finance – Page 19523

With 50 Tonnes Of Gold Smuggled In 10 Days, India’s Physical Gold Premiums Set To Double

As the price of precious metals that is eschewed daily by status-quo-hugging talking-heads on business media as indicative of the days of hard money being over continues to come under ‘pressure’, demand for physical gold remains extremely high. With India’s festive season about to begin, The Hindustan Times reports a massive surge in gold smuggling in the last 10 days as heavy demand for gold during Dussehra (for which booking and supply starts today when Navratri begins) has dragged 50 tonnes of gold across the borders to avoid the government’s capital controls. As Bloomberg adds, physical gold premiums may double by the end of October.

As The Hindustan Times reports,

About 50 tonne gold has been smuggled into the country in the past 10 days, and subsequently pushed into the market to cater to a surge in demand for the precious metal in the festive season. There is a heavy demand for gold during Dussehra, for which booking and supply will start from Thursday, when shradh ends and Navratri starts.

Market sources said that 30% of the smuggled gold has been supplied in Mumbai to unscrupulous jewellers, while the rest was distributed to different parts of the country.

Sources said that illegal gold is finding a place in the market because of below average import resulting from the 80:20 scheme and 10% import duty. Against the average monthly demand of 80 tonne, the import is presently around 51 tonne in the country.

Sources said that gold was smuggled into the country through the land route, via Nepal, Bhutan, Bangladesh and Pakistan. “This is because airports have tightened security, restricting the smuggling of gold by the air route,” said a market expert. The Mumbai airport customs, which has started a serious crackdown on gold smugglers, has seized around 529 kg gold from April to August this financial year.

Experts fear that more gold will be smuggled from similar land routes in days to come, as the demand will shoot up once the marriage season begins, in the later part of November. “There will be huge demand because of the festive season, and also the low price at which gold is presently being traded,” said Kumar Jain, vice-president of Mumbai Jewellers’ Association.

Jain said, “The government should immediately bring down the import duty and relax the 80:20 scheme, so that official import goes up. That will bring down the smuggling.”

Rajiv Popley, director Popley Group, said, “Smuggling of gold has been on the rise for the last eight months, due to irrational supply issues. The officially available gold was at a premium, which was higher than anywhere else in the world.”

Popley said that the demand for gold is increasing with the onset of festivities. “Both Dussehra and Diwali are auspicious festivities to invest in gold,” he said.

As Bloomberg reports,

Gold premiums in India, the biggest user after China, may double by the end of October as the fourth straight quarterly decline in local prices spurs jewelry purchases before the nation’s main festival season.

The fees that jewelers pay banks and dealers may increase to $20 an ounce over the London cash price by the Diwali festival, a level last seen in early July, Bachhraj Bamalwa, a director at the All India Gems & Jewellery Trade Federation, said by phone from Kolkata. The nation celebrates the Hindu festival of lights on Oct. 23 this year.

“Consumers have realized that the government will not take any measures to ease import restrictions soon, so they will stop postponing purchases. Price is the most important factor.”

“We expect premiums to rise but they will still be lower than last year and therefore won’t trouble consumers much,” said Bamalwa. The fees were about $120 an ounce last Diwali and peaked at $160 in December, he said.

* * *

While premiums for physical gold surge, we can only imagine the “thanks” the people of India are offering up to Western Cartel banks in lowering their purchasing prices…

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Record Durables Drop Follows Record Boeing-Driven Surge; Ex-Transports In Line

What goes up must come down. The saying applies not only to aircraft, but aircraft orders. As a reminder, last month the volatile nondefense aircraft order category soared by 318%, leading to a 22.6% increase in headline Durable Goods, a record monthly swing courtesy of Boeing conducting its own “subprime for flying clunkers” program which sent airplane orders to an all time high. And now that the bumper airplane order month is over, with all orders purchased on credit gobbled up by yield-starved investors of course, the anticipated drop took place, with durable goods sliding by a record 18.2%, a fraction worse than the -18.0% expected.

And the year over year change:

So volatile transport grouping aside, here is how the core data acted:

Durable goods ex transports: 0.7%, essentially in line the expected 0.6% print, with the previous month revised from -0.8%, or the worst drop of 2014, to -0.5%
Capital Goods shipments non-defense ex aircraft, i.e., actualized CapEx: 0.1%, Exp. 0.5%, last revised from 1.5% to 1.9%
Capital Goods nondefense ex-aircraft, i.e., projected CapEx: 0.6%, Exp. 0.4%, last month revised from -0.5% to -0.2%

And visually:

Judging by the market’s complete non-response to either this or last month’s durable goods report, it is quite clear that the market is far less focused on still non-existant real CapEx growth, and is far happier to reward the use of leverage to fund stock repurchases, i.e., instant stock pops, instead of long-term growth.

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Initial Jobless Claims Rise 12k, Hover Near 14-Year Lows

After last week’s tumble to 280k, initial jobless claims rose modestly this week to 293k (slightly better than expected) but remain near a dovish-Yellen-crushing 14-year low. Continuing claims also remain at cycle lows around 2.4 million (rising modestly – by 7k – this week). The labor department cites no unusual or estimated claims this week. It appears this is as good as it gets and the Fed has reached its ‘job-creating’ mirage peak…

As good as it gets…

Remamber when initial claims were touted as the best indicator support for stock strength?

Fed limit reached..

* * *

Poroshenko was on the tape with “positive” peace news… so one has to wonder, what drove this move? (as if we need a catalyst for market moves anymore)… Who knew what abouty claims and durable goods?

This is the market move into the data…?

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Unusual Activity

Live review of news items influencing the Markets

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A Look Inside The Secret Deal With Saudi Arabia That Unleashed The Syrian Bombing

For those to whom the recent US campaign against Syria seems a deja vu of last summer’s “near-war” attempt to ouster its president Bashar al-Assad, which was stopped in the last minute due to some very forceful Russian intervention and the near breakout of war in the Mediterranean between US and Russian navies, it is because they are. And as a reminder, just like last year, the biggest wildcard in this, and that, direct intervention into sovereign Syrian territory, or as some would call it invasion or even war, was not the US but Saudi Arabia – recall from August of 2013 – “Meet Saudi Arabia’s Bandar bin Sultan: The Puppetmaster Behind The Syrian War.” Bin Sultan was officially let go shortly after the 2013 campaign to replace Syria’s leadership with a more “amenable” regime failed if not unofficially (see below), but Saudi ambitions over Syria remained.

