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The big news this week was the flash crash in silver late on 6 July. We will publish a separate forensic analysis of this, as there is a lot to say and see.

It’s hard to tell—we don’t have the tools to measure such a thing—but it seems like the hype and aggression from the gold bugs and conspiracy theorists is reaching a fever pitch. For example, one high-profile commentator, whose reputation goes way beyond the world of gold, claimed that 1.8 million ounces of gold were sold in a few seconds on June 26. A contract is 100oz, so that means 18,000 contracts. Surprisingly (so often these guys are off by orders of magnitude), this is in line with the data in our own analysis.

On a typical day, it is common for 250,000 (active month) contracts to change hands. This is about 777 tons. That conspiracy theorist compares this quantity to the amount produced by the miners. He does not acknowledge that virtually all of the gold ever mined in human history is still in human hands, and all of that metal is potential supply, at the right price and under the right conditions.

And there is another point. Of course, in a free market there would be no futures market in gold or silver. A futures market is for goods that are produced seasonally, but consumed throughout the year. It is a market for warehousing.

There would be an interest-rate market for gold, i.e. a bond market. A gold futures market is a bizarre creature, a Frankenstein created by the artificial environment of irredeemable currencies and laws that force everyone to use them.

A futures market for gold is a mechanism to turn gold into a chip in the casino, just another way for speculators to bet on the price action, to generation profits in dollars. Like all other derivatives markets, the gold futures market offers leverage so that traders can maximize profits even when price moves are small.

Of course, big leveraged positions mean big risk. That is why traders must set tight stop-loss orders, creating opportunities for other speculators to hunt for stop-loss levels, adding more risk to the casino. And it is also the basis (no pun intended) of our basis analysis. We like to see how much these leveraged bettors are moving the price.

Anyways, back to the idea of peak hype. We think, but again it’s hard to tell, that this corresponds to peak desperation from those who sell gold for a living. Profits per ounce are down, and so are ounces sold. The reality is that it’s a moribund market out there today. If you have a frank and sober discussion with your local dealer—it may help to do this over a beer or two—you will get the same answer. There’s little buying action at retail.

Peak hype, peak desperation, all selling in the streets with little buying… we are not technicians and do not focus on sentiment… but this description sounds like the definition of capitulation.

We would think that by now, the hypsters have about exhausted their credibility, having predicted 100 of the past zero moonshots since 2011. Of course, even if now is the price low, these stopped clocks are not correct for a bullish prediction. Their writing is not really prediction, but sales pitch, perennially permabull.

Also, we would add something important. Even if this is a capitulation low, that does not necessarily a mean a moonshot to $5,000 or even $2,000. We don’t expect that, and won’t expect it without evidence of a much more serious shift in the fundamentals. We would expect a normal trading bounce within the range and perhaps a few bucks over $1,300.

 

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The prices of the metals fell $29 and $1.02.

As always, we are interested in the fundamentals. Did the market change in a durable way? Are gold and silver being devalued? Is it time to capitulate and avoid the rush?

Monetary Metals publishes the only true measure of the fundamentals. But first charts of their prices and the gold-silver ratio.

Next, this is a graph of the gold price measured in silver, otherwise known as the gold to silver ratio. The ratio moved up sharply this week, to a new high for the move, over 78.

In this graph, we show both bid and offer prices for the gold-silver ratio. If you were to sell gold on the bid and buy silver at the ask, that is the lower bid price. Conversely, if you sold silver on the bid and bought gold at the offer, that is the higher offer price.

For each metal, we will look at a graph of the basis and cobasis overlaid with the price of the dollar in terms of the respective metal. It will make it easier to provide brief commentary. The dollar will be represented in green, the basis in blue and cobasis in red.

Here is the gold graph.

We had a rising price of the dollar (the mirror image of the falling price of gold). Look at it rise. Those who are all-in on the dollar (which is most people) must be feeling pretty smug right now, unless they measure their dollar against its derivatives such as euro, pound, etc. This is a similar mistake as measuring gold in dollars.

In any case, note the rising backwardation in August gold. Now well over +0.3%. For the October and December contracts, the cobasis is -0.2% and -1%. So it’s still a temporary backwardation, though October is a ways into the future and -0.2% is high.

Our calculated gold fundamental price actually rose about $11 (chart here), to $1345.

Now let’s look at silver.

Last week, the September silver cobasis hit 0, the same as gold. This week it’s over +0.9%. The December cobasis is 0. That is interesting.

Zero is an interesting number for the cobasis, because it’s the margin where decarrying becomes profitable. Decarrying is when you sell metal and buy a futures contract to recover the position. This trade does not require credit, only the metal.

Last week, we said:

It should be interesting to see if the cobasis moves firmly into positive territory this week.

And how! Of course, this was with the dollar rising very sharply in silver terms, from 1.85 grams silver to 2g.

Our calculated silver fundamental price did correct a bit, 26 cents to $17.59. See here for a graph showing the discount (green) or premium (red) for silver. The discount is even greater this week than last week.

 

Monetary Metals will be exhibiting at FreedomFest in Las Vegas in July. If you are an investor and would like a meeting there, please click here. Keith will be speaking, on the topic of what will the coming gold standard look like.

 

© 2017 Monetary Metals

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Authored by Lance Roberts via RealInvestmentAdvice.com,

You can almost hear the announcer for the movie trailer;

“In a world stricken by financial crisis, a country plagued by spiraling deficits and cities on the verge of collapse – a war is being waged; gauntlet’s thrown down and at the heart of it all; two dead white guys battling over the fate of the economy.”

While I am not so sure it would actually make a great movie to watch – it is the ongoing saga we will continue to witness unfold over the next decade. While the video below is entertaining, it does lay out the key differences between Keynesian and Austrian economic theories.

Just last week, the Federal Reserve released a report which forms the basis of the semi-annual testimony Ms. Yellen will give to Congress this week. There was much in this report which suggests the models the Federal Reserve continues to use are at best flawed and, at worst, broken.

For decades, ivory tower economists have heaped high praise on Keynesian policies as they have encouraged Governments to drive deeper into debt with the expectation of reviving economic growth.

The problem is – it hasn’t worked.

Here’s proof. Following the financial crisis, the Government and the Federal Reserve decided it was prudent to inject more than $33 Trillion in debt-laden injections into the economy believing such would stimulate an economic resurgence. Here is a listing of all the programs.

Unfortunately, the results have been disappointing at best, considering it took almost $17 Billion for every $1 of cumulative economic growth.

Keynes contended that “a general glut would occur when aggregate demand for goods was insufficient, leading to an economic downturn resulting in losses of potential output due to unnecessarily high unemployment, which results from the defensive (or reactive) decisions of the producers.”  In other words, when there is a lack of demand from consumers due to high unemployment then the contraction in demand would, therefore, force producers to take defensive, or react, actions to reduce output.

In such a situation, Keynesian economics states that government policies could be used to increase aggregate demand, thus increasing economic activity and reducing unemployment and deflation. Investment by government injects income, which results in more spending in the general economy, which in turn stimulates more production and investment involving still more income and spending and so forth. The initial stimulation starts a cascade of events, whose total increase in economic activity is a multiple of the original investment.

Unfortunately, as shown below, monetary interventions and the Keynesian economic theory of deficit spending has failed to produce a rising trend of economic growth.

What changed?

