Dec 16/GLD loses 1.8 tonnes/Inventory now at 721.56 tonnes/no change in silver inventory/wicked roller coaster ride for gold and silver today/authorities halt trading in the Russian rouble/Russian rouble finishes above 67 roubles/usa dollar/

 

 

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: $1193.90 down $13.30
Silver: $15.72 down $0.81

In the access market 5:15 pm

Gold $1196.10
silver $15.72

 

 

The gold comex today had a poor delivery day, registering 0 notices served for nil oz. Silver comex registered 5 notices for 25,000 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 rose by a considerable 631 contracts with yesterday’s huge fall in price of $0.49. The OI refuses to go down despite raids.  Somebody has extremely strong hands and are very patient.  The total silver OI still remains relatively high with today’s reading at 149,964 contracts. The big December silver OI contract fell by 189 contracts down to 194 contracts.

 

In gold we had a rise in OI with the fall in price of gold yesterday to the tune of $14.80. The total comex gold OI rests tonight at 373,254 for a gain of 182 contracts. The December gold OI rests tonight at 801 contracts losing 80 contracts.

 

TRADING OF GOLD AND SILVER TODAY

it is not worth discussing as the bankers are manipulating all metals 24/7. It is a waste of time.  However both metals certainly had a roller coaster of a ride today.

 

 

Today, we an addition of 1.80 tonnes  of inventory with respect to gold inventory at the GLD /Inventory 721.56 tonnes

In silver, no change in silver inventory

SLV’s inventory rests tonight at 341.009 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:

 

 

all rates moved closer to the negative.  All GOFO rates are out of negativity but now heading again closer to the banker’s dreaded backwardation.

Now, most the months of GOFO rates( one, two,three six and 12 month GOFO moved  to the negative . They must have found a few bars to lease but the quantity must be at extreme low levels . On the 22nd of September the LBMA stated that they will not publish GOFO rates. However today we still received today’s GOFO rates. These rates are still fully manipulated. London good delivery bars are still quite scarce.

Dec 16 2014

1 Month Rate: 2 Month Rate 3 Month Rate 6 month rate 1 yr rate

+.0925.% + .1050 -% -+11750 -% +. 14275 .% +. 1750%

Dec 15 2014:

+.125% +.1400% +.14750 % +.155% +.1925%

 

 

end

 

 

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 rose today by 182 contracts from 373,072 all the way up to 373,254 with gold down by $14.80 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 801 contracts for a loss of 80 contracts. We had 35 delivery notice served yesterday so we lost 45 contracts or 4500 oz of gold that will not stand for the December contract month. The non active January contract month fell by 31 contracts down to 442. The next big delivery month is February and here the OI fell to 231,650 contracts for a loss of 42 contracts. The estimated volume today was poor at 124,893. The confirmed volume yesterday was fair at 157,599 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 .

And now for the wild silver comex results. Silver OI rose by 631 contracts from 149,333 up to 149,964 even though silver was down by  $0.49 on yesterday. The big December active contract month saw it’s OI fall by 189 contracts down to 194 contracts. We had 178 notices served upon on yesterday. Thus we lost 11 contracts or an additional 55,000 oz will not stand. The estimated volume today was fair at 33,809. The confirmed volume yesterday was good at 45,816. We had 5 notices filed for 25,000 oz today

 

 

 

December initial standings

 

 

Dec 16.2014

Gold

 

 

December initial standings

 

Dec 16.2014

Gold

Ounces

Withdrawals from Dealers Inventory in oz nil oz
Withdrawals from Customer Inventory in oz nil oz
Deposits to the Dealer Inventory in oz 699.98 oz (Brinks)
Deposits to the Customer Inventory, in oz nil
No of oz served (contracts) today 0 contracts(nil  oz)
No of oz to be served (notices) 801 contracts (80,100 oz)
Total monthly oz gold served (contracts) so far this month  2641 contracts(264,100 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

 145,996.45 oz

Today, we had 1 dealer transactions

total dealer withdrawal: nil oz

 

we had 1 dealer deposit:

 

i) Into Brinks: 699.98 oz

total dealer deposit: 699.98 oz

 

we had 0 customer withdrawals

 

total customer withdrawal: nil oz

we had 0 customer deposits:

 

total customer deposits;  nil oz

We had 0 adjustments

Today, 0 notice was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 0 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 0 notices were stopped (received) by JPMorgan customer account.

To calculate the total number of gold ounces standing for the December contract month, we take the total number of notices filed for the month (2641) x 100 oz to which we add the difference between the OI for the front month of December (801) minus the # gold notices filed today (0) x 100 oz = 344,200 the amount of gold oz standing for the December contract month.

Thus the initial standings:

2641 (notices filed for the month x 100 oz) + (801) the number of OI notices for the front month of December served upon – (0) notices served today equals 344,200 oz or 10.706 tonnes

we lost 45 contracts or 4500 oz that will not stand.

 

 

 

Total dealer inventory: 737,866.946 oz or 22.95 tonnes

Total gold inventory (dealer and customer) = 7.922 million oz. (246.418) 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.

 

 

end

 

 

 

And now for silver

Dec 16/2014:

December silver: initial standings

Silver
Ounces

 

Dec 16/2014:

 December silver: initial standings

Silver

Ounces

Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory 29,825.62  oz  (Brinks  )
Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory nil
No of oz served (contracts) 5 contracts  (25,000 oz)
No of oz to be served (notices) 189 contracts (945,000 oz)
Total monthly oz silver served (contracts) 2861 contracts (14,305,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month  1,594,966.8  oz
Total accumulative withdrawal  of silver from the Customer inventory this month  6,496,618.3  oz

Today, we had 0 deposits into the dealer account:

total dealer deposit: nil oz

 

 

we had 0 dealer withdrawal:

total dealer withdrawal: nil oz

 

 

We had 1 customer withdrawals:

 

ii) Out of Brinks: 29,825.62 oz

 

total customer withdrawal 29,825.62 oz

 

 

We had 0 customer deposits:

 

total customer deposits: nil oz

 

we had 0 adjustments

 

Total dealer inventory: 64.594 million oz

Total of all silver inventory (dealer and customer) 175.567 million oz.

 

 

The total number of notices filed today is represented by 5 contracts for 25,000 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 (2861) x 5,000 oz to which we add the difference between the total OI for the front month of December (194) minus (the number of notices filed today (5) x 5,000 oz = the total number of silver oz standing so far in November.

Thus: 2861 contracts x 5000 oz + (194) OI for the November contract month – 5 (the number of notices filed today) =15,250,000 oz of silver that will stand for delivery in December.

we lost 55,000 oz that will not stand for the December silver contract.

for those wishing to see the rest of data today see:

http://www.harveyorgan.wordpress.com or http://www.harveyorganblog.com

 

 

end

 

 

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 16.2015  we lost 1.80 tonnes in tonnage at the GLD/721.56 tonnes

 

Dec 15.2014: we lost 2.39 tonnes of gold inventory at the GLD/Inventory at 723.36 tonnes

dec 12.2014: we had no change in gold inventory/GLD inventory 725.75 tonnes

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 16 / we lost 1.80 tonnes of   inventory / 721.56 tonnes

inventory: 721.56 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 : 721.56 tonnes.

 

 

end

 

 

And now for silver:

 

Dec 16.2014/ no change in silver inventory/SLV 341.009 million oz

Dec 15.2014: we lost 1.341 million oz of silver at the SLV/Inventory 341.009 million oz

Dec 12.2014 no change in silver inventory at the SLV/Inventory at 342.35 million oz

Dec 11.2014: we lost 2.873 million oz of silver inventory 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 16/2014/ no change  in silver inventory at the SLV/inventory

 

registers: 341.009 million oz

 

 

end

 

 

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 11.3% percent to NAV in usa funds and Negative 11.1 % to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 61.6%

Percentage of fund in silver:37.9.%

cash .5%

( December 16/2014)

2. Sprott silver fund (PSLV): Premium to NAV rises to positive 0.48% NAV (Dec 16/2014)

3. Sprott gold fund (PHYS): premium to NAV rises to negative -0.49% to NAV(Dec 16/2014)

Note: Sprott silver trust back hugely into positive territory at 0.48%.

Sprott physical gold trust is back in negative territory at -0.49%

Central fund of Canada’s is still in jail.

 

 

end

 

 

 

And now for your most important physical stories on gold and silver today:

 

 

Early gold trading from Europe early Monday morning:

 

 

wow!!! gold imports in November a huge 150 tonnes. India itself without China would be at this rate approaching 1800 tonnes per year.

Remember that the tax of 10% is still on.  Thus we must add smuggling and that number is huge too!!

The world produces 2200 tonnes ex China ex Russia.

 

 

(courtesy Mark O’Byrne)

 

 

Gold Imports ‘Phenomenal’ In India – 571 Percent Surge To 150 Tonnes in November

Published in Market Update  Precious Metals  on 16 December 2014

By Mark O’Byrne

India’s gold imports were over a staggering 150 tonnes in November and have seen a “phenomenal” rise in India according to India’s Trade Secretary, Rajeev Kher.

A few weeks ago we said that the death of the Indian gold market was greatly exaggerated. The latest gold import data out of India confirms this.

The import restrictions on gold that were imposed on Indians in August of 2013 were lifted at the end of last month. Despite the fact that the restrictions were still in place gold importation in November surged an incredible 571% relative to the same month last year at over 151.58 tonnes.

This was an increase of 38 percent from 109.55 tonnes a month earlier, trade ministry data showed on Tuesday.

