Courtesy of Visual Capitalist

This infographic documents the rise and fall of Bre-X.

From initial private offerings at 30 cents a share, Bre-X stock climbed to more than $250 on the open market. Near the peak of Bre-X share prices, major banks and media were on board:

The Peak

• It was touted by media and banks as the “richest gold deposit ever”
• In December 1996, Lehman Brothers Inc. strongly recommended a buy on “the gold discovery of the century.”
• Major mining companies such as Barrick Gold, Placer Dome, and Freeport-McMoRan Copper & Gold, among other top producers, fought an epic battle to get a piece of Bre-X’s Busang deposit.
• Indonesia’s Suharto regime managed to grab 40% of the deposit for Indonesian interests.
• Fidelity Investments, Invesco Funds Group, and other mutual-fund companies piled into the stock.
• J.P. Morgan bankers talked up Busang in a conference call in which Bre-X’s top geologist predicted the deposit might contain a staggering 200 million oz of gold, worth over $240 billion in 2014 prices. Morgan declined to comment.
• Egizio Bianchini, stock broker and one of Canada’s top gold analysts, said “What most people are now realizing is that Bre-X has made one of the great gold discoveries of our generation.”

The Timeline:

1989: David Walsh founded Bre-X Minerals Ltd. in 1989 as a subsidiary of Bresea Resources Ltd.

1993: Walsh followed the advice of geologist John Felderhof and bought a property in the middle of a jungle near the Busang River in Borneo, Indonesia.

1994: Initial drill results were encouraging, and the drill program was ramped up.

1994: However, it was the project manager, Michael de Guzman, who was filing gold from his wedding ring and mixing the flakes in with the crushed core samples.

De Guzman used realistic ratios of gold to rock to not set off alarm bells, and to keep project going forward.
Over the next 2.5 years, de Guzman would buy $61k of panned gold from locals to use in salting.

Independent auditors that were sent in by large institutional investors found that the panned gold had rounded edges, but de Guzman explained it was because of “volcanic pool” theory.

De Guzman, Felderhoff and Walsh sell off a small portion of their options for $100 million

1996: Bre-X hits a snag with the Indonesian government, who claimed that Bre-X was not playing by the “rules” of the country. Bre-X’s exploration permits are revoked.

1997: January fire at Busang destroys many of the sample records.

1997: After many major miners express interest in Bre-X, eventually a joint venture is reached that gives Indonesia 40% share, Bre-X 45%, and Freeport McMoRan a 15% share of interests.

1997: Freeport begins due diligence on deposit and starts to twin holes that were already drilled.

1997: Freeport reports “minor amounts of gold” in some holes, but not much else.

1997: On his way to meet the Freeport due diligence team, de Guzman mysteriously falls to his death 600 ft from a helicopter. Police rule it a suicide.

1997: Shares of Bre-X crash.

1997: Report confirms that there is no gold at Busang, and samples were tampered with.

• Greece requests euro zone loan extension, offers big concessions (Reuters)
• Germany Rejects Loan Request Saying Greece Must Meet Conditions (BBG)
• Did the Fed Just Enter the Currency Wars (BBG)
• French consumer prices fall for first time since 2009 (Reuters)
• Oil falls sharply after U.S. crude inventories rise (Reuters)
• High-Speed Firm Virtu Revives IPO Plans (WSJ)
• Fed Tiptoes Into Rate-Hike Debate (Hilsenrath)
• Rajoy’s Nemesis Is Back: Anti-Graft Editor Targets Vote (BBG)
• Are the World’s Biggest Banks Moving Money for Terrorists? (BBG)
•  U.S. authorities probe alleged forged letter from Mirach in Sahara deal (Reuters)
• McDonald’s Brings Back Tenders, Giving Boost to Chicken Industry (BBG)
• Caterpillar Faces Pileup of Probes and Inquiries (WSJ)
• Apple poaching auto engineers to build battery division (Reuters)
• Sears Turnaround Seen Failing by Traders in Credit-Swaps Market (BBG)

Overnight Media Digest

WSJ

* Federal Reserve officials held detailed discussions in January on the timing and pace of interest-rate increases, though they stopped short of agreeing to specific plans, according to minutes of the meeting. (http://on.wsj.com/1E6ycyK)

* A growing list of federal investigations and inquiries threatens to become a serious embarrassment for Caterpillar Inc , which has long projected a squeaky-clean image. (http://on.wsj.com/1MzdM4O)

* Federal authorities are probing whether a hacker is behind the online posting of a cache of Morgan Stanley's client data - and not the financial adviser who was fired in connection with the breach. (http://on.wsj.com/1DtHHJ2)

* Virtu Financial Inc, one of the world's biggest high-frequency trading firms, is reviving its plan to go public, according to people familiar with the matter. (http://on.wsj.com/1Boqb8u)

* Auto-parts maker Delphi Automotive Plc agreed to sell its car heating and cooling business to Germany's Mahle for more than $700 million in a move to refocus on higher margin electronic safety and self-driving technologies. (http://on.wsj.com/1ESXKNq)

* NBC's "Nightly News" held on to first place in the ratings last week, but its numbers took a tumble with Lester Holt sitting in the anchor chair in place of Brian Williams. (http://on.wsj.com/17X3L1N)

* Samsung Electronics Co Ltd said it had acquired a U.S. startup whose technology is likely to underpin the South Korean technology giant's new mobile-payment service. The deal to buy LoopPay Inc, represents the clearest signal that Samsung intends to compete aggressively with Apple Inc in trying to change consumer behavior at the checkout counter. (http://on.wsj.com/17X4ikr)

FT

British businesses fear the charge towards regional devolution will damage growth and undermine the internal market, Confederation of British Industry, the country's largest employers' group will say on Thursday.

Secret policies for eavesdropping on confidential conversations between lawyers and their clients by British spy agencies do not adhere to European human rights laws, the government has admitted.

The adoption of expensive new drugs by the National Health Service is doing patients more harm than good, according to a research report by the University of York urging sharp reduction in the price pharmaceuticals companies are paid for their products.

Harriet Yeo, a former head of Labour's ruling body, the National Executive Committee said she has left the party to support the anti-EU UK Independence Party at the next election as she was "disillusioned" with its failure to offer a referendum on Britain's membership of the EU.

NYT

* The new leftist-led Greek government plans to submit a new proposal on Thursday. The ability of Greece and its banks to remain solvent could depend just as much on Mario Draghi and a series of decisions by the European Central Bank that might determine the financial fate of Greece. (http://nyti.ms/1EqVjBT)

* The Safra Group, led by Joseph Safra, recently bought Chiquita Brands International, the fruit company, and the London office tower known as the Gherkin. (http://nyti.ms/1AIIhCh)

* The Federal Reserve does not sound like an institution that is ready to raise its benchmark interest rate in June. Fed officials at their most recent policy-making meeting in January worried that economic growth remained fragile, and that raising rates prematurely could undermine recent gains, according to an official account released Wednesday. (http://nyti.ms/1JqLlab)

* Uber has expanded its Series E round of venture financing by $1 billion, according to documents filed Wednesday with the Delaware secretary of state, bringing the total capacity for the round up to $2.8 billion. (http://nyti.ms/1CLoxsL)

* The United States Marshals Service announced that it would auction 50,000 Bitcoins, worth nearly $12 million, seized in connection with the online marketplace Silk Road. The Bitcoin auction, to be held on March 5, comes more than two months after the service's second Bitcoin auction in December, when it also sold 50,000 Bitcoins. (http://nyti.ms/1E8gg6T)

* Unusually close competition among films that have split pre-Oscar honors most prominently, "Birdman" and "Boyhood" has brought Hollywood table talk about subtle maneuvers and well-managed serendipity that have made Fox Searchlight the company to beat. (http://nyti.ms/1FwmRtp)

Canada

THE GLOBE AND MAIL

** Sales of luxury vehicles hit a record in Canada last year and Porsche Cars Canada Inc is riding the wave. Porsche posted the best year-over-year percentage increase of any auto maker in Canada, topping off a four-year run that has doubled sales. (http://bit.ly/1CLZCrD)

** Ontario Superior Court ruled on Wednesday that Target Canada's franchised pharmacists should get C$100,000 ($80,103) from Target Canada to cover their legal and financial advice in the insolvency proceedings of the chain, which is closing all 133 of its stores by mid-May. (http://bit.ly/1DEdiGs)

** Islamic jihadis have "declared war on Canada and its allies," posing a grave threat and justifying sweeping new surveillance of terrorist suspects, Minister of Public Safety Steven Blaney said on Wednesday as he headed to a summit hosted by U.S. President Barack Obama on countering violent extremism. (http://bit.ly/1LdUWwO)

** Barrick Gold Corp slashed jobs and hung the for sale sign on some of its Asia-Pacific assets, as the Canadian company vowed to reduce its debt by at least $3-billion this year. (http://bit.ly/1G6PdrE)

** The Canadian government has failed to get Washington to pay the roughly $250 million needed to build a U.S. Customs plaza on the Michigan side of a new Detroit-Windsor bridge. Ottawa will be responsible for financing the entire cost of the $2.1-billion bridge, including access roads on both sides of the Detroit River as well as U.S. border installations, under a deal announced on Wednesday. (http://bit.ly/1Jr5ooX)

NATIONAL POST

** Leonard Asper, whose family built, and later lost, the Canwest Global Communications Corp empire, had scrambled a last-ditch effort to buy Sun News Network. That was less than 72 hours before its owner, Quebecor Media, officially pulled the plug on it. (http://bit.ly/17Y8tfR)

** Ezra Levant, left unemployed by the demise of Sun News, is hoping to emulate the success of U.S. commentator Glenn Beck by launching his own subscription-based conservative website. (http://bit.ly/1Jr4F7j)

** Parti Quebecois leadership candidate Pierre Karl Peladeau is not excluding the possibility of Quebec becoming an independent country based on an election result that would put the party in power. (http://bit.ly/1vJ8IQW)

** Finance Minister Joe Oliver came under fire on Wednesday over allegations his office broke federal rules by sole-sourcing speechwriting services in 2013 for C$9,200 to the law firm of Guy Giorno - Prime Minister Stephen Harper's former chief of staff. (http://bit.ly/1EVyl5O)

Britain

The Times

OLD MUTUAL PUTS CITY BOARDS ON NOTICE OVER TESCO-STYLE 'REWARDS FOR FAILURE'

In a defiant move inspired by perceived "rewards for failure" at Tesco Plc, Old Mutual Global Investors threatened to vote against any company that has failed to shorten service contracts for main board directors to under a year by next March. (http://thetim.es/1LeSg3K)

The Guardian

UK ADMITS UNLAWFULLY MONITORING LEGALLY PRIVILEGED COMMUNICATIONS

The regime under which UK intelligence agencies, including MI5 and MI6, have been monitoring conversations between lawyers and their clients for the past five years is unlawful, the British government has admitted. (http://bit.ly/1ASzex6)

UK EMPLOYMENT RATE HITS HIGHEST LEVEL SINCE RECORDS BEGAN

David Cameron has hailed news that Britain's employment rate is at the joint highest level since records began in 1971 as evidence that the economy is strengthening. (http://bit.ly/1AkGBf0)

The Telegraph

MONSOON BOSS JOHN BROWETT QUITS

John Browett, who left Apple after just six months in charge of its retail operations, has suddenly quit his position as chief executive of fashion chain Monsoon Accessorize. (http://bit.ly/17VL0M9)

PUTIN WILL TARGET THE BALTIC NEXT, DEFENCE SECRETARY WARNS

There is a "real and present danger" that Vladimir Putin will launch a campaign of undercover attacks to destabilise the Baltic states on Nato's eastern flank, the Defence Secretary has warned. (http://bit.ly/1LeNPpC)

Sky News

LLOYDS AND RBS FACE REPEAT OF CASH BONUS CAP

Lloyds Banking Group and Royal Bank of Scotland have been in discussions with UK Financial Investments , the agency which manages taxpayers' stakes in the two lenders, about their pay structures for 2014. (http://bit.ly/1ET0SZK)

ECB EXTENDS FUNDING FOR GREEK BANKS - REPORTS

The European Central Bank has decided to increase its emergency funding to Greek commercial banks, it has been reported. (http://bit.ly/1A7poab)

The Independent

GREEK BAILOUT: GREECE TO ASK EUROZONE FOR EXTENSION OF LOAN DEAL BUT STAND FIRM AGAINST AUSTERITY MEASURES

The Greek government has confirmed it is to ask the Eurozone for a six-month extension of its European loan agreement today. (http://ind.pn/1AHAzZa)

Fly On The Wall Pre-market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Jobless claims for week of Feb. 14 at 8:30--consensus 290K
Philadelphia Fed survey for February at 10:00--consensus 8.2
Leading indicators for January at 10:00--consensus up 0.3%
EIA natural gas storage change for week of Feb. 13 at 10:30
DOE petroleum inventory reports for week of Feb. 13 at 11:00

ANALYST RESEARCH

Upgrades

Angie's List (ANGI) upgraded to Overweight from Equal-Weight at First Analysis
Coach (COH) upgraded to Buy from Hold at Topeka
Fiat Chrysler (FCAU) upgraded to Outperform from Neutral at Exane BNP Paribas
Garmin (GRMN) upgraded to Buy from Neutral at BofA/Merrill
Hologic (HOLX) upgraded to Buy from Hold at Canaccord
Monster Worldwide (MWW) upgraded to Buy from Hold at Evercore ISI
Pharmacyclics (PCYC) upgraded to Buy from Neutral at Nomura
RPC, Inc. (RES) upgraded to Equal Weight from Underweight at Morgan Stanley
Sanofi (SNY) upgraded to Buy from Neutral at BofA/Merrill
Sasol (SSL) upgraded to Neutral from Underweight at HSBC
Tractor Supply (TSCO) upgraded to Outperform from Perform at Oppenheimer
Valero (VLO) upgraded to Buy from Hold at Deutsche Bank
Weingarten Realty (WRI) upgraded to Neutral from Sell at UBS
Werner (WERN) upgraded to Outperform from Sector Perform at RBC Capital

Downgrades

Castlight Health (CSLT) downgraded to Hold from Buy at Canaccord
Delek US (DK) downgraded to Hold from Buy at Deutsche Bank
EOG Resources (EOG) downgraded to Neutral from Buy at Citigroup
Heartland Express (HTLD) downgraded to Sector Perform from Outperform at RBC Capital
Huntsman (HUN) downgraded to Neutral from Buy at Citigroup
Intelsat (I) downgraded to Neutral from Buy at UBS
Intelsat (I) downgraded to Underweight from Neutral at JPMorgan
Mazor Robotics (MZOR) downgraded to Hold from Buy at Needham
Pharmacyclics (PCYC) downgraded to Neutral from Buy at Roth Capital
Pharmacyclics (PCYC) downgraded to Neutral from Overweight at JPMorgan
Potbelly (PBPB) downgraded to Underperform from Neutral at BofA/Merrill
Sasol (SSL) downgraded to Neutral from Buy at BofA/Merrill
Terex (TEX) downgraded to Market Perform from Outperform at BMO Capital

Initiations

Alaska Air (ALK) reinstated with an Underperform at BofA/Merrill
Allegiant Travel (ALGT) reinstated with a Buy at BofA/Merrill
American Airlines (AAL) reinstated with a Buy at BofA/Merrill
Delta Air Lines (DAL) reinstated with a Buy at BofA/Merrill
EPIRUS (EPRS) initiated with an Outperform at Wedbush
Endo (ENDP) resumed with a Buy at Citigroup
Hawaiian Holdings (HA) reinstated with an Underperform at BofA/Merrill
JetBlue (JBLU) initiated with a Buy at BofA/Merrill
Proto Labs (PRLB) initiated with a Sector Perform at Pacific Crest
Southwest (LUV) initiated with a Buy at BofA/Merrill
Spirit Airlines (SAVE) reinstated with a Buy at BofA/Merrill
United Continental (UAL) initiated with a Neutral at BofA/Merrill
Virgin America (VA) reinstated with an Underperform at BofA/Merrill

COMPANY NEWS

Ball's (BLL) proposed acquisition of Rexam (REXMY) valued at $8.4B
Verizon (VZ) named John Stratton as head of wireless and wireline operations
T-Mobile (TMUS) said COO Jim Alling resigns, effective March 13, and named Mike Sievert as COO
Kimberly Clark (KMB) CFO Buthman to retire at year end, Maria Henry to succeed
Lockheed Martin (LMT) named Dana Jackson as Chief Technology Officer 
Cubic Corporation (CUB) announced the next steps in streamlining its corporate and business segment operations as part of a company-wide activity to improve profitability and competitiveness through its One Cubic initiatives. These initiatives are anticipated to yield $15-16M in annualized pre-tax savings in FY16

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Hormel Foods (HRL), LPL Financial (LPLA), State Auto Financial (STFC), T-Mobile (TMUS), Teekay Tankers (TNK), Parker Drilling (PKD), Key Energy (KEG), Axiall (AXLL), Barrick Gold (ABX), PRA Health (PRAH), Sunoco (SUN), Coeur Mining (CDE), IAMGOLD (IAG), Oil States (OIS), Employers Holdings (EIG), Apollo Residential Mortgage (AMTG), Theravance (THRX), AVG Technologies (AVG), Six Flags (SIX), Marriott (MAR), Convergys (CVG), Maiden Holdings (MHLD), Altra Holdings (AIMC), SunEdison Semiconductor (SEMI), iPass (IPAS), On Assignment (ASGN), SunEdison (SUNE), United Insurance (UIHC), Synopsys (SNPS), Universal Forest (UFPI), Rex Energy (REXX), Trinity Industries (TRN), Grand Canyon (LOPE), ONE Gas (OGS), Nova Measuring (NVMI), Fidelity National (FNF), Williams (WMB), BJ's Restaurants (BJRI), XPO Logistics (XPO), LDR Holding (LDRH), Intrepid Potash (IPI), Castlight Health (CSLT), Pharmacyclics (PCYC), ARRIS (ARRS)

Companies that missed consensus earnings expectations include:
Pan American Silver (PAAS), Remy International (REMY), Energy Transfer Equity (ETE), SolarCity (SCTY), America's Car-Mart (CRMT), Curtiss-Wright (CW), Questar (STR), EOG Resources (EOG), Regency Energy Partners (RGP), EarthLink (ELNK), Marathon Oil (MRO), Sunoco Logistics (SXL), ExamWorks (EXAM), Tenaris (TS), KEYW (KEYW), American Railcar (ARII), Regulus (RGLS), YuMe (YUME), EVERTEC (EVTC), B&G Foods (BGS), Interface (TILE), Western Gas Partners (WES), Datalink (DTLK)

Companies that matched consensus earnings expectations include:
Quanta Services (PWR), Alamos Gold (AGI), Steiner Leisure (STNR), Healthstream (HSTM), ManTech (MANT), Denny's (DENN)

Hormel Foods (HRL) raises FY15 adjusted EPS to $2.50-$2.60 from $2.45-$2.55
BAE Systems (BAESY) reports 2014 operating profit GBP1.3B vs. GBP806M last year, sees 2015 underlying EPS marginally higher vs. 2014
Curtiss-Wright (CW) sees FY15 EPS $3.80-$3.90, consensus $3.50
Marriott (MAR) sees Q1 EPS 68c-72c, consensus 66c, sees FY15 EPS $3.00-$3.12, consensus $3.03

NEWSPAPERS/WEBSITES

Authorities investigating possible hack in Morgan Stanley (MS) leak, WSJ reports
A123 Systems (AONE) sues Apple (AAPL) for poaching employees, WSJ reports
YouTube (GOOG) to unveil paid music service soon, Reuters reports
Air France-KLM (AFLYY) to reduce investments, make 800 job cuts, Financial Times says
Lockheed Martin (LMT) on track to cut cost of F35 jets by 30%, Financial Times reports

SYNDICATE

Netlist (NLST) files to sell common stock, no amount given
Stamps.com (STMP) files to sell 769k shares of common stock for holders

Submitted by John Rubino via DollarCollapse.com,

One (perhaps the only) bright spot in the past few year’s gold market has been Chinese and Indian demand for the metal. Here’s a chart, courtesy of Ed Steer’s Gold & Silver Daily, showing that the two countries have imported a cumulative 15,000 tonnes since 2008, which is not far from the total production of the world’s gold mines in that period.

But physical bullion is only part of the story, and may not be the biggest one going forward. Speculation has been circulating for years that China’s miners, flush with cash from selling their low-cost output to the government, would soon start buying up the world’s in-ground gold reserves. Here’s a representative opinion from 2010:

China buying Gold Mines Instead of Gold Bullion

A top industry official from the China Gold Association told The China daily back in February that the Chinese purchase of IMF bullion would cause market speculation and volatility. Instead, China is continuing to buy gold not directly from the market but through acquiring gold mines…abroad!

Dennis Gartman reported in March: “Perhaps we are to begin owning gold mines rather than gold futures of gold ETFs. We have avoided owning mines for years, preferring the “purer” play of owning gold rather than the mines, for we fear being exposed to poor mine management, or accidents in a mine that might do damage to the equity while gold itself moves higher. But if the Chinese authorities want to own mines, perhaps we have to consider doing so also…"

Why shouldn’t this make sense? After all, where do investors want to put their money? Banks are unsafe. Stocks are unsafe and speculative. With Real Estate at least you have a tangible asset and it will hold some value despite market busts. And buying Gold Bullion, especially buying in large quantities, can cause the prices to fluctuate significantly.

The best bet? Gold Mines! Maybe even patented gold mines where the investors own both the title to the land AND the Gold in the ground. Get ready to see a huge surge in gold mine buyers, especially from China!

That was obviously a little optimistic, since mining shares have plunged in the ensuing five years. But price action notwithstanding, the speculation didn’t let up. From 2013:

5 reasons China is coming to buy your gold mine

Chinese producers are aggressively looking at picking up gold companies and mines elsewhere as domestic demand reaches record highs.

Takeovers and asset purchases by Hong Kong and mainland miners increased to a record $2.2 billion in 2013 according to data compiled by Bloomberg.

Chinese companies like Zijin Mining Group and Zhaojin Mining Industry Co are in a good position to to take a bite out of struggling North American and European-based producers because:

• Chinese gold demand is soaring and at 1,000 tonnes will overtake Indian purchases this year, but domestic deposits are less than 5% of the global total.

• Targets are cheap – the S&P/TSX Global Gold Index of the globe’s 49 biggest gold companies are down 31% this year alone.

• Domestic Chinese producers enjoy some of the lowest cash costs – Zhaojin manages $549/oz, compared with a global average of $831/oz

• Chinese and Hong Kong companies have access to cheap capital – Zijin got $4.9 billion in soft loans from a state bank for M&A

• The majors are actively looking to sell as debt levels increase and high-cost mines are mothballed – Barrick could dump as many as 12 of its mines.