The Breaking Point & The Death Of Keynes

Take a look at the chart above. Beginning in the 1950’s, and continuing through the late 1970’s, interest rates were in a generally rising trend along with economic growth. Consequently, despite recessions, budget deficits were non-existent allowing for the productive use of capital. When the economy went through its natural and inevitable slowdowns, or recessions, the Federal Reserve could lower interest rates which in turn would incentivize producers to borrow at cheaper rates, refinance activities, etc. which spurred production and ultimately hiring and consumption.

However, beginning in 1980 the trend changed with what I have called the “Breaking Point.” It’s hard to identify the exact culprit which ranged from the Reagan Administration’s launch into massive deficit spending, deregulation, exportation of manufacturing, a shift to a serviced based economy, or a myriad of other possibilities or even a combination of all of them. Whatever the specific reason; the policies that have been followed since the “breaking point” have continued to work at odds with the “American Dream,” and economic models.

As the banking system was deregulated, the financial system was unleashed upon the unsuspecting American public. As interest rates fell, the average American discovered the world of financial engineering, easy money, and the wealth creation ability through the use of leverage. However, what we didn’t realize then, and are slowly coming to grips with today, is that financial engineering has a very negative side effect – it deteriorated our economic prosperity.

Furthermore, this also explains why the dependency on social welfare programs is at the highest level in history.

As the use of leverage crept through the system, it slowly chipped away at savings and productive investment. Without savings, consumers can’t consume, producers can’t produce and the economy grinds to a halt.

Regardless of the specific cause, each interest rate reduction that was used from that point forward to stimulate economic growth did, in fact, lead to a recovery in the economy; just not at levels as strong as they were in the previous cycle. Therefore, each cycle led to lower interest rates and economic growth slowed and as a result of consumers and producers turning to credit and savings to finance the shortfall which in turn led to lower productive investment. It was like an undetectable cancer slowing building in the system.

The “Breaking Point” in 1980 was the beginning of the end of the Keynesian economic model.

Hayek Might Have It Right

The proponents of Austrian economics believe that a sustained period of low interest rates and excessive credit creation results in a volatile and unstable imbalance between saving and investment. In other words, low interest rates tend to stimulate borrowing from the banking system which in turn leads, as one would expect, to the expansion of credit. This expansion of credit then, in turn, creates an expansion of the supply of money.

Therefore, as one would ultimately expect, the credit-sourced boom becomes unsustainable as artificially stimulated borrowing seeks out diminishing investment opportunities. Finally, the credit-sourced boom results in widespread malinvestments. When the exponential credit creation can no longer be sustained a “credit contraction” occurs which ultimately shrinks the money supply and the markets finally “clear” which then causes resources to be reallocated back towards more efficient uses.

Unfortunately, as is clearly shown in both charts above, this has hardly been the case.

Time To Wake Up

For the last 30 years, each Administration, along with the Federal Reserve, have continued to operate under Keynesian monetary and fiscal policies believing the model worked. The reality, however, has been most of the aggregate growth in the economy has been financed by deficit spending, credit expansion and a reduction in savings. In turn, this reduced productive investment in the economy and the output of the economy slowed. As the economy slowed and wages fell the consumer was forced to take on more leverage which also decreased savings. As a result of the increased leverage more of their income was needed to service the debt.

Secondly, most of the government spending programs redistribute income from workers to the unemployed. This, Keynesians argue, increases the welfare of many hurt by the recession. What their models ignore, however, is the reduced productivity that follows a shift of resources toward redistribution and away from productive investment.

All of these issues have weighed on the overall prosperity of the economy. What is most telling is the inability for the current economists, who maintain our monetary and fiscal policies, to realize the problem of trying to “cure a debt problem with more debt.”

This is why the policies that have been enacted previously have all failed, be it “cash for clunkers” to “Quantitative Easing”, because each intervention either dragged future consumption forward or stimulated asset markets. Dragging future consumption forward leaves a “void” in the future that has to be continually filled, and creating an artificial wealth effect decreases savings which could, and should have been, used for productive investment.

The Keynesian view that “more money in people’s pockets” will drive up consumer spending, with a boost to GDP being the end result, has been clearly wrong. It hasn’t happened in 30 years.

The Keynesian model died in 1980. It’s time for those driving both monetary and fiscal policy to wake up and smell the burning of the dollar. We are at war with ourselves and the games being played out by Washington to maintain the status quo is slowing creating the next crisis that won’t be fixed with another monetary bailout.

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Amid the 2016 Presidential campaign, White House chief strategist Steve Bannon reportedly told late Fox News head Roger Ailes to "go fuck yourself" during the Trump campaign’s battle with the news network.

New York Magazine reported that Ailes, who died in May, sent his personal lawyer, Peter Johnson Jr., to Breitbart headquarters in D.C. to tell Bannon to stop running stories against then-Fox News host Megan Kelly, who questioned to President Trump during a primary debate about his behavior and language about women.

As The Hill reports, Bannon reportedly refused to call off the coverage, calling Kelly “pure evil” and saying that she would turn on Ailes one day.

“We’re going full-bore. We’re not going to stop. I’m gonna unchain the dogs,” Bannon said, according to the magazine, before telling Johnson to “go back to New York and quote me to Roger. ‘Go f— yourself.’”

 

Ailes initially called Bannon after the debate over the negative coverage, saying that it wasn’t “fair and it’s killing us. You have to stop it,” the magazine reported.

 

“F— that, that was outrageous what she did!” Bannon reportedly said. “She pulled every trick out of the leftist playbook.”

 

Ailes and Bannon didn’t speak for a year after the exchange, according to New York Magazine.

Bannon later took a leave of absence from Breitbart to join the Trump campaign and then the president's administration.

Given these comments to a generally 'friendly' media outlet, we can only imagine the behind the scenes words used in discussions with Zucker and CNN…

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In the usual post-payrolls economic data lull, the focus this week will be on North America, with Chair Yellen’s semi-annual testimony on Wednesday alongside the the BoC, as well as a Friday data deluge in the US including CPI & retail sales. A 25bp hike this week from the Bank of Canada is expected, although the central bank may choose to wait until October. Additionally, there are monetary policy meetings in Korea, Malaysia, Chile, Peru & Israel.

All eyes on the US: Fed Chair Yellen delivers her semi-annual testimony to Congress this week. According to DB, it will be fascinating to see whether Mrs Yellen chooses this week’s semi-annual testimony to Congress on Wednesday and the Senate on Thursday to reinforce the recent more hawkish global central bank speak or whether she tries to pull things back a little. DB expect her to reinforce the message from the June 14 post-FOMC press conference and continue to guide the market towards an announcement of the beginning of balance sheet normalisation at the September 20 meeting as well as a rate hike by year-end, potentially resulting in futher bond selling.  BofA will be looking at how Chair Yellen describes her concern about financial stability risks, at how she talks about progress towards the dual mandate and for any details about balance sheet policy. She will also likely be asked questions about fiscal policy and financial market regulation, Our US Economic Weekly describes our expectations in more detail.

US inflation data will also draw attention, as will retail sales, both released on Friday. Many expect another soft core CPI print of 0.1% m/m in June.

Canada: Time to hike: The Bank of Canada will also be a key event this week. The recent avalanche of hawkish messages from the BoC, as well as from central bankers of advanced economies around the world, indicate that a hike is highly likely. A hike this week is our baseline, though the bank may also choose to wait until October. We have raised our CAD profile, but remain a little skeptical given valuation and recent moves in oil.

The week ahead in Emerging Markets: There are monetary policy meetings in Korea, Malaysia, Chile, Peru and Israel. We expect BCRP to cut the reference rate 25bp. We also have several China macro releases.

