Posted at 11:49 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Coming soon to bank you use.

BES shareholders brace for ‘bail in’
By Peter Wise in Lisbon

Regulators are preparing to inject up to €4bn into Banco Espírito Santo as part of a government-backed rescue that is expected to penalise shareholders and bondholders but spare taxpayers most of the burden of bailing out the distressed Portuguese lender, according to people familiar with the situation.

Carlos Costa, governor of the Bank of Portugal, was expected to make a statement on the rescue late on Sunday.

Lisbon is expected to use a small bank resolution fund financed by the Portuguese financial sector as a vehicle to acquire BES. It would then be recapitalised and sold to private investors after its toxic assets were removed to a separate “bad bank”, Luís Marques Mendes, a former leader of the governing Social Democrat party, told Portuguese television.

EU regulators have promised a tougher stance on mismanaged lenders, and a bail-in for BES shareholders and bondholders would demonstrate that they are ready to protect taxpayers from bearing the cost of bank rescues before legislation on the issue comes into force at the end of 2015.

Pedro Passos Coelho, prime minister, has also pledged that Portugal’s taxpayers will not be called on to bail out failing banks.

A rapid intervention to rescue BES has become increasingly probable since Wednesday when the lender reported a first-half net loss of €3.58bn and impairments totalling €4.25bn. The record loss wiped out the bank’s capital buffers, dangerously weakened its solvency ratios as its share price plummeted.

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Jim Sinclair’s Commentary

There is light at the end of this manipulative tunnel.

Mining Stocks Climb Into Top 10 Of IBD Industry Ranks
By SCOTT STODDARD, INVESTOR’S BUSINESS DAILY
Posted 08/01/2014 06:03 PM ET

Gold and silver miners have risen into the upper echelon of IBD’s industry ranks in recent weeks amid a pickup in profit growth.

The Mining-Gold/Silver/Gems industry stood at No. 7 out of 197 as of Friday’s IBD. That’s up from No. 26 six weeks ago.

Also, the broader mining sector was ranked fifth out of 33.

As a whole, the 50-stock group is up 29% this year, easily outpacing the S&P 500′s 4% gain.

Agnico Eagle Mines (NYSE:AEM) leads the industry with a Composite Rating of 96. However, the stock fell sharply Thursday after the company announced profit of 28 cents per share in the second quarter, rebounding from a loss of 3 cents in the same period last year but below Wall Street estimates.

Revenue for the period jumped 30% to $437.8 million, accelerating from the prior quarter’s 17% gain and the biggest increase in 13 quarters. The stock is getting support at its 10-week moving average for the first time since it broke out of a cup-with-handle base in mid-June.

While that technically puts Agnico in a secondary buy range, investors should be cautious with the market in weak condition and the severe selling last week in Agnico shares.

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Missing Soldier Killed in Battle, Israel Confirms
By STEVEN ERLANGER and JODI RUDORENAUG. 2, 2014

JERUSALEM — The Israeli military said early Sunday morning that an officer thought to have been captured by Palestinian militants during a deadly clash Friday morning, which shattered a planned 72-hour cease-fire, was now considered to have been killed in battle.

The announcement came just hours after Prime Minister Benjamin Netanyahu vowed to continue Israel’s military campaign in the Gaza Strip as long as necessary to stop Hamas attacks, while suggesting a de-escalation of the ground war in Gaza may be near.

The case of the missing soldier, Second Lt. Hadar Goldin, 23, became the latest flash point in the conflict, prompting a fierce Israeli bombardment and calls from leaders around the world for his release. His disappearance came after Hamas militants ambushed Israeli soldiers near the southern border town of Rafah, at the start of what was supposed to have been a pause in the fighting.

As the death toll mounted Saturday to more than 1,650 Palestinians, many of them women and children, and images of homes, mosques and schools smashed into rubble filled the media, Mr. Netanyahu was under considerable international pressure, from Washington and Europe, to end the conflict. The United Nations warned of “an unfolding health disaster” in Gaza with little electricity, bad water and a lack of medical supplies.

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Jim Sinclair’s Commentary

For those who believe the COT figures, please consider this.

CFTC Charges J.P. Morgan Securities LLC with Repeatedly Submitting Inaccurate Large Trader Reports and Imposes a $650,000 Civil Monetary Penalty

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against J.P. Morgan Securities LLC (JPMS), a wholly-owned subsidiary of JPMorgan Chase & Co. and a CFTC-registered Futures Commission Merchant (FCM), for submitting inaccurate reports to the CFTC relating to the required reporting of positions held by certain large traders whose accounts are carried by JPMS. The reporting violations occurred despite the CFTC notifying JPMS of numerous errors in its reports. The CFTC Order requires JPMS to pay a $650,000 civil monetary penalty to address its unlawful conduct.

