My website is now ready You can find my site at the following url:
http://www.harveyorganblog.com or www .harveyorgan.wordpress.com
I will continue to send the comex data down to my good friends at the Doctorsilvers website on a continual basis.
They provide the comex data. I also provide other pertinent data that may interest you. So if you wish you can view that part on my website.
Gold: $1225.10 down $3.80
Silver: $17.06 down $0.07
In the access market 5:15 pm
The gold comex today had a poor delivery day, registering 0 notices served for nil oz. Silver comex registered 115 notices for 575,000 oz.
A few months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 245.83 tonnes for a loss of 57 tonnes over that period.
In silver, the open interest fell by a tiny 175 contracts with yesterday’s rise in price of $0.05. Looks like some of the shorts are vacating the arena as they are scared at what they are witnessing. For the past year, we have been witnessing massive liquidation of contracts despite the fact that it cost nothing to roll. This makes no sense and it smacks of cash settlements which are totally illegal. Since I have been following comex data, I have never witnessed such a massive liquidation in both gold and silver. The total silver OI still remains relatively high with today’s reading at 148,020 contracts. The big December silver OI contract fell by 58 contracts down to 517 contracts.
In gold we had a fall in OI with the fall in price of gold yesterday to the tune of $2.60. The total comex gold OI rests tonight at 372,720 for a loss of 2,603 contracts. The December gold OI rests tonight at 1054 contracts losing 23 contracts.
TRADING OF GOLD AND SILVER TODAY
the bankers certainly wanted gold under suppression today.
By midnight, gold was down to $1228.00. By London’s first fix it was already down to $1224.00 and then proceeded to head southbound. At 4 am it hit $1218.00. Then gold saw some action as it swiftly rebounded to $1222 by 8;20 am (comex opening). By London’s second fix it was back down again to 1216.10 only to rebound again to $1230.30 by 12:30 as London as already put to bed. It finished the comex session at $1225.10 and the access market at $1227.00.
Silver had a similar roller coaster ride. The bankers had trouble suppressing silver in the Asian time zone. By midnight silver remained at $17.15. By London’s first fix at 3 am it registered $17.06. Then the bankers hit silver hard as it was propelled southbound to $16.95 by 4:30 am est. It then rebounded in sympathy with gold back up to $17.04 by comex opening time and it remained there as the 10 am (2nd London fix) also came in at $17.04. Silver continued its northbound journey for the day hitting its peak at 12 noon at $17.19 as London was finally put to bed. It finished the comex session at $17.06 and the access closing price came in at $17.08.
Today, we had another addition in gold inventory at the GLD of .95 tonnes/Inventory 725.75 tonnes
In silver, we had lost 2.873 million oz in silver inventory
SLV’s inventory rests tonight at 342.35 million oz
We have a few important stories to bring to your attention today…
Let’s head immediately to see the major data points for today.
First: GOFO rates:
some rates moved closer to the positive and some remained constant and they are out of backwardation!!
Now, all the months of GOFO rates( one, two, three six and 12 month GOFO moved positive . They must have found a few bars to lease. On the 22nd of September the LBMA stated that they will not publish GOFO rates. However today we still received today’s GOFO rates. It looks to me like these rates even though negative are still fully manipulated. London good delivery bars are still quite scarce.
The backwardation in gold is incompatible with the raid on gold. It does not make any economic sense.
Dec 11 2014
1 Month Rate: 2 Month Rate 3 Month Rate 6 month rate 1 yr rate
+.1375.% + .142500 -% -+14750 -% +. 1625 .% +. 2025%
Dec 10 2014:
+.1375% +.142500% +.1450 % +.160% +.1925%
Let us now head over to the comex and assess trading over there today,
Here are today’s comex results:
Let us now head over to the comex and assess trading over there today,
Here are today’s comex results:
The total gold comex open interest fell today by 2,603 contracts from 375,323 all the way down to 372,720 with gold down by $2.60 yesterday (at the comex close). We are now into the big December contract month where the number of OI standing for the gold metal registers 1054 contracts for a loss of 23 contracts. We had 1 delivery notice served yesterday so we lost 22 contracts or 2200 oz of gold will not stand for the December contract month. The non active January contract month fell by 51 contracts down to 503. The next big delivery month is February and here the OI fell to 233,726 contracts for a loss of 3,341 contracts. The estimated volume today was poor at 82,580. The confirmed volume yesterday was fair at 152,140 even with the help of high frequency traders. The comex now has no credibility and many investors have vanished from this crooked casino. Today we had 0 notices filed for nil oz .
December initial standings
|Withdrawals from Dealers Inventory in oz||nil oz|
|Withdrawals from Customer Inventory in oz||nil oz|
|Deposits to the Dealer Inventory in oz||nil oz|
|Deposits to the Customer Inventory, in oz||nil oz|
|No of oz served (contracts) today||0 contracts(nil oz)|
|No of oz to be served (notices)||1054 contracts (105,400 oz)|
|Total monthly oz gold served (contracts) so far this month||2605 contracts(260,500 oz)|
|Total accumulative withdrawals of gold from the Dealers inventory this month||153,424.154 oz|
Total accumulative withdrawal of gold from the Customer inventory this month
Today, we had 0 dealer transactions
total dealer withdrawal: nil oz
we had 0 dealer deposit:
total dealer deposit: nil oz
we had 0 customer withdrawals
total customer withdrawal: nil oz
we had 0 customer deposits:
We had 0 adjustments
Total dealer inventory: 737,166.946 oz or 22.93 tonnes
Total gold inventory (dealer and customer) = 7.905 million oz. (245.87) tonnes)
Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 57 tonnes have been net transferred out. We will be watching this closely!
This initiates the month of December for gold.