A snapshot look at the global week ahead

• Key Events: – Monday: Chinese Inflation Data, all in line with expectations (Jun)
• Wednesday: Fed Chair Yellen testifies to the US House Financial Services Committee, Bank of Canada Monetary Policy Decision, UK Labour Market Data (May/Jun)
• Thursday: Chinese Trade Balance (Jun)
• Friday: US CPI (Jun), US Retail Sales (Jun)

DB with a more detailed look at the week ahead:

• We’re kicking off the week today in Germany where first out the gate we’ll get the latest trade data. Following that this morning we are due to receive the latest Bank of France business sentiment reading and Sentix investor confidence reading for the Euro area. It’s a typically quiet post-payrolls day for data in the US with the June labour market conditions index and May consumer credit reading the only data due.
• Tuesday looks equally quiet with no releases of note in Europe and just the NFIB small business optimism, JOLTS job openings and wholesale inventories data due in the US.
• Turning to Wednesday, the early data is due out of Japan where PPI will be released. In the UK we are due to receive the May and June employment data while Euro area industrial production for May will also be released. In the US the Fed’s Beige Book release is all that is due.
• On Thursday we’re kicking off in China with the June trade data. In Europe the final June CPI reports in Germany and France will be due. The BoE will also release its latest credit conditions and bank liabilities survey. In the US on Thursday we’ll get June PPI, initial jobless claims and the June monthly budget statement.
• We end the week in Asia on Friday with May industrial production data. In Europe we’ll get the May trade balance for the Euro area before we finish the week in the US with June CPI, retail sales, industrial production, manufacturing, July University of Michigan consumer sentiment and May business inventories.

A focus on North America courtesy of RanSquawk

North America: The major US economic releases will come on Friday. Headline CPI data for June is expected to moderate to 1.7% Y/Y from 1.9%, while the core metric is expected to tick up to 1.8% Y/Y from 1.7%. Commerzbank believe that “the Fed has a problem. Oil and food prices often mask the underlying inflation trend, the Fed watches the core rates, which are adjusted for these volatile components. Since the end of the recession in mid-2009, the core rate of the private consumption expenditure deflator rarely rose above 2%. Even core consumer price inflation, which usually comes in somewhat higher, was below target for most of the time. In recent months, however, even the slight uptrend came to a standstill, led by a price war by cellular phone providers.” Commerz suggest that “against this backdrop, it does not come as a surprise that the Federal Reserve is no longer referring to inflation to justify the normalisation of its monetary stance, but to the labour market and – recently – above all to the risks that a sustained expansionary course would have on financial market stability.” US Retail Sales data also hits on Friday. The headline is expected to rise by 0.1% M/M, following last month’s 0.3% fall, while the ex-autos measure is expected to rise by 0.2% M/M following last month’s 0.3% fall. May’s release represented the weakest outcome for retail sales since January 2016, as gasoline and auto sales both subtracted from total sales growth in the month, but even core sales were weak. Westpac believe that “the weak underlying trend is not expected to reverse in the near future. Rather, growth is set to persist at or near current levels.”
After the minutes from the latest FOMC meeting held no surprises, focus will fall on Fedspeak, with particular onus on any language surrounding balance sheet reduction. The focal point will be the questions following Fed Chair Yellen’s appearance before the US House Financial Services Committee, after the text release held no notable headlines. On the voter front we will hear from Brainard, Kaplan and Evans during the week, while non-voters George and Williams will also make public addresses.

The focal point in the Canadian docket comes on Wednesday, as the Bank of Canada issues its latest monetary policy decision and quarterly Monetary Policy Report 

The majority of analysts are looking for the for the BoC to stand pat, and leave its key rate unchanged at 0.5%, although the swaps market prices in a circa 87% chance of a 25bps hike. Rhetoric from BoC governor Poloz and Senior Deputy Governor Wilkins has swung to the hawkish side in recent weeks. Wilkins was the first to shift her stance, noting that the “the Bank will assess whether all of the considerable policy stimulus presently in place is still required.” Poloz followed this up by suggesting “the rate cuts in the wake of the drop in oil prices in mid-2014 had largely done their job,” while he has backed this up with further hawkish rhetoric in subsequent speeches. On the domestic data front GDP growth has averaged 3.5% per quarter over the past three quarters, with Poloz noting that he expects inflation to be “well into an uptrend” as the output gap closes in the first half of 2018. The domestic labour market experienced its best quarter since 2010 during Q2 it is also worth noting that BoC’s Summer 2017 Business Outlook Survey (BOS) showed that businesses were very confident about future sales growth, employment, and investment. In particular, a record 66% of firms plan to increase employment over the next 12 months. Scotiabank now expects the Bank of Canada “to start raising interest rates in the second half of this year (two increases in 2017) and to raise interest rates once more in 2018.”

It is also worth noting that US earnings season gets underway with the likes of JPMorgan Chase (JPM), Citigroup (C), Wells Fargo (WFC), PepsiCo (PEP) and Delta Airlines (DAL) all reporting their quarterly results.

Other releases of note during the week: Tuesday US Wholesale Inventories (May) Thursday US PPI (Jun) Friday US Industrial & Manufacturing Production (Jun) US University Of Michigan Sentiment (Jul, P)

* * *

Finally, here is Goldman with a detailed breakdown of what to expect in the US, alongside consensus expectations:

The key economic releases this week are the CPI and retail sales reports on Friday. In addition, there are several scheduled speaking engagements by Fed officials this week, including Fed Chair Yellen’s Semiannual Monetary Policy Report to Congress on Wednesday and Thursday.

Monday, July 10

• 03:00 PM Consumer credit, May (consensus +$13.5bn, last +$8.2bn)
• 11:00 PM San Francisco Fed President Williams (FOMC non-voter) speaks: San Francisco Fed President Williams will give a speech titled “Speed Limits and Stall Speeds: Fostering Sustainable Growth in the United States” in Sydney, New South Wales. Audience Q&A is expected.

Tuesday, July 11

• 06:00 AM NFIB small business optimism, June (consensus 104.4, last 104.5)
• 10:00 AM JOLTS job openings, May (last 6,044k)
• 10:00 AM Wholesale inventories, May final (consensus +0.3%, last +0.3%)
• 12:30 PM Fed Governor Brainard (FOMC voter) speaks: Federal Reserve Governor Lael Brainard will give the keynote address at a conference jointly sponsored by Columbia University’s School of International and Public Affairs and the Federal Reserve Bank of New York. The topic of the conference is “Normalizing Central Banks’ Balance Sheets: What is the New Normal?” Audience Q&A is expected.
• 01:20 PM Minneapolis Fed President Kashkari (FOMC voter) speaks: Minneapolis Fed President Neel Kashkari will participate in a moderated Q&A discussion at the Minnesota Women’s Economic Roundtable event. Audience Q&A is expected.

Wednesday, July 12

• 08:30 AM Fed Chair Yellen’s opening statement for testimony released: Federal Reserve Chair Yellen’s prepared opening statement for her Semiannual Monetary Policy Report to Congress will be released ahead of her appearance before the House Financial Services Committee later in the morning.
• 10:00 AM Fed Chair Yellen appears before the House Financial Services Committee: Federal Reserve Chair Janet Yellen will appear before the House Financial Services Committee to deliver the Fed’s semi-annual Monetary Policy Report to Congress and answer questions from lawmakers. We expect her testimony to be in line with the June FOMC statement and the post-meeting press conference.
• 02:00 PM Beige Book, July FOMC meeting period: The Fed’s Beige book is a summary of regional economic anecdotes from the 12 Federal Reserve districts. The June Beige Book noted that while activity continued to expand across most districts, a couple reported a slowdown in the pace of growth. Labor markets continued to tighten, while consumer spending softened. In the July Beige Book, we look for additional anecdotes related to the state of consumption, price inflation, and wage growth.
• 02:15 PM Kansas City Fed President George (FOMC non-voter) speaks: Kansas City Fed President Esther George will give a speech on the US economic outlook and the Federal Reserve’s balance sheet in Denver, Colorado. Audience Q&A is expected.