The reports are known as the “large trader” reports and are used by the CFTC in order to evaluate potential market risks and monitor compliance with CFTC requirements.

CFTC Director of Enforcement Aitan Goelman commented: “The large trader reports are vital to the CFTC’s role in monitoring market behavior and are important to members of the public, many of whom rely on that information in forming trading strategies. Therefore, submission of accurate and reliable data to the CFTC is essential. The CFTC will be vigilant in enforcing these rules in order to ensure the integrity of the regulatory structure and to maintain transparency in the markets.”

The CFTC Order specifically finds that since at least 2012, the CFTC was notifying JPMS about errors in its large trader reports, which increased in frequency throughout the year. CFTC Regulations require FCMs to submit information on a daily basis for certain large traders, such as the number of open futures or options positions; the number of delivery notices issued or stopped; and the number of Exchange For Related Positions (EFRPs). In December 2012, the CFTC notified JPMS that the on-going problems were unacceptable. JPMS, relying on its third-party vendor that generated the reports for JPMS, assured CFTC staff that the problems would be resolved on or before the end of January 2013. However, JPMS continued to submit large trader reports that contained hundreds of errors throughout the period from February 1, 2013 to February 2014.

Accordingly, the CFTC Order finds that JPMS violated Section 4g(a) of the Commodity Exchange Act (CEA), 7 U.S.C. § 6g(a) (2012), and CFTC Regulation 17.00(a)(1), 17 C.F.R. § 17.00(a)(1) (2013), with respect to its large trader reporting of delivery notices and EFRPs in connection with futures positions.

In addition to imposition of the $650,000 civil monetary penalty, the CFTC ordered JPMS to submit a certified statement of compliance within 120 days of the entry of the CFTC Order stating that it has completed enhancements to its systems and procedures related to reporting of delivery notices and EFRPs, and has tested such systems and procedures to ensure that they now comply with the requirements of the CEA and CFTC Regulations.

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Jim Sinclair’s Commentary

Act and reaction is the formula for spreading economic war.

Russia Eyes Banning U.S. Chicken And Some European Fruit
By Brian Wingfield and Ilya Arkhipov Jul 29, 2014 12:21 PM ET

July 29 (Bloomberg) — The U.S. and the European Union may move as soon as today to impose tougher sanctions on Russia as Vladimir Putin’s government formulates its response to growing international pressure over the conflict in Ukraine. Ryan Chilcote reports on “In The Loop.” (Source: Bloomberg)

Facing tougher sanctions over Ukraine, Russia said yesterday it may ban imports of chicken from the U.S. and fruit from Europe and is investigating McDonald’s Corp. (MCD) cheese for safety.

Meanwhile, a Russian lawmaker has drafted legislation that might result in U.S. accounting firms such as Deloitte LLP and KPMG LLP being barred from doing business in his country.

While Russia and the U.S. have long sparred over agricultural trade, the actions fueled speculation they could be retaliatory. The 28-nation European Union and the U.S. plan to impose stiffer sanctions to punish Russian President Vladimir Putin’s government.

“It’s a troubling continuation/expansion of trade as a geopolitical tool,” Gary Blumenthal, president of World Perspectives Inc., a Washington-based agricultural consulting firm, said in a phone interview.

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Jim Sinclair’s Commentary

War can start by mistake when combatants and spies are in the same airspace.

U.S. official: Spy plane flees Russian jet, radar; ends up over Sweden
From Barbara Starr, CNN Pentagon Correspondent
updated 10:56 AM EDT, Sun August 3, 2014

Washington (CNN) — The Cold War aerial games of chicken portrayed in the movie "Top Gun" are happening in real life again nearly 30 years later.

A U.S. Air Force spy plane evaded an encounter with the Russian military on July 18, just a day after Malaysia Airlines Flight 17 was downed by a suspected surface-to-air missile that Ukraine and the West allege was fired by pro-Russia rebels in eastern Ukraine.

The RC-135 Rivet Joint fled into nearby Swedish airspace without that country’s permission, a U.S. military official told CNN. The airplane may have gone through other countries’ airspace as well, though it’s not clear if it had permission to do so.

The U.S. plane had been flying in international airspace, conducting an electronic eavesdropping mission on the Russian military, when the Russians took the unusual action of beginning to track it with land-based radar.

The Russians then sent at least one fighter jet into the sky to intercept the aircraft, the U.S. official said Saturday.

The spy plane crew felt so concerned about the radar tracking that it wanted to get out of the area as quickly as possible, the official said. The quickest route away from the Russians took them into Swedish airspace. The U.S. official acknowledged that was done without Swedish military approval.

As a result of this incident, the United States is discussing the matter with Sweden and letting officials know there may be further occurrences where American jets have to divert so quickly they may not be able to wait for permission.

