dec 17/NO Change in both GLD and SLV/massive confusion with FOMC announcement/Russia shores up its rouble/oil settles at $55.90/

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: $1194.30 up $0.90
Silver: $15.89 up $0.17

In the access market 5:15 pm

Gold $1189.00
silver $15.75

 

 

The gold comex today had a poor delivery day, registering 7 notices served for 700 oz. Silver comex registered 72 notices for 360,000 oz.

 

A few months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 247.02 tonnes for a loss of 56 tonnes over that period.

 

 

In silver, the open interest rose by 235 contracts despite yesterday’s huge fall in price of $0.84. 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 150,199 contracts. The big December silver OI contract fell by 14 contracts down to 180 contracts.

 

In gold we had a slight fall in OI with the huge fall in price of gold yesterday to the tune of $13.30. The total comex gold OI rests tonight at 371,743 for a loss of 1511 contracts. The December gold OI rests tonight at 771 contracts losing 30 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 again today both metals certainly had a roller coaster of a ride .

 

 

Today, we had no change  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.

 

OH OH they are back !!!!

 

First: GOFO rates:

 

 

all rates moved closer to the negative.  The One month GOFO rates moved into  negativity with the other others moving closer to backwardation.

Now, all the months of GOFO rates( one, two,three six and 12 month GOFO moved towards  to the negative, with the one month already negative .  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 17 2014

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

-.03333.% + .00667 -%   +.030 % +. 075 .% +. 140%

Dec 16 2014:

+.0925% +.10500% +.11750 % +.14275% +.1750%

 

 

end

 

 

 

Let us now head over to the comex and assess trading over there today,

Here are today’s comex results:

 

 

The total gold comex open interest fell today by 1511 contracts from 373,254 all the way down to 371,743 with gold down by $13.30 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 771 contracts for a loss of 30 contracts. We had 35 delivery notice served yesterday so we gained 5 contracts or 500 oz of gold that will  stand for the December contract month. The non active January contract month rose by 11 contracts down to 453. The next big delivery month is February and here the OI fell to 226,492 contracts for a loss of 5158 contracts. The estimated volume today was poor at 72,453. The confirmed volume yesterday was excellent at 252,290 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 7 notices filed for 700 oz .

And now for the wild silver comex results. Silver OI rose by 235 contracts from 149,964 up to 150,199 even though silver was down by  $0.84  yesterday. The big December active contract month saw it’s OI fall by 14 contracts down to 180 contracts. We had 5 notices served upon on yesterday. Thus we lost 9 contracts or an additional 45,000 oz will not stand. The estimated volume today was awful at 19,346. The confirmed volume yesterday was huge at 81,986. We had 72 notices filed for 360,000 oz today

 

 

 

December initial standings

 

 

 

 

December initial standings

 

Dec 17.2014

Gold

Ounces

Withdrawals from Dealers Inventory in oz nil oz
Withdrawals from Customer Inventory in oz 908.76 oz (HSBC,Manfra0.
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz 20,736.75 oz (JPM,Scotia)
No of oz served (contracts) today 7 contracts(700  oz)
No of oz to be served (notices) 801 contracts (80,100 oz)
Total monthly oz gold served (contracts) so far this month  2648 contracts(264,800 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

 146,905.3 oz

Today, we had 0 dealer transactions

total dealer withdrawal: nil oz

 

we had 0 dealer deposit:

 

 

total dealer deposit: nil oz

 

we had 2 customer withdrawals

 

i) Out of HSBC:  683.71 oz

ii) Out of Manfra:  225.05 oz

 

 

 

total customer withdrawal: 908.76 oz

we had 2 customer deposits:

i) Into JPMorgan:  16,075.000 oz  (500 kilobars) and the farce continues!!

ii) Into Scotia; 4661.75 oz

total customer deposits;  20,736.75  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 7 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 (2648) x 100 oz to which we add the difference between the OI for the front month of December (771) minus the # gold notices filed today (7) x 100 oz = 341,200 the amount of gold oz standing for the December contract month.

Thus the initial standings:

2641 (notices filed for the month x 100 oz) + (771) the number of OI notices for the front month of December served upon – (7) notices served today equals 341,200 oz or 10.612 tonnes

we gained 5 contracts or 500 oz that will stand.

 

 

 

Total dealer inventory: 737,866.946 oz or 22.95 tonnes

Total gold inventory (dealer and customer) = 7.942 million oz. (247.02) tonnes)

Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 56 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 17/2014:

December silver: initial standings

 

 December silver: initial standings

Silver

Ounces

Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory 151,592.68  oz  (CNT,HSBC,Scotia  )
Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory 963.800 oz (Delaware)
No of oz served (contracts) 5 contracts  (25,000 oz)
No of oz to be served (notices) 108 contracts (540,000 oz)
Total monthly oz silver served (contracts) 2933 contracts (14,665,000 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  6,648,211.1  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 3 customer withdrawals:

 

i) Out of CNT: 40,414.11  oz

ii) Out of HSBC:  45,885.770 oz

iii) Out of Scotia: 65,292.800 oz (one decimal)

 

total customer withdrawal 151,592.68 oz

 

 

We had 1 customer deposit:

 

i) Into Delaware:  963.800 oz (one decimal)

 

total customer deposits: 963.800  oz

 

we had 0 adjustments

 

Total dealer inventory: 64.594 million oz

Total of all silver inventory (dealer and customer) 175.416 million oz.

 

 

The total number of notices filed today is represented by 72 contracts for 360,000 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 (2933) x 5,000 oz to which we add the difference between the total OI for the front month of December (180) minus (the number of notices filed today (172) x 5,000 oz = the total number of silver oz standing so far in November.

Thus: 2933 contracts x 5000 oz + (180) OI for the November contract month – 72 (the number of notices filed today) =15,205,000 oz of silver that will stand for delivery in December.

we lost 45,000 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 17.2014: no change in inventory at the GLD/721.56 tones

 

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 17 / we had no change in tonnage 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 17.2014: no change in silver inventory/SLV 341.009 million oz

 

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 17/2014/ 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 9.7% percent to NAV in usa funds and Negative 9.4 % to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 62.0%

Percentage of fund in silver:37.5.%

cash .5%

( December 17/2014)

2. Sprott silver fund (PSLV): Premium to NAV falls to positive 0.12% NAV (Dec 17/2014)

3. Sprott gold fund (PHYS): premium to NAV rises to negative -0.34% to NAV(Dec 17/2014)

Note: Sprott silver trust back hugely into positive territory at 0.12%.

Sprott physical gold trust is back in negative territory at -0.34%

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 Wednesday  morning:

 

(courtesy Mark O’Byrne/Goldcore)

 

 

Russian Currency Crisis and Defaults Could Create Contagion in West

 

 

Russia’s currency market witnessed further huge volatility again today.  The finance ministry said it would start selling foreign exchange which are primarily in dollars. This appeared to reduce selling pressure on the battered rouble.

The fall of the rouble this year has been severe, with a 50 percent fall against the dollar and of course gold this year. The slide has been precipitous as in the past two days alone, it fell about 20 percent against the dollar and gold.

On Monday, the ruble fell 10% against the dollar and gold followed by another crash of 11% on Tuesday, despite a massive rate hike.

The heavy selling pressure this week, made the central bank sharply increase its key interest rate by an unexpected 6.5 percent or 650 basis points. The move did little to buttress the currency in the short term as speculators and traders continued to sell the rouble.

Momentum is clearly down and computer driven markets and increasing dominance of algorithmic or black box trading is exacerbating the rouble’s short term weakness. However, the sharp increase in interest rates and the fact that the fundamentals of the Russian economy remain reasonably sound and not much worse than many western economies, will support the rouble. It is likely to stabilise at these levels and recover in the coming months.

It is also important to note that political and economic relations between Russia and China are very good at the moment and China would likely provide financial assistance – if indeed that is needed.

The rouble rout is due in part to the collapse in oil and now very low oil prices. It may also be due to the effects of western sanctions.  This is likely to rally the Russian people behind Putin and will not have the impact that western leaders hope it to have.

The effects of the crisis are already being felt in western Europe and in the global financial system.

Austria’s third largest bank, Raiffeisen Bank lost 10.3% of it’s share value on the news that the Russian central bank had raised rates a stunning 6.5% overnight on Monday.

It is worth remembering that it was the bankruptcy in 1931 of Austrian bank Creditanstalt’s, founded by the Rothchild family, that resulted in a new global financial crisis and ultimately the bank failures and deep recessions of the Great Depression.

In France, Societe General – a bank which is also exposed to the Russian economy to the tune of €25 billion – lost 6.3% of it’s share value. If the Russian crisis continues, and there is little to suggest it won’t – with the U.S. set to impose a new round of sanctions, the repercussions for the west and the global economy could be drastic.

In the modern, interconnected, globalised world of today, there is a real sense that and a risk that western leaders are “cutting off our nose to spite our face.”

The global banking system has a very limited capacity to absorb sizeable losses and the risk of contagion is as high now as in 2008. It may be the case that western banks and institutions have more to lose than Russia in the longer term.

Russia is still energy and resource abundant with close economic ties to the industrialising East, Asia and China. It also has substantial gold reserves – some 10% of their sizeable foreign exchange reserves of $370 billion.

It’s oil companies are reasonably well insulated from the crisis as the rouble value of their exports has soared.

It should also be noted that what looked like a public display of weakness, that was Monday night’s rate hike, is most uncharacteristic of Russia, especially under Putin. In the murky goings on of geopolitics, it is wise to question every action and motivation. Some have suggested that the move could lead to severe losses in the interest rate market and the multi trillion interest rate swap market and this could be part of the reason for the move.

Putin is well aware of Warren Buffett’s “financial weapons of mass destruction”.

In the event of another banking crisis due to financial instability, market crashes and or western banks exposure to Russia, larger deposits will be confiscated by banks as “bail-in is now the rule,” to quote Irish finance minister Michael Noonan.

The experience of Russian holders of gold since this crisis began is worthy of note as evinced by the chart above. Gold has acted as a very effective insurance policy against financial instability and currency instability for those ordinary Russians prudent enough to have allocated some of their savings to gold as a diversification.