Thursday, July 13

• 08:30 AM PPI final demand, June (GS flat, consensus flat, last flat); PPI ex-food and energy, June (GS +0.1%, consensus +0.2%, last +0.3%); PPI ex-food, energy, and trade, June (GS +0.2%, consensus +0.2%, last -0.1%): We expect PPI was flat for a second month in June, reflecting a modest rise in core producer prices offsetting a decline in energy prices. We estimate PPI ex-food and energy rose 0.1% and a somewhat firmer 0.2% increase after additionally excluding trade services.
• 08:30 AM Initial jobless claims, week ended July 15 (GS 255k, consensus 245k, last 248k); Continuing jobless claims, week ended July 8 (consensus 1,950k, last 1,956k): We estimate initial jobless claims rose 7k to 255k in the week ended July 15. Initial claims can be particularly volatile around this time of year due to annual summer auto-plan shutdowns, and we expect closures concentrated around the July Fourth holiday to produce a rise in claims this week. Continuing claims – the number of persons receiving benefits through standard programs – have started to rise, increasing in each of the last five weeks following a sharp decline in the first four months of the year.
• 10:00 AM Fed Chair Yellen appears before the Senate Banking Committee: Federal Reserve Chair Janet Yellen will appear before the Senate Banking Committee in the second day of testimony to deliver the Fed’s semi-annual Monetary Policy Report to Congress and answer questions from lawmakers.
• 11:30 AM Chicago Fed President Evans (FOMC voter) speaks: Chicago Fed President Charles Evans will give the keynote speech at the 9th Annual Rocky Mountain Economic Summit in Victor, Idaho. President Evans will discuss current US economic conditions and monetary policy. Audience and media Q&A is expected.
• 01:00 PM Fed Governor Brainard (FOMC voter) speaks: Federal Reserve Governor Lael Brainard will give a speech on monetary policy at the National Bureau of Economic Research’s Summer Institute in Cambridge, Massachusetts. Her remarks will be very similar to the speech given on July 11 at the conference hosted by Columbia University and the New York Fed. Audience Q&A is expected.
• 02:00 PM Monthly budget statement, June (consensus -$20.0bn, last -$88.4bn)

Friday, July 14

• 08:30 AM CPI (mom), June (GS +0.03%, consensus +0.1%, last -0.1%); Core CPI (mom), June (GS +0.12%, consensus +0.2%, last +0.1%); CPI (yoy), June (GS +1.7%, consensus +1.7%, last +1.9%); Core CPI (yoy), June (GS +1.7%, consensus +1.7%, last +1.7%): We expect a 0.12% increase in June core CPI, which would leave the year-over-year rate unchanged at +1.7%. While we expect sequential improvement in the monthly pace of core inflation following three consecutive readings below 0.10%, several negative factors suggest scope for a somewhat soft report, including weakness in used car prices and airfares, as well as additional disinflation from cell phone plan discounts. On the positive side, we expect a rebound in apparel prices following three consecutive monthly declines. We estimate a 0.03% rise in headline CPI, reflecting rising food prices but a second monthly decline in energy prices. This would be consistent with the year-over-year rate slowing by two-tenths to 1.7%.
• 08:30 AM Retail sales, June (GS flat, consensus +0.1%, last -0.3%); Retail sales ex-auto, June (GS +0.2%, consensus +0.2%, last -0.3%); Retail sales ex-auto & gas, June (GS +0.4%, consensus +0.4%, last flat); Core retail sales, June (GS +0.4%, consensus +0.3%, last flat): We estimate core retail sales (ex-autos, gasoline, and building materials) rose 0.4% in June, reflecting firmer same-store sales results. We also estimate a 0.4% increase in the ex-auto ex-gas component. However, we estimate a 0.2% rise in the ex-auto component due to a second sharp monthly drop in gas prices. We expect the headline measure to be unchanged, reflecting a modest decline in auto sales.
• 09:15 AM Industrial production, June (GS +0.4%, consensus +0.3%, last flat); Manufacturing production, June (GS +0.4%, consensus +0.3%, last -0.4%); Capacity utilization, June (GS +76.9%, consensus +76.8%, last +76.6%): We estimate industrial production increased 0.4% in June, reflecting solid growth in auto and mining production. We estimate manufacturing production also rose 0.4%, reflecting broad cyclical improvement in several components, particularly in auto output.
• 09:30 AM Dallas Fed President Kaplan (FOMC voter) speaks: Dallas Fed President Robert Kaplan will take part in a moderated Q&A session at the Center for Economic Studies of the Private Sector’s conference on the Federal Reserve and monetary policy in Mexico City. Audience and media Q&A is expected.
• 10:00 AM Business inventories, May (consensus +0.3%, last -0.2%)
• 10:00 AM University of Michigan consumer sentiment, July preliminary (GS 94.4, consensus 95.0, last 95.1): We estimate the University of Michigan consumer sentiment index fell 0.7pt to 94.4 in the July preliminary reading, on top of the two point decline from its recent peak in May. Our forecast reflects continued a further pullback in higher frequency consumer surveys and choppy stock market performance over the last two weeks. Gas prices declined further over the last month, suggesting scope for a negative impact on the report’s measure of 5- to 10-year ahead inflation expectations, which at 2.5% in June was in the middle of its recent range.

Source: DB, BofA, GS, RanSquawk

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Authored by Soeren Kern via The Gatestone Institute,

• Threats of violence against "errant" women are viewed as "acts of patriotism."
• "They have come to Germany because they wanted to live in Germany, but they keep trying to turn it into Chechnya with its medieval ways." — Social worker interviewed by Meduza.
• "Everyone's attention is fixed on the Syrians, but the Chechens are the most dangerous group. We are not paying sufficient attention to this." — Police in Frankfurt (Oder).

A hundred Islamists are now openly enforcing Sharia law on the streets of Berlin, according to local police who are investigating a recent string of violent assaults in the German capital.

The self-appointed morality police involve Salafists from Chechnya, a predominantly Sunni Muslim region in Russia. The vigilantes are using threats of violence to discourage Chechen migrants from integrating into German society; they are also promoting the establishment of a parallel Islamic legal system in Germany. German authorities appear unable to stop them.

The Sharia patrol came to public light in May 2017, when Chechen Salafists released a video warning other Chechens in Germany that those who fail to comply with Islamic law and adat, a traditional Chechen code of behavior, will be killed. The video's existence was reported by Meduza, a Russian-language independent media organization based in Latvia. The video, which circulated through WhatsApp, an online messaging service, showed a hooded man aiming a pistol at the camera. Speaking in Chechen, he declared:

"Muslim brothers and sisters. Here, in Europe, certain Chechen women and men who look like women do unspeakable things. You know it; I know it; everybody knows it. This is why we hereby declare: For now, there are about 80 of us. More people are willing to join. Those who have lost their national identity, who flirt with men of other ethnic groups and marry them, Chechen women who have chosen the wrong path and those creatures who call themselves Chechen men — given half a chance, we will set all of them straight. Having sworn on the Koran, we go out onto the streets. This is our declaration of intent; do not say that you were not warned; do not say that you did not know. May Allah grant us peace and set our feet on the path towards justice."

