Tag: finance

Gold supply and demand data published by all primary consultancy firms is incomplete and misleading. The data falsely presents gold to be more of a commodity than a currency, having caused deep misconceptions with respect to the metal’s trading characteristics and price formation.

Numerous consultancy firms around the world, for example Thomson Reuters GFMS, Metals Focus, the World Gold Council and CPM Group, provide physical gold supply and demand statistics, accompanied by an analysis of these statistics in relation to the price of gold. As part of their analysis the firms present supply and demand balances that show how much gold is sold and bought globally, subdivided in several categories. It’s widely assumed these balances cover total physical supply and demand, which is incorrect as the most important category is excluded. The firms though, prefer not to share the subtle truth or their business models would be severely damaged.  

The supply and demand balances by the firms portray gold to be more of a commodity than a currency, as the gist of the balances reflect how much metal is produced versus consumed – put differently, the firms mainly focus on how much gold is mined versus how much is sold in newly fabricated products. However, in reality gold is everlasting and cannot be consumed (used up), all that has ever been mined is still above ground carefully preserved in the form of bars, coins, jewelry, artifacts and industrial products. Partly because of this property the free market has chosen gold to be money thousands of years ago, and as money the majority of gold trade is conducted in above ground reserves. Indisputably, total gold supply and demand is far in excess of mine production and retail demand.

As most individual investors, fund managers, journalists, academics and precious metals analysts consider the balances by the firms to be complete, the global misconception regarding gold supply and demand is one of epic proportions. Physical gold is a profound anchor in our global financial system and thus it’s of utmost importance we understand the fine details of its trading characteristics. 

Supply & Demand Metrics By The Firms

The firms can argue that the difference between what they present as supply and demand (S&D), as opposed to what I deem to be a more unadulterated approach of S&D is due to contrasting metrics. Accordingly, we’ll discuss their metrics to reveal their infirmity. In a nutshell, the firms only count the physical gold S&D flows that are easy to measure, while leaving out the most important part: institutional supply and demand. 

Although the firms all have slightly different methodologies to measure S&D, from comparisons the numbers appear to be quite similar. For our further investigation we’ll spotlight the metrics and models by GFMS. The reason being, GFMS has been the only firm that was willing to share a full description of their methodology for publication – to be viewed here. Metals Focus (MF) provided a partial methodology, the World Gold Council and CPM Group declined to comment.

Let’s have a look at GFMS its S&D categories. On the supply side is included:

• Mine supply (newly mined gold)
• Scrap supply (gold sourced from old fabricated products)

On the demand side is include:

• Jewelry demand (gold content used in newly manufactured jewelry products bought locally at retail level, adjusted by jewelry exported and imported).
• Industrial demand (the volume of gold used in industrial applications, for example bonding wire, products used in semiconductors/electronics and dental alloys).
• Retail bar investment (the net volume of bars that are purchased by individual investors through retail channels).
• Coin investment (a combination of published data from mints and also a proprietary survey conducted by GFMS detailing where coins are sold).

The above four demand categories summed up are often referred to as “consumer demand” by the firms. Furthermore GFMS includes:

• Net hedging (change in physical market impact of mining companies’ gold loans, forwards, and options positions)
• Net official sector (total central bank selling or buying)
• ETF inventory build (change in ETF inventory)
• Exchange inventory build (change in exchange inventory)

The last four categories can be either supply or demand. In example, when central banks (the official sector) in total are net sellers this will be listed as a negative demand figure, as is shown in the S&D balance by GFMS below from 2006 until 2009, when central banks in total are net buyers this will be listed as a positive demand figure, as is shown in the balance from 2010 until 2015. For a clear overview of the GFMS S&D balance please have a look at all line items below.

Exhibit 1. Courtesy GFMS. Global gold S&D balance as disclosed in the Gold Survey 2016.

According to GFMS Supply consists of Mine production, Scrap and Net Hedging. In turn, Demand consists of Jewelry, Industrial Fabrication, Retail Investment, and Net Official Sector. After balancing Supply and Demand this results in a Physical Surplus/Deficit. Then, ETF Inventory Build and Exchange Inventory Build are added/subtracted from the Physical Surplus/Deficit to come to a Net Balance.

GFMS likes to pretend their balance is complete and occasionally articulates any surplus or deficit arising from it is positively correlated to the price of gold, which is anything but true, as I will demonstrate step by step.  

The Firms Exclude Majority Gold Supply & Demand

Most important what’s excluded from the balance is what we’ll refer to as institutional supply and demand, which can be defined as trade in bullion among high net worth individuals and institutions. Usually the bullion in question comes in 400-ounce (12.5 Kg) London Good Delivery (GD) bars having a fineness of no less than 995, or smaller 1 Kg bars having a fineness of no less than 9999. In addition, bullion bars can weigh 100-ounce or 3 Kg, among other less popular sizes, generally having a fineness of no less than 995. Bullion can be traded without changing in weight or fineness, but it can be refined and/or recast for transactions as well, in example from GD bars into 1 Kg bars. In some cases institutional supply and demand involves cross-border trade, when bullion is sold in country A to a buyer in country B, in other cases the bullion changes ownership without moving across borders.

Provided are two exemplifications of institutional S&D:

• An (institutional) investor orders 400 Kg of gold in its allocated account at a bullion bank in Switzerland – which would be purchased in the Swiss wholesale market most likely in GD bars. This type of S&D will not be recorded by GFMS.
• A Chinese (institutional) investor buys 100 Kg of gold directly at the Shanghai Gold Exchange (SGE), the Chinese wholesale market, in 1 Kg 9999 bars and withdraws the metal from the vaults. Neither this transaction will be registered by GFMS – or any other firm.

These examples show the S&D balances by GFMS are incomplete.

For illustrational purposes, below is a chart based on all S&D numbers by GFMS from 2013, supplemented by my conservative estimate of institutional S&D. Including institutional transactions total S&D in 2013 must have reached well over 6,600 tonnes.

Exhibit 2. Global gold S&D 2013 by GFMS, including conservative estimate institutional S&D.

GFMS Covers The Tracks With Help From The LBMA

Although GFMS intermittently admits their number are incomplete (they have to), at the same time they’ve been battling for years to eclipse apparent institutional S&D for its audience. Dauntless tactics were needed when in 2013 institutional demand in China reached roughly 1,000 tonnes and over 500 tonnes in Hong Kong. Institutional demand in the East was predominantly sourced through GD bars from the London Bullion Market, which were refined into 1 Kg 9999 bars that are more popular in Asia. For the cover up GFMS went to great lengths to refute the volumes of gold withdrawn from SGE vaults, and accordingly have the London Bullion Market Association (LBMA) adjust statistics on total refined gold by its member refineries. Remarkably, the LBMA cooperated. Allow me to share my analysis in detail.

In 2013 something unusual happened in the global gold market as Chinese institutional demand exploded for the first time in history. Hundreds of tonnes of institutional supply from London in the form of GD bars were mainly shipped to Switzerland to be refined in 1 Kg 9999 bars, subsequently to be exported via Hong Kong to meet institutional demand in China. From customs data by the UK, Switzerland and Hong Kong the institutional S&D trail was clearly visible. From 2013 until 2015 there was even a strong correlation between the UK’s net gold export and SGE withdrawals. Demonstrated in the chart below. 

Exhibit 3. Correlation between UK net gold export and SGE withdrawals.

Because of the mechanics of the gold market in China, Chinese institutional demand roughly equals the difference between the amount of gold withdrawn from SGE designated vaults (exhibit 4, red bars) and Chinese consumer demand (exhibit 4, purple bars). In the exhibit 4 below you can see this difference that brought GFMS in a quandary, especially since 2013. For more information on the workings of the Chinese gold market and the size of Chinese institutional demand please refer to my post Spectacular Chinese Gold Demand Fully Denied By GFMS And Mainstream Media.

Exhibit 4. Chinese wholesale demand (SGE withdrawals), versus GFMS consumer demand versus apparent supply.

Stunningly, since 2013 GFMS has tried to convince its readers through numerous arguments why SGE withdrawals crossed 2,000 tonnes for three years in a row, while Chinese consumer demand reached roughly half of this. Yet the arguments have failed miserably to explain the difference – they rationalize only a fraction, read this post for more information.

And GFMS did more to eclipse apparent institutional S&D. They colluded with the LBMA.

To be clear, I cannot exactly measure global institutional S&D. However, let me make an estimate of apparent institutional demand for 2013. Notable, in 2013 a flood of gold crossed the globe from West to East. Chinese institutional demand accounted for 914 tonnes and Hong Kong net imported 579 tonnes – the latter we’ll use as a proxy for additional Asian institutional demand, as Hong Kong is the predominant gold trading hub in the region.  In total apparent institutional demand in 2013 accounted for (914 + 579) 1,493 tonnes. If we add all other demand categories by GFMS shown in exhibit 1, total demand in 2013 was at least 6,619 tonnes. Be aware, this excludes non-apparent institutional demand.

Exhibit 5. Global gold demand 2013 by GFMS, including apparent institutional demand.

Because nearly all wholesale gold demand in Hong Kong and China is for 1 Kg 9999 bars, the global refining industry was working overtime in 2013, mainly to refine institutional and ETF supply in GD bars coming from London. In December 2013 I interviewed Alex Stanczyk of the Physical Gold Fund who just before had spoken to the head of a Swiss refinery. At the time Stanczyk told me [brackets added by me]:

They put on three shifts, they’re working 24 hours a day and originally he [the head of the refinery] thought that would wind down at some point. Well, they’ve been doing it all year [2013]. Every time he thinks it’s going to slow down, he gets more orders, more orders, more orders. They have expanded the plant to where it almost doubles their capacity. 70 % of their kilobar fabrication is going to China, at apace of 10 tonnes a week. That’s from one refinery, now remember there are 4 of these big ones [refineries] in Switzerland.

As a consequence, statistics on “total refined gold production” in 2013 by “LBMA accredited gold refiners who are on the Good Delivery List”, which the four large refineries in Switzerland are part off, capture the immense flows of institutional S&D – next to annual mine output and scrap refining. On May 1, 2015, the LBMA disclosed total refined gold production by its members at 6,601 tonnes for 2013 in a document titled A guide to The London Bullion Market Association. It’s no coincidence this number is very close to my estimate on total demand (6,619 tonnes), as apparent institutional demand in Asia was all refined from GD into 1 Kg bars.

Here’s exhibit 2 from another angle.

Exhibit 6. Global gold S&D by GFMS, including apparent institutional S&D, versus total refined gold production 2013.

In the table below we can see the LBMA refining statistics for 2013 at 6,601 tonnes.

Exhibit 7. Courtesy LBMA. Screenshot from A guide to The London Bullion Market Association captured by Ronan Manly in May 2015.

After this publication GFMS was trapped; these refining statistics revealed a significant share of the institutional S&D flows they had been trying to conceal. What happened next – I assume – was that GFMS kindly asked the LBMA to adjust downward their refining statistics. First and painstakingly exposed by my colleague Ronan Manly in multiple in-depth posts, the LBMA kneeled and altered its refining statistics to keep the charade in the gold market going.

On August 5, 2015, the LBMA had edited the aforementioned document, now showing 4,600 tonnes in total refined gold production. (Click here to view the original LBMA document from the BullionStar server, and here to view the altered version from the BullionStar server.) Have a look.

