Good evening Ladies and Gentlemen:
Here are the following closes for gold and silver today:
Gold: $1177.90 down $1.80 (comex closing time)
Silver: $15.73 up 8 cents (comex closing time)
In the access market 5:15 pm
The gold comex today had a poor delivery day, registering 41 notices served for 4100 oz. Silver comex registered 0 notices for nil oz.
A few months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 247.62 tonnes for a loss of 55 tonnes over that period.
In silver, the open interest rose by 1719 contracts despite yesterday’s silver price fall by 34 cents. The OI refuses to go down despite raids. Somebody has extremely strong hands and are very patient. The total silver OI still remains relatively high with today’s reading at 149,820 contracts. The big December silver OI contract lost 66 contracts. It lowers to 35 OI contracts.
In gold we had a slight rise in OI with the fall in price of gold on Monday to the tune of $16.20. The total comex gold OI rests tonight at 374,716 for a gain of 806 contracts. The December gold OI rests tonight at 586 contracts gaining 2 contracts despite the raid.
TRADING OF GOLD AND SILVER TODAY
you have more important things to read instead of how gold/silver traded today.
Today, we had no change in gold inventory at the GLD /Inventory 724.55 tonnes
In silver, no change in silver inventory/
SLV’s inventory rests tonight at 338.135 million oz
We have a few important stories to bring to your attention today…
Let’s head immediately to see the major data points for today
First: GOFO rates:
all rates moved in the negative direction. Now the one month GOFO two month GOFO and 3 month GOFO rates are negative and also moved deeper into the negative. The 6th and 12 month GOFO also moved a little closer to the negative but still positive and out of backwardation.
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 23 2014
1 Month Rate: 2 Month Rate 3 Month Rate 6 month rate 1 yr rate
-.0625.% – .035 % –.015 % +. 03 .% +. 14250%
Dec 22 2014:
-.035% -.015% +.0200 % +.0475% +.1450%
Let us now head over to the comex and assess trading over there today.
Here are today’s comex results:
The total gold comex open interest rose today by 806 contracts from 373,910 all the way up to 374,716 with gold down up by $16.20 yesterday (at the comex close). It seems that nobody left the gold arena with the massive raid orchestrated by the bankers. We are now into the big December contract month where the number of OI standing for the gold metal registers 586 contracts for a gain of 2 contracts. We had 3 delivery notices served yesterday so we gained 5 contracts or 500 additional oz will stand for the December contract month. The non active January contract month fell by 36 contracts down to 443. The next big delivery month is February and here the OI rose to 224,241 contracts for a gain of 234 contracts. The estimated volume today was poor at 69,471. The confirmed volume yesterday was also poor at 139,290 even although they had help from our high frequency traders. The comex now has no credibility and many investors have vanished from this crooked casino. Today we had 41 notices filed for 4100 oz .
And now for the wild silver comex results. Silver OI rose by 1719 contracts from 148,101 up to 149,820 even though silver was down 34 cents yesterday. We are again losing more short covering from our bankers as the OI refuses to liquidate appreciably despite the low price of silver. The big December active contract month saw it’s OI lower by 66 contracts down to 35 contracts. We had 0 notices served upon on yesterday so we strangely saw 66 contracts roll to a future month. This is highly unusual late in any delivery month. The estimated volume today was simply awful at 16,102. The confirmed volume yesterday was just as bad at 35,324. We had 0 notices filed for nil oz today. It now seems that most of the volume at the comex is done off hours.
December initial standings
|Withdrawals from Dealers Inventory in oz||nil oz|
|Withdrawals from Customer Inventory in oz||nil oz ,|
|Deposits to the Dealer Inventory in oz||nil|
|Deposits to the Customer Inventory, in oz||21,379.75 oz (Manfra,Scotia)|
|No of oz served (contracts) today||41 contracts(4,100 oz)|
|No of oz to be served (notices)||545 contracts (54,500 oz)|
|Total monthly oz gold served (contracts) so far this month||2836 contracts(283,600 oz)|
|Total accumulative withdrawals of gold from the Dealers inventory this month||153,424.154 oz|
Total accumulative withdrawal of gold from the Customer inventory this month
Today, we had 0 dealer transactions
total dealer withdrawal: nil oz
we had 0 dealer deposit:
total dealer deposit: nil oz
we had 0 customer withdrawal
total customer withdrawal: nil oz
we had 2 customer deposits:
i) Into Manfra: 3697.25 oz (115 kilobars)
ii) Into Scotia: 17,682.500 oz (550 kilobars)
total customer deposits; 21,379.75 oz (665 kilobars)
We had 0 adjustment
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 41 contracts of which 41 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 (2836) x 100 oz to which we add the difference between the OI for the front month of December (586) minus the # gold notices filed today (41) x 100 oz = 338,100 the amount of gold oz standing for the December contract month.
Thus the initial standings:
2836 (notices filed for the month x 100 oz) + (586) the number of OI notices for the front month of December served upon – (41) notices served today equals 338,100 oz or 10.51 tonnes.
we gained 5 contracts or 500 additional oz will stand for delivery in the December contract month.
Total dealer inventory: 770,690.631 oz or 23.971 tonnes
Total gold inventory (dealer and customer) = 7.961 million oz. (247.62) tonnes)
Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 55 tonnes have been net transferred out. We will be watching this closely!
This initiates the month of December for gold.
And now for silver
December silver: initial standings
|Withdrawals from Dealers Inventory||nil oz|
|Withdrawals from Customer Inventory||25,001.200 oz (Brinks )|
|Deposits to the Dealer Inventory||nil|
|Deposits to the Customer Inventory||nil oz|
|No of oz served (contracts)||0 contracts (nil oz)|
|No of oz to be served (notices)||35 contracts (175,000 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||7,579,647.1 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 1 customer withdrawals:
i) Out of Brinks: 25,001.200 oz (one decimal)
total customer withdrawal 25,001.200 oz
We had 0 customer deposit:
total customer deposits: nil oz
we had 0 adjustments
Total dealer inventory: 64.594 million oz
Total of all silver inventory (dealer and customer) 175.276 million oz.
The total number of notices filed today is represented by 0 contracts for nil 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 (35) minus (the number of notices filed today (0) x 5,000 oz = the total number of silver oz standing so far in November.
Thus: 2933 contracts x 5000 oz + (35) OI for the November contract month – 0 (the number of notices filed today) =14,840,000 oz of silver that will stand for delivery in December.
We lost 330,000 silver ounces that will not stand for the December silver contract. These were obviously cash settled.
for those wishing to see the rest of data today see:
The two ETF’s that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.
There is now evidence that the GLD and SLV are paper settling on the comex.
***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold. I can visualize demand coming to the buyers side:
i) demand from paper gold shareholders
ii) demand from the bankers who then redeem for gold to send this gold onto China
vs no sellers of GLD paper.
And now the Gold inventory at the GLD:
Dec 23.2014; no change in gold inventory at GLD/724.55 tonnes
Dec 22.2014: no change in gold inventory at the GLD/724.55 tonnes
Dec 19.2014: a huge addition of 2.99 tonnes at the GLD/724.55 tonnes
Dec 18.2014: no change in inventory at the GLD/721.56 tonnes
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
Today, December 23 / we had no change in tonnage of gold inventory / 724.55 tonnes
inventory: 724.55 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 : 724.55 tonnes.
And now for silver (SLV):
Dec 23.2014: no change in silver inventory/338.135 million oz
Dec 22.2014: today we lost 862,000 oz of silver inventory from the SLV. this left late Friday night./Inventory 338.135 million oz
Dec 19.2014; No change in silver inventory at the SLV/Inventory 338.997 million oz.
