The ECB Has Almost Run Out Of German Bonds To Buy

One month ago, when looking at the sudden change in ECB bond purchasing patterns, especially of German Bunds, we reported that the central bank may have as little as 4 months of space left in its PSPP program when it comes to German bond purchases. The first thing that caught our eye was that based on calculations from ABN Amro’s Kim Liu, the ECB bought roughly 400 million fewer bonds in Germany in April than its rules allow, suggesting a severe scarcity of eligible bonds.
“It was by far the largest deviation, at least for Germany, and for me suggests that on top of the political stress and smoothing of purchases, there are scarcity constraints for the Bundesbank,” said Pictet’s senior economist Frederik Ducrozet. “What it means is that the ECB has to be very cautious with its exit and if they don’t taper within less than six months (of ending the programme) something might have to give.”
In addition to the sharp drop in nominal purchases, the ECB data also revealed that in just six months the average maturity of monthly German debt purchases by the ECB has dropped to under five years from more than 10.

This post was published at Zero Hedge on Jun 6, 2017.

The Same Crossroads

Writing earlier this year on the topic of the Fed’s future balance sheet reductions, Ben Bernanke had occasion to recount his experience from 2013. It was a stressful time for the Fed after they panicked into QE3 (and then QE4) and then almost panicked right out of it. The then-Fed Chairman stressed from his experience the importance of communications as a means to, as he sees it, maintain control.
When, as Fed chair, I indicated in testimony in 2013 that the FOMC was considering slowing asset purchases if economic conditions improved sufficiently, the markets responded with a ‘taper tantrum’ that included sharp increases in volatility and a rise in longer-term rates. Much of this response came through the signaling channel, as some market participants inferred that slower asset purchases also implied a more-rapid increase in short-term interest rates. The taper tantrum calmed after FOMC members pushed back on that incorrect inference, emphasizing that short-term rates would remain low well after asset purchases were phased out.
This is demonstrably false. Interest rates as well as yield curve flattening continued right on through with actual tapering, and then did even more so for nearly two years after the last balance sheet expansion purchases were conducted in October 2014. In other words, the bond market did more of what he calls ‘stimulus’ without it than with it. Therefore, his explanation for how interest rates unfolded in that period just doesn’t hold up.

This post was published at Wall Street Examiner on June 6, 2017.

Carson Block Triggers A Small Panic In Hong Kong After Teasing His Latest Short

Short-seller Carson Block triggered a small panic in Hong Kong on Tuesday after he told Bloomberg that he had identified a new short play listed in the former British colony.
His comments triggered a flurry of speculation in the city’s $4.6 trillion equity market, Bloomberg reported. The Hang Seng Composite Index dipped shortly after Block appeared on Bloomberg. Shares of Tongda Group Holdings Ltd., Man Wah Holdings Ltd. and Sunny Optical Technology Group Co. tumbled on concerns that they could be in Block’s crosshairs. For his part, Block said he will reveal his latest short at the Sohn Hong Kong conference on Wednesday.

This post was published at Zero Hedge on Jun 6, 2017.

South Africa Unexpectedly Plunges Into Recession

Despite expectations (among 19 ‘economists’) that growth would be up 1.0% in Q1, South African GDP tumbled 0.7% (the second drop in a row) pushing the nation back into recession after eight years.
The median of 19 economists’ estimates in a Bloomberg survey was for 1 percent expansion. There was only one forecast for a contraction. This was a four standard deviation miss…
Indicating contraction for the second quarter in a row – technically signaling a recession – as all bar two industries shrank.

This post was published at Zero Hedge on Jun 6, 2017.

Stocks and Precious Metals Charts – The Summer Wind

“It was June, and the world smelled of roses. The sunshine was like powdered gold over the grassy hillside.”
Maud Hart Lovelace
“Who has seen the wind?
Neither I nor you.
But when the leaves hang trembling,
The wind is passing through.
Who has seen the wind?
Neither you nor I.
But when the trees bow down their heads,
The wind is passing by.”
Christina Rossetti
Today was just a bit of a ‘risk off’ day, with gold and silver showing gains, and the big gap NDX showing its first negative number on the futures in twelve trading days.
The weather here is glorious one day, and cooler and rainy the next. Nature is fairly bursting forth as Spring gives way to early Summer.
Gold is bumping its head against a new high for the year, and some serious overhead resistance.