Must-read guide to and research on bail-ins can be read here:
Guide: Protecting your Savings In The Coming Bail-In Era

Research: From Bail-Outs to Bail-Ins: Risks and Ramifications – including World’s Safest Banks

 

MARKET UPDATE
Today’s AM fix was USD 1,199.00, EUR 962.36 and GBP 763.16 per ounce.
Yesterday’s AM fix was USD 1,199.25, EUR 960.25 and GBP 763.95 per ounce.

Spot gold climbed $4.60 or 0.39% to $1,196.30 per ounce yesterday and silver fell $0.40 or 2.48% to $15.74 per ounce.

Gold in Singapore was flat again overnight with gold hovering just below $1,200 per ounce before slight gains in London saw gold touch the $1,200/oz level. Spot gold was up 0.3% at $1,199.66 an ounce by late morning in London.  A volatile session yesterday, saw a high above $1,221 then a drop to a one-week low of $1,188.41, before finishing stronger.

The electronic gold market or futures gold market continues to have all the hallmarks of a managed market and gold seems tethered to the $1,200/oz level for now despite the very bullish geo-political backdrop and robust global demand.

There is a lot of market chatter about Russia selling gold – mostly by non gold experts and people who are not renowned for analysis of the gold market. The chatter is just that chatter as Russia is likely to keep accumulating gold rather than sell it.

Russia is unlikely to sell gold in any meaningful way as long as Putin remains at the helm. Indeed, while a wily Putin may allow an announcement regarding gold sales and official statistics may show a reduction in reserves, Putin may adopt the Chinese gold policy and not be so transparent regarding the Russian gold reserve accumulation and reserves in general.

Traders await the outcome of the U.S. Federal Open Market Committee’s last policy meeting of the year, where traders will look for a clue as to when they may raise interest rates.

The Fed’s statement is at 1900 GMT and analysts are looking for the phrase “considerable time” to be removed as a signal that the Fed may take action in 2015 to hike rates. As ever it is important to watch what the Fed does rather than what they signal they might do.

SPDR Gold Holdings, the world’s largest gold ETF, saw a second consecutive daily outflow on Tuesday, of 1.8 tonnes, after they posted their largest weekly rise last week since July.

In other precious metals, silver climbed 1% to $15.92 an ounce and platinum up 0.7% at $1,197.52 an ounce. Palladium was up 0.8% at $785.31 an ounce.

Get Breaking News and Updates On Gold Here

 

 

end

 

Bill Kaye discusses gold with Eric King of Kingworldnews

 

(courtesy Bill Kaye/Kingworldnews)

 

Kaye tells KWN why 2015 will be gold’s year

Section:

4:15p ET Wednesday, December 17, 2014

Dear Friend of GATA and Gold:

Hong Kong fund manager William Kaye today tells King World News why he thinks 2015 will be gold’s year:

http://kingworldnews.com/top-asian-hedge-fund-manager-predicts-banner-ye…

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

 

 

end

 

The real reason that Guvnor left the gold scene:

“executives decided to abandon the precious metals trading business partly because of difficulties in finding steady supplies of gold where the origin could be well documented, one of the people said.”

 

(courtesy bloomberg)

Commodity Trading Giant Exits Physical Gold Due To “Lack Of Physical With A Documented Origin”

Back in March, otherwise very under-the-radar Swiss commodities trading giant Gunvor and the fifth largest oil trader in the world, made headlines in the press when one of its then-Russian owners, billionaire Gennady Timchenko (estimated net worth of $8.5 billion), sold his entire 44% stake in the company to his partner in the firm, Torbjorn Tonqvist, just a day before the US revealed its first round of sanctions against individuals affiliated with the Putin regime. Timchenko was among them. As a result of the sale, however, Gunvor avoided falling on the US sanctions list and a Treasury official said that “Gunvor Group Ltd. isn’t subject to automatic blocking from dealing with U.S. persons under Russian sanctions because co-founder Gennady Timchenko owns less than 50 percent of the company.”

Since then the Geneva-based company rarely appeared in the media which is how the nondescript company lliked it. Until last week, that is, when Bloomberg reported that the company was giving up trading physical precious metals,read gold, less than a year after the commodity house started a business dedicated to buying and selling gold. Gunvor is, or rather was, one of the few large commodity firms that handles precious metals. The move into gold was part of an expansion into non-oil businesses that now include iron ore, industrial metals and natural gas. Gold trading was done by a handful of people in Singapore and Geneva.

Gunvor’s move away from physical commodities trading in itself is not surprising: recall that first it was Germany banking titan Deutsche Bank which announced it would no longer trade physical precious metals last month.

According to Bloomberg at least two traders are leaving the company in Geneva and Singapore: Francois Beuzelin, hired in 2012 as head of metals in Geneva, and Cedric Chanu, who started in Singapore in January as a precious-metals trader. Chanu declined to comment by phone and Beuzelin didn’t answer calls to his office nor an e-mail sent via his LinkedIn account.

But the biggest surprise in this story was the reason why Gunvor chose to discontinues its gold trading. Per Bloomberg, “executives decided to abandon the precious metals trading business partly because of difficulties in finding steady supplies of gold where the origin could be well documented, one of the people said.”

And while we would certainly love to learn more about this problem of “undocumented” physical gold, just like that we have the most definitive confirmation yet that the story surrounding China’s rehypothecated commodities scandal in the port of Qingdao which as previously reported included copper and aluminum and which mysteriously disappeared just as abruptly as it first appeared, not only also involved the precious yellow metal but never really went away, and instead what appears to have happened is that “robosigned” physical gold – or gold whose ownership traders are unable to validate – has now flooded into the global trading infrastructure.

Because if the world’s fifth largest trader of commodities has chosen to outright not trade gold, and thus not generate value for its shareholders over risks and fears that another, or two, or three, or a countless number of other prior “owners” may come knocking one day and demanding delivery of gold whose origin could not be documented by its trading intermediaries, and whose ownership link Gunvor is unable to trace, then just what on earth is really going on with the world’s physical gold inventory (here’s looking at you, Chinese gold-backed Commodity Funding Deals), and just what is the catalyst that will unleash what is essentially the infamous US mortgage robosigning scandal onto the gold arena, at which point owners of gold realize the gold they thought they owned, even if held safely in a deposit box deep in a gold vault in a safe offshore location, in reality “belongs” to someone else?

end
I highly doubt this.  The Russians will keep their gold.
(courtesy Bloomberg)

Traders betting Russia’s next move will be to sell gold

Section:

By Debarati Roy
Bloomberg News
Tuesday, December 16, 2014

NEW YORK — Russia’s surprise interest-rate increase failed to stop the plummeting ruble. The next weapon available to repair economic havoc caused by sanctions and falling oil prices: selling gold.

Russia holds about 1,169.5 metric tons of the precious metal, the central bank said last month. That’s about 10 percent of its foreign reserves, according to the London-based World Gold Council. The country added 150 tons this year through Nov. 18, central bank Governor Elvira Nabiullina told lawmakers.

Russia’s cash pile has dropped to a five-year low as its central bank spent more than $80 billion trying to slow the ruble’s retreat. The currency’s collapse combined with more than a 40 percent tumble in oil prices this year is robbing Russia of the hard currency it needs in the face of sanctions imposed after President Vladimir Putin’s annexation of Crimea. A fall in gold prices signals that traders are betting that the country will tap its reserves. …

… For the remainder of the report:

http://www.bloomberg.com/news/2014-12-16/traders-betting-russia-s-next-m…

 

end

 

The crooks in action:

 

(courtesy Pam Martens/Wall Street on Parade)

 

Pam Martens: Meet your newest legislator — Citigroup

Section:

By Pam Martens
Wall Street on Parade, New York
Tuesday, December 16, 2014

Citigroup is the Wall Street mega-bank that forced the repeal of the Glass-Steagall Act in 1999; blew itself up as a result of the repeal in 2008; was propped back up with the largest taxpayer bailout in the history of the world even though it was insolvent and didn’t qualify for a bailout; has now written its own legislation to deregulate itself; got the president of the United States to lobby for its passage; and received an up vote from both houses of Congress in less than a week.

And there is one more thing you should know at the outset about Citigroup: It didn’t just have a hand in bringing the country to its knees in 2008; it was a key participant in the 1929 collapse under the moniker National City Bank. Both the U.S. Senate’s investigation of the collapse of the financial system in 1929 and the Financial Crisis Inquiry Commission that investigated the 2008 collapse cited this bank as a key culprit. …

… For the remainder of the report:

http://wallstreetonparade.com/2014/12/meet-your-newest-legislator-citigr…

 

 

end

 

 

 

Bill Holter tackles the huge oil problem plus its massive derivatives:

 

(courtesy Bill Holter/Miles Franklin)

Crashing oil may result in “perestroika”?