Exhibit 8. Courtesy LBMA. Altered document on refining statistics by the LBMA August 2015.

In the altered version it says:

Total refined gold production by the refiners on the List was estimated to be 4,600 tonnes in 2013, owing to recycling of scrap material, above world mine production of 3,061 tonnes (source Thomson Reuters GFMS).

A few important notes:

• In the altered version the LBMA mentions “an estimate” for “total refined gold production”, while it doesn’t need to make an estimate as all LBMA accredited gold refiners who are on the Good Delivery List are required to provide exact data to its parent body. The exact data was disclosed in the first version of A guide to The London Bullion Market Association, and it stated, “total refined gold production by the refiners on the List was 6,601 tonnes”.
• In the altered version the LBMA states the refining statistics were sourced from Thomson Reuters GFMS, but the LBMA doesn’t need GFMS for these statistics. The fact they mention GFMS, though, suggests a coordinated cover up of institutional S&D. Not only the firms, also the LBMA publishes incomplete and misleading data.
• The altered version stated refining production totaled 4,600 tonnes, which is a round number and obviously quickly made up. A few weeks after the numbers were adjusted, the LBMA adjusted the numbers again, this time into 4,579 tonnes (click here to view from the BullionStar server). Clearly, on several occasions there has been consultation with the LBMA to get the statistics in line with GFMS.
• In the original document the LBMA states, “Total refined gold production by the refiners on the List was 6,601 tonnes in 2013, more than double world mine production of 3,061 tonnes”, while in the altered version they state, “Total refined gold production by the refiners on the List was estimated to be 4,600 tonnes in 2013, owing to recycling of scrap material, above world mine production of 3,061 tonnes”. Notable, GFMS prefers to have total supply focused around mine and scrap production, instead of including institutional supply.
• The original refining statistics (6,601 tonnes) are still disclosed in the LBMA magazine The Alchemist (#78 on page 24), to be viewed from the LBMA server here.
• The fine details about how often and when the LBMA changed its refining statistics can be read in Ronan Manly’s outstanding post Moving the goalposts….The LBMA’s shifting stance on gold refinery production statistics.

And so nothing is spared in trying to uphold the illusion of the GFMS S&D balance to be complete. In another example GFMS excluded gold purchases by the central bank of China from its S&D balance. In June 2015 the People’s Bank Of China (PBOC) increased its official gold reserves by 604 tonnes, from 1,054 tonnes to 1,658 tonnes. During that quarter (Q2 2015) all other central banks worldwide were net buyers at 45 tonnes. Thus, in total the Official Sector was a net buyer at 649 tonnes. Now, let’s have a look at GFMS' S&D balance for Q2 2015:

Exhibit 9. Courtesy GFMS. Global gold S&D balance as disclosed in the Gold Survey 2015 Q2.

Net Official Sector purchases are disclosed ay 45 tonnes. GFMS decided not to include the 604 tonnes increment by the PBOC simply because it didn’t fit their balance model. A 604 tonnes increment in would have set the “net balance” at -480 tonnes. Readers would have questioned the balance from this outlier, and so GFMS decided not to include the tonnage.

According to my sources PBOC purchases were sourced from institutional supply (from abroad and not through the SGE), which is a supply category not disclosed by GFMS and therefore the tonnage was a problem. (Note, GFMS disclosed the PBOC increment in text, but not in their balance.) For more information read my post PBOC Gold Purchases: Separating Facts from Speculation.

Gold Is More A Currency Than A Commodity

The biggest flaw of the balance model by GFMS is that it depicts gold to be more of a commodity than a currency. It’s focused on mine output and gold recovered from old fabricated products on the supply side, versus retail sales of newly fabricated products on the demand side. In parlance of the firms, how much is produced (supply) versus consumed (demand). Official sector, ETF and exchange inventory changes are then added to the balance. This commodity S&D balance approach by GFMS has caused deeply rooted misconceptions about the essence of gold and its price formation.

The price of a perishable commodity is mainly determined by how much is annually produced versus how much is consumed (used up). However, gold is everlasting, it cannot be used up and its exchange value is mainly based on its monetary applications, from being a currency, or money if you will. Logically the best part of its trading is conducted in above ground reserves. From my perspective the impact of global mine supply, which increases above ground stocks by roughly 1.5 % annually, and retail sales have less to do with gold’s price formation than is widely assumed.

Back to GFMS. Have a look at the picture below that shows their S&D flows for 2015. 

Exhibit 10. Courtesy GFMS. The global S&D flows for 2015.

GFMS pretends total supply is mine production plus some scrap, which is then met by jewelry demand in addition to retail investment, industrial fabrication and official sector purchases. The way they present it is misleading. These S&D flows are incomplete; they suggest gold is traded like any other commodity. But what about institutional S&D in above ground bullion? Trades that define gold as an international currency. Let’s do another comparison; this time between what GFMS calls Identifiable Investment demand, consisting of…

• Retail bar & coin
• ETF demand

…versus my what I deem to be a more unadulterated approach of investment demand, consisting of…

• Retail bar & coin
• ETF demand
• Institutional demand

According to my estimates, in 2015 apparent Chinese institutional demand accounted for roughly 1,400 tonnes (exhibit 4). In the Gold Survey 2016 GFMS states on page 15 [brackets added by me]:

Total [global] Identifiable Investment, … posted a modest 5 % increase in 2015, to reach 990 tonnes.

That’s quite a tonnage between global Identifiable Investment by GFMS at 990 tonnes and apparent Chinese institutional demand at 1,400 tonnes. We should also take into account non-apparent institutional demand, gold that changes hands in trading hubs like Switzerland. Unfortunately we can’t always measure institutional S&D, but that doesn’t justify denying its subsistence. Have a look at the chart below that shows the large discrepancy. In the next chapter we’ll specifically discuss the significance of investment demand in relation to the price of gold.

Exhibit 11. Global Gold Investment Demand 2015.

My point being: what many gold market participants and observers think is total supply and demand is just the tip of the iceberg. This truly is a staggering misconception created by the firms.

The global gold market. H/t Dan Popescu.

When observing the GFMS balance in exhibit 1 its incompleteness is self-evident. At the bottom we can see the line item “net balance”, which reflects the difference between total supply and total demand. According to GFMS, if the “net balance” is a positive figure there was a surplus in the global gold market, and if “net balance” is a negative figure the market has been in deficit. In the real world this figure is irrelevant. Gold supply and demand are by definition always equal. One cannot sell gold without a buyer, and one cannot buy gold without a seller. Furthermore the gold market is deep and liquid. So how come there is a difference between total supply and total demand in the GFMS balance? As I’ve demonstrated before, because GFMS doesn’t include institutional S&D that in reality makes up for the difference and far beyond. In all its simplicity the “net balance” item reveals their data is incomplete.

Let’s have another stab at this. How can “net balance” exist in the real world, for example in 2009? According to GFMS the gold market had a 394 tonnes surplus in 2009. But how? Were miners left with 394 tonnes they couldn’t sell? Or some supranational entity decided to soak up the surplus to balance the market? Naturally, this is not what happens. Total supply and total demand are always equal, but GFMS doesn’t record all trades.

Moreover, in my opinion the words “surplus” and “deficit” do not apply to gold. There can be no deficit in gold; there will always be supply. At the right price that is. Sometimes Keynesian economists claim there is not enough gold in the world for it to serve as the global reserve currency. Austrian economists then respond by saying that there will always be enough gold at the right price. I agree with the Austrians and their argument also validates why there can be no deficit in gold.  

There is more proof the “net balance” item presented by GFMS is meaningless. Although according to GFMS the market had a 394 tonnes “surplus” in 2009 the price went up by 25 % during that year. This makes no economic sense. A surplus suggests a declining price, not the other way around. Tellingly, S&D forces presented in GFMS balances are often negatively correlated to the gold price, as was the case in 2005, 2006, 2009, 2010 and 2014 (exhibit 1). In conclusion, GFMS S&D balances are not only incomplete, the resulting “net balance” items are misleading with respect to the price. Below are a few charts that demonstrate this conclusion.

If we plot “net balance” versus the end of year price of gold we can see the correlation is often negative. Have a look below. Green “net balance” chart bars show a positive correlation to the gold price, red chart bars show a negative correlation (note, the left axis is inverted for a more clear overview between any “deficit/surplus” and the price of gold). As you can see nearly half of the “net balance” chart bars are negatively correlated to the price of gold.

Exhibit 12. GFMS’ gold market “net balance” versus the gold price. We can quarrel if the “net balance” in 2014 was positively or negatively correlated to the price. I say the correlation was negative as the gold price in 2014 remained flat in US dollars but was up in all other major currencies, in contrast to the “surplus” presented by GFMS.

Mind you, although the “net balance” item is often negatively correlated to the gold price, in the Gold Survey 2016 GFMS states on page 9:

In terms of the Net Balance, 2015 marked the third year in which the gold market remained in surplus, and therefore it is not surprising that the bear market continued.     

And on page 14:

The forecast reduction in global mine output and a gradual recovery in demand will see the physical surplus narrow in 2016, providing support to the gold price and laying the foundation for better prospects.  

GFMS likes to pretend any “surplus” or “deficit” arising from their balance is correlated to the price, but the facts reveal this is not true. Let us plot the “physical surplus/deficit” line item by GFMS (exhibit 1) versus the gold price. This results in even more negative correlations.

Exhibit 13. GFMS gold market “physical surplus/deficit” versus gold price.

This exercise reveals that a positive correlation between either a “surplus” or “deficit” arising from a GFMS balance and the price of gold is just a coincidence. No surprise when one is aware their S&D data is incomplete.

Remarkably, the last chart was also published in the Gold Survey 2016, but GFMS chose not to invert the left axis and doesn’t disclose what we see is a surplus or deficit. As a result the largest surpluses (2006, 2007, 2009, 2010) seem to correlate with a rising price, though in reality they did the opposite. Compare the chart below with the one above.

Exhibit 14. Courtesy GFMS.

GFMS also publishes S&D balances for silver (a monetary metal that is comparable to gold). For silver the presented correlations by GFMS between a “surplus” or “deficit” in relation to the price are even weaker.

Exhibit 15. GFMS silver market “net balance” versus silver price, as disclosed in the Silver Survey 2016.

Exhibit 16. GFMS silver market “physical surplus/deficit” versus silver price, as disclosed in the Silver Survey 2016.

According to GFMS the silver market is always in deficit, but the price goes up and down. Obviously GFMS neglects to measure institutional S&D for silver. 

Conclusion

In my opinion, when Gold Fields Mineral Services (GFMS) was erected many decades ago they made a mistake to adopt a commodity S&D balance approach. Surely with the best intentions they gather intelligence and retrieve data from the market. But we must be aware this is not the full picture. The most significant data is not disclosed by GFMS. When it comes to what drives the price of gold GFMS and I agree it’s determined by gold’s role as a currency in the global economy. When reading the chapter PRICE AND MARKET OUTLOOK in the Gold Survey 2016, GFMS shares its insights with respect to the gold price. Factors mentioned are:

• Turmoil in global stock markets
• A Chinese hard landing
• Geopolitical tensions in the Middle-East
• Central bank stimulus (QE)
• Global economic weakness
• Interest rates policy by central banks
• Low risk asset / safe haven demand

So if these factors drive the gold price, in what S&D category would this materialize? Would (large) investors buy and sell jewelry? Or bullion bars? I think the latter. According to my analysis the price of gold is largely determined by institutional demand, and to a lesser extent ETF and retail bar & coin demand.