The Indian government had recognised the socially destructive impact of the 80:20 scheme – which obliged importers to export 20% of it’s gold imports before bringing in another shipment – by pushing business into the hands of smugglers and thereby empowering criminality while losing out on the 10% duty currently charged on all gold imports.
It had been assumed that, because demand was being met by these “informal” supplies, the relaxing of the 80:20 policy would not have a dramatic impact on gold imports into India. That remains to be seen. Smuggling networks are now well established and arguably could provide cheaper gold than government-sanctioned channels.
The restrictions were put in place because the appetite of the growing Indian middle classes for gold was causing India to run large trade deficits. It is believed that it was also a misguided attempt at financial repression of gold in order to discourage Indians from buying physical gold. There were concurrent attempts to get Indians to open bank accounts and indeed to own digital and paper gold.

This highlights once again how deeply Indians feel about gold in that demand for this single commodity or form of money – could skew the trade deficit in such a dramatic way.
India officially imported $5.6 billion worth of gold in November. The trade deficit increased to $16.9 billion in the same period despite the cost of oil imports being low. This is putting pressure on the rupee which is currently valued at almost 63 to the dollar.
The central bank appears happy enough at this level as it will help boost exports which have been booming. However, India’s trade secretary – Rajeev Kher – has said that any level below 62 rupees to the dollar would cause him to be a “little more concerned.”
Russia’s drastic rate hike of 6.5% up to 17% is likely to further unnerve the Indian government as it tries to balance insatiable public demand for gold with the need to rein in the deficit. If the rupee falls more India will be forced to raise rates to discourage capital flight.

However, taking the longer term view, it must be said that – as a country that imports between 25% and 33% of the global gold supply – India will be well placed when currency wars deepen and the inevitable world-wide monetary reset occurs.

India’s imports are around the 1,000 metric tonne mark and global gold production is just under 3,000 metric tonnes.
We believe that it will be eastern countries who will determine monetary policy when that time comes. As Russia’s foreign minister Lavrov has pointed out the seven countries led by the BRICS nations now have a larger combined GDP than the western G7.
The old adage that “those who own the gold make the rules” will likely come to pass again. As it did in 1945, when the U.S. was the largest holder of gold in the world which enabled it to dictate the terms of the new Bretton Woods monetary system.

This seems likely given the affinity that the people, governments and central banks of India, China and the East have for gold as a store of value.

Essential Guide to  Storing Gold Bullion In Singapore

MARKET UPDATE
Today’s AM fix was USD 1,199.25, EUR 960.25 and GBP 763.95 per ounce.
Yesterday’s AM fix was USD 1,210.75, EUR 974.53 and GBP 772.41 per ounce.

Spot gold slid $30.40 or 2.49% to $1,191.70 per ounce yesterday and silver plummeted $0.87 or 5.12% to $16.14 per ounce despite no market moving news or developments.


Gold in USD – 5 Days (Thomson Reuters)

Gold in Singapore was flat overnight in Asia prior to gold bouncing back from yesterday’s biggest drop this year and is over 2% higher today as buyers accumulate after yesterday’s dip. Traders await the policy statement from the U.S. Federal Reserve meeting tomorrow.

Gold fell yesterday as U.S. manufacturing data beat estimates supporting the case for higher borrowing costs next year. Federal Reserve officials meet today and tomorrow to debate the possibility of rising U.S. interest rates, which have been near zero since 2008.

Silver for immediate delivery rose 2.5% to $16.70 an ounce, after plunging by 5.1% yesterday. Platinum was little changed at $1,209.88 an ounce. Palladium added 0.3% to $800.38 an ounce.

Holdings in gold-backed ETPs dropped 3 metric tons to 1,608.2 tons as of yesterday, Bloomberg data showed.


Silver in USD – 5 Days (Thomson Reuters)

The world’s second largest gold consumer surprised analysts and discarded a rule for traders to export 20% of all gold imports.  This change led to gold imports surging to 151.58 tonnes in November, an increase of 38% from 109.55 tonnes a month earlier, noted the trade ministry data yesterday.

Indian gold imports had risen hugely and the government should examine the impact of last month’s revision of the so-called 80:20 rule commented Trade Secretary Rajeev Kher.

The global price of crude oil plummeted through $60 a barrel for the first time in five years with almost no signs producers are ready to tackle a glut. Brent futures slid as much 3.3% to its lowest since May 2009 in London.

Crude oil fell about 45% this year as OPEC (Organization of Petroleum Exporting Countries) sought to defend market share amid a U.S. shale boom that’s exacerbating a global glut. The group, responsible for 40% of the world’s supply, will refrain from curbing output, U.A.E. Energy Minister Suhail al-Mazrouei said over the weekend.

 

end

 

Worried on the huge increase in gold imports, the authorities in India are again weighing their gold policy:

 

(courtesy GATA/Reuters)

 

 

India to weigh gold policy impact after 38% spurt in November imports

Section:

By Suvashree Choudhury and Meenakshi Sharma
Reuters
Tuesday, December 16, 2014

India will weigh the impact of last month’s easing of gold import rules after inbound shipments jumped 38 percent in November to push its trade deficit to an 18-month high, Trade Secretary Rajeev Kher said today.

In a surprise move, the world’s second-biggest gold consumer scrapped a rule for traders to export 20 percent of all gold imports, belying expectations for tighter curbs instead.

After the change, gold imports surged to 151.58 tonnes in November, an increase of 38 percent from 109.55 tonnes a month earlier, trade ministry data showed today. …

… For the remainder of the report:

http://www.reuters.com/article/2014/12/16/india-gold-trade-idUSL3N0U0324…


 

 

 

end

 

 

 

 

James Turk explains the reason by Guvnor left the gold business:

it could not verify the accuracy of bars..so it decided to vacate the arean altogether.

 

a must read…

 

(courtesy zero hedge)

 

Secret central bank interventions are the worst market disruptions, Turk says

Section:

5:08p ET Monday, December 15, 2014

Dear Friend of GATA and Gold:

Secret central bank interventions are the reason for the withdrawal of a big commodity trading company from the gold market, GoldMoney founder and GATA consultant James Turk tells King World News today.

The trading company, Turk notes, said it was getting out of the gold business because it could not confirm the origin of the gold it was trading, but the gold likely was central bank gold.

“Central planners claim that secrecy is essential so that markets are not disrupted, which is not only misleading but totally spurious,” Turk says. “The disruption to the market process that arises from the interventions of central planners is far worse than what would occur by disclosing to the public what central banks are doing and when they are doing it.”

Turk’s interview is excepted at the KWN blog here:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/12/15_T…

Also at King World News, Canadian market analyst John Ing sees oil’s price decline as a double boost to gold and gold miners:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/12/15_L…

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

 

end

 

 a very important interview with John Embry and Eric King
(courtesy John Embry/Kingworldnews)

Finance now runs the world and productive economy is an afterthought, Embry says

Section:

12:15p ET Tuesday, December 16, 2014

Dear Friend of GATA and Gold:

Finance used to facilitate the productive economy but now, Sprott Asset Management’s John Embry tells King World News, finance runs and expropriates the world and the productive economy is a mere afterthought. Embry adds that since monetary metal mining shares can hardly be given away, the advice from entrepreneur Frank Giustra to buy them now should be taken. An excerpt from Embry’s interview is posted at the KWN blog here:

http://kingworldnews.com/follow-this-billionaires-massive-bet-for-extrao…

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

 

* * *

end
Bill Holter explains to us the significance of the Austrian repatriation.
It is due to the probable emergence of the Nordic euro gang:
i) Austria
ii) Belgium
iii) Germany
iv) Holland
a must read…
(courtesy Bill Holter/Miles Franklin)

The “Core Four” Nordic Bank Run!

 
 