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G-20 Revolt? France Gets "Positive Reception" To Challenge US Bank Fines
Submitted by Tyler Durden on 08/03/2014 15:46 -0400

In recent weeks France has defied US demands not to build Mistrals for Russia, has questioned dollar imperialism and the Petrodollar, and has blasted the US banking regulator’s fines as "accelerating the decline of the dollar." So it is likely not a huge surprise that ahead of the G-20 meeting of world leaders later in the year, The FT reports, France has gathered support to challenge US regulators imposing heavy penalties on foreign banks.Berlin, London and Rome have backed Paris in its push to have its concerns about so-called US extraterritoriality discussed when leaders of the world’s top 20 economies meet hoping to bring "more proportionality" to bank fines. With allies like this…

As The FT reports, top regulators have been raising concerns about the impact of the long procession of fines on their efforts to strengthen banks’ finances.

France has gathered support to challenge US regulators imposing heavy penalties on foreign banks at a G20 meeting of world leaders later this year after the record $8.9bn fine levied on BNP Paribas last month.

Berlin, London and Rome have backed Paris in its push to have its concerns about so-called US extraterritoriality discussed when leaders of the world’s top 20 economies meet in Brisbane in Australia in November, according to French and other European officials.

“There should be co-ordination between regulators, as there should not be multiple jeopardy,”agreed one senior European official, who confirmed that there had been “informal discussions” about putting the issue of bank fines on the G20 agenda.

“It is an issue, but we have to be careful not to go into an area of saying ‘it is too much and we have got to lay off these guys’,” said the official, who added that the G20 could discuss how to bring more “proportionality” to bank fines.

French finance minister Michel Sapin sought support for France’s stance in recent meetings with Wolfgang Schäuble and Pier Carlo Padoan, his German and Italian counterparts, according to French officials. There was a “positive reception”, one said.

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Jim Sinclair’s Commentary

So many moves are afoot to distance the USD.

Eurasian Economic Union plans to adopt common currency unit
August 03, 23:15 UTC+4

MOSCOW, August 03, /ITAR-TASS/. The Eurasian Economic Union of Russia, Belarus and Kazakhstan might adopt it’s a common currency unit, the Rossiiskaya Gazeta newspaper writes in its Monday issue.

The daily cites Bembya Khulkhachiyev, director of the Eurasian Economic Union’s financial policy department, as saying that the Union was planning to make a wider use of the national currencies of the three member states with an eye to create a common payment system. If these tasks are solved successfully, the issue of a common currency unit might be raised, he said.

Currently, the Eurasian Economic Union, according to Khulkhachiyev, makes 50% of internal settlements in roubles, 40% – in U.S. dollars, eight to nine percent – in euros. The share of other currencies barely reaches one percent.

Processes of financial integration within the Eurasian Economic Union “are especially important now that the European Union and the United States have imposed sanctions against Russia’s financial sector – Sberbank, VTB, VEB, Gazprombank and Rosselkhozbank,” the Rossiiskaya Gazeta notes.

The three countries signed a Eurasian Economic Union Treaty in May 2014. The Union is to supersede the Common Economic Space of Belarus, Russia and Kazakhstan on January 1, 2015. Two more countries of the Commonwealth of Independent States (CIS), Armenia and Kyrgyzstan, have announced their plans to join the Union.

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Posted at 10:50 PM (CST) by & filed under Jim's Mailbox.

Jim,

One story after another spells doom for this world. It is difficult to imagine all these bad story will be resolved without a major world response.

CIGA Larry

Islamic State fighters seize Iraq’s biggest dam

Islamic State fighters seized control of Iraq’s biggest dam, an oilfield and three more towns on Sunday after inflicting their first major defeat on Kurdish forces since sweeping through the region in June.

Capture of the Mosul Dam after an offensive of barely 24 hours could give the Sunni militants the ability to flood major Iraqi cities, sharply raising the stakes in their bid to topple Prime Minister Nuri al-Maliki’s Shi’ite-led government.

Islamic State, which sees Iraq’s majority Shi’ites as apostates who deserve to be killed, also seized the Ain Zalah oil field, adding to four others already under their control, and three towns.

They faced strong Kurdish resistance only at the start of their latest offensive when taking the town of Zumar. The Islamists then hoisted their black flags there, a ritual that usually precedes mass executions of their captured opponents and the imposition of an ideology even al-Qaeda finds excessive.

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Posted at 12:12 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Mr. Beef, Chief Canine Officer and #1 Assistant.

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Jim Sinclair’s Commentary

OTC derivatives do their dirty business one more time.

Argentina blames US for debt woes, denies default
By Paula Bustamante

Buenos Aires (AFP) – Argentina blamed the United States for the legal battle that forced it to miss a debt payment and, despite ratings agencies’ declarations to the contrary, denied being in default.

