Good evening Ladies and Gentlemen:
Here are the following closes for gold and silver today:
Gold: $1195.30 up $21.80 (comex closing time)
Silver: $16.11 up 44 cents (comex closing time)
In the access market 5:15 pm
The gold comex today had a fair delivery day, registering 13 notices served for 1300 oz. Silver comex registered 1 notice for 5,000 oz.
Three 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 fell by only 45 contracts despite Wednesday’s silver price fall of 7 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 149,104 contracts. The big December silver OI contract lost 3 contracts. It lowers to 22 OI contracts.
In gold we had a huge fall in OI with the fall in price of gold on Wednesday to the tune of $4.40. The total comex gold OI rests tonight at 372,298 for a loss of 2914 contracts. The December gold OI rests tonight at 299 contracts losing 246 contracts.
TRADING OF GOLD AND SILVER TODAY
you have more important things to read instead of how gold/silver traded today.
Today, we had a tiny loss in gold inventory of 0.60 tonnes at the GLD /Inventory 712.30 tonnes (probably to pay for fees)
In silver, no change in silver inventory/
SLV’s inventory rests tonight at 330.569 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: LBMA off today
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 26 2014
1 Month Rate: 2 Month Rate 3 Month Rate 6 month rate 1 yr rate
Dec 24 2014:
-.09% -.065% -.040 % +.023% +.1375%
Let us now head over to the comex and assess trading over there today.
Here are today’s comex results:
The total gold comex open interest fell today by 2,914 contracts from 375,212 down to 372,298 with gold down up by $4.40 on Christmas eve (at the comex close). We are now into the big December contract month where the number of OI standing for the gold metal registers 299 contracts for a loss of 246 contracts. We had 246 delivery notices served on Wednesday so we neither gained nor lost any gold contracts standing for delivery in the December contract month. The non active January contract month fell by 4 contracts down to 472. The next big delivery month is February and here the OI fell to 220,568 contracts for a loss of 3,674 contracts. The estimated volume today was poor at 48,292. The confirmed volume on Wednesday was also poor at 49,218 even although they had some help from our high frequency traders. The comex now has no credibility and many investors have vanished from this crooked casino. Today we had 13 notices filed for 1300 oz .
And now for the wild silver comex results. Silver OI fell by only 45 contracts from 149,149 down to 149,104 even though silver was down by 7 cents on Wednesday. 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 3 contracts down to 22 contracts. We had 2 notices served on Wednesday so we lost 1 contract or 5,000 additional oz that will not stand The estimated volume today was simply awful at 10,638. The confirmed volume on Wednesday was just as bad at 12,489. We had 1 notices filed for 5,000 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||1,478.90 oz ,(Brinks/Manfra) 46 kilobars|
|Deposits to the Dealer Inventory in oz||nil|
|Deposits to the Customer Inventory, in oz||nil oz|
|No of oz served (contracts) today||13 contracts(1300 oz)|
|No of oz to be served (notices)||286 contracts (28,600 oz)|
|Total monthly oz gold served (contracts) so far this month||3095 contracts(309,500 oz)|
|Total accumulative withdrawals of gold from the Dealers inventory this month||153,424.154 oz|
Total accumulative withdrawal of gold from the Customer inventory this month
Today, we had 0 dealer transactions
total dealer withdrawal: nil oz
we had 0 dealer deposit:
total dealer deposit: nil oz
we had 2 customer withdrawals
i) Out of Manfra: 1286.000 oz (40 kilobars)
ii) Out of Brinks: 192.90 oz (6 kilobars)
total customer withdrawal: 1478.90 oz (46 kilobars)
we had 0 customer deposits:
total customer deposits; nil
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 13 contracts of which 13 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 (3095) x 100 oz to which we add the difference between the OI for the front month of December (299) minus the # gold notices filed today (13) x 100 oz = 338,100 the amount of gold oz standing for the December contract month.
Thus the initial standings:
3095 (notices filed for the month x 100 oz) + (299) the number of OI notices for the front month of December served upon – (13) notices served today equals 338,100 oz or 10.51 tonnes.
we neither gained nor lost any gold ounces standing for the December contract month.
Total dealer inventory: 770,987.09 oz or 23.98 tonnes
Total gold inventory (dealer and customer) = 7.959 million oz. (247.58) 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||3,054.849 oz (Delaware )|
|Deposits to the Dealer Inventory||nil|
|Deposits to the Customer Inventory||584,856.510 oz (Scotia)|
|No of oz served (contracts)||1 contracts (5,000 oz)|
|No of oz to be served (notices)||21 contracts (105,000 oz)|
|Total monthly oz silver served (contracts)||2936 contracts (14,680,000 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||7,582,702.0 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 deposit:
i) Into Scotia; 585,856.510 oz
total customer deposit 585,856.510 oz
We had 1 customer withdrawal:
i) Out of Delaware: 3054.849 oz
total customer withdrawal: 3054.849 oz
we had 0 adjustments
Total dealer inventory: 64.604 million oz
Total of all silver inventory (dealer and customer) 176.485 million oz.
The total number of notices filed today is represented by 1 contract for 5,000 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 (2936) x 5,000 oz to which we add the difference between the total OI for the front month of December (22) minus (the number of notices filed today (1) x 5,000 oz = the total number of silver oz standing so far in November.
Thus: 2936 contracts x 5000 oz + (22) OI for the November contract month – 1 (the number of notices filed today) =14,785,000 oz of silver that will stand for delivery in December.
We lost 5,000 silver ounces that will not stand for the December silver contract. These were obviously cash settled and then another purchase of a future contract.
for those wishing to see the rest of data today see:
The two ETF’s that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.
There is now evidence that the GLD and SLV are paper settling on the comex.
***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold. I can visualize demand coming to the buyers side:
i) demand from paper gold shareholders
ii) demand from the bankers who then redeem for gold to send this gold onto China
vs no sellers of GLD paper.
And now the Gold inventory at the GLD:
Dec 26.2013/ a small loss of .6 tonnes of gold. Inventory tonight at 712.30 tonnes
Dec 24.2014: wow!! somebody robbed the cookie jar/ we had a huge withdrawal of 11.65 tonnes from the GLD inventory/inventory at 712.90 tonnes. England must be bleeding badly!
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 26 / we had a small withdrawal of 0.60 tonnes of gold inventory from the GLD / 712.30 tonnes
inventory: 712.30 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 : 712.30 tonnes.
And now for silver (SLV):
Dec 26/ no change in silver inventory at the SLV/inventory 330.569
Dec 24.2014: we had a huge loss of 7.566 million oz/inventory 330.569 million oz
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 26/2014 /no change at the SLV/inventory
registers: 330.569 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 10.5% percent to NAV in usa funds and Negative 10.5 % to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 61.8%
Percentage of fund in silver:37.6.%
( December 24/2014) no figures today/Canadian holiday.
2. Sprott silver fund (PSLV): Premium to NAV rises to + 0.36%!!!!! NAV (Dec 24/2014)
3. Sprott gold fund (PHYS): premium to NAV rises to negative -0.51% to NAV(Dec 24/2014)
Note: Sprott silver trust back into positive 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 Friday morning:
Mark O’Byrne is off today/no report from Goldcore
(courtesy Mark O’Byrne/Goldcore)
As we explained on Christmas Eve, the GLD lost a massive 11.65 tonnes of gold.
Gold Assets in Biggest Bullion ETF Tumble Most Since ‘13
Investors in the world’s biggest exchange-traded product backed by bullion sold the most gold in 18 months as the U.S. economic recovery cut demand for a haven.
Holdings in the SPDR Gold Trust fell 1.6 percent yesterday to 712.9 metric tons, the biggest drop since June 2013. Assets declined to the smallest since September 2008.