    To say that events are now taking place at the speed of light is an understatement.  It was just last Monday, I wrote a missive entitled “The Mother of all Bank Runs”.  In it I wrote about the German and Dutch repatriations of gold which was then followed by the Belgians beginning discussions on the same topic.  As a final speculation, I mentioned that “logically the Austrians would be next”.  There was no way you could have told me it would be less than one week until the same news would actually come out of Austria!  Unlike the Germans, Dutch and Belgians who have gold held in N.Y., Paris, and London, Austria holds 80% of their 280 tons of gold concentrated in London.  http://www.zerohedge.com/news/2014-12-12/breaking-austria-considers-repatriating-its-physical-gold This is truly big news for several reasons which we will explore and it certainly brings up a few more questions.
  These four countries represent the core of the European Union.  The EU is located in Brussels and the ECB is located in Frankfurt so the “power centers” (or financial centers) if you will are located within this “block” of countries, let’s call them the “Nordic bloc”.  These four are the strength of the euro, they are the highest rated credits and for the most part they alone dictate policy.  …And now, ALL of them will be asking for their gold to be returned to them.  The same questions I asked last week still apply, even more so now because of the addition of Austria.  Why do they want their gold returned and why now?  There are other questions which we can look at shortly.
  First, “why”?  Why is there all of a sudden this rush by Holland, Belgium and Austria to follow Germany’s lead in asking for their gold back.  The obvious answer is trust, or better said, lack of trust.  For years there have been questions as to whether or not “official gold” has been leased into the markets.  These questions have arisen because of the simple math of supply and demand.  If China, India and Russia have been gobbling up 100% of current mine supply… then where is the supply coming from to meet the demand from the rest of the world?  If there was no trust issue whatsoever, these central banks would not “bother” with where this gold is being held because it brings up questions central banks would prefer you not think about.  These questions would obviously include “why” move the gold if it is already “safe”?  It also brings up the question of why bother if gold is really not important in today’s financial world …as many central banks will have you believe?
  You see, for central banks to ask for their gold must mean it has some importance to them, right?  For that matter, why have these countries not asked for dollars, pounds or euro’s (from France) for the values of the gold held?  Why are these central banks asking for the actual metal?  The answer of course is because they know gold is real money and there is no substitute… in other words, there is nothing “as good as gold” when it comes to money.  I cannot stress enough how big these actions are because these are central banks bringing publicity to gold in a manner showing just how important the gold really is to them!  Let’s move on to other questions rather than rehash last weeks missive.
  Why and why now are the main questions but I believe these two are wrapped up by “why these four countries”?  What this obviously leads us to is the very real potential that the Eurozone which is an imperfect union, will now be “splittable”!  These four countries are the center of the “have’s” with the rest of Europe being “have nots” for the most part.  These four country’s gold reserves amount to roughly 4,000 tons.  Officially they would be number two in the world behind the U.S., assuming the U.S. has not already divested their gold (I believe we have), “unofficially” this 4,000 tons would make them number two behind China if you believe they 8,000 tons of gold or more (which I do).
  These four countries with reserves of 4,000 tons will have the ability to set up a northern or “Nordic euro” …especially if China revalues gold and re sets the world’s financial system which looks very probable in my eyes.  Repatriating their gold also does something else which few have thought of so far.  Actually having their gold in hand may just allow them to purchase energy from Russia.  Remember, Russia is testing their own clearing system to bypass the West’s SWIFT system.  Would Russia possibly refuse Western currencies for their energy exports if they had a system up and running which could clear rubles and yuan?  You bet they would, especially during a time of financial war.  Is gold a western currency?  Is it an eastern currency?  No, gold is the ULTIMATE currency, even Alan Greenspan concedes this!
  This theory of a possible European breakup into northern and southern euros has more legs if Russia were to accept the new Nordic” for trade but refuse the “southern euro”.  Would Russia have more “confidence” and thus be more likely to accept the northern euro …if it is supported by gold?  Gold that is actually accounted for and held within these countries own vaults as opposed to vaults controlled by N.Y. and London?
  The answer of course is “yes” but it also brings up another question which has a very humorous answer!  For a little background before I ask the question, do you remember why all of this gold was moved to London and New York all those years ago?   That’s right, there was a fear Stalin or one of his successors would roll tanks across Europe and take the gold …so the further away from Russia this gold was …the better!  Fast forward to present day, isn’t Mr. Putin and Russia the “scary and aggressive” potential invaders of Europe?  Why would these countries want their gold within their borders at this EXACT point in time if they have any worries of an aggressive neighbor called Russia?  Does this make any sense at all?  It does, and the humor is that these four countries apparently trust Mr. Putin and Moscow more than they do the U.S., Britain and the West!
  Let me wrap this up and speculate a little as to what I believe is happening because it is clear something IS happening.  It can be no coincidence these four core European countries want to repatriate their gold.  It is also clear this action signals a change of some sort in their “relations”.  For this “block” of countries (which is exactly what I believe they will be seen to be) to remove gold from the West and placing it within marching distance from Moscow tells me they trust “us” less than they fear Russia.  I also believe they know where this whole game is headed and who is leading it.  I believe China will back their currency with a “re marked” price of gold with Russia as their right hand energy man.  The game is going toward gold, not away, this Nordic group is simply positioning themselves for when the starting gun is fired.
  While the West has tried to “isolate” Russia, we will have succeeded only in isolating ourselves and creating the “cause” for a run on our own banking system.  I am not talking about the paper Ponzi scheme banking system as this will also fall, I am talking about an old fashioned and REAL run on the bank!  This “run” started slowly and ran for years as China accumulated what we foolishly “gave away”.  Now, it looks like the “run” is accelerating and the “core four” are taking the attitude “he who panics first panics best”!  None of this had to happen but it has and is, simply because the West has done dirty business and ruined credibility.  There is absolutely no rationale whatsoever for these banks to ask for their gold back if it is truly safe and they have full and complete faith in the U.S. as custodian and enforcer of the rule of law.
  Please understand, the “core four” IS Europe.  Other than Britain, Europe is supposed to be America’s number one ally.  It is obvious allegiances all over the world are changing.  It is also obvious what is considered as “important” as far as money and currencies are concerned is also changing, otherwise these countries would accept dollars in lieu of their gold..  The West has bled gold, trust and thus credibility while the East (and new northern Europe partners?) has accumulated gold, trust and thus also credibility.  “Power” has always followed gold wherever it went.  If gold is leaving London and New York, it is for a very good reason.  I believe we may very well see a “Nordic euro” that trades primarily with Russia and China as opposed to the U.S. and Japan.   No one has ever run their bank “just for fun”, there has to be a reason.  I can see no reason for these four countries to act in unison on this issue unless trust is being questioned and/or a break away from the other deadbeat EU nations is planned …we will see shortly.  Regards,  Bill Holter
end

And now for the important paper stories for today:

 

 

 

Early Tuesday morning trading from Europe/Asia

1. Stocks down on major Asian bourses as the  yen pole vaulted into the atmosphere  to 116.25, a rise of 151 basis points.

1b Chinese yuan vs USA dollar/ yuan slightly strengthens to 6.1903
2 Nikkei down 344 points or 2.01%

3. Europe stocks all down /Euro up/ USA dollar index up to 87.70/

3b Japan 10 year yield at .37% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 116.25

3c Nikkei now below 17,000

3e The USA/Yen rate below the 117 barrier
3fOil: WTI 54.11 Brent: 58.81 /all eyes are focusing on oil prices. This should cause major defaults.

3g/ Gold up/yen up;

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 plummeted this morning for both WTI and Brent/Oil demand forecasts another drop/UAE minister will not drop production until Brent hits $40.

3k  Disastrous Chinese PMI

3l  Emerging market’s currency also collapse (India’s rupee/Indonesia’s Rupiah)

3m Gold at $1214 dollars/ Silver: $16.44

3n USA vs Russian rouble: 73.54!!!!!! (a huge descent against the dollar) even though Russia raises rates for the sixth time and central bank rate yields 17%/Russian intervention fails/ Putin is noticeably very angry/

3o  Russian stock exchange crashing!!

4. USA 10 yr treasury bond at 2.03% early this morning. Thirty year rate well below 3% AND COLLAPSING (2.68%!!!!)
5. Details: Ransquawk, Bloomberg/Deutsche bank Jim Reid

 

 

(courtesy zero hedge)/your early morning trading from Asia and Europe)

 

Turmoil Spreads: Ruble Replunges, Crude Craters, Yen Surges, Emerging Markets Tumbling

 

For those wondering if the CBR’s intervention in the Russian FX market with its shocking emergency rate hike to 17% overnight calmed things, the answer is yes… for about two minutes. The USDRUB indeed tumbled nearly 10% to 59 and then promptly blew right back out, the Ruble crashing in panic selling and seemingly without any CBR market interventions, and at last check was freefalling through 72 74 76, and sending the Russian stock market plummeting by over 15%.

It is so bad, US equity futures which had jumped earlier on hopes of more Chinese intervention following the latest disastrous Chinese PMI print, as well as a French manufacturing PMI beat (don’t laugh), are back to unchanged.

The latest rout continues to be driven by the relentless plunge in Brent which also continued crashing overnight to fresh 5 year lows, sliding decidedly under $60 as WTI dropped well under $55 as well. And as we previewed over a month ago, it is not just Russia, but every single petroleum exporting country that is suddenly seeing a currency crisis, and spreading to all EMs with the Indian Rupee weakening the most since 2013, Indonesia lowering the Rupiah’s reference rate by the most on record, and so on. Ironically, this happens as the USDJPY is also crashing and dropping moments ago to 116.25, the lowest level since mid-November. At this rate the Fed will have no choice but to intervene, however in the opposite direction, and admit that despite all its best intentions, the US can not decouple from the rest of the world and a rate hike – so very priced in by everyone – is just no going to happen in the coming years (which sadly means that the latest subprime debt driven “recovery” is about to be called off).

A quick look at the oil market where Brent drops for 5th day, falls below $60 for 1st time since July 7, 2009 as the market continues to look for signs that falling prices is crimping production. WTI breaks below $55, drops to lowest since May 6, 2009.  “The race to the bottom continues, we are still not seeing any signs of supply disruption,” says Saxo Bank head of commodity strategy Ole Hansen. “There is very big negative momentum in the mkt and the fact people are starting to talk about breakeven levels of $35-$40 has put up a new red flag for mkts to aim at.… Jan. WTI options expire today and there is quite a lot of open interest ~$55 put strikes, that is probably the key level of potential support today.”

Not helping things was Russia’s announcement that it too like the Saudis will not cut production: Russia agrees with OPEC that market will determine crude price, Energy Minister Alexander Novak tells reporters at meeting of Gas Exporting Countries Forum in Doha, Qatar. Novak says that he met with OPEC energy ministers in Vienna; “The participants of that meeting concurred that the situation will be fixed by the market itself in terms of supple and demand balance.  Russia is not a country that changes its supply. We will maintain our production unchanged.”

Looking at the Markets, first in Asia, the Nikkei 225 tumbled -2% fell for a 2nd day to breach the key psychological 17,000 level for the first time since the 17th Nov. as the JPY continued to strengthen. In China bad news was good, and the Shanghai Comp surged higher som +2.3% on renewed easing calls following disappointing Chinese data. December HSBC flash Manufacturing PMI printed a contractionary reading for the first time in 7 months (49.5 vs. Exp. 49.8 (Prev. 50.0), with both output and new orders components slipping, the latter contracting for the first time since April. Hang Seng traded down 1.55% weighed on by weakness across energy stocks.

Despite opening higher, European stocks took a turn lower in early trade, with the move to the downside led by energy names after Brent crude futures broke below USD 60/bbl pre-market and WTI broke below USD 54/bbl. Furthermore, the softness in stocks lifted European fixed income products with the Bund tripping stops through 154.73, leading the German 10yr yield to once again print record lows and slip below 0.6%. Overall global sentiment remains relatively negative with Saudi Arabian (-5.5%) and Dubai (-8%) stock indexes also placed under further pressure as the fall in oil prices continue to dent domestic profits. Furthermore, concerns were also placed on Russia as despite the Russian central bank hiking their rate by 650bps, the RUB hit record lows vs the USD and the MICEX was down as much as 7%. This then triggered fears over the ramifications for the Eurozone economy, given the close trade ties to Russia, particularly for Germany.