Ratings agency Fitch declared Argentina in "restrictive default" Thursday after 11th-hour talks failed to resolve the country’s dispute with two US hedge funds that refuse to accept a write-down on their Argentine bonds.

Fitch’s label echoed the "selective default" declared Wednesday by Standard & Poor’s. Both terms indicate that Argentina has defaulted on one or more of its financial commitments but continues to meet others.

US District Judge Thomas Griesa has blocked Argentina from paying its "exchange creditors" — those who agreed to take a 70-percent write-down after the country’s 2001 default — without also paying two American hedge funds that took it to court demanding full payment.

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Jim Sinclair’s Commentary

Surprise to MSM and FTV who called up to 300,000.

Economy adds 209,000 jobs in July; unemployment rate edges up to 6.2 percent
By Ylan Q. Mui August 1 at 8:42 AM

For six straight months, the U.S. economy has added more than 200,000 jobs, according to government data released Friday morning, the longest streak since the mid-’90s.

The Labor Department reported 209,000 net new jobs were created in July, though the unemployment edged up slightly to 6.2 percent. The report was the latest in a string of upbeat data suggesting the country’s economic recovery has shifted into the next gear.

The industries hiring the most workers were professional and business services, as well as manufacturing and construction. That dovetailed with a private estimate of job growth earlier this week indicating broad-based improvement in the labor market. That analysis, by human resources firm ADP, showed both larger corporations and smaller businesses were adding workers.

Still, the government data revealed that progress in several trouble spots in the job market stalled in July. The ranks of part-time workers who would like more hours was essentially unchanged at 7.5 million in July after spiking the previous month. The number of people out of work for six months or more also barely budged at 3.2 million, representing about one-third of the unemployed. And the size of the nation’s workforce held pretty much steady at 62.9 percent.

Federal Reserve Chair Janet Yellen has cited those indicators as potential signs that the job market is weaker than the official hiring and unemployment numbers suggest. In an official statement released Wednesday, the central bank acknowledged the broad gains in employment but included a caveat.

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Jim Sinclair’s Commentary

You have to feel for the victim of Ebola, but transporting him to the US is a major roll of dice.

Ebola patient coming to U.S. as aid workers’ health worsens
BY JULIE STEENHUYSEN AND COLLEEN JENKINS
CHICAGO/WINSTON-SALEM N.C. Fri Aug 1, 2014 10:40am EDT

(Reuters) – A U.S. aid worker who was infected with the deadly Ebola virus while working in West Africa will be flown to the United States to be treated in a high-security ward at Emory University Hospital in Atlanta, hospital officials said on Thursday.

The aid worker, whose name has not been released, will be moved in the next several days to a special isolation unit at Emory. The unit was set up in collaboration with the U.S. Centers for Disease Control and Prevention.

CDC spokeswoman Barbara Reynolds said her agency was working with the U.S. State Department to facilitate the transfer.

Reynolds said the CDC was not aware of any Ebola patient ever being treated in the United States, but five people in the past decade have entered the country with either Lassa Fever or Marburg Fever, hemorrhagic fevers similar to Ebola.

News of the transfer follows reports of the declining health of two infected U.S. aid workers, Dr. Kent Brantly and missionary Nancy Writebol, who contracted Ebola while working in Liberia on behalf of North Carolina-based Christian relief groups Samaritan’s Purse and SIM.

CNN and ABC News reported that a second American infected with Ebola was to be flown to the United States. CNN identified the U.S.-bound patients as Brantly and Writebol. Reuters could not independently confirm the reports.

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Jim Sinclair’s Commentary

No, it is not.

If it’s not OK to spy on senators, is it still OK to spy on citizens?
By Ashe Schow | July 31, 2014 | 1:08 pm

Central Intelligence Agency Director John Brennan admitted Thursday that agency officials acted improperly when they hacked Senate computers,according to the Associated Press.

Dean Boyd, a spokesman for the CIA, said, the officials “acted in a manner inconsistent with the common understanding reached between [the Senate Select Committee on Intelligence] and the CIA in 2009.”

Brennan is now apologizing to senators, including Dianne Feinstein, D-Calif., who accused the CIA earlier this year of possibly violating the Constitution.

“The director … apologized to them for such actions by CIA officers as described in the [Office of Inspector General] report,” Boyd added.

Brennan had initially denied the notion that the CIA was spying on members of Congress, telling NBC host Andrea Mitchell in March that “nothing could be further from the truth.”

At issue is the fact that in January, the CIA hacked into computers used by staffers on the Intelligence Committee to remove documents relating to the committee’s review of government torture policies under President George W. Bush.