That much is revealed by the WSJ today in a piece exposing the backdoor dealings that the US conducted with Saudi Arabia to get the “green light” to launch its airstrikes against ISIS, or rather, parts of Iraq and Syria. And, not surprising, it is once again Assad whose fate was the bargaining chip to get the Saudis on the US’ side, because in order to launch the incursion into Syrian sovereign territory “took months of behind-the-scenes work by the U.S. and Arab leaders, who agreed on the need to cooperate against Islamic State, but not how or when. The process gave the Saudis leverage to extract a fresh U.S. commitment to beef up training for rebels fighting Mr. Assad, whose demise the Saudis still see as a top priority.“

In other words, John Kerry came, saw and promised everything he could, up to and including the missing piece of the puzzle – Syria itself on a silver platter – in order to prevent another diplomatic humiliation.

When Mr. Kerry touched down in Jeddah to meet with King Abdullah on Sept. 11, he didn’t know for sure what else the Saudis were prepared to do. The Saudis had informed their American counterparts before the visit that they would be ready to commit air power—but only if they were convinced the Americans were serious about a sustained effort in Syria. The Saudis, for their part, weren’t sure how far Mr. Obama would be willing to go, according to diplomats.

Said otherwise, the pound of flesh demanded by Syria to “bless” US airstrikes and make them appear as an act of some coalition, is the removal of the Assad regime. Why? So that, as we also explained last year, the holdings of the great Qatar natural gas fields can finally make their way onward to Europe, which incidentally is also America’s desire – what better way to punish Putin for his recent actions than by crushing the main leverage the Kremlin has over Europe?

But back to the Saudis and how the deal to bomb Syria was cobbled together:

The Americans knew a lot was riding on a Sept. 11 meeting with the king of Saudi Arabia at his summer palace on the Red Sea.

A year earlier, King Abdullah had fumed when President Barack Obama called off strikes against the regime of Syria’s Bashar al-Assad. This time, the U.S. needed the king’s commitment to support a different Syrian mission—against the extremist group Islamic State—knowing there was little hope of assembling an Arab front without it.

At the palace, Secretary of State John Kerry requested assistance up to and including air strikes, according to U.S. and Gulf officials. “We will provide any support you need,” the king said.

But only after the Saudis got the abovementioned assurances that Assad will fall. And to do that they would have to strongarm Obama:

Wary of a repeat of Mr. Obama’s earlier reversal, the Saudis and United Arab Emirates decided on a strategy aimed at making it harder for Mr. Obama to change course. “Whatever they ask for, you say ‘yes,'” an adviser to the Gulf bloc said of its strategy. “The goal was not to give them any reason to slow down or back out.”

Arab participation in the strikes is of more symbolic than military value. The Americans have taken the lead and have dropped far more bombs than their Arab counterparts. But the show of support from a major Sunni state for a campaign against a Sunni militant group, U.S. officials said, made Mr. Obama comfortable with authorizing a campaign he had previously resisted.

To be sure, so far Obama has refrained from directly bombing Assad, it is only a matter of time: “How the alliance fares will depend on how the two sides reconcile their fundamental differences over Syria and other issues. Saudi leaders and members of the moderate Syrian opposition are betting the U.S. could eventually be pulled in the direction of strikes supporting moderate rebel fighters against Mr. Assad in addition to Islamic State. U.S. officials say the administration has no intention of bombing Mr. Assad’s forces”… for now.

But why is Saudi Arabia so adamant to remove Assad? Here is the WSJ’s take:

For the Saudis, Syria had become a critical frontline in the battle for regional influence with Iran, an Assad ally. As Mr. Assad stepped up his domestic crackdown, the king decided to do whatever was needed to bring the Syrian leader down, Arab diplomats say.

In the last week of August, a U.S. military and State Department delegation flew to Riyadh to lay the ground for a military program to train the moderate Syrian opposition to fight both the Assad regime and Islamic State—something the Saudis have long requested. The U.S. team wanted permission to use Saudi facilities for the training. Top Saudi ministers, after consulting overnight with the king, agreed and offered to foot much of the bill. Mr. Jubeir went to Capitol Hill to pressed key lawmakers to approve legislation authorizing the training.

And once the US once again folded to Saudi demands to attack another sovereign, it was merely a matter of planning:

Hours before the military campaign was set to begin, U.S. officials held a conference call to discuss final preparations. On the call, military officers raised last-minute questions about whether Qatar would take part and whether the countries would make their actions public.

Mr. Kerry was staying in a suite on the 34th floor of New York’s Waldorf Astoria hotel, where he was meeting leaders attending United Nations gatherings. He called his Gulf counterparts to make sure they were still onboard. They were.

The UAE, which some defense officials refer to as “Little Sparta” because of its outsized military strength, had the most robust role. One of the UAE’s pilots was a woman. Two of the F-15 pilots were members of the Saudi royal family, including Prince Khaled bin Salman, son of the crown prince. In the third wave of the initial attack, half of the attack airplanes in the sky were from Arab countries.

The best news for Obama: it is now just a matter of time to recreate the same false flag that the Saudi-US alliance pushed so hard on the world in the summer of 2013 to justify the first attempt to remove Assad, and once again get the “sympathy” public cote behind him, naturally with the support of the US media.

But how does one know it is once again nothing but a stage? The following blurb should explain everything:

Saudi players in attendance for the Sept. 11 meeting included Prince Bandar bin Sultan, who as the king’s spymaster last year ran afoul of Mr. Kerry over Syria and Iraq policy. U.S. officials interpreted his presence as a sign the king wanted to make sure the court was united, U.S. officials said.

Actually, his presence is a sign that the same puppetmaster who pulled the strings, and failed, in 2013 to remove Assad, and as noted above was at least officially removed from the stage subsequently, is once again the person in charge of the Syrian campaign, only this time unofficially, and this time has Obama entirely wrapped around his finger.