Possible targets include:
• Australia’s Mali-focused Papillion Resources ($390 million)
• Toronto-based Iamgold ($2.5 billion)
• Amara Mining active in West Africa ($48 million)
• Perseus Mining ($325 million) with producing mines in Ghana and Cote d’Ivoire

While these companies are looking to get rid of a number of mines:
• Barrick Gold
• Newmont Mining Corp
• Gold Fields
• Alacer Gold Corp

Again, too early. Mining stocks are down by about half since that article was published.

But now, finally, the China-buying-all-the-gold-mines scenario has begun to solidify. From last week:

Barrick Gold Sells 50% Stake In Big PNG Gold Mine To The Chinese

In what it describes as a ‘long-term strategic co-operation agreement which outlines the intent of both companies to collaborate on future projects’ Barrick (NYSE:ABX) is to sell a 50% stake in Barrick (Niugini) Limited (which owns 95% of the Porgera gold mine in Papua New Guinea) to China’s Zijin Mining (OTCPK:ZIJMY) for $298 million in cash. Barrick (Niugini) Mining is wholly-owned by its parent company.

Porgera, in production terms, is one of the world’s larger gold mines. Barrick’s share of gold production in 2014 was 493,000 ounces at all-in sustaining costs of $996 per ounce. Barrick’s share of proven and probable mineral reserves as at December 31, 2014, was 3 million ounces of gold.

From the Zijin standpoint this will all be a part of the overall Chinese move to secure supplies of strategic metals from around the world to meet its future needs. And China considers gold as very much a strategic metal on the economic front, particularly as it tries to increase its global trading influence over the next few years – which seems to be a key aim of the nation’s government. A $298 million outlay for a share in annual production amounting to 250-275,000 ounces of gold in a single year strikes one as a pretty good deal for the Chinese – and Porgera has an expected mine life of at least another five or six years, and this may well prove to be a conservative estimate.

Despite the “win-win” rhetoric, it’s clear that at this point in the gold price cycle the power is with the deep-pocketed Chinese while the many, many miners who brought expensive mines on-line just in time for financing to dry up are there for the taking. So — just based on current market conditions and leaving aside long term strategic considerations — it’s reasonable to expect plenty of similar deals in the next few years, and that the end result will be Chinese control of reserves that dwarf the bullion now sitting in its bank vaults.

Whether this is a buy signal for the gold mining sector remains to be seen. A falling gold price would, without doubt, more than offset the occasional merger. But in a world of stable to slightly higher gold prices, the presence of big Chinese buyers would make the dominant question “who will they buy next?” and that’s great news for the takeover candidates.

• Only update software on down days: NYSE, SEC Suspect Software Update Triggered Trading Halt (BBG)
• Trade halts add to China’s Potemkin market problem (Reuters)
• Why Beijing’s Efforts Have Failed to Tame China’s Stock Market (WSJ)
• China stems stocks rout, but market faces lengthy hangover (Reuters)
• Irrational Exuberance Triggers Chaos as China Watchdog Sidelined (BBG)
• China bounce ends five-day losing streak for stocks (Reuters)
• Fear Grows in Greece as Decisive Hour Nears (WSJ)
• Greece Shuts Markets Through July 13 as Officials Debate Bailout (BBG)
• Once Swarming with Greek Visitors, a Bulgarian Town Reels as Business Languishes (WSJ)
• Robots on Wall Street? Firms Try Out Automated Analyst Reports (WSJ)
• Germany calls for European defence sector consolidation (Reuters)
• Proof That Merkel Is Europe’s Economic Bully (BBG)
• California Farms Are Using Fracking Wastewater to Grow Crops (BBG)
• Chat Apps Take a Swipe at Facebook (WSJ)
• Draghi said to doubt Greek solution as Tsipras reforms awaited (Reuters)
• Hit by drought and seawater, Bangkok tap water may run out in a month (Reuters)
• Oil Rout Seen Ending as Demand Trumps China’s Market Crash (BBG)
• Jared Isn’t Subway’s Only Problem (BBG)
• Keep It Quiet, Aide Tells Shouting Kerry and Iran Minister (BBG)
• South Carolina poised to remove Confederate flag on Thursday (Reuters)

Overnight Media Digest

WSJ

* Recent moves by Chinese authorities to try to stem stock market losses have only heightened what is turning into an epidemic of anxiety among Chinese investors. (on.wsj.com/1Cqhwnn)

* The New York Stock Exchange resumed trading after technical problems forced a halt earlier Wednesday, jarring investors and traders already unnerved by recent volatility across global financial markets. (on.wsj.com/1Cqhwnn)

* Facebook Inc popularized the notion of an online social network a decade ago. Now, the rapid rise of messaging services is changing social networking, as users increasingly communicate one-to-one. (on.wsj.com/1NPSSNL)

* As its creditors continue to express skepticism and capital controls bite into supplies of cash and even medicine, many Greeks are finding the euphoria after Sunday's "no" vote fading fast. (on.wsj.com/1JQHH9t)

* Federal Bureau of Investigation Director James Comey said Wednesday the White House soon will announce that "millions and millions" of government background investigation records - dating back 20 years - were stolen by hackers who broke into the Office of Personnel Management's network. (bloom.bg/1LXzuAY)

* Apple Inc is preparing for a larger initial production run of its next iPhones, betting that even modest hardware changes will entice consumers to upgrade handsets and outstrip demand for the larger-screen phones that it released last year. (on.wsj.com/1eFV9iZ)

* Paramount Pictures has struck a deal with two major cinema chains to make new movies available to watch at home just two weeks after they leave most theaters. The new arrangement will begin with two smaller films, but the Viacom Inc- owned studio hopes to continue with the strategy, potentially changing the calculus of movie distribution for studios and exhibitors alike. (on.wsj.com/1HODNf5)

FT

Germay's three big car makers lead a 3.5 billion euros ($3.87 billion) race to acquire Nokia's maps business. Talks between Nokia and BMW, Daimler and Audi, a unit of Volkswagen, over the sale are ongoing but no decision has been made by Nokia. The Finnish company has not committed to selling the unit, having made it clear to bidders that it would only offload its mapping unit if the price offered met its expectations.

Microsoft Corp said on Wednesday it would cut 7,800 jobs, or nearly 7 percent of its workforce, and write down about $7.6 billion related to its Nokia phone business.

Barclays Plc said on Wednesday it fired Chief Executive Antony Jenkins after he had a row with the bank's investment bank head, Tom King, over the future of the troubled division.

NYT

* Facing unknown consequences if Greece is pushed out of the euro zone, citizens are buying appliances and jewelry, and even prepaying their taxes. (nyti.ms/1NPLrpQ)

* International Business Machines Corp said on Thursday that it had made working versions of ultradense computer chips, with roughly four times the capacity of today's most powerful chips. (nyti.ms/1LTrzUh)

* Microsoft Corp will shed more than 6 percent of its workers and take a charge against earnings related to its acquisition of Nokia's smartphone business. (nyti.ms/1dLT8kk)

* Hedge funds that used a strategy to claim billions of dollars in tax savings will face new scrutiny from the government, according to guidance issued by the Internal Revenue Service on Wednesday. (nyti.ms/1IKOUGL)

* Trading on the New York Stock Exchange was shut down for hours on Wednesday as the exchange tried to cope with what appeared to be a technical malfunction. (nyti.ms/1Mf0KaW)

* Despite further efforts by Beijing to calm trading, shares plunged on Wednesday, extending a rout that began last month. (nyti.ms/1LXDrFQ)

Canada

THE GLOBE AND MAIL

** A pair of investors has scrapped a $2 billion takeover offer for Pacific Rubiales Energy Corp after facing a opposition to the deal in a campaign led by shareholders. Pacific Rubiales said Mexico's Alfa SAB and Harbour Energy Ltd, which had offered $6.50 per share for the company, had withdrawn the bid they had launched in May. (http://bit.ly/1KQJNX8)

** The Quebec government is heading back to court to again challenge Ottawa's plan to create a national securities regulator. Quebec has sent the securities regulator proposal to the Quebec Court of Appeal for a decision on its constitutionality. (http://bit.ly/1KQJYBZ)

** Precision Drilling Corp, Canada's largest drilling services company, sees the potential for more spending by customers in the second half. The company sees some room for the North American rig count to rebound as customers restart wells and upgrade equipment after cutting costs, chief executive Kevin Neveu said in an interview. (http://bit.ly/1KQK5gE)

NATIONAL POST

** Bank of Montreal's Doug Porter and Royal Bank of Canada's Mark Chandler joined a growing list of economists calling for Canada's central bank to cut interest rates next week on signs of a faltering recovery. The two predicted Wednesday the Bank of Canada will reduce its overnight rate to 0.5 per cent at the next decision July 15. (http://bit.ly/1KQKsYN)

** BHP Billiton Ltd, Teck Resources Ltd, HudBay Minerals Inc and China Molybdenum Co Ltd are among the companies that submitted final bids for Barrick Gold Corp's Zaldivar copper mine in Chile, people with knowledge of the matter said. (http://bit.ly/1KQKy2k)

** Ottawa needs to build a fund of up to $9 billion that would cover taxpayer losses from mass defaults and staunch the effects of a U.S. style housing collapse, a new report by the C.D. Howe Institute claims. (http://bit.ly/1KQL54B)

China

SOUTH CHINA MORNING POST

-- Fewer police officers have unmanageable debt problems, but more have fallen behind with their tax payments, according to a document submitted to the Legislative Council security panel by the Security Bureau. (http://bit.ly/1KPTtkD)

-- A staff union that represents railway workers on the MTR has slammed the average 5.25 percent pay rise offered by the MTR Corporation, demanding an 8 percent rise instead. The Federation of Railway Trade Unions expressed fears that workers' morale would plummet and warned of possible strike action. (http://bit.ly/1HgML3m)

-- The outbreak of Middle East Respiratory Syndrome in South Korea has prompted Wing On Travel - one of Hong Kong's largest tour operators - to slash its forecast for business growth by up to 4 percentage points. (http://bit.ly/1gpd8vh)

THE STANDARD

-- Hong Kong employees are less likely to look for jobs elsewhere compared to their global counterparts, but are more willing to be headhunted. A LinkedIn survey found that 74 percent of local professionals were considered "passive talent," meaning they were not actively looking for another job. (http://bit.ly/1KPUIAx)

-- Hong Kong Export Credit Insurance Corporation said Greece accounts for a tiny portion of local exports and its insured business in Europe, and so far no compensation has been given due to capital controls imposed there. (http://bit.ly/1eHuP86)

HONG KONG ECONOMIC TIMES

-- Business of mid- to high-end restaurants in the city is likely to be hit by the recent stock market plunge with consumers not wanting to spend on food and beverages, leading to a drop of about 10 percent in business, said Hong Kong Federation of Restaurants & Related Trades Ltd's president Simon Wong. Some high-end restaurants expect a 20-30 percent drop in business.

Britain

The Times

UK'S OSBORNE DRAWS BATTLE LINE WITH BUSINESS OVER 9 POUND LIVING WAGE

UK Finance Minister George Osborne irritated small business leaders by announcing that he is going to force all companies to pay staff a minimum wage of 9 pounds ($13.83) an hour by 2020. (http://thetim.es/1NPpZ4k)

Barclays chief Antony Jenkins fired after board shake-up

Barclays has begun a search for a new leader with investment banking experience to take control of the banking group as it tries to boost growth and meet sweeping regulatory requirements to restructure. (http://thetim.es/1NU2UOu)

The Guardian

BUDGET BOOST FOR HMRC IN NEW PUSH ON TAX EVASION

Her Majesty's Revenue and Customs tax investigators are to be armed with 800 million pounds of extra funding over the next five years to combat tax evasion and non-compliance, the chancellor has promised, as part of a drive to raise 7.2 billion pounds. (http://bit.ly/1KPNrk5)

UK'S CHANCELLOR HANDS BUSINESSES 6.6 BLN POUNDS IN TAX CUTS AND GIVEAWAYS

Businesses have been handed a surprise 6.6 billion pound tax cut, as the chancellor also unveiled a number of new measures designed to boost the private sector and Britain's flagging productivity. (http://bit.ly/1IKjIaC)

The Telegraph

UK'S OBR SAYS STRONG CHANCE OSBORNE WILL NOT BALANCE BOOKS BY 2020

Robert Chote, head of the UK's Office for Budget Responsibility, the government's independent fiscal watchdog, said the Chancellor's ability to deliver budget surpluses past 2020 will be hampered by Britain's demographic challenge. (http://bit.ly/1JUTEbw)

GEORGE OSBORNE GIVES MORE POWERS TO ENGLISH CITIES

Devolution in England "has only just begun", Finance Minister George Osborne has said, as he unveiled plans to give more power to cities in a bid to boost economic growth across the country. (http://bit.ly/1HOXm6Y)

Sky News

TUBE STRIKE ACTION BRINGS UK'S UNDERGROUND TO HALT

Tube services have ground to a halt with the start of a 24-hour strike that has been branded "illegitimate" by the boss of London Underground. (http://bit.ly/1J5iW3D)

PAY RISE FOR UK WITH 'NATIONAL LIVING WAGE'

The Chancellor pledges a "higher wage, lower tax" Britain - but is accused of lining the country up for "years of pain". (http://bit.ly/1LXnwHA)

The Independent

SMITHS GROUP LURES GKN CHIEF ANDREW REYNOLDS SMITH WITH 5 MLN POUND DEAL

The airport scanner maker Smiths Group has appointed Andrew Reynolds Smith as its new chief executive, luring him from rival GKN with a 4.9 million pound pay package. (http://ind.pn/1LXnLCl)

MARKS AND SPENCER ASSAILED ON ALL FRONTS BY SHAREHOLDERS

Marks and Spencer's board has faced a barrage of criticism from shareholders at its annual general meeting. (http://ind.pn/1TmwHCr)

If yesterday's market action was boring, today has been a virtual carbon copy which started with the usual early Chinese selloff levitating into a mildly positive close, with the SHCOMP closing just above the psychological 4,000 level: the next big hurdle will be 4058, the 38.2% Fib correction of the recent fall.

The Nikkei likewise rallied into the close after a massive Toshiba accounting scandal sent the stock higher, even if it cost the CEO his position. European equities are mixed with an early push lower becoming a flattish morning. The Euro Stoxx 50 future is down small, still eyeing its April 13 high at 3769, above which the future would be trading at 200 levels.

In the US equity futures are currently unchanged ahead of a day in which there is no macro economic data but lots of corporate earnings led by Microsoft, Verizon, UTX and of course Apple. Most importantly, some modest USD weakness overnight (DXY -0.1%) has helped the commodity complex, with gold rebounding from overnight lows, while crude has at least stopped the recent carnage which sent WTI below $50.

Asian equities rose following modest gains on Wall Street, as technology names bolstered US indices ahead of earnings from tech giants Apple and Microsoft, which saw the NASDAQ Comp print fresh record highs . Consequently, the Nikkei 225 (+0.9%) rose and is now on course to post its 2nd longest winning streak of the year as participants played catch up on return from their elongated break. Hang Seng (+0.5%) and Shanghai Comp (+0.6%) traded in volatile fashion, with initial weakness following reports that some margin lenders are to require clients sell stocks purchased through margin debt. However, Chinese stocks then shrugged off losses and are on course for its longest run of gains since May. JGB's traded relatively flat with minor gains seen as the BoJ conducted its large JGB purchase program.

Less than impressive earnings by blue-chip names including Novartis (-2.6%) this morning and IBM after yesterday's close weighed on sentiment in Europe this morning . As a result, stocks traded lower since the get-go (Euro Stoxx: -0.1 %), with health-care and information technology sectors underperforming as a result. Consequently, this supported the bid tone by Bunds, with market participants failing to react positively to the reports that the Greek government has submitted a bill on bailout prior measures to parliament as per the request of Greece's creditors, measures including actions such as bank restructuring.

In FX, despite the growing expectations of a rate hike by the Fed, the USD index traded lower, albeit marginally (-0.1%), driven by the upside by EUR/USD after stops were tripped on the break of overnight high, which in turn supported GBP/USD and subsequently saw USD/JPY move into negative territory.

Antipodeans were in focus in the Asia-Pacific session with AUD/NZD notably underperforming in the wake of RBA minutes, where the RBA reiterated that further AUD depreciation is likely and needed. Elsewhere, NZD continued to extend on gains after NZ finance minister English stated that dairy prices could recover by year-end coupled with reports of Tokyo-based banks buying in NZD/JPY.

Precious metals have seen a paring of some of yesterday's heavy losses, with spot gold and platinum both up over USD 10/oz on the day. However gold still remains near 5 year lows, with analysts at ABN Amro suggesting that gold will reach USD 1,000/oz due to the firmer USD amid Fed's rate outlook. Elsewhere, WTI and Brent crude futures have swung between gains and losses amid light fundamental news, with WTI Sep'15 crude futures briefly falling below the psychological USD 50/bbl handle ahead of today's API crude oil inventories (Prey. -7300k).

There is little in terms of tier-1 data releases, however market participants will be looking out for comments from BoE's Carney, especially following a raft a hawkish comments by the fellow MPC and ahead of tomorrow's release of the BoE July meeting minutes.

Today's most notable US earnings report comes in the form of Apple, who are scheduled to report after markets with the likes of Microsoft, Verizon and United Technologies also scheduled to report.

US Event Calendar From Bloomberg and RanSquawk

• Less than impressive earnings by blue-chip names has weighed on sentiment in Europe
• Despite the growing expectations of a rate hike by the Fed, the USD index traded lower, albeit marginally
• Today sees comments from BoE's Carney and earnings from Apple, Microsoft and United Technologies
• Treasury curve steepens overnight amid “commodity rout” that has sent Bloomberg Commodity Index to 13-year low; no economic data releases today.
• Volumes were reported light in futures (40% normal) and cash (60%), ED&F Man head of U.S. rates Tom DiGaloma writes
• The worst isn’t over yet for gold. That’s what options trading is signaling, at least, as two of the three gold options attracting the most volume on Monday were wagers on further declines
• European Commissioner Pierre Moscovici said Greece’s European creditors have agreed to provide debt relief so long as the country’s government can deliver on the terms of its third bailout package
• Puerto Rico’s budget director ratcheted up the risk of a default on some agency securities, saying cash from the commonwealth’s operating budget won’t be redirected to make debt payments due next month
• Treasury investors are starting to believe in a September interest-rate increase again. Futures show a 42% chance the Federal Reserve will raise borrowing costs in that month, up from 35% odds a week ago
• BoE close to taking concrete step toward first interest-rate increase in eight years as at least one Monetary Policy Committee member will vote next month to raise the key rate from a record low, according to 65% of 26 economists in a Bloomberg survey
• Sovereign 10Y bond yields mostly steady. European stocks mixed, Asia higher; U.S.equity- index futures mixed. Crude oil drops, copper and gold rise

US Event Calendar

• 10am: Revisions to U.S. Industrial Production data
• 11:30am: U.S. to sell $25b 1Y bills, $40b 4W bills

DB's Jim Reid concludes the overnight event recap as usual

With Greece now paying its bills with freshly borrowed money and few serious players allowed to short or sell the Chinese stock market it does feel like markets are becalmed again and have been allowed to settle into a typical summer lull. Yesterday was pretty dull but we did see the S&P 500 (+0.08%) briefly pass its record closing high intra-day before retracing gains into the close. It seemed Energy was to blame for the softer close as the recent commodity rout continued quietly in the background. WTI (-1.45%) dipped below $50 at one stage for the first time in over 3 months and Gold (-3.32%) fell further to five-year lows.

The move in Gold supported a selloff across most of the precious metal space with Silver (-1.22%), Platinum (-1.62%) and Palladium (-1.47%) also dipping lower. The move has largely been attributed to the prospect of Fed liftoff and the recent strong run in the Dollar with attention moving back to the Fed after recent events in Greece and China. Reuters are also suggesting that the mini flash crash experienced in trading in Asia yesterday (when Gold tumbled nearly 5%) was exaggerated with the relatively low liquidity as CME circuit breakers triggered twice in just one minute with suggestions of large amounts of stop-loss selling. So this will give all of us worried about a lack of trading liquidity more ammunition that this cycle is behaving quite differently in this respect.

The moves in Gold also come on the back of the lower than expected reserves data out of China on Friday which we touched on yesterday. The latest leg lower in the commodity complex has now helped take the Bloomberg commodity index to the lowest level since March 2002. In the S&P 500, energy (-1.29%) and material names (-0.90%) were the main decliners yesterday with the likes of Newmont Mining (-12%) hardest hit. The pain was felt elsewhere too with AngloGold falling to all time lows in South Africa and the world’s largest producer Barrick Gold crashing 16% lower in Canada to the lowest level since the early 90s.

Despite this, further supportive earnings reports out of Halliburton, Lockheed and Hasbro in particular helped offset much of the pressure in the commodity space, while in Europe we saw the Stoxx 600 (+0.28%), DAX (+0.53%) and CAC (+0.35%) all close up. Europe credit markets also ended a touch better with Crossover 5bps tighter at the close while across the pond CDX IG was +0.4bps.

We remain positive on credit and equities due to what is still huge global central bank liquidity but prefer Europe equities to the US as QE related trades build again. In European credit we continue to prefer HY to IG but as we showed in our HY monthly at the start of the month the valuation of HY and IG have converged for the first time in 18 months. In the first 6 months of 2014, HY traded increasingly expensive to IG and then reversed this trend completely in H2 to be left very cheap to IG at the start of this year. As we stand now they're broadly fair value to each other so our HY overweight is more based on the extra carry and the extra spread tightening that HY will bring in a spread compression period. We still think the financial world is a bit of a manipulated mess but for now liquidity is likely to be the dominant theme. We'll revisit as the Fed gets closer to potential lift-off meetings but we still think a delay into 2016 is marginally more likely.

Taking a look at markets this morning now, we’ve seen a small bounce back in Gold (+0.73%) although WTI (-0.34%) and Brent (-0.04%) have continued to move lower. Having closed for a public holiday yesterday, the Nikkei (+0.54%) is leading the equity gains in Asia this morning followed by the ASX (+0.38%) and Hang Seng (+0.38%) while the Kospi (-0.14%) is slightly lower. It’s another volatile session in China. Having initially plunged some 2% at the open, the Shanghai Comp (+0.26%) has bounced back along with the CSI 300 (+0.13%) and Shenzhen (+0.92%) with 543 mainland companies still suspended from trading. S&P 500 futures are unchanged while Asia credit is around half a basis point wider.

Moving on, comments out of St Louis Fed President Bullard yesterday helped support a modest move up in Treasury yields and the Dollar. The benchmark 10y yield closed 2.5bps higher at 2.373% while 5y (+3.6bps) and 30y (+1.2bps) yields also moved slightly higher, while the Dollar index closed the session +0.17% for the fourth consecutive daily gain with the index now extending its MTD gains to +2.7%. Bullard said that the US economy is closer to normal than it has been over the last five years and that ‘I’d see September having more than a 50% probability right now’. Bullard also said that he expects unemployment to probably move below 5% and that, consistent with other Fedspeak, any decision will be on a meeting by meeting basis.