Bullion for immediate delivery is heading for the first back-to-back annual decline since 2000. A collapse in oil prices is curbing demand for the metal as an inflation hedge, while the Federal Reserve is moving closer to increasing interest rates. Gains for the dollar and U.S. equities have also made gold less attractive as an alternative asset.
“You’ve got all these factors conspiring against gold,” Michael Cuggino, president and fund manager at Permanent Portfolio Family of Funds Inc. who helps oversee $7 billion, said in a telephone interview. “A certain number of investors are throwing in the towel.”
Spot gold slid 0.2 percent to $1,174.42 an ounce at 10:19 a.m. in New York today. Prices fell 2.3 percent this year after a 28 percent plunge in 2013, the most since 1981.
The U.S. economy expanded at a 5 percent annualized rate in the third quarter, the biggest advance in 11 years, government figures showed yesterday. Fed officials last week dropped a pledge to keep borrowing costs near zero percent for a “considerable time,” replacing it with a promise to be “patient,” according to a statement.
The value of assets in the SPDR has dropped 13 percent to about $27 billion this year after slumping 57 percent in 2013, according to data compiled by Bloomberg. Holdings in gold-backed ETFs declined 8.7 percent to 1,609.3 tons after a 33 percent plunge last year, data compiled by Bloomberg show.
Gold has “held up pretty well considering other markets have been sold off pretty heavily,” said Mark Pervan, head of industry economics and research at Australia & New Zealand Banking Group Ltd. in Melbourne. “You haven’t seen as much selling in ETFs. Although it’s not recovering, it’s certainly nothing like what we saw last year.”
Holdings in the SPDR Gold Trust in which billionaire John Paulson is the biggest investor have declined 11 percent this year after plunging 41 percent in 2013.
While investors have been selling, some countries have bought gold after reducing holdings for about two decades from the late 1980s. Central banks globally will probably purchase 400 tons to 500 tons this year, the World Gold Council says. Russian reserves climbed for an eighth month in November to about 1,187.5 tons, the highest in at least two decades, according to International Monetary Fund data.
Brent crude oil tumbled 46 percent in 2014 and West Texas Intermediate fell 42 percent as supplies climbed. The Bloomberg Commodity Index of 22 components dropped 15 percent to head for a fourth straight annual loss.
While the stronger dollar has made gold less appealing for American buyers, physical demand in India and China can help support prices, Cuggino said. In the U.S., there’s a “reallocation trade happening” with investors switching out of gold and into equities, he said.
Yesterday’s better-than-estimated report on the U.S. economy sent benchmark stock gauges to record highs.
The collapse in crude and the longest commodity slump in at least a generation means that instead of the surge in consumer prices that gold buyers have been expecting for much of the past decade, the U.S. is “dis-inflating,” according to Bill Gross, who used to run the world’s biggest bond fund.
Gold surged 70 percent from December 2008 to June 2011 as central banks increased money supply on an unprecedented scale, spurring concerns that inflation would accelerate. Bullion generally offers investors returns only through price gains.
Canadian gold miner San Gold has filed for bankruptcy protection.
These guys should file a complaint with the Serious Fraud Squad in England who have already charged a Royal Bank of Scotland senior trader with manipulation of gold/silver.
Also China seems to be dropping their shovels as well as their costs greatly exceed revenue on their gold mines
a very important read…
(courtesy zero hedge)
Chinese Gold Diggers Drop Their Shovels As Gold Miner Bankruptcies Begin
For those wondering where US shale exploration and production companies will be in about 2-3 years, look no further than the gold miners, where the disconnect between undaunted physical demand and relentless paper supply (after rebounding above 0%, GOFO is once again negative through the 3 month mark), and where high production costs and low selling prices, after two years of balance sheet pain, is finally leading many over the cliff. Case in point, Canadian gold-miner San Gold, which had a capitalization of over $1 billion in 2010 just filed for bankruptcy protection. It isn’t the first gold-miner to wave the white flag, and it certainly won’t be the last.
As the WSJ reported earlier, the Winnipeg-based company said in a statement that it has asked Canadian courts for an initial 30 days protection from its creditors as it seeks to restructure its business.
“San Gold spent half a billion on their assets, and they haven’t had a profitable quarter in six years,” said Greg Gibson, who became CEO in June after a boardroom revolt against the previous management.
The problem, as gold miners (and their long-suffering shareholders know) and as shale companies are about to find out, is that “the sector had overstretched itself during the commodity boom, when the high gold price, and willing investors, saw miners spend heavily on acquisitions and bring new production on line. Some of the sector’s new production was lower grade gold, which is more expensive to mine and became unprofitable as the price of gold fell.”
This all happened before the Swiss National Bank imposed its currency controls by way of a EURCHF 1.20 floor on September 6, 2011 as the Eurozone was tearing apart, and which, incidentally, also marked the record high in the gold price. Since then gold has tumbled by a third and many of the smaller miners have gone bankrupt while others have stopped production or exploration as they look to raise cash.
As Gibson said, “The party is over and its time fix things” and now even the big companies, those which have access to Wall Street’s ZIRP capital are starting to fold.
But it’s not just western gold miners that are finally starting to feel the pain of three years of declining gold prices: even more importantly, according to Bloomberg’s Chart of the Day, China’s “gold diggers” are also preparing to drop their shovels.
As a reminder, China surpassed South Africa as the top bullion producer in 2007 as surging prices spurred domestic companies such as Shandong Gold and Zijin Mining Group. Global production reached a record high in 2013, according to the World Gold Council. China’s output may exceed 470 metric tons this year, up from a record 428 tons last year, according to the China Gold Association.
That is about to change: monthly output growth in China almost stalled in August through October, World Bureau data show. Miners’ costs are mostly higher than spot prices, increasing the likelihood of writedowns next year, Nick Holland, chief executive officer of Gold Fields Ltd., said Nov. 20. The production cost per unit for Shandong Gold Mining Co., one of China’s four biggest gold miners, will rise to 150 yuan per gram ($749 an ounce) in 2015 from 146 yuan now, UBS’s Lin estimates. And while Shandong will still be profitable, many of its peers will not be so lucky.
As a result, Chinese gold miners, which ramped up production are poised to begin reducing output as the price slump begins to bite with a several year delay. Putting it in context, Chinese mine output rose 15% in the first 10 months of this year, outpacing a 3.4% gain in the global total, according to World Bureau of Metal Statistics data, even as gold prices declined.
“We will see output growth moderating going forward into 2015 as miners perceive a downtrend in gold prices to persist,” said Lin Haoxiang, an analyst at UBS Group AG in Shanghai. “Falling prices are cutting into some high-cost private mines in China, while some big miners chose to reduce costs by reducing jobs and capital investments.”
The bottom line: just as everyone expects oil production to decline as capital spending plunges, the reality is that for the next couple of years domestic oil production will actually surge as producers try to put their competitors out of business while collecting every dollar of demand cash that is available, a process described previously. For the gold miners, however, the buffer period is now over even with the benefit of ZIRP providing cheap funding extending the inevitable collapse, not only in the US but also in China. And as gold prices continue to slide, themarginal cost producers – who have been living onborrowed time for year – are about to fold en masse.
What happens next is that physical gold supply is about to slide, even as demand for physical gold remains solid, or even rises more now that India is once again easing import regulations. The only question is how will relentless paper gold supply impact the price of gold and can the world hit a thought experimental state where the cost of gold is so low that physical production is completely mothballed and where the price of gold is set entirely by paper contracts representing said non-existent physical. Impossible? Then read the fascinating story of how an otherwise bankrupt Radioshack is kept in a pseudo-alive zombie state thanks to $25 billion of Credit Default Swaps who just can’t envision the company folding. Now reverse that and apply it to gold
Deutsche Bank open to offers for London gold vault-sources
By Clara Denna
Wednesday, December 24, 2014
LONDON — Deutsche Bank is open to offers for its London-based gold vault following the closure of its physical precious metals business, three sources familiar with the matter said on Wednesday.