And now for silver
December silver: initial standings
|Withdrawals from Dealers Inventory||nil|
|Withdrawals from Customer Inventory||445,505.880 oz (CNT,Brinks,JPMorgan)|
|Deposits to the Dealer Inventory||106,023.300 oz (CNT)|
|Deposits to the Customer Inventory||1,180,422.85 oz (CNT,Scotia,Delaware)|
|No of oz served (contracts)||115 contracts (575,000 oz)|
|No of oz to be served (notices)||402 contracts (2,010,000 oz)|
|Total monthly oz silver served (contracts)||2678 contracts (13,390,000 oz)|
|Total accumulative withdrawal of silver from the Dealers inventory this month||1,163,562.6 oz|
|Total accumulative withdrawal of silver from the Customer inventory this month||5,555,479.7 oz|
Today, we had 1 deposits into the dealer account:
i) Into CNT: 106,023.300 oz (one decimal)
total dealer deposit: 106,023.300 oz
we had 0 dealer withdrawal:
total dealer withdrawal: nil oz
We had 3 customer withdrawal:
i) Out of Brinks: 280,660.46 oz
ii) Out of CNT: 130,115.060 oz
iii) Out of JPMorgan: 34,730.36 oz
total customer withdrawal 445,505.88 oz
We had 3 customer deposits:
i) Into Scotia; 572,304.610 oz
ii) Into Delaware; 8,046.000 oz ????
iii) Into CNT: 494,048.94 oz
total customer deposits: 1,180,422.85 oz
we had 0 adjustments
Total dealer inventory: 65.025 million oz
Total of all silver inventory (dealer and customer) 176.939 million oz.
The total number of notices filed today is represented by 115 contracts or 575,000 oz. To calculate the number of silver ounces that will stand for delivery in December, we take the total number of notices filed for the month (2678) x 5,000 oz to which we add the difference between the total OI for the front month of December (517) minus (the number of notices filed today (115) x 5,000 oz = the total number of silver oz standing so far in November.
Thus: 2678 contracts x 5000 oz + (517) OI for the November contract month – 115 (the number of notices filed today) =15,400,000 oz of silver that will stand for delivery in December.
we gained 70,000 oz that will stand for the December silver contract.
for those wishing to see the rest of data today see:
The two ETF’s that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.
There is now evidence that the GLD and SLV are paper settling on the comex.
***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold. I can visualize demand coming to the buyers side:
i) demand from paper gold shareholders
ii) demand from the bankers who then redeem for gold to send this gold onto China
vs no sellers of GLD paper.
And now the Gold inventory at the GLD:
Dec 11.2014: we had another addition of .95 tonnes of gold inventory at the GLD/Inventory 725.75 tonnes
dec 10.2014: we gained another 2.99 tonnes of gold at the GLD. If China cannot get its gold from London, then its only source will be the FRBNY.
Inventory: 724.80 tonnes
Dec 9.2014: we gained 2.69 tonnes of gold/inventory 721.81 tonnes
Dec 8.2014: we lost .900 tonnes of gold/inventory 719.12 tonnes
Dec 5.2014: no change in tonnage/720.02 tonnes
Dec 4 no change in tonnage/720.02 tonnes
Dec 3 no change in tonnage/720.02 tonnes/
December 2/2014; wow!! we had a huge addition of 2.39 tonnes of gold /Inventory 720.02 tonnes
December 1.2014: no change in gold inventory at GLD
Nov 28.2014: a loss in inventory of 1.19 tonnes/tonnage 717.63 tonnes
Nov 26.2014: we lost 2.09 tonnes of gold heading to India and or China/inventory at 718.82 tonnes
Today, December 11 / another addition in inventory of .95 tonnes/ inventory now 725.75
inventory: 725.75 tonnes.
The registered vaults at the GLD will eventually become a crime scene as real physical gold departs for eastern shores leaving behind paper obligations to the remaining shareholders. There is no doubt in my mind that GLD has nowhere near the gold that say they have and this will eventually lead to the default at the LBMA and then onto the comex in a heartbeat (same banks).
GLD : 725.75 tonnes.
And now for silver:
Dec 11.2014: we lost 2.873 million oz at the SLV/Inventory 342.35 million oz
December 10.2014; no change in inventory/345.223 million oz
Dec 9.2014: no change in inventory/345.223 million oz
Dec 8.2014: no change in inventory/345.223 million oz
Dec 5/2014: no change in inventory/345.223 million oz
Dec 4/we lost another 2.204 million oz of silver/inventory 345.223 million oz
dec 3. we lost 2.73 million oz of silver/inventory 347.427 million oz and back where we were on Dec 1.2014.
dec 2 wow@!!@ a huge addition of 2.20 million oz of silver/inventory 350.158 million oz.
December 1: no change in inventory/347.954 million oz
Nov 28.2014: no change in inventory/347.954 million oz
Nov 26.2014; no change in inventory/347.954 million oz
December 11/2014/ we lost 2.873 million oz of inventory silver at the SLV/inventory registers: 342.35 million oz
And now for our premiums to NAV for the funds I follow:
Note: Sprott silver fund now deeply into the positive to NAV
Sprott and Central Fund of Canada.
(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)
1. Central Fund of Canada: traded at Negative 10.9% percent to NAV in usa funds and Negative 10.9% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 61.0%
Percentage of fund in silver:37.5.%
( December 10/2014)
2. Sprott silver fund (PSLV): Premium to NAV rises to positive 0.26% NAV (Dec 11/2014)
3. Sprott gold fund (PHYS): premium to NAV rises to negative -0.56% to NAV(Dec 11/2014)
Note: Sprott silver trust back hugely into positive territory at 0.26%.
Sprott physical gold trust is back in negative territory at -0.56%
Central fund of Canada’s is still in jail.
And now for your most important physical stories on gold and silver today:
Early gold trading from Europe early Thursday morning:
Faber Favours Commodity Stocks In India, Asia … and Gold
Respected economic historian and author of the “Gloom, Boom and Doom Report,” Dr Marc Faber has warned about the continuing and coming decline of western economic power.
He believes that the generation of young people starting to work today will be the first in two hundred years to have a lower standard of living than their parents had. He believes dividend paying Asian stocks will grow wealth in the coming years and remains an advocate of owning physical gold.