Staying on the Fed, yesterday the Central Bank approved a final rule requiring the largest and most systematically important banks to further strengthen their capital positions. The findings found that the 8 largest banks have extra capital requirements of between 1% and 4.5% with JP Morgan at the top end of that range at 4.5% (a shortfall of $12.5bn although lower than initial estimates). Citigroup, Goldman Sachs, Morgan Stanley and Bank of America are the other notable institutions next in line with the surcharges due to be phased in from 2016 and becoming fully effective from 2019.

Wrapping up markets yesterday in Europe, 10y Bund yields closed the session 2.6bps lower at 0.761% while yields in the periphery were more mixed with Spain (+0.9bps) a touch higher but Italy (-1bp) and Portugal (-4.3bps) lower. As mentioned earlier yesterday we got confirmation that Greece repaid €6.8bn owed to the ECB and IMF as banks reopened under continued strict capital controls. According to Bloomberg Greek parliament is set to vote tomorrow on a second set of prerequisites for further aid.

It’s set to be another quiet day ahead for data with just UK public sector net borrowing prints expected this morning in Europe and no data due out of the US this afternoon. Corporate earnings will likely retain much of the focus with Apple, Microsoft and Verizon the big names due up.

• U.S. stock futures slip amid lukewarm earnings, fall in commodities (Reuters)
• Stressful times for low-polling Republicans who may miss debate stage (Reuters)
• Trump shows staying power with surge ahead of first debate (Reuters)
• China Market Manipulation Probe Targets Spoofers After Crash (BBG)
• Beijing Chosen to Host 2022 Winter Olympics (WSJ)
• Obama Warns Support on Iran Deal ’Getting Squishy’ Amid Pressure (BBG)
• Pacific trade negotiators chase elusive final deal in tough talks (Reuters)
• Relativity Media’s Bankruptcy Filing Ripples Beyond Hollywood (WSJ)
• Commodities Slide With Ruble as Europe’s Stocks, Bonds Decline (BBG)
• Cargill’s Black River Asset Management Shutting Four Hedge Funds (WSJ)
• 'What lion?' Zimbabweans ask, amid global Cecil circus (Reuters)
• Greek bailout talks shift into higher gear (AP)
• Greek PM defends controversial 'Plan B' for euro zone exit (Reuters)
• U.S. Banks Take Global Lead (WSJ)
• AQR’s Trading Chief Goes on Leave Amid SEC Probe of Ex-Employer (BBG)
• Investigators Face Pressure to Confirm MH370 Link (WSJ)
• Nusra Front attacks Western-backed rebels in northern Syria (Reuters)
• Stocks Turmoil Leaves Chinese Investors in Nowhere-to-Run Bind (BBG)
• Suspect in Charleston church massacre to be arraigned on hate charges (Reuters)

Overnight Media Digest

WSJ

* In the trans-Atlantic rivalry for banking supremacy, U.S. banks are preparing to pounce, with executives touting the gloom emanating from their European counterparts as a big opportunity to press their newfound advantage. (http://on.wsj.com/1MxAyL6)

* Accident investigators appeared tantalizingly close to determining whether a piece of plane debris belongs to Malaysia Airlines Flight 370, but still faced a long and complex process in trying to solve one of the world's greatest aviation mysteries. (http://on.wsj.com/1eEPWHK)

* Diageo and other global spirits companies are expanding across Africa, targeting even the poorest consumers with liquor made locally and sold cheaply. The global spirits industry sees Africa as the final frontier - a potentially huge market that is largely untapped. (http://on.wsj.com/1I6daRR)

* Comcast Corp struck a deal with Verizon Communications Inc in 2011 giving it the right to sell wireless service using the carrier's network at set terms and pricing. But as the company again explores a wireless offering, the deal is looking dated. (http://on.wsj.com/1Ub8BLi)

* Cargill's Black River Asset Management plans to shutter four of its hedge funds and return more than $1 billion to investors over the next several months, the latest agricultural giant to reassess its investment ambitions. (http://on.wsj.com/1IO7aR7)

* The U.S. economy emerged from its winter lull with a moderate spring rebound, but the historically sluggish expansion is looking even more sluggish as it enters year seven. (http://on.wsj.com/1ODCb8K)

* Despite a government crackdown on extremists in Pakistan, one group operates openly in Karachi and elsewhere and is believed to serve as a recruiting ground for militants. (http://on.wsj.com/1DefGq4)

FT

GEORGE OSBORNE PROPOSES TO CAP PUBLIC SECTOR PAY-OFFS AT 95,000 STG (http://on.ft.com/1DdnE2V)

AMAZON PAYS $250 MLN TO SIGN DEPARTING TOP GEAR TRIO FOR NEW SHOW (http://on.ft.com/1DdoFbi)

IHG and Starwood have held early deal talks (http://on.ft.com/1DdpZLf)

Overview

George Osborne on Friday will set out plans to end six-figure severance payments for civil servants as he tries to save about 100 million pounds ($156.00 million) a year by curbing pay-offs.

Britain's former BBC "Top Gear" host Jeremy Clarkson has signed an exclusive deal with Amazon to present a new motoring show for the online retailer's subscription service alongside co-presenters Richard Hammond and James May.

InterContinental Hotels Group has held early stage talks with Starwood Hotels & Resorts over a union to create the world's largest hotel group, said two people familiar with the discussions.

NYT

* SunGard is in talks to sell itself to Fidelity National Information Services Inc, a big service provider for banks, people briefed on the matter said on Thursday. Such a deal could value SunGard at more than $8 billion, one of those people said. (http://nyti.ms/1OS2d91)

* Wells Fargo & Co announced on Thursday that it was ending all mortgage marketing services and desk rental agreements with builders and real estate brokers. These arrangements are widespread throughout the highly competitive mortgage industry, where lenders scrap to find eligible borrowers. (http://nyti.ms/1fNvUf5)

* Fitness chain SoulCycle filed for an initial public offering on Thursday, hoping to take advantage of swelling interest in workouts. (http://nyti.ms/1MWRvfW)

* The European private equity firm PAI Partners said on Thursday that it had signed an agreement to sell the air cargo services company Swissport International to the owner of Hainan Airlines of China for 2.7 billion Swiss francs, or about $2.8 billion. (http://nyti.ms/1IO6zyU)

Canada

THE GLOBE AND MAIL

** Bombardier Inc pushed back the commercial launch of its Global 7000 corporate jet by two years as chief executive Alain Bellemare slows the company's output of business aircraft and tries to reset near-term sales expectations for its flagship C Series plane. (http://bit.ly/1De3sy5)

** Home Capital Group Inc began suspending mortgage brokers after its board of directors received a letter from an anonymous whistle-blower last fall pointing it to problems with some of its mortgages, company officials confirmed Thursday. (http://bit.ly/1IxloUr)

** Major landlords of failed retailer Target Canada have raised concerns about the U.S. parent's role in the insolvency process - and whether it jeopardizes creditors' collecting what could be billions of dollars they are owed.

RioCan Real Estate Investment Trust, the largest landlord of Target Canada, contends the retailer could be holding back on releasing vital information, possibly putting all creditors at a disadvantage. (http://bit.ly/1eFBKy5)

NATIONAL POST

** The federal and provincial governments have put aside their differences to help expand Toyota's manufacturing operations in Southern Ontario. The two governments will provide a total of $100 million toward Toyota's planned $421-million investment in the automaker's Cambridge operations. (http://bit.ly/1MBpX2F)

** Barrick Gold Corp has struck a deal to sell a 50 percent stake in its Zaldivar copper mine in Chile for just over $1 billion, giving the company's balance sheet some much-needed relief. The buyer is Antofagasta Plc, a large Chilean copper miner. (http://bit.ly/1MBq9iv)

** Goldcorp Inc has slashed its dividend 60 percent in order to maintain financial flexibility in a miserable gold market. The Vancouver-based mining giant announced on Thursday that it cut the monthly dividend to two cents per share, down from five cents. The move will save Goldcorp almost $300 million a year. (http://bit.ly/1MBqdid)

China

CHINA SECURITIES JOURNAL

- Investment in China's robotic industry could exceed 100 billion yuan ($16.10 billion) between 2014 and 2020, the newspaper reported, citing the National Development and Reform Commission.

SHANGHAI SECURITIES NEWS

- China's Insurance Regulatory Commission (CIRC) suggested insurance funds should not sell off their investments in the equity market in the near term, unnamed sources told the newspaper.

SECURITIES TIMES

- The vice president of the Industrial and Commercial Bank of China (ICBC) Zhang Wanchun may become the president of China Minsheng Bank, the newspaper said, citing several Minsheng Bank sources.

CHINA DAILY

- The Trans-Pacific Partnership (TPP) should not undermine the role of the World Trade Organisation in global trade liberalisation, the newspaper said in an editorial, noting that one of the problems in negotiations is the extremely high standards set by countries for trade blocs.

PEOPLE'S DAILY

- The fall of former military leader Guo Boxiong has demonstrated the Chinese government is determined to purge corruption, the newspaper said in its commentary. "One demon killed, all demons deterred, the article was quoted as saying."

Britain

The Times

RBS SHARE SELL-OFF IS GIVEN THE GREEN LIGHT

The government is set to launch its first sale of Royal Bank of Scotland Group Plc shares since the lender's 46 billion pound ($71.73 billion) taxpayer-funded rescue nearly seven years ago, marking the beginning of the bank's return to private ownership. (http://thetim.es/1DdcgEl)

MPs QUESTION HEDGE FUND TIES OF BANK'S NEW RATESETTER

The newest member of the Bank of England's rate-setting committee, Gertjan Vlieghe, will face tough questions from the Treasury select committee after it emerged that he has retained a financial link to a hedge fund, raising concerns over a potential conflict of interest. (http://thetim.es/1DdcImb)

The Guardian

SANTANDER'S UK SPIN-OFF DELAYED

The spin-off of Spanish bank Santander's UK arm has been pushed back for a number of years, the chief executive officer of the British operation has revealed. Nathan Bostock said on Thursday he did not expect the flotation of the business, first mooted five years ago, to take place "for the next couple of years". (http://bit.ly/1Ddd0ta)

IMF WILL REFUSE TO JOIN GREEK BAILOUT UNTIL DEBT RELIEF DEMANDS ARE MET

The International Monetary Fund will refuse to participate in a new bailout for Greece until there is an "explicit and concrete agreement" on debt relief from the country's eurozone creditors, an IMF official has confirmed. (http://bit.ly/1DddlMs)

The Telegraph

FORMER RABOBANK TRADER BANNED FROM WORKING IN THE CITY OVER LIBOR FRAUD

A Libor-manipulating trader from Dutch institution Rabobank has been banned from working in the UK's financial services industry by the Financial Conduct Authority. (http://bit.ly/1Ddgvj9)

DEUTSCHE BANK MUST DO BETTER, NEW CHIEF JOHN CRYAN TELLS STAFF

Deutsche Bank's profits are "not nearly good enough", the German firm's new chief executive told staff as he unveiled his first set of financial results. New boss John Cryan criticised costs, litigation and fines, and operating inefficiencies at the lender on Thursday. (http://bit.ly/1DdgJqA)

Sky News

IOD CHIEF CALLS FOR EARLY EU REFERENDUM

Simon Walker, the head of one of Britain's Institute of Directors (IoD), will urge David Cameron on Friday to hold the referendum on the UK's European Union (EU) membership next year and avoid an "inappropriate" delay. (http://bit.ly/1Dd9miR)

FOOD GROUP BRAKES COOKS UP 2.5 BLN STG FLOAT PLAN

Brakes Group, the UK's biggest food distributor, has begun preparing for a stock market listing in London that could see it valued at up to 2.5 billion pounds ($3.90 billion). (http://bit.ly/1Ddmjcx)

The Independent

ALEXIS TSIPRAS TRIES TO CALM HIS INCREASINGLY FRACTURED SYRIZA PARTY WITH INTERNAL VOTE ON BAILOUT PLANS

Greece's Prime Minister Alexis Tsipras has made a last-minute bid to secure unity in his increasingly fractured Syriza party, with the offer of an internal referendum this Sunday. (http://ind.pn/1Ddm2Gp)

TESCO SCRAPS 'UNEXPECTED ITEM IN THE BAGGING AREA' AS SELF-CHECKOUTS SWITCH TO LESS 'FRUSTRATING' AUDIO

Tesco Plc is to replace the audio on its self checkout machines with one that is "friendlier, more helpful and less talkative". It will also scrap the infamous alert "unexpected item in the bagging area" that was introduced with the self-checkout machines in 2003. (http://ind.pn/1DdlOPD)

• July job gains may favor September interest rate rise (Reuters)
• It's all about Trump at raucous Republican debate (Reuters)
• The 5 Most Important Takeaways From the First Debate of 2016 (BBG)
• Republican presidential candidate Carly Fiorina wins the Web (Reuters)
• Hedge Fund Losses From Commodity Slump Sparking Investor Exodus (BBG)
• Winners and losers from the first Republican presidential debate (WaPo)
• Bush turns in workmanlike debate performance, but will it be enough? (Reuters)
• ‘You Wake Up and Think, I’m in Prison:’ Ex-Con’s Wisdom to Hayes (BBG)
• China’s Stock Crash Is Spurring a Shakeout in Shadow Banks (BBG)
• Apple Helps Push U.S. Watch Sales to Biggest Drop in Seven Years (BBG)
• China’s Tighter Grip on Stock Market Strangles Shareholders (WSJ)
• Wall Street Banks Amass Treasuries Amid Slow Fed Rate Increases (BBG)
• EU officials to review progress in Greek bailout talks (Reuters)
• Levy Weathers Impeachment Storm and Dismisses Brazil Downgrade (BBG)
• Pimco Over ‘Gross Effect’ as Break-Even Nears, Allianz Says (BBG)
• Why It’s So Difficult to Turn Down the Volume at Popular Restaurants (BBG)
• China’s Stocks Advance Amid Speculation of More State Support (BBG)
• ‘Frack now, pay later,’ top services companies say amid oil crash (Reuters)
• Donald Trump: Fox anchor ‘Megyn [Kelly] behaved very badly’ (WaPo)

Overnight Media Digest

WSJ

* Donald Trump kicked off the first Republican presidential debate by refusing to promise not to run against the eventual party nominee if he doesn't clinch the nomination, an unpopular stance with GOP voters that could threaten his perch atop the primary field. (http://on.wsj.com/1KTNmta)

* Yodlee Inc, a provider of personal finance tools, tracks transactions and sells the data to investors, who mine the information for clues about trends that can move stock prices. The details are so valuable that some investment firms have paid more than $2 million apiece for an annual subscription to Yodlee's service, according to people familiar with the matter. (http://on.wsj.com/1NdDRFx)

* Does it make sense to reunite the old Kraft Foods business that activists helped split apart just three years ago? In the topsy-turvy world of today's U.S. food industry, some observers say the answer is yes, if the price is right. (http://on.wsj.com/1eWr921)

* U.S. President Barack Obama's pursuit of congressional support for his Iran deal has hit turbulence in New York, with Sen. Chuck Schumer saying he must oppose the deal. (http://on.wsj.com/1SWO0gz)

* Despite all their spending cutbacks and idle drilling rigs, American energy producers are finding it hard to turn off the taps that have helped lead to a global glut of oil. (http://on.wsj.com/1K6hPRS)

* Officials said they would deploy ships, helicopters and a military plane to look for wreckage of Malaysia Airlines Flight 370 in the waters around Réunion Island. (http://on.wsj.com/1OUlZ2Y)

* Under pressure from New York regulators, Abercrombie & Fitch Co is ending a controversial scheduling practice for workers. The company will cease using on-call scheduling-which requires workers to make themselves available for shifts that may be canceled at the last minute-at its New York stores by the end of 2015, according to a letter sent Thursday to the office of New York Attorney General Eric Schneiderman. (http://on.wsj.com/1J0tgjq)

FT

Three of Europe's main bottlers of Coca-Cola products are to join in a $27 billion agreement to simplify manufacturing as the beverage maker tries to cut costs. Coca-Cola Enterprises , the U.S.-based bottler with exclusive Coke licences in many Western Europe countries, will merge with its Iberian and German counterparts.

Vimpelcom and Hutchison have agreed to combine their Italian mobile operations in a long-awaited deal that would cut the number of players in Europe's fourth-largest telecom market to three from four.

Britain's competition watchdog has accused Pfizer and Flynn Pharma of breaching UK and European law by ramping up the cost of an epilepsy drug, given to more than 50,000 British patients.

U.S. fertilizer maker CF Industries Holdings Inc said on Thursday it will buy OCI NV's North American and European plants in an $8 billion deal including debt, making CF one the world's largest nitrogen companies.

NYT

* The American fertilizer maker CF Industries Holdings Inc said on Thursday that it had agreed to acquire several European and North American operations and a global distribution business from OCI NV of the Netherlands for $8 billion, including debt. (http://nyti.ms/1OUsfaW)

* As Informatica Corp closes its $5.3 billion sale to private equity on Thursday, the enterprise software maker would count two of its big technology partners as new investors as well. Joining Permira and the Canada Pension Plan Investment Board in buying Informatica are Microsoft Corp and Salesforce Ventures. The two will join the biggest leveraged buyout of the year to date, taking ownership stakes in the company, whose products combine and analyze customers' data. (http://nyti.ms/1SXgcQD)

* IBM Corp said on Thursday morning that it was buying Merge Healthcare Inc, a medical-imaging software company, for $1 billion. When IBM set up its Watson health business in April, it began with a couple of smaller medical data acquisitions and industry partnerships with Apple Inc , Johnson & Johnson and Medtronic Plc. (http://nyti.ms/1IRr0sW)

* The activist hedge fund Elliott Associates has sold shares in Samsung C&T Corp, the South Korean construction company, after Elliott failed to block an $8 billion merger with another Samsung affiliate, Cheil Industries Inc. (http://nyti.ms/1P9J7eu)

Canada

THE GLOBE AND MAIL

** At the first election debate of the 2015 campaign Liberal Leader Justin Trudeau and New Democratic Party chief Tom Mulcair tried to paint Stephen Harper as an out-of-touch leader who's frittered away government revenue on tax breaks and remains insulated from the weakening economy. (http://bit.ly/1IJRg41)

** Alberta's NDP government took heat from the oil patch for its corporate tax hike as Canadian Natural Resources Ltd blamed it for a deep quarterly loss. Canadian Natural, among early vocal critics of the new provincial government's fiscal policies, said it took a C$579-million non-cash charge in the second quarter to account for future tax liability. (http://bit.ly/1KUdC6H)

** After years of hesitation, Barrick Gold Corp is making it clear to investors that its executives are weighing every single option available. Their immediate goals: to slash the company's crippling debt load and to cut everyday costs. (http://bit.ly/1K6Ukbn)

NATIONAL POST

** A research paper out of the University of Alberta is calling for more information on foreign investment in Canadian housing and raises the spectre that money laundering may be part of the residential real estate market. (http://bit.ly/1T9Xdgw)

** In a bizarre election vow ahead of the campaign's first debate Thursday night, Prime Minister Stephen Harper implied that the Conservatives were the only party without designs on taxing the streaming website Netflix. (http://bit.ly/1KUf7lw)

Hong Kong

SOUTH CHINA MORNING POST

- Veteran journalist Leung Ka-wing has been named by the government as the new director of broadcasting, avoiding a repeat of the storm over the last appointment of a career bureaucrat, to lead RTHK as the public broadcaster faces critical challenges ahead. (bit.ly/1eW6MSD)

- Customs and police officers made their biggest seizure of counterfeit products in 10 years when they closed down two fake-goods showrooms and a storage centre in Hong Kong. Officers believe they have smashed a racket with the seizure of more than 30,000 counterfeit brand-name products and arrest of three people in the joint operation mounted last week. (bit.ly/1K66DEY)

- Four water samples taken from flats in phases one and two of Wah Fu Estate in Hong Kong contained heavy metal nickel, a skin irritant, at well above the World Health Organisation standard, the Democratic Party said. The 20 samples taken were all clear of lead and cadmium but four of them had a nickel content above WHO guidelines of 70 micrograms per litre of water. (bit.ly/1HupaZq)

THE STANDARD

- The Let's Go Korea campaign website crashed for five hours on Thursday after an overwhelming number of people attempted to book cut-price return tickets to South Korea. A spokeswoman for the Hong Kong office of Korea Tourism Organization said due to the rush, would-be travellers were redirected to Facebook, where the campaign had posted a list of airlines and their offers. (bit.ly/1SW8Mgj)

- The world's first ever ant map showing the distribution of the tiny creature around the globe was launched by the University of Hong Kong in a bid to shed more light on the insect world. The interactive online map, antmaps.org, displays the geographic locations of nearly 15,000 species of ants. Hong Kong has 170 species on the map. (bit.ly/1KTG5JL)

- Developers are pumping out a fresh supply of new homes ahead of a probable interest rate hike in the United States. More than 2,000 flats, mostly small-sized units, will come to the market in the near future, including at least 50 studio and one-bedroom apartments from Henderson Land's Parker 33 in Shau Kei Wan. (bit.ly/1gg8MWK)

HONG KONG ECONOMIC JOURNAL

- MTR Corp said its train delayed for an aggregate 227 minutes during the first half of the year, about 50 percent less than the same period last year, of which five cases of delay lasted for more than 31 minutes. It said it would be fined HK$6 million ($774,063) for the delay and the fines would be returned to passengers through discount programme.

