Tuesday, August 19, 2014

aug 19/Gold advances 1.5 tonnes/Silver again advances by 3.07 tonnes/Gold and silver whacked/Silver OI remains highly elevated/

Gold closed down $2.60  at $1295.10 (comex to comex closing time ). Silver was down 19 cents at $19.41


In the access market tonight at 5:15 pm
gold: $1295.50
silver:  $19.42


GLD: today great news with a huge gain of 1.5 tonnes of  gold inventory at the GLD (tonnage now 799.19 tonnes).

SLV : another huge gain of 3.07 million oz of silver inventory at the SLV

          now 328.841 million oz.


I think you can sound the alarm bells as silver has advanced continually at the SLV. As you can see above, 3.07 million oz was "added" to inventories.  We know that India is importing roughly 25% of global annual demand. I strongly feel that the silver addition is a paper addition and not real metal.

As for gold we are also seeing rising inventories.  We are of the opinion that the GLD gets its gold from the Bank of England through a swap arrangement and this swap  (with dollars) is never unwound.  Then gold leaves the GLD and heads to more gold friendly confines like that of Russia and China.  The fun will begin once the Bank of England demands its gold back.  


Gold trading:

Gold had a firming tone throughout the night and reached its zenith at the first London gold fix (3 am) at $1302.20 and from that point it was all downhill as gold finished the day at $1295.50

As I have pointed out to you, the bankers continue to whack gold trying to influence silver as  they are concerned with it's high open interest resting tonight at  165,052 coupled with a low price of $19.42.  This is totally incompatible in the real world. Somebody or some big entity with deep pockets (hint: sovereign China) is willing to take on JPMorgan and their crooked bankers.  JPMorgan knows quite well that the regulators:

1 are not watching
2. will not watch

the comex data.

So it is battle to the finish!!

 
Ladies and gentlemen:


Something big is going on in silver, and this should unravel shortly.





 Here is Dave Kranzler as he talks about today's manipulation:



More Corruption On The Comex

Dave,  NOBODY IS TALKING ABOUT THIS!!! Everyday at 8 to 830am this happens… oh gold trades  fine all night and then Bang. We should short it at 745am eastern… HAha
That quote is from an email I received this morning from an executive at a gold/silver/copper mining company.
How come no one discusses that fact that, day after day, silver and gold trade flat to higher when the eastern hemisphere is open but, for some reason, as soon as the Comex trading floor opens, the price of gold and silver get demolished:
Untitled
It seems that the fine fellows at the Comex perceive some sort of trouble with the fundamental outlook for silver that no one in the rest of the entire world outside of the Comex silver trading pit is able to understand.
I will say that it is becoming more apparent by the day that some very smart, deep-pocketed money is accumulating the mining stocks, especially the juniors.  As I write this, with silver flat on its back, the junior mining stock indices are green and the large-cap indices are about to go green.
When I say “smart” money, I mean pools of wealth outside of George Soros.  Everyone knows he’s buying.  But Soros alone can not move the sector higher.   My
“Easy Trade” idea is green today…

end


Today we had conflicts in many areas of concern:

1. Russia/China undergoing exercises jointly
2. Pakistan
3. Israel and Hamas broke off their ceasefire
4. Isis/threats to the USA
5. USA (Missouri)


We will discuss these and other stories 

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




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



First:  GOFO rates/



All months moved on both sides of the fence. 

 London good delivery bars are still quite scarce. 


August 19 2014


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

+.058000%        +.008000%         +.10400%         +.13600%    +  .202000%


August 18.2014:


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

+05400%         +.078000%         +.10200%             +.14200%       +.20000%


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 fell today by 1182 contracts from  369,084 all  the way down to 367,902  with gold down by $6.80 yesterday.The  big delivery month of August saw it's OI fall by 209 contracts down to  616 contracts. We had 216 notices filed yesterday so we gained 7 contracts or 700  additional oz will   stand for delivery in the August contract month. 

The next non active delivery month is September and here  we see that the open interest fell by 6 contracts down to 897.    The estimated volume today was poor at 76,483 contractsThe confirmed volume yesterday was also poor at 81,140.



The total silver Comex OI fell slightly  by 601 contracts as silver  was up by 11 cents yesterday.We must have a had a few nervous nellies who covered their short positions yesterday. Tonight the silver OI complex rests  at 165,052 contracts. The silver contracts are in very strong hands and this will continue to bring nightmares to our bankers. Also the record high OI is incompatible with reality with low silver prices.  The front August contract month saw it's OI fall to 3 contracts for a loss of 9.  We had 10 notices filed yesterday so in essence we gained 1  contract or 5,000 oz of additional silver ounces will  stand for delivery. The next big delivery month is September and it is this month that is causing grave concern to our bankers. Without a doubt, continual raids for the past few weeks and even today,  was orchestrated due to the high OI for the upcoming September contract month.  The  OI  for September fell slightly by 2188 contracts down up to 65,809 with 1 1/2 weeks before first day notice (Friday Aug 29.). The estimated volume today was good at 43,114.  The confirmed volume yesterday was fair at 32,736 contracts.

data for the August delivery month.




August 18.2014  


Ounces
Withdrawals from Dealers Inventory in oz
nil
Withdrawals from Customer Inventory in oz
nil
Deposits to the Dealer Inventory in oz
1,399.96 (Brinks)
Deposits to the Customer Inventory, in oz
nil
No of oz served (contracts) today
108  (10,800 oz)
No of oz to be served (notices)
508  (50,800 oz)
Total monthly oz gold served (contracts) so far this month
5433   (543,300 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month                       


21,792.30
Total accumulative withdrawal of gold from the Customer inventory this month


 
 700,975.2 oz

we had tiny activity again in the comex gold vaults.

 we had  1 dealer deposits and 0 withdrawals from the dealer

i) Into Brinks:  1,399.96 oz

Total dealer deposit: 1399.96 oz


we had 0 dealer withdrawals:



We had 0 customer deposits today





total customer deposit:  nil oz

we had 0 customer withdrawals:



total customer withdrawal:  nil oz

Today we have 1   adjustment

i) Out of Manfra:  46,279.894 oz was removed from the dealer account and this landed in the customer account and no doubt this will be used for a settlement.

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

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

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

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



Today, 0 notices was issued from  JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 108 contracts  of which 0 notices were stopped (received) by JPMorgan dealer and 61  notices stopped by JPMorgan customer account.
  
The total dealer comex gold  remains  tonight  at  1,111,973.562 oz or 34.587 tonnes of gold . The total of all comex gold (dealer and customer) rests at 9,855,020.323 oz or 306.53 tonnes.  

Tonight, we have dealer gold inventory for our  3 major bullion banks (Scotia, HSBC and JPMorgan) with its gold inventory  resting  tonight  at only 23.175 tonnes.


i) Scotia:  303,190.834 oz or 9.43 tonnes
ii) HSBC: 153,391.097 oz or  4.771 tonnes
iii) JPMorgan: 288,540.533 oz or 8.974 tonnes

total: 23.175 tonnes

Brinks dealer account which did have  the lions share of the dealer gold saw its inventory level lower  tonight  to 290,562.129 oz or 9.037 tonnes.  Several months ago they had over 13 tonnes of gold at its registered or dealer account.



Today we  had 108 notices served upon our longs for 10,800  oz of gold.  In order to calculate what will be  standing for delivery in August, I take the number of contracts served so far  this month at 5433 x 100 oz  = 543,300 oz, to which I add the  the open interest for the August contract month (616) - the number of notices served today (108) x 100 oz

Thus:  August  standings:

5433 notices served already x 100 oz  =  543,300 oz  +  616  (OI for August) - 108 (number of notices served today) x 100 oz per contract  =   594,100 oz or 18.479 tonnes of gold.

we gained an additional 700  oz of gold that will  stand for the August contract month.


In Summary:


i) the total dealer inventory of gold settles tonight  at a  level of 34.587 tonnes.

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

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


iii) the 3 major bullion banks have collectively only 23.175 tonnes of gold left in their dealer account.(JPMorgan, HSBC,Scotia)



end




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




Silver:


August 18/2014:   

  
  August silver:  August contract month
  

Silver
Ounces
Withdrawals from Dealers Inventorynil
Withdrawals from Customer Inventory 287,477.74  oz (CNT,Brinks )  
Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory 581,092.88 oz (Brinks)
No of oz served (contracts)0 contracts  (nil oz)
No of oz to be served (notices)3 (15,000 oz )
Total monthly oz silver served (contracts)299 contracts  (1,495,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month566,345.0 oz
Total accumulative withdrawal  of silver from the Customer inventory this month4,167,983.3 oz


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






total dealer withdrawals:  nil oz

we had no dealer deposits:

Total dealer deposits: nil




We had 0 customer deposits:



Total customer deposit: nil oz




We had 1 customer withdrawals:

i) Out of Scotia: 326,203.710 oz
Total customer withdrawals  326,203.710  oz


we had 0  adjustments:





Registered (dealer) silver   : 59.929 million oz  
total of all silver:                 176.162 million oz


The CME reported that we had  0 notices filed for nil oz today. To calculate what will stand for this  active delivery month of August , I take the number of contracts served  for the entire  month at 299  x 5,000 oz per contract  or 1,495,000 ounces  to which I add the OI for August (3) - 0  (the number of notices served today x 5,000 oz  =   1,510,000 oz of silver

Thus  standings for silver:  299 notices x 5,000 oz per notice or  1,495,000 oz + (3- 0)x 5000 oz =   1,510,000  oz of silver standing right now for the August silver contract month. We  gained an additional 5,000 silver oz standing for the August contract month.


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: 

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

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

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


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

august 12.2014: no change in gold inventory/795.86 tonnes

August 11.2014; no change in gold inventory/795.86 tonnes

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


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

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



 Today, August 19.2014:

 today a gain of 1.5 tonnes in gold inventory  799.19 tonnes.  

  

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


As a reminder the total comex gold had inventories of around 11 million oz in 2011. Today the total comex gold remains at   9.8550 million oz  (306.53 tonnes).


The total dealer comex gold remains at : 1,111,973.562 oz or 34.587 tonnes.

GLD gold:  799.19 tonnes.


end



And now for silver:

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


KEY FACTS

Net Assets
as of 18-Aug-2014
$6,440,406,491
Ounces in Trust
as of 18-Aug-2014
328,841,830.00
Tonnes in Trust  
as of 18-Aug-2014
10,228.12





August 18.2014:  no change in silver inventory

KEY FACTS

Net Assets
as of 15-Aug-2014
$6,468,481,149
Ounces in Trust
as of 15-Aug-2014
325,771,410.80
Tonnes in Trust  
as of 15-Aug-2014
10,132.62


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

KEY FACTS

Net Assets
as of 14-Aug-2014
$6,468,569,759
Ounces in Trust
as of 14-Aug-2014
325,771,410.80
Tonnes in Trust  
as of 14-Aug-2014
10,132.62



August 14.2014: no change in silver inventory at the SLV


KEY FACTS

Net Assets
as of 14-Aug-2014
$6,468,569,759
Ounces in Trust
as of 13-Aug-2014
324,763,902.20
Tonnes in Trust  
as of 13-Aug-2014
10,101.29

August 13.2014: no change in silver inventory at the SLV

KEY FACTS

Net Assets
as of 12-Aug-2014
$6,520,186,537
Ounces in Trust
as of 12-Aug-2014
324,763,902.20
Tonnes in Trust  
as of 12-Aug-2014
10,101.29



august 12.2014: no change in silver inventory at the SLV

KEY FACTS

Net Assets
as of 11-Aug-2014
$6,445,579,135
Ounces in Trust
as of 11-Aug-2014
324,763,902.20
Tonnes in Trust  
as of 11-Aug-2014
10,101.29



August 11.2014:  no change in silver inventory at the SLV

KEY FACTS

Net Assets
as of 08-Aug-2014
$6,536,781,663
Ounces in Trust
as of 08-Aug-2014
324,763,902.20
Tonnes in Trust  
as of 08-Aug-2014
10,101.29



August 8.2014: A HUGE GAIN  OF 2.159 million oz of silver inventory into SLV vaults.