Let’s do an exercise to see what physical gold S&D trends correlate to the price. The majority of supply on the GFMS balance consists of mine output and the majority of demand on the GFMS balance consists of jewelry consumption. But if we plot these volumes versus the price of gold in a chart, there is no push and pull correlation. For example, when the gold price surged from 2002 until 2011 jewelry consumption was not rising. Neither was it outpacing mine supply. The opposite happened, to be seen in the graph below. This is because jewelry demand is price sensitive – when the price goes up jewelry demand goes down, and vice versa. Jewelry demand is not driving the price of gold.

Exhibit 17. GFMS retail demand, versus mine and scrap supply versus the gold price.

I also added retail bar & coin demand. Interesting to see is that retail bar & coin demand is on one hand a price driver, moving up and down in sync with the gold price, on the other hand it can be price sensitive having brief spikes when the price of gold declines.

The best correlation between physical S&D in relation to the gold price can be seen in institutional and ETF S&D. One of the largest gold trading hubs in the West is the UK, home of the London Bullion Market that also vaults the largest ETF named GLD. The UK has no domestic mine production, no refineries and national gold demand is neglectable in the greater scheme of things. Therefore, by measuring the net flow of the UK (import minus export) we can get a sense of Western institutional and ETF demand and supply. For example, if the UK is a net importer – import demand being greater than export supply – that signals a net pull on above ground stocks. Approximately one third of the UK’s net flow corresponds to ETF inventory changes, the other two thirds reflect pure institutional S&D.

Exhibit 18. UK net flow versus the gold price.

Exhibit 19. UK net flow, GLD inventory change, gross import and gross export versus the gold price.

In the charts above we can observe a remarkable solid correlation between the UK’s net flow and the gold price. The UK is a net importer on a rising price and net exporters on declining price. The shown correlation can't be a coincidence, though there's no guarantee it will prevail in the future. The two charts above show the gold price is mostly determined by institutional supply and demand in above ground reserves. Effectively, GFMS is hiding the most important part of global physical gold flows.

When I asked an analyst at one of the leading firms why his company doesn’t measure institutional S&D he told me candidly, “because it’s extremely difficult to accurately estimate it”. And it is. As I wrote previously, I can’t exactly measure global institutional S&D either. However, very often publicly available information gives us a valuable peek at it, and it shows to be more relevant to the gold price than what the firms keep staring at. Not knowing exactly what institutional S&D accounts for doesn’t mean GFMS shouldn’t pay attention to it.

But the firms keep trying to uphold the illusion the data they’ve been selling for decades is complete. For if they would plainly confess it was incomplete, future business could be severely damaged.

What I blame these firms is that they’ve created a meme that the gold market is as large as annual mine supply. This has caused all sorts of misconceptions. Often I read analyses based on a comparison between quantitative demand and mine output. Such analyses are likely to jump erroneous conclusions.

H/t Ronan Manly, Bron Suchecki, Nick Laird from Goldchartsrus.com

Appendix

Simplified overview gold flows 2015:

via http://ift.tt/2edeona BullionStar

For the last 7 days, something odd has happened at the end of the day… stocks haven't ripped higher into the close.

While no confirmation has been received, we are hearing increasing chatter on desks about probes over index ETF rebalancing shenanigans which many have argued have been responsible for the ubiquitous end of day ramps in US equity markets over the last few years. Note that VIX has collapsed during this time but stocks have gone nowhere…

 

The 7 day streak is very unusual…

 

The last time this happened was in June/July 2015 (which coincided with turmoil in China)…

 

And the Yuan is tumbling once again…

 

Just like it did in Aug 2015…

 

Something has changed, there is no doubt. And judging by yesterday's utter chaos in the equity-vol complex, it's not over…

via http://ift.tt/2eqDKfg Tyler Durden

Submitted by Michael Shedlock via MishTalk.com,

Obamacare premiums are skyrocketing out of sight. A jump of a mere 30% looks like a good deal compared to jumps of over 50% in six states, and 93% in New Mexico.

Congratulations are in order for those living in a handful of states whose premiums only rose 20%.

The Wall Street Journal reports Rate Increases for Health Plans Pose Serious Test for Obama’s Signature Law.

Finalized rates for big health insurance plans around the country show the magnitude of the challenge facing the Obama administration as it seeks to stabilize the insurance market under the Affordable Care Act in its remaining weeks in office.

 

“The situation is serious,” said Alissa Fox, senior vice president of the Office of Policy and Representation for the Blue Cross Blue Shield Association. “The reason the premiums are where they are is that the people we are covering have serious conditions and they’re using a lot of medical services because of their chronic illnesses. That’s clear. And there’s not enough young, healthy people to balance out those costs.”

 

In Minnesota, for example, Blue Cross Blue Shield is pulling its preferred provider organization plans from the state’s online exchange, MNSure, and the narrow network product has been approved for an average rate increase of 55%.

 

Democratic Gov. Mark Dayton told local reporters that the law is “become unaffordable for many Minnesotans, a growing number with these rate hikes” and that federal and state action is necessary.

 

House Speaker Paul Ryan, a Wisconsin Republican, has gone further and said the insurance markets are already in a “death spiral,’” and that “we’re going to have to change this thing.”

 

The danger for insurers and supporters of the law now is that high prices and limited choices further deter low-risk people from signing up, and that the increases continue and become irreversible.

Approved Hikes

• Approved Hikes Just Under 20%: Colorado, Florida and Idaho
• Approved Hikes 20% to 29%: Connecticut, Georgia, Indiana, Kentucky, Maine, Maryland
• Approved Hikes 30% to 49%: Alabama, Delaware, Hawaii, Kansas, Mississippi, Texas
• Approved Hikes 50% to 92%: Arizona, Illinois, Montana, Oklahoma, Pennsylvania, Tennessee
• Approved hikes 93%: New Mexico

Just a Transition

President Obama calls this a “transition” because insurers aggressively priced too low to get healthy people to sign up.

It’s a transition all right, to hell, for those watching rates skyrocket.

Meanwhile, young and healthy millennials have decided it is ridiculous to overpay for healthcare with $5,000 deductibles to support chronically ill smokers with cancer.

Obvious Death Spiral

I have been writing about the Obamacare death spiral since the legislation first passed. Some are now just catching on.

Please consider Now, Even Democrats Can see the ObamaCare Death Spiral.

Another day, another Democrat finally owning up to the fact that ObamaCare is a disaster. And another state facing the implosion of its health insurance market.

 

Minnesota Gov. Mark Dayton — once one of the Affordable Care Act’s most enthusiastic champions — is the latest Democrat to publicly eat crow for that support.

 

With good reason: Tens of thousands of Minnesotans are losing their coverage next year. And premiums on individual plans — which enroll 250,000 North Star State residents — will rise an average 50 percent to 67 percent.

 

“The reality is the Affordable Care Act is no longer affordable for increasing numbers of people,” Dayton admitted last week, calling the situation in his state “an emergency.”

 

This just a week after former President Bill Clinton blasted ObamaCare as “the craziest thing in the world,” adding that “it doesn’t make sense.”

 

An S&P Global Ratings forecast warns that, for the first time since ObamaCare got rolling, participation in the program will actually shrink by up to 8 percent.

 

Ever-higher premiums are keeping younger, healthier Americans — the ones whose premiums were supposed to subsidize insurance for everyone else — away in droves.

 

And what President Obama intended as his signature domestic achievement is well on the way to becoming his biggest failure.

Obamacare About to Collapse

Rep. Michael Burgess M.D., Rep. Tom Price M.D., and Rep. Phil Roe M.D., all doctors, say ObamaCare is About to Collapse.

ObamaCare is collapsing. Its utter failures become more obvious by the day.

 

We all remember the promises of ObamaCare, chief among them that the “Affordable Care Act” would lower health care costs. The opposite has occurred.

 

In his 2008 campaign for president, then-candidate Sen. Barack Obama repeatedly promised to cut annual health insurance premiums by $2,500. When he took office in 2009, annual family premiums for employer-provided coverage, the most common of private insurance coverage, cost $13,375 according to Kaiser. In 2016, those premiums are $18,142. That’s an increase of $4,767.

 

Back in 2010 just before ObamaCare became law, President Obama’s Department of Health and Human Services forecast there would be 24.8 million individuals in the exchanges by 2016. The actual figure at the end of 2016 according to Avalere Health will be 10.1 million.

 

Not only are premiums skyrocketing, but individuals are also left with fewer choices in the ObamaCare exchanges.

 

The dwindling number of ObamaCare supporters repeatedly point to the fact that 20 million more Americans have coverage now than before ObamaCare.

 

The vast majority of those 20 million, however, have been dropped into a failing Medicaid program. Patients under our broken Medicaid system struggle to find doctors who see Medicaid patients.

 

It is a top-down system that has Washington dictating terms to the states that ignore the diverse needs of communities across this country. That is not a recipe for success, and studies have shown that Medicaid’s impact on the health status of enrollees is negligible.

 

Regardless, 31 states expanded their Medicaid programs under Obamacare. However, it is not going as promised. According to Dr. Brian Blase at the Mercatus Center, there are 50 percent more enrollees at a cost of 50 percent more per person than originally projected. These massive, unanticipated costs will only become more unaffordable in the coming years.

 

Those governors and state legislatures that rejected the Medicaid expansion have been vindicated.

 

Hillary Clinton’s solution is to double down on ObamaCare with more government involvement in health care. She believes the fundamentals of the law are sound and it simply needs more taxpayer subsidies.

 

Her other scheme is to add a so-called “public option” plan even though we’ve already seen the disastrous ObamaCare co-op experience – the original compromise to a public option in the ACA.

 

Finally, as if ObamaCare’s total collapse is not imminent enough, Clinton also wants to add illegal immigrants to ObamaCare at the same time that America’s veterans aren’t getting the care they deserve.

 

One column is not nearly enough space to chronicle all of ObamaCare’s failures. Additional dishonorable mentions include the president’s illegal bailouts of big health insurance companies, as well as a finding by the Government Accountability Office that 100 percent of their investigators with fake documents were able to fraudulently enroll in ObamaCare.

 

You can’t make this stuff up.

Related Articles

April 15, 2016: Obamacare Death Spiral: Insurers to Drop Plans Unless Premiums Rocket, “Something’s Got to Give”

April 20, 2016: United Health Will Dump Obamacare Offerings in 29 of 34 States: Death of Obamacare?

May 17, 2016: As Insurance Losses Mount So Do Refusals: “Sorry, We Don’t Take Obamacare”

June 29, 2016: Health Care Costs Rising Sharply (And It Will Get Worse)

September 8, 2016: Record 29% Say Obamacare Hurt Their Finances; Overall Only 44% Positive on ACA

September 14, 2016: 17th Obamacare Co-Op Exits Due to “Hazardous Financial Condition”, Only 6 Left

Anyone who did not see this coming is blind.

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As gold and silver step back slightly to sit and wait for US economic data to be released later today we bring you news of the US Mint Silver Eagle demand that has ‘Returned with a Vengeance’ as reported by silverseek.com.

