Dollar drop could force global central banks into rates rethink
Submitted by cpowell on Thu, 2018-01-04 19:10. Section: Daily Dispatches
By David Goodman, Anchalee Worrachate, and Enda Curran Bloomberg News Thursday, January 4, 2018
A weaker dollar could be doing the work of global central banks.
The greenback begins 2018 after its worst year since 2003, and analysts at Bank of New York Mellon Corp. and Credit Agricole SA say further declines could mean central banks don't have to tighten monetary policy as much as they may now be planning.
The argument goes that by forcing up rival exchange rates, a decline in the U.S. currency could slow economic growth and inflation elsewhere, creating room for interest rates to stay lower than they otherwise would be. ...
Iran's central bank admits intervening to rig gold price
Submitted by cpowell on Thu, 2018-01-04 13:43. Section: Daily Dispatches
If only the central banks of nominal democracies were as honest.
* * *
Central Bank of Iran to Resume Gold Auctions
From the Financial Tribune, Tehran, Iran Wednesday, January 3, 2018
The Central Bank of Iran has sufficient reserves of gold bars and coins and will resume gold coin auctions until the market is fully saturated and prices become stable, the director of bank's office for Banknote Issuance announced.
"CBI is in charge of minting various kinds of gold coins in the country. Hence it is also responsible for meeting the market demand and controlling the prices," Masoud Rahimi was also quoted as saying by the Islamic Republic News Agency.
The auctions were started in November through Bank Melli Iran's affiliate, Bank Kargoshaee, to deflate the Iranian market bubble that saw benchmark gold coins rise to a six-year high.
However, the launch of 16 auctions has not failed to deflate the bubble, as prices have continued to surge.
According to Tehran Gold and Jewelry Union's website, the price of benchmark Emami gold coin on Tuesday approached 15 million rials ($3,530), registering an increase of 60,000 rials or 0.7 percent compared to the previous day.
This is the highest value of Emami gold coin since five years ago in Tehran's open market.
The director of the CBI's Office for Banknote Issuance added that keeping the national currency strong is the regulator's main agenda.
"Any unreasonable surge in gold coin rates that is not in line with the [real] price of gold can have inflationary effects on the foreign exchange market and that's why CBI interferes in the gold market to stabilize the rates," he said.
Rahimi noted that the main reason for this surge is the unusually high demand since a great deal of investment flowed into the gold coin market instead of the forex market, as the public perception is that the price of gold coin will continue to rise in the coming months.
"Many ordinary people have also invested in the gold market to retain the value of their money, which has further heated up the market," he added. ...
Jan 4/GOLD REBOUNDS FROM AN EARLY WHACKING TO RISE $2.50 UP TO $319.50/SILVER ALSO RECOVERS TO REMAIN BASICALLY UNCHANGED/HUGE GOLD EFP TRANSFER BY ALMOST 9,000 CONTRACTS/SILVER EFP’S OVER 3100 CONTRACTS/
January 4, 2018 · by Harvey Organ
GOLD: $1319.50 up $2.50
Silver: $17.19 down 1 cent
Closing access prices:
Gold $1322.75
silver: $17.23
For comex gold:
JANUARY/ NUMBER OF NOTICES FILED TODAY FOR JANUARY CONTRACT: 16 NOTICE(S) FOR 1600 OZ.
TOTAL NOTICES SO FAR: 238 FOR 23800 OZ (0.7402 TONNES),
For silver:
jANUARY 0 NOTICE(S) FILED TODAY FOR nil OZ/
Total number of notices filed so far this month: 505 for 2,525,000 oz
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX Bitcoin: BID $14,908/OFFER $15,028 DOWN $167 (morning) Bitcoin: BID 14,810/OFFER $14,928 down $264(CLOSING)
In silver, the total open interest SURPRISINGLY FELL BY A SMALL 695 contracts from 192,124 FALLING TO 191,728 DESPITE YESTERDAY’S GOOD 7 CENT RISE IN SILVER PRICING. WE HAD SMALL COMEX LIQUIDATION BUT WITHOUT A DOUBT WE WITNESSED ANOTHER MAJOR BANK SHORT- COVERING OPERATION. NOT ONLY THAT , WE WERE AGAIN NOTIFIED THAT WE HAD ANOTHER HUGE SIZED NUMBER OF COMEX LONGS TRANSFERRING THEIR CONTRACTS TO LONDON THROUGH THE EFP ROUTE: A HUGE 3123 EFP’S FOR MARCH (AND ZERO FOR OTHER MONTHS) AND THUS TOTAL ISSUANCE OF 3123 CONTRACTS. HOWEVER THE MOVEMENT ACROSS TO LONDON IS NOT AS SEVERE AS IN GOLD AS THERE SEEMS TO BE A MAJOR PLAYER TAKING ON THE BANKS AT THE COMEX. STILL, WITH THE TRANSFER OF 3123 CONTRACTS, WHAT THE CME IS STATING IS THAT THERE IS NO SILVER (OR GOLD) TO BE DELIVERED UPON AT THE COMEX AS THEY MUST EXPORT THEIR OBLIGATION TO LONDON. YESTERDAY WITNESSED EFP’S FOR SILVER ISSUED. ALSO KEEP IN MIND THAT THERE CAN BE A DELAY OF 24 HRS IN THE ISSUING OF EFP’S. I BELIEVE THAT WE MUST HAVE HAD SOME MAJOR BANKER SHORT COVERING AGAIN TODAY.
ACCUMULATION FOR EFP’S/SILVER/ STARTING FROM FIRST DAY NOTICE/FOR MONTH OF JANUARY:
10,316 CONTRACTS (FOR 4 TRADING DAYS TOTAL 10,316 CONTRACTS OR 51.580 MILLION OZ: AVERAGE PER DAY: 2579 CONTRACTS OR 11.988 MILLION OZ/DAY)
RESULT: A SMALL SIZED LOSS IN OI COMEX DESPITE THE STRONG 7 CENT RISE IN SILVER PRICE WHICH USUALLY INDICATES HUGE BANKER SHORT-COVERING. WE ALSO HAD A HUGE SIZED SIZED EFP ISSUANCE OF 3123 CONTRACTS WHICH EXITED OUT OF THE SILVER COMEX AND TRANSFERRED THEIR OI TO LONDON AS FORWARDS. FROM THE CME DATA 3123 EFP’S WERE ISSUED FOR TODAY (FOR MARCH EFP’S AND NONE FOR ALL OTHER MONTHS) FOR A DELIVERABLE FORWARD CONTRACT OVER IN LONDON WITH A FIAT BONUS. WE REALLY GAINED 2427 OI CONTRACTS i.e. 3123 open interest contracts headed for London (EFP’s) TOGETHER WITH A DECREASE OF 695 OI COMEX CONTRACTS. AND ALL OF THIS HAPPENED WITH THE RISE IN PRICE OF SILVER BY 7 CENTS AND A CLOSING PRICE OF $17.20 WITH RESPECT TO YESTERDAY’S TRADING. YET WE STILL HAVE A GOOD AMOUNT OF SILVER STANDING AT THE COMEX.
In ounces AT THE COMEX, the OI is still represented by just UNDER 1 BILLION oz i.e. 0.9585 BILLION TO BE EXACT or 137% of annual global silver production (ex Russia & ex China).
