Posts Categorized: Jim’s Mailbox

Posted by & filed under Jim's Mailbox.

Saturday’s notes.

Dave

Greenwald: DOJ Prosecution Of Assange Poses “Grave Threats To Press Freedom”
November 17, 2018

The “accidental” disclosure that WikiLeaks founder Julian Assange has been secretly charged by Department of Justice in the Eastern District of Virginia has ignited a firestorm over the freedom of the press, and protections offered to journalists under the First Amendment.

Beginning in 2010, the Department of Justice under Obama began to draw a distinction between WikiLeaks and other news organizations. Former Attorney General Eric Holder insisting that Assange’s organization does not deserve the same first amendment protections during the Chelsea Manning case, in which the former Army intelligence analyst was found guilty at a court-martial of leaking thousands of classified Afghan War Reports.

Ultimately, the previous administration concluded that it could not criminally charge Assange and WikiLeaks due to First Amendment protections.

More…

Decoding The Hypersonic Putin On A Day Of Remembrance
November 13, 2018

By Pepe Escobar

. . .

Enter the Avangard

Vast sectors of the US Deep State are in denial, but Putin may have been able to impress on Trump the necessity of serious dialogue due to an absolutely key vector: the Avangard.

The Avangard is a Russian hypersonic glide vehicle capable of flying over Mach 20 –  24,700km/h, or 4 miles per second – and one of the game-changing Russian weapons Putin announced at his ground-breaking March 1 speech.

The Avangard has been in the production assembly line since the summer of 2018, and is due to become operational in the southern Urals by the end of next year or early 2019.

In the near future, the Avangard may be launched by the formidable  Sarmat RS-28 intercontinental ballistic missile and reach Washington in a mere 15 minutes, flying in a cloud of plasma “like a meteorite” – even if the launch is from Russian territory. Serial production of Sarmat ICBMs starts in 2021.

The Avangard simply cannot be intercepted by any existing system on the planet – and the US knows it. Here is General John Hyten, head of US Strategic Command:  “We don’t have any defense that could deny the employment of such a weapon against us.”

More…

Why Washington Blows Up over European Army
November 16, 2018

Insulting” – that’s how US President Donald Trump sharply reacted to the idea of a “real European army” proposed by French President Emmanuel Macron.

And it was how Macron rationalized the need for an independent military force for Europe that perhaps most irked the American leader.

Speaking on a tour of World War I battlefields in northern France last week, Macron said that Europe needed to defend itself from “China, Russia and even the United States of America”.

It was a pretty extraordinary choice of words by the French leader. To frame the US among an array of perceived foreign enemy powers was a devastating blow to the concept of a much-vaunted transatlantic alliance.

Since the Second World War, ending 1945, the concept of an American-European alliance has been the bedrock of a supposed inviolable, mutual defense pact. That nearly seven-decade alliance is now being questioned more than ever.

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Merkel Defies Trump, Backs Macron’s Call For European Army
November 13, 2018

Two days after French president Emanuel Macron snubbed President Trump, slamming nationalism as the antithesis of patriotism during a closely watched speech with Trump sitting just a few feet away, and which prompted a flurry of provocative and taunting tweets by the US president demanding that Europe pay for its own defense (or else Paris would now be speaking German), Germany’s Angela Merkel set out her own vision of a more assertive European Union, one which aligned with that of Macron and included a European army.

After spending the weekend commemorating the end of World War I in Paris alongside more than 60 global leaders and witnessed first hand the tensions between Trump and France’s Emmanuel Macron, the normally understated chancellor took an uncharacteristically bold stance as she addressed EU lawmakers in Strasbourg.

In Paris, Merkel defended her world view against the U.S. president’s barbs as he sparred with Macron. And, as Bloomberg reports, she went a step further in the EU parliament on Tuesday, telling deputies they need to adapt to a world in which Europe’s traditional allies may no longer guarantee the continent’s security.

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Saturday’s speaking points and articles for review.

