Durable Goods Orders jumped 4.8% MoM in October, the highest since the October 2015 (start of government fiscal year) bounce last year, thanks to a yuuge in transportation orders (up 12.0%) which included a surge in orders for civilian aircraft (up 138.5%) and military aircraft new orders (up 33.1%). However, Core Capital Goods Shipments, i.e. true CapEx, has now declined 15 straight months year-over-year (the longest non-recesionary streak in history).

Lots of excitement that Durable Goods (ex transport) turned green year-over-year for the first time since Dec 2014.

 

But away from the unsustainable Boeing and Military orders…

 

And, Core Capital goods shipments continue to decline…

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As was speculated yesterday in various media outlets, moments ago Bloomberg confirmed that Ben Carson, the man who ran for president then said he wouldn’t feel comfortable having a role in the Trump administration because he has no government experience, has been formally offered the position of secretary of the Department of Housing and Urban Development.

As AP adds, a person close to Carson, who was not authorized to discuss the offer publicly, told The Associated Press Carson would spend his Thanksgiving mulling over whether to accept the position. Earlier in the day, Donald Trump tweeted that he was “seriously considering” Carson as the head of HUD because he’s a “greatly talented person who loves people!” Carson was also being floated as potential secretary of education or health and human services, AP reports.

Carson’s business manager, Armstrong Williams, previously said the “last thing” Carson would want to do was “take a position that could cripple the presidency,” but he would be open to considering a role if Trump made it clear there was no one else for the job — this must mean the only option is having a retired neurosurgeon lead the government agency that strengthens the housing market to bolster the economy and protect consumers and utilizes housing as a platform for improving quality of life.

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Following news that its Alzheimer’s drug has failed final stage trials, Eli Lilly stock is crashing this morning to 2 year lows. The ‘safe haven’, ‘paid-to-wait’ stock has tumbled almost 15% – erasing over 6 years of dividends, and sparking contagious selling across Biotech stocks.

As The FT reports, many analysts and investors had been expecting the medicine, Solanezumab, to show efficacy in patients suffering from mild dementia due to the disease, after previous trials showed it slowed the disease by roughly a third in early-stage patients, reports David Crow in New York.

However, the company said that while many of the results “directionally favoured the drug, the magnitudes of differences were small” and, as such, it has no plans to seek regulatory approval.

 

“The results of the Solanezumab trial were not what we had hoped for and we are disappointed for the millions of people waiting for a potential disease-modifying treatment for Alzheimer’s disease,” said John Lechleiter, chief executive officer, Lilly.

 

He added: “We will evaluate the impact of these results on the development plans for Solanezumab and our other Alzheimer’s pipeline assets.”

And thus the disappointment.

 

So much for that 2.68% dividend yield.

And other Biotech stocks are taking it on the chin, such as Biogen, which is also running trials on its own Alzheimer drug…

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Submitted by Carey Wedler via TheAntiMedia.org,

As protesters continue to stand against the proposed Dakota Access Pipeline in North Dakota, facing off against heavily militarized police and their water cannons, rubber bullets, tear gas, and tasers, they have gained broad support. Celebrities and millions of social media users have raised awareness about the situation in North Dakota, and now, the “water protectors” have earned support from another group: veterans.

According to an article published by Business Insider that first appeared in Task and Purpose, a military-oriented news and culture site, two veterans are leading the charge in a show of dissent against the increasingly aggressive police. In the last several months, tensions have escalated as Natives and their allies have blocked the pipeline’s construction, citing fears surrounding water will be endangered and sacred burial sites will be destroyed (not to mention the fact their lands were forcibly stolen by the U.S. government over a century ago).

“This country is repressing our people,” says Michael A. Wood Jr., a Marine Corps veteran who recently retired from the Baltimore police force to work toward reforming law enforcement. “If we’re going to be heroes, if we’re really going to be those veterans that this country praises, well, then we need to do the things that we actually said we’re going to do when we took the oath to defend the Constitution from enemies foreign and domestic,” he asserted about his plans to go to Standing Rock.

Woods Jr. is joined by Wes Clark Jr. Clark Jr. is the son of General Wesley Clark, the famous military leader who once warned that shortly after 9/11, the government had its eyes on Iraq, Syria, Lebanon, Libya, Somalia, Sudan, and Iran. Clark would later attempt to distance himself from those statements but still managed to convince his son, a member of the Army at the time, to stay away from Iraq.

“I was like, ‘I’m going back in. I’m going to go in there and fuck people up,’” Clark Jr. recalls of his desire to fight for the military after 9/11. He later changed his mind after his father warned him, as Task and Purpose summarized, “that as a soldier he would be fighting a war that had nothing to do with defeating al Qaeda.”

Now, Wood Jr. and Clark Jr. are attempting to organize a mass, nonviolent protest against police action in North Dakota. Just this past weekend, a female protester was hit with a concussion grenade, causing severe damage to her arm and requiring surgery.

Other have been tear gassed, tased, beaten, and shot with rubber bullets. Anti-Media journalist Derrick Broze was tased by law enforcement immediately after he declared he was a member of the media. Another journalist was shot with a rubber bullet while standing away from a gathering of protesters as she interviewed an attendee.

Police have made over 470 arrests since August, and the Indigenous Environmental Network claims 167 people were injured just this past Sunday when police deployed water cannons in freezing weather.

Clark, a contributor to the Young Turks, explained that aside from the flagrant violations protesters are subject to in North Dakota, Natives are especially deserving of veteran support:

“First Americans have served in the Unites States Military, defending the soil of our homelands, at a greater percentage than any other group of Americans. There is no other people more deserving of veteran support,” he said.

According to a Facebook event the two men created called “Veterans Stand for Standing Rock,” those who join the effort will arrive at the protest site on December 4, where they will stay until December 7.

The event description reads:

“Come to Standing Rock Indian Reservation and hold the line with Wes Clark jr, Michael Wood Jr, Tulsi Gabbard and hundreds of other veterans in support of the Sioux nation against the DAPL pipeline. Bring Body armor, gas masks, earplugs AND shooting mufflers (we may be facing a sound cannon) but no drugs, alcohol or weapons.”

Clark Jr. was clear he was not looking for violence and that the protest would be unarmed.