According to Meduza, the declaration was read by a representative of a Berlin-based gang of about one hundred members, headed by former henchmen of Dzhokhar Dudayev, the late Chechen separatist leader. All Berliners of Chechen origin who were interviewed by Meduza said they were aware of the gang's existence.

The video surfaced after nude images of a 20-year-old Chechen woman who lives in Berlin were sent en masse from her stolen cellphone to every person on her contact list. Within an hour, the woman's uncle demanded to speak with her parents. According to Meduza, they agreed to "resolve the issue" within the family by sending the woman back to Chechnya, where she would be killed to restore the family's honor. German police intervened just hours before the woman was to board a plane bound for Russia.

After the woman was placed in protective police custody, her circumstance went from being a family issue to a communal one. According to Meduza, it is now the duty of any Chechen man, regardless of his ties to her or her family, to find and punish her. "It is none of their business, but it is an unwritten code of conduct," said the woman, who has since cut her hair and now wears colored contact lenses in an effort to hide her identity. She said that she intends to change her name and undergo plastic surgery. "If you don't change your name and your face, they will hunt you down and kill you," she said. Although the woman graduated from a German high school, she hardly ever leaves her apartment because it is too dangerous. "I don't want to be Chechen anymore," she said.

According to Meduza, at least half of the population of single Chechen girls in Germany have enough compromising information on their cellphones to be considered guilty of violating adat:

"Associating with men of other nationalities, smoking, drinking alcohol, visiting hookah lounges, discotheques or even public swimming pools can cause communal wrath. A single photograph in a public WhatsApp chat can outcast an entire family and the rest of the community would be obliged to cease all communication with them. With everyone under suspicion and everyone responsible for one another, Chechen girls say they are sometimes approached by strangers in the street who chastise them for their appearance, including for wearing bright lipstick. The theft of a cellphone and the subsequent posting of compromising material is a hard blow; the dishonored person has no one to turn to and the one who posted the victim's photos does not risk anything."

Chechens interviewed by Meduza said that expectations for behavior are more rigid and strict in among Chechen emigrants in Germany than in Chechnya itself. This situation has been described as "a competition in righteousness" between Chechens living abroad and those in Chechnya who are loyal to Chechen leader Ramzan Kadyrov: each party is seeking to prove that they are the better Chechens, and threats of violence against "errant" women are viewed as "acts of patriotism."

Chechens have said in interviews that expectations for behavior are more rigid and strict in among Chechen emigrants in Germany than in Chechnya itself — "a competition in righteousness." Threats of violence against "errant" women are viewed as "acts of patriotism." Pictured above: A volunteer tutor (left) instructs an asylum-applicant from Chechnya in a German-language class, on November 10, 2015, in Berlin, Germany. (Photo by Sean Gallup/Getty Images)

In one instance, a young Chechen woman was recorded on video while walking down a street in Berlin and conversing with a non-Chechen man. That same evening, a few dozen unknown Chechen men drove to her house in northern Berlin. The man she had been seen with was brutally beaten; almost all of his teeth were knocked out. The young woman managed to hide.

On July 4, the Berlin newspaper Tagesspiegel reported that several other women and men have been assaulted by the Sharia gang in recent weeks, and that the Berlin Criminal Police Office has now launched an investigation. A police spokesperson said that the investigation is being hampered by the fact that so far no victim has publicly dared to bring formal accusations against the gang. The victims are all, apparently, afraid of retribution.

According to Tagesspiegel, some members of the gang, which has grown to around a hundred members, are armed and many have combat experience from the Chechen wars with Russia. The gang members, who also come from Dagestan and Ingushetia, have attacked Muslims as well as non-Muslims, including Christian asylum seekers at migrant shelters in Berlin.

The gang is linked to several Salafist mosques in the German capital, including Fussilet 33, which once served as the headquarters of the so-called Berlin Caliphate. The mosque was shuttered by German authorities in February 2017, after they learned that Anis Amri, the Tunisian jihadist who carried out the suicide attack on a Berlin Christmas market, had sheltered there.

Around 60,000 Chechens live in Germany, according to official statistics, although the actual number is believed to be much higher. Nearly 40,000 Chechens have applied for asylum in Germany during just the past five years; many have crossed the border illegally from Poland.

An internal paper produced by the Federal Audit Office (Bundesrechnungshofes) revealed that "the majority of the unauthorized persons in Germany are Russian citizens of Chechen ethnicity, some of whom have been linked to the Islamic terrorist environment."

The Chechen community in Germany is primarily based in Brandenburg and Berlin, where they are firmly entrenched in a parallel society. A social worker interviewed by Meduza said that the main obstacle to Chechen integration is their ultra-conservative moral code, the adat:

"They have come to Germany because they wanted to live in Germany, but they keep trying to turn it into Chechnya with its medieval ways. This inability and reluctance to integrate is extremely frustrating and typical of all migrants, not just Chechens. The only difference is that most other migrants come from the 20th century, not the times of feudalism."

In an interview with Radio Berlin-Brandenburg, Maciej Falkowski, a Polish political scientist specializing in the Caucuses, said that many younger members of the Chechen diaspora are embracing radical Islam:

"The Chechen people are a very self-contained, homogenous nation. They resolve all problems among themselves. You will hardly find a Chechen, for example, who will seek remedy from a German court. Religion, of course, also plays an important role in the younger generation. Moreover, the Chechens have not had their own country for hundreds of years and therefore are not acquainted with the legal state (Rechtsstaat) in our sense of the concept.

 

"We are increasingly seeing a generational conflict among the Chechens. The elderly are rather skeptical of Salafism and radical Islam, while the younger ones are embracing it. They believe Salafism offers answers with regard to their identity. Here they find community and charismatic leaders. Salafism is now their dominant current."

Heiko Homburg, an official at Ministry of the Interior of Brandenburg, the German federal state that encircles Berlin, said that most of the known Islamic extremists there are from Chechnya:

"Our problem in Brandenburg is that the Caucasian Emirate [a militant jihadist organization active in southwestern Russia], to which many Chechens feel committed, has submitted to the Islamic State. So, whether we want it or not, we have de facto Islamic State structures here in Brandenburg."

German security officials estimate that 1,500 to 2,000 Chechens are currently fighting in Iraq and Syria. As the Islamic State nears its end, it is feared that many of those fighters will travel to Europe, through Ukraine and Poland with the help of pan-European, Chechen clan relations.

In Frankfurt (Oder), a German city on the border with Poland, police are warning that Chechen migration is a ticking time bomb:

"We have a serious and ever-growing problem with radical Chechens who are constantly traveling back and forth across the German-Polish border. Their families are building Europe-wide structures which they are using to finance the Islamic State with the proceeds of organized crime. Everyone's attention is fixed on the Syrians, but the Chechens are the most dangerous group. We are not paying sufficient attention to this."

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

China, Russia Alliance Deepens Against American Overstretch

 – China and Russia allied on Syria and North Korea
– Beijing & Moscow economic & monetary ties deepen
– Trump needs Russia in order to maintain balance of power in superpower triumvirate
– Sino-Russian relations currently in their “best time in history” says Chinese President ahead of G20
– China, Russia call for calm diplomacy on Syria, Korea
– China, Russia “fed up with Washington’s pursuit of hegemony”
– US is “biggest source of global strategic risks” according to China state media
– Important calm and diplomacy prevails to prevent nuclear war

‘Trump and Putin meet for the first time and the handshake wasn’t what you expected!’ read the headline on my in-flight entertainment newsfeed, on Friday afternoon.

