jan 29.2015/Huge increase of 5.67 tonnes of gold into GLD/Inventory now at 758.37/no changes at the SLV/Greece looks to ally with Russia/Ukraine needs 3 billion USA dollars immediately/Denmark increases NIRP again to -.5%/

 

Good evening Ladies and Gentlemen:

Here are the following closes for gold and silver today:

 

Gold: $1254.60 down $31.30   (comex closing time)
Silver: $16.71 down $1.36  (comex closing time)

 

 

In the access market 5:15 pm

 

Gold $1257.00
silver $16.95

 

Tomorrow is first day notice

Gold/silver trading:  see kitco charts on right side of the commentary.

 

The bankers for the past several years have raided gold and silver at the conclusion of every month.  Four days prior to the end of the month we have the options expiry on the comex.  On the last day of the month we have the OTC options expiry where hedge funds buy options from the bankers on the OTC market.  Why on earth investors day in and day out buy options on the precious metals is beyond me? These guys are mega crooks.  In gold they wanted to have all 1260 dollar call  options and above go worthless.  In silver it was all calls between $16.75 and $18.00. They were successful as they pocketed all of the premiums.  This is how the banks make money.  The Fed keeps the rates at zero and provides loans to these bums at 0% so that they can execute these trades against us.

 

The gold comex today had a good delivery day, registering 9 and 12 notices served for 2100 oz. Silver comex registered 17 notices for 85,000 oz.

 

 

Three months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 247.83 tonnes for a loss of 55 tonnes over that period.

 

In silver, the open interest fell slightly by 400 contracts despite Wednesday’s silver price being unchanged. The total silver OI continues to  remain relatively high with today’s reading at 162,040 contracts. After today’s monstrous raid, it will be interesting to see how many open interest contracts in silver were knocked off.  The January contract month is now off the board.

 

In gold we again experience a large decrease in OI as we enter an active delivery month.(gold entering February and this is an active month) The drop in OI occurred with a decrease   in the price of gold yesterday to the tune of $5.80. The total comex gold OI rests tonight at 429,563 for a loss of 56,127 contracts. It will be interesting to see the damage in OI for tomorrow.

 

 

 

 

 

Today, we had a huge addition of 5.67 tonnes in gold inventory at the GLD/Inventory at 758.37 tonnes

 

In silver, /SLV inventory remains constant at 319.314 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 GOFO rates moved in both directions   All months are in contango and thus positive in rates.

 

On January 30/2015 the LBMA will officially stop providing the GOFO rates.

 

Jan 29 2015

 

+.09%                     +.10%                     +.11%                +.12%            .1575%

 

Jan 28 2014:

 

 

+.085%                   +.0975%                 +.1075 %             +.125%               +.16%

 

 

end

 

 

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

 

 

Here are today’s comex results:

 

 

The total gold comex open interest collapsed again today by a rather large 8,716 contracts from 438,279 down to 429,563 with gold down by $5.80  yesterday (at the comex close). We have been witnessing for the past year, total OI collapse once first day notice approaches for an active precious metals contract month.We cannot explain this as it makes no sense at all. We are now off the January contract month.  The next big delivery month is the active February contract month and here the OI fell by 56,127 contracts  from 84,617 contracts all the way down to 28,490, with many of these guys  moving to April and the rest selling outright their contracts without rolling. First day notice is tomorrow Jan 30.2014 or 1 day away. The estimated volume today was fair at 168,388. The confirmed volume yesterday was good at 345,104 contracts. Today we had 21 notices filed for 2100 oz .

 

 

And now for the wild silver comex results. Silver OI fell slightly by 400 contracts from  162,440 down to 162,040 as silver was unchanged  yesterday. The front January contract month is now off the board. The next non active contract month is February and here the OI fell by 9 contracts down to 330.The next big active contract month is March and here the OI fell by 1412 contracts down to 100,910.  The estimated volume today was fair at 35,426. The confirmed volume  yesterday was fair  at 35,357. We had 17 notices filed for 85,000 oz today.

 

January final standings

 

Jan 29.2015

Gold

Ounces

Withdrawals from Dealers Inventory in oz nil oz
Withdrawals from Customer Inventory in oz nil oz
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz nil  oz
No of oz served (contracts) today 21 contracts(2100 oz)
No of oz to be served (notices)  off the board
Total monthly oz gold served (contracts) so far this month  95 contracts(9500 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month

Total accumulative withdrawal of gold from the Customer inventory this month

 4,051.3 oz

Today, we had 0 dealer transactions

 

we had 0 dealer withdrawals:

total dealer withdrawal: nil oz

 

we had 0 dealer deposits:

 

 

total dealer deposit: nil oz

 

we had 0 customer withdrawal

 

 

 

total customer withdrawal: nil oz

 

 

 

we had 0 customer deposit:

 

total customer deposits;  nil oz

 

We had 1 adjustment

i) out of JPMorgan:   5,281.195 oz was adjusted out of the dealer and this landed into the customer account of JPM

 

Today, 0 notices was issued from JPMorgan dealer account and 8  notices were issued from their client or customer account. The total of all issuance by all participants equates to 21 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 0 notices were stopped (received) by JPMorgan customer account.

To calculate the total number of gold ounces standing for the December contract month, we take the total number of notices filed for the month (95) x 100 oz  or 9500 oz  , the amount of gold oz standing for the January contract month. (0.2954 tonnes of gold)

 

Thus the final standings:

95 (notices filed for the month x 100 oz) equals 9500 oz (or .2954 tonnes)

we gained 1700 oz of additional gold standing in this January gold delivery month. This completes the January contract gold month

 

Total dealer inventory: 767,805.746 oz or 23.88 tonnes

Total gold inventory (dealer and customer) = 7.968 million oz. (247.83) 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 finalizes the month of January for gold.

 

end

 

 

And now for silver

 

Jan 29 2015:

 

 

 January silver: final standings

 

 

Silver

Ounces

Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory 36,027.600 (Brinks Delaware)
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory nil
No of oz served (contracts) 15 contracts  (75,000 oz)
No of oz to be served (notices) 17 contracts (85,000 oz)
Total monthly oz silver served (contracts) 453 contracts (2,265,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
Total accumulative withdrawal  of silver from the Customer inventory this month  6,529,404.1 oz

Today, we had 0 deposit into the dealer account:

 

total dealer deposit: nil   oz

 

we had 0 dealer withdrawal:

total dealer withdrawal: nil oz

 

We had 0 customer deposits:

 

 

total customer deposit nil oz

 

 

We had two customer withdrawals:

 

i) Out of Brinks:  31,129.95 oz

ii) out of Delaware: 4,897.65 oz

 

 

total customer withdrawal: 36,027.600 oz

 

 

we had 3 adjustments

i) From CNT: a total of 43,658.500 oz was adjusted out of the customer and this landed into the dealer account of CNT

ii) From Delaware: a total of 5165.045 oz was adjusted out of the customer and this landed into the dealer account of Delaware

iii) From JPMorgan; a total of 5129.00 oz was adjusted out of the dealer account and this landed into the customer account of JPM

 

Total dealer inventory: 66.657 million oz

Total of all silver inventory (dealer and customer) 177.618 million oz.

The total number of notices filed today is represented by 17 contracts for 85,000 oz. To calculate the number of silver ounces that will stand for delivery in January, we take the total number of notices filed for the month (453) x 5,000 oz    = 2,265,000 oz the number of ounces standing in the January delivery month.

 

Final standings for silver for the January contract month:

453 contracts x 5000 oz= 2,265,000 oz

we gained 10,000 additional silver ounces standing in this January delivery month. This completes the January contract month.

 

 

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

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

 

 

end

 

 

 

The two ETF’s that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.

There is now evidence that the GLD and SLV are paper settling on the comex.

***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold. I can visualize demand coming to the buyers side:

i) demand from paper gold shareholders

ii) demand from the bankers who then redeem for gold to send this gold onto China

vs no sellers of GLD paper.

 

 

And now the Gold inventory at the GLD:

 

Jan 29/we had an addition of 5.67 tonnes of gold inventory at the GLD/Inventory at 758.37 tonnes

 

Jan 28/no changes in gold inventory at the GLD/Inventory at 752.44 tonnes

 

Jan 27.we had a monstrous “paper” addition of 9.26 tonnes of gold into the GLD tonight/Inventory at 752.44 tonnes

 

Jan 26.2015: another volatile day as they added  1.79 tonnes/743.44 tonnes of gold.

 

Jan 23/the action at the GLD is very volatile:  today they added 1.20 tonnes of gold to their inventory/Inventory 741.65

 

Jan 22 no change in gold inventory at the GLD/Inventory 740.45 tonnes

 

Jan 21.2015: Tonight, we lost 1.79 tonnes of gold from the GLD/Inventory 740.45 tonnes

 

Jan 20.2015:

 

Late Friday night, we had another addition of 13.74 tonnes of gold on top of the earlier amount of 9.56 tonnes which were added to inventory.

Tonight another 11.45 tonnes was added to inventory

 

Thus so far inventory rests at 742.24 tonnes of gold.

 

There is no chance that these guys could have assembled 34.65 tonnes over the weekend. The addition is nothing but a paper entry!! No real physical has been received.

 

 

Jan 16.2015 we had a huge addition of 9.56 tonnes of gold into the GLD/New inventory 717.15 tonnes.  (where on earth did they obtain that quantity of physical gold??)

 

 

 

 

, Jan 29/2015 / we had a huge addition of 5.67 tonnes of gold inventory at the GLD/

inventory: 758.37 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 : 758.37 tonnes.

 

 

end

 

 

And now for silver (SLV):

 

Jan 29/no change in silver inventory/SLV inventory at 319.314 million oz

 

Jan 28/no changes in silver inventory/SLV inventory at 319.314 million oz

 

Jan 27/no change in silver inventory/SLV inventory at 319.314 million oz

 

 

Jan 26.2015: no change in silver inventory/SLV inventory at 319.314 million oz

 

jan 23/2015/ a  huge addition of 1.053 million oz.  This entity is also being quite volatile/Inventory at SLV 319.314 million oz.

 

Jan 22 a huge reduction of 6.75 million oz/Inventory at 318.261 million oz

 

Jan 21 no change in silver inventory/Inventory at 325.011 million oz

 

Jan 20.2015: no change in silver inventory so far tonight/Inventory at 325.011 million oz

 

 

Jan 16.2015: we had another withdrawal of 1.34 million oz of silver inventory/Inventory 325.011 million oz

(something is up!!)

 

Jan 15.2015 we had a huge withdrawal of 1.628 million oz/Inventory 326.391 million oz

 

 

Jan 29/2015 no change in silver inventory

registers: 319.314 million oz

 

 

end

 

 

 

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)

 

BIG CHANGES (NAV’s becoming less negative for CEF)

1. Central Fund of Canada: traded at Negative  5.2% percent to NAV in usa funds and Negative 4.7 % to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 60.9%

Percentage of fund in silver:38.7%

cash .4%

 

 

( Jan 29/2015)

 

 

2. Sprott silver fund (PSLV): Premium to NAV rises to + 3.08%!!!!! NAV (Jan 29/2015)

3. Sprott gold fund (PHYS): premium to NAV falls to +.27% to NAV(Jan 29/2015)

Note: Sprott silver trust back  into positive territory at +3.08%.

Sprott physical gold trust is back in positive territory at +.27%

Central fund of Canada’s is still in jail.

 

 

end

 

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

 

 

 

Early gold trading from Europe early Thursday  morning:

 

(courtesy Mark O’Byrne)

 

EU Threatens Sanctions on Russia as War in Ukraine Intensifies, Greece Pivots to Russia

 

 

EU foreign ministers are meeting in Brussels today to discuss imposing further sanctions on Russia following an upsurge in fighting in east Ukraine.

29-01-2015
A woman pushes a cart as she visits a hypermarket of French grocery retailer Auchan in Moscow, Jan. 15, 2015. A new poll shows 80 percent of Russians would give up Western food for a stronger economy. Reuters

The EU and the US have already imposed sanctions on Russia and slapped asset freezes and travel bans on Russian individuals and businesses.