The situation brings up another question for civil liberty-minded Americans: Why can’t innocent Americans get the same agreement with the CIA – or the National Security Agency – that the Intelligence Committee received?

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US Manufacturing PMI Misses By Most In 11 Months, Employment Plunges, Blames Russia & Gaza
Tyler Durden on 08/01/2014 09:54 -0400

US Manufacturing PMI in July dropped to 3-month lows at 55.8, missing expectations by the most since Augiust 2013 as employment growth moderated to its slowest in 13 months. The ‘excuse’ this time – Russia and Gaza.

PMI tumbled…

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and employment plunged…

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Don’t worry, we have an excuse for that:

“The one area of concern is the slacking pace of employment growth signalled by the survey, which suggests companies have become increasingly cautious about taking on new staff given growing uncertainties, such as the escalating situations in Russia and Gaza.

“With overseas worries likely to hit demand in key export markets, and exports having already stagnated in the past two months, overseas trade looks likely to continue to act as a drag on the US economy.“

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The West’s Reckless Rush Towards War with Russia
We’re taking big risks for unclear reasons
by Chris Martenson
Thursday, July 31, 2014, 10:54 AM

For reasons that have no rational explanations at this time, the US and Europe have embarked on a concerted program to demonize Putin, ostracize Russia, and bring the world as close to a major conflict as it’s been since the Cold War, a time hardly memorable to many in the current crop of our elected officials.

Within hours of the MH-17 plane crash, the United States pinned the blame on Russia generally, and Putin particularly. The anti-Putin propaganda (and if there were a stronger term I’d use it) has been relentless and almost comically over-the-top (see image above, and those below).

The US and the UK in particular, are leading the charge. Indeed, the UK’s Daily Mail managed to crank out an article on the MH-17 affair within just a few hours on the very same day it occurred with this headline:

The blood on Putin’s hands…

Jul 17, 2014

The world may have averted its gaze towards Israel and Gaza, but this week the rumbling warfare in eastern Ukraine has been erupting into something growing daily more dangerous.

Meanwhile the Russian bear, still pretending to be an innocent party despite blood dripping from its paws, has begun stealthily rebuilding its forces on the border.

Now we may well have witnessed the kind of shocking event that happens when heavy armaments are placed in the hands of untrained and desperate militias.

That’s really an amazing piece of journalism to have managed to have figured out the who, the what and the why of a major catastrophe without the benefit of any evidence or investigation.  One wonders who the author’s source was for obtaining what have become very crisp talking points that both the US and Europe are echoing as they exert increasing pressure on Russia?

Nearly two weeks later, neither the US nor Europe has provided substantial evidence of any sort to support their assertions that Ukrainian separatists and/or Russia are to blame for the MH-17 catastrophe. There’s literally been nothing.

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Gaza Cease-Fire Collapses; Israeli Soldier Is Captured
By ISABEL KERSHNER and FARES AKRAM

JERUSALEM — A newly reached cease-fire in the Gaza conflict quickly collapsed on Friday as the Israeli military announced that two soldiers had been killed and a third apparently captured by Palestinian militants who emerged from a tunnel near Rafah in the southern Gaza Strip.

Gaza health officials said 35 Palestinians had been killed and more than 100 wounded as Israeli forces bombarded the area. Palestinian witnesses said by telephone that Israeli tank shells had hit eastern Rafah as residents returned to inspect homes they had evacuated.

Each side accused the other of violating the 72-hour truce, which disintegrated in less than two hours.

Hamas, the dominant militant group in Gaza, said in a statement that Israel’s announcement about the capture of an Israeli soldier was intended “to cover up the barbaric massacres, especially in Rafah.”

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Posted at 11:19 AM (CST) by & filed under Jim's Mailbox.

Jim,

Another bad day for the Cabal.  Everywhere Kerry goes he faces failure.  Other than another photo op, I’m not sure why Kerry went to India since WTO issues do not fall within a Secretary of State’s preview.

Since the earlier 1960′s trade negotiations are the responsibility of the US Office of Trade Representative, which is a cabinet position reporting directly to the President.

The India trip is just another example of Kerry’s need for the spotlight. In contrast note how focused Russia FM Lavrov is.

CIGA Craig

India says WTO deal not dead, can sign in September if concerns addressed
By Manoj Kumar and Tom Miles
NEW DELHI/GENEVA Fri Aug 1, 2014 11:25am EDT

(Reuters) – India is willing to sign a global trade deal, which it has torpedoed, if other World Trade Organization members can agree to its parallel demand for concessions on stockpiling food, senior officials in New Delhi said on Friday.

The deadline to sign the WTO pact to ease worldwide customs rules lapsed at midnight in Geneva on Thursday after India demanded that the group also finalise an agreement giving it more freedom to subsidise and stockpile food grains than is allowed by WTO rules.