Dec 18.2014: we lost 2.012 million oz of silver from the SLV vaults/inventory 338.997 million oz
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
December 23/2014/no change in silver inventory at the SLV/inventory
registers: 338.135 million oz
And now for our premiums to NAV for the funds I follow:
Note: Sprott silver fund now for the first time into the negative to NAV
Sprott and Central Fund of Canada.
(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)
1. Central Fund of Canada: traded at Negative 10.6% percent to NAV in usa funds and Negative 10.5 % to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 61.9%
Percentage of fund in silver:37.6.%
( December 23/2014)
2. Sprott silver fund (PSLV): Premium to NAV falls to – 0.72%!!!!! NAV (Dec 23/2014)
3. Sprott gold fund (PHYS): premium to NAV falls to negative -0.66% to NAV(Dec 23/2014)
Note: Sprott silver trust falls into negative territory at -.72%.
Sprott physical gold trust is back in negative territory at -0.66%
Central fund of Canada’s is still in jail.
And now for your most important physical stories on gold and silver today:
Early gold trading from Europe early Tuesday morning:
Mark O’Byrne is off today/no report from Goldcore
(courtesy Mark O’Byrne/Goldcore)
China now devalues its yuan to match the devaluing of the yen:
(courtesy Ambrose Evans Pritchard/UKTelegraph)
Ambrose Evans-Pritchard: China quietly joins Asia’s currency wars to avert deflation
By Ambrose Evans-Pritchard
The Telegraph, London
Monday, December 22, 2104
China has for the first time warned openly about the excessive strength of the Chinese yuan, a sign that the country may be shifting its exchange rate policy as deflation takes hold and currencies slide across Asia.
Yi Gang, the deputy governor of the People’s Bank of China (PBOC), said the yuan’s rise had been “very fast” over the past year as it surges in tandem with the US dollar, making it the world’s second strongest currency.
China’s real effective exchange rate (REER) has risen for six months in a row, tightening the screws on struggling exporters with wafer-thin margins. It rose 2.3pc in trade-weighted terms in November alone as countries devalue on all sides, leaving China exposed like a sore thumb. The effect is to tighten China’s monetary conditions into the downturn.
The country has quietly joined Asia’s escalating currency wars, steering the yuan down by 2pc against the dollar since early November. This looks increasingly like a move to protect itself against Japan’s dramatic devaluation and against weakening currencies in Korea and other key Asian states.
The yuan is no longer fixed to the dollar but remains linked through a “soft peg”. It has therefore been forced sharply upwards this year even though the Chinese economy is slowing and the country is losing global competiveness.
China is also sliding uncomfortably close to deflation. Producer prices are falling at a rate of 2.7pc as excess plant in steel, cement, chemicals, coal and even solar chips lead to price wars. The headline inflation rate has dropped to 1.4pc. “China has a major deflation problem,” said Societe Generale.
Any action to devalue the yuan has the effect of exporting China’s deflation to the rest of the world, especially to Europe where the authorities are struggling to defend themselves.
The chief currency shock comes from Japan, where the world’s most radical monetary experiment has caused the yen to plunge by 40pc since early 2012. This yen slide has become increasingly threatening over recent months as the Japan’s exporters start to cut prices rather than pocketing the exchange rate gains as higher profit.
Emerging market jitters have led to a further currency sell-off in a string of countries, from Russia to Indonesia, India, Thailand and Malaysia. The effect is to leave China stranded in a sea of devaluation. “This is similar to the East Asia crisis in 1998 when the Japanese yen was falling like a stone,” said George Magnus, from UBS. “Given the mix of slowing growth and deflation in China, I don’t see how they can hold the line.”
Mr Yi said the recent fall in the Chinese yuan is the result of market forces as Beijing phases out rigid controls. However, there are signs that the country is once again buying foreign bonds to hold down the currency.
China stopped intervening earlier this year after purchasing $106bn of US Treasuries, German Bunds, Gilts and other bonds, in the first quarter. Premier Li Keqiang said in May that the country’s $4 trillion reserves had become burden and was making it harder to run an independent monetary policy, but he does not have the last say on the Standing Committee.
Marc Chandler, from Brown Brother Harriman, said the Chinese currency is falling under its own weight. “We don’t think the government is intervening to drive it down. Capital is leaving the country,” he said.
Sprott Gold Miners ETF hits $100 million in assets
By Tom Lydon
ETFTrends.com, Irvine, California
Monday, December 22, 2014
One of the newest entrants to the gold miners exchange traded funds arena is proving to be successful. The Sprott Gold Miners ETF (SGDM) has eclipsed $100 million in assets under management, according to a statement issued today.
SGDM’s ascent to $100 million in assets under management makes the ETF one of the most successful new ETFs to come to market this year.
Several factors make SGDM’s asset-gathering acumen even more impressive. First, the ETF debuted in July, meaning the fund has needed less than half of 2014 to gather $100 million in assets. Second, gold prices have stumbled since SGDM debuted. Over the past six months, the SPDR Gold Shares fund has plunged 10.6 percent. …
… For the remainder of the report:
(courtesy Matt Clinch/CNBC)
Could Russia back its currency with gold?
Russia’s government could still be pushed into using its gold reserves to bolster the falling ruble, currency experts have forecast.
Rumors last week that Russia was on the verge of selling its gold reserves were quashed with the news on Friday that it has continued to add to its holdings. However, John Butler, chief investment officer at Atom Capital, and Alasdair MacLeod, the head of research at online bullion exchange GoldMoney Foundation, believe that Russian President Vladimir Putin could bring the country onto some sort of “gold standard” to try to shore up its economy.
“It was (and still is) in Russia’s power to adopt a gold standard,” MacLeod told CNBC via email.
“There is no doubt that Russia and China, plus the other Eurasian states in their sphere of influence are all accumulating gold and the indications are they see it as central to replacing the U.S. dollar for cross border trade.”
Whether Russia would actually decide to do it was another matter, said MacLeod, and expected the country’s central bank to the lack the courage to act. However, he said that if Putin is “provoked sufficiently” he may judge it to be in Russia’s best interests and could overpower any reluctant officials at the bank.
“It is already in Russia’s interest to cast itself off from inflating western currencies and to base their economy on sound money, aka gold,” he said.
Countries that are indebted and provide substantial welfare for its citizens would be most threatened by any return to gold convertibility, according to MacLeod, who said Russia could therefore be building a “weapon of mass financial destruction.”
The Nixon administration has been credited with originally breaking the link between gold and the dollar in the early 1970s amid surging inflation, rising costs from the Vietnam War, and an oil crisis.
Before that, fixed amounts of gold were directly convertible to the U.S. dollar and vice versa. That meant money supply theoretically was limited by the amount of gold backing it, and exchange rates were based on the difference in price for an ounce of gold between the dollar and a foreign currency.
Russia has been aggressively buying the commodity in recent years and has formed closer currency ties with neighboring China in the process. Russia’s gold holdings rose to 38.2 million ounces as of December 1, according to a statement by the central bank on Friday. This was a rise from a figure of 37.6 million from the month before, and allayed fears that it had sold the precious metal for dollars so it could further rebalance the ruble. The Russian currency had a torrid week, plunging bmore than 11 percent last Tuesday — its steepest intraday fall since 1998.
Jim Rickards, the senior managing director at Tangent Capital and who has written extensively on the subject, told CNBC via email that Russia will move to a gold-backed currency but believes that such a move could be a long way off.
Informal capital controls arrest Russian ruble’s slide
By Darya Korsunskaya, Elena Fabrichnaya, and Lidia Kelly
Tuesday, December 23, 2014
MOSCOW — The Russian rouble hit its highest levels in two weeks on Tuesday, shored up by informal capital control measures designed to head off a repeat of the galloping inflation and mass protests that marked Russia’s 1998 financial crisis.