FOR THE NEW FRONT JANUARY MONTH/ THEY FILED: 0 NOTICE(S) FOR NIL OZ OF SILVER
In gold, the open interest ROSE BY AN HUMONGOUS SIZED 11,441 CONTRACTS UP TO 512,172 WITH THE SMALL RISE IN PRICE OF GOLD WITH YESTERDAY’S TRADING ($2.00). IN ANOTHER HUGE DEVELOPMENT, WE RECEIVED THE TOTAL NUMBER OF GOLD EFP’S ISSUED YESTERDAY FOR TODAY AND IT TOTALED A STRONG SIZED 8798 CONTRACTS OF WHICH THE MONTH OF FEBRUARY SAW 8498 CONTRACTS AND APRIL SAW THE ISSUANCE OF 300 CONTRACTS. The new OI for the gold complex rests at 512,172. DEMAND FOR GOLD INTENSIFIES GREATLY AS WE CONTINUE TO WITNESS A HUGE NUMBER OF EFP TRANSFERS TOGETHER WITH THE MASSIVE INCREASE IN GOLD COMEX OI TOGETHER WITH THE TOTAL AMOUNT OF GOLD OUNCES STANDING FOR JANUARY. EVEN THOUGH THE BANKERS ISSUED THESE MONSTROUS EFPS, THE OBLIGATION STILL RESTS WITH THE BANKERS TO SUPPLY METAL BUT IT TRANSFERS THE RISK TO A LONDON BANKER OBLIGATION AND NOT A NEW YORK COMEX OBLIGATION. LONGS RECEIVE A FIAT BONUS TOGETHER WITH A LONG LONDON FORWARD. THUS, BY THESE ACTIONS, THE BANKERS AT THE COMEX HAVE JUST STATED THAT THEY HAVE NO APPRECIABLE METAL!! THIS IS A MASSIVE FRAUD: THEY CANNOT SUPPLY ANY METAL TO OUR COMEX LONGS BUT THEY ARE QUITE WILLING TO SUPPLY MASSIVE NON BACKED GOLD (AND SILVER) PAPER KNOWING THAT THEY HAVE NO METAL TO SATISFY OUR LONGS. LONDON IS NOW SEVERELY BACKWARD IN BOTH GOLD AND SILVER (BIG RISE IN BOTH GOFO AND SIFO) AND WE ARE WITNESSING DELAYS IN ACTUAL DELIVERIES. IN ESSENCE WE HAVE ANOTHER STRONG GAIN OF 20,239 OI CONTRACTS: 11,441 OI CONTRACTS INCREASED AT THE COMEX AND A GOOD SIZED 8798 OI CONTRACTS WHICH NAVIGATED OVER TO LONDON.
YESTERDAY, WE HAD 3168 EFP’S ISSUED.
ACCUMULATION OF EFP’S/ GOLD(EXCHANGE FOR PHYSICAL) FOR THE MONTH OF JANUARY STARTING WITH FIRST DAY NOTICE: 34,277 CONTRACTS OR 3.4277 MILLION OZ OR 106.72 TONNES (4 TRADING DAYS AND THUS AVERAGING: 8,569 EFP CONTRACTS PER TRADING DAY OR 856,900 OZ/DAY)
Result: A STRONG SIZED INCREASE IN OI WITH THE SMALL SIZED RISE IN PRICE IN GOLD TRADING ON YESTERDAY ($2.00). WE HAD ANOTHER GOOD SIZED NUMBER OF COMEX LONG TRANSFERRING TO LONDON THROUGH THE EFP ROUTE: 8798. THERE OBVIOUSLY DOES NOT SEEM TO BE MUCH PHYSICAL GOLD AT THE COMEX AND YET WE ALSO OBSERVED A HUGE DELIVERY MONTH FOR THE MONTH OF DECEMBER. I GUESS IT EXPLAINS THE HUGE ISSUANCE OF EFP’S…THERE IS HARDLY ANY GOLD PRESENT AT THE GOLD COMEX FOR DELIVERY PURPOSES. IF YOU TAKE INTO ACCOUNT THE 8798 EFP CONTRACTS ISSUED, WE HAD A NET GAIN IN OPEN INTEREST OF 20,239 contracts:
8798 CONTRACTS MOVE TO LONDON AND 11,441 CONTRACTS INCREASED AT THE COMEX. (in tonnes, the gain in total oi equates to 62.95 TONNES)
we had: 16 notice(s) filed upon for 1600 oz of gold.
With respect to our two criminal funds, the GLD and the SLV:
GLD:
Today, NO CHANGES IN GOLD INVENTORY AT THE GLD/
Inventory rests tonight: 836.32 tonnes.
A SLIGHT CHANGES IN SILVER INVENTORY AT THE SLV/ A WITHDRAWAL OF 180,000 OZ TO PAY FOR FEES/
INVENTORY RESTS AT 320.449 MILLION OZ/
end
First, here is an outline of what will be discussed tonight:
1. Today, we had the open interest in silver FELL BY A SMALL SIZED 695 contracts from 193,827 DOWN TO 191,728 (AND now A LITTLE FURTHER FROM THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) DESPITE THE RISE IN PRICE OF SILVER TO THE TUNE OF 2 CENTS YESTERDAY. WE HAD WITHOUT A DOUBT A MAJOR SHORT COVERING FROM OUR BANKERS AS THEY HAVE CAPITULATED. NOT ONLY THAT BUT OUR BANKERS USED THEIR EMERGENCY PROCEDURE TO ISSUE ANOTHER 3123 PRIVATE EFP’S FOR MARCH (WE DO NOT GET A LOOK AT THESE CONTRACTS AS IT IS PRIVATE BUT THE CFTC DOES AUDIT THEM). EFP’S GIVE OUR COMEX LONGS A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON. WE HAD NO COMEX SILVER COMEX LIQUIDATION. BUT, IF WE TAKE THE SLIGHT OI LOSS AT THE COMEX OF 695 CONTRACTS TO THE 3123 OI TRANSFERRED TO LONDON THROUGH EFP’S WE OBTAIN A GAIN OF 2427 OPEN INTEREST CONTRACTS DESPITE THE MAJOR BANKER SHORT COVERING. WE STILL HAVE A GOOD AMOUNT OF SILVER OUNCES THAT ARE STANDING FOR METAL IN JANUARY (SEE BELOW). THE NET GAIN TODAY IN OZ: 12.135MILLION OZ!!!
RESULT: A SMALL SIZED DECREASE IN SILVER OI AT THE COMEX DESPITE THE TINY SIZED RISE OF 2 CENTS IN PRICE (WITH RESPECT TO YESTERDAY’S TRADING). BUT WE ALSO HAD ANOTHER 3123 EFP’S ISSUED TRANSFERRING COMEX LONGS OVER TO LONDON. TOGETHER WITH THE GOOD SIZED AMOUNT OF SILVER OUNCES STANDING FOR JANUARY, DEMAND FOR PHYSICAL SILVER INTENSIFIES AS WE WITNESS MAJOR BANK SHORT COVERING ACCOMPANIED BY INCREASES IN GOFO AND SIFO RATES INDICATING SCARCITY.
(report Harvey)
.