“If the right offer came along, then the bank would sell the London vault,” one source close to the situation said.
The German bank shut its physical precious metals trading arm last month as it further reduced its exposure to commodity markets. …
… For the remainder of the report:
zero hedge comments on the above story:
(courtesy zero hedge)
Massive 1,500 Ton Gold Vault For Sale In The Heart Of London, One Previous Owner, Asking £4,500,000 O.B.O.
Back in June 2013, when Deutsche Bank opened a gold vault in Singapore which could hold up to metric 200 tons, the German bank was euphoric about the prospects for storing physical gold: “Gold has traditionally been stored in London, Zurich and New York, but there is a serious shift in dynamics going on as the global financial crisis continues to evolve,” Mark Smallwood, Deutsche Asset & Wealth Management’s head of wealth planning in the Asia-Pacific region, told The Wall Street Journal.
Mark was correct and thanks to the ongoing decline in gold prices, Chinese and Indian demand for the metal, the physical metal that is, not its various paper manifestations, has risen to record levels. Alas, one thing Mark did not know is that in early 2014, a German regulator would reveal that “precious metals manipulation was worse than the Libor scandal” and as a result, shortly thereafter the biggest German bank (and largest bank in the world by notional derivative exposure) – which iscurrently being probed for gold-rigging – would quietly liquidate its entire physical precious metals trading group.
Which means that Deutsche Bank’s Singapore gold vault, barely a year old, is about to go on sale.
But while one can debate when the Singapore will see a “for sale” sign attached to the front door, one thing is clear: Deutsche Bank’s massive, and even newer, gold vault in London is already looking for offers. According to Reuters, Deutsche Bank is “open to offers for its London-based gold vault following the closure of its physical precious metals business, three sources familiar with the matter said on Wednesday.”
“If the right offer came along, then the bank would sell the London vault,” one source close to the situation said.
One source familiar with the matter said Deutsche is still assessing whether to shift its vaulting business from its investment banking arm (CB&S) to its Global Transaction Banking (GTB) business, which includes custodial services. Deutsche declined to comment on the status of its vaulting operation.
The bank’s London gold vault only became operational in June this year, more than two years after launching the project. It can store some 1,500 tonnes of gold and was built and managed by British security services company G4S.
As Reuters observes, with other banks withdrawing from the commodities business to cut costs and reduce their regulatory burden, it could be difficult for Deutsche Bank to find buyers amongst its nearest peers. However, one possible buyer is Chinese bank ICBC, which is trying to build a presence in London and the sources said it was a likely candidate.
The Chinese bank will finalise the acquisition of a 60 percent stake in Standard Bank’s London-based global markets unit at the end of January 2015.
“It would make perfect sense for them to enter the vaulting business and I’m sure they are interested,” one of the sources said.
Perhaps. Or perhaps Reuters’ source is a little too excited once again. Recall it was Reuters’ reporter Clara Denina who back in February, when Deutsche Bank was looking to dump its seat at the London gold fix, reported that “ICBC, is in prime position to buy the Deutsche seat. “Standard Bank is a shoo-in for the fixing seat – they want it, and it would be acceptable to the other members,” a senior gold market source told Reuters. “It’s just whether they can agree a fee.””
Considering that no sale materialized, perhaps China is not that eager to pick up Deutsche Bank’s manipulated gold pieces after all.
But perhaps other buyers will shop up. It is for their benefit that we once again disclose the “secret” location of the Deutsche Bank vault, which as disclosed in the G4Sbuilding application, is located in the Park Royal complex, and specifically at the 291 Abbey Road, London NW10 7SA location.
The reinforced street-side entry to the vault complex can be seen on the Google streetview map below:
Curious what the starting asking price may be? According to Clay Street property consultants, the 291 Abbey road property was marketed in November 2011, and the 1.89 acre site attracted a broad range of interest including institutional investors, property companies, developers and owner occupiers.
Securing 15 bids all at in excess of the asking price the site was sold in April 2012 to an owner occupier for £4,500,000 reflecting a price of £2.38m per acre.
So you want to be the proud owner of a massive “secret” vault in London, one which was supposed to be used by Deutsche Bank? Then just make sure you have £4,500,000 ready. O.B.O.
And now for the important paper stories for today:
Early Friday morning trading from Europe/Asia
1. Stocks up on major Asian bourses / the yen slightly rises to 120.34,
1b Chinese yuan vs USA dollar/ yuan slightly strengthens to 6.2131
2 Nikkei up 10 points or 0.06%
3. Europe stocks mostly up /Euro down/ USA dollar index up to 89.96/
3b Japan 10 year yield at .33% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 120.34
3c Nikkei now above 17,000
3e The USA/Yen rate well above the 120 barrier
3fOil: WTI 56.33 Brent: 60.74 /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 rises this morning for both WTI and Brent after rising on Rouble stability.
3k Greek third vote on Monday 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. China relaxes reserve requirements and thus stimulation (see below)
3m Gold at $1194 dollars/ Silver: $16.19
3n USA vs Russian rouble: ( Russian rouble down 2 roubles per dollar in value) 54.32!!!!!!
3 0 Japanese figures released last night simply awful:
Industrial production weakens/real wages fall/inflation levels fall/retail sales falter/all in all a weak day for Japan
4. USA 10 yr treasury bond at 2.26% early this morning. Thirty year rate well below 3% (2.81%!!!!)
5. Details: Ransquawk, Bloomberg/Deutsche bank Jim Reid
(courtesy zero hedge)/your early morning trading from Asia and Europe)
Chinese Stocks Soar To 4 Year High On Stimulus Hopes As Japan’s Economy Implodes; US Futures Rebound
Today, by yet another Obama executive order, overworked Federal workers get a day off. “All executive branch departments and agencies of the Federal Government shall be closed and their employees excused from duty on Friday, December 26, 2014, the day after Christmas Day,” the order says. Exceptions may be made “for reasons of national security, defense, or other public need.” Which means that the US crack anti-hacker teams will be busy working all day, because weeks after the infamous Sony “hack” led to a surge in the popularity of and revenue from a badly made, C-grade movie, yesterday both the Xbox and Playstation (which is also owned by Sony) networks were taken offline with hackersonce again taking credit. One would think in the aftermath of its shocking hack, Sony would take measures to prevent such events from occurring, but apparently not: perhaps it is everyone’s patriotic duty to buy a Playstation next so the evil “hacking terrorists” don’t win?
One group of Federal workers that is definitely not taking the day off, is the trading desk located on the 9th floor of the New York Fed, responsible for such things as preserving the “fair” value of the bond and the stock market and avoiding any sharp downward moves. Because if there is one thing on the “national security” agenda that must be avoided at all costs, it is a drop in the S&P in today’s trading session – after all now is when the official Santa rally begins and judging by the futures, which after a steep selloff in the last minute of trading on Wednesday have restored all their losses and then some, we may finally hit Goldman’s year end target of 2100… for 2015.
Said Federal workers were aided overnight by the latest easing out of China where as reported yesterday, the PBOC lowered the non-bank deposit reserve rate to zero (making China just the latest country to join the rank of fractional unreserved banking). And while Asia, which did not celebrate the day off, was largely flat, the Shanghai stock exchange soared for the second day in a row on the back of hope that even more easing policy is on deck, surging 2.77%, or 85.06 points, to 3,157.60. The close marked the highest since November 8, 2010 when the Shanghai index ended at 3,159.51 points.
