ITALY BUDGET PLANS LIKELY TO BE SEEN AS “SERIOUS VIOLATION” OF EU RULES AND REJECTED BY COMMISSION – EU SOURCE
As France previously did, but is now fighting back (as Bloomberg reports),
The EU Commission has no power to reject a budget as sovereignty belongs to France’s parliament, Finance Minister Michel Sapin says in an interview with Les Echos.
France will give nature and calender of planned structural reforms very soon, Sapin says in the interview.
* * *
Which seems odd – let’s see the Greeks pull the same game…
Via Les Echos,
The Commission, I believe, has absolutely no power to “reject”, “return” or “censor” a budget, as I have read it.
Here as elsewhere, sovereignty rests with Parliament French. About the bullies I hear often uttered anonymously, can only harm Europe …
France is a responsible country, we can not have the same currency without concern for consistency of budgetary developments in each of our countries.
The euro zone is in a situation of very low growth and very low inflation. With a clear risk of ” Japanese-style scenario .”
* * *
The bottom line is that France is arguing that it will run bigger deficits now to ensure better growth in the future and that the EU commission needs to comprehend that and let them off… once more, hope trumps reality – for now we wait to see just how quickly Brussels folds.
Or summing it up in two words, it appears France is telling the EU to “F##k Off” – we’ll do what we like! Having learned the lessons of the Greeks as beggars can be choosers…
UPDATE: and it seems the Italians will be saying the same soon.
end
The press are simply hopeless. Greece can never exit from their bailouts and they simply need someone to buy their mega paper.
The ECB is in a quandary: Draghi must buy the Greek junk or else Greece defaults and sets off massive credit default swaps.
This will be interesting to see how Germany interacts with the ECB to prevent them from buying the junk
(courtesy zero hedge)
Greek Bond & Stock Prices Plunge On Bailout-Exit & OMT Fears
Submitted by Tyler Durden on 10/14/2014 11:16 -0400
• Bond
• ETC
• European Central Bank
• Germany
• Greece
• Monetary Policy
• Reality
• Testimony
• Unemployment
inShare2
While Greek leaders are proclaiming victory, intending to exit the bailout plan early and fund themselves in the public marketplace – just as they did in April (despite record poverty, unemployment, and suicides); it appears investors are a little less sanguine about the prospect. Greek bond yields have topped 7% for the first time since March and any gains from the 5Y bonds sold to hedge funds in April have now gone (and Greek stocks are at 13-month lows). The driver of recent weakness appears to befears over whether Draghi’s OMT will ever be real enough to monetize Greek debt and a re-rating based on morestandalone risk if Greece were to exit the bailout program early.
As Bloomberg reports,
Greece’s government bonds declined, pushing 10-year yields above 7 percent for the first time since March, after euro-area finance ministers clashed with the nation’s leaders over their desire to sever a bailout program.
Greek 10-year bonds fell for a second day and the nation’s stock index tumbled to the lowest in more than a year. Ministers are watching Greece “with a certain skepticism and concern,” Austrian Finance Minister Hans Joerg Schelling said yesterday. The euro area’s second-biggest bond rally this year is slowing amid concern Greece won’t be able to finance itself at sustainable rates without the support of its regional partners. Benchmark German 10-year yields dropped to a record.
“We are starting to approach yield levels where doubts are starting” about Greece’s ability to finance itself, said Christian Lenk, a fixed-income analyst at DZ Bank AG in Frankfurt. “There is a lot of uncertainty in the market and that is helping to increase pressure on Greek bonds.”
As we warned yesterday, decisions on the legality (or reality) of OMT are weighing on peripheral bonds (most notably GGBs):
While a ruling on the legal questions forwarded by Germany’s Constitutional Court is not expected this year, the hearing and questions posed by EU judges may give some early insights into their views and to what extent they might share the view of the German court that, unless several restrictions are imposed, the OMT should be considered illegal under European law.