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Frontrunning: September 25

Apple CEO Cook Goes From Record Sales to IPhone Stumbles (BBG)
Deal With Saudis Paved Way for Syrian Airstrikes (WSJ)
Drone delivery: DHL ‘parcelcopter’ flies to German isle (Reuters)
Tory Burch Hires Ralph Lauren Veteran as Co-CEO (WSJ)
Apple releases iOS 8 workaround to fix dropped cell service (Reuters)
Ukraine Probes Ex-Minister Over $3 Billion Russian Bond (BBG)
Goldman Sachs-Led Group Near Deal to Buy Messaging Startup Perzo (WSJ)
U.K. Seeks to Criminalize Manipulation of 7 Benchmarks (BBG)
New ‘Bash’ software bug may pose bigger threat than ‘Heartbleed’ (Reuters)
Ukraine Urges No Russia Sanctions End Until Land Regained (BBG)
Larry Ellison Boosts Oracle Credit Line to $9.9 Billion (BBG)
Islamist fighters advance in Syria despite U.S. strikes (Reuters)
Rothschild Makes Comeback With London Cab App to Rival Uber (BBG)
Rosneft may back out of Morgan Stanley oil unit deal (Reuters)

Overnight Media Digest

WSJ

* Chinese leaders are discussing replacing the central bank chief, Zhou Xiaochuan, amid disagreements over the direction of financial policy, raising questions over how quickly and deeply Beijing wants to remake the economy amid slowing growth. (http://on.wsj.com/1pdYzrM)

* Tory Burch, the maker of logo-emblazoned bags and ballet flats, has hired Ralph Lauren veteran Roger Farah as co-CEO to help build the billion-dollar apparel and accessories business into a global fashion empire. (http://on.wsj.com/1rnvjDE)

* Wall Street firms led by Goldman Sachs Group Inc are close to acquiring messaging startup Perzo Inc to create an instant-messaging service to rival that of Bloomberg LP. (http://on.wsj.com/1uoR2xc)

* Comcast Corp and Time Warner Cable Inc fired back at critics of their proposed $45 billion merger, accusing them of engaging in “extortion” to extract business concessions and win their support for the deal. In comments filed with the Federal Communications Commission late Tuesday night, the companies took shots at streaming-video juggernaut Netflix Inc, cable channel-owner Discovery Communications Inc and Glenn Beck’s The Blaze, among others. (http://on.wsj.com/1yrK5hJ)

* European Central Bank President Mario Draghi has again said the ECB could use additional unconventional policy measures if it felt that its inflation target was under threat. (http://on.wsj.com/1CkUkTv)

* General Motors Co continued dribbling out details of its revival plan for the struggling Cadillac luxury brand on Wednesday, saying it will begin renaming the lineup’s vehicles after the launch of a new large sedan called the CT6 next year. (http://on.wsj.com/Ze3fZ3)

* Two of China’s biggest state-run lenders are encouraging their branches to step up mortgage lending as the country’s property market continues to slump. Agricultural Bank of China Ltd said Thursday that it would step up lending to the housing sector with a priority toward demand from home buyers. (http://on.wsj.com/1mX5Lxd)

* Federal security agencies warned retailers on Wednesday that a previously unseen malicious software program they are calling Mozart was used in the attack on Home Depot earlier this year, people familiar with the matter said. (http://on.wsj.com/1u0yu52)

A High Court judge has found that Barclays Plc “misused” confidential deal information in its acquisition of Tricorona for which the British bank was sued by financial advisory firm CF Partners in a 82 million pound ($133.82 million) lawsuit.

Cookies and snacks maker United Biscuits Ltd <IPO-UNI.L> has shortlisted three potential buyers including Kellogg Co, while its private equity owners Blackstone LP and PAI Partners consider a deal that could value the snacks maker at about 2 billion pounds, people close to the matter said.

German ecommerce investor Rocket Internet said its planned 1.5 billion euro ($1.92 billion) initial public offering is already fully subscribed. The company set a price range on Tuesday of 35.50 to 42.50 euros, valuing the business at 6.2 billion euros at the midpoint of this range. A group of over 1,000 authors is planning to call for an antitrust inquiry into Amazon Inc by the U.S. Department of Justice, hoping that the ecommerce company will drop its tactics in a dispute with French publisher Hachette.

Danish container shipping company Maersk Line, owned by A.P. Moller-Maersk, is lining up its first orders of new vessels in three years to maintain its position as the world’s largest container shipping company. (1 US dollar = 0.6127 British pound) (1 US dollar = 0.7827 euro)

NYT

* As Harvard named a new management chief in its bid to improve the returns on its huge portfolio, Yale University reported on Wednesday that its fund had earned a 20.2 percent return for the fiscal year, a big payoff for a strategy that was criticized in the wake of the financial crisis. (http://nyti.ms/1DxY85a)

* Top executives at General Motors Co and Ally Financial Inc, both of which received bailouts from the United States Treasury Department in 2009, were paid excessively even as taxpayers lost money, according to a special inspector general report. (http://nyti.ms/1vj9kNy)

* At a hearing in a Federal District Court in New Orleans, Judge Carl J. Barbier ruled that oil giant BP Plc cannot recoup hundreds of millions of dollars it claims to have overpaid victims of the 2010 Gulf Coast oil spill. (http://nyti.ms/1wLZN2s)

* Three days of strikes by union members at five of Amazon Inc’s warehouses in Germany ended on Wednesday without the company agreeing to wage talks or reporting any serious disruption to scheduled deliveries. (http://nyti.ms/1uIaJwC)

* China plans to connect the Shanghai stock exchange to its counterpart in Hong Kong over the next month as part of an initiative announced by Premier Li Keqiang this year to open China’s markets to foreign investors who have been largely shut out. (http://nyti.ms/1rve7fz)

* Comcast Corp accused its business partners and rivals of “extortion,” lashing out against opposition to its proposed $45 billion acquisition of Time Warner Cable Inc . In documents submitted late Tuesday to the Federal Communications Commission, Comcast said many of the media and tech companies that have urged regulators to block or add conditions to
the deal were doing so out of their own business interests. (http://nyti.ms/1ss04JM)