Nonetheless, European equities then reversed earlier losses, with the move higher led by utility and consumer discretionary names, while Russian asset classes began to stabilise. Additionally, from a data perspective, Eurozone PMIs also painted a less dreary than expected picture with the headline manufacturing and services Eurozone PMIs exceeding expectations. This was then later exacerbated by a particularly strong German ZEW survey (Expectations 34.9 vs. Exp. 20.0), which also subsequently saw Bunds pull away from their best levels.

Looking ahead, attention turns towards US housing starts, building permits, manufacturing PMI and API crude oil inventories. Most importantly, the two-day FOMC meeting begins.

Market Wrap

In Summary, European stocks rise led by carmakers after German investor expectations increased more than estimated. Shares with exposure to Russia dropped as the ruble continues its decline. Asian stocks fall as Hong Kong shares enter a correction, U.S. stock index futures gain. Brent crude oil price falls through $60 a barrel for the first time in 5 years. Euro rises against the dollar.

  • S&P 500 futures unchanged, after being up 0.5%
  • Stoxx Europe 600 up 0.7% to 325.44
  • US 10Y yield down 2bps to 2.1%
  • German 10Y yield down 1bps to 0.61%
  • MSCI Asia Pacific down 0.7% to 134.73
  • Gold spot up 0.4% to $1198.55/oz

M&A

  • Repsol Agrees to Buy Canada’s Talisman for $8.3b
  • RBS Sells Irish Property-Loans Portfolio to Cerberus
  • InterContinental to Purchase Kimpton Hotels for $430m
  • Wanda Said to Be Poised to Raise $3.7b in Hong Kong IPO
  • Woodside to Pay $2.75b for Apache LNG Project Stakes
  • Olam to Buy Archer-Daniels-Midland Cocoa Unit for $1.3b

FX/BONDS

  • USDJPY down to 116.290
  • Euro up 0.5% to $1.25065
  • Dollar Index down 0.4% to 88.064
  • Italian 10Y yield up 2bps to 2.02%
  • Spanish 10Y yield up 1bps to 1.8%
  • 3m Euribor/OIS down 1bps to 9.38bps

COMMODITIES

  • S&P GSCI index down 1.7% to 434.07
  • Brent futures down 2.8% to $59.33/bbl, WTI futures down 2.6% to $54.46/bbl
  • LME 3m copper down 0.7% to $6357.25/MT
  • LME 3m nickel down 1.6% to $16192/MT
  • Wheat futures down 0.1% to $618.25/bu

Bulleting Headline Summary

  • European stocks rebound from earlier energy/Russia-inspired losses as Eurozone data helps to lift investor sentiment.
  • The USD-index trades in negative territory, with the move lower in US yields hitting the greenback and seeing EUR/USD break above 1.2500.
  • Looking ahead, attention turns towards US housing starts, building permits, manufacturing PMI and API crude oil inventories.
  • Treasuries gain as Brent crude plunges though $60/bbl for first time in five years, ruble slides to record low as investors shrug off surprise Bank of Russia decision to hike its key rate to 17% from 10.5%.
  • HSBC/Markit’s China PMI fell to 49.5 in Dec., lowest in seven months, from 50 in Nov., even after PBOC efforts to ease monetary conditions
  • Manufacturing and services in the 18-nation euro area barely expanded in December as sluggish growth in Germany and France kept business activity subdued
  • Bundesbank’s Jens Weidmann said there’s no need for the ECB to expand monetary stimulus, and argued that sovereign-debt purchases aren’t a solution even if slumping oil prices cause deflation
  • German investor confidence rose for a second month, with ZEW Center’s index rising to 34.9 in Dec. from 11.5 in Nov.
  • U.K. inflation fell to 1% in Nov., lowest in more than a decade, as tumbling oil prices pushed down transport costs and food prices dropped; U.K. 30Y yields fell below 2.5% for the first time on record
  • Sweden’s central bank kept its main interest rate at zero and said it’s preparing more measures to jolt the largest Nordic economy out of a deflationary spiral
  • Norway’s krone dropped to parity with Sweden for the first time since 2000
  • Bank of England Governor Mark Carney said the selloff in emerging markets may worsen, posing the risk of higher borrowing costs and weaker growth in core markets
  • China’s U.S. Treasury holdings fell to a 20-month low in October, as yuan appreciation indicated less of an impetus to buy the government securities
  • Pakistan militants killed 84 children after storming an army-run school in the northwestern city of Peshawar, one of the country’s worst terrorist attacks in years
  • Sovereign yields mostly lower. Nikkei falls 2% as most Asian equity indexes fall; Shanghai +2.3%. European stocks mostly higher, U.S. equity-index futures gain. Brent crude falls 3%, trades below $60/bbl level; copper falls, gold gains

 

Central Banks

  • FOMC two-day meeting begins in Washington Supply

FX

The main focus has been on the RUB as despite the Russian central bank hiking their key rate by 650bps, USD/RUB has erased its opening losses, with RUB printing a record lows vs. USD and breaking above the 66.00 handle. Allied to this, the USD-index has weakened throughout the morning and made a technical break below 88.00 alongside the move lower in US yields as USTs benefited from a flight to quality. This has also benefited JPY and CHF in a safe-haven Bid, while EUR/USD broke above 1.2500 for the 1st time since 1st Dec. UK inflation data came in at 1.0% vs. Exp. 1.2% and printed its lowest reading since 2002. This subsequently saw a fast-money move lower in GBP/USD of around 46 pips. However, this move to the downside was later reversed, as market participants focused on the fact these numbers do not change the course of BoE action. Finally, the SEK has also weakened throughout the session after the Riksbank this morning kept their key rate on hold at 0.0% as expected but warned the repo rate needs to remain at zero for longer than initially forecast and are preparing further measures that can be used to make monetary policy more expansionary. This has also weighed on neighbouring currency NOK, which also falling victim to the slide in oil prices.

COMMODITIES

In the commodity complex, energy prices have once again been a key focus after Brent crude futures broke below USD 60/bbl pre-market and WTI broke below USD 54/bbl. This has been a continuation of the bearish rhetoric we’ve seen for the sector following comments yesterday from the UAE oil minister who said OPEC stands by their decision not to cut output even if oil prices fall as low as USD 40/bbl and will wait at least three months before considering an emergency meeting, while Saudi reiterated they have no plans to cut output. In metals markets, precious metals have been granted some reprieve with spot gold breaking above USD 1,200 following the cautious sentiment throughout the session while copper has remained under pressure following lacklustre Chinese HSBC manufacturing data and comments from Deutsche Bank who said the copper market is moving into surplus and the lagged effects of the weaker Chinese property market will hit copper demand.

* * *

DB’s Jim Reid concludes the overnight recap

 

 

We were expecting difficult times before tighter spreads in 2015 but this is already proving to be such a tough December that 2015’s returns across many asset classes are going to be influenced by where we end the year.

For example, as recently as December 5th many equity markets were trading at YTD or multi month highs. 6 business days later and the turmoil is being seen in Greece, Russia, Oil, many areas of EM and in DM equity and credit markets. In Europe virtually all equity markets are comfortably down for the year now. Some markets have lost a few years of normal sized returns in the last few days alone so this has to impact 2015.

Given the mini turmoil, we will truly learn a lot about the Fed tomorrow night as if they become more hawkish we can see that they’re comfortable that financial markets are not the primary concern. If they end up being dovish then it’s probably a sign that they will struggle to have the confidence to upset markets in 2015 and will only raise rates if both the economy merits it and markets are calm. As we state in the outlook we think they will struggle to raise rates but this might not stop them from signalling an intention to do so in advance. So definitely more volatility than the QE3 period we’ve now left far behind.

Oil continues to dominate headlines with further sharp declines yesterday, extending the 5-year lows and pairing an earlier rally. Indeed both WTI (-3.29%) and Brent (-1.28%) declined to $55.91/bbl and $61.06/bbl and have continued to trade some 0.5-0.6% lower overnight. The oil-sensitive Russian Rouble continues to suffer and yesterday it closed 10.22% lower versus the Dollar at 64.24. The move marked the biggest one-day decline since 1998 taking the year to date decline to nearly 96%. The move appears to have sparked the nation’s Central Bank into action who, post the U.S. close, raised benchmark interest rates by 650bps to 17%. The rate rise marks the sixth hike this year and comes just five days since the last rate move with the Central Bank stating that ‘the decision was driven by the need to limit the risks of devaluation and inflation, which have recently significantly increased’. The move also corresponds with an expansion in foreign currency repo auctions of $3.5bn to $5bn as well as further statements from the Central Bank that GDP may shrink 4.5% to 4.7% next year should oil prices average $60/bbl. The MICEX closed 2.38% lower yesterday and 10y benchmark local government bond yields finished 20bps wider at 13.02%. Expect big moves again this morning. The Russian central bank will no doubt be hoping they can repeat the success of the Turkish central bank earlier this year where they raised rates from 7.75% to 12%. If the new rate is sustained for any length of time it will surely have huge implications for the economy though so it’s certainly high risk. Ironically when Russia collapsed in 1998, the Fed slashed rates and arguably started the era of ‘moral hazard’. So it’ll be interesting if the Fed choose to ignore international events this time round. I suspect they’ll find it tough.

Returning to markets, in the US the S&P 500 closed 0.63% lower at the close after a volatile day which saw a near 2% intraday range. Energy stocks continued to weigh on the overall index with the component declining 0.71% although in reality all sectors finished weaker. Credit markets softened, CDX IG closing 2bps and CDX HY around half a point lower and spreads on US HY energy names widening a further 18bps. Pressure on smaller oil and gas producers continues with US-based Apache reporting yesterday that it has agreed to sell its stake in a natural gas project whilst the Canadian oil and gas company Talisman Energy confirmed it’s in talks with various targets over a potential sale of the company.