NATO says hundreds of Russian tanks and armoured vehicles are in east Ukraine. Moscow denies direct involvement but says some Russian volunteers are fighting alongside the rebels.

Greek’s new Prime Minister Alexis Tsipras and a leader of the country’s radical left-wing anti-austerity party, has indicated dissatisfaction with the sanctions posed on Russia. Russia and Greece have a history of good relations and shared culture. The opposition of EU sanctions by Tsipras may lead to the strengthening of the relationship between the two countries and spells trouble for further sanctions that are to be decided in the weeks ahead.

Tensions between Russia and the West are intensifying. President Obama’s suggestion that Russia would be cut out of the SWIFT banking transfer system was met with a degree of hostility and threatening words that has not been customary of the Russian government.

Prime Minister Medvedev warned that the “Russian response – economically and otherwise – will know no limits.”

The EU‘s push for further sanctions on Russia may be imprudent and only help ‘bait the bear’. Measures under discussion include asset freezes, travel restrictions on certain Russian individuals, and restricted access to capital markets.

The consequences of such a move could be dire. China have made it clear that it can provide liquidity to Russia if necessary, an offer the Russians have not felt the need to avail of as yet. Russia still sits on vast dollar reserves which it could dump on the market and buy Chinese yuan and other allied nations fiat currencies and indeed precious metals such as gold and palladium.

Or Russia could choose to cut off natural gas to Europe causing a crisis for homes and industry across Europe and paralysing industry and agriculture in already struggling periphery economies.

The war in Ukraine, in which 5000 people have already died, is growing in scope and intensity.

At some point Russia may directly enter the conflict – which it would justify given that the ethnically Russian people of Donetsk voted to secede from Ukraine following the overthrow of democratically elected, albeit corrupt, President Yanukovych.

Moscow’s intervention in Ukraine and its continued support for rebels in the east of the country is not “not a wise course for Russia”, former UK foreign secretary and leading government politician William Hague has told CNBC.

“If Russia continues on this course of the last few days there will be a further grave deterioration in relations between the European Union and Russia,” Hague who is close to NATO told CNBC’s Worldwide Exchange.

The risks now fomenting in Greece as well the escalating tensions with Russia, along with the tacit admission that the EU is already in serious crisis by initiating emergency QE measures, mean that that the risk of banking contagion and collapse, economic collapse and currency collapse are real threats.

Bail-ins of deposits remain a real possibility.

In the event of any and all of these possibilities gold and silver bullion will perform well as a currency of last resort.

Comprehensive Guide to Bail-ins: Protecting Your Savings in the Coming Bail-in Era

MARKET UPDATE

Today’s AM fix was USD 1.275.50, EUR 1,129.36 and GBP 842.25 per ounce.
Yesterday’s AM fix was USD 1,287, EUR 1,131.93 and GBP 846.71 per ounce.

 

Gold and silver both dropped yesterday. Gold lost 0.76% or $9.80, closing at $1,284.90/oz. Silver fell 0.55% or $0.1 and closed at $17.99/oz.

29-01-2015_2
Gold Performance since 2006 and in 2015

 

In Singapore, gold for immediate delivery fell by 0.5 per cent to USD 1,278.27 an ounce and silver by 0.9 per cent to USD 17.84 an ounce and that weakness continued in European trading.

On the wider markets this morning, European shares are down 0.7% on concerns about the health of the Eurozone economy and risks of a new crisis.

Global economic growth concerns pushed stock markets lower in Asia overnight. Non-gold safe haven assets such as German bund futures rose sharply, mirroring an earlier move in U.S. Treasuries.

Greek Prime Minister Tsipras challenged to international creditors by halting privatisation plans agreed under the country’s bank bailout deal, prompting a third day of heavy losses on financial markets in Greece.

The U.S. Federal Reserve remains remarkably sanguine on the U.S. economy and signalled that it remains firmly on track to raise interest rates this year, despite an uncertain global outlook. As ever, we prefer to watch what the Fed actually does rather than what it says it will do.

Get Breaking News and Updates Here

 

end

 

This will become interesting:

 

(courtesy Reuters/GATA)

 

Sen. Rand Paul re-introduces ‘audit the Fed’ bill

Section:

By Michael Flaherty
Reuters
Wednesday, January 28, 2015

Republican U.S. Sen. Rand Paul, a potential 2016 presidential candidate, on Wednesday re-introduced a bill that would expose the Federal Reserve’s monetary policy discussions and decisions to a congressional audit.

The Kentucky senator’s move to re-introduce the bill, along with 30 co-sponsors, comes as Republican lawmakers and some Democrats increase their efforts to rein in the U.S. central bank and make it more transparent.

The Fed gained broad regulatory powers and implemented massive stimulus measures after the 2007-2009 financial crisis, expanding its balance sheet to $4.5 trillion.

Republican U.S. Rep. Thomas Massie of Kentucky introduced a similar bill in the House of Representatives this month. …

… For the remainder of the report:

http://www.reuters.com/article/2015/01/28/usa-fed-audit-idUSL1N0V71IH201…

 

 

 

end

 

 

(courtesy Chris Powell/Bud Conrad/Casey Research)

 

 

Central banks irrelevant? Doug Casey says yes but his chief economist disagrees

Section:

7:19p ET Wednesday, January 28, 2015

Dear Friend of GATA and Gold:

At the New Orleans Investment Conference in October, Casey Research founder Doug Casey declared that central bank interventions in markets are irrelevant, as are central banks themselves. But in an interview with Dennis Miller, editor of the Casey Research newsletter Miller’s Money Forever, the firm’s chief economist, Bud Conrad, describes some of those interventions and concludes: “There are no markets, only interventions.”

What a concise way of putting it. And how good that Casey Research allows analysis as well as mere pontificating.

Miller’s interview with Conrad is headlined “The Age of Intervention Continues” and it’s posted at the Miller letter’s Internet site here:

http://www.millersmoney.com/editorial/the-age-of-intervention-continues

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

 

 

end

 

A very important interview on gold with Eric Sprott and Eric King of Kingworldnews

 

(courtesy Eric Sprott/Kingworldnews/Eric King)

 

Central banks’ gold suppression will fail, maybe any day now, Sprott tells KWN

Section:

8:50p ET Wednesday, January 28, 2015

Dear Friend of GATA and Gold:

Volatility in currencies signals that central banks are losing control while investors increasingly move into physical gold, straining central bank supplies to the market, Sprott Asset Management founder Eric Sprott tells King World News tonight.

“The physical demand just won’t let up at these depressed prices,” Sprott says, “and when you throw in a massive currency war that is taking place on a global basis, it is only making matters worse for the Western central banks.”

Sprott likens today’s gold suppression scheme to the last days of the London Gold Pool in 1968. He thinks the central banks could surrender any day now.

The interview is excerpted at the KWN blog here:

http://kingworldnews.com/billionaire-eric-sprott-entities-wiped-overnigh…

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

 

 

end

 

What on earth is frightening our banker crooks in silver?

 

In a day in which silver was pounded the most since September 2013 without any fundamental reason to explain this weakness (aside for the extensively discussedPrecious Metals-USDJPY funding pair trade, so favored by the central banks to punish gold/silver while pushing risk higher), many are wondering: what was the reason for this crash? Well, in a day in which Yellen now openly advised Democrats in a non-public setting about Fed policy, is it that ludicrous to assume that someone leaked the following announcement made after the close by the CME, namely that silver margins were just hiked by 11%?

end

 

Part ii

 

(courtesy Manley/Bullionstar/GATA)

 

NY Fed’s auxiliary gold vault may be JPM’s and a device of foreign policy

Section:

4:35p ET Wednesday, January 28, 2015

Dear Friend of GATA and Gold:

In the second installment of his series about the gold vaults of the Federal Reserve Bank of New York, GATA consultant Ronan Manly compiles documentation indicating that the bank’s auxiliary vault is operated jointly with JPMorganChase, whose own gold-vaulting facilities, regulated by the Commodity Futures Trading Commission, are adjacent and apparently being exempted from ordinary disclosure under federal freedom-of-information law because they implicate national defense or foreign policy. Manly’s analysis is headlined “The Keys to the Gold Vaults at the New York Fed — Part 2: The Auxiliary Vault” and it’s posted at Bullion Star’s Internet site here:

https://www.bullionstar.com/blog/ronan-manly/keys-gold-vaults-new-york-f…

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

 

 

end

 

 

 

 

This is how gold has performed in the various G 20 currencies:

 

(courtesy/ Burning Platform/ zero hedge)

 

 

 

 

Early Warning Signs

 

If, as Kyle Bass so eloquently noted previously, “buying gold is just buying a put against the idiocy of the political cycle. It’s That Simple,” then recent (post-QE3) activity suggests the narrative is changing fast…

 

 

Perhaps Larry Summers was right last week in Davos,“we have to recognize that the era when central bank improvisation can be the world’s growth strategy is coming to an end.”

 

Source: The Burning Platform

 

 

end

 

Without a doubt, one of Bill Holter’s best commentaries

Please take note of what he is saying:

 

(courtesy Bill Holter/Miles Franklin)

 

 

 

 

Still in control? Greece says no.

 

 