This post was published at Jesses Crossroads Cafe on 06 JUNE 2017.

Despite Near Certainty Of June Rate-Hike, Millions Of Eurodollar ‘Bets’ Are Set To Expire Worthless

As a trader one of the most frustrating things is to have the correct view on the direction of the market, while not being able to monetize that view because you have the wrong structure on.
Due to the lack of a deep & liquid options market in fed fund futures, many market participants – particularly macro players – instead leverage the highly liquid eurodollar options market to express views on the direction of short-term interest rates.

This post was published at Zero Hedge on Jun 6, 2017.

Is It So Hard To Believe The Textbooks Are All Wrong?

If I was forced to use only one word to describe most that is wrong in the world today it would be ‘economists.’ The global economy is stuck in a depression that has already lasted ten years. Because of it, the world’s social and political order has frayed around the edges and threatens to do much more than that (in some places already in progress). Meanwhile, economists who are no experts in anything other than statistics and regressions have all this time stuck with their statistics and regressions.
ZeroHedge reports this morning on some (more) interior confusion by economists at one of the big banks. The Fed has ‘raised rates’ and yet according to their calculations, all their calculations, financial conditions are for them paradoxically easier.
The supportive trend in financial conditions evident in our FCI is not dependent on the methodology we use to construct our index. Indeed, the signals from various alternative FCIs – including from Bloomberg and the Chicago, Kansas City and St. Louis Federal Reserve Banks – are similar: financial conditions have eased materially in recent months even as the Fed has raised rates.
It’s almost as if the Fed doesn’t really matter, which for economists at this one bank as well as everywhere else just cannot be. Therefore, these same people will spend hours upon hours upon hours trying to unravel what for them is a mystery. The system is supposed to work how the system is supposed to work, where the central bank is the center point of everything.

This post was published at Wall Street Examiner on June 6, 2017.

India GST News Powers Gold Higher

Gold is the world’s ultimate asset, and another spectacular week is underway for investors. While May was mostly sideways (and lower for many gold stocks), it’s starting to look like the month of June could be a serious ‘barnburner’. Please click here now. Double-click to enlarge this daily bars gold chart. Gold tends to stage a decent rally in the days following the release of the US jobs report. That’s in play now, as I suggested it would be, but the rally is also on ‘Indian demand steroids’. Please click here now. It’s unknown how big black market demand is, but the official demand alone came in at over 100 tons for May! This weekend’s government announcement of a 3% GST rate on gold sales has sent Indian jewellery stocks skyrocketing. The new GST effectively cuts the total tax rate in the state of Kerala, which I have dubbed ‘world gold demand headquarters’. In my professional opinion, the bear cycle in Indian demand is over. Once the Diwali festival buying season arrives, I’m predicting that imports could reach a new single month record high of 200 tons. Please click here now. Double-click to enlarge this big picture gold chart. With the bear cycle in Indian demand over, gold is likely to begin its rise out of the huge $1923 – $1045 consolidation pattern. Gold is essentially poised to play ‘catch-up’ with the skyrocketing price of anti-fiat currency bitcoin, and begin a steady rise to my targeted $2800 price level.

This post was published at GoldSeek on 6 June 2017.


GOLD: $1294.40 up $15.10
Silver: $17.68 up 13 cent(s)
Closing access prices:
Gold $1294.30
silver: $17.68
Premium of Shanghai 2nd fix/NY:$9.78
LONDON FIRST GOLD FIX: 5:30 am est $1287.85
For comex gold:
TOTAL NOTICES SO FAR: 1927 FOR 192700 OZ (5.9937 TONNES)
For silver:
For silver: JUNE
Total number of notices filed so far this month: 486 for 3,430,000 oz

This post was published at Harvey Organ Blog on June 6, 2017.

