Tuesday, July 22, 2014

July 22/1.5 tonne increase in GLD inventory/no change in silver inventory/Gold falls but silver remains constant/Venezuela manufacturing crumbles to zero/Argentina may have to default/

Gold closed down $7.60  at $1306.10 (comex to comex closing time ). Silver was unchanged at $20.97


In the access market tonight at 5:15 pm
gold: $1308.00
silver:  $20.97


GLD: a big gain of 1.5 tonnes of  gold inventory at the GLD (tonnage now 804.84) tonnes).

SLV : no change in  silver  inventory at the SLV .



Gold trading for the past 24 hours:  suppression due to options expiry later this week.

here is today's graph of gold's trading from midnight until 5: 30 pm est
the bankers are in control of the price of gold/silver until options expiry and probably until the end of the month.

We have two major hot points: Israel's invasion of Gaza to destroy tunnels and their rockets, and continuing stories on the downing of the Malaysian aircraft.


We have continuing articles on the downing of a commercial Malaysian aircraft over eastern Ukraine as to who was at fault..

and on  Israel's  ground invasion into Gaza with the mission to destroy all of the tunnels and rockets.

We have a great story on Venezuela's manufacturing sector coming to a complete halt.  Also Judge Greisa refused to listen to Argentina.  They have one week to pay defaulted bond holders.


Late today, in an extremely surprising move, Turkey stated that it was abandoning ties to the USA and will move closer to China and Russia.

We also have two huge commentaries from Bill Holter, that you do not want to miss.





We will discuss these and other stories 

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




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



First:  GOFO rates/




 All  GOFO rates are positive and thus we have no real backwardation. Some of the  months GOFO moved closer to the positive needle (the earlier months) with the 3 month GOFO remaining constant and the 1 yr moving towards the negative. It looks to me like the Indian gold swap with the B. of E is entering the market as leases.

 London good delivery bars are still quite scarce. 


July 22 2014


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

+.1020000%        +.112000%         +.11800%         +.1500%    +  .172000%


July 21.2014:


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

+.09600%         +.108000%         +.118000%             +.14800%       +.174000%


end





Let us now head over to the comex and assess trading over there today,

Here are today's comex results:


 

The total gold comex open interest rose today by  contracts from 404,332  all the way up to 405,070 with gold up  $4.50 yesterday. The non active gold contract month of July had its OI fall by 30 contracts down to 14.  We had 25 notices filed upon yesterday, so we  lost 5 contracts or 500 oz standing for delivery in the July contract month. . The next big delivery month is August and here the OI fell by 8,954 contracts down to 137,000. We have a little over 1 week before first day notice. The estimated volume today was fair at 136,355 contractsThe confirmed volume  yesterday was poor at 105,768.  


The total silver Comex OI  fell slightly by 281 contracts as silver was up 13 cents on yesterday.  The total OI now rests tonight at 163,011 contracts. The silver contracts are in very strong hands and this will continue to bring nightmares to our bankers.  The July contract month saw it's OI rise by 5 contracts up to 188. We had 0 notices filed yesterday, so we gained 5 contract or 25,000 additional oz will stand for silver metal in July. The estimated volume today was fair  at 36,201.  The confirmed volume yesterday was poor at 23,844 contracts.


July 22.2014   data for the July delivery month.





Ounces
Withdrawals from Dealers Inventory in oz
 nil
Withdrawals from Customer Inventory in oz
nil
Deposits to the Dealer Inventory in oz
nil
Deposits to the Customer Inventory, in oz
 nil
No of oz served (contracts) today
0  (nil oz)
No of oz to be served (notices)
14  (1400 oz)
Total monthly oz gold served (contracts) so far this month
330   (33,000 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month
     nil oz
Total accumulative withdrawal of gold from the Customer inventory this month


 
  795.90    oz 


 we had no activity again inside the gold comex:

 we had  0 dealer deposits and 0 withdrawals from the dealer



Total dealer deposit: nil oz





total dealer withdrawals:  nil oz



We had 0  customer deposit today




total customer deposits: nil oz


we had 0 customer withdrawal:

Total customer withdrawals:  nil oz



Today we had 0   adjustments.




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

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

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

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



Today, 0 notices was issued from  JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to nil contracts  of which 0 notices were stopped (received) by JPMorgan dealer and 0  notices stopped by JPMorgan customer account.
  
The total dealer comex gold  remains  tonight  at  932,807.553 oz or 29.01 tonnes of gold . The total of all comex gold (dealer and customer) rests at 8,486,920.567 oz or  263.97 tonnes.

Tonight, we have dealer gold inventory for our  3 major bullion banks (Scotia, HSBC and JPMorgan) with its gold inventory  resting  tonight  at only 23.117 tonnes.


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

total: 23.117 tonnes

Brinks dealer account which did have  the lions share of the dealer gold saw its inventory level lower  tonight  to 165.375.569 oz or 5.143 tonnes.  Several months ago they had over 13 tonnes of gold at its registered or dealer account.



Today we  had 0 notices served upon our longs for nil  oz of gold.  In order to calculate what will be  standing for delivery in April, I take the number of contracts served so far this month at 330 x 100 oz  = 33,000 oz, and then we add the difference between the total OI standing for July (14) minus the amount of notices served upon already x 100 oz per contract (0) x 100 oz per contract 


Thus:  July standings:

330 notices served already x 100 oz  =  33,000 oz + (14 - 0) x 100  =  34,300 oz or 1.0668 tonnes.

we lost 500 oz of gold that will not stand for delivery in July.

In Summary:


i) the total dealer inventory of gold settles tonight  at a  level of 29.01 tonnes.

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

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


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



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

end




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




Silver:


Jul 22/2014:  July delivery month

  
  July silver:
  

Silver
Ounces
Withdrawals from Dealers Inventorynil
Withdrawals from Customer Inventory 542,498.08  oz (CNT,,Scotia )  
Deposits to the Dealer Inventory 619,247.34 oz (Brinks,CNT)
Deposits to the Customer Inventory 837,849.910 oz (Delaware)
No of oz served (contracts)12 contracts  (60,000 oz)
No of oz to be served (notices)188 contracts (940,000 oz)
Total monthly oz silver served (contracts)3063 contracts  (15,315,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month558,631.6 oz
Total accumulative withdrawal  of silver from the Customer inventory this month8,942,518.2 oz


Today, we  had good activity  inside the silver vaults 
 we had 2 dealer deposits and 0  dealer withdrawal.


i) Into Brinks:  599,911.64 oz
ii) Into CNT: 19,335.700 oz


total dealer deposit:  619,247.34 oz




total dealer withdrawal:  nil oz








We had 1 customer deposit:


i) Into Delaware:  837,849.910 oz


Total customer deposit: 837,849.910 oz




We had 2 customer withdrawals:

i) Out of Scotia:  514,515.58 oz
ii) Out of CNT: 982.50 oz



Total customer withdrawals: 542,498.08    oz


we had 1  adjustments:


i) Out of the CNT vault:  1,160,619.02 oz was adjusted out of the dealer account at CNT and this landed into the customer account at CNT


Registered (dealer) silver   : 58.148 million oz  
total of all silver:                 176.562 million oz


The CME reported that we had 12 notices filed for 60,000 oz today. To calculate what will stand for this  active delivery month of  July , I take the number of contracts served  for the entire  month at 3063  x 5,000 oz per contract  or 15,315,000 ounces to which I add the difference between the OI for the July contract month (188 contracts) minus the number of notices served today (12) x 5000 oz


Thus in summary,initial standings :  3063 contracts  x 5000 oz per contract (served so far) equals 15,315,000 oz +  ( 188 - 12 ) x 5,000  = total number of oz standing for July  ( 16,255,000   oz)

we gained 5,000 additional oz that will stand for July delivery. 



end






The two ETF's that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.
There is now evidence that the GLD and SLV are paper settling on the comex.


***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold.  I can visualize demand coming to the buyers side:

i) demand from paper gold shareholders
ii) demand from the bankers who then redeem for gold to send this gold onto China

vs no sellers of GLD paper.






 
And now the Gold inventory at the GLD:


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


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

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

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


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

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

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

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


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

July 9.2014: no change in gold inventory/800.28 tonnes



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


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

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


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




 Today, July 22.2014:

 we gained 1.5 tonnes of  gold inventory at the GLD today  resting tonight at 804.84 tonnes.  

  

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


As a reminder the total comex gold had inventories of around 11 million oz in 2011. Today the total comex gold remains at   8.486 million oz  (263.97 tonnes).


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

GLD gold:  804.84 tonnes.

end



And now for silver:


July 22.2014:  no change

KEY FACTS

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







July 21.2014: no change in inventory

KEY FACTS

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



July 18.2014: no change in inventory

KEY FACTS

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



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

KEY FACTS

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

July 16.2014: no change in silver inventory

KEY FACTS

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



July 15.2014: no change in silver inventory at the SLV

KEY FACTS

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


J


Today, July 22: no change in silver inventory at the SLV
end





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



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



Sprott and Central Fund of Canada. 




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




1. Central Fund of Canada: traded  at Negative 5.5% percent to NAV in usa funds and Negative 5.5%  to NAV for Cdn funds. July 22/2014)  

2. Sprott silver fund (PSLV): Premium to NAV falls to positive 2.39% NAV (July 22/2014) 
3. Sprott gold fund (PHYS): premium to NAV falls to negative -0.45% to NAV (July 22. /2014)

Note: Sprott silver trust back hugely into positive territory at 2.39%. 
Sprott physical gold trust is back in negative territory at  -0.45%.


Central fund of Canada's is still in jail.






end







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


1

(courtesy Mark OByrne)




Gaza And Ukraine: Pawns In A Deadly, Grotesque Geopolitical Game



Published in Market Update  Precious Metals  on 22 July 2014
By Mark O’Byrne



Today’s AM fix was USD 1,307.00, EUR 969.44 and GBP 765.76 per ounce.
Yesterday’s AM fix was USD 1,312.75, EUR 970.75 and GBP 768.72 per ounce.
Gold rose $2.40 or 0.18% on yesterday to $1,312.90/oz and silver climbed $0.09 or0.43% to $20.94/oz.
Gold prices are flat in London this morning after gold in Singapore fell from $1,312/oz to $1,305/oz. Futures trading volumes were low and 16% below the average for the past 100 days for this time of day.
Increased risk appetite as seen in rising stock prices countered haven demand but continuing tension in Iraq, Syria and Gaza saw oil prices tick higher again.
Silver for immediate delivery was 0.3% lower at $20.87/oz in London. Platinum lost 0.4% to $1,484.50/oz. Palladium fell 0.5% to $871.20/oz. It reached a 13-year high of $889.75 on July 17.
Weakness on equity markets helped gold prices rise slightly yesterday as heightened geopolitical tensions boosted the demand for haven assets. Unrest in the Middle East and Ukraine may have helped gold rebound 8.7% this year.
Data may show today that U.S. inflation held at the fastest pace since October 2012, putting pressure on the Federal Reserve to tighten monetary policy.
Rising interest rates will be bearish for stocks, bonds and property. They are likely to be bullish for gold.
This was seen clearly in the 1970s when rising interest rates were negative for stocks and bonds but positive for gold. It is towards the end of the interest rate tightening cycle that gold will be vulnerable to falling when depositors are again incentivised to save through positive real interest rates.
    
Relations between western powers and Russia have sunk to a new low after UK Prime Minister compared “Russia’s aggression” to that of “Nazi Germany.”
David Cameron accused Vladimir Putin of  “bluster and obfuscation” on last night and called on Europe to impose “hard-hitting sanctions” on Russia after the downing of Flight MH17.
More hawkish U.S. and European leaders pushed for harder sanctions on Russia and the prospect of economic war and currency wars  looms larger by the day.
There is a real sense of certain UK and U.S. leaders crossing the rubicon … this makes cyber,  economic, currency and actual war more likely.