I’m not sure what the Mirror website thought I was expecting the handshake between the US and Russian leader to be like, but by all accounts it was a relatively normal handshake given it was no doubt the most important diplomatic meeting of 2017.

The handshake between the US and Russian Presidents was always going to be newsworthy, no matter who was in power but not since the Cold War have the stakes been so high in a meeting between the two leaders.

The meeting was scheduled for 30 minutes, but went on for more than 2 hours. Both men continuously praising one another. One of the outcomes of the meeting was an announcement by Trump that the two countries would work together on cybersecurity.

This prompted much derision from senior politicians, Republican Senator Lindsey Graham said: “It’s not the dumbest idea I’ve ever heard, but it’s pretty close.”

The decision to work with Russia was described as a ‘significant’ accomplishment’ by Treasury Secretary Steve Mnuchin. Then, in classic Trump-style, the US president backtracked on the proposal to work with Russia tweeting “The fact that President Putin and I discussed a cybersecurity unit doesn’t mean I think it can happen. It can’t.”

This move by Trump is not uncommon. He has seemingly flip-flopped since his election campaign on working alongside or against the world’s two other superpowers, Russia and China. When it comes to Russia, Trump’s less-than-slick management of his special White House advisory team has meant that the US President has not got far with Putin.

Last week a UN report stated that nationalism, protectionism and attitudes of “my country first” posed threats to the United Nation’s global goals. It seems that now more than ever Trump must get relations with the super powers, onto an even keel.

Trump is aware that the US has similar issues with Russia and that it must get Putin on side to a degree or at least neutral in order to confront the more powerful China. The US needs to work with President Xi Jinping on globally important matters such as North Korea. But there are elephants in the room which also must be confronted, namely currency manipulation, trade, climate change and deepening tensions in the South China Sea.

As James Rickard’s writes, “one power in a three-power game, it is essential to have an alliance with the other power, or at least keep it neutral. The US needs a neutral or friendly Russia before it confronts China.”

But, at the beginning of last week observers were asking if Russia and China were perhaps getting too close for the United States’ liking or advantage. Perhaps the calamitous arrival of Trump and his new approach to diplomacy (i.e. tweet it) has opened up an opportunity for both Putin and Xi Jin-ping to push ahead with their alliance. The outcome of which may be a lesson in how the US must stop overreaching when it comes to geopolitics.

Sino–Russian relationship: Entente or alliance?

Ahead of the G20 meeting last week China’s President Xi Jin-ping met with President Putin in Moscow. This was Xi’s sixth visit to Russia since becoming president, and the third meeting between the two heads of states in the last six months. Neither country has ever referred to the other as an ally, but the meeting was strategic in terms of the Sino–Russian comprehensive relationship, both politically and economically.

During the two day meeting, the two countries signed deals which will allow Russia to bypass Western sanctions by China agreeing to fund investments in Russia worth billions of dollars. Both the Russian Direct Investment Fund (RDIF), a sovereign wealth fund and VEB, Russia’s state development bank are subject to US sanctions. But both have now signed deals with China Development Bank. The deals will will finance infrastructure and development projects as well as a new innovation fund.

The purpose of the US and Western sanctions was to cut Russia off from long term financing in the U.S. and EU. These new deals will be set up in Russia and China’s own currencies and are a demonstration to the West that Russia cannot be cut off from major trading partners and the global market place and the US no longer has the means or power to do so.

It is worth reminding readers at this point of Putin’s comments last year that both

“Russia and China need to secure their gold and foreign reserves.”

It’s unlikely Putin was speaking out of turn by mentioning China’s monetary policy. Both countries central banks continue to increase their gold reserves and are accumulating large gold in anticipation of currency wars reigniting in the coming months.

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

Influential state media Chinese daily, the Global Times, reported last Monday that China and Russia have decided to deepen their ties because they are “fed up with Washington’s pursuit of hegemony.”

The US and other Western countries are yet to pass comment on these new deals. It is likely that they are each treading carefully, fully aware that they need Russia and China on side when it comes to more pressing matters such as Syria and North Korea.

Whilst neither Russia nor China mentioned the US in relation to the two countries’ meetings, nor were they mentioned in joint statements, it was easy enough to connect the dots in terms of where both Putin’s and Xi’s concerns lie.

“To strengthen global strategic stability’ is a new way of speaking to remind people of the US being the biggest source of global strategic risks,” explained the Global Times.

“The joint statements (show) both Beijing and Moscow are fed up with Washington’s pursuit of hegemony. Beijing and Moscow have confirmed that their relationship is not an alliance, and it is not aimed at a third party. The affirmation is not rhetoric, but their real deliberation.

A China-Russia alliance, which will bring a game-changing impact on world order, is not in the interests of either side. They are more willing to develop all-out diplomacy and maintain a normal relationship with the Western world. However, the US efforts to encroach on China and Russia’s strategic room has rendered an interdependence between Beijing and Moscow over some core interest issues.”

In the name of national sovereignty

Russia and China appear to be working together on the basis of preserving national sovereignty. For too long the US has used many means to advance its own goals of so-called democratisation around the world. One example is NGOs, both international and domestic. Even Colin Powell once spoke of the US advancing its own goals in terms of democratising authoritarian regimes and market economics.

“I have made it clear to my staff here and to all of our ambassadors around the world that I am serious about making sure we have the best relationship with the NGOs who are such a force multiplier for us, such an important part of our combat team.”

More recently the US has been exceptionally vocal about how it will ‘manage’ regimes with which it does not agree. This has seemingly been seen as an overstep too far especially as they have been far-reaching in who to blame for various issues.

Nikki Haley is one of the most prominent figures in this aggressive form of US ‘diplomacy’. The US ambassador to the United Nations followed a bizarre White House press release about a supposed Syrian gas attack with the following tweet

“Any further attacks done to the people of Syria will be blamed on Assad, but also on Russia & Iran who support him killing his own people.”

Haley has positioned herself as both judge and executioner, not only in regard to Syria but also the more powerful Russia and Iran. So far Haley remains in her position, with little criticism from the White House.

Meanwhile, it is clear that both Russia and China are resentful of America’s actions when it comes to Syria. Both are apparently suspicious that the U.S. is attempting to stir up trouble in the hope of eliminating unwanted political leaders.

Diplomacy lessons, from Russia and China

When Putin and Xi met last week, they expressed their mutual concerns regarding both Syria and North Korea not in a tweet or in a cloud of emotion but in a far more diplomatic fashion. They released joint-statements calling for calm.

“The sides emphasize that in matters of chemical weapons in Syria, all parties, with respect to Syrian sovereignty, must support the efforts of the Organization for the Prohibition of Chemical Weapons [OPCW] and relevant UN structures to conduct an independent and comprehensive investigation in order to obtain irrefutable evidence, establish genuine circumstances and draw conclusions that are capable of withstanding the verification by facts and time.”

Calling for calm heads and diplomacy the statement went on to state that both China and Russia ‘strongly condemn any use of chemical weapons anywhere and by anyone.’

Calm heads is the opposite of Nikki Haley who is about as subtle at diplomacy as Trump is with a blonde Irish reporter invited into the Oval office.

Any alliance (whether formal or otherwise) between two countries as powerful as Russia and China, in the Middle East is the last thing the US wants to be fighting against.

The call for calm will not only reverberate well throughout countries in the Middle East and North Africa which have been devastated by the ongoing wars in the region. It will also resonated well with European nations which are becoming destablised by the massive exodus of desperate people from destroyed states into the EU, creating a wave of populist backlash.

