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TVR [#517] 06-12-2018 END OF DAY REPORT: FOMC IN FOCUS GLD,SLV GOLD SILVER BTC BONDS
ALGO CAPITALIST


Published on Jun 12, 2018
Please remember to RATE, SHARE, FAVORITE, COMMENT AND SUBSCRIBE.
 

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Intuit takes aim at gun customers by refusing to allow payments for firearms by phone or online through the credit service

  • Credit service Intuit has ceased processing phone or online payments on guns
  • Money was refunded to customers, even if they already had the product
  • Some businesses say even purchases of t-shirts and coffee mugs were refunded
  • Intuit says their policy means customers must swipe their card in machine to pay
  • The company says policy is the same for alcohol, cigarette and pet sales
http://www.dailymail.co.uk/news/art...ts-gun-purchases-refunds-money-customers.html
 

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Futures Coiled As Traders Brace For Fed Rate Hike


by Tyler Durden
Wed, 06/13/2018 - 07:20


Bulletin Headline Summary from RanSquawk
  • European bourses have put in a mixed performance thus far (Eurostoxx 50 +0.2%) ahead of the FOMC rate decision
  • In FX, DXY eyes 94.00 to the upside ahead, GBP the G10 laggard following UK CPI
  • Looking ahead, highlights include US PPI, DoEs, FOMC rate decision and press conference
After yesterday's surprisingly contained session, in which the priced-in Singapore summit made little impact on markets, so far today we have seen contained markets with little to note, as is usually the case in the pre-FOMC session.

Commenting on the action so far this week, DB's Jim Reid writes that:

"it might be a packed week for big events but so far it’s hard to argue that anything has gone against the grain. The US-North Korea Summit passed without barely moving the dial. Yesterday’s US CPI report was bang in line with expectations and the Brexit vote seems to have provided enough to keep all sides happy for now. Will the Fed this afternoon buck the trend and bring a bit of volatility and fizz back to markets?"​

European markets rose, as did S&P futures as investors await today's 2pm Federal Reserve 25bps rate hike, which the market sees as a 100% certainty. Here is UBS' Paul Donovan on today's Fed action:

Today sees a new era dawning, with the US Federal Reserve expected to raise interest rates another quarter point. Rates of 2% are back to where we were almost 10 years ago. The Wall Street Journal reported that the Fed may hold a press conference every meeting. This would just bring the Fed into line with other central banks, and is probably not a policy signal.​

The looming Fed rate hike came in tandem with a plethora of M&A newsflow overnight that began after a US judge ruled AT&T could proceed with its acquisition of Time Warner without any conditions imposed, which in turn underpinned several media and telecom names on the prospects of open M&A floodgates.

The dollar nudged rose to a 7 month high in advance of the higher US interest rate with Treasury yields, and emerging-market currencies extended a drop. The dollar strength was aided by a report that Trump said $80BN in agriculture purchase commitment from China was insufficient, rekindling the fear of potential trade wars. In related news, there were also comments from White House trade adviser Navarro that President Trump is planning to impose tariffs on a subset of China imports that were part of an initial list of around USD 50bln in goods, while reports also noted speculation this could be in place as soon as Friday.

Italian assets supported by further conciliatory comments from perceived eurosceptic Savona, while the Italian FTSE MIB rose +0.9%. Italian BTPs were supported from the open and also by solid long-end demand at today’s auction, conversely bunds pressured by surprisingly weak 10y auction; USTs hold in tight range, curve marginally flatter. Crude futures near yesterdays lows, still in reaction to yesterdays reports of Russian proposals for higher supply.

Earlier, Asian stocks traded subdued, with Japanese shares rose as the yen dipped, while equities fell in Hong Kong and Australia. Chinese shares also retreated, with ZTE Corp. plunging by its daily limit after it agreed to a $1 billion fine; Nikkei 225 (+0.4%) outperformed and was kept afloat by JPY weakness, while Shanghai Comp. (-0.9%) and Hang Seng (-1.2%) were lower amid expectations of a looming Fed hike and China to follow suit by raising rates on its repo and lending facilities. Trade concerns also resurfaced as President Trump stated that $80BN agriculture purchase commitment from China and with trade adviser Navarro suggesting that Trump is to impose some tariffs on China.

The Bloomberg Dollar Spot Index rose to a seven-month high as investors speculated that the FOMC will hike the "dots" and signal that it will hike rates a total of four times this year. And as always when the DXY strengthens, emerging-market currencies came under pressure. In other global FX, EURUSD traded up 0.1% around 1.1760 amid light flows ahead of Thursday’s ECB decision where Draghi is expected to preview the end of QE.

  • USD/JPY holds near Asian session highs and above 200DMA; TRY much weaker after latest poll shows election risks possibly greater than expected.
  • Cable fell a fourth day to a session low and weakened against all major currencies amid political jitters even as U.K. CPI data matched estimates; the biggest increase in auto-fuel prices in more than seven years helped keep price growth from extending a three- month easing
  • The Aussie reversed losses after earlier edging lower following comments by RBA’s Lowe that a rate hike is still some way off
  • The Japanese yen fell 0.2% to 110.63 per dollar, a three-week low
  • Turkey’s lira fell as much as 2.2% to a three-week low as polls pointed to a close-run election

Euro-area bonds edged north and Treasuries steadied. Italian bonds gained amid an auction of new debt. The yield on 10-year TSYs declined one basis point to 2.95%; German 10-year bund yields dipped less than one basis point to 0.49% while Britain’s 10-year yield declined two basis points to 1.401%, the lowest in a week on the biggest fall in almost two weeks. Italy’s 10-year yield dropped 9bps to 2.769%, the lowest in more than a week.

Ahead of today's FOMC rate hike, a China PBoC adviser said there is no need for the PBoC to follow Fed rate hikes in the long term. He added that the PBOC could still carry out small open market operations rate hike and that it was not necessary for China to lift the benchmark deposit and lending rates.

In other geopolitical news, North Korea said US President Trump agreed in summit to lift sanctions against North Korea and offer North Korea security, while North Korea also stated that US President Trump agreed to step-by-step denuclearization by the North in return for US concessions.

Commodities were subdued overnight amid a slightly firmer USD with WTI crude futures also hampered by an unexpected build in API crude inventories (+0.800M vs. Exp. -2.700M), with the pressure exacerbated on a break below USD 66.00/bbl and the prior session’s lows. This also came in the context of source reports suggesting Russia are to seek a rollback on oil cuts for most OPEC+ nations and propose OPEC+ share out 1.8mln bpd quota increase, with the plan said to leave 1mln bpd of involuntary oil cuts intact. In the metals scope Gold and base metals are all lower with traders tentative ahead of the FOMC’s rate decision later in the day.

On today's calendar, in addition to the Federal Reserve rate decision, data points include the MBA mortgage applications and US PPI.

Market Snapshot
  • S&P 500 futures up 0.09% to 2,786.50
  • STOXX Europe 600 up 0.1% to 387.95
  • MXAP down 0.4% to 174.47
  • MXAPJ down 0.7% to 570.27
  • Nikkei up 0.4% to 22,966.38
  • Topix up 0.4% to 1,800.37
  • Hang Seng Index down 1.2% to 30,725.15
  • Shanghai Composite down 1% to 3,049.80
  • Sensex up 0.5% to 35,857.01
  • Australia S&P/ASX 200 down 0.5% to 6,023.53
  • Kospi down 0.05% to 2,468.83
  • German 10Y yield fell 2.0 bps to 0.471%
  • Euro down 0.03% to $1.1742
  • Brent Futures down 0.3% to $75.67/bbl
  • Italian 10Y yield rose 2.3 bps to 2.592%
  • Spanish 10Y yield fell 3.6 bps to 1.415%
  • Gold spot down 0.2% to $1,293.66
  • U.S. Dollar Index up 0.1% to 93.93

Top Overnight News from Bloomberg
  • President Trump’s summit with North Korea’s Kim Jong Un produced a historic handshake but all the work lies ahead, with no benchmarks for progress, follow-up meetings scheduled or agreement on what success would look like
  • Following his meeting with North Korean leader Kim Jong Un in Singapore on Tuesday, U.S. President Donald Trump says “there is no longer a nuclear threat” from the Asian country
  • Kim Jong Un said Trump offered to lift sanctions against his regime when they met, state media reported, a claim that contrasts with the U.S. president’s rhetoric that the economic strictures would remain
  • Trump returns to Washington to face what may be the biggest threat to his presidency. Special Counsel Robert Mueller is intent on quickly resolving a central issue with Trump’s legal team: whether the president will sit voluntarily for an interview in the probe of Russian election meddling, according to current and former U.S. officials
  • For a Fed meeting where a rate hike is seen as a given, the stakes are still huge. Investors have piled into front-end wagers and curve plays betting on the timing and pace of tightening in the second half of the year
  • Theresa May won a key vote on Brexit, staving off a revolt from the pro-European wing of her Conservatives after offering concessions that make it likely Parliament will get a greater say in the EU divorce process
  • Mario Draghi is holding what might be the most awkward ECB meeting in his tenure. The session in Riga will have a notable absentee. Latvian Governor Ilmars Rimsevics is fighting corruption allegations
  • Russia plans to propose that OPEC and its allies be allowed to return production to October 2016 levels, rolling back most but not all of their output cuts, according to a person familiar with Russian thinking
  • A slump in euro-area industrial production is adding to a spate of underwhelming economic data ahead of Thursday’s ECB meeting that may set the course for future stimulus
  • Italy sold a combined 5.6b euros worth of bonds amid a calmer market in the first major test of investor appetite this month. The auction saw strong demand across all tenors except the seven-year notes

Asian stocks traded subdued with participants tentative ahead of the looming FOMC decision later today. ASX 200 (-0.5%) was dragged by weakness in energy and financials, although upside was seen in APA Group which surged over 20% after Cheung Kong Infrastructure made an offer for the Co. valued at AUD 13bln. This was also in tandem with a plethora of M&A newsflow overnight that began stateside after a US judge ruled AT&T could proceed with its acquisition of Time Warner without any conditions imposed, which in turn underpinned several media and telecom names on the prospects of open M&A floodgates. Nikkei 225 (+0.4%) outperformed and was kept afloat by JPY weakness, while Shanghai Comp. (-0.9%) and Hang Seng (-1.2%) were lower amid expectations of a looming Fed hike and China to follow suit by raising rates on its repo and lending facilities. Today saw the resumption of trade for ZTE shares from a 2-month halt which hit limit down in Shenzhen and dropped around 40% in Hong Kong after agreeing to pay a USD 1.4bln penalty to the US, while trade concerns also resurfaced as President Trump stated that USD 80bln agriculture purchase commitment from China and with trade adviser Navarro suggesting that Trump is to impose some tariffs on China. Finally, 10yr JGBs were flat amid similar uneventful trade in T-notes and a tentative tone in riskier assets, while the BoJ Rinban announcement also failed to spur demand with the total amount at a reserved JPY 505bln. PBoC injected CNY 60bln via 7-day reverse repos, CNY 40bln via 14-day reverse repos and CNY 30bln via 28-day reverse repos, for a net daily injection of CNY 70bln.

Top Asian News
  • Li’s CKI Attempts Biggest-Ever Deal With $9.8 Billion APA Bid
  • ZTE Dives After Agreeing to $1 Billion Fine and Major Revamp
  • Ezion Falls After Converting Bonds to Shares at Discounted Price
  • China Is Said to Ease Some Curbs on Coal Imports, CCTD Reports
  • Philippine Central Bank Moves Policy Meet a Day Early to June 20
European bourses have put in a mixed performance thus far (Eurostoxx 50 +0.2%) ahead of the FOMC rate decision. The outperforming index is currently the FTSE MIB (+0.9%), with the IBEX flat following disappointing earnings from index heavyweight Inditex. The approval of AT&T’s merger with Time Warner by a US judge, is an event in focus by traders, as this could lead to M&A follow through, with specific focus on Sky and Deutsche Telekom. Glencore (+2.6%) has seen the resolution of Gécamines’ litigation in DR Congo following the writing off of USD 5.6bln in their subsidiary Katanga Mining. Dixons Carphone (-4%) is the latest co. to be hit by a data breach, with 105k payment cards compromised, and 1.2m records containing non-financial personal data.