Gaza And Ukraine: Pawns In A Deadly, Grotesque Geopolitical Game
by David McWilliams


Ukraine, Gaza, Iran, Isis, Syria and Turkey are all just pawns in a grotesque geopolitical game. All sides have their narratives. But in all cases, innocents must die.
When an airliner is blown out of the sky by people who want part of their country to break away, it’s time to actually take things seriously. This isn’t just some country. We are talking about Russia here and its southern border with Ukraine. The West (and that includes us) will now demand that the Russians disown their out-of-control compatriots in Ukraine. We will be treated to experts suggesting that this is evidence of the war mongering of the Russians, the instability of Putin and the need for Ukraine to move towards the EU with haste.
I am writing this morning from the Balkans and as a result, have been listening to different interpretations of what has been going on globally. Many of these views are more understanding of the Russian interpretation than the western one. Over the years, having spent some time in Russia, I have been aware of the very different ways the Russians and the West view the same events.
When seen from the Russian perspective, Ukraine is just another example of the gradual but definitive encroachment of the West into all things Russian. Russia and Ukraine are not different cultures. They are part of the same broader Russian/Slavic family. Our narrative is that the Russians are happy to keep Ukraine unstable and that what happened to the Malaysian airliner was the risk Russia was running by arming the separatists with sophisticated weapons.
Seen from the Russian side, it isn’t the Russians who are doing the destabilising but the Americans.
For them, the Americans arming and financially supporting an opposition in Ukraine would be like the Scottish Nationalists being financed by Russia. How do you think London and Washington would react to that? How do you think they’d react to the idea of a Russian puppet running an independent Scottish state from Edinburgh?
This is how close Ukraine is to Russia.
Now when you think about it in those terms, do you think Putin will back down and do what the West wants him to do?
Many in Russia believe that ultimately Ukraine is simply a pawn to keep Germany away from Russia. They believe that the only real alliance in Europe is one between an energy-rich Russia and an energy-impoverished Germany, between a technology and manufacturing-rich Germany and a manufacturing-poor Russia. These Russians regard an alliance with Germany as the logical geopolitical relationship for Europe in the first half of the 21st century. They regard the EU as a relic of the 20th century, necessary to protect western Europe under the umbrella of Nato both from itself and ultimately from the Red Army. With this threat gone, many Russian strategists argue that an alliance between Russia and Germany is going to happen.
Such a coalition would terrify America because it would mean that America would no longer be a player in Europe. This is why America heightens the fears of those who would have most to lose in such an alliance – such as Poland. Therefore Poland gets all the best American military equipment, gets the US investment and regular US pats on the back. By destabilising Ukraine, the Americans can heighten the regional angst of the Poles and also line the Germans up against the Russians in defence of a Ukrainian state, which is little more than an IMF supplicant propped up by IMF/EU loans to cover the day-to-day pilfering of its home grown kleptocracy.
Again when seen from Moscow, further south on the other side of the Black Sea, America is happy to allow its ally, prime minister Erdogan, in Turkey to tear up the Turkish constitution, jail opposition politicians and questioning journalists, and allow him to do the very thing that they scolded Putin for doing, staying in power by jumping from prime minister to president and back.
While Erdogan makes a mockery of Ataturk’s Turkish republican values, America sells Turkey the finest military hardware because Turkey promises to put manners on Russia’s ally in the region, Assad in Syria. Furthermore, the Turks and the Persians have hated each other for millenniums, so a strong Turkey keeps Russia’s other ally, Iran, in check.
America’s other ally in the region, Saudi Arabia, lends its support to al-Qaeda and its various Sunni offshoots such as Isis in Iraq, revealing that America is either very capable of playing both sides or is terribly out of its depth in the region. All the while, America’s biggest ally in the region, Israel, pulverises Gaza, but Gaza itself is held by Iran’s ally Hamas and thus is a pawn in Iran’s regional game.
Hamas were out of favour with Iran for not backing Assad in Syria at the beginning, but now with Assad securely in power after an unbelievable 150,000 people have been killed in Syria, Hamas has to cozy up to Iran again. The Hamas embrace of Iran was made more urgent by the eclipse of the Muslim Brotherhood, the Qatari-financed movement in Cairo, which is now on the run.
This grotesque geopolitical chessboard, where each conflict can be seen as a proxy war for something else is the kaleidoscope through which the world is seen from Moscow and Washington and indeed the other capitals of major world players from Beijing to London.
All sides have their narratives, allies and interests. All desperately want to remain in control and are happy to turn a blind eye to the atrocities committed by their allies. In all cases, innocents are killed.
So the Americans look the other way in Gaza, while the Russians discount the killings in Aleppo. The French get all hot and bothered about Ukraine while ignoring the fact that its own troops are up to their eyes in the civil war in Chad and southern Libya. Britain lectures Russia on intervention in Ukraine while ignoring the fact that their troops are in Afghanistan.
Maybe it’s because I am in the Balkans 100 years after Gavrilo Princip killed Franz Ferdinand and kicked off a global conflict, but the unstable alliances of 2014 look equally as fragile as they did in 1914.
Sometimes when you are living through historic times you don’t realise it, but last week’s events from Ukraine to Gaza and Iraq do have a momentous feel to them.

David McWilliams
Global Macro 360° offers actionable and affordable insight into what’s going in the global economy; insight that you can use to protect and grow your wealth.
David McWilliams is the author of Global Macro 360° which is his valuable daily guide to understanding the global economy, in order to invest in financial markets, thereby creating and preserving personal wealth.
GoldCore greatly value David’s daily insights and in partnership with David McWilliams, are offering you a one week free trial to Global Macro 360°. Plus, you will gain access to all the content on the Global Macro 360° website.
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end







Peter Hambro is a good guy and owner of Russian gold producer Petropavlocsk PLC.
This is what he has to say with the tampering of the London gold fix:


(courtesy Bloomberg/GATA)





Hambro 'Horrified' by Tampering of London Gold Fix
By Thomas Biesheuvel
Bloomberg News
Tuesday, July 22, 2014

LONDON -- Peter Hambro, chairman of gold producer Petropavlovsk Plc, said he was "horrified" by the manipulation of the London fix given its importance to the industry.
"When I read the reports on what people had been doing to it, I was horrified," Hambro said in an interview today. "It is something that is really important to people in the industry. It's something that we use in a big way as we deliver our gold. That's how we price."
Barclays Plc was fined $44 million earlier this year after a trader sought to influence the gold fix in 2012. The gold fixing takes place twice a day by phone and is used by mining companies to central banks to trade or value the metal.
The banks conducting the century-old London gold fixing and the London Gold Market Fixing Ltd., which runs the procedure, are seeking to revamp the process. Deutsche Bank's exit from the process this year as it scales back its commodities business left Societe Generale, Bank of Nova Scotia, HSBC Holdings, and Barclays to conduct fixings.
"To have something that we can rely on is vitally important," said Hambro, who previously traded bullion at Marc Rich Group and Mocatta & Goldsmid Ltd. "I look forward to its continuing existence."



-END-




 I wonder what gives on the story that Credit Suisse is exiting its commodities trading:






(courtesy Bloomberg/GATA)




Credit Suisse to Exit Commodities Trading After Biggest Loss Since 2008


Precious metals trading unit again an exception.....
From Bloomberg, Jul 22, 2014, 7:29:07 AM

Credit Suisse Group AG said it will abandon commodities trading as a $2.6 billion fine to settle a U.S. tax investigation pushed the Swiss bank to its biggest quarterly loss since 2008.
To read the entire article, go to http://bloom.bg/1lovTdI
Sent from the Bloomberg iPad application. Download the free application athttp://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8







James Turk talks about the markets with Eric King.

John Embry knocks Yellen's disinformation





(courtesy James Turk, John Embry/Kingworldnews/Eric King/GaTA)









Turk notes weakening 'flash crashes'; Embry knocks Yellen's disinformation

 Section: 
5:57p ET Monday, July 21, 2014
Dear Friend of GATA and Gold:
"Flash crashes" in gold and silver, the attacks of market-rigging central planners, are having less effect, GoldMoney founder and GATA consultant James Turk tells King World News today. "With both gold and silver -- as well as the mining stocks -- being so undervalued," Turk says, " the central planners can't keep downward pressure on the precious metals for days or even weeks like they used to."
Turk's interview is excerpted at the KWN blog here:
Meanwhile Sprott Asset Management's John Embry, also interviewed at KWN, disputes last week's statement to Congress by Federal Reserve Chairwoman Janet Yellen. "That is one of the most naive statements I've ever read," Embry says. "There is untruth in virtually every assumption. I think there is a much stronger probability that economic activity in the United States is already contracting. This means monetary policy is going to have to be aggressive rather than accommodative or the system is going to collapse."
Embry's interview is excerpted at KWN here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


end




As Bill Holter alerts us:




(courtesy Liam Halligan/UKTelegraph/GATA)

Liam Halligan: The dollar's 70-year dominance is coming to an end

 Section: 
By Liam Halligan
The Telegraph, London
Friday, July 19, 2014
In early July 1944, delegates from 44 countries gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire. A three-week summit took place, at which a new system was agreed to regulate the international monetary and financial order after the Second World War.
The US was already the world's commercial powerhouse, having eclipsed the British Empire several decades earlier. America was also on course to be among the victors of "Europe's conflict", even though its economy was largely unscathed by war. As such, Bretton Woods was US-dominated and produced a settlement largely on US terms.
Seventy years ago this week, that fateful summit ended. Its close marked the moment the dollar's unquestionable supremacy was secured. Since then, global commerce has been conducted largely in dollars and leading economies have held the greenback as their primary reserve currency.

The same system remains intact today, with the lion's share of commercial settlements worldwide still clearing the US banking system -- even if the parties involved have nothing to do with the States.
The dollar's hegemony continues to be cemented, meanwhile, by the operations of the International Monetary Fund and World Bank. Founded at Bretton Woods, they're both Washington based, of course, and controlled by America, despite some Francophone window-dressing.
The advantages this system bestows on the US are enormous. "Reserve currency status" generates huge demand for dollars from governments and companies around the world, as they're needed for reserves and trade. This has allowed successive American administrations to spend far more, year-in year-out, than is raised in tax and export revenue.
By the early Seventies, US economic dominance was so assured that even after President Nixon reneged on the dollar's previously unshakeable convertibility into gold, amounting to a massive default, dollar demand kept growing.
So America doesn't worry about balance of payments crises, as it can pay for imports in dollars the Federal Reserve can just print. And Washington keeps spending willy-nilly, as the world buys ever more Treasuries on the strength of regulatory imperative and the vast liquidity and size of the market for US sovereign debt.
It is this "exorbitant privilege" – as French statesman ValĂ©ry Giscard d'Estaing once sourly observed – that has been the bedrock of America's post-war hegemony. It is the status of the dollar, above all, that's allowed Washington to get its way, putting the financial squeeze on recalcitrant countries via the IMF while funding foreign wars. To understand politics and power it pays to follow the money. And for the past 70 years, the dollar has ruled the roost.
This won't change any time soon. Something just took place, though, which illustrates that dollar reserve currency status won't last forever and could be seriously diluted. Last week, seven decades on from Bretton Woods, the governments of Brazil, Russia, India and China led a conference in the Brazilian city of Fortaleza to mark the establishment of a new development bank that, whatever diplomatic niceties are put on it, is intent on competing with the IMF and World Bank.
It's long been obvious the BRICs are coming. The total annual output of these four economies has spiralled in recent years, to an astonishing $29.6  trillion (£17.3 trillion) last year on a PPP-basis adjusted for living costs. That's within spitting distance of the $34.2 trillion generated by the US and European Union combined.
America's GDP, incidentally, was $16.8 trillion on World Bank numbers, and China's was $16.2 trillion -- within a whisker of knocking the US off its perch. The balance of global economic power is on a knife-edge. Tomorrow is almost today.
Consider also that the BRICs collectively hold sway over 50 percent of global currency reserves, rising to almost three-quarters if you take the emerging markets as a whole. The G7 nations between them control only 20 percent -- and less than 8 percent if you exclude Japan.
Based on such balance sheets, we're now seeing institutional change. The new BRICs Development Bank, modelled on the IMF, will have a $100bn currency reserve available to lend around the world, giving distressed debtor nations an alternative to the "Washington consensus."
For a long time, the BRICs have been paying in to the IMF, yet been denied additional influence over what happens to the money. Belgium has more votes than Brazil, Canada more than China.
The institutions governing the global economy have failed to keep pace with reality. Modest reforms giving the large emerging markets more power, agreed with much fanfare in 2007 and again in 2010, have been stalled by Washington lawmakers. The BRICs have now called time, setting up their own, rival institution based in Shanghai.
The key to the dollar's future is petrocurrency status -- whether it's used for trading oil and other leading commodities. Here, too, change is afoot. China's voracious energy appetite and America's increased focus on domestic production mean the days of dollar-priced energy look numbered.
Beijing has struck numerous agreements with Brazil and India that bypass the dollar. China and Russia have also set up rouble-yuan swaps pushing America's currency out of the picture. But if Beijing and Moscow – the word's largest energy importer and producer respectively -- drop dollar energy pricing, America's reserve currency status could unravel.
That would undermine the US Treasury market and seriously complicate Washington's ability to finance its vast and still fast-growing $17.5  trillion of dollar-denominated debt.
In May, Beijing and Moscow signed a huge multi-decade gas supply contract, to sit alongside a similar oil deal agreed in 2009. No one knows what share of this energy trade will be on a yuan-rouble basis -- and the two governments aren't saying. This question, seemingly inane, is among the most important diplomatic issues of our time.
At the moment, although Russia's export partners do sometimes settle in roubles, most Sino-Russian trade is still in dollars. But the combination of this new gas deal, and western sanctions on Russia -- has seen Moscow and Beijing step up bilateral efforts to facilitate large-scale non-dollar settlement.
With western anti-Russia sanctions likely to be tightened again after the tragic shooting of a Malaysian passenger plane over Ukrainian airspace, Beijing's response will be closely scrutinised. I, for one, expect the Chinese to say little until it's clearly established who grounded the plane and why.
Although the dollar's reserve status won't end overnight, the global payments system is now moving inexorably towards that outcome. The US currency accounted for just 33 percent of all foreign exchange holdings in 2013, on IMF numbers, down from 55 percent in 2001.
Within a decade or so, a "reserve currency basket" may emerge, with central banks storing wealth in a mix of dollars, yuan, rupee, reals and roubles, as well as precious metals. Perhaps some kind of synthetic bundle of the world's leading currencies will be developed, with emphasis placed, after years of Western money-printing, on assets backed by commodities and other tangibles.
I also believe central banks may include cyber-currencies (such as bitcoin) in their reserves. If you think that's mad, consider that mankind has long sought scarcity -- be it with shells, stones or metallic elements -- to store wealth. Now the money-printing taboo has been broken by yet another generation, it makes sense to use complex computer algorithms to ensure that only a certain amount of a particular currency unit can ever exist.
The dollar's status is a big question. Judging the outcome is more akin to star-gazing than scientific economics. But the establishment of this BRIC Development bank, timed to coincide with the anniversary of Bretton Woods, is an audacious and significant move. The world's emerging giants now have thumbscrews on the West.