Dave

https://www.thedailybell.com/all-articles/news-analysis/why-the-most-expensive-military-ever-still-cant-win-a-war/

https://www.zerohedge.com/news/2018-11-15/national-defense-strategy-commission-us-could-lose-wars-russia-china

http://www.atimes.com/article/us-drops-the-gauntlet-in-the-south-china-sea/

http://www.atimes.com/article/us-tells-china-to-remove-missile-systems-in-south-china-sea/

https://www.rt.com/usa/443911-pence-cold-war-china/

 

Jim,

Here are a few articles for further reading from Saturday’s talk.

Dave

https://www.zerohedge.com/news/2018-11-13/malaysian-prime-minister-obviously-we-have-been-cheated-goldman-sachs

https://www.cnn.com/2018/11/09/business/lloyd-blankfein-goldman-sachs-1mdb/index.html

https://www.cnbc.com/2018/11/12/ex-jp-morgan-silver-traders-guilty-plea-could-boost-manipulation-suit.html

https://www.reuters.com/article/us-goldmansachs-1mdb-probe-idUSKCN1NC0SN

 

Courtesy of Dave.

Jim

Saudi Crown Prince Ordered Khashoggi’s Assassination: CIA
November 17, 2018

By Shane Harris & Greg Miller

Washington: The CIA has concluded that Saudi Crown Prince Mohammed bin Salman ordered the assassination of journalist Jamal Khashoggi in Istanbul last month, contradicting the Saudi government’s claims that he was not involved.

The CIA’s assessment, in which officials have said they have high confidence, is the most definitive to date linking Mohammed to the operation and complicates the Trump administration’s efforts to preserve its relationship with a close ally.

A team of 15 Saudi agents flew to Istanbul on government aircraft in October and killed Khashoggi inside the Saudi consulate, where he had come to pick up documents that he needed for his planned marriage to a Turkish woman.

More…

 

Jim & Bill,

On Saturday, we talked about Trump losing it. This, from the Saker a few weeks ago.

Dave

Trump Goes Full Retard… (UPDATED)
November 02, 2018

I can’t say that I am ‘surprised’, but still, I am.  That he would actually do this really makes reality even weirder than fantasy.  Check out what The Donald posted today:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

I think that if I was a kinder person I would probably be embarrassed for him, but I cannot muster enough kindness in me for that.  To me, he looks like one delusional and pompous ass with a serious narcissistic personality disorder to boot.  To think that he actually controls the US nuclear arsenal (at least in theory) is outright frightening.

I suppose that these “tweets” are this idiot’s idea of communicating a message so I will place this in the “speeches and statements” section and nevermind that “tweets” are something which is associated with bird and, hence, bird-brains.

More…

 

Courtesy of Dave.

Breaking/Exclusive: NEO, Why the Khashoggi Murder Really Matters
November 17, 2018

By Gordon Duff

[Editor’s note:  Today, the CIA threw MBS under a bus, telling the Washington Post that they have proof the Saudi Crown Prince ordered the brutal dismembering of Washington Post correspondent Jamal Khashoggi, a Virginia resident.

Their failed cover story is that they planned to “repatriate” him, an effort which began when they put a plastic bag over his head.  I am certain Khashoggi saw that as a sign things were beginning to go very wrong since CIA records now show the same folks who brought the Glad Freezer Bags for his body parts also brought electric bone saws with the proper connectors to run on the Turkish power grid.

We tell the real truth, that the “slice and dice rendition” is a Gina Haspel special. We might go a bit further, pointing out that Ms. Haspel is an Israeli citizen planted as a mole inside the CIA to destroy both the US and Saudi Arabia, but that is for another article. G]

[ Editor’s Note Two: As is often the case, only VT will touch the third rail of the Kashoggi killing. The others don’t have the background, the sources, or the connecting the dots talent without the necessary 30 to 40 years of experience in doing it.

No one has dared bring the Kashoggi killing to the door step of rogue operators in the US, at the highest levels. You have it all below, an early Thanksgiving present.