Macro data was perhaps a bright spot in an otherwise weaker day. An initially weaker December NY Fed manufacturing reading (-3.58 vs. +12.4 expected) was followed up by a stronger November industrial production (+1.3% vs. +0.7% expected) print and capacity utilization (80.1% vs. 79.4%) reading. On the firmer industrial production print in particular, the reading was the highest since May 2010 and our US colleagues note that at its current level, production is growing at a near 8% annualized rate relative to its Q3 average, supporting the case for a strong Q4 GDP number. Just rounding off the data prints in the US yesterday, the NAHB housing market notched down slightly to 57 for December. Treasuries took something of a back seat, the yield on the 10y benchmark bouncing off Friday’s lows to close 1.8bps higher at 2.118%.

Closer to home and with a lack of data releases, risk assets took a sharp leg lower in Europe with the Stoxx 600 closing 2.08% lower – with similar weakness in energy names (-2.95%) – the index now 1.5% in negative territory YTD. There was similar weakness in credit markets with Xover finishing 19bps wider. Whilst core yields closed largely unchanged, supportive comments from ECB officials Visco and Nowotny helped support peripheral bonds with 10y benchmark yields in Spain (-9.1bps), Italy (-6.8bps) and Portugal (-5.6bps) all closing tighter at 1.789%, 1.996% and 2.916% respectively. Recapping the comments, the ECB’s Visco commented in Rome that the central bank could begin large-scale asset purchases ‘rather quickly’ if deflation risks continue citing the threat from oil price declines. This was followed up by Austria’s central bank governor Nowotny who stated that any further QE measures would be the ‘prospect of missing our target on price stability in the longer term’. One of the ECB’s preferred measure of inflation expectations – the EUR 5y5y inflation swap rate – extended declines to close at 1.67% yesterday and mark a 10-year low. With chatter around further ECB broad-based asset purchases likely to attract more headlines in the new-year, a Bloomberg survey yesterday showed that 90% of respondents expect sovereign QE in 2015 from 57% last month.

Interestingly with the large sell off in risk assets in Europe yesterday, Greek equities closed firmer ahead of tomorrow’s election with the ASE ending +1.45% stronger at the end of play. Greek government bonds also recovered somewhat with 3y and 5y yields tightening 87bps and 34bps respectively. DB’s resident expert George Saravelos noted that there is little change in terms of current government support ahead of tomorrow’s first-round presidential election (due 5.00pm GMT) with initial ‘bean-count’ estimates still below the 180 votes required for the final vote.

Turning our attention over to markets this morning, following the disturbing scenes in Sydney yesterday, the ASX 200 is -0.65% and AUD is holding in at 0.82 to the Dollar. With the exception of China, equities are weaker in Asia this morning with the Nikkei, Hang Seng and KOSPI -1.85%, -1.40% and -0.83% respectively. The CSI 300 (+1.03%) and Shanghai Comp (+0.85%) have strengthened despite a weak flash HSBC manufacturing PMI print. The 49.5 reading for December is below the 49.8 consensus and down from 50 last month with the print the first below 50 since May.

Looking ahead to today’s calendar and away from the start of the FOMC meeting, we kick this morning off in Europe with the flash manufacturing and services PMI prints for the Eurozone as well as regionally for both France and Germany. Elsewhere we’ll keep an eye on the BoE statement on the financial stability report due out this morning with Carney speaking shortly after, as well as UK inflation data. We round off the key releases this morning with the ZEW survey out of Germany. Across the Atlantic this afternoon we’ve got housing data to keep an eye on with both building and November housing starts due. This is followed up later in the US with the flash manufacturing PMI print.

 

 

end

 

 

 

This morning registered the 3rd consecutive drop in Chinese PMI.

It is the lowest in 7 months and speaks volumes as to the contraction in China:

 

(courtesy zero hedge)

 

 

 

 

 

China Manufacturing PMI Drops Back Into Triple-Dip Contraction, Lowest In 7 Months

Perhaps the collapse in oil prices does have something to do with demand after all? HSBC’s China’s Manufacturing PMI tumbled to 49.5 (missing expectations of 49.8), its lowest since May (and first contraction). This is the 3rd contractionary print in the last 2 years as HSBC notes “domestic demand slowed considerably,” with only new export orders (to whom we wonder) improving. Employment slipped yet again as did output leaving HSBC no choice but to demand “further monetary easing,” due to “rising disinflationary pressures, which fundamentally reflect weak demand.”

Triple-dip contraction in soft-survey data…

 

as across the board the PMI components were weak… apart from new export orders?? To who?

 

Of course – you know what HSBC thinks this should mean:

Commenting on the Flash China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & CoHead of Asian Economic Research at HSBC said: “The HSBC China Manufacturing PMI dropped to a seven-month low of 49.5 in the flash reading for December, down from 50.0 in November. Domestic demand slowed considerably and fell below 50 for the first time since April 2014. Price indices also fell sharply. The manufacturing slowdown continues in December and points to a weak ending for 2014. The rising disinflationary pressures, which fundamentally reflect weak demand, warrant further monetary easing in the coming months.”

* * *

end

 

 

 

Last night, the following article (from Citigroup) stated that the rate hike, although mammoth at 17% may not be enough. And true to form it was not this morning as the rouble plummeted to almost 78 roubles/dollar.

It settled this morning at 73 to the dollar!! This afternoon final closing price was 67.92 roubles per USA dollar.

 

(courtesy zero hedge)

 

 

 

The First Sellside Reactions Trickle In: “17% Rate Hike Not Enough” According To Citi, JPM

Two short hours ago Russia shocked everyone with an unprecedented rate hike sending the nation’s various interest rates some 650 bps higher. Well, according to the initial sellside responses, as shocking as the move was, it is not nearly enough.

Here is Citi:

Many market participants are looking at Russia’s hike from 10.5% to 17.0% and saying “wow”.

 

However, speaking with one of our senior RUB traders, the move is likely not aggressive enough for the medium-term. “Hiking the key rate to 17.0% is not enough to get a hold of a currency that can drop 10% in one day,” he says.  “On top of that, the FX repo size needs to be much larger than it is at the moment…however, the hike might give RUB a few days of breathing space.”

One wonders just which “chatroom” Citi’s FX traders decide what the fair value of the Rub(b)le should be.

And while we wonder, here is JPM which already appears to have exchanged notes in chatroom XYZ with Citi:

The rate hike occurred after today’s 10% depreciation of the RUB despite attempts by the CBR to intervene earlier in the day. The decision was aimed at “limiting substantially increased ruble depreciation risks and inflation risks” according to the CBR. This emergency move suggests to us that household deposit dollarisation had increased significantly (official October data had already suggested dollarisation re-accelerated again). Tonight’s large rate hike should in the short term help to slow retail dollarisation demand. However rate hikes do little to help the underlying demand for USD from corporates and banks who continue to front load their demand in order to apy their FX debt payments further down the line. With limited access to USD funding markets and oil having yet to find its bottom, the perceptions of local banks and corps on RUB continues to be negative, fuelling this hoarding behavior. In this context, there is a real possibility that even such a significant rate hike may not be enough in the medium run to stem RUB depreciation. The central bank in our view needs to announce a package of measures alongside rate hikes which also aim to lam local fears of USD scarcity. This will most likely involve making available a sizeable amount of FX reserves (we have suggested around USD100bn in our piece) through a combination of deposits in state banks and the CBR’s existing repo facility. The CBR however continue to be unwilling to commit their FX reserves, with their focus still primarily concentrated on defending the sovereign balance sheet. As part of a package of measures, the CBE may also look to cap local bank open FX position limit down from the current 20% of capital as well as raise FX RRRs to help stem deposit dollarisation. Further pressure can also be put on corporates to convert their FX proceeds faster.

 

Bottom line: expect the market to react positively to the rate hike in the short run, but further measures are needed from the CBR for us to turn more bullish on RUB in the medium run, particularly in the absence of improved geopolitical risks and higher oil prices.

So get to work, Mrs. Russian Chairwoman, unless somehow the ex-KGB spy is prepared to make good on his recent threat to personally tear off the heads of any and all FX speculators found to be short the RUB.

 

 

end

 

Not only is Russia in freefall, but so is most of the middle east countries

with huge reserves of oil

 

(courtesy zero hedge)

 

 

 

 

It’s Not Just Russia: Middle East In Freefall, Biggest Plunge In 6 Years

 

 

Dubai’s Financial Market General Index is now down 40% since the peak in oil prices in June this year. For now, only Qatar is clinging to gains year-to-date as the rest of the Middle Eastern equity markets give up 30-60% gains from mid-year and tumble to negative. Dubai and Abu Dhabi alone are down over 8% since Friday. Saudi Arabia is down 7.3% today – the biggest drop in 6 years.

 

Saudi Arabia’s worst day in 6 years

Year-to-date, Kuwait is now down almost 20% with only Qatar clinging to gains…

 

as All Middle Eastern equity markets have collapsed since oil peaked…

 

Charts: Bloomberg

 

end
What else is at risk?  The huge 1 trillion in global capital expenditures to find oil is at risk due to the crude crash.  This will damage the GDP’s of many nations.
(courtesy zero hedge)

$1 Trillion In Global CapEx At “Unambiguous” Risk As A Result Of Crude Crash

Just like with the Mohammed Islam story, the religious belief by the cheerleading crew that the crashing price of oil is so “unambiguously, unquestionably, undisputably” good for the US is so taken for granted, that nobody actually checked the facts.So here is one such attempt by the FT, which writes that “almost $1 trillion of spending on future oil projects is at risk as a result of the plunge in crude to $60.”