2.a) The Shanghai and London gold fix report
(Harvey)
2 b) Gold/silver trading overnight Europe, Goldcore
(Mark O’Byrne/zerohedge
and in NY: Bloomberg 3. ASIAN AFFAIRS 3a)THAILAND/SOUTH KOREA/NORTH KOREA
i)North Korea b) REPORT ON JAPAN 3 c CHINA 4. EUROPEAN AFFAIRS 5. RUSSIAN AND MIDDLE EASTERN AFFAIRS 6 .GLOBAL ISSUES 7. OIL ISSUES 8. EMERGING MARKET 9. PHYSICAL MARKETS 10. USA stories which will influence the price of gold/silver Let us head over to the comex:
The total gold comex open interest ROSE BY A STRONG 11,441 CONTRACTS UP to an OI level of 512,172 WITH THE GOOD SIZED RISE IN THE PRICE OF GOLD ($2.00 GAIN WITH RESPECT TO YESTERDAY’S TRADING). OBVIOUSLY WE HAD ZERO COMEX GOLD LIQUIDATION WITH ANOTHER STRONG GAIN IN TOTAL OPEN INTEREST AS WE WITNESSED ANOTHER HUMONGOUS COMEX TRANSFER THROUGH THE EFP ROUTE. THESE LONGS RECEIVED A DELIVERABLE LONDON FORWARD TOGETHER WITH A FIAT BONUS. THE CME REPORTS THAT 8498 EFP’S WERE ISSUED FOR FEBRUARY AND 300 EFP’s FOR APRIL AND 22 FOR OCTOBER: TOTAL 8798 CONTRACTS. THE OBLIGATION STILL RESTS WITH THE BANKERS ON THESE TRANSFERS.
ON A NET BASIS IN OPEN INTEREST WE GAINED TODAY: 20,239 OI CONTRACTS IN THAT 8798 LONGS WERE TRANSFERRED AS FORWARDS TO LONDON AND WE GAINED 11,441 COMEX CONTRACTS. NET GAIN: 20,239 contracts OR 2,023,900 OZ OR 62.95 TONNES
Result: A STRONG SIZED INCREASE IN COMEX OPEN INTEREST WITH THE SMALL RISE IN THE PRICE OF YESTERDAY’S GOLD TRADING (2.00.) WE HAD NO GOLD LIQUIDATION ANYWHERE. TOTAL OPEN INTEREST GAIN ON THE TWO EXCHANGES: 20,239 OI CONTRACTS…
We have now entered the active contract month of JANUARY. The open interest for the front month of JANUARY saw it’s open interest FALL by 46 contracts DOWN to 197. We had 50 notices served on Friday so we GAINED 4 contracts or 400 additional oz of gold will stand in this non active month AND AGAIN WE WITNESS QUEUE JUMPING .
FEBRUARY saw a gain of 1436 contacts up to 362,453. March saw a gain of 13 contracts up to 57. April saw a GAIN of 805 contracts UP to 41,867. (CORRECTING CME ERROR)
We had 50 notice(s) filed upon today for 5000 oz PRELIMINARY VOLUME TODAY ESTIMATED; 248,952 FINAL NUMBERS CONFIRMED FOR YESTERDAY: 383,417
comex gold volumes are RISING AGAIN
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx And now for the wild silver comex results.
Total silver OI FELL BY A SMALL 695 CONTRACTS FROM 192,243 DOWN TO 191,727 DESPITE YESTERDAY’S TINY 2 CENT RISE IN PRICE WHICH SEEMS TO INDICATE WE HAD ANOTHER MAJOR ROUND OF BANKER SHORT-COVERING. NOT ONLY THAT, WE HAD ANOTHER HUMONGOUS SIZED 3123 EMERGENCY EFP’S FOR MARCH ISSUED BY OUR BANKERS (ZERO FOR ALL OTHER MONTHS) TO COMEX LONGS WHO RECEIVED A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON: THE TOTAL EFP’S ISSUED: 3123. IT SURE LOOKS LIKE THE SILVER BOYS HAVE STARTED TO MIGRATE TO LONDON FROM THE START OF DELIVERY MONTH AND CONTINUING RIGHT THROUGH UNTIL FIRST DAY NOTICE JUST LIKE WE ARE WITNESSING TODAY. USUALLY WE NOTED THAT CONTRACTION IN OI OCCURRED ONLY DURING THE LAST WEEK OF AN UPCOMING ACTIVE DELIVERY MONTH. THIS PROCESS HAS JUST BEGUN IN EARNEST IN SILVER STARTING IN SEPTEMBER. HOWEVER, IN GOLD, WE HAVE BEEN WITNESSING THIS FOR THE PAST 2 YEARS. WE HAD SMALL LONG COMEX SILVER LIQUIDATION BUT A RISE IN TOTAL SILVER OI AS IT SEEMS THAT WE ARE WITNESSING SOME MAJOR BANKER SHORT-COVERING. WE ARE ALSO WITNESSING A FAIR AMOUNT OF SILVER OUNCES STANDING FOR COMEX METAL IN THIS NON ACTIVE JANUARY AS WELL AS THAT CONTINUAL MIGRATION OF EFPS OVER TO LONDON. ON A PERCENTAGE BASIS THERE ARE MORE EFP’S ISSUED FOR GOLD THAN SILVER AS IT SEEMS THAT A MAJOR PLAYER WISHES TO TAKE ON THE CROOKED COMEX SHORTS. ON A NET BASIS WE GAINED 2427 OPEN INTEREST CONTRACTS:
695 CONTRACT LOSS AT THE COMEX COMBINING WITH THE ADDITION OF 3123 OI CONTRACTS NAVIGATING OVER TO LONDON.
NET GAIN: 2427 CONTRACTS
We are now in the poor non active delivery month of January and here the OI loss by 180 contracts down to 24. We had 181 notices served upon yesterday, so we GAINED 1 contract or an additional 5,000 oz will stand for delivery
February saw a GAIN OF 2 OI contracts RISING TO 180. The March contract LOST 1613 contracts DOWN to 149,569.
We had 0 notice(s) filed for NIL oz for the January 2018 contract for silver INITIAL standings for JANUARY
Jan 4/2018. Gold Ounces Withdrawals from Dealers Inventory in oz nil oz Withdrawals from Customer Inventory in oz N/A oz Deposits to the Dealer Inventory in oz nil oz Deposits to the Customer Inventory, in oz nil oz No of oz served (contracts) today 16 notice(s) 1600 OZ No of oz to be served (notices) 181 contracts (18,100 oz) Total monthly oz gold served (contracts) so far this month 238 notices 23800 oz 0.7402 tonnes Total accumulative withdrawals of gold from the Dealers inventory this month NIL oz Total accumulative withdrawal of gold from the Customer inventory this month xxx oz I CANNOT RETRIEVE COMEX DATA MOVEMENTS
For JANUARY: Today, 0 notice(s) were issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 16 contract(s) of which 16 notices were stopped (received) by j.P. Morgan dealer and 0 notice(s) was (were) stopped/ Received) by j.P.Morgan customer account.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx To calculate the INITIAL total number of gold ounces standing for the JANUARY. contract month, we take the total number of notices filed so far for the month (238) x 100 oz or 23800 oz, to which we add the difference between the open interest for the front month of JAN. (197 contracts) minus the number of notices served upon today (16 x 100 oz per contract) equals 41,900 oz, the number of ounces standing in this active month of JANUARY
Thus the INITIAL standings for gold for the JANUARY contract month:
No of notices served (222 x 100 oz or ounces + {(197)OI for the front month minus the number of notices served upon today (50 x 100 oz which equals 41,900 oz standing in this active delivery month of JANUARY (1.303 tonnes). THERE IS 33.29 TONNES OF REGISTERED GOLD AVAILABLE FOR DELIVERY SO FAR.