European Court of Justice scheduled to hear testimony on the ECB’s OMT on 14 October
The ECJ has scheduled a hearing on the ECB’s OMT for next Tuesday, 14 October (starting at 9am CET), which we expect to last all day. Under the OMT, the ECB could purchase, without limitation, bonds of a member state that has entered into an ESM aid programme and agreed to be subject to its conditions. Earlier this year (see German Constitutional Court’s referral of key legal OMT aspects to European Court of Justice is good news, 7 February) the German Constitutional Court (GCC) in an unprecedented move referred a long list of questions to the ECJ (see Appendix below) for a preliminary ruling after it declared admissible a constitutional complaint by some 30,000 plaintiffs (Gauweiler and others) against the OMT. The discussion and specifically questions posed by the EU judges to the parties involved (the ECB, etc) during the hearing might give some early insight on their views. We do not expect the ECJ to come to a ruling this year but the court’s advocate general may announce the schedule for the proceedings next week. Usually, it takes the ECJ about 16 months on average to rule on cases referred by national courts which implies that the OMT ruling could come by June.
German court insists on several restrictions for the OMT
The German constitutional court put some pressure on the EU court and made clear its view last February that there are important reasons to assume that the OMT would be illegal under EU law as it exceeds the European Central Bank’s monetary policy mandate and violates the prohibition of monetary financing of the budget, unless certain restrictions are imposed. These should require “that the acceptance of a debt cut must be excluded, that government bonds of selected Member States are not purchased up to unlimited amounts,and that interferences with price formation on the market are to be avoided where possible.”
* * *
It appears that fear is being seen in the riskiest of risky bonds that have been bid to the moon alice on the back of OMT hopes…5Y GGB traded over 104 in September and is now back under 99…
and stocks have crashed back to 13-month lows…
* * *
Let’s see the Greek leaders push for a bailout exit when yields break 8, 9, or 10%!
* * *
On the bright side, at least the Greeks are now competitive with Zee Germans…
Charts: Bloomberg
end
And now that Kiev is not fighting the rebels they are fighting with themselves in Kiev>>>
(courtesy zero hedge)
Meanwhile In Kiev…
Submitted by Tyler Durden on 10/14/2014 09:36 -0400
• BATS
• Ukraine
inShare2
Not satisfied with fighting pro-Russian separatists, Ukrainians are fighting among themselves in Kiev. As RT reports, Kiev police deployed additional forces around the parliament building after a group of demonstrators started throwing smoke bombs and firecrackers at guards in an apparent reprisal over MPs’ failure to honor past nationalists. More than 15 officers have been hurt as far-right protesters clash with riot police at the government buildings on the anniversary of UPA (Ukrainian Insurgent Army). Perhapa more troubling is, if this is the internal tension now, how bad will it get in the winter when they are freezing as Ukraine says it won’t prepay for Russian gas.
Bats, Chains, and firecrackers…
You are looking at the next “Venezuela”
(courtesy Simon Black/the Sovereign Man/zero hedge)
Argentina Becomes Venezuela With The Passage Of This Law
Submitted by Tyler Durden on 10/14/2014 16:39 -0400
• Brazil
• ETC
inShare1
Submitted by Simon Black via Sovereign Man blog,
In the pantheon of utter political stupidity in our time, the competition is pretty fierce to see who ranks #1.
But I have to imagine that, even with so many rivals, Argentina’s Cristina Fernandez de Kirchner makes a pretty compelling argument to be the champion.
And though the productive class of Argentina is no stranger to being vilified by a populist government whose grasp on power rests on praising the dignity of poverty, Cristina has managed to take things to an entirely new level.
Exhibit A: Argentina’s new ‘supply law’, or Ley de Abastecimiento, due to take effect in December next year.
Under this new law, the government will have the honorable burden of defending consumers from greedy producers.
Companies are now prohibited from setting their prices too high, generating too much profit, or producing too little.
And unlike the country’s astronomically high taxes (which at least have defined numbers and penalties), the new supply law doesn’t even say what is meant by too high, too many, or too little.
It simply reinforces the government’s unchecked power to arbitrarily audit, fine, shut down, and expropriate production of private companies.
Argentina’s government has already been maintaining “voluntary” price controls on over 400 consumer products for the past year, all in the name of combating the inflation that they themselves created.
And as any high school economics student can tell you, price controls create… SHORTAGES. Duh.
Needless to say, local production of these staple consumer products has dropped as a result of price controls. And given the pitiful state of the peso, they’re too expensive to import.
And anyone who can actually get their hands on these products—sugar, cooking oil, canned fruits, cleaning products, etc. often strolls across the land borders into Paraguay and Brazil where they are sold at competitive market prices.