In a video interview with Barron’s, Dr Faber states,
“I meant that with respect to western societies and Japan where essentially the younger people – today’s generation – will earn less than their parents and they will have less wealth than their parents, inflation adjusted.”
“[This is] because we will have wealth taxes, we will have more estate taxes and we have essentially declining real median incomes in the western world and Japan.”
Faber has consistently warned since the late 1990’s that this dynamic would come to pass as the West and the U.S. in particular exported its industrial infrastructure and binged on consumer junk fuelled by easy credit while the emerging economies of east Asia used the proceeds to focus on production rather than consumption to become industrial powerhouses.
He went on to say,
“In the countries that opened up post breakdown of the socialist/communist ideology – China, Soviet Union, Eastern Europe – and India of course we have an entire generation who will earn much more and will have a better standard of living than their parents had.”
He highlighted certain factors that are leading to this lower standard of living for young western people. Banks now generally charge more to hold one’s money than the interest they pay out. He cites the yields on Swiss ten year bonds at 0.46% as an example of how people, and especially young people, are disadvantaged relative to previous generations.
“These people will not enjoy the compounding impact that I enjoyed having started to work in 1970 when bond yields were 6% and they went to 15% and so forth. So during that period of time wealth was accumulating very rapidly plus we had a huge boom in real estate and in equities and bonds between 1980 and 2007.”
“That is not going to happen again.”
Agricultural commodities including palm oil and Asian companies processing agricultural produce is where Dr. Faber currently sees value. Some of these companies in Malaysia and India, for example, pay dividends between 2% and 4%.
The young people who invest in these types of company will see their wealth steadily rise as opposed to their western counterparts who rely on the casino of rising paper asset prices.
Faber also likes the stock market in India and thinks it could see gains of 15% next year. The new government is free market and enterprise friendly and Faber believes the central bank in India is the “world’s best central bank.”
Dr. Faber is a long time proponent of owning physical gold. He has consistently urged people to act as their own central bank in acquiring bullion coins and bars as financial security and he believes that storing gold in Singapore is the safest way to own gold today.
Dr Faber has said that in the long term, he thinks gold could rise to over $10,000 per ounce.
More importantly, he continues to emphasise the importance of owning physical gold as part of a diversified portfolio in order to protect against a coming stock market correction and the possibility of another global financial crisis and crash.
The short Barrons Interview with Dr Faber can be seen here
Our recent comprehensive Webinar with Dr Faber can be seen here
Today’s AM fix was USD 1,219.50, EUR 980.94 and GBP 778.24 per ounce.
Yesterday’s AM fix was USD 1,228.25, EUR 991.88 and GBP 783.82 per ounce.
Spot gold fell $2.20 or 0.18% to $1,227.40 per ounce yesterday and silver climbed $0.04 or 0.24% to $17.08 per ounce.
Gold in Singapore ticked marginally lower and this trend continued in London. Gold is down from Wednesday’s seven-week high as the dollar and European shares firmed, leading to a decline in a safe haven bid for gold.
The precious metal is still on track for a 2.6% weekly gain so far, its strongest since mid-October, as safe haven demand and short covering have given support.
Gold remains just below its highest in more than six weeks as investors weighed the possibility of deflation contributed to by falling energy prices against signs of rising demand.
Chinese demand saw volumes on the Shanghai Gold Exchange (SGE) for gold of 99.99% purity rise for a second day yesterday to 28,152 kilograms. This is the highest since November 18 in the world’s biggest gold buyer.
An improvement in sentiment was seen in the holdings of SPDR Gold Trust, the world’s largest gold exchange-traded fund. The fund saw inflows of nearly 3 tonnes on Wednesday, bringing total holdings to 724.80 tonnes.
Silver continues to consolidate above $17 per ounce, while platinum rose 0.4 % to $1,238.25 an ounce and palladium gained 0.5% to $814.70 an ounce – the highest level since September.
Get Breaking News and Updates On Gold Here
Stephen Leeb talks about mining companies profitability improving with the lower oil price
(courtesy Stephen Leeb/Kingworldnews)
As oil falls against gold, mining profitability will improve, Leeb tells KWN
Submitted by cpowell on Thu, 2014-12-11 09:59. Section: Daily Dispatches
11a CET Thursday, December 11, 2014
Dear Friend of GATA and Gold:
Fund manager Stephen Leeb tells King World News that a steady-to-rising gold price against a collapsing oil price likely means greater profitability for gold mining companies. An excerpt from Leeb’s interview is posted at the KWN blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Travelogue from London and Munich
Submitted by cpowell on Thu, 2014-12-11 10:56. Section: Daily Dispatches
11:57a CET Thursday, December 11, 2014
Dear Friend of GATA and Gold:
While most residents of the United Kingdom may have managed to get photographed with Queen Elizabeth II during her 62-year reign, a lifetime and more of gladhanding and suffering fools lightly that would have destroyed even the most compulsive politicians, few foreigners get the privilege. Somehow Max Keiser of Russia Today’s “The Keiser Report” arranged it last week for a foreigner, your secretary/treasurer, at his TV program’s studio overlooking London Bridge:
And this week your secretary/treasurer was welcomed to Munich, Germany, at the Bayerischer Hof Hotel by Dagmar Metzger of the Foundation for Liberty and Ratio and Peter Boehringer of the German Precious Metals Society, leaders of the campaign for limited and accountable government in Germany:
Thanks to all GATA supporters who helped make this expedition possible. Some blows were struck against the bad guys.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Early this morning, Deutsche bank and Barclay’s busted for foreign exchange rigging in the algos that they developed which hurts their clientele instead of serving them:
Zero Hedge: Deutsche, Barclays algos busted for FX rigging
Submitted by cpowell on Thu, 2014-12-11 13:24. Section: Daily Dispatches
Thursday, December 11, 2014
First it was humans. Now it is vacuum tubes.
