Good evening Ladies and Gentlemen:
Here are the following closes for gold and silver today:
Gold: $1163.00 down $6.50 (comex closing time)
Silver $15.54 down 1 cent.
In the access market 5:15 pm
Gold $1167.00
Silver: $15.68
First, here is an outline of what will be discussed tonight:
At the gold comex today, we had a good delivery day, registering 300 notices for 30,000 ounces . Silver saw 1115 notices filed for 5,575,000 oz.
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 250.01 tonnes for a loss of 53 tonnes over that period.
In silver, the open interest rose by 1113 contracts despite the fact that Wednesday’s price was unchanged. The total silver OI continues to remain extremely high, with today’s reading at 197,837 contracts now at decade highs despite a record low price. In ounces, the OI is represented by .989 billion oz or 141% of annual global silver production (ex Russia ex China). This dichotomy has been happening now for quite a while and defies logic. There is no doubt that the silver situation is scaring our bankers to no end as they continue to raid as basically they have no other alternative. There can only be one answer as to how the OI of comex silver is now just under 1 billion oz coupled with a low price under 16.00 dollars: sovereign China through proxies are the long and they have extremely deep pockets. This is the first time in almost two years that the open interest in an active delivery month did not collapse in number.
In silver we had 1110 notices served upon for 5,565,000 oz. for July
In gold, the total comex gold OI rests tonight at 446,319 for a gain of 4018 contracts even though gold was down $2.50 yesterday. We had 300 notices filed for 30,000 oz today.
We had a huge withdrawal in tonnage at the gold inventory at the GLD to the tune of 1.79 tonnes; thus the inventory rests tonight at 709.65 tonnes. The appetite for gold coming from China is depleting not only gold from the LBMA and GLD but also the comex is bleeding gold. I am sure that 700 tonnes is the rock bottom inventory in gold. Anything below this level is just paper and the bankers know that they cannot retrieve “paper gold” to send it onwards to China .In silver, we had no change in inventory at the SLV to the tune / Inventory now rests at 325.342 million oz.
We have a few important stories to bring to your attention today…
1. Today, we had the open interest in silver rise by 526 contracts to 196,724 as silver was down 7 cents yesterday. The OI for gold fell by another 922 contracts down to 442,301 contracts as the price of gold was down by $7.00 yesterday.
(report Harvey)
2. Today, 12 important commentaries on Greece
(zero hedge, Reuters/Bloomberg/)
3.USA data tonight; i) Jobs report
ii) New Factory orders
iii) jobless claims
4. Gold trading overnight
(Goldcore/Mark O’Byrne/off tonight)
5. Trading from Asia and Europe overnight
(zero hedge)
6. Trading of equities/ New York
(zero hedge)
7. Dave Kranzler/IRD: topic the phony jobs report
(Dave Kranzler IRD)
plus other important topics….
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 by a huge 4,018 contracts from 442,301 up to 446,319 even though gold was down $2.50 in price yesterday (at the comex close). We are now in next contract month of July and here the OI surprisingly fell by only 1 contract to 420 contracts. We had 0 notices filed yesterday and thus we lost only 1 contract or an additional 100 ounces will not stand in this non active delivery month of July. The next big delivery month is August and here the OI rose by 1468 contracts up to 285,041. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 117,985. The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day was poor at 104,437 contracts. Today we had 300 notices filed for 30,000 oz.
And now for the wild silver comex results. Silver OI rose by a huge 1113 contracts from 196,724 up to 197,837 despite the fact that the price of silver was unchanged in price with respect to Wednesday’s trading. We continue to have our bankers pulling their hair out with respect to the continued high silver OI. The front non active delivery month of June is now off the board. The next delivery month is July and here the OI fell by only 306 contracts down to 1,771. We had 330 notices served upon yesterday and thus we gained 24 contracts or an additional 120,000 ounces of silver will stand for delivery in this active month of July. This is the first time in quite some time that we have not lost any silver ounces standing immediately after first day notice. The August contract month saw it’s OI fall by 8 contracts. The next major active delivery month is September and here the OI rose by a small 901 contracts to 139,082. This is the first time we did not witness the collapse of OI in an active delivery month. All of the longs that stayed to the end in July rolled into September. The estimated volume today was horrendous at 21,403 contracts (just comex sales during regular business hours. The confirmed volume yesterday (regular plus access market) came in at 36,011 contracts which is good in volume. We had 1110 notices filed for 5,565,000 oz
July initial standing
July 2.2015
Gold
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
300 contracts (30,000 oz)
No of oz to be served (notices)
120 contracts 12,000 oz
Total monthly oz gold served (contracts) so far this month
300 contracts(30,000 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
13,994.554 oz
Today, we had 0 dealer transactions
we had zero dealer withdrawals
total Dealer withdrawals: nil oz
we had 0 dealer deposits
total dealer deposit: zero
we had 0 customer withdrawals
total customer withdrawal: nil oz
We had 0 customer deposits:
Total customer deposit:0 ounces
We had 0 adjustments.