The price plunge has shaken the energy industry, throwing some of the majors’ most ambitious plans into doubt and pummelling oil company shares. Projects in challenging frontier regions like the deep waters of the Gulf of Mexico are predicated on high oil prices and may not be economic with oil at $60 a barrel — the level Brent was trading at on Monday afternoon.

 

Goldman has examined 400 oil and gasfields around the world, many of which are still awaiting a final investment decision. Its analysis, based on a $70 oil price, shows that fields representing 2.3m b/d of output by 2020 and awaiting a green light have now become uneconomic. That figure rises to 7.5m b/d of production by 2025. The analysis excludes US shale.

 

The bank shows that companies will need to cut costs by up to 30 per cent — for example by forcing suppliers to take steep price cuts — to make these projects profitable at $70 a barrel.

 

In total, the production at risk from such fields adds up to $930bn of investment.

And just in case the waking up fact-checkers are confused, in the definition of GDP is Y = C + I + G + (X ? M), I is Investment. Which means $1 trillion less in global investment. But that’s ok, because Americans who are about to receive their November 401(k) statements showing a plunge in their retirement holdings courtesy of the collapse in Energy stocks, will rush to spend all those low crude price “tax-savings”… on things aside from Obamacare that is. Surely that wil lmore than make up for the collapse on the investment side.

 

 

end

 

The following is what I have been emphasizing on the collapse of crue:

not only oil companies debt but only financial institutions are having problems due to the huge number of bets placed by our major underwriting banks:

 

 

(courtesy zero hedge)

Crude Contagion Spreads To Investment Grade Credit: Spreads Burst To 14-Month Wides

 

 

 

This morning’s bounce in stocks off the overnight lows is being entirely ignored by credit markets. US HY Energy spreads just broke 1050bps – record highs, worst than during the 98 crisis. Broad HY spreads have surged wider to 18-month wides. But perhaps most worrisome, investment grade credit spreads are ‘relatively’ underperforming, bursting to 77.5bps – the widest in 14 months.

 

Equity bounce ignored by credit…

 

Broad HY markets are surging wider as managers seek any protection and HY energy breaks 1050bps…

 

But it is IG credit’s surge that is most worrisome….

 

As contagion wreaks havoc.

 

end

 

As indicated above, the Russian contagion is spreading to major USA banks like Soc Gen and the big Austrian bank Raiffeisen:

 

(courtesy zero hedge)

 

 

Russia Contagion Spreads To European Banks : French SocGen, Austrian Raiffeisen Plummet

 

 

We recently noted the rise of counterparty risks in the financial system due to oil prices dropping (and leveraged derivative exposures) but as the Russia situation has deteriorated so dramatically this week, a renewed focus on bank exposures has sent stocks reeling (and credit risk soaring) among many European (and US) banks. As Bloomberg reports, Raiffeisen Bank International and Societe Generale, the European banks with most at stake in Russia, led European lenders lower. Raiffeisen fell as much as 10.3% to 11.40 euros in Vienna, the lowest level since it went public in 2005. Societe Generale dropped as much as 7.3% to 31.85 euros, hitting the lowest intraday level since August 2013. CDS markets for both also exploded with Raffeisen risk at 27 month highs. As one analyst noted, “There remains a huge amount of uncertainty at this juncture, but the key point is that there are no benign scenarios.” While not on the same scale, US bank risk has also widened signicantly in recent weeks (despite equity strength).

Credity risk is surging…

\

 

As Bloomberg continues,

“More fundamental concerns are building over the outlook for Russia’s economy and the likely policy response,” Neil Shearing, an economist at Capital Economics in London, wrote in a note to clients. “There remains a huge amount of uncertainty at this juncture, but the key point is that there are no benign scenarios. Even if the ruble does stabilize over the coming weeks, the economic crisis facing Russia has much further to run.”

 

Societe Generale is the bank that has the biggest absolute exposure to Russia, at 25 billion euros ($31 billion), according to Citigroup Inc. analysts led by Kinner Lakhani. That’s equivalent to 62 percent of the Paris-based bank’s tangible equity. Raiffeisen has 15 billion euros at risk in Russia, almost twice its tangible equity, and it also has the biggest exposure to Ukraine, with 4.9 billion euros, according to Citigroup.

 

UniCredit, the third European bank strongly invested in the former Soviet Union, has 18 billion euros at stake in Russia, or 40 percent of its tangible book value, Citigroup said.

And while European banks are starting to show real cracks, US financial institutions are also seeing spreads widen notably since oil prices peaked…

 

Charts: Bloomberg

 

 

 

end

 

The following states why Russia is not hurt by the massive fall in price of oil.  Pay attention to what the author claims:

 

(courtesy zero hedge)

 

 

 

What America Does Not Understand About Russia & Oil

As hard as it is to believe – given the strength of the “Russia-is-doomed” meme – Crude oil prices for Russia (in Rubles) are unchanged since February… This is important as all costs are Ruble denominated while revenues are USD denominated, leaving Russian oil companies’ margins insulated despite the dollar decline in price. In addition, the Russian government is easing the export taxes which further improve the profitability of Russian oil. So as US Shale Oil sector is destroyed by its USD costs, it appears Putin’s core energy industry is somewhat insulated… and America’s late-80s “defeat The Sovet Union” playbook is failing.

 

Reserves are tumbling with the Ruble…

 

Did Russia peg the Ruble to Crude? Not quite the crash everyone thinks of…

 

As Giannis Kolmer explains,

The subject under discussion is whether or not the “clearing” taking place in the oil markets “rhymes” with the events of 1986 that led to fall of the Soviet Union; and the effects of the devaluation of the Ruble, which I strongly believe will be more favorable for Russia, combined with recent trade agreements.

The last time around the US used oil as a tool to combat Russia (at the time the Soviet Union), on a nominal basis Brent underwent a correction from over $30 toward the range of $11-13.5 where it remained until the defeat of the Soviet Union and the withdrawal of the Red Army from Afghanistan in February 1989 after the signing of Geneva Accords in 1988.

While successful this time around the Russian’s via Putin are more than able to cope with an oil rout for the near future. Already the devaluation of the Russian Rubble means that oil revenues will in fact be more in Rubles than last year since the devaluation is currently wider than the correction of the oil price itself.

In many ways, the Ruble is the thing to watch in terms of timing the bottom. Since intervention is ahead of the correction.  From 33 to 63 rubles per dollar, that’s almost a 50% devaluation while the correction of oil prices is just nearing the 50% correction level at 52.5 assuming a peak of $105 per barrel. So where does intervention stop? $45 on Brent Crude means 40 to 42 for WTI while in the relationship of USD with respect to the RUB that means 70 to 75 or another few billion worth of foreign reserves while revenues from oil in rubles double at the minimum.Also it is important to remember that Russia has very low debt compared with the 80’s and 90’s.

Meanwhile such weakness in oil markets leads to strength in the Natural Gas sector as the aged, inverse correlation between the two (as oil rises NG prices fall and vice versa) combined with winter conditions boost a price, which in itself is stable-NG prices are not in the process of price discovery but rather in the stage of consolidation, after a violent upswing last winter. While since October NG prices have sold off from 4.5 to 3.7 currently, the 20% drop is nothing compared to the drop in WTI.

In the meantime, if 1986 is any indication, the process of price discovery “clears out” when the correction enters the 60% territory or in number terms from 105 to 42 dollar per barrel

So really what all this suggest is that a bounce is to be expected as we head into the winter, however the long term lows suggest that the mid 40’s is where all this end, which coincides with the correction of 86 and a Ruble above 70 per USD.

Anything below 50 is scary for the energy sector, which accounts for a third of capex in a world dominated by buybacks and dividends fueled by cheap financing. But credit markets are already actively taking that option away.

“Widening”, is definitely the word of the week.However, like in Afghanistan in the late 80’s, in the words of Charlie Wilson, the US “are fucking up the endgame.”

After spending a few billion along with the Saudi’s fighting a covert war, the Senate committee in charge of the budget did not see fit for the US to spend a few more million to build schools and infrastructure, indirectly enforcing the belief that God helped the Afghan people, (who for the most part were under the age of 20 at a rate of 1 out of three) fight off the Red Army, not the US taxpayer.

 

This time, after spending billions to make the USA energy independent, at great risk, they are falsely using a vulnerable geopolitical tool as a weapon against a highly formidable opponent. In the game of career politician versus former spy, like in the game of follow the leader, the bets are in favor of the side with less layers of political red tape and influence.

 

As George R.R. Martin’s King Robert Baratheon stated “which is the bigger number 5 or 1?… One, one army, united behind one leader with one purpose.

This is not a result of problematic markets. It’s a problem of political stupidity. The question is do you bet on the one leader or on the combination of the Senate, the President, NATO, the Pentagon and all related offensive defensive components in its arsenal.

*  *  *

Chart: Bloomberg

 

 

end

 

Yet, Russian credit default swaps skyrocket.  Is a paper default in the cards?

 

(courtesy zero hedge)

 

Outspooking The Lehman Apocalypse: Could A Russian Default Be In The Cards?

 

Via Mint – Blain’s Extra Porridge,

“Nazhmite Lyubuyu Stavku…“

Extra Comment – this might be getting serious.

 

Russia’s markets have been spanked hard despite last night’s hike. 19% currency crash and 13% down stocks in a session. Ouch! Cumulatively, over the past few weeks stocks, oil and the Ruble are off 50% plus, and bonds off 40%. This morning felt like free-fall. Expect more action from the Russians to stave off economic catastrophe… imminent capital controls are rumoured, but markets are demonstrating a massive loss of confidence.

Lots of old market hands are talking about how its similar to the Russia default and crash of ‘98 all over again.. Actually.. its worse.

Much worse.

The scale and speed of the current collapse is a magnitude greater, and the effects are accelerated and magnified by the utter absence of liquidity, and by the political stakes at play. Lots of comments about how a Russian crisis might play out and what cornered Putin may do – or be forced into. Let’s not speculate, but it seems pretty clear that any Western support to calm the crisis and stabilise markets would come at a very high personal cost to Putin. That would be a good point to get selectively involved.