Having quickly learned that letting carbon-based traders engage in FX (or stock, or bond, or Libor, but not gold, never gold) rigging usually leads to said carbon-trader ultimately being fired with the bank suffering a violent slap on the wrist, banks are getting smart, and have — as we have been claiming for about four years — decided to let pre-programmed algos do all the market manipulation. Only this time it is not some tinfoil blog making this accusation, but New York regulators who, according to Bloomberg —
— have found evidence that Barclays and Deutsche Bank may have used algorithms on their trading platforms to manipulate foreign-exchange rates, a person with knowledge of the investigation said.
As Bloomberg reports, the practice suggests there may be a systemic problem involving automated tools that goes beyond individuals colluding to rig currency benchmarks and take advantage of less sophisticated clients. …
… For the complete commentary:
Transparency?? by the Bank of England??
(courtesy Giles,London financial times)
Yeah, sure, FT: ‘Governor Mark Carney sweeps aside secrecy at Bank of England’
Submitted by cpowell on Thu, 2014-12-11 16:23. Section: Daily Dispatches
Of course not for records of the bank’s gold transactions and those of its “customers.” What puffery!
* * *
Governor Mark Carney Sweeps Aside Secrecy at Bank of England
By Chris Giles
Financial Times, London
Thursday, December 11, 2014
Mark Carney, Bank of England governor, swept aside much of the secrecy that traditionally surrounds the central bank’s deliberations on Thursday, promising to publish voting details and minutes of interest rate decisions at the same time they are announced.
The bank also wants to hold fewer monetary policy meetings each year and, after reviewing its practice of deleting recordings, has decided it will publish transcripts of monetary policy meetings after a delay of eight years. …
… For the remainder of the report:
And now Bill Holter with another fine commentary..
(courtesy Bill Holter/Miles Franklin)
Why don’t you listen to them? …revisited.
Early Thursday morning trading from Europe/Asia
1. Stocks down on major Asian bourses even with a lower yen value rising to 118.41
2 Nikkei down 155 points or 0.89%
3. Europe stocks all down (except German DAX) /Euro down/ USA dollar index up to 88.39/
3b Japan 10 year yield at .41% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 119.89
3c Nikkei now below 18,000
3fOil: WTI 60.23 Brent: 63.87 /all eyes are focusing on oil prices. A drop to the mid 60′s would cause major defaults.
3g/ Gold down/yen down;
3h/ Japan is to buy the equivalent of 108 billion usa dollars worth of bonds per MONTH or $1.3 trillion
Japan’s GDP equals 5 trillion usa/thus bond purchases of 26% of GDP
3i Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt (see Von Greyerz)
3j Oil collapsing this morning both WTI and Brent
3k Greece accelerates its bid for a new president/if they fail then a new election/Athens stock exchange down 10%
3m Gold at $1223 dollars/ Silver: $17.10
3n USA vs russian rouble: 55.28 (much weaker against the dollar)/Russia raises rates for the fifth time and central bank rate yields 10.5%
4. USA 10 yr treasury bond at 2.14% early this morning. Thirty year rate well below 3% AND COLLAPSING (2.80%)
5. Details: Ransquawk, Bloomberg/Deutsche bank Jim Reid
(courtesy zero hedge)/your early morning trading from Asia and Europe)
Central-Bankers Have Their Hands Full As 30 Year Yield Falls Below 2014 Lows
Not quite as many fireworks overnight, in another session dominated by central banks. First it was revealed that China had injected CNY400 billion into the banking system to add liquidity as the economy slows, which is ironic because on the other hand China is also seemingly doing everything in its power to crash its nascent stock market bubble mania, following the latest news that China’s CSRC approved 12 IPOs ahead of schedule which is seen as a pre-emptive step to tighten interbank liquidity amid the recent rise in margin trading. This happened as China’s big 5 banks hiked deposit rates by 20% limit with aim to cap funds heading into stocks.
Another central bank that acted overnight was Russia’s which proceeded with its 5th rate hike of the year, pushing the central rate up by 100 bps to 10.50% as expected.
Elsewhere, the Bank of England wants to move to a Fed-style decision schedule and start releasing immediate minutes as Governor Mark Carney overhauls the framework set up more than 17 years ago.
The Swiss National Bank predicted consumer prices will drop next year and said the risk of deflation has increased as it vowed to defend its cap on the franc even as the bank refrained from cutting interest rates.
Finally Norway’s central bank cut its main interest rate for the first time in more than two years and signaled it may ease again next year as plunging oil prices threaten growth in western Europe’s biggest crude exporter.
All in all, a busy day for central-planners everywhere. And while crude is attempting its latest feeble rebound, both the 10 Year and the 30 Year yields are sliding, with the former now down to under 2.15%, the lowest since the October flash crash, while the 30 Year touched 2.805%, below the 2014 closing low.
In Asia, the Nikkei 225 (-0.89%) traded in negative territory throughout the session albeit now off its worst levels as JPY lost some ground against USD. Hang Seng (-0.9%) was led by weakness in energy stocks while the Shanghai Comp (-0.4%) fluctuated between gains and losses, as strength in airlines and shipping names mitigated declines across oil stocks. China’s PBoC said to inject CNY 400bln into banking system. In addition there were further source reports in the Asian session that China has eased bank restrictions and PBOC targets CNY 10trln loans for 2014. These measures are to quicken the pace of lending.
European equity markets have been relatively mixed this morning with marginal outperformance observed in the IBEX and FTSE MIB following the release of the ECB’s TLTRO, however the FTSE 100 is lagging as the resource heavy index is being weighed upon by weakness in the materials sector with the likes of Glencore, Rio Tinto, Anglo-American each down 2.3%-3.3%.
In terms of today the calendar starts to pick up in the US as we await the latest retail sales, jobless claims data and business inventories.
Bulletin Headline Summary from Bloomberg and RanSquawk
- ECB allots 129.84bln in its second TLTRO resulting in a brief move higher in the DAX future of ~ 40 ticks, however, overall reaction has been muted given the number is largely in line with expectations.
- RUB touches fresh all time lows as the market is left with disappointed with the central banks decision to raise rates by just 100bps (Now 10.5%).