 

Oil has crashed and now trading at roughly half the level it was just 6 months ago.  There are winners and losers of course but this is not the point, the point is …this is either the sign of a credit contraction, the cause of a credit contraction or both.  Consumers are obviously winners and producers the losers, just as oil importing nations are the winners and exporters the losers.  But, as I just mentioned, this is not the point at all.
  It is my belief that this was “our” plan to try to bust or at least hamper Mr. Putin and Russia.  This type of action worked during Ronald Reagan’s era and the Soviet Union was financially broken.  I believe Washington simply opened up the old playbook, started rubbing their palms together in anticipation and then …”let ‘er rip”.  This action obviously included the help of our “friends” the Saudis, a glut could not ever develop without their help.  Please understand this very important data point, supply and demand were only out of balance by less than 2%, something much bigger is at work here.  “What is at work here” as I see it were all the high(est) level meetings held over the last six months between the Saudi royalty and both Russia and China, what do you suppose was discussed?
  Has Saudi Arabia “bowed” to U.S. wishes and held or even increased output…BUT with the blessing of China and the knowledge of Russia?  Let me explain the thought process.  Has China calculated what would happen to the West’s highly levered and “derivatised” system were oil to crash “too far”?  Did they have any idea what or how big the derivative time bombs were that are now surely being set off?  Yes, it means cheap oil for China who is a huge importer of oil but I only believe this is just icing on the cake.  In my opinion, this “U.S. plan” to bankrupt Russia was “PLANNED” (by the East) to boomerang back on the U.S.  Yes it has already destroyed our shale industry but more importantly, what is it doing behind the scenes to banks and brokers who are sitting on $ trillions worth of energy derivatives?  We already know Phibro, the 130 year old commodities firm is shutting their doors… but what about the banks and brokers?
  I ask the question and again repeat “there are both winners and losers” …but please remember, if the losers lose “so badly” as to make them insolvent …the winners suddenly become losers!  The financial system in the West is so intertwined and leveraged, no one can be allowed to lose “so big” that they are bankrupted.  But this is exactly what has already in most likelihood happened.  Someone is already dead, or better said “someone(s)” plural are already dead!  We are talking about 100’s billions or more likely $ trillions have already changed hands (on P + L statements).
  Another set of time bombs are all of the CDS issued and purchased not just on energy companies but on sovereigns themselves.  Let’s assume (which I do not), Russia does actually default on their $200 billion of external debt.  This is actually quite small when compared with other nations but how many credit default swaps have been written on this?  Typically, CDS is insanely written at a 10-1 ration versus the actual credit.  My question is this, if Russia were to default on $200 billion and triggered $2 trillion worth of CDS, someone wins and someone loses.  “Who” could lose $2 trillion in today’s world?  What about others like Iran, Venezuela and on down the line not to even mention the various corporate entities could bankrupt?
  The oil crash in my opinion is really about a global credit contraction.  Global economies are slowing and yes demand for oil has decreased but this decrease does not account for a 50% drop in price …leverage does.  Oil, just like anything else is “commoditized” with levered bets which increases the volatility when it occurs.  The leverage works on the upside where the move looks orderly and like it will never end, until it does.  Once the trend has ended, “margin calls” force sales and is exactly what we are seeing now.
  Switching gears just a little, the world’s monies are all debt or credit based, a credit contraction will also destroy various (all) currencies that are levered into this trap.  What will happen if (I believe when) Russia decides to ask for gold in exchange for their oil and gas?  Think about this question as it is very real.  Were Putin to decide on this strategy, is he dealing from a position of strength or weakness?  Does Russia need the revenue as much as the world needs his oil?  Before making up your mind, remember, Russia is actually a larger producer than Saudi Arabia.
  If Russia were to ask for gold in return for oil, where would things go from there?  Oil would whipsaw in price as would the ruble.  Gold would then be “remonetized” overnight and its price more than likely explode.  But there is one more step to a “demand” of gold for oil.  This step would “expose some folks” so to speak.  In other words, who really has the gold to pay for oil?  Yes I know, at current prices, sovereign gold would run out pretty quickly, a mark up of gold prices versus oil which would be a natural from market forces would change this.  What I am getting at here is, were Mr. Putin to demand gold in payment for oil, we would pretty quickly find out who actually has gold and who doesn’t.
  Before you shut your brain down and call it lunacy … “no one will ever ask for gold as payment for oil” …ask yourself why China and Russia have been accumulating it so fiercely?  Russia can certainly say “hey, you crashed the price of oil, but now we want something real for our real product”.  This would certainly work for China as they are filling their oil reserves and would like their gold stash to be valued at a level to back their currency for the next 100 years or more.  The other side of coin of course is what will be learned of Western gold reserves.  Do we have it or not to pay?  Is this why the “core four” of Germany, Holland, Belgium, and Austria want their gold back within their borders?  Can they see the need to use it for oil and gas purchases or to back a bloc currency?
  Think for a moment, think about the “shorts” in the ruble and now the shorts in oil?  Are the “shorts” of Western origin?  Who would lose the most from a spiking oil, ruble and gold price?  As I mentioned earlier, there are most probably some very dead participants who were caught on the wrong side of oil.  What will happen if some Sunday night Mr. Putin said “we will be happy to ship oil, please ship us gold”?  The oil, ruble and gold shorts will be destroyed along with the record amount of dollar longs followed by the dollar itself!
  Let me add this to the mix.  I have written many times just how easy it would be for the COMEX to be broken.  It would only take $2 billion to physically take out the registered inventories of gold and silver.
Another $10 billion would probably be enough to include the LBMA and topple their fractional reserve scheme.  If this were done, it would be viewed as a declaration of war on the West by the East.  Instead, we have declared financial war on Russia, who would blame Russia if they retaliated by asking for real money for their real goods?
  I will leave you with a couple of questions.  Why did the budget deal just pass in Congress with hugs, kisses and the inclusion of $303 trillion worth of derivatives being “covered” by the FDIC (read; “taxpayer”)?  Why did CME expand limits for gold and silver trading to $400 and $12 per day effective next Monday?  Why is Russia testing their own clearing alternative to the West’s SWIFT system?  Oh, and one more question, is “gold” a part of this clearing alternative?
  Before you write to tell me “this can never happen”, please don’t waste your time.  It CAN certainly happen!  Will Mr. Putin decide on this?  I have no idea but if I were in his position I would certainly go this route.  Especially since the Western credit edifice has never been more vulnerable than it is now.   A credit “wobble” from a self inflicted oil price implosion would be ironic.  I would also do this as a way to move away from the dollar and toward an asset I have been steadily accumulating, gold.  I would do this to FORCE a “perestroika” (Russian for “restructuring”) on the West!  Regards,  Bill Holter
end

And now for the important paper stories for today:

 

 

 

Early Wednesday morning trading from Europe/Asia

1. Stocks mixed on major Asian bourses as the  yen continues to rise    to 117.19, a rise of 14 basis points.

1b Chinese yuan vs USA dollar/ yuan  strengthens to 6.1972
2 Nikkei up 64 points or 0.38%

3. Europe stocks all down /Euro down/ USA dollar index up to 88.25/

3b Japan 10 year yield at .36% !!!!(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 just above the 117 barrier
3fOil: WTI 54.44 Brent: 58.95 /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 continues its descent this morning for both WTI and Brent/Oil demand forecasts another drop/UAE minister will not drop production until Brent hits $40.

3k  FOMC today

3l  Russia also plans to increase oil production aiding OPEC!!

3m Gold at $1200 dollars/ Silver: $15.88

3n USA vs Russian rouble: 65.35!!!!!!  Russian currency stabilizies

3o  First round of Greek Presidential elections/needs 180 votes but only 161 votes for the candidate Dimas is expected.

4. USA 10 yr treasury bond at 2.09% early this morning. Thirty year rate well below 3%  (2.74%!!!!)
5. Details: Ransquawk, Bloomberg/Deutsche bank Jim Reid

 

 

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

 

Crude Continues Slide, Ruble Stabilizes, US Futures Rebound As Global Stocks Slump: All Eyes On Yellen

 

Previewing today’s market: near record low liquidity, with chance of ridiculous volatility in the Ruble, energy and equity markets.

While no doubt today’s main event will be the “considerable” FOMC announcement and the Fed’s downward-revised economic projections followed by Yellen’s press conference, what traders will be most excited by is that, finally, Jim Bullard will no longer be bound by the blackout period surround FOMC decisions, and as such can hint of QE4 again at his leisure during key market inflection (i.e., selling) points.

FOMC aside, overnight markets were shaped by the now usual suspects: declining energy, with WTI trading again below $55 at last check, and Brent also back below $60. One of the drivers for today’s weakness appears to be a late digestion of yesterday’s story that Russia will race OPEC to the bottom with “plans to boost daily oil exports in the first quarter of 2015 by 6.6 percent to 52.32 million tonnes, quarter-on-quarter, according to Reuters. This follows WTI closing higher (even if literally by pennies) for the first time in a week yesterday, however today’s European session has so far seen both WTI and Brent crude back under selling pressure, with the stronger USD combined with yesterday’s API Crude Oil Inventories showing a build in crude stockpiles of 1.9mln weighing on oil ahead of DoE inventories.

As for the RUB, things appear to have stabilized a bit even if the intraday gyrations remain, and the USDRB was trading a little below 68 at last check, while more and more brokers simply refuse to trade the Russian currency, in line with what was first reported here yesterday.  One of the factors leading to the stabilization is that the Russia finance ministry announced it would start selling its own FX reserves on market leading to a brief ruble rally vs USD. Also, PM Medvedev added that order must be brought to Russian FX market, while Kremlin economic aide Andrey Belousov said that Russia was working to stop ‘bacchanalia’ on FX market, according to Interfax. In other Russian news, Sberbank will raise FX, ruble deposits rates starting tomorrow, while president Putin plans no ‘special statements’ on markets, Kommersant says.

Over in Asia, equities traded mostly higher as oil prices saw a brief respite from the ongoing downturn during yesterday’s session. The Nikkei 225 (+0.4%) snapped its 2-day decline as JPY weakened ahead of the Fed rate decision although at last check it has reverted to trading back around the 117 USDJPY tractor beam moderating the zero liquidity exuberance in S&P futures.

Elsewhere, the Shanghai Comp (+1.31%) touched a 4yr high led by financials and brokerage names, following reports that China may loosen capital restrictions on brokerages. (read “Chinese Investors Bet This Time Is Different as Stocks Surge“) Money market rates are also notably higher amid a liquidity shortage further stoking expectations of a PBoC intervention. The Hang Seng (-0.3%) fell on casino stocks weakness as Fitch said sees Macau gaming revenue negative in 2015 and reports of a possible China crackdown on Macau casinos. China’s central bank has issued short-term funds to some local banks to ease liquidity strains and has also renewed some banks medium-term lending facilities that have expired, according to sources familiar with the matter. (RTRS) This has prompted some analysts to suggest that this action reduces the probability of a RRR cut before year-end.

European equities trade in the red following from the negative Wall Street close as lower oil prices combined with the depressed economic climate in Russia weighs on stocks. In a relatively quiet session with all focus on the FOMC rate decision, position squaring has been observed boosting the USD-index back above the 88.00 handle with the market looking to see whether the Fed drop their ‘considerable time’ rhetoric. In Fixed income markets, Bunds have remained relatively flat due to a lack of major macro news.