“We’re not going out there to get in a fight with anyone,” he said. “They can feel free to beat us up, but we’re 100% nonviolence.”

As Task and Purpose explained:

“With an eye toward the media, old military uniforms will be donned so that if the veterans are brutalized by the police, they are brutalized not as ordinary citizens, but as people who once served the government they are protesting against.”

The event page makes it clear that the group will not tolerate “hate, violence or divisive behavior of any kind.”

“We’re doing this to support our country,” they advise, “so let’s do it with honor, working together. We can stop this savage injustice being committed right here at home. If not us, who? If not now, when?”

Over 250 veterans have already committed, but organizers hope to have a group of 500 or more by the time they head to Standing Rock.

Once there, the  veterans intend to engage in a traditional native healing ceremony with protesters, with whom they have been coordinating, according to the veterans. Then, protective gear like gas masks and body armor will be issued to anyone who needs it. The soldiers will march to bagpipes and Sioux war songs as they head to the banks of the Missouri River to meet police.

“Then, the veterans and their allies — or at least the ones who are brave enough — will lock arms and cross the river in a ‘massive line’ for their ‘first encounter’ with the ‘opposing forces.’”

Though the veterans have adopted a strict policy of nonviolence, they refuse to back down and apparently hope to use their military status to spotlight the egregious behavior of the police.

“We’ll have those people who will recognize that they’re not willing to take a bullet, and those who recognize that they are,” says Wood Jr. “It’s okay if some of them step back, but Wes and I have no intention of doing so.”

Veterans Stand for Standing Rock is accepting donations to cover food, transportation, and supplies for those who travel to North Dakota. You can donate here. You can also donate directly to the water protectors.

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In the first woman appointment to Trump’s administration, South Carolina Govenor Nikki Haley has accepted the president-elect’s offer to be his ambassador to the United Nations, NBC News reported this morning. The daughter of immigrants from India, Haley served three terms in South Carolina’s State House before winning the governorship in 2010 and again in 2014. A two-term governor, Haley, 44, initially backed Trump rivals Sen. Marco Rubio and then Sen. Ted Cruz during the GOP battle for a White House nominee.

She is the first woman in the state’s history to hold the role and only the nation’s second Asian-American governor.

If confirmed, Haley would succeed Samantha Power, who served as President Barack Obama’s U.N. ambassador since 2013, and who has been the most vocal opponent of the Russian regime’s overtures in the United Nations.

Trump transition team @Scaramucci: Nikki Haley has enormous amount of respect across parties https://t.co/NIkkkdaa1Q https://t.co/rIcEwwDHMz

— New Day (@NewDay) November 23, 2016

Haley has little direct foreign policy experience. She has spent time overseas negotiating trade deals for South Carolina businesses, but she has never served in a roll directly related to American foreign policy, or any other role in the federal government. As such, she is likely to draw scrutiny during Senate confirmation hearings for the Cabinet-level position. Haley would be the first ambassador since Madeleine Albright never to have served in any other role in the federal government before heading to Turtle Bay.

In what has been dubbed a “remarkable” shift in the president-elect’s mindset, Trump’s selection of Haley caps a dramatic year for their political relationship. They started 2016 with a fight and are ending it as allies in a nascent Trump administration, suggesting that far from bearing grudges Trump is willing to reconcile in the name of national interests.

The pair feuded in January after Haley’s Republican response to President Barack Obama’s State of the Union, during which she took a thinly-veiled swipe at Trump, warning against “the siren call of the angriest voices.”  Haley told Matt Lauer the following morning that then-candidate Trump “has definitely contributed to what I think is just irresponsible talk.”

“If we have citizens who are law-abiding, who love our traditions, who do everything to be productive citizens in America, they should feel welcome in this country,” Haley said. “The reason this country is so great is because the fabric of this country was made by immigrants, and its legal immigrants.”

In February, she called Trump “everything a governor doesn’t want in a president.” The following month Haley endorsed Rubio in the South Carolina primary. Following Rubio’s loss and subsequent withdrawal from the race, Haley said it was her “hope and prayer” tha Cruz would win the Republican nomination.

By the Republican National Convention in July, though, Haley had warmed enough to Trump to say she planned to vote for him in a tepid endorsement to MSNBC’s Jacob Soboroff.

“I would not be here if I didn’t want to make sure that Hillary [Clinton] was not going to be the next president,” Haley said in July.

Haley is married to a captain in the Army National Guard who served in Afghanistan, and has two teenage children, according to her biography on the state’s website.

As The Hill adds, back in South Carolina, Haley’s selection will have a significant impact on the race to replace her in 2018. If Haley becomes the next ambassador to the United Nations, she would be succeeded by Lt. Gov. Henry McMaster (R), who has had his own conversations with the incoming Trump administration. cMaster, the first major South Carolina politician to back Trump during the primaries, had considered running to replace Haley when term limits barred her from a third term in 2018. If Haley were to leave the state before her term expires, McMaster would likely get a leg up on a potentially crowded primary in 2018.

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Russia gold buying accelerated in October with the Russian central bank buying a very large 48 metric tonnes or 1.3 million ounces of gold bullion.

This is the largest addition of gold to the Russian monetary reserves since 1998 and could be seen as a parting ‘gift’ by Prime Minister Putin to his rival ex-President Obama.

The Russian central bank gold purchase is the biggest monthly gold purchase of this millennium.

Concerns about systemic risk, currency wars and the devaluation of the dollar, euro and other major currencies has led to ongoing diversification into gold bullion purchases by large creditor nation central banks such as Russia and China.

Commerzbank went with the simple explanation:

“Clearly the central bank was taking advantage of the stronger ruble – which has made gold cheaper in local currency – to buy more gold.” 

“By contrast, the Chinese central bank bought only around four tons of gold last month – the second-lowest gold purchases since China began publishing monthly figures back in June 2015. The currency is likely to have played a role here, too – the yuan has been depreciating noticeably since the end of September.”

However, the Russian Central Bank has quietly been buying huge volumes of gold over the last 10 years. This diversification into gold accelerated since the financial crisis and since relations with the U.S. deteriorated in recent years. Russia bought gold systematically both when the ruble was strong and when it was weak.