Top European News
  • Dixons Says Almost 6 Million Cards Targeted in Cyberattack
  • Former BNP Gilts Trader Sues Bank After Being Fired for Bullying
  • Draghi Set to Boost Euro, Weigh on Bonds as Political Risks Dim
  • Russia Is Said to Seek Oil-Cuts Rollback for Most OPEC+ Nations
  • Hedging the Euro Before ECB Meeting is Most Expensive Since 2016

In FX, the DXY is hovering just below 94.000 and looking for anything further to keep the momentum going from the FOMC beyond an already factored in 25 bp hike. GBP: The G10 laggard, and once again undermined by UK data to a degree as CPI remained unchanged in May (m/m and y/y) vs some expectations for an uptick. Cable was drifting down towards 1.3300 as a result, before trimming losses ahead of the 2nd day of Brexit bill debate and voting before attention turns to the Fed. JPY/CHF/CAD: All extending recent loss vs the Dollar as Usd/Jpy finally soaks up all offers around 110.50 to trade up at 110.70 and technically through another key resistance level (110.62 Fib), while Usd/Chf is back in the upper end of a broad 0.9850-0.9900 band after mixed Swiss data (y/y PPI firmer than previous, but industrial orders slowed markedly). The Loonie is back under pressure and sub-1.3000 again vs its US counterpart as the NA disharmony continues to impact, and 1.3050 is the next upside chart target in sight. EUR: Holding around 1.1750 vs the Usd amidst expectations that the ECB will live up to recent more hawkish impulses (via sources and GC officials) tomorrow, but also checked by very large option expiries ranging from 1.1700-1.1800 and just above.

Commodities were subdued overnight amid a slightly firmer USD with WTI crude futures also hampered by an unexpected build in API crude inventories (+0.800M vs. Exp. -2.700M), with the pressure exacerbated on a break below USD 66.00/bbl and the prior session’s lows. This also came in the context of source reports suggesting Russia are to seek a rollback on oil cuts for most OPEC+ nations and propose OPEC+ share out 1.8mln bpd quota increase, with the plan said to leave 1mln bpd of involuntary oil cuts intact. In European trade, oil broke back above the USD 66.00/bbl level in the wake of the IEA monthly report forecasting stable oil demand, as well as Iranian and Venezuelan oil output possibly falling by almost 30%. The fossil fuel is still negative for the day, however, at USD 66.20/bbl. Further news in the oil sector emanated from the Kremlin with Russian President Putin not planning to discuss an exit from the global oil output deal with Saudi Crown Prince at their World Cup meeting. In the metals scope Gold and base metals are all lower with traders tentative ahead of the FOMC’s rate decision later in the day.

Looking at the day ahead, all eyes will be on the Fed when we get the outcome of the FOMC meeting, followed closely by Fed Chair Powell's statement and presser. Prior to that we get the May PPI report in the US, while in Europe we'll get May CPI / PPI / RPI prints out of the UK (core CPI of 2.1% yoy expected) and the final reading of Spain’s CPI. April industrial production for the Euro area is also due. Elsewhere, the BOE’s Kashyap will speak in London.

US Event Calendar
  • 7am: MBA Mortgage Applications, prior 4.1%
  • 8:30am: PPI Final Demand MoM, est. 0.3%, prior 0.1%; PPI Ex Food and Energy MoM, est. 0.2%, prior 0.2%
    • PPI Final Demand YoY, est. 2.8%, prior 2.6%; PPI Ex Food and Energy YoY, est. 2.3%, prior 2.3%

DB's Jim Reid concludes the overnight wrap
It might be a packed week for big events but so far it’s hard to argue that anything has gone against the grain. The US-North Korea Summit passed without barely moving the dial. Yesterday’s US CPI report was bang in line with expectations and the Brexit vote seems to have provided enough to keep all sides happy for now. Even my birthday celebrations passed without a hiccup notwithstanding the impact of one glass of bubbly at home last night. Will the Fed this afternoon buck the trend and bring a bit of volatility and fizz back to markets?

Well a 25bp hike is as good as given so that won’t be the shock but what our US economists also expect is the FOMC to drop its forward guidance language, which will advance the Fed another half-step along the path of policy normalization. Our colleagues believe the time has come to phase out the commitment to hold rates low for longer given that rates are now significantly above the zero bound and the Fed’s dual mandate has essentially been achieved.

Away from that they also expect the post-meeting statement to convey a modestly more upbeat message on domestic activity. Indeed changes to the summary of economic projections will likely include further reductions in unemployment, rate projections and slightly higher inflation, but their best guess for the 2018 median fed funds dot is that it remains at three, at least for now. Market pricing is fairly split between 3 and 4 hikes this year so it probably doesn’t require a hawkish signal to correct a mispricing. It’s worth noting that our economists are still pegged at 4 hikes by the end of the year.

As for the press conference, the team expect Powell to take note of solid prospects for aggregate demand growth given significant fiscal stimulus, the tightening labour market with prospects for more to come, gradual increases in wage inflation (such as ECI) and PCE inflation nearing target. On the downside, Powell should note that some downside risks have arisen associated with Italy and trade policy. Any mention of policy outlook will likely include reference to further gradual rate increases being in order and a summary of the median SEPs and dots. As an aside, it’s worth noting that a CNBC article which came out on Sunday suggesting that the Fed could have a surprise in store for today’s meeting has turned a few heads. The crux of the story was that the Fed could announce that it is bringing forward the date at which it aims to stop reducing its balance sheet to as soon as next year depending on financial conditions.

Finally on the Fed there was a story last night that they are considering a press conference every meeting instead of quarterly. The story gathered a fair bit of interest without making much difference to markets. The perception is that it wouldn’t change the Fed’s path but might slightly change their exact route and create a bit more volatility around what were previously non-presser meetings.

As for markets, they go into the Fed meeting coming off the back of a fairly unexciting last 24 hours of price action which reflects all the big events going to plan so far. The S&P 500 eventually finished last night +0.17% higher with the Nasdaq (+0.57%) closing at a new record high, while in Europe the likes of the Stoxx 600 (-0.11%), DAX (unch.) and FTSE (-0.43%) weakened slightly, weigh down by energy and materials stocks. Treasuries were only modestly weaker with the 10y back up +0.9bps while Bunds were little changed (-0.2bp). 10 year BTPs finished +1.3bps which is the smallest one-day move for 13 days. It’s worth noting that the BTP 365-day bill sale passed without any hiccups however today is likely to be a bigger test with an auction of 3-year, 7-year and 30-year bonds due. Meanwhile the US dollar index firmed for the third straight day (+0.22%) while EM currencies outside of the Turkish Lira (-1.63%) were a lot calmer. Finally, wheat prices jumped 3.9% after the USDA trimmed its outlook for Russian wheat production while Australia also lowered its domestic output estimate.

Overnight sentiment in Asia is mixed with the Nikkei up +0.42% as the YEN dipped, while the Hang Seng (-0.62%), Shanghai Comp. (-0.75%) and ASX200 (-0.69%) are down modestly as we type. Elsewhere, the US District Court has cleared AT&T’s US$85bn takeover of Time Warner after rejecting the Justice Department’s request for an order blocking the proposed deal. Reuters noted the approval could lead to further M&A activity in the media sector. After the bell, Time Warner and Twenty-First Century Fox’s share price was up 4.5% and 7% respectively.

Back to yesterday where the afternoon’s US CPI report threw up no real surprises as mentioned at the top after core CPI printed at +0.2% mom for May and so helping to push the annual rate up to +2.2% yoy and the highest since February 2017. Both of these were in line with expectations. The 3 decimal place core print was +0.171% mom so if you were leaning one way or the other then it was a touch on the softer side but certainly not enough to move the dial. The 3-month annualized rate of core CPI was steady at 1.8% while the six-month rate nudged up to 2.5%. Overall, the data certainly fits the narrative that core inflation has risen back towards the Fed target but isn’t showing signs of running away at the moment.

Elsewhere the UK government won a crucial Brexit vote in the House of Commons, with the UK's lower house rejecting an amendment put forward by the upper house (House of Lords) that would require the government to accept the direction of Parliament in the event that no deal was reached with the EU27. To win the vote they offered Parliament a lot of influence/oversight over the negotiations. DB’s Oli Harvey believes that while there are risks certainly still out there this is further evidence of a shift towards a softer Brexit. There is clearly no parliamentary majority for a hard (either Canada or WTO-based) Brexit deal and this vote makes that difficult to sign off. This expected move from our FX guys is one factor behind our bullish sterling recommendation from earlier this year. Sterling rallied as much as 0.4% following the vote, but pared back gains throughout the day to close marginally lower (-0.05%).

As for the US-North Korea Summit, well in a nutshell it was big on optics but light on details which was enough to keep the market happy. A twopage document was signed in which both leaders committed to “complete denuclearization of the Korean Peninsula” albeit within an undefined timeframe and without a defined path. Perhaps the most significant part of the meeting was just after it ended when China announced support for revising economic sanctions against North Korea. President Trump also said that the US would suspend military exercises with South Korea although troops are set to remain in the peninsula. President Trump himself called the meeting “a very great moment in the history of the world” and was full of praise for North Korea Leader Kim Jong Un, saying that the two have formed “a very special bond”. He also said that Kim is a “talented man” and a “worthy negotiator”. Compare that to how Trump felt at the end of the G7 meeting at the weekend when he tweeted that Trudeau was “meek and mild” and “dishonest and weak”. Who would have thought the leader of the US could on paper have a better relationship with the leader of North Korea than the equivalent at their closest neighbour Canada.

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the May NFIB small business optimism index was above market at 107.8 (vs. 105 expected) - marking a fresh record high since September 1983. Firms indicated that they were more optimistic about the economy, with a record 34% of firms believing it to be a good time to expand.

Meanwhile, the May monthly budget statement was slightly wider than expected at -$146.8bln (vs. -$144bln) - the largest deficit for the month of May since 2009. In the UK, the April unemployment rate was steady mom and in line at 4.2%, which remains the lowest print since 1975. The headline average weekly earnings growth was in line at 2.5% yoy, but the ex-bonus growth slowed to 2.8% yoy (vs. 2.9% expected). In Germany, the June ZEW survey current situations index was below consensus at 80.6 (vs. 85 expected) while the expectations index for Germany (-16.1 vs. -14 expected) and the Eurozone (-12.6 vs. 2.4 previous) were both below market, in part due to the recent Italian politics and trade uncertainties.

Looking at the day ahead, all eyes will be on the Fed when we get the outcome of the FOMC meeting, followed closely by Fed Chair Powell's statement and presser. Prior to that we get the May PPI report in the US, while in Europe we'll get May CPI / PPI / RPI prints out of the UK (core CPI of 2.1% yoy expected) and the final reading of Spain’s CPI. April industrial production for the Euro area is also due. Elsewhere, the BOE’s Kashyap will speak in London.

https://www.zerohedge.com/news/2018-06-13/futures-coiled-traders-brace-fed-rate-hike
 

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Euronav Becomes World’s Largest Independent Tanker Company as Merger with Gener8 Maritime Closes
June 12, 2018 by gCaptain



The Euronav’s 299,533 dwt Very Large Crude Carrier (VLCC) Anne. Photo credit: Euronav

Belgian tanker company Euronav has completed its merger with former rival Gener8 Maritime following approval from Gener8’s shareholders on Monday.

The merger creates the world’s largest independent operator of large crude tankers.

Through the merger, Euronav has an operating fleet of 74 crude tankers consisting of 43 Very Large Crude Carriers (VLCCs), 27 Suezmax tankers, two Ultra Large Crude Carriers, and two LR1s, representing an aggregate carrying capacity of 19.4 million deadweight tons. It also has two Floating Storage and Offloading (FSO) vessels.

Shareholders representing 81 percent of the Gener8 Maritime’s outstanding shares voted on the proposed merger on Monday, with 98 percent in favor of the proposed merger.

The transaction was not subject to further regulatory approvals and it was expected to close on Tuesday.

Under the terms of the merger, shareholders of Gener8 will each get 0.7272 Euronav shares, which will result in the issuance of approximately 60.9 million new Euronav shares.

The merger results in Euronav shareholders owning approximately 72 percent of the share capital of the combined company and Gener8 shareholders holding the remaining 28 percent.

Euronav, as the combined entity, will continue to be listed on the NYSE and Euronext stock exchange under the symbol “EURN”.

In connection with the merger, former Gener8 director, Steven Smith, has been nominated and elected to serve as an independent director of Euronav. He will also join Euronav’s board of directors for a three-year term.