The government put pressure on state-owned exporters on Tuesday to sell dollars while officials and banking sources said the central bank had installed supervisors at the currency trading desks of top state banks. …
Analysts said the measures were effectively a softer version of capital controls, adding that they did not believe President Vladimir Putin, who has drawn much of his popularity from financial stability and rising prosperity, would break his pledge not to resort to full-fledged controls. …
… For the remainder of the report:
And now for the important paper stories for today:
Early Tuesday morning trading from Europe/Asia
1. Stocks up on major Asian bourses as the yen continues to fall to 120.16, a fall of 1 basis points.
1b Chinese yuan vs USA dollar/ yuan weakens to 6.2260
2 Nikkei closed
3. Europe stocks up /Euro down/ USA dollar index up to 89.83/
3b Japan 10 year yield at .34% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 120.16
3c Nikkei now above 17,000
3e The USA/Yen rate well above the 120 barrier
3fOil: WTI 55.94 Brent: 60.81 /all eyes are focusing on oil prices. This should cause major defaults.
3g/ Gold up/yen down;
3h/ Japan is to buy the equivalent of 108 billion usa dollars worth of bonds per MONTH or $1.3 trillion
Japan’s GDP equals 5 trillion usa/thus bond purchases of 26% of GDP
3i Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt (see Von Greyerz)
3j Oil falls this morning for both WTI and Brent after rising on Rouble stability.
3k Greek second vote fails to elect a new president with 168 votes.
Needs 180 votes
3l China coming to the aid of cash strapped countries like Venezuela, Russia and Argentina
3m Gold at $1177 dollars/ Silver: $15.72
3n USA vs Russian rouble: ( Russian rouble up in value) 54.73!!!!!! Russian currency stabilizies
4. USA 10 yr treasury bond at 2.17% early this morning. Thirty year rate well below 3% (2.76%!!!!)
5. Details: Ransquawk, Bloomberg/Deutsche bank Jim Reid
(courtesy zero hedge)/your early morning trading from Asia and Europe)
Economic Data Bonanza Set To Send Algos Spasming To Recorder Highs
With the wind down of the record 2014 trading slump now in its final days (although judging by volumes throughout the year one may have a difficult time noticing just when the holidays began and ended), the already entertaining zero-liquidity market moves are sure to provide further amusement today in the context of the US economic data bonanza on deck, which includes Durable Goods, GDP, Personal Income and Spending, Richmond Fed, UMich, and New Home Sales. Beat or miss, all of the above are guaranteed to send the S&P to higher recorder highs because in the multiple-expansion euphoria blow-off top phase nobody cares about such trivia as fundamentals or the economy, especially when Japan and Germany areabout to monetize all of their gross issuance. Just remember to occasionally keep an eye on the preferred rigging correlation pairs: the USDJPY and the VIX, whose every illiquid jerk will be followed by Citadel & NYFed’s algos tic for tic.
As we enter further into the festive period, things are particularly quiet from a European perspective with most EU indices trading in the green with the exception of the FTSE MIB and IBEX who trade relatively unchanged amid a lack of pertinent newsflow. The main outlier in Europe is the Athens stock exchange which trades lower with losses of just under 2% ahead of the second round of voting in the Greek Presidential elections. Today we saw that Stavros Dimas is unable to secure the required 200 votes for a majority in the second presidential vote round, getting just 168 of the 200 votes needed. And now we await the third round of votes where the threshold will be lowered to 180. If Dimas fall short of this level then it will trigger snap elections which would favour the anti-euro far-left Syriza party.
Bulletin Headline Summary from Bloomberg and RanSquawk
- FX markets remain tentative with GBP the underperformer following the weak UK final Y/Y GDP reading (2.6% vs. Exp. 3.0%)
- Treasuries steady as week’s auctions continue with $13b 2Y FRN and $35b 5Y notes; latter yield 1.675% in WI trading vs 1.595% in Nov.; 1.80% award at Sept. auction was highest since May 2011.
- U.K. GDP rose 0.7% in 3Q as consumers drove a seventh straight quarter of growth as the euro-area slump held back exports and investment plunged
- ECB Governing Council member Ardo Hansson says in interview with Sueddeutsche Zeitung that the ECB sees risk of losses on government debt purchases, prefers ECB buy corporates rather than sovereigns
- Greek Prime Minister Antonis Samaras failed in his second effort to get lawmaker backing for his nominee for president and avert snap general elections
- Russian lawmakers pushed through a bill to aid banks, one day after the central bank announced its biggest bailout of a retail lender since the ruble’s collapse began
- China is stepping up its role as the lender of last resort to some of the world’s most financially strapped countries, including Russia, Argentina and Venezuela
- Chinese President Xi Jinping’s decision to investigate his predecessor’s top aide for corruption marks the downfall of the remaining “tiger” in a group that Communist Party cadres termed the “New Gang of Four”
- New York City mayor Bill de Blasio is trying to heal rifts with police who accuse him of fostering an environment that contributed to the killing of two officers
- Sovereign yields mostly lower. Asian stocks mixed, European stocks gain, U.S. equity-index futures higher. Brent crude and gold higher, copper lower
- Looking ahead, today sees the release of Canadian & US GDPs, US
Durable Goods Orders, Univ. of Michigan Confidence, New Home Sales and
Personal Income as well as the outcome of the second round of Greek
FX markets remain relatively subdued with the USD-index residing in modest negative territory (-0.14%) and most major pairs trading in a relatively rangebound manner. AUD saw a bout of underperformance overnight after coming under pressure led by heavy selling in AUD/JPY following a break below the 100DMA seen at 97.30, with AUD/USD now below 0.8100, for the first time since August 6th 2010. However, AUD has since pulled away from its worst levels. Elsewhere, Russian state companies are to sell USD 1bln a day to prop RUB, according to Kommersant. In terms of levels to look out for today, at 1.5600 in GBP/USD there is a USD 1.3bln option expiry due to roll off at the 10am NY cut. Finally, GBP/USD saw a fast-money move lower of around 40 pips following the weaker than expected final UK Y/Y GDP reading (2.6% vs. Exp. 3.0%).
In energy markets, both WTI and Brent crude futures trade in positive territory after WTI spiked higher over 1% in a 1min interval to a high of USD 56.85/bbl, following a volume surge. Elsewhere, in metals markets spot gold traded with gains overnight on a mild rebound from yesterday’s losses where the precious metal declined by almost 2%. Elsewhere, copper prices remained near yesterday’s lows where prices declined amid continued concerns of slowing demand from China.
As explained above, Greece is on the edge as the second vote garnered only 168 votes. They need 180 or a snap election must be called. The leading Syriza party is threatening to pull out of the Euro:
(courtesy zero hedge)
Greece On The Edge After Second Failed Presidential Vote
A week after the Greek Prime Minister, Antonis Samaras, was unable to push through his nominee for president, Stavros Dimas, in a vote in parliament that needed 200 votes to pass, hours ago the second presidential vote took place and just like last week it again failed to secured the needed 200 votes, with just 168 lawmakers voting for the designated appointee. This means that in the third and final voting round next week, on December 29 – a trading day where bad news will propagate like wildfire in the absence of any market liquidity and means Kevin Henry will have to work overtime buying ETFs – New Democracy’s Samaras has to find (or bribe) another 12 votes or else Greece is facing a snap election where the anti-bailout/anti-austerity leftist Syriza party is expected to win, and set off a chain of events that may result in Greece being kicked out of the Eurozone at least if the jitters seen during the summer of 2012 are any indication.
Then again, judging by the absolute non-reaction by the market, it seems that not an algo cares any longer if Greece is or isn’t part of the Eurozone, and/or if peripheral European bond yields trade with the implied ECB monetization premium or are allowed to trade at fair value, well into double-digit yield territory.