end







Late today, we get this shocker from Turkey.  A huge nail in the coffin of the uSA dollar
Remember that the USA has huge naval bases there and also the huge transportation of natural gas goes through Turkish pipelines.

Slowly but surely everybody is withdrawing its support of the uSA and its currency




(courtesy zero hedge)


Turkish PM Cuts Ties With US, Mulls De-Dollarization With Russia

Tyler Durden's picture





As Turkey's graft probe continues (which the Prime Minister believes is a conspiracy - fact or not - created by The West), AP reports that Recep Tayyip Erdogan has said heno longer holds "direct" telephone conversations with U.S. President Barack Obama, suggesting a rift between the leaders who were once close. What is perhaps even more concerning is Turkey's recent de-dollarization discussions with Russia to move to settlement in local currencies. It appears 'allies' are falling by the way-side quicker than many thought...

Turkey shuns Obama... (via AP)
Turkish Prime Minister Recep Tayyip Erdogan has said he no longer holds "direct" telephone conversations with U.S. President Barack Obama, suggesting a rift between the leaders who were once close.

In an interview with Turkey's ATV television late Monday, Erdogan said that "in the past, I used to call him directly. Because I was not able to get direct results on Syria, now our foreign ministers talk to each other."

Erdogan did not elaborate. But the Turkish leader is known to have been frustrated by U.S. reluctance for a military involvement in Syria to end the violence there.

Erdogan told ATV he speaks with Vice President Joe Biden to discuss Iraq.

In the past, Obama cast Turkey as a model democracy and the two would frequently talk by telephone.
Turkey prepares to De-Dollarize with local currency settlement with Russia... (via Google Translate)
In Sydney, the Minister of Economic Development of the Russian Federation Alexei Ulyukayev "on the margins" of the meeting of trade ministers of the "Group of Twenty" met with the Minister of Economy of the Republic of Turkey Nihat Zeybekchi.

In 2013, the volume of trade between the countries amounted to 32.7 billion dollars. Russia is the second (after the EU) among foreign trade partners of Turkey, and Turkey - the eighth largest trade partner of Russia.

As one of the measures to stimulate the development of trade and economic relations between Russia and Turkey, the Turkish side proposes to proceed in mutual national currencies. The question now being discussed at the site of the bilateral Working Group on banking and financial cooperation.

Minister of Economy of the Republic of Turkey Nihat Zeybekchi noted that the Turkish side is interested in building on the territory of Russian transport and logistics center for the provision of warehousing, customs clearance, loading and unloading, packing of goods, etc., which is connected with the sea ports, airports and railways and highways.

Discussion of all issues Ministers agreed to continue an ad hoc working group in late September in Istanbul.
*  *  *
Making friends and influencing people the world over...


end



Chris Powell on the new gold miner ETF sponsored by Eric Sprott.  The ETF is leaving out Barrick:

(courtesy Chris Powell/GATA)



New gold miner ETF avoids primary investment in Barrick

 Section: 
11:24p Monday, July 21, 2014
Dear Friend of GATA and Gold:
Looks like you can now buy a gold-mining stock exchange-traded fund without putting the biggest part of your money in Barrick Gold, the biggest gold hedger and enabler of gold price suppression, the company that 11 years ago, by virtue of its enormous hedging, claimed to be the agent of central banks in the gold market:
The new ETF is the Sprott Gold Miners ETF, which began trading last week. According to its announcement, the ETF is based on the Sprott Zacks Gold Miners Index and "uses a transparent, rules-based methodology designed to identify 25 gold stocks that historically have the highest beta to the spot price of gold, with each stock's weighting in the index adjusted based on its quarterly revenue growth and long-term debt to equity":
The ETF received favorable notice from the Wall Street Cheat Sheet, which noted that "each quarter the fund is re-weighted. This means that the fund is going to take profits on its outperformers and reallocate this capital to the underperformers. The Market Vectors Gold Miner ETF does no such thing. In fact, when the fund sees capital inflows, it pumps more money into the top performers because these are the companies that become the highest-weighted stocks in the fund."
The Wall Street Cheat Sheet commentary is here:
Of course GATA is no investment adviser, but nobody who wants a free and transparent market in the monetary metals can be enthusiastic about any investment that abets gold price suppression.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


end


(courtesy Peter Cooper/Arabian money)





Sell stocks and buy gold advises Dr Marc Faber

Posted on 22 July 2014 with 2 comments from readers
With the US stock market to GDP ratio at its highest since 2000 before the dot-com crash the original Dr. Doom Marc Faber is saying sell stocks and buy gold.
Anybody who has read his 2002 book ‘Tomorrow’s Gold’ knows that he has been right many times in the past, even if his call to sell stocks in 2011 proved well off target. ArabianMoney can remember first meeting him in 1999 when he was in a very similar situation, having shorted US stocks too early.
He was, of course, proven spectacularly right shortly afterwards in the dot-com crash. Here are his latest thoughts courtesy of Bloomberg TV…


end




We have another great article from Bill Holter, on the demise of the uSA dollar

(courtesy Bill Holter/Miles Franklin)

Passing the baton

The biggest news last week was that the BRICS bank has been formed and being funded.  Some may argue that the downing of the Malaysian airline flight was bigger but I don't think so.  From a money and banking standpoint, the formation of the BRICS bank is THE biggest news since either 1971 or 1973 when the U.S. defaulted off of the gold standard or when the Saudis stepped up to the plate for the petrodollar. 
  The formation of the BRICS bank is in direct competition with both the IMF and The World Bank.  Both of these are "U.S" controlled banks and the currency that they lend to "help" or "save" countries with are dollars.  During our lifetimes these two banks have been the lender of last resort for troubled banks, banking systems and sovereign countries.  Often the loans led to alleviating liquidity problems in the short term but then created bigger problems for borrowers in the long term.
  Stepping back to look at what has happened and "why" the BRICS decided to form this bank is an important exercise.  This will allow and facilitate trade between nations without using dollars.  This is important because of recent the recent "fine" paid by French bank PNB Paribas and the looming fines for both Commerzbank and DeutscheBank of Germany.  They transacted business for customers which broke U.S. sanction "rules" regarding Iran and Sudan.  These fines as I understand it were levied because the money transfers were in dollars.  Anyone even simple minded would understand that to avoid any future "fines", you just don't use dollars.  It is this simple and foreigners will now use less dollars because they don't have to use them and it is "safer" for them from a "risk" standpoint.
  The BRICS bank has been a long time coming and certainly not done in secret.  This news has been widely known by foreigners in real time.  It has been a different story for Americans.  Mainstream U.S. press has barely even whispered the news yet it is the most important event for at least a generation.  To put it in perspective, this is the nullification of Bretton Woods outright. 
  I think that it's important to understand that the action of forming a non dollar competitive bank could only have been done if "everyone" went along with it.  We have seen in the past what has happened when a country spoke of no longer using the dollar.  Their "ruler" was displaced and the country as in the case with Iraq was bombed back into the stone age.  This is now a simple case of all the schoolyard kids lining up against the bully and "saying" (not asking) "what are you going to do about it?".
  I have been very boisterous in my opinion that Saudi Arabia would be the final straw that breaks the back of the dollar.  They have had top level talks with both Russia and China with very little comment or "statement" after the meetings.  What was said?  What was decided?  My guess is that Saudi Arabia was "told" what was going to happen.  This is no different than a marriage that breaks up or even when "Mafioso" migrate from a weakening family to one that is strong and getting stronger.  Saudi Arabia will move to the East.
  If you recall the movie "Rollover" from 1981 you will remember the scene where Kris Kristofferson talks about the Arab's selling Treasuries and dollars.  Any announcement by the Saudis that they will accept currencies other than dollars will make "Rollover" come true ...exponentially!  I say "exponentially" because the system is now 35 years into the futures and at least $1 quadrillion more bloated with debt and derivatives.  The system will implode and "wealth", paper wealth will evaporate over night.  As is said in the movie, "$2,000 gold will be cheap by tomorrow morning", gold at the time if you remember was $400-$500. 
  Please understand the "what and why" of the BRICS bank.  The Chinese, Russians and the rest of the world know that the petrodollar system is on it's last legs.  The case can even be made that the rest of the world has "carried" the U.S. for a few rounds so that they could get their ducks in a row ahead of time.  The BRICS bank has been put into place because there has to be "something" to "start over with".  Prior to this bank being formed, were the Western banking system to implode the rest of the world had no alternative.  When I say "alternative" I am talking about no other clearing system and no place to "hide" so to speak.
  It is clear to me that the BRICS bank formation and the massive accumulation of gold over the last several years has gone hand in hand.  "The rest of the world" has known for some time that the dollar, the U.S. and the entire Western financial system was on shaky ground and had finite lives.  A plan to distance themselves from the inevitable was formed and has been carried out.  All that now remains in my opinion is for Saudi Arabia to defect from the U.S. and knock the last remaining leg out from under the dollar.
  My opinion as you already know is that within two weeks of a Saudi announcement, our world will change.  The purchasing power of the dollar will crash, this in turn will mean that more dollars will be needed to pay for foreign imported goods.  This will affect you directly when you "shop"... for anything.  The inflation which we have been exporting for all these years will wash back onto our shores.  The "baton" of world reserve currency issuance is being passed right before our eyes.  Actually I should reword this, the baton is being TAKEN from us because we have so badly abused the privilege.  Regards,  Bill Holter

end




 Bill talks about the MH 17 disaster and what is means to gold:


(courtesy Bill Holter/Miles Franklin)








Manufactured collision course with destiny.