Britain

The Times

The Bank of England has dashed savers' hopes for an interest rate rise this year, signalling that the first move was unlikely to come until around May. The Bank's latest economic outlook pointed to no change until well into 2016. (http://thetim.es/1SVURah)

Two large pharmaceutical companies are to be investigated for allegedly charging "excessive and unfair" prices for anti-epilepsy drugs used by more than 50,000 people in Britain. Pfizer Inc and Flynn Pharma are being investigated by the Competition and Markets Authority for allegedly overcharging for phenytoin sodium, in a breach of UK and EU law. (http://thetim.es/1SVV8d2)

The Guardian

The owner of British Airways, IAG, has placed an order for 31 Airbus aircraft valued at $5.2 billion in a deal that the aircraft manufacturer said would sustain thousands of British jobs. IAG is to buy 11 long-haul aircraft destined for BA's Spanish sister airline Iberia, as well as 20 short-haul planes to be used for fleet replacement across the group, which includes the low-cost carrier Vueling. (http://bit.ly/1SVVlNB)

The RSA boss, Stephen Hester, said the ball was in Zurich's court over any potential bid for the UK insurer as he reported better-than-expected half-year results. But shares in RSA dropped as Zurich warned it would not overpay. (http://bit.ly/1SVVAbn)

The Telegraph

Sky Plc is being formally investigated by the communications regulator Ofcom over concerns that it does not allow customers to cancel at the end of their contracts. Ofcom's investigation, which could run into next year, will consider whether Sky breached its obligations to ensure that contract termination procedures do not act as a disincentive for customers to change provider. (http://bit.ly/1SVWfJM)

Coca-Cola Enterprises, the bottling group, has unveiled a three way merger with two of its counterparts, in the biggest European consumer deal this century. The group has announced a deal to combine with Coca-Cola Iberian Partners and the German bottling business of the Coca-Cola Company. (http://bit.ly/1SVWrJc)

Sky News

Blackstone and Hellman & Friedman, two of the world's biggest buyout firms, are joining forces in a bid to derail a blockbuster 6 billion pound ($9.31 billion) flotation by Worldpay, the payments processing group. Two of the private equity giants are in talks about a joint bid for Worldpay that is expected to be proposed within weeks. (http://bit.ly/1SVXgS4)

Discount supermarket Aldi has announced plans to hire 8,000 more staff and open 130 new stores as part of a 600 million pound UK expansion. The supermarket is aiming to increase its UK workforce to 35,000 by 2022. (http://bit.ly/1SVXkkS)

The Independent

Owners of London City airport are about to find out just how much it is worth, after they put it up for sale. Growing demand for air travel is said to have prompted Global Infrastructure Partners to appoint advisers to work on a deal. The fund, which also owns Edinburgh airport and 75 percent of Gatwick, wants to complete a deal by the end of the year, the Financial Times reported, and they expect to get around 2 billion pounds for it. (http://ind.pn/1SVXY1Y)

• China central bank tries to soothe global markets, says no reason for yuan to fall further (Reuters)
• Huge blasts at Chinese port kill 44, with hundreds injured (Reuters)
• China efforts to slow yuan fall hoist Europe shares, bond yields (Reuters)
• Greek Economy Unexpectedly Surged Before Capital Controls (BBG)
• Joe Biden Is Sounding Out Allies About a 2016 Bid (WSJ)
• U.K. Tries to Kick-Start Shale Gas With Planning Speedup (BBG)
• Crude Prices Seen Staying Below $70 A Barrel Over The Next Year (WSJ)
• Former President Carter says he has cancer (Reuters)
• Who’s Crazy Now? Yuan Bears Vindicated by Tumble See More Pain (BBG)
• Deutsche Bank Employees Charged in Emissions Trading Case (WSJ)
• Lenovo faces Motorola hangover, cuts 3,200 jobs as sales slide, profit tumbles (Reuters)
• Fractures Form Inside Russia’s Central Bank as Recession Deepens (BBG)
• Bang & Olufsen Sinks as Car-Stereo Retreat Weighs on Profit (BBG)

Overnight Media Digest

WSJ

* Vice President Joe Biden this week is sounding out friends and family about a presidential bid, as some Democrats press him to enter the race and give the party another option in the face of lingering controversies involving Hillary Clinton.(http://on.wsj.com/1DOqD1U)

* Apple Inc, grappling with swooning sales of the once-blockbuster iPad and sensing an opening in the changing ways of work, is making its broadest assault to date on business computing. (http://on.wsj.com/1Eog3tw)

* AT&T Inc Chief Executive Randall Stephenson launched a robust defense of the DirecTV acquisition that has been criticized as ill-timed in the face of rapid declines in cable television subscriptions. (http://on.wsj.com/1JUXcwd)

* Months after its blockbuster U.S. IPO, Alibaba Group Holding Ltd reported its slowest quarterly revenue growth in more than three years, while its transactions with Chinese consumers also disappointed. (http://on.wsj.com/1WjjMUb)

FT

Richard Buxton, the UK equity fund manager, is to replace Julian Ide to become the chief executive officer of Old Mutual Global Investors while continuing to run his UK equity funds. OMGI runs 22 billion pounds ($34 billion) on behalf of investors and its parent company.

Pearson Plc shares have fallen by one-fifth since the end of March and attempts to reverse this trend, like selling FT Group and the Economist Group stake for more than most analysts' valuations, has failed. Some investors are questioning Pearson's ability to benefit from this after four years without organic revenue growth.

Dick Durbin, the second-highest ranking Democrat in the U.S. Senate, has called CF Industries Holdings Inc decision to move its corporate tax base to the United Kingdom as "simply wrong" and urged it not to do so. Last week, CF Industries bought its Dutch-listed rival OCI NV for $8 billion including debt. ($1 = 0.6407 pounds)

NYT

* Federal prosecutors have asked the courts to refuse bail to all five men arrested in connection with a scheme that enabled securities traders to benefit from confidential corporate information in news releases stolen by hackers in Ukraine before the documents were made public. (http://nyti.ms/1L7eyEO)

* News Corp, controlled by Rupert Murdoch, said on Wednesday that it would take a $371 million write-down on its education division, Amplify, and would move to wind down the production of tablets for school children, a key part of the unit's offering.(http://nyti.ms/1J0M6Rf)

* In a move that starts a new chapter in the battle over the bailout of the American International Group during the financial crisis, the Justice Department formally appealed a court ruling on Wednesday that said the government's terms for saving the company had been too harsh. (http://nyti.ms/1UEauQZ)

* Germany softened its resistance to a third bailout package for Greece on Wednesday, raising the chances that a draft plan could be approved in time for the country to make a crucial debt payment next week. (http://nyti.ms/1Mp5AWO)

Canada

THE GLOBE AND MAIL

** Moody's Investors Service downgraded Barrick Gold Corp's credit to the lowest investment grade rating, a blow to the company that is on track to reduce its debt by $3 billion this year. (http://bit.ly/1KiUuMQ)

** The City of Vancouver has fired another salvo in its long-running dispute with Canadian Pacific Railway Ltd, applying for an order that would force the company to put its Arbutus corridor up for sale at a reduced price. (http://bit.ly/1gCXgF1)

** Transporting oil and gas by rail is more dangerous than moving it by pipeline, a new study has found. Oil shipments by rail are four-and-a-half times more likely to have a spill or incident than those pumped through a pipeline, says a report from the Fraser Institute, which examined data from Canada's Transportation Safety Board and Transport Canada between 2003 and 2013. (http://bit.ly/1HIlraT)

NATIONAL POST

** More than 600 people have signed an online petition asking Quebec's toponymy commission to immediately change the names of 11 geographic sites in the province that include the N-word or the word Negre. (http://bit.ly/1P8QF0D)

** The Conservatives pledged to let first-time buyers withdraw as much as C$35,000 from their registered retirement savings plan accounts to buy a home, in a yet another election move aimed at the housing market. (http://bit.ly/1N3EZOT)

** Canadian banks could see their forecast earnings decline if the oil downturn spills over into the wider economy. Oil and gas companies defaulting on their loans could shave off as much as 4.3 percent of estimated earnings at major Canadian banks next year, according to a stress-test report by the Canadian Imperial Bank of Commerce. (http://bit.ly/1J5U2Fj)

China

PEOPLE'S DAILY

- There is currently no basis for a sustained depreciation trend for the yuan, according to a statement released Wednesday by the People's Bank of China.

China's economy is still growing relatively fast, the trade balance remains favourable, yuan internationalisation and financial sector opening have accelerated this year, foreign currency reserves are plentiful, and markets have already priced in the Federal Reserve's likely interest rate hike, the central bank said.

CHINA DAILY

- More than 60 people are missing after being buried in a landslide at a mining site in Shaanxi province on Wednesday, according to the information office of Shanyang county.

CHINA BUSINESS NEWS

- Fiscal expenditures grew much faster than tax revenue in July, according to data released on Wednesday by the Ministry of Finance. Expenditures grew 24.1 percent year on year, while revenue only increased 12.5 percent.

• Fed is out so...BOJ brainstorms stimulus overhaul as options dwindle (Reuters)
• And... Yellen Pause Ups Pressure on Draghi as Global Pessimism Mounts (BBG)
• But... Eurozone Nears Limits of What Monetary Policy Can Do (WSJ)
• Global shares struggle on global growth concerns (Reuters)
• VW's Emissions Cheating Found by Curious Clean-Air Group (BBG)
• David Cameron allegedly fucked a dead pig's head (Mirror)
• U.S. to Boost Refugee Intake by 30,000 Over Two Years (WSJ)
• Apple's iOS App Store suffers first major attack (Reuters)
• Tsipras returns to power to fight for Greek debt relief (Reuters)
• Tsipras’s Syriza Set to Return to Power After Resounding Greek Election Victory (WSJ)
• Putin Faces Growing Exodus as Russia's Banking, Tech Pros Flee (BBG)
• Big Landlords to Merge, Betting on Rising Rents (WSJ)
• Who's Left to Sell U.S. Stocks? Mood Darkens Most Since Volcker (BBG)
• Austria saw the arrival of at least 10,000 migrants on Saturday (BBC)
• Oil Speculators Most Bullish in Two Months as OPEC Calls for $80 (BBG)
• GE's Immelt says more U.S. jobs likely to move overseas over Exim Bank policy (Reuters)
• Alibaba's $105 Billion Lockup Ends, Putting Focus on Yahoo Stake (BBG)
• Bob Diamond Stumbles on Road to Redemption in African Banking (BBG)

Overnight Media Digest

WSJ

- The United States will boost the number of refugees it accepts in the coming years to 100,000 annually, from 70,000 now, as part of an effort to help Europe cope with a migration crisis, Secretary of State John Kerry said. (http://on.wsj.com/1JjTIOD)

- Alexis Tsipras was set to return to Greece's premiership after a resounding re-election win, this time with a mandate to carry out the very kind of harsh austerity that he was previously elected to resist. (http://on.wsj.com/1Yt992r)

- Pope Francis met former Cuban President Fidel Castro on Sunday shortly after dissidents said they were detained to prevent them from attending a papal Mass in the country's iconic Revolution Square. (http://on.wsj.com/1LqVnYS)

- Some of the most popular Chinese names in Apple Inc's app store were infected with malicious software in a first-of-its-kind security breach, exposing a rare vulnerability in Apple's mobile platform, according to multiple researchers. (http://on.wsj.com/1V3kaD4)

- The head of Hong Kong's stock exchange was involved in controversial hiring efforts when he worked at JPMorgan Chase & Co, recommending that the bank employ children and acquaintances of Chinese officials, clients and potential clients, according to people familiar with the matter. (http://on.wsj.com/1FWktZg)

- Warner Bros, the Time Warner Inc owned studio, said it struck a deal with private-equity firm China Media Capital to make Chinese-language films for the fast-growing market. Warner Bros will own 49 percent of the venture called Flagship Entertainment Group Ltd and will be based in Hong Kong. (http://on.wsj.com/1V4r6Qi)

- Starwood Waypoint Residential Trust plans to combine with Colony American Homes Inc, valuing Colony at about $1.5 billion based on Starwood Waypoint's closing share price Friday. The merger could be announced as soon as Monday. (http://on.wsj.com/1WcH8d8)

FT

Deutsche Wohnen AG, Germany's second-largest real estate company, is to buy peer LEG Immobilien AG in a 7.6 billion euros ($8.58 billion) deal including debt, as consolidation in the German real estate market intensifies.

The UK has paved the way for the first Chinese-designed nuclear power plant in the West, to be constructed in Essex, in eastern England, saying Beijing could use Britain to launch a global rollout of its technology.

CK Hutchison Holdings Ltd would support an initial public offering for the combined business after the closing of O2's merger with Hutchison's Three network, Canning Fok, co-chief executive of the Hong Kong group, said in an interview with the Financial Times.

NYT

- Specialists in infectious disease are protesting a gigantic overnight increase in the price of a drug sold by Turing Pharmaceuticals, used to treat a life-threatening parasitic infection, to $750 from $13.50 a tablet. (http://nyti.ms/1QSdJSA)

- Volkswagen AG said it would halt sales of cars in the United States equipped with the kind of diesel motors that had led regulators to accuse the German company of illegally installing software to evade standards for reducing smog. (http://nyti.ms/1YsKScz)

- Co-founders of Kickstarter, an online crowdfunding website, said it was reincorporating as a "public benefit corporation" to ensure that money would not corrupt their company's mission of enabling creative projects to be funded. (http://nyti.ms/1OJXI1S)

- Apple Inc confirmed that a tool used by software developers for the company's devices was copied and modified by hackers to put bad code into apps available on the app store. (http://nyti.ms/1QSedbo)

Canada

THE GLOBE AND MAIL

** There has been strong interest in a package of six U.S. gold assets that Barrick Gold Corp wants to sell, a senior executive of the company said on Sunday, adding that he expects a deal to close before year-end. The interest has been largely from North America-based miners, Barrick President Kelvin Dushnisky said. (bit.ly/1isw2ly)

** Two of Canada's biggest resources companies have endorsed a call for governments and industry to clearly assert the right of aboriginal communities to veto major projects that negatively affect their traditional territories. Suncor Energy Inc and Tembec Inc are members of the Boreal Leadership Council that is releasing a report on Monday, calling for the adoption of the principle of "free, prior and informed consent" when industry is working with indigenous populations. (bit.ly/1iswgZX)

NATIONAL POST

** Despite recent stock market volatility and objections from opposition parties, Hydro One Ltd's initial public offering is expected to go ahead later this year. The Ontario government filed a preliminary prospectus on Friday for Canada's biggest IPO in more than 15 years. (bit.ly/1iswoII)

Britain

The Times

Cenkos is canvassing opinion among investors for a change of management at the top of Debenhams Plc and the ousting of the chairman. (http://thetim.es/1Kssd7e)

The cost to the taxpayer of funding the retirement of 1.3 million former and present staff of National Health Service was close to topping 500 billion pounds ($775.85 billion), London financier Edi Truell said in a report to the Treasury. (http://thetim.es/1KstCe8)

The Guardian

Two companies heading towards flotations in London worth billions of pounds face pressure over a lack of female representation on their boards following criticism from Lord Davies, who oversaw the coalition government's initiative to increase the participation of women on boards. Neither Hastings, which is preparing for a 1.5 billion pounds ($2.33 billion) flotation, nor Worldpay, which could be valued at 3.5 billion pounds ($5.43 billion) when it floats, have any female representation at the highest level. (http://bit.ly/1KswSWZ)

Nicola Shaw, who is due to report back to the government early next year on the future structure and financing of Network Rail, said she could not rule out recommending privatisation as a solution to its financial problems. (http://bit.ly/1Ksx7RM)

The Telegraph

Dan Cobley, the former UK head of Google, has launched a new venture called SalaryFinance, which he claims will become the next "unicorn" - 1 billion-pounds-turnover success story - by offering the nation's workers a solution to their money worries. (http://bit.ly/1Kswqrx)

Banks in Britain paid a total of 31.3 billion pounds ($48.57 billion) in tax last year, with foreign banks responsible for just over half of the sector's tide of cash into the Treasury's coffers. (http://bit.ly/1KswkjF)

Sky News

Blackstone Group Lp, which has owned well-known companies in the UK such as Butterkist popcorn and Center Parcs, will announce on Monday that it is pursuing an initial public offering of Dutch financial services company Intertrust. (http://bit.ly/1Kvjvo2)

Sky News has learnt that Aberdeen Asset Management will sign a deal with Chinese authorities next week to become the first British fund manager to gain a key licence from Beijing to operate on the Chinese mainland. (http://bit.ly/1KsvC60)

The Independent

One in every three people born this year in the UK will eventually develop dementia, according to a new research commissioned by Alzheimer's Research UK, revealing the scale of what has been described as the country's "greatest medical challenge". (http://ind.pn/1KsxCeG)

Submitted by Christopher Gisiger via Finanz Und Wirtschaft,

James Grant, Wall Street expert and editor of the investment journal Grant’s Interest Rate Observer, warns of ever more extreme central bank policies and bets on the comeback of gold.

The global financial markets are under severe stress. The postponed interest rate hike in the United States, the fast cooldown of the Chinese economy and the crash in the commodity complex are causing a great amount of unease among investors. Fear is growing that the world slips into recession."Central bank policy is intended to paper over the cracks in the systems. Seven years after the outbreak of the financial crisis we’re paying for this with a lack of growth", says James Grant. The sharp thinking editor of the iconic Wall Street newsletter Grant’s Interest Rate Observer draws worrisome parallels between the command based central planning of the Chinese economy and the economic policies in the West. He also doubts that Fed Chair Janet Yellen is the right fit for the top job at the world’s most powerful central bank. Looking for protection he points to gold and shares of gold miners.

*  *  *

Jim, since the fall of Lehman Brothers seven years have passed now. In what kind of world are investors living in today?

It seems longer ago, doesn’t it? Certain things have not changed. The first of those permanent things is the nature of human beings who operate in markets and their tendency to buy high and sell low. That is just as it was the day before Lehman failed and it’s just as it will be forever. What’s new and different is the larger than life presence of government in our markets, both with respect to regulation and with respect to the management and the production and the manipulation of money.

Are you referring to super low interest rates?
There is nothing so terribly new about very low interest rates. In the 19th century interest rates fell for most of the area from the end of the Napoleonic wars in 1815 to the turn of the 20th century. But something new under the sun might be very well the hyperactivity of our central banks.

But without their interventions we might be even worse off today.
We are living in the age of magical thinking. Governments through central banks have muscled down money market interest rates to zero and in some cases below zero. Not content with that, they have implemented what economists chose to call "the portfolio balance channel". That’s a very fancy phrase meaning higher stock prices in the interest of rising aggregate demand. That was the theory of the Bernanke Fed and it certainly was the theory of the Chinese communists who sponsored the fly away levitation of the Shanghai A-shares. So the world over – and this goes for Europe as well – central bankers have taken it upon themselves to sponsor great bull markets in the hopes of making people spend more because they will feel richer. That was the theory. But they neglected to think through the full consequences of these policies.

The slowdown in China is putting the financial markets under a lot of stress. How bad is the situation?
If I were a member of the ruling elite of the Chinese communist party I would say to myself: "Wait a second, we were just doing what the capitalist West was doing for the sake of economic recovery:  Manipulating interest rates, administering asset prices through QE and inducing people through broad winks and nudges to taking risks and thereby seeding bull markets. When things went to smash in 2008 they didn’t arrest short sellers but they did threaten them as well. So what are we doing that’s different?" What China is doing different is that they’re doing it more ham handed. But aren’t there rather obvious analogies between old fashioned marxist central planning of the entire economy and our style of western central banking in which they seek to impose certain outcomes through the manipulation of prices?

Is China set for a hard landing?
I think China is very worrying. The macroeconomic data are largely made up and their methods are almost predestined to fail as the methods of command and control and suppression of the price mechanism are always predestined to fail. And then, on top of that, what’s scary is the reaction of the West: Instead of questioning those principles we talk about that the Chinese are just not as proficient in these techniques.

China was a main concern for the Federal Reserve not to raise interest rates at their recent meeting. Was this the right decision?
I was hoping that they would choose to act if only as a mercy to change the subject. I mean can we talk about something more interesting like the weather? Of course, it’s not just about one quarter of one percent of scarcely discernable monetary tightening. It’s about the idea of something in the way of a normal structure of interest rates in the time to come. But here it is again: Seven years after the fall of Lehman the biggest and supposedly most dynamic, most resilient economy in the world is still not strong enough to absorb that. That is the message from the Fed. So no wonder the markets are worried.

Usually stocks rally when the Fed stays easy. Not this time. Is Fed Chair Janet Yellen still on top of things?
Here is a a very revealing fact: According to the Wall Street Journal when Janet Yellen goes to the airport to catch a flight she arrives hours early. Now, what does that tell you about her personality type? She’s really, really anxious. I think this is a personality type that perhaps is better suited not for high command. If a difficult decision needs to be taken a person who’s so anxious or so much of an impulsive risk minimizer is perhaps not the best qualified to take sometimes a leap into the dark. But that’s what investing and the management of money is everything about: At one point you have to take a leap in the dark because you can’t know the future. So this says a lot about a person who manages the world’s reserve currency without thinking of making too much of it.

So far there are few signs of inflation however. If anything, economists are concerned about deflation.
We see no inflation in the supermarket but we have already seen a great deal of it on Wall Street. Also, what exactly is wrong with low inflation? Many accredited economists and central bankers want us to think that unless the rate of debasement of money is 2% or higher we’re all in danger of some catastrophic economic event. Says who? This is one of these moments in which I feel utterly isolated from mainstream financial and monetary thinking. I ask myself: Are we at Grant’s crazy or are they? I guess we’ll know more in twenty years.

So what’s next for the global financial markets?
The mispricing of biotech stocks or corn and soybeans is of no great consequence to financial markets at large. Interest rates are another matter. They are universal prices: They discount future cash flows, calibrate risks and define investment hurdle rates. So interest rates are the traffic signals of a market based economy. Ordinarily, some are amber, some are red and some are green. But since 2008 they have mainly been green.

You’re saying there’s an accident waiting to happen?
The central banks lifted off the stock market so that aggregate demand is going to rise. But they forgot to consider that aggregate supply is likely also to rise: Oil drillers will have it easier to find financing with which to drill the marginal well and to produce the marginal barrel of oil. This will weight on the market causing lower oil prices which will lead the central bankers in return to print still more money to save us from what they call "the risk of deflation." So it’s seemingly a never ending, circular process of so called stimulus leading to still more stimulus and unconventional ideas leading to radical ideas. I dare to say that we have not yet seen the most radical brainwaves of the mandarins running our central banks.

What do you think this will look like?
They don’t keep those things as a secret. They talk quite openly about "direct monetary funding" which is what Milton Friedman had in mind when he coined the phrase “helicopter money”. So the next idea is just bypassing the banking system altogether and mailing out checks to the citizens.

Would something like that even work?
All this monetary stimulus does two things in a reciprocal way: It pushes failure into the future and brings consumption into the present. Providing marginal businesses with very cheap credit is inviting companies that have passed their useful days of their commercial lives to pretending some kind of an afterlife thanks to the subsidies from the central banks. But capitalism is inherently a dynamic system based on entrepreneurship and to new inventions. It’s a little bit like the forest for the trees: You need life but you also need death. Without death there is no room for a new generation and what you get is Japan: Standing timbers of ancient age, none of them too healthy. Quantitative easing and artificially low interest rates reduce the dynamics, the growth and the vibrancy of economic life.

Now the fear of corporate failures is growing. You can see that in the widening spreads in the junk bond market.
The junk bond market has been characterized by very loose protections to the creditors. Those protections have been mainly eviscerated or weakened during this cycle of very aggressive lending and borrowing. That’s why I think the recovery rates on junk bonds in default will be lower and the final permanent losses to capital will be higher this cycle. But this should not be confused with the apocalypse. This is how finance works. This is the cycle of psychology of bull markets and bear markets, of boom and bust: There is euphoria and that mellows to complacency and at length it ripens to apprehension and then to fear and finally to abject terror – and that’s when you buy!

So where do you see opportunities for investors right now? Emerging markets for instance have crashed already pretty hard.
We see the beginnings of opportunity in some of the emerging markets. Still, I don’t think this is the moment to get involved broadly. But at least some securities have been marked down to levels at which  you can say: "Ok, that’s at least interesting". One of them is Sberbank. It’s a very good bank and it happens to be in Russia, a rather forbidding place at the moment. But Sberbank came through the 2008/09 experience with shining colors, its management is first rate and it has terrific scale. So altogether it’s a first rate bank now greatly under strain owned to the difficulties in Russia. But I think it will survive and do well. Another interesting stock is the Moscow Stock Exchange. Like Sberbank it’s well managed, cheap and a good business. There are also Avianca, an airline in Colombia and Grupo Nutresa, a midcap food distributor and processor which is called the Nestlé of Columbia.