Meanwhile, last night in Japan, the government reported an onslaught of economic data that was absolutely abysmal.
First, the nation’s industrial output suffered a surprise drop in November, turning down after two months of rises. Industrial production declined 0.6% mom in November, contrary to market consensus for growth in production. This also represented a significant undershoot versus the production outlook released last month for an increase of 2.3%. Manufacturer shipments were -1.4% mom, the first contraction in three months. As a result, the inventory ratio rose 4.0% mom. The government maintained its assessment that production fluctuates directionlessly.
Then there was Japanese consumer inflation which continued to slow in November, dealing another challenge to Tokyo and the Japanese central bank’s battle to conquer years of deflation. November national core CPI slowed to +0.7% yoy (excl. VAT impact). The November core national CPI came in at +2.7% yoy, slowing by 0.2 pp from +2.9% in October, in line with our expectations. Factoring out the Bank of Japan’s calculation of a +2.0 pp boost from the consumption tax hike, the core national CPI works out to +0.7%. The November headline CPI came in at +2.4% yoy (+0.3% excluding the tax hike impact), slowing by 0.5 pp from +2.9% (+0.8%) in October. The core core CPI, excluding food and energy, was +2.1% yoy in November (+0.4% excluding the tax hike impact), a slowdown of 0.1 pp from October. The main contributor to the slowdown in the headline CPI was energy prices (gasoline, etc.), but accommodation and home leisure & learning products (TVs, etc.) also contributed to the slowdown, among others.
Then there was the Japanese consumer who clearly needs even moar Krugman, if only to accelerate the demise: real consumer spending dropped 2.5% yoy in November. While this was less than the 4.0% fall in October, this still marked the eighth straight month that real consumer spending has dropped yoy since the consumption tax hike. Real consumer spending on housing continued to slump, by -20.3% yoy, dragging overall spending by -1.42%, chiefly on a slide in repair/maintenance-related items. Utilities also declined -5.7% yoy, pushing down overall spending by -0.43pp. Among utility spending, those on electricity declined -7.2% yoy. Furniture/household goods fell 4.5% (contribution: -0.16%) on an ongoing decline in spending on household durables such as air conditioners. Spending on culture/leisure declined -2.0% yoy (contribution: -0.20% points).
Real disposable income of workers’ households in November slid 3.9% yoy, declining further from a -2.4% yoy decline in October. On a seasonally adjusted basis, real disposable income came in at -1.3% (October: +3.1%). The continuous yoy decline in real income and its instability is restraining household spending.
Finally, there was the one issue that is at the crux of the entire failed Keynesian dogma: nominal and real wages. We will have more to say about this, but in a nutshell, total cash wages and overtime pay decline yoy for the first time in 9 months and 20 months, respectively. More impotantly, real wages (nominal wages less the CPI inflation) came in at -4.3% yoy (October: -3.0%), as the extent of the decline widened in step with the fall in nominal wages. This was the largest decline since the 4.8% recorded in December 1998. That’s right: Abenomics is now responsible for the biggest drop in Japanese wages on record.
So how did all this economic devastation impact the Nikkei? It was up by 10 points, or 0.06%, to 17,818, of course.
In energy markets, oil prices rose modestly as dealers reacted to a surprise Islamist attack on Libya’s main oil terminals that left 22 soldiers dead. Since fresh clashes between government forces and the jihadists erupted on December 13, Libya’s oil production has dropped to nearly 350,000 barrels per day compared with 800,000 previously, according to industry experts. Production in Libya, a member of the Opec oil-producing cartel, has only just started to rise following a prolonged disruption due to civil unrest.
Summarizing it all, here is Bloomberg’s overnight headline summary:
- Treasuries head for second straight weekly loss amid stronger-than-forecast eco data, 2014’s last coupon auctions; trading likely to be slow today with London closed, New Year’s holiday next week.
- Saudi Arabia’s 2015 budget is probably assuming an oil price of $80/bbl and will be seen as a sign of confidence in the market, according to a former economic adviser to the country’s government
- Japan’s inflation slowed for a fourth month in November, and industrial production and retail sales unexpectedly dropped, pointing to further weakness in an economy Prime Minister Abe is trying to revive from recession
- China’s benchmark money-market rate dropped the most this week since April after cash locked up to buy new shares returned to the banking system
- Credit Suisse was ordered to face a lawsuit by New York’s attorney general accusing the bank of fraud in sales of MBS before the recession; suit demands as much as $10b in damages
- Envoys to Ukraine peace talks are discussing an exchange of prisoners before the New Year, according to a separatist leader, as Russia criticized the country for having “NATO ambitions”
- Obama drew the short straw in a lawsuit by 25 states seeking to block efforts to loosen immigration restrictions: The judge who will decide the case has previously assailed him in that arena for turning “a blind eye to criminal conduct”
- At least seven New Yorkers have been charged with making threats against police officers since the Dec. 20 killing of two patrolmen shot in their squad car in Brooklyn, a police spokeswoman said
- Hong Kongers who thought Christmas came a day early have returned about half of HK$15m that rained down on a city street from a passing security van
- Sovereign yields mixed. Asian stocks higher; Europe closed. U.S. equity-index futures rise. Brent crude and gold higher, copper little changed
There is nothing on the US economic calendar today, and with virtually nobody actually left trading, perhaps the Fed can just advise what today’s S&P 500 closing print will be a few milliseconds after 9:30 am so the algos can get a few billion stuffed quotes in, and so non-vacuum tube based traders can go home early.
Now it is China’s turn to ease as they lower reserve requirements;
(courtesy zero hedge)
China’s Christmas Present To The World: Beijing Eases Again, Sets Non-Bank Deposit Reserve To Zero
Four years ago, on Christmas Day in 2010, China shocked the world when, unexpectedly, hiked its lending and deposits rates by 0.25% in order to battle inflation – only its second such hike in the prior 3 years. Since then things for the global economy haven’t done exactly as expected, and certainly not for China, which as the following chart of constantly downward-revised IMF growth forecasts, has seen its growth rate tumble from double digits to just hanging on to 7%, and dropping fast.
Fast forward to last night, when in another Christmas surprise, China once again decided to adjust the cost of money, only this time instead of hiking it eased, and in an effort to shore up the world’s second-largest economy, China Business News reported that:
- PBOC WAIVES RESERVE REQUIREMENT FOR NON-BANK DEPOSIT
As WSJ adds, at a meeting with big financial institutions on Wednesday, the People’s Bank of China told participants that they will soon be able to add deposits from nonbank financial institutions to their calculations of their loan-to-deposit ratios, according to the executives. The move would add considerably to the banks’ deposits and allow them to lend more.
Why is this a major development? Because as we reported over a month ago, “China’s Shadow Banking Grinds To A Halt As Bad Debt Surges Most In A Decade” in which we explained:
As the following chart shows the main reason for China’s relentless slowdown in its growth pace, which only two years ago was expected to rebound back into the double digits soon (atleast according to the IMF), is the ongoing contraction in credit formation, which rising at 13.2% for new loans and 15.4% for TSF outstanding, was the lowest credit expansion recorded in China also since 2005.
So what is the main culprit for the contraction in China’s all important credit formation? In two words: shadow banking. As Bank of America summarizes “shadow banking is being tamed” because “the changing structure of TSF suggests that Beijing’s efforts in controlling some types of shadow banking have made some achievements. Two major drivers for the steep decline of TSF from Sept to Oct were the falling of non-discounted bills (down RMB241bn) and falling trust loans (down RMB22bn). By contrast, new corporate bonds were at RMB242bn, a sharp rise from RMB151bn in Sept.”
In other words, China’s shadow banking not only ground to a halt, it actually continued moving in reverse!