The stock-to-stock merger between the two companies was first agreed to in December with unanimous support from Euronav’s board but subject to Gener8 shareholder approval.

Upon announcing the merger, Peter Georgiopoulos, former Chairman and CEO of Gener8, commented: “I have been a vocal advocate for consolidation in the shipping industry and have always stated that we would be a will buyer or seller depending upon what is best for our shareholders. This transaction create the largest independent VLCC fleet in the world. The company has a very bright future that will benefit both Gener8 and Euronav shareholders.”

http://gcaptain.com/euronav-becomes-worlds-largest-independent-tanker-company/
 

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Shake Shack Launches Order Kiosks To Eliminate Minimum Wage Workers


by Tyler Durden
Wed, 06/13/2018 - 15:17



Fast food workers who enthusiastically joined the "fight for $15" are about to get the latest lesson in life's numerous ironies: Shake Shack has become the latest fast food purveyor to launch with order kiosks, which the company said will help it minimize its "largest P&L headwind": People.

In an investor presentation released Wednesday, Shake Shack touted its first "cashless shack" - located at the company's Astor Place location - which opened in New York back in October. As we pointed out last year, self-order kiosks have already become a staple at thousands of McDonald's restaurants, and Shake Shack is rapidly catching up. As a result, the company says it has been testing the sleek-looking kiosks at six restaurants.





And here things got confusing: people are Shake Shack's "most valuable asset" - the crucial component to the company's theory of "enlightened hospitality," it said in its presentation. And yet, by "valuable" it turns out the company actually meant "expensive" thanks to to rising rising cost of unskilled labor - thanks to movements like the fight for $15, which has pushed several large US cities to raise the municipal minimum wage, in some cases all the way to $15.

"People are our most valuable asset...and our largest P&L headwind for the foreseeable future."

What's worse for workers, the kiosks aren't the company's only experiment with integrating more high-tech solutions to make minimum wage employees redundant: Shake Shack launched an iOS mobile app last year, which has been incredibly successful, according to the company.

Orders placed on the app typically generate 15% more revenue. Because of this, the company is planning to expand its ability to "connect directly with guests" by adopting more desktop and mobile-based ordering options.

Translation: making human workers even more obsolete.



Of course, kiosks won't entirely eliminate restaurant staff: Shake Shack will still employ "hospitality" workers who will hang out in the dining area and make sure everything is okay with customers' food. At least until it finds the right robots to replace them too...



The good news: for now Shake Shack will continue paying its employees in New York City $15 an hour - $4 more than NYC's minimum wage. Just don't plan on being employed there too long.

And what assures that the company will continue its robotization is the market's reaction to its efforts: the company's stock price has persistently moved higher, beating most of its rivals.




Here is the kiosk in operation.


And while Shake Shack values its commitment to providing employees with a "livable" wage...





...we imagine it will be more difficult to "live" when you've just lost your job to a robot.

Read the full investor presentation below:
https://www.scribd.com/document/381...m-Blair-Presentation-6-12-18-600PM#from_embed

https://www.zerohedge.com/news/2018...ucing-order-kiosks-cut-down-15-hour-employees
 

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Gold Seeker Closing Report: Gold and Silver Close Higher After Mixed Fed Reaction
By: Chris Mullen, Gold Seeker Report
Gold dipped $3.50 to $1292.60 in Asia before it bounced back to $1299.00 by late morning in New York and then fell back to $1292.90 after today’s fed statement, but it then shot up to a new session high of $1301.00 in the last minutes of trade and ended with a gain of 0.31%. Silver climbed up to $16.992 before it also dropped in early afternoon trade, but it then jumped to a new session high of $17.106 and ended with a gain of 1.25%.
 

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America’s Gas Prices May Double by 2040 as LNG Exports Grow
June 13, 2018 by Bloomberg



Loading of the first commissioning cargo at the Sabine Pass LNG Terminal in February 2016. File photo: Cheniere Energy

By Rachel Adams-Heard (Bloomberg) — American gas prices could double by 2040 as the U.S. exports more liquefied natural gas, but consumers will be shielded as production of the fuel increases and trade balances improve.

That’s the conclusion from a study commissioned by the U.S. Department of Energy that found an almost 50 percent chance of gas reaching $5 to $6.50 per million British thermal units over the next two decades. U.S. consumers won’t suffer, the study said, because LNG exports will boost the economy while higher output helps mitigate the cost.

The U.S. is already shipping record amounts of super-cooled natural gas overseas as production from shale basins surges. The nation is now a net exporter of the fuel for the first time since the 1950s, putting the U.S. on course to rival Qatar and Australia for global LNG dominance in the next five years as new Gulf Coast terminals start up.

U.S. gas futures have averaged about $2.90/MMBtu over the past year amid ample supply. Some groups, including several Democratic lawmakers and manufacturers, have argued that a jump in LNG exports would send prices sharply higher, hurting consumers.

This latest study, conducted by NERA Economic Consulting, should help assuage those concerns, according to Katie Bays, an analyst at Height Capital Markets. “For policymakers who are on the fence on whether or not capping LNG exports is a good policy objective, this will tell them it shouldn’t be a priority,” she said by telephone.
© 2018 Bloomberg L.P

http://gcaptain.com/americas-gas-prices-may-double-by-2040-as-lng-exports-grow/
 

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Port of Long Beach Crane Operators Set New Single-Shift Cargo Record
June 13, 2018 by gCaptain


File Photo: TTI’s Pier T terminal at the Port of Long Beach. Photo: Port of long Beach

A pair of crane operators at the Port of Long Beach on the U.S. West Coast have set a new productivity record for moving the most cargo using a single crane during one eight-hour shift.

The record was set on May 15 when two crane operators working the containership Gudrun Maersk at Total Terminals International’s Pier T terminal moved a total of 564 containers using a single crane over just an eight-hour period. This represents an average of 70 container moves per hour, which is nearly triple the West Coast average of 25 container moves per hour.

The new record breaks the previous American record of 534 container moves set in 2014, also at the Port of Long Beach.

The credit for the single-shift record goes to crane operators Branko Sindicich and John Gabriellini of Local 13, as well as the Local 94 walking bosses and the Local 63 marine clerks coordinating the moves.

Over the four-day call, more than 9,300 total containers were discharged and loaded on the 11,000 TEU capacity Gudrun Maersk.

Based on volume, TTI operates the busiest terminal in the San Pedro Bay port complex, home to the nation’s No. 1 and No. 2 busiest container ports. In 2017, the Long Beach and Los Angeles ports moved more than 16.8 million TEUS combined, which would rank the combined complex as the world’s ninth-busiest.

Until late 2016, Total Terminals International (TTI), and thus pier T, was majority owned by now-defunct Hanjin shipping. After Hanjin’s collapse, however, TTI was acquired by a unit of Mediterranean Shipping Company.

Read Next: APM Terminals Sets Single-Vessel Cargo Record

http://gcaptain.com/port-of-long-beach-crane-operators-set-new-single-shift-cargo-record/
 

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TVR [#518] 06-13-2018 END OF DAY REPORT: THE EFFECTS OF FOMC
ALGO CAPITALIST


Published on Jun 13, 2018
Please remember to RATE, SHARE, FAVORITE, COMMENT AND SUBSCRIBE.
 

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Comcast offers $65billion for most of 21st Century Fox to outbid Disney's existing deal - one day after AT&T's Time Warner mega-deal got the go ahead from federal judge

  • Comcast has made a play for the large portion of Fox that Disney had been readying to acquire, by offering 19 per cent more
  • Comcast made the bid on the heels of a federal judge approving AT&T's similar deal to take over Time Warner
  • Disney could now challenge the Comcast offer
http://www.dailymail.co.uk/news/art...ntury-Fox-undercut-Disneys-existing-deal.html
 

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Dave Janda – Donald Trump Will Preside Over Reset and Bankruptcy
Greg Hunter


Published on Jun 12, 2018
Radio host Dr. Dave Janda says the debt based financial system is headed for a reset. Janda says the reset will not only reset the debt but clear out corruption and “restore the rule of law.” Janda also says, “I have political sources that have said a reset will occur. I do not have a time frame for the reset . . . . I believe Donald Trump will preside over the largest bankruptcy in history, and that is why he’s there. I also believe that this reset will involve an escalation in the price of gold and silver, and the manipulation will be terminated.”

Join Greg Hunter as he goes One-on-One with Dr. Dave Janda, host of the “Operation Freedom” radio show, for an in-depth interview.

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Exhausted Traders Prepare For This Week's Final Surprise From Mario Draghi


by Tyler Durden
Thu, 06/14/2018 - 06:58


Bulletin Headline Summary from Ransquawk
  • Defensive trading as traders look ahead to the ECB’s monetary policy meeting
  • Significant beats on UK retail sales lifts the GBP
  • Looking ahead, highlights include, ECB rate decision conference and press conference, US weekly jobs, retail sales

US futures are flat after a torrid 24 hours, which saw European and Asian stocks decline led by China, HK and South Korea, as weak economic data, a Fed rate hike and U.S. tariff threats spooked emerging markets and sucked the life out of a rally spurred by the Chinese central bank unexpectedly deciding not to follow the Fed in raising interest rates amid what Rabobank said was "shockingly weak" Chinese data as the global economy is now on its last legs. Of course, the looming ECB rate decision, in which Draghi may announce the beginning of the end of QE, is adding another layer of uncertainty (full ECB preview here).

This is the amusing preview of today's main ECB event from UBS economist Paul Donovan

Now it is the turn of the ECB. ECB President Draghi's extensive rehabilitation to overcome an addiction to easing seems to have paid off. There are hopes of either 1) an announcement of the timetable to end bond buying, or 2) an announcement of an announcement of the timetable to end bond buying.​

Whatever Draghi says, the market is confident that it will be hawkish and is bidding up the Euro this morning. As a result, the most likely outcome is that the Euro will tumble especially with the Fed on pace to hike 2 more times in 2018 blowing out rate differentials out of the water.

Going back to the Fed, it is only appropriate that most benchmark stock gauges retreated after Powell unveiled a picture of sterling health for the US economy, suggesting that despite the actual data, the Fed expects the economy to overheat (for a while), with Powell talking up the U.S. growth as the Fed raised rates and hinted at a total of four hikes in 2018, while China’s central bank unexpectedly failed to follow the increase.





Asian shares taking their cue from Wednesday’s weak U.S. session and deepening recent losses. As previously noted, abysmal Chinese economic data which saw industrial production, retail sales, and fixed investment miss across the board, did not help. sentiment. In a whiplash session, the Shanghai Composite Index down 0.2%, after first rising as much as 0.5% following the PBOC decision not to hike rates in line with the Fed, and then fell as much as 0.6% in wake of the disappointing Chinese economic data. Adding to the Chinese gloom, President Trump threatened to “strongly” confront China on trade with new tariffs expected as soon as Friday.






In Asia, Australia's ASX 200 (-0.1%) and Nikkei 225 (-1.0%) opened lower although were off lows with strength in telecoms helping Australia to briefly return flat, while KOSPI (-1.3%) was the worst performer as it also took into account the weakness during the prior day’s market holiday. Elsewhere, Hang Seng (-0.9%) was downbeat after the HKMA hiked rates in lockstep with the Fed and the Shanghai Comp. (-0.2%) traded choppy with early support seen after the PBoC refrained from increasing its repo rates. However, upside in the mainland was later pared amid prospects of looming US tariffs on China and following disappointing Industrial Production and Retail Sales data, in which the latter grew at its slowest pace since 2003.

Europe's Stoxx 600 Index followed Asia's example and slumped pressured by the stronger euro, while American equity futures erased a drop to trade little changed. European equities declined as traders are tentative ahead of the ECB’s monetary policy decision, with moves dictated by equity specific stories. Rolls Royce (+3.0%) is leading the gains in the Stoxx 600, after the announcement that 4,600 jobs will be cut from the company in order to save GBP 400mln.

Amid a market divided on whether President Draghi will announce an end date for asset purchases, euro-area bonds slipped. Emerging-market currencies attempted to form a short-term bottom, while Treasuries advanced and oil consolidated recent gains. The 10Y TSY yield declined one basis point to 2.95 percent, the first retreat in a week. Germany 10-year gilts rose 2bps to 0.50 percent, the highest in more than three weeks, while Britain’s 10-year yield increased 1bp to 1.369 percent. Finally, Italy’s 10-year yield climbed four basis points to 2.85 percent.