Where else do you see opportunities?
This is a monetary moment. I think we are looking at the beginning of the world’s reappraisal of the words and deeds of central bankers like Janet Yellen and Mario Draghi. What we’re waiting for is a sufficient recognition of the monetary disorder. You see monetary disorder manifested in super low interest rates, in the mispricing of credit broadly and you see it in the escalation of radical monetary nastrums that are floating out of the various central banks and established temples of thought: Negative real rates, negative nominal rates and the idea of helicopter money. So you need some hedge against things not going according to the script and that makes gold and gold mining equities terrifically interesting now.

Are there any gold mining stocks you would recommend specifically?
Anything that the Canadian mining entrepreneur Pierre Lassonde is involved with, is interesting. He is a very unusual mining entrepreneur because he is a businessman first and and geologist second. He wants a return on investment rather than just digging a hole in the ground out of which comes gold. He is involved especially with Euro-Nevada and with a very low priced speculative mining company called Newgold. Barrick Gold is another stock that is an attractive speculation because it is highly encumbered and in the not so distant future it faces a debt drama. But the shares are priced for that and if gold goes higher they have huge potential.

• Fed puts December rate hike firmly on the agenda (Reuters)
• Charting the Markets: A More Hawkish Fed Rattles Investors (BBG)
• China to modernize and improve fiscal and tax systems (Reuters)
• Deutsche Bank to Cut 35,000 Jobs in Overhaul (WSJ)
• Deutsche Bank Said to Near $200 Million Sanctions Settlement (BBG)
• Barclays profits drop as it abandons cost-cutting targets (FT)
• Noisy GOP Debate Leaves Republican Race Unsettled (WSJ)
• European stocks firm, dollar rises as Fed revives Dec hike talk (Reuters)
• Shell Has Biggest Loss in More Than a Decade on Price Slump (BBG)
• Republicans pick Ryan for speaker; House passes budget deal (Reuters)
• The Tiny Pharmacy at the Center of Valeant's Money Mystery (BBG)
• Pimco Loss Is Prudential Fund's Gain as Investors Add $7 Billion (BBG)
• London and Hong Kong Facing Housing Bubble Risk, UBS Says (BBG)
• China Signs $17 Billion Deal to Buy 130 Airbus Planes (BBG)
• U.S., Chinese navy chiefs to discuss South China Sea on Thursday (Reuters)
• Samsung Deploys Cash With $10 Billion Buyback, Capex Boost (BBG)

Overnight Media Digest

WSJ

- Drugmakers Pfizer Inc and Allergan Plc are considering combining, in what would be a blockbuster merger capping off a torrid stretch for health care and other takeovers. Pfizer recently approached Allergan about a deal, according to people familiar with the matter, with one of them adding that the process is early and may not yield an agreement. Other details of the talks are unclear. (http://on.wsj.com/1LD8eFO)

- Federal Reserve officials Wednesday kept short-term interest rates unchanged near zero, but opened the door more explicitly than they have before to raising rates at a final 2015 meeting in December. (http://on.wsj.com/1OZcJOK)

- Toshiba Corp said Wednesday it would sell its image-sensor unit to Sony Corp, as Toshiba presses to shed unprofitable businesses after an accounting scandal rocked the company earlier this year. (http://on.wsj.com/1Rfentr)

- Billionaire investors Carl Icahn and John Paulson are pressing American International Group Inc to split into three parts, the latest evidence of how new rules passed since the financial crisis are roiling the financial-services industry. (http://on.wsj.com/1MirVQy)

- Deutsche Bank AG will not pay shareholders a dividend this year or next, as the German lender tries to meet financial targets tied to a sweeping restructuring. (http://on.wsj.com/1WjLy09)

FT

Deutsche Bank AG said on Wednesday it is scrapping this year's and next year's dividends as new Chief Executive Officer John Cryan overhauls Germany's biggest bank to restore growth and strengthen the company's balance sheet.

Barclays Plc agreed on Wednesday to spin out its natural resource private equity investing arm to Global Natural Resource Investments in return for remaining as an investor in its existing portfolio.

GlaxoSmithKline Plc reported better-than-expected earnings on Wednesday, helped by growth in HIV drugs and vaccines, which offset a further slide in sales of respiratory medicine Advair that is facing mounting competition in the United States and Europe.

NYT

- Leaders of the United Automobile Workers approved a tentative four-year deal with General Motors that includes a more lucrative signing bonus than what Fiat Chrysler workers were given, and $1.9 billion in new investments that will retain or create 3,300 jobs at a dozen G.M. sites. (http://nyti.ms/1P6KdJF)

- Deutsche Bank AG, the German financial giant with a big presence on Wall Street, is close to settling one of the many government investigations it currently faces. In a deal that is expected to be announced as soon as next week, Deutsche Bank would pay at least $200 million to resolve investigations into its dealings with countries like Iran and Syria, according to officials briefed on the matter. (http://nyti.ms/1LYXCPm)

- The Federal Reserve said on Wednesday, after a two-day meeting of its policy-making committee, that it would keep rates near zero for now, as expected, but it added an unusually explicit statement that it would consider raising rates at its final meeting of the year in mid-December. (http://nyti.ms/1RCvGUX)

- European policy makers moved ahead on Wednesday with plans to begin subjecting cars to on-the-road testing of exhaust emissions, rather than rely solely on laboratory tests. (http://nyti.ms/1GxXUQJ)

- Hyatt Hotels Corp is in talks to acquire Starwood Hotels and Resorts Worldwide Inc, two people briefed on the matter said, a combination that would create one of the largest lodging chains in the world. Hyatt is preparing a cash-and-stock bid that could be announced within the next few weeks, said the people, who requested anonymity because the talks are private. The discussions may yet fall apart, they said. (http://nyti.ms/1jSQ3TA)

Canada

THE GLOBE AND MAIL

** The oil patch is cutting ever deeper to cope with the longest crude-price rout in more than 15 years. Royal Dutch Shell Plc took the drastic step of halting its multibillion-dollar Carmon Creek oil sands development in Alberta after it had already started construction. The oil major blamed weak crude markets and insufficient pipeline capacity to export the eventual production. (http://bit.ly/1MVUALT)

** Spending by Chinese travelers to Canada is up sharply, as China closes in on second place among the country's largest sources of foreign tourists. The most recent report on debit and credit card spending in Canada, released by payment processor Moneris Solutions Corp, shows that Chinese visitors increased their use of credit cards by 30.2 percent in the third quarter of 2015 compared with the year-earlier period. (http://bit.ly/1MVUmnQ)

** Under heavy fire and facing a possible audit, Premier Kathleen Wynne has pulled an abrupt U-turn, telling a surprised legislature she will force teachers' unions to provide receipts before they receive multi-million dollar payments to cover negotiating expenses. Education Minister Liz Sandals previously insisted no receipts from the unions were necessary. (http://bit.ly/1RBx0Yh)

NATIONAL POST

** Barrick Gold Corp delivered solid third-quarter earnings, generating positive cash flow for the second straight quarter after a long period of negative cash flow. The world's biggest gold producer also reduced its cost guidance and said it is close to meeting its $3 billion debt reduction target for 2015. (http://bit.ly/1GLRJs0)

** Alberta's NDP government is taking bold steps to reduce its reliance on oil, including borrowing heavily to boost infrastructure and sponsoring economic diversification. Alberta still needs an oil-price recovery to balance its books or it could end up in a risky spot. The likely unintended outcome would be higher the debt, the more Alberta will need oil and gas to be its reliable cash cow. (http://bit.ly/1kdgjHX)

China

SHANGHAI SECURITIES NEWS

- The finance ministry's supervision office said on Wednesday it would investigate local governments to see whether they had disclosed their final accounts, and would publish the results of the investigation.

CHINA SECURITIES JOURNAL

- China National Offshore Oil Corp (CNOOC) said unaudited oil and gas sales revenue fell 32.3 percent to 36.3 billion yuan ($5.71 billion) in the third quarter from the same period a year earlier.

21ST CENTURY BUSINESS HERALD

- An investigation of 96 domestic tourism routes found "serious problems" in nearly three-quarters of them, according to a report by China Consumer Association released on Wednesday without giving details.

PEOPLE'S DAILY

- China does not stir up trouble but it is also not timid and the Chinese people will not stand for anyone violating China's sovereignty, said an editorial that called on the United States to stop harming peace and stability in the South China Sea.

Britain

The Times

Dyson has been accused by the maker of Bosch and Siemens AG vacuum cleaners of falsely alleging that it cheated energy efficiency tests in a manner similar to the Volkswagen AG emissions scandal. (http://thetim.es/1LCVnUa)

One of Britain's biggest housing associations plans to cut the number of affordable homes it builds each year and double the amount of properties it will sell after George Osborne said he would cut social rents. (http://thetim.es/1Wivh0D)

The Guardian

David Cameron refused six times under questioning from the Labour leader, Jeremy Corbyn, to say whether people would be left worse off by cuts to tax credits after the Treasury revises the proposals. (http://bit.ly/1RBJ0ZS)

BT Gorup Plc's proposed 12.5 billion stg takeover of EE, the UK's largest mobile phone operator, has been given provisional clearance by the competition watchdog after it said the deal was unlikely to damage consumers. (http://bit.ly/1RBJ0ZS)

The Telegraph

The Football Association was consulting its lawyers on Wednesday night following Sepp Blatter's stunning disclosure that Fifa had decided to give the 2018 World Cup finals tournament to Russia before the vote even took place. (http://bit.ly/1ihsqlU)

Sky News

State-backed Lloyds Banking Group has set aside an additional 500 million stg to cover the payment protection insurance (PPI) mis-selling scandal, taking its total provision so far to 13.9 billion stg. (http://bit.ly/1MUT0JX)

The Independent

The UK has come in at number six in the World Bank rankings of the best places to do business, its highest ranking since 2011. (http://ind.pn/1Hb3dAg)

It has been another choppy, illiquid, volatile overnight session, which started with weakness out of China, whose Shanghai Composite dropped 20% into another bear market in early trading, then further slammed by news of a terrorist attack in Jakarta, only to rebound back over 3000 as the Chinese National Team decided to intrevene again, this time in the ChiNext small cap index, pushing it higher by 5.6%.

Then after China faded from center stage, the big mover, both in FX and cross-assets, was the EUR, which soared nearly 100 pips just after the European open on reports the ECB is content for current policy measures to filter through. This in turn slammed the carry trade of choice, the USDJPY, and ultimately trickled down to US equity futures which after hitting overnight highs just shy of 1,900 have since tumbled 22 points to session lows, at 1,879, down 0.2% on the session.

Finally, moments ago Europe was hit by a double whammy when Renault shares plunged 20%, most since August, after Agence France-Presse reported that French fraud investigators seized computers from the automaker as part of an apparent probe into emissions testing. Other carmarkers across Europe were likewise slammed...

... and since there has been no official statement from the company, nobody knows what is really going on and the selling has persisted to this moment, as the primary concern fueling the 2016 drop remains: “Everything boils down to concerns about global growth,” said Ralf Zimmermann, a strategist at Bankhaus Lampe in Dusseldorf. “There are few people out there willing to buy the dips because everyone is scared that the selloff will be deeper the next day. And it has been. I would sell any highs -- there is definitely potential for bigger losses in the short term.”

To summarize: European shares tumbled, wiping out gains from a two-day rally, Asian stocks slid and the cost of insuring corporate debt rose as investor concern over global growth prospects resurfaced. U.S. equity-index futures pared gains of as much as 0.9 percent. Government bonds rose, with yields falling to records in Japan and China amid anxiety over the world economy. U.S. crude prices stabilized after dropping below $30 a barrel on Tuesday to touch the lowest since 2003 as Iran moved closer to boosting exports. South Korea’s won slid after the central bank kept interest rates unchanged and Indonesia’s stocks and currency dropped after several people were killed in explosions and gunfire in central Jakarta.

Top overnight news stories include Goldman’s job cuts on fixed income desk, Jakarta bombings, JPMorgan AM mandate from BlueCrest, German GDP, Blue Coat IPO managers, scrutiny towards Buffet’s Clayton Homes.

Drilling down into regional markets, Asian stocks traded with firm losses following Wall St.'s negative close, as the slump in energy prices continued to weigh on sentiment. The Nikkei 225 (-3.0%) continued to underperform as Japanese exporters were pressured by a firmer JPY, while Japanese Machine Orders printed their largest decline since May 2014. Elsewhere, the ASX 200 (-1.6%) was led lower by the energy sector as Brent crude fell back below the USD 30/bbl level for the 1st time since 2004, while Chinese bourses fluctuated as the Shanghai Comp (+2.0%) declined into bear market territory, having fallen 20% from its recent December 2015 highs, but then saw an influx of bargain hunting to recover in late trade. Finally, 10yr JGBs were initially higher amid weakness in Asian equity markets which saw the 10yr yield decline to a record low of 0.190%, while the BoJ also entered the market for JPY 1.27tr1 in government debt. However, prices then reversed as stocks came off their worst levels with Nikkei 225 climbing back above the 17000 level.

Top Asian News:

• Several Killed as Explosions Rock Jakarta, Police Battle Gunmen: Islamic State had warned of shining “spotlight” on Indonesia.
• Indonesian Stocks Decline With Rupiah After Deadly Explosions: Bank Indonesia cuts key rate for first time since February.
• Indonesia Assesses Offer for $1.7b Stake in Freeport Unit: FCX has offered Indonesia a stake of ~11% of its local unit for $1.7b, according to govt. official.
• Herro Says Now Is a Time for True Investors to Profit From Panic: Sees opportunities in beaten-down shares, oil-related firms.
• China Stocks Pull Back From Bear-Market Brink as Smallcaps Jump: ChiNext cos. pledge to stabilize market by not selling.
• Yuan Bears Frustrated by Intervention Sell Freely Traded Aussie: Australian dollar is off to worst start to a year since 2009.

In Europe, Equity indices (Stoxx -2.6%) have been weighed upon in European trade following the source reports which point to a lack of further action by the ECB, while questions remain regarding the health of both the Chinese and US economies. The Stoxx 600 has fallen to its lowest since Aug 24th, with markets opening firmly in the red, but taking another leg lower in the wake of reports that a number of members on the ECB governing council are cynical as to whether the central bank needs to unveil further policy action in the near term as existing measures need time to take effect.

Meanwhile, despite the ECB sources suggesting a lack of upcoming stimulus, Bunds have also seen an uptick today amid the heightened risk off sentiment, with the Mar'16 contract having now broken above the high seen on Jan 7th at 160.19 and could now test 160.66 to the upside which marks the 27th Nov high. Also of note, today's Spanish issuance, which hit Spanish paper after uninspiring bid to covers, concludes the raft of supply that was set for this week, combined equivalent to around 120K Bund futures, while net cash flow for this week is negative EUR 15.97b1n, with the Netherlands, Italy and Austria paying coupons/redemptions.

Top European News

• German Economy Defied 2015 World Slowdown With Faster Growth: rose 1.7% after gain of 1.6% in 2014, Federal Statistics Office said at press conference in Berlin on Thursday.
• Pound Touches 11-Month Low Versus Euro Before BOE Announcement: At weakest level since Feb. versus euro before the Bank of England’s first policy decision of 2016.
• European Dark Pools Expand in Face of Rules Limiting Their Use: European dark pools had 45% jump in value of trading they handled in 2015, according to broker, equity-market operator Investment Technology Group Inc., vs 28% increase for public exchanges.
• Burberry, Richemont Say Mainland China Luxury Sales Rebounding: Co. says luxury-goods market returned to growth in mainland China at end-2015, as sales in Hong Kong kept slumping.
• Fiat Chrysler Accused of Falsifying Sales: Automotive News: 2 Chicago-area dealerships filed racketeering lawsuit against Fiat Chrysler, alleging co. offered dealers money to falsify sales.

In FX, The euro strengthened versus all of its 16 major peers and the yen pared a decline as stocks slid, bolstering demand for the safest assets. The currencies of commodity producers including New Zealand, Australia and Canada were among the worst performers versus the dollar.

The pound dropped to 75.90 pence per euro, the weakest level since February, before the Bank of England’s first policy decision of the year. The central bank cited sterling strength as a factor in dragging prices down in the minutes of its previous meeting on Dec. 10, when its nine-member Monetary Policy Committee voted 8-1 to keep the key rate at a record-low.

The won depreciated 0.8 percent against the dollar and Indonesia’s rupiah slid 0.6 percent, leading declines in emerging-market currencies. A gauge of 20 exchange rates slipped 0.1 percent.

The Hong Kong dollar weakened as much as 0.3 percent -- its biggest intraday loss since 2003 -- to HK$7.7823 versus the U.S. dollar. Speculation mounted in the options market that the city’s 32-year-old currency peg will break as investors lose confidence in Chinese assets.

One-year implied volatility on the Hong Kong dollar has doubled this month to a 12-year high of 3.43 percent. Prices for the derivatives indicate there’s a 24 percent chance the Hong Kong dollar will have weakened beyond its permitted trading range of HK$7.75-HK$7.85 versus the greenback by the end of this year, up from 9.5 percent on Dec. 31, data compiled by Bloomberg show.

Poland’s zloty dropped 0.2 percent versus the euro before the central bank decides on interest rates. While policy makers are expected to keep borrowing costs on hold Thursday, the ruling Law & Justice party, which won elections in October, has said it supports rate cuts and wants the central bank to help spur economic growth. Five of its candidates will join the 10-member rate-setting council for its next meeting in February.

In commodities, the Bloomberg Commodity Index, which tracks raw material returns, was little changed after dropping to the lowest since 1991 on Tuesday.

West Texas Intermediate oil for February delivery swung between gains and losses, with prices rising after attacks in Indonesia. Futures were up 1 percent at $30.78 a barrel after earlier dropping as much as 0.7 percent. Brent added 1.3 percent to $30.71 a barrel.

Most industrial metals traded lower on the London Metal Exchange. Copper for delivery in three months lost 0.3 percent to $4,380 a metric ton after touching a six-year low. Only aluminum managed to eke out a gain, advancing 1 percent to $1,476 a ton.

On today's US event calendar we have the import price index print along with last week’s initial jobless claims data. Fedspeak wise we’ve got the Fed’s Bullard. US earnings will also be a focus with JP Morgan kicking off for the banks, while in the corporate space Intel is also scheduled to report.

Top Global News

• Goldman Said to Mull Cutting Fixed-Income Staff More Than 5%: Co. considering cutting >5% of its fixed-income traders, salesmen later this quarter, according to person familiar.
• Ackman’s Pershing Square Down 11% in 2016 After ’15 Losses: Fund lost 11.4% this year through Jan. 12, according to its website.
• JPMorgan to Manage $1.2b of BlueCrest Hedge Fund Money: Asset Management unit will take over managing GBP804m for BlueCrest All Blue Fund Ltd.
• Pfizer Said to Weigh Sale of Pump Unit Acquired in Hospira Deal: Co. weighing sale of the pumps, devices business that could fetch up to $2b, according to people familiar.
• Boeing, Engineers Reach Pact Bringing Long-Term Labor Peace: New terms reached during formal talks well before existing contract expires in October, co. said Weds.
• Blue Coat Said to Pick Morgan Stanley, JPMorgan for IPO: Internet security-software co. backed by Bain Capital, picked Morgan Stanley, JPMorgan, according to person familiar.
• Glencore Mine Sale Said to Draw Interest From Ex-Barrick CEO: Former Barrick Gold Corp. CEO Aaron Regent among remaining bidders for Glencore’s Lomas Bayas copper mine in Chile, according to people familiar.
• Buffett’s Mobile-Home Unit Should Be Probed: Legislators: U.S. lawmakers called for federal investigations into Clayton Homes, the mobile-home business at Warren Buffett’s Berkshire Hathaway Inc.
• Twitter Accused in Widow’s Lawsuit of Allowing IS Use: Co. accused in lawsuit by widow of man killed at a police training center in Amman, Jordan, of knowingly allowing Islamic State to spread its terrorist message through its service.
• Extra Space Storage to Replace Chubb in S&P 500 Index: Change to take place after close Jan. 15.
• Cheniere Sabine Pass Approved to Export Extra 600bcf of LNG: Exports approved to take place over 2-yr period, U.S. DoE says in order issued Wednesday

Bulletin Headline Summary From RanSquawk and Bloomberg

• The big mover in FX this morning is the EUR after reports the ECB is content for current policy measures to filter through sent the single unit higher across the board
• Energy prices trade modestly higher after Brent crude briefly broke below USD 30/bbl for the 1st time since April 2004 yesterday
• Today's highlights include BoE rate decision & minutes, ECB minutes, US weekly jobs data and comments from ECB's Draghi, Fed's Lockhart and Bullard
• Treasuries gain for a third day amid losses in global equity markets, Islamic State attack in Indonesia; week’s auctions conclude with $13b long bonds, WI 2.850% vs. 2.978% in Dec.; 30Y yield 3.016% at start 2016.
• Chinese stocks headed for a bear market while government bond yields fell to a record as central bank cash injections and a stable yuan fixing failed to shore up confidence in the world’s second-largest economy
• Lost in all the Chinese stock and currency market gyrations, policy missteps and mixed data is this economic reality: The government is constrained by a credit bubble that has ballooned to $28 trillion in an economy growing at its slowest pace in 25 years
• Hong Kong’s dollar sank by the most in more than a decade and speculation mounted in the options market that the city’s 32-year-old currency peg will end as investors lose confidence in Chinese assets
• The Islamic State assault in Jakarta began when a suicide bomber blew himself up inside a Starbucks; militants then opened fire and detonated further bombs, including one outside a nearby police post; at least two were killed
• The number of refugees entering Europe in the first 10 days of 2016 is already three times the level in all of January 2015, signaling no letup in the pressure facing the region’s leaders amid the biggest wave of migration since World War II
• The German economy expanded about a quarter of a percent in 4Q, with record employment and expansionary monetary policy fueling domestic consumption at a time of weakening global trade
• Renault SA shares plunged as much as 20% after a union said French fraud investigators seized computers from the automaker as part of an apparent probe into emissions testing
• Donald Trump told Bloomberg’s With All Due Respect just minutes after he finished a rousing speech to a capacity crowd of 10,000 inside a Pensacola, Florida, arena that he’s building a movement bigger than Reagan’s
• Goldman is considering cutting more than 5% of its fixed- income traders and salesmen later this quarter as it contends with an industrywide revenue slump, according to a person with knowledge of the matter
• Sovereign bond yields lower. Asian stocks slide with the exception of China, European stocks decline, equity-index futures steady. Crude oil higher, copper and gold lower

US Event Calendar

• 8:30am: Import Price Index m/m, Dec., est. -1.3% (prior -0.4%); Import Price Index y/y, Dec., est. -8.4% (prior -9.4%)
• 8:30am: Initial Jobless Claims, Jan. 9, est. 275k (prior 277k); Continuing Claims, Jan. 2, est. 2.210m (prior 2.230m)
• 8:45am: Bloomberg U.S. Economic Survey, Jan.
• 9:45am: Bloomberg Consumer Comfort, Jan. 10 (prior 44.2)
• 1:00pm: U.S. to sell $13b 30Y bonds in reopening

Central Banks

• 7:00am: Bank of England bank rate, est. 0.5% (prior 0.5%)
• 7:30am: ECB account of monetary policy meeting
• 9:15am: Fed’s Bullard speaks in Memphis, Tenn.