Also of note, the Greek presidential vote begins today at 1700GMT/1100CST with the govt. expecting its candidate Stavros Dimas to receive at least 161 of 300 MP’s votes, short of the 200 needed to be elected but a basis for a coalition to work for final ballot Dec 29th.

Looking ahead, all eyes will be on the FOMC rate decision, also we get US inflation data with CPI expected to print -0.1%, while CPI ex food and energy are expected to rise 0.1%, below last month’s 0.2% increase.

Market wrap summary

European stocks drop lead by banks and industrial companies. Asian shares decline, U.S. stock index futures advance. Euro drops against dollar, WTI crude oil falls as Russia reiterates it will keep crude production steady. Fed to end 2-day meeting and economists expect it to drop a vow to keep interest rates low for a  “considerable time.”

  • S&P 500 futures up 0.6% to 1976
  • Stoxx Europe 600 down 0.6% to 327.06
  • US 10Y yield up 3bps to 2.09%
  • German 10Y yield little changed at 0.59%
  • MSCI Asia Pacific down 0.4% to 133.86
  • Gold spot little changed at $1196.89/oz

Bulletin Headline Summary from Bloomberg and RanSquawk

  • Dampened economic sentiment and a continued slide in oil prices weighs on European equities.
  • USD-index strengthens as market participant position square ahead of the latest Fed policy announcement
  • Treasuries decline, 10Y and 30Y yields retreat from YTD lows before FOMC statement and summary of economic projections at 2pm, Yellen press conference at 2:30pm.
  • Fed seen likely to drop “considerable time” language,  may address recent global market turmoil
  • Russia struggled for a second straight day to reverse a rout in the ruble, with Finance Ministry selling its FX on the market;  Sberbank, Russia’s largest lender, to raise FX and ruble deposit rates starting tomorrow
  • Fallout from Russia’s crisis is spreading across markets: Pimco is facing mounting losses on its Russian bond holdings almost every bullish ruble option contract registered in the U.S. has been made worthless; and forex brokers in New York and London told clients they’re no longer taking ruble trades
  • The Bank of Russia will probably intensify interventions and spend almost a sixth of its reserves ($70b) after its emergency increase of interest rates failed to stem the ruble’s worst crisis since 1998, according to a survey of economists
  • The biggest causes for worry, according to SLJ Macro’s Stephen Jen, bigger than a recession in Russia or the oil-price plunge: the slowdown in China, which has already upended commodity prices, and likelihood U.S. growth will propel USD higher and suck assets out of emerging markets
  • German govt to sell EU185.5b in bonds and bills in 2015, lowest level since 2002, Federal Finance Agency says in provisional calendar; may sell 30Y linkers for first time next year
  • PBOC rolled over at least a portion of a three-month lending facility from September that was set to expire, according to a government official familiar with the matter
  • A federal judge weighing whether an immigrant from Honduras should be deported said Obama’s executive order on immigration is unconstitutional and violates the principle of separation of powers
  • Taliban militants vowed more strikes on Pakistan’s army if it doesn’t halt operations along the Afghan border, a threat that comes a day after the group slaughtered young students in one of the country’s deadliest attacks
  • No IG or HY deals priced yesterday.
  • Sovereign yields mostly higher. Asian stocks mixed, European stocks fall, U.S. equity-index futures gain. Brent crude falls 0.8%, trades below $60/bbl level; copper declines, gold little changed

 

Central Banks

  • 4:30am: Bank of England issues minutes
  • 2:00pm: FOMC seen maintaining overnight bank lending rate between 0% and 0.25%; release of summary of eco projections
  • 2:30pm: Fed’s Yellen holds news conference

FX

In FX markets, AUD/USD initially reached June’10 lows of 0.8140 after tripping stops allied by the subsequent USD-index strength despite this AUD/USD has since come off worst levels. NZD was dragged lower in sympathy, further weighed on by comments from RBNZ assistant governor McDermott, who reiterated the exchange rate remains unjustifiable and unsustainable. Separately, GBP was relatively unmoved following the BoE minutes vote remained at 7-2 and a broadly in line UK jobs report. Elsewhere, Russian news agency Interfax reported that the Russian Finance Ministry would sell USD 7bln worth of FX stocks to the market, while the Russian government and Russian Central Bank announced that they have worked on packages of additional measures for the RUB.

COMMODITIES

In the energy complex, WTI and Brent crude remain under selling pressure with the stronger USD combined with yesterday’s API Crude Oil Inventories showing a build in crude stockpiles of 1.9mln. Looking ahead, the DoE Crude Inventories data release is expected to show a drawdown of -2.25mln/bbl. Elsewhere, copper prices traded lower overnight following the release of yesterday’s production figures from China which showed output of the red metal rose by 3.1% M/M to a record for its 4th consecutive month, while the benchmark China iron ore prices extended on its declines for the 8th day with prices near this year’s low

 

* * *

DB’s Jim Reid shares his thought on the overnight even summary

 

 

The Fed, Greece, Oil, EM and Russia stole my Xmas. The European economics team and my team had their annual joint Xmas lunch yesterday (in collaboration terms think Aerosmith and Run D.M.C.) but because of the EMR and the above key themes I made a polite exit at around 5.30pm to keep a clear head to be able to try to make sense of everything that is going on. For all I know the lunch could still be in progress!!

Two of these stories see major developments today with the first round of the Greece presidential election and the much anticipated FOMC meeting.Indeed in just over 12 hours we may know a lot more about how brave the Fed actually are which will have a lot of pointers to their behaviour in 2015. One of the trillion dollar questions for 2015 is whether the Fed are going to try to ignore markets and attempt to start normalising rates. Alternatively are they going to have to acknowledge that they are now hostage to trillions of dollars of global investments that have been directed into various assets due largely to their (and other central bank’s) extraordinary policy over the last few years. We’ll get clues today and it will be fascinating to see the tone of the statement and Yellen’s press conference. Overall we think they are still hostage to markets and will struggle to raise rates in 2015 but we might get some frights along the way as they do want to tighten. Given recent turmoil in global markets our gut feeling is that tonight will be a fairly dovish meeting. They might save the hawkish rhetoric for a meeting where markets are more stable.

If that isn’t enough we’ve also got the November CPI print in the US this afternoon to look forward to. Our US colleagues expect the headline reading to drop to -0.2% mom (vs. -0.1% expected) and the core to remain unchanged at +0.2% mom which is a tad above market expectations (+0.1%). They note that although inflation expectations have dropped – most obviously through the declines in the oil market and subsequent fall in the 5y/5y forward inflation rate to recent lows – recent macro data perhaps paints a more mixed picture with the University of Michigan survey showing a 0.3% rise in LT inflation expectations whilst the Philadelphia survey showed a slight decline in projected inflation forecasts. It’ll be interesting to see if today’s print causes any material changes to the language used around inflation in the FOMC statement.

It was a wild day for financial markets yesterday with volatility in most major equity benchmarks as oil prices swung back-and-forth and the Russian ruble traded with extreme volatility. Starting with the latter, following the overnight rate hike by the Central bank of Russia, markets opened with some hope in early trading as the ruble opened around 9.7% firmer and traded back below 60 in the first hour of trading. The better sentiment appeared to be short-lived however as by lunch-time the currency touched its lows of the day at 79.2, an intra-day day swing of nearly 36% with speculation over capital controls for the currency weighing on sentiment. The currency firmed up into the close however following comments from the Economy minister Ulyukayev who denied any potential controls but still closed 5.72% weaker at 67.91 to the Dollar. Russian government bonds didn’t fare much better, 10yr benchmark hard currency yields closing 40bps wider at 7.59% and local currency yields 286bps wider to 15.88%. The dollar-denominated RTS Index declined 12.41% – the biggest one day fall in six years and is now down nearly 57% YTD. The moves also came at the same time as the FT reporting that President Obama is due to sign a bill authorizing fresh sanctions on Russia – although the article suggests that the bill will have little immediate impact and instead allows Congress to impose tougher sanctions on Russia next year should we see further escalation in the Ukraine crisis. With the dramatic moves in the currency, Russian banks in particular suffered yesterday with Sberbank (-21.60%) and VTB Group (-13.48%) declining sharply in London trading. State-owned Gazprom closed 11.78% lower. The moves have also caused Apple to halt online sales in Russia.

Over in the US the S&P 500 finished -0.85% yesterday following a volatile day in oil markets in which WTI (+0.04%) and Brent (-1.96%) closed at $55.93/bbl and $60.01/bbl respectively. Both grades have declined 1-2% again this morning. The volatility in US equities was evident by a 2.2% intraday trading range which saw the index open some 0.6% weaker before paring those losses to trade at a high of 1.4% as energy stocks recovered, only to then retreat through the afternoon session and close in negative territory as oil backtracked. The initial weakness largely came about following a set of soft macro releases with housing market data largely disappointing. Both November housing starts (-1.6% mom vs. +3.1% expected) and November building permits (-5.2% mom vs. -2.5% expected) came in below consensus. The December flash manufacturing PMI also came in below expectations at 53.7 (vs. 55.2 expected) – marking the fifth consecutive fall since August’s 3 year high. The energy component of the S&P 500 actually closed as the top performing sector (+0.7%) despite WTI trading from anywhere as low as $53.6/bbl to as high as $57.2/bbl intraday. Credit markets closed modestly softer whilst Treasuries ended firmer although they also swung around with moves in the ruble. Benchmark 10y yields closed 5.9bps tighter at 2.059% – having touched a low of 2.009% as the ruble traded at its intra-day lows.

Closer to home, European stocks also traded with notable volatility although the Stoxx 600 closed +1.73%, fuelled by a turn-around in energy stocks (+3.31%) over the last two hours of trading. This was before the late US sell-off started though. Data was modestly stronger which helped. Although both preliminary euro-area December PMI manufacturing (50.8 vs. 50.5 expected) and services (51.9 vs. 51.5 expected) prints came in ahead of expectations, on a regional basis the readings were more varied. In Germany manufacturing (51.2 vs. 50.3 expected) was stronger, however services (51.4 vs. 52.5) disappointed. In contrast, the French manufacturing print (47.9 vs. 48.6 expected) came in below consensus, but services (49.8 vs. 48.5) was a beat. UK CPI was soft, the core reading dropping to 1.2% yoy from 1.5% previously and back to levels last seen in 2008. Elsewhere the December German ZEW survey was strong, with expectations of 34.9 rising from 11.5 in November – the strongest reading since April. Bunds closed firmer, the 10y benchmark extending its record lows in yield to close 2.7bps tighter at 0.596%.