Can the dollar and gold continue to rise in tandem for long?  The last three months have seen a very peculiar dollar/gold anomaly.  Since mid November, gold (and silver) have “acted” very differently.  We have seen “outside days” and even an outside week.  Gold has moved nearly $160 of its lows for a rise of nearly 15%.  This has happened while the dollar has rallied furiously versus foreign currencies (with the exception of the franc).  From a “textbook” sense, this should never happen.  Actually, I am sure there are professors out there who would have argued “it cannot happen” …but it has.  Both the dollar and gold have rallied at the same time, so far gold outpacing the dollar.  But why?  Why has the tone for gold changed and why is it not “falling” versus a rising dollar?
  This is a very important question because the answer may (probably does) hold the key to which will be the ultimate winner and which may lose and lose big.  First, the explanations for a strong dollar are twofold, one mainstream and the other probably the real reason.  Mainstream says the dollar is getting stronger because the world is a mess and the dollar is the “cleanest dirty shirt” of the bunch.  It is said the U.S. economy is getting stronger and interest rates will be raised later this year which will give the dollar a strong yield advantage.  Personally, I see this argument as hogwash, I see the economy as very weak and getting weaker while the overall financial system is fragile.  The reported “strength” of the economy has been proven to be smoke and mirrors, this last quarter for example was revised higher because of Obamacare, even the lobotomized know this is fallacy.  A higher “tax” is not now and never will be economic “output”.
  An increase in interest rates is almost a zero percent probability in my view with the exception of a forced raise to save a crashing dollar.  I do not see the real economy nor financial system as having the ability to absorb higher interest rates of any sort.  This is the current debate, “when will the Fed raise rates”?  The answer in my opinion is they cannot, ever, until the markets force them to.
  In my opinion, the dollar rally has been 100% synthetic and the result of a global margin call.  Dollars on a global basis have been “purchased” to repay margin from busted carry trades.  Fundamentally, less dollars are now required by the world to consummate trade.  Less dollars will change hands on the oil trade simply because the price of oil has been halved.  Less dollars will be required because nation after nation have cut deals and sworn off dollars in lieu of using local currencies.  The list of countries is long and led by China who will transact trade using “non dollars”.
  My point is this, I believe we will soon see this first batch of margin calls met.  Couple this with slowing dollar demand for trade and the dollar should run out of steam.  Surely your next question is, “but what if margin calls actually increase again?”.  Aha!  Good question and one which in my opinion is a mathematical certainty.  We will get another round of margin calls …big ones!  HUGE… because the recent volatility has created some dead financial bodies all over the world.  I believe that as the bodies surface, more volatility will ensue.  It will be at this point, panic will begin to set in and the margin clerks will be working 24/7.  The opinion of Eric Sprott of this exact scenario can be found here http://kingworldnews.com/billionaire-eric-sprott-entities-wiped-overnight-western-central-banks-near-total-surrender/  I believe this is well worth reading as his the arguments are well thought out.
  This in my opinion will not create “net” synthetic demand because the question of “quality” will also factor in.  To explain, yes there will be more demand for dollars to meet margin calls but when you add in the decline in demand for trade AND the flight from dollars as a credit consideration, then you will see a net weaker dollar.  It is this scenario where I believe the rubber meets the road.  The dollar will be viewed as a “credit”, in fact, I believe the dollar will then be viewed as the “credit” it is (or isn’t!).
  The above needs to be put in simpler terms.  Gold has outperformed the strongest paper currency over the last 2 1/2 months.  The outperformance has surprised many, even those in the gold camp have been surprised.  Had a 15%-20% higher dollar been suggested as fact three months ago, a flat gold price would probably have been the best forecast even by most gold advocates.  In my opinion, physical demand is finally beginning to take over as the pricing mechanism.  The danger of a “call” for real gold is preventing the paper markets from getting much downside action as the cost of production acts as barrier.  I also believe increased global demand is a function of “credit considerations” by foreigners as they look at and view the dollar.
  Switching gears to “out of control” geopolitics, Greece just voted in the non austerity party.  Within 24 hours of taking power, Greece is already turning away from the West.  They are simply calling a spade a spade when they say they “cannot pay”.  No matter how much they cut their budgets, interest and principal alone cannot be paid …and this is on money ALREADY borrowed.  Greece is simply suggesting they “un” borrow it and receive writedowns on what is owed, and this is the central core problem!.  This is not just a Greek problem, it is a Western world problem, only Greece hit the wall first!  They cannot pay, they don’t have the revenue, they don’t have the money, nor do they have the production capacity under any scenario.  Greece will fail, the only thing in question is how it is handled.  A very good read on the situation can be read here http://www.theautomaticearth.com/its-not-the-greeks-who-failed-its-the-eu/ .
  I would go even one step further than this piece does and say “It’s not the world who failed, it’s the Western financial system who failed”.  I also believe the result for the rest of the Western world will be similar to what Greece is facing now.  Do they continue the game (can they continue?) or do they “switch sides” so to speak?  In my opinion, this is an easy question and one the Swiss have already begun to answer.  They were the latest in a string of nations announcing currency hubs, Britain, Germany and Australia being notable predecessors.  The West will one by one turn East.
  The reasoning behind my writing this missive is simple.  The thought process out there in “gold land” has just at the wrong time shifted to “but why can’t they just keep papering things over indefinitely?”.  The answer is just as simple and if you stand back and put your “common sense goggles” on, you can see it.  Our financial system is simply untenable.  All collateral has already been margined.  We arrived (in 2007-08) at the point in time where collective credit cards could only be paid by “balance transferring” to another card.  New debt has needed to be issued just to service existing debt.  Now, this is true even for sovereigns.
  The comedy of course is the Fed.  Everyone hangs on every word they speak.  Everyone is hoping to hear “we will kick the can”.  Let me help you stand back for a moment to see the forest.  It has now been five years, since 2009, that we have heard the word “recovery” and the Fed will begin to tighten.  Every year, every quarter and every Fed meeting we have heard the meme “the Fed will begin to tighten later this year or early next year”.  Do you see my point?  Nothing has changed since 2008, the only thing that has changed is the world is now further in debt, gobs of currency issued, yet consumption nor production are higher.  The bad situation we were in is only bigger while the amounts of unencumbered collateral underlying it all are much smaller.  In understandable terms, systemic RISK has never been higher!
  Getting back to Greece for a moment, why should they matter?  They are a very small and peripheral country in the EU.  I am here to tell you they do matter for two reasons.  First, financially, let’s call them a $350 billion burr under the system’s saddle.  Looking at the sovereign debt market, rounded off, the sovereign debt market is $100 trillion so $350 billion is not very significant.  You would be correct IF much of this debt was not carried with such huge leverage.  If you consider the CDS “overwritten” and derivatives on this $350 billion, now you’re talking about real money!  Maybe $3 trillion?  Or even $5 trillion?  More?  Could the system collectively come up with a $trillion or two to paper this over?  Maybe?  The answer is yes they can, but with one very large caveat.  Whatever salve to sooth the wound they come up with will be 100% printed because there is nothing left to “lever” off of.  Think of it this way, Greece will be the “Lehman moment” with all the same potential dominos “plus two”.  The extra dominos are the fact that Greece is a sovereign AND the thread that if pulled on will unravel Europe itself.
  Digging even deeper and assuming Greece itself doesn’t set off a chain reaction, though the world ignored what Iceland did in 2009, I don’t think they can or will ignore it with Greece.  Even if Greece were to get their requested debt reductions, they would soon be followed by the other “lazy” southern Europeans.  Country after country would line up and ask for reductions.  Should Greece come right out and say “we cannot pay”, or worse, defiantly say “we WON’T pay”, the same thing will happen.  Other cash strapped countries will “follow the leader” and default.
  To finish, it is important you understand that now is no time to “let your guard down” and fall into the “they can do this forever camp”.  They mathematically cannot and as the math takes over, sentiment will follow …very quickly!  I would like to add, the above has not been lost on China nor Russia.  They fully understand it all and have been preparing for and waging a financial war, the U.S. being the ultimate target.  Do they want to harm the U.S. population?  I don’t believe so and is not their intent.  But harm they will and the unsuspecting will be nothing more than collateral damage.  The East only wants one thing, “true and fair settlement” of trade.  They want “something in return for something”.  Can you blame them?
  The reason the can will not be kicked down the road any further is because the rest of the world, led by China and backed up by Russia will not allow it much longer.  The alternative of course is unthinkable and has happened many times throughout history, real and bloody war.  I pray the end of our current financial system is bloodless, the odds of this however are probably near zero.  Regards,  Bill Holter

 

And now for the important paper stories for today:

 

 

Early Thursday morning trading from Europe/Asia

 

 

1. Stocks mainly down on major Asian bourses  / the  yen falls  to 118.07

1b Chinese yuan vs USA dollar/ yuan strengthens  to 6.2462
2 Nikkei down 189 points or 1.06%

3. Europe stocks  all in the red  // USA dollar index up to 94.58/

3b Japan 10 year yield back up to .30% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 118.07/

3c Nikkei now  above 17,000/

3e The USA/Yen rate still well below the 120 barrier this morning/
3fOil: WTI 44.54 Brent: 48.94 /all eyes are focusing on oil prices. This should cause major defaults as derivatives blow up.

3g/ Gold down /yen down;

3h/ Japan is to buy the equivalent of 108 billion usa dollars worth of bonds per MONTH or $1.3 trillion

Japan’s GDP equals 5 trillion usa/thus bond purchases of 26% of GDP

3i Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt (see Von Greyerz)

3j Oil rises this morning for  WTI and rises for  Brent

3k markets react to hawkish Fed FOMC

3l  serious crackdown in China on margin concerns/China to crackdown on leverage

3m Gold at $1272.00. dollars/ Silver: $17.50

3n USA vs Russian rouble:  ( Russian rouble  down 1 1/4 in roubles per dollar in value)  69.18!!!!!!

3 0  oil rises into the 44 dollar handle for WTI and 49 handle for Brent

3p Markets react to Greece being serious about leaving the euro/worries about spread of “Greek virus”  to other peripheral European nations

3Q  SNB (Swiss National Bank) intervening again driving down the SF

3r options expiry on the gold/silver OTC tomorrow

 

3s UK inflation rate may turn negative according to central boss, Carney/gilt rates drop on that news

 

4. USA 10 yr treasury bond at 1.75% early this morning. Thirty year rate well below 3%  (2.31%!!!!)/yield curve flattens/foreshadowing recession
5. Details: Ransquawk, Bloomberg/Deutsche bank Jim Reid

 

 

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

 

Markets Drift Without Direction As Zombified BTFDers Unable To Frontrun Hawkish Fed

 

With markets still digesting the surprising FOMC announcement, which was far more hawkish than most expected, and which once again saw right through the crude weakness and interpreted it as “favorable for households” if saying nothing about investment linkages to this most financialized of commodities, this morning has seen more of the same, with the Nikkei sliding on JPY strength despite the BOJ’s clear mini-intervention in the market through its favorite commercial banks buying USJDPY early in the session and moments ago as the pre-US open ramp begins, and even as the Shanghai Composite – now detached completely from everything but investor leverage – once again dipped by 1.3% on fears of a more serious crackdown on margin accounts. In Europe all eyes are still on Greece with the curve now massively inverted, as the 10Y continues to drift wider than 10% even as the Athens Stock Exchange has found a bit of a dead cat bounce this morning and is up just over 3%.

The bottom line is that unfortunately for the BTFDers, with the Fed no longer giving explicit buy signals with the “considerable time” language struck, and with an implicit economic upgrade suggesting a rate hike is still on the table, it is becoming increasingly more difficult to frontrun the Fed’s “wealth creation” intentions.

 

More details from RanSquawk:

 

Asian equity markets mostly fell after following suit from a second consecutive negative Wall Street close after yesterday’s slightly hawkish FOMC rate meeting. The Nikkei 225 (-1.06%) fluctuated between gains and losses underpinned by weakness in JPY, while Chinese bourses fell for a third day as China’s CRSC launched a new margin trading probe on 46 brokerages. Consequently, the Shanghai Comp (-1.31%) fell to a 1-week low while the 50DMA crossed above the 100DMA in the Hang Seng (-1.07%), for the first time since May’14.

Today’s European session has seen equities open in negative territory, but pared some of these moves throughout the session, after some disappointing earnings pre market, specifically from Shell (RDSA LN), which consequently weighed on competitors BP (BP/ LN) and Total (FP FP). However, as has been the case over the last few days, market participants will be keenly watching todays US corporate earnings, with the likes of Alibaba (BABA) and ConocoPhillips (COP) due to report ahead of the opening bell and Google (GOOGL), Amazon (AMZN) and Visa (V) aftermarket.

The other factor weighing on European indices today is last night’s FOMC meeting, whereby the Fed removed their `considerable time` phrasing in what was interpreted as a less dovish than expected announcement, with Fed watcher Hilsenrath stating that the Fed keeping their `patience` phrase suggesting that rates will not rise before June at the earliest.

Elsewhere, Gilts outperform its German counterpart after BoE’s Carney stated aftermarket that interest rate hikes will be more gradual than the central bank anticipated at this stage last year. Meanwhile, the GR/GE 10y spread remains in focus after yesterday’s moves, wider today by around 50 bps in the wake of S&P changing Greece’s sovereign rating outlook to `watch negative` from `stable`, with the rating maintained at `B`. Note, this move comes ahead of a scheduled meeting between EU’s Dijsselbloem and SYRIZA’s Tsipras in Athens on Friday.

In FX, antipodean currencies have been in focus as AUD continues its downtrend from the Asian session where attention was still on the dovish article by RBA watcher McCrann, with market now pricing a high probability of a rate cut at the next scheduled meeting on 3rd February, with AUD/USD breaking below 0.7800 to trade at 5 and a half year lows. While NZD has been weighed on by yesterday’s dovish RBNZ policy meeting, where the central bank abandoned its tightening bias to trade at 4 year lows.

Elsewhere, EUR/CHF and USD/CHF have moved to intraday highs with CHF weakness evident across the board; EUR/CHF trades just off highs hit on Tuesday at 1.0383 which was hit in the midst of talk that the SNB were intervening in the market. Looking ahead, later today sees German CPI data, after we have seen all German states report a fall from previous month’s CPI. As well as this, out of the US today we have Weekly Jobs data and Pending Home Sales.

Gold has been the underperformer in the precious metals complex today in response to FOMC inspired USD strength seen during Asia-Pac hours. In the energy complex, both WTI and Brent have seen a slight uptick this morning after WTI crude futures closed last night’s session at the lowest level since early 2009 as crude stockpiles rose above 400mln bbls for the first time in over 30 years.

In summary: European shares are mixed, after paring earlier declines, with the oil & gas and financial services sectors underperforming and food & beverage, personal & household outperforming. Companies including Royal Dutch Shell, Deutsche Bank, Diageo, Infineon, Nokia and Sandvik released earnings/trading statements. Greek stocks rise after 3 sessions of losses, Greek bond yields continue rise. Turkish lira falls to new record against the dollar. The U.K. and Swedish markets are the worst-performing larger bourses, the Swiss the best. The euro is stronger against the dollar. German 10yr bond yields fall; U.K. 10-year gilt yield drops to record low. Commodities decline, with silver, copper underperforming and Brent crude outperforming. U.S. jobless claims, pending home sales due later.