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 300 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 0 notices were stopped (received) by JPMorgan customer account
To calculate the total number of gold ounces standing for the July contract month, we take the total number of notices filed so far for the month (300) x 100 oz or 30,000 oz , to which we add the difference between the open interest for the front month of July (420) and the number of notices served upon today (300) x 100 oz equals the number of ounces standing.
Thus the initial standings for gold for the July contract month:
No of notices served so far (300) x 100 oz or ounces + {OI for the front month (420) – the number of notices served upon today (300) x 100 oz which equals 42,000 oz standing so far in this month of July (1.306 tonnes of gold). .
Total dealer inventory 522,283. or 16.24 tonnes
Total gold inventory (dealer and customer) = 8,043,291.086 oz or 250.01 tonnes
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 245.02 tonnes for a loss of 53 tonnes over that period.
end
And now for silver
July silver initial standings
July 2 2015:
Silver
Ounces
Withdrawals from Dealers Inventory
nil
Withdrawals from Customer Inventory
630,432.89 oz (Delaware,Brinks,Scotia)
Deposits to the Dealer Inventory
nil
Deposits to the Customer Inventory
601,703.118 oz (HSBC,CNT)
No of oz served (contracts)
1155 contracts (5,775,000 oz)
No of oz to be served (notices)
616 contracts (3,080,000 oz)
Total monthly oz silver served (contracts)
2231 contracts (11,155,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
nil
Total accumulative withdrawal of silver from the Customer inventory this month
630,432.89 oz
Today, we had 0 deposits into the dealer account:
total dealer deposit: nil oz
we had 0 dealer withdrawal:
total dealer withdrawal: nil oz
We had 0 customer deposits:
total customer deposit:nil oz
We had 1 customer withdrawals:
i) Out of Brinks: 311,379.730 oz
total withdrawals from customer: 311,379.730 oz
we had 1 adjustment out of the CNT vault
We had an adjustment of 427,630.18 oz adjusted out of the customer and this landed into the dealer account of CNT
Total dealer inventory: 60.116 million oz
Total of all silver inventory (dealer and customer) 183.685 million oz
The total number of notices filed today for the July contract month is represented by 1155 contracts for 5,775,000 oz. To calculate the number of silver ounces that will stand for delivery in July, we take the total number of notices filed for the month so far at (2231) x 5,000 oz = 11,155,000 oz to which we add the difference between the open interest for the front month of July (1771) and the number of notices served upon today (1155) x 5000 oz equals the number of ounces standing.
Thus the initial standings for silver for the July contract month:
2231 (notices served so far) + { OI for front month of June (1771) -number of notices served upon today (1155} x 5000 oz ,= 14,235,000 oz of silver standing for the July contract month.
we gained 24 contracts or an additional 120,000 oz will stand in this active delivery month of July.
for those wishing to see the rest of data today see:
http://www.harveyorgan.wordpress.comorhttp://www.harveyorganblog.com
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 2/we had a huge withdrawal of inventory to the tune of 1.79 tonnes/rests tonight at 709.65 tonnes
July 1.2015; no change in inventory/rests tonight at 711.44 tonnes
June 30/no change in inventory/rests tonight at 711.44 tonnes
June 29/no change in inventory/rests tonight at 711.44 tonnes
June 26./it did not take our bankers long to raid the GLD. Yesterday they added 6.86 tonnes and today, 1.75 tonnes of that was withdrawn/Inventory tonight rests at 711.44 tonnes.
June 25/a huge addition of 6.86 tones of inventory at the GLD/Inventory rests tonight at 713..23 tonnes
June 24/ a good addition of.900 tonnes of gold into the GLD/Inventory rests at 706.37 tonnes
June 23/no change in gold inventory/rests tonight at 705.47 tonnes
June 22/ a huge increase of 3.27 tonnes of gold into GLD/Inventory tonight: 705.47 tonnes
June 19.2015: no change in gold inventory/rests tonight at 701.90 tonnes.
June 18/no change in gold inventory/rests tonight at 701.90 tonnes
June 17/no change in gold inventory/rests tonight at 701.90 tonnes
June 16./no change in gold inventory/Rests tonight at 701.90 tonnes.
June 15/we lost a huge 2.08 tonnes of gold from the GLD/Inventor rests tonight at 701.90 tonnes
June 12/we had a small withdrawal of .24 tonnes of gold from the GLD/Inventory rests this weekend at 703.98 tonnes.