Staying in Europe and focusing on Greece, ahead of the presidential election today there was further pressure on Greek rates yesterday with 3y and 5y yields widening a further 57bps and 80bps to 10.83% and 9.90% respectively. The ASE closed 0.26% lower. With regards to today, voting starts at 5pm GMT and results will be known within the hour. In terms of the outcome to the vote, DB’s George Saravelos is expecting around 165 yays, way short of the 200 required today and the 180 required in the third round on December 29th. George doesn’t think that this would preclude a positive outcome in the third round (some MPs could easily change vote), but it would highlight how difficult it will be to get there. His baseline is that we don’t and there being an 80% chance of an early general election.

Quickly refreshing our screens this morning, bourses in Asia are generally firmer. Having opened softer the Nikkei is now +0.36% as we type, supported by a smaller than expected November trade deficit print. The Shanghai Comp (+0.45%) has extended its 3-year highs although the Hang-Seng is 0.36% lower – dragged down by gaming names following news that China is set to crackdown on illicit money channeling in Macau.

Looking ahead to today’s calendar and away from the CPI print and FOMC meeting we’ve got the BOE minutes as well as various employment prints for the UK as well as the final November CPI reading for the Euro-area and trade data in Spain.

 

 

end

 

 

 

The Euro tumbled after Coeure who previously sided with the Germans

signaled that everyone is onside with QE!! Go figure!

 

(courtesy zero hedge)

 

EUR Tumbles As ECB Coeure (Once Again) Signals Sovereign QE Is Coming

Just two weeks after Germnay reported that Draghi was facing mutiny and Benoit Coeure was firmly against the ECB undertaking Sovereign QE, The WSJ reports today that the very same ECB board member sees a “broad consensus around the table in the governing council that we need to do more to raise inflation and boost the economy.” This of course has been interpreted by the market as meaning sovereign QE though there is no mention of an agreement on what “more” is.

 

 

As The WSJ reports,

In an interview with The Wall Street Journal, Mr. Coeuré also provided details of the ECB’s plans to publish minutes of its policy meetings starting next year, saying the accounts should be released four weeks after meetings and will be “substantial” in providing the balance of views among officials.

 

“I see a broad consensus around the table in the governing council that we need to do more” to raise inflation and boost the economy, Mr. Coeuré said in the interview, conducted late on Tuesday at his office in the ECB’s new skyscraper headquarters in Frankfurt.

 

 

“It’s not that much of a question on whether we should do something, but more a discussion on the best way to do it,” he said. “If we want to do more we obviously have to reach out to market segments where there is more liquidity and that is why the government bond market is the baseline option, which doesn’t necessarily mean we would only buy government bonds.”

 

“What has changed is the confirmation of low growth and low inflation, and the oil shock which is obviously new,” Mr. Coeuré said.

And then there is this utter bullshit smoke and mirrors…

“We were able to design [OMT] the right way because we took concerns on board, and we are now going through exactly the same process,” Mr. Coeuré said. “The more governors standing by this new instrument, the safer you feel that the pros and cons have been weighed in the right way.”

So why not show the world the documentation?

*  *  *
Now ECB QE is even more priced-in-er-er…

 

 

 

end

 

The Russian central bank releases 7 measures to stabilize its financial sector:

 

(courtesy zero hedge)

 

Russian Central Bank Releases 7 Measures It Will Take To Stabilize The Financial Sector

 

 

In its latest effort to counter financial instability – and show its commitment to maintaining order and support for the economy – Russia’s Central Bank (CBR) has unveiled 7 new measures… Ranging from bank recaps to measures aimed at helping manage interest-rate and credit risks, the reaction in the Ruble is positive for now… as perhaps, taking a lesson from the US, The CBR removes Mark-to-Market accounting for various credit instruments.

 

The Central Bank of the Russian Federation (Bank of Russia)

On measures of the Bank of Russia to maintain the stability of the Russian financial sector

1. The Bank of Russia will introduce a temporary moratorium on the recognition of the negative revaluation of securities portfolios of credit institutions and non-credit financial institutions,which will reduce the sensitivity of market participants to market risk.

2. To limit the impact of the revaluation of foreign currency denominated assets and liabilities on prudential requirements of credit institutions, the Bank of Russia plans to provide credit institutions temporary right to use in the calculation of prudential requirements on transactions in foreign currency rate calculated in the previous quarter.

3. The Bank of Russia will improve the mechanism of credit institutions in foreign currency. Within the framework of a currency Repo planned additional auctions for various periods of time if necessary. As part of the mechanism for providing loans to credit institutions secured by non-marketable assets (according to the Regulation number  312-P), is scheduled to begin providing loans to banks in foreign currency, secured credit claims in foreign currency to non-financial organizations.

4. The Bank of Russia considers the central counterparty on the Moscow Stock Exchange as an important institution for centralized distribution of liquidity among all financial market participants – both credit and non-credit financial institutions. To ensure the sustainability of the stock market for the Bank of Russia, if necessary, will provide support to the central counterparty on the Moscow Stock Exchange, market participants have confidence in the reliability of centralized clearing and continuity of its functions.

5. To empower Interest Rate Risk Management The Bank of Russia plans to:

– Temporary (up to 07.01.2015) not to apply the restriction values of the total cost of consumer credit (loan) at the conclusion of credit and microfinance institutions in consumer contracts (loan);

 

– Increase the range of the standard deviation of market interest rates on deposits in banks from the estimated average market interest rate to a maximum of 3.5 percentage points (instead of 2 percentage points at the moment).

6. To enhance the management of credit risks, the Bank of Russia intends to:

– To give credit institutions an opportunity not to impair the quality assessment of debt service, regardless of the assessment of the financial position of the borrower on loans restructured, for example, in the case of changes in the currency in which the loan is denominated, regardless of changes in the maturity of the loan (principal and (or) percent ), the interest rate;

 

– To give credit institutions an opportunity to make a decision on non-worsening assessment of the financial position of the borrower for the purpose of provision for losses if the changes in financial position due to the action imposed by individual foreign countries restrictive economic and (or) policy measures (Annex to the letter of the Bank of Russia from 21.10.2014 ?  184 -T);

 

– To increase the period during which the credit institution has the right not to increase the size Actual provision of loans to borrowers, financial position, and (or) quality of debt service, and (or) as collateral for loans has deteriorated as a result of an emergency, from 1 year to 2 years.

 

– To increase the period during which a credit institution can not form a provision for possible losses on loans for investment projects, while maintaining other existing minimum reserve requirements set depending on the number of years, the lack of payments on investment loans or entering the minor size;

 

– To cancel the increased rate risk with respect to loans to leasing and factoring companies – participants of the banking group, which includes the lending bank;

 

– Introduce a reduced weighting factor of risk for the ruble-denominated loans to Russian exporters under an insurance contract EXIAR (Export Insurance Agency of Russia).

7. In order to maintain the stability of the banking sector in the face of increased interest rate and credit risks of a slowdown of the Russian economythe Bank of Russia and the Government of the Russian Federation prepare measures to recapitalize credit institutions in 2015.

*  *  *

So far a modestly positive reaction the Ruble…

 

and Russian Stocks are rallying…

 

Are traders greatly rotating back to Russia?

 

Charts: Bloomberg

 

 

end

 

And the result:  Russian stocks soar 17% and the rouble trades now at the 62 handle instead of the 72

 

(courtesy zero hedge)

 

 

 

Russian Stocks Soar 17% – Most Since 2008; Ruble Back Below 62/USD

 

After falling for 15 of the last 16 days, the RTS (Russian Stocks) are surging 17% today, extending gains post CBR 7 Measures, the most since October 2008.The Ruble is soaring also – back below 62/USD.

RTS biggest gain since Oct 2008…

 

Juiced by the CBR Measures…

 

Charts: bloomberg

 

 

end

 

How gold has performed in roubles in the past month:

 

 

 

 

 

 

end

 

 

The following commentary was released late last night. It explains that western banks are cutting off liquidity to Russian entities.  The Russians have now introduced their SWIFT system which will bypass the USA dollar.

 

It is interesting that Goldman Sachs cut off all  rouble transactions due to the volatility in that currency.  They must have been caught in the wrong direction and suffered huge losses:

 

(courtesy zero hedge)

 

 

 

Western Banks Cut Off Liquidity To Russian Entities

As Zero Hedge first reported today, shortly before noon one (and subsequently more) FX brokers advised clients that any existing Ruble positions would be forcibly closed out because “western banks have stopped pricing USDRUB“, over concerns of Russian capital controls. Ironically, it was this forced liquidation of mostly short RUB positions that pushed the RUB higher, which in turn had a briefly favorably impact on energy commodities and risk assets, as the market had by then perceived the Ruble selloff as excessive. Of course, since nothing had actually changed aside from a temporary market technical, the selloff promptly resumed into the close of trading once the market finally understood what we had explained hours previously.

And unfortunately for the bulls, various falling knife-catchers, and those who hope the Russian situation will stabilize imminently with or without capital controls, it appears things in Russia are about to get a whole lot worse because as the WSJ reports, the next driver of the Russian crisis is likely to come from within the banking system itself because global banks are curtailing the flow of cash to Russian entities, a response to the ruble’s sharpest selloff since the 1998 financial crisis.”

Presenting Russia’s banks: now cut off from the outside world as the second cold war goes nuclear, at least when it comes to the financial system: 

Such banks as Goldman Sachs Group Inc. this week started rejecting requests from institutional clients to engage in certain ruble-denominated repurchase agreements and other transactions designed to raise cash, according to people familiar with the matter.

 

Bankers and traders say the moves to restrict some ruble transactions have become increasingly widespread among major Western financial institutions this week, even as the same institutions continue to try to profit from the ruble’s wild swings. The moves, which the banks are deploying to protect themselves against further swings in the currency, have the potential to add to the strain on Russia’s financial system.