This call for calm and peace has been particularly reflected in the Qatar crisis. Last Monday China’s UN ambassador said the best way for the crisis to be resolved was to employ the radical solution of…letting the four countries sit down, talk diplomatically, negotiate and thereby sort it out themselves.

The power of China in the face of nuclear war

Both China and Russia are concerned and strongly opposed to the controversial US missile system known as the Terminal High Altitude Area Defense (THAAD) positioned in South Korea, to defend against North Korea.

Despite assurances to the contrary, China are concerned the missiles could be trained on China itself. Russia is also concerned about the positioning of the missiles and issued a joint-statement citing “strong opposition against the unilateral installation of anti-missile systems in Europe and Asia-Pacific by some specific countries at the expense of others’ security interests.”

When it comes to North Korea, no one is ignoring the real threat that exists. But, both Putin and Xi are calling for restraint on both sides. In the same joint statement, they called for ‘a mutual freeze on Pyongyang’s nuclear program and U.S.-South Korean military manoeuvres in the region.’

The US needs to tread carefully here as China is their only real hope when it comes to settling the North Korea crisis peacefully. China is all too aware of the amount of leverage it has over North Korea and, therefore, America. The People’s Republic of China accounts for over 75% of North Korean exports, this gives it a huge amount of power when it comes to sanctions on the country.

Not everyone is convinced that China’s help with North Korea is with the desire to reduce their nuclear power. Adam Mount, a senior fellow at the liberal Center for American Progress expressed concern over China and Russia’s joint approach, “I think we need to be aware of the possibility that China and Russia could take a step back from containing the regime and move towards increased diplomatic recognition, which could someday lead to their recognition of North Korea as a nuclear state.”

Will the triumvirate ever exist?

At the moment there are three main superpowers. Will they ever exist in a true triumvirate, or is the tussle of power too great and the outcomes desired too different?

At the moment it seems they all hold leverage over one another in various ways. But, for the first time in modern history the US isn’t able to bring the most amount of chips to the table.

For too long the US has believed that threats and sanctions alone will keep the Russia and China’s ideas of grandeur, in check. But the world has been changing for a while, with Sin-Russian relations taking advantage and preparing accordingly.

It seems the arrival of Trump and his erratic and badly managed team has exacerbated pre-existing trends and given Putin and Xi with the opportunity to further advance themselves as two emerging superpowers in a world which is moving from US hegemony to a multi polar world.

 

News and Commentary

Gold prices edge down on steady dollar, firmer stocks (India Times)

India imports more gold in H1 than all of 2016 (Mining.com)

Another Bullion Flash Crash Is Testing Traders (Bloomberg)

Gold Buyers Flee a Month After Their Most Bullish Bet of ’17 (Bloomberg)

Gold prices down a fifth week in a row; silver drops to lowest in over a year (Marketwatch)

Giant Metals Exchange Is Taking on the Gold Elite (Bloomberg)

Global Silver Mine Production Drops in 2016 for First Time in 14 Years (Silver Institute)

Silver Sinks In Market Mystery (Pound Sterling Live)

Where are Slavs on ‘Gold Reserve’ map of Europe (Slavorum)

Qatar’s hoard of $340 billion and gold bullion means it’s not worrying about the current boycott (CNBC)

Gold Prices (LBMA AM)

10 Jul: USD 1,207.55, GBP 938.63 & EUR 1,060.11 per ounce
07 Jul: USD 1,220.40, GBP 944.47 & EUR 1,068.95 per ounce
06 Jul: USD 1,224.30, GBP 946.14 & EUR 1,077.51 per ounce
05 Jul: USD 1,221.90, GBP 945.87 & EUR 1,078.45 per ounce
04 Jul: USD 1,224.25, GBP 947.32 & EUR 1,078.81 per ounce
03 Jul: USD 1,235.20, GBP 952.09 & EUR 1,085.00 per ounce
30 Jun: USD 1,243.25, GBP 957.43 & EUR 1,090.83 per ounce

Silver Prices (LBMA)

10 Jul: USD 15.22, GBP 11.82 & EUR 13.36 per ounce
07 Jul: USD 15.84, GBP 12.29 & EUR 13.88 per ounce
06 Jul: USD 16.01, GBP 12.36 & EUR 14.09 per ounce
05 Jul: USD 15.95, GBP 12.36 & EUR 14.09 per ounce
04 Jul: USD 16.15, GBP 12.48 & EUR 14.23 per ounce
03 Jul: USD 16.48, GBP 12.72 & EUR 14.49 per ounce
30 Jun: USD 16.47, GBP 12.69 & EUR 14.44 per ounce

Recent Market Updates

– Silver Prices Bounce Higher After Futures Manipulated 7% Lower In Minute
– Precious Metals Are “Best Defence” Against Bail-ins In Economic Crisis
– Buy Gold Near $1,200 “As Insurance” – UBS Wealth
– UK House Prices ‘On Brink’ Of Massive 40% Collapse
– Gold Up 8% In First Half 2017; Builds On 8.5% Gain In 2016
– Pensions Timebomb In America – “National Crisis” Cometh
– London Property Bubble Bursting? UK In Unchartered Territory On Brexit and Election Mess
– Shrinkflation – Real Inflation Much Higher Than Reported
– Goldman, Citi Turn Positive On Gold – Despite “Mysterious” Flash Crash
– Worst Crash In Our Lifetime Coming – Jim Rogers
– Go for Gold – Win a beautiful Gold Sovereign coin
– Only Gold Lasts Forever
– Your Future Wealth Depends on what You Decide to Keep and Invest in Now

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

Despite headlines from Kuwait's oil minister that Nigeria and Libya had been asked to joing OPEC/NOPEC discussions with the view of agreeing to a production cap, crude prices are tumbling once again this morning, not helped by dramatic price targetr cuts by BNP and Macquarie.

As Bloomberg reports, oil fell from the lowest closing price in two weeks as talk of Libya and Nigeria being requested to cap their production failed to dispel doubts about the effectiveness of OPEC’s cut.

Futures were down over 1% in New York, extending last week’s 3.9 percent drop.

The two African producers, who were exempt from supply cuts because of internal strife but are now recovering, have been invited to a July 24 meeting in Russia to discuss whether their production has stabilized, Kuwait’s Oil Minister Issam Almarzooq said in Istanbul.

BNP Paribas SA sharply reduced its price forecasts for this year and next because supply growth elsewhere is diluting the impact of the OPEC-led curbs.

Brent 2H 2017 forecast reduced to $54.15/bbl from $58.75, analysts including Vikas Dwivedi at Macquarie Capital (USA) say in e-mailed note.

• 2018 WTI forecast cut to $46.08/bbl from $52.50
• 2018 Brent forecast reduced to $49.33/bbl from $55.75
• 2019 WTI forecast at $48.75/bbl from $56.63
• 2019 Brent forecast at $52.75/bbl from $60.63

Price forecasts cut as “there will be too much oil being produced, loaded, and marketed, around the world until 2020”

“Today our plain view is that there are too many active oil rigs in the U.S.,” says Bjarne Schieldrop, chief commodities analyst at SEB.

 

“Rigs keep flowing in and the only way to stop that is a lower oil price”

Additionally, Dennis Gartman notes,

The news over the weekend is rather bearishly inclined for as noted here last week there is an important meeting later this month… the 24th to be precise… in St. Petersburg, Russian of the OPEC-non-OPEC Ministerial Monitoring Committee as it is now called, where the current quota and the adherence to that quota by the member nations will be discussed.