Canada

THE GLOBE AND MAIL

** With a decision imminent on the Site C hydroelectric project in northeastern British Columbia, area First Nations have delivered a message to the provincial government: You can have the dam or you can have liquefied natural gas, but you will not get both. The C$8-billion dam would lie in the heart of British Columbia’s nascent LNG industry. (http://bit.ly/1qxlduF)

** Switzerland’s Bank Gutenberg AG has agreed to pay C$850,000 to settle accusations that it allowed British Columbia’s residents to open accounts and trade more than C$300 million worth of securities without being registered in the province. (http://bit.ly/1v2trBk)

** New Brunswick’s premier-designate, Brian Gallant, who publicly declared his pro-choice stand in a province that restricts women’s access to abortion, is moving quickly to remove those barriers. (http://bit.ly/1rvqcBB)

NATIONAL POST

** Hundreds of Ontario residents who might have contracted tuberculosis from undiagnosed, active-TB patients at a local hospital have won a C$1.7-million settlement in an unusual class-action lawsuit. (http://bit.ly/1urGT30)

** In a marketing deal that critics are alleging is a tad ill-timed, one of Toronto’s newest public plazas, Maple Leaf Square, is soon set to be redubbed Ford Square. The rebranding – which has nothing to do with Toronto Mayor Rob Ford – is part of a major sponsorship deal between the Ford Motor Co and square owners Maple Leaf Sports and Entertainment. (http://bit.ly/1v2uAIY)

** A judge has suspended exploratory drilling for the TransCanada oil terminal in eastern Quebec after objections by environmentalists. The decision by Quebec Superior Court Justice Claudine Roy to grant a temporary injunction on Tuesday stops the Alberta-based company from conducting seismic surveys in Cacouna until Oct. 15. (http://bit.ly/1sZerQ5)

China

CHINA SECURITIES JOURNAL

– The quality of China’s banking assets is within a stable range and the risks are controllable, said Shang Fulin, Chairman of China Banking Regulatory Commission.

– China National Development Regulatory Commission told the newspaper that it plans to start four projects that will produce 1,000 gigawatts of nuclear power in the coastal areas.

21ST CENTURY BUSINESS HERALD

– Alibaba is looking to take a stake in Shanghai Media Group’s soon-to-be merged Bestv and Shanghai Oriental Pearl units for about 1 billion yuan ($163.01 million), the newspaper said citing a source close to the matter.

SHANGHAI SECURITIES NEWS

– The China Securities Regulatory Commission said it would continue to expand its team and improve its technology to clamp down on insider trading.

– Guangdong’s supervisory body for state-owned companies plans to invite private investors to inject about 78 billion yuan into 188 projects later this month, as part of a wider government effort to promote mixed-ownership reform.

CHINA DAILY

– The Suzhou branch of property developer Vanke is crowd funding a 100 square metre apartment, saying investors can get a return of 40 percent once the flat is sold.

Britain

The Times

TESCO’S ‘BULLYING’ AT HEART OF ACCOUNTING SCANDAL

A deeply ingrained pattern of bullying behaviour towards suppliers is said to lie at the heart of Tesco’s 250 million pound ($408.28 million) accounting scandal as managers under pressure at the supermarket chain adopt increasingly outlandish tactics to sustain profits. (http://thetim.es/1sYhVCp)

PILOTS BAIL OUT FROM RYANAIR FOR RIVAL AIRLINES, CLAIMS UNION Ryanair has been warned that it is facing a pilot manning crisis that could be puncturing the airline’s much-vaunted punctuality record. (http://thetim.es/ZMY4z1) The Guardian TESCO DIRECTOR KEPT OUT OF MONITORING BY ACCOUNTANCY WATCHDOG, SAYS FRC

British accountancy watchdog the Financial Reporting Council confirmed on Wednesday it was monitoring the situation at Tesco Plc and stressed that the non-executive director of the troubled supermarket business who also sits on the FRC board would not participate in any discussions relating to the 250 million pound shortfall in the accounts. (http://bit.ly/1xh4LY8)

ROYAL BANK OF SCOTLAND CHAIRMAN TO MOVE TO GLAXOSMITHKLINE Sir Philip Hampton, chairman of Royal Bank of Scotland Group Plc , is to quit his role at the helm of the bailed-out bank to take on the same position at the embattled pharmaceutical company GlaxoSmithKline Plc. (http://bit.ly/1raaTz1)

BRITAIN’S TOBACCO FIRMS PROTEST AT LABOUR PLAN TO TAX THEM MORE TO PAY FOR NHS

Britain’s tobacco industry reacted with fury to the plan by the Labour party leader, Ed Miliband, to tax British cigarette companies to pay for NHS spending, branding the move anti-business and unjust. (http://bit.ly/1xdRS18)

The Telegraph

PRESSURE BUILDS ON TESCO AS MAJOR INVESTOR SELLS SHARES

The pressure on Tesco Corp and its beleaguered Chairman Richard Broadbent has piled up after BlackRock, a major investor, dumped a 150 million pound collection of its shares and the company was forced to admit that it has had no dedicated finance director for the last five months. (http://bit.ly/1vhTFy3)

VODAFONE BRACED FOR BT ATTACK ON MOBILE MARKET

Vodafone Group Plc has admitted it will delay a decision on whether to introduce its own home broadband and television services until BT launches its attack on the consumer mobile market. (http://bit.ly/1ruPxLW)

The Independent

FORMER JJB BOSS IN COURT ACCUSED OF 1 MLN POUND FRAUD

Christopher Ronnie, former chief executive of JJB Sports Plc , allegedly orchestrated a massive fraud when he was 11 million pounds in debt to an Icelandic bank, a court heard on Tuesday. (http://ind.pn/1v1fq6N)

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Jobless claims for week of September 20 at 8:30–consensus 296K
Durable goods orders for August at 8:30–consensus down 18.0%
Markit services PMI for September at 9:45–consensus 59.2
Kansas City Fed manufacturing activity for September at 11:00–consensus 6

ANALYST RESEARCH

Upgrades

Barrick Gold (ABX) upgraded to Overweight from Neutral at HSBC
Comerica (CMA) upgraded to Buy from Hold at Wunderlich
Schlumberger (SLB) upgraded to Outperform from Sector Perform at Iberia
Thompson Creek (TC) upgraded to Sector Perform from Underperform at Scotia Capital