In other words, as China finally reveals little by little the true extent of its gargantuan bad debt problem (which is far worse than ever in history, although Beijing is taking its time in making the necessary revelations: and after all Chinese banks are all SOEs – if needed they can all just get a few trillions renminbi in in liquidity injections a la the “developed west”), it is also slamming the breaks on the shadow banking system that for years what the sector where marginal credit creation, and thus growth as well as bad debt formation, was rampant.
So while it has been widely documented that Japan is doing all in its power to crush the Japanese economy and in the process to send the Nikkei to all time highs, little has been said about a far greater slowdown in domestic (and indirectly global) credit creation using the “China” channel, where shadow banking has just slammed shut.
And with unregulated Chinese Shadow Banking credit creation essentially halted, the PBOC has no other option than to boost traditional credit creation via official loan channels. Which is precisely what the PBOC did overnight:
Currently, deposits from nonbank financial institutions–such as fund managers and securities firms–aren’t part of the loan-to-deposit ratio calculation. Adding those deposits would beef up banks’ total deposit base and enable them to lend more.
Under China’s regulatory requirement, banks in the country can’t lend more than 75% of their total deposits.
At the same time, PBOC officials told the participants at the meeting that banks wouldn’t have to set aside additional reserves for these deposits with the central bank, according to the executives. Big Chinese banks currently need to place 20% of their deposits with the PBOC as reserves, a figure known as the reserve-requirement ratio.
Remember when fractional-reserve banking required that banks retain some of the deposits before they re-lend them out. Fun times.
The WSJ concludes, that the two steps combined would have the same effect as a 1.5-percentage-point cut in banks’ reserve-requirement ratio. Then again, by taking such “alternative” steps, it appears increasingly unlikely that the PBOC will engage in convention rate cuts as it is already struggling with an unprecedented amount of bad loans. From Bloomberg: “The waiver is seen as another move to replace a universal reserve-requirement ratio cut that the People’s Bank of China needs to boost credit and bolster the economy. Concerned that a broad reduction might send out a strong easing signal and bring turmoil to stock market, the PBOC has added liquidity by stealth at least four times in the past four months.”
Naturally, financial pundits in China were delighted with this latest easing. From Reuters:
“The central bank setting a zero deposit reserve for non-banking financial institutions is a positive development for financials, particularly banking shares. Also, funds locked up by IPOs have gotten unfrozen since yesterday, largely improving capital conditions in the market,” said Du Changchun, analyst at Northeast Securities in Shanghai.
Chinese stocks, which had been pricing in further easing by the PBOC for the past 3 months, a period during which the Shanghai Composite soared over 50%, were delighted by the latest easing move and surged even more: the Shanghai Composite Index closed up exactly 100 points, or 3.36%, rising to 3,072.5. This was the biggest jump in three weeks: Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp., the largest lenders, advanced at least 3%.
And since China didn’t actually cut rates, yet, there is continued hope that as China’s economy slows down further, the PBOC will do everything in its power to boost stocks even higher, in other words, mimic the failed policies of its western central banking peers. That and of course, using a “hidden hand” in seeking to boost the economy, because the last thing China wants or can afford, is another bad debt surge. After all, with the recent record spike in non-performing loans, even Beijing is running out of couches and carpets under which it can sweep the trillions in debt that will henceforth exist in limbo: never to be repaid, nor to be acknowledged as being in default.
In short: after the BOJ and the SNB, it was the PBOC’s turn to provide that extra “oomph” for risk and blow the global equity bubble that little bit bigger. And now we await the ECB to go full blown QE in the next few months, in preparation for the Fed to finally hike rates some time in 2015. And the simple reason why every single other central bank is doing everything it can to offset the removal of easy financial conditions by the Fed is because nobody has any idea, or even remembers, what a tightening cycle by the Federal Reserve looks like, or what it will do to global risk assets.
China is now replacing the USA as the lender of last resort
China Steps In as World’s New Bank
7 DEC 25, 2014 6:00 PM EST
Two-year Japanese government bonds sold at negative yield for first time
By Shinichi Saoshiro
Thursday, December 25, 2014
TOKYO — Japanese two-year government bonds were sold for the first time at negative yields today, underlining strong demand for the debt under the Bank of Japan’s qualitative and quantitative easing policy, through which it buys large amounts of short-term debt. …
In Europe, the two-year German bund yield has spent most of its time since August beneath zero, while in the Swiss government debt market even the five-year yield has gone negative.
… For the remainder of the report:
Japanese 10Y Yield Drops To Record Low; 2s Sell Subzero After BOJ Indirectly Buys Record Foreign Stocks
While the rest of the world was preparing to celebrate Christmas, China was busy easing its economy into growth, and its stock market into low earth orbit, by lowering non-bank deposit reserve rates to zero as reported previously, while Japan was enjoying the consequences of the BOJ monetizing 100% of all gross JGB issuance, when overnight the Japanese Ministry of Finance not only sold $22 billion in 2 Year paper at a negative yield of -0.003%: the first time ever a government note (not bill) has sold at a negative yield, but the Japanese 10 Year yield dropped to 0.31%, declining below the previously all time low hit on April 2013 when the BOJ first announced its unprecedented QE program.
While negative auction yields have moved steadily along the Japanese yield curve, with three-month and one-year bills already sold at sub-zero yields earlier this year, the relentless surge in bond prices, and tumble in yields, merely confirms what we said recently: the global shortage of high quality collateral (set to get 20% worse in 2015) will wreak havoc with the central-planners’ intention to boost yields in “confirmation” that a reflationary recovery has taken place.
Case in point: as Reuters reminds us, in Europe, the two-year German bund yield has spent most of its time since August beneath zero, while in the Swiss government debt market even the five-year yield has gone negative.
At this point it is probably worth updating the chart showing how many billions in European Treasury debttrade at negative yield. Ironically, the bond market is now so broken that Japanese yields, already at record lows, are actually higher than matching maturities in many European countries.
So what is causing this market distortion? Why the BOJ of course. Recall that as we showed previously, following its latest QE expansion the BOJ is set to monetize all gross issuance in 2015.
But it is not just gross issuance: the BOJ is also buying up existing bonds from the private market, i.e., the infamous POMO pathway, which means that all the BOJ is doing is enabling the purchases of other securities from those it buys bonds from (at a markup since the BOJ is completely cost-insensitive).
So what really is the BOJ buying? For the answer we go to the latest Japanese flow of funds report in which we find that Japanese pension funds bought 2.21 trillion ($18.6b) yen of overseas securities in the third quarter, the most on record dating back to 1998: a more than sevenfold increase from Q2.
They did this because at the same time, they sold 2.85 trillion yen of JGBs in the three months ended Sept. 30, an all-time high and twice as much in 2Q, to whom? Why the BOJ of course. And not only did they sell it, they made a killing because as the plunging yield indicates, the BOJ keeps lifting the bid for the price it will pay for any JGB paper across the curve.
In other words, the BOJ just bought, indirectly, a record amount of foreign stocks. We hope it is now clear why Goldman, Krugman and the entire Keynesian brigade have been urging Abe to continue with his destructive policies until the bitter end.
And as long Japan’s rates keep going lower courtesy of the relentess BOJ bid, global equities will keep rising: after all that is the whole premise of a fungible, globalized monetary system in which it no longer matters if the Fed, or the BOJ, or the ECB is doing the monetization.
But how does this ridiculous Keynesian “perpetual engine” of stock market growth end? We have made our opinionquite clear on the topic over the past 2 years, so instead we will hand the mic over to Blackrock:
being bullish on Japanese equities has become somewhat mainstream in the last two years. Foreign investors dominate trading, with a 60% share of volume on the Tokyo Stock Exchange. A loss of confidence in Abenomics could cause market gyrations. Reforms to develop a stronger equity culture would reduce Japan’s vulnerability to the mood swings of global investors, but this will take time.