KEY FACTS

Net Assets
as of 07-Aug-2014
$6,517,385,108
Ounces in Trust
as of 07-Aug-2014
324,763,902.20
Tonnes in Trust  
as of 07-Aug-2014
10,101.2




August 7/2014: we gained 767,000 oz of silver inventory into the SLV

KEY FACTS

Net Assets
as of 06-Aug-2014
$6,380,582,930
Ounces in Trust
as of 06-Aug-2014
322,604,748.20
Tonnes in Trust  
as of 06-Aug-2014
10,034.13


Today, August 19.2014/another whopping addition of 3.07 million oz of  silver inventory at the SLV



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



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



Sprott and Central Fund of Canada. 




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




1. Central Fund of Canada: traded  at Negative 5.5% percent to NAV in usa funds and Negative 5.6%  to NAV for Cdn funds. August 19/2014)   

2. Sprott silver fund (PSLV): Premium to NAV rises to positive 4.17% NAV (Aug 19/2014)   (has been rising lately)
3. Sprott gold fund (PHYS): premium to NAV falls to negative -0.34% to NAV (Aug19. /2014) 
Note: Sprott silver trust back hugely into positive territory at 4.17%. 
Sprott physical gold trust is back in negative territory at  -0.34%.


Central fund of Canada's is still in jail.




end




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



Very important topic from Mark OByrne today as Shanghai wishes to become a global hub for gold and most important
to become a gold price discovery center and thus replace the corrupt USA

We will talk about this in another GATA commentary from Reuters:
A. Ananthalakshmi and Fayen Wong

(courtesy Mark O’Byrne)


Shanghai Becoming Global Gold Hub And Gold Price Discovery Centre

Published in Market Updates  Precious Metals Upate  on 19 August 2014
By Mark O’Byrne

Today’s AM fix was USD 1,300.25, EUR 973.75 and GBP 781.17 ounce.
Yesterday’s AM fix was was 1,302.75, EUR 972.93 and GBP 778.51 per ounce.
Today’s ‘LBMA Silver Price’ was USD 19.66 per ounce.
Yesterday’s ‘LBMA Silver Price’ was USD 19.59 per ounce.

Gold Bust (2.8 Kilogramme) of Deng Xiaoping (Reuters/Bobby Yip)
Incredibly lacklustre trading continues with gold and silver tethered to the $1,300/oz and $20/oz levels respectively. Gold traded between $1,298 and $1,300 per ounce after gold in Singapore ticked very marginally higher.
After a pick up volumes yesterday, volumes fell again today and gold futures trading volumes were 49% below the average for the past 100 days in London according to Bloomberg data.

Gold in US Dollars - 2 Years (Thomson Reuters)
Silver for immediate delivery was flat at $19.73 an ounce. Spot platinum rose 0.2% to $1,450 an ounce, while palladium moved another 0.2% higher to $898 an ounce - consolidating near new multi year nominal highs. Palladium touched $902.09 yesterday, the highest since February 2001 on concerns about tightness in the physical market and concerns regarding supply.
There are no such concerns in the gold and silver markets at this time. They remain peculiarly range bound and tepid despite significant geopolitical risk and a very positive monetary backdrop of ultra loose monetary policies by western central banks for the foreseeable future.
Shanghai Gold Exchange Launching International Bullion Exchange In Yuan Next Month
China is moving closer to positioning itself as the physical gold trading hub of the world and the world’s gold price discovery centre. It is a natural progression for the largest economy in the world and for the world’s largest gold buyer, importer and indeed producer.
The Shanghai Gold Exchange (SGE) is launching its yuan denominated international bullion trading exchange next month. This is another important step in internationalising the yuan or renminbi and positioning it as an alternative global reserve currency.

Bloomberg reports this morning:
"The Shanghai Gold Exchange plans to start bullion trading in the city’s free-trade zone on Sept. 26, according to three people with knowledge of the matter.
The people asked not to be identified because they aren’t authorized to speak to the media. Gu Wenshuo, a spokesman for the exchange, confirmed that the trading system is being tested, without giving further details.
Shanghai wants to become a regional bullion-trading hub, giving foreigners access to the world’s largest physical-gold market, Xu Luode, the exchange’s chairman, told a conference in Singapore in June.
The gold contract will be priced and settled in yuan and the infrastructure is in place for trading to start in the third quarter, Xu said in June. The zone will have avault capable of holding 1,500 metric tons of gold, which can either be imported into China or be in transit to other markets, Xu said.
China is seeking to open up its bullion markets just as domestic demand weakens. Consumption contracted 19 percent in the first six months of the year, according to the China Gold Association. Bullion of 99.99 percent purity traded on the Shanghai Gold Exchange climbed 8.7 percent this year, damping demand which reached a record in 2013."
Reuters reports this morning:
"China has allowed three more banks, including a foreign lender, to import gold, sources with direct knowledge of the matter said, as the world's top gold buyer gears up for its strongest effort yet to gain pricing power of the metal.
The move, which brings the number of firms allowed to import gold into China to 15, comes ahead of the launch in September of a new international bullion exchange in Shanghai with which China hopes to become a price-discovery centre.
China and other Asian gold trading centres such as Singapore are calling for more localised pricing of the precious metal as they seek alternatives to the so-called London fix, the global benchmark for spot gold prices, which is being investigated by regulators on suspicion that it may have been manipulated.
Standard Chartered (STAN.L), Shanghai Pudong Development Bank (600000.SS) and China Merchants Bank (600036.SS) were given regulatory approval recently to import gold, five sources with direct knowledge of the matter told Reuters.
China approached foreign banks, gold producers and refiners to participate in SGE's international bourse, sources told Reuters earlier in the year, to boost its position as a price-discovery centre for gold. It plans to launch three physically-backed gold contracts.
The chairman of the exchange said in June that China should have its own pricing benchmark as it is the biggest consumer and producer of gold."
Conclusion
Chinese gold demand has fallen from record levels in recent months. this was to be expected given the huge leap in demand seen in recent years. Nothing moves in a straight line and a fall was inevitable and reflects the natural ebb and flow of demand, one would expect.
However, an important fact, not realised by most market participants, is that the people of China were banned from owning gold bullion by Chairman Mao in 1950. This means that the per capita consumption of over 1.3 billion people is rising from a miniscule base. This suggests that demand will consolidate at these levels and could again return to record levels - particularly if there are losses in the Chinese property market or stock markets.
This prohibition continued until 2003 when the Chinese gold market was first liberalised and China made its first steps to becoming a global gold hub to rival New York or London.
Since the market in China was liberalised, gold in yuan terms has risen by more than 250% while the stock market has performed poorly.
Even after the significant increase in demand seen in recent years - Chinese per capita gold ownership remains well below that of the levels seen in India and other Asian countries and indeed below levels seen in more affluent Hong Kong.
Culturally, India is known to have the greatest affinity for gold in the world. China had a similar cultural affinity prior to the "cultural revolution" and in time its levels of gold ownership will likely rival those seen in India, Vietnam and other Asian countries.
Within the lifetime of many Chinese people living today is the experience of hyperinflation as many middle aged and elderly Chinese people experienced hyperinflation in 1949.
Therefore, as in Germany, there is a greater awareness of what inevitably happens when a central bank debases the paper currency.
Many market participants and non gold and silver experts tend to focus on the daily fluctuations and “noise” of the market and not see the “big picture” or major change in the fundamental supply and demand situation in the gold and silver bullion markets.
This is particularly due to investment, store of wealth and central bank demand from China and the rest of an increasingly affluent Asia.
It is worth noting that the People’s Bank of China’s official gold reserves are very small when compared to those of the U.S. and indebted European nations. They are miniscule when compared with China’s massive foreign exchange reserves of more than $3 trillion.
The People’s Bank of China is continuing to quietly accumulate gold bullion reserves. As was the case previously, they will not announce their gold bullion purchases to the market in order to ensure they accumulate sizeable reserves at more competitive prices. They also do not wish to create a flight from the dollar – thereby devaluing their sizeable dollar reserves.
Expect an announcement from the PBOC, sometime later this year or in 2015, that they have trebled or even quadrupled their reserves to over 3,000 or 4,000 tonnes.
Receive our award winning research here.


end






We just jot our first Briton to plead guilty to libor rigging:

(courtesy Ruston/The Telegraph/London/GATA)





First Briton pleads guilty to Libor rigging

 Section: 
By Katherine Rushton
The Telegraph, London
Monday, August 18, 2014
Paul Robson, a former trader at Rabobank, has become the first Briton to plead guilty to being part of the worldwide conspiracy to rig the Libor interest benchmark.
The executive, who worked at the Dutch bank's London office, admitted before a New York court to one count of bank fraud and wire fraud, as part of a conspiracy that also involved the taxpayer-backed Lloyds Banking Group.
The scheme, which was designed to boost profits at the companies involved, which affected mortgage rates and pension payments around the world, estimated to have cost the public trillions of pounds. ...
... For the remainder of the report:


end





Shanghai withdrawals = Chinese wholesale demand.

This week another 33 tonnes of gold enters and leaves Shanghai Gold Exchange:



(courtesy Koos Jansen)





East Asia Geared Up For RMB Gold Trading

Published: 18-08-2014 22:57
Weekly withdrawals from the Shanghai Gold Exchange (SGE), which equals Chinese wholesale demand, have been nearly flat for four weeks in a row. 33 metric tonnes have been withdrawn in week 32 (August 4 - 8), up a modest 4.2 % w/w. Year to date 1,127 tonnes have been withdrawn, annualized 1,831 tonnes.
Gold premiums also remained flat, around zero. 
 
The total volume of gold contracts traded on the SGE during week 32, including the Chinese OTC market, was 131 tonnes. On the Shanghai Futures Exchange (SHFE) the traded volume was 365 tonnes, added to the SGE volume makes 496 tonnes (counted unilaterally).  
In the next screenshot the number boxed in red is the total volume of gold traded on the SGE in Kg's, counted bilaterally. 
In comparison, on the COMEX the weekly volume was 2,092 tonnes and it's estimated that in the London Bullion Market 25,000 tonnes are being traded weekly. But will the western paper markets be able to stay in the driver's seat of the gold market? We know China is developing it's market infrastructure not only for physical gold trade, but also to expand paper trading to steal pricing power from the dominant forces in the West and to promote the internationalization of the renminbi. 
Bloomberg recently reported the SGE will launch gold trading in the Shanghai Free Trade Zone (FTZ) on September 26. From what was disclosed previously by the SGE this will likely be a gold-backed spot contract traded through the SGE's subsidiary the Shanghai International Gold Trading Center. The next step would be the launch of gold derivatives. According to Bloomberg the FTZ hosts a vault capable of storing 1,500 tonnes of gold. If this vault is in addition to the 2,000 tonnes vault opened in the FTZ by precious metals transportation and storage company Malca-Amit I do not know. Approximately at the same time as the SGE's international board will go live, the kilobar gold contract will be launched in Singapore.
The SGE international board will allow investors worldwide to trade gold in renminbi, which undoubtedly will lead to higher trade volumes on the SGE. The gold industry is fully prepared in East Asia for what might be a pricing shift, following the great physical shift of recent years - most notably 2013. According to analyst Kenneth Hoffman: 
Several massive gold vaults have already been built in Singapore, Hong Kong and China proper to house all the metal moving from West to the East. Funds, traders and analysts are all gearing up in the East to analyze and trade gold, with its center of movement now firmly in Asia.   
The previous quote was taken from a slide of Hoffman's presentation on June 18.
Koos Jansen

end


As discussed by Mark O'Byrne, the following is a huge story as China now allows 3 more banks including the big foreign bank Standard Chartered to import gold.  What China is trying to accomplish is to have Shanghai not only a physical market but also incorporate a futures exchange (backed by physical gold) whereby a price discovery mechanism would be established.  This would be a dagger to the comex as everything will leave that crooked casino to the more honest Shanghai.  I would like to point out that Singapore will be ready with its futures and physical gold exchange this September:

(courtesy Reuters/Ananthalaskshmi/Wong) GATA)




Reuters: China allows 3 more banks, including Standard Chartered, to import gold

 Section: 
By A. Ananthalakshmi and Fayen Wong
Reuters
Tuesday, August 19, 2014
China has allowed three more banks, including a foreign lender, to import gold, sources with direct knowledge of the matter said, as the world's top gold buyer gears up for its strongest effort yet to gain pricing power of the metal.
The move, which brings the number of firms allowed to import gold into China to 15, comes ahead of the launch in September of a new international bullion exchange in Shanghai with which China hopes to become a price-discovery centre. ...
... For the remainder of the report:


end



Singapore's legengary Grant Willliams (of Hmmmm fame) talks with Eric King and he believes (as do I) that the entire USA gold reserve has been leased out

(courtesy Grant Williams/Eric King/Kingworldnews)



U.S. gold reserve likely has been leased out, Grant Williams tells KWN

 Section: 
12:02a ET Tuesday, August 19, 2014:
Dear Friend of GATA and Gold:
The U.S. gold reserve likely has been mobilized through leasing to suppress the gold price, Singapore fund manager Grant Williams tells King World News tonight, adding that eventually more nations that deposited their gold with the U.S. government will start asking for its return and it won't be available either. Williams' interview is excerpted at the KWN blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

end




This is what gold price suppression does to the environment in Peru and elsewhere

 Section: 
There's money only for subsistence workers, none for remediating the landscape.
* * *
Getting the Gold Story in Peru, and Getting Out
By Nick Miroff
Washington Post
Monday, August 18, 2014
Just about everyone we met in Madre de Dios, Peru, told us to stay away from the mining camps.
Even at the lunch café where we stopped after arriving in Peru's southeastern Amazon region, the family at the next table over looked deeply worried when we asked for directions. "Very dangerous," they said. "A lot of bad people there."
Madre de Dios is the center of illegal gold mining in the western Amazon. The miners' dredging equipment and the mercury they use to tease gold out of alluvial sediments has led to some of the most appalling environmental destruction anywhere in South America, turning lush forests into lunar wastelands.
Photographer Dominic Bracco and I wanted to see it up close. But the jungle camps where the miners work are notoriously lawless and miles from any help. Foreigners -- especially foreigners with cameras -- are not welcome.
Our timing wasn’t good, either. The Peruvian government had been cracking down on the miners, raiding their camps and dynamiting their machinery to try to drive them out of the forest. But the only way we'd be able to talk to the miners and see their operations up close would be to go without soldiers or police.
Braulio, a young cabdriver we met in Puerto Maldonado, the boom-town capital of Madre de Dios, seemed to be our guy. He told us his padrino (godfather), Don Vicente, was running a crew in a gold pit a couples of miles into the forest, and he could take us out there to meet him.
Two days later, we crammed into Braulio's battered Suzuki hatchback and headed for the camps. We also brought along a former park ranger and taxi-driver colleague of Braulio's for added security.
Soon after we turned off the paved highway into the forest, it was clear the Suzuki wouldn't make it. The mud was too deep, and the main access road had been wrecked by a government raid.
Dirt bikes were the only way in. We hired two motorcycle taxis outside a grimy cantina and rode three to a bike, zipping down jungle trails and across rickety bridges of rattling planks that looked as if they were salvaged from an Indiana Jones set, and about as old.
Everywhere we went, we drew hostile stares.
Miners heading to and from the camps shouted at us from passing motorcycles, cursing the bike cabbies for bringing us in.
It was a jarring ride through ruined landscapes of man-made deserts and sickly craters. I'd never seen humans do anything so hideous to the planet. In just a few years, vast stands of forest had been totally annihilated, as if hit by a massive napalm strike.
Then we saw the pits. Dominic jumped off the bike and started taking pictures as casually as possible, but it was as if our arrival had triggered a silent alarm.
Almost immediately we were surrounded by angry men demanding to know why we were there. Are you environmentalists? they asked.
More and more miners appeared out of the gold pits, shouting in Quechua, the Incan language, and swarming around us. We'd kicked over a hornet's nest.
They were not in a cheerful mood. The government had been raiding the area several times a month, scattering everyone into the forest and torching the camps.
An older man in rubber boots pushed through the crowd to confront us. His teeth were black from chewing coca and his broken nose was so askew it practically pointed at his ear.
"They're journalists!" he declared. The crowd tightened around us.
Braulio tried to quiet them. "No, it's okay!" he shouted, holding up his hands. "They're tourists!"
Now, I should say: I have been to journalism school. I have even read the part of The Washington Post ethics guidelines where it says to always tell the truth if someone asks if you are a reporter.
But I'm pretty sure this one wasn’t in the handbook. By then, 40 to 50 men and boys had encircled us.
I swallowed the speech I'd been preparing about how we were there to tell the miners’ side of the story, and kept my mouth shut.
Braulio’s “tourist” lie wasn’t much help anyway. "We don't allow tourists here," growled the man with the sideways nose.
I nudged Braulio. What about his godfather?
"We're here to see Don Vicente, my godfather," Braulio announced, apparently remembering our cover story.
"Ah, Don Vicente," said the black-toothed man. He knew him. He existed after all. The noose around us seemed to slacken.
Don Vicente was several miles deeper into the forest, the miners said. We'd come back to visit another time, we told them, thank you very much.
More men were arriving. But the crowd had loosened up enough for us to wiggle back onto the bikes and ease away without looking like we were running.
On the way back, we stopped at another mining camp, but once again drew an uneasy crowd after we introduced ourselves as journalists. I jotted down a few quick interviews with some of the friendlier miners, and with several miners' wives who ran little cantinas fashioned from tarps and tree branches. Dominic stood back and shot pictures as fast as he could.
The miners were boiling with rage at the government.
“What are we supposed to do -- go home and chew our nails?” said Marina Tapia, a 50-year-old café proprietor with gold-capped teeth and a floral apron. She said she and her husband had put their two sons through engineering school with the money they socked away working in the camps.
“The government treats us like thieves,” she said, standing next to the edge of a massive pit, where several dredgers were running. Others around her nodded.
It was interesting to hear the miners say they knew they were destroying the forest, and seem disturbed, even embarrassed, by it. But ultimately they said the damage was justified if it meant pulling their families out of poverty.
The longer we stayed to talk, the more we also seemed to be attracting people who really didn't want us there. It was time to split.
On the ride back to the highway, Braulio told us a Peruvian TV crew had been badly beaten when they showed up at the camps a few months earlier.
Maybe we got the tourist treatment after all.

end





Grant Williams talks about gold and is a must read.

it is long so take your time

(courtesy Grant Williams/Hmmmmm/GATA/J Maulden)

Grant Williams: Thinker, trader, holder. Why?

 Section: 
9:34p ET Monday, August 18, 2014
Dear Friend of GATA and Gold:
In the new edition of his "Thngs That Make You Go Hmmm. ..." letter, Singapore fund manager Grant Williams suggests that Asian central bank demand will be decisive for the gold price eventually, and he extensively praises gold researcher and GATA consultant Koos Jansen for calculating Chinese gold demand better than anyone else.
Williams writes: "If you really want to understand what the reality might very well be, then from time to time you need to take a little leap of imagination when considering the activities of the Chinese central bank and open your mind to possibilities that the mainstream just refuses to entertain.
"Nobody -- and I mean nobody -- does that better than my friend Koos Jansen.
"Koos watches gold data more closely than just about anybody else in the world (Nick Laird, if you're reading this, you’ve still got Southern Hemisphere bragging rights, my friend); and, crucially, he is one of the few who is happy to ignore what he's told by officials and do the math himself.
"Now when it comes to gold and China, that takes an incredible amount of hard work. However, when he does that work, the numbers Koos comes up with are quite extraordinary and -- for my money -- likely to be far more accurate than anything coming out of the People's Bank of China."
Williams' new letter is headlined "Thinker, Trader, Holder. Why?" and is posted at the Mauldin Economics Internet site here"
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


end





James Turk talks with Eric King on gold issues:

(courtesy James Turk/Eric King/Kingworldnews)






Central banks aim to scare 'trend followers' away from gold, Turk tells KWN

 Section: 
8:54p ET Monday, August 18, 2014
Dear Friend of GATA and Gold:
Central banks trying to suppress the price of gold, GoldMoney founder and GATA consultant James Turk tells King World News today, are most afraid that "trend followers" will jump into the market and suppression tactics are aimed at scaring them out. Turk's interview is excerpted at the KWN blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

end

Poor Randgold:



Randgold CEO just shrugs as gold mining industry produces more metal at a loss

 Section: 
10:25p ET Monday, August 18, 2014
Dear Friend of GATA and Gold:
In the report appended here Randgold Resources CEO Mark Bristow complains to Bloomberg News today that the gold-mining industry is boosting supply to the market even while mining the metal at an increasing loss. Overlooking the gold mining industry's silence and the silence of its supposed trade association, the World Gold Council, in the face of the longstanding Western central bank policy of gold price suppression, Bristow seems not to understand even half the problem.
Randgold shareholders might ask Bristow if he's aware of any of the documentation archived by GATA here --
-- and if he plans to do anything about it. If he's not and he doesn't, he'll have one more reason to be shaking his head at his brain-dead industry.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
Ill-Disciplined Gold Miners Deal Loss to Their Industry
By Thomas Biesheuvel
Bloomberg News
Monday, August 18, 2014
LONDON -- Gold producers opening new mines are hurting efforts to revive industry returns following the biggest price slump last year in more than three decades, according to Randgold Resources Ltd. Chief Executive Officer Mark Bristow.
Bloomberg's Chart of the Day shows how world gold output breached an annual 3,000 metric tons for the first time last year. That's while demand dropped 11 percent to 4,080 tons and gold prices tumbled 28 percent, the biggest slide since 1981. In the first half of 2014, demand also shrank 7.2 percent from the same period a year earlier, according to World Gold Council data.



end






Now Lawrence Williams of Mineweb weighs in on the phony silver fix:

(courtesy Lawrence Williams/Mineweb)




Is the LBMA Silver Price more transparent than the Fix? No!

The new LBMA Silver Price benchmark setting has commenced to replace the old London Silver Fixing, but it doesn’t seem to be any more open and transparent than the old system.
Author: Lawrence Williams
Posted: Tuesday , 19 Aug 2014 
LONDON (MINEWEB) - 
So now we have had three days of the new LBMA Silver Price – the new name for the London Silver Fixing given that the term ‘Fix’ is somewhat discredited in modern-day parlance.  The banks involved in the old system, which had fallen to two, wanted to withdraw from it, in part because they felt the process, even if it was a totally honest system, which it probably was, could lay them open to having to defend expensive, and probably spurious, lawsuits and the London Bullion Market Association took upon itself to go out and set up some kind of new silver benchmarking process at very short notice. 
And is this new process any more transparent than the old one – one of the main charges laid against the old Silver fixing process.  The answer so far is probably not!  
Although one assumes it could become more open as the markets get to understand how it operates its new rather obscure process dealing in lakhs of silver rather than ounces, and in converting it back to a per ounce price.  (A lakh is a South Asian term for 100,000 units – in this case ounces.)  Why on earth such a measure was chosen defeats us – it just seems to be another way to obfuscate what should be a relatively straightforward process.
Mark O’Byrne’s Goldcore website out of Ireland has come up with a withering look by Ronan Manley at the new process which is well worth a read by anyone trying to get to grips with what the LBMA Silver Price is all about – click Silver price setting not transparent to read it.