Market Wrap:

  • S&P 500 futures up 0.5% to 2000.75
  • Stoxx 600 up 0.04% to 369.2
  • US 10Yr yield up 1bps to 1.73%
  • German 10Yr yield down 2bps to 0.34%
  • MSCI Asia Pacific down 1.4% to 140.4
  • Gold spot down 0.9% to $1272.4/oz
  • Euro up 0.27% to $1.1318
  • Dollar Index up 0.1% to 94.56
  • Italian 10Yr yield up 3bps to 1.62%
  • Spanish 10Yr yield up 3bps to 1.47%
  • French 10Yr yield up 1bps to 0.58%
  • S&P GSCI Index down 0.4% to 375.2
  • Brent Futures up 0.5% to $48.7/bbl, WTI Futures down 0.3% to $44.3/bbl
  • LME 3m Copper down 2.3% to $5359/MT
  • LME 3m Nickel down 1.7% to $14790/MT
  • Wheat futures down 0.6% to 502 USd/bu

Bulletin Headline Summary From RanSquawk and Bloomberg

  • Antipodean currencies trade at multi year lows after the dovish article by RBA watcher McCrann and the prospect of a dovish RBA next week continues to be priced into the currency, while the RBNZ abandoned their tightening bias.
  • Today’s European session has seen equities open in negative territory but ebb higher throughout the European morining in the wake of a less dovish than expected announcement from FOMC and some weaker than expected earnings pre market, specifically from Shell (RDSA LN).
  • Looking ahead, later today sees German CPI data, as well as Weekly Jobs data and Pending Home Sales from the US, with Alibaba (BABA) and ConocoPhillips (COP) due to report ahead of the opening bell and Google (GOOGL), Amazon (AMZN) and Visa (V) aftermarket.
  • Treasuries steady, headed for biggest weekly gain in more than three years after Fed added “international developments” to items used to assess progress toward employment and inflation objectives.
  • While Yellen says history and theory suggest wages will pick up as job market tightens, investors have their doubts, expecting inflation will run well below the Fed’s target for the next decade
  • U.K. gilt yields fell to a record as Bank of England’s Carney said inflation is likely to turn negative for a period, adding to speculation rates will stay at a record low for longer
  • Investors gave their verdict on the new Greek government, selling the country’s stocks and bonds in a signal to Prime Minister Alexis Tsipras of the price he will pay for sticking to promises to end austerity
  • ECB Executive Board member Benoit Coeure said it is “not an urgent issue” to discuss how long quantitative easing will last, because “it will be assessed based on a range of indicators, including inflation expectations”
  • Economic sentiment in the euro area rose for the first time in three months after the ECB committed to spend at least EU1.1t on fueling growth and inflation
  • Sovereign yields mostly lower, Greece 10Y surges 44bps to 10.78%  Portugal, Spain and Italy also higher. Asian stocks mostly lower; European stocks fall, U.S. equity-index futures gain. Brent, WTI and gold lower; copper gains

 

We conclude with DB’s Jim Reid summarizing all the major overnight events

 

 

So today is 1 AD (1 week after Draghi) and its interesting to see which major assets have been impacted most by the move so far. Using the Thursday pre-announcement levels and the closing prices from yesterday the Stoxx 600, DAX and CAC have rallied +2.81%, +3.90% and +2.44% respectively. Despite the weakness yesterday in peripherals, the IBEX (+0.28%) and FTSE MIB (+1.07%) are also in positive territory whilst on the flip side equity markets in the US are lower with the S&P 500 (-1.49%) and Dow (-2.08%) both down – not helped by a weaker session yesterday which we’ll touch upon later. So its been a good week for one of our trades for 2015 – namely European equities over US. This does seem to be creating more attention of late but we don’t think its becoming consensus positioning wise yet. In fixed income, 10y yields in Germany (-23bps), France (-17bps), Spain (-12bps) and Italy (-12bps) have rallied hard since the announcement. Treasuries (-22bps) have also performed strongly although softer US data has helped. Crossover to some surprise is largely unchanged although yesterdays moves wiped a lot of the gains. The Euro, meanwhile, is nearly 3% weaker versus the Dollar and Gold -0.2% softer.

The clear outlier to all this is Greece and yesterday’s 9.24% decline in the ASE means that Greek equities are now over 15% down from pre-election levels. Yesterday’s sharp leg lower was once again led by steep falls for the banks (-26.2%) after a report on Bloomberg that bank deposit outflows stood at over €14bn in the run-up to the Greek election, €11bn of which came out in January alone. The last reported total Greek bank deposits was said to stand at around €164bn in November according to Moodys.

Recent announcements by the new government to block privatizations of assets which had previously been agreed under the bailout package – starting with the Piraeus Port – is only adding tension to the relationship between the Syriza-led coalition and the Eurozone. A Reuters article yesterday also noted that the new government is looking at plans to reinstate public sector employees and announce increased pensions for those on low incomes. Germany’s economy minister Gabriel was quoted in another Reuters article saying that ‘if Greece wants to deviate from some of these measures, it must bear the cost itself rather than exporting this to other European countries via a haircut or other such ideas’. Gabriel was also critical of the announced blocks to privatizations of assets, specifically saying that ‘citizens of other euro states have a right to see that the deals linked to their acts of solidarity are upheld’. Meanwhile PM Tsipras yesterday declared that Greece would look to seek a solution with creditors, but refused to back down from its pre-election pledge. Specially the Prime Minister was quoted on Bloomberg as saying that ‘there will neither be a catastrophic clash, nor will continued kowtowing be accepted’ before going on to say that the new government ‘will not be forgiven’ in reference to going back on its word on renegotiating the bailout terms.

Greek 10y yields closed 86bps wider yesterday and 3y yields finished 270bps wider at 16.73% – the highest since 2012. Meanwhile the 5y CDS is now implying a 70% probability of default within 5 years for the sovereign, not helped by S&P yesterday announcing that it was placing Greece’s credit rating on credit watch negative. Clearly the situation is becoming more and more fragile each day with the banking sector in particular being hardest hit at this point. With the ELA facility currently under bi-weekly review and the relationship between Greece, the Euro-area and Troika coming under more pressure as the government goes against earlier bailout terms, all eyes will be on Athens’ meeting with the Eurogroup tomorrow and if we get any clues or progress towards the end of February funding deadline in particular. For this to seriously impact global markets it does have to spread to other peripherals. With the ECB about to be big buyers the news has to be pretty bad for this to occur. Although yesterday saw some weakness, as we showed earlier these countries are still lower in yield over the past week due to the ECB impact outweighing Greek political concerns.

Away from Greece yesterday the day’s other focus was the release of the FOMC January statement. In a nutshell the comments painted further improvement in both the economy and labour market however highlighted that inflation had declined further and reiterated patience around raising rates – specifically noting that the move will be data dependent. With regards to the former, the Fed changed language around job gains from ‘solid’ to ‘strong’ and suggested that the economy has expanded at a ‘solid’ pace having previously suggested a ‘moderate’ pace. On the inflation front language changes included inflation ‘declining further’ below target from ‘continued to run’ and the addition of ‘inflation is anticipated to decline further in the near term’. The FOMC also changed the language around market-based inflation measures by moving from declining ‘somewhat further’ to ‘substantially’. Also of some interest was the addition of ‘international developments’ in the text – highlighting no doubt the recent ECB QE move and tensions around Greece. So an upgraded assessment of the economy but perhaps a slightly more dovish inflation picture. The ‘patience’ language means a March/April hike is very unlikely although mid-year is still in the picture, however their acknowledgement of ‘international developments’ is interesting. As regular readers know we still think this gets pushed back further as the Fed struggles to hike in a global easing environment.

Indeed yesterday we highlighted that 9 Central Bank have eased policy this year. However we’ve subsequently learnt there are actually 13. Here is the full list: Singapore, Europe, Switzerland, Denmark, Canada, India, Turkey, Egypt, Romania, Peru, Albania, Uzbekistan and Pakistan. Given that the ECB covers 19 countries you could actually say its 31 countries. On the other hand we think 5 countries have tightened monetary policy including Brazil, Armenia, Krygyzstan, Mongolia and Belarus. Overnight the RBNZ kept rates on hold although attention in the Asia-Pacific region will move to the RBA decision next week.

In terms of market reaction to the Fed, equities closed weaker yesterday with the bulk of the losses coming post the statement release. Indeed, the S&P 500 (-1.35%) and Dow (-1.13%) finished in the red for the second successive day. With the softer tone there was a firm bid for Treasuries. Yields on the 10y benchmark ended the day 10.2bps tighter at 1.721%, closing just above the January 15th lows. 30y yields meanwhile dropped 10.9bps to close at a new record low (2.291%). In fact an early gain for equities was also pared back by further weakness for energy stocks (-3.87%). Both WTI (-3.85%) and Brent (-2.28%) took a sharp leg lower to $44.45/bbl and $48.47/bbl respectively after the latest EIA report showed US crude inventories increasing 8.9m barrels last week to the highest on record.

Just wrapping up yesterday’s market moves, the Stoxx 600 closed +0.10% supported by a +0.78% strengthening for the Dax. The FTSE MIB (-0.81%) and IBEX (-1.34%) both weakened whilst 10y peripheral yields were anywhere from 5bps to 14bps wider after the negativity in Greece. The Euro weakened post FOMC to pare back the bulk of Tuesday’s gains and finish 0.83% lower versus the Dollar at $1.129. Data took a backseat with just consumer confidence data out of Germany (9.3 vs. 9.1 expected) and France (90 vs. 91 expected).

In terms of markets in Asia this morning, bourses are generally following the lead from the US and trading lower as we type. Indeed the Nikkei (-1.20%), Hang Seng (-1.17%), Kospi (-0.54%) and Shanghai composite (-0.86%) are all weaker. Chinese equities in particular have pared some of the earlier weakness after reports on Reuters that the regulator may launch a fresh review into margin lending in the region.

In terms of today’s calendar, focus this morning will likely be on the Euro-area with various confidence indicators due for January including consumer, services and economic prints as well as money supply data. German CPI will also be a highlight as well as unemployment data for the nation. Spanish retail sales will also be worth keeping an eye on. It’s fairly quiet in the US this afternoon with just initial jobless claims (market looking for 300k) and pending home sales due out although 50 S&P 500 companies are due to report. Tomorrow we shift our attention to another payroll report.

 

end

 

 

Chinese stocks drop for the 3rd day in a row as authorities are cracking down on excessive margins (leverage).  The yuan tumbles and it is trading very close to the 6.25 upper peg which may force the Chinese to unload dollars and purchase back yuan:

 

(courtesy zero hedge)

 

 

Chinese Stocks Drop 3rd Day In A Row On Margin Crackdown As Yuan Tumbles To Record Discount Versus Fix

 

Chinese stocks are trading lower again (on margin crackdowns) – the first 3-day drop in 3 weeks – back into the red year-to-date. Despite weakening the fix this evening, the ‘market price’ for USDCNY is trading at a record 1.93% discount to the official rate – inching ever closer to the 2% peg limit. At 6.2522, the market is just 40 pips away from forcing policy makes to intervene (selling the USD and and buying Yuan) – which realistically is perhaps a positive for the Chinese to unload some USD reserves. This move comes as China’s currency overtook Canada’s dollar to rank fifth for global payments last month with a record market share of 2.17% and HSBC this evening forecast the Yuan will overtake the Japanese Yen as Asia’s most-used Global FX in Q2.

 

Chinese stocks are lower for the 3rd day in a row… and negative year-to-date again (note the last 2 days saw afternoon session bounces… but yesterday failed)

 

On the heels of more margin crackdowns…

  • *CSRC TO CHECK 46 COS.’ MARGIN FINANCE BUSINESSES: XINHUA

It appears the regulators are serious about taming the wild beast of speculative frenzy that created this…

 

 

The upper USDCNY (lower CNY) band is getting tested as the market appears to be forcing policy-maker’s hands to raise the fix (weaken the Yuan fix)…

 

As Yuan overtakes CAD to become the 5th most used cuirrency in global trade

 

and HSCB sees JPY being overtaken soon…

HSBC expects rapid uptake of international payments in yuan to continue this year and beyond, according to Vina Cheung, global head of RMB internationalization for payments and cash management.