As for framing, Gordon used the massive coverage on the British Skirpal psyops, a pitiful affair, but one that mass media put wind in its sails by not punching holes in it early on, which a smart elementary school kid could have done.

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Jim,

With world markets priced for perfection, this is not good news.

Dave

Unexpected Decline In German Industry Output Hints At Economic Slowdown
October 7, 2018

Michelle Martin

BERLIN (Reuters) – German industrial output dipped unexpectedly in August for the third time in as many months, data showed on Monday, suggesting Europe’s largest economy lost steam in the third quarter.

Data from the Economy Ministry showed industrial output fell 0.3 percent in August, confounding a Reuters forecast for a rise of 0.4 percent. It followed a fall of 1.3 percent in July, itself a downward revision of an earlier, stronger number.

Jennifer McKeown, economist at Capital Economics, said the weak reading, combined with a recent downturn in retail sales, indicated the economy had not sustained its strong start to the year.

“August’s 0.3 percent fall in German industrial production is much weaker than expected and suggests that the economy is very unlikely to match the second quarter’s 0.5 percent expansion in the third quarter,” she said.

More…

 

Jim/Bill,

We warned listeners this was not going to end well.

Dave

“It Will Be A Cold War”: APEC Summit Ends In Unprecedented Chaos After Dramatic US-China Showdown
November 18, 2018

One day after vice president Mike Pence and China’s president Xi Jinping clashed after exchanging sharply worded barbs in a showdown between the two superpowers, on Sunday the annual Asia-Pacific Economic Cooperation summit ended in unprecedented chaos and disarray, without agreement on a joint communique for the first time in its history as the escalating rivalry between the United States and China dominated proceedings and reflected escalating trade tensions.

Competition between the United States and China over the Pacific was also thrown into focus with the United States and its Western allies launching a coordinated response to China’s Belt and Road program, Reuters added.

One diplomat told Reuters tension between the U.S. and China, bubbling all week, erupted when the Chinese government’s top diplomat, Wang Yi, objected during a leaders’ retreat to two paragraphs in a draft document seen by Reuters. One mentioned opposing “unfair trade practices” and reforming the WTO, while another concerned sustainable development.

“These two countries were pushing each other so much that the chair couldn’t see an option to bridge them,” said the unnamed diplomat. “China was angered that the reference to WTO blamed a country for unfair trade practices.”

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Posted by & filed under Jim's Mailbox.

Courtesy of JB.

Jim

BREAKING: Lindsey Graham to Take Over as Chairman of Senate Judiciary Committee
November 16, 2018

by Cristina Laila

Senator Lindsey Graham (R-SC) is set to take over as Chairman of the Judiciary Committee following Chuck Grassley’s move to Chair the Finance Committee.

Senator Chuck Grassley (R-IA) announced Friday he will be stepping down as Judiciary Chair.

Via The Hill:

    Sen. Lindsey Graham (R-S.C.) is poised to become the chairman of the Senate Judiciary Committee after Sen. Chuck Grassley (R-Iowa) announced Friday that he would step down to take over the chairmanship of the Finance Committee.

    The shuffle would put Graham, a close ally of President Trump who made headlines this fall with a forceful denunciation of Democrats during Brett Kavanaugh‘s Supreme Court confirmation hearings, in charge of the panel handling judicial nominations.

Earlier this week, Senator Lindsey Graham said if he became the Chairman of the Judiciary Committee he would further investigate the FBI’s botched probe of Hillary Clinton’s private server.

More…

Posted by & filed under Jim's Mailbox.

I truly LOVE JUDICIAL WATCH!

JB

Judicial Watch: Federal Court Orders Hillary Clinton to Answer Additional Email Questions Under Oath
November 15, 2018

 (Washington, DC) –Judicial Watch announced today that U.S. District Court Judge Emmet G. Sullivan ruled that within 30 days Hillary Clinton must answer under oath two additional questions about her controversial email system.