June 11/we had another huge withdrawal of 1.5 tonnes of gold from the GLD/Inventory rests tonight at 704.22 tonnes
July 2 GLD : 709.65 tonnes
end
And now for silver (SLV)
July 2/ no change in inventory at the SLV/rests tonight at 725.342 million oz
July 1/ we had an addition of 1,624,000 oz into the SLV inventory/rests tonight at 725.342 million oz
June 30/we lost another 621,000 oz of silver from the SLV/Inventory rests at 323.718 oz (somebody must be in great need of physical silver)
June 29/ a monstrous loss of 4.777 million oz of silver from the SLV/Inventory rests tonight at 324.339 million oz
June 26/today we had another addition of 198,000 of silver/Inventory rests at 329.116 million oz
June 25/ a huge increase of 1.242 million oz of silver into the SLV inventory/Inventory rests at 128.918 million oz
June 24/no change in inventory/rests tonight at 326.918 million oz
June 23/we had a small withdrawal of 956,000 oz/Inventory tonight rests at 326.918 million oz
June 22/ no change in silver inventory/327.874 million oz
June 19/no change in silver inventory/327.874 million oz
June 18 no change in silver inventory/327.874 million oz
June 17/no change in silver inventory/327.874 million oz
June 16./no change in silver inventory/327.874 million oz
June 15/we had no change in silver inventory/327.874 million oz
June 12/we had another addition to the tune of 956,000 oz/Inventory rests this weekend at 327.874. Please note that there has been an addition on each of the past 5 days.
June 11.2015: we had another monster of an addition to the tune of 2.791 million oz/Inventory rests at 326.918
June 10/another monster of an addition to the tune of 1.126 million oz/Inventory rests at 324.127
July 2/2015: tonight inventory rests at 325.342 million oz
end
And now for our premiums to NAV for the funds I follow:
Sprott and Central Fund of Canada.
(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)
1. Central Fund of Canada: traded at Negative 7.4 percent to NAV usa funds and Negative 7.7% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 62.0%
Percentage of fund in silver:37.7%
cash .3%
( July 2/2015)
2. Sprott silver fund (PSLV): Premium to NAV falls to 1.15%!!!! NAV (July 2/2015)
3. Sprott gold fund (PHYS): premium to NAV falls to – .60% toNAV(July 2/2015
Note: Sprott silver trust back into positive territory at +1.15%
Sprott physical gold trust is back into negative territory at -.60%
Central fund of Canada’s is still in jail.
Sprott formally launches its offer for Central Trust gold and Silver Bullion trust:
SII.CN Sprott formally launches previously announced offers to CentralGoldTrust (GTU.UT.CN) and Silver Bullion Trust (SBT.UT.CN) unitholders (C$2.64)
Sprott Asset Management has formally commenced its offers to acquire all of the outstanding units of Central GoldTrust and Silver Bullion Trust, respectively, on a NAV to NAV exchange basis.
Note company announced its intent to make the offer on 23-Apr-15 Based on the NAV per unit of Sprott Physical Gold Trust $9.98 and Central GoldTrust $44.36 on 22-May, a unitholder would receive 4.45 Sprott Physical Gold Trust units for each Central GoldTrust unit tendered in the Offer.
Based on the NAV per unit of Sprott Physical Silver Trust $6.66 and Silver Bullion Trust $10.00 on 22-May, a unitholder would receive 1.50 Sprott Physical Silver Trust units for each Silver Bullion Trust unit tendered in the Offer.
* * * * *
end
And now overnight trading in gold/silver from Europe and Asia/plus physical stories that might interest you:
First: Goldcore’s Mark O’Byrne
(courtesy Goldcore/Mark O’Byrne)
>no commentary today/day off!!
end
Mike Kosares: Gold ownership as a lifestyle decision
Submitted by cpowell on Thu, 2015-07-02 01:44. Section: Daily Dispatches
9:46p ET Wednesday, July 1, 2015
Dear Friend of GATA and Gold:
In the July edition of USAGold’s News & Views letter, proprietor Mike Kosares describes the serene confidence and gratitude of a now-retired doctor who put a huge amount of his savings into gold coins a little more than a decade ago, taking a long-term approach to capital preservation and perceiving ownership of the monetary metal as a sort of lifestyle decision.
Such an outlook is not likely to mollify anyone aggrieved by the ever-more-comprehensive destruction of markets by megalomaniacal central banks, but it’s a reminder of the monetary metal’s enduring virtue and purpose and of why a free and transparent market in gold is worth contending for.
The newsletter’s headline, taken from Kosares’ commentary, is “Gold Ownership as a Lifestyle Decision” and it’s posted at USAGold here:
http://www.usagold.com/publications/NewsViewsJuly2015.html
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
end
Is gold ‘shrugging off Armageddon’ or just being shrugged off?