It was not immediately clear if the latest comments by Indian officials would open a window for the deal to be resurrected.

In Geneva, a trade diplomat from a developing nation said: "The trust that countries have in what India says is going to be significantly diminished."

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Posted at 1:27 PM (CST) by & filed under In The News.

Russia And India Begin Negotiations To Use National Currencies In Settlements, Bypassing Dollar
Submitted by Tyler Durden on 07/31/2014 11:44 -0400

Over the past 6 months, there has been much talk about the strategic proximity between Russia and China, made even more proximal following the "holy grail" gas deal announced in May which would not have happened on such an accelerated time frame had it not been for US escalation in Ukraine.

And yet little has been said about that other just as crucial for the "new BRIC-centric world order" relationship, that between Russia and India. That is about to change when yesterday the Russian central bank announced that having been increasingly shunned by the west, Russia discussed cooperation with Reserve Bank of India Executive Director Shrikant Padmanabhan. The punchline: India agreed to create a task group to work out a mechanism for using national currencies in settlements. And so another major bilateral arrangement is set up that completely bypasses the dollar.

From the Russian Central Bank:

First Deputy Chairman of the Central Bank of the Russian Federation KV Yudaeva and Executive Director of the Reserve Bank of India G. Padmanabhan at the twentieth meeting of the Subgroup on banking and financial issues of the Russian-Indian intergovernmental commission on trade-economic, scientific-technical and cultural cooperation discussed the current state and prospects of cooperation between banks.

The meeting was attended by representatives of central banks, ministries and agencies, credit organizations in Russia and India.

During the meeting dealt with the problems faced by the branches and subsidiaries of banks in the two countries and ways of addressing these problems.

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Jim Sinclair’s Commentary

One result of sanctions.

China advocates further development of strategic cooperation with Russia
July 31, 18:41 UTC+4

BEIJING, July 31. /ITAR-TASS/. China stands for further development of comprehensive strategic cooperation and partnership with Russia, Foreign Minister Wang Yi said on Thursday.

He made the statement during a meeting with Russian Foreign Minister Sergei Lavrov on the sidelines of the Shanghai Cooperation Organization (SCO) summit in Dushanbe, Tajikistan. The two top diplomats unanimously agreed to “maintain close strategic contacts and coordinate activities” of the two countries.

As active members of the UN Security Council, China and Russia should maintain close contact on such international and regional issues as Afghanistan, the Korean nuclear problem, the Iranian nuclear program, and Ukraine in order to facilitate their resolution, the Chinese Foreign Ministry said.

Wang and Lavrov also noted the need to step up cooperation within the SCO and take further steps to advance the common interests of its member states.

The ministers said bilateral meetings and high-level visits in the second half of the year would help to promote political, trade, economic, energy and humanitarian cooperation between China and Russia.

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Chicago PMI plunges in biggest one-month drop since Oct. 2008
Index at lowest level in a year
By Greg Robb, MarketWatch

WASHINGTON (MarketWatch) — A key Midwestern manufacturing gauge saw its biggest drop in July since the start of the financial crisis in October 2008, suggesting the possibility of a softer second half U.S. economic performance than had been hoped.

The Chica The July reading was the worst in over a year.

Purchasing managers said the downturn was a “lull” and not the start of a new downward trend.

“Some feedback from panelists points to this being a temporary setback, although we’ll need to see the August data to judge to what extent this is a blip,” said Philip Uglow, chief economist at MNI Indicators.

Jim O’Sullivan, chief economist at High Frequency Economics, said the slowdown was not likely due to the annual shutdown of auto plants to retool for new production.

“It hasn’t been an issue before,” he said.

go purchasing managers index plunged to a reading of 52.6 in July, down from a reading of 62.6 in the prior month and well below the consensus of 63.5.

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On Washington’s Ukrainian Fiasco: "Who Is The Real Problem Here?"
Submitted by Tyler Durden on 07/28/2014 22:07 -0400

Submitted by David Stockman via Contra Corner blog,

In just 800 words Pat Buchanan exposes the sheer juvenile delinquency embodied in Washington’s current Ukrainian fiasco. He accomplishes this by reminding us of the sober restraint that governed the actions of American Presidents from FDR to Eisenhower, Reagan and Bush I with respect to Eastern Europe during far more perilous times.

In a word, as much as they abhorred the brutal Soviet repression of the Hungarian uprising in 1956, the Prague Spring in 1968 and the solidarity movement in Poland in the early 1980s, among many other such incidents, they did not threaten war for one simple reason: These unfortunate episodes did not further endanger America’s national security. Instead, in different ways each of these Presidents searched for avenues of engagement with the often disagreeable and belligearent leaders of the Soviet Empire because they “felt that America could not remain isolated from the rulers of the world’s largest nation”.