DB's Jim Reid concludes the overnight wrap

Yesterday saw another big turnaround in markets with positive momentum from the European session quashed. For the fourth day in the row the S&P 500 got off to a reasonable start, however much like the previous three sessions the index quickly turned on a dime and headed south in a hurry. The previous two days had seen the market recover in the last hour or so into the close to finish in positive territory but there was no such rebound this time round with the index eventually closing with a -2.50% loss. That was the biggest one-day loss since September 28th as the index finished below the 1,900 level for only the fifth time in the last 15 months. The Dow finished 365pts lower (or -2.21%) with its YTD loss now close to -7.5% while the Nasdaq sold off a heavy -3.41%. Meanwhile small cap stocks in the US entered a bear market following yesterday’s moves with the Russell Index closing -3.30% to fall -22% from the all time highs made in June last year.

Along with events in China, a lot of the blame for weakness in risk assets so far this year has clearly been on the plummeting Oil price. This was partly the case again yesterday after Oil tumbled 4% from the day’s highs in a matter of moments following some bearish inventory data which saw Brent temporarily dip below $30. However, it was interesting to see that energy stocks weren’t actually the biggest underperformers on a sector basis yesterday. Of the ten sectors in the S&P 500, energy (-1.78%) was actually the fourth best performing sector yesterday (behind the more non-cyclical utilities, telecoms and consumer staples sectors). Instead, consumer discretionary (-3.38%), healthcare (-2.93%), tech (-2.79%) and financials (-2.60%) led yesterday’s broader sell-off in a signal that some of the equity weakness is filtering into the broader economy sectors.

Yesterday was also a rough day for US credit markets with CDX IG leaking +6bps wider (and +8bps wider from the early tights). CDX HY was +20bps wider also with the spread of 536bps now the widest since November 2012. The big US HY ETF (HYG) marked a fresh six and a half year low, while US HY energy spreads were a whopping +43bps wider at 1,489bps. Of note also was Reuters reporting that the SEC is to start a review into the potential liquidity risks posed by HY fund managers in light of the recent collapse of a US credit fund, adding to the already poor sentiment.

Looking at our screens this morning bourses outside of China are following much of the lead from the US yesterday, although markets in China have rebounded post the midday break. The biggest falls have come in Japan where the Nikkei and Topix are -2.56% and -2.34% respectively. Elsewhere the Hang Seng is -0.91% while in China the CSI 300 (+0.95%) and Shanghai Comp (+0.66%) have recovered after a poor start. The CNY fix was again set unchanged this morning, but we’ve seen the onshore and offshore currencies weaken 0.2% and 0.6% respectively since. Some slightly better than expected Australian employment data has failed to lift the ASX (-1.80%) while the Aussie Dollar (-0.3%) continues to trend lower along with other EM currencies this morning. As we go to print, reports of an explosion in Jakarta has seen markets there tumble along with the Indonesian Rupiah also selling off.

Yesterday also saw a distinctly more dovish tone to the Fedspeak. In particular it was comments from the Boston Fed President Rosengren which attracted some attention. The Fed official made reference to the fact that ‘policy makers should take seriously the potential downside risks to their economic forecasts and manage those risks as we think about the appropriate path for monetary policy’. Rosengren opined that these ‘downside risks reflect continued headwinds from weakness within countries that represent many of our major trading partners, and only limited data to support the projected path of inflation’. Meanwhile, Chicago Fed President Evans reiterated his view that ‘we are likely headed toward a lower resting point’ for the fed funds rate relative to the past, while also citing that the policy of normalization should be ‘very gradual’ to bring inflation to target in a reasonable amount of time.

Having been a bit of a non-event of late, the Fed’s Beige Book also had a few interesting takeaways yesterday. The report confirmed that seven of the twelve districts reported ‘modest’ growth in the past six weeks, with two citing ‘moderate’ growth, one ‘upbeat’ and the other ‘essentially flat’. Further labour market improvement was made, but the same issues with a lack of wage pressure was evident once more as ‘price increases tended to be minimal’ with districts reporting ‘little overall change in wage and price pressures’. Of interest, auto sales ‘were somewhat mixed, as activity has begun to drop off from previously high levels in some districts’. Manufacturing sectors were said to have weakened generally as ‘several districts reported the strong dollar’s negative impact on demand’. Unsurprisingly weakness in oil and gas sectors was again a feature.

In terms of the rest of the price action yesterday, European stocks closed well off their intraday highs, declining with the moves across the pond. The Stoxx 600 finished +0.41% although it had been up as much as +1.8%. Interestingly energy stocks were the best performing sector there. Rates markets firmed up meanwhile. 10y Treasury yields extended their move lower to 2.093% although it did go as low as 2.040% before a late move higher. Some of early rally in rates was also helped by a strong US 10y auction, the bid-to-cover ratio of 2.77 the highest since December 2014.

In terms of yesterday’s data, in Europe we saw the soft regional industrial production reports confirm a -0.7% mom decline for the Euro area (vs. -0.3% expected) during November. Over in France the December CPI print came in a tad better than expected during the month at +0.2% mom (vs. +0.1% expected). In the US meanwhile we learned that the December trade deficit was wider than expected at $14.4bn (vs. $10.0bn expected).

Looking at the day ahead, it’s another relatively quiet session for data in Europe this morning with the calendar year GDP print out of Germany the main release of note. There’s some central bank action for us to follow however with the BoE decision due around midday (no change expected but the focus will be on the minutes) while we’ll also get the ECB account of the last monetary policy meeting which could be fascinating given the disappointments seen in markets after it. In the US we will receive the December import price index print along with last week’s initial jobless claims data. Fedspeak wise we’ve got the Fed’s Bullard due to speak at 2.15pm GMT, while in Europe the ECB’s Draghi and Coeure are due to participate in a Eurogroup meeting in Brussels this afternoon so it’ll be worth seeing if anything comes out of that. US earnings will also be a focus with JP Morgan kicking off for the banks, while in the corporate space Intel is also scheduled to report.

• Oil extends rally towards $35 after Iran welcomes output freeze (Reuters)
• Overproduction Swamps Smaller Chinese Cities, Revealing Depth of Crisis (WSJ)
• House Flipping Is Making a Comeback in Las Vegas (BBG)
• Trump leads Republican field nationally by more than 20 points (Reuters)
• Turkey blames Kurdish militants for Ankara bomb, vows response in Syria and Iraq (Reuters)
• Brexit nerves knock FTSE as oil rally cools (Reuters)
• Fed’s Kashkari: 25% Capital Requirement May Be Right for Banks (WSJ)
• Russia Sues Ukraine in London Court Over $3 Billion Default (BBG)
• China's Banks May Be Getting Creative About Hiding Their Losses (BBG)
• Chinese Money Keeps Coal Mines Humming (WSJ)
• Anglo Cut to Junk for Third Time This Week as S&P Downgrades (BBG)
• The People's Bank of China Moves to Daily Open-Market Operations (BBG)
• Hungary Central Bank Stockpiles Guns, Bullets Citing Terror Risk (BBG)
• Obama Said to Plan Historic Trip to Cuba Next Month (BBG)
• Iraq Follows Iran by Avoiding Commitment to Oil Freeze (WSJ)
• Hedge Funds Will Pay for You to Own Small-Cap ETFs (BBG)
• China's Subprime Crisis Is Here (BBG)

Overnight Media Digest

WSJ

- President Barack Obama will travel to Cuba next month, according to a U.S. official, in the first such visit by a sitting American president in 88 years. (http://on.wsj.com/1VoVc2h)

- The legal fight around the locked iPhone of one of the San Bernardino shooters highlights the growing role of encryption in digital life. (http://on.wsj.com/1VoV6rs)

- China had hoped small cities like Suizhou would help drive the expansion of the middle class and sustain economic growth. But overproduction is clouding the country's path to prosperity and jolting the global economy. (http://on.wsj.com/1VoVbeK)

- Iran dented the efforts of other big oil exporters to limit production Wednesday by refusing to curb its own output, demonstrating the limits of OPEC's power to boost prices amid rising tensions among its members. (http://on.wsj.com/1VoVeqP)

- China's deployment of missiles on a disputed South China Sea island exacerbated tensions between China and the U.S., prompting Secretary of State John Kerry to suggest President Xi Jinping had abandoned a pledge not to militarize the strategically important region. (http://on.wsj.com/1VoVfv6)

FT

Most managers at HSBC's UK retail and wealth unit will not be getting a pay rise this year, the lender told the affected employees at the end of last week, even though the bank struck an agreement with employees last year.

Britain's National Health Service(NHS) could end up with a 2.3 billion pounds ($3.29 billion) deficit by the end of the financial year and is at risk of breaching parliamentary protocol by overspending its budget, according to a report by think-tank King's Fund.

Arla Foods, one of Europe's biggest dairy companies, said on Wednesday the global milk market was in crisis due to oversupply, but it expected demand, particularly from China, to pick up at the end of the year.

NYT

- Tim Cook, Apple Inc's chief, said the government's request to bypass security on the phone used by Syed Rizwan Farook had "chilling" implications. This is not the first time a technology company has been ordered to effectively decrypt its own product. (http://nyti.ms/1R7PKzy)

- Yahoo Inc told dozens of employees at 15 digital publications that they were losing their jobs, part of a larger plan to cut the work force by 15 percent. (http://nyti.ms/1QlInaI)

- Delta Air lines Inc is seeking an edge in the battle for premium-class passengers by serving food intended to be as good as what is served in Meyer's restaurants. The company has struck an alliance with Union Square Hospitality Group, the food service empire behind Shake Shack and restaurants like Union Square Cafe, Blue Smoke and Gramercy Tavern. (http://nyti.ms/219RPQi)

- A long-running internal battle among ABC Corp executives over creative control and future strategy led to the ouster on Wednesday of the network's entertainment president and the elevation of a pair of his lieutenants. Channing Dungey, previously ABC's drama chief, will take over the prime-time part of his job. (http://nyti.ms/1TrLBtI)

Canada

THE GLOBE AND MAIL

** The Liberal government plans to launch a full-scale review of the controversial temporary foreign workers program, which limits foreign workers to 10 percent of a company's work force in low-paying jobs, and prohibits employers from hiring them in regions of high unemployment. (bit.ly/1R9u71K)

** Air Canada, the country's largest airline, has signed a letter of intent to buy as many as 75 of Bombardier's new C Series planes, giving the troubled Montreal-based transportation giant the first order it has landed since September, 2014. (bit.ly/1mJpDUJ)

** Jean-Pierre Blais, chairman of Canada's telecom and broadcast regulator, is calling on the federal government to take quick action to resolve an outstanding appeal over small competitors' access to the highest-speed Internet services.(bit.ly/1PHK277)

NATIONAL POST

** Canada Jetlines Inc said on Wednesday that it plans to list on the TSX Venture Exchange in a reverse takeover of Jet Metal Corp, a junior uranium explorer, with the IPO expected sometime in May. (bit.ly/1Qmt3uv)

** Barrick Gold Corp has set aggressive new targets for debt and cost reduction as it looks to continue momentum after a largely successful 2015. (bit.ly/1Q33lJH)

** In the latest caustic outbreak in an ongoing cultural war, the Friends of the Simon Wiesenthal Centre for Holocaust Studies (FSWC) accused the York University's faculty association of endorsing "a campaign of censorship against Israel and the Jewish People". (bit.ly/20FXBXV)

Britain

The Times

- Nearly 1,400 UK engineering jobs are to go after Bombardier Inc announced it was cutting its global workforce by 10 percent. The Canadian group is to shed 1,080 jobs from its Belfast aircraft plant and three other locations over the next two years, representing more than a fifth of its workforce. (http://thetim.es/219sExi)

- Rolls-Royce Holdings Plc has entered into talks with an American activist investor seeking a seat on the struggling engineer's board. The group said it had not yet decided whether to give ValueAct, a San Francisco hedge fund, a place on its board. (http://thetim.es/219tgTE)

The Guardian

- British workers' rights to paid holiday, maternity leave and fair treatment at work would be at risk if the UK voted to leave the European Union, the head of the Trades Union Congress has warned. Frances O'Grady, general secretary of the body representing British trade unions, said the EU debate had been too dominated by business interests, with not enough focus on the potential costs for ordinary workers. (http://bit.ly/219tyKg)

- The number of properties in Britain worth 1 million pounds ($1.43 million) or more is set to more than triple by 2030, widening the gap between the housing haves and have-nots, according to a report. Less than half a million homes in the UK are currently valued at over 1 million pounds, but a study by high street lender Santander claims this number will rise to more than 1.6 million in the next 15 years.

The Telegraph

- Britain's job rich recovery pushed employment to a record high at the end of 2015, though a "marked" decline in wage growth since last summer suggests the Bank of England remains a long way from raising interest rates. The number of people in work rose by 205,000 to 31.42 million in the final quarter of last year, according to the Office for National Statistics (ONS). (http://bit.ly/219u0Z1)

- BT Group Plc is facing fresh calls to split with Openreach, its broadband infrastructure division, ahead of a landmark review into the telecoms industry. Ofcom is set to unveil next week a widely anticipated set of proposals for the next decade of the telecoms sector, including BT's arm's length control of Openreach, after almost a year of fierce debate in the industry. (http://bit.ly/219u234)

Sky News

- Trinity Mirror Plc, publisher of the Daily Mirror, will unveil a weekday newspaper called New Day. New Day is expected to launch on 29 February, according to people close to the plans, and will initially be priced at 25p - compared to the 40p cover price of the I newspaper, with which it is expected to compete. (http://bit.ly/219uWfI)

The Independent

- UK households have kicked fears of an interest rate rise this year into the long grass, despite official figures showing unemployment at its lowest for a decade. The number of households expecting the Bank of England to raise its record-low interest rates over the next 12 months has fallen to its lowest in more than two years amid near-zero inflation and growth fears, according to Markit, the financial data firm. (http://ind.pn/219v8M5)

Gold is many things to many people. A perennial battleground subject, gold remains arguably one of the most debated asset classes across global financial markets, but as Goldman's precious metals equity analyst notes, from a fundamental perspective, the risk/reward looks more balanced than that of its bulk and base metal peers, especially in terms of the supply/demand dynamics.

Bulls believe gold is the ultimate store of wealth, and should be compulsory in a welldiversified portfolio given its perceived safe-haven appeal.

 

In contrast, bears are quick to highlight the lack of industrial use for this non-yielding asset and focus on the fact there is an abundance of above-ground inventory.

 

Love it or hate it, gold will always be relevant and mentioned in the same sentence as oil when market participants refer to the all-important commodities complex.

Gold is probably the pick of a bad bunch from a future investment standpoint.

Macro trumps micro

Gold is the chameleon of commodities, but ultimately it is primarily used as a financial asset by investors as a store of wealth, a hedge against the threat of inflation, and in some instances, as portfolio insurance. Historically, one of the strongest relationships is the inverse relationship between the gold price and US real interest rates; higher TIPS, lower gold prices, mainly owing to the fact that gold is a non-yielding asset and as such the opportunity cost will increase for investors holding gold as rates increase.

As can be seen from the chart below, the relationship between US 5-year TIPS and gold has been very strong, returning an R-squared of 0.85. In 2016, our economists expect above-trend US economic growth and a corresponding recovery in US inflation expectations.

As we gingerly move through 2016, and the market recalibrates its expectations for the imminent Fed rate hiking cycle, the gold price could be an interesting sideshow and alternative store of value for investors, if the currently anticipated timetable is pushed out.

One of the reasons for the drawn out correction in gold prices in 2013 was the partial liquidation of ETFs.

Above, we show that the number of ounces of gold in ETFs has stabilised in the past 12 months, and in fact, has ticked upwards in 2016.

Saving lustre

While a US market correction is not our base case, below we identify the major risk-off periods over the past 45 years, and investigate whether gold acted as effective short-term portfolio insurance. We observe that for nine of the last 10 major downturns in US equity markets, gold outperformed the S&P with 1980-82 the only exception (the gold bubble burst in 1980). Moreover, gold generated positive returns in eight of those instances.

Chindia

In 2014, the world’s two most populous nations accounted for over 50% of total gold demand. Citizens and the governments of these two countries play pivotal roles in the global gold market from both a supply and demand perspective. China is now the largest gold producing nation, more than doubling its output over the past decade to 450t. To put this in perspective, China was listed as #4 in 2005. In India, gold has always been a symbol of wealth, status, and a fundamental part of many rituals. In 2013, the government tried to introduce policies to reduce its current account deficit that included curbing gold imports, but these policies ultimately increased smuggling. While the 80:20 gold import rule was scrapped in November 2014, the 10% import duty on all gold imports is still in place.

Miner miner 49er

The fundamental difference between gold and other commodities is that once extracted, it is generally not consumed. It remains in existence in a form (jewelry, art, coins, bars) that is easily recoverable and is periodically returned to the market through recycling. Owing to this, gold’s above-ground stock is always rising. Mine output accounts for about c.75% of total annual supply. A labour-intensive and costly activity with long lead times, mine production is relatively inelastic to prices in the short run. In 1Q15, mine supply increased by 1% yoy to 734t while in 2014, global gold production increased by 5% yoy.

Mine supply rose significantly during gold’s bull run in 2003-11, when prices rose 450% and new mines ramped up to full capacity following significant investments in new projects. However, with gold prices falling dramatically (by 42% since September, 2011), miners have been forced to delay/suspend new projects as they seek to increase operational efficiencies and cut growth capex. Consequently, reducing operating costs to optimise free cash flow has been a major focus for the gold companies.

While closures and suspensions have been limited to small and ageing operations, there have been deferrals of major development-stage projects as part of the drive to reduce unnecessary capital expenditure. Most activities are centered on the divestment of non-core operations. Miners have taken steps to enable their survival through the current squeeze of their margins, and it seems that the consequences of these actions will be detrimental to mine supply levels in future years.

The pain that the broader mining industry experienced in 2015 was endured by the gold sector in 2013/14. After the gold price fell 25% in the first six months of 2013, the gold companies were forced in to action to conserve cash. Dividends were cut, capex was significantly pared back, non-core assets were sold and balance sheets slowly improved. The aggressive action from gold companies resulted in a sector that is able to survive and generate cash at a US$1,000/oz gold price.

The need to conserve cash in the face of sustained lower commodity prices is a situation we believe that the broader mining complex is slowly coming to terms with. As the chart below indicates, the gold sector has been more decisive in addressing the issues.

Global miners are all facing their problems (BHP: dividend and Samarco; Glencore: debt; Anglo: debt & restructuring; Chinese producers: high debt) and these are likely to drag on performance in 2016. Buy-rated Barrick Gold (US$12.25) and AngloGold Ashanti (R172) have ‘cleared the decks’ on the cash conservation front and are well positioned to perform in 2016. They are cash flow positive at respective gold prices of US$890/850 per oz. FCF yields are strong and we believe the gold miners provide more stable mining opportunities relative to their large cap non-gold peers.

 
The need to conserve cash in the face of sustained lower commodity prices is a situation we believe that the broader mining complex is slowly coming to terms with. As the chart above indicates, the gold sector has been more decisive in addressing the issues.

It was just last week when legendary hedge fund manager Stanley Druckenmiller delivered his latest anti-Fed sermon and once again extolled gold as the asset class to own in these experimental times in which the "bull market in stocks is exhausted", saying "what was the one asset you did not want to own when I started Duquesne in 1981? Hint…it has traded for 5000 years and for the first time has a positive carry in many parts of the globe as bankers are now experimenting with the absurd notion of negative interest rates. Some regard it as a metal, we regard it as a currency and it remains our largest currency allocation."

Today, it is the turn of that other prominent anti-Fed crusading hedge fund billionaire, Elliott Management's Paul Singer, who in his latest letter said that gold’s best quarter in 30 years is probably just the beginning of a rebound as global investors weigh the ramifications of unprecedented monetary easing on inflation.

As cited by Bloomberg, Singer said that "it makes a great deal of sense to own gold. Other investors may be finally starting to agree,” Singer wrote in an April 28 letter to clients. "Investors have increasingly started processing the fact that the world’s central bankers are completely focused on debasing their currencies."

He said that "if investors’ confidence in central bankers’ judgment continues to weaken, the effect on gold could be very powerful. We believe the March quarter’s price action could represent something closer to the beginning of such a move than to the end."

What makes Singer's outlook especially notable is that it thankfully disagrees with the view from Goldman Sachs which as we reported last night, was stopped out of its short gold position with a 4.5% loss, and while forecasting modestly higher prices in 3, 6 and 12 months (it now sees gold at $1,100 instead of $1,000) still expects weaker gold prices over the next 12 months. Which considering Goldman's absolutely abysmal predictive track record is great news for gold bulls.

Bloomberg adds that in addition to expressing his gold view through options, Singer is backing a new venture focused on royalties, streaming, and other forms of investments in the mining industry that will be led by Shaun Usmar of Barrick Gold Corp.

And while Goldman cotninues to bash gold (which has once again jumped this morning right on schedule), some unexpected support to Singer's view came from none other than JPMorgan's Private Bank whose Solita Marcelli told CNBC that "we're recommending our clients to position for a new and very long bull market for gold."After seeing three back-to-back years of losses, the precious metal has rallied 20 percent in 2016. And that's just the start of the next leg higher, according to Marcelli. "[We think] $1,400 is very much in the cards this year."

As CNBC adds, the firm's global head of fixed income, currencies and commodities reasoned that, with so many negative interest rate policies around the world, gold will continue to be bought as an alternative currency. And, with expectations that investors will seek to hedge against the resulting volatility, Marcelli believes that gold will remain attractive in a world where bonds and U.S. rates may cease to be the main risk-off asset.

"Central Banks may consider diversifying their reserves [as they anticipate] negative rates on existing holdings,"said Marcelli, when discussing the commodity as safe-haven trade. "Gold is a great portfolio hedge in an environment where the world government bonds are yielding at historically low levels." 

While Marcelli admits the move will come slowly, she remains convinced that the commodity will continue to grind higher — with that key $1,400 level being the first line in the sand. 

"Gold is looking more and more attractive every single day,"concluded Marcelli. "As a nonyielding asset, it has a minimal storage cost, so when you compare it to negative-yielding assets, it actually has a positive carry."

It is refreshing to see that in a world in which over $7 trillion in bonds have a negative yield, someone has done the math. It is less refreshing that gold is once again so prominently featured in the official narrative, because if cash has recently become a target in a global NIRP world, that means that gold, whose wealth preservation qualities are vastly greater, will surely undergo an Executive Order 6102 redux in the coming years as governments around the globe seek to eliminate access to hard assets.

It has been more of the same overnight, as global stocks piggybacked on the strong US close and rose despite the lack of good (or bad) macro news, propelled higher by the two usual suspects: a higher USDJPY and a even higher oil, if mostly early on in the trading session.