In 2016, Clinton was required to submit under oath written answers to Judicial Watch’s questions. Clinton objected to and refused to answer questions about the creation of her email system; her decision to use the system despite warnings from State Department cybersecurity officials; and the basis for her claim that the State Department had “90-95%” of her emails.

After a lengthy hearing yesterday Judge Sullivan ruled that Clinton must address two questions that she refused to answer under-oath.

Describe the creation of the clintonemail.com system, including who decided to create the system, the date it was decided to create the system, why it was created, who set it up, and when it became operational.

During your October 22, 2015 appearance before the U.S. House of Representatives Select Committee on Benghazi, you testified that 90 to 95 percent of your emails “were in the State’s system” and “if they wanted to see them, they would certainly have been able to do so.” Identify the basis for this statement, including all facts on which you relied in support of the statement, how and when you became aware of these facts, and, if you were made aware of these facts by or through another person, identify the person who made you aware of these facts.

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Which company conducted the Pentagon audit is the question, because if the government audits the government it is not an audit.

Jim

It’s official.

JB

Pentagon Fails Its First-Ever Audit, Official Says
November 15, 2018

WASHINGTON (Reuters) – The Pentagon has failed what is being called its first-ever comprehensive audit, a senior official said on Thursday, finding U.S. Defense Department accounting discrepancies that could take years to resolve.

Results of the inspection – conducted by some 1,200 auditors and examining financial accounting on a wide range of spending including on weapons systems, military personnel and property – were expected to be completed later in the day.

“We failed the audit, but we never expected to pass it,” Deputy Secretary of Defense Patrick Shanahan told reporters, adding that the findings showed the need for greater discipline in financial matters within the Pentagon.

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Posted by & filed under Jim's Mailbox.

True story!

JB

Broward County Brings In Expert Consultant To Speed Up Ballot Count
November 13th, 2018

FLORIDA—Broward County, which has had trouble meeting its legal deadlines in the counting of ballots, has now brought in a consultant to speed up the recount: counting expert Count von Count.

The Count wasted no time and immediately began counting as soon as he saw the ballots. He picked up one and said, “One vote for governor, eh eh eh.”

After that, he picked up a second ballot and said, “Two votes for governor, eh eh eh.”

Next, he picked up a third ballot and said, “Three votes for governor, eh eh eh.”

“Wow!” exclaimed Broward County official Stanley Collier. “He’s way faster than us!”

More…

 

Courtesy of JB.

Jim

Posted by & filed under Jim's Mailbox.

Jim/Bill,

Sorry Folks. Park’s closed!

 

 

 

 

 

 

 

 

Venezuela want its gold back, currently stored in the BOE vaults, and Great Britain says “NO”.

If this doesn’t send red flags throughout the international central banking community, I don’t know what will!

“The very fact that Great Britain asked Venezuela “what do you need your gold for?” is preposterous.

With the penalties in place, it’s impossible to sell the gold straight from the Bank of England.

Adding fuel to the fire, now this:

Germany, the second biggest holders of gold in the world after the US with 3,378 tons, finished repatriating 300 tons from the US last year. It had taken the United States several years to do it! It was reported that the gold bars received by Bundesbank had different labels to make one think that US might have replaced the German bullion with different gold bars bought from the market. It means the gold was not in place when the Germany’s request for return was made. Perhaps, the UK is not able to comply with Venezuela’s request for the same reason – the gold is not in vaults and London needs time to purchase it.

Today it’s Venezuela; tomorrow it could be any other holder on the list of more than 30 nations keeping gold reserves in BOE vaults.”

CIGA Wolfgang Rech

UK Blatantly Violates Norms of Decent Behavior
November 10, 2018

Russia and Venezuela are among the countries the EU, including Great Britain, has imposed sanctions on. Both nations have been targets of London’s vigorous attacks, being blamed for numerous nefarious things they have allegedly done. The UK insists that everyone play by the rules. Meanwhile, London is making mockery of commonly accepted norms in the international relations.