 

“Following 102% growth in 2014, we anticipate the RMB will overtake the JPY as Asia’s top global currency in Q2 2015,”Cheung says in statement

*  *  *

De-dollarization continues…

 

end

 

Now we see Germany has entered the dreaded deflation as their CPI is -0.5.  You can now imagine the huge deflation facing the European  periphery:

 

(courtesy zero hedge)

 

 

Germany Is Officially Back In Deflation: Stocks Slide

For the first time since October 2009, Germany saw Consumer Price Inflation fall in January. Missing expectations for the 2nd month, Germany’s deflationary 0.5% drop in CPI is the worst deflation since July 2009 and comes just 3 weeks after Europe broadly entered the dreaded deflation spiral of doom so many status quo economists are terrified of.

 

Oops…

 

 

Just a good job Draghi unleashed Q€ … oh wait inflation expectations have tumbled since then too…

 

and stocks are sliding on the news…

 

 

Charts: Bloomberg

 

 

end

 

We brought this to your attention yesterday as it seems that Greece has a veto power over sanctions against Russia. Germany is absolutely livid:

 

(courtesy zero hedge)

 

 

Putin’s Unexpected Victory: Germany Furious That Greece Is Now A Russian Sanctions Veto

 

Two days ago, Zero Hedge first, and shortly thereafter everyone else, pointed out something stunning: the biggest surprise to emerge so far out of the new anti-Troika/austerity Greek government was not so much its intention to proceed with the first test of “Odious Debt” – this was largely known in advance – but its dramatic pivot away from Germany and Europe, and toward Russia.

As we noted before, not only has Greece already blocked all ongoing privatization processes, a clear snub of Merkel and the Troika which demands the piecemeal blue light special sale of Greece to western buyers as part of the “bailout”, but is also looking at plans to reinstate public sector employees and announce increased pensions for those on low incomes: further clear breaches of the Troika’s austerity terms.

But the most important message that Tsipras is sending to Europe is that (after meeting the Russian ambassador first upon his election) Greece is now effectively a veto power when it comes to future Russian sanctions!

This was first hinted when the Foreign Minister Nikos Kotzias, who arrives in Brussels today to discuss possible additional sanctions on Russia over the conflict in Ukraine, said a few days ago that the Greek government disagreed with an EU statement in which President Donald Tusk raised the prospect of “further restrictive measures” on Russia. AsBloomberg observed before, in recent months, Kotzias wrote on Twitter that sanctions against Russia weren’t in Greece’s interests. He said in a blog that a new foreign policy for Greece should be focused on stopping the ongoing transformation of the EU “into an idiosyncratic empire, under the rule of Germany.

And Europe, shocked that one of its own has dared to question its “unanimous” policy toward Russia, a policy driven by the US foreign state department whose opinion of Europe is best captured by the hacked andintercepted “Fuck the EU” outburst by Victoria Nuland in February 2014, has been forced to backtrack. From DPA:

The European Union denied Wednesday that it ignored Greek objections when it issued a statement raising the prospects of new sanctions against Russia.

 

The row is the first of several clashes expected between Brussels and Greece’s new prime minister, Alexis Tsipras, who was elected Sunday on promises to renegotiate the bailout granted to Greece by its European neighbours and the International Monetary Fund.

 

Tsipras has in the past also spoken out against sanctions on Russia, rejecting the use of “Cold War language.

 

The EU has imposed several rounds of sanctions on Russia for its role in the Ukraine crisis, notably economic measures restricting Russian access to European credit markets and European exports. On Tuesday morning, EU leaders in a joint statement tasked their foreign ministers with considering “further restrictive measures” when they meet on Thursday.

 

But Tsipras complained to Greek media that his country had not been consulted on the statement. “Greece do not consent,” a statement by Tsipras’ office said on Tuesday evening, adding that the announcement from Brussels violated “proper procedure.”

 

A spokesman for EU President Donald Tusk, who issued the statement on behalf of the leaders, denied that Athens had been sidelined during the preparation of the text.

 

“We consulted everybody, as we always do, and we didn’t ignore or sidestep Greece in any way – quite to the contrary,” Preben Aamann told dpa. “We tried to find a special solution that would accommodate them.”

Actually what the EU “always does” is to ignore the voices and interest of everyone but the most powerful. And as for “not ignoring” Greece, apparently the EU failed. Only this time Greece, its government no longer a Eurozone lackey, will no longer let it slide: “Greek broadcaster Skai said newly appointed Foreign Minister Nikos Kotzias would bring up the issue at Thursday’s meeting in Brussels. Tsipras is also expected in the Belgian capital on February 12 for an EU summit that will touch upon the situation in Ukraine.”

And here is how Russia just won another completely unexpected victory in Europe: “EU sanctions require unanimity to be implemented, so a Greek veto could block any further measures.” And all thanks to the epic blunder by Brussels to allow a European nation to voice its opinion in a democratic fashion.

It wasn’t just Zero Hedge who first suggested the Greek Russian pivot: here is RBS’ Greg Gibbs who says that there are now “concerns Greek government may threaten to veto further Russian sanctions in exchange for debt relief fuels fear of conflict.

To be sure, Germany, whose theatrical opposition to money printing folded like Boehner’s lawn chair last week, as it is now all too clear the preservation of German export dominance (and hence aversion to the DEM) and the sanctity of Deutsche Bank is what it is all about no matter the hyperinflationary concerns of the people, is quite furious that the grand ambitions of Europe’s economic powerhouse – which as we reported moments ago has now officially entered deflation – have been crushed by tiny, depression-ridden Greece.

Here is Germany’s economy minister Gabriel, who was on the tape earlier, casting fire and brimstone at Greece. From Reuters:

Greece should not burden the rest of Europe with its internal political debates, German Economy Minister Sigmar Gabriel said on Thursday, adding that Greece’s own inequalities were to blame for problems that it tried to blame on its multilateral lenders.

 

Gabriel told parliament Greece should stay in the euro but the new leftist leader Alexis Tsipras must respect the terms of its bailout. Greece could not blame the “troika” of multilateral lenders for its own unfair distribution of wealth, he said.

 

All democratic people must respect the democratic decision of voters and a newly-elected government’s right to decide its course – but the rest of Europe’s citizens should not have to expect changes in Greek politics to burden them,” he said.

Of course, as long as the changes in Greek politics allowed the rest of Europe’s citizens to continue to benefit at Greek expense, nobody batted an eyelid. But change the equation and all hell breaks loose.

And the final confirmation that suddenly tiny Greece may have all the leverage in Europe is that moments ago Germany’s Foreign Minister Frank-Walter Steinmeier said that European sanctions on Russia are complicated by the “new Greek government.”

The good news for Greece, of course, is that it now has all the optionality: it can use its veto power as a bargaining chip to unblock US foreign policy in Ukraine (because at the end of the day, Europe is merely losing as a result of the Russian sanctions) and demand a debt haircut in exchange for siding with John Kerry on further Russian “punishment.” Or he may simply hold the line and hold off for a competing, better offer from Russia and the BRICs, whose leverage may be nominal  now that crude is plummeting, but if and when the last shale junk bond investor blows up and the US shale renaissance is over sending crude soaring right back to $100, then watch as the oil exporters are back with a bang, and dictating geopolitical terms.

In any event, the European balance of power has just shifted and in a way that nobody anticipated. The biggest winners, if only for now: Greece and Russia. The losers: all the unelected Eurocrats in Brussels who at this moment are scratching their heads how to bring the bad news that there is no longer unanimity on Russian sanctions to John Kerry.

 

 

 

end

 

Open letter by Alex Tsipras:

 

also remember he stated this in 2014:

 

sanctions against Russia.

Via VoR,

“[The SYRIZA] party believes that the new government in Ukraine came to power as a result of a coup, and call it a junta.”

 

h/t @Erula1

 

“We should not accept or recognize the government of neo-Nazis in Ukraine,”the Athens News Agency quotes Tsipras who believes that the Ukrainian people should decide their future themselves.

 

Speaking about different peoples’ movements for self-determination, Tsipras said that the European left respected the right to self-determination, but nationalism and clashes could not lead to positive results.

 

“We in the EU should not give preference to changing borders, but must respect the position of the peoples, who have decided to create a Federation within the state,” said the SYRIZA leader.

Tsipras added,

the EU must change in order to survive; the EU lacks democracy, and citizens do not believe that their vote can change policy.”

 

 

 

 

Now his open letter:

 

(courtesy Alexis Tsipras/Prime Minister of Greece)

 

 

Alexis Tsipras’ Open Letter To Germany: What You Were Never Told About Greece

 

Authored by Alexis Tsipras via Syriza.net,

Most of you, dear [German] readers, will have formed a preconception of what this article is about before you actually read it. I am imploring you not to succumb to such preconceptions. Prejudice was never a good guide, especially during periods when an economic crisis reinforces stereotypes and breeds biggotry, nationalism, even violence.

In 2010, the Greek state ceased to be able to service its debt. Unfortunately, European officials decided to pretend that this problem could be overcome by means of the largest loan in history on condition of fiscal austerity that would, with mathematical precision, shrink the national income from which both new and old loans must be paid.An insolvency problem was thus dealt with as if it were a case of illiquidity.

In other words, Europe adopted the tactics of the least reputable bankers who refuse to acknowledge bad loans, preferring to grant new ones to the insolvent entity so as to pretend that the original loan is performing while extending the bankruptcy into the future. Nothing more than common sense was required to see that the application of the ‘extend and pretend’ tactic would lead my country to a tragic state. That instead of Greece’s stabilization, Europe was creating the circumstances for a self-reinforcing crisis that undermines the foundations of Europe itself.

My party, and I personally, disagreed fiercely with the May 2010 loan agreement not because you, the citizens of Germany, did not give us enough money but because you gave us much, much more than you should have and our government accepted far, far more than it had a right to. Money that would, in any case, neither help the people of Greece (as it was being thrown into the black hole of an unsustainable debt) nor prevent the ballooning of Greek government debt, at great expense to the Greek and German taxpayer.

Indeed, even before a full year had gone by, from 2011 onwards, our predictions were confirmed. The combination of gigantic new loans and stringent government spending cuts that depressed incomes not only failed to rein the debt in but, also, punished the weakest of citizens turning people who had hitherto been living a measured, modest life into paupers and beggars, denying them above all else their dignity. The collapse of incomes pushed thousands of firms into bankruptcy boosting the oligopolistic power of surviving large firms. Thus, prices have been falling but more slowly than wages and salaries, pushing down overall demand for goods and services and crushing nominal incomes while debts continue their inexorable rise. In this setting, the deficit of hope accelerated uncontrollably and, before we knew it, the ‘serpent’s egg’ hatched – the result being neo-Nazis patrolling our neighbourhoods, spreading their message of hatred.

Despite the evident failure of the ‘extend and pretend’ logic, it is still being implemented to this day. The second Greek ‘bailout’, enacted in the Spring of 2012, added another huge loan on the weakened shoulders of the Greek taxpayers, “haircut” our social security funds, and financed a ruthless new cleptocracy.

Respected commentators have been referring of recent to Greece’s stabilization, even of signs of growth. Alas, ‘Greek-covery’ is but a mirage which we must put to rest as soon as possible. The recent modest rise of real GDP, to the tune of 0.7%, signals not the end of recession (as has been proclaimed) but, rather, its continuation. Think about it: The same official sources report, for the same quarter, an inflation rate of -1.80%, i.e. deflation. Which means that the 0.7% rise in real GDP was due to a negative growth rate of nominal GDP! In other words, all that happened is that prices declined faster than nominal national income. Not exactly a cause for proclaiming the end of six years of recession!