In 2015, Russia added a record 208 tons of gold to her reserves compared with 172 tons for 2014.

According to the World Gold Council, only the central banks of the U.S., Germany, Italy, France and China currently hold larger gold reserves than Russia.

The Central Bank of Russia has outpaced the People’s Bank of China (PBOC) by nearly 150 tonnes in the last seven years, and has been the world’s largest central bank buyer of gold reserves for some time. This trend is expected to continue.

Total gold mining production globally is  around 3,200 metric tonnes per year.

Thus, Russia’s purchase of 48 metric tonnes is around 1.5% of total annual global gold production. This is a very large amount for one country to buy in just one month.

Some of the gold bought will have come from Russian gold production which is currently at about 26 metric tonnes per month. In 2014, Russia was the third largest gold miner in the world at 266.2 tonnes, just six tonnes short of Australia in second place and China in first place.

The Russian central bank is buying all of Russian gold production and sometimes buying gold on the international market.

This demand is solely from the Russian central bank. There is little data regarding investor, high net worth (HNW) and ultra high net worth (UHNW) individuals including family offices who are diversifying into gold in Russia.

Russia is an increasingly wealthy nation with thousands of millionaires and hundreds of billionaires including mega rich oligarchs. It seems likely that some of these Russian investors are also diversifying into gold.

Clearly, Russia puts great strategic importance on its gold reserves. Both Prime Minister Medvedev and President Putin  have been photographed on numerous occasions holding gold bars and coins. The Russian central bank declared in May 2015 that Russia views gold bullion as “100% guarantee from legal and political risks.”

Prudent investors are following Russia’s lead by diversifying and having an allocation to physical gold coins and bars.

Must-Read Guide: Gold and Silver Storage Must Haves

 

Gold and Silver Bullion – News and Commentary

Gold slips as equities, dollar rise (Reuters.com)

Platinum market deficit set to shrink in 2017 – WPIC (Reuters.com)

French man discovers gold bars worth €3.5m after inheriting home (Telegraph.co.uk)

SA to exhaust gold reserves in 38 years (Fin24.com)

Christmas tree made out of SOLID GOLD worth £1.45million is unveiled in Tokyo (Mirror.co.uk)

Why Gold Fell After Trump Election – Rickards (DailyReckoning.com)

Junk-Bond Market Heads Toward Deep Freeze (Bloomberg.com)

The Spreading Bondfire and the Rising Price of Gold (GoldSeek.com)

UK borrowing shrinks in October ahead of Autumn Statement as Dow Jones closes over 19,000 for first time (Telegraph.co.uk)

London property: expect further price falls (MoneyWeek.com)

Gold Prices (LBMA AM)

23 Nov: USD 1,213.25, GBP 998.00 & EUR 1,143.00 per ounce
22 Nov: USD 1,217.55, GBP 997.89 & EUR 1,144.98 per ounce
21 Nov: USD 1,214.95, GBP 984.72 & EUR 1,143.39 per ounce
18 Nov: USD 1,206.10, GBP 971.15 & EUR 1,135.54 per ounce
17 Nov: USD 1,232.00, GBP 988.19 & EUR 1,148.10 per ounce
16 Nov: USD 1,225.70, GBP 984.36 & EUR 1,144.68 per ounce
15 Nov: USD 1,228.90, GBP 988.65 & EUR 1,138.70 per ounce
14 Nov: USD 1,222.60, GBP 978.08 & EUR 1,136.53 per ounce

Silver Prices (LBMA)

23 Nov: USD 16.56, GBP 13.36 & EUR 15.59 per ounce
22 Nov: USD 16.76, GBP 13.46 & EUR 15.77 per ounce
21 Nov: USD 16.68, GBP 13.47 & EUR 15.69 per ounce
18 Nov: USD 16.51, GBP 13.30 & EUR 15.54 per ounce
17 Nov: USD 17.04, GBP 13.65 & EUR 15.87 per ounce
16 Nov: USD 16.95, GBP 13.64 & EUR 15.85 per ounce
15 Nov: USD 17.00, GBP 13.68 & EUR 15.80 per ounce
14 Nov: USD 17.20, GBP 13.73 & EUR 15.95 per ounce

Recent Market Updates

– Stocks, Bonds, Pension Funds “Will Be Wiped Out…” – Rickards
– Physical Gold Is A “Long-Term Position” as “Hedge Against Governments”
– Gold Sell Off On Fed Noise – “Interesting Times” To “Support Gold”
– Islamic Gold – Vital New Dynamic In Physical Gold Market
– Peak Gold Globally – “Bullish For Gold”
– Gold Price Should Go Higher On Global Risks and Trump – Capital Economics
– President Trump – Why Market Loves Him and Experts Wrong
– ‘Helicopter Money President’ Trump To Create Inflation and Gold Will Rise
– Central Bank Gold Demand continues in Q3
– Trump Victory Sends Gold Surging 5%
– An uncertain election outcome looks good for gold
– Ignore past elections, this one’s too uncertain
– Gold may be the only winner in US elections

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

• S&P 500 Futures Signal Rally Ebbing; Bonds Decline in Europe (BBG)
• Oil prices capped by doubts OPEC-led cut will end glut (Reuters)
• Fed Minutes to Be Parsed for Insight on Inflation, Jobs (WSJ)
• Trump keeping ‘open mind’ on pulling out of climate deal (Reuters)
• Trump Raises Prospect of Keeping Ties to His Firms (WSJ)
• Obama’s not-so-secret admirer: Donald Trump (Reuters)
• Facebook’s Fake News Crackdown: It’s Complicated (BBG)
• Iran warns of retaliation if U.S. breaches nuclear deal (Reuters)
• U.S. retailers push deals early as Black Friday loses focus (Reuters)
• For Department Stores, the Big Lure on Black Friday: $19.99 Boots (WSJ)
• How Apple Lost China to Two Unknown Local Smartphone Makers (BBG)
• Automakers seek to cut inventories with Black Friday, holiday promotions (Reuters)
• Xerox Overcharged Student Debtors, State Prosecutor Says (BBG)
• Wall Street’s Youngest Workers Not Worried About Robots (BBG)
• Brady Dougan Gets Back in the Game With $3 Billion Investment (WSJ)
• North Sea Oil Glut to Get Short-Term Relief as Flows Go East (BBG)