Manley concludes by saying “The entire process has been a bit of a shambles. The Gold Anti Trust Action Committee (GATA) and those concerned about price manipulation will allege that the LBMA and the western bullion banks are engaged in a rebranding and repackaging exercise in order to maintain a cosy gold and silver cartel of bullion banks and ultimately control over precious metal prices.  If the CME/Reuters aren’t willing to share with the public the presentation that they made at a closed door seminar, especially since they won the competition and are now running the process, what hope is there for transparency in this new process?”
Manley obviously feels that a secretive selection process for the eventual winners of the group conducting the new silver pricing benchmark (Thomson Reuters/CME), coupled with a seemingly obscure process which few seem yet to fully understand, can be no more transparent than the old system – indeed some might argue less so.
Manley extensively quotes Ross Norman, the head of Sharps Pixley, who has had long experience in viewing the machinations of the London precious metals scene whether obscure, or open and a supporter of the old system.  Norman’s views we published in these pages on Wednesday last week – see: Confused by the new London silver fix? You should be! when the initial details of the new electronic process were revealed.
To an extent the reform of the London Silver Fixing is less important for global precious metals markets than the twice daily settings of the gold pricing benchmark – the London Gold Fix – where there is also pressure for reform and why, perhaps there was an indecently hasty rush to try to get in on the revised silver pricing system.  Those who jumped in here may feel that they’ll get the first shot also at revising the gold benchmark should the external pressures, not to mention the perhaps spurious lawsuits, cause that process to be completely reformed too.  That is a much bigger deal altogether.  One hopes rather more time will be taken to set up a system here that is open and transparent should a change be felt necessary to be made.


end



Why is George Soros buying gold and shorting the markets?

Find out why:





(courtesy Bill Holter/Miles Franklin)









George knows! Do you?


 This past week we saw the hedge fund industry release their 13F filings which showed their holdings as of June 30th.  The most famous and arguably the most successful hedge fund manager is George Soros.  If you know about George Soros, you may or may not like his politics or his beliefs, I personally don't.  No matter what you think of the man, he does know how to make money on large outsized moves which have a tendency to happen in very compressed timeframes.
  Going back to 1992, Mr. Soros made a very outsized bet against the British pound.  He levered into a $10 billion short position and "won".  It has been said that "he broke the Bank of England" when they were forced to devalue.  Soros made $1 billion on this adventure. 
  The latest 13F holdings report showed that Soros nearly doubled his short position betting heavily against U.S. equities.  He also holds a large position in the ETF GLD and has outsized option positions betting on junior miners so it's apparent he believes in the merit of gold.  Is he right?  Does he "know" something that we don't know?  He is positioned for a crash and will profit when one occurs.  To answer the question, I believe yes, he probably does "know" for a fact what is coming to pass.  He has the ability to speak with presidents, prime ministers and central bankers at will.  Has he been told that the banking or financial system is already upside down or that a war is going to take place?  My guess is probably yes, he knows and has been advised.  Even if this is not the case, the man is smart and can see for himself...just as we can.
  So is there a point to me writing about George Soros' positioning himself for a crash?  Well yes, because he has a very long term track record of being correct and correct in very big ways.  If you are already positioned in this manner or some form of it, you now have something to strengthen your convictions.  If you haven't completely bought the math and logic pointing to a coming crash, this news might move you off the fence?
  I also want to use Mr. Soros positioning with a hypothetical.  Where would we be right now if Ukraine really did wipe out a Russian convoy?  What if Russia does just start the engines and roll into Ukraine?  That all "supposedly" happened this pastFriday, today is Tuesday so we would have had 2 full trading days behind us.  Again, hypothetically, what if the Dow Jones was down 700 points on Friday and another 1400 points on Monday, what would you do today?  Would you buy the dip?  Would you sell?  Would you do nothing and just wait for the smoke to clear?
  What about gold and silver?  What if gold was up $90 on Friday and $230 on Monday?  Would you be a buyer here at the new price of $1,600+ or would you wait and hope to be able to buy some on a pullback?  Or would you hit the sell button and wipe your brow in relief that you could sell your gold at a breakeven from metal purchased in 2012?  How would you react to $27 silver?  Remember, this is what George Soros is positioned for, what do you think he would be doing?
  I cannot answer any of the above questions because only you personally may have an idea as to what your thought process might be.  I caution you however, in the heat of battle, what you believe now may be very very different from the reality when you are faced with it.  My personal thought process is this, once the collapse starts it will be bigger and farther reaching than anything we have ever seen before.  In fact, I believe what is coming will be 1929, 1987, 2000 and 2008 all wrapped up into one big toilet flush!  We have more debt than ever before.  True unemployment if calculated the way we used to is probably pushing levels seen at the depths of the depression.  The same can be said about true inflation, we are probably running at levels or close to what we saw in 1980.  Our Treasury has never before been this indebted and our vaults not this empty in over 100 years.
  How is that for a mix?  Yet the majority go on as if it's business as usual and fool themselves into believing "I'll do what I need to do when the time comes".  My point is this, if the stock market is down 10% or more in a couple of days or gold and silver up 10-20%, what will you do?  Will you hesitate to sell stocks or buy metal (real money)?  Human nature says that you in fact will hesitate.
  I can foresee a meltdown/melt up in stocks and precious metals coming.  I believe it is possible we could see in a one week to one month timeframe where stocks lose nearly 50% and metals double ...AND THEN the markets close.  I have said all along I believe we will see a bank/market holiday where everything closes and then will reopen at "new" levels.  Human nature says you will not do anything in the tumultuous phase, this is called the "deer in the headlights" syndrome.  Then, if I am correct, you won't be able to do anything while the markets are closed ...which leaves you with what alternative? 
  The "alternative" is to use your own common sense and logic to where we are now, where we are headed and what you need to do about it.  The time is now, right NOW!  Did you know last Thursday that WW III could have started the next day?  Do you know when or what the spark will actually be?  No, you don't, I don't and only a handful of insiders do.  All I can say is that the U.S./NATO/West is hell bent on starting a war somewhere and soon to cover up the bankruptcy they've caused.  Markets will do things that previously had been unthinkable.  Trades will "clear", or not.  Metals will be available for delivery, or not.  Markets will be open to transact business, or not.  Please don't wait for the "or not" phase, in my opinion it has an almost 100% probability of arriving.  Regards,  Bill Holter
end

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

Early morning trading from Europe/Asia



1. Stocks up for all  Asian bourses   with the slightly lower yen values   to 102.64.

Nikkei up 127 points or .83%

3. Europe stocks all in the  green /Euro down/USA dollar index up  again at 81.69.  Chinese bourse Shanghai up as  the yen strengthens  in value  to 6.14704 per usa dollar/yuan. 

3b Japan 10 year yield at .50%/Japanese yen vs usa cross now at 102.64/
3c  Nikkei still above 14,000

3d  oil up in price early this morning ($96.70 WTI/$101.86 Brent)
3e:  German bunds 10 yr break below the 1% barrier
3f.  USA 10 yr treasuries break below 2.40 at 2.36%/30 yr treasury bond yield at 3.22%
3g Russians thinking of new sanctions./talks on cease fire in the Ukraine failed/
3h  The Ukraine shelling of a Russian convoy a hoax!!