Submitted by cpowell on Wed, 2015-07-01 21:32. Section: Daily Dispatches
5:33p ET Wednesday, July 1, 2015
Dear Friend of GATA and Gold:
Your secretary/treasurer today sent the e-mail below to Bloomberg View columnist Barry Ritholtz in response to his commentary posted today, “Gold Shrugs Off Armageddon,” which can be found here:
http://www.bloombergview.com/articles/2015-07-01/gold-shrugs-off-armaged…
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
Wednesday, July 1, 2015
Dear Mr. Ritholtz:
Your commentary today, “Gold Shrugs Off Armageddon” —
http://www.bloombergview.com/articles/2015-07-01/gold-shrugs-off-armaged…
— invites people to e-mail you “explaining how wrong and stupid I am.” Instead, may I write you to ask that in future commentary you address a few specific questions of fact and that you review and respond to some documentation about the gold market?
Particularly:
— Was the Banque de France’s director of market operations, Alexandre Gautier, telling the truth when he told the London Bullion Market Association meeting in Rome in September 2013 that the bank is secretly trading gold for its own account and the accounts of other central banks “nearly on a daily basis”? (See:http://www.gata.org/node/13373.)
— Is the Bank for International Settlements telling the truth when it maintains in its annual report that it does the same sort of secret trading on behalf of its member central banks, trading not only gold itself but also gold futures, options, and other derivatives? (See: http://www.gata.org/node/12717.)
— Is the BIS sincere when it advertises that it undertakes secret interventions in the gold market for its members? (See http://www.gata.org/node/11012.)
— Was CME Group, which operates the major futures exchanges in the United States, telling the truth last year when it told the U.S. Commodity Futures Trading Commission that it is offering volume trading discounts to central banks for secretly trading all contracts on its exchanges? (See http://www.gata.org/node/14385.)
— Was CME Group telling the truth last year when it told the U.S. Securities and Exchange commission that its customers include governments and central banks? (See http://www.gata.org/node/14411.)
— If central banks are indeed doing so much secret trading in the gold market and other markets, what are their objectives and might this secret trading be intended to manipulate markets, support government currencies and bonds, and deceive and cheat investors who think that markets are free trading?
There is a lot more documentation suggesting as much here:
http://www.gata.org/node/14839
My organization would welcome an honest exchange with you about these things, as your commentaries about gold seem to overlook the most relevant “narrative” about the monetary metal and ignore a substantial and serious audience quite different from the one you seem to enjoy engaging with.
With good wishes.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
end
Why gold should be heading higher:
(courtesy Moe Zulfigar/Profit Confidential/GATA)
Gold Prices Headed Higher; Scrutiny at Suppliers Says So
By Moe Zulfiqar BAS • Thursday, July 2, 2015
Don’t pay attention to the current gold prices. Think long-term when looking at the precious metal. As it stands, the fundamentals are improving. This will eventually reflect in prices.
I am paying extra attention to the supply side.
Gold Mining Companies Falling Victim to Low Prices
You see, when the prices are low, the producers struggle by facing severe scrutiny.
So far, we have heard some miners already giving up as they have stopped their operations. For instance, Midway Gold Corp. filed for Chapter 11 bankruptcy. The reasons for this were too much debt, and needing to restructure the company. (Source: Midway Gold Corp., June 22, 2015.) There are other companies that have stopped their operations as well; Allied Nevada Gold Corp. is another.
Sadly, there are many more companies that are currently in business and producing. But if they are faced with even a minor issue that results in cash outflow, they won’t be operating for too long.
What does this all mean? All of this will impact production. As mining companies shuffle to keep their business in order, or give up, they are bound to produce less.
We already see it happening; if you pay attention to production figures from gold producing regions, you will notice a decline. I will not be surprised if there are even further declines in production.
Gold Recycling Hitting Multi-Year Lows
Another major source of gold supply is from recycling.
To give you some perspective on how big this factor is to the gold market; in the first quarter of 2015, recycled gold amounted to 355.1 tons of the 1,089.2 tons of total supply. Simple math will tell you this was about one third of the total. (Source: World Gold Council, last accessed June 29, 2015.)
Thanks to the low prices, gold recycling has been hurt.
According to a report by the World Gold Council and the Boston Consulting Group, gold recycling in 2014 hit a seven year low and will remain low in 2015 as well. (Source: World Gold Council, last accessed June 29, 2015.)
Over years, it has declined significantly; in 2009, it was 42% of the total gold supply. By 2014, it declined to just 26% of the total supply.
For the recycler, life has become difficult. For example, the Cash4Gold.com mail-in refinery. The company bought gold, silver, and platinum from consumers. In 2009, it even ran an ad during the Super Bowl. Due to the decline of this sort of business, it had to file for bankruptcy just three years later.
Where’s Gold Headed?
Over the past few years, the mainstream has made it appear that gold is a useless metal and shouldn’t be held in a portfolio. I completely disagree with this claim.
I certainly agree that the metal prices are going through a rough phase, and mind you; every asset class does this. In 2008 and early 2009, stocks were a horrible investment. After a period of security, they turned out to be great. Gold is in very similar state.