In FX trading, the dollar came under pressure against most major peers, while haven assets such as the yen, Treasuries and gold advanced; the greenback weakened versus all Group-of-10 peers apart from the Aussie, with the BBDXY index sinking 0.2%, the largest decrease in more than two weeks; the euro rose 0.3% to a one- week high as traders positioned for the ECB meeting and are all on the same side of the boat now (which obviously means that after the ECB, the euro will be lower). In other FX trading:

  • The pound jumped as much as 0.5% after annual retail-sales growth exceeded all analyst forecasts
  • Sweden’s krona resumed declines briefly rising around the time of the inflation report earlier in the day, which was in line with estimates
  • The Australian dollar decline accelerated in early European dealings as leveraged funds sold it against the yen and New Zealand’s currency on concerns over escalating U.S.-China trade tensions; the Aussie was already on the backfoot after data disappointing employment data
  • South Africa’s rand jumped.

In commodities, brent dropped 0.2% on the day, with WTI +0.1% on a softer USD. Traders are also looking ahead to developments that may come from the Saudi-Russia meeting on the sidelines of the World Cup which kicks off today. In the metals scope, gold is up on the day hitting 2 week highs as investors flock to safe havens ahead of the ECB’s rate decision, as well as having support offered by a softer USD and trade concerns. The yellow metal is up 0.2% on the day. Copper has fallen to a near one week low after weak Chinese industrial data. Steel is in the green for the 3rd straight session after China has said it will introduce a new capacity limit in certain areas.

Looking ahead, highlights include, ECB rate decision conference and press conference, US weekly jobs, retail sales

Market Snapshot
  • S&P 500 futures down 0.1% to 2,771.50
  • STOXX Europe 600 down 0.6% to 386.12
  • MXAP down 0.9% to 173.14
  • MXAPJ down 1.1% to 564.62
  • Nikkei down 1% to 22,738.61
  • Topix down 0.9% to 1,783.89
  • Hang Seng Index down 0.9% to 30,440.17
  • Shanghai Composite down 0.2% to 3,044.16
  • Sensex down 0.4% to 35,588.51
  • Australia S&P/ASX 200 down 0.1% to 6,016.64
  • Kospi down 1.8% to 2,423.48
  • German 10Y yield rose 2.0 bps to 0.502%
  • Euro up 0.2% to $1.1819
  • Italian 10Y yield fell 5.6 bps to 2.537%
  • Spanish 10Y yield fell 0.5 bps to 1.406%
  • Brent futures down 0.2% to $76.59/bbl
  • Gold spot up 0.2% to $1,302.31
  • U.S. Dollar Index down 0.2% to 93.34
Top Overnight News from Bloomberg
  • China’s economy fell short of expectations and its central bank chose not to follow the Fed in raising borrowing costs, adding fresh caution on the outlook for global growth as trade tensions with the U.S. escalate
  • Mario Draghi and his European Central Bank colleagues will hold their first formal talks on Thursday on when to end their asset purchase program, though it’s less clear whether they’ll make a decision or wait until July
  • President Donald Trump said he’ll confront China “very strongly” over trade in the coming weeks, as his administration plans to announce on Friday a final list of tariff targets, which will be imposed shortly thereafter
  • Federal Reserve Chairman Jerome Powell signaled growing optimism on the U.S. economy while trying to reassure investors that the central bank would not derail the country’s second-longest expansion by aggressively tightening monetary policy. Fed officials on Wednesday raised interest rates by a quarter point for the second time this year and upgraded their median forecast to four total increases in 2018
  • Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman will discuss how to boost oil production while maintaining their petro-alliance when they meet in Moscow tomorrow to watch the soccer World Cup’s opening match between the two countries
  • The U.K. housing market stayed stuck in a rut in May as activity and prices remained broadly flat, according to the Royal Institution of Chartered Surveyors
  • China’s central bank held off from immediately raising borrowing costs following the U.S. Federal Reserve, a decision that came just as economic data for May showed that the economy is losing steam
  • U.S. Secretary of State Mike Pompeo emphasized that Kim Jong Un wouldn’t receive sanctions relief until after his complete disarmament, pushing back against North Korean suggestions that penalties would soon start being relaxed
  • U.K. Brexit Secretary David Davis says the compromise amendment that the government is negotiating with rebels in the ruling Conservative Party on the so-called meaningful vote will be published on Thursday. Asked if it will give Parliament control in the event lawmakers reject the final Brexit deal, he says “wait and see”
Asia stocks traded softer as the region reacted to the FOMC which hiked rates by 25bps to 1.75%-2.00% as expected and forecast a total of 4 hikes this year vs. Prev. forecast of just 3 increases, while the statement also contained a more hawkish undertone regarding growth and rates. As such, ASX 200 (-0.1%) and Nikkei 225 (-1.0%) opened lower although were off lows with strength in telecoms helping Australia to briefly return flat, while KOSPI (-1.3%) was the worst performer as it also took into account the weakness during the prior day’s market closure.

Elsewhere, Hang Seng (-0.9%) was downbeat after the HKMA hiked rates in lockstep with the Fed and the Shanghai Comp. (-0.2%) traded choppy with early support seen after the PBoC refrained from increasing its repo rates. However, upside in the mainland was later pared amid prospects of looming US tariffs on China and following disappointing Industrial Production and Retail Sales data, in which the latter grew at its slowest pace since 2003. Finally, 10yr JGBs saw mild gains amid the risk averse tone although upside was contained following the BoJ Rinban announcement in which the central bank reduced its purchase amounts in the belly. PBoC injected CNY 70bln via 7-day reverse repos, CNY 50bln via 14-day reverse repos and CNY 30bln via 28-day reverse repos, for a net daily injection of CNY 70bln, while the PBoC kept its reverse repo rates unchanged despite the Fed hike.

Top Asian News
  • BOJ Cuts Purchases of Three-to-Five Year Bonds by 30 Billion Yen
  • Erdogan: Turkey to Conduct an Operation Against Moody’s
  • China Signals Confidence in Yuan With Surprising Rate Decision
  • Anta Leads China Sportswear Stocks Decline After Critical Report

European equities are lower as traders are tentative ahead of the ECB’s monetary policy decision, with moves dictated by equity specific stories. Rolls Royce (+3.0%) is leading the gains in the Stoxx 600, after the announcement that 4,600 jobs will be cut from the company in order to save GBP 400mln. Volkswagen (-0.5%) is pressuring the DAX (-0.3%) as the company was handed a EUR 1bln fine over the emissions scandal. GlaxoSmithKline (+0.7%) is propping up the FTSE 100 as the co. reported positive top-line results for its Gemini 1&2 studies, as well as competitor Mylan failing in a generic competitor for its blockbuster asthma treatment. This however is negated by the effect of a rising GBP following retail sales beats, with the FTSE 100 the underperforming bourse (-0.7%).

Top European News
  • U.K. Retail Sales Climb as Weather, Royal Wedding Boost Spending
  • Aveva Soars After Strong Full-Year Earnings Top Expectations
  • Rolls-Royce to Slash Thousands of Jobs in Latest Overhaul
  • Talk of June Hike Flags Hawkish Shift for Czech Rate Setters
  • Moscow Financier Goes AWOL as Global Clients Hunt for Millions

In FX, the DXY index and Dollar overall has settled lower after some volatile moves in wake of the FOMC and despite an upgrade to dot plot rate projections from 1 more hike this year to 2, with some market observers pointing to the more dovish elements of the latest policy pronouncements, like the marginally smaller than forecast OIER tweak and ongoing symmetry around the inflation target, along with the various trade/tariff rifts between the US and other nations of course. Whatever the rationale, the DXY has retreated further from recent peaks just shy of 94.000 to sub-93.500 and remains on the back foot ahead of the ECB and US retail sales data later today. GBP: Exceptionally strong UK retail sales data has boosted the Pound with Cable up to 1.3445 and Eur/Gbp back under 0.8800 as flagging BoE rate hike prospects get a partial reprieve. However, macro developments over the weak as a whole have been somewhat mixed and do not really change the near term outlook materially. JPY: From zero to hero, or at least one of the main G10 beneficiaries of the Greenback’s post-Fed about turn, as the headline pair retreats sharply from Wednesday’s circa 110.70 highs to sub-110.00 and from a chart perspective back down below a key fib level (110.62 – 76.4% retracement of 111.39-108.12 decline). Tech bears are now eyeing another fib at 109.62 (50% of the rally from 108.12 to 110.85), but the next fundamental driver for the Jpy could come via the BoJ on Friday and there are also mega option expiries to consider around the big figure (3bln from 109.90-110.05).

In commodities, in energy markets, Brent is down 0.2% on the day, and its US counterpart +0.1% on a softer USD. Traders are also looking ahead to developments that may come from the Saudi-Russia meeting on the sidelines of the World Cup which kicks off today. In the metals scope, gold is up on the day hitting 2 week highs as investors flock to safe havens ahead of the ECB’s rate decision, as well as having support offered by a softer USD and trade concerns. The yellow metal is up 0.2% on the day. Copper has fallen to a near one week low after weak Chinese industrial data. Steel is in the green for the 3rd straight session after China has said it will introduce a new capacity limit in certain areas.


US Event calendar
  • 8:30am: Retail Sales Advance MoM, est. 0.4%, prior 0.3%; Retail Sales Ex Auto MoM, est. 0.5%, prior 0.3%
  • Retail Sales Ex Auto and Gas, est. 0.4%, prior 0.3%; Retail Sales Control Group, est. 0.4%, prior 0.4%
  • 8:30am: Import Price Index MoM, est. 0.5%, prior 0.3%; Import Price Index ex Petroleum MoM, est. 0.2%, prior 0.1%
  • Export Price Index MoM, est. 0.3%, prior 0.6%; Export Price Index YoY, prior 3.8%
  • 8:30am: Initial Jobless Claims, est. 223,000, prior 222,000; Continuing Claims, est. 1.73m, prior 1.74m
  • 9:45am: Bloomberg Consumer Comfort, prior 54.8
  • 10am: Business Inventories, est. 0.3%, prior 0.0%

DB's Jim Reid concludes the overnight wrap
As an Englishman working for a German bank there can only be one team that I can predict to win the World Cup that starts today.....
..... Yes Brazil.

I think they’ll beat Germany in the final and France will finish 3rd and Spain 4th. England (who have actually only won 1 of their last 8 World Cup matches!) will likely lose on penalties in the quarter final and lots of people will cry. Actually I haven’t worked out if my top 4 ordering is possible or realistic given the groups but that’s never stopped me making research predictions in the past. Please feel free to send in who you think will win and we’ll do a bar chart of the distribution of answers in tomorrow’s EMR. One word answers are fine unless of course you expect Costa Rica, South Korea or Saudi Arabia to win and then you’ll need two. The event officially kicks off this afternoon with hosts Russia taking on Saudi Arabia at the Luzhniki Stadium in Moscow. It’s not exactly a heavyweight opening tie given that these are the two lowest ranked sides in the tournament with a combined FIFA ranking of 137 but at least they were kind enough to schedule it after the ECB press conference finishes.

I’m actually writing this coming home from a late dinner so I’ll leave you in the capable hands of Craig and Jeff for the rest of the EMR today.

See you tomorrow. Over to them.

As Jim discussed above the highlight today is the supposed ‘live’ ECB meeting. We’ll preview that shortly but firstly to the Fed where last night as expected the FOMC raised rates by 25bps but the bigger story was the overall fairly hawkish message. Indeed the median dot for this year nudged up to 4 from 3 while the 2019 dot also moved up to 3 hikes which is a bit more of a surprise. Forward guidance was changed to omit language saying that the fed funds rate would remain “for some time” below longer-run levels while inflation language was also upgraded to remove “carefully monitoring”. One interesting point was that the Fed also marked down unemployment rate forecasts but didn’t lower NAIRU which is making for an interesting debate amongst economists.

As for Fed Chair Powell, well he confirmed that there will now be a press conference after every meeting beginning next year. He rightly downplayed any policy read-through but it could provide greater flexibility for a faster pace of rate hikes next year if inflation begins to respond to the tightening labour market. The tone of the rest of his conference felt like one where by the Chair was seeking to downplay the hawkish signal despite the dots moving. Indeed he said that the Fed is “not ready to declare victory on inflation” and shortly after when questioned on the neutral rate, answered in a way which kept the Fed’s options sufficiently open without committing at all. DB’s Peter Hooper also believed the meeting and Fed forecasts were more hawkish than expected. He added that Mr Powell didn’t seem to be too concerned about downside risks associated with trade policy or Italy. Overall, Peter and his team believes four rate hikes (2 more) this year seem pretty well baked in and continue to expect four more rate hikes next year. Refer to his note for details.