 

Goldman in recent days largely stopped doing longer-term ruble-denominated repurchase agreements, or repos, in which securities or other assets are swapped in exchange for cash, said a person familiar with the matter. The Wall Street bank is still doing short-duration ruble repos, those that mature in less than a year, this person said.

And where Goldman goes, everyone else follows, even though according to the WSJ this has not happened, yet:

Other banks, including Bank of America Corp. and Citigroup Inc., haven’t changed their trading with Russia or in rubles, according to people familiar with those banks.

They will, it is only a matter of time. Meanwhile, the entire Russian capital market, and not just its currency, is becoming isolated from the rest of the Western world:

In one sign of the banking industry’s hasty retreat, the London-based manager of an emerging-markets hedge fund said Tuesday that he couldn’t get any banks to trade Russian government bonds with him.

Of course, anyone who read our article in early November explaining “How The Petrodollar Quietly Died, And Nobody Noticed“, predicting the crunch in global intermarket liquidity as a result of the collapse in crude, would know this is coming. As for the death of the Petrodollar we warned about, a death which has resulted in the disintegration of market volume just as warned, suddenly everyone is noticing.

Regardless, what all of the above means is that Russia now has at best a few weeks in which to find an alternative source of short-term funding. One coming from the East.

The question is will Putin swallow his pride and proceed with the next logical step as the Eurasian axis realizes the time to abandon the dollar has long past, that now only actions matter and not words, and joins forces with China in a new monetary union, one which combines the Ruble and the Yuan, and is backed by China’s gold and Russia’s natural resources, as cheap as they may be for the time being… until one or more of the largest middle-east oil exporters experiences a major and “unexpected” geopolitical incident, one which sends the price of oil soaring right back up.

 

end

 

 

Roxburgh is correct!!

(courtesy the Guardian/Roxburgh)

 

Wrecking Russia’s economy could be a disaster for the west

It’s sheer folly to hope that the country is destabilised and Vladimir Putin overthrown. We’ve no idea what the outcome would be
George W Bush looks into Putin's eyes
‘Bush understood nothing about Russia – from the moment he looked into Putin’s eyes and told us he got a sense of his soul.’ Photograph: Maxim Marmur/AFP/Getty Images

 

Like a rudderless ship running out of fuel and buffeted in an icy storm, the Russian economy looks as if it is heading for a crash. All the graphs – the rouble-dollar rate, the slump in GDP, bank interest rates, oil prices – look like menacing icebergs. The only question seems to be how long the ship can stay afloat.

There are two immediate causes of the crisis: the price of oil, and western sanctions. Oil is trading at below $60 a barrel while Russia, still overwhelmingly dependent on exports of its most precious resource, needs a price of $105 to balance its books. That’s the consequence of having failed to reform and diversify the economy over the past 20 years.

As for the west’s sanctions, they were introduced with one explicit aim – to force Putin to change tack in Ukraine. At least, that was the stated aim. But since the measures show no sign of having any effect on his thinking, and yet the west is considering even more sanctions, there is obviously another goal – to punish Putin for his actions, regardless of whether he changes his mind. Sadly, it is not Putin who feels this punishment. It is the Russian people.

The west needs to accept a simple fact: that Putin’s response to sanctions is always bizarre. He tends to favour reactions that hit his own people rather than the west. America passed the Magnitsky Act to “punish” those alleged to be responsible for the killing of the lawyer Sergei Magnitsky, and Putin responded by banning adoptions of Russian orphans by Americans. There is no sign that the killers of Magnitsky suffered in any way; indeed the only official being investigated for the crime was released. The west imposed sanctions on Putin’s “cronies” and Russian banks because of the invasion of Ukraine and annexation of Crimea; and Putin responded by banning the import of western foodstuffs.

To keep repeating the same mistake again and again and expecting different results is, as they say, a sign of madness. And if by doing so you punish only ordinary Russian people, then it is also cruel – and counterproductive. Twenty years ago the dream was to rescue the former communist world and bring prosperity and democracy to its people. What we are doing now is impoverishing and alienating the Russians.

We can, of course, stick to our guns and insist that “sanctions are having an effect”. But what will we gain if the only effect is to destroy the Russian economy? Perhaps the hope is to destabilise the country so much that Putin is overthrown. (I detect much schadenfreude among observers, who desperately hope a collapse of the Russian economy will bring about Putin’s fall.) If so, it is a highly dangerous game of chance. Pouring fuel on Kremlin clan wars that we barely understand would be the height of folly. We have no idea what the outcome might be – and it could be much worse than what we have at present.

Or perhaps the hope is that the Russian people, ground down into poverty and despair, will rise up against the Kremlin and install a government of the west’s choosing. Dream on!

It has long been my contention that we should deal with the causes of Putin’s aggressive behaviour, not the symptoms. There is a way to bring him back into the fold (always assuming that anyone actually wishes to do so any more), but it will require fresh ideas that are utterly unappealing to most of the west’s leaders. It will take bold and imaginative thinking, not kneejerk reactions and the false logic of piling on ever tougher sanctions.

Perhaps it is time to recognise that George W Bush’s disastrous foreign policy legacy encompasses far more than just Iraq, torture and the fanning of terrorism. Bush also understood nothing about Russia – right from the moment that he looked into Putin’s eyes and told us how he “got a sense of his soul” – and now we are living with the consequences.

It was the Bush administration that created the sense of insecurity that has caused Russia to react, and overreact, to every perceived threat – including, most recently, the perception that Ukraine was being forcibly dragged out of Russia’s orbit and into the west’s. Bush unilaterallyabandoned the anti-ballistic missile treaty, seen by Russia as the cornerstone of strategic balance; he began building a missile shield on Russia’s doorstep; he expanded Nato to Russia’s frontiers, blithely granting the east Europeans “security” while causing Russia to feel threatened.

The solution is clear. Abandon the missile shield. End the expansion of Nato. And think boldly about a new security arrangement for the whole of Europe – one that will bring Russia in rather than leaving it outside feeling vulnerable. If this were done, everything I know about Putin and Russia tells me the crisis over Ukraine would be solved – and the Russian economy would not end up being needlessly destroyed, causing woe and bitterness among its people. If it is not done, we will have to deal with a resentful Russia for decades – for Putin’s successors will also demand security.

Let us return to the ideals of 1989, when Mikhail Gorbachev envisaged a new “common European home”. That is what every Russian leader since him has wanted – while the west, it seems, never did.

• Angus Roxburgh served as an adviser to the Russian government from 2006 to 2009

 

 

end

Today, the Greek President vote falls short. They received only 160 votes.  They eventually need 180 votes. They have 2 more cracks at it.

If they fail, then a snap election is called and the Syriza party looks poised to win

 

(courtesy zero hedge)

 

Greek Prime Minister Fails To Get Enough Votes To Elect President, Has Less Support Than Expected

 

As previewed earlier today, in a vote whose outcome was widely anticipated, Greece’s Samaras failed to get enough votes (200) to push through his choice for president, Stavros Dimas.

  • GREECE’S SAMARAS FAILS TO GET VOTES TO ELECT PRESIDENT: TALLY
  • GREECE’S SAMARAS LOSES FIRST OF THREE DEC. VOTES ON PRESIDENT

As a reminder, this is the first of three votes, in which the candidate needs 200 votes. ND and PASOK have together 155 seats in the Parliament, and they expected to win some votes from independent MPs and possibly also some votes from Independent Greeks and Democratic Left MPs. According to Greek media, the government expects to win a total of 162-165 votes for Dimas in the first round.

The final vote: 160 For, 135 Against, and 5 Abstain. This is a problem because the whisper number was around 170 for the 3rd round vote to be even remotely close.

Up next is the second round vote when the threshold once again is 200, which will take place on December 23, with the vote limit dropping to only 180 votes in the third and last round of voting on December 29.

In other words, Samaras is a crucial 20 votes short of getting his candidate pushed through in 2 weeks, after which follows a messy election that according to recent polls may easily be won by left-wing Syriza and its anti-bailout leader, Samaras.

Should the Parliament fail to elect Greece’s next President, the Parliament dissolves and snap elections are due. That’s the “worst case” scenario for the statists as Goldman warned previously of a “Cyprus-Style Prolonged Bank Holiday.” And considering the direct urging from none other than Juncker telling Greeks not to “vote wrong” perhaps chosing the “wrong president” is precisely what the long-suffering country needs.

For those seeking more clarity, here is the primer fromKeep Talking Greece:

The countdown for the first round of Presidential voting started. At 7 pm local time the roll call procedure will start in the Greek Parliament. Three hundred lawmakers will be asked to say either the name of the sole presidential candidate “Stavros Dimas” or just “Present” if they don’t agree.

According to the rules of Presidency vote, the procedure opens with the Parliament Speaker reading the statute, the votes-collectors take their places and the voting starts.

Each MP who hears his name stands up and expresses his preference. Each vote is being noted down.

No debate takes place, and no MP has the right to justify his/her vote.

The voting procedure lasts 40 minutes.

Stavros Dimas is the sole candidate proposed by coalition government partners Nea Dimokratia and PASOK.

In the first round of voting, the candidate needs 200 votes. ND and PASOK have together 155 seats in the Parliament, and they expect to win some votes from independent MPs and possibly also some votes from Independent Greeks and Democratic Left MPs. According to Greek media, the government expects to win a total of 162-165 votes for Dimas in the first round.

Also 200 votes are needed for the second round (23. December), but only 180 votes in the third and last round of voting (29. December).

All opposition parties are expected to vote “Present”.

Eight Golden Dawn MPs, currently in custody pending trial, will be taken to the Parliament and participate in the voting.

Should the Parliament fail to elect Greece’s next President, the Parliament dissolves and snap electionsare due.

Pressure to MPs to vote in favor of Dimas has reached unbelievable dimensions with national and international mainstream media to warn of “an economic and political turmoil” should the country go to early elections.

Why are they afraid of the snap polls?  Oh, because chances are big that left-wing SYRIZA wins the elections and attempts some radical changes in the oh-so-successful loan and austerity agreements with the country’s lenders, the Troika.