3i Gold at $1300.50 dollars/ Silver: $19.62

4.  USA 10 yr treasury bond at 2.37% early this morning.


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




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




Futures Levitate Because Any Re-escalation Is Simply Pent Up De-escalation

Tyler Durden's picture





A quick reminder of how geopolitics governs markets: on Friday, the market plunged 0.005% over fears Ukraine and Russia may be about to go at it all out after a fake report Ukraine shelled a Russian military convoy. On Monday, the same "market" soared just under 1% as the news that had caused the "crash" was refuted. That has been the dominant rinse, repeat theme for the past month and will continue to be well after Yellen's Friday speech at Jackson Hole (although one does wonder why she is not speaking on Wednesday when the symposium begins). Not surprisingly, with only modest re-escalation news overnight (that Russia is preparing further retaliatory sanctions against the West), which is simply "pent up de-escalation" in the eyes of Keynesian algos, futures are again up a solid 0.2% and rising, and the way the rampy USDJPY is being manipulated before its pre-market blast off, we may well see the S&P hit 1980, if not a new all time high before 9:30am, let alone during today's cash session. In any event, whatever you do, don't you dare suggest that algos should care one bit about Ferguson and its implications for US society.
Taking a closer look at the geopolitical stories, as DB summarizes, no bad news is certainly viewed as good news for now. Following the four-way diplomatic talks in Berlin on Sunday, Russian Foreign Minister Sergei Lavrov yesterday told the press that the talks have failed to produce positive results in establishing a ceasefire and (starting) a political process. According to Reuters, Lavrov accused Ukraine for changing their demands over what it would take to establish a truce between government troops and pro-Russian insurgents. The good news though is that some progress was made on allowing the delivery of Russian humanitarian aid to eastern Ukraine. Lavrov said that “all questions” regarding the humanitarian convoy had been removed and agreement had been reached with Ukraine and the International Committee of the Red Cross (ICRC). Bloomberg news overnight said that the ICRC expects to work out the details of a safe-passage plan for the convoy into Ukraine “soon”. The four-way talk is expected to resume again sometime this week but we don’t have specific timing on that yet. Despite the ongoing volatility, it is interesting to see the strong performance in Russian equities over the past week. The MICEX index has rallied every single day for the past 7 trading sessions and is currently about 7% off its early August lows.  One wonders which Russian oligarchs are selling into the latest liftathon.
European equity markets trade strongly, with the benchmark DAX outperforming as Bayer (+2.0%) benefit from a UBS upgrade and ThyssenKrupp (+1.8%) gain on a bullish outlook provided by the CEO. Nonetheless, the materials sector underperforms as BHP Billiton (-4.0%) trade poorly after their earnings update. BHP Billiton are to spin-off coal, nickel, aluminium, manganese and silver assets into a new Australian and South African listed company. Nonetheless, BHP Billiton failed to disclose a new share buyback and their financial metrics remained weaker.
Looking ahead, inflation readings from the UK and the US will be the notable releases to watch. We will also get July housing starts and building permits from the US today, which are both expected to rebound strongly after a disappointing month in June. We might be back to geopolitical watch mode again today as we build up towards Jackson Hole this Friday.
Bulletin Headline Summary
  • European equities take confidence from the strong Wall Street close, however T-notes erase overnight weakness on weak UK CPI and reports of the Kremlin preparing further retaliatory sanctions against the West in the event of stricter controls on Russian trade
  • Markets await any further clarity on the Russian aid convoy’s safe passage into eastern Ukraine after Ukraine/Russia tensions ebbed lower yesterday on a series of negotiations held between the countries counterparties
  • Treasuries gain amid rally in core euro-zone bonds on U.K. inflation data, expectations for dovish Yellen at Fed’s Jackson Hole conference; German 10Y holds below 1.00% level.
    U.K. inflation fell to 1.6% in July from 1.9% in June, more than forecast, giving Bank of England room to keep its key interest rate at a record low; GBP fell to four-month low vs USD
  • Pimco has been buying some of the higher-rated high-yield bonds dumped by speculative-grade debt managers amid the recent exodus from funds
  • Fed Chair Yellen is likely to avoid taking more hawkish stance at this week’s Jackson Hole symposium, based on published research
  • The Fed now owns almost a third of MBS outstanding. One rarely discussed consequence: Money managers are being pushed to add more of the securities than they otherwise might because the benchmark debt indexes that they’re judged against fail to exclude the Fed’s sizable holdings,  according to Citigroup Inc. analysts
  • Australia’s central bank said the nation’s economic outlook remains uncertain because of the conflicting forces at play and reiterated that interest rates are set to remain on hold
  • A former Rabobank Groep senior trader pleaded guilty in New York to conspiring to manipulate a benchmark interest rate tied to trillions of dollars of securities to benefit his trading positions, the U.S. said
  • The biggest overhaul to the $19t credit derivatives market in more than a decade will seek to solve flaws that have stopped some contracts paying out as buyers anticipated
  • The Red Cross is close to working out the details of a safe- passage plan for a Russian aid convoy intended for war-torn southeastern Ukraine, while four-way talks on a halt to the fighting reached an impasse in Berlin.
  • Obama said the U.S. will continue “limited” airstrikes against Islamic State militants, which have stopped their advance on the city of Erbil and helped Iraqi and Kurdish forces recapture a key dam at Mosul
  • Police fired stun grenades and tear gas at protesters in a St. Louis suburb rocked by violence after police shot and killed an unarmed black teen 10 days ago
  • Obama is dispatching Attorney General Eric Holder to the St. Louis suburb in a show of commitment to an aggressive inquiry into the shooting of an unarmed black teenager by a local police officer
  • Orphans whose families were killed by Ebola are becoming a tragic legacy of the deadly outbreak in West Africa, say relief organizations struggling to care for the children who may themselves be infected
  • Sovereign yields mostly lower. Euro Stoxx Banks +0.6%. Asian and European equities higher, U.S. stock futures gain. WTI crude, gold and copper higher
  • US CPI expected to decline further, keeping the focus on Fed chair Yellen’s appearance at Jackson Hole this Friday
Market Wrap
  • S&P 500 futures up 0.2% to 1971.3
  • Stoxx 600 up 0.5% to 335.2
  • US 10Yr yield down 1bps to 2.39%
  • German 10Yr yield down 1bps to 1.01%
  • MSCI Asia Pacific up 0.7% to 149
  • Gold spot up 0.1% to $1299.9/oz
US Economic Docket
  • 8:30 am: CPI m/m, July, est. 0.1% (prior 0.3%)
    • CPI Ex-Food and Energy m/m, July, est. 0.2% (prior 0.1%)
    • CPI y/y, July, est. 2% (prior 2.1%)
    • CPI Ex-Food and Energy y/y, July, est. 1.9% (prior 1.9%)
    • CPI Core Index SA, July, est. 238.520 (prior 238.083)
    • CPI Index NSA, July, est 238.316 (prior 238.343)
  • 8:30am: Housing Starts, July, est. 966k (prior 893k)
    • Housing Starts m/m, July, est. 8.1% (prior -9.3%)
    • Building Permits, July, est. 1m (prior 963k, revised 973k)
    • Building Permits m/m, July, est. 2.8% (prior -4.2%, revised -3.2%)
  • 11:00am: Fed to purchase $250m-$350m notes in 2024-2031 sector
  • 11:30am: U.S. to sell $50b 4W bills, $25b 52W bills
ASIAN HEADLINES
The Nikkei 225 (+0.9%) closed at 2-week highs on a strong Wall Street close, with the Hang Seng (+0.2%) having opened above the 25,000 level for the first time since 2008.
FIXED INCOME
Bund futures opened relatively unchanged, despite JGBs falling overnight as the market made way for 20yr supply from the Ministry of Finance, but found some support at the lows of 149.82 as a Kremlin spokesman warned that Russia were preparing retaliatory sanctions against the West if they continue their aggressive and destructive policy toward Russia. Nonetheless, the bid-tone was relatively short-lived as the Finnish PM stated the EU are unlikely to embark on further sanctions last week. Gilt futures sharply outperform, pressing the UK 10yr yield to 2.385% after UK CPI fell below expectations (1.6% vs. Exp. 1.8%) as the drop in apparel prices weighed.
EQUITIES
European equity markets trade strongly, with the benchmark DAX outperforming as Bayer (+2.0%) benefit from a UBS upgrade and ThyssenKrupp (+1.8%) gain on a bullish outlook provided by the CEO. Nonetheless, the materials sector underperforms as BHP Billiton (-4.0%) trade poorly after their earnings update. BHP Billiton are to spin-off coal, nickel, aluminium, manganese and silver assets into a new Australian and South African listed company. Nonetheless, BHP Billiton failed to disclose a new share buyback and their financial metrics remained weaker.
FX
GBP/USD fell below the 200DMA at 1.6674 and hit April 2014 lows on the lower-than-expected CPI, heightening speculation that the Bank of England will be forced to remain dovish in the near-term in order to prop up inflationary expectations. Elsewhere, the USD-index trades positively, pressing EUR/USD toward touted options rolling off at 1.3350 (just under USD 1bln) at today’s 10am (1500BST) NY cut.
NZD declined sharply against all of its counterparts after New Zealand PPI fell by the most in 7 quarters and as the New Zealand Treasury announced a cut to its growth forecasts. Elsewhere, AUD firmed following the release of the RBA August 5th meeting minutes, where the central bank refrained from aggressive jawboning of the currency and instead highlighted noticeable easing in financial conditions, hence lowering expectations of further easing.
COMMODITIES
Brent and WTI crude futures trade higher after yesterday’s Libya, Ukraine and Iraqi-inspired sell-off, but WTI is still far from testing the week’s best levels at USD 95.33 as the market makes way for the ongoing resumption of Libyan exports – another tanker is set to load crude at the Es Sider oil port on the Libyan coast in due course. Precious and industrial metals prices trade relatively muted, with gold awaiting the upcoming US CPI figures, with falling inflation in the US expected to keep the onus on Yellen’s Jackson Hole appearance later this week.
* * *
DB's Jim Reid Concludes the overnight recap
Geopolitics continues to be front and centre of mind at the moment. Indeed markets were off to a positive start to the week given the lack of negative geopolitical surprises over the past 24 hours. We’ll recap some of the key stories below but for now markets are seeing a decent follow through in the Asian session overnight. Main bourses in Japan, Korea, and Australia are up +0.8%, +0.9%, +0.5%, respectively as we type. Asian cash credits are also performing well given the absence of new supply. The Asia iTraxx IG index is wrapped around 101bp, down from the wides of 112bps two Fridays ago. Treasuries have lost some of the safe-haven bid with the 10s now at around 2.39% (9bps off its recent intraday lows) as we go to print.
Taking a closer look at the geopolitical stories, no bad news is certainly viewed as good news for now. Following the four-way diplomatic talks in Berlin on Sunday, Russian Foreign Minister Sergei Lavrov yesterday told the press that the talks have failed to produce positive results in establishing a ceasefire and (starting) a political process. According to Reuters, Lavrov accused Ukraine for changing their demands over what it would take to establish a truce between government troops and pro-Russian insurgents. The good news though is that some progress was made on allowing the delivery of Russian humanitarian aid to eastern Ukraine. Lavrov said that “all questions” regarding the humanitarian convoy had been removed and agreement had been reached with Ukraine and the International Committee of the Red Cross (ICRC). Bloomberg news overnight said that the ICRC expects to work out the details of a safe-passage plan for the convoy into Ukraine “soon”. The four-way talk is expected to resume again sometime this week but we don’t have specific timing on that yet. Despite the ongoing volatility, it is interesting to see the strong performance in Russian equities over the past week. The MICEX index has rallied every single day for the past 7 trading sessions and is currently about 7% off its early August lows.
Away from Russia, the reclamation of the strategic Mosul Dam by the Iraqi and Kurdish forces (aided by US airstrikes) was seen as a key progress in the fight against the ISIS militants. The fear was that ISIS could use the dam to cut off power and water supplies to millions of Iraqis who lived downstream and a destruction of the dam could also flood the capital city of Baghdad. Moving slightly westwards, markets were probably relieved to learnt that the Gaze truce has been extended for an extra day at the request of Egypt. The extension came just minutes before the 5-day cease fire deadline was set to expire at midnight local time on Monday. According to the WSJ, there were no indications on whether both sides have narrowed their differences which does raise the question of what an extra 24 hours would do to help. Indeed both sides have failed to make a compromise, with Israel demanding the demilitarization of the territory while Hamas demanding an end of the economic blockade of the Gaza strip.
Back to markets, the sharp outperformance in European equities was hardly surprising as they had some catch up to do. The Stoxx600 closed up +1.18% with the DAX and CAC leading the way, up +1.68% and +1.35% respectively. On the other side of the pond the S&P 500 gained around +0.8% while the VIX dropped to its lowest in about 3 weeks. US markets were also supported by M&A news and a better-than-expected NAHB Housing Market index (55 v 53 expected) print for August. Dollar General Corp yesterday announced a takeover offer of US$9bn for Family Dollar stores stating that the deal will generate US$550-600m in cost synergies three years after completion. The S&P 500 Homebuilding sub index also rallied nearly 2% on the day helped by the positive housing data.
In fixed income markets, Credit also performed well with European Main and Xover 5bps and 16bps tighter and the US CDX IG and HY 2bps and 9bps tighter, respectively. The 10yr bund yield unwound some of its recent gains, closing 6bp higher at 1.014%. Gilts also gave back virtually all of its Friday’s gains with the 10-year yields up 10bps to 2.43% after Carney’s weekend interview with the Sunday Times. The BoE Governor noted that an expectation of recovery in earnings may be enough to push the MPC toward policy tightening and the bank doesn’t need to wait for an actual increase in wages before raising rates. The policy divergence amongst key central banks also makes this Jackson Hole an interesting one to watch, particularly given the representation from the BoE, the ECB and the BoJ at the symposium.
Looking ahead, inflation readings from the UK and the US will be the notable releases to watch. We will also get July housing starts and building permits from the US today, which are both expected to rebound strongly after a disappointing month in June. We might be back to geopolitical watch mode again today as we build up towards Jackson Hole this Friday.


end




The big story:  China and Russia launch joint military drill and they are testing surface to air missiles.  As we have been stating to you over and over again:  Russia is joined to the hip with China.  You can say that Russia is the muscle and China is the money.

(courtesy zero hedge)





Russia-China Launch Biggest Central Asian Military Drill, Testing Surface-To-Air Missiles

Tyler Durden's picture




 
More than 7,000 troops from China, Russia and four central Asia countries have gathered in Inner Mongolia for their biggest joint drills "to fight terrorists". The drills are purportedly to prepare troops to protect the so-called Silk Road economic and transport belt that will run through central Asia from China to Europe from terrorist attack, but as one analyst notes, "it is kind of rare to have an anti-terrorist mission which uses battle tanks." Furthermore, as part of a drill:
  • *RUSSIA TESTING S-300, S-400 SYSTEMS IN ASTRAKHAN REGION: RIA
So, surface-to-air missile tests? Not very "de-escalation"-y. Perhaps this statement is a clue, "we are trying to exercise together to coordinate our troops to meet any potential eventuality."

A total of 23 Chinese aircraft will participate in Peace Mission-2014, along with tanks, drones and air-defense missiles from countries in the Shanghai Cooperation Organization, China’s Xinhua News Agency reported. The SCO groups China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan.

The exercises are another sign China and Russia are willing to work together as both seek to upgrade their military capacity in the face of rising territorial tensions. The drills will prepare troops to protect the so-called Silk Road economic and transport belt that will run through central Asia from China to Europe from terrorist attack, China Radio International reported.

“It is kind of rare to have an anti-terrorist mission which uses battle tanks,” said Matthew Sussex, head of politics and international relations at the University of Tasmania. “It says: ‘We are trying to exercise together to coordinate our troops to meet any potential eventuality’ — in other words war.