The BOJ is playing with fire. What if the central bank actually succeeds and inflation starts to take off quickly? The nightmare scenario would be a spike in JGB rates leading to a fiscal crisis. Japan’s public debt load stands at almost 250% of GDP, according to the IMF, the highest in the G7.
Which also “explains” why Japan has the lowest 10-Year yield too…
as we explained above, Japan released terrible numbers last night.
First real wages crash. Savings rate turns negative/industrial production collapses as well as retail sales.
(courtesy zero hedge)
Game Over Japan: Real Wages Crash Most In 21st Century, Savings Rate Turns Negative
When about a month ago it was revealed that Japan’s shadow economic advisor is none other than Paul Krugman, we said it was only a matter of time before the Japanese economy implodes. Terminally. We didn’t have long to wait and last night the barrage of Japanese economic data pretty much assured Japan’s transition into terminal Keynesian state status.
In fact, after last night’s abysmal Japanese eco data, we doubt even the most lobotomized Keynesian voodoo priests have anything favorable left to say about Abenomics: not only did core inflation miss expectations and is now clearly in slowdown mode despite Japan’s openly monetizing all gross issuance, not only did industrial production decline 0.6% missing expectations of an increase and record its first decline in 3 months with durable goods shipments crashing, not only did consumer spending decline for the 8th straight month plunging 2.5% in November (with real spending on housing crashing by 20%), but – the punchline – both nominal and real wages imploded, when total cash wages and overtime pay decline yoy for the first time in 9 months and 20 months, respectively.
And the reason why any poll that shows Abe has even a 1% approval rating has clearly been Diebolded beyond recognition is that real wages (nominal wages less the CPI inflation) cratered 4.3% compared to a year ago. This was the largest decline since the 4.8% recorded in December 1998. In other words, Abenomics has now resulted in the worst economy, if only for consumers, in the 21st century.
But that’s not all: as Bloomberg reported, for the first time ever since records were collected in 1955, Japan’s savings rate turned negative. To wit:
Japanese drew down savings for the first time on record while wages adjusted for inflation dropped the most in almost five years, highlighting challenges for Prime Minister Shinzo Abe as he tries to revive the world’s third-largest economy.
The savings rate in the year through March was minus 1.3 percent, the first negative reading in data back to 1955, the Cabinet Office said.
A higher sales tax combined with the central bank’s record easing are driving up living costs, squeezing household budgets and damping consumption. Abe’s task is to convince companies to agree to higher wages in next spring’s labor talks to sustain a recovery.
“Households are suffering from a decline in real income,” said Hiromichi Shirakawa, an economist at Credit Suisse Group AG who used to work at the Bank of Japan.
Actually, if you ask Krugman, they are suffering from not enough inflation, and a lack of willingness to spend their savings. Oh wait… Never mind.
The savings rate, which the Cabinet Office calculates by dividing savings by the sum of disposable income and pension payments, peaked at 23.1 percent in fiscal 1975.
As Japan’s population ages, its growing ranks of elderly are tapping their savings, according to the Cabinet Office. Consumers also ran down savings to make purchases ahead of a sales tax-increase in April, the first since 1997.
The report offers perspective on a debate of decades ago over Japan’s trade surplus with the U.S., which caused periodic bouts of tension between the military allies. While respective savings rates have moved in opposite directions, the U.S. still had a $56 billion deficit with Japan in the first 10 months of 2014, U.S. government data show.
As for that imminent surge in wages: Today’s data showed there were 1.12 jobs available for every person seeking a position, the most since 1992. Said otherwise, Japan now has the most labor slack in over two decades!
The preliminary wage data released today lack a large enough sample and include some biases, so the final figures may be revised upward, according to Hiroaki Muto, an economist at Sumitomo Mitsui Asset Management Co. “Looking ahead, wages will probably rise but not accelerate,” said Muto.
Actually, it is far more likely that they will keep falling as Japanese corporations build up cash for what is now shaping up as the inevitable collapse of Abenomics which will send the economy, and the Nikkei, into a tailspin, one from which, however, there will be no recovery this time.
Or, as Keynesians around the world would like to call it, “a job well done.”
Putin escalates tensions with the west with a new military doctrine:
naming NATO, and the USA as main foreign threats. It also names the Arctic as a key area for protection.
(courtesy zero hedge)
Putin Signs New Military Doctrine: Names NATO, US As Main Foreign Threat; Test Fires New ICBM
Last week, after the unanimous passage of the Ukraine Freedom Support Act of 2014 in Congress, which made legal the provision of US “lethal aid” to Kiev and which Russia blasted as an act of aggression and promised that it would merely accelerate the deterioration of relations between Russia and the west, we wrote that “World Awaits Russian Response As Obama Makes “Lethal Aid” To Ukraine Legal.” We didn’t have long to wait: one short hour ago, Putin adopted an updated version of its military doctrine, which “reflects the emergence of new threats against its national security” and which names both the NATO military buildup on Russia’s borders, as well as the US and the destabilized situation in some regions (read Ukraine) as the main foreign threats to Russian security. The doctrine update also, for the first time, put protection of Russian national interest in the Arctic (read oil and nat gas) among the key priorities for Russia’s armed forces.
In other words, Putin is not only not backing down, but has once again explicitly warned NATO that any western action, either in Ukraine or elsewhere, will have a proportional response.
Among the highlights of the new doctrine:
- Russia’s military doctrine names NATO military buildup, destabilized situation in some regions among main external threats to security
- Russia’s new military doctrine puts protection of national interests in Arctic among priorities for Armed Forces for the first time
- Territorial claims to Russia and its allies, intervening in domestic policy main military threats
- Likelihood of large-scale war against Russia decreased, but some security threats continue to grow
- Anti-missile shields, ‘global strike’ concept, plans of placing weapons in space are external military threats to Russia
- Attempts to destabilize situation in Russia, terrorist activities are country’s main internal threats
More from RT:
The new doctrine was approved on Friday by President Vladimir Putin. Its core remains unchanged from the previous version. The Russian military remains a defensive tool which the country pledges to use only as a last resort. Also unchanged are the principles of the use of nuclear weapons which Russia adheres to. Their primary goal is to deter potential enemies from attacking Russia, but it would use them to protect itself from a military attack – either nuclear or conventional – threatening its existence.
The new sections of the doctrine outline the threat Russia sees in NATO’s expansion and military buildup and the fact that the alliance is taking upon itself “global functions realized with violation of international law.” The doctrine lists among major foreign military threats “the creation and deployment of global strategic antiballistic missile systems that undermines the established global stability and balance of power in nuclear missile capabilities, the implementation of the ‘prompt strike’ concept, intent to deploy weapons in space and deployment of strategic conventional precision weapons.”
Another new point in the doctrine is that one of the Russian military’s goals is to protect national interests in the Arctic region.
The document also points to the threat of destabilization countries bordering Russia or its allies and deployment of foreign troops such nations as a threat to national security.
There was a token segment focusing on domestic threats to peace and stability:
Domestically, Russia faces threats of “actions aimed at violent change of the Russian constitutional order, destabilization of the political and social environment, disorganization of the functioning of governmental bodies, crucial civilian and military facilities and informational infrastructure of Russia,” the doctrine says. Moscow sees international cooperation with countries sharing its effort to increase security, particularly members of BRICS, the OSCE, the Shanghai Cooperation Organization and others as the key to preventing military conflicts, the doctrine states.