 

Overnight media Digest

WSJ

– Donald Trump indicated that he was unlikely to disentangle himself from his business empire as fully as he previously suggested, raising questions about potential conflicts of interest while president. on.wsj.com/2fDEkpZ

– The Dow Jones Industrial Average closed above 19000 for the first time, extending a stretch of milestones for major U.S. stock indexes. on.wsj.com/2gdNXiR

– A handful of doctors, many with close ties to John Kapoor’s Insys Therapeutics, are responsible for outsize levels of prescriptions for Subsys, a form of the opioid fentanyl. Officials in more than 15 jurisdictions are investigating Insys’ business practices. on.wsj.com/2gismTL

– As department stores gear up for the holiday shopping frenzy that unofficially gets underway this week, behind the scenes they have been locked in a battle with some big-name suppliers over rampant discounting. on.wsj.com/2gGBmGg

– President-elect Donald Trump is leaning toward asking former Massachusetts Gov. Mitt Romney to be his secretary of state, according to people familiar with the deliberations. on.wsj.com/2fCFDFI

– Former Credit Suisse Group AG Chief Executive Brady Dougan plans to launch a merchant bank in early 2017 and has lined up a $3 billion investment to seed the venture, according to people familiar with the matter. on.wsj.com/2f49ydK

– China is moving swiftly to capitalize in Asia on the apparent collapse of a landmark U.S.-backed Pacific trade agreement, saying it hopes now to conclude its own Asia-wide trade pact in a step to broaden its influence as priorities shift under a new administration in Washington. on.wsj.com/2gFYtkk

 

FT

* Britain’s finance minister will say on Wednesday that he is reducing a benefits squeeze for low-paid workers, but that fixing the public finances and improving productivity are the best ways to improve living standards.

* Companies would be given more breathing space to restructure their debts in times of crisis under a European Union draft law unveiled on Tuesday, inspired by U.S. insolvency rules and aimed at avoiding bankruptcies and saving jobs.

* Frank Field, the chair of the committee probing the collapse of BHS, has asked regulators whether it can see seize Philip Green’s assets including his yachts.

 

NYT

– President-elect Donald Trump said on Tuesday he had no intention of pressing for an investigation into Hillary Clinton’s use of a private email server or the financial operations of her family’s foundation. http://nyti.ms/2gA67M8

– Facebook has developed software to suppress posts from appearing in people’s news feeds in specific geographic areas, according to three current and former Facebook employees. The feature was created to help Facebook get into China, a market where the social network has been blocked. http://nyti.ms/2gA3iut

– A federal judge in Texas issued a nationwide injunction on Tuesday against an Obama administration regulation expanding by millions the number of workers who would be eligible for time-and-a-half overtime pay. The regulation was scheduled to take effect on Dec. 1. It would raise the salary limit below which workers automatically qualified for overtime pay to $47,476 from $23,660. http://nyti.ms/2gA5AKd

– George Soros says he will commit $10 million from his personal foundation to combat a rise in hate crimes that he linked to the “incendiary rhetoric” of President-elect Donald Trump’s campaign. He said he was “deeply troubled” by hundreds of reports of possible hate crimes since the election. http://nyti.ms/2gA6TJ6

 

Britain

The Times

Belgian industrial equipment supplier TVH Group NV launched a hostile bid for Lavendon Group Plc after its initial takeover approaches were rebuffed by the British company’s largest shareholder. http://bit.ly/2fPAL3c

There is “zero chance” of British Airways operating any new domestic flights from an expanded Heathrow, said the head of the airline’s parent company, International Consolidated Airlines Group SA. http://bit.ly/2fPEltT

The Guardian

Millions of families who are being charged hundreds of pounds by agencies to cover the supposed administrative costs of renting will be offered relief when the chancellor of the exchequer promises to ban letting fees. Philip Hammond will unveil the measure in the autumn statement on Wednesday alongside a 1.4 billion pounds ($1.74 billion) investment in affordable housing as he tries to deliver on Prime Minister Theresa May’s promise to help families who are “just about managing.” http://bit.ly/2g1guoY

Discount chains Aldi and Lidl have begun putting up the price of basic groceries, including milk and bananas, as the squeeze from the Brexit-driven fall in the value of the pound hits. http://bit.ly/2g1c9BU

The Telegraph

MPs have written to the Pensions Regulator to ask if assets owned by Philip Green, including his multi-million-pound super yacht, could be seized in order to pay the pensions of thousands of BHS workers. http://bit.ly/2fPAMDV

Hewden, the heavy machinery rental firm, has collapsed into administration after being hit by uncertainty following the EU referendum and after a desperate search for new funding failed. http://bit.ly/2g1fqRR

Sky News

Administrators to BHS have lodged a furious protest against a move to force them to begin liquidating the collapsed retailer within days, accusing its biggest creditor of jeopardising efforts to complete an orderly wind-down, according to a copy of a progress report obtained by Sky News. http://bit.ly/2g1czbH

The Independent

The UK government has reduced its stake in Lloyds Banking Group Plc to below 8 percent as it continues progress towards fully privatising the bailed-out lender. http://ind.pn/2g1cMM1

 

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As we showed yesterday, while the rest of the European bond market has suffered from the some “trumpflation-linked” weakness in the long end as US Treasurys in the aftermath of the Trump election as inflation and new supply fears grow, short-dated German bund yields unexpectedly plunged to record lows…

 

… as a result of what appears to be a massive year-end collateral shortage (which has come in about a month early) with demand for German collateral soaring and reflected in repo funding levels as funds are now forced to pay up to 1.5% to borrow a 10-year Bund, up from some 0.40% a year ago, according to Icap data..

Today we saw more of the same in early trading, as the German 2Y continued to outperform on collateral shortage fears, which likely prompted Reuters to report that the ECB is looking for ways to lend out more of its huge pile of government debt to avert a freeze in the €5.5 trillion repo market that underpins the financial system, manifesting in the surge in short-term Bunds.