The government of Venezuela is seeking to eventually repatriate at least 14 tons of gold held at the Bank of England (BOE). It has recently asked to release the gold bars worth about £420 million or $550 million. This is the right and timely move as the new round of punitive measures recently imposed on Caracas by Washington showed. The Bank has refused to do so!

UK officials have reportedly insisted that Venezuela clarify its intentions for the gold. Venezuelan President Maduro is suspected by London of harboring plans to sell the national treasure for personal gains. There is also a subterfuge used to explain why the Venezuelan property has not been returned to the owner. The UK says it’s very hard to obtain insurance for the shipment to move the large cargo. Even if Venezuela gets the gold back, it’ll be a large order to use it for raising hard currency because of the new round of US sanctions announced on Nov.1. With the penalties in place, it’s impossible to sell the gold straight from the Bank of England.

More…

 

Courtesy of JB.

Jim

 

 

 

 

 

 

 

 

 

 

Tomorrow is the day.

JB

Judicial Watch: Federal Court Hearing to Compel Testimony from Hillary Clinton and Make Video Depositions Public
November 13, 2018
‘The public and the media have a right to a full accounting from top officials of the Clinton State Department’ – Judicial Watch President Tom Fitton.

(Washington, DC) –Judicial Watch announced today that a hearing will be held in federal court Wednesday, November 14, 2018, on a motion to compel further testimony from former Secretary of State Hillary Clinton and Director of Information Resource Management of the Executive Secretariat John Bentel, as well as make public the audiovisual recordings of the depositions of top Clinton aides and State Department officials, including Huma Abedin and Cheryl Mills.

Clinton claimed that she “does not recall” 20 times in her under-oath responses to 25 Judicial Watch questions concerning her Clinton.com, non-state.gov email system. Bentel asserted his Fifth Amendment right and refused to answer 87 questions at his deposition.

The hearing is before U.S. District Court Judge Emmet G. Sullivan.

More…

Posted by & filed under Jim's Mailbox.

 

 

 

 

 

 

 

 

 

 

Jim,

We brought this up on Saturday, accidents can and do happen…then what?

Dave

Unsafe Military Encounters Are Getting More Frequent
November 10, 2018

This week, a U.S. Navy reconnaissance aircraft flying in international airspace over the Black Sea was intercepted by a Russian fighter jet. The Navy released video footage of the incident, labeling the intercept “unsafe” and “irresponsible”.

The footage shows the Russian SU-27 turning on its afterburners and banking in front of the U.S. EP-3 Aries, creating vibrations which the crew could feel inside.

More…

 

Jim,

We talked about this on Saturday.

Dave

Russia Deploys Its Avangard Glide Vehicle – the Unmatched Leader in Hypersonic Technology
November 8, 2018

On Oct. 12 CNBC reported that Russia had hit a snag in its development of its hypersonic weapon, because it was at the time unable to find a source for the critical carbon fiber components. The news agency stated that the Pentagon had doubts that the Avangard hypersonic glide vehicle (HGV) existed. Skepticism seems widespread. Some believe that Russia’s new super weapons are “virtual reality,” while others think they are “mostly hype.” In March, the National Interest cited Michael Kofman, a research scientist for the Center for Naval Analyses and a highly respected analyst, who offered his assurances that there was no chance Russia could field its hypervelocity boost-glide weapon by 2019.  But history has shown that those who believed it to be just a bluff have been proven wrong.

According to recent Russian media reports, the Avangard hypersonic boost-glide system, one of the new super weapons that President Putin mentioned in his address to the Federal Assembly in March, went into production last summer and will be operational with the 13th Strategic Missile Forces division by the end of 2019. It will be deployed near Yasny, a town 502 kilometers (312 mi) southeast of Orenburg in the southern Urals, by the end of 2019.

