Good evening Ladies and Gentlemen:
Here are the following closes for gold and silver today:
Gold: $1094.90 up $6.50 cents (comex closing time)
Silver $14.75 up 6 cents.
In the access market 5:15 pm
Gold $1093.80
Silver: $14.78
I have been away for three days and away from all computers.
I arrived back tonight to provide you the data from the comex and I will be up to snuff by tomorrow morning!
First, here is an outline of what will be discussed tonight:
At the gold comex on Thursday, we had a poor delivery day, registering 0 notices for nil ounces and on Friday we had 3 notices for 300 oz . Silver saw 1 notice for 5,000 oz for Friday.
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 235.52 tonnes for a loss of 59 tonnes over that period.
In silver, the open interest fell by 1122 contracts. The total silver OI continues to remain extremely high, with today’s reading at 187,085 contracts now at decade highs despite a record low price. In ounces, the OI is represented by .935 billion oz or 133% 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.
In silver we had 1 notices served upon for 5,000 oz.
In gold, the total comex gold OI rests tonight at 427,678. We had 3 notices filed for 300 oz on Friday.
We had 7.45 tonnes of withdrawals in gold tonnage at the GLD / thus the inventory rests tonight at 672.70 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 thought that 700 tonnes is the rock bottom inventory in GLD gold, but I guess I was wrong. However we must be coming pretty close to a level of only paper gold and the GLD being totally void of physical gold. In silver, we had no change in silver inventory at the SLV / Inventory rests at 326.829 million oz.
We have a few important stories to bring to your attention today…
1. Today, we had the open interest in silver fall by 1122 contracts down to 187,085. We again must have had some shortcovering by the bankers as they feared something was brewing in the silver arena. The OI for gold fell to 427,678 contracts
(report Harvey)
2 COT report/Harvey
3. Two big commentaries from Bill Holter
will be provided on Monday
(Bill Holter/Holter-Sinclair collaboration)
4. Gold trading overnight
(Goldcore/Mark O’Byrne/)
5.Are we reaching the climax for gold shorting?
(zero hedge)
6 Trading of equities/ New York
(zero hedge)
7. USA stories: lower 2nd quarter GDP
Here are today’s comex results:
The total gold comex open interest fell from 431,583 contracts down to 427,678. For the past two years, we have strangely witnessed the gold comex collapse in OI as we enter an active delivery month, and today this again is the norm. What is interesting is that the LBMA gold is witnessing a 7.40 premium spot/next nearby month as gold is now in backwardation over there. We are now in the contract month of August and here the OI fell by 18,806 contracts falling to 9215 contracts. The next delivery month is September and here the OI rise by 219 contracts up to 2072. The next active delivery month if October and here the OI rose by 1364 contracts up to 25,027. The estimated volume on Friday (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was fair at 196,300. However Friday’s volume was aided by HFT traders. The confirmed volume on Thursday (which includes the volume during regular business hours + access market sales the previous day was fair at 232,801 contracts. Today we had 3 notices filed for 300 oz.
And now for the wild silver comex results. Silver OI fell by 1122 contracts from 188,207 down to 187,085. We continue to have our bankers pulling their hair out with respect to the continued high silver OI as the world senses something is brewing in the silver arena. We are in the delivery month of August and here the OI fell by 36 contracts down to 109. The next major active delivery month is September and here the OI fell by 1640 contracts to 123,261. The estimated volume on Friday was excellent at 55,076 contracts (just comex sales during regular business hours). The confirmed volume yesterday (regular plus access market) came in at 37,247 contracts which is fair in volume. We had 1 notices filed for 5,000 oz.