While the ECB has bought more than a trillion euros ($1.06 trillion) of euro zone government bonds in a bid to shore up economic growth and inflation in the euro zone, in doing so, it has taken away the key ingredient for repurchase agreements, or repos, whereby financial firms lend to each other against collateral, typically high-rated government bonds such as Germany’s. Repo, as covered here extensively over the years, is the core lubrication of debt capital markets, and is used by investment funds to finance trading and is regarded by the ECB as a key avenue to transmit its own monetary stimulus to the economy. More details:

A freeze in repo activity risks undoing some of the ECB’s stimulus by hampering lending between financial companies and leaving bond markets vulnerable to sharp selloffs.

 

To avert this, the ECB wants to make it easier for banks to borrow the bonds that it has bought so that they can be used as collateral for repo loans, the sources said.

 

Possible changes include reducing charges for firms which fail to return on time the bonds they have borrowed, accepting new types of collateral and extending the duration of loans.

 

“If liquidity dries up there are more fails and banks are more cautious when it comes to making the market,” one of the sources said. The sources added the issue will be discussed at the ECB’s Dec. 8 meeting, when rate setters will decide on whether to continue purchases beyond March and ensure they can still find enough bonds to buy.

 

Any decision on bond lending will depend on what other changes the ECB makes to its asset-purchase program and might not be finalised in December.

While Europe is not alone in its central bank dominating the repo market, with the Fed likewise having quietly become the biggest player in the US repo market as well, the problem appears to be most severe in Germany.

With the ECB now owning more than a quarter of all outstanding German bonds as it continued to slowly nationalize European debt, funds pay up to 1.5% to borrow a 10-year Bund, up from some 0.40 percent a year ago, according to Icap data.

This is putting a strain on investors as they face increasingly frequent demands to put up cash or liquid collateral against their derivative positions due to new regulation.

“If a pension fund can’t borrow a bond in time, it may have to sell its own cash bond, foregoing a potential return in the future to fulfill a short-term obligation,” Godfried DeVidts of the International Capital Market Association industry body said. “So basically the pension funds are getting poorer and the pensioners too.”

Any ECB decision how to remedy the “repo freeze” would meet further roadblocks as it would then have to be implemented by national central banks, which own the bulk of the debt bought by the ECB and bear the risk for their own bond-lending schemes. “This means the most radical proposals may run into resistance, the sources said.”

And while the actual remedy to be implemented by the ECB is yet to be determined, the concern that the ECB may inject more securities to unfreeze repo has quickly rippled through the bond market, and as a result Germany’s two-year bond yields rose: the two-year Schatz yield shot up 6 basis points from the day’s lows to minus 0.69 percent, having hit a record low earlier in the day. Other euro zone bond yields also rose, reversing earlier falls.

The most notable move was in 10Y bunds which jumped to 0.278% after hitting a session low of 0.21%. French 10Ys also rose over 7 bps, as did Italian bonds.

Bund futures slid to a session low of 160.78, losing as much as 62 ticks, following the Reuters report.

The best summary of the quandary the ECB has found itself in comes from David Schnautz, interest rate strategist at Commerzbank, who first pointed out the collateral shortage, and who said that “there is something going on with the repo markets and we can see that as soon as the ECB starts talking about tackling these problems we see a market reaction.”

For now, despite the modest pick up in yields, the market is confident that the collateral shortage, something we have warned about since 2013, will be resolved although the specifics could lead to another major asset repricing, especially if it comes at a time when the ECB and BOJ are expected to provide the “cross-border” helicopter money to finance Trump’s stimulus plan, as reported yesterday.

via http://ift.tt/2fQK8iX Tyler Durden

 

 

Hold your real assets outside of the banking system in one of many private international facilities  –>    http://ift.tt/2cyFwvQ;

 

 

 

 

Speculators Are Finally Bailing Out Of Gold, And That’s A Good Thing

Posted with permission and written by John Rubino

 

 

 

 

All this talk of massive new infrastructure spending financed with a tsunami of freshly-minted currency should be lighting a fire under gold. That it hasn’t is a testament to how out-of-whack the precious metals market had gotten during the first six months of this year.

 

As gold rose, the futures contract traders whose games tend to dictate near-term price action had set the metal up for a fall. Specifically, the speculators (who are always wrong at the extremes) were ridiculously long. With the suckers all-in, a big correction was needed to restore balance.

 

But it didn’t come. Several months passed with gold treading water, leading some to wonder if the paper market tail had finally stopped wagging the physical market dog.

 

 

Now the long-overdue correction seems to have arrived. Gold is down 11% from its recent high, and the speculators are bailing. Here’s the Commitment of Traders (COT) report (courtesy of GoldSeek) for the week ending Tuesday the 15th showing a 17% drop in large speculator long positions. That’s a huge move for a single week. And based on the price declines of the subsequent three days, it’s likely that the next report will show a similar drop.

 

Meanwhile the commercial traders – the guys who sucker the speculators into these unwise bets – cut their short positions by an also notable 9%.

 

 

Typically, a bottom occurs when both commercials and speculators are flat — that is, carrying more-or-less equal long and short positions. The latest report is still a long way from that kind of balance. But another few weeks like the last one and this indicator, at least, will be screaming “buy gold”.

 

 

 

Please email with any questions about this article or precious metals HERE

 

 

 

 

Speculators Are Finally Bailing Out Of Gold, And That’s A Good Thing

Posted with permission and written by John Rubino

via http://ift.tt/2gjMl5a Sprott Money

In a quiet overnight session in which Japan was closed, European shares are mixed as financials and auto weigh, Asian stocks rise led by materials while S&P futures little changed against a backdrop of the continuing commodity rally with oil holding near $48 a barrel, up fractionally on the session. Against a basket of currencies, the dollar index was up slightly at 101.12, very close to a 14-year peak. The dollar also kept most of its recent hefty gains on the yen at 111.05 though it has met resistance around 111.35 in the last couple of sessions

“I think markets had been a bit euphoric in the wake of Trump and now they are coming around to the understanding that there is not going to be fiscal stimulus that is going to be good for everyone” said Rabobank strategist Lyn Graham-Taylor said.

Emerging markets have struggled in recent days as surging U.S. bond yields sucked much-needed capital out of Asia. President-elect Donald Trump’s past talk of trade tariffs has also weighed on sentiment in the export-intensive region.