But the gist of the message was clearly focused on external developments because while the doctrine explicitly stated that “Prevention of nuclear war and any other type of conflict core to Russia’s military policies” and that “Moscow reserves right to use nuclear weapons if Moscow, its allies are under nuclear or non-nuclear attack”, just a few hours prior to the doctrine announcement, Russia’s intercontinental ballistic missile RS-24 Yars was test fired from the Plesetsk military cosmodrome in the country’s northwest, Russian Defense Ministry’s spokesman for the Strategic Missile Forces (RVSN) Colonel Igor Yegorov told TASS on Friday.
The missile’s dummy warheads with given accuracy hit a target at the Kura range in Kamchatka in the Russian Far East.
“On December 26, 2014 at 11:02 am, Moscow time, the solid-propellant RS-24 Yars mobile ground ICBM with a multiple warhead was test fired from the Plesetsk state test cosmodrome by a combined combat crew of the RVSN and Aerospace Defense Forces,” the official said.
Clear enough. Then again, now that Ukraine’s gold has been pillaged and the country’s economy in freefall, it wouldn’t be at all surprising if Kiev’s “allies” let the nation fend for itself and push it right back into the hands of Russia. After all, the plunging oil prices are causing enough hurt to the Kremlin where events in Ukraine are now largely irrelevant.
Ukraine (and the west ) respond. Recall that on Wednesday, they temporarily halted services to the Crimea: (train and electricity)
(courtesy zero hedge)
There was some expectation following the loud public response following Ukraine’s shut down of power to Crimea on Christmas Eve, that Kiev would treat the territory which it alleges is still part of Ukraine as, well, part of Ukraine. And sure enough, a few hours after the regionwide blackout was first reported, Ukraine restored power. Until today, when moments ago we learned that not only did Ukraine cut off electricity to Crimea earlier today, but also halted train services, moves which, according to the WSJ, could raise tensions with Russia, but which also will harden the local popluation’s pro-Russian determination even further.
Crimea’s Fuel and Energy Minister Sergei Egorov told Russia’s Interfax news agency that power was cut off at 1:50 p.m. Friday without warning. He said backup diesel generators and mobile turbine power plants were supplying critical infrastructure with electricity. More from WSJ:
The power cutoff is the second this week by Ukraine, which says it has electricity shortages of its own because rebels have halted shipments of coal to its power plants.The cutoff in railway services, however, could indicate Ukraine is stepping up its pressure of the peninsula.
Ukraine’s state rail company Ukrzaliznytsia on Friday said it would stop passenger and cargo train services to Crimea “in order to insure the safety of passengers.” The move will affect both Ukrainian and foreign trains traveling to the peninsula, the company said. It didn’t indicate when services would resume.
More from ABC:
Ukraine’s state rail company Ukrzaliznytsia has suspended passenger and cargo train services to the Black Sea peninsula of Crimea due to security concerns.
Ukrzaliznytsia said cargo trains would be suspended from Friday while passenger routes would gradually cease running over the weekend and on Monday.
The company did not say how long the suspensions would be in place or specify what the security concerns were.
“In order to ensure the safety of passengers … (the railway) will cut the route of trains to Crimea off at Novooleksiyvka and Kherson,” Ukrzaliznytsia said in a statement, referring to two towns on the Ukrainian mainland near Crimea.
Back to the WSJ:
Cutting supplies to Crimea may be a lever of influence for Kiev, since the matter has become a headache for Moscow after it annexed the territory in March. Crimea has no overland connection to Russia and has traditionally relied on a land bridge to Ukraine for essentials such as food, power and water.
Alternatively, it may simply force Russia to find an alternative solution much faster than it would have otherwise, much in the same way western financial pressure on Russia has forced the Kremlin and Beijing to accelerate their mutual cooperation not only in the field of energy infrastructure and natgas deals, but has led to China openly providing financial support to the country which is isoleted by the debt-monetizing west, if not by the BRIC countries and other non-US allies, whose combined population is well over half that of the world.
In hyperinflationary torn Belarus:
(courtesy zero hedge)
Belarus President Tells “Retailers, Money-Grabbers And Thieves” That Capital Controls “Will Remain Forever
There is just so much win in the following article describing what is taking place in hyperinflation-riddenBelarus (aka a true Keynesian success story), that we decided to post it in its entirety.
State control of prices in Belarus will remain forever
Belarusian President Alexander Lukashenko has said that state control over prices will remain in place in the republic and urged businesses not to count on a liberalization of the price policy after the scraping of a package of emergency measures from the government and the National Bank.
“I was told, and saw it for myself, that some of our scoundrel-officials have been telling entrepreneurs, businessmen and all sorts of thieves that they should wait until around (January) 9th or 15th, everything will be liberalized here, and they would be able to get what they have not until now. People are simply begging to be you know where. I want to say that the trend, as is fashionable to say nowadays, towards control over domestic prices will remain forever,” Lukashenko said at a meeting which focused on the country’s economic development on Friday.
It is outrageous that certain politicians have been telling businesses the control over price-formation in the country will soon be lifted and businessmen will be able to make up for lost profits, the president said.
“Retailers, middlemen, money-grabbers and thieves working in this sector have become the richest people in our country,” Lukashenko said.
“We did all we could to form a proper retail industry in our country. Even if tomorrow we have no more new retail companies, we still have an incredible number of them and middlemen. We could do without new ones. But those that are operating, we’ll make them work the way they should,” the president said.
“Like I said, unless they heard already: 2-3% of the profit margin. We’ll have each type of goods under control, especially imported ones,” Lukashenko said.
“They should not expect to be able to hide something somewhere in the hope that after (January) 9th or 15th they would get incredible prices and fill their pockets even more,” the president said.
And just like that, we have government central-planning of… everything. Coming soon to every banana republic near you.
First it was oil. Now natural gas tumbles below $3.00 usa
(courtesy zero hedge)
Nat Gas Tumbles Below $3 For The First Time Since 2012, Plunges 30% In 2014
For the past few months, the one silver lining to the energy complex – with crude oil plummeting to levels not seen since 2009 – was nat gas, which soared to the mid-$4s in early November on expectations of a brutal polar vortex for the second year in a row sending heating demand surging. Well, so far the “harsh” weather, which was blamed for the epic collapse in the US economy in Q1 has not materialized, and all those buyers of natgas contracts have been scrambling to sell all of their exposure afraid they may suffer the same fate as their crude trading brethren. End result: as of moments ago, nat gas finally slide under $3, the first time it has done so since 2012!
This also means that while crude oil longs have had a horrible year, with nat gas now down 29% in 2014, and headed for the first annual decline since 2011 as mild weather leaves stockpiles at a surplus to year-ago levels for the first time in two years, yet another commodity is set to ring in margin calls for all those who are not long the USDJPY, pardon the S&P500, where the only trade off to daily all time highs is simply the total collapse of Japan as a nation state.
And since temperatures will be mostly above average in the eastern half of the U.S. through Dec. 30, according to Commodity Weather Group LLC, look for gas to keep sliding. From Bloomberg:
“We haven’t seen a lot of cold weather this winter,” said Carl Larry, a Houston-based director of oil and gas at Frost & Sullivan. “The warmer it stays, the more pressure on natural gas. Gas production is not dropping and demand is not that high.”
Natural gas for January delivery fell 1.6 cents, or 0.5 percent, to $3.014 per million British thermal units as of 9:25 a.m. on the New York Mercantile exchange. Earlier, futures touched $2.98 per million Btu, the lowest since Sept. 26, 2012. Volume was 68 percent below the 100-day average for the time of day.
“This market continues to look oversupplied,” Aaron Calder, senior market analyst at Gelber & Associates in Houston, said by phone on Dec. 24. “We are seeing support at $3 but I would say that once we break that I think $2.70 is probably our lower technical target.”
“Unseasonably warm weather this month now necessitates extreme conditions ahead in order to avert a surplus,” Teri Viswanath, director of commodities strategy for the bank in New York, said in the report.