Last month it seemed some of the heat had come out of the US Mint Silver market when sales had failed to maintain the momentum seen in the first five months of the year when between 5.9m and 4 million coins had been sold each month.

But things have dramatically picked up. Sales of US Mint Silver Eagles in the month of October have reached 2,925,000, 75% higher than those seen in September when just 1,675,000 were sold, reports silverseek.com. Buyers have already bought more than the previous record month of June when they snapped up some 2,837,000. Given October’s buying patterns commentators now expect sales to touch 4,000,000 in total should the pace continue.

Silver Eagle sales this year lift the tally higher than all but five of the years in the last thirty.

Last year sales reached 47 million coins, and have reached over 35.35 million coins this year. At present the buying pace is not keeping up with the record year that was 2015, but it isn’t far off. We’re 80% through the year and sales are 71% of last year’s total.

The sales figures for October-to-date are not that surprising when you consider the 1 million coins that were shifted in 24 hours by the US Mint earlier this month as the price fell to $17.65/oz. source

One reason for the drop off over the summer may have been the silver price.  Last July, the sub $15/oz price of silver saw investors snapping up coins from authorised dealers, this year summer saw highs of over $20/oz prompting some buyers to draw a profit.

silverseeker.com also draws our attention to Gold Eagles which are also set to outperform September’s sales numbers of 94,000 compared to 84,000 this month to-date. If buying remains at pace, sales could reach 130,000 coins making this month the highest of 2016 beating the January record of 124,000.

Unlike Silver Eagles, Gold Eagles’ buying rate has outpaced that seen in 2014 and 2015. In the months from January to September, 692,000 ounces were sold, an increase from 670,000 in 2015 and 379,000 in 2014.

All of this is clearly positive news given Thomson Reuters (and the FT’s trumpet fare) reported that net sales volumes to retail investors in the US of gold and silver coins and bars fell 40 to 50 per cent in the third quarter.

Coining the landscape

Silver and gold coin sales have been an interesting indicator of economic and political sentiment, over the years but none more so since the financial crisis in 2008.

Between 1987- 2000, fifteen SilverEagles were sold for every 1oz Gold Eagle.  This nearly doubled between 2001 and 2007 when the ratio climbed to 29:1.  But post financial crisis in 2008 things really exploded. In the first six years (2008- 2014) the ratio averaged 49:1.

In March this year the ratio hit a huge 141.59 times more Silver Eagles sold than gold, this has gradually fallen and in August this year the ratio fell to just 25.61 Silver Eagles to every one Gold Eagle sold.

Given that global production of silver has recently only been about 8.5 times more than gold, you can see where we are going in terms of shortages.

As Goldcore reported, in 2015 the US Mint, Royal Canadian Mint and Perth Mint each set new records for silver coin sales. This has seemingly continued this year against a backdrop of increased political uncertainty as earlier this year the Royal Mint reported a ‘surge’ in demand for coins following the Bank of England’s decision to cut base rates to 0.25% in August.

Future for silver

Longer term, we expect silver to return to and surpass the nominal silver bullion high of $50/oz seen in 1980 and very nearly again in April 2011.

The fundamentals for the silver price remain strong, as they do for gold which many expect to see bottom out at $1,250/oz.

Countries continue to import silver for industrial and technological purposes and whilst mining companies are bringing up more silver than ever before their capital is low, which implies future shortages in both the gold and silver supply chains.

At present the US dollar’s strength is driven by the weakness of other currencies, this will remain the case as any other factors (namely a rate hike) are unlikely take effect prior to the US election.

This will no doubt impact gold and silver which look out over a horizon that includes Brexit, a tricky French election, Italian referendum (both of which may rock the Euro) and a struggling banking sector including RBS and Deutsche Bank which are both down this year.

So whilst the market is distracted by a seemingly strong dollar, its important to remember that the situation that is keeping it strong will remain after an election which will no doubt take its toll on it. This will only be good for gold and silver, and in the meantime why not take advantage of cheaper silver coins.

Read Silverseek’s piece here.

Gold and Silver Bullion – News and Commentary

Gold inches down as dollar firms, but set for weekly gain (FinancialExpress)

Gold futures mark first decline in 4 sessions (MarketWatch)

Wall Street dips as Verizon drags; AmEx curbs losses (Reuters)

ECB leaves door open to more stimulus, points to December meeting (Reuters)

Leading indicators point to moderate U.S. growth (MarketWatch)

Fed risks repeating Lehman blunder as US recession storm gathers (Telegraph)

Why are fund managers suddenly terrified (MoneyWeek)

Inflation is heading your way – here’s how to prepare your portfolio (MoneyWeek)

David Rosenberg Calls For A Multi-Trillion, “Helicopter Money” Stimulus Package (ZeroHedge)

SilverSeek (http://ift.tt/2e5TdlL)

 

Gold Prices (LBMA AM)

21 Oct: USD 1,263.95, GBP 1,033.79 & EUR 1,160.69 per ounce
20 Oct: USD 1,269.20, GBP 1,034.65 & EUR 1,156.75 per ounce
19 Oct: USD 1,269.75, GBP 1,031.29 & EUR 1,154.97 per ounce
18 Oct: USD 1,261.65, GBP 1,031.15 & EUR 1,145.33 per ounce
17 Oct: USD 1,252.70, GBP 1,029.59 & EUR 1,139.58 per ounce
14 Oct: USD 1,256.15, GBP 1,028.79 & EUR 1,140.08 per ounce
13 Oct: USD 1,258.00, GBP 1,029.93 & EUR 1,141.76 per ounce

Silver Prices (LBMA)

21 Oct: USD 17.51, GBP 14.34 & EUR 16.08 per ounce
20 Oct: USD 17.60, GBP 14.35 & EUR 16.03 per ounce
19 Oct: USD 17.69, GBP 14.38 & EUR 16.11 per ounce
18 Oct: USD 17.65, GBP 14.37 & EUR 16.03 per ounce
17 Oct: USD 17.40, GBP 14.30 & EUR 15.83 per ounce
14 Oct: USD 17.47, GBP 14.28 & EUR 15.86 per ounce
13 Oct: USD 17.59, GBP 14.40 & EUR 15.95 per ounce

Recent Market Updates

– Cashless Society – War On Cash to Benefit Gold?
– “Higher Gold Prices” On Global Trade Slowdown – HSBC
– Euro “Will Collapse” As Is “House of Cards” Warns Architect of Euro
– Property Bubble In Ireland Developing Again
– “Gold Is A Great Hedge Against Politicians” – Goldman
– Sell Gold Now – Time To Liquidate Gold ETF, Pooled and Digital Gold
– Gold In GBP Up 43% YTD – “Massive Twin Deficits” To Impact UK Assets
– Ron Paul Says “Gold Going Up” Whether Trump Or Clinton Elected
– Gold Trading COT Report “Means Lower – Then Much Higher – Prices Coming”
– Currency Shock Sees Sterling Gold Surges 5% In One Minute “Flash Crash”
– Top Gold Forecaster: “As Quickly As Gold Fell” May “Rally Back” on Global Risks
– Gold Buying ‘Opportunity’ After Surprise 3.4% Drop
– Deutsche Bank “Is Probably Insolvent”

via http://ift.tt/2eAGaZ9 GoldCore

• Trump, Clinton trade barbed jokes for charity (Reuters)
• Islamic State retaliates as Iraqi forces push on Mosul (Reuters)
• Hedge Fund Managers Struggle to Master Their Miserable New World (BBG)
• Woebegone Stock Pickers Vow: We Shall Return! (WSJ)
• Madonna pledges oral sex for Clinton voters (The Hill)
• AT&T Discussed Idea of Takeover in Time Warner Meetings (BBG)
• U.S. has few good options for response to Philippines’ Duterte (Reuters)
• San Francisco lawsuit, NYC law highlight global risks for Airbnb (Reuters)
• Duterte didn’t really mean ‘separation’ from U.S., Philippine officials say (Reuters)
• China’s property market shows signs of cooling  (China Daily)
• A $47 Billion Bid to Create the World’s Largest Tobacco Company (BBG)
• Vatican and China in final push for elusive deal on bishops (Reuters)
• SpaceX Explosion Investigation Focuses on Fueling Snafu (WSJ)
• U.S. mall investors set to lose billions as retail gloom deepens (Reuters)
• Tesla, rivals joust over how to put self-driving cars on the road (Reuters)

 

Overnight Media Digest

WSJ

– A former National Security Agency contractor amassed at least 500 million pages of government records, including top-secret information about military operations, by stealing documents bit by bit over two decades, the Justice Department alleged in a court filing submitted Thursday. http://on.wsj.com/2edCrov

– Donald Trump, in a rally in Ohio on Thursday, compared his reluctance to accept a possible loss in the presidential election to Democrat Al Gore’s fight over the 2000 presidential election. http://on.wsj.com/2edCWyW

– Iraqi special forces reclaimed a strategically important town from Islamic State on Thursday and joined Kurdish fighters in opening a new front against Islamic State, while the U.S. suffered its first combat death since the start of the Mosul offensive. http://on.wsj.com/2edGFMQ

– A heightened emphasis by banking regulators and law-enforcement officials on financial misconduct may be constraining global growth, some officials warn. http://on.wsj.com/2edE7yh

– A dozen miles off the southwestern edge of Africa’s Atlantic coast, a 285-ton vacuum machine operating 400 feet below sea level is sucking some of the world’s most valuable diamonds from the ocean floor. http://on.wsj.com/2edDy7U

– PayPal announced Thursday that it had struck an agreement with Alibaba Group Holding Ltd. to make PayPal a one-click payment option on the Chinese e-commerce giant’s AliExpress marketplace for consumers. http://on.wsj.com/2edDRPW

– The U.N.’s General Assembly met informally Thursday to discuss whether to take steps to override the Security Council on the Syrian conflict, as the council remains deadlocked over how to bring an end to the bombing of the northern city of Aleppo. http://on.wsj.com/2edEU2t

– Hong Kong was bracing for the impact of Typhoon Haima on Friday, as one of the strongest storms to hit the city this year shut down the stock market and disrupted flights. http://on.wsj.com/2edDKEa

 

FT

– Roche, the Swiss pharma group, said its group sales were up 4 percent in the nine months to September and its third quarter revenues were up 3 percent. Chief Executive Schwan said that he was confident that the company will meet full year expectations for 2016.

– Britain, Germany and France pushed for new sanctions against Moscow for the bombardment of Aleppo. After “difficult” talks with Vladimir Putin, German Chancellor Angela Merkel said that Russian support for the bombing was “completely inhuman”.

– Sky, in an investor day, said it intends to take a “substantial” share of the crowded UK mobile market. From October 31, existing Sky customers can register for its new mobile service with a full launch taking place in 2017.

– Morgan Stanley is going to make $120 million for the less-than-four-month advice to Monsanto on its $66 billion takeover by Bayer, which is the most a bank has ever collected for selling a company in dealmaking.