Gulf States Launch Naval Blockade Of Qatar

#SaudiArabia and its allies are effectively running a sea blockade on #Qatar — #OOTT #oil #OPEC #QatarCrisis — Javier Blas (@JavierBlas2) June 6, 2017

In what has emerged as the most significant escalation to result from the Qatar diplomatic crisis – which pits two of OPEC’s largest oil producers, Saudi Arabia and the UAE, against the world’s biggest exporter of liquefied natural gas and further disrupts stability in the region – the biggest Middle East oil and container ports banned all vessels sailing to and from Qatar from using their facilities.
According to a notice posted on the website of Inchcape Shipping, Saudi Arabian and Bahraini authorities closed off all of their ports to Qatari-flagged vessels or ships traveling to or coming from the Persian Gulf state, in what has been described as a naval blockade.
As Bloomberg adds, container and oil terminals in the United Arab Emirates also closed off traffic to any ships touching Qatar.
Saudi Arabia’s eastern coast is home to the port of Ras Tanura, which state-owned Saudi Arabian Oil Co. says is the biggest crude terminal in the world. Jebel Ali port, the region’s biggest container terminal, will be restricted from Tuesday until further notice, its operator Dubai’s DP World Ltd. said in an emailed statement according to Bloomberg. In the U. A. E., DP World operates Jebel Ali along with Dubai’s Mina Rashid and Mina Al Hamriya ports. Elsewhere, government-owned Abu Dhabi National Oil closed its crude and refined-product ports to any vessels to or from Qatar. The port at Fujairah, a main oil transit and refined product hub, said Monday it was closed to Qatar-linked traffic.

This post was published at Zero Hedge on Jun 6, 2017.

What Can We Learn from Japanese Gangsters?

If government regulations are squeezing your business, and you want to avoid the risk inherent in the mainstream financial system, what do you do?
Buy gold!
This is true even if your business is – shall we say – not completely above board.
In fact, Japanese organized crime is reportedly turning to gold as its traditional revenue streams are squeezed by stepped-up law enforcement. Deutsche Welle reports gold smuggling and theft have risen sharply, particularly in southern Japan.
Obviously, we don’t want to get involved in organized crime, but can we learn something from these Japanese gangsters?
Jake Adelstein is an expert on Japan’s underworld. He said the country’s organized crime groups, known as ‘yakuza’ have found gold to be a lucrative income stream in recent years. The sudden surge in gold smuggling provides evidence of this trend. Japanese customs detected only eight attempts to smuggle gold into the country in in 2014. That number increased to 294 last year.
Gangs across the country are desperate for new sources of income after the police began a crackdown on their more traditional sources of income around five years ago. In years gone by, the ‘yakuza’ earned their living largely from extortion and protection rackets, but the new legislation has effectively eliminated those revenue streams. So they have been casting around for a new way of making a living, and the gangs that are dominant in southern Japan have clearly recognized the opportunities that lie in gold.’

This post was published at Schiffgold on JUNE 6, 2017.

The Last Stage Of Popping The Bubbles Has Begun, It’s Only A Matter Of Time – Episode 1299a

The following video was published by X22Report on Jun 6, 2017
Macy’s issues warning that profits are declining. Bankruptcies for consumers and businesses are on the rise, looks like 2008 all over again. Nancy Pelosi says she is going to put up a fight over the debt ceiling. Financial media now convincing millennials this is the time to invest. The market is rising and its time to put your money into the market. This is how bubbles pop. The central bankers don’t know what else to do but to hand out money to the people and hope they will spend it in the economy. When this happens, we will see inflation and the debt will grow astronomically and then collapse, it’s a no win situation

Yellen’s America Is Facing a $13 Trillion Consumer Debt Hangover

Actually, the title of the Bloomberg article was Trumps’s America Is Facing a $13 Trillion Consumer Debt Hangover, but that was a misleading title. Trump has only been President since January and household debt growth has been growing (again) since 2012.
Bloomberg – Matt Scully – After bingeing on credit for a half decade, U. S. consumers may finally be feeling the hangover.
Americans faced with lackluster income growth have been financing more of their spending with debt instead. There are early signs that loan burdens are growing unsustainably large for borrowers with lower incomes. Household borrowings have surged to a record $12.73 trillion, and the percentage of debt that is overdue has risen for two consecutive quarters. And with economic optimism having lifted borrowing rates since the election and the Federal Reserve expected to hike further, it’s getting more expensive for borrowers to refinance.

This post was published at Wall Street Examiner on June 6, 2017.