Argentina’s new law of clamping down supply-side control echoes Venezuela’s 2011 “Fair Price and Cost Law”, which instead of reigning in inflation has reduced the Bolivarian state to the continent’s preeminent example of failure
Throngs of Venezuelans now line up around the block for days to buy single-ply toilet paper at a “fair” price. Argentina is not far behind.
This isn’t even about the country being “leftist” or “socialist”.
What has destroyed the country is not the high taxes or government waste (although that certainly doesn’t help). Argentina shoots itself in the foot by passing laws that call into question legal certainty and basic property rights.
All of this exacerbates unquantifiable country risk and the inability for businesses and individuals to plan ahead—in any environment.
If you think Argentina is an aberration, think again.
Just as Argentina used to be one of the richest places in the world and Buenos Aires competed with New York for the brightest and most talented minds on the planet, many Western countries are going down the same road.
They create absurd and confiscatory tax systems and regulations. They condemn companies who have a fiduciary responsibility to their shareholders – not governments – and follow THEIR OWN LAWS to legally minimize their tax obligations.
The seize, steal, kill and regulate every aspect of our private and economic lives. And they even have to resort to such comical measures as in Europe where they now count illegal activities such as spending on drugs and prostitutes as part of the GDP to maintain the illusion of economic growth.
All this uncertainty pushes people and businesses out the door. No one wants to deal with long-term stability issues when the next debt-ceiling debacle is always just around the corner, and when you have to look out for any number of three-letter agencies to reprimand you for doing business.
Argentina is a sign of things to come. Are you willing to wait for when your government decides that your profits are too high?
end
And now your more important Ebola stories:
(courtesy zero hedge)
Most US Hospitals Cannot Safely Handle Ebola Patients
Submitted by Tyler Durden on 10/14/2014 15:02 -0400
• ABC News
• Barack Obama
• NBC
• Obama Administration
• Reality
• Washington D.C.
inShare1
Submitted by Michael Snyder of The End of the American Dream blog,
This Ebola outbreak is being called the “most severe, acute health emergency seen in modern times“, and the U.S. health care system is completely and totally unprepared for it. The truth is that most U.S. hospitals are simply not equipped to safely handle Ebola patients, and most hospital staff members have received little or no training on Ebola. And the fact that Barack Obama and our top public health officials are running around proclaiming that Ebola is “difficult to catch” is giving doctors and nurses a false sense of security. There is a reason why Ebola has been classified as a biosafety-level 4 (BSL-4) pathogen. It is an extraordinarily dangerous virus, and there are only a few facilities in the entire country that are set up to safely handle such a disease.
The Ebola patient that recently died in Dallas was the first to be cared for in a facility that did not follow biosafety-level 4 protocols. And so it should not be a surprise that this is the facility where transmission happened…
Of the six Ebola patients treated in the U.S. before the health worker’s case, Duncan was the only one not treated at one of the specialized units in several hospitals around the country set up to deal with high-risk germs.
The CDC’s director, Dr. Thomas Frieden, has said that any U.S. hospital with isolation capabilities can care for an Ebola patient. But his stance seemed to soften on Sunday, when asked at a news conference whether officials now would consider moving Ebola patients to specialized units.
“We’re going to look at all opportunities to improve the level of safety and to minimize risk, but we can’t let any hospital let its guard down,” because Ebola patients could turn up anywhere, and every hospital must be able to quickly isolate and diagnose such cases, he said.
The head of the CDC continues to underestimate the seriousness of this disease. His opinion that just about any U.S. hospital can safely handle Ebola patients is being contradicted by a whole host of medical experts, including ABC News chief health and medical editor Dr. Richard Besser…
Besser said he does not agree with the Centers for Disease Control, which says any U.S. hospital can safely care for an Ebola patient.
“To do it safely, health care workers need to train and practice using protective equipment like they have been doing at the Emory and Nebraska facilities,” he said, referring to special biocontainment units at Emory University Hospital in Atlanta — where Fort Worth physician Kent Brantly was treated for Ebola exposure; and the Nebraska Medical Center in Omaha, where an NBC photojournalist is currently being cared for. “I would never have gone into an Ebola ward in Africa without being dressed and decontaminated by experts — health care workers here should expect no less.”