In the meantime, the PM is starting to sweat:”I hope in the final vote for president we will avert a national catastrophe,” Greek PM Antonis Samaras told reporters in Athens today after the failed second round vote. By “national catastrophe” he, of course, means allowing the majority to express its opinion.
Here is what Bank of America had to say via Bloomberg:
- Unless Greek Prime Minister Samaras comes up with a new initiative, early election is increasingly becoming the most likely scenario for Greece, Athanasios Vamvakidis, BofAML’s head of G-10 FX strategy, says in e-mailed comments.
- Greek prime minister Samaras could improve his chances at 3rd round of election on Dec. 29 by changing candidate
- Today’s outcome of 2nd round of vote as expected
- Estimated range for 3rd final round of Greek election at 168-172 unless Samaras persuades independent parliamentarians and small parties to vote for his candidate
- Early elections are likely to take place by late Jan. or early Feb.; this shouldn’t be a big surprise for investors
- Markets are likely to react positively to any poll released in any pre-election period showing that the difference between the main parties continues shrinking
Further details from Reuters:
Greek Prime Minister Antonis Samaras failed to capture the support needed to elect a new president in a second round of voting on Tuesday and now needs another 12 votes in the final round next week to avert a snap general election. Samaras’ nominee, Stavros Dimas, the only candidate in the race, had not been expected to win the second round and the score of 168 votes was broadly in line with expectations.
But it leaves the result of the decisive third round on Dec. 29, when Samaras needs 180 votes, finely balanced.
There were 131 blank votes on Tuesday, which count against the candidate, and one absentee. Parliament must elect a president or a general election would have to be held by early February, potentially bringing in the leftwing Syriza party which wants to renegotiate Greece’s international bailout and roll back the austerity policies of recent years.
The second round vote followed an offer by Samaras at the weekend to bring pro-European independents into his government and hold early elections late next year if Dimas is elected. Greek stocks trimmed losses in the minutes following the result, with the main Athens index trading 2.1 percent lower by 1052 GMT.
Samaras must now concentrate on winning over independents and rebels from the smaller parties.
Maybe Jean-Claude Juncker can add a “bribe” carve out sub-fund in his infrastructure “fund” CDO-squared?
Both the Democratic Left, which left the ruling coalition last year and Independent Greeks, a right-wing anti-bailout party, have said they would not vote for Dimas.
But it is unclear how much discipline they can impose on their members and a furious round of lobbying and telephone calls is likely over Christmas. Two Democratic Left lawmakers announced they were leaving the party to sit as independents just minutes before the vote.
By lobbying, Reuters of course means bribery.
Ironically, even a worse case scenario, with Dimas not getting the third round vote may not be the end of the Eurozone: all Brussels would have to do is fund an offshore Antonis Samaras bank account with a “necessary and sufficient” number, and lo and behold, all of Greece’s anti-bailout demands will evaporate into thin air:
Syriza still leads in the opinion polls but its advantage has narrowed over recent weeks and a survey at the weekend gave it a lead of 3.4 points. The party has sounded a more moderate note lately, seeking to reassure Europe that it would be a responsible negotiating partner and would keep Greece in the euro.
But a victory would signal a major shift in the politics of the euro zone, for the first time bringing in a government openly opposed to the Brussels consensus which has governed the bloc’s response to the wider crisis.
It would also mean that European GDP numbers will now be adjusted to include “Eurozone cohesion fees paid to ruling politicians” as part of the addbacks to make sure that nobody has any idea that all of Europe is now in a triple-dip recession.
The following sent oil plummeting yesterday:
Oil plummets after Saudis say $20 crude is possible
Saudi Arabia’s oil minister has sent oil prices tumbling below $60 per barrel by ruling out any cuts to productionBy Andrew Critchlow, Commodities editor5:28PM GMT 22 Dec 2014
Brent crude crashed below the $60 per barrel level again on Mondayafter Saudi Arabia’s oil minister said his country would not intervene to revive prices.Ali al-Naimi – who oversees the world’s largest exporter of crude – said in an interview that even if the price of oil fell to $20 per barrel the kingdom would do nothing to arrest the decline.“Whether it goes down to $20, $40, $50, $60, it is irrelevant,” he said in an interview with Middle East Economic Survey (Mees). (In other words it’s not the Arabs who got caught here. They’ve trapped someone.)Mr Naimi’s remarks sent oil prices back into reverse after finishing last week firmer. Brent crude fell over 2.3pc to trade below the $60 per barrel range.The minister – who is the most powerful voice with the Organisation of Petroleum Exporting Countries (Opec) – said that the cartel had changed its strategy from defending a certain price to focusing on retaining its market share.“As a policy for Opec, and I convinced Opec of this, even Mr al-Badri (the Opec Secretary General) is now convinced, it is not in the interest of Opec producers to cut their production, whatever the price is,” Mr Naimi told Mees.In recent years, Opec members have lost market share in the US where the growing presence of shale drillers has spurred an energy revolution. In addition, the opening of new oil basins in the Arctic and in South America has threatened to pour a flood of crude onto the market.For years, Opec has attempted to defend prices at around $100 per barrel, a figure that was thought to be vital for the cartel’s petrodollar economies.Opec’s decision in late November to keep pumping at a rate of 30m barrels per day (bpd) triggered a rout in oil prices that has also seen billions of dollars wiped off the value of energy stocks. Prices have fallen more than 45pc since June.However, Mr Naimi may come under growing pressure from within the cartel as more of the group’s members begin to suffer economic distress from the fall in prices. Venezuela and Iran are both struggling with crippled economies, while Iraq needs higher prices to help pay for rebuilding after decades of war.
T Boone Pickens strongly believes that they reason for the low price of oil is poor demand:
(courtesy zero hedge)
T. Boone Pickens Rages On CNBC: “I Am The Expert, Not You”, Says Oil Down Due To “Weak Demand”
Narrative, we have a problem! No lesser oil-man than T. Boone Pickens made quite an appearance on CNBC this morning – stunning the cheerleaders into first defense then silence as he broke the facts on oil’s collapse to them. Oil is down “mainly due to weak demand,” he explains… the anchors deny, “I am the expert, not you” Pickens rages as he warns drilling rigs will be laid down on a very wide scale (just as we have noted previously). Arguing over ‘peak oil’, he calls CNBC chatter “bullshit” and laid out a rather dismal short- to medium-term outlook for the oil & gas sector – not what the cheerleading tax-cut slurping media narrative wants to hear at all…
“demand is down” – “lower demand is the main driver” – “rig count is gonna fall – drop 500 rigs in next 6-9 months”
Capex cuts coming… oil prices may be back at $90-100 Brent in 12-18 months but not without rig counts plunging.
At 4:15 Pickens starts to discuss Peak Oil… enjoy –
CNBC: “Peak Oil didn’t happen” ..
Pickens: “that’s all bullshit… I am the expert not you” CNBC: “well you’re not much of an expert if you thought Peak Oil happened”
Enjoy some real-life pushback on the narrative… (apologies for audio quality)
IMF raises fears of global crisis as Russian bank forced into bailout
The International Monetary Fund warned on Monday of the risk of Russia triggering a fresh phase of the global financial crisis as the plunge in the value of the rouble claimed its first banking victim.
On the day that Russia’s central bank threw a $530m (£340m) lifeline to Moscow’s Trust Bank, the IMF said its generally upbeat assessment of the impact of falling oil prices on the global economy could be upset by investors taking fright at what is happening to Vladimir Putin’s energy-rich country.
Alexei Kudrin, Russia’s former finance minister, said 2015 would be a tough year for the economy as he blamed the Kremlin for failing to act quickly enough and said the country’s debt would be downgraded to “junk” status.