As I see it, just from basic economics, the yellow metal is setting up to reward big-time. Investors should at least keep an eye on it.
end
Alasdair Macleod on the Greek referendum:
(courtesy Alasdair Macleod)
Greece’s referendum
By Alasdair Macleod
Posted 02 July 2015
This coming Sunday Greece will hold its referendum.
The question to be asked is not, as the foreign press initially reported it, about leaving the euro. It is about accepting or rejecting the troika’s bail-out terms.
The Greek government’s finance minister is making this distinction clear to voters in the few days remaining. As if to ram the point home, Greece was reported earlier this week to be considering taking out an injunction at the European Court of Justice to block attempts to expel Greece from the euro on the grounds that there is no mechanism to do so. Well, there is in the Lisbon Treaty, but it needs Greece’s approval, which amounts to the same thing. Indeed, in a blog written over a year ago the then economist Yanis Varoufakis wrote, “In short, the answer to a German ‘Go jump’ can be ‘We shall not jump but we shall stay rock solid within the Eurozone and behind our demand for a debt conference. Just watch us'”. Now that he is finance minister he is ensuring his prediction will come to pass.
Behind the press reports there is also a common, dangerous assumption; and that is Greece would be better off out of the euro with its own currency, which it can devalue at will. This is not what Varoufakis seeks. He is not naïve enough to think that a new drachma is a panacea. The truth is simpler: Greece is drowning in debt and needs to negotiate at least a partial default, a point Varoufakis has made time and time again.
Unfortunately, in the minds of the Eurozone establishment, for which read Germany as the main creditor-nation, a negotiated default cannot be permitted: it’s the red line. Give in to Greece and you have Portugal, Italy and perhaps Spain and eventually France demanding the same forgiveness. The Eurozone’s banks, while reasonably free of Greek debt, are loaded up with sovereign debt issued by these nations and cannot take haircuts on it without going under. It would not only undermine the Eurozone, but it could trigger a global financial crisis as well.
Furthermore the Greek government’s own spending is exceptionally high, and from a creditor’s point of view should be addressed. This is behind the troika’s emphasis on radical pension reform, already rejected by this far-left government. But there comes a time when even the most lenient creditor has to bite the bullet and face reality, and that is what Germany is now being forced to do.
Of course this is a black-or-white argument, and reality is usually shades of grey. Normally politicians seek compromises so the press is naturally prone to believing that negotiations could be restarted at any time. However, Germany’s continuing insistence that the law will prevail means Varoufakis’s point will be addressed, if not through debt compromise, through the full pain of the financial rug being pulled. It really would be the end of the paved-with-debt road for Greece.
Paradoxically the worst outcome for everyone, creditors included, would be for the electorate to accept the troika’s terms by voting ‘Yes’ in the referendum. If this happens Greece’s debt problem will only be deferred, but not for long. The diversion of economic resources to pay debt-interest tightens the screw on the Greek economy, because the burden of debt escalates as GDP contracts, hastening economic collapse instead of deferring it. The troika, as instrument for this financial torture would naturally be judged by Greece’s people to be motivated by hard reparations, just as France was with Germany in the wake of the Versailles Treaty of 1919. Follow this route and the life of the Eurozone may be extended for a year or so, but the political consequences could hasten its destruction. Germany’s red line is very thin indeed.
Instead, a ‘No’ vote should be an opportunity in the absence of a post-referendum agreement for Greece to scrub all its international debt and start again. It will get no substantive financial help from the EU or financial markets, so the government would be forced to address bloated government spending itself without resorting to money-printing. At least Greece’s electorate will bear full responsibility for its own future.
It was easy to deride Varoufakis as the game-theorist turned finance minister wholly out of his depth negotiating with his hard-nosed opposite numbers in the Eurozone. History may judge him instead to have played a poor hand very well indeed
end
Welcome to the club of investigators, seeking to punish the banks for manipulation of interest rates:
(courtesy Wall Street Journal/GATA)
Brazil’s antitrust agency investigates banks for interest rate manipulation
Submitted by cpowell on Thu, 2015-07-02 16:35. Section: Daily Dispatches
By Jeffrey T. Lewis and Rogerio Jelmayer
The Wall Street Journal
Thursday, July 2, 2015
SAO PAULO, Brazil — Brazil’s antitrust agency is investigating banking giants HSBC Holdings PLC, Citigroup Inc., Deutsche Bank AG, and a long list of their peers on suspicion of forming a cartel to manipulate the exchange rate of the Brazilian currency, the real.
The agency, known as CADE, said Thursday there are “strong indications” of the use of anticompetitive practices in the foreign-exchange market by the three big banks and a number of other U.S. and overseas lenders.
CADE said there was evidence the banks worked together to fix the exchange rate, coordinate the buying and selling of currencies, and impede the operations of other banks operating in Brazil’s foreign-exchange market, among other things. …
… For the remainder of the report:
http://www.wsj.com/articles/brazil-antitrust-agency-investigating-banks-..