 

 

end

 

 

 

 

Bellwether stock Fedex misses despite the plunging energy prices.

Fedex is a great stock measuring global demand!!

 

(courtesy zero hedge)

 

 

 

Logistics Bellwether FedEx Misses Across The Board Despite Plunging Energy Costs

 

Remember the narrative that the plunge in gas prices is supposed to lead to a surge in corporate profitability if only for those companies for which energy is a cost (not a top-line item like in the decimated energy sector?). Moments ago logistics and trade bellwether came out with numbers that roundly refuted this, after it missed not only on the top line, with revenues of $11.94 billion on expectations of $11.98 billion, but a wide EPS miss, printing $2.14, well below the $2.25 expected and one which the company admitted includes the benefit of $0.16 in EPS from stock repurchases.

This is what the company had to say about its surprising across the board miss:

Operating income and margin increased primarily due to higher volumes and base yields in all three transportation segments. Results in the second quarter also included benefits from the company’s profit improvement programs, lower pension expense and a slightly positive net impact from fuel. These benefits were partially offset by higher aircraft maintenance expense due to the timing of aircraft maintenance events.

 

Revenue increased due to higher U.S. domestic package volume and international export package base revenue, partially offset by lower fuel surcharges and exchange rates. U.S. domestic package volume grew by 7%, including a 10% increase in U.S. overnight box. U.S. domestic revenue per package declined 2% due to decreased fuel surcharges and lower weight.

 

FedEx International Economy® volume grew 5%, while FedEx International Priority® volume increased 1%. International export revenue per package was flat, as higher rates were offset by unfavorable currency exchange and lower fuel surcharges.

But with gas prices seemingly sticky at these new low, low levels surely FedEx would at least boost its guidance as a result of lower costs, right? Wrong:

The company reaffirms its fiscal 2015 earnings forecast of $8.50 to $9.00 per diluted share. The outlook assumes continued moderate economic growth and a modest net benefit from fuel. The capital spending forecast for fiscal 2015 remains $4.2 billion.

And while we commend FedEx on posting revenue increases across its four key segments, including Express, Ground, Freight and Services, what was omitted is how FDX got there. A few things to note:

  • Express Package Yield, aka Revenue per Package: down 2%
  • Freight total average daily pounds: down 2%
  • Revenue per US freight pound: down 2%
  • Fedex Ground operating margin down from 15.4% to 15.2% despite a 25% drop in fuel operating expenses.

And so on. Judging by the plunge in the stock price, the market is starting to see through the “narrative”

Your more important currency crosses early Wednesday morning:

Eur/USA 1.2458 down .0053

USA/JAPAN YEN 117.19 down 0.140

GBP/USA 1.5717 down .0025

USA/CAN 1.1641 up .0009

This morning in Europe, the euro is well down , trading now well below the 1.25 level at 1.2458 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.  This morning it continues to exhibit extreme havoc to our yen carry traders as it settled  up in Japan by 14 basis points and settling just above the 117 barrier to 117.19 yen to the dollar. This would certainly blow up our yen carry traders with this rapid ascent. The pound is down this morning as it now trades just above the 1.57 level at 1.5714.(very worried about the health of Barclays Bank and the FX/precious metals criminal investigation). The Canadian dollar is down today trading at 1.1641 to the dollar.

 

 

Early Wednesday morning USA 10 year bond yield: 2.09% !!! up 2  in basis points from Tuesday night/

USA dollar index early Wednesday morning: 88.25 up 12 cents from Tuesday’s close

 

The NIKKEI: Wednesday morning up 64 points or 0.38%

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

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

Gold early morning trading: $1200.00

silver:$15.88

 

 

Closing Portuguese 10 year bond yield: 2.86% down 7 in basis points from Tuesday

Closing Japanese 10 year bond yield: .36% !!! par in basis points from Tuesday

 

 

Your closing Spanish 10 year government bond, Wednesday ,down 3 in basis points in yield from Tuesday night.

Spanish 10 year bond yield: 1.77% !!!!!!
Your Wednesday closing Italian 10 year bond yield: 1.96% down 5 in basis points from Tuesday:

trading 19 basis points higher than Spain:

 

 

 

IMPORTANT CLOSES FOR TODAY

 

 

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

Euro/USA: 1.2345 down .0170

USA/Japan: 118.57 up 1.36

Great Britain/USA: 1.5576 down .0166

USA/Canada: 1.1641 up .0011

The euro fell badly in value during the afternoon , and it was way down by closing time , finishing well below the 1.24 level to 1.2345. The yen fell a lot in the afternoon, and it was still well down by closing up to the tune of 136 basis points and closing just above the 118 cross at 118.57. The British pound lost considerable ground during the afternoon session and it was down on the day closing at 1.5576. The Canadian dollar was well down in the afternoon and was down on the day at 1.1641 to the dollar.

Currency wars at their finest today.

 

 

Your closing USA dollar index: 89.05 up 93 cents from Tuesday.

your 10 year USA bond yield , up 7 in basis points on the day: 2.14%!!!!

 

 

European and Dow Jones stock index closes:

 

 

England FTSE up 4.65 or 0.07%

Paris CAC up 18.71 or 0.46%

German Dax down 19.46 or 0.20%

Spain’s Ibex down 32.40 or 0.32%

Italian FTSE-MIB down 102.02 or 0.54%

The Dow: up 288.00 or 1.69%

Nasdaq; up 96.48 or 2.12%

OIL: WTI 55.97 !!!!!!!

Brent: 60.69!!!!

 

Closing USA/Russian rouble cross: 61.60

 

 

end

 

 

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

Your trading today from the New York:

 

Santa Yellen Arrives: Stock Buying-Panic Sparks Biggest Short Squeeze In Over 3 Years

More crazy pills…

 

Another day, another face-ripping short squeeze… this was the biggest day for “most shorted” stocks in over 3 years!!!!

 

…that lifted stocks magnificently from last night’s closing lows to the week’s highs…

 

Small Caps rip in a massive short squeeze… up 2% on the week now!!!

 

Broken Markets

 

S&P’s best day since Jan 2013… ripping back above the 50DMA and 100DMA

 

Don’t get too excited…

 

Ruble rallied…

 

Oil roundtripped…

 

Energy credit did indeed raly on the day – how could it not – but we suspect stocks are getting a little ahead of themselves

 

Treasury yields rose on the day…post FOMC

 

rates decoupled from stocks

 

The USDollar surged…

 

Silver was relatively flat (but down hard on the week), goldslipped lower after FOMC, oil pumped and dumped…

 

 

 

 

Charts: Bloomberg

 

 

 

end

 

 

 

The chronological order of events today with respect to the FOMC meeting:

 

First:  the words “conserable time” replaced by the world “patient”

 

markets rejoiced..

 

No More “Considerable Time” – Meet The New, “Patient” Fed

 

With expectations that the FOMC would drop “considerable time,” ignore foreign market instability, and shrug off HY credit’s demise (as they had previously said it was a bubble), the members did not let anyone down…

  • *FOMC SAYS IT CAN BE ‘PATIENT’ IN APPROACH TO RAISING RATES
  • *FOMC DECLINES TO MENTION RECENT GLOBAL MARKET INSTABILITY
  • *FOMC SAYS PATIENT APPROACH ‘CONSISTENT WITH OCT. STATEMENT’
  • *FISHER, PLOSSER, KOCHERLAKOTA DISSENT IN FOMC DECISION

For the 3rd FOMC meeting in a row, equity markets have surged (and decoupled from bonds); we will soon see if history repeats a third time.

Pre-FOMC: S&P Futs: 1988.00, 10Y 2010%, Gold $1195, WTI $57.50

 

What happened the last 2 times…

 

The Fed goes on to say…

  • *FOMC SAYS JOB MARKET UNDERUTILIZATION `CONTINUES TO DIMINISH’
  • *FOMC SAYS LABOR MARKET `IMPROVED FURTHER’
  • *FOMC SEES INFLATION RISING TO TARGET AS LOW OIL IMPACT FADES
  • *FED SEES JOBLESS RATE AT FULL EMPLOYMENT BY LATE-2015
  • *FED SEES 2015 GDP GROWTH OF 2.6%-3%, UNCH VS SEPT. EST
  • *FED SEES INFLATION AS LOW AS 1% IN 2015 VS 1.6% IN SEPT. EST.
  • *FED SEES 2015 JOBLESS RATE 5.2%-5.3% VS 5.4%-5.6% IN SEPT. EST
  • *FED MEDIAN FED FUNDS RATE 2.5% END-2016 VS 2.875% SEPT. EST.

*  *  *

 

end

 

Confusion on the meaning of patient vs considerable:

 

(courtesy zero hedge)

 

Fed Confusion Sparks Crude Chaos; Stocks, Bonds, Bullion Whiplash

 

Stocks are up and crude oil is down following The Fed’s confusing statement. Treasury yields whiplashed lower then higher and are holding slightly lower. Gold did the same – holding slightly above pre-FOMC levels.

 

Bonds up, Stocks up, Gold up, Crude down…

 

Crude Oil has given back all its spike gains…

 

Be careful…

 

Charts: Bloomberg

 

end

 

 

Then  in the conference, everything went into total chaos:

 

(courtesy zero hedge)

 

Algos Spooked After Yellen Says “Almost All Participants” See 2015 Rate Hike

 

It was all going well for Janet – stocks were up, crude was down – and then she said…

  • YELLEN SAYS ALMOST ALL PARTICIPANTS SEE RATE INCREASE IN 2015

Sending stocks back below pre-FOMC levels and sparking a tumble in Gold, a surge in The Dollar, and slip higher in yields.

 

 

and the reaction across assets

end
Then she loses all credibility when she states that rates will rise after the next “couple” of meetings:

“A Couple Means Two” – Why This Is Important

Moments ago, after Yellen earlier explained that the Fed may hike rates at any moment, and certainly not only during press-briefing days, she also explicitly, and very unexpectedly, said that the Fed will likely not hike for a “couple” of meetings. And when she was subsequently asked to explain what “a couple” means, she further explained that it means “two.” As a reminder, this comes from a Fed chairwoman who had a trial by fire when, fresh after replacing Bernanke, she locked herself in the “6 month” calendar interval. In other words, she knows not to give the market a timing bogey. And still she did so. Which, quite explicitly, means that anything starting with the 3rd meeting, currently scheduled for April 28-29, 2015, and onward is very fair game and the market will be foolish to expect the Fed not to follow through with this warning, a Fed which is already dangerously close to losing all credibility it has.