And even if our hospitals had the proper equipment and hospital staff were being given proper BSL-4 protective clothing, the reality of the matter is that most of them have not received adequate training. Just check out the following excerpt from an NBC News article that was posted this week…
Three out of four nurses say their hospital hasn’t provided sufficient education for them on Ebola, according to a survey by the largest professional association of registered nurses in the United States.
National Nurses United has been conducting an online survey of health care workers across the U.S. as the Ebola outbreak has widened globally. After a Texas nurse who cared for the first patient diagnosed with the Ebola in the U.S. tested positive for the virus Sunday, the group released its latest survey findings.
Out of more than 1,900 nurses in 46 states and Washington D.C. who responded, 76 percent said their hospital still hadn’t communicated to them an official policy on admitting potential patients with Ebola. And a whopping 85 percentsaid their hospital hadn’t provided educational training sessions on Ebola in which nurses could interact and ask questions.
If this is indeed the most serious health emergency in modern times like the WHO is saying, then we need to get our health care personnel trained to face it immediately.
Sadly, if a major Ebola pandemic does break out in this country, there is no way that we are going to have the resources to be able to deal with it.
As I discussed yesterday, WND is reporting that there is only one BSL-4 care facility in the entire nation that is available to treat the general public…
Have you wondered why Ebola patients are being sent to Omaha, Nebraska?
It’s because one physician, Dr. Philip Smith, had the foresight to set up the Nebraska Biocontainment Patient Care Unit after the Sept. 11 attacks as a bulwark against bioterrorism. Empty for more than a decade, used only for drills, it was called “Maurer’s Folly,” for Harold Maurer, former chancellor of the University of Nebraska Medical Center.
The unit has a special air handling system to keep germs from escaping from patient rooms, and a steam sterilizer for scrubs and equipment.
It could handle at most 10 patients at a time, but one or two would be more comfortable, owing to the large volume of infectious waste.
It is the largest of only four such units in the U.S., and the only one designated for the general public.
If the outbreak in the United States is limited to just a few patients we will probably be fine.
But what if it isn’t?
Meanwhile, the Obama administration continues to do next to nothing to prevent more people infected with Ebola from traveling into this country.
Obama says that there is “extensive screening” at our airports, but that simply is not true.
The following is one example of the “extensive screening” that is taking place…
The World Health Organization is sending doctors to countries where the virus is most prevalent — Liberia, Guinea, Sierra Leone and Nigeria. Fusion’s Jorge Ramos spoke to one of the doctors, Dr. Aileen Marty, who recently returned home to Miami after spending 31 days in Nigeria. She says she was surprised what happened when she arrived at Miami International Airport.
“I get to the kiosk…mark the fact that I’ve been in Nigeria and nobody cares, nobody stopped me,” Marty said.
“Not a single test?” Ramos asked her, surprised.
“Nothing,” Marty answered.
And the head of the CDC continues to rule out a ban on air travel for non-essential personnel to and from the countries where Ebola is raging…
Dr. Frieden strongly argued against curtailing travel to and from West Africa, in part because that could make it harder to get supplies to those countries. “That will make it harder to stop the disease,” he said. “Whatever we do, we won’t stop travel to and from these countries.”
It is hard to put into words how foolish this is.
If this virus gets loose inside the United States it could easily become the worst health crisis our nation has ever seen.
The key is to keep the virus from getting into our country in the first place.
Banning air travel for non-essential personnel to and from Sierra Leone, Guinea and Liberia would not be that big of a deal. Many other countries have already done it.
But the CDC and the Obama administration are not even considering it.
If they have made the wrong call on this, it could end up costing large numbers of Americans their lives.
end
(courtesy zero hedge)
WHO Warns Up To 10,000 Ebola Cases Per Week By December
Submitted by Tyler Durden on 10/14/2014 13:42 -0400
• Florida
• Germany
inShare2
With more than 4,400 people dead from Ebola – mainly in West Africa – senior WHO official Bruce Aylward told reporters on Monday that the outbreak was continuing to spread geographically to new districts in the capitals of Sierra Leone, Liberia and Guinea. As The BBC reports, the WHO says it is alarmed by the number of health workers exposed to the disease and warned the epidemic threatens the “very survival” of societies and could lead to failed states. “Any sense that the great effort that’s been kicked off over the last couple of months is already starting to see an impact, that would be really, really premature,” Aylward said, as WHO further warned the number of new Ebola cases may jump to 10,000 a week by Dec. 1 as the deadly viral infection spreads – “the virus is still moving geographically and still escalating in capitals, and that’s what concerns me.”