Accordingly, during the entire span from 1933, when FDR recognized the Soviet Union, until 1991, when it ended, the US never once claimed Ukraine’s independence was part of its foreign policy agenda or a vital national security interest. Why in the world, therefore, should we be meddling in the backyard of a far less threatening Russia today?

More importantly, if Ike could invite Khrushchev to tour America and pow-wow with him at Camp David after the suppression of the Hungarian freedom fighters and his bluster over Berlin, what in the world is Obama doing attempting to demonize Putin and make him an international pariah? The fact is, Crimea had been part of Russia for 200 years, and the Donbas had been its Russian-speaking coal, steel and industrial heartland since the time of Stalin.

Putin’s disagreements with the Ukrainian nationalists who took over Kiev during the Washington inspired overthrow of its constitutionally-elected government in February are his legitimate geo-political business, but have nothing to do with our national security. And whatever his considerable faults, Putin is no totalitarian menace even remotely in the same league as his Soviet predecessors. In that regard, Hillary Clinton’s sophomoric comparison of him to Hitler is downright preposterous.

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Moscow fights back after sanctions; battle rages near Ukraine crash site
BY POLINA DEVITT AND GABRIELA BACZYNSKA
MOSCOW/KIEV Thu Jul 31, 2014 7:13am EDT

(Reuters) – Russia fought back on Wednesday over new U.S. and EU sanctions imposed over Ukraine even as G7 leaders warned of further steps, while Ukraine’s government accused pro-Russian rebels of placing land mines near the site of a crashed Malaysian airliner to prevent a proper investigation.

Russia announced a ban on most fruit and vegetable imports from Poland and said it could extend it to the entire European Union, a move Warsaw called Kremlin retaliation for new Western sanctions over Ukraine imposed on Russia on Tuesday.

Moscow called the new EU and U.S. sanctions "destructive and short-sighted" and said they would lead to higher energy prices in Europe and damage cooperation with the United States on international affairs.

The confrontation between Russia and the West entered a new phase this week, with the United States and European Union taking by far the strongest international steps yet against Moscow over its support for Ukraine’s rebels.

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Jim Sinclair’s Commentary

Apparently those funds confiscated in various ways in the "Bail In," may not have been necessary.

A Secret in Cyprus Bank Bailout Stirs Resentment
By LANDON THOMAS JR.
July 24, 2014 8:27 pm

Of all the financial implosions in the eurozone, few matched last year’s collapse of tiny Cyprus in terms of drama and chaos.

Frantic Cypriots queued up at banks to drain their accounts. Russian oligarchs scrambled to repatriate hidden fortunes. European officials, fearing another bout of market contagion, orchestrated an audacious 17 billion euro rescue package — forcing depositors to bear a large part of the cost, unlike other bailouts.

Now, the foundation of the bailout, an analysis by bond giant Pimco, is being challenged by economists, lawyers and politicians in Cyprus. They argue that the analysis relied too heavily on aggressive financial assumptions that in some cases deviated from international accounting standards, thus inflating how much cash banks needed to survive.

The basis for the criticism comes from an unusual source: a separate BlackRock study commissioned by the Cypriot central bank shortly before Pimco issued its report. The central bank chief, voicing concerns over Pimco’s models and its approach, asked BlackRock, the world’s largest investor, to dissect the work of its rival.

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Posted at 1:24 PM (CST) by & filed under Jim's Mailbox.

Jim,

Once again the IMF in recent days presents to the world their concerns for what is happening financially and economically around the world. I interpret that to mean that they want the citizens of the world to not hold them responsible for the crash that is coming. Their hands are clean.

CIGA Larry

Tight Financial Conditions, Emerging Market Slowdown To Damage Global GDP: IMF
7/30/2014 1:17 AM ET

The International Monetary Fund said the interactions between sharply tightening financial conditions and a structural slowdown in emerging markets would be damaging for the global economy.

Given the significant and rising contribution of emerging market economies to the global economy over the past few decades, their recent slowdown could have far-reaching implications for the rest of the world, it said.

According to IMF estimates, a 1 percentage point drop in emerging market GDP growth would lead to a 0.2 percentage point decline in annual growth in advanced economies.

Further, IMF noted that monetary policy normalization should be a healthy global development as growth firms up in key advanced economies but there could be adverse spillovers.

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Posted at 1:23 PM (CST) by & filed under Yra Harris.

Dear CIGAs,

It seems that the Fed’s FOMC statement was an effort to have it all:“LABOR MARKET CONDITIONS IMPROVED, WITH THE UNEMPLOYMENT RATE DECLINING FURTHER. HOWEVER, A RANGE OF LABOR MARKET INDICATORS SUGGESTS THAT THERE REMAINS SIGNIFICANT UNDERUTILIZATION OF LABOR RESOURCES.” This is Janet Yellen coming clean. She is a labor economist who will ensure that the FED will err on the side of labor and wage gains. The battle cry from the Fed is loud and clear: No RATE RAISES BEFORE WAGE INCREASES.