China’s President Xi Jinping, the head of the Central Military Commission, has made it a priority to better prepare the People’s Liberation Army for combat, while Russia’s Vladimir Putin has embarked on the biggest overhaul of his country’s armed forces since the Cold War.

Russia and China in May held their first joint naval exercises near Japanese-controlled islands that are at the center of a Chinese-Japanese rift. Russia further inflamed tension with Japan last week when it started military exercises in the disputed Kuril Islands.
But then, as Reuters adds...
  • RUSSIA TESTS SURFACE-TO-AIR MISSILES IN MILITARY EXERCISES IN SOUTHERN RUSSIAN PROVINCE - STATE NEWS AGENCY RIA 
  • *RIA CITES RUSSIA DEFENSE MINISTRY SPOKESMAN ON MILITARY DRILLS
De-Escalation? Doesn't look like it...


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The following commentary by Bensch is a terrific commentary as it outlines how the Ukraine will fail and become an economic disaster.  It has to do with their non mining of important coal assets in the east and this is causing a massive reduction in their electricity supply.  Generally the Ukraine is a huge exporter of thermal coal.  Now they must import power.

a must read...

(courtesy Robert Bensch/zero hedge)

  

Ukraine’s Next Crisis? Economic Disaster

Tyler Durden's picture




 
Ukraine’s next crisis will be a devastatingly economic one, as violent conflict destroys critical infrastructure in the east and brings key industry to a halt, furthering weakening the energy sector by crippling coal-based electricity production.
The Ukrainian military’s showdown with separatists in the industrial east has forced coal mines to severely cut production or close down entirely. This has led to an electricity crisis that can only be staunched by cutting domestic production along with exports to Europe, Crimea, and Belarus -- or worse, getting more imports from Russia.
In the coal centers of Ukraine’s industrial east—Luhansk and Donetsk—fighting has forced the full closure of an estimated 50 percent of coal mines, while overall coal production has fallen 22 percent over the same period last year.
Key industry sources say they will potentially run out of coal in less than three weeks.
For Ukraine, the second largest producer of coal in Europe, this will have a devastating impact on the energy sector, which is in a state of emergency, unable to get coal to thermal power plants that provide some 40 percent of the entire country’s electricity.
In the wider energy picture, the halt of coal production sets Ukraine back a decade. The plan was to rely more on coal in order to reduce dependence on Russian natural gas.
But the new reality has insiders wondering how Ukraine will produce more of its own natural gas, after theimplementation earlier this month of an amended tax code that targets private gas producers with a tax so high that they will significantly reduce production through the end of the year and beyond that is anyone’s guess. (Full disclosure: my firm, Pelicourt LLC, is the majority shareholder of Ukraine’s third-largest gas producer, Cub Energy, and I have advised the U.S. and Canadian governments on the potential harm the new tax will cause.)
Economically, the conflict in the east is a disaster for Ukraine, which has traditionally been a net exporter of thermal coal for power generation. Now it will have to increase imports of fuel to make up for the loss. But even then, the destruction of supply routes makes this challenging.
Not only have coal supply routes been destroyed in the conflict, but other critical infrastructure has taken a hit as well, threatening other industries.
Across the board, Ukraine’s industrial heartland is reeling from cut-off supply and shipping chains that threaten to destroy as much as 5 percent of Ukraine’s gross domestic product in the second half of this year.
In the meantime, observers can be forgiven their confusion over various measures Kiev has taken since the intensification of the conflict. Indeed, the signals coming out of Kiev have been mixed, at best.
While parliament has passed a bill allowing for sanctionsagainst Russia, the state-run Naftogaz leadership has been quick to point out that we probably shouldn’t expect sanctions against Russian gas giant Gazprom, and the new bill doesn’t implement sanctions of any kind—it simply makes it legal to slap sanctions on Russian individuals should Kiev decide to do so. Another paper tiger.
Parliament has also adopted a bill approving the joint-venture lease of Ukraine’s gas-transit facilities with Western firms.
At the same time, however, Kiev passed a new amendment to the tax code that doubles taxes for private gas producers and promises to keep Western investors as far away from Ukraine as they can get.
Each move is designed to negate the other. The economy is being destroyed, yet Kiev is itself destroying any chance of bringing in Western investment to prop it up. Western firms are invited to invest in Ukraine, while at the same time Ukraine makes a mockery of transparency and ensures that the investment climate is suddenly even less attractive than it was two weeks ago. Lip service is paid to developing more resources to build energy independence, but a new tax doubles costs for private producers who will stop producing and pick up stakes.  
It’s hard not to conclude that Energy Minister Yuriy Prodan is working hard to discourage new investment in the energy sector.


end

Another important read

(courtesy Dr Paul Craig Roberts)


In The West Respect for Truth No Longer Exists — Paul Craig Roberts

August 17, 2014
In The West Respect for Truth No Longer Exists

Paul Craig Roberts


The Western media have proved for all to see that the Western media comprises either a collection of ignorant and incompetent fools or a whorehouse that sells war for money.
The Western media fell in step with Washington and blamed the downed Malaysian airliner on Russia. No evidence was provided. In its place the media used constant repetition. Washington withheld the evidence that proved that Kiev was responsible. The media’s purpose was not to tell the truth, but to demonize Russia.
Now we have the media story of the armored Russian column that allegedly crossed into Ukraine and was destroyed by Ukraine’s rag-tag forces that ISIS would eliminate in a few minutes. British reporters fabricated this story or were handed it by a CIA operative working to build a war narrative. The disreputable BBC hyped the story without investigating. The German media, including Die Welt, blared the story throughout Germany without concern at the absence of any evidence. Reuters news agency, also with no investigation, spread the story. Readers tell me that CNN has been broadcasting the fake story 24/7. Although I cannot stand to watch it, I suspect Fox "news" has also been riding this lame horse hard. Readers tell me that my former newspaper, The Wall Street Journal, which has fallen so low as to be unreadable, also spread the false story. I hope they are wrong. One hates to see the complete despoliation of one’s former habitat.
The media story is preposterous for a number of reasons that should be obvious to a normal person.
The first reason is that the Russian government has made it completely clear that its purpose is to de-escalate the situation. When other former Russian territories that are part of present day Ukraine followed Crimea, voted their independence and requested reunification with Russia, President Putin refused. To underline his de-escalation, President Putin asked the Russian Duma to rescind his authority to intervene militarily in Ukraine in behalf of the former Russian provinces. As the Russian government, unlike Washington or EU governments, stresses legality and the rule of law, Russian military forces would not be sent into Ukraine prior to the Duma renewing Putin’s authority so to do.
The second reason the story is obviously false is that if the Russian government decides to invade Ukraine, Russia would not send in one small armored group unprotected by air cover or other forces. If Russia invades Ukraine, it will be with a force capable of rolling up the rag-tag Ukrainian forces, most of which are semi-private militias organized by nazis. The "war" would last a few hours, after which Ukraine would be in Russia’s hands where it resided for hundreds of years prior to the dissolution of the Soviet Union and Washington’s successful efforts in 1991 to take advantage of Russian weakness to break apart the constituent provinces of Russia herself.
The third reason that the story is obviously false is that not a single Western news organization hyping the story has presented a shred of evidence in its behalf.
What we witness in this fabricated story is the total lack of integrity in the entirety of
the Western media.
A story totally devoid of any evidence to support it has been broadcast world wide. The White House has issued a statement saying that it cannot confirm the story, but nevertheless the White House continues to issue accusations against Russia for which the White House can supply no evidence. Consequently, Western repetition of bald-faced lies has become truth for huge numbers of peoples. As I have emphasized in my columns, these Western lies are dangerous, because they provoke war.
The same group in Washington and the same Western "media" are telling the same kind of lies that were used to justify Washington’s wars in Iraq (weapons of mass destruction), Afghanistan (Taliban = al Qaeda), Syria (use of chemical weapons), Libya (an assortment of ridiculous charges), and the ongoing US military murders in Pakistan, Yemen, and Somalia.
The city upon the hill, the light unto the world, the home of the exceptional, indispensable people is the home of Satan’s lies where truth is prohibited and war is the end game.

Update: After pretending that the Russian humanitarian truck convoy contained a hidden invasion force, the stooge Kiev government was forced by facts on the ground to officially acknowledge that the trucks only contained aid for those that the Kiev stooge government has been bombing and attacking with artillery.

 http://rt.com/news/180844-ukraine-recognizes-russia-humanitarian-aid/

Putin's next target for USA sanctions:  Jack Daniel's:

(courtesy zero hedge)



Putin Considers Banning Jack Daniel's

Tyler Durden's picture




 
We knew the blowback from western sanctions against Russia would get serious - and Europe is already finding that out the hard way - but Vladmimir Putin appears to have gone 'cruel-and-unusual' in his latest step. AsITAR-TASS reports, Russian consumer-protection agency Rospotrebnadzor will decide in next few days whether toseize Jack Daniel’s Tennessee Whiskey and Honey Liqueur after 'reportedly' finding "suspicious" chemicals in batch of flavored whiskey on sale in Sverdlovsk stores. Luckily Jack Lew has told us this will not impact the US economy (unless of course, you are Jack Daniels).

A regional branch of Russia's state food safety watchdog found "chemical substances not common to whiskey" in Jack Daniel's Tennessee Honey Liqueur, an agency spokesperson told the ITAR-Tass news agency late last week.

The agency also had issues with the honey-flavored drink's more common sibling, Jack Daniel's Tennessee Whiskey.

Under Russian law, alcohol packaging should include a list of ingredients written in Russian, the location where it was brewed, and the length of the distilling process — all of which Jack Daniel's lacks, the spokeswoman said.

Responding to suspicions that the whiskey in question may have been fake — state statistics indicate 9.9 million liters of fake whiskey may have been sold in Russia in 2013 — a spokesman for the region's customs service defended the results.

"According to our information, the alcohol products on the Sverdlovsk region market are original," the spokesman said, adding that no imports of counterfeit U.S. alcohol to the region have been recorded for at least a year and a half.

The regional authorities are continuing their inspection and plan to confiscate the Jack Daniel's whisky currently in circulation, the food safety watchdog's spokeswoman said.

Earlier this month, imports of Kentucky Gentleman bourbon, another popular U.S. alcohol brand, were suspended by Russia's consumer protection watchdog. The agency said that it had discovered phthalates — organic chemicals — in the bourbon.
*  *  *


end

Due to the bombs falling on the ISIS fighters, these guys are getting angry and they have quite a few cells in the uSA:

(courtesy zero hedge)




ISIS Gets Angrier At America: "We Will Drown All Of You In Blood"

Tyler Durden's picture





Over the past month ISIS has been getting angrier (""God Willing, We Will Raise The Flag Of Allah In The White House" - A Deeper Look Inside ISIS") and angrier ("ISIS Issues Threat To White House; Secret Service Taking "Appropriate Steps") until today it released a video in which it warned the United States it will attack Americans "in any place" if continuing US raids hit its militants. The video, released by Reuters, which shows a photograph of an American who was beheaded during the U.S. occupation of Iraq, featured a statement which said in English "we will drown all of you in blood".
But while we get the anger of the Islamic State, be it real or staged, now that the US has allegedly retaken the Mosul dam, one wonders how a terrorist organization with over half a billion dollars in funding, a state of the art "made in the US" weapons arsenal, and glossy year-end profit & loss reports, can't afford to spend a few dollars on the production quality of its propaganda videos, especially if as the rumors suggest not one but several key "developed world" intelligence outlets are pulling the ISIS strings.

(For video see zero hedge)

end


This is awful:

I will not show the clip as it is too gruesome!!