July final standing
July 31.2015
Gold
Ounces
Withdrawals from Dealers Inventory in oz
nil
Withdrawals from Customer Inventory in oz
272,871.421 oz (HSBC,JPMorgan,Manfra)
Deposits to the Dealer Inventory in oz
nil
Deposits to the Customer Inventory, in oz
2572.000 oz (80 kilobars)
No of oz served (contracts) today
3 contracts (300 oz)
No of oz to be served (notices)
9212 contracts (921,200 oz)
Total monthly oz gold served (contracts) so far this month
3 contracts(300 oz)
Total accumulative withdrawals of gold from the Dealers inventory this month
nil
Total accumulative withdrawal of gold from the Customer inventory this month
272,871.421 oz
Today, we had 0 dealer transactions
total Dealer withdrawals: nil oz
we had 0 dealer deposits
total dealer deposit: zero
we had 3 customer withdrawals
i) Out of HSBC: 72,022.363 oz
ii) Out of JPMorgan; 200,752.608 oz
iii) Out of Manfra: 96.45 oz
total customer withdrawal: 272,871.421 oz
We had 1 customer deposits:
i) Into Manfra: 2572.00 oz (80 kilobars
Total customer deposit: 2572.000 oz
We had 2 huge adjustments
i) Out of Brinks: 8602.400 oz was adjusted out of the dealer and this landed into the customer account of Brinks
ii) Out of JPMorgan: 16,783.956 oz was adjusted out of the dealer and this landed into the customer account at JPMorgan
JPMorgan has only 3.098 tonnes left in its registered or dealer inventory.
.
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 3 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 August contract month, we take the total number of notices filed so far for the month (3) x 100 oz or 300 oz , to which we add the difference between the open interest for the front month of August (9215) and the number of notices served upon today (3) x 100 oz equals the number of ounces standing
Thus the initial standings for gold for the August contract month:
No of notices served so far (3) x 100 oz or ounces + {OI for the front month (9215) – the number of notices served upon today (3) x 100 oz which equals 921,200 oz standing so far in this month of July (28.65 tonnes of gold).
Total dealer inventory 351,519.358 or 10.93 tonnes
Total gold inventory (dealer and customer) = 7,572,284.933 oz or 235.52 tonnes
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 235.52 tonnes for a loss of 67 tonnes over that period.
end
And now for silver
August silver initial standings
July 31 2015:
Silver
Ounces
Withdrawals from Dealers Inventory
nil
Withdrawals from Customer Inventory
609,168.406 oz (Delaware,HSBC)
Deposits to the Dealer Inventory
nil
Deposits to the Customer Inventory
2031.047 oz(CNT,Delaware)
No of oz served (contracts)
1 contract (5,000 oz)
No of oz to be served (notices)
108 contracts (540,000 oz)
Total monthly oz silver served (contracts)
1 contracts (5,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
nil
Total accumulative withdrawal of silver from the Customer inventory this month
609,168.406oz
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 2 customer deposits:
i) Into CNT: 1037.300 oz
ii) Into Delaware: 993.747 oz
total customer deposits: 2031.047 oz
We had 2 customer withdrawals:
i)Out of Delaware: 9151.636
ii) Out of HSBC 600,006.770
total withdrawals from customer: 609,168.406 oz
we had 0 adjustments
Total dealer inventory: 56.594 million oz
Total of all silver inventory (dealer and customer) 175.620 million oz
The total number of notices filed today for the August contract month is represented by 1 contracts for 5,000 oz. To calculate the number of silver ounces that will stand for delivery in August, we take the total number of notices filed for the month so far at (1) x 5,000 oz = 5,000 oz to which we add the difference between the open interest for the front month of July (109) and the number of notices served upon today (1) x 5000 oz equals the number of ounces standing.
Thus the initial standings for silver for the August contract month:
1 (notices served so far) + { OI for front month of August (109) -number of notices served upon today (1} x 5000 oz ,= 545,000 oz of silver standing for the August contract month.
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 31/we had a huge withdrawal of 7.45 tonnes/Inventory rests this weekend at 672.70 tonnes
July 29/no change in inventory/rests tonight at 680.13 tonnes
July 28/no change in inventory/rests tonight at 680.13 tonnes
July 27/no change in inventory/rests tonight at 680.13 tonnes
July 24.2015/we had another massive withdrawal of 4.48 tonnes of gold form the GLD/Inventory rests at 680.13 tonnes.
July 23.2015: we had another withdrawal of 2.68 tonnes of gold from the GLD/Inventory rests at 684.63 tonnes
july 22/another withdrawal of 2.38 tonnes of gold from the GLD/Inventory rests at 687.31
July 21.2015: a massive withdrawal of 6.56 tonnes of gold from the GLD.
Inventory rests at 689.69 tonnes. China and Russia need their physical gold badly and they are drawing their physical from this facility.