 

NYT

– Nintendo Co Ltd provided the first look at a new console it is developing that will do double-duty as a portable game system outside the home and one that will serve in the traditional role, connected to television sets. http://nyti.ms/2eov914

– In a case that has raised concerns over freedom of speech in Hong Kong’s financial markets, a securities tribunal has issued a trading ban against an American investor who criticized the accounts of a Chinese property developer. The investor, Andrew Left, the founder of the California-based firm Citron Research, was barred on Wednesday from trading in Hong Kong for five years. http://nyti.ms/2eozyOB

– Sequoia says it has hired its first female investment partner in the United States. Jess Lee, 33, an entrepreneur and the former chief executive of Polyvore, a fashion start-up that allowed customers to clip, save, style and shop for clothing online. She begins at Sequoia in November and will be a partner in the firm’s current fund. http://nyti.ms/2du1Vrf

– It has been a bruising year for hedge funds. Big bets have been disastrous, investors have voiced discontent and some managers have been forced to rewrite their playbooks or call it quits. And now, there is new data to rub salt into the industry’s wounds: Over the last three months, investors pulled $28 billion out of hedge funds, according to the research firm Hedge Fund Research. It is the biggest quarterly outflow of dollars since the depths of the financial crisis in 2009. http://nyti.ms/2e6fQH3

 

Canada

THE GLOBE AND MAIL

** The former parent company of Essar Steel Algoma Inc is teaming up with agriculture and industrial giant Cargill Inc to renew its bid to buy U.S. Steel Canada Inc, sources familiar with the companies’ plans say. http://bit.ly/2dsVUQJ

** Tourmaline Oil Corp is buying northeastern British Columbia natural gas assets from Royal Dutch Shell Plc for C$1.4 billion ($1.06 billion) in cash and stock. http://bit.ly/2dsVNEN

NATIONAL POST

** The Ontario Energy Board has told power companies across the province that they must send customers a hydro bill every month by the end of the year – a change that could cost up to C$10 million ($7.55 million). http://bit.ly/2dsTzoC

** The federal government has appointed four people to consult with communities along the Energy East pipeline after concerns over the integrity of National Energy Board’s hearing process forced three members to step down last month. http://bit.ly/2dsUvtt

 

Britain

The Times

– Nestle SA, the maker of Kit Kat and Maggi noodles, has cut its forecast for sales growth this year as it struggles with competition and said it could increase prices in the UK. http://bit.ly/2drGAnf

– The trial of three former Tesco Plc executives charged with fraud and false accounting by the Serious Fraud Office has been set for September next year. http://bit.ly/2drIJzt

The Guardian

– A planned Southern rail strike that would have happened close to Remembrance Day has been suspended following a request from the British Legion. The union said it had suspended the strike on Nov. 3 after being contacted by the armed forces charity. http://bit.ly/2drKaha

– The UK’s chief tax man has referred the parcel delivery giant Hermes to HM Revenue and Customs compliance officers following complaints by couriers that they are being paid at levels equivalent to below the “national living wage.” http://bit.ly/2drMgOd

The Telegraph

– Brazilian prosecutors have charged 26 people in connection with the Samarco mine disaster last year which killed 19 people. Of those charged, 21 have been accused of qualified homicide. http://bit.ly/2dtFylR

– British engineering companies Senior Plc and Keller Group Plc lost nearly 18 percent of their market value this morning after issuing downbeat trading updates, warning investors that full-year performance will be lower than they previously thought. http://bit.ly/2dtGkiC

Sky News

– Thousands of Post Office workers are to stage a one-day strike later this month over jobs, pensions and branch closures. Communication Workers Union members will walk out on Oct. 31. http://bit.ly/2drGHzc

– Carlos Ghosn is to be the new chairman of Mitsubishi Motors Corp after Nissan Motors Co Ltd became the scandal-hit brand’s biggest shareholder. http://bit.ly/2drJUPc

The Independent

– Nestle SA said it could follow Unilever Plc and raise prices in the UK to deal with the collapse in the value of the pound. http://ind.pn/2drK1u6

– Three former Tesco Plc executives will stand trial in September next year in relation to the 326 million pounds accounting scandal at Britain’s biggest supermarket. http://ind.pn/2drLuke

 

via http://ift.tt/2e7336X Tyler Durden

It may come as a surprise to some that as the S&P500 has remained in a tight trading range over the past month, investors continued to withdraw substantial amounts of cash. According to the latest EPFR weekly data, global equities saw another $3.9bn outflows (comprised of $6.2bn in mutual fund outflows vs $2.3bn ETF inflows), which brings the number of weekly outflows to 5 in the past 6 weeks. Of note here is that while Europe has now suffered a record record 37 straight weeks of outflows, the US has been comparably pressured, with outflows in 6 of the past 7 weeks.

On a global basis, a whoppping $146 billion has now been pulled across equity funds, with $79 billion in ETF inflows offsetting $225 billion in mutual fund outflows.

As money was leaving equities it entered bonds, which saw not only $2.7bn inflows in the latest week, but inflows in 15 of past 16 weeks. Precious metals, the “forgotten category” benefited from $0.5bn in inflows in the last week, making that 4 straight weeks of money being allocated to PMs.

Summary by Asset Class:

• Equities: $3.9bn outflows (outflows in 5 of past 6 weeks), $6.2bn mutual fund outflows vs $2.3bn ETF inflows
• Bonds: $2.7bn inflows (inflows in 15 of past 16 weeks)
• Precious metals: $0.5bn inflows (4 straight weeks)

The breakdown by region:

• EM: $1.0bn inflows (inflows in 15 of past 16 weeks)
• Europe: $1.6bn outflows (record 37 straight weeks of outflows)
• US: $5.1bn outflows (outflows in 6 of past 7 weeks)
• Japan: tiny $22mn inflows (inflows in 6 of past 7 weeks)
• By sector: 4 straight weeks of financials inflows ($0.4bn); 5 straight weeks of materials inflows ($0.3bn); largest REITs outflows in 13 months ($1.0bn); 3 straight weeks of outflows from utilities & telcos; chunky healthcare outflows ($0.7bn.

Some details on fixed income flows:

Fixed Income Flows 

• 12 straight weeks of inflows to bank loan funds ($0.6bn)
• 19 straight weeks of TIPS inflows ($0.4bn)
• 16 straight weeks of inflows to EM debt funds ($0.6bn)
• Small $0.1bn inflows to HY bond funds (4 straight weeks)
• $1.5bn inflows to IG bond funds (inflows in 32 of past 33 weeks)
• 2 straight weeks of outflows from munis ($0.2bn) (following 55 straight weeks of inflows)
• 15 straight weeks of outflows from Govt/Tsy funds ($0.5bn)

* * *

So we go back to our favorite question: with everyone pulling their cash, who is buying? Traditionally the normative answer would be buybacks, however we mostly entered buyback week two weeks ago, so the question certainly remains unanswered.

via http://ift.tt/2eACuqb Tyler Durden

Asian stocks and S&P futures fall modestly and European shares are little changed as traders digested the surprising reticence from yesterday’s ECB meeting and weighed earnings reports from companies including Microsoft, which soared to all time highs after beating non-GAAP estimates, and Daimler. The dollar jumped to 7 month highs, pressuring EM currencies and pushing the euro to its weakest level since March and below the Brexit lows, after Mario Draghi shut down talk of tapering, while the Yuan dropped to the lowest since 2010 after the PBOC cut the fixing by most since August; commodities declined on speculation U.S. monetary policy will diverge from stimulus measures in Europe and Asia.

Top corporate stories include BAT’s offer to buy the remaining stake in Reynolds American for $47 billion and speculation AT&T is discussing a takeover of Time Warner; NBC is doubling in bet in BuzzFeed by investing another $200 million.

S&P 500 Index futures signaled U.S. equities will pare this week’s advance and European stocks fluctuated while Japanese shares fell after the nation was struck by an earthquake. A gauge of commodities fell for a second day. The Bloomberg Dollar Spot Index headed for a third weekly gain after European Central Bank President Mario Draghi said Thursday that the authority’s bond-buying program will likely be tapered before it is halted, a hint that there will be an extension beyond the scheduled end-date of March 2017. Despite today’s muted tone, global stocks were set for their first weekly gain in four weeks.

“Weaning markets off easy monetary policy will be a delicate exercise for the ECB, and we think the bank is unlikely to remove its stimulus until inflation is solidly on track to 2 percent,” Andrew Bosomworth, managing director and portfolio manager at PIMCO, said in a note. “We thus view tapering as a topic for 2017 and beyond.”

The euro fell to its lowest since March after Draghi’s guarded appearance on Thursday, and was trading just under $1.09 on Friday morning. Speaking after the Governing Council left its stimulus strategy unchanged, Draghi said that “sometimes it’s important to say what we did not discuss.” The topics deemed out of bounds included future rate cuts, extending bond-buying and tapering the program — or even whether those topics will be on the December agenda.

Prospects for more stimulus contrast with Federal Reserve policy as officials weigh the case for its first interest-rate hike since 2015. Fed Governor Daniel Tarullo and San Francisco Fed President John Williams are scheduled to speak today.

“Anybody who had positioned for the risk that Draghi would signal a hard taper took their chips off that particular table,” said Ned Rumpeltin, the head of European currency strategy at Toronto Dominion Bank in London. “This also put emphasis back on the dollar. And the calendar over the next few weeks look dollar friendly.”

More troubling than the move in the Euro was the latest plunge in the yuan, whose lower fixing to 6.7558, down 5.8% Y/Y, was the biggest daily move since August, pushing the Chinese currency beyond Bloomberg’s year-end forecast of 6.75, CNH hit 6.7666- close to weakest since trading began in 2010.

S&P 500 Index futures were down 0.3%. General Electric Co. and McDonald’s Corp. are among American companies reporting results on Friday. Microsoft Corp. surged as much as 6.2% in after-hours trading after first-quarter sales and earnings topped analysts’ estimates. 

The Stoxx Europe 600 Index was little changed near a two-week high. Daimler AG fell 2 percent after the automaker reported a 10 percent increase in third-quarter earnings and SAP SE was up 2 percent following the announcement of sales that topped estimates. Ericsson AB slid 2.2 percent following its first loss in almost four years. British American Tobacco Plc paced gains among retailers, rising 2.7 percent after offering to buy the stake it doesn’t already own in Reynolds American Inc. for $47 billion.

Japan’s Topix index slid 0.4 percent and the yen strengthened after a magnitude-6.6 earthquake struck western Japan. The nation’s earnings season ramps up next week, with more than 350 members of the equity gauge set to report results.

The yield on benchmark U.S. Treasuries due in a decade fell one basis point to 1.74 percent. It touched a four-month high of 1.81 percent this week as higher oil prices spurred speculation inflation will gather pace. That may boost the case for the Fed to raise rates. China’s 10-year bond yield fell two basis points to a record 2.64 percent. Demand for sovereign debt firmed this week as data showed industrial output missed estimates last month and a weakening yuan spurred concern about capital outflows.

“It’s still a matter of debate whether economic fundamentals have turned better,” said Luo Yunfeng, a fixed-income analyst at Essence Securities Co. in Beijing. “It’s possible that, some time next year, the economy might show some sort of weakness again.”