“Today, I can say that we have entered or are entering a real, full-fledged economic crisis. Next year, we will feel it clearly,” Kudrin said.
Predicting a wave of corporate failures and state bailouts of the banks, he added: “The government has not been quick enough to address the situation … I am yet to hear … its clear assessment of the current situation.”
Olivier Blanchard, the fund’s chief economist, and Rabah Arezki, head of its commodities research team, said: “Oil prices have plunged recently, affecting everyone: producers, exporters, governments, and consumers. Overall, we see this as a shot in the arm for the global economy. Bearing in mind that our simulations do not represent a forecast of the state of the global economy, we find a gain for world GDP between 0.3% and 0.7% in 2015, compared to a scenario without the drop in oil prices.”
But they said their optimistic analysis came with a warning. “One of the lessons from the Great Financial Crisis is that large changes in prices and exchange rates, and the implied increased uncertainty about the position of some firms and some countries, can lead to increases in global risk aversion, with major implications for repricing of risk and for shifts in capital flows. This is all the more true when combined with other developments such as what is happening in Russia. One cannot completely dismiss this tail risk.”
Trust, which uses the Hollywood star Bruce Willis to advertise its credit cards, ran into trouble after its policy of offering attractive savings rates and consumer loans fell foul of Russia’s economic slowdown.
The country’s central bank said it was providing up to 30bn roubles to help the medium-sized bank in what is thought likely to be the first of a series of bailouts made necessary by the near-halving of the global price of oil and the sharp fall in the value of the rouble.
Russian MPs rushed through a bill last Friday authorising a 1tn-rouble recapitalisation of the country’s banks, which have suffered big losses as a result of the currency crisis.
The central bank’s deposit insurance agency will be responsible for supervising Trust under a temporary arrangement until a new investor, likely to be one of Russia’s leading banks, is chosen as a white knight.
Trust’s problems echo those of Northern Rock, the first bank to get into trouble in the UK when the global financial crisis broke in the summer of 2007. Like Northern Rock, the Russian bank had been offering loans on easy terms and paying annual rates of interest in excess of 20% on rouble deposits.
Its difficulties have been made worse by western sanctions, which have made it impossible for Russian banks to get funding from overseas financial markets, and left them dependent on domestic investors. The rouble ended the day 3.6% higher at 56.1 against the US dollar, although its gains were checked by a 2.25% drop in Brent crude to $60 a barrel.
The Saudi oil minister, Ali al-Naimi, told Middle East Economic Survey that Opec, the producers’ cartel, did not intend to cut output “whatever the price is”.
“Whether it goes down to $20 a barrel, $40, $50, $60, it is irrelevant,” he said.
Sberbank, Russia’s biggest lender, was forced to deny a report that it had suspended taking new requests for car loans and mortgages.
Russia’s biggest oil firm, Rosneft, eased worries that it could default as a result of sanctions when it said it had made a $7bn debt repayment from its cash reserves. But Rosneft announced separately that a deal to acquire an oil trading business from Morgan Stanley had been terminated after it was refused clearance by US regulators.
A Cyber War With North Korea And An Economic War With Russia
In addition to all of our wars in the Middle East and the war that has erupted on the streets of America, we are now engaged in a cyber war with North Korea and an economic war with Russia. Without a doubt, the United States has the capability to do a tremendous amount of damage to both of them. But what about the damage that they could potentially do to us? We have a society that is absolutely teeming with soft targets. Our Internet infrastructure is extremely vulnerable, our debt-based economic system is already teetering on the edge of disaster, and government officials freely admit that security at key facilities such as power plants is sorely lacking. And these kinds of bitter conflicts have a way of escalating. The North Koreans and the Russians are both very proud, and neither one is going to back down any time soon. If a foreign power wanted to really make us hurt, it wouldn’t take much imagination at all. There are thousands of ways to do it. So Americans should not just smugly assume that we are untouchable. In a war, it is often those that are overconfident that get hurt the worst.
Last week, Barack Obama blamed North Korea for the nightmarish hack attack on Sony Pictures Entertainment and he promised that the U.S. would respond.
Well, it looks like that response began on Monday. According to Bloomberg, North Korea’s connection to the Internet was totally cut off…
North Korea’s limited access to the Internet has been cut off, according to a network-monitoring company, days after the U.S. government accused the country of hacking into Sony Corp. (6758)’s files.
North Korea, which has four official networks connecting the country to the Internet — all of which route through China — began experiencing intermittent problems yesterday and today went completely dark, according to Doug Madory, director of Internet analysis at Dyn Research in Hanover, New Hampshire.
Needless to say, that got the attention of the North Koreans.
On their end, the North Koreans are still denying that they had anything to do with the attack on Sony. And we may never know the actual truth. In reality, Russia could have carried out such an attack. Or it could have been the Chinese. Or it could have even been a false flag cyberattack conducted by a three letter U.S. agency. We just don’t know.
But what we do know is that North Korea is now vowing to take action against “the White House, the Pentagon and the whole U.S. mainland“…
“The DPRK has already launched the toughest counteraction. Nothing is more serious miscalculation than guessing that just a single movie production company is the target of this counteraction. Our target is all the citadels of the U.S. imperialists who earned the bitterest grudge of all Koreans,” a report on state-run KCNA read.
“Our toughest counteraction will be boldly taken against the White House, the Pentagon and the whole U.S. mainland, the cesspool of terrorism,” the report said, adding that “fighters for justice” including the “Guardians of Peace” — a group that claimed responsibility for the Sony attack — “are sharpening bayonets not only in the U.S. mainland but in all other parts of the world.”
So can North Korea back up those bold words?
We shall see.
But without a doubt our Internet infrastructure is very vulnerable. As I have written about previously, our big banks are under Internet attack every single minute of every single day. And in recent months we have seen a whole host of retailers and major corporations get hacked.
This is an emerging threat that should not be underestimated. As a society, we have become extremely dependent on the Internet, and these attacks are constantly becoming more powerful and more sophisticated.
I think that Steve Quayle put it very well during one recent interview…
“Cyberwarfare is increasing dramatically as we speak. There are serious concerns about the ability of the United States’ banking system to whether extremely sophisticated cyberattacks. The Sony breach is just one example of how a detrimental cyberattack can bring one of the world’s most prominent entertainment giants to its knees.”
And we do know that the North Koreans take hacking very seriously.
In fact, it has been reported that North Korea has a small army of hackers that are continually harassing the western world known as “Unit 121″…
Just like in a Bond movie, an army of teenage geniuses tap away at keyboards in fortified complex tucked away from prying eyes in a rogue state, bent on bringing cyber-carnage to their Western enemies on the orders of their leader who is bent on revenge.
But this isn’t the plot line from a film. This is North Korea in 2014. And the cyber-warriors inside have diverted from their usual work of disrupting governments and big business to turn their collective fury on Sony.
The building, the Kim Il-Sung Military Academy, is one of four North Korean universities known to train children, hand-picked for their intelligence from all around the country, and turn them into recruits for an elite group of hackers simply known as Unit 121 or Bureau 121.
Meanwhile, the struggle between the United States and Russia over Ukraine has escalated into a full-blown economic war.
At first, both sides started slapping each other with relatively minor economic sanctions.
But then things started escalating. I think that things really began to get serious for the U.S. when Russia started to make moves against the petrodollar. This is not something that has been reported on much at all by the mainstream media in the United States, but it is a very big deal. If you want to become enemy #1 in the eyes of the U.S. government, just start attacking the petrodollar. So when Russia began cutting the U.S. dollar out of oil and natural gas transactions, that definitely got the attention of some folks in Washington. You can read much more about what Russia has been doing in this regard in this article, this article and this article.