As for markets, well despite the hawkish bias moves were hardly exaggerated. Perhaps this reflects the fact that the hurdle to an even more hawkish Fed is a lot higher now than the one just passed. Looking across the yield curve the biggest move was at the short end with 2y yields finishing 2.9bps higher at 2.569% although a small rally for this morning has pared much of that. 10y yields by comparison finished just 0.6bps higher at 2.967% after passing but failing to hold above 3%. The 2s10s spread fell below 40bps for the first time since September 2007 while at the long end 30y yields actually fell slightly (-0.8bp to 3.087%). The 5s10s spread is also at a miniscule 14bps. It’s worth noting that Powell again acknowledged the yield curve but merely said that it’s something people are talking about a lot”. Meanwhile, equities suffered from a bit of a late collapse which might have more to do with the Trump interview headlines which came out post the Fed suggesting that he’ll confront China “very strongly” over trade in the coming weeks and that China “could be a little bit upset”. The WSJ also reported that the US plans to announce a final list of tariffs targeting $50bn of Chinese goods as early as Friday, with implementation subject to Trump’s approval. The S&P 500 fell for only the second time in 9 sessions (-0.40%), with only consumer discretionary stocks in the black. The Dow (-0.47%) and Nasdaq (-0.11%) also closed lower.

In other markets EM FX was weaker although we will likely have to wait for today to see the full extent. Overnight in Asia the tone is a bit more negative with the Kospi (-1.63%) playing a bit of catch up as trading resumed today, while the Nikkei (-0.49%), Hang Seng (-0.62%) and ASX 200 (-0.14%) are all down. The Shanghai Comp (-0.28%) has swung about a bit after the PBOC refrained from immediately lifting the cost of reverse repo agreements following last night’s Fed rate hike but then China’s May activity indicators disappointed across the board. More details on that data further down. In a busy overnight session, the BoJ has also announced that it is lowering purchases of 3-5y JGBs. The Yen is slightly stronger at the margin although JGBs haven’t moved much.

Moving on. As a side note, last night’s Fed hike means that we’ve now seen a total of 15 rate hikes in 2018 from the 23 biggest central banks around the world for which we have data for. This compares to just 7 rate cuts. So the ratio of hikes to cuts is now 2.1x which is the highest since 2011, when it was also 2.1x. Despite being less than 50% of the way through 2018 the 15 hikes are only 5 less than the total in 2017 and more than 2016 (14 hikes) and 2015 (10 hikes), in line with 2014 (15) and more than 2013 (9) and 2012 (1). In fairness a lot of the 2018 story has to do with EM central banks tightening to help combat various currency crises. If we look at developed market central banks only which we count as 9 of them, then we’ve only had 3 hikes (2 from the Fed and 1 from the BoC). Still, that compares to 0 cuts but there’s still a way to go to match the 2017 ratio of 7 hikes to 0 cuts from developed market central banks.

Coming back to the ECB then, as DB’s Mark Wall noted in his preview of the meeting, Peter Praet’s speech last week means that no one will be able to claim surprise if the ECB announce the end of QE today. Mark adds that it is difficult to dispute the signal in Praet’s comments but the question is not whether an exit decision is close but what could stall the decision temporarily. His note which you can find here (link) runs through two dovish scenarios. In the first scenario the ECB judges the exit criteria to be met but stalls the exit decision for a couple of months to confirm the criteria are being met sustainably. In the second the ECB stalls for input from the internal committees on the post-QEpolicy stance.

Mark notes that the ECB has tended to smooth exit decisions with dovish counterbalances and in his speech Praet underlined again the importance of reinvestments and a recalibration of forward guidance post-QE. For choice Mark thinks the QE exit decision will be made in July but caveats that it’s a very close call. Irrespective, he still believes that QE will end in December after a taper in Q4 followed by a first policy rate hike in June 2019. Anyway we’ll know more this afternoon with the meeting due at 12.45pm BST followed shortly after by Mario Draghi’s press conference.

With regards to other markets yesterday, well it was very quiet in Europe which isn’t a great surprise given most investors were sitting on the sidelines pre-Fed. The Stoxx 600, DAX and CAC finished +0.19%, +0.38% and -0.01% respectively. The FTSE MIB (+0.44%) outperformed and closed higher for the third consecutive day – the first time in a month that has happened. Sovereign bonds were a bit stronger at the margin.

10y Bunds finished 0.9bps lower at 0.478% while BTPs finished 4.7bps lower at 2.795%, in part as Italy’s new EU Affairs Minister Paolo Savona said the Euro was “indispensable”. It’s also worth noting that BTPs passed a heavy supply day with reasonable ease yesterday.

Elsewhere EM FX was again fairly calm pre-Fed, certainly at least relative to recent weeks, although the exception continues to be Turkey where the Lira weakened another -1.09%. It’s now weakened -3.89% in the 3 days this week while 10y yields also rose 8.4bps. Keep in mind that Turkey’s central bank has jacked up rates by 500bps recently. As we’ve said in recent weeks the EM issues haven’t yet spread to other asset classes but it’s certainly bubbling below the surface.

Meanwhile the Oil complex was slightly stronger yesterday with WTI up +0.80% from the intraday lows and it’s worth noting that Oil could be back in the spotlight today with Russia President Vladimir Putin due to meet Saudi Crown Prince Mohammed bin Salman with the pair planning to discuss the OPEC accord and Oil markets. So worth watching out for any headlines. The OPEC-Russia oil exporting group is then scheduled to meet next Friday.

Away from markets, the most significant data print yesterday was the May PPI report in the US which was mostly a mixed bag. Headline PPI surprised to the upside at +0.5% mom (vs. +0.3% expected) however the ex food, energy and trade services reading was softer than expected (+0.1% mom vs. +0.2% expected). Notably, healthcare PPI (which is used by the BEA to construct the health care services series in the core PCE deflator) was even softer at -0.26% mom – the biggest fall since October 2014.

In contrast, the inflation data in the UK yesterday was pretty much bang on expectations. The May headline and core CPI were both in line and steady on month on month, at +0.4% mom and +2.1% yoy, respectively. Meanwhile, the May RPI edged down 0.1ppt from April to an in line print of +0.4% mom while the core PPI was also in line at +0.2% mom, although prior downward revisions led to a lower than expected annual growth of +2.1% yoy (vs. +2.5% expected). Elsewhere, the Euro zone’s April IP was weaker than expected at -0.9% mom (vs. -0.7% exoected), leading to annual growth of +1.7% yoy, down from +3.2% previously.

Finally in China this morning, as noted at the top the activity data was pretty much softer everywhere you look. May retail sales expanded at a slower than expected rate of +8.5% yoy (vs. +9.6%) and fell from +9.4% in the month prior. Meanwhile, industrial production was also below market (+6.8% yoy vs. 7.0% expected) and down two-tenths from the month prior, and fixed asset investments posted the slowest increase since 1999 (+6.1% yoy vs. +7.0% expected and in the previous month), weighed down by investments in the public sector.

Looking at the day ahead now, the focus is obviously on the ECB with their latest monetary policy meeting due in the early afternoon, followed by President Draghi's press conference. Prior to that though we are due to get final May CPI revisions in Germany and France. In the UK May retail sales data is due while in the US the main data release is also the May retail sales report. The May import price index reading is due too in the US along with weekly initial jobless claims and April business inventories data.

And for supporters of Russia and Saudi Arabia, good luck tonight!

https://www.zerohedge.com/news/2018...ers-prepare-weeks-final-surprise-mario-draghi
 

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Asian Metals Market Update: June 14 2018
By: Chintan Karnani, Insignia Consultants
The European Union, the Chinese and Canada have not yet started significant counter sanctions on US goods and US corporations. The negative effect on certain US corporations will be felt in the coming months and not now. (2) Nymex crude oil up to $80 will not shake US economic growth. It will only affect emerging market nations and emerging market currencies. The US economy will slow down if nymex crude oil trades over $80 for a few months.
 

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TVR [#519] 06-14-2018 END OF DAY REPORT: PM'S BREAKOUT WILL BITCOIN FOLLOW?
ALGO CAPITALIST


Published on Jun 14, 2018
Please remember to RATE, SHARE, FAVORITE, COMMENT AND SUBSCRIBE.
 

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How the West Can Counter China’s Maritime Expansion
June 14, 2018 by Bloomberg





by Hal Brands (Bloomberg) In previous articles I’ve explored the changing nature of China’s challenge to U.S. interests and the existing international order, with a particular focus on three issues: China’s progressively more global military ambitions, its promotion of authoritarianism and subversion of democratic practices abroad, and its efforts to build new international institutions more responsive to its own interests.

All of this is in addition to other, more familiar aspects of the Chinese challenge: Beijing’s efforts to overturn the military balance in the Western Pacific, its coercion of U.S. allies and partners, and its audacious plans to establish economic dominance in an array of critical sectors.

American officials have known for many years that China would eventually be a force to reckon with in global politics. But how rapidly and expansively that challenge has emerged has nonetheless been striking.

The previous three articles were devoted largely to diagnosis rather than prescription. Now I turn to the matter of solutions: How to deal with a China that is putting U.S. leadership and international order under stress on a variety of fronts at once.

Doing so will be no easy task, but neither should it be considered impossible. Although some observers argue that the U.S. and its allies have little choice but to stand aside as the Chinese juggernaut advances, the fact is that Washington and its friends still control a clear preponderance of global power. If they can get their act together, they ought to be able to protect their interests and defend the international system that has benefitted them all so enormously for the indefinite future. Here are some basic guidelines.

First, with respect to China’s expanding military footprint, it is important to remember that this trend is not all bad, at least in the short term. A dollar that China spends on prestige capabilities such as a vulnerable aircraft carrier is a dollar it may not be able to spend on the more lethal anti-access/area-denial capabilities that could give U.S. forces fits in the Western Pacific.

Yet Washington still needs to be begin thinking about a future in which Beijing can create global dilemmas by projecting power outside the Western Pacific, contesting control of sea lanes in the Indian Ocean and beyond, and perhaps establishing a more significant presence in regions as far afield as Africa or even Latin America.

How can the U.S. and its allies safeguard their global freedom of action in light of this emerging challenge? It may not be strictly or even primarily a military task.

China will struggle to project power globally without foreign bases, and preventing key countries from granting those installations may be something that requires skillful diplomacy and economic assistance more than the application of force. But regardless of the method, such efforts will represent an important facet of U.S.-China competition should Beijing’s military capabilities and horizons continue to expand.

Second, the U.S. needs to embrace the ideological dimension of the competition. The idea of waging a protracted ideological struggle is out of fashion, largely because of the hangover from the Iraq and Afghanistan wars.

But putting those conflicts aside for a moment, the fact remains that America’s democratic values have long represented an ideological and geopolitical advantage over its authoritarian rivals. Conversely, if China is successful in distorting democratic practices and making the world safer for autocracy, U.S. influence will suffer.

Granted, there may be cases where solicitude for human rights and democracy cannot trump all other concerns. There is simply not an enormous amount Washington can do to pressure the Philippines’ quasi-authoritarian leader, Rodrigo Duterte, or Thailand’s military junta right now without further compromising its strategic position in Southeast Asia.

But the U.S. and its partners can still highlight the authoritarian, brutal aspects of Chinese rule; they can publicly expose and constrain Chinese efforts to distort democratic debate within their own societies; they can, in many cases, provide moral and material support to democratic actors in countries where democratic governance is either in danger or struggling to take hold.

This is not Wilsonianism run amok. It is good practice in dealing with an authoritarian challenger that is not shying away from ideological competition.

Third, regarding the rival institutional order that China has begun to build, the key is to offer attractive alternatives to countries that are faced with hard choices. Over the past year, I have heard numerous U.S. and allied officials say that smaller, poorer states in the Indo-Pacific region and elsewhere do not necessarily want to tilt toward Beijing economically and geopolitically.

They often recognize the danger of debt traps that will spring shut when large loans cannot be repaid. And several strongly object to Beijing’s expansive claims on the South China Sea.