July 2o.2015: no change in inventory
July 17./a massive withdrawal of 11.63 tonnes in gold tonnage tonight from the GLD/Inventory rests at 696.25 tonnes
July 16./we lost 1.19 tonnes of gold tonight/Inventory rests at 707.88 tonnes
July 15/no change in inventory/gold inventory rests tonight at 709.07 tonnes.
July 14.2015:no change in inventory/gold inventory rests at 709.07 tonnes
July 13.2015: a big inventory gain of 1.49 tonnes/Inventory rests tonight at 709.07 tonnes
July 10/ we had a big withdrawal of 2.07 tonnes of gold from the GLD/Inventory rests this weekend at 707.58 tonnes
August 1 GLD : 672.70 tonnes
end
And now for silver (SLV) July 31/no change in inventory/rests tonight at 326.829 million oz
July 29/no change in silver inventory/326.829 million oz
July 28/we had a huge withdrawal of 2.005 million oz from the SLV/Inventory rests at 326.829 oz
July 27/no change in silver inventory/inventory rests tonight at 328.834 million oz
July 24/no change in silver inventory/inventory rests tonight at 328.834 million oz
July 23.2015; no change in silver inventory/rests tonight at 328.834 million oz
july 22/no change in silver inventory/inventory rests at 328.834 million oz.
July 21.we had a massive addition of 1.241 million oz into the SLV/Inventory rests tonight at 328.834 million oz.
Please note the difference between gold and silver (GLD and SLV). In GLD gold is being depleted and sent to the east. In silver: no depletions, as I guess this vehicle cannot supply physical metal.
July 20/no change
july 17.2015/no change in silver inventory tonight/inventory at 327.593 million oz
July 16./no change in silver inventory/rests tonight at 327.593 million oz
July 15./no change in silver inventory/rests tonight at 327.593 million oz/
July 14.2015: no change in silver inventory/rests tonight at 327.593 million oz.
July 13./an inventory gain of 1.051 million oz/Inventory rests at 327.593 million oz
july 10/no change in silver inventory at the SLV tonight/inventory 326.542 million oz/
July 9/ a huge increase in inventory at the SLV of 1.337 million oz. Inventory rests tonight at 326.542 million oz
July 31/2015: tonight inventory rests at 326.829 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 11.4 percent to NAV usa funds and Negative 11.0% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 62/2%
Percentage of fund in silver:37.5%
cash .4%
( July 31/2015)
2. Sprott silver fund (PSLV): Premium to NAV rises to -.67%!!!! NAV (July 31/2015) (silver must be in short supply)
3. Sprott gold fund (PHYS): premium to NAV falls to – .86% to NAV(July 31/2015)
Note: Sprott silver trust back into negative territory at- 0.67%
Sprott physical gold trust is back into negative territory at -.86%
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
Wow!!
the commercials are becoming closer and closer to a net long position.
Gold COT Report – Futures
Large Speculators
Commercial
Total
Long
Short
Spreading
Long
Short
Long
Short
182,977
158,512
44,365
176,720
191,986
404,062
394,863
Change from Prior Reporting Period
-4,743
-929
-2,578
-12,956
-19,274
-20,277
-22,781
Traders
127
121
85
55
55
223
226
Small Speculators
Long
Short
Open Interest
34,220
43,419
438,282
-1,201
1,303
-21,478
non reportable positions
Change from the previous reporting period
COT Gold Report – Positions as of
Tuesday, July 28, 2015
Our large specs:
Those large specs that have been long in gold pitched 4743 contracts from their long side.
Those large specs that have been short in gold covered 929 contracts from their short side.
Commercials;
Those commercials that have been long in gold pitched a huge 12,956 contracts from their long side.
Those commercials that have been short in gold covered a monstrous 19,274 contracts form their short side.
Our small specs:
Those small specs that have been long in gold added 1201 contracts to their long side.
Those small specs that have been short in gold added another 1303 contracts to their short side.
Silver COT Report: Futures
Large Speculators
Commercial
Long
Short
Spreading
Long
Short
67,125
60,829
21,869
79,630
91,703
549
-1,502
1,448
-161
745
Traders
94
64
43
51
36
Small Speculators
Open Interest
Total
Long
Short
190,322
Long
Short
21,698
15,921
168,624
174,401
-1,740
-595
96
1,836
691
non reportable positions
Positions as of:
167
124
Tuesday, July 28, 2015
Our large specs:
Those large specs that have been long in silver added 549 contracts to their long side.