With Japan on holiday, Australia’s main index led the action in Asia with a rise of 1.35 percent to a one-month top helped by strength in bulk commodity prices. China’s blue-chip CSI300 index advanced 0.5 percent to a near 11-month peak as the yuan touched its lowest in six years.

Ahead of tomorrow’s Thanksgiving holiday in the US, European stocks were little changed, with miners leading gains after a metals index rose to the highest since June 2015 on Tuesday. Oil fluctuated after OPEC left unresolved participation by Iraq and Iran in the group’s plan to cut output. German two-year note yields touched a new record-low amid a scarcity of collateral and speculation the European Central Bank will ease policy at next month’s meeting. Treasuries gained before the Federal Reserve releases minutes of its November meeting.

“The reflation theme in the U.S. is dominating all markets,” said Christian Stocker, a strategist at UniCredit Bank AG in Munich, Germany. “In Europe the picture is a bit more complicate.d”

As Bloomberg notes, markets are flat ahead of U.S. economic reports including jobless claims, durable goods orders and consumer confidence for confirmation the Fed will hike rates next month.  As the chart below shows, the market-implied probability of a rate hike has been at 100% for the past few days, just as S&P hit new all time highs above 2,200.

Developed-market shares and the dollar have been among the biggest winners since Donald Trump’s surprise election victory fueled speculation of more fiscal stimulus in the U.S., while government bonds and emerging markets have slumped.

Futures on the S&P 500 Index rose less than 0.1 percent at 10:12 a.m. in London, after all four major U.S. stock benchmarks climbed to records on Tuesday.

The Stoxx Europe 600 Index slipped 0.1 percent, while the U.K.’s FTSE 100 Index added 0.6 percent. U.K. Chancellor of the Exchequer Philip Hammond is scheduled to outline a series of measures to help “ordinary working-class families” and stress that a stable economy, fiscal discipline and better productivity are the best ways to raise living standards in his Autumn Statement to Parliament on Wednesday.

Earlier today Europe reported Flash November PMI Data, which largely came in stronger than expected. As BBG notes, Euro-area economic growth accelerated to its fastest pace this year as growing order books prompted companies to add more workers and raise prices. A Purchasing Managers’ Index for manufacturing and services rose to 54.1 in November from 53.3 a month earlier, IHS Markit said on Wednesday. That’s the strongest level in 11 months and above the 50 mark that divides expansion from contraction.

• Eurozone Nov. Flash Composite PMI 54.1; Est. 53.3
• Eurozone Nov. Flash Services PMI 54.1; Est. 52.9
• Eurozone Nov. Flash Manufacturing PMI 53.7; Est. 53.3
• Germany Nov. Flash Composite PMI 54.9; Est 55
• Germany Nov. Flash Services PMI 55; Est 54
• Germany Nov. Flash Manufacturing PMI 54.4; Est 54.8
• France Nov. Flash Composite PMI 52.3 Vs 51.6; Est 51.9
• France Nov. Flash Services PMI 52.6; Est 51.9
• France Nov. Flash Manufacturing PMI 51.5; Est 51.5

The signs that recovery is gathering momentum should give some relief to
the European Central Bank as it faces a complex decision on Dec. 8
whether to extend its 1.7 trillion-euro ($1.8 trillion)
quantitative-easing program. President Mario Draghi said this week that
the recovery remains reliant on continued monetary support. However, any hints of rising inflationary pressures will be met with disappointment by the market which expects no changes from the ECB’s QE for the foreseeable future.

* * *

Bulletin Headline Summary from RanSquawk

• European equities trade mixed with participants awaiting Chancellor Hammond’s inaugural Autumn budget, while Bunds have been hampered by ECB source comments regarding measures of addressing bond scarcity
• Another relatively quiet morning in FX markets, but notable was the hit on EUR/USD, with players still gunning for 1.0500 on the downside
• Looking ahead, highlights include FOMC minutes, UK Autumn Statement, US mfg PMI, US Durables and DoEs

Market Snapshot

• S&P 500 futures up less than 0.1% to 2202
• Stoxx 600 down 0.1% to 341
• FTSE 100 up 0.6% to 6860
• DAX down 0.3% to 10680
• German 10Yr yield down less than 1bp to 0.22%
• Italian 10Yr yield up 6bps to 2.09%
• Spanish 10Yr yield up 2bps to 1.54%
• S&P GSCI Index down less than 0.1% to 370.9
• MSCI Asia Pacific up 0.5% to 136
• Nikkei 225 closed
• Hang Seng down less than 0.1% to 22677
• Shanghai Composite down 0.2% to 3241
• S&P/ASX 200 up 1.3% to 5484
• US 10-yr yield down 2bps to 2.3%
• Dollar Index up 0.11% to 101.15
• WTI Crude futures up 0.4% to $48.22
• Brent Futures up 0.3% to $49.26
• Gold spot up less than 0.1% to $1,212
• Silver spot up less than 0.1% to $16.66

Top Headline News

• US Oil Trades Near $48 as OPEC Fails to Agree on Iraq, Iran: Iraq, Iran output levels left for Nov. 30 meeting to resolve
• Facebook May Have Tool to Return to China, But No Government OK: Social network operator said to lack Beijing office license
• IAC Directors Sued Over Creation of Non-Voting Class of Shares: Chairman Diller accused of seeking to cement control
• Dollar Rally Cools Before Thanksgiving as Traders Mull 2017 Fed: Traders less certain Fed will hike aggressively in 2017
• Trump Shifts Tone on Climate Change, Environmentalists Scoff: Says there is ‘some’ link between humans and global warming
• Monsanto Sued Over Alleged CEO, Board Bayer Merger Conflicts: CEO Grant may collect $18 million through deal, investor says
• Engine Capital Said Pushing Del Frisco to Seek Options: Reuters: Co. pushed to seek alternatives, including a sale

* * *

Looking at regional markets, we start in Asia where stock markets traded higher across the board following a positive lead from the US where all 3 major US indices extended on record highs, with DJIA breaking above 19,000 for the first time. The increased risk appetite filtered through to ASX 200 (+1.3%) which led the region and was also boosted by gains in the materials sector. Hang Seng (+0.1%) and Shanghai Comp (-0.2%) traded mixed, with the latter failing to extend on its best levels seen in 10-months, while Japanese markets remained shut for Labour Thanksgiving Day. PBoC injected CNY 100bIn 7-day reverse repos, CNY 80bIn in 14-day reverse repos, CNY 10bIn in 28-day reverse repos. PBoC set mid-point at 6.8904 (Prey. 6.8779).