Normally it takes two systems for a regiment to be combat ready by that time, but in this case that number will be increased to six. At least two regiments with six systems each are expected to be battle-ready by 2027. According to the state armaments program (GPV2027), twelve UR-100UTTKh (NATO: SS-19 Stiletto) missiles will be integrated into the Avangard hypersonic glide vehicles (HGVs). The deployment of the HGV might begin without additional flight tests. Eventually, the Sarmat RS-28 ICBM could be used to deliver the Avangard, potentially carrying a single, massive thermonuclear warhead with a yield exceeding two megatons.

More…

 

Bill/Jim,

As you said on Saturday, it is all about Sovereign debt!

Dave

The Nation’s Fiscal Doomsday Machine is Now Unstoppable
November 9, 2018

By David Stockman

Earlier this year the Donald provoked a bleep-hole moment per the Fox “family channel” or what was otherwise known as the shit-hole moment across the rest of the MSM.

But whatever you called the contretemps spurred by the president’s crude utterance with regard to certain countries domiciled on the African continent, the claim this was evidence that he’s an incorrigible racist was risible. Actually, we already knew that the Donald is a semi-literate bully, who never got (read) the memo on racial comity—to say nothing of political correctness.

 Still, there is a not inconsiderable share of Washington’s preening, self-important ruling class that indulges in that very same kind of gutter talk on a regular basis when puffing their chests and marking the objects of their displeasure. That’s why the shaming chorus which sprung up from all corners of the Swamp was enough to give hypocrisy a bad name.

 But if we have to have a shaming of politicians, there is a far better reason for it than that unfortunate presidential slur.

More…

Posted by & filed under Jim's Mailbox.

Apologies, there is more to the story below.

JB

Embattled Attorney General Jeff Sessions resigns under pressure from Trump
November 7, 2018

Embattled Attorney General Jeff Sessions resigned at the “request” of President Donald Trump on Wednesday after more than a year of public criticism from the president.

Sessions’s chief of staff Matthew Whitaker will serve as acting attorney general, Trump announced.

Whitaker also will assume oversight of the ongoing investigation by special counsel Robert Mueller into Russian interference in the 2016 presidential election, and possible collusion by Trump’s campaign in that meddling, according to the Justice Department.

Whitaker, who has publicly criticized the Mueller investigation, by law can serve as acting AG for a maximum of 210 days.

More…

 

Jim/Bill,

The latest news this morning regarding international payments systems:

SWIFT Caves To US Pressure, Defies EU By Cutting Off Iranian Banks
November 7, 2018

https://www.zerohedge.com/news/2018-11-07/swift-caves-us-pressure-defies-eu-cutting-iranian-banks

However, Europe will respond:

See the source image

The U.S. is cutting off their nose to spite their face.

Is anything thought through?

Somebody teach these guys the game of chess.  Checkers just doesn’t cut it anymore.

CIGA Wolfgang Rech

Europe’s Alternative To Swift Another Nail In The Dollar’s Coffin
September 27, 2018

Summary

  • Europe’s alternative to SWIFT will allow them to get around trade sanctions the US has put on Iran.
  • Russia, China, and European leaders have all expressed the desire to move past the dollar system for international trade.
  • The Dollar’s reserve currency status is under serious threat considering trade deals being negotiated in other currencies and gold.
  • The Wall Street Journal reports that Europe has agreed to develop an alternative to the SWIFT payments system to facilitate trade with Iran.

    The European Union’s announcement that it would establish a special payments channel to maintain economic ties with Iran sent a clear message to Tehran and Washington: Europe is intent on trying to save the 2015 nuclear deal.

More…

 

Courtesy of Q via JB.

Jim

 

C

 

 

 

 

 

 

 

 

 

 

 

Courtesy of JB.

Jim

The Senate was the target.

Corker + Flake removed.

How do you catch a FISH?

Mission forward.

These people are stupid.

Q

 

Future proves past.

Q

 

 

 

 

 

 

 

More…

 

Jim/Bill,

It’s not the auction itself, but the inner workings that should spook everyone.