ON FIRST DAY NOTICE FOR JANUARY 2017, THE INITIAL GOLD STANDING: 3.904 TONNES STANDING
BY THE END OF THE MONTH: FINAL: 3.555 TONNES STOOD FOR COMEX DELIVERY AS THE REMAINDER HAD TRANSFERRED OVER TO LONDON FORWARDS.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Total dealer inventory 1,070,309.229 or 33.29 tonnes (dealer gold continues to disappear) Total gold inventory (dealer and customer) = 9,143,181.135 or 284.39 tonnes
I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process and are being used in the raiding of gold! The gold comex is an absolute fraud. The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction. This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.
IN THE LAST 14 MONTHS 70 NET TONNES HAS LEFT THE COMEX.
end And now for silver AND NOW THE DECEMBER DELIVERY MONTH DECEMBER FINAL standings Jan 4/ 2018 Silver Ounces Withdrawals from Dealers Inventory nil oz Withdrawals from Customer Inventory N/A oz Deposits to the Dealer Inventory nil oz Deposits to the Customer Inventory N/A oz Scotia No of oz served today (contracts) 0 CONTRACT(S) (NIL OZ) No of oz to be served (notices) 24 contract (120,000 oz) Total monthly oz silver served (contracts) 505 contracts
(2,525,000 oz) Total accumulative withdrawal of silver from the Dealers inventory this month NIL oz Total accumulative withdrawal of silver from the Customer inventory this month
CANNOT RETRIEVE COMEX INVENTORY DATA
The total number of notices filed today for the JANUARY. contract month is represented by 0 contract(s) FOR NIL oz. To calculate the number of silver ounces that will stand for delivery in JANUARY., we take the total number of notices filed for the month so far at 505 x 5,000 oz = 2,525,000 oz to which we add the difference between the open interest for the front month of JAN. (24) and the number of notices served upon today (0 x 5000 oz) equals the number of ounces standing.
.
Thus the INITIAL standings for silver for the JANUARY contract month: 505(notices served so far)x 5000 oz + OI for front month of JANUARY(24) -number of notices served upon today (0)x 5000 oz equals 2,645,000 oz of silver standing for the JANUARY contract month. This is VERY GOOD for this NONACTIVE delivery month of JANUARY. WE GAINED 1 CONTRACT OR AN ADDITIONAL 5,000 OZ WILL STAND
ON FIRST DAY NOTICE FOR THE JANUARY 2017 CONTRACT WE HAD 3,790 MILLION OZ STAND.
YESTERDAY’S CONFIRMED VOLUME OF 96,611 CONTRACTS EQUATES TO 483 MILLION OZ OR 69.0% OF ANNUAL GLOBAL PRODUCTION OF SILVER
COMMODITY LAW SUGGESTS THAT OPEN INTEREST SHOULD NOT BE MORE THAN 3% OF ANNUAL GLOBAL PRODUCTION. THE CROOKS ARE SUPPLYING MASSIVE PAPER TRYING TO KEEP SILVER IN CHECK.
Total dealer silver: 59.182 million Total number of dealer and customer silver: 240.232 million oz
The record level of silver open interest is 234,787 contracts set on April 21./2017 with the price at that day at $18.42 The previous record was 224,540 contracts with the price at that time of $20.44
end
NPV for Sprott and Central Fund of Canada
1. Central Fund of Canada: traded at Negative 2.4 percent to NAV usa funds and Negative 2.2% to NAV for Cdn funds!!!! Percentage of fund in gold 62.8% Percentage of fund in silver:37.0% cash .+.2%( Jan 3/2018)
2. Sprott silver fund (PSLV): NAV RISES TO -0.91% (Jan 3/2018)?????????????????????????????? 3. Sprott gold fund (PHYS): premium to NAV RISES TO -0.50% to NAV (Jan 3 /2018 ) Note: Sprott silver trust back into NEGATIVE territory at -0.91%-/Sprott physical gold trust is back into NEGATIVE/ territory at -0.50%/Central fund of Canada’s is still in jail but being rescued by Sprott. Sprott WINS hostile 3.1 billion bid to take over Central Fund of Canada
(courtesy Sprott/GATA)
END
And now the Gold inventory at the GLD
Jan 4/2018/no change in gold inventory at the GLD/Inventory rests at 836.32 tonnes
Jan 3/a huge withdrawal of 1.18 tonnes of gold from the GLD/Inventory rests at 836.32 tonnes
Jan 2/2018/no changes in gold inventory at the GLD/inventory rests at 837.50 tonnes
Dec 29/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 837.50 TONNES
Dec 28/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 837.50 TONNES
Dec 27/NO CHANGES IN GOLD INVENTORY AT THE GLD/ INVENTORY RESTS AT 837.50 TONNES
Dec 26/no change in gold inventory at the GLD
Dec 22/ A DEPOSIT OF 1.48 TONNES OF GOLD INTO GLD INVENTORY/INVENTORY RESTS AT 837.50 TONNES
Dec 21' NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 836.02 TONNES
Dec 20/DESPITE THE GOOD ADVANCE IN PRICE TODAY/THE CROOKS RAIDED THE COOKIE JAR TO THE TUNE OF 1.18 TONNES/INVENTORY RESTS AT 836.02 TONNES
Dec 19/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 837.20 TONNES
Dec 18 SHOCKINGLY AFTER TWO GOOD GOLD TRADING DAYS, THE CROOKS RAID THE COOKIE JAR BY THE SUM OF 7.09 TONNES/INVENTORY RESTS AT 837.20 TONNES
Dec 15/NO CHANGES IN GOLD INVENTORY/RESTS AT 844.29 TONNES.
Dec 14/a good sized gain of 1.48 tonnes of gold into the GLD/inventory rests at 844.29 tones
Dec 13/no changes in gold inventory at the GLD/inventory rests at 842.81 tonnes
Dec 12/SURPRISINGLY NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 842.81 TONNES
Dec 11/SURPRISINGLY NO CHANGES IN GOLD INVENTORY AT THE GLD DESPITE THE CONSTANT RAIDS ON GOLD/INVENTORY RESTS AT 842.81 TONNES
Dec 8/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 842.81 TONNES
Dec 7/A BIG WITHDRAWAL OF 2.66 TONNES FROM THE GLD/INVENTORY RESTS AT 842.81 TONNES
Dec 6/No changes in GOLD inventory at the GLD/Inventory rests at 845.47 tonnes
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Jan 4/2018/ Inventory rests tonight at 836.32 tonnes
*IN LAST 304 TRADING DAYS: 104.65 NET TONNES HAVE BEEN REMOVED FROM THE GLD *LAST 239 TRADING DAYS: A NET 52.66 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY. *FROM FEB 1/2017: A NET 211.754TONNES HAVE BEEN ADDED.
end
Now the SLV Inventory
Jan 4.2018/a slight withdrawal of 180,000 oz and this would be to pay for fees/inventory rests at 320.449 million oz/
Jan 3/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 320.629 MILLION OZ.