First – the good news:
• *WHO TO DECLARE END OF EBOLA IN SENEGAL OCT. 17 IF NO NEW CASES
But – as The FT reports,
The Ebola epidemic in west Africa is set to reach a peak of between 5,000 and 10,000 cases a week by early December – up to 10 times the current official figure – before international action is likely to reverse the rise, the World Health Organisation has predicted.
Dr Bruce Aylward, who recently took charge of the WHO’s operational response to the crisis, also warned on Tuesday not to misinterpret the official Ebola lethality numbers. The latest figures show 8,914 cases and 4,447 deaths so far, suggesting that about half the patients recover, but may only show half the real toll.
…
“We anticipate that the number of cases [per week] occurring by that time will be 5,000 to 10,000,” he said. “It could be higher, it could lower, but it’s going to be in that ballpark.”
* * *
Outside of West Africa, cases continue to rise:
Sadly, European cases continue to deteriorate…
A UN medical worker infected with Ebola has died at a hospital in Germany. Doctors at the hospital in Leipzig said the man, 56, originally from Sudan, died despite receiving experimental drugs to treat the virus. (via BBC):
The man who died in Leipzig had been working as a UN medical official in Liberia – one of the worst affected countries – when he caught Ebola.
He arrived in Germany last Thursday for treatment and was put into a hermetically sealed ward, accessed through airlock systems.
“Despite intensive medical measures and maximum efforts by the medical team, the 56-year-old UN employee succumbed to the serious infectious disease,” a statement from St Georg hospital said.
He was the second member of the UN team in Liberia to die from the virus, the BBC’s Jenny Hill in Berlin says.
He was also the third Ebola patient to be treated for the virus in Germany after contracting the disease in West Africa.
The Spanish nurse remains in critical condition after becoming the first person to contract the disease outside of Africa last week, although doctors say there are signs of improvement
In the US, potential cases continue to appear…
In Jacksonville, Florida a patient with flu-like symptoms was isolated and tested for Ebola “on the basis of self-reported casual contact with a West Africa traveler,” according to the hospital.
In Boston, Massachusetts on Monday, a patient who had recently traveled to Liberia was evaluated for Ebola and deemed not to have the virus.
And finally, the most worrying case for Americans remains in Kansas…
Kansas University Hospital officials have placed a man into isolation while awaiting the results of Ebola tests, officials said Monday. The patient—a medic who had recently worked in West Africa treating locals for the virus—admitted himself to the hospital with flu-like symptoms. Despite his exposure, officials described his case as “a low risk patient.”
Since once Ebola hits the heartland, one might expect domestic air travel to slow dramatically.
* * *
We leave it to UN Ebola mission leader Tony Banbury to sum up what’s needed:
“We need everything. We need it everywhere, and we need it superfast.”
end
And now for your major data points today:
Portuguese 10 yr bond yield: 3.04 par in basis points from Monday night.
(Portugal imploding)
Your closing Portuguese 10 year bond yield Tuesday night: up 3 in basis points on the day
Portuguese 10 year bond yield: 3.07%
Your closing Japanese yield Tuesday down 1 in basis points from
Friday night:
yield .50%
Japanese 10 year bond yield: .50%
And now for your closing Japanese 10 year bond yield / par in basis points from the morning: ( Japanese markets imploding)
Japanese 10 year bond yield: .50%
end
Your opening currency crosses for Tuesday morning:
EUR/USA: 1.2657 down .0077
USA/JAPAN YEN 106.78 down .210
GBP/USA 1.5946 down .01260
USA/CAN 1.1246 up .0048
This morning the Euro is well down , trading now just above the 1.26 level at 1.2657 as Europe continues to face deflation and crumbles. The yen is up a lot and It closed in Japan rising by 21 basis points at 106.78 yen to the dollar. The pound is well down from Monday as it now trades just below the 1.60 level to 1.5946. The Canadian dollar is well down this morning with its cross at 1.1246 to the USA dollar.