Those large specs that have been short in silver covered 1502 contracts from their short side.
Our commercials;
Those commercials that have been long silver added a tiny 161 contracts to their long side.
Those commercials that have been short in silver added 745 contracts to their short side.
Our small specs
Those small specs that have been long in silver pitched 1740 contracts from their long side.
Those small specs that have been short in silver covered 595 contracts from their short side.
And now for your overnight trading in gold and silver plus stories
on gold and silver issues:
(courtesy/Mark O’Byrne/Goldcore)
Protection From Cold and Hot Wars, Cyber and Currency Wars
By Mark O’ByrneJuly 31, 20150 Comments
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We are living in an extremely uncertain world – perhaps the most uncertain in most of our lifetimes.
In this rapidly changing and uncertain world – there are many new and emerging risks and we believe it is vital to stay informed.
These include cyber and currency wars, terrorism, cold and indeed very hot wars
The threat posed by cyber war to our increasingly complicated, technologically dependent and vulnerable financial institutions, markets, banks and indeed deposits becomes more clear by the day.
Banks’ “archaic technology systems” are unable to cope with the demands of modern online banking according to leading experts – let alone hacking by terrorists or hostile nation states.
The risks posed to our paper assets held digitally and our digital currency by hacking, cyberterrorism and cyberwar remains very under appreciated.
Our modern western financial system with its massive dependency on single interface websites, servers and the internet faces serious risks that few analysts have yet to appreciate and evaluate.
Download the Essential Guide to Storing Gold Offshore here
Currency wars and competitive currency devaluations continue and if diplomacy does not prevail, then ‘beggar thy neighbour’ trade wars and currency wars will intensify with attendant consequences for the already vulnerable fiat currencies and our modern financial monetary system.
An intense Cold War has recommenced and there is the possibility of this degenerating into a very hot war and actual conflict and war between large nuclear armed nations such as Russia, China and the U.S.
Terrorism, whether non state or state sponsored poses a real risk to all nations. A single dirty nuclear bomb in a suit case detonated in New York or London could bring down the world’s financial system.
It is an increasingly risky world and yet these risks are far from appreciated. Our research covers breaking news and important views on the precious metal and wider financial markets and helps you better understand the risks of today.
While many will say the risks will not materialise, we believe that it is prudent to be aware of and take appropriate measures to protect your wealth with the financial insurance that is gold and silver.
We believe in helping our clients to understand the increasing risks of today and believe that owning physical bullion coins and bars in the safest jurisdictions in the world will again protect and grow wealth in the coming months and years.
end
And now your overnight Thursday morning trading in bourses, currencies, and interest rates from Europe and Asia:
1 Chinese yuan vs USA dollar/yuan remains constant at 6.2096/Shanghai bourse: red and Hang Sang: red
2 Nikkei up 219.92 or 1.08%
3. Europe stocks mostly in the green /USA dollar index up to 97.27/Euro down to 1.0969
3b Japan 10 year bond yield: rises to 42% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 124.29
3c Nikkei still just above 20,000
3d USA/Yen rate now just above the 124 barrier this morning
3e WTI 49.17 and Brent: 54.16
3f Gold down (options expiry on LBMA/OTC on Friday) /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 slightly rises to .714 per cent. German bunds in negative yields from 4 years out.
Except Greece which sees its 2 year rate rises to 22.130%/Greek stocks this morning: still expect continual bank runs on Greek banks /stock markets will be allowed to be open as per ECB but restrictions
3j Greek 10 year bond yield rises to: 12.12%
3k Gold at $1087.10 /silver $14.68
3l USA vs Russian rouble; (Russian rouble down 9/10 in roubles/dollar) 59.58,
3m oil into the 49 dollar handle for WTI and 54 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 .9727 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0647 well 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 4 year German bund remains in negative territory with the 10 year moving further away from negativity at +.713%
3s The ELA rose another 900 million euros to 90.4 billion euros. The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”. Greece votes again and agrees to more austerity even though 79% of the populace are against.