It’s too early. We’ve seen a few cautious buyers get wallpapered with Russian and Ukraine paper – and done decent amount of business, but generally none of the main distressed players feel it’s yet time to get involved. “Don’t expect a V-Shaped recovery – its different and aint going to happen..” said one manager. Hope is not a strategy when it comes to Russia at present.

The big risk is whether the Russian meltdown can be contained within the borders of the Rodina. All kinds of no-see-ems suggest themselves.

What are potential knock-ons into other markets? Perhaps Russians having to unwind London Property, (we understand Russians have been very big buyers in recent weeks prefiguring potential exchange controls), or further ructions in Europe? We’re already concerned European sovereign debt is poised on a knife-edge between brutal reality and over-inflated hopes for QE. A strong nudge from a conflagurating Russia and bang goes Italy?

Or will it come from safe-haven flight triggering sell-offs across every asset class in a replay of 2008? Could a Russia default that will outspook the Lehman apocalypse be on the cards?

So much for dull Christmas markets…

 

end

 

 

The big news of the day:  the suspension of trading of the Russian rouble:

 

The Russian Ruble Is Hereby Halted Until Further Notice

 

 

As liquidity evaporated from Ruble, after three retail FX platforms abandoned trading of the USDRUB pair,Reuters reports, the more liquid Norwegian Krone began acting as a proxy for the Russian unit of exchange. When the selling in the Ruble was at its peak, the Krone bore the brunt and smashed to its lowest level in over a decade, dropping below parity against its Swedish counterpart for the first time in almost 15 years.

 

As Reuters reports,

Three retail currency trading platforms halted trading in roubles on Tuesday, citing growing signs of stress among the banks that underpin trade in the battered Russian currency.

 

FXCM, one of the biggest platforms catering to online and retail traders of currencies, said the move stemmed from the expectations of banks that Moscow would impose outright capital controls within the next few days.

 

Angus Campbell, an analyst at another platform, FxPro, said a number of the top tier-one banks that provide its liquidity had ceased quoting prices on one of its systems, prompting it to halt trading there.

 

A third platform, Alpari, also halted trade.

Which led anxious traders to shift to the Krone…

Traders and analysts said liquidity in the Russian rouble was evaporating fast and, to some extent, the more liquid Norwegian Krone was acting as a proxy for the Russian unit.

 

 

The Krone fell to its lowest in more than a decade against the dollar and dropped below parity against its Swedish counterpart for the first time in almost 15 years.

JPMorgan said in a note that a relentless slide in oil prices was pushing up yields on U.S. lower-rated bonds,boosting volatility in currency markets and hurting overall liquidity in the $5.5 trillion market.

“Although FX volumes this month are actually above average for a typical December, bid-offer spreads have been widening for several weeks, and the pace has quickened alongside recent moves in oil and credit,” JPMorgan said.

“It is unlikely that this surge reflects year-end seasonals, as bid-offer spreads exhibit much less variation by calendar month than trading volumes do.”

Source: Reuters

 

 

end

 

 

 

OH OH!!  the classic hyperinflation is rearing its ugly head in Russia as citizens rush to buy things trying to discard their roubles:

 

(courtesy zero hedge)

 

 

 

Russia Prepares For GDP Surge As Consumers Scramble To Spend Their Plunging Rubles

 

 

In the most ironic twist of all amid the “currency crisis” enveloping Russia, we suspect the world’s central bankers will be looking on jealously as The CBR manages to achieve precisely what The BoJ and The Fed are desperate to achieve. In raising inflation expectations,The FT reports, Russians are hurriedly turning their depreciating Rubles into jewelry, furniture, cars, and apartments as the currency’s collapse prompts a shopping spree that will likely lead to a surge in GDP. As one anxious shopper noted, “none of us know what’s happening. We’re all worried that the currency will keep falling,” and so “it’s time to buy furniture!” And sure enough, shopping centers are currently experiencing a spectacular rush.

 

As The FT reports,

Russians hurried to change their savings and pensions into dollars and euros while also stocking up on furniture and jewellery as the rouble’s collapse accelerated.

 

Their mounting concern was reflected on Tuesday morning in the red lights of the currency exchange booths that dot the city, which were ticking over to show ever weaker rouble rates.

 

 

“I took out some of my pension and I want to change it into dollars,” said Galina, a retiree, who declined to give her surname. “None of us know what’s happening. We’re all worried that the currency will keep falling.”

 

The dramatic collapse in the rouble in recent days has not triggered outright panic, but it has prompted a rush to change currency and to stock up on durable goods such as furniture, cars and jewellery before they become even more expensive.

 

 

“I think the rouble will carry on falling until the end of the year,” she said. “It’s time to buy furniture!”

 

Indeed, shoppers reported enormous queues even at 2am in Ikea on Mondaynight as people rushed to stock up before the rouble plunge triggered price rises. The Swedish furniture company had said it would be raising prices from Thursday.

 

 

“People who didn’t manage to exchange their money at 35 roubles or 40 roubles to the dollar have been buying up high-end goods, cars and apartments because a massive repricing hasn’t happened yet,” said Vyacheslav Trapeznikov, acting director of the Urals Builders’ Guild, in Yekaterinburg.

 

Car sales in Russia rose in November from the previous month — in spite of a slowing economy — and December is “rather promising”, according to the Association of European Businesses in Russia trade group. “Retail demand has been extraordinary in recent weeks,” said Joerg Schreiber of the AEB.

 

 

“People are trying to spend their last roubles and buy up things that haven’t been priced, but this trend has an expiration date,” Mr Trapeznikov said.

Russians are lining up at currency exchange centers to swap their increasingly worthless Rubles for Dollars…

 

And as Germany’s N-TV also notes, they are spending that money…

Shopping centers are currently experiencing a spectacular rush. The most recent example is the Swedish furniture chain Ikea, prior to their department stores in the past few days with long queues. Several hours had to wait for the customers before they could enter.

 

The reason is that Ikea had announced in early December to try to raise prices in the near future because of the decline of the ruble. While Ikea calmed after its customers that prices would continue to meet the published list prices in the summer. At the same time, the Group achieves in Russia each year well over a billion euros in sales, that its operations were dependent on external factors explained.

 

 

“At this point, Russia differs from industrialized countries to save where people start when a crisis begins,” says the economist Igor Nikolayev. “For us, this is accompanied by a strong degradation of money and the people spend more, which relaxes the situation for some time,” adds the analyst of consulting company FBK.

 

 

“People have rushed to buy expensive goods such as televisions, computers, laptops, to save their rubles, which lose value dramatically,” says Maria Wakatowa of the consulting firm Watcom, the observed trade.

*  *  *

Simply put – it’s all about inflation expectations. And unlike The Fed or The BoJ, who keep trying to jawbone higher expectations into their citizens’ minds, the CBR has achieved it and with it – a spending spree before things get more expensive and implicitly a surge in GDP. Ofcourse, however, the spending surge can only be short-term and will stop as soon as there are no more Rubles to spend.

*  *  *

Finally – this seemed to sum it all up nicely…

 

 

end
And tonight, Obama rattles Putin’s cage by signing off on the Lethal USA aid to the Ukraine:
(courtesy zero hedge)

Obama To Sign Off On Lethal US Aid To Ukraine By End Of Week, Russian Response To Follow

As we reported over the weekend, in the tumult surrounding Citigroup’s annexation of Congress with the passage of the theatrically dramatic $303 trillion derivative quid-pro-$1.1 trillion spending quo, what most missed is that Congress also unanimously passed the The Ukraine Freedom Support Act of 2014, which not only expands Russian sanctions (read the details here) but far more impotantly, provides “lethal assistance to Ukraine’s military.” And as we explained, passage of this law is just the pretext some Russian legislators needed to push for a full-blown, preemptive military incursion in east-Ukraine.

Recall:

“The decision of the US Senate is extremely dangerous. If it is supported by the House of Representatives and signed by their president, Russia must reply with adequate measures,” Mikhail Yemelyanov of the Fair Russia party told reporters on Friday.

 

It is quite possible that we should return to the decision by our Upper House and give the Russian president an opportunity to use military force on Ukrainian territory preemptively. We should not wait until Ukraine is armed and becomes really dangerous,” the lawmaker stated.

 

Yemelyanov also noted that in his opinion the US Senate’s decision to arm Ukraine had revealed that Washington wasn’t interested in the de-escalation of the Ukrainian conflict. He then said that US actions gave him the impression they was seeking to turn Ukraine into some sort of an “international militant targeting the Russian Federation.”

 

“In a few years Ukraine will turn into a poor and hungry country with an anti-Russian government that will teach its population to hate Russia. They will be armed to the teeth and Ukraine and US reluctance to recognize the Russian Federation within its current borders would always provoke conflicts,” the MP said.

Furthermore, we asked if “this means that what was a lingering proxy cold civil war in east Ukraine between NATO-armed Ukraine troops and Russia-armed Separatists and local militias is about to escalate into a shooting precursor to something greater? There is still hope an all out escalation can be avoided” and we cited White House press secretary Joshn Earnest who last week said that “the administration hadn’t finished reviewing the language and isn’t ready to take a position on the legislation. He said the administration wants to ensure that the U.S. and its European allies are working together, that any sanctions are effective and that they minimize harm to U.S. and European companies. “This is delicate work,” Earnest said.”