Yes, the oil squeeze higher continues, and as the charts below courtesy of Andy Critchlow show, Brent is now 82% higher in the past 82 days...

... while crude has had its strongest rally since 2010.

However, after rising above $48 for the first time since October, crude finally pulled back modestly and was unchanged at last check while Brent was modestly in the red. This led to equities paring much of their overnight advance. In FX, in addition to the abovementioned spike in the USDJPY now well in the mid-109.50s, the other prominent mover was Australia’s dollar which advanced after central bank officials suggested authorities will hold off on cutting interest rates.

The Stoxx Europe 600 Index was still set for its third day of gains also following the crude jump above $48 a barrel. The British pound climbed by the most in four weeks as a poll indicated support is growing in the U.K. for the country to remain in the European Union. Investors got a reminder of the challenges facing central banks as a report showed U.K. consumer-price growth unexpectedly slowed in April. U.S. data on Tuesday are forecast to show inflation quickened last month. West Texas Intermediate crude was unchanged at $47.74. The pound was 0.6 percent stronger at $1.4486 and the Aussie gained 0.5 percent to 73.25 U.S. cents. US equity futures were unchanged after rising 0.3% around the European open.

"Markets seem to be in a relatively sweet spot with a steadily stronger U.S. dollar and resilient commodities prices,” Angus Nicholson, a Melbourne-based market analyst at IG Ltd., told Bloomberg "Many investors have been predicting a pullback in markets, but despite all the negativity, markets have continued to grind higher."

Spot on: which is why to all those who are itching to short the market here, our advise is to wait for Gartman to go long first.

This is where markets were at this moment

• S&P 500 futures up less than 0.1% at 2063.5
• Stoxx 600 up 0.5% to 337
• FTSE 100 up 0.6% to 6191
• DAX up 0.1% to 9963
• German 10Yr yield up 1bp to 0.16%
• Italian 10Yr yield down less than 1bp to 1.48%
• Spanish 10Yr yield down less than 1bp to 1.6%
• S&P GSCI Index down 0.1% to 367.2
• MSCI Asia Pacific up 0.7% to 127
• Nikkei 225 up 1.1% to 16653
• Hang Seng up 1.2% to 20119
• Shanghai Composite down 0.3% to 2844
• S&P/ASX 200 up 0.7% to 5396
• US 10-yr yield up less than 1bp to 1.76%
• Dollar Index down 0.04% to 94.53
• WTI Crude futures up less than 0.1% to $47.74
• Brent Futures down 0.6% to $48.68
• Gold spot down 0.2% to $1,271
• Silver spot up less than 0.1% to $17.16

Top Global News

• Oil Advances to Seven-Month High as U.S. Stockpiles Seen Falling
• Saudi Arabia’s Treasuries Holdings Are Unveiled After 41 Years
• Soros Cuts U.S. Stock Investments 37%, Buys Barrick Gold Stake
• Hedge Funds Abandon Ex-Darling Valeant and Other 13F Highlights
• LendingClub Subpoenaed by Justice Department After CEO Exit

Looking at regional m,arkets, Asian stocks traded mostly higher following a firm Wall Street close where tech and energy surged after Berkshire Hathaway took a USD 1bIn stake in Apple and WTI rose to fresh 6-month highs. This saw the energy sector underpin ASX 200 (+0.7%) and Nikkei 225 (+1.1%) as WTI extended its advances during Asia hours to above USD 48/bbl, while JPY weakness further bolstered Japanese stocks. Shanghai Comp (-0.3%) underperformed despite the PBoC injecting funds through its Medium-term Lending Facility, as debt concerns continued to linger after Evergreen Holding defaulted on bond repayments to become at least the 10th defaulter in China YTD. 10yr JGBs traded flat with a lack of demand seen amid a positive risk tone in Japan, while today's 5yr auction saw mixed results with the b/c slightly declining from prior although the lowest accepted price was higher than expected. Japanese PM Abe said the sales tax will be increased as planned unless a serious event occurs. PM Abe also commented he will make a decision at an appropriate time which will be based on expert opinions.

Top Asian News

• BlackRock’s Fink Says ‘All Have to’ Worry About China Debt
• China to Restrict Trading Halts, Report Says, Boosting MSCI Odds
• ANZ to Cut About 200 Jobs in Australia as Loan Growth Slows
• As China Revamps Regulation, PBOC Gears Up for Central Role
• Aircastle’s Japan Venture to Buy Up to 10 Boeing, Airbus Planes
• Japan to Seek Cheaper Plans From Operators, Official Says

European equities have been climbing higher this morning with Germany and Switzerland returning from their elongated break. Risk on sentiment has been supported by the continuation of the upside in oil prices in which Brent crude futures had sustained a move above USD 49/bbl for a large part of the morning. However, in recent trade prices have tailed off with WTI crude retesting USD 48/bbl to the downside.
Additionally, the upbeat tone has also been supported by the gains in Apple yesterday following Berkshire Hathaway announcing a USD 1bIn stake in the Co. As such, gains in equities has seen Bunds on the back foot. Alongside this, a slew of EUR-denominated bond sales is set to continue this week after near record amount of sales last week. Furthermore, as energy markets continue to climb this could continue to hamper fixed income products as markets inflation expectations adjust to the uptick in prices.

Top European News

• U.K. Inflation Rate Unexpectedly Declines to 0.3% on Air Fares: Economists had forecast a rate of 0.5 percent, based on the median estimate in a Bloomberg survey
• Vodafone Beats Estimate With 2.5% Quarterly Network Revenue Gain: Analysts surveyed by Bloomberg expected 1.5 percent growth, on average
• Iliad First-Quarter Sales Increase 6.6% on Wireless Promotions: Revenue rose to 1.15 billion euros ($1.3 billion)
• Barclays’ Ramos Emerges as Best-Value South African Bank CEO: Barclays Africa earned 508 rand ($33) in net income for every rand the Johannesburg-based company paid Ramos in base salary, long-term incentives and bonuses in 2015, according to data compiled by Bloomberg
• Deutsche Bank Names Ex-EDF CFO Thomas Piquemal to Lead M&A: Piquemal, 47, who quit as chief financial officer of French utility Electricite de France SA in March, will be based in Paris and report to corporate and investment banking chief Jeff Urwin

In FX, Asia and early London have been pretty active today, with the ongoing levitation in USDJPY one of the most prominent trades, where a 109 stop hunt unleashed short covering above 109 and pushed the pair as high as 109.60.  Cable has also been active with inflation data in both the UK and US today. The UK numbers saw some softness in the more focused-upon core read, with the y-o-y rate registering 1.2% vs median 1.4% expected. Ahead of this, the ORB/Telegraph poll saw the remains showing a significant lead to send the spot rate tearing through the 1.4400's, trading through 1.4500 but holding resistance levels ahead of 1.4550 before the data response saw us lower again. EUR/GBP was testing .7800 early on, but has survived a potential breach of the figure level. Elsewhere, the post RBA (minutes) recovery in AUD looks to have been short-lived as the spot rate sinks back into the low .7300's. US inflation now set to determine whether we test through the figure, with EUR/USD also mid-range ahead of the release. USD/JPY is higher on the positive risk tone, with the quest for 110.00 back on. USD/CAD has duly found anticipated support in the mid 1.2800's to return through 1.2900, coinciding with a turn-back in WTI through $48.0 and Brent below $49.0.

In commodities, WTI and Brent have fallen off session highs after eyeing the USD 50.00/bbl level. Gold and silver have also been falling alongside the rest of the commodities complex as the USD has been strengthening in the EU session. Elsewhere, copper and iron prices were underpinned and were in minor positive territory amid the global risk sentiment.

On today's US calendar, the big focus will be on the April inflation data. Market expectations are for a +0.3% mom headline print which should be boosted by higher oil prices and a +0.2% mom print at the core.  Elsewhere this afternoon we’ll also get April housing starts and building permits data – both of which are expected to rebound. Finally we’ll cap the day off with more important data in the form of industrial production (+0.3% mom expected), capacity utilization and manufacturing production. Fedspeak wise we’ll also hear from Williams and Lockhart at noon in a joint interview, as well as Kaplan (at 1.15pm EDT) later on while the ECB’s Praet and Nouy are scheduled to speak this morning.

Bulletin Headline Summary From RanSquawk and Bloomberg

• European equities trade higher as European equities take the lead from their US and Asian counterparts with elevated energy prices also underpinning sentiment
• GBP has been a key focus for FX markets as UK CPI fell short of expectations, while the latest polls develop a further bias for remaining in the EU
• Looking ahead, highlights include US CPI, Housing Starts, Building Permits and API Inventories, ECB's Praet, Fed's Williams, Lockhart and Kaplan
• Treasuries trade slightly lower overnight, led by belly, amid rise in global equities while crude oil is off session-highs; U.S. data includes CPI and housing starts.
• Even as the VIX sits 25 percent below its bull market average, investors are using futures on the index to hedge against trouble in equities six months from now
• After spending years fighting the European Union, Ryanair Holdings Plc CEO Michael O’Leary has turned into one of its biggest defenders, and he’s even decorating his airplanes to prove it
• The pound rallied the most in two weeks after the ORB/Telegraph poll showed 55 percent of respondents were in favor of remaining in the European Union, while 40 percent wanted to leave
• U.K. inflation unexpectedly slowed in April, highlighting the struggle Bank of England policy makers face to revive price growth
• Chinese stocks traded in Hong Kong rose the most in a month, with commodity producers gaining as oil prices climbed and President Xi Jinping vowed to press ahead with plans to cut capacity at state-owned enterprises
• As China’s leaders consider ways to improve market oversight and avoid the kind of boom and bust in equities that shook investors around the world last year, the PBOC is already extending its oversight to areas beyond its traditional focus
• BlackRock Inc.’s Laurence D. Fink, who oversees the world’s largest money manager with $4.7 trillion of client assets, said “we all have to be worried” about China’s mounting debt amid slowing growth, even as he remains bullish on the economy in the long run
• Ray Dalio’s $154 billion Bridgewater Associates became the first foreign hedge fund manager to win approval to set up a wholly owned investment-management business in China, according to Shanghai-based consulting firm Z-Ben Advisors
• Sovereign 10Y yields mostly lower; Asian, European equities higher; U.S. equity-index futures higher; WTI crude oil rises while precious metals fall

US Event Calendar

• 8:30am: Housing Starts, April, est. 1.125m (prior 1.089m)
  • Housing Starts m/m, April, est. 3.3% (prior -8.8%)
  • Building Permits, April, est. 1.135m (prior 1.086m, revised 1.076m)
  • Building Permits m/m, April, est. 5.5% (prior -7.7%, revised -8.6%)
• 8:30am: CPI m/m, April, est. 0.3% (prior 0.1%)
  • CPI Ex Food and Energy m/m, April, est. 0.2% (prior 0.1%)
  • CPI y/y, April, est. 1.1% (prior 0.9%)
  • CPI Ex Food and Energy y/y, April, est. 2.1% (prior 2.2%)
  • CPI Index NSA, April, est. 239.119 (prior 238.132)
  • CPI Core Index SA, April, est. 246.450 (prior 246.095)
  • Real Avg Weekly Earnings y/y, April (prior 1.1%)
• 9:15am: Industrial Production m/m, April, est. 0.3% (prior -0.6%)
  • Capacity Utilization, April, est. 75% (prior 74.8%)
  • Manufacturing (SIC) Production, April, est. 0.3% (prior -0.3%)
• 12pm: Fed’s Williams, Lockhart speak in Washington
• 1:15pm: Fed’s Kaplan speaks in Midland, Texas
• 4:30pm: API weekly oil inventories

DB's Jim Reid concludes the overnight wrap

Yesterday was all about Apple and oil. Starting with the former, Apple’s share price gained close to 4% yesterday and the most in over two months following the news that Warren Buffet’s Berkshire Hathaway has bought a $1bn slice of the company. That comes as other high-profile money managers have recently cut or exited their positions in the tech giant (including Carl Icahn). That said, after trading just above $130 in the summer of 2015, shares have since collapsed into the low $90’s and while Buffet has for a while typically avoided investment in the tech sector, the move will been as a something of a vote of confidence that Apple can halt the recent slide in sales.

Meanwhile, the other big headline grabber yesterday was Oil. An upbeat broker report suggesting that the market has moved into a deficit quicker than expected following some of the recent supply disruptions (including Nigeria, Canada and Venezuela) helped fuel a +3.27% for WTI and so taking it to close to $48/bbl and the highest close since November 3rd. Brent was up a similar amount and is edging closer to the $50/bbl mark (hovering around $49.26/bbl this morning). With the moves this morning it means that the unrelenting rally for WTI since the February intraday lows has seen it surge an impressive 84% in that time.

Unsurprisingly then it was energy and tech names which led the S&P 500 to a +0.98% gain yesterday, while the Nasdaq finished up a slightly higher +1.22%. While Oil has been on a one-way track since February, it does appear that US equities have however hit a bit of a stumbling block this month even after considering yesterday’s strong performance. In fact in the nine sessions prior to yesterday, the S&P 500 had followed three days of consecutive losses, with three days of gains and then three more days of losses again with the index back to flat for the month of May (which compares to a 4% return for Oil). So while the old adage ‘sell in May and go away’ hasn’t quite been completely true, it’s proving to be a much more directionless month for US equities compared to the positive performance of March and April.

With the rebound in oil we thought we'd update our long-term chart of the average real price of oil back to 1861. When we last published back in January we remarked that for the first time in a decade oil was actually cheap relative to its long term value. 4 months on and with the large rally its back just above its 155 year long term real adjusted average (around $47). The chart is in the PDF today for those interested.

Switching our focus now to the latest in Asia this morning, bourses are largely following the US lead with the majority advancing. The Nikkei (+0.77%), Topix (+0.76%), Hang Seng (+0.31%), and ASX (+0.56%) are all up, while it’s China which is the standout underperformer with the Shanghai Comp currently - 0.37% although it’s not obvious what has triggered that. The poor weekend data was largely ignored yesterday but perhaps it's causing a drag today. Credit markets are benefiting from the general better sentiment with indices in Asia and Australia a couple of basis points tighter. In FX markets the Aussie Dollar (+0.80%) is the big mover following the RBA minutes from the meeting earlier this month which indicated that the decision to cut rates was actually more balanced than maybe first thought.

Moving on. Aside from the Apple and oil focus there wasn’t a great deal else to drive markets yesterday although the US data did turn a few  heads. Specifically it was the May Empire manufacturing print which attracted attention after the data was reported as tumbling from its recent April high by nearly 19pts to -9.0 (vs. +6.5 expected). That monthly change was actually the most since October 2014 and of further concern was the weakness in the components with new orders, shipments and inventories all negative. Our US economists highlighted that this has resulted in their ISM-adjusted manufacturing survey index now falling below 50 after two successive monthly >50 readings. The ISM manufacturing print is due to be released on June 1st but for now yesterday’s reading will see much attention placed on Thursday’s Philly Fed manufacturing survey. Meanwhile the other data yesterday was the NAHB housing market index which also came in lower than expected at 58 for May, albeit unchanged relative to the prior month.

There was also some Fedspeak to mention yesterday and it came from Richmond Fed President Lacker. The Fed official said that while he would never completely make up his mind prior to a meeting, he noted that ‘at this point it looks to me as if the case for raising rates looks to be  pretty strong in June’. Lacker made mention of inflation moving ‘decidedly toward 2%’ as well as there being further evidence of tightening in  labour markets. He also said that the downside risks which dominated at the beginning of the year ‘have dissipated’. The US Dollar was little changed by the end of play yesterday although there was a reasonable move in the Treasury market with the benchmark 10y finishing up over 5bps higher in yield at 1.754% and wiping out Friday’s move lower.

Wrapping up the rest of the price action yesterday, with a number of public holidays it was an unsurprisingly quiet and low volume session in Europe reflected by just the +0.01% return for the Stoxx 600. Credit markets in the region were a touch wider (Crossover +4bps) although the stronger day for risk in the US saw CDX IG finish nearly 2bps tighter. It’s the new issue market which is still taking up much of the attention - particularly the mega deal from Dell. Bloomberg is reporting that the $16bn deal will be split across 8 tranches and is set to possibly price today but notably the same article suggests that the order book has already run past the $60bn mark, with the company suggesting that it is weighing up whether or not to upsize the deal.

Before we move on to the day ahead, the latest The House View titled “A challenging road” came out overnight. Despite rising concerns about global growth, the team expects only a modest deceleration into year-end from the US, China and the eurozone in aggregate. This, coupled with central banks taking a backseat in the coming months and geopolitical risk events approaching, leaves them holding a short-term neutral view on most markets.

Moving now to today’s calendar, this morning in Europe we’re kicking off in the UK where we’ll get the April inflation docket including CPI, PPI and RPI prints. Current expectations for CPI are for a +0.3% mom headline reading. The only other notable data this morning is the Euro area trade balance reading. Across the pond this afternoon the big focus is on the April inflation data. Market expectations are for a +0.3% mom headline print which should be boosted by higher oil prices and a +0.2% mom print at the core. Our US economists have a +0.1% mom forecast for the core as they expect further moderation in the growth rate of residential rents to keep a lid on inflation. Elsewhere this afternoon we’ll also get April housing starts and building permits data – both of which are expected to rebound. Finally we’ll cap the day off with more important data in the form of industrial production (+0.3% mom expected), capacity utilization and manufacturing production. Fedspeak wise we’ll also hear from Williams and Lockhart this evening (due at 5.00pm BST) in a joint interview, as well as Kaplan (at 6.15pm BST) later on while the ECB’s Praet and Nouy are scheduled to speak this morning.

While far less attention is being paid to hedge fund 13F filings, which show a stale representation of equity long stakes among the hedge fund community as of 45 days prior, than in years gone by as a result of increasingly poor performance by the 2 and 20 crowd, they still remain closely watched source of investment ideas but mostly to find out what the new cluster ideas and hedge fund hotel stocks are at any given moment so they can be faded.

Courtesy of a Bloombert compilation, here are some highlights from the latest round of 13F filings.

Valeant.

 What used to be one of the industry’s most popular holdings has fallen out of favor with just about every major hedge fund holder save Pershing Square Capital Management’s William Ackman. Brahman Capital, which had invested in Valeant for at least 2010, exited the 8.12 million shares it held at the end of 2015 during the first quarter. The New York firm was joined by a who’s who of hedge fund giants: Andreas Halvorsen’s Viking Global Investors, Stephen Mandel’s Lone Pine Capital, Philippe Laffont’s Coatue Management and Barry Rosenstein’s Jana Partners all sold off the former high-flier, which has plunged about 90 percent from its peak last August.

Allergan

The merger-arb blow up of the year has claimed its set of scalps, however the company's failed acquisition by Pfizer took place after the end of Q1, which is why all those who loaded up in the first quarter are now nursing big losses on their failed M&A bets. Among them are Lone Pine and Seth Klarman’s Baupost Group who bought into Allergan Plc during the first quarter, establishing stakes shortly before Pfizer Inc. decided in April to terminate a $160 billion deal to combine with the Dublin-domiciled company as the U.S. cracks down on corporate inversions. Pentwater Capital Management, Arrowgrass Capital Partners and Eton Park Capital Management also took new stakes or increased their Allergan holdings. The stock has fallen 28 percent this year.

Cutting back equity exposure

As noted earlier, the value of Soros Fund Management’s publicly disclosed holdings dropped by 25% to $4.5 billion as of the end of the first quarter. He was not alone in rapidly derisking his portfolio. At Glenview Capital Management, the hedge fund run by Larry Robbins, investments in U.S.-listed stocks declined by 22 percent. At Louis Bacon’s Moore Capital Management, the value of the holdings fell by about 29 percent.

Gold

Gold is gaining popularity among prominent investors. Soros established a $264 million position in Barrick Gold Corp., acquiring a 1.7 percent stake in the world’s biggest bullion producer that was the fund’s biggest equity position. Soros also disclosed owning bullish options on 1.05 million shares in the SPDR Gold Trust, an exchange-traded fund tracking the price of bullion. Other major investors also sought safety in the yellow metal. Eton Park purchased 3.6 million shares in the same gold ETF, a $422 million position. Bessemer Group bought 546,000 shares valued at $64.3 million.

As has become the norm, John Paulson once again went the other way and cut his holdings in the gold ETF. Paulson & Co. owned 4.8 million shares of ETF at the end of the first quarter, compared with 5.8 million as of Dec. 31. Instead he bought over $50 million worth of Office Depot stock which suffered a spectacular collapse after its merger with Staples was also terminated shortly after.

* * *

Here are the rest of the notable highlights among the marquee hedge fund names.