4. USA 10 year treasury bond at 2.32% early this morning. Thirty year rate below 3% at 3.00% / yield curve flatten/foreshadowing recession.
5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.
(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)
Overnight Wednesday night/Thursday morning
Chinese Stocks Tumble In Close Of Trading “Causing Panic”, US GDP To Be Revised Higher On Seasonal Adjustments
We start off the overnight wrap up with the usual place, China, where in a mirror image of Wednesday’s action, stocks once again started off uneventful, then gradually rose in the afternoon session and meandered near unchanged territory until the last half hour, when out of the blue they tumbled to close near the day’s low, some 2.2% below yesterday’s closing level.
Bloomberg adds that drugmakers and technology companies led declines. A gauge of 100-day price-swings rose to the highest level in six years. Trading volumes in Shanghai have halved from their peaks in June, while margin debt, which had fueled a world-beating rally for China’s stocks, declined to a four-month low.
All 10 industries in the CSI 300 slid more than 2 percent, led by a 4.1 percent slump in the gauge of health-care companies. Lepu Medical Technology Co. plunged 8.3 percent, while Hualan Biological Engineering Inc. slid 5.2 percent. The drug sub-index has been the best performer over the past three month, falling 5.6 percent versus the 20 percent slump for the CSI 300.
Volatility has increased this week as Monday’s 8.5 percent plunge by the benchmark gauge shredded a calm induced by unprecedented state intervention.
“There were no major macro developments,” said Gerry Alfonso, a sales trader at Shenwan Hongyuan Group Co. in Shanghai. “The disconnect with fundamentals continues making trading challenging.”
What caused it? It is unclear why the government would step away from the bid despite the PBOC injecting liquidity for the 11th consecutive day, just as everyone was selling in an attempt to capture the EOD upside as telegraphed the day before, or perhaps the selling was just too violent.
One possible catalyst came from Reuters which reportedthat that Chinese banks were investigating their exposure to the stock market via wealth management products and loans backed by stock as collateral. If true, since this was the catalyst that also ended the steep ascent of mega fraud Hanergy, one can see why Chinese gamblers would be concerned and rush to take profits.
And with every close on a down tick forcing the PBOC and the polibturo to implement even more “anti-panic” regulations which merely reinforce the lack of faith in a normal market, expect the situation to get worse before it gets bettter.
With China out of the way, it brings us to the main event of the day: the first estimate of US Q2 GDP release which also will incorporate the annual revision to GDP growth with the widely mocked and goalseeked “second seasonal adjustments” part of historical GDP, whose only purpose will be to remove the negative Q1 GDP print from 2014 and 2015.
This is how BofA sees today’s GDP release:
The first estimate of 2Q GDP is likely to show growth of 3.0%, which would be a bounce from the contraction of 0.2% in 1Q. However, it is important to remember that the history will be revised along with this report. The annual GDP revisions will alter the trajectory of growth, particularly over the past three years. There will be a change to the seasonal adjustment process which should push up growth in 1Q, reflecting stronger seasonal factors, but potentially lower the later quarters. This adds additional uncertainty around forecasting 2Q GDP growth
The annual revision to GDP growth on July 30th will adjust estimates of growth over the past few years. If growth is indeed revised higher it would help solve the puzzle of low productivity growth.
This will also be the first release of the new GDP and GDI composite. This will show a stronger trend of growth given that GDI has outpaced GDP recently.
Taking a step back and examining a range of indicators reveals an economy expanding at a mid-2% pace, largely consistent with the Fed’s forecasts.
Although it is hard to say with any certainty, we believe GDP growth is likely to be revised up modestly. This will likely leave the Fed comfortable arguing that the economy is making progress closing the output gap, allowing a gradual hiking cycle to commence.
Actually it is rather easy to say with certainty that this is precisely what will happen, which however may be a clear case of good news is bad news (for stocks), since a substantial upward revision to GDP data will greenlight Yellen to hike rates that much sooner. As a reminder the current Atlanta Fed estimate has Q2 GDP at 2.4%. Will it be the closest forecast again? Find out in just over 90 minutes.