Nonetheless, they feel that they cannot say no to Chinese engagement and assistance — even when they recognize its potentially predatory dimensions — given their economic needs. If America and other liberal powers do not strengthen bilateral and multilateral development lending to pivotal countries, if they do not push forward with the trade arrangements that give nations in the Asia-Pacific and elsewhere options other than being pulled into Beijing’s orbit, if they do not reinvest in the U.S.-led institutions China is challenging such as the World Trade Organization and the Asia-Pacific Economic Cooperation forum, they will not have much luck stemming the Chinese tide.

This leads to a final point, which is that accomplishing any of the tasks outlined here will require a seriousness of purpose and an integration of national power that, under the current U.S. administration, has been painfully lacking.

To be fair, the Defense Department is rightly refocusing on long-term competition with China. The White House also deserves some credit (although Congress deserves more) for bringing a years-long period of U.S. military austerity to an end.

Yet the Trump administration has also overseen a disinvestment in and denigration of diplomacy; the careless discarding of America’s best tool of geo-economic competition with China, the Trans-Pacific Partnership trade deal; and a striking indifference, at least on the part of the president himself, to the role that American values have long played in accentuating U.S. power.

Moreover, although the administration has admirably declared its intention to confront unfair Chinese commercial practices, it has simultaneously undercut the multilateral democratic unity necessary to do so by pursuing trade policies that threaten to injure allies such as Japan as much as they will hurt China.

The U.S. and its friends will find it hard enough to address the difficulties China poses if they cooperate effectively and bring all the elements of their influence to bear. They will find it far, far harder if they don’t.

http://gcaptain.com/how-the-west-can-counter-chinas-maritime-expansion/
 

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Futures Slide On Quad-Witch Friday As US-China Trade War Begins; Chinese Stocks Tumble


by Tyler Durden
Fri, 06/15/2018 - 07:23


Bulletin Headline Summary from RanSquawk
  • US President Trump set to impose USD 50bln of tariffs on Chinese imports
  • BoJ keeps monetary policy unchanged as expected but cut its assessment on inflation, ECB’s Nowotny underlines QE and rate guidance
  • Reports that Germany’s CSU/CDU alliance is at breaking point flatly denied
  • Looking ahead, highlights include, Russian rate decision, US NY Fed mfg PMI, industrial production, Uni. of Michigan, Baker Hughes, quadruple witching
On this quad-watching Friday, U.S. equity futures slide alongside Asian and European shares, after a torrid week full of political news and central bank developments, with Friday now anxiously eyeing the start of trade war between the US and China.

As reported overnight, it is now a done deal that President Trump will impose tariffs on $50BN of Chinese imports, with Chinese retaliation imminent. However, what hit S&P futures and sent the dollar sliding from 2018 highs was a subsequent report from Reuters that Trump is also preparing to release a second list for $100BN in Chinese tariffs which will target technologies Beijing hopes to be a leader in and which is expected to be enacted in about 60 days. In response, China's Foreign Ministry said that if the U.S. rolls out new tariffs, all previous bilateral agreements on trade will not come into effect; China will take “appropriate measures”. As a result markets are slowly starting to price in a messy collapse to all the ongoing trade negotiations between the US and China, which initially sent the dollar lower, but expect the move to be completely unwound once markets start scrambling for safe assets. Remember: full blown trade war is the best thing that can happen for the dollar.





Meanwhile, the European session caught between the ECB re-pricing in its dovish QE end, which sent the EUR lower, and tariff-related fears which in turn pushed the common currency higher and the USD/JPY through overnight Asian session low. The Stoxx 600 index fell 0.4%, led lower by the banking sector as Thursday’s signal from the ECB that interest rates will stay at historic lows through the summer of 2019 or longer was seen as a negative surprise for the sector’s profit recovery. The SX7P Stoxx bank sector index is down 2.1%, falling back toward a 1-1/2 year low hit in late May; sector is down 17% since year- high reached in January, and is the worst European sector YTD.

The European short-end continues to price out rate hike expectations while peripheral EGBs remain well-supported led by Italy as the dovish taper is seen as conducive for at least some more carry, until the market violently realizes that the party is almost over. Still, European core equity markets were well off the highest levels in reaction to the imminent launch of trade war.

The Euro suffered further drama just after 6am EDT when Germany's Hessischer Rundfunk radio reportedly said the CSU interior minister has announced the end of the CDU alliance in an internal message, however this was denied by a senior CSU lawmaker, but not before the EUR took a sharp dive lower.




Meanwhile, over in Asia, despite the PBOC's dovish decision not to follow the Fed's rate hike (risking another bur st of capital outflows), a 90BN yuan net liquidity injection and rumors that an RRR cut may be just around the corner, the Shanghai Composite Index fell to the lowest since September 2016, back toward the 3,000 level supported by the government's plunge-protection "national team" in the wake of Thursday's ugly economic data and as the U.S. prepared to release a list of Chinese goods that will face tariffs, while also putting together a 2nd round. As a result, the Shanghai Composite dropped as much as -1% at 3,014.before closing down 0.7% to 3,021.90, headed for fourth weekly loss, the longest downward run this year.


Source: @YuanTalks

Also overnight, the BoJ kept its monetary policy unchanged as expected with NIRP held at -0.1% and 10yr JGB yield target at around 0%, while the decision was made by 8-1 vote with Kataoka the dovish dissenter again. While the BoJ maintained its assessment of Japan's economy which it stated is expanding moderately, the central bank cut its assessment on inflation and said that inflation expectations are proceeding sideways. The news sent the Yen sliding to session lows.

In macro trading, the dollar came under pressure as the abovementioned trade war concerns came back into the spotlight after President Donald Trump approved tariffs on Chinese goods worth about $50 billion and Reuters reported a second list twice the size was in the making. This helped the yen and the euro reverse early declines, with the euro rebounding from a two-week low of $1.1543 to a $1.1615 day high while keeping U.S. stock futures and emerging-market currencies under pressure. ECB aftermath also saw euro-area bonds trading in the green, with Treasuries following suit.

Despite the overnight setback to the USD, the greenback is still set for its best week since November 2016 as meetings of the Fed, ECB and BOJ highlighted the policy divergence in favor of the dollar. The yen bounced on haven demand after earlier slipping following the BOJ downgrading its inflation assessment, which intensified perceptions it’s in no hurry to exit its stimulus policy. Aussie and kiwi extended losses under weight of momentum selling by leveraged funds. After touching a two-week low of $1.3212, the pound reversed the drop to hit a new day high of $1.3292.

For at least a few hours, the bloodbath in Emerging Markets has halted although we expect it to resume shortly.

Euro-area government bonds rallied as traders pushed back bets for the timing of the ECB’s first interest-rate increase to December 2019, with Italy leading regional gains and the yield on bunds falling as much as 5bps; the yield on 10-year Treasuries fell 2bps to 2.92%

In other central bank news, ECB's hawk Ewald Nowotny said inflation is in line with the ECB's target, adds ECB is beginning normalization without setting off a taper tantrum, sees a trend toward USD appreciation. Over in Russia, the Russian Interest Rate Decision came in as expected at 7.25% vs. Exp. 7.25% (Prev. 7.25%) note, with analysts generally split between unchanged and a 25bps cut.

WTI crude is negative on the day as the week end approaches, with WTI -0.2% and Brent -0.7%, as investors look forward to further developments of the OPEC cut deal, OPEC’s meeting late next week, and rig counts later in the day. In the metals scope Gold is stagnant at ~USD 1300/oz. Steel has hit over 9 month highs as Chinese property data posted firm results, and is set to be in the green for the 3rd straight week. Copper is in the red for the second session in a row a growth concerns in China are rocking the metal.

Expected data include Empire Manufacturing survey, industrial production, and University of Michigan Consumer Sentiment Index. Canada Goose reports earnings

Market Snapshot
  • S&P 500 futures down 0.4% to 2,778.75
  • MXAP down 0.2% to 172.77
  • MXAPJ down 0.4% to 562.60
  • Nikkei up 0.5% to 22,851.75
  • Topix up 0.3% to 1,789.04
  • Hang Seng Index down 0.4% to 30,309.49
  • Shanghai Composite down 0.7% to 3,021.90
  • Sensex down 0.4% to 35,469.55
  • Australia S&P/ASX 200 up 1.3% to 6,094.03
  • Kospi down 0.8% to 2,404.04
  • STOXX Europe 600 down 0.05% to 392.85
  • German 10Y yield fell 3.8 bps to 0.388%
  • Euro up 0.2% to $1.1592
  • Italian 10Y yield fell 6.7 bps to 2.47%
  • Spanish 10Y yield fell 7.8 bps to 1.271%
  • Brent futures down 0.8% to $75.30/bbl
  • Gold spot down 0.2% to $1,300.13
  • U.S. Dollar Index down 0.2% to 94.72
Top Overnight News from Bloomberg:
  • Trump has approved tariffs on Chinese goods worth about $50 billion, said a person familiar with the decision, ratcheting up a confrontation with Beijing. The U.S. is also nearing completion of a second list of tariffs on products from China worth an additional $100 billion, which would be subject to the same public hearing process as the first, maybe taking 60 days or more, Reuters reported on Friday
  • Mario Draghi put the ECB on the road to raising rates, though he may never get the chance to complete the journey. Sixteen months before his crisis-marked tenure at the central bank draws to a close, he has shifted the ECB back toward using borrowing costs as the main policy tool
  • ECB’s Nowotny: inflation target has been achieved; full policy normalization will take significant time
  • BOJ: policy unchanged, vote 8-1 as expected; downgrades CPI assessment to range of 0.5% to 1.0% (from ~1%)
  • Eurozone May CPI unrevised y/y at 1.9%; Core CPI unrevised 1.1%
  • German Chancellor Angela Merkel refused to back down in a clash over migration policy with her Bavarian allies, heightening the risk of a political crisis that could threaten her 13-year hold on power
  • Argentina’s central bank is getting a new chief after the monetary authority failed to stop the peso’s plunge despite obtaining the biggest loan in the history of the IMF
  • Senior European Union officials have informally discussed whether the U.K. might need to stay in the bloc past March 2019 if Brexit negotiations don’t accelerate over the summer.
  • Saudi Arabia is more confident than ever it can deliver the OPEC production increase that oil consumers have been demanding
  • Pro-European lawmakers in U.K. Prime Minister Theresa May’s Conservative Party are calling for new talks to reach a compromise on her key Brexit law, in an effort to avoid a potentially damaging showdown next week
  • U.S. economy is sprinting ahead of the rest of the world, at least for now. Spurred by solid consumer spending, the U.S. is increasingly likely to rack up growth of at least 4% in the current quarter
Asian equity markets were somewhat mixed as the region digested the fallout from the ECB, while participants also mulled over Trump’s decision to impose tariffs on China. ASX 200 (+1.3%) and Nikkei 225 (+0.5%) traded higher with Australia the outperformer on broad gains across all sectors. Elsewhere, Hang Seng (-0.4%) and Shanghai Comp. (-0.7%) were lower despite the PBoC conducting a net weekly injection of CNY 240bln and Pledged Supplementary Lending operation, as Trump’s decision to impose tariffs on USD 50bln of Chinese goods overshadowed the central bank’s liquidity efforts. Finally, price action in 10yr JGBs was uneventful throughout the morning amid gains in Japanese stocks and with participants side-lined prior to the BoJ conclusion, although JGBs later saw mild support on following the BoJ announcement in which the central bank kept policy unchanged but downgraded its assessment on inflation. PBoC injected CNY 50bln via 7-day reverse repos, JPY 30bln via 14-day reverse repos and CNY 20bln via 28-day reverse repos, for a net weekly injection of CNY 270bln vs. last week's CNY 300bln net drain. PBoC also announced a CNY 60.5bln Pledged Supplementary Lending facility operation. PBoC set CNY mid-point at 6.4306 (Prev. 6.3962).

Other Asian News

  • BOJ Keeps Policy Unchanged, Downgrades Assessment of Inflation
  • Emerging-Market Strains Deepen With Argentina in Tantrum
  • Shanghai Stocks Hit Lowest Since 2016 as Trump Tariff List Looms
  • Ritz-Carlton Crackdown Haunts Crown Prince’s New Saudi Arabia

European stocks are mixed in the wake of a rally driven by the ECB policy announcement in yesterday’s trade. The outperforming bourse is currently the CAC (+0.2%) with the IBEX (-0.8%) underperforming on the back of poor Spanish bank performance (Bankia -2.0%, Santander -1.8% and BBVA -1.3%). Lower yields are weighing on the baking sector as a whole, with the EU financial sector underperforming. The energy sector is seeing some pressure from lower oil prices. Rolls Royce (+10.0%) is leading gains as the co. affirmed FCF guidance for 2018, and outlined a mid-term ambition to deliver GBP 1 per share of FCF. Tesco (+2.2%) is also up on the back of positive earnings results and encouraging comments on the Bookers merger. H&M (-4.5%) reported uninspiring earnings and are negative for the day.