 I thought about choosing a topic to write about today and decided that the downing of the Malaysia Airlines plane needs to be discussed because it is being thrown around like a political football.  Before beginning to write, I received an e-mail from my mentor in which he said "It is obvious that we are on a manufactured collision course with destiny" which I unfortunately think is 100% correct.  I will explain the quote later, first let's look at the tragic "political football".
  Zero Hedge has written several pieces on the airline missile strike, the latest missive is here http://www.zerohedge.com/news/2014-07-21/russia-says-has-photos-ukraine-deploying-buk-missiles-east-rader-proof-warplanes-mh1 .  Please read this because some very interesting points are brought forth.  In this, Russia claims to have photos of the Ukrainians deploying their BUK missiles in the eastern part of the country.  If this is true, what will happen to global sentiment towards the Ukraine and thus their sponsor the U.S.? 
  I have had several questions myself along the way where the answers could be very ugly to me (as an American).  I first wondered how we knew for sure who pulled the trigger on the missiles within minutes of the plane coming down.  I wondered whether the Russian separatists even had any missiles that could down a plane at 33,000 feet since shoulder mounted versions apparently don't have this type of range.  I also wondered how it is possible that "we" don't have radar tracks or photos of the missiles being launched as we have the technology and satellite ability to decipher whether you had a flour or rather corn tortilla with breakfast this morning. 
  There have been other alleged "oddities" so to speak such as President Putin's plane may have followed the same path as the Malaysian Airlines flight did less than 30 minutes later.  Also there have been reports that the Malaysian flight's path was diverted to go north of Donetsk and that possibly 2 Ukrainian fighters were close by or "marking" the flight.  These are all speculations and fall into the category of "conspiracy theory" until being proven conspiracy fact.           
  The West's press has whipped up anti Russian sentiment into a frenzy and Russia has responded by asking 10 very good, logical and pertinent questions of the West that may or may not be answered.  I guess the simplest question of all would be "why are any civilian flights routed here in the first place"?  In any case, we have to await answers from the Ukraine and U.S., hopefully they will not defy logic, be embarrassing or answered with a simple "because".
  Here is how I see it and I will lead toward the quote "It is obvious that we are on a manufactured collision course with destiny".  We, the U.S. are the ones desperately looking for some sort of military action ...somewhere.  We tried in Syria late last year and I'm afraid that this is what we are doing in the Ukraine.  As I see it, both China and Russia know and see this.  It is my opinion that it is known that the dollar and debt based system is doomed and cannot be reflated again.  Wars generally help "reflation" but this time I think it's different because there is no collateral left to reflate upon.  I think that those "running the show" are in need of something to point at so they can say "our policies were working and would have worked were it not for this war". 
  I know that my viewpoint may not be a popular one but I have come to these conclusions because current policy in the U.S. could not have come from or been formed by sane people with America's best interests at heart.  I believe that the U.S. had to be "gutted" so to speak if the "one world order" had any chance of succeeding.  The problem now is that China, Russia and the rest of the world are in the process of isolating the U.S. because of our radical policies, deeds and business practices.  I don't believe that they have any interest in a "one world order".  It is also my opinion that the rest of the world is very fearful of what the U.S. might do with our nuclear arsenal.  Excellent thought and reading on this topic can be read at Paul Craig Roberts website where he fears the same, the U.S. pushing the world into or even starting a nuclear war. 
  The above said, I believe that China, Russia et al have the ability to pull the plug on the U.S. any time that they'd like.  They are the creditors, we are the debtors.  They have a banking system and clearing facilities in place so that soon they will no longer "need" us.  They have set up markets, trade deals, swaps and credit lines all over the world.  It is my opinion that Russia and China would far rather let the West's financial system tip over and implode on its own rather than "pushing it".  I believe that they are very fearful of a world war and are doing what they can to stay refrained from starting anything but have been preparing for what is probably inevitable. 
  As I recently showed you, gold is coiled and ready to spring.  Whether the cause is global war, a financial collapse or any other number of combinations, gold is set to move higher.  Will it be market based or an "official" mark up?  It does not matter, what does matter is that the chart is saying that here and now (or VERY soon) gold is going to a much higher level.  Another way to look at chart is that something "very bad" is about to take place.  Take your pick what it is or where, the bottom line is that we as Americans have lived far beyond our means for as many years as I have been on Earth.  Payback is surely coming as it always and inevitably does, "payback" won't be pleasant.  By the way, "payback" could be defined as a "destiny" and it's looking like ours is being planned and playing out from both outside and within.  Regards,  Bill Holter

end


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




1. Stocks up for all Asian bourses   with the slightly lower yen values   to 101.50.

Nikkei up 128 points or .84%.  
3. Europe stocks all deeply in the green /Euro down/USA dollar index up   again at 80.74. Chinese bourse Shanghai up as  the yuan strengthens  in value  to 6.20300 per usa dollar/yuan. carry traders still very nervous.  Yen carry traders are still be unwinding their trades and are experiencing terrific pain and now we have the Chinese shadow banking sector collapsing!!  Home prices falling in half of Chinese cities.  The Chinese disappearance of collateral scandal goes systemic 

3b Japan 10 year yield at .54%/Japanese yen vs usa cross now at 101.50/
3c  Nikkei still above 14,000

3d  oil up in price ($104.60 WTI/$108.26Brent)


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

3h Gold at 1306.50 dollars


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


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




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



Stocks Desperate To Put Ukraine In Rearview Mirror But More Russian Sanctions Loom