Allow me to submit to you that this sorry attempt to recruit a new version of ‘Greek statistics’, in order to declare the ongoing Greek crisis over, is an insult to all Europeans who, at long last, deserve the truth about Greece and about Europe. So, let me be frank: Greece’s debt is currently unsustainable and will never be serviced, especially while Greece is being subjected to continuous fiscal waterboarding. The insistence in these dead-end policies, and in the denial of simple arithmetic, costs the German taxpayer dearly while, at once, condemning to a proud European nation to permanent indignity. What is even worse: In this manner, before long the Germans turn against the Greeks, the Greeks against the Germans and, unsurprisingly, the European Ideal suffers catastrophic losses.

Germany, and in particular the hard-working German workers, have nothing to fear from a SYRIZA victory. The opposite holds. Our task is not to confront our partners. It is not to secure larger loans or, equivalently, the right to higher deficits. Our target is, rather, the country’s stabilization, balanced budgets and, of course, the end of the grand squeeze of the weaker Greek taxpayers in the context of a loan agreement that is simply unenforceable. We are committed to end ‘extend and pretend’ logic not against German citizens but with a view to the mutual advantages for all Europeans.

Dear readers, I understand that, behind your ‘demand’ that our government fulfills all of its ‘contractual obligations’ hides the fear that, if you let us Greeks some breathing space, we shall return to our bad, old ways. I acknowledge this anxiety. However, let me say that it was not SYRIZA that incubated the cleptocracy which today pretends to strive for ‘reforms’, as long as these ‘reforms’ do not affect their ill-gotten privileges. We are ready and willing to introduce major reforms for which we are now seeking a mandate to implement from the Greek electorate, naturally in collaboration with our European partners.

Our task is to bring about a European New Deal within which our people can breathe, create and live in dignity.

A great opportunity for Europe is about to be born in Greece. An opportunity Europe can ill afford to miss.

 

end

 

Open letter to the new Greek Finance Minister:  Yanis V.

 

from Bruno de Landovoisin

 

 

Greece should Ice the Troika!

The StealthFlation Blog

 

 

Open Letter to the New Finance Minister of Greece Yanis Varoufakis

 

Dear Yanis,

As an ardent admirer, with the utmost respect for what you have put forward and accomplished to date, I humbly offer my thoughts for your consideration.

In my measured estimation, requesting substantive forbearance from the TROIKA on a purely rational and fair minded basis, as you have suggested, in the anticipation of a desirable outcome, is likely a proposition which will disappoint.  There obviously exist significant and powerful vested financial interests adamantly opposed to you on the other side of the table, not to mention the even more considerable, and now intensifying, European periphery precedent concerns which are clearly raising the ante.

Your adversaries’ obtuse position continues to remain implacable for the most determined of self-seeking reasons, and the collateral damage that is Greece, obviously matters far less to them then the well defined and established course that they have set for themselves. Remember, they have not done the right thing previously, they don’t do the right thing presently, and thus, will likely not do the right thing in the future given the opportunity. Don’t kid yourself, these adversaries are just that, and lethal opponents.

Considering they were able to stomach the desolation Greece has so desperately endured throughout this period, there should be little to no expectation that they will now suddenly magnanimously change their stripes, simply because it’s been determined by newly elected, more reasoned and humane men, that it’s the right and sound thing to do.

Having accepted that reality, almost certainly, zero sum game theory shall be called for.  Therefore, in my view, it would be critical that your Ministry of Finance promptly establish an official and entirely credible, thoroughly planned, monetary regime/reset exit program, so as to be perfectly positioned to exercise and execute a realpolitik monetary policy option/bluff, should the ensuing situation which develops call for it.

Make no mistake, Greece must have on the table a true, legitimate and authoritative default & national currency alternative, which the other side is firmly but calmly made to fully appreciate and understand, if not outright fear, even if your first choice is to actually avoid going down that extreme path.

Accordingly, onboarding an internationally recognized and esteemed monetary restructuring firm, with professional expertise in the comprehensive complex field of Sovereign finance and banking, would go a long way to fully validate the genuine viability of a well reasoned, planned and completely prepared alternative option for Greece. Establishing beyond any reasonable doubt the imperative credibility necessary in order to successfully leverage an epic bluff of such magnitude, or simply to have the full capability so as to effectively exercise the monetary reset option should it become entirely necessary.

 

The old adage; carry a big stick so you don’t have to use it, immediately comes to mind.

Finally, it is my genuine belief, that your special souls and broad shoulders, are now bearing the long awaited bright torch of capital enlightenment, which may very well carry with it an even more momentous moment in time than the vital issue of Greece itself, which is quite naturally closest to your hearts.

 

These are my sincere concerns, that I feel compelled to pass on to you, and which I would very much appreciate the opportunity to briefly discuss with you. As I see it, your only viable play is to threaten to go Icelandic on the Troika’s Medieval ass, thus the completely credible option/bluff game therory stratagem.

 

When you’re up against monsters, don’t bring a knife to a gunfight.

 

Good luck my brother in arms, Godspeed, and know that we are all with you.

Respectfully,

Bruno de Landevoisin

 

end

 

 

And now finally Russia does confirm it is in talks with Greece to help them out in their financial crisis.  Germany is now livid:

 

 

Putin Pivots Back: Russia Confirms Willingness To Provide Financial Aid To Greece

 

 

We suggested the Greek pivot from Europe to Russia was building previously, and now, we get confirmation from Russia’s finance minister Anton Siluanov that the pivot could be mutual, who told CNBC in the interview below:

  • *RUSSIA WOULD WEIGH FINANCE FOR GREECE IF ASKED, SILUANOV: CNBC

With fire and brimstone spewing from Germany over the potential for Greece to veto any and everything, it seems Russia may just have stymied Europe’s leverageover the newly democratic nation.

* * *

Recall that a German central banker warned of dire problems should the new government call the country’s aid program into question, jeopardizing funding for the banks.

“That would have fatal consequences for Greece’s financial system. Greek banks would then lose their access to central bank money,” Bundesbank board member Joachim Nagel told Handelsblatt newspaper.

Well, maybe…

Unless of course Greece finds a new, alternative source of funding, one that has nothing to do with the establishmentarian IMF, whose “bailouts” are merely a smokescreen to implement pro-western policies and to allow the rapid liquidation of any “bailed out” society.

 

An alternative such as the BRIC Bank for example. Recall that the “BRICS Announce $100 Billion Reserve To Bypass Fed, Developed World Central Banks

*  *  *

It appears, in Russia, Greece has found another possible friend…

Siluanov: “if such a petition [for financial aid] is submitted to The Russian Government, we will definitely consider it”

So once again, it appears as if all the leverage is. much to the shock and humiliation of Brussels, back in Tsipras’ hands.

 

 

end

 

 

Europe’s largest insurance company explains in clear detail why the ECB’s latest QE will fail: he will not swap assets with the ECB mainly because he has nowhere to put them.

 

 

end

 

 

 

(courtesy zero hedge/AXA Insurance Company/Hayes)

 

 

 

Europe’s Largest Insurance Company Explains Why The ECB’s QE Has Already Failed Using “Widget Makers”

 

 

According to a recent ranking, French AXA is the largest insurance company in Europe ranked by Assets, and one of the top ten global financial services firms by revenues. Whether or not it is, is irrelevant. What matters is what Nick Hayes, U.K. head of fixed income active management, at AXA Investment Managers said in interview earlier today, in which he explained, quite succinctly, why Q€ will be a total failure.

As quoted by Bloomberg, he said that “AXA Investment Managers doesn’t plan on selling much of its assets to ECB under QE, given its investment mandates for specific holdings and a lack of opportunities to put cash received to work.”

“People say, ‘Sell government bonds and lend money to widget manufacturers.’ It doesn’t really work like that.” Hayes says, adding that “Low yields don’t necessarily mean more lending to the real economy; time and confidence are key elements and last 6 years have shown QE can’t control those.”

Hayes went on: “AXA IM might lighten up on some holdings “at the margin,” such as peripheral or core govt bonds. It has already pared an overweight position in peripheral govt bonds in recent month.”The reason being that “yield levels don’t justify the position as much as before, as bonds are nearly fully valued, even as economics are still improving.”

His conclusion: “It’s difficult to see a huge amount of money being made out of the peripherals trade from here on.” Or, as many are discovering, a huge amount of money is now being lost on peripherals, starting with Greece and soon all the other ones, and mean reversion finally kicks in with a vengeance.

In short: it hasn’t even started and QE is already a complete failure.

And now, back to the Danish central bank threatening with castration anyone who dares to save money inside the mattress.

 

end

 

To which the ECB responded:

 

“it will work because it is big”

 

(courtesy zero hedge)

 

 

 

 

This Is Why The ECB’s QE Will Work, According To The ECB

 

Earlier, we laid out a very reasonable explanation by none other than Europe’s largest insurer AXA why the ECB’s QE will fail. The ECB did not like ththis, so it decided to reply. This is how the ECB just “crushed” AXA’s logic.

  • COEURE SAYS QE WILL WORK BECAUSE IT IS BIG

…..

What else is there to add?

 

 

end

 

 

Yesterday, we brought you news that the Baltic Dry Index hit its lowest level in many years at 666.  Tonight, it went further south, down to 632.

It has not been this low in 32 years:

 

(courtesy zero hedge)

 

 

WTF Chart Of The Day: Baltic Dry Index Crashes To Lowest In 29 Years

 

Quietly behind the scenes – and not at all reflective of a collapsing global economy (because that would break the narrative of over-supply and pent-up demand) – The Baltic Dry Index plunged over 5% today to 632… That is the lowest absolute level for the global shipping rates indicator since August 1986

 

 

“Transitory”

 

end

 

 

 

The new Greek government arrives in its official residence to which it finds no power, no internet and no toilet soap. There is no love lost between Samaras and Tsipras

 

(courtesy zero hedge)

The New Greek Government Arrives In Its Residence: Finds No Power, No Wifi Password And No Toilet Soap

Things in Greece are bad. So bad, that the outgoing government of Antonis Samaras decided to not only leave the new inhabitants of the official residence of the Greek prime minister, the Maximos Mansion, without power, and without the WiFi password, but they decided to “borrow” all the soap in the toilet as well.

More from Spiegel, google translated:

“We sit in the dark. We have no internet, no email, no way to communicate with each other”, said an employee of the Office, who has worked for various government for years. “That’s never happened before.” It shows that Samaras’ team have “no manners and no decency.”

 

Because of blackouts in the Maximos Mansion the official website of the Greek Prime Minister still shows the image and the resume of Samaras – even though since Monday, the left SYRIZA leader Alexis Tsipras is the head of government in Athens.

 

It was the first time that a government handover has been so bitter, said the office staff to SPIEGEL ONLINE. “Everything was seamless and worked under Mr Samaras but he would not let Mr Tsipras benefit.”

 

Samaras had already demonstrated in recent days that he is a bad loser. He was absent, as Tsipras arrived after his swearing-in of the Maximos Mansion on Monday. This Samaras broke with tradition: It is common for an outgoing Prime Minister his successor in office sitting welcomes you and wishes him success for the government’s work.

 

The environment of the ousted conservative Prime Minister pointed out that Samaras was not required according to Greek constitution to welcome his successor welcome.

 

But the lack of internet access should be the least of the problems for Tsipras and his team. Greek media report that Samaras’ employees have not even left the soap in the staff toilets.

?

Maybe we were wrong to mock Greek austerity after all.

 

end

 

The Danes are desperate to keep the peg at 7.46038 kroners per Euro.

The central banker just cut rates to -.5%

 

(courtesy zero hedge)

 

 

It Will Now Cost You 0.5% To Save Money In Denmark: Danish Central Bank Cuts Rates For Third Time In Two Weeks

When the Danish Central Bank cut rates precisely a week ago, going from NIRP to NIRPer, and pushing the deposit rate from -0.2% to -0.35%, the sense of desperation was already in the air: after all this was already the second rate cut by the Denmark’s monetary authority in one week, all in the hope of preserving the peg to the DEK to the EUR. That sense of desperation just hit a fever pitch moments ago, when the Dutch central bank just went NIRPest, and cut rates across the board yet again, and made it even more costly to save money in the north European country, where the Deposit rate has just been cut from -0.35% to -0.5%!