Other European News
  • European Banks Tumble as Hopes for Early Rate Hike Evaporate
  • Euro-Area Bonds Rally as Traders Push Back ECB Rate- Hike Bets
  • Steinhoff Sells Loss-Making Austrian Unit to Rene Benko’s Signa
  • Merkel Courts Government Crisis in Refugee Clash With Allies

In FX, the DXY hit fresh 2018 highs for the index around 95.140 before a retracement back below the 95.000 mark amidst latest US vs China tariff talk ahead of the anticipated announcement targeting an initial $50 bn goods. However, the Greenback is still firmly bid against the bulk of its rivals on further divergence in monetary policy following this week’s FOMC rate hike and shift to tighter guidance for H2 this year.

Technically, DXY bulls will be eyeing 95.150 and then 95.470 assuming no major trend reversal and or deeper Usd pull-back. EUR - Extended post-ECB losses for the single currency and a concerted attack against barrier defences vs the Greenback at 1.1550, but only a minor breach and subsequent recovery to just over 1.1600. However, the Eur still looks heavy across the board in wake of Thursday’s dovish QE unwind from the ECB and rate guidance flagging a 6+ month gap between the end of asset purchases and first tightening move. For reference, 1.1510 is the ytd low and in terms of option expiries, 1.4 bn at the 1.1600 strike could be influential, but also 1 bn in Eur/Jpy at 127.50 as the cross straddles 128.00. No reaction to unrevised Eurozone inflation data or relatively hawkish comments from ECB’s Nowotny who also noted the Dollar’s stronger trend, but selling and buying in fast market conditions on reports about Germany’s CDU/CSU partnership ending were swiftly “rubbished”. AUD/NZD/CAD - All victims of the Usd rally to new ytd peaks as the Aud loses grip of another big figure to test support ahead of 0.7450, but actually holds up better than its NZ peer in a role-reversal with the Kiwi failing to stay above 0.7000 and down through 0.6950, and the Aud/Nzd cross bouncing off 1.0700. Meanwhile, the Loonie continues to languish post-G7 with the US-Canada row hardly conducive to resolving NAFTA issues, and Usd/Cad has climbed just over 1.3150 accordingly to expose 1.3165 chart resistance ahead of 1.3200.

In commodities, oil is negative on the day as the week end approaches, with WTI -0.2% and Brent -0.7%, as investors look forward to further developments of the OPEC cut deal, OPEC’s meeting late next week, and rig counts later in the day. In the metals scope Gold is stagnant at ~USD 1300/oz. Steel has hit over 9 month highs as Chinese property data posted firm results, and is set to be in the green for the 3rd straight week. Copper is in the red for the second session in a row a growth concerns in China are rocking the metal.

Looking at the day ahead, the final May CPI revisions for the Euro area will be made along with that for Italy. In the US we'll get June empire manufacturing, May industrial production and the preliminary June University of Michigan consumer sentiment survey. Elsewhere, the ECB’s Coeure will speak today.

US Event Calendar
  • 8:30am: Empire Manufacturing, est. 18.8, prior 20.1
  • 9:15am: Industrial Production MoM, est. 0.2%, prior 0.7%; Manufacturing (SIC) Production, est. 0.05%, prior 0.5%
  • 10am: U. of Mich. Sentiment, est. 98.5, prior 98; Current Conditions, prior 111.8; Expectations, prior 89.1
  • 5%
  • 4pm: Total Net TIC Flows, prior $38.5b deficit; Net Long-term TIC Flows, prior $61.8b
DB's Jim Reid concludes the overnight wrap
Thanks for all the responses on who will win the World Cup from yesterday. In the sad absence of Paul the Octopus this will have to do. The order was as follows Brazil (24%), France (23%), Germany (14%), Spain (11%), Belgium / Argentina (both 7%), Iceland (4%), and with Switzerland, Portugal, Russia and Croatia also picking up a few votes. As you can see no-one voted for England. Interestingly I did the same exercise 4 years ago and back then Brazil (31%) pipped the eventual winners Germany (29%) as the EMR reader's favourites. Next came Holland (9%), Spain (7%), Argentina (6%), Belgium (4%), Italy (4%), France (3%), Uruguay (2%), with Greece, Ivory Coast, Russia, Cameroon, Switzerland and the US all below 1%. Again no votes for England. We obviously have long standing astuteness in the readership. Today’s big game is Portugal vs Spain which I’ll miss as I have my bi-annual night out alone with my wife. We have deliberately not been talking to each other all week so we hopefully have plenty to say to each other tonight.

A relaxing meal will be nice after ‘super week’ which although starting a bit slow has livened up over the last 36 hours. The combination of a hawkish Fed on Wednesday and a creatively dovish ECB yesterday has certainly increased activity although the extraordinary move from the ECB might depress volatility for a while until we get new news.

The fun and games started immediately with the statement with the big change being the inclusion of the reference “the Governing Council expects the key ECB interest rates to remain at their present levels at least through the summer of 2019 and in any case for as long as necessary to ensure that the evolution of inflation remains aligned with the current expectations of a sustained adjustment path”. The big shock was that inclusion of calendar based guidance on rates which is the first time the ECB has done such a thing and is a material evolution to the policy framework. The timing implies sometime between end Q2 and start Q3 depending on how you define “through the summer” however market pricing for a full 10bp hike had been closer to sometime just after midway through next year pre ECB with the June 2019 contract for example previously implying a 76% chance of a 10bp hike. Needless to say markets have pushed that back with June now at closer to 30%. Clearly the ECB can still push back this date if risks to the economy materialise but they’ve made it very tough to be hawkish for at least a year now.

I can’t help but feel a bit uncomfortable with this move though. When I was first taught economics - when the last century still had a fair bit of road left to travel - the school of thought at the time was that central banks should keep an element of surprise to their policy. However the ECB are increasingly at the other end of the spectrum. Indeed what happens if inflation edges up unexpectedly over the next 12-15 months. Do you simply say we’ve promised the market we won’t raise rates from the emergency negative yield levels or do you break your promises? If policy making was this easy you would permanently offer such guarantees. There is a reason you don’t. We’ll see if it ends up being a smart move or whether it backfires.

The other dovish element yesterday was the taper reference. It was no surprise to see the ECB announce a cut to €15bn/month from September (with QE ending in December) but the caveat was that it would still be “subject to incoming data confirming the Governing Council’s medium-term inflation outlook”. So this is was very much a conditional taper. Those were the two main developments. In his press conference Draghi confirmed that the ECB didn’t discuss when or if to raise rates but also that the decision on changes to forward guidance was unanimous which is notable given that this implies even the most hawkish members were on board. He was also asked if “through the summer” means September to which Draghi replied “if it had meant September we have said September” and that the choice of language was “intentionally not precise”.

Moving the focus to the corporate part of the ECB QE, Michal in our eam published the report “IG Strategy: Draghi Conjures up a Dovish QE/CSPP Taper” which summarises his latest views on what yesterday’s taper announcement means for corporate credit. It highlights that the ECB still has the option to allow reinvestments across QE programmes later in the year, which would enable it to rotate some maturing govies into corporate paper next year. If no such rotation takes place, the report shows there will be an abrupt fall in CSPP flows in January while PSPP flows would remain relatively material due to much greater redemptions. It also looks at the relative pricing of CSPP-eligible
and ineligible bonds. You can download the full report here.

There was also some interest in the ECB’s economic forecasts yesterday. 2018 growth was revised down three-tenths to 2.1% while 2019 and 2020 was left unchanged at 1.9% and 1.7% respectively. The big (hawkish) surprise was the 2018 and 2019 headline CPI forecasts which were revised up three-tenths to 1.7%. 2020 inflation was left at 1.7%.

As for markets well there’s no doubt that they reacted in a pretty dovish way. The Euro tumbled -1.89%, which is the largest decline since the Brexit vote on June 2016. Bond yields were lower everywhere you looked. 10y Bunds rallied 5.6bps to 0.424% (0.509% on the initial taper headlines). Similar maturity yields in France, Italy, Spain and Portugal were -7.7bps, -6.5bps, -5.9bps and -3.3bps lower respectively. 2y Bunds also fell 3.6bps. Treasuries also strengthened with 10y yields down 3.1bps and they are now 7.1bps off the intraday post-Fed highs.

Meanwhile equities turned on a dime just after the statement was announced. The Stoxx 600 rallied within a +2.17% intraday range before closing up the most since early April (+1.23%). The DAX ended +1.68% (most since 5th April), FTSE MIB +1.22% and IBEX +0.59%. Even the FTSE 100 closed +0.81% while last night the S&P 500 finished +0.25% while the Nasdaq rose to another fresh record high (+0.85%). It’s worth highlighting that while bond-sensitive sectors like utilities led the rally in Europe yesterday, European Banks didn’t really tumble as much as you might expect was the falling yields with the Stoxx Banks index down only -0.21%.

Moving onto trade tensions, WSJ reported overnight that President Trump has already approved higher tariffs on US$50bn worth of Chinese imports, with a final tariffs list on impacted goods to be released today. Conversely, the WSJ also cited unnamed Chinese officials who indicated that China will immediately retaliate with their own tariffs. Back in Europe yesterday, EU countries have unanimously backed a decision to impose import tariffs on US$3.3bn worth of US goods, with plans for it to be effective by early July. This morning, unnamed Mexican officials told Reuters that Mexico may impose higher tariffs on US$4bn worth of US corn and soybeans imports, although conceded this may be a final option as it would also hurt Mexico’s own agricultural industry. Our Chinese economists noted that if the trade war escalates meaningfully between US and China, China may: (1) tolerate the property and land market boom in tier 3 cities, (2) cut RRR twice in the rest of this year; (3) raise central government transfer to cities with worse economic performance.

Overnight in Asia, markets are trading broadly lower with the Hang Seng (-0.13%), Kospi (-0.55%) and Shanghai Comp. (-0.91%) all down while the Nikkei is up +0.39%. The BoJ has voted 8-1 to keep rates steady, but the bank did softened its view on core inflation. It now sees “consumer price growth in a range of 0.5% - 1%” versus its April statement which said “around 1%”. The Yen’s reaction was relatively muted this morning (-0.1%). We shall find out more in Governor Kuroda’s news conference after we go to print.

Back to yesterday. It’s hard to keep EM FX away from the headlines at the moment as yesterday it was the turn of the Argentine Peso to collapse -6.58% versus the dollar, marking another fresh record low. Bloomberg suggested it was press speculation about changes at the central bank which drove the move and even the Finance Ministry’s move to stabilize the fall with a $7.5bn intervention did little to help stem the bleeding.

With the dollar rally and euro weakness EM FX in Eastern Europe also had a difficult time yesterday with the Hungarian Forint (-2.70%), Czech Koruna (-2.23x%), Polish Zloty (-2.06%) and Bulgarian Lev (-1.93%) among the other big fallers.

Meanwhile, WTI oil pared gains as Saudi Arabia’s oil minister said it’s “inevitable” that OPEC members will decide to boost supplies gradually when they meet in Vienna next week, although he added that “I think it’ll be a reasonable and moderate agreement” (+0.38% to $66.89/bbl).

Elsewhere post talks with his Saudi Arabian counterpart, the Russian energy minister Mr Novak noted that “in principle” both nations supported a gradual rise in output, but “specifics will be discussed” next week.

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the headline May retail sales jumped the most since November 2017 as consumers brought more motor vehicles and a range of other goods (0.8% mom vs. 0.4% expected). Core retail sales (ex-auto & gas) was also above market at 0.8% mom, with year to date growth up 5% yoy (vs. 3.9% previous), which puts the year on year pace at the highest since 2006. The weekly initial jobless claims fell to a c44.5 year low (218k vs. 223k expected), while continuing claims (1,697k vs. 1,732k expected) was also lower than expectations. Elsewhere, the April business inventories was in line at 0.3% mom. Following the above,the Atlanta Fed’s estimate of Q2 GDP growth was revised up 0.2ppt to 4.8% saar.