And now overnight trading in equities, currencies interest rates and major stories from Asia and Europe:
1 Chinese yuan vs USA dollar/yuan weakens to 6.2035/Shanghai bourse red and Hang Sang: green
2 Nikkei closed up by 193.18 points or 0.95%
3. Europe stocks all in the green (barely) /USA dollar index up to 96.28/Euro rises to 1.1071
3b Japan 10 year bond yield: rises to 53% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 123.51/ominous rise in yield.
3c Nikkei still just above 20,000
3d USA/Yen rate now well above the 123 barrier this morning
3e WTI 57.07 and Brent: 62.32
3f Gold down/Yen down
3gJapan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa.
Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.
3h Oil up for WTI and up for Brent this morning
3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund rises to .84 per cent. German bunds in negative yields from 4 years out.
Except Greece which sees its 2 year rate fall to 35.78%/Greek stocks this morning: stock exchange closed again/ still expect continual bank runs on Greek banks /Greek default to the IMF in full force/
3j Greek 10 year bond yield fall to: 14.78%
3k Gold at 1162.50 dollars/silver $15.60
3l USA vs Russian rouble; (Russian rouble down 1/4 in roubles/dollar in value) 55.64,
3m oil into the 58 dollar handle for WTI and 62 handle for Brent/Saudi Arabia increases production to drive out competition.
3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation. This can spell financial disaster for the rest of the world/China may be forced to do QE!!
30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9495 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0514 just above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.
3p Britain’s serious fraud squad investigating the Bank of England/
3r the 3 year German bund remains in negative territory with the 10 year moving further from negativity at +.78%
3s The ELA is frozen now at 88.6 billion euros. The bank withdrawals were causing massive hardship to the Greek banks. We now await the Greek referendum.
4. USA 10 year treasury bond at 2.44% early this morning. Thirty year rate well above 3% at 3.23% / yield curve flatten/foreshadowing recession.
5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.
(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)
China Crash Accelerates, Drags Composite Under 4000; US Futures Flat Ahead Of Nonfarm Payrolls
If it was Greece’s intention to crush the Chinese stock market instead of Europe’s, well – it succeeded. Because despite the PBOC and politburo throwing everything but QE at the stock market, China stocks closed down sharply on Thursday after another wild trading day as investors shrugged off regulators’ intensified efforts to put a floor under the sliding market, by cutting trading fees and easing margin rules, which has now crashed 25% in about two weeks wiping out $2.5 trillion of the peak $10 trillion in Chinese stock market cap as of June 14. This ultimately resulted with the Shanghai Composite closing under 4000 for the first time since April.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 3.4 percent, to 4,107.99, while the Shanghai Composite Index lost 3.5 percent, to 3,912.77 points, on volume of 58.3 billion shares as margin calls are accelerating and as regulators realize that investor took leverage upon margin upon leverage.
The only good news out of China is for those long realized vol; if only there was some way to be long realized vol that is…
Elsewhere in Asia, most markets ignored the ever louder noise out of China, and are so far doing their best to ignore what is going on their neighbor China, trading mixed following a positive Wall Street close, where renewed Greek optimism lifted sentiment after the Greek government showed a willingness to meet creditor’s demands. The Nikkei 225 (+1.0%) rose supported by JPY weakness, with lower than prior CPI forecasts from BoJ’s Tankan Survey adding to the case of further easing measures by the BoJ. Yes, bad news remains good news.
The ASX 200 (+1.5%) traded in the green with all sectors in positive territory, with gains exacerbated by a break above its 200 DMA (5584.62). Hang Seng (+0.12%) was bolstered by financials, while the Shanghai Comp (-3.48%) bucks the trend despite measures by the nation to support the stock markets by cutting trading fees and ease margin rules. JGB’s fell 40 ticks amid spill-over selling in USTs coupled with today’s lacklustre 10-yr JGB auction.
But while Greece may be happy with its “impact” on China, which alas could care less about the fate of Athens, the European session kicked off with equities trading in mixed territory (Euro Stoxx: -0.21%) amid fairly light newsflow as many market participants look ahead to US Nonfarm Payrolls scheduled for 8:30 Eastern as well as any potential Greek comments, which however have slowed to a trickle following the Eurogroup’s response it would not negotiate until after Sunday’s referendum.
In stock specific news, Syngenta (+2.3%) outperforms, boosting the SMI after reports pre market stated Monsanto (MON) CEO has travelled to Europe in order to hold discussions with Syngenta investors amid Monsanto’s bid for the Co.
Amid the light Greece related newsflow and supply from France and Spain, Bunds have drifted lower throughout the morning in a continuation of yesterday’s trend, while USTs also trade in the red, lower on the day by 4 ticks.