From the release:

Effective from 30 January 2015, Danmarks Nationalbank’s interest rate on certificates of deposit is reduced by 0.15 percentage point to -0.50 per cent. The lending rate, the discount rate and the current account rate are unchanged.

 

The interest rate reduction follows Danmarks Nationalbank’s purchase of foreign exchange in the market.

 

Danmarks Nationalbank’s interest rates are:

 

Lending rate: 0.05 per cent

 

Certificate of deposit rate: -0.50 per cent

 

Current account rate: 0.00 per cent

 

Discount rate: 0.00 per cent.

Ironically, all this will achieve is delay the Peg breach by a few weeks. If anything, the Danish central bank is merely confirming that while it hasn’t sounded an all out retreat from currency wars, like the Swiss and Singapore banks did recently, it is in furious retreat and it is only a matter 0f time at this point.

 

end

 

Now for that other hot spot, Ukraine.  They have just begged the USA for 3 billion dollars in financial aid. They are within inches of default.  The EU just increased the sanctions against Russia and they stated that it was unanimous!!  (how about Greece’s negative vote)

 

(courtesy zero hedge)

 

 

 

Ukraine Is “Pressing” Obama For $3 Billion In Financial Aid

 

It would appear Gazprom has once again come knocking for payment – or else. As Bloomberg reports, Ukraine is pressing the Obama administration to provide political support, as much as $3b in financial aid and “non-lethal weapons,” with the goal of some progress by the end of February, Ukrainian Deputy Foreign Minister Vadym Prystaiko says. Of course, given Europe’s agreement to further sanction Russia (asEU agrees more “punitive” steps are now possible) President Obama will be happy to lend Ukraine more American taxpayer money (despite the market’s perception that Ukraine’s default probability is over 80% – six year highs).

 

 

What Ukraine wants…

Top priorities are political and financial aid, then military support Prystaiko says during meeting with Bloomberg editors and reporters in Washington

 

Ukraine seeking U.S. assistance for weapons radar, armored vehicles, access to surveillance drones

 

“We are ready to buy,” says Prystaiko; also asking France, Germany, U.K. for military support

 

“We would like to have these radars to be able to tell us” when attack is coming

*  *  *

  • *EU TO PREPARE FURTHER ECONOMIC MEASURES ON RUSSIA: LINKEVICIUS
  • *EU TO ADD NAMES TO RUSSIA-LINKED BLACKLIST BY FEB. 9
  • *EU DECISION ON RUSSIA SANCTIONS WAS UNANIMOUS, MOGHERINI SAYS
  • *EU AGREES MORE ‘PUNITIVE’ STEPS POSSIBLE ON RUSSIA: MOGHERINI
  • *EU FOREIGN POLICY CHIEF MOGHERINI COMMENTS IN BRUSSELS

 

Norway now has a huge real estate bubble along with Canada.

Just take a look at each country’s real estate index rise from 1992 until now:  Norway:  380% and Canada : 280%

Remember that both Norway and Canada are big oil producers.

 

(courtesy zero hedge)

 

 

 

 

 

 

Norway Regulator Fears Housing Bubble “Isn’t Sustainable”

Amid the collapse in crude oil prices, the Norwegian central bank cut rates in December (after 1000 days on hold) and is likely to cut again as economic growth stalls. However, the country’s financial regulator is warning falling interest rates risk pushing the Norwegian housing market beyond its breaking point into a “self-augmenting spiral.” With prices up 8.1% YoY, and up 85% nationwide in the last decade, even Robert Shiller warned of Norway’s housing bubble in 2012 – and since then household debt (and home prices) have surged. As Bloomberg reports, Morten Baltzersen, head of Norway’s Financial Supervisory Authority stressed “continued rapid growth in debt and house prices isn’t sustainable.” Unintended consequences?

 

As Bloomberg reports, a combination of plunging oil prices and falling interest rates risks pushing Norway’s housing market beyond its breaking point, the financial regulator said.

Norway’s housing market, which Nobel laureate Robert Shiller all the way back in 2012 said was in a bubble, has been inflated amid an oil boom that has driven wealth creation and kept unemployment below 4 percent.

 

 

Norwegians have more debt than ever before, owing their creditors about twice their disposable incomes, a level that Olsen and FSA’s Baltzersen have said is unsustainable.

 

And it’s about to get worse…

The economy of western Europe’s biggest oil exporter is now struggling to expand amid a slump in crude. The central bank cut rates in December and said there’s a 50-50 chance for another reduction, triggering a mortgage war as banks such as DNB ASA and Nordea Bank AB lowered rates to lure customers.

 

“Lower interest rates and strong competition in the mortgage lending market could contribute to continued rapid growth in debt and house prices,”Morten Baltzersen, head of Norway’s Financial Supervisory Authority, said in an e-mailed reply to questions this week. That could drive the housing market into a “self-augmenting spiral,” he said.

 

“I’m beginning to be a little bit worried,”Steinar Juel, chief economist at Nordea, said by phone in Oslo. Another rate cut from the bank would be risky and drive house price gains up by 15 percent, he said. “We could also have a situation where we really are in a bubble.”

Regulators have tried to slow the expansion…

In an effort to cool the market, Norway has introduced a number of measures including raising capital requirements, the risk weights that lenders assign their mortgages and capping loans at 85 percent of a property’s value.

But, the government rejected advice from the FSA for tighter regulations to slow debt growth.

The Conservative-led government last year allowed more flexibility in loan standards, allowing banks to lend up to 90 percent of a property’s value.

Leaving the regulator threatening once again…

Baltzersen said he has monitored the rise of house prices last year…. “Continued rapid growth in debt and house prices isn’t sustainable,” he said.

*  *  *

Ironic really that American policy makers have never seen a housing bubble they didn’t like and yet we see with Norwegian regulators that there are very clear consequences to playing in the currency wars (both at home and abroad)

 

 

end

 

Crude crashes into the 43 handle:

 

(courtesy zerohedge)

 

 

Crude Crumbles To Fresh Lows: $43 Handle

Yet again this morning’s “bounce” to $45 was heralded as maybe possibly could be the stability that markets are looking for. And once again it was not as WTI makesfresh cycle lows to a $43 handle.. and once again,energy stocks plunged back to energy credit’s reality

 

Another bounce, another new low… (breaking yesterday’s $44.08 lows)

 

It would appear Silver and Crude are linked somehow – margin calls?

 

As Oil started to crack, so silver plunged on heavy volume…

 

Who could have seen this coming?

 

Charts: Bloomberg

 

end

 

Shell cuts 15 billion dollars of spending due to the low oil price.

And this is good for the global economy?

 

(courtesy Bloomberg)

Shell Cuts $15 Billion of Spending as Profit Misses Expectations

(Bloomberg) — Royal Dutch Shell Plc will cut $15 billion of investment over the next three years as the crash in oil prices saw fourth-quarter profit miss forecasts.

Shell, the first of the world’s largest oil companies to report earnings following the slump in crude to a five-year low, will defer or cancel about 40 projects worldwide, Chief Executive Officer Ben van Beurden said today. Exploration will also be curtailed.

“We see pressure on our investment program,” van Beurden said on Bloomberg TV. “It’s a game of being prudent but at the same time not overreacting.”

Profit excluding one-time items and inventory changes was $3.3 billion in the quarter, up from $2.9 billion a year earlier, Shell said today. That missed the $4.1 billion average of 13 analyst estimates compiled by Bloomberg.

Shell shares dropped as much as 5.2 percent in London and traded at 2,065.5 pence at 2:29 a.m.

The global industry is scurrying to respond as oil below $50 a barrel guts cash flows. Occidental Petroleum Corp. and ConocoPhilips also announced lower spending today. BP Plc has frozen wages and Chevron Corp. delayed its 2015 drilling budget. By cutting investment, companies aim to protect returns to investors.

Iconic Item

Shell, based in The Hague, will pay an unchanged quarterly dividend of 47 cents a share and repeat the same payment in the first quarter and possibly for the rest of the year. The yield stands at 5.7 percent.

The payout is an “iconic item at Shell, I will do everything to protect it,” the CEO said in the television interview.

In addition to the $15 billion of cuts in planned spending over three years, Shell warned there could be more to come should crude prices remain relatively low.

“I don’t want to get into a panic, slash and burn response that we will later regret,” he said at a press conference.

Fourth-quarter oil and natural-gas production fell 1 percent to 3.213 million barrels of oil equivalent a day due to loss of a license in Abu Dhabi and security issues in Nigeria.

Refining Results

A fall in earnings from the upstream part of the business, pumping oil and gas, was offset by better results in refining and chemicals. Shell, which was forced to issue a profit warning a year ago, is expected to be the only large oil company to report a gain in fourth-quarter profit.

“Shell widely missed expectations in upstream, particularly in the Americas, but performed well in downstream – – a key cushion for integrated oil companies in a declining crude price environment,” said Kim Fustier, an analyst at Edison Investment Research. Shell missing expectations by about 20 percent “doesn’t bode well for competitors.”

ConocoPhillips, the third-largest U.S. energy producer, reported its first quarterly loss since 2008 and has announced spending cuts. Exxon Mobil Corp., the world’s largest oil company by market value, reports earnings on Monday.

Shell accelerated asset sales and cut spending even before the slump in oil prices. The Anglo-Dutch company axed a $6.5 billion petrochemicals plant in Qatar this month and said it’s selling a stake in an oil-producing project offshore Brazil amid declining output and higher costs to extract the crude.

Asset Sales

Asset sales could slow in 2015 in part because potential buyers may have trouble getting funding amid the crude slump, Chief Financial Officer Simon Henry said. “There is no fire sale,” he told reporters.

Average Brent crude prices in the quarter fell 30 percent from a year before to $77 a barrel. This month the benchmark extended its decline, touching $45.19 a barrel on Jan. 15.

While declining to speculate about where crude prices are headed, van Beurden warned that canceling or delaying too many projects could risk putting in jeopardy supply over the longer term.

Shell’s like-for-like capital spending will be lower than last year, according to today’s statement. That number, which doesn’t include acquisitions, was $35 billion last year and $38 billion in 2013.

Shell has slowed deepwater projects and will be considering whether to push ahead with chemical plants in Pennsylvania and China, Majnoon in Iraq and LNG projects in Canada and Australia, van Beurden said. It may exit some unconventional projects.

Spending on exploration will be held steady this year at around $4 billion, a budget that includes an increase in Alaska and a drop in conventional exploration outside of the U.S. to less than $3 billion, Henry said. This has already meant deferring drilling plans in the Gulf of Mexico, offshore China and Malaysia.

‘Hard Choices’

A year ago, when oil prices were above $100, Van Beurden pledged to make “hard choices” on new projects, sell $15 billion in assets over 2014-2015 and slow investment growth.

More than 30,000 dismissals have been announced across the oil industry as companies shrink budgets, according to a tally by Bloomberg News. Exploration and production spending will fall by more than $116 billion, or 17 percent, on weaker oil revenues, according to an estimate from Cowen & Co.

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net

To contact the editors responsible for this story: Will Kennedy atwkennedy3@bloomberg.net Alex Devine

end
If you have time: JIM WILLIE INTERVIEW/ almost 2 hours.

Your more important currency crosses early Thursday morning:

 

Eur/USA 1.12965 down  .0013

USA/JAPAN YEN 118.07  up .493

GBP/USA 1.5132 down .0007

USA/CAN 1.2548 up .0023

 

 

This morning in Europe, the euro continues to move lower, trading   now just below the 1.13 level at 1.1296 as Europe reacts to deflation,   announcements of massive stimulation and falling bourses.   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 as this morning it settled  down again in Japan by 49 basis points and settling just above the 118 barrier to 118.07 yen to the dollar. The pound was down this morning as it now trades well below the 1.52 level at 1.5132.(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 falling apart (oil down/all of Target stores closing/all of Sony stores closing) and now its yield curve is inverted. This morning the Canadian dollar is trading well down again at 1.2548 to the dollar. It seems that the 4 major global carry  trades are being unwound. (1) The total dollar global short is 9 trillion USA, and as such we now witness a sea of red blood on the streets as derivatives blow up with the massive rise in the dollar against all paper currencies.We also have the second big yen carry trade unwind as the yen refuses to blow past the 120 level.(3) the Nikkei vs gold carry trade. (4) short Swiss Franc/long assets  (European housing), the Nikkei, etc. These massive carry trades are terribly offside as they are being unwound. It is  causing deflation as the world reacts to a lack of demand. Bourses around the globe are reacting in kind to these events.