Tyler Durden's picture




Following the overnight ramp in various JPY crosses (dragging equity futures higher, and the Nikkei up 0.8%) it is as if the market is desperate to put all of last week's geopolitical events in the rearview mirror, and while yesterday there were no economic events of note, today's CPI and existing home prints should provide at least some distraction from the relentless barrage of one-line updates on Ukraine and Gaza. Still, that is precisely where the biggest risk remains, with an emphasis on the possibility of more Russian sanctions, this time by Europe.
Today will likely see more headlines on the situation as EU foreign ministers meet as well as the Russian Security Council. Watch out for headlines from all angles. Perhaps the most market-friendly outcome is that EU leaders talk very tough but do not agree on intensifying sanctions against Russia. Reuters thinks that despite all the tough talk, the EU is unlikely to punish Russia beyond the speeding up of the imposition of already agreed individual sanctions. A summit of EU leaders on July 16, the day before the airliner was downed, agreed the EU would punish Russian companies that help to destabilize Ukraine. According to Reuters, diplomats said Tuesday's meeting in Brussels was still not expected to go much further than agreeing on the people and possibly companies to be hit with asset freezes under the framework agreed last week. Previously, they had only said they would decide on the list by the end of July. Citing unnamed diplomats, Reuters said moving towards more sweeping economic sanctions could only be decided by heads of government. The next scheduled summit of EU leaders is on August 30, though EU members could call for another emergency meeting.
An unknown element today will be the Dutch, who have previously advocated caution in imposing sanctions against Russia, but are likely going to be a large swing factor today. The Netherlands previous caution with respect to Russia was perhaps to due to its significant economic ties, but they will be forced into action given the loss of life they have experienced in the MH17 tragedy. In terms of the Russian Security Council meeting, not a lot has been reported on what to expect from this. Putin will chair the meeting to discuss "issues connected with safeguarding the sovereignty and territorial integrity of the Russian Federation," the Kremlin said in a statement on Monday.
Turning to Asia, we’re seeing a tentative but positive tone to trading ahead of today's events which include the EU foreign ministers meeting, US CPI and a number of important corporate earnings. There are solid gains being recorded across the Hang Seng (+1.15%), HSCEI (+1.5%) and Japan has return from holidays with a 0.8% gain in the Nikkei. There is an interesting article on Bloomberg today, suggesting that there is a rift within the Bank of Japan’s board with respect to the ability of the central bank to meet its inflation target. According to the article, a majority of the nine members disagree with Kuroda’s view that the BoJ’s QQE program is sufficient to get 2% inflation, and most conclude it cannot be done without government steps to raise Japan’s growth potential, citing unnamed sources. USDJPY is broadly unchanged today. Elsewhere Indonesia remains a focus with official election results to be announced later today. IDR continues to rally and is a further 0.3% stronger today while Indonesian USD sovereign paper is trading stronger.  MSCI Asia Pacific up 0.6% to 147.8; Nikkei 225 up 0.8%, Hang Seng up 1.7%, Kospi up 0.5%, Shanghai Composite up 1%, ASX up 0.1%, Sensex up 0.9%.
Equity markets in Europe shrugged off the lower close on Wall Street as the strong performance from Asia-Pacific equities prompted a gap higher at the open, with the energy and materials sectors outperforming on a recent rebound in commodities prices. Earnings in Europe have been received favourably, with ARM Holdings (ARM LN), IG Group (IGG LN) and Actelion (ATLN VX) outweighing a poor update from Credit Suisse (CSGN VX), who have been forced to close their commodities trading unit in order to offset losses prompted by US tax fines. 17 out of 19 Stoxx 600 sectors rise; basic resources, oil & gas outperform; retail, media underperform. 73.2% of Stoxx 600 members gain, 24.8% decline. Eurostoxx 50 +0.5%, FTSE 100 +0.6%, CAC 40 +0.3%, DAX +0.5%, IBEX +0.5%, FTSEMIB +0.6%, SMI +0.2%
Today’s calendar looks more interesting than that of the last 24 hours. The EU foreign ministers’ meeting starts at 8:30am London time this morning. Ahead of that we have some European corporate earnings with Credit Suisse (which were a bigger miss than expected) and Norsk Hydro’s results. Today’s US earnings calendar today features results from a number of megacaps including the likes of McDonalds, Coca-cola Co, Verizon (before the open) and Apple and Microsoft (after-market). A major focus today is on US CPI. Consensus is +2.1% YoY and +2.0% in headline and core respectively. There is also existing home sales today. Both pieces of data have the capacity to move treasury markets. Hungary’s central bank also holds its rate meeting today.
Market Wrap
  • S&P 500 futures up 0.1% to 1967.7
  • Stoxx 600 up 0.5% to 339.7
  • US 10Yr yield up 1bps to 2.48%
  • German 10Yr yield up 1bps to 1.16%
  • MSCI Asia Pacific up 0.6% to 147.8
  • Gold spot down 0.4% to $1307.5/oz
Bulletin Headline Summary from RanSquawk and Bloomberg
  • EUR/USD approached YTD lows at 1.3477 this morning, after July’s support at 1.3491 was broken. Real money supply and strong demand for USD/CHF lifted the USD-index to six week highs as thin trade exacerbated price action
  • All eyes on Brussels as the EU foreign affairs presser is expected to unveil further sanctions on the Russian arms and dual-use industrial goods sector
  • US earnings calendar thick and fast today, with Apple, Microsoft, Verizon, Coca-Cola, McDonalds, Lockheed Martin and Altria all due today
  • Treasuries decline, led by 7Y and 10Y notes as global stocks rally; 5/30 curve touches new 5-year tight in overnight trading.
  • EU governments labored to identify more Russian businesspeople and companies to sanction and pressed Putin to speed a probe into the downing of Malaysian Air flight MH17 or face isolation
  • 54% of jobs in the EU are at risk of advances in computerization, according to a study by economist Jeremy Bowles published by Bruegel, a Brussels-based research organization.
  • U.S. Secretary of State Kerry put the onus on the Gaza Strip’s Hamas rulers to halt two weeks of fighting with Israel that has killed more than 600 people, the overwhelming majority of them Palestinians
  • Credit Suisse said it will exit commodities trading as a $2.6b fine to settle a U.S. tax investigation pushed the Swiss bank to its biggest quarterly loss since 2008
  • Texas Governor Rick Perry said he will send as many as 1,000 National Guard troops to help secure the border with Mexico; about 57,000 unaccompanied minors have arrived at the border since October, double the total from fiscal 2013
  • U.S. Senator Ron Johnson’s lawsuit challenging an Obamacare provision subsidizing health insurance for members of Congress and their aides was dismissed by a judge who found the lawmaker failed to show he’d been harmed
  • Sovereign yields mostly higher. Euro Stoxx Banks +1.54%. Asian and European stocks equities gain, U.S. stock futures rise. WTI crude and copper higher, gold declines
US Event Calendar
  • 8:30am: CPI m/m, June, est. 0.3% (prior 0.4%)
    • CPI Ex Food and Energy m/m, June, est. 0.2% (prior 0.3%)
    • CPI y/y, June, est. 2.1% (prior 2.1%)
    • CPI Ex Food and Energy y/y, June, est. 2% (prior 2%)
    • CPI Core Index SA, June, est. 238.227 (prior 237.776)
    • CPI Index NSA, June, est. 238.535 (prior 237.9)
  • 9:00am: FHFA House Price Index m/m, May, est. 0.2% (prior 0.0%)
  • 10:00am: Richmond Fed Manufacturing Index, July, est. 5 (prior 3)
  • 10:00am: Existing Home Sales, June, est. 4.99m (prior 4.89m)
    • Existing Home Sales m/m, June, est. 2% (prior 4.9%) Supply
ASIAN HEADLINES
The Nikkei 225 (+0.84%) managed to pull back the majority of Friday’s losses after yesterday’s market closure, with Chinese and Hong Kong markets (Shanghai Comp +1.02%, Hang Seng +1.69%) benefiting from the PBoC choosing not to drain liquidity overnight.
FIXED INCOME
Fixed income markets trade softer, with strong equity markets weighing, as Bund futures continue to retreat from contract highs at 148.49 printed on Friday. Furthermore, relatively poorly received (bid/cover 1.84 vs. prev. 2.04) Gilt supply (circa 30K Gilt futures contracts) has pressed prices lower. Italian and Spanish 10yr yield spreads trade slightly tighter, as markets take a favourable view on consolidation in the Italian banking sector, after Banca Carige unveiled plans to offload assets. Barclays Prelim Pan Euro Agg Month-end Extension +0.11y (Prev. month 0.09y, 12m ave. 0.08y), Prelim Treasury Month-end Extension +0.08y (Prev. month 0.08y, 12m ave. 0.09y)
EQUITIES
Equity markets in Europe shrugged off the lower close on Wall Street as the strong performance from Asia-Pacific equities prompted a gap higher at the open, with the energy and materials sectors outperforming on a recent rebound in commodities prices. Earnings in Europe have been received favourably, with ARM Holdings (ARM LN), IG Group (IGG LN) and Actelion (ATLN VX) outweighing a poor update from Credit Suisse (CSGN VX), who have been forced to close their commodities trading unit in order to offset losses prompted by US tax fines.
FX
EUR/USD tripped stops on the way through 1.35 to hit the lowest level since February at 1.3481, with real money supply weighing on the currency as USD/CHF buying lifted the USD-index by almost 0.2%. Traders now eye a base in EUR/USD at the yearly lows of 1.3477, with analysts at IFR noting talk of option barriers at 1.3475 and 1.3450.
COMMODITIES
Oil trades slightly higher ahead of the NYMEX open as continued instability in the Middle-east and eastern Europe keeps a floor under prices. Nonetheless, expectations of a resumption of shipping from Libya’s Brega oil port could keep a cap on Brent price action. Precious metals markets have fallen alongside fixed income, as EU sanctions on Russia are seen sparing the resources and commodities sectors. Near-term focus shifts to the API crude oil inventories due after market and the August WTI option expiries due at the pit close
* * *
DB's Jim Reid Concludes the Overnight Summary
Ever since news broke that Thursday's tragic plane crash may have been caused by a missile fired by pro-Russia separatists I've felt that this story was an incredibly dangerous one for global stability and also the global economy. However most of these major geopolitical events do eventually pass even if concerns heighten so maybe the market is correct to be relatively sanguine. Will this be another such occasion? In my mind the market is not assigning a high enough probability of this situation escalating to uncomfortable levels but the reality is the most likely outcome is that it doesn't. Therein lies the dilemma of investing. Do you position for the most likely outcome along with the crowd or do you stand more alone and position for the lower probability but higher impact outcome. Over a career you'll probably get higher overall returns with the latter strategy but you may have more uncomfortable moments explaining and surviving frequent small under-performance. Also trading liquidity is shallow enough at the moment, especially in assets like cash credit, that it doesn't necessary pay to try to capture short-term moves. So we're not changing our recommendations at the moment but it’s fair to say we feel uneasy at developments over the past few days.
Indeed the newsflow continues in this story with no signs of an imminent solution or escalation yet. However with Russia seemingly not keen on accepting the West's version of events, President Obama putting some pressure on them yesterday afternoon and EU foreign ministers meeting today there is a real possibility of a ratcheting up of sanctions on Russia later this week – including possibly more hard-hitting “level 3” sanctions. The US may find it economically easier to deal with this outcome than Europe though. On a client call yesterday (call replay details included at the end), DB’s Yaroslav Lissovolik, DB’s Head of Research (Russia) discussed Putin’s likely next actions and commented that opinion polls in Russia are suggesting war fatigue, with two thirds against continued support for the pro-Russian separatists. Given this there is a chance that Putin may wish to de-escalate the situation if possible, although Yaroslav noted that Putin may decide to escalate the situation further in the near-term in order to de-escalate at a later point. Also on the call was Frank Kelly, DB’s geopolitical go-to man, who gave his view on the US position. After watching Obama’s press conference yesterday he sees the White House’s position as giving Putin the opportunity to save face and help de-escalate the situation before the stepping up of sanctions. For example Frank thinks we need to see Putin call for a ceasefire and take actions to support it and/or help secure the MH17 crash site. If these actions aren’t forthcoming he believes the US will announce further sanctions on Russia.
As we mentioned earlier, today will likely see more headlines on the situation as EU foreign ministers meet as well as the Russian Security Council. So watch out for headlines from all angles. Perhaps the most market-friendly outcome is that EU leaders talk very tough but do not agree on intensifying sanctions against Russia. Reuters thinks that despite all the tough talk, the EU is unlikely to punish Russia beyond the speeding up of the imposition of already agreed individual sanctions. A summit of EU leaders on July 16, the day before the airliner was downed, agreed the EU would punish Russian companies that help to destabilize Ukraine. According to Reuters, diplomats said Tuesday's meeting in Brussels was still not expected to go much further than agreeing on the people and possibly companies to be hit with asset freezes under the framework agreed last week. Previously, they had only said they would decide on the list by the end of July. Citing unnamed diplomats, Reuters said moving towards more sweeping economic sanctions could only be decided by heads of government. The next scheduled summit of EU leaders is on August 30, though EU members could call for another emergency meeting.
An unknown element today will be the Dutch, who have previously advocated caution in imposing sanctions against Russia, but are likely going to be a large swing factor today. The Netherland’s previous caution with respect to Russia was perhaps to due to its significant economic ties, but they will be forced into action given the loss of life they have experienced in the MH17 tragedy. In terms of the Russian Security Council meeting, not a lot has been reported on what to expect from this. Putin will chair the meeting to discuss "issues connected with safeguarding the sovereignty and territorial integrity of the Russian Federation," the Kremlin said in a statement on Monday.
So we may get a short term relief rally if the EU foreign ministers meeting ends today with no concrete steps towards further sanctions – but this doesn’t take away from the fact that we still face a potentially dangerous threat to global stability. Following yesterday’s speech from Obama, we saw a small relief rally as the US president said he still preferred a diplomatic resolution for Ukraine and did not announce any level 3 sanctions. Some also highlighted that Obama chose to discuss the situation in the Middle East first, before the Ukraine/Russia crisis, and was perhaps trying to play the situation down a touch. Either way, US equities bottomed just before Obama’s comments, and from there the S&P500 recovered around 0.33% to close at -0.23% on the day. Rates closed marginally stronger (10yr yield at 2.47%, -1.5bp) although yields also bottomed shortly before Obama spoke and traded upwards towards the end of the NY session. However, this didn’t stop the US30yr yield (3.26%, -3bp) closing at its lowest level in more than a year.
Turning to Asia, we’re seeing a tentative but positive tone to trading ahead of today's events which include the EU foreign ministers meeting, US CPI and a number of important corporate earnings. There are solid gains being recorded across the Hang Seng (+1.15%), HSCEI (+1.5%) and Japan has return from holidays with a 0.96% gain in the Nikkei. There is an interesting article on Bloomberg today, suggesting that there is a rift within the Bank of Japan’s board with respect to the ability of the central bank to meet its inflation target. According to the article, a majority of the nine members disagree with Kuroda’s view that the BoJ’s QQE program is sufficient to get 2% inflation, and most conclude it cannot be done without government steps to raise Japan’s growth potential, citing unnamed sources. USDJPY is broadly unchanged today. Elsewhere Indonesia remains a focus with official election results to be announced later today. IDR continues to rally and is a further 0.3% stronger today while Indonesian USD sovereign paper is trading stronger.
As we noted in last Friday’s EMR, one corner of the fixed income market worth watching closely is US high yield. The Fedchair has warned repeatedly that she sees worrying signs in the HY market and last week’s flow data from Lipper suggested that perhaps US retail investors are beginning to take heed of those warnings. According to Lipper, retail-cash outflows from HY funds in the week ended July 16 were the single largest one-week redemption in 11 months. The latest EPFR data also confirmed the same, with their data showing that retail investors’ redemptions from US HY funds hit 57 week highs for the week ending July 16th. ETFs were the major contributing factor to that week’s outflows and yesterday we saw the major US high yield ETFs resume their downward moves in price. The iShares iBoxx High Yield ETF closed 0.17% lower (its 9th down day in the last 12 sessions). In addition, the ETF’s 10-day average premium to NAV is now in negative territory (i.e. trading at a discount to NAV), which last occurred last summer. So certainly some evidence of retail selling of the HY asset class. Something to watch over the next few weeks.
On a separate but somewhat related theme, the US Securities and Exchange Commission is expected to vote tomorrow on a plan that may require some money market funds to float the value of their fund’s shares, rather than sticking to the norm of a fixed $1 per share. If the five-member commission on July 23 votes for the plan, institutional money market funds would float the value of their fund’s share price, thus creating a potentially sensitive situation where these perceived low-risk funds could “break the buck”, i.e. trade lower than $1/share. The SEC is also considering the introduction of withdrawal restrictions and exit fees on these funds. Similar to the HY situation described above, in a world accustomed to central bank liquidity, it’s difficult to understand how markets will behave if flows go the other way and perhaps the SEC’s proposals to introduce “gates” on redemptions is a reflection of that unknown.
Today’s calendar looks more interesting than that of the last 24 hours. The EU foreign ministers’ meeting starts at 8:30am London time this morning. Ahead of that we have some European corporate earnings with Credit Suisse and Norsk Hydro’s results. CS is expected to report a negative headline earnings number following recent settlements with US regulators, but as is usually the case of late; markets will be more interested in the underlying earnings. Today’s US earnings calendar today features results from a number of megacaps including the likes of McDonalds, Coca-cola Co, Verizon (before the open) and Apple and Microsoft (after-market). A major focus today is on US CPI. Consensus is +2.1% YoY and +2.0% in headline and core respectively. There is also existing home sales today. Both pieces of data have the capacity to move treasury markets. Hungary’s central bank also holds its rate meeting today.





end

end


My goodness!!












Malaysian Airlines In Hot Water Again, This Time For Flying Above War-Torn Syria

Tyler Durden's picture




Fool me once, shame on you; fly civilians over a war-zone twice, shame on Malaysian Airlines. In what is perhaps the most incredulous news of today (aside from Kerry's belief that he will make a difference in Gaza) is, as BNO reports,a Malaysia Airlines passenger plane flying from Kuala Lumpur to London flew over Syria on Sunday... The U.S. Federal Aviation Administration (FAA) and other organizations have warned airlines for more than a year to avoid the entire country. “Information from the International Civil Aviation Organization and open source reports of surface-to-air missile firings,” the FAA said in a notice last year, describing the risk to civilian flights as “significant.”


The log details published by flight tracking website Flightradar24 showed the flight path of Malaysia Airlines flight MH4, an Airbus A380 which departed Kuala Lumpur on early Sunday.The log showed the aircraft flying over Syria, which is in the midst of a raging civil war, from about 1:20 p.m. local time, flying close to the city of Homs.

Reports about Flight MH4 flying over Syria garnered the responses of thousands of people on the social networking website Twitter, where the vast majority described the airline’s route as irresponsible. It appeared Flight MH4 was routed over Syria after airspace over eastern Ukraine was closed following the shootdown of Malaysia Airlines Flight 17 last week.

No airspace restrictions are in place over much of Syria, but the U.S. Federal Aviation Administration (FAA) and other organizations have warned airlines for more than a year to avoid the entire country. “Information from the International Civil Aviation Organization and open source reports of surface-to-air missile firings,” the FAA said in a notice last year, describing the risk to civilian flights as “significant.”

There are some local flights going over to Iraq and Lebanon and Jordan, but they are not big airlines or transcontinental flights,” said Flightradar24 co-founder Mikael Robertsson.