ADAGE CAPITAL

• New stakes in GCP, CHTR, FOXA, ROK, X
• Boosts RTN, DD, GE, DAL, VZ, AGN
• Cuts SYF, PFE, CFG, BA, TYC, BAC
• No longer shows MHK, VC, SUNEQ, SFG, SO, EBAY

APPALOOSA MANAGEMENT

• New stakes in FB, SYF, MHK, BAC, FOXA, VRX, GLBL
• Boosts ETP, WPZ, CYH, AMLP, NXPI, DAL, GOOG, AGN, PFE, TERP
• Cuts GM, KMI, HCA, GT, URI
• No longer shows PCLN, AAPL, HPE, CBI, EMN

BAUPOST GROUP

• Reports new stakes in AGN, VMW, SRAQU, LQ, GNW
• Boosts EMC, AR, FOXA, OLN, LNG, FOX
• Cuts PYPL, PBF, BXE, NG
• No longer shows FTR, OCN, KOS, MU, SN

BERKSHIRE HATHAWAY

• New stake in AAPL
• Boosts PSX, IBM, CHTR, LBTYA, DE, V, BK
• Cuts PG, MA, WBC, WMT
• No longer shows T

BLUE HARBOUR

• New stakes in FFIV, LM
• Boosts AVT, AGCO, VRNT, XLNX, RAX
• Cuts INXN, CHS, BIN, BW
• No longer shows AKAM, GWR

BLUEMOUNTAIN

• New stakes in MBLY, AIG, IBKR, XLY, TV, ENDP
• Boosts IMS, POST, AVGO, JCI, BBY, TSO, HLF
• Cuts PFE, NUVA, IAC, EURN, GNRT, TARO, VRNT
• No longer shows TEVA, BRCM, SLH, BAC, VRX, WTW, MET

BRIDGEWATER ASSOCIATES

• New stakes in EWZ, DIS, MCD, POT, DISH, MDLZ, GOOG
• Boosts VWO, EEM, INTC, ESRX, RL
• Cuts AAPL, PEP, SPY, EXC, ORCL, M
• No longer shows BCE, VIAB, FOSL, TU, KO, JNJ

COATUE MANAGEMENT

• New stakes in PYPL, SPLK, FFIV, CMG, HTZ, SQ
• Boosts EA, AVGO, AKAM, LCI, LBTYA, GOOGL
• Cuts GOOG, NFLX, MSFT, HAIN, EXPE, CHTR, AMZN, GPRO, FB
• No longer shows AAPL, AGN, TWX, CBS, VRX, LNKD, IBM

CORVEX MANAGEMENT

• New stakes in NOMD, TMH, VRX, GLPI
• Boosts PFE, PAH, SIG, COMM, P, BLL, FNF
• Cuts GOOGL, VER, AGN
• No longer shows BAC, AN, CMA, CFG, KMI, TWX

DUQUESNE FAMILY OFFICE

• New stakes in KO, PM, SO, DUK, PPL, PEP, CAT, VZ
• Boosts GOOGL, PSTG
• Cuts AMZN, MSFT, FB, HDB
• No longer shows RTN, CTRP, NOC, SYF, CMG

ELLIOTT MANAGEMENT

• New stakes in QLIK, PFE, PAH, EGN, NE, HLF
• Boosts HES, CNP, SYMC, CAB, AA, BXLT, AGN
• Cuts IPG, ODP, PRGO, RYAAY, FCB, TWC
• No longer shows XLE, VMW, HPE, XOP, STE, NBL, SHPG

EMINENCE CAPITAL

• New stakes in LEN, HUM, ZBRA, RL, ANTM
• Boosts CAA, AN, CCE, SPGI, LNKD
• Cuts TRIP, SJM, ZNGA, ADSK, FOSL
• No longer shows YUM, GOOG, HOT, ATVI, YELP, GNC

ETON PARK CAPITAL

• New stakes in BXLT, GLD, ITC, MHK, CDK, HOT
• Boosts TWC, AGN, EMC, CRTO, CI
• Cuts MSFT, ADBE, SHW, SBAC, ODP, JAH
• No longer shows ADSK, PRGO, AER, HUM, RAD

FAIRHOLME CAPITAL

• Boosts BAC, SRSC
• Cuts SHLD, LUK, SHLDW, JOE, LE
• No longer shows MRC, CNQ, BRK/A, BRK/B, AIG, IBM

GATES FOUNDATION

• Boosts TV, ECL, AN
• Cuts BRK/B

GLENVIEW CAPITAL MANAGEMENT

• New stakes in FIS, AAP, GPN
• Boosts HCA, TWC, GOOGL, HLS, LBTYK, ABBV
• Cuts MON, TMO, HUM, MCK, CI, DOW
• No longer shows PCLN, CYH, PVH, AMAT, UHS, AIG

GREENLIGHT CAPITAL

• New stakes in HTS, PVH, CYH, GSAT, LAMR
• Boosts AAPL, YHOO, M, AGNC, YELP, AER, FOXA
• Cuts IAC, AGR, TTWO, IM, TWX, KORS
• No longer shows CBI, OI, GRMN, ON, SGMS, MTCH

HIGHFIELDS CAPITAL MANAGEMENT

• New stakes in MAR, PEP, PFE, DIS, BXLT, CL, TWX, GS
• Boosts WBA, GOOG, WMB, GOOGL, ABBV, IAC, AER
• Cuts MCD, DD, ICE, APC, HOT, CBS, EBAY, YUM
• No longer shows MSFT, SPGI, PRGO, YHOO, SRE, PYPL, AGN

ICAHN ASSOCIATES

• New stakes in MFS
• Boosts XRX, AIG
• Cuts NUAN, PYPL
• No longer shows AAPL, HOLX, TGNA, MENT, PBY, GCI

ICONIQ CAPITAL

• New stakes in UNH, APO, BX, OAK, KKR, CG, SUNEQ
• Boosts GLD, IAU, VTI, IWB, SPY, FB
• Cuts PARR, BABA, VEA, VWO, ACWI, CVX
• No longer shows AMLP, PXD, TSLA, RIG, TOT

JANA PARTNERS

• New stakes in GOOG, SRCL, HDS, TDG, BAC
• Boosts PFE, SPY
• Cuts CAG, LGF, AGN, LVNTA, WBA, MSFT, TWC
• No longer shows QCOM, AIG, LBTYK, BAX, STRZA, TWX, VRX, WMB

KERRISDALE ADVISERS

• New stakes in BRO, EBAY, MENT, PYPL, SNPS
• Boosts CTSH, LXFT, YELP, ETSY, PRXL
• Cuts TARO, MCK, PCLN, MRKT, BGCP, TFM
• No longer shows KFY, BID, EPAM, WSM, RHI

LAKEWOOD CAPITAL

• New stakes in GS, COF
• Boosts CDK, HCA, BIDU, CMCSA, ORCL, MA
• Cuts WRK, ACAS, IM, GTS, TSE, FDX, TWC
• No longer shows TSO, UNP, NPO, SPR, JBLU, GME, NFLX

LANSDOWNE PARTNERS

• New stakes in FB, JCI, UNH, RAI, AGR, GLPI, KO
• Boosts WFC, GOOGL, AMZN, JPM, UTX, UPS, NKE, LNKD
• Cuts ACN, AAPL, LB, DIS, V, DAL, CMCSA, FIT, MTCH
• No longer shows GS, TMUS, C, SYF, ETFC, BAC, MS, SCTY

LONE PINE CAPITAL

• New stakes in AGN, BXLT, PYPL, MNST, YUM
• Boosts FB, GOOG, NOC, GOOGL, EQIX, ADBE, BUD, NKE
• Cuts ILMN, V, EA, AMZN, JD, MA, MSFT
• No longer shows WMB, VRX, WBA, ATVI, ADSK

LONG POND CAPITAL

• New stakes in HLT, CBG, CAA, LQ, CFG
• Boosts KEY, CLNY, TCO, H, SRC
• Cuts FCE/A, SRG, BPOP, FPO, SFR
• No longer shows HOT, LHO, ARPI, SBAC, AL, BYD

MARCATO CAPITAL

• New stakes in RLGY, SFR, LIND
• Boosts M, LBRDK, LBRDA, BLDR, VRTS
• Cuts GT, BID
• No longer shows LPLA, CAR, MDCA, TOWR, BLD

MAVERICK CAPITAL

• New stakes in LRCX, NOC, CMCSA, PCRX, USB, NVDA, VIAB
• Boosts PCLN, FB, AGN, ADBE, AVGO, BUD
• Cuts LBTYK, PF, CIT, PFE, ST, GOOG, ARMK
• No longer shows ARRS, SC, FLT, CHTR, ORI, AER, SNY

MELVIN CAPITAL

• New stakes in NFLX, HD, COST, KHC, MNST, WYNN
• Boosts EXPE, AMZN, LOW, V, MHK, FB, NKE
• Cuts LVS, JD, GIL, BABA, ORLY, HBI
• No longer shows MCD, RCL, ADS, GOOGL, BC, PCLN, LULU, SBUX

MILLENNIUM MANAGEMENT

• New stakes in COP, MRO, CMS, ZBH, PG, RCL, DPZ
• Boosts APC, PEP, T, FIS, PCG, ADBE, YHOO
• Cuts OXY, PPL, NEE, LOW, HFC, TEVA, NBL, FB
• No longer shows WMT, AMZN, OII, GG, PSX

MOORE CAPITAL

• New stakes in EEM, FIS, XHB, FXI, BG, ATVI, HD
• Boosts GOOGL, AAPL, AME, MGM, DLTR, AIG
• Cuts FB, AMZN, CTRP, EQIX, RH, BABA
• No longer shows BAC, C, XOP, JPM, MCD, MSFT, MS, GS

OMEGA ADVISORS

• New stakes in UNH, PYPL, GILD, ETP, BLL, AAPL, EA
• Boosts MSFT, TRGP, SYF, TRCO, WBA
• Cuts GOOGL, AGN, AIG, DISH, AER, FB
• No longer shows C, JPM, EEM, PFE, GLBL, AMZN, HLT

PASSPORT CAPITAL

• New stakes in TSM, TAP, MRK, QVCA, PCLN, CHTR
• Boosts CMCSA, JNJ, YHOO, PFE, LMT, HDP, BABA
• Cuts NKE, GOOG, SBUX, MSFT, HD, KO, MCD
• No longer shows SYT, DAL, UNP, NFLX, LBTYK, LLY

PAULSON & CO

• New stakes in BEAV, ATVI, ACAS, ODP, ALXN, EXPE, BXLT, FB
• Boosts AKRX, ENDP, RDN, PFE, BIIB, ETSY, CVC
• Cuts TWC, HOT, AGN, TMUS, AIG, PRGO
• No longer shows OUT, PMC, ABBV, GMED, LH, PCLN

PERRY CORP.

• Boosts AER
• Cuts TWX, AIG, HCA, SE
• No longer shows WMB, CPGX, CYH, ETE, ETP

PERSHING SQUARE

• New stakes in NOMD
• Boosts QSR
• Cuts APD, MDLZ

POINT72 ASSET MANAGEMENT

• New stakes in NFLX, COP, MNST, YHOO, KORS
• Boosts LOW, FB, APC, NWL, VRX, TWX, AMZN
• Cuts NKE, AAP, SIG, GOOGL, COH, MCD, RL, MDVN, EA
• No longer shows AMAT, TYC, CELG, LULU, TJX, WTW

POINTSTATE CAPITAL

• New stakes in CELG, MDVN, EEM, HAL, COG
• Boosts CHTR, LYB, ABBV, AGN, MSFT
• Cuts TEVA, TWC, NOC
• No longer shows LUV, BAC, CFG, GD, JAZZ

SANDELL ASSET

• New stakes in HOT, BXLT, CAG, AFFX, FCS, CPGX
• Boosts YHOO, CAM, MEG, YOKU, CVC, CIT
• Cuts VIAV, TVPT, ARG, XLF, ALLY, BOBE
• No longer shows ETH, PMCS, FCE/A, ABG, SFG, VSLR

SOROS FUND MANAGEMENT

• New stakes in ABX, BXLT, CCI, AVGO, SLB, AET
• Boosts EQIX, GLPI, EMC, HOT, SPY
• Cuts SYF, CY, AGRO, AGN, LYB, PYPL, DISH, AMZN
• No longer shows LVLT, DOW, ENDP, DAL, MCD, BUD

STARBOARD VALUE

• New stakes in MRVL, DEPO, NXST
• Boosts YHOO, M, BAX, CW, WRK
• Cuts DRI, FCPT, QTM
• No longer shows MDAS, MEG, WPP, RLD, ODP, CI

TEMASEK

• New stakes in FIS, BGNE
• Boosts ILMN, REGN, JD, GILD
• Cuts MON

TIGER GLOBAL

• New stake in Z
• Boosts CHTR, EHIC, ETSY, XO
• Cuts AMZN, JD, AAPL, PCLN, DATA, QSR, FLT, MA, SQ
• No longer shows VIPS, TDG, RH, BUD, ATHM, TWC

THIRD POINT

• New stakes in GOOGL, BXLT, LOW, EMC, VMW, FOXA, WMB
• Boosts YUM, DHR, CB, BUD, STZ, KHC
• Cuts AMGN, AGN, SJM, ROP, DOW, MHK, TWC
• No longer shows LBTYK, EBAY, MS, AXTA, CWEI

TRIAN FUND

• Boosts SYY, PNR, DD, BK, MDLZ
• Cuts GE
• No longer shows PEP

TUDOR INVESTMENT

• New stakes in PEP, ITC, CL, MEG, CSCO
• Boosts FIS, MRK, SPY, WMT, ZBH
• Cuts FB, CSRA, EFX, CSC, TEVA, LLY, K, SJM
• No longer shows ULTI, IYR, EWJ, ADP, BABA, V

VALUEACT

• New stake in ADS
• Boosts WLTW, CBG
• Cuts ADBE, AGU, MSI, MSCI
• No longer shows HAL

VIKING GLOBAL

• New stakes in FB, LLY, JD, NWL, DVA, MET, TMUS
• Boosts COG, ECA, AVGO, GPOR, AMZN, AET, MA
• Cuts PXD, LYB, AGN, WBA, HUM, LNG, ANTM, CCI, PFE
• No longer shows VRX, MCK, PCLN, QUNR, BK, CMG, NKE, HAL

Source: BBG

Gold Goes From "Ultimate Bubble" To Ultimate Buy For Soros

George Soros, who once called gold “the ultimate bubble,” has resumed buying the gold ETF and shares after a three-year hiatus.

Soros Gets Gold Badly Wrong In 2010 – Gold in USD (2009 to 2012)

The billionaire investor yesterday disclosed that in the first quarter he bought 1.05 million shares in SPDR Gold Trust, the world’s biggest gold exchanged-traded fund, valued at about $123.5 million.

Soros cut his firm’s investments in U.S. stocks by more than a third in the first quarter and bought a $264 million stake in the world’s biggest bullion producer Barrick Gold Corp.

Soros allocation to the Gold ETF and nearly a quarter of a billion to just one gold mining share – Barrick – shows he is clearly now bullish on gold and no longer viewsgold as the “ultimate bubble.”

This seems likely as he has warned that there is a real risk of a euro break up and is on record regarding having deep concerns regarding the US fiscal situation – both of which are of course bullish for gold. He had also publicly declared concerns about a collapse of the Chinese economy and issued very vocal warnings a year ago in May 2015, that we are on the “threshold of a Third World War”.

Not surprisingly, he is bearish on stocks. Soros Fund Management doubled its bet against the S&P 500 stock index according to its filing to the Securities and Exchange Commission yesterday.

Soros is the man who nearly “broke the Bank of England” when the self-styled philosopher-economist and political activist manipulated the price of the pound pushing it sharply lower on international markets and badly impacting the UK economy. Five years later, he exacerbated the Asian economic crisis by betting against Thai and Malaysian currencies which almost led to a global financial crisis.

This is yet another positive development for the gold market and Soros follows in the footsteps of other many other leading hedge funds managers and billionaire investors such as Singer, Dalio and Druckenmiller and indeed institutions such asBlackrock and Munich Re.

Most hedge and institutional funds were buyers of gold in Q1. A notable exception was gold bull John Paulson who further reduced his allocation to the gold ETF by 17 percent to 4.8 million shares. It was Paulson’s third cut to his SPDR stake in a year and saw him drop to the third largest investor in the fund from second, behind BlackRock and First Eagle Investment Management. Some speculated that Paulson may have been taking profits. There is also the possibility that he quietly diversifying into physical gold in allocated accounts.

Given Soros’ awareness of financial, geo-political and indeed systemic risk, it is likely that he also owns physical gold bars in allocated accounts and not just ‘paper gold assets’ in the form of the more visible, publicly filed and high risk mining shares and gold SPDR trust.

Gold and Silver News
Funds allocate back to gold as prices surged in Q1 (GoldCore via Reuters)
China’s ICBC To Buy Giant London Gold Vault (GoldCore via WSJ)
Platinum stockpiles to fall 19% to 2 million oz in 2016 (Mining MX)
WPIC lifts platinum market deficit in 2016 by three-fold to 455k ounces (Bullion Desk)
Gold edges up but dollar strength, stocks recovery cap gains (Reuters)

What “Lured” Soros to Boost His Gold Holding? (Bloomberg Video)
Make America Gold Again: Calls for Everyone’s Favorite Standard Are Back (Bloomberg)
University of Michigan to Invest in Gold, Copper Mining Fund (Bloomberg)
Libya’s Central Bank Needs Money Stashed in a Safe; Problem Is, Officials Don’t Have the Code (WSJ)
Gold depository could soon be on its way to Texas (Star Telegram)

Gold Prices (LBMA)
17 May: USD 1,270.10, EUR 1,121.43 and GBP 877.50 per ounce
16 May: USD 1,281.00, EUR 1,132.04 and GBP 892.87 per ounce
13 May: USD 1,275.15, EUR 1,123.51 and GBP 885.16 per ounce
12 May: USD 1,268.30, EUR 1,111.30 and GBP 878.28 per ounce
11 May: USD 1,271.80, EUR 1,116.19 and GBP 882.45 per ounce

Silver Prices (LBMA)
17 May: USD 17.08, EUR 15.09 and GBP 11.80 per ounce
16 May: USD 17.32, EUR 15.30 and GBP 12.07 per ounce
13 May: USD 17.09, EUR 15.06 and GBP 11.85 per ounce
12 May: USD 17.23, EUR 15.12 and GBP 11.91 per ounce
11 May: USD 17.51, EUR 15.36 and GBP 12.14 per ounce

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With high-yield bond funds suffering the largest redemptions in their history, this week saw gold fund flows soar to their highest in 2016 as buyers took advantage of the lower prices following the same path as George Soros, Stan Druckenmiller, Jana Partners, and Canada's financial giant CI Financial.

Junk bonds saw the single-biggest daily redemptions in history this last week...

Submitted by John Rubino via DollarCollapse.com,

The list of heavy hitters who are saying bad things about this world and its financial markets - while acting aggressively on their pessimism - is growing to alarming proportions. A few examples:

Stan Druckenmiller: The bull market is exhausted; move to gold

(MineWeb) – Legendary investor Stan Druckenmiller, founder of Duquesne Capital Management LLC, told the Sohn Investment Conference in New York last week that he is bullish on gold and bearish on the stock market. Gold, he told the conference, “is our largest currency allocation.”

 

Druckenmiller recommended that investors sell their equity holdings. “The bull market is exhausting itself,” he told the conference. A major factor has been the Federal Reserve’s easy money policy, which has resulted in “reckless” corporate behavior.

 

Growing corporate debt is increasingly used for financial engineering, rather than in R&D that could lead to productivity improvements, Druckenmiller said. According to him, from 2012 to 2015, use of debt for U.S. nonfinancial firms for stock buybacks and M&A increased from $1.25 trillion to $2 trillion, while debt for R&D and office equipment grew from $1.55 trillion to only $1.8 trillion.

 

“The corporate sector today is stuck in a vicious cycle of earnings management, questionable allocation of capital, low productivity, declining margins and growing indebtedness,” Druckenmiller added.

 

The slowing Chinese economy as another reason to sell equities, according to Druckenmiller. He believes that stimulus measures by China have “aggravated the overcapacity in the economy.” While he had hope two years ago that the Chinese were willing to accept the tradeoff of a slowdown to gain reform, the Chinese “have opted for another investment-focused fiscal stimulus, which may buy them some time but will exacerbate their problem. They do not need more debt and more houses.”

 

Instead, Druckenmiller has made a move to gold. “It has traded for 5,000 years and for the first time has a positive carry in many parts of the globe as bankers are now experimenting with the absurd notion of negative interest rates,” he said. “Some regard it as a metal, we regard it as a currency, and it remains our largest currency allocation,” he added. Among his investments are holdings in the SPDR Gold Trust.

 

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A Bearish George Soros Is Trading Again

(Fox Business) – Worried about the outlook for the global economy and concerned that large market shifts may be at hand, the billionaire hedge-fund founder and philanthropist recently directed a series of big, bearish investments, according to people close to the matter.

Soros Fund Management LLC, which manages $30 billion for Mr. Soros and his family, sold stocks and bought gold and shares of gold miners, anticipating weakness in various markets. Investors view gold as a haven during times of turmoil.

 

Mr. Soros’s recent hands-on approach reflects a gloomier outlook than many. His worldview darkened over the past six months as economic and political issues in China, Europe and elsewhere have become more intractable. While the U.S. stock market has inched back toward records after troubles early this year and Chinese markets have stabilized, Mr. Soros said he remains skeptical of the Chinese economy, which is slowing.

 

The fallout from any unwinding of Chinese investments likely will have global implications, Mr. Soros said.

 

“China continues to suffer from capital flight and has been depleting its foreign currency reserves while other Asian countries have been accumulating foreign currency,” Mr. Soros said in an email. “China is facing internal conflict within its political leadership, and over the coming year this will complicate its ability to deal with financial issues.”

 

Mr. Soros also argues that there remains a good chance the European Union will collapse under the weight of the migration crisis, continuing challenges in Greece and a potential exit by the United Kingdom from the EU.

 

“If Britain leaves, it could unleash a general exodus, and the disintegration of the European Union will become practically unavoidable, ” he said. Still, Mr. Soros said recent strength in the British pound is a sign that a vote to exit the EU is less likely.

 

Mr. Soros’s bearish firm bought over 19 million shares of Barrick Gold Corp. in the first quarter, according to securities filings, making it the firm’s largest stockholding at the end of the quarter. That position has gained more than $90 million since the end of the first quarter. Soros Fund Management also bought a million shares of miner Silver Wheaton Corp. in the first quarter, a position that has increased 28% so far in the second quarter.

 

The last time Mr. Soros became closely involved in his firm’s trading: 2007, when he became worried about housing and placed bearish wagers over two years that netted more than $1 billion of gains.

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If the Markets Crash Then Carl Icahn Could Win Big

(Barrons) – If financial markets crash, one of the biggest beneficiaries could be billionaire investor Carl Icahn.

An investment fund run by the 80-year-old Icahn had a net short position of 149% at the end of the first quarter. Icahn is considerably more bearish than he was at the end of 2015, when the fund’s net short position was 25%. A year ago, the fund had a net long position of 4%. It’s rare to see a fund outside a dedicated short fund with such a large bearish stance.

 

Asked about the big bearish stance, Icahn Enterprises CEO Keith Cozza said on the conference call that “Carl has been very vocal in recent weeks in the media” about his negative views. “We’re much more concerned about the market going down 20% than we are it going up 20%. And so the significant weighting to the short side reflects that.” Icahn was not on the call.

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The Sam Zell Indicator – Time to Get Out of Real Estate?

(Value Walk) – Talk about exquisite timing.

Even today, a decade after the fact, the leveraged buyout of Equity Office Properties Trust remains one of the largest of all time: $36 billion for nearly 600 office buildings in New York, Washington D.C. and dozens of the nation’s largest cities.

 

But in late 2006, some wondered if the billionaire who sold the REIT was being a little rash. After all, the real estate boom was in full swing, and the S&P 500 was primed to hit new all-time highs. “Is he cashing out too early?” asked a Bloomberg headline when the deal was announced.

We all know the answer, of course.

 

Billionaire Sam Zell deftly sidestepped the coming real estate carnage. Then, with prices at generational lows a few years later, Zell bought hundreds of apartment complexes at dirt-cheap prices.

 

And today? Well, that’s the ominous part…

 

Once again, Zell is selling his real estate holdings. Last fall, he unloaded a quarter of his portfolio, buildings totaling about 23,000 rental apartments, to Starwood Capital Group for more than $5 billion.

 

Zell next sold off apartment buildings in South Florida and Denver, with complexes in Phoenix, Boston and other metro areas expected to be sold before the year is out.

 

“No one has ever accused me of not being a realist,” Zell told CNBC’s talking heads recently.

Of course for every seller there has to be a buyer, so to the extent that these guys are bearish, an equal amount of optimistic capital disagrees with their assessment. Still, between Soros, Druckenmiller, Icahn and Zell there’s about a thousand years of successful, audacious experience, so at a minimum their sudden bearishness should be a comfort to smaller players who have reached the same conclusion.

The fact that they see gold as the antidote to crashing financial markets is also reassuring for long-suffering gold bugs.

If these and the several other big names now saying scary things (see Bill Gross’s supernova comments) are right, the short stocks/long gold trade is finally about to pay off.