Jan 2/WITH SILVER UP DRAMATICALLY THESE PAST 4 TRADING DAYS, THE FOLLOWING MAKES NO SENSE: WE HAD A WITHDRAWAL OF 2.83 MILLION OZ FROM THE SLV
INVENTORY RESTS AT 320.629 MILLION OZ/
Dec 29/no changes in silver inventory at the SLV/inventory rests at 323.459 million oz/
Dec 28/DESPITE THE RISE IN SILVER AGAIN BY 13 CENTS, WE LOST ANOTHER 1,251,000 OZ OF SILVER FROM THE SILVER.
Dec 27/WITH SILVER UP AGAIN BY 17 CENTS, WE LOST ANOTHER 802,000 OZ OF SILVER INVENTORY/WHAT CROOKS/INVENTORY RESTS AT 324.780 MILLION OZ/
Dec 26/no change in silver inventory at the SLV./Inventory rests at 325.582
Dec 21/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 326.227 MILLION OZ/
Dec 20/INVENTORY REMAINS CONSTANT AT 326.337 MILLION OZ (COMPARE WITH GLD)
Dec 19/SILVER INVENTORY REMAINS CONSTANT AT 326.337 MILLION OZ
Dec 18.2017//SILVER INVENTORY CONTINUES TO REMAIN PAT./INVENTORY REMAINS AT 326.337 MILLION OZ/
INVENTORY RESTS AT 326.337 TONNES
Dec 15/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 326.337 MILLION OZ/
Dec 14/a small withdrawal of 377,000 oz and that usually means to pay for fees./inventory rests at 326.337 million oz/
Dec 13/no change in silver inventory at the SLV/Inventory rests at 326.714 million oz/
Dec 12/WOW!ANOTHER STRANGE ONE: SILVER HAS BEEN DOWN FOR 10 CONSECUTIVE DAYS, YET THE SLV ADDS ANOTHER 1.415 MILLION OZ TO ITS INVENTORY. IN THAT 10 DAY PERIOD, SLV ADDS 9.584 MILLION OZ/
INVENTORY RESTS AT 326.714 MILLION OZ
Dec 11/WOW!! ANOTHER STRANGE ONE: SILVER DESPITE BEING DOWN FOR 9 CONSECUTIVE TRADING DAYS ADDS ANOTHER 944,000 OZ TO ITS INVENTORY. FROM NOV 30 UNTIL TODAY SILVER HAS BEEN DOWN EVERY DAY. HOWEVER THE INVENTORY OF SILVER HAS RISEN 8.169 MILLION OZ.
Dec 8/A HUGE DEPOSIT OF 2.642 MILLION OZ/INVENTORY RESTS AT 324.355 MILLION OZ/
Dec 7/strange!! with the continual whacking of silver, no change in silver inventory at the SLV/Inventory rests at 321.713
Dec 6/no change in silver inventory at the SLV/Inventory remains at 21.713 million oz.
Jan 3/2017: Inventory 320.449 million oz
end
6 Month MM GOFO Indicative gold forward offer rate for a 6 month duration
+ 1.74% 12 Month MM GOFO + 1.97% 30 day trend
end Major gold/silver trading /commentaries for THURSDAY
GOLDCORE/BLOG/MARK O’BYRNE.
GOLD/SILVER Palladium Prices Surge To New Record High Over $1,100 On Supply Crunch Concerns January 4– Palladium prices surge to new record high over $1,100/oz today – Palladium surges past record nominal price seen in 2001 after 55% surge in 2017 – Best-performing precious metal and commodity of 2017 is palladium – Palladium prices top platinum prices for first time in 16 years – Strong Chinese car demand and switch from diesel to petrol cars sees demand surge – Supply crunch as six year supply deficit & 2017 deficit expected to hit 83,000 ounces – Palladium supply crunch to intensify if world’s leading producer Russia restricts supply and investors diversify into tiny palladium bullion marketEditor: Mark O’Byrne
Palladium prices surged to a new record nominal high today, over $1,100 an ounce on growing concerns of a supply crunch in the very small physical palladium bullion market. It is important to remember this is a nominal record high and adjusted for inflation, palladium prices would have to reach over $1,400 per ounce in order to surpass the 2001 record high.
Nymex palladium futures for March delivery increased by 2.5% to $1,087.35 yesterday after hitting $1,090.45, ‘the highest for a most-active contract in records going back to 1986’ according to Bloomberg.
Palladium prices very strong performance can be attributed to two main, complementary factors: falling supply and increased demand in the automotive industry. It has also benefited from a weak dollar, expectations of future market changes and geopolitical risk and tensions with Russia.
Supply concerns
The palladium market has seen a supply deficit for six of the last seven years. In 2017, the deficit was expected to reach 83,000 ounces.
In contrast, the platinum market has been in over supply, a situation which is expected to continue well into 2020.
According to Nymex tracked warehouse inventories shrank 25% in December. This marked the fourth consecutive annual decline.
The majority of the world’s palladium supply – over 80% by some estimates – are found in just one country, Russia. This in itself could complicate matters when it comes to supply as we have covered in the past.
Russia has restricted supplies of valuable and strategic natural resources, such as natural gas, in the past and geopolitical tensions and resource nationalism could see it do so again. This would lead to much higher prices in a very small, finite physical market that is already in deficit.
Dirty diesel
After years of hearing about the benefits of diesel engines and enjoying tax breaks from governments, motorists are now doing an about-face turn and embracing petrol engines which are now reportedly better. This is in part thanks to palladium which helps to combat emissions from such engines.
Diesel market share in Europe has been under pressure since carmaker Volkswagen admitted in 2015 that it had used illegal software to cheat U.S. emissions tests, slipping below 50 percent the following year for the first time since 2009, as reported by Bloomberg.
Kieron Hodgson, analyst at Panmure Gordon, told the Telegraph that palladium’s recent surge was directly connected to “the demise of the diesel engine and the resurgence of gasoline.” Forecasters expect the number of diesel engines to halve over the next ten years.
Some of the 17-year highs seen in the 2017 palladium price came on the back of expectations that demand in the automotive industry is going to keep climbing.
Much of the demand for cars has come from an uptick in car sales in both the US and especially China. Approximately 78% of palladium supply is used in the automotive sector. Whilst this may seem to be painful news for the likes of platinum (used in diesel cars’ catalytic converters) it at least has the benefit of diversification.
Approximately only 43% of mined platinum is used in catalytic converters, while around 30% goes into jewellery. The balance is split between the likes of electricals and chemicals.
Unsurprisingly, manufacturers are likely to begin seeking alternatives to palladium given the costs and limited supply. This is where platinum may benefit as it can also be used in catalytic converters.
Will the record breaking continue?
2018 may see a calming in the palladium market and a correction could be expected given the scale of price gains in 2017. However, it is not expected to have a dramatic impact on price. Whilst the market may currently seem both overheated and over- speculated the fundamentals that are driving the price are unlikely to change in the next twelve months.
After all, there is little anyone can do to boost supply and demand shows little sign of abating imminently.
When we are told that we should invest in precious metals then we primarily think of gold and silver. The truth is, that we should consider platinum and palladium which are, like silver, industrial commodities and can play a significant and beneficial role in portfolio diversification.
In terms of holding palladium in your portfolio, there is now research showing the diversification benefits of investing in palladium and platinum bullion.