Downgrades

Chemtura (CHMT) downgraded to Hold from Buy at KeyBanc
Danone (DANOY) downgraded to Underweight from Neutral at JPMorgan
KB Home (KBH) downgraded to Sector Perform from Outperform
at RBC Capital

Initiations

Korn/Ferry (KFY) initiated with a Neutral at Piper Jaffray
Manpower (MAN) initiated with an Overweight at Piper Jaffray
On Assignment (ASGN) initiated with an Overweight at Piper Jaffray
Robert Half (RHI) initiated with a Neutral at Piper Jaffray
Towers Watson (TW) initiated with an Overweight at Piper Jaffray

COMPANY NEWS

BioMarin (BMRN) submits Paragraph IV notice letter for Kuvan tablets to the FDA
Boeing (BA) delivers first 777-300ER to China Eastern Airlines
CSR (CSRE) extends deadline for Microchip takeover talks
Echo (ECTE) cut 70% of workforce, may see added cost from job cuts, bankruptcy possible
GlaxoSmithKline (GSK) names Philip Hampton Non-Executive Director
JAT Capital raises stake in Madison Square Garden (MSG) to 9.36% from 7.75%
MannKind (MNKD) announces closing of global licensing agreement with Sanofi (SNY)
Marchex (MCHX) received notice of termination from Allstate
Novartis (NVS) AIN457 meets primary endpoint in two Phase III studies
Pacira Pharmaceuticals (PCRX) receives FDA warning letter
Regado Biosciences (RGDO) announces 60% workforce reduction, exploring alternatives
Rexahn (RNN) confirms receipt of FDA orphan drug designation for RX-3117
Shire (SHPG) reaches final agreement with U.S. government over sales and marketing of certain drugs
Yahoo (YHOO) in one year lock-up agreement for shares of Alibaba

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Radiant Logistics (RLGT), Jabil Circuit (JBL)

Companies that missed consensus earnings expectations include:
H.B. Fuller (FUL)

Companies that matched consensus earnings expectations include:
Worthington (WOR)

NEWSPAPERS/WEBSITES

Amazon’s (AMZN) head of digital music and video to leave, WSJ says
Apple (AAPL) knew early of security hole in iCloud, The Daily Dot reports
Authors group to ask DoJ to investigate Amazon, WSJ says
Ex-Telstra CEO aiming for $9.6B offer for Telecom Italia (TI) share, Bloomberg says
GE set to increase industrial battery sales in Japan, Nikkei says
Global tablet sales momentum to slow down in 2015, DigiTimes reports
Odds of Colgate-Palmolive (CL) takeover rise amid slew of megamergers, Bloomberg says
Tim Cook, others sold $142.76M in Apple (AAPL) stock, Barron’s says

SYNDICATE

CONE Midstream (CNNX) 17.5M share IPO priced at $22.00
Travelport (TVPT) 30M share IPO priced at $16.00
W.P. Carey (WPC) 4M share secondary priced at $64.00

via Zero Hedge http://ift.tt/ZQ2tRL Tyler Durden

Equity Futures Unchanged As Dollar Surges To Fresh 4 Year Highs

It has been a relatively subdued session, with not much action in either stocks or bonds – European stocks rise for the second day on US market momentum from yesterday; Asian stocks are mixed advance while metals decline with Brent, WTI crude, U.S. equity index futures. The biggest highlight in overnight action, however, was once again the Dollar whick climbed to a fresh 4-year high, on pace to strengthen for 2 straight months for first time since March. The reason: ongoing sentiment that there will be a major dispersion between central banks, with the USD tightening just as other central banks join the liquidity fray. To wit, ECB data showed that lending decline in Europe slowed to -1.5% y/y in Aug. vs -1.6% in July and the latest statement from Draghi who said in Lithuania that economic reform possible without devaluing currency.

We are seeing a slightly more mixed performance in the Asian session overnight. The Nikkei is over 1% higher helped by further weakness in JPY. Chinese equities are just barely firmer too with the Shanghai Composite up about one-tenths of a percent despite news reports of potential change of Governor at the PBOC. The WSJ first reported the story during yesterday’s US session saying that Chinese leaders are discussing replacing the current Governor Zhou Xiaochuan amid disagreements over the direction of financial policy and as part of a wider personnel shuffle that comes after internal battles over economic overhauls. The WSJ said that these changes are expected around a major party meeting in October although no final decision about Zhou has been made. Zhou has been leading the move to liberalising interest rates and market reforms so any changes there would be followed closely by the market. Away from China, equity markets in Korea, Taiwan and Hong Kong are all weaker. In brief: Asian stocks mixed the TOPIX outperforming and Taiwan’s TAIEX underperforming. MSCI Asia Pacific up 0.1% to 143.3. Nikkei 225 up 1.3%, Hang Seng down 0.6%, Kospi down 0.1%, Shanghai Composite up 0.1%, ASX up 0.1%, Sensex down 0.7%. 5 out of 10 sectors rise with consumer, industrials outperforming and energy, financials underperforming.

European equity markets have gained further today after the strong close on Wall Street, however the benchmark DAX remains lower by approx. 0.6% on the week. Gains today have been further cemented by the market’s underlying belief that the ECB will be backed into a corner by the market and conduct sovereign bond purchases in order to lift credit to southern Europe. Airbus Group perform strongly today, as their 20yr jet demand forecast was raised, lifting shares by as much as 2.8%. Nonetheless, retailer H&M temper the gains in Scandinavia as poor a sales update knocked shares lower by close to 4%. 16 out of 19 Stoxx Europe 600 sectors rise; travel & leisure outperform, basic resources, retail underperform. 70% of Stoxx 600 members gain, 26.5% decline. Eurostoxx 50 +0.3%, FTSE 100 +0%, CAC 40 +0.3%, DAX +0.4%, IBEX +0.7%, FTSEMIB +0.4%, SMI +0.4%

Looking at the day ahead, durable goods orders, initial jobless claims, flash Markit services PMI and the Kansas Fed manufacturing survey are the key releases in the US. We also have a 7yr UST auction. In Europe we expect a relatively quiet day for data watchers with the Eurozone money aggregates for August perhaps noteworthy. Draghi will speak this morning on ‘Single Market, Single Currency, Common Future’ at a ECB conference in Lithuania.