Early Tuesday morning USA 10 year bond yield: 2.19% !!! down 9 in basis points from Monday night/ (USA economy not doing so well with this low yield) wow!!
USA dollar Index early Tuesday morning: 85.74 up 21 cents from Monday’s close
end
The NIKKEI: Tuesday morning: down 364 points or 2.38%
Trading from Europe and Asia:
1. Europe all in the red
2/ Asian bourses mostly in the red except Australia / Chinese bourses: Hang Sang in the red, Shanghai in the red, Australia in the green: /Nikkei (Japan) red/India’s Sensex in the red
Gold early morning trading: $1235.00
silver:$ 17.50
end
Your closing Spanish 10 year government bond Tuesday/ down 4 in basis points in yield from Friday night.
Spanish 10 year bond yield: 2.04% !!!!!!
Your Tuesday closing Italian 10 year bond yield down 3 in basis points and trading 26 in basis points above Spain./
Italian 10 year bond yield; 2.30%
end
IMPORTANT CLOSES FOR TODAY
Closing currency crosses for Tuesday night/USA dollar index/USA 10 yr bond: Europe falling apart this afternoon
Euro/USA: 1.2651 down .0083 (huge move)
USA/Japan: 106.97 down .020
Great Britain/USA: 1.5907 down 0.0168 (HUGE MOVE)
USA/Canada: 1.1304 up .0112 (huge move)
The euro fell sharply in value during this afternoon’s session, and it was down badly on the day , closing well below the 1.27 level to 1.2651. The yen was up during the afternoon session,and it gained 2 basis points on the day closing just below the 107 cross at 106.97. The British pound lost major ground during the afternoon session and it was down for the day as it closed at 1.5904
. The Canadian dollar was well down during the afternoon session, and it was down on the day closing at 1.1304.
Your closing USA dollar index:
85.19 down 71 cents on the day
your 10 year USA bond yield, a fall of 9 basis points: 2.19%!!!!!!!!!
European and Dow Jones stock index closes:
England FTSE up 26.44 or 0.42%
Paris CAC up 9/55 or 0.23%
German Dax up 12.78 or 0.15%
Spain’s Ibex 17/60 or 0.17%
Italian FTSE-MIB up 16.77 or 0.09%
The Dow: down 5.88 or 0.04%
Nasdaq; up 13.52 or 0.32%
OIl: WTI 82.06
Brent: 85.11
end
And now for your big USA stories
Today’s NY trading:
Trannies Surge, Industrials Purge As Oil Plunges Most In 2 Years
Submitted by Tyler Durden on 10/14/2014 16:05 -0400
• Bond
• Copper
• High Yield
• Reality
• Volatility
inShare
Yet again, early exuberance in stocks – which was entirely unsupported by credit and bonds – plunged back to reality late in the day. Intraday volatility in Russell and Trannies was unbelievable with 3-4% swings (Trannies best day in 14 months before the tumble – but managed to close back above its 200DMA). Since Friday, Treasury yields are 6-9bps lower and the dollar rallied back to unchanged today. The big story was the total collapse in oil prices into their close (accompanied by weakness in CAD and EUR, stocks, and bond strength) as it appears someone large got a serious tap on the shoulder to liquidate (WTI under $82 -4.4%, biggest drop in 2 years). Copper gained as gold and silver slipped modestly on the day. HY credit pushed back above 400bps (widest in 13 months) as VIX broke above 24.5 briefly in the last hour (from below 21.5 at its lows) highest since June 2012.
Quite a day in stocks…
And week so far…
As stocks caught down to bonds…
And bonds rallied further today (10Y 2.17% lows, 30Y 2.92% lows)
and credit…
As High Yield credit spreads surged back above 400bps – widest in 13 months…
VIX banged around once again but note that we closed around the levels of the big afternoon dump yesterday…
But USDJPY was in charge of the S&P all day.. and pinned to 107.00
FX markets saw USD strength on the day – led by Cable, EUR, and CAD weakness…
USD strength on the day sapped some strength from PMs, Copper spurted, oil squirted…
Charts: Bloomberg
end
Super dove SF governor Williams is already preaching for more QE
(courtesy zero hedge)
The QE4 Countdown Has Begun
Submitted by Tyler Durden on 10/14/2014 14:21 -0400
• Bond
• Federal Reserve
• Federal Reserve Bank
• Hyperinflation
• Janet Yellen
• John Williams
• None
• Reserve Currency
• Reuters
inShare6
Actually, it may well be QE5, or QE6 depending on how one counts Operation Twist and the extension of QE3, but what matters is that the countdown to whatever it is, has begun courtesy of none other than one of the Fed’s biggest doves, the head of the Fed which spawned Janet Yellen, San Francisco Fed’s John Williams
• FED’S WILLIAMS SAYS QE MAY BE NEEDED IF ECONOMY FALTERS
This is what a happy, money-printing John Williams looks like:
More from Reuters:
The head of the San Francisco Federal Reserve Bank on Tuesday said he would be open to another of round asset purchases if inflation trends were to fall significantly short of the U.S. central bank’s target.