Note the common denominator in the past few auctions listed at the end of this posting:  Direct Bidder Collapse!

This could be significant as it represents a lack of demand by asset management firms, which are generally thought of as offsetting any central bank selling.  Here’s a snippet from an older article, but the concept is still the same:

“Global reserves turned negative on a year-over-year basis in the middle of 2015 (blue-line in the chart below). In spite of this and the strong correlation of foreign treasury holdings (red-line), ten-year treasury yields have remained stubbornly low. Many market pundits have theorized that central bank selling pressure in treasuries will be offset by a “risk-off” trade domestically. The argument is that during times of market uncertainty where emerging market governments are grappling with slow economic growth, a flight of capital, and weakening currencies, there is a burgeoning demand among investors and asset managers for treasuries. This demand naturally offsets the selling pressure by Central Banks as they try to stem their currency devaluations by buying their domestic currencies (selling dollars and U.S. treasuries). “

 

 

 

 

 

 

 

 

https://seekingalpha.com/article/3835426-u-s-treasury-auction-showing

My fear is that the consensus of opinion is showing a global slowdown today, as was back in then, but with a major difference…the Direct Bidder is no longer there!

CIGA Wolfgang Rech

Bond Traders Shocked By Dismal 30Y Auction As Direct Bidder Collapse Continues
November 7, 2018

When discussing yesterday’s stellar 10Y auction, we said that we expect today’s sale of $19 billion in 30Y paper to show the same collapse in Direct bidder demand observed that has been observed for the past 2 weeks. Well, that’s precisely what happened. However, it was much more than just that in what was a truly dismal auction.

Starting at the top, the yield on today’s 30Y auction was 3.418%, the highest since April 2014, which tailed the When Issued 3.395% by 2.3bps, the biggest delta in years and a major surprise for the market which did not expect such a poor topline demand heading into today’s auction. The bid to cover was also dreadful, printing at just 2.058, not only far below last month’s 2.419% and the six auction average 2.36%, but also the lowest since February 2009.

Meanwhile, it was the internals where the big “surprise” was to be found once again, as the ongoing Direct bidder collapse emerged again, with Directs taking down just 2.9% of the auction, far below last month’s 12.8%, and the lowest since Sept. 2009. The Treasury has yet to provide some argument or justification for the ongoing boycott by this aspect of the buyside. Offsetting the plunge in Directs was a relatively strong Indirect bid, if at 59.1% it was also the lowest since March 2018. Rounding off the demand were Dealers, who took down 38.1% of the auction, the highest since August 2015.

More…

Bizzare Plunge In Direct Demand Continues In Today’s 3Y Treasury Auction
November 5, 2018

Two weeks ago we observed a series of Treasury auctions, specifically the 2Y, 5Y and 7Y issues in late October, which were generally in line with historical average except for a perplexing collapse in Direct Bidders. Today, this Direct bidder “boycott” continued, when moments ago the Treasury sold $37 billion in an upsized 3Y auction whose most notable feature was the plunge in the Direct takedown.

First, the big picture: the 3Y auction stopped at a high yield of 2.983%, just below last month’s 2.989% and tailing the When Issued 2.980% by 0.3bps, and the 2nd highest since May 2007. The bid to cover printed at 2.54, also in line with last month’s 2.56 if below the 6 auction average of 2.67.

However, it was the internals where the surprise lay again, because while Indirects took down a strong 49.1%, the highest since July, and above the 42.1 6 auction average, the Directs tumbled again, taking down just 3%, or $1.1 billion, of the auction after tendering $2.8BN in bids. This left Dealers holdings 47.9% of the auction, the highest since December 2016.

As we discussed two weeks ago, it remains a mystery why the Direct bid has suddenly dried out, and due to the Treasury’s somewhat nebulous distinction between Directs and Indirects, as well as what and who Dealers actually buy US paper for, it will be next to impossible to get to the bottom of this recent quandary without the Treasury itself chiming in.

More…