* * *

Bulletin Headline Summary from RanSquawk

• A rather uninspiring session so far in Europe with equities trading relatively flat as earnings continues to guide price action
• USD bull theme is largely in play, though EUFt/USD losses through 1.0900 have been slow and steady
• Looking ahead, highlights include Canadian CPI and Retail Sales, ECB’s Weidmann (Hawk) and Fed’s Tarullo (Voter, Dove) Speaks

Market Snapshot

• S&P 500 futures down 0.3% to 2130
• Stoxx 600 up less than 0.1% to 345
• FTSE 100 up less than 0.1% to 7033
• DAX up less than 0.1% to 10710
• German 10Yr yield up less than 1bp to 0.01%
• Italian 10Yr yield down less than 1bp to 1.36%
• Spanish 10Yr yield up less than 1bp to 1.11%
• S&P GSCI Index up less than 0.1% to 374.1
• MSCI Asia Pacific down 0.3% to 140
• Nikkei 225 down 0.3% to 17185
• Hang Seng closed
• Shanghai Composite up 0.2% to 3091
• S&P/ASX 200 down 0.2% to 5430
• US 10-yr yield down 1bp to 1.75%
• Dollar Index up 0.25% to 98.56
• WTI Crude futures up less than 0.1% to $50.67
• Brent Futures up 0.3% to $51.51
• Gold spot down less than 0.1% to $1,265
• Silver spot down 0.3% to $17.49

TOP NEWS:

• BAT Offers to Buy Rest of Reynolds American for $47 Billion: Deal would create world’s largest publicly traded tobacco co.
• AT&T Said to Discuss Takeover Idea in Time Warner Meetings: Executives said to have met in recent weeks for informal talks
• Shell Sells $1 Billion of Western Canada Assets to Tourmaline: Oil major follows Conoco, EOG in shedding Canadian assets
• Chesapeake Finds 4.5 Billion-Barrel Oil Field in Appalachia: Rome Trough field holds about 65 percent oil and gas liquids
• JPMorgan Facing Criticism on Valuation of Complex Bonds It Sold: Bank ignored fees when determining values, consultant says
• NBCUniversal Said to Near $200 Million Investment in BuzzFeed
• Microsoft Jumps as Sales, Profit Top Estimates on Cloud Demand
• PayPal’s Three-Year Forecast Eases Concern About Card Pacts
• Volvo Profit Falls as North American Truck Orders Plunge
• Daimler Quarterly Profit Rises 10% on Mercedes E-Class, SUVs
• Schlumberger Beats Estimates as U.S. Shale Helps Lead Recovery
• China to Surpass U.S. as World’s Largest Aviation Market by 2024

Asian stocks pared their biggest weekly advance in a month as health-care companies led losses and an earthquake in western Japan weighed on Tokyo equities. Hong Kong markets were shut due to a typhoon. Local markets traded in lackluster fashion following the weak US lead where declines in oil and losses in telecoms dragged sentiment lower. Nikkei 225 (-0.2%) was initially supported by a weaker JPY before reports of an earthquake in the region dragged the index into the red. ASX 200 (-0.2%) was held back by underperformance in healthcare after Healthscope warned of weaker revenue growth for hospitals, while oil and gold names were pressured by the declines in their respective commodities. Shanghai Comp. (+0.2%) traded choppy after property prices continued to soar which could increase the attractiveness of real asset investments over stocks, while a stronger PBoC liquidity injection and typhoon which kept Hong Kong markets closed for trade further added to the indecisiveness. 10yr JGBs saw uneventful trade with the BoJ absent from the market while Kuroda comments also failed to provide any new surprises. 9 out of 10 sectors fall with telcos, staples underperforming and materials, energy outperforming. “It’s likely the quake provided a reason for investors to sell ahead of the weekend,” with the index hovering around multi-month highs, said Shinichi Yamamoto, a senior strategist at Okasan Securities Co. in Tokyo. “Stocks appear to have managed to break out of their recent boxed-in range, and are likely to show solid performance next week as well.”

Top Asian News

• Yuan Weakens Beyond Year-End Estimates as PBOC Lowers Fixing: Currency traded offshore declines close to record low
• China Home Prices Rise in Fewer Cities Amid Tougher Curbs: Authorities in 21 cities have imposed curbs to cool prices
• China Resources Pharma Said to Raise $1.8 Billion From IPO: Drugmaker prices first-time share sale below midpoint of range
• Inflation Outlook Rises Everywhere But Japan in Test for BOJ: Japan’s 5-year inflation swap below 0.3%, versus 1.9% in U.S.
• Duterte Goodbye to U.S. Swelling Costs on $42 Billion Bonds: Middle finger curse of EU also sped up outflows from peso debt
• Hong Kong Cancels Stock Trading as Typhoon Haima Lashes City: Airport Authority says 689 flights canceled or delayed

In Europe, it has likewise been a rather uninspiring session so far with equities trading relatively flat as earnings continues to guide price action. IT names outperform this morning following Microsoft’s financial results beating expectations, consequently shares rose over 6% in after-market hours to surge past their dot.com peak, while European listed SAP are among the best performers after the tech giant upgraded their profit forecast. Elsewhere, British American Tobacco leads the FTSE 100 higher on the back of reports that they are to purchase the remaining stake in Reynold American for GBP 47BN. European stocks held on to their biggest weekly gain in a month amid deal activity and mixed earnings report after ECB chief yesterday pushed talks on bond-plan future to later meeting. 10 out of 19 Stoxx 600 sectors fall with autos, health care underperforming and basic resources, banks outperforming. 50% of Stoxx 600 members decline, 47% gain. The ECB “put a lot of pressure on themselves and on us for the December meeting,” said Holger Sandte, chief European analyst at Nordea Markets in Copenhagen. “Markets are pretty dependent on their drugs, so to get out is difficult. There’s a big communication challenge here.”

Top European News

• Draghi’s ‘Did Not Discuss’ Leaves Investors Filling Blanks: ECB chief pushes talks on bond-plan future to later meeting.
• Bombardier to Scrap 7,500 More Jobs as CEO Deepens Cost Cuts: Bellemare reduces employment for second time in eight months.
• Nissan Confronts Post-Brexit Reality With SUV Plant Decision: Britain’s top auto producer weighing whether to keep Qashqai.
• Deutsche Bank Shares Back to Level Before DOJ $14 Billion Demand: Shares traded at 13.10 euros before company confirmed request.
• Daimler Sees Growth Stalling on North America Truck Market Woes: Weak North America demand burdens Daimler’s trucks division
• Monte Paschi Heads for Best Week Ever With Fidentiis Skeptical: Monte Paschi climbs as much as 15%, extending this week’s rally to 54% as the Italian bank pressed ahead with plans to boost capital and sell non-performing loans.
• UBS’s Currency Trading Volume Hit Record as Pound Crashed: ‘We processed our highest volume of trades in a minute’: Hall Fed move, other central bank policy changes to boost trading

In FX, the Bloomberg dollar gauge added 0.2 percent. South Korea’s won was the worst performer among major currencies, sliding 0.7 percent. The euro dropped 0.5 percent to $1.0880, falling for the first time through the low recorded on June 24, when the outcome of Britain’s vote to leave the European Union was announced. Draghi’s non-committal stance leaves traders waiting until at least December for news about policy changes. China’s yuan fell as much as 0.2 percent to 6.7605 per dollar in Shanghai, weakening beyond the 6.75 level that it was forecast to reach by year-end. The onshore yuan has declined in all but one session this month as the People’s Bank of China allowed a drop past the 6.7 level that was previously seen as its line in the sand. In offshore trading, the currency was within 0.5 percent of the weakest level recorded since trading began in 2010.

In commodities, the Bloomberg Commodity Index extended the first weekly decline in a month, falling 0.2 percent as dollar strength made raw materials more expensive to buy in other countries. Crude oil was little changed at $50.64 a barrel in New York, following Thursday’s retreat from a 15-month high. Rosneft PJSC Chief Executive Officer Igor Sechin said Russia is capable of a substantial boost to production less than two weeks after President Vladimir Putin pledged support for international efforts to limit output. Nigeria also said Thursday that it cut the price of every type of crude it sells in an effort to boost its global oil market share.  Nickel fell 0.8 percent to $10,045 a ton in London having earlier touched the lowest price in two weeks. The metal came under pressure after China’s top stainless steel producer said it plans to cut output. Aluminum climbed for the first time in six days in London, trimming this week’s loss to 3.5 percent. Gold fell for a second day, dropping 0.2 percent to $1,263.73 an ounce, near its 200-day average, a measure watched by traders and analysts who use chart patterns to make price predictions.

Looking at today’s calendar, it looks set to be a much quieter end to the week today for data. In fact with no releases due in the US the only prints we’ll get today will be the UK public sector net borrowing data for September, due out this morning and the October consumer confidence print for the Euro area this afternoon. Away from that, the Fed’s Tarullo will speak this afternoon (3.15pm BST) followed by Williams (7.30pm BST) later this evening. The EU leaders will also continue on with the summit in Brussels while the Bundesbank’s Weidmann and Italy’s Padoan are due to speak this morning. Away from the macro, earnings wise we’ve got nine S&P 500 companies due to report including McDonald’s and General Electric (both prior to the open).

* * *

US Event Calendar

• No Macro
• 10:15am: Fed’s Tarullo speaks in New York
• 2:30pm: Fed’s Williams speaks in San Francisco
• 1pm: Baker Hughes rig count

DB’s Jim Reid concludes the overnight wrap

At a period of time in the current cycle where every other word spoken by central bankers gets debated to the nth degree, we instead find ourselves sitting here this morning mulling over what Draghi didn’t say at the ECB press conference yesterday. In one of the more dull ECB meetings in recent memory, Draghi has instead passed the baton on to December. The main takeaway was that Draghi confirmed that the ECB has not discussed tapering or extending the asset purchase program. Indeed there was no intention of using up the option to completely rule out tapering, or to openly pre-signal a QE extension. That said we don’t know what’s going on behind the scenes and it’s more than possible that his refusal to pre-commit to an extension is because he is trying to build a consensus on the council and that therefore the topic is being actively discussed.

Our European economists don’t think that Draghi’s refusal to pre-commit in terms of extending QE and excluding a tapering should be read as the Governing Council thinking about a gradual termination of the QE programme from March 2017. Importantly they note that staff working groups have not yet completed their analysis on how to best tackle the bond scarcity issue were QE to be extended so pre-signalling at the meeting yesterday would have perhaps been premature. They also note that there was some room for an implicitly dovish signal towards the end of the press conference. Draghi seemed to dismiss the idea that markets are becoming too complacent in expecting QE to run indefinitely. One could see this as validating current market pricing of a further extension of QE. In summary, our economists continue to believe that the ECB will announce an extension of the €80bn QE programme in December. The key though to make it credible is how to resolve the eligible bond problem.

On that subject, with today’s calendar fairly bare one event worth keeping an eye on is Portugal’s sovereign rating review by DBRS today. Draghi yesterday confirmed that Portugal’s debt would no longer become eligible to buy under the current QE programme in the event of a downgrade to junk today with Moody’s, Fitch and S&P already there. Earlier this month Portugal’s Finance Minister claimed that DRBS had a more positive assessment of the country’s fiscal efforts so that has somewhat tempered concerns.

Markets were fairly choppy at and around the ECB. As Draghi spoke the Stoxx 600 dipped and touched an intraday low of -0.84%. However by the end of the press conference the index had pared all of that move lower and in fact as the session crept towards the close it had edged into positive territory (+0.19%) by the time the closing bell sounded. European Banks in particular seemed to enjoy the fact that there were no shocks with the Stoxx 600 Banks index ending +1.26% for its third successive daily gain. That index has quietly gone about climbing over +27% from the lows back in July which compares to a gain of ‘just’ +8% for the broader index. Meanwhile, the Euro (-0.41%) was under a bit of pressure and has touched the lowest level since March in trading this morning while sovereign bond yields – with the exception of Portugal (+1.5bps) – were 1-4bps lower across the board.