Top Asian News

• Ex-StanChart Global Rates Head Said to Open Singapore Hedge Fund: Three Bamboo said to plan raising external money next year
• The ‘Widow-Maker’ Returns as Shorts Target Australian Banks: Short interest in big four lenders has climbed in past month
• China Selfie App Said in Talks for $5 Billion Valuation in IPO: Meitu plans to test demand with investors in U.S., London
• Crown Staff Face at Least Two Months Detainment on Arrest: Group of Crown employees were arrested last Friday
• HSBC Said to Advise Saudi Pension Fund on Financial Hub Sale: Parties discussing sale of struggling $8b district in Riyadh

In Europe, equities trade mixed with participants awaiting the Chancellor Hammond’s inaugural Autumn budget in which there are some expectations that the budget will entail a ban on letting fees. As such, property names have come under pressure thus far with Foxtons falling as much as 11%. Additionally, after yesterday’s debacle whereby Vinci shares fell just shy of 20% following a false report the company of pared the entirety of those losses. Fixed income markets have seen a bid this morning with much of the focus in the German 2yr after the yield fell to record lows of -0.745%, however has pulled off in recent trade. While political uncertainty in Italy remains at the forefront of investors’ minds which has been observed in the ITA-GER 10yr spread, now at the widest in 3-yrs. Heading into the US crossover, ECB sources suggested that the ECB are reportedly set to issue more bonds in order to avoid a market freeze, however, details may not be finalised in December. This subsequently weighed on prices given the supply impact with the Dec’16 Bund contract falling circa 50 ticks.

Top European News

• Euro-Area Economic Growth Gathers Pace as Orders and Prices Rise: Euro-area Nov. services PMI rises to 54.1 from 53.3
• German Two-Year Yields Drop to Record as ECB Speculation Mounts: Benchmark 10-year bunds hold gain before 2026 auction
• Lufthansa Cancels About 900 Flights Amid 2-Day Pilot Strike: Walkout extended to Thursday after effort to block strike
• Ericsson Falls After Reports of Corruption in Costa Rica, Poland: Reports on wireless network contracts at end of 1990s
• Credit Suisse’s Dougan Said to Land $3b for Merchant Bank: Firm backed by royal families, state funds to stake venture
• Innogy, Galapagos, Cembra to Be Added to Stoxx Europe 600 Index: Effective as of Europe market open on Dec. 19
• Crunch Time for Monte Paschi, and Italy, as Share Sale Looms: New CEO Morelli criss-crosses globe to pitch crucial offering

In commodities, WTI (+USD 0.14/bbl) and Brent crude futures (+USD 0.14/bbl) are up marginally on the day edging ever closer to the USD 50.00/bbl area as we await more comments from oil producing nations, an API inventory drawdown failed to provide any sustained support to prices overnight after the Iraq Governor stated that ‘we are agreed and happy after the OPEC meeting’. Gold and silver have not seen too much movement this session, but USD 1204/oz may be targeted after a firm rejection yesterday.

In FX, it has been a quiet morning in FX markets, but notable was the hit on EUR/USD, with players still gunning for 1.0500 on the downside, however it has since rebounded on a Reuters report that the ECB is seeking to lend out more bonds to prevent a market freeze. Overstretched levels do not seem to be deterring the unyielding USD bulls in the current climate, and with the Fed funds rate path now significantly steeper dip buying has been pretty shallow. As such, 1.0650-60 continues to contain the lead EUR rate, but sops continue to build above this area, which could generate a stronger short squeeze the more shorts are added. Similarly in USD/JPY, there is no let up in the quest for 111.40-45+ – this the target level standing in the way of higher levels amid the backdrop of buoyant stock markets. To this end, AUD and CAD have seen some upside in recent sessions, with higher metals prices adding to the AUD/USD move through .7400, while USD/CAD looks to be tempering the move below 1.3400 as WTI holds comfortably off $50.00 levels. All eyes on GBP ahead of the Autumn statement, where the growth forecasts are expected to be lower.

Looking at the day ahead, the early release will be the October durable and capital goods orders data which generally speaking would be considered an important release however given that the data is for the month prior to the Election, the more important release will probably be next month’s print where we’ll get a better idea of the possible shift in order flow. Also due out in the US is the latest weekly initial jobless claims print, new home sales, FHFA house price index, flash manufacturing PMI and the final revisions to the University of Michigan consumer sentiment survey. The focus then turns to the FOMC minutes from the meeting earlier this month where most will be looking for a confirmation that the Fed will be tightening next month. Away from the data, the other big event today is the aforementioned UK Chancellor Hammond’s long awaited post-Brexit Autumn statement.

US Event Calendar

• 7am: MBA Mortgage Applications, Nov. 18 (prior -9.2%)
• 8:30am: Durable Goods Orders, Oct. P, est. 1.7% (prior -0.3%); Capital Goods Orders, Oct. P, est. 0.3% (prior -1.3%)
• 8:30am: Initial Jobless Claims, Nov. 19, est. 250k (prior 235k); Continuing Claims, Nov. 12 est. 2.008m (prior 1.977m)
• 9am: FHFA House Price Purchase Index q/q, 3Q (prior 1.2%)
• 9:45am: Bloomberg Consumer Comfort, Nov. 20 (prior 45.4)
• 9:45am: Markit U.S. Manufacturing PMI, Nov. P, est. 53.5 (prior 53.4)
• 10am: New Home Sales, Oct., est. 590k (prior 593k)
• 10am: U. of Mich. Sentiment, Nov. F, est. 91.6 (prior 91.6)
• 10:30am: DOE Energy Inventories
• 11am: EIA natural-gas storage change
• 1pm: Baker Hughes rig count
• 2pm: FOMC Minutes, Nov.