Today’s most notable news come as the Riksbank unexpectedly cut their interest rate by 10bps to -0.35% from -0.25%, QE extended by SEK 45b1n and cut inflation expectations for 2015 & 2016. This happens even though as we explained previously, the Riksbank has become the first central bank for whom QE has failed as incremental QE merely drives rates higher due to a soaring illiquidity premium. The announcement immediate downward pressure on SEK, with EUR/SEK reaching highs of 9.3683. Elsewhere, UK Construction PMI (58.1 vs. Exp. 56.5) came out better than expected, leading to strength in GBP, which in turn contributed to greenback weakness with the USD in modest negative territory (-0.2%).
Looking ahead, the Nonfarm Payroll report dominates this afternoon’s data slate, while participants will also be looking out for ECB minutes and US Factory orders as well as comments possible from ECB’s Draghi and Mersch.
The energy complex resides is modest positive territory having retraced earlier gains amid reports of progress in Iran nuclear talks ahead of the new deadline for an agreement to be reached of July 7th. Participants are wary of a possible deal due to concerns of Iran being able to increase supply substantially if a deal is agreed.
In terms of Genscape alerts, Pony Express pipeline, with a capacity of 235k bpd has seen increased flow to capacity from 56k bpd. Other notable energy news has seen reports that Saudi Arabia are expected to cut official selling price differentials for most of crude grades loading in August for Asian buyers according to trade sources. Libya have reduced Es-Sider OSP for July to USD 1/bbl discount to dated Brent and participants look ahead to EIA NatGas Storage Change (Exp. 70).
Elsewhere, the metal complex has also weakened overnight, with concerns over China failing to subside, while a note from UBS forecasts an increase in nickel prices amid rising Chinese imports and cancelled warrants as well as a fall in exchange inventories.
In summary: European shares remain little changed with the utilities and oil & gas sectors outperforming and tech, media underperforming. Greek poll shows voters almost evenly split ahead of referendum, Varoufakis says he’ll quit if Greek’s vote yes. Sweden deepens negative interest rates to curb gains in krona. Shanghai Composite falls below 4,000. U.K. house prices drop most in 9 months. The Swiss and U.K. markets are the best-performing larger bourses, Swedish the worst. The euro is stronger against the dollar. Japanese 10yr bond yields rise; German yields increase. Commodities gain, with wheat, zinc underperforming and natural gas outperforming. U.S. jobless claims, continuing claims, Bloomberg consumer comfort, ISM New York, factory orders, nonfarm payrolls, unemployment, average earnings, labor force participation due later.
Market Wrap
S&P 500 futures up 0.1% to 2073.7
Stoxx 600 little changed at 387.2
US 10Yr yield up 1bps to 2.43%
German 10Yr yield up 5bps to 0.86%
MSCI Asia Pacific up 0.1% to 146.7
Gold spot down 0.4% to $1164.4/oz
7 out of 19 Stoxx 600 sectors rise; utilities, oil & gas outperform, tech, media underperform
Asian stocks rise with the ASX outperforming and the Shanghai Composite underperforming; MSCI Asia Pacific up 0.1% to 146.7
Nikkei 225 up 1%, Hang Seng up 0.1%, Kospi up 0.4%, Shanghai Composite down 3.5%, ASX up 1.5%, Sensex down 0.3%
Euro up 0.21% to $1.1076
Dollar Index down 0.09% to 96.23
Italian 10Yr yield up 2bps to 2.31%
Spanish 10Yr yield up 1bps to 2.29%
French 10Yr yield up 6bps to 1.3%
S&P GSCI Index up 0.2% to 433.3
Brent Futures up 0.4% to $62.3/bbl, WTI Futures up 0.1% to $57/bbl
LME 3m Copper up 0.4% to $5798.5/MT
LME 3m Nickel up 1.7% to $12230/MT
Wheat futures down 1.2% to 581.5 USd/bu
Bulletin Headline Summary
Markets remained relatively subdued during the European session, with the most notable data showing UK Construction PMI (58.1 vs. Exp. 56.5) coming out better than expected, leading to strength in GBP
Riksbank unexpectedly cut their interest rate by 10bps to -0.35% from -0.25%, QE extended by SEK 45b1n and cut inflation expectations for 2015 & 2016
This afternoon sees Nonfarm Payroll report (Exp. 233k) as well as ECB minutes, US Factory Orders and comments from ECB’s Draghi and Mersch
Treasuries steady, yields higher by 1bp-2bp before reports forecast to show U.S. economy added 233k jobs in June while unemployment rate declined to 5.4% from 5.5%.