Although he said it would take a big shift in the U.S. economic outlook for the Fed to restart its bond buying, John Williams said the possibility of a new downturn in Europe and other global economic woes pose a risk to the United States. “If we really get a sustained, disinflationary forecast … then I think moving back to additional asset purchases in a situation like that should be something we should seriously consider,” Williams said in an interview with Reuters.
Rinse, repeat, for round number 4 (or 5, or 6), in the process completely destroying what little is left of the middle class and making the uber super rich uberer, superer richer. Because when all is said and done, the Fed will either get runaway inflation through money printing or hyperinflation through collapse of the US reserve currency. There is now no middle ground, further compounded because the Fed has sole control of the CTRL and P buttons.
Needless to say, Williams is right and more QE is just a matter of time before the data-dependent (dependent on the datadescribing the drop in the S&P that is) Fed realizes that this aggression against rigged markets can not stand. What’s worse, this lunacy will continue until the US people finally go all “French revolution” on the Marriner Eccles building and give the locals the Marie Antoinette “haircut.”
end
JPMorgan’s results disappoints the street.
(courtesy zero hedge)
JPM Results Plagued By Recurring “Non-Recurring” Legal Charges, Stagnant Trading Revenues, Record Low NIM
Submitted by Tyler Durden on 10/14/2014 08:23 -0400
• fixed
• GAAP
• NASDAQ
• NIM
• recovery
• Reuters
inShare3
Earlier today, in a surprising leak, JPM reported another batch of disappointing Q3 earnings well before the scheduled time. The reason for the early report, according to the WSJ, “an inadvertent early release by a third party website Tuesday meant J.P. Morgan’s financial supplement was in circulation hours before the scheduled 7 a.m ET. The statement was later removed from the site. J.P. Morgan said there appeared to have been a problem with Shareholder.com., the investor relations company owned by Nasdaq. Nasdaq didn’t immediately respond to requests for comment.” So another Nasdaq glitch, and this time not at all related to the Facebook IPO Snafu.
So back to JPM’s earnings which were more of the same.
We don’t recall if JPM’s legal charges in the past few years are now $20, $30, $40 billion or more, but as of this morning they are X + $1 billion. The reason: JPM will settle its latest market rigging “allegations”, this time in FX, and as a result has set aside $1 billion in indulgences to pay its way away from corporate prison. And so in the company’s ongoing mockery of the term “one-time, non-recurring”, JPM added $1.062 billion in recurring, multiple-time pretax legal expenses, a $0.26 EPS impact to Pro Forma EPS, EPS which also declined courtesy of JPM’s repurchase of $1.5 billion in shares in the quarter thus reducing the number of “S”.
So what were the bottom line numbers:
• EPS $1.36, a miss to estimate of $1.39
• Revenue (non-GAAP revenue that is): $25.16 billion, better than the $24.43 billion; that said GAAP net revenue was $24.246 billion
• Non-interest expense rose tom $15.8 billion, well above the $14.52 billion expected, and more than the $15.43 billion Q/Q
In table format:
Breaking down the key revenue items, the focus as always continued to be on Mortgage Banking, where we found the following:
• Mortgage Production pretax income of $74mm
• Revenues, excl. repurchase, down 33% YoY; Originations down 48% YoY, but up 26% QoQ
• Headcount down ~6,000 YTD7, on track to exceed prior 2014; guidance by ~1,000
In other words, the mortgage deterioration continues as the only good housing buyer is a cash buyer. But it wasn’t just mortgage banking this time. For the first time in a while, Card, Merchant Services and Auto also stumbled: Net income of $1.1B, down 10% YoY
The reason: Credit costs of $846mm, up 26% YoY, driven by lower loan loss reserve releases, partially offset by lower net chargeoffs.