Apparently, not delicate enough, and moments ago we got confirmation that the epic collapse in the USDRUB is just a jovial preview of the main event. To wit:

  • OBAMA DOES INTEND TO SIGN RUSSIAN SANCTIONS LEGISLATION:EARNEST
  • OBAMA LIKELY TO SIGN SANCTIONS BILL BEFORE END OF WEEK: EARNEST

And with that, US “lethal aid” will shortly begin arriving in Kiev, which in turn will be just the pretext needed by Sergey Lavrov and the Kremlin to escalate the recent events in Russia as a direct attack by the West, and to demand retaliation against a US president who “does not reason” as the Russian media will appeal to the population in an attempt to “rally round the flag“, and as a result Russian tanks may have no choice but to enter the separatist territories in East Ukraine.

What the western, and certainly NATO, response at that point will be, is far beyond our meager prediction skills.

 

 

end

 

 

 

Your more important currency crosses early Tuesday morning:

Eur/USA 1.2535 up .0094

USA/JAPAN YEN 116.25 down 1.151

GBP/USA 1.5744 up .0101

USA/CAN 1.1660 up .0005

This morning in Europe, the euro is well up , trading now just above the 1.25 level at 1.2535 as Europe reacts to deflation and announcements of massive stimulation and crumbling bourses. In Japan Abe went all in with Abenomics with another round of QE purchasing 80 trillion yen from 70 trillion on Oct 31 and Sunday night won his big election. And now he wishes to give gift cards to poor people in order to spend. The yen continues to trade in yoyo fashion.  However this morning it  caused extreme havoc to our yen carry traders as it settled dramatically up in Japan by 151 basis points and settling just below the 117 barrier to 116.25 yen to the dollar. This would certainly blow up our yen carry traders with this rapid ascent. The pound is up this morning as it now trades just above the 1.57 level at 1.5744.(very worried about the health of Barclays Bank and the FX/precious metals criminal investigation). The Canadian dollar is down today trading at 1.1660 to the dollar.

 

 

Early Tuesday morning USA 10 year bond yield: 2.03% !!! down 6  in basis points from Monday night/

USA dollar index early Tuesday morning: 87.70 down 76 cents from Monday’s close

The NIKKEI: Tuesday morning down 344 points or 2.01%

Trading from Europe and Asia:
1. Europe all in the red

2/ Asian bourses mostly in the red  (except Shanghai… Chinese bourses: Hang Sang in the red ,Shanghai in the green, Australia in the red: /Nikkei (Japan) red/India’s Sensex in the red/

Gold early morning trading: $1214.00

silver:$16.44

 

 

Closing Portuguese 10 year bond yield: 2.92% par in basis points from Monday

Closing Japanese 10 year bond yield: .36% !!! down 2 in basis points from Monday

 

 

Your closing Spanish 10 year government bond, Tuesday ,up 1 in basis points in yield from Monday night.

Spanish 10 year bond yield: 1.80% !!!!!!
Your Tuesday closing Italian 10 year bond yield: 2.01% up 1 in basis points from Monday:

trading 21 basis points higher than Spain:

 

 

 

IMPORTANT CLOSES FOR TODAY

 

 

Closing currency crosses for Tuesday night/USA dollar index/USA 10 yr bond:

Euro/USA: 1.2503 up .0063

USA/Japan: 117.33 down .431 ( the yen carry traders are whacked again)

Great Britain/USA: 1.5747 up .0104

USA/Canada: 1.1633 down .0021 (oil countries are still getting killed in their currencies)

The euro fell slightly in value during the afternoon , but it is still way up by closing time , finishing just above the 1.25 level to 1.2503. The yen fell a bit in the afternoon, but it was still well up by closing up to the tune of 43 basis points and closing just below the 118 cross at 117.33. The British pound gained some ground during the afternoon session and it was up on the day closing at 1.5747. The Canadian dollar was well up in the afternoon and was up on the day at 1.1633 to the dollar.

Currency wars at their finest today.

 

 

Your closing USA dollar index: 88.03 up 43 cents from Monday.

your 10 year USA bond yield , down 3 in basis points on the day: 2.07%!!!! wow!!

 

 

European and Dow Jones stock index closes:

 

 

England FTSE up 149.11 or 2.41%

Paris CAC up 87.82 or 2.19%

German Dax up 229.88 or 2.46%

Spain’s Ibex down 178.00 or 1.80%

Italian FTSE-MIB up 591.08 or 3.27%

The Dow: down 111.97 or 0.65% (after being +248 earlier in the day)

Nasdaq; down 57.32 or 1.24%

OIL: WTI 55.96 !!!!!!!

Brent: 59.56!!!!

 

 

end

 

 

And now for your more important USA economic stories for today:

Your trading today from the New York:

 

Total Chaos: Massive Market Moves Spark Selling-Panic Into Close

 

 

Perhaps this sums up the day for many FX, bond, equity, and oil traders today…

 

Incredible Volatility today – 100 point roundtrip in the S&P, and 800 points in the Dow – all driven by a halt in Ruble Trading, the European close, and Kuwait pissing on the US market’s fireworks…

 

And the volatility was incredible across the entire US equity market – as the S&P ramp ran stops to yesterday’s highs then gave it all back...again around the EU close

 

Close-up on S&P 500 e-minis… the machines ran all the stops everywhere today…

 

A massive roundtrip in cash markets…

 

The Russian markets dominated headlines…

 

but the US credit markets were more worrisome as it appears the risk has finally started to appear in the investment-grade credit market.

High yield bond yields hit 2-year highs… and spreads to 18 month wides…

 

And Investment Grade credit has become infected…

 

Longer-term…

 

Every asset class underwent a roller-coaster…

Treasury yields fell 10ps, rose 10bps then fell 8bps…

 

Silver and Gold pumped and dumped.. as oil dumped and pumped and dumped…

 

FX markets turmoiled leasving the USD lower on the day but USDJPY was in charge of stocks – and major unwinds into the close – which is very unusual ahead of FOMC tomorrow and Japan tonioght

 

Across the asset classes today – these were the events..

 

Finally we wonder… who was this mysterious $3.7 billion trader today…

But don;t forget…

 

Charts: Bloomberg

 

 

 

end

 

Dave Kranzler correctly states that the following massive divergence must end badly as the stock market tanks:

 

(courtesy IRD/Dave Kranzler)

 

 

 

 

This Massive Divergence Will End Badly For Stocks…

 

source:  Zerohedge:

20141212_TSY1

Despite the Orwellian smoke being blown at us from The Fed, Wall Street, the media and other assorted moronic analysts, the economy is starting to collapse.  That means yields will not be correcting this divergence by moving higher.  Therefore, at some point stocks are going to plunge quickly.

 

end

 

Now it is the turn of the USA to see its manufacturing PMI plunge to 11 month lows:

 

(courtesy zero hedge)

 

 

US Manufacturing PMI Plunges To 11 Month Lows, Misses By Most On Record

Tyler Durden's picture

 

 

But what about the massive cajillion-dollar tax cut for American manufacturers from the oil-drop? US Manufacturing PMI collapsed to 53.7 in December, missing expectations of a rebound to 55.2 by the most on record and falling to its lowest since January 2014 – the middle of the Polar Vortex. This is the 4th monthly drop in a row off the mid-year “yay recovery is here” record highs and 4th miss in a row as economists continue to ‘price in’ the hockey-stick. The employment sub-index dropped to its lowest since July and new orders collapsed to its lowest since January. This comes on the heels of Germany’s 18-month lows for its Manufacturing PMI. No decoupling after all.

 

 

 

As Markit noted about Germany,

“Overall, the data are consistent with only marginal GDP growth in the fourth quarter at best, with the average PMI reading in the latest three months the weakest since the second quarter of 2013. The possibility of a renewed downturn at the start of next year is clearly becoming more and more likely, especially if the survey data continue to disappoint.”

And added on USA,

“Softer output and employment numbers merely represent a cooling in the pace of expansion from unusually strong rates earlier in the year, but also send a warning light to policymakers that the fourth quarter is likely to see a weakening in the pace of economic growth, which is starting to hit hiring.

 

“We expect this weakening to become evident in the official data early in the new year, meaning rate setters will continue to err on the side of caution in terms of when the economy may be ready for higher interest rates, especially as the survey data also highlight a further drop in inflationary pressures.

 

 

Charts: Bloomberg

 

 

end

 

This morning Jefferies reports its Q4 earning reports and it is a bloodbath: a huge 73% plunge in fixed income revenue and a drop of 45% in equities:

 

 

 

(courtesy zero hedge)

 

 

 

Wall Street Harbinger Jefferies Reports Q4 Bloodbath: 73% Plunge In Fixed Income Revenue, 45% Drop In Equities

 

 

But what about the massive cajillion-dollar tax cut for American manufacturers from the oil-drop? US Manufacturing PMI collapsed to 53.7 in December, missing expectations of a rebound to 55.2 by the most on record and falling to its lowest since January 2014 – the middle of the Polar Vortex. This is the 4th monthly drop in a row off the mid-year “yay recovery is here” record highs and 4th miss in a row as economists continue to ‘price in’ the hockey-stick. The employment sub-index dropped to its lowest since July and new orders collapsed to its lowest since January. This comes on the heels of Germany’s 18-month lows for its Manufacturing PMI. No decoupling after all.

 

 

 

As Markit noted about Germany,

“Overall, the data are consistent with only marginal GDP growth in the fourth quarter at best, with the average PMI reading in the latest three months the weakest since the second quarter of 2013. The possibility of a renewed downturn at the start of next year is clearly becoming more and more likely, especially if the survey data continue to disappoint.”

And added on USA,

“Softer output and employment numbers merely represent a cooling in the pace of expansion from unusually strong rates earlier in the year, but also send a warning light to policymakers that the fourth quarter is likely to see a weakening in the pace of economic growth, which is starting to hit hiring.

 

“We expect this weakening to become evident in the official data early in the new year, meaning rate setters will continue to err on the side of caution in terms of when the economy may be ready for higher interest rates, especially as the survey data also highlight a further drop in inflationary pressures.

Charts: Bloomberg

 

 

That is all for today.

I will see you Wednesday night

bye for now

Harvey,

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