Platinum and palladium in the long-run Using data from 1914 to 1996 to assess the inflation hedging ability of the white precious metals Taylor (1998) finds that platinum and palladium ‘served as a long-run inflation hedge, while evidence also points towards the short-run hedging abilities of platinum.’ Which trading strategy should I use? By examining the daily price of silver between January 1968 and March 2016 and the daily price observations of platinum and palladium between April 1990 and March 2016, Almudhaf and Al Kulaib (2016) conclude that a traditional buy-and-hold strategy outperforms an attempted market timing strategy The white precious metals are increasing in importance Fernandez (2017) also finds that ’the rise in importance of the price of white precious metals and consumer confidence and exchange rates in the United States, [is] in line with the rise in importance of white precious metals as an investments asset.’
There is a strong case for having an allocation of some 20% to 30% of an investment or savings portfolio in physical precious metals. The majority of this should be in gold and silver but as we have seen the academic research shows that having smaller allocations – maybe 5% and 5% – to platinum and palladium – will also have diversification benefits.
Investors would be prudent to consider an allocation to all four precious metals, and rebalance when there is outperformance, in order to maximise the safe haven aspect and return of their portfolio.
In order to benefit from the safe haven qualities or precious metals, investors should opt for physical bullion in the form of coins and bars and opt for allocated and segregated storage as provided by GoldCore for gold, silver, platinum and palladium bullion. -END-
Your early THURSDAY morning currency, Asian stock market results, important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight/9 AM EST Stocks Smash Records Around The Globe; Nikkei Has Best Annual Start Since 1996
Another day, another record high in markets around the globe as stocks – contrary to what Jeremy Grantham expects – have already entered the blow-off top mania phase. U.S. equity index futures rise, following a jump in European and Asian shares, while the Nikkei exploded higher after being held back for the past two days by holidays. Base metals and the euro gain.
European stocks rose the most in over two weeks on an acceleration in risk euphoria and signs the global economic expansion of 2017 remains intact. European bourses (Eurostoxx 50 +0.8%) trade higher across the board with all ten sectors in the green, as builders and automakers lead the advance. Gains are relatively broad-based with the exception of consumer staples which trades relatively flat, financials supported post-FOMC minutes. Today has seen a turn in sentiment for UK retail names with Debenhams (tumbling -17.7%) taking the shine off the sector after a disappointing sales update which saw the Co. cut their guidance.
Confirming Europe’s upward economic momentum, Markit reported the best EU Composite PMI since February 2011, printing at 58.1, above last month’s 58.0 and the expected 58.0. The breakdown as follows:
EU Markit Comp Final PMI (Dec) 58.1 vs. Exp. 58.0 (Prev. 58.0), EU Markit Services Final PMI (Dec) 56.6 vs. Exp. 56.5 (Prev. 56.5) German Markit Comp Final PMI (Dec) 58.9 vs. Exp. 58.7 (Prev. 58.7), German Markit Services PMI (Dec) 55.8 vs. Exp. 55.8 (Prev. 55.8) French Markit Comp PMI (Dec) 59.6 vs. Exp. 60.0 (Prev. 60.0), French Markit Services PMI (Dec) 59.1 vs. Exp. 59.4 (Prev. 59.4) Italian Markit/ADACI Services PMI (Dec) 55.4 vs. Exp. 54.7 (Prev. 54.7) Spanish Services PMI (Dec) 54.6 vs. Exp. 54.7 (Prev. 54.4)
Earlier, the MSCI Asia Pacific Index headed for another record close after benchmarks in Tokyo closed at their highest in more than a quarter century, and posting their biggest one-day gains since November 2016. Japanese investors returned to the market after two extra days of holidays for the first time this year, catching up to the rest of the global euphoria with the Nikkei 225 closing up 3.3%, boosted by tech firms and banks, the best annual opening day since 1996 while the Topix index (+2.6%) closed at its best level since 1991 as brokers and oil & coal lead gains in all 33 industry groups.
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In macro, the dollar slipped and U.S. Treasuries declined as minutes of last month’s Federal Reserve meeting showed policy makers continue to back a “gradual approach” to raising interest rates.
The USD unwound post FOMC minutes gains and reversed course, with the DXY trading below the 92.00 level with EUR/USD moving higher in the wake of another set of relatively strong PMI figures. The composite PMI rose to its highest level since February 2011 as Germany rose to its highest level in 80 months. AUD/NZD/CAD are all back in the ascendency vs the Greenback, with AUD/USD absorbing at least some 0.7850 offers overnight on the back of China’s services PMI beat and another rise in iron ore prices. The Kiwi has reclaimed the 0.7100 handle having tested, but not clearly breaching key tech DMAs around 0.7105-0.7100 yesterday despite a short dip below the big figure. USD/CAD still drawn to 1.2500 amidst a range up to circa 1.2550, with the Loonie supported by firm crude prices.
Core European bonds pared Wednesday’s gains and the euro advanced toward a three-year high as data showed economic activity in the euro-area accelerated to the fastest pace in almost seven years. US Treasury yields were supported as traders lifted the odds of a Fed move by end-March, gains were limited as the minutes from the Dec. 12-13 policy meeting still lacked any explicit signal of a move in the first quarter, with some officials reiterating their concern about low inflation. “There was no suggestion that the Fed is beginning to feel concerned over the possibility of falling behind the curve,” said Lee Hardman, a currency analyst at MUFG, in a client note. “There appears to be a high hurdle for the Fed to deliver a faster pace of rate hikes beyond their current plans for three hikes in 2018. As a result, we continue to believe that the U.S. dollar will struggle to reverse last year’s weakening trend.”
Meanwhile, commodities extended a record run of gains as oil climbed from the highest close in three years. As shown in the chart below, commodities are enjoying a record run of gains that straddles the end of 2017 and the start of the new year as crude oil notches multiyear highs and investors bet that booming global manufacturing output will help to sustain rising demand for raw materials.
The Bloomberg Commodity Index, which tracks returns on 22 raw materials, posted an unprecedented 14 days of gains to Wednesday, closing at the highest since February. Bloomberg notes that the index is poised for further gains as metals and oil climb higher, supported by supply disruptions, a weaker dollar and improving demand. Palladium, a metal used in car exhaust systems, is approaching an all-time high.
asd
The Bloomberg Commodity Index has rebounded 12 percent since mid-June. In recent days, the cold snap in the U.S., which helped to boost wheat as well as natural gas, also helping to lift the index. Still, prices remain well below the highs from 2008.
Oil climbed from the highest in three years as optimism on the global economy, cold weather and political unrest bolstered a market that’s finally shaking off a prolonged surplus. Crude is having its best start to a year since 2012, after hitting $62 a barrel in New York. Swollen inventories in the U.S. are declining and could shrink further as winter storms boost demand for heating fuel, while a strong economy underpins consumption. OPEC is continuing its fight against a global glut, while street protests are stoking concern over the stability of the group’s third-biggest producer, Iran.
“The rise in oil prices has mainly been caused by the freezing polar vortex hitting the U.S., firing up heating demand, and spurring concern about a potential impact on oil production and trade,” said Jens Naervig Pedersen, an analyst at Danske Bank A/S in Copenhagen.
sdf
Copper, a bellwether for global manufacturing, climbed 1 percent after U.S. factory output data on Wednesday beat expectations. China also imposed heavy curbs on scrap imports, leaving buyers there more reliant on mined output, which analysts see tightening in the months ahead.
The commodity rally has ignited shares of producers. BHP Billiton Ltd., the world’s largest mining company, has risen in London to the highest since 2014. BP Plc, the British oil major, posted the first back-to-back annual gain last year since 2005.