Well, that’s not good. In fact, it gets worse:
The provision for credit losses was $902 million, compared with a benefit of $267 million in the prior year. The current-quarter provision reflected a $200 million reduction in the allowance for loan losses and total net charge-offs of $1.1 billion. The prior-year provision reflected a $1.6 billion reduction in the allowance for loan losses and total net charge-offs of $1.3 billion.
In other words, JPM starting to see a notable deterioration in credit quality and as a result is boosting credit loss reserves. Hardly good for a subprime-loan consumer driven “recovery.”
And then there was Investment Banking, where things were about as bad as they have been in a while:
Notable: Fixed Income market unchanged from a quarter and a year ago; same with equity market and security services. As a reminder, it is these revenue lines that provide the biggest surprises on the margin. In other words, the trading doldrums in Q3 were just more of the same. Also notable: VaR of $35 is about the lowest it has ever been (net of all the London Whale copy paste fabrications).
And an interesting tangent: “Lending revenue of $147mm, down 58% YoY, primarily driven by losses on securities received from restructured loans” – did JPM get stuck with a bad debt-to-equity conversion that was so subtantial it impacted the entire firm? So it appears.
Then there was Commercial Banking, whose revenue of $1.7B was down 3% YoY and 2% QoQ.
And finally, no London Whale in the house anymore: Treasury and CIO net loss of $30mm, compared to a net loss of $46mm in 2Q14. In fact, as Reuters reported, no prop traders rigging FX any more either:
JP Morgan’s chief currency trader in London, Richard Usher, has left the bank, a source familiar with the matter said on Tuesday.
Usher was listed as “inactive” on the UK Financial Conduct Authority’s register of approved individuals as of Oct. 6.
Usher, the head of spot G10 currency trading at the U.S. bank in London, had been suspended since October last year. It was unclear at the time whether that was related to the global investigation into allegations of collusion and manipulation in the world’s currency market.
Usher could not be immediately reached for comment. An employee at the JP Morgan switchboard said there was no record of anyone called Usher on the worldwide directory.
Usher is also the reason why JPM suffered a $1 billion legal fee this quarter as he was the head of the “Cartel” FX rigging syndicate. “Allegedly” of course.
Going back to JPM’s results, while we are happy to report that this quarter JPM only used up $437 in imaginary net income from loan loss reserve releases…
… the bigger problem was that JPM’s core NIM for the nth consecutive quarter, declined once again. Why the decline? Core NIM down 5 bps QoQ, largely due to:
Higher cash balances – up $27B QoQ; Lower loan yields. i.e. thanks Fed.
As long as this fails to rise, JPM will simply be unable to post a notable improvement in profits.
Finally, here is JPM’s forecast:
• Expect Firmwide adjusted expense to be above $58B for FY14; actual Firmwide expense will be affected by performance-related compensation for FY14
• Expect 4Q14 Markets revenue to be impacted by normal seasonal trends and business simplification
• Expect a $1B+ reduction in allowance for consumer loan losses over the next couple of years, as the credit quality of the portfolio continues to improve
• Expect small negative Production pretax income in 4Q14 – actual results will be market dependent
• Expect 4Q14 revenue to be down YoY, impacted by the absence of one-time proceeds of ~$100mm from a lending related workout
• Expect Servicing revenue to be at or slightly below $600mm in 4Q14, and to continue to decrease in 2015
• Expect FY14 pretax margin and ROE to be below TTC targets
In short: one of these quarters JPM will have actual good, undoctored news to report. Just not now, and probably not under Jamie Dimon’s watch, who clearly wants to get the hell out of the sinking dodge.
end
That is all for today
I will see you tomorrow night
harvey
JB Slear
866-443-0868 Ext 104
817-717-5489
Fax: 817-764-2537
www.FortWealth.com
Don’t risk what you cannot afford to lose….
There is significant risk involved in trading futures and/or options on futures. Futures and/or options of futures trading may not be suitable for all investors. Investors should consider these risks and evaluate their suitability based on their financial conditions. Past performance is not indicative of future results.
Source: http://fortwealth.com/blog/?p=6033
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