“So Malaysia Airlines was the first flight I’ve seen going over there for like a year... I know that Iraqi Airways and Syria Air are flying over Syria sometimes. No big airlines.”
*  *  *
Of course, avoiding the world's ever-increasing warring nations is not
easy - perhaps it is time to consider trans-polar travel...
But with oil prices so high...
*  *  *
On the bright side...
black boxes now in hands Malaysia delegation.


end

Putin speaks as to his version of events in the shooting down on the MH 17 commercial airliner


(courtesy zero hedge)





Putin Speaks: Will Respond "Adequately" To Ongoing NATO Buildup; "Wont Tighten Screws" In Response To Threats

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Perhaps there were some concerns that Putin, following the Russian Security Council Meeting today, may lash out at the west with escalating retaliatory sanctions against the west of his own. He did not which may explain why futures just saw an algo-driven buying wave moments ago. Still, what he did say is hardly justification to declare an "all clear" for risk as Putin being Putin, he merely reiterated for the nth time the Russian party line: Ukraine should facilitate a cease fire, Russia won't "blink" no matter how intense western sanctions are, and Russia will retaliate in kind to any ongoing NATO build up on its borders. Oh, and Crimea is now Russia's to do as it sees fit.
Full comments from Bloomberg, Reuters and RIA
  • PUTIN: RUSSIA WON'T `TIGHTEN THE SCREWS' IN RESPONSE TO THREATS
  • PUTIN SEES `DEFIANT' NATO BUILDUP IN EASTERN EUROPE
  • PUTIN WANTS `ADEQUATE, PROPORTIONATE' RESPONSE TO BORDER THREAT
  • PUTIN: RUSSIA TO BOOST DEFENSE CAPABILITY AFTER NATO BUILDUP
  • PUTIN: SAYS SEES INCREASE IN USE OF LANGUAGE OF "ULTIMATUMS AND SANCTIONS" TOWARD RUSSIA, CALLS FOR MORE DIALOGUE
  • PUTIN SEES EFFORTS TO WEAKEN, DESTABILIZE RUSSIA
  • PUTIN SAYS GOVT IN KIEV TOOK POWER USING UNCONSTITUTIONAL MEANS
  • PUTIN URGES UKRAINE GOVT TO AGREE TO TRUCE, `HOWEVER BRIEF'
  • PUTIN: RUSSIA CREATING ANEW MILITARY INFRASTRUCTURE IN CRIMEA
  • PUTIN: U.S. MISSILE DEFENSE OFFENSIVE SYSTEM TARGETING RUSSIA
  • PUTIN: RUSSIA NEEDS FURTHER SAFEGUARDS TO DEFEND ECONOMY
  • PUTIN: RUSSIA TO USE CRIMEA AS IT BOOSTS DEFENSE CAPABILITY

end


Tonight, here is the latest updates on the Ukrainian/Russian situation with respect to MH 17:

(courtesy zero hedge/Bloomberg)






The Latest Updates About Ukraine And Flight MH17: News Roundup

Tyler Durden's picture





For those just waking up and looking to catch up on all the latest news out of Ukraine and the MH17 crash response in particular, here is the latest news roundup.
  • Putin says country will resist attempts to destabilize it; sees not direct threat to Russian sovereignty
  • Putin, Dutch PM Rutte hold phone call on MH17 crash issues
  • Separatist leader Borodai hands over black boxes; says rebels didn’t shoot down MH17
  • Train with MH17 bodies arrives in Kharkiv: Interfax
  • Pro-Russia rebels released bodies of victims, turned over two black box flight recorders; have given investigators access to MH17 crash site.
  • EU Foreign ministers meet today to discuss sanctions against Russia; U.K., Germany seek to limit expectations
  • German Deployment for UN in Ukraine conceivable: Leipziger
  • Obama urges Putin to rein in “Russia-backed” rebels
  • Self-proclaimed Donetsk People’s Republic PM Borodai declares ceasefire at site, says separatists didn’t have technical means to shoot down plane
  • Russian Ambassador to Malaysia says “no way” rebels could down plane, videos implicating them are fake 
  • Russian military says Ukraine fighter jet picked up speed toward MH17
  • Russia's Rakhmanov says Russian isolation would mean "collapse" for Europe
  • Dutch deaths prompt angry calls to Rutte for action; Netherlands considers measures
  • PM Rutte says Putin made “constructive contribution” to efforts at organizing probe
  • Putin said crash shouldn’t be used for political gain
  • Steinmeier skeptical over UN Force in Ukraine: Bild
RELATED STORIES
  • U.N. Security Council yday unanimously approved resolution calling for international probe, unimpeded access to site and end to military activities around wreckage
  • Merkel, Putin discuss ICAO’s role in crash investigation; need for talks
  • U.S. Secretary of State Kerry, Russian Foreign Minister Lavrov agree on impartial investigation
  • Russians divided over their country’s role in Ukraine: poll
  • France to cancel second Mistral sale if sanctions raised
  • MAS to offer $5,000 aid to MH17 families
  • Lufthansa joins Emirates in call for MH17 summit: Reuters
  • Malaysian Air likely near end of days as publicly traded co.
  • MAS says flight to London over Syria is ICAO-approved
  • Shell says 2 Dutch, 2 Malaysian employees died on MH17
WHAT TO WATCH:
  • Ukrainian Parliament votes for partial mobilization of reserves, military-age citizens
  • France to cancel second Mistral ship sale if Russian sanctions fortified
  • Russia amassing troops at Ukraine frontier: border service
  • Russian PM Medvedev says 144k Ukrainians have sought refuge in Russia
  • Credit Suisse CEO sees little Russia impact on business; notes general impact on markets
MARKETS
  • Yield on 10-yr ruble bonds down 8bps to 9%
  • Ruble appreciates 0.9% vs euro-dollar basket
  • Micex +1.3% to 1,402.66, largest gain since July 7
  • Hryvnia strengthens 0.3% to 11.67 per dollar
  • Brent crude rises 0.4% to $108.51/bbl; WTI up 0.1% to $104.72/bbl

Source: Bloomberg


end

And finally, they cannot even agree or disagree with respect to new Russian sanctions

(courtesy zero hedge)




Europe Agrees To Disagree Over New Russian Sanctions

Tyler Durden's picture





As usual, Europe is talking out of both sides of its mouth (or other orifices). On the one hand, we are told:
  • EU foreign ministers failed to agree new sanctions against Russia at a Brussels meeting
And on the other hand:
  • Dutch minister says EU imposing new sanctions on officials over Russia
So - which is it Europe?
EU foreign ministers failed to agree new sanctions against Russia at a Brussels meeting on Tuesday and instead tasked their diplomats to explore possible wider-ranging measures this week.
Although such measures could include cutting off access to Europe's capital markets and an arms embargo, they would be contingent on whether Russia fails to cooperate in the future, not on past behaviour - like ties to the downing of MH17, reports the FT's Peter Spiegel in Brussels.
Dutch minister says EU is imposing new sanctions on officials over Russia's actions in Ukraine.
German Foreign Minister Frank-Walter Steinmeier said that while Berlin was still willing to talk with Russia, greater economic pressure was needed to make Moscow change course.

"I say we remain open to defusing the situation with all political and diplomatic means but it will be necessary to accompany this willingness with higher pressure, which also means sharper measures," he told reporters on arrival.
And Britain the most aggressive...
Britain's new Foreign Secretary Philip Hammond said he would urge fellow ministers to "send a very clear and strong signal to Russia today".
Along with Lithuania...
Lithuanian Foreign Minister Linas Linkevicius said it was "time to name names" and to put Ukraine's breakaway republics of Luhansk and Donetsk on the EU's list of terrorist organizations.
*  *  *
Dis-united States of Europe...


end


And now events in Gaza:


(courtesy zero hedge)





As Gaza Death Toll Surpasses 600 Israel Ambassador Says IDF Deserve Nobel Peace Prize For "Unimaginable Restraint"

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The situation in Gaza has crossed beyond the rabbit hole (or perhaps in this case, tunnel) and has entered the surreal zone.
Consider, from Reuters: "Israel pounded targets across the Gaza Strip on Tuesday, saying no ceasefire was near as top U.S. and U.N. diplomats pursued talks on halting fighting that has claimed more than 600 lives."On the other side, Israel's military announced that the total number of army fatalities have risen to 29, three times as many as were killed in the last ground invasion of Gaza, in a 2008-2009 war.
Among the Gaza targets: five mosques, a sports stadium and the home of the deceased Hamas military chief. But why is Israel targeting what are clearly civilian locales? "Israeli military accuses Hamas militants of firing rockets from the grounds of Gaza hospitals and seeking refuge there." Remember, this was supposed to be a "pinpoint military operation."
About 2,000 rockets have been launched over the past fortnight, Israeli military says. The country has also been destroying tunnels that Hamas reportedly constructed from Gaza into Israel to carry out attacks.
Jens Laerke, spokesman of the UN Office for Humanitarian Assistance (OCHA) said at a Geneva news briefing that nearly 500 homes have been destroyed in the Israeli bombardments and 100,000 people have been displaced. Of course, if this had been any other part of the world than Gaza, the UN, the Western media and everyone else would be at arms over the humanitarian crisis that has developed in Gaza. But, well, it's Gaza.
All of this is happening despite Kerry's arrival in the region in an attemp to fix things. Or rather, due to. U.S. Secretary of State John Kerry held discussions in neighboring Egypt, while U.N. Secretary General Ban Ki-moon flew to Israel to see Prime Minister Benjamin Netanyahu and meet on Wednesday with the Palestinian prime minister in the occupied West Bank.
Dispatched by U.S. President Barack Obama to the Middle East to seek a ceasefire, Kerry held talks on Tuesday in Cairo with Egyptian Foreign Minister Sameh Shukri.

"There is a framework ... to end the violence and that framework is the Egyptian initiative," Kerry said at a joint news conference with Shukri.

"For the sake of thousands of innocent families whose lives have been shaken and destroyed by this conflict, on all sides, we hope we can get there as soon as possible," he said.
His words were summarily ignored and dismissed by Israel which has no intention of reducing the soaring body count: ""A ceasefire is not near," said Justice Minister Tzipi Livni, viewed as the most dovish member of Israeli Prime Minister Benjamin Netanyahu's inner security cabinet.  "I see no light at the end of the tunnel," she told Israel's Army Radio."
There is some good news: Kerry said the United States would provide $47 million in humanitarian aid for Gaza. He plans to stay in Cairo until Wednesday morning but has no set departure date from the region.
In other words, the latest Gaza land invasion, which is now far more deadly than the last invasion during the 2008-2009 war, is nowhere near finding a resolution, which perhaps is just the catalyst the S&P 500 needed to keep rising to recorder highs.
* * *
But where things get truly surreal, was the statement by Israel’s ambassador to the United States, Ron Dermer, who said on Tuesday that the Israeli army should be given the Nobel Peace Prize for its “unimaginable restraint” in Gaza.
Well, considering Barack "Don't drone me, bro" Obama received it, why not?
During an address at the Christians United for Israel Summit in Washington, Dermer was interrupted several times by hecklers, but delivered a passionate and warmly received speech in defense of Operation Protective Edge, calling Iran the “Great Evil” and accusing the United Nations and human rights groups of inadvertently aiding Hamas in its war against Israel.

Some are shamelessly accusing Israel of genocide and would put us in the dock for war crimes,” Dermer said. “But the truth is that the Israeli Defense Forces should be given the Nobel Peace Prize… a Nobel Peace Prize for fighting with unimaginable restraint.”

Dermer’s comments followed a statement issued by Foreign Minister Avigdor Liberman, who on Sunday said that the IDF is the “most humane and bravest army in the world.”
And scene.


end

Friday evening, I mistakenly stated that the bank BES has defaulted.  So far that is not true.
The parent ESI on Friday defaulted (but not BES) and that should trigger many credit default swaps.  Today, the company underneath ESI, Rioforte, after failing to pay Portugal Telecom decided to call it quits today and it too is seeking bankruptcy protection.  

However, what is alarming is that the President of Portugal stated that the failure of the Santo set of companies can go systemic


(courtesy zero hedge)



Portugal President Admits Espirito Santo Failure Could Be Systemic As Another HoldCo Goes Bankrupt

Tyler Durden's picture





As RioForte joins its parent ESI in bankruptcy, in astrangely honest turn of events from a European leader, Portugal's President Anibal Cavaco Silva warned on Monday that fallout from the financial troubles of the founding family of Banco Espirito Santo (BES) could affect the wider economy. With Portugal's hope-strewn GDP growth expectations at only 0.9% for 2014, they do not have much room for disappointment before the nation (whose yields remain near record lows) double- or triple-dips back into recession. Silva concluded, "We cannot ignore that there will be some impact on the real economy," which is odd given every talking-head has explained it is "contained" and "priced-in."

Rioforte joins ESI in bankjruptcy...
  • *RIOFORTE SAYS IT SEEKS PROTECTION FROM CREDITORS
  • *RIOFORTE SAYS FILING IS LINKED TO DIFFICULTIES AT ESI
Just another default in the chain

President Anibal Cavaco Silva is the first high-profile politician to warn of a possible economic impact from the Espirito Santo crisis, after the family asked for creditor protection for one of its key holding companies on Friday.

Last week another of the family's companies failed to repay on time over $1 billion in debt owed to Portugal Telecom, which had a knock-on effect on the latter's merger with Brazil's Grupo Oi, forcing it to take a cut in its stake in the new entity.