- Moderate strength seen in CHF as the SNB refrain from cutting interest rates leaving their 3 month LIBOR target at 0.00-0.25% and maintained the EUR/CHF floor at 1.20.
- Treasuries steady, curve flattening continues; 30Y yields 2.816%, trading at lowest since mid- October even as U.S. prepares to sell $13b of the debt in last of week’s coupon auctions.
- Long bonds to be sold today yield 2.825% in WI trading after drawing 3.092% in Nov.; stop at that level would be lowest in more than two years
- ECB’s second round of long-term loans came in at the low end of estimates; allotted EU130b vs range of EU90b-EU250b in Bloomberg News survey
- Euro-area bonds rally, with German 30Y bond falling below 1.50% level for first time ever; ECB’s Liikanen says central bank’s purchase debate covers “full range” of debt
- PBOC injected 400b yuan into the banking system, according to a person familiar with the matter, pressing ahead with targeted steps to add liquidity as the economy slows
- Norway’s central bank cut its main interest rate for the first time in more than two years and signaled it may ease again next year as plunging oil prices threaten growth in western Europe’s biggest crude exporter
- The Swiss National Bank predicted consumer prices will drop next year and said the risk of deflation has increased as it vowed to defend its cap on the franc
- The Bank of England wants to move to a Fed-style decision schedule and start releasing immediate minutes as Governor Mark Carney overhauls the framework set up more than 17 years ago
- Russia’s fifth interest-rate increase this year failed to stem the ruble’s worst rout in 16 years, risking further damage to an economy battered by sanctions and oil prices near the lowest since 2009
- New York regulators have found evidence that Barclays Plc and Deutsche Bank AG may have used algorithms on their trading platforms to manipulate forex rates, a person with knowledge of the investigation said
- Sovereign yields mostly higher. Asian stocks fall. European stocks, U.S. equity-index futures gain. Brent crude +0.9%, trading below $65/bbl level; gold and copper decline
In FX, AUD has come under pressure this morning having broken technical support and with the USD index edging higher with gains of 0.5%, which in turn has put pressure on EUR/USD and GBP/USD over the last hour. RANsquawk sources have noted larger leveraged funds seen as general USD buyers (Unconfirmed). In addition, worth noting that overnight RBA Edwards stated that he continued to expect falls in the local currency and that there is room to cut rates if needed. Furthermore, following the Russian key rate decision (10.5% from 9.50%), the RUB weakened against the USD as some participants may have been disappointed that the Russian central bank didn’t adopted a more aggressive move.
Also of note, The Norges Bank surprised the market this morning opting to cut their key interest rate by 25 bps to 1.25% which was against market consensus. In addition, the Norges Bank said that they see they key rate at present level or lower until the end of 2016. As a result of this action EUR/NOK rose above 9.000 for the first time since 2009.
WTI and Crude oil futures have traded within a relatively tight range as the market awaits key tier 1 data later today. In specific news, analysts at Commerzbank cut their 2015/2016 Brent price forecast to USD 73.bbl and USD 83/bbl and cut their WTI price forecast to USD 69/bbl and USD 80/bbl. In the precious metal complex, Gold is under selling pressure as it moves inversely with the strengthening USD, with the DXY-index trading up 0.4%.
DB’s Jim Reid concludes the overnight summary as customary:
Xmas is in danger of being cancelled if markets continue to behave like they have this week. Risk assets broadly sold off yesterday as oil markets tumbled following a cut in crude demand forecasts for 2015 by OPEC. Both WTI (-4.51%) and Brent (-3.89%) dropped to $60.94/bbl and $64.24/bbl respectively – the latter closing below $65 for the first time in five years. With regards to the demand forecasts, the cartel has reduced its forecast to 28.92m barrels/day in 2015 marking the lowest level since 2004. More pertinent however is that the demand forecast is also well below the 30m barrels/day output target that OPEC recently agreed to stick to in late November. Not helping the situation there was also comments from the Saudi Arabian Oil Minister Ali Al Naimi who told reporters that “why should I cut production?” and “the market will correct itself”. With all that the Energy sector (-3.08%) suffered another round of losses to lead the S&P 500 (-1.64%) lower for the third consecutive day. Energy aside all other major sector groups from Materials to Staples all finished the day in the red. Treasuries closed firmer, the 10y benchmark yield tightening 5bps to 2.164% – aided by a strong 10y Treasury auction with demand the highest since March 2013. The bid-to-cover ratio also hit 2.97, well above the 2.69 average of the last 10 auctions. Data was light, the only noticeable release being US trade data which showed a smaller than expected budget deficit print ($56.8bn vs. $64.0bn deficit expected).
As we’ve discussed numerous times of late, the sell-off in energy credits has also been a notable theme for the US HY market. Looking at the recent price action, spreads across US HY energy names widened further yesterday and are now around 82bps wider this week. Spreads have widened over 210bps since the OPEC meeting in late November. The moves for the broader US HY market, although less exaggerated, are similar in terms of direction with the index some 44bps wider this week and +65bps post OPEC. Our US credit colleagues have recently updated their analysis highlighting that Brent at $55/bbl (on a sustained basis) could represent something of a distress point for US HY energy producers so we are not far off that now. These stresses are filtering through to decision making at the micro level with corporates starting to prudently manage their capex and cash flows ahead of expected further weakness. We flagged the ConocoPhillips story yesterday and several more over the past few weeks (eg. Schlumberger and Vale although the latter is more related to metals) but these stories may have more legs from here. Indeed yesterday saw US shale operators Oasis Petroleum and Goodrich Petroleum announce planned slashes to capex spending next year. We also saw BP announce that they are looking at incurring significant redundancy payments associated with overhauling operations through 2015. With consumption and government spending not exactly firing on all cylinders slashing investment is hardly going to be helpful for growth.