Market Wrap

S&P 500 futures little changed 1990.6
Stoxx 600 up 0.4% to 345.8
US 10Yr yield down 1bps to 2.55%
German 10Yr yield down 1bps to 0.99%
MSCI Asia Pacific up 0.1% to 143.2
Gold spot down 0.7% to $1209/oz

Bulletin Headline Summary from RanSquawk and Bloomberg

Central bank policy divergence remains the theme of the week, as the USD marches to four-year highs for the third time in four days
RBNZ joins the slew of central banks talking down their currency, as the RBNZ Governor Wheeler deems the NZD’s high value as ‘unsustainable’
Looking ahead, attention turns to US Durable Goods Orders, Weekly Jobs data and the USD 29bln 7yr auction – particularly after yesterday’s 5yr sale drew the lowest bid/cover since December
Treasuries steady before week’s auctions conclude with $29b 7Y notes; WI yield 2.255%, highest since April. Weekly IG issuance volume near $30b, with September poised to be busiest month of the year.
The SEC’s probe into Bill Gross’s Pimco Total Return ETF is investigating whether the firm bought smaller lots of bonds at discounts, then marked them up, according to the person, who asked not to be identified because the probe isn’t public
The U.K. government plans to criminalize the manipulation of seven more benchmarks in markets from foreign exchange to gold and oil as it tries to revive confidence in the integrity of London as a financial center
Speculation about the retirement of China central bank Governor Zhou Xiaochuan, a champion of shifting the world’s second-largest economy to greater reliance on markets, is resurfacing, focusing attention on potential successors
China uncovered almost $10b in fraudulent trade nationwide as part of an investigation begun in April last year, including many irregularities in the port of Qingdao, the country’s currency regulator said today
The buffer zone being carved out to bring peace to eastern Ukraine may also cement the conflict’s front lines and preserve Vladimir Putin’s influence over the region for years to come
Obama’s blunt words on Islamic terrorism marked a striking shift for his annual address to United Nations, as he moved away from the language of accommodation to rhetoric reminiscent of predecessor President George W. Bush
U.S. and Arab warplanes attacked small oil refineries in eastern Syria controlled by Islamic State to undercut the extremist Sunni group’s revenue and impede its mobility, the Pentagon said
A group of Syrian women activists delivered a jarring message to top American officials: Syrians aren’t grateful for the U.S.-led airstrikes, which they say have killed innocents and worsened the suffering
An Algerian militant group beheaded a Frenchman it kidnapped three days earlier, in retaliation for French airstrikes in Iraq, President Francois Hollande confirmed
Sovereign yields lower. USD strengthens to four-year high. Nikkei +1.3, Shanghai Composite little changed. European stocks higher, U.S. equity-index futures mixed. WTI crude, gold and copper lower

Key Events

8:30am: Initial Jobless Claims, Sept. 20, est. 296k (prior 280k)
- Continuing Claims, Sept. 13, est. 2.440m (prior 2.429m)
8:30am: Durable Goods Orders, Aug., est. -18% (prior 22.6%)
- Durables Ex Transportation, Aug., est. 0.6% (prior -0.8%, revised -0.7%)
- Capital Goods Shipments Non-Defense Ex-Aircraft, Aug., est. 0.5% (prior 1.5%, revised 1.4%)
- Capital Goods Orders Non-Defense Ex-Aircraft, Aug., est. 0.4% (prior -0.5%, revised -0.7%)
9:45am: Markit US Services PMI, Sept., est. 59.2 (prior 59.5)
9:45am: Bloomberg Consumer Comfort, Sept. 21 (prior 37.2)
11:00am: Kansas City Fed Manufacturing Activity, Sept., est. 6 (prior 3)

Central Banks

8:40am: Bank of England’s Carney speaks in Wales
1:20pm: Fed’s Lockhart speaks in Jackson, Mississippi Supply
1:00pm: U.S. to sell $29b 7Y notes

FIXED INCOME

Bund futures trade toward the top-end of the week’s range, with the 10yr yield still sitting below 1.0% on underlying expectations of easing from the ECB. Nonetheless, peripheral European bonds are outperforming, with the GR/GE spread tightening by close to 8bps as the market trims bets that the Greek so
vereign’s finances will be damaged by an early repayment of the IMF loan tranche. Ahead of the CBOT open, T-notes trade higher, recouping some of the losses seen yesterday in the wake of the poor 5yr auction, where the bid/cover fell to the lowest level since December.

Pan Euro Agg month-end extensions +0.08yrs (Prev. +0.03yrs), 12-month average +0.07yrs (IFR)

RANsquawk sources report large Sterling month-end extensions, ranging between +0.28yrs to +0.31yrs – Unconfirmed. Note, that this is much higher than the monthly average of +0.05yrs, but broadly in-fitting with this time last year at +0.33yrs.

EQUITIES

The USD has outperformed all others this morning, keeping the currency on track to record the best quarterly gain since the period ending Sep’11. Policy divergence between ECB, BoJ, RBA playing down their currencies and most recently, the RBNZ has resulted in many crosses seeing marked weakness against the USD, as the Fed come closer toward lifting their rates in the near future. As such, fell below 1.2700, hitting the lowest level since Nov’12. RANsquawk sources also reported leveraged names buying USD against EUR, GBP, CHF and CAD and as some traders will be out of the market for Jewish New Year lower liquidity may exacerbate moves.

EM currencies are also under pressure with USD/ZAR and USD/TRY all rising sharply. Antipodean commodity currencies have been hit hard with verbal intervention from the RBNZ weighing on NZD/USD (down over a point) alongside the commodity weakness, and continued concerns of the growth momentum in China, dragging AUD/USD lower.

COMMODITIES

USD strength has weighed on Gold, hitting close to YTD lows as Palladium falls to levels not seen since May as the prospect of Fed tightening constricts USD-denominated commodities. WTI and Brent crude futures remain on the backfoot, with the Brent curve still sharply in a contango formation as the Iranian oil minister repeats that OPEC must balance output to keep oil prices stable. As such, the Brent-WTI spread trades close to the tightest level of the year.