Back to markets where aside from China, Asian equities traded mostly higher following a strong lead from Wall Street, as the Fed failed to yield any definitive clues as to when a Fed rate-lift off would occur. Nikkei 225 (+1.1%) outperformed amid a slew of strong corporate earnings, coupled with Industrial production growing at its fastest rate in a year (2.0% vs. Exp. 1.3%); yet another tumble in the JPY certainly helped push stocks higher. ASX 200 (+0.8%) was led higher by miners after iron ore prices rose 4.6%. Finally, JGB’s fell in conjunction with USTs as the demand for safer assets subsided following the broad based gains in Asian indices.
Today has seen the busiest day of earning season so far in Europe and as such company specific news has dictated market movements . A host of large cap names all reported, including heavyweights Siemens (+3.0%), Shell (+2.8%), Deutsche Bank (+2.6%), AstraZeneca (+2.1%), Sanofi (-0.4%) and Santander (-1.9%), with the IBEX underperforming (-0.6%, Euro Stoxx: -0.1%) after being weighed on by Santander, with all other indices trading in the green.
Yesterday saw Facebook Inc (FB) report after the close, with Q2 Adj. EPS USD 0.50 vs. Exp. USD 0.47, CFO says they are affected by currency headwinds. Q2 revenue USD 4.04bIn vs. Exp. USD 3.99b1n. Q2 MAU’s 1.49bIn vs. Exp. 1.475bIn Q2 DAU’s average of 968m1n vs. Exp. 970.5mln. High profile US earnings include US earnings including P&G, Time Warner Cable and Teva pre-market, while Amgen and Linkedln report after the close.
The USD-index has spent the European morning in positive territory, however coming off its highest levels heading into the North American crossover, with participants initially reacting to the FOMC meeting yesterday, whereby no clear clues were given as to when a Fed rate hike but with the FOMC highlighting that job gains had been ‘solid’ ., while elsewhere we have seen a spate of German data, with German regional CPIs painting a mixed picture and unemployment change (9K vs. Exp. -5K) coming in marginally higher than expected, with the 9000 unemployed breaking a 9 month run of improvements in employment.
In line with the mixed regional German CPIs, we have seen choppy price action in Bunds, with the German benchmark outperforming its US and UK counterparts following the mixed data with T-Notes lower on the back of the aforementioned Fed statement last night.
USD strength has weighed upon gold, with the yellow metal falling USD 11.00 to break below USD 1185 in early European trade with some attributing the move to a large fund sale after liquidating a position on the back of last night’s Fed announcement. WTI and Brent both trade in modest positive territory this morning after seeing strength yesterday on the back of DoE’s, with the latest move higher being attributed to reports from WSJ that Saudi Arabia are to lower production from record level.
In summary: European shares remain higher, close to intraday highs, with the oil & gas and tech sectors outperforming and autos, telcos underperforming. Companies including Siemens, Deutsche Bank, Shell, AstraZeneca, Diageo, RBS, BT, ABI, Swiss Re, Sanofi, Infineon, Renault, EDF, Telefonica release earnings/statements. Spanish 2Q GDP in line with quarterly growth est., Swedish GDP above. Japanese industrial output above estimates. The Dutch and French markets are the best-performing larger bourses, Spanish the worst. The euro is little changed against the dollar. Italian 10yr bond yields fall; French yields decline. Commodities gain, with nickel, zinc underperforming and Brent crude outperforming. U.S. jobless claims, continuing claims, Bloomberg consumer comfort, GDP, personal consumption, core PCE due later.