 

However, yesterday, Mr. Barkindo, the Secretary- General of OPEC, said that there will be no discussion of further cuts in the current quota, noting that having such discussions are “premature.” Interestingly, Russia’ Oil Minister, Mr. Novak, has said that such discussions at the meeting are appropriate and that Moscow is prepared to consider such talks and further action.

While inventories to decline in 2H, a higher rig count and weaker longer-term supply outlook will continue to weigh on the energy complex.

via http://ift.tt/2t4KtBG Tyler Durden

• World stocks rally, dollar up to two-month high against yen (Reuters)
• Oil Prices Fall Amid Rising U.S. Production (WSJ)
• Trump’s ‘America First’ Policy Proves to Be an Immovable Object at G-20 (WSJ)
• Russia says joint cyber unit with U.S. will take time to set up (Reuters)
• Senate Health Bill Fails to Pick Up Support After Week of Recess (BBG)
• Trump’s Massive Tax-Cut Plan Faces ‘Train Wreck’ of a Calendar (BBG)
• Trump’s push to replace Obamacare faces trouble as U.S. Congress returns (Reuters)
• Republicans debate Plan B if ObamaCare repeal fails (The Hill)
• Department Stores Are Starting to Discount Cosmetics (WSJ)
• Ready or not, New York commuters to get taste of ‘summer of hell’ (Reuters)
• Facebook Again Cuts Price of Oculus Rift VR Headset (WSJ)
• Markets No Longer Make Sense to Macro Managers (BBG)
• BOJ Draws Line in Sand But Faces Battle to Cap Bond Yields (BBG)
• Wanda’s Disney Dreams Are Frozen as It Retreats From Theme Parks (WSJ)
• Saudi Aramco Chief Predicts Oil Shortage (WSJ)
• Big financial woes linger in Illinois’ new budget (Reuters)
• Oil Up? Oil Down? Blame the Algorithms (WSJ)
• Iraq’s Abadi to declare Mosul victory, few pockets of resistance (Reuters)
• Blockchain too slow for banks, warns top blockchain firm (Fin News)
• Pimco’s Daniel Ivascyn on Staying Ahead of the Fed (Barrons $$)
• Apple’s iTunes Falls Short in Battle for Video Viewers (WSJ)
• Finance Chiefs Want You to Use Plastic, Not Paper (WSJ)

 

Overnight Media Digest

WSJ

– President Donald Trump’s eldest son arranged a June 2016 meeting between top campaign aides and a Russian lawyer who has been linked to the Kremlin after being told she “might have information helpful to the campaign.” on.wsj.com/2sUSf61

– Singapore’s sovereign-wealth fund, GIC Pte Ltd, has reduced its exposure to riskier assets against a backdrop of global economic imbalances and policy risks, including concern over whether President Donald Trump will follow through with promised economic overhauls. on.wsj.com/2sVA6ER

– Iraqi Prime Minister Haider al-Abadi congratulated Iraqi military forces during a visit here following nearly nine months of battle to oust Islamic State, meeting with commanders and greeting residents, with the extremists confined to a tiny patch of territory. on.wsj.com/2sVl9CM

– Cosco Shipping Holdings Co, China’s biggest shipping company, agreed to buy smaller rival Orient Overseas International Ltd for $6.3 billion, establishing an Asian container giant at the same time that the industry struggles to emerge from a multiyear down cycle. on.wsj.com/2sUT0Mp

– Tesla Inc’s sales in Hong Kong came to a standstill after authorities slashed a tax break for electric vehicles on April 1, demonstrating how sensitive the company’s performance can be to government incentive programs. on.wsj.com/2sVAgMz

– Dalian Wanda Group Co will sell hotels and cultural and tourism projects to Chinese developer Sunac China Holdings Ltd for $9.3 billion, the two companies said Monday. on.wsj.com/2tEoHqi

 

FT

– The owner of British Airways, International Airlines Group , has thrown its support behind a new third runway plan for Heathrow airport from the founder of the Arora Hotel Group who claimed he could cut price of the project by up to 7 billion pounds ($9.02 billion).

– The UK government’s Repeal bill, which will be published on Thursday, is set to become one of the most constitutionally significant pieces of legislation in Britain’s history, reversing the 1972 European Communities Act that made European law effective in the UK.

– John Allan, Tesco’s Chairman, emerged as the frontrunner to be the next president of the CBI. CBI said on Sunday that Allan will become vice-president in October.

– HSBC triggered a probe into the palm oil subsidiary of commodity trader Noble Group. The bank’s call for an investigation by the Roundtable on Sustainable Palm Oil, the industry standards body, is a first for a leading bank.

 

NYT

– U.S. President Donald Trump’s son, Donald Trump Jr., was promised damaging information about Hillary Clinton before agreeing to meet with a Kremlin-connected Russian lawyer during the 2016 campaign, according to three advisers to the White House briefed on the meeting and two others with knowledge of it. nyti.ms/2tyi0HT

– Trump tried on Sunday to put the matter of Russia’s alleged election meddling behind him, insisting that he had “strongly pressed” Russian President Vladimir Putin on the matter twice in a private meeting last week and declaring that it was “time to move forward.” nyti.ms/2tYfY4M

– Two congressional Democrats are demanding more information about U.S. President Donald Trump’s potential conflicts of interest stemming from his part ownership of the nation’s largest federally subsidized housing complex, which they say could benefit financially from decisions made by the Department of Housing and Urban Development. nyti.ms/2v1pqRE

– A group of news organizations will later in the week begin an effort to seek bargaining rights against Google and Facebook Inc and will ask for a limited antitrust exemption from Congress in order to do so. nyti.ms/2txHOE6

– A fire late Saturday at a Los Angeles Department of Water and Power facility forced officials to cut off power to about 140,000 city residents, leaving them without air-conditioning for roughly 12 hours during a record-breaking heat wave. nyti.ms/2uGZDPC

 

Britain

The Times

– External consultants have been drafted in by BT as part of a cost-cutting drive aimed at rebuilding its reputation. The telecoms group has been working with McKinsey to find efficiency savings as it prepares to face shareholders at its annual meeting on Wednesday. bit.ly/2txoVB8

– Santander has gone back on a plan to allow its private British shareholders to take part in a 7.1 billion euro capital-raising this month. Europe’s biggest bank, which has 1.4 million Britons among its shareholders, said that it was not practicable to allow them to participate. bit.ly/2txaahy

The Guardian

– Wealthy hotel operator Surinder Arora, Chairman of Arora Group has submitted plans for a third runway at Heathrow which he claims would be 6.7 billion pounds cheaper than the airport’s current scheme. bit.ly/2txhzNP

The Telegraph

– The BBC is considering a cull of its mobile apps in the next phase of its rearguard action against the growing influence of Netflix and Amazon. bit.ly/2txhMR7

– British specialist engineering services provider TP Group is embarking on a fundraising to build up a 23.9 million pound war-chest as it eyes acquisition targets in the defence, aerospace and government sectors. bit.ly/2txzGmT

Sky News

– CBI is poised to name Tesco’s Chairman John Allan as its vice-president, a role that is expected to lead to him taking over from Paul Drechsler next year. bit.ly/2txGYal

– Theresa May has been warned by the Confederation of British Industry not to rush into Donald Trump’s “bear hug” and try to negotiate a free trade deal with the US too quickly. bit.ly/2twUrz0

The Independent

– British Airways is paying staff working normally the bonuses that would have gone to their colleagues who are on strike. ind.pn/2tx4Qei

 

via http://ift.tt/2uI7yfp Tyler Durden