But while traders will be ok, the one industry that appears set to suffer the most is, once again, shale:
Output from the Marcellus shale formation in the Northeast may climb to 16.3 billion cubic feet a day in January, up 19 percent from a year earlier, the EIA said in its monthly Drilling Productivity Report on Dec. 8.
And now, since the Keynesian angle of “higher commodity prices mean more pent up demand and higher future growth” is finished, expect a major switch in the narrative to “deflation is actually good.” Because apparently Austrians are only wrong whenever their being right does not conflict with the official propaganda of making trillionaires out mere billionaires.
Your more important currency crosses early Friday morning:
Eur/USA 1.2185 down .0023
USA/JAPAN YEN 120.34 up .044
GBP/USA 1.5547 down .0011
USA/CAN 1.1612 down .0009
This morning in Europe, the euro is down , trading now just below the 1.22 level at 1.2185 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 up in Japan by 4 basis points and settling well above the 120 barrier to 120.34 yen to the dollar. The pound is down this morning as it now trades just below the 1.56 level at 1.5547.(very worried about the health of Barclays Bank and the FX/precious metals criminal investigation/Dec 12 a new separate criminal investigation on gold,silver oil manipulation). The Canadian dollar is up today trading at 1.1612 to the dollar.
Early Friday morning USA 10 year bond yield: 2.25% !!! down 1 in basis points from Wednesday night/
USA dollar index early Friday morning: 89.96 up 12 cents from Wednesday’s close
The NIKKEI: Friday morning up 10 points or 0.06
Trading from Europe and Asia:
1. Europe stocks mostly in the green except Paris
2/ Asian bourses all up … Chinese bourses: Hang Sang in the green ,Shanghai in the green, Australia in the green: /Nikkei (Japan) green/India’s Sensex in the green/
Gold early morning trading: $1194.00
Closing Portuguese 10 year bond yield: 2.71% par in basis points from Wednesday
Closing Japanese 10 year bond yield: .33% !!! par in basis points from Wednesday
Your closing Spanish 10 year government bond, Wednesday ,par in basis points in yield from Wednesday night.
Spanish 10 year bond yield: 1.73% !!!!!!
Your Friday closing Italian 10 year bond yield: 1.99% par in basis points from Wednesday:
trading 26 basis points higher than Spain:
IMPORTANT CLOSES FOR TODAY (1:30 pm est)
Closing currency crosses for Friday night/USA dollar index/USA 10 yr bond:
Euro/USA: 1.2176 down .0032
USA/Japan: 120.36 down 0.020
Great Britain/USA: 1.5555 down .0001
USA/Canada: 1.1624 up .0003
The euro fell a bit in value during the afternoon , and it was down by closing time , finishing well just below the 1.22 level to 1.2176. The yen was down in the afternoon, and it was down by closing to the tune of 2 basis points and closing well above the 120 cross at 120.36. The British pound gained considerable ground during the afternoon session but it was still down on the day closing at 1.5555. The Canadian dollar was down in the afternoon and was down on the day at 1.1624 to the dollar.
Currency wars at their finest today.
Your closing USA dollar index: 90.03 up 20 cents from Wednesday.
your 10 year USA bond yield , down 1 in basis points on the day: 2.25%!!!!
European and Dow Jones stock index closes:
England FTSE off today
Paris CAC off today
German Dax up 56.35 points or .57%
Spain’s Ibex off
Italian FTSE-MIB off
The Dow: up 23.50 or 0.13%
Nasdaq; up 33.39 or 0.17%
OIL: WTI 54.85 !!!!!!!
Closing USA/Russian rouble cross: 53.41 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:
Late-Day Selling Scramble Almost Ruins Christmas, Crude Crash Continues
With everything decoupled from stocks…
This seemed rather apropos…
Record highs for the S&P, Dow, Trannies, and Russell 2000… on NO volume.. as oil tumbled, treasury yields fell, and credit widened… sure why not!
7th Day up in a row for the Dow… off the Yellen lows…
Although the 2nd day in a row with an ugly close… with The Dow clinging to gains…
Leading stocks to record-er-est highs
Even as Crude oil fell back below $55…
Decoupling entirely from stocks…
Treasury yields dropped today but are up on the week…
also decoupling from stocks…
The USD gained today to close the week up 0.45% at multi-year highs…
Despite USD strength, Gold and Silver end the week unchanged as copper and crude crashed lower…
Here is another municipality in trouble in the uSA;
(courtesy Mark Gillespie/www.Kentucky.com)
and special thanks to Robert H for sending this to us:
Cellphones cut off, Ohio suburb weighs bankruptcy
Associated PressDecember 26, 2014 Updated 1 hour ago
EAST CLEVELAND, OHIO — East Cleveland has long been one of the poorest cities in the state, a model for what urban decay looks like — streets filled with blighted and boarded-up homes and tired commercial districts.
And it’s beyond broke.
The city government’s cellphone provider recently cut off service for nonpayment. It is getting two new salt trucks purchased with federal money but won’t be able to fill them because of what it owes Morton Salt Inc., one of the city’s fiscal overseers said.
This city of 17,000 people is now considering whether to file for municipal bankruptcy, which would be a first for an Ohio municipality.
East Cleveland in recent years lost two of its biggest employers and the income taxes paid by those who worked there. East Cleveland’s bottom line has been further diminished by substantial cuts in state funding and a countywide reappraisal that further reduced property tax receipts.
The Cleveland suburb has been under a state-ordered fiscal emergency since 2012, which means a fiscal commission oversees the city’s finances and works with officials to devise a recovery plan. East Cleveland has been there before. It was under a fiscal emergency from 1988 until 2006, the longest in state history.
The city’s financial woes have reached a point where the head of the fiscal commission doesn’t think bankruptcy would even help. Sharon Hanrahan of the Ohio Office of Management and Budget said she’s concerned the city won’t have enough cash in the bank to make payroll for the first pay period of 2015.
Mayor Gary Norton said a bankruptcy filing is being considered.
“We have to recognize the reality we face, weigh our options and choose a course,” Norton said in an interview with The Associated Press. “Right now, we’re in the stage of weighing our options.”
He bristled at the notion that East Cleveland won’t make payroll, noting that doomsayers have been predicting such a thing for months. He emphasized that city government is still delivering essential police, fire and emergency medical services and is picking up residents’ trash.
There have been fewer than 500 government-related bankruptcies in the country since 1934, when bankruptcy laws took effect during the Great Depression. Detroit recently emerged from the country’s largest-ever municipal bankruptcy after piling up $7 billion in debt.
Hanrahan said East Cleveland can’t be compared with Detroit because East Cleveland has so few resources. The city has negative fund balances of about $5 million and more than $2 million in past-due bills.
In a letter to the East Cleveland fiscal commission dated Nov. 21, Ohio Auditor Dave Yost wrote: “During 2014, only sheer luck has kept (East Cleveland) from the one unexpected expense that would jeopardize payroll.”
Yost further wrote that the city’s recovery plan is “unworkable.” The letter said there is anecdotal evidence that doctors are refusing to treat city workers because medical bills have gone unpaid.
The aftermath of a municipal bankruptcy can be ugly, Hanrahan said. She pointed to Vallejo, California, which emerged from bankruptcy in 2011 but may have to file again. That city had to make deep cuts in safety services and has watched crime rise and city streets go neglected.
A bankruptcy would result in East Cleveland’s debtors getting whatever a judge decides. But it won’t change East Cleveland’s primary condition — a poor city that appears to be growing poorer.
Hanrahan said a municipal bankruptcy can work under “certain circumstances.”
“And I don’t think the circumstances exist in East Cleveland,” she said.
That is all for today.
I will see you Monday night
bye for now