Of course Washington was not just going to sit back and let this happen. The Obama administration has retaliated by going after two of the most important pillars of the Russian economy – oil and the ruble. And without a doubt, a tremendous amount of damage has already been done.
At this point, Russia is facing a full-blown currency crisis, major banks are starting to fail and economists are forecasting a deep recession for next year…
The central bank bailed out its first victim of the collapsing currency, authorities announced a tax on grain exports to protect domestic stocks and a Reuters poll of 11 economists predicted that Russia’s gross domestic product would fall 3.6 percent next year.
Russia has been hit by what Economy Minister Alexei Ulyukayev recently called a “perfect storm” of plummeting oil prices, sanctions related to its military action in Ukraine, and a flight of investors’ capital — made worse by a lack of structural reforms that means the economy is overwhelmingly dependent on oil revenues.
But don’t count out the Russians just yet.
They are a very crafty people, and they are not afraid to fight dirty.
And it is important to keep in mind that the Russian Bear never forgives and it never forgets. Most Americans don’t realize this, but right now anti-American sentiment in Russia is actually higher than it was at the end of the Cold War era. Many Russians believe that this is a new Cold War, and that the United States is the greatest force for evil on the entire planet.
So while many Americans view this current conflict as a temporary foreign policy tussle about Ukraine, many Russians view this as a long-term struggle that is absolutely critical to the future of humanity. If you doubt this, you should check out some of the things that their leading thinkers have been saying.
This conflict between the United States and Russia is not going to end any time soon. And someday down the road, it could evolve into something more than just an economic war. But before that happens, the Russians have a whole host of other ways that they can damage us.
Yes, the United States can hurt Russia.
But Russia can also hurt us.
In the end, this conflict is not going to be good for anyone.
Nuclear Power Plant In South Korea Hacked
The marketing stunt involving what would otherwise have been a straight to DVD flop, a pudgy North Korean dictator, an FBI desperate to create a fabricated YouTube clip of North Korean hackers scheming maliciously in their mother’s basement, an American president demanding retaliation because a 80286-equipped hacking army poses a threat to the American way of life and other surreal, B-grade movie elements may be about to end with the “shocking” re-release of The Interview on Christmas day, but that doesn’t mean that the push to implement an internet kill switch is over. Which really is what the relentless “hacking on the front pages” media scramble is all about.
And since the ultimate scare tactic appears likely to be a controlled take down of the energy grid to demonstrate just how scary “hackers” may be, here comes the “other” Korea with an appetizer of what is to come to the US on short notice. According to RT, a South Korean nuclear plant operator’ computer system was hacked and the perpetrator has leaked blueprints and manuals, says if his demands for three reactors’ closure aren’t met, those living near the facilities should “stay away” from home.
The Shin Kori No. 1 reactor (R) and No. 2 reactor of state-run utility
Korea Electric Power Corp (KEPCO) are seen in Ulsan.
The hacker has been releasing the internal data of Korea Hydro & Nuclear Power Co (KHNP) in stages, with the latest piece being posted online on Sunday. It came together with a warning of a major leak still ahead.
“I can open to the world 100,000 pages of data that have not yet been revealed,” the hacker said in the post, cited by Korea’s Yonhap news agency. “You say this isn’t confidential material. Let’s see if you will take responsibility if the information on blueprints, systems and programs are all disclosed to the countries that want them.”
Perhaps the hacker should have emerged in Japan some 4 years ago: had he released the blueprints of the Fukushima NPP then perhaps someone would have realized what a deathtrap that power plant is. As it stands, however, in a rubble of radioactive mess, it has by now irradiated a substantial portion of Japan, probably in perpetuity.
And while it would be logical to immediately blame North Korea once more in the aftermath of a South Korea hacking, and certainly would bolster the case that Obama should promptly invade the small nation in the name of US “national security”, it appears this time the culprit is someone else:
A Twitter user called “president of anti-nuclear reactor group in Hawaii” has claimed responsibility for the leaks.
He demands the shutdown of KHNP’s Gori-1, Gori-3 and Wolsong-3 nuclear reactors for three months starting Christmas, warning “residents near the reactors should stay away for the next few months” in case the demand is ignored.
Both the Korean government and the nuclear plants’ operator have assured no hacker can possibly damage nuclear plants.
So could it be a US-based hacker and will South Korea now proceed to take the US internet offline with the full blessing of the UN? Or would that be seen as a slightly disproportional response, and one which only the US is allowed to engage in when it feels like it?
Meanwhile, North Korea is scrambling to do damage control of its own:
“It is 100 percent impossible that a hacker can stop nuclear power plants by attacking them because the control monitoring system is totally independent and closed,” an official at KHNP told Reuters on Monday. There’s a perception at the nuclear enterprise that the information could have been stolen before April 2013, when internal networks were isolated from all outside connection.
South Korea’s Deputy Energy Minister Lee Kwan-sup confirmed on Monday the leaked data was from Gori and Wolsong nuclear power plants, but said it was general information and claimed most of it could even be found “using Google’s search engine.”
Nevertheless he still believes the leak is a reason to be wary. “The government is handling this case with extreme care, but what we must bear in mind is that we do not know what the true intentions of these people are,” Lee said, according to Yonhap.
It was unclear as of this posting whether Sony would yank all of its nuclear safety clips only to re-release them at a more lucrative time.
Finally, as to question of who did it, we learn that, joking aside, North Korea may still be blamed: South Korea has not yet this time pointed a finger at Pyongyang. Seoul says the incident is being investigated.
Prosecutors have traced the IP used for a blog carrying the stolen documents to an online user in a southern city, Reuters reported. The person in question denies any involvement and claims his user ID has been stolen.
Surely the thief will be promptly identified as a North Korean individual at which point all bets are off.
In the meantime, the Korean Hydro & Nuclear Power company has launched a two-day exercise on Monday to prepare staff to a possible cyber-attack.
Your more important currency crosses early Tuesday morning:
Eur/USA 1.2214 down .0009
USA/JAPAN YEN 120.16 up .010
GBP/USA 1.5532 down .0046
USA/CAN 1.1622 down .0022
This morning in Europe, the euro is down , trading now well below the 1.23 level at 1.2214 as Europe reacts to deflation and announcements of massive stimulation. In Japan Abe went all in with Abenomics with another round of QE purchasing 80 trillion yen from 70 trillion on Oct 31. He now wishes to give gift cards to poor people in order to spend. The yen continues to trade in yoyo fashion. This morning it settled down in Japan by 1 basis points and settling just above the 120 barrier to 120/15 yen to the dollar. The pound is down this morning as it now trades just below the 1.56 level at 1.5532.(very worried about the health of Barclays Bank and the FX/precious metals criminal investigation/Friday night a new separate criminal investigation on gold,silver oil manipulation). The Canadian dollar is up today trading at 1.1622 to the dollar.
Early Tuesday morning USA 10 year bond yield: 2.16% !!! down 1 in basis points from Monday night/
USA dollar index early Tuesday morning: 89.83 up 7 cents from Monday’s close
The NIKKEI: Tuesday morning closed
Trading from Europe and Asia:
1. Europe all in the green
2/ Asian bourses all in the red … Chinese bourses: Hang Sang in the red ,Shanghai in the red, Australia in the red: /Nikkei (Japan) closed/India’s Sensex in the red/
Gold early morning trading: $1177.00
Closing Portuguese 10 year bond yield: 2.70% par in basis points from Monday
Closing Japanese 10 year bond yield: .34% !!! par in basis points from Monday
Your closing Spanish 10 year government bond, Tuesday ,par in basis points in yield from Monday night.
Spanish 10 year bond yield: 1.67% !!!!!!