(courtesy zero hedge)




ISIS Beheads Captured American Journalist, Threatens To Kill Another

Tyler Durden's picture




 
An American journalist, James Foley who was previously held captive by pro-Gaddafi forces for six weeks in Libya, was captured again in 2012 in Syria by - at the time 'unidentified' gunmen - which we now know was ISIS. James Foley - a freelance reporter from Boston - was kidnapped Thanksgiving Day 2012. We now know the sad ending of this young man's life. In the following shocking clip just released from ISIS, Foley explains - at the point of a blade - "I call on my friends, family members and loved ones to rise up against my real killers, the U.S. government" - and is then gruesomely beheaded. In the last few minutes, the captor shows another poor soul.
James Foley in 2012

Foley's monologue, as delivered under duress:
I call on my friends, family, and loved ones to rise up against my real killers, the US government. For what will happen to me is only a result of their complacency and criminality.

My message to my beloved parents, save me some dignity, and don't accept some meagre compensation, for my death, from the same people who effectively hit the last nail in my coffin with their recent aerial campaign in Iraq.

I call on my brother John, who is a member of the US air force. Think about what you are doing, think about the lives you destroy, including those of your own family. I call on you John, think about who made the decision to bomb Iraq recently and kill those people, whoever they may have been. Think John, who did they really kill? And did they think about me, you, our family when they made that decision?

I died that day John, when your colleagues dropped that bomb on those people they signed my death certificate. I wish I had more time. I wish I could have the hope of freedom and seeing my family once again. But that ship has sailed. I guess all in all I wish I wasn't American.
And at the very end, ISIS threatens to kill another journalist, Steven Sotloff


end




The cease fire between Israel and Hamas has ended with 3 rockets landing in Israel.
Israel retaliated:

(courtesy zero hedge)




Cease-Fire Violated: Israeli Military Says 3 Rockets Fired From Gaza

Tyler Durden's picture




 
Well that didn't last long...
  • *ISRAEL ARMY SAYS 3 ROCKETS WERE FIRED FROM GAZA
  • *ISRAEL ARMY SAYS ROCKETS LANDED IN OPEN AREAS, NO INJURIES
The Israeli military has declared the cease-fire broken. So this is the escalation that will enable a pent-up de-escalation buying opportunity?

As Reuters reports,
Three rockets fired from the Gaza Strip struck southern Israel on Tuesday, the Israeli military said, hours before a truce with Palestinian militant groups was set to expire.

A military spokeswoman said the rockets landed in open areas near the city of Beersheba and there were no reports of casualties. Reuters witnesses in Gaza City said they heard the sound of rockets being launched from the Palestinian enclave
BREAKING: Israeli military says a number of rockets have been fired from Gaza Strip, breaking cease-fire.
BREAKING: Moments ago, 3 rockets fired from Gaza hit Be'er Sheva and Netivot. Terrorists have violated the ceasefire




end 




We have a new area of concern in Pakistan where rioting is occuring.  The opposition leader Khan is claiming election fraud against him.  He is advocating elimination of taxes.  That will get the citizens riled up

(courtesy zero hedge)




Meanwhile In Pakistan

Tyler Durden's picture




 
With all the other geopolitical war/conflict/droning hot spots around the world, one has so far managed to fly under the radar for the past few weeks, yet one which has the potential to generate a substantial disturbance in the central-planning farce: Pakistan.
Pakistan's opposition-leader (and cricket legend) Imran Khan has asked his followers surround the nation's parliament building, calling for a Tahrir-Square-like protest to oust Prime Minister Nawaz Sharif. While political instability is a hallmark of Pakistan's coup-prone government, Khan's concerns at the demise of law-and-order in the nation along with a belief that May 2013's election was "stolen" through conspiracies to rig the results, have led him to demand his followers stop paying taxes and utility bills.
The populist politician has a large following as anti-government protests rise against Pakistan's fragile democracy. Local media reports up to 20,000 in the crowd set to enter Islamabad's "red Zone" and government is calling on the military to protect them.
Pakistan’s last election brought Prime Minister Nawaz Sharif to power with a sweeping mandate. That was supposed to consolidate the democratic process for the country. This was the first time one civilian government had passed power onto another democratically elected government. The oft-repeated claim was that the hangover from past military rule had burdened civil-society just enough to prevent a regression. Most people today would share that sentiment, however reluctantly.

That reluctant strain has only found more space to ruminate in the past three weeks, as the central government ties itself up in knots of mismanagement, following an almost ritualistic script from the past. There are several threads to this story that are all intersecting at the wrong time for the Sharif-led Pakistan Muslim League-Nawaz (PML-N) government.

...

Pakistan’s civilian government, led by the Pakistan Muslim League under Nawaz Sharif, is facing its biggest challenge since coming to power this week. Thousands of Pakistani protesters took to the streets of Islamabad, led by Pakistan Tehreek-e-Insaaf’s (PTI) Imran Khan and cleric Tahur ul-Qadri. The protesters are demanding that Nawaz Sharif’s government step down. Imran Khan threatened the independence day protests in advance, prompting the Pakistani government to move the Pakistani military into Islamabad to bolster security ahead of the occasion. So far, the government insists that its response has been non-violent. A government statement rebuffs claims from PTI that protesters had been fired upon: “There were absolutely no gunshots fired at his rally and such PTI-driven sensationalism is unfortunate.” The PTI describes its march on Islamabad as an “independence march.”
And there are two main threads to the current tension...first, fears of violence... Pakistan has been facing the worst ever law and order situation for some years with dozens of suicide bombings and killings taking place every month.
Two months ago, following an attack on the Jinnah International Airport in Karachi that left 30 dead, the military launched a major offensive — dubbed Zarb-e-Azaab, or “Sharp Strike” – against militants in North Waziristan. Though details on the progress of the operation are murky, what is clear is the displacement of over a million people with no place to reside besides poorly resourced government shelters and camps. Pakistan’s past patterns of migration would suggest that many of these internally displaced people (IDPs) will find their way to urban centers such as Karachi, which is already grappling with conflict between competing ethnic groups.The inadvertent consequences of this operation will inevitably produce greater unrest in Pakistan’s financial capital, which is already distraught with problems of gang violence and political turmoil.
The second line running through this narrative is the story of Imran Khan, chairman of the Pakistan-Tehrik-i-Insaf (PTI), who claims that his third place finish in the last election was due to electoral fraud. Khan’s allegations of election rigging however, have no basis: of the 58 petitions filed by his party members requesting an audit of various constituencies, 70 percent have been decided, with not one in favor of PTI. Secondly, Khan’s party, which formed the provincial government in Khyber Pakhtunkhwa, continues to struggle with governance, having achieved little during its term despite riding high into office on a wave of populism. Having failed on both accounts,Khan has found a path by playing opposition politics through his “Million Man Freedom March,” with the goal of wringing a mid-term election from the central government so that seats can be reallocated on the basis of those results.Until this demand is met, Khan vows to remain encamped in the capital of Islamabad.
But now things are escalating...
  • *KHAN CALLS FOR TAHRIR SQUARE-LIKE PROTEST TO OUST NAWAZ SHARIF
  • *KHAN CALLS ON SUPPORTERS TO SURROUND THE PARLIAMENT BUILDING
  • *PAKISTAN ARMY SAYS TROOPS TO DEPLOY IN ISLAMABAD `RED ZONE'
Cricketer-turned-politician Imran Khan called for widespread civil disobedience in Pakistan, urging supporters to stop paying taxes and utility bills in a bid to oust the government of Prime Minister Nawaz Sharif.


The populist politician also raised the stakes. In a speech following a third day of protests in Islamabad, he warned that after two more days he would no longer be able to stop his supporters from storming the prime minister's house.

"We have to decide what to do with Nawaz Sharif, because he evades all laws, and he rigs the elections," Mr. Khan told a crowd of thousands. "We can't let this unjust regime continue."

The antigovernment protests have underscored the fragility of Pakistan's democracy, reviving fears of intervention from the country's coup-prone army.

...

In a speech that he described as the most important speech of his life, Mr. Khan said no taxes, including sales tax, and no electricity bills should be paid to a "fraudulent" government. Mr. Khan, who once campaigned on a "rule of law" platform, previously promoted the payment of taxes. Pakistan's low tax-collection rate and an inability to get consumers to pay for their electricity are among the country's most urgent economic problems.

Mr. Khan also said that, after two more days, he would no longer be able to keep his agreement not to enter Islamabad's so-called Red Zone, an area that houses the prime minister's house and office, Parliament, government ministries, the Supreme Court and embassies, including the U.S. Embassy.

...

The crowd cheered loudest at the prospect of pushing beyond the barricades. Some in the audience were carrying gas masks and goggles—in preparation, they said, for tear gas.
And so, here we are.. it begins...
  • *KHAN BEINGS MARCH TOWARD PAKISTAN PARLIAMENT HOUSE IN ISLAMABAD
The government said Saturday that it haddeployed 30,000 security forces to safeguard the march and Islamabad's sensitive areas, in one of the biggest peacetime operations seen in Pakistan. Mr. Khan himself in his speech acknowledged that any attempt to reach the Red Zone would involve bloodshed and it could draw in the army.


end




Your Ebola update:

the 17 Liberian escapees have been found and quarantined.  However 2 Austrian cases have now been confirmed as positive:

(courtesy zero hedge)


Cameroon Blocks All Nigeria Borders As Ebola Cases Rise, 17 Liberian Escapees Recovered

Tyler Durden's picture




 
On the bright side, Nigeria claims it is "cautiously optimistic" about the spread of Ebola in Lagos; however, 3 more cases reported and the fact that Cameroon has decided to block all borders with Nigeria because "it is better to act preventively rather than have to heal" suggests things are anything but under control. The 17 quarantined Ebola-symptomatic patients that escaped from a Liberia clininc have been found and put back into quarantine in another clinic. The WHO reports the rate of cases and deaths are accelerating further with 1,229 deaths and 2,240 reported cases with Austria the most recent nation to get a scare as APA reports two cases found.

In Lagos, it was a case of mixed fortunes for the nation, yesterday, in the management of the Ebola Virus Disease..
.
Three fresh cases were discovered, while four of those earlier admitted at the isolation centre in Lagos were discharged.

"What we have now is that, there are four people dead, including the index (Mr. Patrick Sawyer). We have eight in the isolation ward
Cameroon blocks borders to Nigeria...
Cameroon has closed all its land, sea and air borders with Nigeria in a move to help prevent the spread of the Ebola virus, the government spokesman told AFP today.

"All borders (land, sea and air) between Cameroon and Nigeria are closed. Our thinking is that it is better to act preventively rather than have to heal" later those who may fall ill, said Issa Tchiroma Bakary, who is Cameroon's communications minister.

No cases of Ebola have been recorded so far in Cameroon which shares a nearly 2,000-kilometre-long border with Nigeria, where the virus has claimed four lives with about a dozen people infected.
A group of suspected Ebola patients who escaped a quarantine centre in Liberia have been found and put in another clinic.

The 17 people reportedly fled a facility in Monrovia on Saturday after protesters broke down the doors and looted the building, sparking fears that contaminated items would spread the deadly disease further.

Lewis Brown, Liberia’s information minister, said all the patients have since been accounted for and transferred to the JFK Ebola specialist treatment centre.
And Austria has 2 Ebola cases...
  • *AUSTRIAN PROVINCE SUSPECTS EBOLA IN TWO CASES, APA REPORTS
Two men who arrived in Austria last week from Nigeria have been hospitalised on suspicion of carrying the Ebola disease, a regional Austrian governor said today.

Blood samples were sent to a laboratory in Germany with results expected later today, Josef Puehringer, governor of Upper Austria province said.

The two men were hospitalised in Voecklabruck after developing a fever following their return from Lagos and were currently being held in quarantine, Puehringer said.

Authorities were also trying to locate anyone the pair may have been in contact with in case further action was needed, he said.
As WHO reports...
World Health Organisation (WHO) figures show 1,229 people have died among the 2,240 reported cases in Guinea, Liberia, Nigeria and Sierra Leone.