* * *

DB’s Jim Reid concludes the overnight recap

In terms of markets, after a few weak days, yesterday proved to be a positive day for most risky assets. In the absence of any major news or developments, dovish sound bites from ECB’s Draghi and Fed’s Evans (more below) helped set the first daily gain in European and US equities this week. The S&P 500 (+0.78%) rose for the first time in four days and went on to post its best gain in over a month. Indeed it was a good day for most S&P 500 sub-sectors with Health Care (+1.68%) and Consumer Staples (+1.22%) enjoying the best of the day’s gains. The Dollar’s winning stream continues to gain momentum with the Greenback appreciating about 0.5%-0.6% against the EUR, JPY and GBP over the last 24 hours. Interestingly the commodity complex wasn’t tested by the stronger Dollar with Brent and Copper both moderately higher yesterday. Treasuries were weaker with the 10yr up around 4bps to 2.564% probably as some of the flight-to-quality flows were unwound.

We are seeing a slightly more mixed performance in the Asian session overnight. The Nikkei is over 1% higher helped by further weakness in JPY. Chinese equities are firmer too with the Shanghai Composite up about four-tenths of a percent despite news reports of potential change of Governor at the PBOC. The WSJ first reported the story during yesterday’s US session saying that Chinese leaders are discussing replacing the current Governor Zhou Xiaochuan amid disagreements over the direction of financial policy and as part of a wider personnel shuffle that comes after internal battles over economic overhauls. The WSJ said that these changes are expected around a major party meeting in October although no final decision about Zhou has been made. Zhou has been leading the move to liberalising interest rates and market reforms so any changes there would be followed closely by the market. Away from China, equity markets in Korea, Taiwan and Hong Kong are all weaker as we head to print.

Staying within the region, the Asian Development Bank noted in a report overnight that domestic demand for some of the major Southeast Asian countries have moderated. The ADB revised its GDP growth forecast for the region a smidgen lower 5.3% from 5.4% previously but highlighted that China is on track to meet its forecast of 7.5% in 2014 and 7.4% in 2015. China is still a key variable for many globally and in particular those who are directly connected via the commodity export trade. Iron ore prices had a flat day yesterday even though the commodity has fallen to lows not seen since 2009 as economic momentum in China continues to show limited impetus. Chinese authorities seem also adamant that no stimulus is on the cards in the near term which adds uncertainty to the outlook especially on commodity prices. We saw this with the revision the trajectory of coal prices in 2015 yesterday from the Australian authorities. With the ongoing theme of China growth worries the AUD has depreciated markedly from 0.933 at the start of the month to 0.8833 currently – the lowest since February this year.

Turning to EM, the Dollar strength had a bigger impact on EMFX yesterday than on EM credit and rates themselves. Nevertheless, Russia’s 10yr USD bond yield fell 14bps as the situation over there continues to de-escalate. On the local rates front all eyes are still on Brazil and polls ahead of the presidential election next month. There wasn’t any fresh polls overnight but the 10yr Brazilian government bond yield came down another 16bps yesterday.

Moving on to the middle east, US and allied Arab jet fighters bombed a dozen of small oil refineries in eastern Syria yesterday which was understood to be part of a$2million a day revenue stream for the Sunni Muslim extremist group (LA Times). The BBC reported that the UK Parliament will be recalled on Friday to discuss its possible role in air strikes as an ally.

Back to the central bank speeches yesterday, being his dovish self Draghi said that monetary policy will remain accommodative for a long time and added that the risk of doing too little is higher than the risk of doing too much. From the Fed we heard from Evans who said the FOMC should be “exceptionally patient” before hiking rates even to the point of allowing a modest overshoot of its inflation target. The sound bites from Fed’s Mester and George were less dovish though. Mester said the Fed should end its crisis era policies and should also move away from qualitative forward guidance and repeated her view that it was time for the Fed to drop the “considerable time” phrase from the statement. The Fed’s George wanted the Fed to begin raising rates soon or risk inflation although emphasised that her objective is to not to raise rates quickly.

On that note we’d highlight Joe LaVorgna’s daily yesterday in which he noted that given the departure of the two most hawkish members of the FOMC next year (Fisher and Plosser) the FOMC becomes much more dovish next year. This at the margin could have important implications for the timing of the initial hike.

Data probably played second fiddle yesterday but US new home sales (+504k v 430k) did surprised us on the upside for August. European data remains weak with the latest Ger
man IFO Business Climate (104.7 v 105.8) and Expectations (99.3 v 101.2) both below consensus. For the latter this was also the weakest print since December 2012.

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Where Is Venezuela's 366 Tonnes Of Gold?

Where Is Venezuela’s 366 Tonnes Of Gold?

? Where is Venezuela’s 366 tonnes of gold?

? Does Venezuela still control and own unencumbered it’s own gold reserves?

Former President Hugo Chavez and a London Good Delivery Gold Bar (400 oz)

? Is any of the country’s gold encumbered, loaned or leased to Goldman Sachs or other banks?

? Bank of America economist on visit to Venezuelan central bank last week was allowed to view the bank’s gold vault and the gold repatriated by Former President Hugo Chavez

? Is there a possibility of this given the Venezuelan economy’s weak position?

? An arbitration court of the World Bank ruled that Venezuela needs to immediately repay $740 million to US mining company ‘Gold Reserve’.

? Repayment is connected to Venezuela having terminated Gold Reserve’s gold and copper mining project in 2009 as part of Chavez’s nationalisation of energy and mining projects

? This ruling could set a precedent for other companies to seek compensation from Venezuelan government during a time in which Venezuelan economy is weak and heavily indebted
? Venezuela’s international credit ratings will now be in an even worse state, as will its international bond servicing situation

? Chinese have also lent to Venezuela in return for ongoing deliveries of oil. Could Venezuela now need to mobilise more of its gold again to help finance its debts? Will China seek to use its considerable financial and economic power to build a stronger economic and political relationship with Venezuela?

? The confiscation also highlights the risks to precious metals mining companies operating in politically unstable countries and the stock specific risk of investing in mining shares

Former President Hugo Chavez and a London Good Delivery Gold Bar (400 oz)

Venezuela’s gold reserves are back in focus after Francisco Rodríguez, a Bank of America economist, revealed in a client note yesterday that while on a visit to the Central Bank of Venezuela last week, his party was given a tour of the central bank’s underground gold vault in Caracas and allowed to view the bank’s considerable gold holdings.