 

 

 

The NIKKEI: Thursday morning : down 189.51 points or 1.06%

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

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

Gold very early morning trading: $1268.00

silver:$17.46

 

 

 

 

Early Thursday morning USA 10 year bond yield: 1.75% !!!  up  3  in basis points from Wednesday night/

 

USA dollar index early Thursday morning: 94.63  up 17  cents from Wednesday’s close.

 

This ends the early morning numbers.

 

 

 

 

 

 

And now for your closing numbers for Thursday:

 

Closing Portuguese 10 year bond yield: 2.61% up 2 in basis points from Wednesday

 

Closing Japanese 10 year bond yield: .30% !!! par in basis points from Wednesday

 

Your closing Spanish 10 year government bond,  Thursday up 2 in basis points in yield from Wednesday night.

Spanish 10 year bond yield: 1.46% !!!!!!
Your Thursday closing Italian 10 year bond yield: 1.60% up  1 in basis points from Wednesday:

 

trading 16 basis points higher than Spain:

 

 

IMPORTANT CURRENCY CLOSES FOR TODAY

 

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

 

 

Euro/USA: 1.1309  up .0026

USA/Japan: 118.38 up .798

Great Britain/USA: 1.5048 down .0091

USA/Canada: 1.2616 up .0091

 

The euro rose a bit this afternoon and it closed up by .0026  points finishing the day just above  the 1.13 level to 1.1309. The yen was well down in the afternoon, and it was down by closing  to the tune of 80 basis points and closing well above  the 118 cross at 118.38 and still causing much grief again to our yen carry traders who need a much lower yen (to surpass 120). The British pound  lost  ground during the afternoon sessions and was down on  the day closing at 1.5048. The Canadian dollar collapsed this afternoon from the weak oil price finishing at 1.2616 to the dollar.

As explained above, the short dollar carry trade is being unwound, the yen carry trade , the Nikkei/gold carry trade, and finally the long dollar/short Swiss franc carry trade are all being unwound and these reversals are  causing massive derivative losses. And as such these massive derivative losses is the powder keg that will destroy the entire financial system. The losses on the oil front will no doubt produce many dead bodies.

 

end

 

 

 

 

Your closing 10 yr USA bond yield: 1.76 up 4 basis points

 

Your closing USA dollar index: 94.79 up 32 cents on the day.

 

 

 

 

 

European and Dow Jones stock index closes:

 

 

England FTSE  down 15.34 points or 0.22%

Paris CAC up 20.49 or 0.44%

German Dax  up 26.90 or 0.25%

Spain’s Ibex up  50.70 or 0.48%

Italian FTSE-MIB up 115.28 or 0.56%

 

The Dow: up 225.48 or 1.31%

Nasdaq; up 44.41 or 0.98%

 

OIL: WTI 44.48 !!!!!!!

Brent: 49.09!!!!

 

 

Closing USA/Russian rouble cross: 68.55  up 3/4  roubles per dollar on the day.

 

 

 

 

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

 

Your New York trading for today:

 

 

Janet Yellen Saves The Day: Stocks Soar After Fed Chairwoman Tells Democrats To BTFD

 

Because everyone knows you BTFD when Janet Yellen speaks (and Sell The F**king Shit out of precious metals in the middle of surging currency volatility and monetray policy chaos…)

 

Thank The Market Gods for Janet Yellen… Stocks were rescued back above their 100DMAs to prove everything is fine…

 

Which dragged all stock indices back into the green post-QE3

 

The big news today was Gold & Silver crushed… Crude new cycle lows… and Swiss Franc slapped hard and put away wet… (oh and stocks bounced)

Stocks started to squeeze after Europe closed (as usual) and then Janet Yellen struck with hints to Senate Democrats that its tiem to BTFD!! Ramped back to unch from yesterday’s FOMC but could not hold it!!

 

Some context for the exuberance today… As Small Caps creep green for the week

 

Stocks decoupled from rates…

 

Treasury yields remain lower on the week…

 

The USDollar fell modestly today led by EUR strength but Swissy was smashed lower again…

 

Commodities are all lower on the week with silver clubbed today leading the way…

 

Yet again Crude made fresh cycle lows… (before bouncing back once again)

 

And Energy stocks tumbled back to that reality…

 

 

Silver and Gold really accelerated lower after Crude broke $44 (around the European Close)

 

Gold tumbled despite the resurgence in Currency vol…

 

Charts: Bloomberg

end

 

 

 

Strange jobless numbers today:

 

(courtesy BLS/zerohedge)

 

Initial Jobless Claims Collapse To 15 Year Lows But Shale States Job Losses Explode

 

After 4 weeks missing expectations (and 3 above the crucial 300k mark), initial jobless claims totally and utterly collapsed last week. Printing 265k (beating the 300k expectation by the most in years), the 13.9% drop WoW was the biggest since September 2005!!! This is the lowest initial claims data since the financial crisis and in fact the lowest since April 2000. But it is the story from the Shale states that is most troubling as initial claims through the 2nd week of January (data is lagged by state) show a massive surge in initial claims as unambiguously good news is very much not for many thousands across these regions.

 

Yep looks totally normal…

 

Lowest initial claims since April 2000… and biggest drop since September 2005…

 

This is lowest non-seasonally-adjusted claims print for this time of year in at least a decade.

The 265k print perfectly adjusts the 4-week average that is so closely watched below the 300k mark (to 299k)… coincidence?

 

as Shale State Claims explode…

 

we can only say WTF!?

 

Charts: Bloomberg

 

end

 

U.S. pending home sales drop more than expected in December

By Lindsay Dunsmuir

WASHINGTON Thu Jan 29, 2015 10:01am EST (Reuters) – Contracts to buy previously owned U.S. homes fell more than expected in December as tighter inventory and an increase in house prices discouraged buyers.

The National Association of Realtors said on Thursday its Pending Home Sales Index, based on contracts signed last month, decreased 3.7 percent to 100.7. The NAR also slightly revised down its index in November to 104.6.

These contracts usually become sales after a month or two. Economists polled by Reuters had forecast total pending home sales rising 0.5 percent in December from the previously reported level.

-END-

 

 

 

And now the crude contagion blasts into California’s Kern country

 

(courtesy zero hedge)

 

 

 

Crude Contagion: California’s Kern County Declares Fiscal Emergency Due To Plunging Oil Price

 

t this point only an act of god, or a sudden Saudi change of heart to cut crude production by 50% (unclear which is more probable) can prevent a recession in Texas. However, one state that few thought would be impaired as a result of the crude plunge, is California. Yet as the LA Times reports, it is precisely California, and specifically Kern County located in the middle of the state and containing the farmer town of Bakersfield and countless oil rigs, that yesterday declared a state of fiscal emergency during the weekly supervisors’ meeting on Tuesday. The reason: predictions of a massive shortfall in property tax revenues because of tanking oil prices.

Oil companies account for about 30% of the county’s property tax revenues, a percentage that has been declining in recent decades but still represents a critical cushion for county departments and school districts.

According to the LA Times, as a result of the plunge in crude prices which is primarily driven by the de-financializaition of crude futures and the collapse in Chinese demand coupled with a relentless and rising production quota by the marginal, junk-bond funded producers (and everyone else) Kern, the heart of oil production in California, is facing what could be a $61-million hole in its budget once its fiscal year starts July 1, according to preliminary calculations from the county’s assessor-recorder office.

“It affects all county departments – every department will be asked to make cuts,” said County Assessor Jon Lifquist in an interview this month. “It just doesn’t bode well.”

 

That, and there’s also demographic issues which have little to do with the crude contagion: soaring pension costs also influenced the fiscal emergency declaration, which allows supervisors to tap county reserves. Operating costs expected at a new jail facility in fiscal 2017 and 2018 factored into the decision as well.

 

Looking at an operational deficit of nearly $27 million for the 2015-16 fiscal year, supervisors adopted a plan to immediately begin scaling back county spending rather than making deep reductions all at once in July.

 

The Service Employees International Union Local 521 urged officials in a statement to “not adopt drastic cuts that could cripple vital community services.”

The union said that although temporary wage cuts and hiring freezes “may be an obvious solution,” such tactics “are never the sole answer to economic problems.”

* * *

Remember, no matter how bleak the facts and reality are, just keep whistling past the graveyard and just keep repeating “unambiguously good”, “unambiguously good”, “unambiguously good“…

 

 

 

end

 

And now Alaska has budgetary problems due to the low price of oil:

 

 

 

(courtesy Tully/OilPrice.com)  and special thanks to Robert H for sending this to us

 

Alaska Facing Huge Deficit Without Oil Tax Revenues

 

By Andy Tully
Posted on Tue, 27 January 2015 22:06 | 0

Alaska, once oil-rich, now faces tough decisions on what parts of the state’s budget can be cut, and where it can find other sources of revenue to confront deficits it has never faced before.

The part-time state legislature, whose 2014 session ended in April, had passed a $6.1 billion budget for 2015, but since then a barrel of oil has lost more than half its value. Add to that, Alaska gets 90 percent of its budget from oil taxes. So when the 2015 legislative session began Jan. 27, the state’s budget was $3.5 million short.

With an 80 percent drop in oil revenues since June, Alaska is over a barrel. It has no state sales or income taxes, but it does have a kind of savings account from previous oil revenues, but that may not be enough to make up for the shortfall.

Related: If Shell Backs Out, Arctic Oil Off the Table for Years

“Even if you lay off every state employee, that only saves us a billion [dollars],” Representative Chris Tuck, a Democrat and the minority leader in the Alaska House of Representatives, told The New York Times. “We’d still have $2.5 billion to go.”

The state’s solution, for now at least, is on raising money, not cutting services,according to David Teal, director of Alaska’s Legislative Finance Division. “The numbers just don’t allow you to cut your way out of this, not without some severe impacts on the economy,” he said.

As a result, the new governor, Bill Walker – previously a Republican who’s now an independent – is considering something anathema to most members of his former party: creating the state’s first income and sales taxes and even reducing Alaska’s oil wealth fund, which shares the state’s oil wealth with virtually every Alaskan with an annual payment. Last year’s payment was $1,884 per person.

Besides sales and income taxes, Walker has proposed across-the-board budget cuts of between 5 percent and 8 percent, and would deepen that cut to as much as 25 percent over a four-year period if oil prices don’t return to more profitable levels.

“I’m talking about deep cuts, and they will hurt,” Walker said in a recent televised address.
Walker also said work on the state’s natural gas pipeline would be accelerated, but still wouldn’t be ready to contribute to state revenues until 2023 or even later.

Related: Is The Arctic Dream Dead?

But don’t call the huge deficit a crisis, Walker tells the Alaska Dispatch News.
“I don’t use the word ‘crisis,’ having been through some crises in Alaska,” the governor said. “This is a downturn, this is a serious time to sit down and make some changes within our fiscal structure.”

Walker said the big difference between the current deficit and previous troubles, including a similar collapse in oil prices in late 1980s, is that Alaska has saved enough of its oil wealth to help ease the impact on Alaska’s economy.

“I’m pleased we have a buffer, that we have savings, and I give credit to those who were in the legislature and the administration that wisely put money aside,” he said. “Without that we’d be in a very different situation.”

By Andy Tully of Oilprice.com

 

 

end

 

 

 

We  will see you on Friday.

bye for now

Harvey,

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5 comments

  1. Stephen Arthur Jr · · Reply

    Harvey, double check your GLD (tons) #’s. You’re showing 900+ tons instead of 700+ tons.
    Best regards, Stephen

    Like

  2. Paul Thompson · · Reply

    Harvey – Zerohedge report that Silver margins were hiked by 11%. http://www.zerohedge.com/news/2015-01-29/cme-hikes-silver-margins-11

    Like

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