Greek voters are almost evenly split heading into a referendum in three days that European leaders said could plunge the country into economic darkness, with 47% endorsing austerity and 43% backing the government’s rejection of it
Greek finance minister Varoufakis said in a BTV interview in Athens that he would “rather cut my arm off” than sign a deal that fails to restructure Greece’s debt and he’ll quit if voters don’t back him in Sunday’s referendum
Merkel’s disapproval helped end the political careers of former Italian prime minister Silvio Berlusconi and Greek leader George Papandreou; Tsipras could be next after burning through whatever goodwill he had
The ECB added state-backed company debt to the list of assets eligible for purchase under its quantitative easing program, widening efforts to spur growth in the region
The Shanghai Composite Index fell below the 4,000 level for the first time since April, as margin traders continued to unwind positions amid doubts over the effectiveness of government measures to support equities
As China’s stock-market slump spurs margin traders to unwind record bullish bets, authorities have responded with a policy that analysts say could exacerbate the problem: make it easier to take on even more leverage
Sovereign 10Y bond yields mostly higher; Greece 10Y yields -20.2bps to 14.78%. Asian stocks mixed; Shanghai plunges over 3.5%. European stocks mostly lower, U.S. equity-index futures gain. Crude oil and copper higher, gold declines
DB’s Jim Reid completes the overnight event summary
For Greece it was a day of high excitement, lots of soundbites, positive sounding headlines and positive global markets but in truth not much changed apart from sentiment. From my angle one of the interesting developments came just after we went to press yesterday. The first opinion poll (for Efysn) showed a ‘no’ vote in the lead. Interesting 57% said they’d vote no before the closure of banks vs. 30% who said yes. After the closure of the banks 46% said no vs. 37% who said yes. The reason I found it interesting is that this was still a ‘no’ and the poll hardly impacted early trading yesterday which can mean one of two things. Firstly that markets were encouraged that the yes vote had some momentum after the banks were closed despite being behind or secondly that a no vote will not actually bring too much market turmoil if it materialises. If there is a hint of the latter then yesterday’s early trading reaction could be seen as a big positive.
After US markets closed yesterday a second opinion poll hit the wires which showed a higher proportion of yes (47%) versus no (43%) votes. The poll (run by GPO) was said to have been taken on Tuesday according to Bloomberg and the result is lending support to the argument of momentum perhaps moving towards the yes vote. Interestingly the poll was split into four categories with votes split between ‘definitely’ and ‘leaning’ with the ‘definitely yes’ at 43% and ‘definitely no’ at 39%. There are still a large number of undecided so all to play for on Sunday.
Equity markets in Asia are generally firmer this morning after the latest poll with the Nikkei (+1.09%), Hang Seng (+0.56%), Kospi (+0.25%) and ASX (+1.55%) all up. Treasuries are unchanged while Asian credit is around a basis point tighter. The outlier once again is in China where the Shanghai Comp (-1.24%) and Shenzhen (-1.95%) have both fallen although the former has pared losses of almost 4% in earlier trading. The moves in fact have come despite the news yesterday that the China Securities Regulatory Commission will no longer require brokerages to force the sale of stock held by clients with insufficient collateral. The Shanghai and Shenzhen exchanges have also announced that stock transaction fees would be cut by nearly a third.
Back to Greece, the better sentiment yesterday, particularly in early European trading, appeared to come about on the back of a story out of the FT which suggested that Tsipras was set to accept most of the earlier bailout terms. Despite some additional concessions it appeared that some important differences still remained and focus instead turned to a defiant nationally-televised address from the Greek PM who once again reiterated a push towards a ‘no’ vote. Addressing the people, Tsipras remarked that ‘the sirens of destruction are blackmailing you to say yes to everything without any prospect of exiting the crisis’ while ‘a no vote is a decisive step toward a better agreement that we aim to sign right after Sunday’s result’.
So with Eurogroup President Dijsselbloem saying that that there are no grounds for further talks at this point and that ‘we will simply wait now for the outcome of the referendum’, and with Merkel also ruling out any negotiations until post Sunday’s result it feels like the Europeans are relaxed enough about the poll and subsequent consequences to not rush to make any concessions ahead of Sunday.
In the meantime we’ve got US payrolls to look forward to today which is coming on the back of a better than expected June ADP employment change report (237k vs. 218k expected) which was up 34k from the May reading and to the highest level since December, with the details all largely supportive. Current market consensus is for a 233k reading for payrolls today, with DB’s Joe Lavorgna at 225k. Yesterday’s employment data helped support a slight lift in yields although in fairness the market was already in more of a risk-on mode with the Greece headlines. 10y Treasuries eventually closed +6.9bps higher in yield at 2.423% and not far off Friday’s closing level of 2.474% just before the referendum announcement. US equities, despite paring some of the initial early bounce, still closed higher on the day with the S&P 500 finishing +0.69%. The gain came despite a notably weaker day for energy stocks which saw the sector fall 1.31% after a particularly weak day in the oil complex. WTI (-4.22%) and Brent (-2.48%) both took a steep leg lower to $56.96/bbl and $62.01/bbl after an EIA report showed US inventories rising for the first time in nine weeks and also signs of crude output from OPEC accelerating last month.
Europe