"If some citizens, some investors suffer significant losses (from the Espirito Santo group) they may delay investment decisions, or some of them may find themselves in very big difficulties," Cavaco Silva said in comments during a visit to South Korea, which were aired on local television.

"We cannot ignore that there will be some impact on the real economy."

Portugal, which in May emerged from an EU/IMF bailout it had to take during the euro zone debt crisis, is expecting its economy to grow by 1 percent this year, the first year of growth since 2011.
*  *  *
Which does not leave much room for Portugal's growth....

end





Oh what fun!!  Argentina was delivered a mortal blow from Judge Griesa this morning.
Argentina has one week to pay the defaulted bond holders who refused to tender to Argentina's offer in 2001.  There are huge credit default swaps underwritten by our 5 major USA banks (JPMorgan, Morgan Stanley, GS, Bank of America, and Citibank)  + Deutsche bank:




(courtesy zero hedge)


With 1 Week Left Until Argentina's 'D'efault-Day, Judge Blasts "Judgments Are Judgments"

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Day after day, headlines from Argentina implore Judge Griesa to do the "fair, responsible" thing and lift his judgment that holdouts get paid before current bondholders receive their payments... and day after day Argentina's demands are met with silence or denials. Today, though, with 1 week left until Argentina must put up or shut up, Judge Griesa has come out swinging...
  • *U.S. JUDGE SAYS OF ARGENTINA RULINGS: 'JUDGMENTS ARE JUDGMENTS'
  • *ARGENTINA'S 'INCENDIARY` RHETORIC `UNFORTUNATE,' JUDGE SAYS
  • *U.S. JUDGE URGES 'SENSIBLE STEPS' TO AVOID ARGENTINA DEFAULT
While CDS spreads have surged once again, bonds trade with default probabilities around only 50% which, according to Jefferies "are expensive on underestimating the risk of default."


As Bloomberg reports,
U.S. District Judge Thomas Griesa declined to rule immediately on calls by holders of defaulted Argentina bonds to bar payment on some dollar- and yen-denominated debt in a hearing in Manhattan federal court.

Argentina had asked the judge to delay rulings that bar the country from making payments on its restructured debt before paying holders of defaulted bonds as it faces a possible second default this month.

The South American nation renewed its request for a delay so it can negotiate without risking liability for what it argues could be billions of dollars in new claims by holders of defaulted and restructured bonds. That request has yet to be addressed.

Today, Griesa began the proceedings by hearing arguments about whether his orders bar payments to holders of U.S. dollar-denominated exchange bonds issued under Argentine law and payable in that country, without a corresponding payment to holders of the defaulted bonds.
Judge Griesa is not happy...
  • *U.S. JUDGE URGES `SENSIBLE STEPS' TO AVOID ARGENTINA DEFAULT
  • *U.S. JUDGE REAFFFIRMS RIGHTS OF DEFAULTED ARGENTINA BONDHOLDERS
  • *U.S. JUDGE SAYS OF ARGENTINA RULINGS: `JUDGMENTS ARE JUDGMENTS'
  • *GRIESA CITES ARGENTINA REFUSAL TO PAY NUMEROUS COURT JUDGMENTS
  • *ARGENTINA'S `INCENDIARY` RHETORIC `UNFORTUNATE,' JUDGE SAYS
  • *ARGENTINA DEFAULT `WOULD BE MOST UNFORTUNATE' U.S. JUGDE SAYS
  • *ARGENTINA DEFAULT JUDGE SAYS WE HAVE ARRIVED AT 'CRUCIAL TIME'
  • *U.S. JUDGE CITES ARGENTINA'S `OBLIGATIONS' TO BONDHOLDERS
  • *ARGENTINA BOND PARTIES MUST MEET WITH MEDIATOR `CONTINUOUSLY'
Jefferies warns bonds are underestimating the risk...
Argentine bonds sold under New York law due 2033 “are expensive on underestimating the risk of default,” which is 50% and increasing, Siobhan Morden, the head of Latin America strategy at Jefferies Group, wrote in a report today
*  *  *
Argentina will enter into technical default on its restructured bonds on July 30 unless it reaches an agreement with the holdouts.
The clock is ticking... and Argentina is furious...
  • *ARGENTINA LAWYER SAYS COURT ORDERS RISK 'IMMINENT' DEFAULT
  • *ARGENTINA LAWYER SAYS JULY ACCORD FACES `HUGE CONSTRAINTS'
Three weeks after President Cristina Fernandez de Kirchner sent $539 million to pay bondholders, the money remains in limbo as a U.S. court considers what to do with the funds.

Fernandez said on July 16 the country can’t default because it sent the funds to the banks, and now it’s the responsibility of bondholders to demand payment from the judge and intermediary banks.

“Only countries that stop paying their debt fall into default,” Fernandez said at a conference in Brazil. “Argentina will keep paying its debt and meeting its obligations.”
We shall see...
We leave it to Judge Griesa to conclude...
"IN MY VIEW, EVERY SINGLE PROBLEM YOU'VE [ARGENTINA] DESCRIBED IS SUSCEPTIBLE TO BE HANDLED IN A SETTLEMENT...

IF WE DON'T, THERE WILL BE A DEFAULT, AND THAT IS THE WORST THING."
Bond prices are falling after the judge's latest ruling...
end


This is where we are heading!!

(courtesy zero hedge)






Venezuela's Transformation To Socialist Utopia Is Nearly Complete As Its Factories Grind To A Halt

Tyler Durden's picture





Venezuela's transformation to a socialist utopia has been well-documented on these pages. Recall:
In retrospect, one can only hope the same "socialist paradise" fate isn't headed to the other "fairness doctrine" members such as the US and France, because withsocialist utopias like these who needs capitalist hell?
In any event, what utopia would be complete without a complete paralysis of the one sector that traditionally serves as the backbone of any functioning economy: no, not makers of iPhone apps... manufacturing.
As the WSJ reports, this car-crazed country's auto industry, once the third largest in South America, is seizing up as manufacturers struggle to produce a few vehicles a day. Apparently channel stuffing hasn't been revealed as a legitimate "retail channel" in the Latin American country just yet. As for subprime car purchase loans, US banks apparently don't offer those in Caracas. Yet.
Car makers, including global giants like Ford Motor Co. , Fiat Chrysler Automobiles NV, General Motors Co. and Toyota Motor Corp., have cut output by more than 80% in the first six months of the year compared with a year earlier because of a lack of dollars to pay parts suppliers, according to data compiled by the Automotive Chamber of Venezuela, which represents car makers.

"This is the first time I have ever seen things this bad," said 61-year-old Antonio Lopez, a Ford worker who recently prepared a sedan for painting at the auto maker's factory here. The cavernous Valencia plant, about 110 miles west of Caracas, was quiet by midafternoon one day last month, with a handful of workers sweeping up and maintaining equipment on assembly stations.

Across Venezuela, car production and sales has been sliding fast. Balance sheets have been battered, with revenue vulnerable to devaluation and trapped in Venezuela because of currency controls. Auto makers built 36,919 vehicles through June of last year. But only produced 6,161 during in the same period this year, about what Argentina produces in a few days.
...
Economists say the car industry, like newspapers, bottlers and food processors, has been hard hit by a shortage of dollars in Venezuela that has left many companies scrambling to pay for much-needed imports in a country that produces little more than oil. The reverberations in the economy include companies going out of business, a shortage of basic products and one of the world's highest rates of inflation.
...

"[Sales] volumes are down 75% below 2013, and last year was the lowest level in a decade," said Carlos Gomes, an economist who follows the global auto industry for Scotiabank. "I think it is fair to say that the situation is alarming."
Alarming maybe, but at least it is a socialist utopia. An utopia where it appears that the phones...
Venezuela's Communications Ministry declined to comment. The ministries of finance and industry didn't return phone calls. A spokeswoman for the Automotive Chamber of Venezuela, which represents foreign auto makers, said the group was in talks with the government and declined further comment.
.... also don't work.
And a quick glance at what is coming to every banana republic socialist utopia near you:
"I can't find anything. Prices are climbing daily," said Jesus Ramirez, a taxi driver who has spent a year trying to replace the 2008 Renault he purchased new for $7,441. He sold the car for over $30,000 five years later.

With inflation at 60% a year, among the highest in the world, Venezuelans protect their earnings by buying cars, among other big-ticket items.

Car parts needed to keep vehicles on the road have also become difficult to find. That has led thieves to steal parts such as batteries from parked cars.

The owner of a Caracas car dealership who said he last sold a vehicle in 2009, said he stays in business by servicing cars. But with spare part shipments tumbling 75%, he said, he fears his business may soon close.

"I spend all day on the phone looking for parts," the owner said, asking to remain nameless. "We are in survival mode."
Oops. Looks like someone forgot to BTFD, or rather BTFATH, and instead of being hopeful is cynical.

end

The Baltic Dry Index collapses!!

Global trade shrinks!!

(courtesy zero hedge)



The Baltic Dry Index Collapses To 18-Month Lows; Worst July Since 1986

Tyler Durden's picture





The bulls will ignore it, shrugging that it's merely over-supply of ships that the resurgent world economy will quickly soak up as it 'recovers'... However, World GDP growth expectations are collapsing, trade volumes are slowing, and the Baltic Dry Index has continued to slump to its lowest since the start of January 2013 (a holiday period). For some context, this is the lowest July level for the Baltic Dry since 1986... "noise"

There's this...


and then there's this...

Which is the worst July level for the global shipping index since 1986...
*  *  *
And if you think the market is just ignoring this... think again... The bonds of CMA CGM - France's largest world wide shipping firm - are tumbling...
*  *  *
Of course - H2 will be great and this is just a 13-month dump of noise...


end


And now important data points for today:







Portuguese 10 year bond yield:  3.68%/up 1 basis point  from Monday night.





Your closing Portuguese 10 year bond yield Tuesday night: up 5 in basis points on the day 





Portuguese 10 year bond yield:  3.72% 


end




Your closing Japanese yield Tuesday morning: down 1  in basis points from Monday night:







 yield .54%  



Japanese 10 year bond yield:  .54% 





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



Japanese 10 year bond yield:  .54%




end




Your opening currency crosses for Tuesday morning:



EUR/USA:  1.3483  down .0039
USA/JAPAN YEN  101.50   up .150
GBP/USA  1.7066  down .0007
USA/CAN  1.0748 up .0010  


This morning the Euro is a lot weaker  trading now well below the 1.35 level at 1.3483.  The yen is a little weaker and trading now well below the all important  102 cross. It closed in Japan down 15 basis points at 101.50 yen to the dollar  (dollar up).  The pound weakened a bit  as it now trades just below the 1.71 level  to 1.7066.  The Canadian dollar is down this morning with its cross at 1.0748 to the USA dollar.





 Early Monday morning USA 10 year bond yield:  2.49%  up 2 in basis points  from Monday night/   (USA economy not doing so well with this low yield)


USA dollar Index early Tuesday morning: 80.74  up 18 cents from Monday's close



end





The NIKKEI:  Tuesday morning:  up 128 points  or  .84%

Trading from Europe and Asia:

1/ Europe, all deeply  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:  $1307.00

silver:$ 20.84






 

end





Your closing Spanish 10 year government bond: Tuesday/ up 1 in basis points in yield  from Monday night.  



Spanish 10 year bond yield:  2.58% 
  



 Your  Tuesday closing Italian 10 year bond yield: flat in basis points and trading 19 in basis points above Spain.



Italian 10 year bond yield;  2.77% 


end



 IMPORTANT CLOSES FOR TODAY

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

Euro/USA:  1.3465 down .0058
USA/Japan:  101.43 up   .040
Great Britain/USA:  1.7060 down .0013
USA/Canada:  1.0731 down .0007



The euro lowered  in value during this afternoon's  session, and it was down on the day , closing well below  the 1.35 level to 1.3465.  The yen was up during the afternoon session, but it lost 4 basis points on the day closing below  the magical support 102 level to 101.43 (dollar up). A breach below the 102 usually sends the Dow and many bourses southbound as many key on this cross and as well if breached many of the yen carry traders must unwind their trades.  The British pound lowered during the afternoon session and was down  for  the day as it closed at 1.7060. The Canadian dollar was up during the afternoon session, and was up on the day closing at 1.0731. 


Your closing USA dollar index:




80.78  up 22 cents on the day  


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

the day.  



YIELD TONIGHT:



USA 10 yr Bond Yield:  2.46%.  