* * *

DB’s Jim Reid concludes the overnight wrap

Over in markets the pre-Thanksgiving holiday cheer has continued with the four major US equity markets once again recording fresh all time highs last night. Indeed the S&P 500 (+0.22%), Dow (+0.35%), Nasdaq (+0.33%) and Russell 2000 (+0.92%) all nudged higher despite a wobble midway through the session after Oil pared gains following a fresh batch of OPEC headlines (more on that shortly). It was also a decent session for risk in Europe with the Stoxx 600 recording a +0.23% gain with the miners leading the way following moves higher for base metals including the likes of iron ore (+6.48%), copper (+0.97%) and aluminium (+2.21%).

It was a good recovery day for European sovereign bond markets too with 10y Bund yields finishing 5.4bps lower at 0.216% and in fact having their strongest day since September 22nd. Yields in the periphery were also 5-9bps lower with the market seemingly playing catch up to the accommodative Draghi and ECB comments on Monday. In fact 2y Bund yields tumbled to -0.753% yesterday and to a fresh record low. With that move it now means that the spread between 2y Bunds and 2y Treasuries has blown out to 183bp which is in fact the highest now since 2005. It’s amazing to think that just 5 years ago Bunds traded about 130bps on top of Treasuries.

Meanwhile, as we’ve been somewhat accustomed to recently, a fresh flurry of OPEC headlines has had Oil whipsawing about again over the past 24 hours. WTI is hovering little changed around $48/bbl this morning but traded in a $2 range around that level yesterday after headlines suggested that OPEC talks in Vienna yesterday had failed to yield an agreement on whether or not Iran and Iraq would join production cuts, and instead deferred the decision to ministers at the meeting this time next week. That was despite Libya’s OPEC governor suggesting that the meeting had ended with a consensus. Yesterday our commodity strategists published a report looking ahead to the meeting. In it they sketched out a range of possible outcomes with their central case being a freeze with loose compliance in which production would be established in the 32.5 to 33.0 mmb/d range for a period of six months, to be revisited and possibly renewed. However they also believe that this is still likely to mean that compliance will both be difficult to achieve and also doubted by the market, hence their revised forecast production rate of 33.4 mmb/d in 2017 versus actual output of 33.8 mmb/d in October.

Refreshing our screens this morning, with little new news flow to change things, the positive tone on Wall Street last night has continued into the Asia session this morning with the Hang Seng (+0.37%), Shanghai Comp (+0.23%), Kospi (+0.50%) and ASX (+1.23%) all higher. Markets in Japan are closed for a public holiday while US equity index futures are also a shade higher in early trading.

Moving on. The potentially most interesting event today is the long anticipated post-Brexit UK Autumn Budget Statement at 12.30pm GMT. As a reminder our Economists last week highlighted that Chancellor, Philip Hammond, has reduced expectations for the volume of his fiscal ‘reset’. Resources are not unlimited. Even with a modest relaxation, our economists expect a GBP30bn increase in Public Sector Net Borrowing (PSNB) on average over the 5-year planning period given the general deterioration in public finances (GBP10bn in 2017/18). They also expect Hammond to say there is some “fiscal space” in reserve if needed. There may be some space relative to the UK’s low Gross Financing Needs, but the more Hammond uses this fiscal space, the steeper the debt trajectory. The more credible the fiscal down-payment, the easier it will be to convince the markets of sustainability if the policy needs to be scaled up later. Credibility is a function of how well the policy targets the problems and the balance Hammond’s new fiscal rules achieve between flexibility and commitment. The Chancellor’s ability to target spending at boosting potential GDP growth (e.g. infrastructure spending) and protect it in weaker-than-expected economic scenarios will determine the success and sustainability of the Autumn Statement. Ahead of the Statement today, yesterday we got October public finances data in the UK which showed that net borrowing excluding banking groups amounted to £4.8bn in October which was a bit less than expected (vs. £6.0bn expected) and also down from £6.4bn a year earlier.

The rest of the more interesting newsflow is unsurprisingly politics orientated again. Following on from his policy agenda video announcement, President-elect Trump confirmed that he has no intention to prosecute or investigate Hilary Clinton over the handling of her secret email information saying that it would be ‘very divisive for the country’ in an interview with the NY Times. Interestingly, in the same interview Trump also suggested that he might abandon another campaign pledge in saying that he would ‘keep an open mind’ about whether or not to withdraw the US from the climate change treaty signed last year in Paris.

Meanwhile in Italy the deputy-secretary of PM Renzi’s Democratic Party, Lorenzo Guerini, confirmed that Renzi’s party would seek early elections by the summer of 2017 in the event that Renzi loses the upcoming referendum. That news shouldn’t come as a big surprise however with Guerini also declining to say whether the premier would stay on to lead the party or honor his promise to resign, should he be defeated.

Before we wrap up, once again it was another relatively quiet day for dataflow yesterday. In the US we learned that existing home sales climbed +2.0% mom in October (vs. -0.6% expected) to an annualised rate of 5.60m which is actually the highest level since February 2007. Meanwhile the Richmond Fed’s manufacturing index rose 8pts to +4 in November with the new orders index in particular up a rather robust 19pts to +7. In Europe the flash November consumer confidence print rebounded to -6.1 from -8.0 which is actually the best print this year. Finally in the UK the CBI Distributive Trends Survey for November showed an improvement in firms’ order books with total orders rising from -17 to -3.

Looking at the day ahead, this morning in Europe it’s all eyes on the November flash PMI’s for the Euro area, Germany and France. The consensus is for a stabilisation in the Euro area composite at 53.3. Across the pond this afternoon we’ve got a reasonably busy diary with the data packed in ahead of Thanksgiving tomorrow. The early release will be the October durable and capital goods orders data which generally speaking would be considered an important release however given that the data is for the month prior to the Election, the more important release will probably be next month’s print where we’ll get a better idea of the possible shift in order flow. Also due out in the US this afternoon is the latest weekly initial jobless claims print, new home sales, FHFA house price index, flash manufacturing PMI and the final revisions to the University of Michigan consumer sentiment survey. This evening, the focus then turns to the FOMC minutes from the meeting earlier this month where most will be looking for a confirmation that the Fed will be tightening next month. Away from the data, the other big event today is the aforementioned UK Chancellor Hammond’s long awaited post-Brexit Autumn statement.

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