As we moved into the US session the focus moved on from the ECB and over towards earnings which were on the whole a bit more disappointing. Following the strong results from the Banks, it was the telecom and tech sectors which underwhelmed with earnings reports from Verizon (shares down -2.48%) and eBay (shares down -10.76%) disappointing. That overshadowed better than expected numbers from American Express which sent shares up over 9% and the most in seven years. The S&P 500 (-0.14%) ended with a modest decline.

Also not helping sentiment was a reversal in Oil prices. WTI (-2.30%) undid most of the move higher on Wednesday to close back below $51/bbl. The leg lower for Oil was blamed on comments from the CEO of Rosneft – the largest Oil company in Russia – who said that Russia has the capacity to add up to 4m barrels a day if there’s demand and conditions allow for it. Staying with Oil, yesterday Schlumberger became the first of the big Oil companies to report in the US. Q3 results were mixed with earnings beating but revenues a slight miss. The big names report next week.

Switching our focus over to Asia this morning where it’s been a fairly directionless session to conclude the week. While the Nikkei (+0.29%) is up, the Shanghai Comp (-0.36%) has reversed earlier gains into the midday break while the Kospi (-0.40%) and ASX (-0.14%) have also edged lower. Markets in Hong Kong are still closed in anticipation of Typhoon Haima drawing closer. Datawise in Asia the focus has been on China. The September property prices data is out and it showed that new home prices (excluding government subsided housing) rose in 63 of the 70 cities last month. That’s down from 64 cities in August while prices dropped in 6 cities versus 4 in August, suggesting a cooling off. It’s worth also highlighting the move in the Chinese Yuan this morning. It’s currently down -0.18% after the fix was set weaker with the current 6.757 level the weakest in six years. Since Golden Week two weeks ago, the Yuan has depreciated on 8 of the last 10 days. Elsewhere this morning US equity index futures are down slightly despite Microsoft reporting better than expected Q3 numbers which sent shares up over 6% in extended trading.

Staying with the micro focus briefly, in a report this morning, our European equity strategists highlight that many investors have been scratching their heads about the continued strength of the European mining sector, which has outperformed by 90% since January despite renewed USD strength and copper price weakness. An important driver of the outperformance is the fact that 75% of the sector is listed in the UK, making mining a key beneficiary of the plunge in Sterling. Yet, our strategists are cautious on the sector, as the recent USD strength and the fading Chinese credit impulse point to around 15% downside for metal prices. Given that Sterling only matters when it moves sharply, it would most likely take a renewed bout of political crisis in the UK to offset the impact of softening metal prices.

Wrapping up what was a broadly decent day for economic data in the US yesterday. Existing home sales rose a bumper +3.2% mom last month, well exceeding expectations for just a +0.4% rise. Elsewhere the Philly Fed survey did fall 3.1pts at the headline to 9.7 however the market was forecasting for a bigger drop to 5.0. Also the underlying details showed much more improvement than the modest decline in the headline suggested. New orders (16.3 vs. 1.4 in the prior month) and shipments (15.3 vs. -8.8) in particular stood out while the number of employees also improved. Our US economists noted that the six-month outlook for capex also bounced by 12.6pts this month to 21.2. Elsewhere, the Conference Board’s leading index was up +0.2% mom last month as expected. Initial jobless claims rose 13k last week to 260k but there was some suggestion that this was impacted by Hurricane Matthew.

The focus data wise in Europe was once again in the UK. The latest retail sales numbers came across as fairly soft with sales flat MoM both excluding and including fuel. That compared to expectations for a +0.2% and +0.3% increase respectively. Sterling was slightly weaker (-0.25%) although the move lower came a few hours after that data.

As we glance over today’s calendar, it looks set to be a much quieter end to the week today for data. In fact with no releases due in the US the only prints we’ll get today will be the UK public sector net borrowing data for September, due out this morning and the October consumer confidence print for the Euro area this afternoon. Away from that, the Fed’s Tarullo will speak this afternoon (3.15pm BST) followed by Williams (7.30pm BST) later this evening. The EU leaders will also continue on with the summit in Brussels while the Bundesbank’s Weidmann and Italy’s Padoan are due to speak this morning. Away from the macro, earnings wise we’ve got nine S&P 500 companies due to report including McDonald’s and General Electric (both prior to the open).

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Submitted by Soeren Kern via The Gatestone Institute,

• More than 1.5 million Germans, many of them highly educated, left Germany during the past decade. — Die Welt.
• Germany is facing a spike in migrant crime, including an epidemic of rapes and sexual assaults. Mass migration is also accelerating the Islamization of Germany. Many Germans appear to be losing hope about the future direction of their country.
• "We refugees… do not want to live in the same country with you. You can, and I think you should, leave Germany. And please take Saxony and the Alternative for Germany (AfD) with you…. Why do you not go to another country? We are sick of you!" — Aras Bacho an 18-year-old Syrian migrant, in Der Freitag, October 2016.
• A real estate agent in a town near Lake Balaton, a popular tourist destination in western Hungary, said that 80% of the Germans relocating there cite the migration crisis as the main reason for their desire to leave Germany.
• "I believe that Islam does not belong to Germany. I regard it as a foreign entity which has brought the West more problems than benefits. In my opinion, many followers of this religion are rude, demanding and despise Germany." — A German citizen who emigrated from Germany, in an "Open Letter to the German Government."
• "I believe that immigration is producing major and irreversible changes in German society. I am angry that this is happening without the direct approval of German citizens. … I believe that it is a shame that in Germany Jews must again be afraid to be Jews." — A German citizen who emigrated from Germany, in an "Open Letter to the German Government."
• "My husband sometimes says he has the feeling that we are now the largest minority with no lobby. For each group there is an institution, a location, a public interest, but for us, a heterosexual married couple with two children, not unemployed, neither handicapped nor Islamic, for people like us there is no longer any interest." — "Anna," in a letter to the Mayor of Munich about her decision to move her family out of the city because migrants were making her life there impossible.

A growing number of Germans are abandoning neighborhoods in which they have lived all their lives, and others are leaving Germany for good, as mass immigration transforms parts of the country beyond recognition.

Data from the German statistics agency, Destatis, shows that 138,000 Germans left Germany in 2015. More are expected to emigrate in 2016. In a story on brain drain titled, "German talent is leaving the country in droves," Die Welt reported that more than 1.5 million Germans, many of them highly educated, left Germany during the past decade.

The statistics do not give a reason why Germans are emigrating, but anecdotal evidence indicates that many are waking up to the true cost — financial, social and cultural — of Chancellor Angela Merkel's decision to allow more than one million mostly Muslim migrants to enter the country in 2015. At least 300,000 more migrants are expected to arrive in Germany in 2016, according to Frank-Jürgen Weise, the head of the country's migration office, BAMF.

Mass migration has — among many other problems — contributed to a growing sense of insecurity in Germany, which is facing a spike in migrant crime, including an epidemic of rapes and sexual assaults. Mass migration is also accelerating the Islamization of Germany. Many Germans appear to be losing hope about the future direction of their country.

At the height of the migrant crisis in October 2015, some 800 citizens gathered at a town hall meeting in Kassel/Lohfelden to protest a unilateral decision by the local government to set up migrant shelters in the city. The President of Kassel, Walter Lübcke, responded by telling those who disagree with the government's open-door immigration policy that they are "free to leave Germany at any time."

This attitude was echoed in an audacious essay published in October 2016 by the newspaper Der Freitag, (also published by Huffington Post Deutschland, which subsequently deleted the post). In the article, an 18-year-old Syrian migrant named Aras Bacho called on Germans who are angry about the migrant crisis to leave Germany. He wrote:

"We refugees… are fed up with the angry citizens (Wutbürger). They insult and agitate like crazy…. There are always these incitements by unemployed racists (Wutbürgern), who spend all their time on the Internet and wait until an article about refugees appears on the Internet. Then it starts with shameless comments….

 

"Hello, you unemployed angry citizens (Wutbürger) on the Internet. How educated are you? How long will you continue to distort the truth? Do you not know that you are spreading lies every day? What would you have done if you were in their shoes? Well, you would have run away!

 

"We refugees… do not want to live in the same country with you. You can, and I think you should, leave Germany. And please take Saxony and the Alternative for Germany (AfD) with you.

 

"Germany does not fit you, why do you live here? Why do you not go to another country? If this is your country, dear angry citizens (Wutbürger), then behave normal. Otherwise you can simply flee from Germany and look for a new home. Go to America to Donald Trump, he will love you very much. We are sick of you!"

In May 2016, the newsmagazine, Focus, reported that Germans have been moving to Hungary. A real estate agent in a town near Lake Balaton, a popular tourist destination in western Hungary, said that 80% of the Germans relocating there cite the migration crisis as the main reason for their desire to leave Germany.

An anonymous German citizen who emigrated from Germany recently wrote an "Open Letter to the German Government." The document, which was published on the website Politically Incorrect, states:

"A few months ago I emigrated from Germany. My decision was not for economic gain but primarily because of my dissatisfaction with the current political and social conditions in my homeland. In other words, I think that I and especially my offspring may lead a better life somewhere else. 'Better' for me in this context is primarily a life of freedom, self-determination and decent wages with respect to taxation.

 

"I do not, however, want to close the door behind me quietly and just go. I would hereby like to explain in a constructive way why I decided to leave Germany.

 

1. "I believe that Islam does not belong to Germany. I regard it as a foreign entity which has brought the West more problems than benefits. In my opinion, many followers of this religion are rude, demanding and despise Germany. Instead of halting the Islamization of Germany (and the consequent demise of our culture and freedom), most politicians seem to me to be more concerned about getting reelected, and therefore they prefer to ignore or downplay the Islam problem.

 

2. "I believe that German streets are less secure than they should be given our technological, legal and financial opportunities.

 

3. "I believe that the EU has a democratic deficit which limits my influence as a democratic citizen.

 

4. "I believe that immigration is producing major and irreversible changes in German society. I am angry that this is happening without the direct approval of German citizens, but is being dictated by you to German citizens and the next generation.

 

5. "I believe that the German media is increasingly giving up its neutrality, and that freedom of expression in this country is only possible in a limited way.

 

6. "I believe that in Germany sluggards are courted but the diligent are scourged.

 

7. "I believe that it is a shame that in Germany Jews must again be afraid to be Jews."

Many Germans have noted the trend toward reverse integration, in which German families are expected to adapt to the customs and mores of migrants, rather than the other way around.

On October 14, the Munich-based newspaper Tageszeitung published a heartfelt letter from "Anna," a mother of two, who wrote about her decision to move her family out of the city because migrants were making her life there impossible. In the letter, addressed to Munich Mayor Dieter Reiter, she wrote:

"Today I want to write you a kind of farewell letter (Abschiedsbrief) about why I and my family are leaving the city, even though probably no one cares.

 

"I am 35 years old, living here with my two young sons and my husband in an upscale semi-detached house with parking. So you could say we are very well off for Munich standards…. We live very well with plenty of space and next to a green park. So why would a family like us decide to leave the city? ….