  

Closing bourses figures for  Tuesday: 






i) England FTSE up 66.90 or 0.99%


ii) Paris/CAC up 64.78 or 1.50%


 iii) German DAX: up 122.28 or 1.27%
  
iv) Spanish ibex up 166.90 or 1.59%

v) Italian bourse (MIB) up 442.30   or 2.16% 


and the Dow up 61.81 or .36 %

Nasdaq up 31.31 or  0.71% 


Oil close:  WTI  104.42/Brent:  107.34


end




The Big USA stories:



Today's summary of trading from NY:

(courtesy zero hedge)


Stocks Are Up - It's Tuesday Durr!

Tyler Durden's picture





A hot CPI and better-than-expected home sales was all that was needed (aside from USDJPY and VIX pumps) to send the S&P 500 and Trannies to new all-time intraday record highs. Escalating sanctions threats and death tolls be buggered... this is going to the moon, Alice.Treasuries were less than exuberant and rallied 4bps off their high yields of the day (i.e. totally disconnecting from stocks) and even USDJPY decoupled through the middle of the day. The USD rose 0.3% (biggest jump in 3 weeks) testing up towards 5-month highs. Gold and silver were dumped, pumped, and then dumped as CPI and housing data hit to end the day mixed. Credit rallied but diverged again this afternoon and remains wider post-MH17. VIX closed back below 12. Only the Dow remains modestly red since MH17 headlines hit last week and in spite of all this exuberance The Russell 2000 remains -0.5% year-to-date.

Dow remains red post-MH17...

It appears the S&P finds the Pre-Payrolls levels the most critical...

USDJPY started it but stocks were in a world of their own... though converged in the end...

Credit markets rallied today but remain less ignorant of geopolitical risk...

Longer-term Treasury yields tumbled after hotter than expected CPI - earlier Fed hikes, slower terminal growth, sooner next cycle...

Shorts were squeezed dramatically at the open...

The USD is pushing towards 5-month highs...

Oil prices slipped on the day with the August futures expiration shanigans. Gold and silver closed mixed...

Gold was dumped (pre-CPI), pumped (post-CPI) then dumped (post home sales)...

Charts: Bloomberg
Bonus Chart



end



Gold initially zoomed to 1,316.00 this morning on news that the CPI is stubbornly high.
The bankers cooled gold's jets immediately after the initial reaction:

(courtesy zero hedge)







CPI Remains Stubbornly High as Yellen's "Noise" Won't Go Away

Tyler Durden's picture





Consumer Price Inflation was 2.1% in June (as expected) remaining above the Fed's mandate levels and worryingly for all those who see the Fed as omniscient... refusing to go "noisily" down. Core CPI fell very modestly to 1.9% year-over-year but the jump in gasoline prices accounted for two-thirds of the overall rise in June CPI(seems like the Fed needs to print some more world peace to brings prices down). How many months of 'high' inflation does it take before Yellen admits it is not 'noise'?

According to the BLS reports, "In contrast to the broad-based increase last month, the June seasonally adjusted increase in the all items index was primarily driven by the gasoline index. It rose 3.3 percent and accounted for two-thirds of the all items increase. Other energy indexes were mixed, with the electricity index rising, but the indexes for natural gas and fuel oil declining. The food index decelerated in June, rising only slightly, with the food at home index flat after recent increases." Supposedly this is great news for those who don't have to pay for gas. Below is the chart of gasoline CPI on a sequential basis.
Still, for those who face inflation in all its forms, the monthly price increase in June was certainly notable, and can be seen on the chart below.

On a year over year basis, the overall CPI remains rather "noisy":

Inflation broken down by its components:
Finally, the full commentary from the BLS:
Food
The food index rose 0.1 percent in June; this compares to a 0.5 percent increase in May and is its smallest monthly increase since January. The index for food at home was unchanged in June after increasing 2.2 percent over the first five months of the year. Major grocery store food groups were mixed in June. The index for dairy and related products turned down in June, falling 0.4 percent after rising in each of the previous seven months. The fruits and vegetables index also  turned down, falling 0.3 percent after a 1.1 percent increase in May. The index for cereals and bakery products fell for the second month in a row, declining 0.2 percent. In contrast to these declines, the index for meats, poultry, fish, and eggs increased in June, though its 0.2 percent increase was its smallest since  December. The index for other food at home increased 0.1 percent in June, while the index for nonalcoholic beverages was unchanged. The index for food at home has increased 2.4 percent over the past year, with the index for meats, poultry, fish, and eggs up 7.5 percent, but the indexes for nonalcoholic beverages and for cereals and bakery products both declining. The index for food away from home rose 0.2 percent in June and has risen 2.2 percent over the past 12 months.
Energy
The energy index increased 1.6 percent in June, its third increase in a row and largest since December. The gasoline index rose for the third month in a row, increasing 3.3 percent. (Before seasonal adjustment, gasoline prices increased 0.3 percent.) The electricity index also increased in June, rising 0.2 percent. In contrast, the fuel oil index fell 1.7 percent, its fourth consecutive decline. The index for natural gas also decreased, falling 2.6 percent. Over the past 12 months, the energy index has increased 3.2 percent, with its major components increasing from a low of 2.0 percent (gasoline) to a high of 5.1 percent (natural gas).
All items less food and energy
The index for all items less food and energy increased 0.1 percent in June after a 0.3 percent increase in May. The shelter index decelerated, increasing 0.2 percent in June after a 0.3 percent increase the prior month. The indexes for rent and owners’ equivalent rent repeated their May increases of 0.3 percent and 0.2 percent, respectively. However, the index for lodging away from home turned down in June, falling 1.9 percent after rising 2.0 percent in May. The apparel index rose 0.5 percent in June, its largest increase since last July. The medical care index rose 0.1 percent in June; the index for medical care services was unchanged, but the index for prescription drugs increased 1.0 percent. The index for household furnishings and operations rose 0.2 percent in June, its first increase since June 2013. The index for airline fares, which rose 5.8 percent in May, increased 0.4 percent in June. The tobacco index also rose, increasing 1.0 percent, and the recreation index advanced 0.1 percent. In contrast, the new vehicles index fell in June; its 0.3 percent decrease was its first decline since January. The index for used cars and trucks also decreased, declining 0.4 percent.
The index for all items less food and energy has risen 1.9 percent over the last 12 months; this is slightly lower than the 2.0 percent figure in May, but higher than the 1.7 percent average annualized increase over the past five years. The shelter index has increased 2.8 percent over the last 12 months, while the medical care index has risen 2.6 percent. The index for new vehicles was unchanged over the span.


end




A deadly blow to Obama on his Obamacare:

(courtesy zero hedge)








In Potentially "Lethal Blow" For Obamacare, US Appeals Court Finds Insurance Subsidies Invalid In Most States

Tyler Durden's picture





It may be back to square 1 for Obamacare.
Moments ago, in what NBC classified as a "potentially lethal blow to Obamacare" a federal appeals court has ruled that the federal government may not subsidize health insurance plans bought by people in states that decided not to set up their own marketplaces under Obamacare. The law clearly says that states are to set up the exchanges. But 34 states opted not to, and the federal government took over in those states. The court ruled that federal government may not pay subsidies for insurance plans in those states.
As the Hill reports further, the D.C. Circuit Court of Appealssaid the Affordable Care Act does not permit the IRS to distribute premium subsidies in the federal ObamaCare exchange, meaning those consumers must bear the full cost of their insurance.
But... they said socialism is for the greater good!?
The 2-1 decision by the three-judge panel in Halbig v. Burwell sets up a major legal showdown that conservatives believe could deal a fatal blow to President Obama’s healthcare law.
And here is where the government's appeal process is sure to benefit from the NSA's treasure trove of dirt on all those judges who dared to throw a spike in the suboptimally greased wheels of government wealth redistribution:
The government is expected to appeal the ruling to the full D.C. Circuit, but even if the administration triumphs there, the case appears destined for the Supreme Court.

The appeals court’s decision tossed out the ObamaCare subsidies on the grounds that the statutory language of the Affordable Care Act does not explicitly allow enrollees on the federal exchanges to receive premium tax credits.

"Because we conclude that the ACA unambiguously restricts the section 36B subsidy to insurance purchased on Exchanges 'established by the State,' we reverse the district court and vacate the IRS’s regulation," the court said.

Previous courts rejected that argument, saying Congress’s clear intent was to provide the subsidy help to everyone in the system.
And now, the time for a diversionary war has clearly come


end


I beg your pardon!! and the 5 big USA banks do not have significant risk with their derivatives?

(courtesy zero hedge)



NY Fed Slams Deutsche Bank (And Its €55 Trillion In Derivatives): Accuses It Of "Significant Operational Risk"

Tyler Durden's picture





First it was French BNP that was punished with a $9 billion legal fee after France refused to cancel the Mistral warship shipment to Russia (which promptly led to French National Bank head Christian Noyer to warn that the days of the USD as a reserve currency are numbered), and now moments ago, none other than the150x-levered NY Fed tapped Angela Merkel on the shoulder with a polite reminder to vote "Yes" on the next, "Level-3" round of Russia sanctions when it revealed, via the WSJ, that "Deutsche Bank's giant U.S. operations suffer from a litany of serious problems, including shoddy financial reporting, inadequate auditing and oversight and weak technology systems."
What could possibly go wrong? Well... this. Recall that as we have shown for two years in a row, Deutsche has a total derivative exposure that amounts to €55 trillion or just about $75 trillion. That's a trillion with a T, and is about 100 times greater than the €522 billion in deposits the bank has. It is also 5x greater than the GDP of Europe and more or less the same as the GDP of... the world.

In a letter to Deutsche Bank executives last December, a senior official with the New York Fed wrote that financial reports produced by some of the bank's U.S. arms "are of low quality, inaccurate and unreliable. The size and breadth of errors strongly suggest that the firm's entire U.S. regulatory reporting structure requires wide-ranging remedial action."

The criticism from the New York Fed represents a sharp rebuke to one of the world's biggest banks, and it comes at a time when federal regulators say they are increasingly focused on the health of overseas lenders with substantial U.S. operations.

The Dec. 11 letter, excerpts of which were reviewed by the Journal, said Deutsche Bank had made "no progress" at fixing previously identified problems. It said examiners found "material errors and poor data integrity" in its U.S. entities' public filings, which are used by regulators, economists and investors to evaluate its operations.

The shortcomings amount to a "systemic breakdown" and "expose the firm to significant operational risk and misstated regulatory reports," said the letter from Daniel Muccia, a New York Fed senior vice president responsible for supervising Deutsche Bank.

...

Deutsche Bank's external auditor, KPMG LLP, also identified "deficiencies" in the way the bank's U.S. entities were reporting financial data in 2013, according to a Deutsche Bank email reviewed by the Journal.
Oh wait, so those €55 trillion in derivatives are actually completely fabricated? Well if that doesn't send the S&P 500 limit up nothing will.
DB's response is the generic one already attempted by that other permacriminal bank, Barclays, which hired a few hundred compliance people after it was revealed that the British firm was manipulating and rigging pretty much every product and market it was involved in.
"We have been working diligently to further strengthen our systems and controls and are committed to being best in class," a Deutsche Bank spokesman said Tuesday. As part of this, he said, the bank is spending €1 billion globally and appointing 1,300 people, including about 500 compliance, risk and technology employees in the U.S. Mr. Muccia declined to comment.
Sadly for now what this latest Pandora's box means is that confidence in Europe's insolvent banks just crashed with a bang once again, not that it would be reflected in the stock's rigged price of course: rigged most likely by Deutsche Bank among other of course.
The New York Fed's concerns also pose a challenge for Deutsche Bank's longtime finance chief, Stefan Krause, who is ultimately responsible for the company's financial figures and has been spearheading efforts to improve the quality of the bank's reporting.

The concerns from regulators strike at the heart of an issue plaguing many of the world's big banks: Some investors lack confidence in the integrity of their numbers. Such fears have been especially prevalent in Europe.
Then again, none of DB's numbers actually matter: if the banks needs a bailout the Fed will promptly step in, and today's advisory has one simple end point, which happens to be the same as the recent BNP $9 billion fine - don't even dare to side with Putin over the US. Because you sure have big bank over there Germany... It would be a pity if the NY Fed i) revealed just how insolvent it truly was and ii) decided not to bail it out subsequently.
* * *
As for Deutsche Bank's response perhaps the simplest and most effective one would be for the Frankfurt megabank to tell the NY Fed that perhaps its own 150x leverage is just a little more worthy of attention.


end

Well that is all for today

I will see you tomorrow night

harvey

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