Turning to Europe, today sees the 2nd TLTRO. A total of EUR 83bn was taken up under the first operation in September, a disappointment relative to DB’s projection for around a EUR 100bn take up and even higher market expectations elsewhere. Our guys do expect a higher take up in the second operation but the total in the first two TLTROs is likely to fall well short of the EUR 400bn total allowance (DB expect EUR ~170bn today), making the ECB’s aim of expanding the size of its balance sheet more challenging, especially as EUR270bn of long-term loans rolls off over the next two months. However a poor take up today should as a consequence increase the likelihood of a broader QE in Q1 which will include Government bonds. It continues to be an upside down world of bad news being quite good for markets a lot of the time. We should know the results around 10.15am London time.
Back to markets the sentiment in Europe was also impacted by the moves in Oil but data wasn’t exactly supportive either. The Stoxx 600 pared earlier gains of as much as +0.9% to close -0.34% at the end of play. Similar declines were felt for energy names, with the component declining 1.93%. In terms of data, French industrial production came in particularly soft at -0.8% mom (vs. +0.2% expected), whilst manufacturing production didn’t fare much better – the -0.2% mom reading below market consensus. The prints perhaps underlined reasons over a new proposal from the French government yesterday aimed at kick starting growth in the economy and putting together the reforms needed to avoid EU sanctions. According to the WSJ, the package includes measures to increase shop opening hours, measures around resolving disputes over employment firings, deregulating legal trade and cutting red tape for construction. Benchmark 10y yields in France yesterday closed 0.5bps tighter at 0.961%. Elsewhere, 10y Bunds struck fresh lows at 0.681% yesterday, although it traded as low as 0.672% intraday as peripheral assets underperformed, headlined by further price moves in Greece. 10y benchmark yields in Greece widened a further 35bps whilst 3y yields closed 104bps wider at 9.122%. Greece’s 1y CDS was the notable price-mover however, widening over 700bps to 1536bps on the day. The ASE closed -1.01%.
Asian markets overnight are taking the lead from the US session yesterday. The Shanghai Composite, HSCEI, Nikkei and the KOSPI are all down -0.24%, -0.94%, -0.86% and -1.49%, respectively. Oil remains a key focus for markets even though Asia on balance should remain a safer play in a falling oil environment given its position as a net importer of fuel. The weakness in DM credit is also seeing some spill over into Asian credit markets overnight. Malaysia (net exporter of Oil) has seen its 5yr CDS widen by around 13bps over the last few days whilst AA-rated China Oil credits are around 10bps wider since the end of last week. The USD continues to trade softer against major currencies whilst Crude oil is bouncing off yesterday’s intraday lows.
Briefly coming back to the oil theme, there was further weakness in Venezuela yesterday as benchmark 3y yields widened a further 220bps to yield north of 44%. With the country’s budget straining under tumbling oil prices, Bloomberg reported that the upfront cost for 5y CDS jumped to 60% and implying a probability of default of 94%. The country’s reserves have dipped to their lowest levels in a decade, covering just 40% of debt due in the next five years.
In terms of today the calendar starts to pick up in the US as we await the latest retail sales, jobless claims data and business inventories. With regards to retail sales, our US colleagues note that the retail control element is most relevant given its direct input into GDP and for this and they expect a +0.5% gain for the second consecutive month. In Europe we will get the final November inflation reading for Germany as well as preliminary French inflation data. Finally we get October industrial production for Italy and housing data out of Spain.
Greek Stocks Crash, Default Risk Spikes After PM GREXIT Comments
Just 2 short months ago we noted S&P’s warning that Greece will default again within 15 months and following comments by Prime Minister Samaras that the market’s drop is due to fear that Syriza will win an early election and seek a Greek exit from the Euro. Pressuring parliamentarians and the public alike, he stated “the choice is simple,” warning that Greek financing needs are only covered through the end of February without further aid from the EU (but we thought they were ‘recovered’). Greek stocks have crashed further, Greek default risk has spiked, and 3Y bond yields are now well north of 10% (138bps inverted to 10Y).
As Bloomberg reports,
Greek PM Antonis Samaras says country’s financing needs covered until end-Feb, in comments to lawmakers of his party in parliament today.
Greece will get next tranche of its bailout loan; if we have elections everything is “up in the air”
Markets react to possible Syriza election win, fall because they fear Syriza: Samaras
Samaras calls on all Greek lawmakers to assume their responsibility; says choice is simple, president or early elections
Dimas is excellent candidate for presidency: Samaras
Credit line to shield Greece’s first steps: Samaras
A further plunge in stocks…
and a spike in Greek default risk
as GGB price collapse and yields further invert…
And about those new 5Y bonds that proved Greece was fixed…
Greece will hold snap general elections in January if parliament fails to elect a president this month, Prime Minister Antonis Samaras said on Thursday as he called on all lawmakers to avert a national crisis by supporting his candidate for head of state.
“We will all be judged in the coming days,” Samaras said in a speech to lawmakers from his conservative New Democracy party. “People do not want elections.”
If the government wins the vote to elect a president, the country will complete a pending bailout review, seek debt relief from European partners and sign a precautionary credit line to support the country after the aid program ends, Samaras said.
He said Greece’s funding needs were covered until the end of February.Responding to speculation that the government might put forward different nominees in the three presidential vote rounds, Samaras said Stavros Dimas would remain the government candidate in all three rounds.
And tonight, the wrap up Greece:
Greece Suffers Biggest 3-Day Crash In 27 Years
Submitted by Tyler Durden on 12/11/2014 17:30 -0500
In the last 3 days, the broad Greek stock market has cratered a stunning 20%. This is the biggest 3-day drop since 1987 and all on the back of the ‘possibility’ that an anti-EU party takes over.
Did we just get a glimpse of the ugly reality hiding behind the veil of status-quo-maintaining central-bank-sponsored manipulation?
Today the low price of oil is having its effect on Norway:
(courtesy zero hedge)
Norway Central Bank, Slammed By Oil Plunge, Warns Of “Severe Downturn”, Unexpectedly Cuts Rates
The governor of Norway’s central bank says western Europe’s biggest oil producer is facing a major economic slowdown as crude prices continue to plunge. As Bloomberg reports, Oeystein Olsen said today in an interview after a press conference in Oslo, “our job now is that we need to prevent a severe downturn in the economy… that is presently the major concern of the board.”