Market Wrap
S&P 500 futures up 0.1% to 2103.2
Stoxx 600 up 0.6% to 396.3
US 10Yr yield up 2bps to 2.31%
German 10Yr yield down 2bps to 0.7%
MSCI Asia Pacific unchanged at 140.8
Gold spot down 0.9% to $1086.7/oz
Eurostoxx 50 +0.5%, FTSE 100 +0.7%, CAC 40 +0.8%, DAX +0.7%, IBEX -0.2%, FTSEMIB +0.6%, SMI +0.6%
Asian stocks little changed with the Nikkei outperforming and the Shanghai Composite underperforming; MSCI Asia Pacific up 0% to 140.8
Nikkei 225 up 1.1%, Hang Seng down 0.5%, Kospi down 0.9%, Shanghai Composite down 2.2%, ASX up 0.8%, Sensex up 0.5%
7 out of 10 sectors rise with materials, energy outperforming and tech, health care underperforming
Euro down 0.09% to $1.0974
Dollar Index up 0.28% to 97.25
Italian 10Yr yield down 7bps to 1.84%
Spanish 10Yr yield down 5bps to 1.9%
French 10Yr yield down 3bps to 0.98%
S&P GSCI Index up 0.6% to 387.2
Brent Futures up 1.5% to $54.2/bbl, WTI Futures up 0.8% to $49.2/bbl
LME 3m Copper down 0.8% to $5284/MT
LME 3m Nickel down 1.6% to $11075/MT
Wheat futures up 0.8% to 500.3 USd/bu
Bulletin headline summary from RanSquawk and Bloomberg:
The USD-index has spent the European morning in positive territory as participants react to the FOMC meeting yesterday
Today has seen the busiest day of earning season so far in Europe and as such company specific news has dictated market movements
Today’s US data includes GDP Advanced reading, Core PCE and weekly jobs numbers
Treasuries fall for a third day before
week’s supply concludes with $29b 7Y notes; WI yield 2.055% vs
2.153% in June.
Chinese stocks fell suddenly in the last hour of trading, almost wiping out Wednesday’s rally and leaving investors in the dark about reasons for the moves
Trading was almost a reverse image of the previous day, when the Shanghai Composite surged in the last hour to close 3.4% higher
Greece’s Prime Minister Tsipras confronted rebels within his own party for not backing him, in a showdown that could put Europe’s most indebted state on course for snap elections
Members of German Chancellor Angela Merkel’s coalition are seeking to amend euro-region rules to ensure private investors bear the brunt of an insolvency by a member state of the currency union
Euro-area economic confidence hit a four-year high this month; outlook may be bolstered by bailout deal that averted Greece’s exit from euro
Saudi Arabia’s recent overtures to other partners suggest the U.S./Saudi relationship is going through another reappraisal because of the landmark accord with regional rival Iran
Sovereign 10Y bond yields mixed. Asian stocks mixed; European stocks gain U.S. equity- index futures lower. Crude oil higher, copper and gold lower
DB’s Jim Reid completes the overnight wrap
If you believed the Fed would raise rates in September before yesterday’s FOMC statement then you probably won’t have changed your mind. They kept their options open but did add a sentence suggesting that job gains have been “solid” which hinted at their confidence in the economy. However if you’re one of the doves then you’ll be pleased they removed the phrase “energy prices appear to have stabilized. However if they hadn’t it would have been strange given recent moves. The most interesting change from the last statement was the tweak to its forward guidance as it added the word “some” to this sentence – “The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen SOME further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.” Does this mean the bar has been lowered for what they need to see to pull the trigger. It’s still pretty vague and no doubt thousands of analysts around the globe will be spending hours debating the addition of a single word. For us there are still great risks in starting a hiking cycle with the great fragility in the global economy and financial system, however the Fed don’t seem to share such a view and it’s going to be a close call for September. Much probably depends on the two interim payroll reports and whether commodities stabilise.
There was fairly minimal reaction in the Fed Funds market in the aftermath of the statement, although we’ve seen more material moves overnight. Yesterday the Dec15 contract closed unchanged at 0.310% (where it’s been all week) while the Dec16 contract rose 1bp to 1.010%. This morning however we’ve seen the respective contracts move +1.5bps and +4.0bps higher. With that, Bloomberg is now reporting that the probability of a hike by September based on the futures market is priced at 42% (up from 38% on Tuesday) while the probability of a move by December is currently priced at 74% (up 4% from Tuesday).
The main mover yesterday was the Greenback with the broader Dollar index, although plunging 0.3% in the initial moments following the release, bouncing back half a percent to close +0.21% as the market slowly digested some of the minor tweaks in the language. In truth this was the only notable price mover following the statement. 10y Treasury yields closed 3.6bps higher at 2.286% which was where they were leading into the statement. Risk assets had a firmer day all round although again the bulk of the gains had been realized preFOMC with fairly minimal reaction post the statement. A boost from energy and industrials stocks in particular helped the S&P 500 close +0.73% while the Dow (+0.69%) and NASDAQ (+0.44%) also closed up. In credit CDX IG finished three-quarters of a basis point tighter while the CDX HY spread tightened 9bps. In the commodity space meanwhile Gold closed +0.13% at $1097/oz while WTI (+1.69%) and Brent (+0.15%) rebounded off the day’s lows following the latest US inventory data which showed a surprise fall in crude stockpiles.