Your Tuesday closing Italian 10 year bond yield: 1.94% up 1 in basis points from Monday:
trading 27 basis points higher than Spain:
IMPORTANT CLOSES FOR TODAY (1:30 pm est)
Closing currency crosses for Tuesday night/USA dollar index/USA 10 yr bond:
Euro/USA: 1.2172 down .0052
USA/Japan: 120.70 up 0.544
Great Britain/USA: 1.5508 down .0069
USA/Canada: 1.1615 down .0028
The euro fell badly again in value during the afternoon , and it was down by closing time , finishing well below the 1.22 level to 1.2172. The yen was down in the afternoon, ans it was down by closing to the tune of 55 basis points and closing well above the 120 cross at 120.70. The British pound lost considerable ground during the afternoon session and it was down on the day closing at 1.5508. The Canadian dollar was well up in the afternoon and was up on the day at 1.1615 to the dollar.
Currency wars at their finest today.
Your closing USA dollar index: 90.09 up 32 cents from Monday.
your 10 year USA bond yield , up 6 in basis points on the day: 2.22%!!!!
European and Dow Jones stock index closes:
England FTSE up 21.44 or 0.33%
Paris CAC up 60.54 or 1.42%
German Dax up 56.35 or 0.57%
Spain’s Ibex up 106.70 or 1.03%
Italian FTSE-MIB up 278.09 or 1.46%
The Dow: up 64.67 or 0.36%
Nasdaq; down 12.81 or 0.27%
OIL: WTI 57.00 !!!!!!!
Closing USA/Russian rouble cross: 54.60 strengthened by 1 rouble per usa dollar.
And now for your more important USA economic stories for today:
Your trading today from the New York:
Dow Over 18,000: Stocks Surge To Record-est Highs, Bond Bloodbath Ensues
1000 Points in 5 days… Dow 18,000… All-Time Record-er Highs… Best GDP In 11 Years… Shitty Durable Goods… Treasuries Crash… Crude Surges… Biotechs battered
What Tepper is worried about…
which fits with Yellen’s guidance for rate lift off…
5-Day run in stocks is best in over 3 years…
Nasdaq underperformed today… and Trannies led (now they like higher oil prices?)
Spot the odd one out…
Weak close as Ebola headlines were spotted…
Nasdaq weakness led by Biotechs…. which are now unchanged from FOMC
Treasuries dumped today as GDP boxes Fed in even more… worst day for 30Y yields since July 2013
As 2Y Yields highest since April 2011…
USDJPY was tick foir tick with stocks today having caught up… as did Treasuries…
The USD rose into the US open then stabilized – up 0.5% on the week… of coursse JPY weakness pumped stocks (down 1% against USD on week)
WTI bounced back briefly into the green; copper slipped lower as gold and silver trod water…
Since The FOMC, Gold and Silver are down 1.5 to 2%…
Crude stuck in a range… Tagged $57 briefly and dropped…
With the wind down of the record 2014 trading slump now in its final days (although judging by volumes throughout the year one may have a difficult time noticing just when the holidays began and ended), the already entertaining zero-liquidity market moves are sure to provide further amusement today in the context of the US economic data bonanza on deck, which includes Durable Goods, GDP, Personal Income and Spending, Richmond Fed, UMich, and New Home Sales. Beat or miss, all of the above are guaranteed to send the S&P to higher recorder highs because in the multiple-expansion euphoria blow-off top phase nobody cares about such trivia as fundamentals or the economy, especially when Japan and Germany are about to monetize all of their gross issuance. Just remember to occasionally keep an eye on the preferred rigging correlation pairs: the USDJPY and the VIX, whose every illiquid jerk will be followed by Citadel & NYFed’s algos tic for tic.
Don’t you think?
Today,we got phony data on the GDP which showed that GDP rose on an annual basis 5% in Q3. We will explain below how the BEA manipulated the data:
(courtesy zero hedge)
Fed Tightening On Deck After Q3 GDP Soars To 5% On Revisions, Highest Since 2003
And just like that Q3 GDP, the one for the quarter ended Sept.30, was revised from 3.9% (which in turn was revised higher from 3.5%) to a mindblowing 5% – the highest print since Q3 2003 when GDP rose by 6.9%. This was above the highest Wall Street forecast of 4.7%, higher even than Joe Lavorgna’s. The drivers: unprecedented revisions to Personal Consumption which supposedly rose by 3.2% in Q3 as opposed to the 2.2% prior reported, and 2.5% expected. Consumption accounted for 2.21% of the final 5.0% GDP print: this was the highest since Q4 2010 when it rose 2.8%. In fact, everything was revised higher: fixed investment rose 1.21% compared to the 0.97% reported previously; private inventories were virtually unchanged after allegedly subtracting 0.6% from growth in the original Q3 GDP estimate; net trade was unchanged adding 0.77% to GDP and finally the government boosted GDP a little as well, contributing 0.8%.
In other words, it is all downhill from here, as the subprime fueled boom in consumer spending in the late summer will certainly not be repeated any time soon, Q4 capex is crashing (as the durables report just confirmed), and inventory restocking took place far earlier than expected, meaning expectations of a low 2% pring for Q4 GDP will now have to be revised lower as consumption was pulled aggressively into the present.
GDP breakdown by component:
And a longer-term view of GDP:
After this report if there was any doubt if the trapped Fed will hike rates in April, it is now gone, unless of course, the market “crashes” by a whopping 5% between now and then and pull the Bullards out of the woodwork once again
Here is the reason for the big surge is Q3: the spending on Obamacare??
(courtesy zero hedge)
Here Is The Reason For The “Surge” In Q3 GDP
Back in June, when we were looking at the final Q1 GDP print, we discovered something very surprising: after the BEA had first reported that absent for Obamacare, Q1 GDP would have been negative in its first Q1 GDP report, subsequent GDP prints imploded as a result of what is now believed to be the polar vortex. But the real surprise was that the Obamacare boost was, in the final print, revised massively lower to actually reduce GDP!
This is how the unprecedented trimming of Obamacare’s contribution to GDP looked like back then.
Of course, even back then we knew what this means: payback is coming, and all the BEA is looking for is the right quarter in which to insert the “GDP boost”.
Don’t worry thought: this is actually great news! Because the brilliant propaganda minds at the Dept of Commerce figured out something banks also realized with the stub “kitchen sink” quarter in November 2008. Namely, since Q1 is a total loss in GDP terms, let’s just remove Obamacare spending as a contributor to Q1 GDP and just shove it in Q2.
Stated otherwise, some $40 billion in PCE that was supposed to boost Q1 GDP will now be added to Q2-Q4.
And now, we all await as the US department of truth says, with a straight face, that in Q2 the US GDP “grew” by over 5% (no really: you’ll see).
Well, we were wrong: it wasn’t Q2. It was Q3, albeit precisely in the Q2-Q4 interval we expected.
Fast forward to today when as every pundit is happy to report, the final estimate of Q3 GDP indeed rose by 5% (no really, just as we predicted), with a surge in personal consumption being the main driver of US growth in the June-September quarter. As noted before, between the second revision of the Q3 GDP number and its final print, Personal Consumption increased from 2.2% to 3.2% Q/Q, and ended up contributing 2.21% of the final 4.96% GDP amount, up from 1.51%.
So what did Americans supposedly spend so much more on compared to the previous revision released one month ago? Was it cars? Furnishings? Housing and Utilities? Recreational Goods and RVs? Or maybe nondurable goods and financial services?
Actually no. The answer, just as we predicted precisely 6 months ago is… well, just see for yourselves.
In short, two-thirds of the “boost” to final Q3 GDP came from, drumroll, the same Obamacare which initially was supposed to boost Q1 GDP until the “polar vortex” crashed the number so badly, the BEA decided to leave this “growth dry powder” for another quarter. That quarter was Q3.