Olsen cut Norway’s main interest rate today by 0.25 percentage point to 1.25 percent, a move that shocked markets and sent the krone down almost 2 percent against the euro (weakest since July 2009). The decision came after almost three years of unchanged rates and marked a shift away from a policy that had sought to prevent excessive monetary easing from fueling house price growth.
Even after today’s cut, the bank sees a “50-50 chance” for another rate reduction next year, Olsen said.
Oil prices have plunged 44 percent from a June high, the worst decline since the financial crisis erupted in 2008. Norges Bank estimates oil investments will decline by 15 percent next year, with the risk of “spillover” effects on the rest of the economy and rising unemployment.
And as Nick Cunningham via OilPrice.com, this is why… since Norway depends on the oil industry for almost a quarter of its economic output and has built an $860 billion wealth fund from its offshore revenue.
New oil projects are being scrapped in Norway amid falling production and low oil prices.
Long held up as the model for managing oil abundance, Norway has painstakingly sought to prevent the problems that occur with other natural resource-based economies, such as corruption, slow economic growth, currency appreciation, and subsequently, deindustrialization.
Since 1990, Norway has diverted much of its oil earnings to a sovereign wealth fund, which has become the world’s largest. The money, reaching $890 billion as of June 2014, amounts to $178,000 for every Norwegian citizen. The sovereign wealth fund helps Norway avoid some of the problems associated with the “resource curse” by investing capital abroad. But more importantly, the money is set aside to be saved and invested to help the country plan for the eventual decline of oil production, with the intention of transitioning to a more diversified economy that can take oil’s place.
The early cracks in Norway’s petrol-based economy are beginning to show, perhaps quicker than many predicted.
Energy analysts have explored in detail how the ongoing decline in oil prices – down 40 percent since June – might affect oil exporting countries like Russia, Iran, Venezuela, and other OPEC members. But even Norway, the model for using natural resources to build a modern wealthy economy, is not immune to the price fall.
Statoil, the mostly government-owned oil company, has seen its share price cut in half since July 2014. It is idling several offshore rigs as oil prices drop. Three rigs – the COSL Pioneer, Scarabeo 5, and Songa Trym – will besuspended until the middle of 2015 because of lower profitability. “These measures are necessary due to the overcapacity of rigs compared to the assignments we are prioritising. This situation is unfortunate, and we are doing what we can to minimise the extent of the suspensions,” Statoil procurement head Jon Arnt Jacobsen said in astatement.
To make matters worse, costs of developing new fields have been steadily rising. “The boom is probably over. But we’re not looking at a steep decline in investment or production,” Norway’s oil minister Tord Lien told Reuters in May 2014. “The costs are rising too high and too fast. The Norwegian costs have risen a little bit more than elsewhere.” Since those comments, oil prices have tumbled. Norway may in fact see a steep decline in investment.
Lower oil prices could force more than $150 billion worth of investments to be put on hold worldwide,according to an assessment by Norwegian firm Rystad Energy. Statoil is deferring a decision on investing $5.74 billion in the Snorre field, an offshore oil project in the Norwegian Sea. Also, Statoil’s Johan Castberg field, an estimated $16-$19 billion oil field in the Barents Sea, will be tabled for the time being. These costly projects won’t generate a sufficient return given today’s prices.
But the oil price decline is only accelerating a trend that is already underway. Even with high oil prices Norway was facing a tougher future due to years of waning oil production. Since 2001, Norway’s oil production has fallen by almost half, from around 3.5 million barrels per day down to about 1.8 or 1.9 million bpd in 2014.
The decline in investment is already pinching the labor market. Around 10,000 Norwegian oil workers have been laid off as the industry pares back spending, accounting for 10 percent of the sector’s total workforce, the Wall Street Journal reports. Oil workers arethreatening to strike unless the government steps in to stem further losses.
And the way forward is murky. Despite its best efforts, Norway’s economy is overwhelmingly dependent on oil, which accounts for more than half of the country’s exports. Other export industries have struggled to develop as costs are too high – a classic symptom felt in countries suffering from the resource curse.
But resuscitating the sector may be difficult. With such a high cost environment, it doesn’t make sense for many companies in Norway to invest in new projects. Spending could drop by another 18 percent next year as project economics look poor.
Conversely, without investment, new production will not materialize in the coming years, leading to further deterioration for the sector as existing fields age and decline.
To be sure, Norway has its almost $1 trillion sovereign wealth fund to fall back on, so it is not as if its citizenry will be thrust into poverty anytime soon. Still, Norway may need to begin building a post-oil economy sooner than it thought.
And now the damage to oil companies in the uSA:
Fed Bubble Bursts in $550 Billion of Energy Debt: Credit Markets
The danger of stimulus-induced bubbles is starting to play out in the market for energy-company debt.
Since early 2010, energy producers have raised $550 billion of new bonds and loans as the Federal Reserveheld borrowing costs near zero, according to Deutsche Bank AG. With oil prices plunging, investors are questioning the ability of some issuers to meet their debt obligations. Research firm CreditSights Inc. predicts the default rate for energy junk bonds will double to eight percent next year.
“Anything that becomes a mania — it ends badly,” said Tim Gramatovich, who helps manage more than $800 million as chief investment officer of Santa Barbara, California-based Peritus Asset Management. “And this is a mania.”
The Fed’s decision to keep benchmark interest rates at record lows for six years has encouraged investors to funnel cash into speculative-grade securities to generate returns, raising concern that risks were being overlooked. A report from Moody’s Investors Service this week found that investor protections in corporate debt are at an all-time low, while average yields on junk bonds were recently lower than what investment-grade companies were paying before the credit crisis.
Borrowing costs for energy companies have skyrocketed in the past six months as West Texas Intermediate crude, the U.S. benchmark, has dropped 44 percent to $60.46 a barrel since reaching this year’s peak of $107.26 in June.