In the weeks ahead, Chinese credit data and central bank policy will be key to determining whether the gains continue, Citigroup’s Layton said. “The only reluctance that people have in terms of getting more bullish on metals and bulks is that China has clearly shifted the tone from growth targets to quality over quantity, and people don’t know what that means yet. Chinese credit numbers are going to be critical to setting the tone for the first half, and I think they’re going to be fine.”
Expected data include jobless claims. Walgreens Boots, Monsanto and Lamb Weston are among companies reporting earnings.
Bulletin headline summary from RanSquawk
Eurozone composite PMI hits highest level since February 2011 Crude trades in close proximity to multi-year highs amid a draw in API inventories and ongoing Iranian tensions Highlights today include US jobless claims, services PMI and DoE oil inventories
Market Snapshot
S&P 500 futures up 0.1% to 2,714.50 STOXX Europe 600 up 0.5% to 392.30 MSCI Asia Pacific up 1.2% to 178.01 MSCI Asia Pacific ex Japan up 0.4% to 582.18 Nikkei up 3.3% to 23,506.33 Topix up 2.6% to 1,863.82 Hang Seng Index up 0.6% to 30,736.48 Shanghai Composite up 0.5% to 3,385.71 Sensex up 0.5% to 33,975.81 Australia S&P/ASX 200 up 0.1% to 6,077.08 Kospi down 0.8% to 2,466.46 German 10Y yield rose 1.2 bps to 0.454% Euro up 0.2% to $1.2033 Italian 10Y yield fell 2.7 bps to 1.798% Spanish 10Y yield fell 3.1 bps to 1.567% Brent futures little changed at $67.84/bbl Gold spot down 0.01% to $1,313.05 U.S. Dollar Index down 0.1% to 92.07
Top Overnight News via BBG
Economic output in the euro-area accelerated to the fastest pace in almost seven years as services surged while factories benefited from booming domestic demand and near-record growth in export orders London was the worst-performing home market in the U.K. last year for the first time in more than a decade and may be stuck there Donald Trump’s desire to squeeze Kim Jong Un’s regime risks being undermined by the furtive maneuvers of oil tankers at sea Russia Deputy Foreign Minister: warns U.S. against any intervention in Iran European Dec. Service PMIs: Spain 54.6 vs 54.6 est; Italy 55.4 vs 54.7 est; France 59.1 vs 59.4 est; Germany 55.8 vs 55.8 est; U.K. 54.2 vs 54.0 est. China Dec. Caixin Services PMI: 53.9 vs 51.8 est. South Africa: ANC party to consider removing Zuma as nation’s president m at Jan. 10 meeting of National Executive Committee API inventories according to people familiar w/data: Crude -5.0m; Cushing -2.1m; Gasoline +1.8m; Distillates +4.3m U.S. Data: lockup for today’s weekly unemployment claims data canceled due to weather, will be released via website Massive Winter Storm Threatens New York With Snow and Floods Calpers Seeks Manager for $40 Billion Private Equity Portfolio Intel, Microsoft Deal With Widespread Computer-Chip Weakness Debenhams Profit Warning Clouds U.K. Retailers’ Christmas London House Market Worst in U.K. With Price Decline Last Year Euro-Area Activity Accelerates to Fastest Pace Since Early 2011 China Property Bonds Seen Facing Highest Default Risk in ’18
Asian bourses continued their rising streak, with the region trading at around 10yr highs. Japanese investors returned to the market for the first time this year, catch up play has been observed with the Nikkei 225 up 3.3%, while the Topix index (+2.6%) closed at its best level since 1991. ASX 200 (+0.1%) was buoyed by energy names yet again amid the persistent rise in crude. Elsewhere, Chinese markets made marginal gains, Shanghai Comp up a modest 0.33% and Hang Seng 0.57% with sentiment supported by Caixin Services PMI which saw its fastest growth since Aug’14. Bank of Japan Governor Kuroda says will continue patiently with easy monetary policy, adding that the economy is showing steady growth. Chinese released its latest Caixin Services PMI for December, which smashed expectations at 53.9 (vs. Exp. 51.8, Prev. 51.9), its fastest rise since Aug 2014.
Top Asian News
Japan’s Nikkei 225 Stock Gauge Has Best Start to Year Since 1996 Saudi Aramco Is Said to Seek Adviser for Global Gas Deals Reliance Communications Lenders Seen Facing Earnings Hit Axiata Is Said to Consider $500 Million Tower Unit IPO This Year Australian Pot Stocks Soar After Government Relaxes Rules Turkey’s Halkbank Could Suffer From Ex-Banker’s U.S. Conviction
European markets trade higher across the board (Eurostoxx 50 +0.8%) with all ten sectors in the green in the wake of a relatively upbeat Asia-Pac session after Japanese markets returned from their market holiday. Gains are relatively broad-based with the exception of consumer staples which trades relatively flat, financials supported post-FOMC minutes. Today has seen a turn in sentiment for UK retail names with Debenhams (-17.7%) taking the shine off the sector after a disappointing sales update which saw the Co. cut their guidance.
Top European News
U.K. Said to Think Barnier Bluffing on No Brexit Deal for Banks Ocado Gains on Renewed M&A Speculation, Rumors of Contract Win Brexit, Prices Cast Shadow Over Buoyant U.K. Services Industry
In FX, the USD has reversed course and the DXY trades below the 92.00 level with EUR/USD moving higher in the wake of another set of relatively strong PMI figures. The composite PMI rose to its highest level since February 2011 as Germany rose to its highest level in 80 months. AUD/NZD/CAD are all back in the ascendency vs the Greenback, with AUD/USD absorbing at least some 0.7850 offers overnight on the back of China’s services PMI beat and another rise in iron ore prices. The Kiwi has reclaimed the 0.7100 handle having tested, but not clearly breaching key tech DMAs around 0.7105-0.7100 yesterday despite a short dip below the big figure. USD/CAD still drawn to 1.2500 amidst a range up to circa 1.2550, with the Loonie supported by firm crude prices GBP is another gainer vs the USD, as Cable rebounds from sub-1.3500 lows with a modest beat on UK services PMI (54.2 vs. Exp. 54.1) unable to offer much traction in the currency.
In commodities, WTI and Brent crude futures trade in close proximity to recent highs (albeit WTI back below USD 62.00) with oil prices supported by a multitude of factors including last night’s draw in the APIs and ongoing tensions in Iran which has led some to speculate whether the US could remove their waiver of sanctions on Iran (given recent rhetoric from the US). Additionally, Libyan Waha oil output has risen to 272K bpd after pipe repairs. In metals markets, gold has recouped some of yesterday’s post-FOMC minutes inspired losses with prices continuing to track fluctuations in the USD. Elsewhere, Chinese steel rebar futures were seen lower overnight as concerns over weather impacts on production continue to linger. Furthermore, China have vowed to meet targets to cut steel production capacity. Libya Waha oil output rises to 272K bpd after pipe repair. Iran’s elite Revolutionary Guards have deployed forces to three provinces to put down anti-government unrest after six days of protests.
Looking at the day ahead, we have the final readings for the December services and composite PMIs across Europe and the US. In the UK, the December Nationwide House price index, November mortgage approvals and net consumer credit data will be due. Over in the US, there is the December ADP employment change print (190k expected) along with the weekly initial jobless and continuing claims. Away from the data, the Fed’s Bullard will speak at an economic convention.