And another way of stating it comes from Peter Tchir of Brean Capital. His take:

Looks like the April/May meeting could be the date.  3 reasons:

 

1) A couple means 2 – just stated
2) then could host a conference call on a non press conference meeting
3) she said, i keep telling the market what we are going to do, i wash my hands of the market if they won’t listen

 

She also does not get about oil as transitory. She is remaining very consistent. Core is what matters. 

 

This is hawkish:

 

Trades:

 

Short treasuries 3 year in particular again
Short front end eurodollar futures
Short equities
Hit any last hy energy bond bids while they remain
Buy IG CDX23 protection (short)

end

And now Dave Kranzler sums up the FOMC meeting today.

He is right, it marks an all time low for the uSA:

 

(courtesy Dave Kranzler/IRD)

 

Today Marks A New All-Time Low For This Country

“Janet Yellen is not even fit to be a high school teacher.  She has no idea what she’s doing” – a good friend and colleague of mine.

Grandma Yellen changes the language in the Fed policy statement from “considerable time” to “patient” and the S&P  500 is driven up 2% because of this.  Technically, there’s no difference in meaning between the two words.  Free money is good for stocks I guess but not for gold.  Gold is anti-free money.  Free money is good, anti-free money is bad.  George Orwell is laughing his ass off somewhere in the ethosphere.

Semantically there is really no difference in meaning between the phrase “considerable time” and the word “patient.”   I wonder if Grandma Yellen knows what semiotics is.   Technically, this whole charade idiotic.

The United States is a corpse with a pulse.  The amount of debt outstanding increases by the hour.  This means that this country spends more every hour than it makes.   The bottom line is that today marks a new low for this country.

 

 

Early this morning, consumer prices plunge the most since 2008 due to basically to the lower gasoline and oil prices as well as a lack of demand

 

(courtesy zero hedge)

 

Consumer Prices Plunge Most Since Dec 2008

 

Great news: The prices consumers pay dropped 0.3% MoM in November – the biggest deflation since Dec 2008.Of course, The Fed will be in “considerable” panic mode at this data and may choose to crush the hope of so many that rate hikes are coming in mid-2015 as definitive evidence that the US economy is well on the road to recovery. Ex-Food-and-Energy, prices rose 1.7% YoY – slightly missing expectations of +1.8%. Of course, a big driver of this ‘transitory’ disinflation is a 10.5% YoY drop in Gasoline and 6.6% MoM drop in November. Despite this huge drop, and thge promises of various talking heads, airfares rose 1.36% in November (after also rising 2.39% in October) – so much for the benefits to the consumer.

 

 

The breakdown by component, showing the 6.6% plunge in gas prices, and the fuel oil index dropping 3.5% in November, its ninth consecutive decline.

Since everyone is most concerned by energy prices, here is what the BLS had to say:

The energy index declined for the fifth month in a row, falling 3.8 percent in November. The gasoline index continued to decrease sharply, falling 6.6 percent. (Before seasonal adjustment, gasoline prices fell 8.9 percent in November.) The fuel oil index fell 3.5 percent in November, its ninth consecutive decline. The gasoline index has fallen 10.5 percent over the last 12 months, and the fuel oil index has declined 10.1 percent. The index for natural gas also declined in November, decreasing 1.7 percent, but it has risen 3.2 percent over the last year. Electricity was the only major component index to rise in November; it increased 0.1 percent and has risen 2.8 percent over the past year.

So while gas prices dropped again, food rose, with the food index up 0.2 percent in November after increasing 0.1 percent in October.

The index for food at home rose 0.1 percent in November and has risen 3.4 percent over the past year. Indexes for major grocery store food groups were mixed in November, with three increases and three declines. The index for meats, poultry, fish, and eggs increased 0.6 percent in November after declining in October. The index for beef and veal rose 0.8 percent, its tenth consecutive increase. The index for nonalcoholic beverages rose 0.5 percent, and the index for other food at home increased 0.4 percent. In contrast, the fruits and vegetables index turned down, falling 0.7 percent in November after a 0.9 percent increase in October. The index for fresh vegetables rose 1.8 percent, but the fresh fruits index fell 2.9 percent. The indexes for dairy and related products and for cereals and bakery products both fell 0.2 percent. All six groups increased over the past 12 months, with increases ranging from 0.2 percent (cereals and bakery products) to 9.1 percent (meats, poultry, fish, and eggs.) The index for food away from home increased 0.4 percent in November, its largest increase since January 2012, and has risen 2.9 percent  over the past year.

And here is how everything else did:

The index for all items less food and energy rose 0.1 percent in November following a 0.2 percent increase in October. The shelter index rose 0.3 percent, with the rent index rising 0.3 percent and the index for owners’ equivalent rent increasing 0.2 percent. The index for lodging away from home was unchanged in November. The index for medical care rose 0.4 percent in November, its largest increase since August 2013. The index for prescription drugs rose 0.6 percent, while the physicians’ services index increased 0.5 percent. The airline fares index increased 1.4 percent after a 2.4 percent increase in October. The index for alcoholic beverages rose as well, increasing 0.8 percent. In contrast to these increases, the apparel index fell 1.1 percent and the index for used cars and trucks declined 1.2 percent. Several indexes posted more modest declines; the indexes for recreation, for household furnishings and operations, and for personal care all declined 0.2 percent, and the new vehicles index fell 0.1 percent. The index for all items less food and energy has risen 1.7 percent over the last 12 months. The shelter index rose 3.0 percent over that span, and the index for medical care increased 2.5 percent. Several indexes have declined over the last 12 months, including airline fares, used cars and trucks, household furnishings and operations, and recreation.

And now, back to the Fed.

 

 

end

 

Let us close with this great commentary and video conference with Paul Craig Roberts and Greg Hunter

 

(courtesy Craig Roberts/Greg Hunter/USAWatchdog)

 

 

 

 

 

Is Ruble Collapse Act of War-Paul Craig Roberts

 

By Greg Hunter’s USAWatchdog.com

Former Assistant Treasury Secretary Dr. Paul Craig Roberts thinks the only thing that explains the plunge in the Russian ruble is that it is being attacked by America.  Roberts contends, “It is not a currency crash in the sense there are no economic reasons for the ruble’s fall.  Unlike the United States, which has a massive trade deficit, and if the currency markets were not rigged, the dollar would be collapsing, the Russian economy has a trade surplus.  Therefore, there is no pressure on its currency for economic conditions.”  Dr. Roberts goes on to say, “This is not some independent action of market forces. So, it’s either hedge funds, currency speculators like Soros, or it’s an Act of War on behalf of the United States government by the Federal Reserve or the Exchange Stabilization Fund. . . or possibly both hedge funds working with the federal government.”

Manipulating the markets, any market, is supposed to be illegal, but don’t count on the bankers going to jail.  Dr. Roberts, who has a PhD in economics, thinks, “The big banks, the big Wall Street money, are essentially agents of the government.  This is why they don’t get prosecuted.  This is why they can break all kinds of laws, commit felonies and settle with a fine.  This is what we’ve been watching in the financial arena.  When these financial gangsters are caught, instead of being indicted and put on trial, they pay money.”

How could the Russians retaliate?  Dr. Roberts says, “If the Russians wanted to do payback, it’s very easy for them.  The next time all of these contracts, paper gold contracts, are dumped on the futures market, the Russians need to go and buy them all up, then demand delivery because there is no gold to deliver.  The whole system would collapse.  So, the Russians could cause a gold squeeze here anytime they want. . . . They would blow the system wide open because they can’t make delivery.”

On war, Dr. Roberts says recent resolutions passed in Congress certainly point to it.  Dr. Roberts explains, “These resolutions demonize Russia and define it as a great threat.  They call on Obama to arm the Ukrainians so we can use the Ukrainians to fight Russia.  In other words, we are going to fight Russia down to the last Ukrainian.  Of course, the Ukraine can’t fight Russia.   The whole purpose of this is to have the Russians slap them down, then we can go to the Europeans and say see, see the Russians invaded and look how dangerous they are.  You’re next.  They will be in Berlin tomorrow.  They’ll be in London by the end of the week.  Paris will fall, and Rome will burn. We can’t wait to tell the Europeans this because the whole purpose of this is to completely break every kind of relationship, economic, political and cultural, between Russia and Europe.  That’s what Washington’s goal is.  That’s what it’s all about.  This includes attacks on the ruble and sanctions.  They are setting up a war that nobody can win, for what reason?  For American superiority?  You don’t have superiority if the world is awash in radioactive waste and there is nuclear winter.  The climate has collapsed.  The whole thing is an absurdity.”

On the teetering economy and possible economic collapse, Dr. Roberts says, “We know something serious is wrong.  The only provision of Dodd-Frank that has any teeth is the provision that says if the big banks are going to be casinos and gamble on derivatives, they cannot do that in the depository institution where depositors have their accounts.  They have to farm it out into subsidiaries.  So, if the subsidiaries get into trouble, the subsidiaries have no access to depositors’ money.  This is the only real reform part of Dodd-Frank.  Citigroup got put into the recent spending bill, the repeal of this, so they can gamble on derivatives, and taxpayers and depositors are on the hook for the losses.  Why would you do that unless you had a lot of derivatives trouble.  It could easily be the oil derivatives. . . .  The banks can gamble all they want and they are covered by the FDIC, which has no money. . . . This gives the banks access to depositors’ money. . . . This is sick, and it shows the United States government is the most corrupt government on earth, far more corrupt than Russia or China.”

Join Greg Hunter as he goes One-on-One with economist Dr. Paul Craig Roberts.

(There is much more in the video interview with Dr. Roberts.)

 

Video Link

http://usawatchdog.com/is-ruble-collapse-act-of-war-paul-craig-roberts/

-END-

 

 

That is all for today.

I will see you Thursday night

bye for now

Harvey,

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