 

"I assume that your children do not use public facilities, that they do not use public transportation, and that they do not attend public schools in "problem areas." I also assume that you and other politicians rarely if ever go for walks here.

 

"So on a Monday morning I attended a neighborhood women's breakfast that was sponsored by the City of Munich. Here I met about 6-8 mothers, some with their children. All of the women wore headscarves and none of them spoke German. The organizers of the event quickly informed me I will probably find it hard to integrate myself here (their exact words!!!). I should note that I am German. I speak fluent German and I do not wear a headscarf. So I smiled a little and said I would try to integrate myself. Unfortunately, I brought a salami and ham sandwich to the breakfast, to which everyone was asked to bring something. So of course I had even less chance of integrating.

 

"I was not able to speak German to anyone at this women's breakfast, which is actually supposed to promote integration, nor was anyone interested in doing so. The organizers did not insist on anyone speaking German, and the women, who appeared to be part of an established Arab-Turkish group, simply wanted to use the room.

 

"I then asked about the family brunch…. I was advised that the brunch would be held in separate rooms. Men and women separately. At first I thought it was a bad joke. Unfortunately, it was not. ….

 

"So my impression of these events to promote integration is miserable. No interchange takes place at all!!! How can the City of Munich tolerate such a thing? In my view, the entire concept of these events to promote integration must be called into question…. I was informed that I am not allowed to include pork in my child's lunchbox!!! Hello?! We are in Germany here! ….

 

"In summary, I find conditions here that make me feel that we are not really wanted here. That our family does not really fit in here. My husband sometimes says he has the feeling that we are now the largest minority with no lobby. For each group there is an institution, a location, a public interest, but for us, a heterosexual married couple with two children, not unemployed, neither handicapped nor Islamic, for people like us there is no longer any interest.

 

"When I mentioned at my son's preschool that we are considering moving out of the city and I told them the reasons why, I was vigorously attacked by the school's leadership. Because of people like us, they said, integration does not work, precisely because we remove our children. At least two other mothers have become wildly abusive. The management has now branded me "xenophobic."

 

"This is exactly the reason why people like me lose their patience and we choose to vote for other political parties…. Quite honestly, I have traveled half the world, have more foreign friends than German and have absolutely no prejudices or aversions to people because of their origin. I have seen much of the world and I know that the way integration is done here will cause others to come to the same conclusion as we have: either we send our children to private schools and kindergartens, or we move to other communities. Well then, so long!!!!!!!!!!!"

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“Those who cast the votes decide nothing. Those who count the votes decide everything.” – Joe Stalin

With the mainstream media lambasting Trump for daring to suggest the election process is rigged – despite hard evidence – this is the hack that proved America’s elections can be stolen using a few lines of computer code.

The ‘Hursti Hack’ in this video is an excerpt from the feature length Emmy nominated documentary ‘Hacking Democracy’.

The hack of the Diebold voting system in Leon County, Florida, is real. It was verified by computer scientists at UC Berkeley.

Watch the full movie here…

h/t The Burning Platform

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Submitted by Pepe Escobar via Stratgic-Culture.org,

There’s no question Baghdad needs to take back Mosul from ISIS/ISIL/Daesh. It could not do it before. In theory, the time is now.

The real question is the conflicting motivations of the large “who’s who” doing it; the Iraqi Army’s 9^th Division; the Kurdish Peshmerga, under the baton of wily, corrupt opportunist Barzani; Sunni tribal lords; tens of thousands of Shi’ite militias from southern Iraq; operational “support” from US Special Forces; “targeted” bombing by the US Air Force; and lurking in the background, Turkish Special Forces and air power.

Now that’s a certified recipe for trouble.

Much like Aleppo, Mosul is – literally – the stuff of legend. The successor of ancient Nineveh, settled 8000 years ago; former capital of the Assyrian Empire under Sennacherib in the 7^th century B.C.; conquered by Babylon in the 6^th century B.C.; a thousand years later, annexed to the Muslim empire and ruled by the Umayyads and the Abbasids; the key hub, from the 11^th to the 12^th century, of the Atabegs medieval state; a key Ottoman hub in a 16^th century post-Silk Road spanning the Indian Ocean all the way to the Persian Gulf, the Tigris valley, Aleppo and Tripoli in the Mediterranean.

After WWI, everyone craved Mosul – from Turkey to France. But it was the Brits who managed to dupe France into letting Mosul be annexed to the British Empire’s brand new colony: Iraq. Then came the long Arab nationalist Ba’ath party domination. And afterwards, Shock and Awe and hell; the US invasion and occupation; the tumultuous Shi’ite-majority government of Nouri al-Maliki in Baghdad; and the ISIS/ISIL/Daesh takeover in the summer of 2014.

Mosul’s historic parallels could not but have a special flavor. That 11^th/12^th century medieval state happened to have roughly the same borders of Daesh’s phony “Caliphate” – incorporating both Aleppo and Mosul. In 2004, Mosul was de facto ruled by disgraced, failed “presidential material” Gen. David Petraeus. Ten years later, after Petraeus’s phony “surge”, Mosul was ruled by a phony Caliphate born in a US prison near the Kuwaiti border.

Since then, hundreds of thousands of residents fled Mosul. The population may be as much as halved compared to the original 2 million. That’s a mighty lot to be properly “liberated”.

Aleppo “falls”

The hegemonic narrative about the ongoing Battle of (East) Aleppo is that an “axis of evil” (as coined by Hillary Clinton) of Russia, Iran and “the Syrian regime” is relentlessly bombing innocent civilians and “moderate rebels” while causing a horrendous humanitarian crisis.

In fact, the absolute majority of these several thousand-strong “moderate rebels” is in fact incorporated and/or affiliated with Jabhat Fatah al-Sham (Conquest of Syria Front), which happens to be none other than Jabhat al-Nusra, a.k.a. al-Qaeda in Syria, alongside a smatter of other jihadi groups such as Ahrar al-Sham (Al-Nusra’s goals – and who supports them – are fully documented here).

Meanwhile, few civilians remain trapped in eastern Aleppo – arguably no more than 30,000 or 40,000 out of an initial population of 300,000.

And that brings us to the crux of the matter explaining the Pentagon sabotage of the Russia-US ceasefire; those fits of rage by Samantha Batshit Crazy Power; the non-stop spin that Russia is committing “war crimes”.

If Damascus controls, apart from the capital, Aleppo, Homs, Hama and Latakia, it controls the Syria that matters; 70% of the population and all the important industrial/business centers. It’s practically game over. The rest is a rural, nearly empty back of beyond.

For the headless chicken school of foreign policy currently practiced by the lame duck Obama administration, the ceasefire was a means to buy time and rearm what the Beltway describes as “moderate rebels”. Yet even that was too much for the Pentagon, which faces a determined Syria/Iran/Russia alliance fighting all declinations of demented Salafi-jihadis, whatever their terminology, and committed to keep a unitary Syria.

So reconquering the whole of Aleppo has to be the top priority for Damascus, Tehran and Moscow. The Syrian Arab Army (SAA) will never have enough military to reconquer the rural, ultra hardcore Sunni back of beyond. Damascus may also never reconquer the Kurdish northeast, the embryonic Rojava; after all the YPG is directly backed by the Pentagon. Whether an independent Rojava will ever see the light of day is an interminable future issue to be solved.

The SAA, once again, is tremendously overextended. Thus, the method to reconquer East Aleppo is indeed hardcore. There is a humanitarian crisis. There is collateral damage. And this is only the beginning. Because sooner or later the SAA, supported by Hezbollah and Iraqi Shi’ite militias, will have to reconquer East Aleppo with boots on the ground as well – supported by Russian fighter jets.

The heart of the matter is that the former “Free Syrian Army”, absorbed by al-Qaeda in Syria and other Salafi-jihadis, is about to lose East Aleppo. Regime change and/or “Assad must go” – the military way – in Damascus is now impossible. Thus the utter desperation exhibited by the Pentagon’s Ash “Empire of Whining” Carter, neocon cells implanted all across lame duck Team Obama, and their hordes of media shills.

Enter Plan B; the Battle of Mosul.

Fallujah remixed?

The Pentagon plan is deceptively simple; erase any signs of Damascus and the SAA east of Palmyra. And this is where the Battle of Mosul converges with the recent Pentagon attack on Deir Ezzor. Even if we have an offensive in the next few months against Raqqa – by the YPG Kurds or even by Turkish forces – we still have a “Salafist principality” from eastern Syria to western Iraq all mapped up, exactly as the Defense Intelligence Agency (DIA) was planning (dreaming?) in 2012.

London-based Syrian historian Nizar Nayouf, as well as unnamed diplomatic sources, have confirmed that Washington and Riyadh closed a deal to let thousands of phony Caliphate jihadis escape Mosul from the west, as long as they head straight to Syria. A look at the battle map tells us that Mosul is encircled from all directions, except west.

But what about Sultan Erdogan in all this? He’s been spinning that Turkish Special Forces will enter Mosul just as they entered Jarablus in the Turkish-Syrian border; without firing a shot, when the city will be cleaned of jihadis.

Meanwhile, Ankara is preparing its spectacular entrance in the battlefield, with Erdogan in full regalia shooting at random. For him, “Baghdad” is no more than “an administrator of an army composed of Shi’ites”; and the YPG Kurds “will be removed from the Syrian town of Manbij” after the Mosul operation. Not to mention that Ankara and Washington are actively discussing the offensive against Raqqa, as Erdogan has not abandoned his dream of a “safe zone” of 5,000 km in northern Syria.

In a nutshell; for Erdogan, Mosul is a sideshow. His priorities remain a fractured, fragmented Syria, “safe zone” included; and to smash the YPG Kurds (while working side by side with the Peshmerga in Iraq).

As far as the US Plan B is concerned, Hezbollah’s Sheikh Nasrallah has clearly seen through the whole scheme; “The Americans intend to repeat the Fallujah plot when they opened a way for ISIL to escape towards eastern Syria before the Iraqi warplanes targeted the terrorists’ convoy.” He added that “the Iraqi army and popular forces” must defeat ISIS/ISIL/Daesh in Mosul; otherwise, they will have to chase them out across eastern Syria.

It's also no wonder that Russian Foreign Minister Sergey Lavrov has also clearly seen The Big Picture: “As far as I know, the city is not fully encircled. I hope it’s because they simply couldn’t do it, not because they wouldn’t do it. But this corridor poses a risk that Islamic State fighters could flee from Mosul and go to Syria.”

It’s clear Moscow won’t sit idly by if that’s the case;“I hope the US-led coalition, which is actively engaged in the operation to take Mosul, will take it into account.”

Of course Mosul – even more than Aleppo – poses a serious humanitarian question.

The International Committee of the Red Cross (ICRC) estimates as many as 1 million people may be affected. Lavrov goes straight to the point when he insists “neither Iraq nor its neighbors currently have the capacity to accommodate such a large number of refugees, and this should have been a factor in the planning of the Mosul operation.”

It may not have been. After all, for the “US-led” (from behind?) coalition, the number one priority is to ensure the phony Caliphate survives, somewhere in eastern Syria. Over 15 years after 9/11, the song remains the same, with the war on terra the perennial gift that keeps on giving.

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