This includes the sizeable quantities of Venezuela’s gold reserves that were very publically repatriated back to Caracas by President Chavez in 2011 and 2012.

Rodríguez covers the economies of Venezuela, Columbia and Peru on behalf of Bank of America Merrill Lynch (BAML), and is a native of Venezuela, having also previously been head of Venezuela’s Congressional Budget Office.

Rodríguez was in Caracas last week for meetings with government and central bank officials including Nelson Merentes, the president of the country’s central bank, the Banco Central de Venezuela (BCV).

According to the latest figures published by the World Gold Council (WGC), Venezuela holds 367.6 tonnes of gold in its reserves, representing 70.6% of its official reserves of foreign exchange and gold.

At current market prices, the official gold holdings are worth nearly $14.5 billion. Venezuela is one of the few large holders of gold whose gold holdings represent such a high percentage of total foreign exchange and gold reserves, the other countries being the US, Germany, Italy, France and Portugal.

Unlike the US, Germany and Italy, and possibly Portugal, Venezuela actually has the majority of its gold in its own vaults and not stored abroad. As to whether any of Venezuela’s gold reserves are leased, loaned, collateralised or otherwise encumbered is another question.

In August 2011, the Venezuelan government surprised the gold market when it announced that it would seek to repatriate, at short notice, 160 tonnes of its foreign held gold reserves back to Venezuela for safekeeping. The government also revealed at that time where its gold was located and in what form it was held.

Celebrations as Venezuela’s gold is repatriated to Caracas in 2011

Of the 366 tonnes held at that time, 154 tonnes was already stored in Venezuela, 99 tonnes were in custody at the Bank of England, 12 tonnes in custody with the Bank of International Settlements, and 17 tonnes in custody with JP Morgan. Another 82 tonnes of gold was held in term deposits with a group of bullion banks consisting of HSBC, Barclays, Standard Chartered, the Bank of Nova Scotia and BNP Paribas.

Gold on term deposit earns interest for the central bank but the bullion banks that either accepted the original deposit or took over an existing term deposit would likely have sold or lent the gold in the market. Yet, they would be obliged to return the same amount of gold when the Venezuelans requested that it be repatriated.

The Venezuelan significant repatriation request, in the summer of 2011 may have been a contributing factor to gold’s strong price appreciation at that time, as market participants were forced to find 160 tonnes of physical gold bullion at short notice.
The 160 tonnes of gold was transported back to Caracas with much fanfare in a series of flights from late 2011 to early 2012, with the last flight carrying 14 tonnes of gold from Paris. The fact that this gold was sourced in Paris suggests the possibility that it was sourced from the Banque de France, meaning that the Banque de France may also have been involved in helping to secure the necessary physical to transfer to Venezuela.

Wherever the repatriated gold came from, it is now residing in a vault in Caracas.
Before the 2011/2012 repatriation, Venezuela held 211 tonnes of its gold reserves abroad. After bringing back 160 tonnes, this still leaves 51 tonnes outside the country. This remaining foreign stored gold is, according to Bank of America’s Francisco Rodríguez now held at the Bank of England.

Rodríguez also revealed that the gold held in Banco Central de Venezuela vault is in approximately 5 smallish compartments, and that in his view, all the gold that w
ould be expected to be in the vault is in fact in the vault.
This would be about 316 tonnes of gold, which is just over 25,000 good delivery gold bars. With 5 compartments, that would be about 5,000 bars per compartment.

In November 2013, Bloomberg revealed that both Goldman Sachs and Bank of America had proposed loan deals to Venezuela. Bank of America’s proposal was said to involve the bank acting as an intermediary to facilitate up to $3 billion in payments for Venezuelan companies seeking US dollars.

Goldman Sach’s proposal was said by Bloomberg to involve a loan or swap of $1.68 billion in US dollars but collateralised by $1.85 billion of the Venezuelan central bank’s gold. That would have been about 47 tonnes of gold at the time.

Banco Central de Venezuela denied that it was considering the Goldman Sachs deal, but its unclear if this swap was ever implemented.
If it was, then part of the Banco Central de Venezuela’s gold is currently spoken for. This would more likely be gold stored at the Bank of England than in Caracas.

With the Venezuelan economy remaining weak and Venezuelan bonds dropping sharply in value, it may be just a matter of time before Venezuela needs to use some of its gold for borrowing purposes.

Last week, S&P cut Venezuela’s credit rating from B – to CCC+. S&P said that they “assign CCC+ ratings in instances where we assess that issuers face at least a one-in-two likelihood of default over the next two years.”
Hedge funds are said to have started looking at Venezuela’s debt with a view to possible default.

On Monday in other gold developments in Venezuela, the International Centre for Settlement of Investment Disputes (ICSID), an arbitration court of the World Bank for investment disputes, ruled that Venezuela needs to immediately repay $740 million to a US mining company called ‘Gold Reserve’. This repayment is connected to Venezuela having terminated Gold Reserve’s Las Brisas gold concession project in 2009 as part of the then President Hugo Chavez’s nationalisation of Venezuelan energy and mining projects.

This ICSID ruling could now set a precedent for other companies to seek compensation from the Venezuelan government during a time in which Venezuelan economy remains weak and heavily indebted. The ruling and earlier confiscation also highlights the stock specific risk inherent in precious metals mining stocks and the risks that these companies face when operating in politically unstable countries.

As the Venezuelan currency and bond market lurches into another possible crisis, it looks like the large international investment banks are waiting to provide increased financing or restructuring while the hedge funds look to profit on the sovereign debt.

The Chinese also supply financing to Venezuela on the understanding of getting continuous oil deliveries in return. Just last weekend the Joint Chinese – Venezuela Fund got an inflow of $2 billion from China to help with Venezuelan infrastructure and housing spending.

With China on one side and US banks on the other, it will be interesting to see who ends up financing the lions share of any needed Venezuelan sovereign financing packages.
Venezuela’s gold reserves may then come into play in some way or another.

by Ronan Manly , Edited by Mark O’Byrne

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Where Is Venezuela’s 366 Tonnes Of Gold?