While most post-FOMC commentary in the media is worthless, CNBC had on former Fed Governor Randy Kroszner and I believe his analysis was perfect. He cited the same language I noted above and indicated that the change in the language on jobs was SIGNIFICANT (the underutilization of labor resources). Kroszner noted that the language change “allowed the Fed to PIVOT from the strong GDP to focus on the labor market, especially the measure of U6.” In Kroszner’s opinion the gap between headline unemployment versus U6 has averaged about 4 percent but it CURRENTLY RESIDES AT 6 PERCENT (12.1 U6 versus 6.1 headline), thus giving the Yellen FOMC a 2 percent gap to close with the zero interest rate policy. This gives Chair Yellen the statistical cover to allow wages to rise for the labor mandate won’t be met until the all those wanting to work are able to find a job.

This leads to my continued opinion that wages are Yellen’s main concern and as the statement concludes: “The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.” If Kroszner and NOTES FROM UNDERGROUND are correct it will show up in the YIELD CURVE STEEPENING and PRECIOUS METALS REGAINING THEIR LUSTER. The Fed’s credibility is certainly on the line as the market will test Janet Yellen.

***Tomorrow’s post will be the last for two weeks as I take a well-earned hiatus. If something major occurs I will post a short note but otherwise I am going to power down so as to recharge. Enjoy and best to all my readers.

Click here to visit Yra Harris’ blog…

Posted at 6:12 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

The latest from John Williams’ www.ShadowStats.com.

- Second-Quarter GDP Surge Not Credible, Significant Downside Revisions Remain in Offing
- Actual Economic Activity Remains in Serious Trouble
- Historical GDP Revised Lower Where Better Data Were Available and Revised Higher Where Better Numbers Were Not

"No. 646: Second-Quarter 2014 GDP, GDP Benchmark Revisions, Household Income"
Web-page: http://www.shadowstats.com

How much did subprime loans fuel the GDP
boom?
By Steve Goldstein, MarketWatch
July 30, 2014, 11:24 a.m. EDT

WASHINGTON (MarketWatch) — It’d be tempting to think that the days of subprime loans fueling the economy were a product of the era of the aged or departed Ace Greenberg, Alan Greenspan and Angelo Mozilo.

Except when you break down the growth in GDP, it’s clear that car and light truck purchases played a major role. And subprime loans, in turn, are financing those transactions.

In the second quarter, motor vehicle and parts spending grew an annual 17.5%. Put another way, cars made up 3.7% of all consumer spending, the highest rate since the first quarter of 2008.

Subprime loans make up about a third of new car-sales and two-thirds of used cars, according to data from Experian Automotive, at the end of last year. The New York Times, in a story about the subprime loan sector , pointed out that growth has climbed more than 130% in the five years since the crisis.

No prizes, by the way, for guessing which sector was cut out of regulation by the Consumer Financial Protection Bureau in an amendment tacked onto the Dodd-Frank bank reform law.

Ally Financial, the financing arm spun off from General Motors, insists subprime isn’t much of their business. (In the first half, 13% of their originations came from non prime or customers with no FICO scores.) But an executive noted on an investor call that, right now, you see aggressive competition in the subprime sector, particularly the “deep subprime space.” And even at Ally, the delinquency rate is beginning to rise.

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GDP Deja Vu Stunner: Over Half Of US Growth In The Past Year Is From Inventory Accumulation
Tyler Durden on 07/30/2014 11:45 -0400

Back in December 2013, when everyone was expecting a 3% GDP print for Q1, we did a simple analysis concluding that "Inventory Hoarding Accounts For Nearly 60% Of GDP Increase In Past Year." We stated that this "hollow growth",which is merely producers pulling demand from the future courtesy of cheap credit and assuming the inventory will be sold off in ordinary course of business without bottom-line slamming liquidations or dumping, and which further assumes a healthy US consumer and global economy, is a flashing red flag for the future of US economic growth. In fact, we were one of the very few who warned that Q1 GDP would be a disaster: "The problem with inventory hoarding, however, is that at some point it will have to be "unhoarded." Which is why expect many downward revisions to future GDP as this inventory overhang has to be destocked."

This is precisely what happened in Q1, however it was blamed on the "harsh weather."

Alas, following today’s "spectacular" 4.0% GDP print following the predicted plunge in the US economy in Q1, we can again conclude that not only has nothing changed, but what we warned in Q4 of 2013 is about to happen all over again, and the inventory overhang (which incidentally was estiamted by the BEA and will certainly be revised lower next month) is about to slam future US growth.

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