Gold and Silver ETF Demand Lacking as Prices Jump, Yuan Leaps vs. Dollar

Gold prices jumped to new 7-week highs at $1291 per ounce on Tuesday, again testing the 6-year downtrend line in place since the metal’s 2011 record highs as Western stock markets fell with longer-term interest rates.
After the ISM Prices Paid measure of inflation in manufacturing costs “tanked” in Friday’s report for May, 10-year US Treasury yields today fell again to post-Trump election lows of 2.15%.
Crude oil also extended its drop despite the “freezing out” of Qatar by other Gulf states over what Saudi Arabia and now US President Trump call the “funding of radical ideology.”
British police meantime said they and the MI5 security service had one of Saturday night’s 3 suicide-murderers in London Bridge under close surveillance back in 2015 when he appeared on a national TV documentary entitled The Jihadi Next Door.
“Gold is not just for turbulent times, it has been a good source of returns over the last 10, 20 and 30 years,” said former UBS and then Paulson & Co. strategist John Reade, now chief market strategist for the mining-backed World Gold Council, at the Asia Pacific Precious Metals Conference in Singapore.

This post was published at FinancialSense on 06/06/2017.

BofA: “If Bonds Are Right, Stocks Will Drop Up To 20%”

This (simple yet powerful) chart from @zerohedge warrants a PhD thesis in #Finance #stocks #bonds #markets
— Mohamed A. El-Erian (@elerianm) June 2, 2017

Quickly skimming the front pages of the financial press in recent days reveals one recurring, and puzzling, story: the diverging and contradictory signals being sent by the bond (deflationary) and stock (inflationary) markets.
Attempts at an easy reconciliation are doomed to fail as this paradoxical divergence has stumped everyone, including the person who is allegedly in charge of the US economy, Trump’s top economic advisor, former Goldman COO Gary Cohn, who last week made the “embarrassing” admission that over the long run, the bond market – with its bearish signal – will be right. Recall the following exchange last Friday captured by Pedro da Costa:
CRAMER: What do you make of the fact that rates are going down so precipitously? Is it that trading partners keeping their currencies down and causing money to come here, or are the bond market right and we just saw a peak in employment and maybe even earnings?
COHN: I don’t think there’s a simple answer or a simple factor here, but remember the bond market takes a longer-term view of what’s going on. I think people are taking a longer-term view on our economy, our economy growth, and where they think policy’s going.

This post was published at Zero Hedge on Jun 6, 2017.

Gold Imports into China and India Surge

Gold is flowing into India and China, as demand for the yellow metal in the world’s two largest markets continues to boom.
Gold imports into India surged once again in May, building on strong March and April numbers. Increasing imports signal a continued rebound in demand for the precious metal in the world’s second-largest market after a tepid 2016.
According to a Reuters report, gold imports quadrupled in May year-on-year, coming in at 103 tons. Analysts say they expect the rise in imports will likely help support global prices in the coming months.
Jewelers accounted for the bulk of Indian gold imports last month, as they worked to replenish depleted inventories after a booming Akshay Tritiya festival in April. Gold sales increased more than 30% during the important Hindu holiday. All-told, Indians bought more than 23 tons of gold in a single day.

This post was published at Schiffgold on JUNE 6, 2017.

Gold and Silver Market Morning: June 6 2017 – Gold poised to attack $1,300!

Gold Today – New York closed at $1,279.60 yesterday after closing at$1,278.20 Friday. London opened at $1,289.50 today.
Overall the dollar was weaker against global currencies, early today. Before London’s opening:
– The $: was slightly stronger at $1.1246 after yesterday’s $1.1264: 1.
– The Dollar index was slightly weaker at 96.73 after yesterday’s96.77.
– The Yen was stronger at 109.52 after yesterday’s 110.51:$1.
– The Yuan was stronger at 6.7954 after yesterday’s 6.8036: $1.
– The Pound Sterling was barely changed at $1.2904 afteryesterday’s $1.2905: 1.
Yuan Gold Fix
While New York saw the gold price rise a little it was Shanghai that gave the spurt to the gold price trading at $1,293 late in their day today. London was pulled up at the opening to just $4 below Shanghai.
Silver Today – Silver closed at $17.57 yesterday after $17.52 at New York’s close Friday.
LBMA price setting: The LBMA gold price was set today at$1,287.85 from yesterday’s $1,280.70. The gold price in the euro was set at 1,144.40 after yesterday’s 1,137.04.

This post was published at GoldSeek on 6 June 2017.