US Event Calendar
7:30am: Challenger Job Cuts YoY, prior 30.1% 8:15am: ADP Employment Change, est. 190,000, prior 190,000 8:30am: Initial Jobless Claims, est. 241,000, prior 245,000 8:30am: Continuing Claims, est. 1.93m, prior 1.94m 9:45am: Markit US Services PMI, est. 52.5, prior 52.4 9:45am: Markit US Composite PMI, prior 53 9:45am: Bloomberg Consumer Comfort, prior 52.4
DB’s Jim Reid concludes the overnight wrap
With 2018 four days old I hope you’ve managed to keep to your new year’s resolutions so far. Mine is to drink less caffeine. If truth be told I’ve always drunk too much tea and now the twins are causing me much stress and upheaval my habit has got out of hand. So here we go….. I’m Jim Reid and I’m a tea-oholic! You’ll find me shaking at my desk this morning whilst drinking a decaf tea.
US equities’ new year’s resolution is obviously to continue to go up in 2018 and yesterday saw more fresh records after a blockbuster ISM and Fed minutes that didn’t really rock the boat. Elsewhere a lot of other assets reversed their opening day 2018 move with the dollar climbing, bond yields rallying and European stocks recovering with the weak Euro. To recap, the S&P rose 0.64% to >2,700 with gains led by energy stocks, while the Stoxx also rose (+0.48%) for the first time in four days. Core 10y bond yields fell c2bp (UST -1.6bp; Bunds -2.6bp) and Gilts fell 7.3bp to largely reverse Tuesday’s move. In FX, the USD dollar index gained 0.34% while Euro fell (-0.36%) for the first time in six days. Finally, the VIX dropped 6.35% to 9.15, marginally above its all-time low of 9.14.
On the data front, the December ISM manufacturing PMI was above expectations at 59.7 (vs. 58.2) and the second highest reading in six years. On an annual basis, the strength was also evident with the 2017 average reading of 57.6 the best in 13 years. In the details, the ISM prices paid jumped to 69 and the gauge of new orders rose to 69.4 – the highest in c14 years.
Turning to the FOMC minutes now. They continue to favour gradual rate hikes but comments on inflation seemed a bit hawkish. On rates, most participants reiterated support for “continuing a gradual approach to raising the target range” (ie: three more hikes in 2018). On the inflation debate, participants noted that “recent readings on monthly inflation had edged up” with “many” participants expecting it to move towards target, although some thought it may stay below target longer than expected and several expressed concerns about inflation expectations. Further, participants discussed several risks that could result in a faster increase in inflation such as higher output, fiscal stimulus or accommodative financial conditions. On the flat yield curve, participants “generally agreed that the current degree of flatness….was not unusual by historical standards”, but several participants thought it required ongoing monitoring. Finally, on tax cuts, many participants expect the reforms to provide a lift to consumer spending and “a modest boost to capital spending”. The Bloomberg implied odds of a rate hike in March increased c12ppt to 81% yesterday.
This morning, Japan’s final reading of the Nikkei manufacturing PMI was 54 (vs. 53.6 prior month) and to the highest level since early 2014, while China’s December Caixin composite PMI also beat at 53.0 (vs. 51.6 previous). Asian markets are broadly higher as we type. The Nikkei is up 2.87% after trading resumed for 2018 while the Hang Seng (+0.55%) and China’s CSI 300 (+0.51%) are up modestly. The Kospi bucked the trend to be down 0.49%.
With the global PMIs/ISM now complete, we’ve updated our usual YoY equity market performance versus the new data based on a regression between the two series over the last 20 years. At face value Europe looks very cheap with the DAX and CAC 30% and 18% lower than where the manufacturing PMIs suggest they should be given the historic relationship between the two. However if we re-benchmark the relationship and dollar adjust the YoY equity market performance we find that these two markets are 14% cheap and only 1% cheap respectively. Other European markets go from being cheap to more in line or a touch expensive (peripherals). This is obviously due to the very strong YoY performance of the Euro over the last 12 months (+15.5% vs the Dollar) that’s preventing European equities from fully benefiting in local currency terms from the strength in the PMIs. For example the DAX should be up around 43% over the last 12 months given where the PMI is but is only up 12%. However on a dollar adjusted basis the DAX is up 29% over the period.
Given the big currency swings the US market is perhaps a better template for general valuations. The regression suggests the S&P 500 should be up 25% YoY whereas it is now up around 20%. So slightly cheap given the data. If we dollar adjust everything, current equity market performance generally implies European, US, UK and Japanese PMIs in the 57-59 region whereas Germany is currently 63.3 and the US at 59.7. We’ve included both local currency and dollar adjusted numbers. As we always say we use this as a rough guide to valuations and try to concentrate on the general cheapness/expensiveness of global markets rather than individual ones where distortions can occur.
Now briefly recapping other market performance from yesterday. US bourses strengthened to fresh highs, with S&P (+0.64%), Dow (+0.40%) and Nasdaq (+0.84%) all higher. Within the S&P, gains were led by energy and tech stocks, with partial offset from telco names. European markets were all higher, with the DAX up (+0.83%) for the first time in six days. Across the region, the CAC (+0.81%), Spain’s IBEX (+0.37%) and FTSE (+0.30%) also advanced.
Elsewhere, key currencies fell modestly against a stronger Greenback with the Euro and Sterling down 0.36% and 0.54% respectively. In commodities, WTI oil rose 2.09% to $61.63/bbl – the highest in 2.5 years, in part on expectations that the EIA report will continue to show a drop in US crude stockpiles. Precious metals softened c0.3% (Gold -0.33%; Silver -0.31%), while other base metals also weakened c0.5% (copper -0.44%; zinc -0.42%; aluminium -0.60%).
Away from markets and onto selected headlines across Europe now. Ireland has sold the first European sovereign bond issuance for the year, with its €4bn bond sale attracting strong investor demand with bids of around €14bn. Over in Germany, the SPD leader Mr Schultz has met with Ms Merkel yesterday to discuss procedural matters. Post the meeting, both parties noted “trust has grown and we’re starting negotiations optimistically”. Looking ahead, formal exploratory talks are scheduled to begin on 7 January.
Back onto Brexit, the UK’s Trade secretary Liam Fox has confirmed UK’s interest in potentially joining the Trans-Pacific Partnership trade group post Brexit, noting that “we want to explore all the opportunities” and “we would be foolish not to look at all the potential”. Elsewhere, two unnamed senior UK government officials noted to Bloomberg that UK based banks will continue to operate freely across the EU bloc post Brexit and that EU negotiator Barnier will soften his stance in not including financial services firms in trade deal discussions that are scheduled to start in March.
Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the November construction spending was also above market at 0.8% mom (vs. 0.5% expected). Factoring in the ISM and above, the Atlanta Fed now forecast 4Q GDP to expand at an annualised rate of 3.2% vs. 2.8% previously. Over in Germany, the December unemployment rate was in line at 5.5% and steady on last month’s revised reading. In the UK, the December construction PMI was slightly below at 52.2 (vs. 53 expected).
Looking at the day ahead, we have the final readings for the December services and composite PMIs across Europe and the US. In the UK, the December Nationwide House price index, November mortgage approvals and net consumer credit data will be due. Over in the US, there is the December ADP employment change print (190k expected) along with the weekly initial jobless and continuing claims. Away from the data, the Fed’s Bullard will speak at an economic convention.
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