The latest numbers include 84 additional deaths from 113 new cases reported between Thursday and Saturday.
The UN World Food Programme is preparing to deliver food to 1 million people over the next three months.
“I think now there is a high vigilance in all countries,” Fadela Chaib, a spokeswoman for WHO, told reporters in Geneva. “I can't remember the last time we fed 1 million people in a quarantine situation.”
*  *  *
But apart from that, it's all under control

end

And now your major data points for today:



Portuguese 10 year bond yield:  3.49% par  in basis points  from Monday night.
(Portugal imploding)




Your closing Portuguese 10 year bond yield Tuesday night down 8 in basis points on the day 
(economy imploding)








Portuguese 10 year bond yield:  3.41%  





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







 yield .50%  (Japan imploding)




Japanese 10 year bond yield:  .50% 





And now for your closing Japanese 10 year bond yield from NY/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:  1.3348  down .0012
USA/JAPAN YEN  102.64   up   .050
GBP/USA  1.6650  down .0072
USA/CAN  1.0896 up .0008  


This morning the Euro is down,  trading now just below at the 1.34 level at 1.3348.  The yen is down and trading now just above the all important  102 cross. It closed in Japan down 5 in basis points at 102.47 yen to the dollar  (dollar up).  The pound weakened quite  a bit  as it now trades well below the 1.67 level  to 1.6650.  The Canadian dollar is down this morning with its cross at 1.0896 to the USA dollar.




 Early Tuesday morning USA 10 year bond yield:  2.37% down 2 in basis point  from Monday night/   (USA economy not doing so well with this low yield)


USA dollar Index early Tuesday morning: 81.69  up 11 cents from Monday's close



end





The NIKKEI:  Tuesday morning: up 127 points or .83%

Trading from Europe and Asia:

1/ Europe, all in the green.

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

Gold early morning trading:  $1300.50

silver:$ 19.62






 

end





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



Spanish 10 year bond yield:  2.43%  
  



 Your  Tuesday closing Italian 10 year bond yield: down 3 in basis points and trading 17 in basis points above Spain./ominous!!!



Italian 10 year bond yield;  2.60% 


end



 IMPORTANT CLOSES FOR TODAY

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

Euro/USA:  1.3319 down .0041
USA/Japan:  102.88 up .320
Great Britain/USA:  1.6615 down .0107
USA/Canada:  1.0942 up  .0054



The euro fell badly in value during this afternoon's  session, and it was down on the day , closing well below  the 1.34 level to 1.3319.  The yen was also down badly during the afternoon session, and it lost 32 basis point on the day closing above   the magical support 102 level to 102.88 (dollar down). A breach below the 102 usually sends the Dow and many bourses southbound as many key on this cross and as well if breached many of the yen carry traders must unwind their trades.  The British pound fell apart  during the afternoon session and was also down badly for the day as it closed at 1.6615. The Canadian dollar was also down  during the afternoon session, and it was down on the day closing at 1.0942. 


Your closing USA dollar index:




81.57  up 14 cents on the day  


Your closing 10 year USA bond yield up 1 in basis points on

the day. 



YIELD TONIGHT:



USA 10 yr Bond Yield:  2.40%.  

  

Closing bourses figures for  Tuesday: 






i) England FTSE up 38.06 or 0.56%


ii) Paris/CAC up 23.80 or 0.56%


 iii) German DAX: up 88.95 or 0.96%
  
iv) Spanish ibex up 33.10 or 0.32%

v) Italian bourse (MIB) up 4.47 or .02%  (Italy is now in recession)


and the Dow up 80.85  points or 0.48 %

Nasdaq  up 19.20 or  0.43% 


Oil close:  WTI  94.92/Brent: 101.54


end




The Big USA stories:



Today's summary of trading from NY

(courtesy zero hedge)




Volume Collapse Sparks 5th Day In A Row Of Nasdaq Gains As Oil Plunges

Tyler Durden's picture




 
S&P futures traded the lowest volume of the year today (for a non-holiday trading day) and volume has slid consistently lower as this rally of the last 8 days. The S&P outperformed today (up over 0.5%) as yesterday's oil-is-falling-so-buy-Trannies meme reversed into oil-is-falling-so-sell-Trannies which ended the day almost unchanged.The Nasdaq made new 14-year highs, up 5 days in a row. Treasury yields dropped notably early on then surged higher as US stocks opened (30Y +8bps on the week). TheUSD index also surged today (up 0.55% on the week) to new 11-month highs as EUR and CHF weakened notably. Commodities in general were clubbed like baby seals with copper, silver, and WTI hammered (but not Brent) after the inflation/housing data leaving oil under $95 - its lowest in 7 months. Gold fell much more modestly (but ended below $1300). AAPL closes at all-time high.VIX and HY Credit diverge notably from stocks after Europe closed.


Volume has collapsed as stocks rallied...

Once again Europe's close stalled the rally...

As geopolitics means absolutely nothing...

VIX diverged notably from stocks after Europe closed...

and so did credit... so if - as CNBC suggest - that professionals are buying what retail is selling - then who the fuck is buying massive protection of HY credit - and why?

Treasury yields dumped and pumped... most of the damage was done between the US open and EU close (not on the macro data release)

FX markets were a one way street as USD demand surged... biggest USD rise in 3 months today

everything cracked when the data hit but oil and silver worst...

WTI was hammered but not Brent...


Charts: Bloomberg
Bonus Chart: AAPl closed at record high - just shy of all-time intrday high...

end


The race for rental properties is on;

(courtesy zero hedge)





Housing Permits, Starts Surge Driven By Renewed Rental Housing Scramble

Tyler Durden's picture




 
After June's very disappointing housing starts and permits numbers, which plunged to 893K and 963K respectively well below consensus expectations, it was time for the Department of HUD to show how it's done, and moments ago the July housing starts and permits data literally blew away Wall Street expectations, as Starts soared from an upward revised 945K to 1093K, the highest print since November 2013, while permits surged from an also upward revised 973K to 1052K, smashing expectations of 1000K and the biggest beat since October.
Starts:
And Permits:

So is this the housing recovery everyone's been waiting for? Sadly, no, because one glance at the internals reveals that virtually all of the surge higher was on the back of multi-family housing units. Specifically, in permits, virtually all of the rise was due to multi-family, aka rental, unit construction, which soared by 73K, from 309K to 382K, a 24% increase, while single family, residential, units were up by a tiny 6K, or less than 1%.

Start was more of the same, because while single-family units here did post a modest improvement, rising to 656K, if well below the 710K highs reached in November 2013, all of the action was again in multi-family units, which exploded higher by a whopping 33% in one month, from 318K to 423K. This just happens to be the highest print since Lehman and matches the other highest mult-fam housing record in the past decade from January 2006, when the same number of multi-family housing units was started.
Finally, considering just how volatile this series has become, don't be surprised if in September the July data is revised wildly lower consiering the wild margin of error, especially on the Starts side, where the "final" data point is within 11% of the presented number.

end

And now we turn our attention to another hot spot on the globe, St Louis:

(courtesy zero hedge)



Another Police Shooting In St. Louis, Just 3 Miles From Ferguson: "Suspect Dead At The Scene" - Live Feed

Tyler Durden's picture




 
St.Louis city police are investigating a fatal police shooting in St.Louis City - less than 3 miles from Ferguson - today at 1230pm. Residents heard at least 5 shots fired. The suspect approached the officers with a knife in an open-hand grip and screamed "shoot me, kill me now." One witness described it at 'suicide by cop'.


Another Police Shooting In St. Louis, Just 10 Miles From Ferguson: "Suspect Dead At The Scene" http://tinyurl.com/mq4ca4s

St. Louis city police officers shot and killed a man they say brandished a knife at them outside a market Tuesday afternoon.

The shooting was about 12:30 p.m., police said.

Witnesses said the man who was shot had been inside Six Stars Market at Riverview Boulevard near McLaran Avenue. He took items from the market and left, followed by a market employee, witnesses said.

When the market employee told the man he would have to pay for the items, the man started throwing the items on the street and sidewalk. St. Louis Alderman Dionne Flowers, who works at a nearby beauty shop, witnessed the encounter, according to St. Louis Police Chief Sam Dotson. She described the man as acting erratically and was grabbing at his waistband, Dotson said.

"The store owner and the alderwoman said the suspect was armed with a knife, acting erratically, pacing back and forth in the street, talking to himself," said Dotson, who spoke at the scene.

Employees at the market and the beauty shop called 911 and two police officers arrived, police said.

The officers ordered the man to get down, according to Dotson. The man, 23, became more agitated and walked toward them, reaching for his waistband. Witnesses told police the man was yelling "Shoot me, kill me now," during the encounter.

The officers drew their weapons and ordered the man to stop. He did stop, but then pulled out a knife and came at the officers with it held up high, Dotson said. They ordered him to stop and drop the knife. When he got within two or three feet of the officers, they fired, killing the man.

“This is a lethal range for a knife,” Dotson said.

The officers were not hurt, police said. They were put on administrative duty pending an investigation.

Initially, a crowd that had gathered at the shooting scene was peaceful, but when Dotson started speaking to reporters at the impromptu press conference, the crowd became rowdier and started chanting the now familiar, “Hands up, don't shoot,” a common refrain at Ferguson protests.

Several older residents in the area got between those shouting and the police line and tried to calm the crowd. The shouts subsided but escalated again when the press conference concluded, and Dotson appeared to be walking away.

Dotson went into the midst of the crowd and reiterated all of the details he had provided the press. Dotson's actions calmed the situation along with help from the residents, who yelled, “Listen up” and “Keep quiet,” when the crowd tried to interrupt.

Several in the crowd asked why police did not use tasers to bring down the subject. Dotson said police officers have the right to defend themselves when an agitated man is coming at them with a knife. Said the chief, “Officers have a reasonable expectation to go home at the end of their shift.”

end

\Without comment: Hertz

(courtesy zero hedge)





After 18% Rise & 8 Days Up In A Row, Hertz Withdraws 2014 Guidance & Crashes

Tyler Durden's picture




 
Presented with little comment... because if this doesn't wake people up to the unreality of the stock 'market', nothing will. Hertz has ripped higher 8 days in a row, surging over 18% in that period as analysts and talking heads piled on proclaiming how wonderful it is.. and then:
  • *HERTZ HAS DECIDED TO WITHDRAW 2014 FINANCIAL GUIDANCE
  • *HERTZ EXPECTS TO BE WELL BELOW LOW END OF 2014 GUIDANCE
Must be a one-off idiosyncratic issue right?

Nope - it's not idiosyncratic...
The Company now expects to be well below the low end of its 2014 guidance due to operational challenges in the rental car and equipment segments as well as the associated costs related to the accounting review previously disclosed.
These ongoing challenges include:
  • Record level, industry-wide OEM vehicle recall activity, which has constrained the Company's U.S. fleet available for rent;
  • Significantly higher-than-expected adjusted direct operating expense in U.S. rental car;
  • Issues and delays associated with the installation of its Enterprise Resource Planning (ERP) and counter systems, which have adversely impacted anticipated synergy capture flowing from the Dollar Thrifty acquisition; and
  • continued soft demand in the equipment rental business segment.
Due to the foregoing, as well as potential revisions related to the ongoing accounting review, the Company has decided to withdraw its 2014 financial guidance.
TheStreet Ratings team rates HERTZ GLOBAL HOLDINGS INC as a "buy" with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate HERTZ GLOBAL HOLDINGS INC (HTZ) a BUY.

This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover.

The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, good cash flow from operations, solid stock price performance and expanding profit margins.

We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."


end

Well that about does it for tonight

I will see you tomorrow night

Harvey.

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