In Europe, the final reading of Germany and France’s May CPI was confirmed at 2.2% yoy and 2.3% yoy respectively, although the monthly rate for France was rounded up to 0.5% mom. Elsewhere, Sweden’s May CPI rose 0.2ppt mom to an in line print of 1.9% yoy. The UK’s May core retail sales was stronger than expected at 1.3% mom (vs. 0.3%) and 4.4% yoy (vs. 2.5% expected), in part due to favourable weather and the Royal Wedding. Meanwhile, the UK’s RICS housing survey was mixed, with slightly fewer respondents reporting prices declines over the past three months but a slightly greater proportion expecting price declines over the next three months.

Looking at the day ahead, the final May CPI revisions for the Euro area will be made along with that for Italy. In the US we'll get June empire manufacturing, May industrial production and the preliminary June University of Michigan consumer sentiment survey. Elsewhere, the ECB’s Coeure will speak today.

https://www.zerohedge.com/news/2018...-china-trade-war-begins-chinese-stocks-tumble
 

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Libya’s Biggest Oil Ports Stop Pumping
June 14, 2018 by Bloomberg



Chart Of Libya via nga.mil

by Salma El Wardany (Bloomberg) Two of Libya’s biggest oil ports stopped loading on Thursday after clashes erupted between rival forces for control of the country’s economic lifeline, taking more barrels off the market just as OPEC debates whether to boost production.

Fighting at Es Sider and Ras Lanuf terminals led to the loss of about 240,000 barrels of Libya’s daily oil production, state energy producer National Oil Corp. said in a statement Thursday. NOC evacuated staff from both terminals, which account for 40 percent of Libya’s oil exports, and declared force majeure on shipments.

The disruptions come a week before OPEC nations hold key meetings in Vienna with other major producers including Russia to discuss if they should stick with a pact to restrain oil supply after prices topped $80 a barrel in May. Oil producers were already facing growing pressure, including from U.S. President Donald Trump, to boost supply to offset disruptions caused by the economic crisis in Venezuela and renewed American sanctions on Iran.

Libya’s oil output has rebounded over the past two years, but remains well below the 1.8 million barrels a day the country pumped before the 2011 campaign to oust Muammar Qaddafi. That NATO-backed war gave way to years of fighting among rival Libyan groups in which the country’s oil installations became prized targets.

Derna Fight
The Libyan National Army, led by self-styled eastern military commander Khalifa Haftar, restored oil exports from Es Sider, Ras Lanuf and other facilities in 2016 after wresting control from another armed group that had blockaded them for two years, devastating the economy and exacerbating political divisions.

The violence on Thursday came as Haftar’s forces seek to capture the city of Derna, further east, and strengthen his political standing ahead of possible elections. The violence has overshadowed last month’s agreement between Haftar and a rival United Nations-backed government in Tripoli to hold ballots in December as part of a broader plan to unify the country and restore peace.

UN-backed Prime Minister Fayez al-Sarraj warned in a Facebook statement that any escalation in fighting could lead to a “civil war all Libyans are trying to avoid.”

Force Majeure
The NOC declared force majeure on shipments at both terminals, according to an emailed statement signed by Chairman Mustafa Sanalla. Force majeure is a legal clause protecting a party from liability if it can’t fulfill a contract for reasons beyond its control.

“The NOC board has called for individuals or political groups who attempt to capture Libya’s oil installations, blockade production, or attempt to make NOC a bargaining chip to be brought to justice,” the company said in a separate statement. It didn’t name the parties behind the clashes. A planned tanker entry to Es Sider has been postponed, it said.

Tanker Minerva Lisa, set to load crude from Es Sider, was instructed to move 10 miles away from the port into deeper water, one person familiar with the situation said. Bloomberg tanker tracking shows the vessel headed away from the immediate vicinity of the terminal early Thursday. Another tanker, Astro Sculptor, set to load oil on June 16 at Es Sider, was canceled, the person said.

Es Sider was set to export 15 crude cargoes, or a total of 9 million barrels this month, while Ras Lanuf was due to ship five cargoes totaling 2.8 million barrels, according to a loading program obtained by Bloomberg.

Haftar’s forces said in a statement that a group known as the Benghazi Defense Brigades had launched the attack, resulting in a fire at a storage tank used by Harouge Oil Co. Storage tanks at the terminals had already been damaged in previous bouts of fighting.

http://gcaptain.com/libyas-biggest-oil-ports-stop-pumping/
 

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Ira Epstein's Morning Flash Update 6 15 2018
Ira Epstein


Published on Jun 15, 2018
Ira Epstein prepares you for today's trading and informs you of market conditions.
 

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How I learned to read -- and trade stocks -- in prison | Curtis "Wall Street" Carroll
TED


Published on May 18, 2017
Financial literacy isn't a skill -- it's a lifestyle. Take it from Curtis "Wall Street" Carroll. As an incarcerated individual, Caroll knows the power of a dollar. While in prison, he taught himself how to read and trade stocks, and now he shares a simple, powerful message: we all need to be more savvy with our money.
 

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Frozen Dreams: Russia's Arctic obsession
Financial Times



Published on Oct 20, 2016
► Subscribe to FT.com here: http://on.ft.com/2eZZoLI

President Vladimir Putin has revived Russia's dreams of exploiting its Arctic territory – boosted by a warming climate that has opened up the Northern Sea Route. The FT travels to remote reaches of Siberia to see if Russia can make it work.
 

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Gold Is “Where It Should Be” - Pierre Lassonde

From my old vantage point, I think he is pretty much correct.

While a much higher gold price is needed to bring bullish sentiment back into the mining space, the yellow metal is already fairly priced, said Pierre Lassonde, Chairman of Franco-Nevada Corp.“At $,1300 [an ounce], I will argue that gold is well priced,” Lassonde told Kitco News on the sidelines of the BMO Global Metals & Mining Conference.
Link:
http://www.kitco.com/news/video/sho...w.kitco.com/news/video/latest?show=Kitco-News
 

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Tiny Japan Shipping Shares Jump On North Korea Detente Hopes
June 15, 2018 by Reuters



Trade routes of Rinko Corp. Image via Rinko Corp.

by Yoshiyuki Osada (Reuters) – Shares of small Japanese shippers jumped this week after the historic summit between U.S. President Donald Trump and North Korean leader Kim Jong Un sparked hopes of news business ties with the reclusive country.

Japanese retail investors are snatching up shares of the firms that may benefit from a potential thaw between Tokyo and Pyongyang, even though the Japanese government has been a staunch supporter of “maximum pressure” on North Korea.

Shares of Rinko Corp, a marine transportation company, jumped 17 percent this week with the heaviest trading volume in more than two years.

The firm is based in the port city of Niigata, a major hub for trade with the areas surrounding the Sea of Japan, such as Russian Far East and the Korean Peninsula.

Niigata was once served by Mangyongbong, a North Korean cargo-passenger ship that connected the Japanese port and Wonsan in North Korea. It was one of a very few connections between the two countries before Japan banned the ship in 2006, when it imposed sanctions following Pyongyang’s missile and nuclear tests.

Shares of some other companies with perceived geographical advantages have also soared.

Fushiki Kairiku Unso rose 38 percent, its biggest weekly gain in almost two decades. The transportation firm is based in Toyama prefecture, which also faces the Sea of Japan, and has business ties with Russia.

Its trading volume this week exceeded 100,000 shares, larger than its trading volume for the whole of last year.

Similarly, Hyoki Kaiun, which operates cargo shipping services to countries including Russia and South Korea, jumped 24 percent in massive trading volume.

But market participants said the gains were driven purely by retail investor speculation.

“Because there aren’t many sellers, just a small number of bids could lift prices,” said Masayuki Otani, Chief Market Analyst at Securities Japan, Inc.

“Retail speculators seem to be trying to make quick money – They have great imagination.”

Tomoichiro Kubota, senior market analyst at Matsui Securities, said there was no clarity on whether sanctions against North Korea would be lifted, let alone what impact such a development would have on these companies’ earnings.

Indeed, U.S. Secretary of State Mike Pompeo said on Friday tough sanctions will remain on North Korea until its complete denuclearisation.

Japan is eyeing a meeting between Prime Minister Shinzo Abe and North Korean leader Kim Jong Un following the Singapore summit between North Korea and the United States.

The issue of Japanese abducted by Pyongyang has been a major stumbling block in any rapprochement. The two countries still do not have diplomatic relations.

Reporting by Yoshiyuki Osada; Writing by Hideyuki Sano; Editing by Sam Holmes.

http://gcaptain.com/tiny-japan-shipping-shares-jump-on-north-korea-detente-hopes/
 

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Ira Epstein's Metals Video 6 15 2018
Ira Epstein


Published on Jun 15, 2018
Ira Epstein reviews the days trading in the metal markets.
 

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Ira Epstein's End of the Day Agriculture Video 6 15 2018
Ira Epstein


Published on Jun 15, 2018
Ira Epstein reviews the days trading in the agriculture markets.
 

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Ira Epstein's End of the Day Financial Video 6 15 2018
Ira Epstein


Published on Jun 15, 2018
Ira Epstein reviews the days trading in the Financial markets.
 

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Silver Gold Prices PLUNGE to Close the Week | Josh Phair
SilverDoctors


Published on Jun 15, 2018
https://SDBullion.com/Scottsdale-Mint
http://www.SilverDoctors.com/precious...

Hello and welcome to this week’s Metals & Markets wrap. I am your host James Anderson filling is for Elijah Johnson. This week’s guest is coming up, but fist a short synopsis on the week for gold and silver prices.

Gold and silver saw healthy price rises from the start of the week. Especially during the Federal Reserve chairman, Jerome Powell’s press conference yesterday. Concerns over future price inflation and specifically the $1.9 trillion dollars still parked on bank balance sheets from the 2008 bailouts, and their possibly getting fractional reserve lent into the economy were a possible impetus as to why gold prices spiked during the discussion. Gold’s hit its week high price of $1,310 oz and silver briefly touched $17.30 an ounce on Thursday.

Both metals price momentums were short lived though, as of this morning a reported 260,000 COMEX gold futures contracts were sold in a 4 hour timeframe representing some $33 billion dollar dollars in notional value traded.

The US dollar index reached a 2018 high yesterday vs other long term debasing fiat currencies, yet it wasn’t until many hours later that waterfall defines in precious metal prices occurred.

Silver and gold futures trading volumes today will likely reach near the all time COMEX record levels witnessed the day President Trump was shockingly elected in November of 2016.

Finding a sensible reasons as to why this sell-off occurred today is unlikely. Most listeners including myself believe this to be yet another currency intervention and systematic buying of time.

Precious metal values remain relatively weak in relation to other overvalued asset classes.

Gold appears to be finishing the week at $1,280 oz with silver at $16.60 an ounce.

Moving along to our guest for the week, Mr. Josh Phair.

He is founder of the popular Scottsdale Mint in Arizona. Scottsdale is a world leading manufacturer and distributor of physical precious metals bullion bars, rounds, and legal tender coins we both buy and sell at here SD Bullion.

Josh Phair, founder of the popular Scottsdale Mint is our guest on this week's program.

Questions covered included:

- How did you get into this business of privately striking bullion products?

- How about the downward price action in gold and silver today?

- What are the different manufacturing processes between manufacturing bullion bars vs coins and rounds?

- What are some of the headaches in your business?

- How long do typical dies last depending on the products?

- What is your long term vision for precious metals and the bullion industry in general?


We want to thank Josh for coming on the show this week.

For anyone watching on YouTube, click the link below to check out some of the Scottsdale Mint bullion products we currently carry here at SD Bullion.

https://SDBullion.com/Scottsdale-Mint
 

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Chris Blasi: We Have Been Sacrificed to Banks & Multi-Nationals
The Daily Coin.org


Published on Jun 14, 2018
Thanks for watching. Don't forget to subscribe, share and like - you probably will want to click the "Bell" for notifications as YouTube has done an outstanding job of shadow banning my audience.

Visit Chris Blasi - https://www.neptuneglobal.com

Visit Rory - https://thedailycoin.org

Since we are not financial advisors we do not offer financial advice and if you read or hear something that reads or sounds like financial advice, believe me, it is not.

The wave that began sweeping the world way back in 2011 with the Occupy Wall Street movement is now truly beginning to take root. We are seeing entire nations stand up to the globalist bankers and their henchmen, the national government.

Continue Reading / https://thedailycoin.org/2018/06/14/c...