Durables Goods Data Ugly Across The Board, Worst Since Polar Vortex
Against expectations of a jubilant 3% surge in November, Durable Goods Orders slipped 0.7% – the biggest miss since December 2013. Perhaps even more worrisome, YoY Durable Goods Orders rose at a mere 0.3% – the slowest since the Polar Vortex. Across the board the data was a disaster, ex-Transports -0.4% (against expectations of a 1% rise), Cap Goods Order non-defense were unchanged (against expectations of a 1% rise) and shipments rose just 0.2% (missing expectations of a 1.3% rise)… But apart from that, everything’s great.
MoM miss biggest since Dec 2013
YoY slowest rate since the Polar Vortex…
And breaking it down looks just as bad…
Miss…miss… miss… miss….
Must be the weather!!
And now how the BEA manipulated the data to show how the economy grew by 140 billion USA.
(courtesy zero hedge)
Exposing The Deception: How The US Economy “Grew” By $140 Billion As Americans Became Poorer
This is simply stunning.
Regular readers will recall that last month, at the same time as the US Bureau of Economic Analysis reported was a far better than expected 3.9% GDP (since revised to 5.0% on the back of the previously noted Obamacare spending surge), it also released its Personal Spending and Income numbers for the month of October, or ratherrevised numbers, because as we explained exactly one month ago “Americans Are Suddenly $80 Billion “Poorer“” thanks to (upward) revised spending data and (downward) revised income. What this meant a month ago is that as a result of a plunge in the imputed US savings rate, some $80 billion in personal savings was revised away from the average American household and right into the US economy.
After all, something had to grow the US GDP by a massive amount in order to give the Fed the green light it needs to hike rates eventually, just so it can then ease when the global dry powders from all the other central banks is used up.
And sure enough, this is how just one month ago, personal income was revised lower…
… Even as personal spending was revised higher:
Leading to an $80 billion revision lower in personal saving, and by mathematical identity, a comparable growth in US GDP.
* * *
Fast forward to today when we find that… absolutely nothing has changed, and in order to boost US GDP some more, the BEA engaged in precisely the same data revision trick!
On the surface, today’s Personal Income and Spending data were inline to a little bit better than expected:
- Personal Income supposedly rose 0.4% in November, up from a 0.3% revised growth in October, and in line with expectations.
- Personal Spending supposedly also rose, this time by 0.6%, up from an upward revised 0.3%, and just above the 0.5% expected. Of note: real spending on gasoline and other energy goods rose 4.1%. Wait, what? Wasn’t spending on energy supposed to drop?
So far so good: nothing abnormal, and in fact, in isolation this data would be good, suggesting the US consumer is spending more as the year closes.
And then we looked at the Personal Savings number: it was reported at 4.4% in November, down from 4.6% in October. Which is odd because last month, the October savings rate was disclosed as 5.0%, in turn down from a downward revised 5.6% in September.
Wait, could the BEA be engaging in precisely the same deception in November as it did in October.
Why yes, Virgina: not only did the US Department of Economic Truth completely fabricate its GDP numbers earlier, but the way it got to said fabrication is by fudging – for the second month in a row – both the entire Personal Income and Personal Saving data series.
Behold what the original data looked like in October, in November, when the extensive and already documented data revision took place, and just now, when the December data shows that the BEA once again revised everything just as it had previously.
To wit: here is Personal Income, revised substantially lower yet again, for every single datapoint of Q3 and then some, from July until October!
Sure enough, here is the revision to Personal Outlays: once again, a reduction in income magically meant that US household spent more in retrospect. As the chart below shows, Personal Outlays (Spending) was revised higher from July until October as well. What is most impressive is how the revision shifted the slope of US personal spending from one of Slowdown as reprted in October, to a literal explosion based on the latest data.
So how was all this spending funded? Simple: Americans “supposedly” dug massively into their savings, and as the following chart shows, Personal Savings have now crashed from what was originally an “unrevised” 5.6% in September, subsequently revised to 5.0% in November and 4.5% currently, and all the way down to 4.4% in November. Incidentally, this is the lowest savings rate since 2013, and the lowest savings rate for the month of November since 2006!
So what do all these revisions mean numerically? Luckily we can put absolute numbers alongside the savings rates, and as the following chart show, as of September 30, or the end of Q3, when US GDP supposedly soared by 5% annualized we now know that data revisions of personal income and spending alone generated…
… A whopping $140 billion in GDP!
So what does this mean? Well, as we learned earlier US GDP grew in Q3 by a nominal $272 billion to $17.6 trillion. We now know that more than half of this increase came from, drum roll please, data revisions!
In other words, US GDP, using pre-revision data, would have been less than 2.5%. But that woul dhardly lead to the euphoric blow-off top rally we have seen today which sent the DJIA for the first time ever above 18,000, which in turn is so critical to boost consumer confidence so Americans will, in real life, do what the BEA hopes they have already done at least on paper, and that is reduce their savings by a whopping 20% at the end of September, or by some $140 billion, to $593 billion in order to spend, spend, spend.
And the other irony: as the BEA also reported, what did Americans allegedly spend the bulk of their savings on?
So in short, today the market is euphoric and hitting all time highs because Americans dug into their savings and spent billions on the “Affordable” Care Act.
And that, ladies and gentlemen, is the short answer why the US is “growing” when the rest of the world is mired in a triple (or quadruple if one is Japan) recession.
Source: Bureau of Economic Analysis
USA Box office receipts plunging!!
(courtesy zero hedge)
Welcome To The Recovery: US Box Office Spend Plunges To Lowest Since 2000
While the cancellation of ‘The Interview’ wiped billions off the US Box Office take in 2014 (</sarc>), ticket sales in North America will total roughly $10.5 billion, according to The NY Times, the lowest since 2000(after inflation). Regal Cinemas and AMX Theatres have seen profits collapse and Carmike Cinemas has plunged to a loss as major movie delays (from Pixar and Universal), “pirating” of several movies (The Expendables 3 and Annie) before their release, and studios suffering one dud after another (Warner Bros.) the 4% YoY decline – for what is ultimately an affordable luxury – suggests thegas-price-savings are going anywhere but discretionary spending (just as we noted previously).
Not a pretty picture of recovery…
Ticket sales at North American theaters gave studiosmixed messages about consumer confidence, as The NY Times reports,
The delay of major movies from Pixar and Universal. The pirating of “The Expendables 3” and “Annie” before their release. Warner Bros. suffering one dud after another. Hackers forcing the cancellation of a big Sony comedy.
Hollywood does not want a sequel to 2014.
For the year, ticket sales at North American theaters will total roughly $10.5 billion, a 4 percent decline from a year earlier, according to projections by the box-office data firm Rentrak. Attendance will drop by about the same percentage.
Annual fluctuations of that size are not uncommon at the domestic box office, which rises and falls based on the strength of the movie lineup. Still, that total would give the movie business its lowest tally since 2000, after accounting for inflation.
Cyclical or Structural decline…
Whenever ticket sales take a tumble, Hollywood pulls the assertion of cyclicality out of its hip pocket: Just wait until next year — next year will be our best ever.
Hollywood’s primary worry is that moviegoing in North America is changing along generational lines. In particular, young ticket buyers traditionally turned out weekend after weekend — with the quality of the films mattering less than the opportunity to fraternize. But this group is staying home more often.
The Nielsen Company said this month that the moviegoing of Americans age 12 to 24 dropped 15 percent in the first nine months of 2014, compared with the same period a year earlier.
And then there’s this…
“It’s been a rather sluggish market since Thanksgiving,” said Chris Aronson, president of domestic distribution for 20th Century Fox.
But but but the gas-price savings…and discretionary spending… what about the narrative!!!
That is all for today.
I will see you Wednesday night
bye for now