Yields on junk-rated energy bonds climbed to a more-than-five-year high of 9.5 percent this week from 5.7 percent in June, according to Bank of America Merrill Lynch index data. At least three energy-related borrowers, including C&J Energy Services Inc. (CJES), postponed financings this month as sentiment soured.
“It’s been super cheap” for energy companies to obtain financing over the past five years, said Brian Gibbons, a senior analyst for oil and gas at CreditSights in New York. Now, companies with ratings of B or below are “virtually shut out of the market” and will have to “rely on a combination of asset sales” and their credit lines, he said.
Companies rated Ba1 and lower by Moody’s and BB+ and below byStandard & Poor’s are considered speculative grade.
The Fed’s three rounds of bond buying were a gift to small companies in the capital-intensive energy that needed cheap borrowing costs to thrive, according to Chris Lafakis, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.
Quantitative easing “has been one of the keys to the fast, breakneck pace of the growth in U.S. oil production which requires abundant capital,” Lafakis said.
The Houston-based company’s $750 million of 9.25 percent notes, issued in December 2010, have tumbled to 64 cents on the dollar from 106.3 cents in September, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. They yield 27.7 percent.
Energy XXI got its lenders in August to waive a potential violation of its credit agreement because its debt had risen relative to its earnings, according to a regulatory filing. In September, lenders agreed to increase the amount of leverage allowed.
Greg Smith, a vice president in Energy XXI’s investor relations department, didn’t return a call seeking comment.
The debt rout is one of the latest examples of a boom and bust in U.S. markets as unprecedented Fed stimulus fuels a hunt for yield. The fallout has been limited so far, yet the longer the Fed holds its benchmark lending rate near zero, the greater the risk of more consequential bubbles, according to former Fed governor Jeremy Stein.
“To the extent that highly accommodative monetary policy courts risks to the economy further down the road, there is more of a live trade-off than there was at 8 percent unemployment” said Stein, now a Harvard University professor.
Joblessness of 5.8 percent in November was about half a percentage point away from the Fed’s estimate of full employment, or the lowest level of labor market slack the economy can sustain before companies bid up wages.
Employment in support services for oil and gas operations has surged 70 percent since the U.S. expansion began in June 2009, while oil and gas extraction payrolls have climbed 34 percent.
“There are distortions in multiple markets,” said Lawrence Goodman, president of the Center for Financial Stability, a monetary research group in New York. “It is like a Whac-A-Mole game: You don’t know where it is going to pop up next.”
Fed Chair Janet Yellen said in a July 2 speech in Washington that she saw “pockets of increased risk-taking,” including in the corporate debt markets.
The Houston-based company’s $700 million of 9.25 percent notes due in June 2021 have plummeted to 53.5 cents from 108 cents at the beginning of September, according to Trace. The debt is rated Caa1 by Moody’s and B- by S&P.
Representatives of Midstates didn’t respond to phone calls and e-mails seeking comment.
Some borrowers are under pressure just a few months after selling new debt. Sanchez Energy Corp.’s $1.15 billion of 6.125 percent notes maturing in January 2023, issued this year, have tumbled to 77 cents from 101 cents in September, according to Trace. Proceeds from the bonds were partly used to fund a purchase of Eagle Ford shale assets from Royal Dutch Shell Plc. (RDSA)
“The company has planned for and is poised to rapidly adapt to a changing commodity price environment,” Tony Sanchez, III, chief executive officer of Sanchez Energy, said in a statement yesterday.
The Houston-based company expects to fully fund its 2015 capital program from operating cash flow and cash on hand without drawing on its revolving credit line, the statement said.
Sanchez Energy has never had positive free cash flow. Michael Long, chief financial officer, didn’t return a call seeking comment.
“Oil companies that have high funding costs in the Eagle Ford and the Bakken shale plays are the ones that are most exposed right now due to lower crude prices,” Gary C. Evans, chief executive officer of Magnum Hunter Resources (MHR) Corp., said in a phone interview.
Magnum Hunter’s $600 million of 9.75 percent debt due in 2020 has tumbled to 84.5 cents from 109 cents in September, Trace data show. The notes are rated CCC by S&P and yield 13.9 percent.
Evans said Houston-based Magnum Hunter sold almost all of its oil properties over the last year and a half and is now predominantly a gas company.
“We’ve insulated ourselves,” Evans said. For other energy borrowers at risk, “the liquidity squeeze” will probably occur in March or April when banks re-calculate have much they may borrow under their credit lines based on the value of their oil reserves.
Deutsche Bank analysts predicted in a Dec. 8 report that about a third of companies rated B or CCC may be unable to meet their obligations should oil prices drop to $55 a barrel.
“If you keep oil prices low enough for long enough, there is a pretty good case that some of the weakest issuers in the high-yield space will run into cash-flow issues,” Oleg Melentyev, a New York-based credit strategist at Deutsche Bank, said in a telephone interview.
For Related News and Information: Junk Fervor Cools as Oil Rout Upends Energy Debt: Credit Markets Junk Backing Shale Boom Faces $11.6 Billion Loss: Credit Markets Shale Boom’s Allure toWall Street Tested by Drop in Oil Prices Oil Slump Heaps Bond Losses in $50 Billion Glut: Credit Markets Drillers Piling Up More Debt Than Oil Hunting Fortunes in Shale
WTI Crude Crashes Into The $50s
Zee overnight stabilitee (and brief dead-cat-bounce this morning) has turned into a renewed bout of selling pressure and for the first time since July 2009, WTI has broken below the $60 level. Canada Heavy is trading $42.10 (down almst $4 today!), its lowest since April 2009. Energy credit spreads are wider once again, now at +952bps.
Canada Heavy has crashed…
And WTI breaks below $60 (and bounces) after multiple stop run attempts…
Now we have a problem…
Who could have seen that coming?
As Deutsche Bank warned last month, a drop in the oil price to $60 a barrel “is likely to push the whole HY energy sector into distress.”
Eur/USA 1.2433 down .0048