As well as the move in Fed Funds contracts this morning, 10y Treasury yields have moved 2.7bps higher in the Asia session this morning while the Dollar index is +0.3%. As we hit the midday break in China meanwhile, the Shanghai Comp (-0.04%), Shenzhen (-0.12%) and CSI 300 (-0.19%) are all a touch lower in another choppy session where bourses have swung between gains and losses (albeit in a small range). Elsewhere bourses are generally mixed. The Nikkei (+1.06%) is leading gains on the back of a stronger than expected industrial production reading (+0.8% mom vs. +0.3% expected) while the ASX (+0.68%) is also firmer. The Hang Seng (-0.07%) and Kospi (-0.90%) are lower in trading this morning though.
Earnings yesterday were generally supportive in the US. Gilead Sciences, General Dynamics and Northrop Grumman in particular were some of the more notable beats to lead the gains, although after the closing bell Facebook tumbled 4% in extended trading after a disappointing quarterly report. With 288 companies in the S&P 500 having now reported, earnings beats are unchanged versus Tuesday at 76% while sales beats have ticked up 1% to 51%. M&A activity is also continuing to be supportive for markets on both sides of the pond at the moment. Bloomberg is reporting that $426bn of deals have been announced so far this quarter which, if it continues at the current rate, is set to pass the record for any third quarter set back in 2007 when $983bn of deals were made.
Yesterday’s data flow in the US came in the form of pending home sales for June which disappointed having slumped 1.8% mom during the month (vs. +0.9% expected), the first drop this year. Over in Europe we saw German consumer confidence print in line at 10.1 although there was a modest tick down in consumer confidence in France, falling to 93 (vs. 94 expected). In the UK June mortgage approvals data was supportive at 66.6k (vs. 66.0k expected) while net consumer credit was a touch ahead of expectations (£1.2bn vs. £1.1bn expected). Equity bourses closed broadly higher in Europe yesterday, with the Stoxx 600 (+1.02%), DAX (+0.34%) and CAC (+0.81%) all rising for the second consecutive session. Sovereign bond yields moved steadily higher meanwhile on the back of the generally more positive tone with 10y Bunds in particular finishing +2.7bps at 0.715%.
One event which will be worth keeping an eye on today is in Greece where the Syriza Central Committee is due to meet for the first time since the actual agreement was reached in what will likely be a tense session. It’s expected that the Central Committee is to decide the timing and logistics of an emergency congress on the back of the high number of lawmakers who didn’t back the agreement with the radical members of the committee likely to push for a congress immediately (and so aim to block the agreement). Tsipras has suggested he would want an emergency congress in September (so as to increase the chances of an agreement in the interim) with the possibility of a general election thereafter.
Taking a look at today’s calendar now, it’s going to be a fairly busy day for data and we start this morning in Germany with the July CPI and unemployment reports. Euro area confidence indicators for July are also expected. With the FOMC out of the way the focus this afternoon now turns to the US Q2 GDP reading and the three years’ worth of revisions which are also due to be released and which may partially address the recent historical pattern of weak growth in Q1. Market expectations are currently set at 2.5% for Q2 which is line with the forecast of DB’s Joe Lavorgna while the Atlanta Fed GDPNow model is forecasting for a 2.4% reading. Elsewhere we’ll also get the Core PCE print as well as initial jobless claims. On the earnings front the highlights include Time Warner, ConcoPhillips and Proctor & Gamble.
end
Your early Thursday morning currency, and interest rate moves
Euro/USA 1.0969 down .0012
USA/JAPAN YEN 124.29 up .350
GBP/USA 1.5621 up .0023
USA/CAN 1.2969 up .0018
Early this Thursday morning in Europe, the Euro fell by 12 basis points, trading now well below the 1.10 level at 1.0969; Europe is still reacting to deflation, announcements of massive stimulation, a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece and the Ukraine, rising peripheral bond yields, and flash crashes.
In Japan Abe went all in with Abenomics with another round of QE purchasing 80 trillion yen from 70 trillion on Oct 31. The yen continues to trade in yoyo fash